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), 1122-1178 [E9-30891]
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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)
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Final rule.
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AGENCY:
SUMMARY: The U.S. Department of
Energy (DOE) is adopting amended
energy conservation standards for
commercial clothes washers (CCWs).
DOE has determined that amended
energy conservation standards for these
types of equipment would result in
significant conservation of energy, and
are technologically feasible and
economically justified.
DATES: The effective date of this rule is
March 9, 2010. The standards
established in today’s final rule will be
applicable starting January 8, 2013.
ADDRESSES: For access to the docket to
read background documents, the
technical support document, transcripts
of the public meetings in this
proceeding, or comments received, visit
the U.S. Department of Energy, Resource
Room of the Building Technologies
Program, 950 L’Enfant Plaza, SW., 6th
Floor, Washington, DC 20024, (202)
586–2945, between 9 a.m. and 4 p.m.,
Monday through Friday, except Federal
holidays. Please call Brenda Edwards at
the above telephone number for
additional information regarding
visiting the Resource Room. (Note:
DOE’s Freedom of Information Reading
Room no longer houses rulemaking
materials.) You may also obtain copies
of certain previous rulemaking
documents in this proceeding (i.e.,
framework document, advance notice of
proposed rulemaking, notice of
proposed rulemaking, supplemental
notice of proposed rulemaking), draft
analyses, public meeting materials, and
related test procedure documents from
the Office of Energy Efficiency and
Renewable Energy’s Web site at https://
www1.eere.energy.gov/buildings/
appliance_standards/commercial/
clothes_washers.html.
FOR FURTHER INFORMATION CONTACT:
Stephen Witkowski, U.S. Department of
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Energy, Energy Efficiency and
Renewable Energy, Building
Technologies Program, EE–2J, 1000
Independence Avenue, SW.,
Washington, DC 20585 Telephone: (202)
586–7463. E-mail:
Stephen.Witkowski@ee.doe.gov.
Francine Pinto, Esq. or Betsy Kohl,
Esq., U.S. Department of Energy, Office
of General Counsel, GC–71/72, 1000
Independence Avenue, SW.,
Washington, DC 20585. Telephone:
(202) 586–7432, (202) 586–7796. E-mail:
Francine.Pinto@hq.doe.gov,
Elizabeth.Kohl@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
B. Current Federal Standards for
Commercial Clothes Washers
C. Benefits to Consumers of Commercial
Clothes Washers
D. Impact on Manufacturers
E. National Benefits
F. Conclusion
II. Introduction
A. Consumer Overview
B. Authority
C. Background
1. Current Standards
2. History of Standards Rulemaking
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
C. Energy Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Commercial
Consumers and Manufacturers
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
IV. Methodology and Discussion of
Comments on Methodology
A. Equipment Classes
B. Technology Assessment
C. Engineering Analysis
1. Efficiency Levels
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
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10. Split Incentive Between CCW
Consumers and Users
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. Impacts of Standards on Shipments
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
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
V. Discussion of Other Comments
A. Proposed Trial Standard Levels (TSLs)
for Commercial Clothes Washers
B. Proposed Standards for Commercial
Clothes Washers
VI. Analytical Results and Conclusions
A. Trial Standard Levels
B. Significance of Energy Savings
C. Economic Justification
1. Economic Impacts on Commercial
Customers
a. Life-Cycle Cost and Payback Period
b. Commercial Consumer Subgroup
Analysis
c. Rebuttable-Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Cumulative Regulatory Burden
c. Impacts on Employment
d. Impacts on Manufacturing Capacity
e. Impacts on Subgroups of Manufacturers
3. National Impact Analysis
a. Amount and Significance of Energy
Savings
b. Net Present Value of Customer Costs and
Benefits
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
7. Other Factors
D. Conclusion
VII. 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
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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
M. Congressional Notification
VIII. Approval of the Office of the Secretary
I. Summary of the Final Rule and Its
Benefits
A. The Standard Levels
The Energy Policy and Conservation
Act 1 (EPCA), as amended (42 U.S.C.
6291 et seq.; EPCA), directs the
Department of Energy (DOE) to consider
amended mandatory energy
conservation standards for CCWs. (42
U.S.C. 6313(e)(2)(A)) Any such
amended energy conservation standard
must 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)) The standards in today’s final
rule, which apply to all CCWs, satisfy
these and other statutory criteria
discussed in this notice.
Table I.1 shows the amended standard
levels that DOE is adopting today. These
standards will apply to all CCWs
manufactured for sale in the United
States, or imported to the United States,
on or after January 8, 2013.
prescribes standards for CCWs
manufactured on or after January 1,
2007. (42 U.S.C. 6313(e)) These
standards require that CCWs have a
modified energy factor (MEF) of at least
1.26 and a water factor (WF) of not more
than 9.5. (Id.; 10 CFR 431.156)
C. Benefits to Consumers of Commercial
Clothes Washers
Table I.2 indicates the impacts on
TABLE I.1—AMENDED ENERGY CON- commercial consumers of today’s
SERVATION STANDARDS FOR COM- amended standards. The economic
impacts of the amended CCW standards
MERCIAL CLOTHES WASHERS
Equipment class
Top-loading commercial clothes washers.
Front-loading commercial clothes
washers.
on commercial consumers as measured
by the average life-cycle cost (LCC)
savings are positive, even though the
standards may increase some initial
costs. For example, typical top-loading
CCWs—the most common type
currently being sold—have an average
installed price of $760 and average
lifetime operating costs (discounted) of
$3,286. To meet the amended standards,
DOE estimates that the average installed
price of such equipment will increase
by $214, which will be more than offset
by savings of $394 in average lifetime
operating costs (discounted).
Amended energy
conservation
standards
1.60 Modified Energy
Factor/8.5 Water
Factor.
2.00 Modified Energy
Factor/5.5 Water
Factor.
B. Current Federal Standards for
Commercial Clothes Washers
EPCA, as amended by the Energy
Policy Act of 2005 (EPACT 2005),
TABLE I.2—IMPLICATIONS OF AMENDED STANDARDS FOR COMMERCIAL CONSUMERS
Average installed
price *
$
Equipment class
Energy conservation standard
Top-loading CCWs .............
Front-loading CCWs ...........
1.60 Modified Energy Factor/8.5 Water Factor ..............
2.00 Modified Energy Factor/5.5 Water Factor ..............
Average installed price
increase
$
Average
life-cycle
cost savings
$
Median payback period
years
974
1,365
214
23
180
** 20
4.3
** 0.4
* For a baseline model.
** DOE estimates that 96 percent of front-loading CCW consumers would purchase a model at the standard level even without amended
standards. The values refer to average impacts for the 4 percent of consumers who would be affected by the standard.
D. Impact on Manufacturers
Using a real corporate discount rate of
7.2 percent, DOE estimates the industry
net present value (INPV) of the CCW
industry to be approximately $62
million in 2008$. DOE expects the
impact of today’s standards on the INPV
of manufacturers of CCWs to be a loss
of between 7.8 percent and 11.4 percent
of the INPV, which is approximately $5
to $7 million. Based on DOE’s
interviews with the manufacturers of
CCWs, DOE expects possible loss of
employment for one manufacturer as a
result of the standards.
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E. National Benefits
DOE estimates that the energy
conservation standards will save a
significant amount of energy—an
estimated 0.10 quadrillion British
thermal units (Btu), or quads, of
1 42
cumulative energy over 30 years (2013–
2043). This amount is equivalent to 2
days of U.S. gasoline use. In addition,
DOE estimates the standards for CCWs
will save over 143 billion gallons of
cumulative water consumption over 30
years (2013–2043).
The national net present value (NPV)
of CCW consumer benefit resulting from
the standards, considering the impacts
of equipment sold in 2013–2043, is $0.4
billion using a 7-percent discount rate
and $0.9 billion using a 3-percent
discount rate, in 2008$. This is the
estimated total value of future operating
cost savings minus the estimated
increased equipment costs, discounted
to 2009. The NPV for consumers (at the
7-percent discount rate) would exceed
industry losses, discussed above, due to
energy efficiency standards by at least
80 times.
By 2043, DOE expects the energy
savings from the standards to eliminate
the need for approximately 18 MW of
electricity generating capacity. The
energy savings will result in cumulative
greenhouse gas emissions reductions in
2013–2043 of approximately 5.1 million
tons (Mt) of carbon dioxide (CO2), or an
amount equal to that produced by
approximately 5.1 million new cars in a
year. Additionally, the standards will
help alleviate air pollution by resulting
in approximately 3.0 kilotons (kt) of
cumulative nitrogen oxide (NOX)
emission reductions and 0.0003 tons of
cumulative mercury (Hg) emission
reductions. The estimated net present
monetary values of these emissions
reductions at a 7-percent discount rate
(discounted to 2009 and expressed in
2008$) are between $13 and $140
million for CO2, between $0.4 and $4.2
U.S.C. 6291 et seq.
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million for NOX, and between $0.0 and
$0.6 million for Hg. At a 3-percent
discount rate, the estimated net present
values of these emissions reductions
(discounted to 2009 and expressed in
2008$) are between $28 and $303
million for CO2, between $0.8 million
and $8.4 million for NOX, and between
$0.0 and $0.6 million for Hg.
The benefits and costs of today’s final
rule can also be expressed in terms of
annualized values. Estimates of
annualized values for three economic
growth cases are shown in Table I.3.
The annualized monetary values are the
sum of the annualized national
economic value of operating savings
benefits (energy, maintenance and
repair), plus the monetary values of the
benefits of carbon dioxide emission
reductions, monetized using a value of
$20 per metric ton of carbon dioxide.
The $20 value is a central interim value
from a recent interagency process, as
discussed in section VI.C.6. Although
summing the value of operating savings
to the values of CO2 reductions provides
a valuable perspective, please note the
following. 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, which
are meant to reflect the global benefits
of CO2 reductions. Furthermore, 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 considers the impacts of
equipment sold in 2013–2043. The
value of CO2, on the other hand is meant
to reflect the present value of all future
climate-related impacts, which go well
beyond the lifetime of the equipment
sold in the forecast period.
Using a 7-percent discount rate for the
annualized cost analysis, the cost of the
standards established in today’s final
rule 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 $56.0 million per year.
TABLE I.3—ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR COMMERCIAL CLOTHES WASHERS (TSL 3)
Category
Primary estimate
(AEO reference case)
Unit
7%
Low estimate
(AEO low-growth case)
3%
7%
3%
High estimate
(AEO high-growth case)
7%
3%
Benefits
Monetized Operating Cost Savings
Quantified Emissions Reductions ...
60.6
0.14
0.087
0.0002
5.1
72.8
0.16
0.194
0.0001
5.9
54.9
0.14
0.087
0.0002
5.1
65.3
0.16
0.194
0.0001
5.9
66.6
0.14
0.087
0.0002
5.1
80.4
0.16
0.194
0.0001
5.9
NOX ....................
Hg .......................
Monetized Avoided Emissions Reductions (Million 2008$).
Million 2008$ ......
CO2 (Mt) .............
NOX (kt) .............
Hg (t) ..................
CO2 ....................
0.2
0.0
0.3
0.0
0.2
0.0
0.3
0.0
0.2
0.0
0.3
0.0
22.7
21.9
20.9
24.6
23.9
56.3
38.3
50.6
47.3
62.7
Costs
Monetized Incremental Product and
Installation Costs.
Million 2008$ ......
23.4
Net Benefits
Monetized Value .............................
Million 2008$ ......
42.5
* For CO2, benefits reflect value of $20/t, which is in the middle of the values considered by DOE for valuing the potential global benefits resulting from reduced CO2 emissions. For NOX and Hg, the benefits reflect values of $2,491/t and $17 million/t, respectively. These values are the
midpoint of the range considered by DOE.
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F. Conclusion
II. Introduction
The benefits (energy savings, LCC
savings for CCW consumers, positive
national NPV, and emissions
reductions) to the Nation of the
standards outweigh their costs (loss of
manufacturer INPV and LCC increases
for some CCW consumers). Today’s
standards also represent the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified, and will result
in significant energy savings. At present,
CCWs that meet the amended standard
levels are commercially available.
A. Consumer Overview
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DOE is amending in today’s final rule
energy conservation standard levels for
CCWs as shown in Table I.1. These
standards apply to equipment
manufactured or imported on or after
January 8, 2013.
DOE research suggests that
commercial consumers will see benefits
from today’s 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
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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 (PBP) for the more
efficient, higher-priced equipment will
range from 0.2 to 5.6 years, depending
on the equipment class.
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B. Authority
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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, the subject of this
rulemaking. (42 U.S.C. 6312; 6313(e))
DOE publishes today’s final rule
pursuant to Part A–1 of Title III, which
provides for test procedures, labeling,
and energy conservation standards for
CCWs and certain other equipment, and
authorizes DOE to require information
and reports from manufacturers. The
test procedures for CCWs appear at 10
CFR part 430, subpart B, appendix J1
(pursuant to 10 CFR 431.154).
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,
2007.2 (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.)
EPCA provides criteria for prescribing
amended standards for covered
products and equipment.3 As indicated
above, any amended standard for this
equipment 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))
Additionally, EPCA provides specific
prohibitions on prescribing such
standards. DOE may not prescribe an
amended or new standard for any
equipment for which DOE has not
established a test procedure. (42 U.S.C.
6295(o)(3)(A) and 6316(a)). Further,
DOE may not prescribe an amended
standard if DOE determines by rule that
such standard would not result in
‘‘significant conservation of energy’’ or
‘‘is not technologically feasible or
2 Under the statute, a CCW must have an MEF of
at least 1.26 and a WF of not more than 9.5.
3 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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economically justified.’’ (42 U.S.C.
6295(o)(3)(B) and 6316(a))
EPCA also provides that, in deciding
whether such a standard is
economically justified for equipment
such as CCWs, 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))
In addition, EPCA, as amended (42
U.S.C. 6295(o)(2)(B)(iii) and 6316(a)),
establishes a rebuttable presumption
that any standard for covered products
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. See section III.D.2.
Furthermore, EPCA contains what is
commonly known as an ‘‘antibacksliding’’ provision. (42 U.S.C.
6295(o)(1) and 6316(a)) 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. EPCA further
provides that the Secretary may not
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prescribe an amended standard if
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 volumes 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) and 6316(a))
Section 325(q)(1) of EPCA is
applicable to promulgating standards for
most types or classes of equipment,
including CCWs, that have two or more
subcategories. (42 U.S.C. 6295(q)(1) and
42 U.S.C. 6316(a)) Under this provision,
DOE must specify a different standard
level than 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)(A) and (B)) In
determining whether a performancerelated 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. (42 U.S.C. 6295(q)(1)) Any
rule prescribing such a standard must
include an explanation of the basis on
which DOE established such higher or
lower level. (See 42 U.S.C. 6295(q)(2))
Federal energy conservation
requirements for commercial
equipment, including CCWs, generally
supersede State laws or regulations
concerning energy conservation testing,
labeling, and standards. (42 U.S.C.
6297(a)–(c); 42 U.S.C. 6316(a)) 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); 42 U.S.C. 6316(a)) DOE
must prescribe a rule granting the
petition if the Secretary finds that the
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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); 42 U.S.C. 6316(a))
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
As discussed in the supplemental
notice of proposed rulemaking
(SNOPR), 74 FR 57738 (Nov. 9, 2009)
(the November 2009 SNOPR), the
EPACT 2005 amendments to EPCA
require that DOE issue a final rule by
January 1, 2010, to determine whether
standards for CCWs 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.)
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).4 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.
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
in this rulemaking. 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.
TABLE II.1—COMMERCIAL CLOTHES WASHER ENERGY CONSERVATION STANDARDS PROPOSED IN THE OCTOBER 2008
NOPR
Modified energy
factor
ft3/kWh
Equipment
rmajette on DSK29S0YB1PROD with RULES2
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 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. 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
4 This document is available on the DOE Web site
at: https://www1.eere.energy.gov/buildings/
1.76
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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
appliance_standards/commercial/
clothes_washers.html.
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CCW efficiencies and the November
2009 SNOPR. DOE subsequently tested
the max-tech unit at an independent test
facility, revised the max-tech level,
updated the analysis, and published the
November 2008 SNOPR to allow
interested parties to comment on the
revised efficiency level proposals. 74 FR
57738 (Nov. 9, 2009).
In the November 2009 SNOPR, DOE
revised the proposed energy
conservation standards for CCWs. 74 FR
57738 (Nov. 9, 2009). In conjunction
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
with the November 2009 SNOPR, DOE
also published on its Web site the
complete TSD for the proposed rule,
which incorporated the final analyses
that DOE conducted, and contained
technical documentation for each step
of the analysis. The TSD included the
engineering analysis spreadsheets, the
LCC spreadsheet, and the national
impact analysis spreadsheet. The
revised energy conservation standards
proposed in the November 2009 SNOPR
for CCWs are shown in Table II.2.
TABLE II.2—COMMERCIAL CLOTHES WASHER ENERGY CONSERVATION STANDARDS PROPOSED IN THE NOVEMBER 2009
SNOPR
Modified energy
factor
ft3/kWh
Equipment
rmajette on DSK29S0YB1PROD with RULES2
Top-loading CCWs ......................................................................................................................................
Front-loading CCWs ....................................................................................................................................
In the November 2009 SNOPR, DOE
identified issues on which it was
particularly interested in receiving
comments and views of interested
parties. These included the following:
(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 toploading 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 manufacturer
impacts, including the effects of
manufacturer tax credits and
competitive concerns; (5) the
determination of environmental
impacts; and (6) the newly proposed
energy conservation standards. 74 FR
57738, 57800 (Nov. 9, 2009) After the
publication of the November 2009
SNOPR, DOE also held a public meeting
in Washington, DC, on November 16,
2009 (referred to as the ‘‘November 2009
public meeting’’), to hear oral comments
on and solicit information relevant to
the revised proposed rule. The
November 2009 SNOPR included
additional background information on
the history of this rulemaking. 74 FR
57738, 57742–43 (Nov. 9, 2009).
Comments presented by interested
parties during the November 2009
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public meeting and submitted in
response to the November 2009 NOPR
concerning the sensitivity of the
analyses to the estimated market share
split of CCW shipments among
laundromats, multi-family housing, and
on-premises laundry applications led
DOE to conduct a sensitivity analysis for
today’s final rule. See appendix 11C of
the TSD.
III. General Discussion
A. 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, 62043–44 (Oct.
17, 2008). While DOE believes
commercial laundry practices likely
differ from residential practices,5 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, interested
parties agreed with DOE’s conclusion
that the DOE clothes washer test
procedure is adequate for rating CCWs.
DOE did not receive any comments
objecting to the use of the DOE clothes
washer test procedure for CCWs.
Therefore, for the November 2009
SNOPR, DOE continued to consider the
existing DOE test procedure adequate to
5 CCWs are typically used more frequently and
filled with a larger load than RCWs.
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1.60
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measure energy and water consumption
of CCWs. 74 FR 57738, 57743 (Nov. 9,
2009).
The Appliance Standards Awareness
Project (ASAP) commented that DOE is
currently reviewing its clothes washer
test procedure, and noted that there may
be revisions as a result of that
rulemaking. ASAP asked whether,
under EPACT 2005, those potential
changes in the test procedure would
apply to the determinations of
compliance with this standard that is
currently proposed for CCWs. (ASAP,
Public Meeting Transcript, No. 67.4 at
pp. 13–16 6) EPCA states that ‘‘[w]ith
respect to commercial clothes washers,
the test procedures shall be the same as
the test procedures established by the
Secretary for RCWs under section
6295(g) of this title.’’ (42 U.S.C.
6314(a)(8)) Therefore, CCWs will be
required to be tested to the DOE clothes
washer test procedure that is effective at
the time the testing is conducted.
B. Technological Feasibility
1. General
As stated above, any standards that
DOE establishes for CCWs must be
technologically feasible. (42 U.S.C.
6 A notation in the form ‘‘ASAP, Public Meeting
Transcript, No. 67.4 at pp. 13–16’’ identifies an oral
comment that DOE received during the November
16, 2009, SNOPR public meeting and which was
recorded in the public meeting transcript in the
docket for this rulemaking (Docket No. EE–2006–
STD–0127), maintained in the Resource Room of
the Building Technologies Program. This particular
notation refers to a comment (1) made by the
Appliance Standards Awareness Project (ASAP)
during the public meeting, (2) recorded in
document number 67.4, which is the public
meeting transcript that is filed in the docket of this
rulemaking, and (3) which appears on pages 13–16
of document number 67.4.
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6295(o)(2)(A) and (o)(3)(B); 42 U.S.C.
6316(a)) 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.
‘‘Technologies incorporated in
commercial products or in working
prototypes will be considered
technologically feasible.’’ 10 CFR part
430, subpart C, appendix A, section
4(a)(4)(i). 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
the November 2007 ANOPR and in
chapter 4 of the 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 the November
2009 SNOPR, DOE did not screen 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
considered the same design options in
the November 2009 SNOPR as those
evaluated in the October 2008 NOPR. 74
FR 57738, 57743–44 (Nov. 9, 2009).
This final rule considers the same
design options as those evaluated in the
November 2009 SNOPR. All the
evaluated technologies have been used
(or are being used) in commercially
available equipment or working
prototypes. DOE also has determined
that there is equipment either in the
market or in working prototypes at all
of the efficiency levels analyzed in this
notice. Therefore, DOE has determined
that all of the efficiency levels evaluated
in this final rule, 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 TSD.
2. Maximum Technologically Feasible
Levels
When DOE considers an amended
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.) For the
October 2008 NOPR, DOE proposed the
max-tech levels shown in Table III.1. 73
FR 62034, 62036 (Oct. 17, 2008).
TABLE III.1—COMMERCIAL CLOTHES WASHER MAX-TECH EFFICIENCY LEVELS PROPOSED IN THE OCTOBER 2008 NOPR
Max-tech level
Equipment class
MEF,
rmajette on DSK29S0YB1PROD with RULES2
Top-Loading CCWs .....................................................................................................................................
Front-Loading CCWs ...................................................................................................................................
DOE received comments in response
to the October 2008 NOPR questioning
the max-tech top-loading CCW
efficiency rating presented in the
November 2009 SNOPR. DOE examined
the max-tech efficiency level for toploading CCWs, contracting an
independent testing laboratory to verify
the performance ratings for the max-tech
top-loading CCW model. The laboratory
results (based on a 3-unit sample)
suggested that the max-tech model
achieves 1.63 MEF/8.4 WF. Based on
this information, DOE revised the maxtech top-loading CCW level in the
November 2009 SNOPR 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 concluded in
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the November 2009 SNOPR is attainable
by the max-tech CCW model. For the
November 2009 SNOPR, the proposed
front-loading max-tech level was the
same as in the October 2008 NOPR,
whereas the proposed top-loading maxtech level was revised to 1.60 MEF/8.5
WF based on the independent test
results. 74 FR 57738, 57744 (Nov. 9,
2009).
DOE received comments in response
to the November 2009 SNOPR that
objected to the max-tech efficiency level
for top-loading CCWs based on lack of
wash performance and consumer
acceptance of the max-tech top-loading
CCW model in a commercial laundry
setting. DOE agrees that inherent in a
determination of technological
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feasibility is performance related to the
equipment’s primary function (i.e.,
cleaning clothes), but DOE considers as
evidence of sufficient performance and
consumer acceptance of the highest
efficiency top-loading CCWs the
presence on the market of two such
models at or near the max-tech level
proposed in the November 2009
SNOPR. Therefore, for today’s final rule,
the max-tech levels for both classes are
the max-tech levels identified in the
November 2009 SNOPR. These levels
are shown in Table III.2 below. For more
details on this selection of max-tech
levels, see section IV.C.1.a of today’s
final rule.
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TABLE III.2—COMMERCIAL CLOTHES WASHER MAX-TECH EFFICIENCY LEVELS
Max-tech level
Equipment class
MEF, ft3/kW
Top-Loading CCWs .....................................................................................................................................
Front-Loading CCWs ...................................................................................................................................
C. Energy Savings
DOE forecasted energy savings in its
national energy savings (NES) analysis
through the use of an NES spreadsheet
tool, as discussed in the November 2009
SNOPR. 74 FR 57738, 57744 (Nov. 9,
2009).
One criterion that governs DOE’s
adoption of standards for CCWs is the
standard must result in ‘‘significant’’
energy savings. (42 U.S.C. 6295(o)(3)(B)
and 42 U.S.C. 6316(a)) While EPCA 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,
1373 (D.C. Cir. 1985), indicated that
Congress intended ‘‘significant’’ energy
savings in this context to be savings that
were not ‘‘genuinely trivial.’’ DOE’s
estimates of the energy savings for the
energy conservation standards adopted
in today’s final rule are nontrivial.
Therefore, DOE considers them
‘‘significant’’ within the meaning of
section 325 of EPCA.
D. 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) and 42
U.S.C. 6316(a)) The following sections
discuss how DOE has addressed each of
those seven factors in this rulemaking.
rmajette on DSK29S0YB1PROD with RULES2
a. Economic Impact on Commercial
Consumers and Manufacturers
DOE considered the economic impact
of the amended CCW standards on
commercial consumers and
manufacturers. For consumers, DOE
measured the economic impact as the
change in installed cost and life-cycle
operating costs, i.e., the LCC. (See
sections IV.D and IV.E and chapter 8 of
the TSD.) DOE investigated the impacts
on manufacturers through the
manufacturer impact analysis (MIA).
(See sections IV.G and VI.C.2, and
chapter 13 of the TSD.) The economic
impact on commercial consumers and
manufacturers is discussed in detail in
the November 2009 SNOPR. 74 FR
57738, 57751–55, 57761–65, 57769–77
(Nov. 9, 2009).
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b. Life-Cycle Costs
DOE considered life-cycle costs of
CCWs, as discussed in the November
2009 SNOPR. 74 FR 57738, 57751–55
(Nov. 9, 2009). DOE calculated the sum
of the purchase price and the operating
expense—discounted over the lifetime
of the equipment—to estimate the range
in LCC benefits that commercial
consumers would expect to achieve due
to the standards.
c. Energy Savings
Although significant conservation of
energy is a separate statutory
requirement for imposing an energy
conservation standard, EPCA also
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) and 42 U.S.C.
6316(a)). As in the November 2009
SNOPR (74 FR 57738, 57755–61 (Nov. 9,
2009)), for today’s final rule, DOE used
the NIA spreadsheet results in its
consideration of total projected savings
that are directly attributable to the
standard levels DOE considered.
d. Lessening of Utility or Performance of
Equipment
In selecting today’s standard levels,
DOE sought to avoid new standards for
CCWs that would lessen the utility or
performance of that equipment (42
U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C.
6316(a)). As with the November 2009
SNOPR (74 FR 57738, 57745 (Nov. 9,
2009)), today’s standards do not involve
changes in equipment design or unusual
installation requirements that would
reduce the utility or performance of
CCWs.
e. Impact of Any Lessening of
Competition
DOE considers any lessening of
competition likely to result from
standards. Accordingly, as discussed in
the November 2009 SNOPR (74 FR
57738, 57745, 57762–63 (Nov. 9, 2009)),
DOE requested that the Attorney
General transmit to the Secretary a
written determination of the impact, if
any, of lessening of competition likely
to result from the proposed standards,
together with an analysis of the nature
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8.5
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and extent of such impact (42 U.S.C.
6295(o)(2)(B)(i)(V) and (B)(ii) and 42
U.S.C. 6316(a)).
To assist the Attorney General in
making such a determination, DOE
provided the U.S. Department of Justice
(DOJ) with copies of the November 2009
proposed rule and the TSD for review.
The Attorney General’s response is
discussed in section VI.C.5 below, and
is reprinted at the end of this rule.
Impacts on manufacturers are also
discussed in section IV.G below.
f. Need of the Nation to Conserve Energy
In considering standards for CCWs,
the Secretary must consider the need of
the Nation to conserve energy (42 U.S.C.
6295(o)(2)(B)(i)(VI) and 42 U.S.C.
6316(a)). The Secretary recognizes that
energy conservation benefits the Nation
in several important ways. The nonmonetary benefits of the standards are
likely to be reflected in improvements to
the security and reliability of the
Nation’s energy system. Today’s
standards will also result in
environmental benefits. As discussed in
the November 2009 SNOPR, DOE has
considered these factors in adopting
today’s standards. 74 FR 57738, 57765–
67 (Nov. 9, 2009).
g. Other Factors
In determining whether a standard is
economically justified, EPCA directs the
Secretary to consider any other factors
deemed relevant (42 U.S.C.
6295(o)(2)(B)(i)(VII) and 42 U.S.C.
6316(a)). In adopting today’s amended
standards, the Secretary found no
relevant factors other than those
identified elsewhere in today’s final
rule.
2. Rebuttable Presumption
Section 325(o)(2)(B)(iii) of EPCA
states that there is a rebuttable
presumption that an energy
conservation standard is economically
justified if the additional cost to the
consumer that meets the standard level
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), as
calculated under the applicable DOE
test procedure (42 U.S.C.
6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a)).
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DOE’s LCC and PBP analyses generate
values that calculate the PBP for
consumers of equipment meeting
potential energy conservation standards,
which includes, but is not limited to,
the 3-year PBP contemplated under the
rebuttable presumption test discussed
above. (See chapter 8 of the TSD.)
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) and 42 U.S.C.
6316(a). 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).
rmajette on DSK29S0YB1PROD with RULES2
IV. Methodology and Discussion of
Comments on Methodology
DOE used several previously
developed analytical tools in setting
today’s standard. Each was adapted for
this rule. One of these analytical tools
is a spreadsheet that calculates LCC and
PBP. Another calculates national energy
savings and national NPV. A third tool
is the Government Regulatory Impact
Model (GRIM), the results of which are
the basis for the MIA, among other
methods. In addition, DOE developed
an approach using the National Energy
Modeling System (NEMS) to estimate
impacts of energy efficiency standards
for CCWs on electric utilities and the
environment. The TSD appendices
discuss each of these analytical tools in
detail.
As a basis for this final rule, DOE has
continued to use the spreadsheets and
approaches explained in the November
2009 SNOPR. DOE used the same
general methodology but has revised
some of the assumptions and inputs for
this final rule in response to comments
from interested parties. The following
paragraphs discuss these revisions.
A. Equipment Classes
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). DOE
determined in the October 2008 NOPR
that two equipment classes were
warranted because the method of
‘‘loading’’ had been previously
determined, under DOE rulemakings for
residential clothes washers, to be a
‘‘feature,’’ as defined by EPCA, and
because an amended standard for a
single equipment class might set the
MEF for all CCWs at a level significantly
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higher than what the max-tech for toploading machines can attain today, and
effectively eliminate top-loading CCWs
from the market. 73 FR 62034, 62049–
50 (Oct. 17, 2008). This determination
remained unchanged in the November
2009 SNOPR, 74 FR 57738, 57746–47,
although DOE sought comment as to (1)
whether the method of ‘‘loading’’ clothes
washers, or any other characteristic
commonly associated with traditional
‘‘top-loading’’ or ‘‘front-loading’’ clothes
washers, such as presence or absence of
agitators, ability to interrupt cycles, and
possibly others, are ‘‘features’’ within the
meaning of 42 U.S.C. 6295(o)(4) in
EPCA; and (2) whether the availability
of such feature(s) would likely be
affected by eliminating the separate
classes for these equipment types
previously established by DOE. DOE
received comments in response to the
November 2009 SNOPR both in support
of and opposed to establishing two
equipment classes for CCWs. These
comments are described in more detail
in the following paragraphs.
The Association of Home Appliance
Manufacturers (AHAM), GE Consumer &
Industrial (GE),7 Whirlpool Corporation
(Whirlpool), and Alliance Laundry
Systems (Alliance) stated that they
support the definition of separate
equipment classes for top-loading and
front-loading CCWs. (AHAM, Public
Meeting Transcript, No. 67.4 at p. 33;
AHAM, No. 67.12 at p. 2;8; GE, Public
Meeting Transcript, No. 67.4 at p. 44;
GE, No. 67.9 at p. 1) Whirlpool, Public
Meeting Transcript, No. 67.4 at p. 45;
Whirlpool, No. 67.11 at p. 1; Alliance,
Public Meeting Transcript, No. 67.4 at p.
46. AHAM stated that EPACT 2005
allows DOE to establish different
classes, directing DOE to create ‘‘classes
of products, depending on their energy
use or performance characteristics.’’
AHAM noted that there is a bimodal
distribution of efficiencies between toploading and front-loading CCWs.
According to AHAM, the standards
proposed for the front-load equipment
class in terms of MEF and WF are
7 In its December 9, 2009, letter, GE states that it
‘‘adopt[s] by reference the comments on the SNOPR
that [it] understand[s] will be submitted by the
Association of Home Appliance Manufacturers
(AHAM) * * * ’’ Therefore, comments submitted by
AHAM, designated by comment number 67.12 in
the docket for this rulemaking, should be
interpreted as representing GE’s and well as
AHAM’s views.
8 A notation in the form ‘‘AHAM, No. 67.12 at p.
2’’ identifies a written comment (1) made by the
Association of Home Appliance Manufacturers
(AHAM), (2) recorded in document number 67.12
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 2 of
document number 67.12.
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beyond the capability of a traditional, or
even a non-traditional, top-load CCW.
(AHAM, Public Meeting Transcript, No.
67.4 at pp. 39–40; AHAM, No. 67.12 at
pp. 2–3) GE, Whirlpool, and Alliance
agree that DOE has the ability to define
two CCW equipment classes. (GE,
Public Meeting Transcript, No. 67.4 at p.
44; Whirlpool, Public Meeting
Transcript, No. 67.4 at p. 45; Alliance,
Public Meeting Transcript, No. 67.4 at p.
46). AHAM further stated that if DOE
moves forward with a single equipment
class, top-loading CCWs would not be
able to meet a standard that would be
fairly easy for front-loaders to achieve.
With two equipment classes, energy and
water savings could be achieved by both
top-loaders and front-loaders, albeit at a
different level. According to AHAM,
this reduces the possibility that
consumers would repair older, less
efficient top-loading CCWs, because
new high efficiency top-loaders would
be available. (AHAM, Public Meeting
Transcript, No. 67.4 at pp. 40–41;
AHAM, No. 67.12 at p. 2.)
Alliance commented that ‘‘ ‘toploading’ is a ‘feature’ within the
meaning of 42 U.S.C. 6295, because it
provides consumers the opportunity to
purchase lower cost CCWs.’’ Alliance
stated that purchase cost is a primary
reason why top-loading clothes washers
hold an approximate 65-percent market
share, since consumers can choose the
lower-cost design option of a toploading door for a vertical-axis machine
versus the higher-cost front-loading
door design for a horizontal-axis
machine. Alliance noted that there is
one unique horizontal-axis design that
incorporates a loading door on top that
essentially opens a door on the side of
the horizontally rotatable spin tub, but
described this design as ‘‘unpopular.’’
Alliance commented that, although the
cost difference between vertical-axis
and horizontal-axis models has
decreased, a comparably featured
standard capacity top-loader remains far
less costly than a standard capacity
front-loader due to the inherent
differences in components. Alliance
listed variable speed motors,
sophisticated motor electronic controls,
heavy mass weights, and door assembly
costs as the key components
contributing to the cost of front-loading
designs. More specifically, Alliance
stated that a front-loader door must
incorporate high-temperature impactresistant glass, a door/tub boot seal, a
very sophisticated lock system, and a
heavy-duty hinge system to withstand
the abuse in a commercial environment.
In contrast, Alliance described a toploader door as a simple metal stamping
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with a low-cost hinge and a fairly
simple micro-switch to remove power
from the basket drive mechanism during
spin. Additionally, Alliance stated that
front-loaders require a ‘‘pedestal’’ to
raise the loading door in response to
consumer objections to stooping so far
down. Alliance estimated the retail
price of such a pedestal as $250, which
along with an estimated $250 retail
price difference between a baseline
efficiency top-loader and a comparably
featured front-loader, would result in a
top-loader costing consumers at least
$500 less than a front-loader. Therefore,
Alliance concluded that top-loading is
‘‘undeniably’’ a feature for consumers
because of its low cost. (Alliance, Public
Meeting Transcript, No. 67.4 at pp. 46–
48; Alliance, No. 66.4 Letter at pp. 1–
2,9 Alliance, No. 67.8 at p. 2.) Whirlpool
described a top-loading horizontal-axis
RCW as a rare configuration that is not
produced or sold domestically by any
major manufacturers of laundry
equipment, and one that does not
effectively meet the needs of either toploading or front-loading RCW
consumers. According to Whirlpool, the
openings of such units are small and
prone to snagging of clothes. Further,
Whirlpool stated that this configuration
is not available in CCWs. (Whirlpool,
No. 67.11 at p. 4.)
Alliance also stated that top-loading is
a ‘‘feature’’ because of its convenience to
the user. A user is not required to stoop
or bend to load a top-loader, and
according to Alliance most consumers
prefer this convenience, though no
supporting data was provided. Alliance
stated that another convenience is the
ability to add a garment to a clothes load
in a washer which has already initiated
a wash cycle. For top-loaders, such
action only requires lifting the lid to
drop the item in. Alliance commented
that most front-loaders require time to
unlock the door and possibly drain the
wash water, then require the user to
stoop or bend to add the garment to the
washer. (Alliance, Public Meeting
Transcript, No. 67.4 at pp. 48–49;
Alliance, No. 66.4 Letter at p. 2;
Alliance, No. 67.8 at p. 2) Finally,
Alliance commented that convenient
cycle times, as defined by typical toploading washers, are important to users.
According to Alliance, front-loading
washers have longer cycle times because
there is less mechanical action in
9 A notation in the form ‘‘Alliance, No. 66.4 Letter
at pp. 1–2’’ identifies pages 1–2 of a written
comment submitted by Alliance entitled ‘‘Is TopLoading a Feature Within the Meaning of EPCA?’’
This letter was entered as comment number 66.4 in
the docket for this rulemaking, along with a written
comment submitted by Alliance entitled ‘‘Response
to DOE Commercial Clothes Washer SNOPR.’’
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tumbling in a front-loading design than
the vigorous mechanical action
imparted by an agitator in a top-loading
design. Alliance cited the February 2009
edition of Consumer Reports magazine
as stating that ‘‘front-loader cycle times
are getting longer; many take more than
90 minutes per load,’’ and that the
article shows that front-loader cycle
times are 70–115 minutes compared to
top-loader cycle times of 30–85 minutes.
Alliance noted that all front-loaders in
the Consumer Reports article with cycle
times less than 85 minutes scored
poorly in Consumer Union’s ‘‘wash
rating’’ compared to front-loaders with
cycle times of 85 minutes or longer,
while top-loaders with cycle times of 55
minutes achieved wash ratings of ‘‘good’’
to ‘‘very good.’’ Alliance concludes that
top-loader door location is associated
with providing consumers with their
expected good washing performance at
a convenient washing cycle time of
around 55 minutes. (Alliance, Public
Meeting Transcript, No. 67.4 at p. 49;
Alliance, No. 66.4 Letter at p. 2;
Alliance, No. 67.8 at p. 3) GE agreed that
cycle time and cost to the consumer are
very important differentiators between
top-loading and front-loading CCWs
which, along with consumer preference,
counsel in favor of maintaining the two
separate equipment classes. (GE, Public
Meeting Transcript, No. 67.4 at pp. 44–
45) AHAM provided a similar consumer
utility rationale in support of two
equipment classes, specifying level of
vibration, ergonomic factors (bending),
history, and experience of use, cycle
interruption, and preference as
consumer utilities and functions.
(AHAM, No. 67.12 at p. 3) Whirlpool
agreed that vibration, ergonomics, cycle
time, and familiarity are factors which
consumers use in selecting top-loading
CCWs, and added configuration, noise,
value proposition, and sour smell.
(Whirlpool, No. 67.11 at p. 1) Whirlpool
also commented that it does not believe
high efficiency top-loaders are viable in
the commercial market because clothes
rollover necessary for effective washing
and rinsing is not possible in an
overloaded machine. Whirlpool states
that overloading is a common practice
by CCW users because they are paying
by the load. (Whirlpool, No. 67.11 at p.
4) Alliance also commented that, for the
September 21, 2009, RCW Framework
public meeting, Whirlpool had stated
that one-fifth of consumers who bought
a front-loading washer have gone back
to a top-loading washer. (Alliance, No.
66.4 Letter at p. 2)
Whirlpool commented that, in
addition to the impact on the user of a
standard applicable to a single
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1131
equipment class, there is also an impact
on the route operators 10 and multihousing complexes, most of which have
specialized in either top-loading or
front-loading CCWs. According to
Whirlpool, a major reinvestment in
terms of technical training and parts
inventories would be required for those
companies that have invested in toploading CCWs if a standard resulted in
the phaseout of such machines.
Whirlpool also stated that CCWs are
often refurbished and moved downmarket, possibly multiple times during
a particular unit’s lifetime, making
CCWs available to many socioeconomic
classes. (Whirlpool, Public Meeting
Transcript, No. 67.4 at p. 45; Whirlpool,
No. 67.11 at p. 1; see also AHAM, No.
67.12 at p. 3) AHAM stated that route
operators have accumulated expertise
on either the top-loading or frontloading platform. (AHAM, No. 67.12 at
p. 3)
Whirlpool also commented that
separate equipment classes would be
consistent with energy conservation
standards for refrigeration, which have
separate classes for side-by-side, top
freezer, and bottom freezer refrigerators,
and room air conditioners, since the
product classes reflect home
configuration, consumer choice, and
consumer utility. (Whirlpool, Public
Meeting Transcript, No. 67.4 at p. 46;
Whirlpool, No. 67.11 at pp. 1–2)
Earthjustice (EJ) stated that the
separation in EPCA of refrigerator by
method of access was codified by
Congress as two distinct standards.
According to EJ, because Congress
enacted a single standard for all CCWs,
what it chose to do for refrigerators is
not entirely applicable to the CCW
rulemaking. (EJ, Public Meeting
Transcript, No. 67.4 at pp. 49–50)
EJ stated that Congress has provided
several examples of the product
attributes that it anticipated as
constituting ‘‘features’’ under EPCA:
‘‘automatic defrost, through the door ice,
size of room air conditioners, and noise
levels.’’ H. Rep. 100–11, at 23 (1987). EJ
commented that this demonstrates that
Congress indicated that the fact of
access is a feature (for example, through
the door ice), but did not suggest that
the method of access is also a feature
(for example, side-by-side versus
stacked configuration refrigerators)
within the meaning of 42 U.S.C.
6295(o)(4). (EJ, No. 67.5 at p. 5)
EJ commented that subparagraph (B)
of 42 U.S.C. 6295(q)(1) is permissive,
and provides that DOE ‘‘shall’’ create
10 Route operators supply laundry equipment and
maintain facilities in exchange for a percentage of
the laundry revenue.
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separate classes for products based on
the presence of ‘‘a capacity or other
performance-related feature’’ only if
‘‘such feature justifies a [different]
standard.’’ According to EJ, EPCA then
sets out very expansive criteria for DOE
to apply in determining whether a given
feature justifies a unique standard. EJ
stated that, although DOE must consider
the utility of the feature, DOE is free to
supplement this consideration with any
other factors it deems appropriate. (EJ,
No. 67.5 at p. 3)
EJ stated that 42 U.S.C. 6295(o)(4)
provides that DOE may separate covered
equipment into distinct classes when
necessary to prohibit the adoption of
standards that eliminate certain product
attributes. EJ further stated that DOE’s
authority to adopt standards that group
all varieties of the given covered
equipment into a single class is only
barred when such a standard is likely to
result in the unavailability of features
that are substantially the same as those
currently available; i.e., EPCA only
mandates the creation of multiple
equipment classes when the failure to
do so would eliminate certain truly
unique equipment attributes from the
market. According to EJ, this statutory
scheme forecloses an interpretation that
EPCA mandates the designation of
distinct equipment classes for toploading and front-loading CCWs. (EJ,
No. 67.5 at pp. 3–4) EJ provided four
separate reasons why it believes 42
U.S.C. 6295(o)(4) prohibits DOE from
adopting standards that would treat all
CCWs as a single equipment class: (1)
The method of loading a CCW is not a
‘‘feature’’ within the meaning of 42
U.S.C. 6295(o)(4) 11; (2) the ability to
load a CCW from the front is
substantially the same as the ability to
load from the top; (3) maintaining a
single CCW category is not likely to lead
to the unavailability of top-loaders; and
(4) top-loading CCWs possess no other
attributes requiring protection under 42
U.S.C. 6295(o)(4). (EJ, No. 67.5 at pp. 4–
8)
EJ commented that if, for the sake of
argument, the method provided to
access a CCW is a ‘‘feature’’ within the
11 EJ stated that the method of loading a CCW is
not a feature because: (1) DOE research on the
public’s valuation of clothes washer characteristics,
presented in a December 2000 Technical Support
Document, shows that door placement was not
among the top ten most important attributes, and
the value of this attribute is likely even lower now
given the increased prevalence of front-loaders; (2)
the FTC eliminated the distinction between toploading and front-loading machines in its labeling
requirements (65 FR 16134 (March 27, 2000)); and
(3) the legislative history supports the conclusion
that door placement is not a feature because
examples cited suggest that while access itself may
be a feature, the method of access is not. (EJ No.
67.5 at 4)
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meaning of 42 U.S.C. 6295(o)(4), it did
not follow that EPCA would require
separate equipment classes. EJ stated
that, in enacting the EPCA language,
Congress was ‘‘careful to note’’ that the
‘‘prohibition against grouping all
varieties of a covered product into a
single product class was a narrow one.’’
(EJ, No. 67.5 at p. 6)
A valid standard may entail some minor
loss of characteristics, features, sizes, etc.; for
this reason, the Act requires that
‘‘substantially the same,’’ though not
necessarily identical, characteristics or
features should continue to be available. [42
U.S.C. 6295(o)(4)] also does not apply to
trivial effects in which a standard might
result.
H. Rep. 100–11, at 23 (1987).
According to EJ, the inclusion of this
‘‘substantially the same’’ language shows
that Congress did not intend the
resulting unavailability of any and every
feature to be a barrier to the imposition
of strong efficiency standards, but rather
a standard would be barred only if it
would have a substantial impact on
product utility. EJ stated that the ability
to access the CCW from the top is
‘‘substantially the same’’ as the ability to
access the unit from the front because
either delivers the same basic
functionality of accessing the unit for
loading and unloading. Thus EJ states
that DOE is not barred from maintaining
a single set of efficiency standards for
all CCWs, even assuming that those
standards would have the consequence
of eliminating all top-loading CCWs
from the market. (EJ, No. 67.5 at p. 6)
EJ also did not agree with AHAM’s
statement that a distinction in energy
use between two types of CCWs would
justify a separate equipment class.
According to EJ, that would be at odds
with the intent of EPCA. EJ stated that
whenever two examples of equipment
use different amounts of energy, the
intent is for a standard to eliminate the
one that uses too much energy. (EJ,
Public Meeting Transcript, No. 67.4 at
pp. 41–42)
EJ also commented that it is sensible
to adopt a strong unitary standard that
applies to both top-loading and frontloading CCWs. EJ stated that it had
already made the case that the method
of loading is not a feature under 42
U.S.C. 6295(o)(4), but even if DOE did
determine that the method of loading is
a feature, a strong standard would not
eliminate top-loading CCWs from the
market. (EJ, Public Meeting Transcript,
No. 67.4 at pp. 42–43) EJ also
commented on the recent Ninth Circuit
decision reversing DOE’s denial of the
California Energy Commission’s (CEC)
petition for exemption from existing
energy efficiency standards for RCWs
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and remanding the petition for further
review.12 EJ stated that the court, while
not directly addressing the ‘‘features’’
issue, indicated that DOE can’t just look
at the market today, but must assess
what the market will be when the
standard takes effect. EJ stated that DOE
would have to find by preponderance of
the evidence that a strong standard
would eliminate top-loaders from the
market in 2013. EJ noted that it did not
believe that top-loaders would be
eliminated at that time, based on the
existence of very efficient top-loading
RCWs currently in the market. (EJ,
Public Meeting Transcript, No. 67.4 at p.
43; EJ, No. 67.5 at pp. 6–7)
EJ further commented that no other
attributes of CCWs which DOE
identified in the November 2009 SNOPR
as possibly providing consumer utility,
such as the presence or absence of
agitators and the ability to interrupt
cycles, require protection under 42
U.S.C. 6295(o)(4). EJ stated that DOE has
neither explained why the presence or
absence of agitators would provide any
consumer utility, nor considered that
high efficiency CCWs may still be
equipped with an agitator. EJ also stated
that horizontal-axis CCWs available
today are often able to be interrupted
mid-cycle. In addition, EJ commented
that, although Alliance cited an article
which discussed cycle times for toploaders and front-loaders, Alliance did
not contend that the variation in cycle
time is an issue for CCWs. EJ stated that
the range of cycle times for top-loaders
and front-loaders broadly overlap, and
because front-loaders typically have a
lower ending remaining moisture
content (RMC) than top-loaders, the
total washing and drying times required
for top-loading and front-loading CCWs
are likely to be equivalent. (EJ, No. 67.5
at p. 8)
The Pacific Gas and Electric
Company, Southern California Gas
Company, and San Diego Gas Company
(the California Utilities) also supported
a single equipment class, arguing for
reasons similar to those articulated by EJ
that the method of loading and other
characteristics commonly associated
with the method of loading are not
features, and that a single class would
not likely result in the unavailability of
top-loading CCWs. (California Utilities,
No. 67.10 at pp. 2–3) Further, the
California Utilities stated that, although
CCWs and RCWs are similar in
technologies, design, and operating
characteristics, a ‘‘feature’’ of RCWs is
not necessarily a ‘‘feature’’ of CCWs.
(California Utilities, No. 67.10 at p. 3)
12 California Energy Commission versus DOE,
Case No. 07–71576 (October 28, 2009).
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The California Utilities also asserted
that the LCC savings of a single
equipment class with standards at
various front-loading TSLs could
increase as much at $304 as compared
to the LCC savings estimated for the
standards proposed in the November
2009 SNOPR. According to the
California Utilities and ASAP, American
Council for an Energy-Efficiency
Economy, American Rivers, National
Consumer Law Center, Natural
Resources Defense Council, Northeast
Energy Efficiency Partnerships, and
Seattle Public Utilities (the Joint
Comment), cost-effectiveness of
standards based on a single equipment
class best serves long-term public
interest. (California Utilities, No. 67.10
at p. 4; Joint Comment, No. 67.6 at p. 3)
The Joint Comment commented that
DOE is concerned that at the highest
TSL, significant numbers of potential
consumers of front-loading CCWs would
choose to purchase a less efficient toploading CCW instead. (Joint Comment,
No. 67.6 at p. 2) According to ASAP and
the Joint Comment, this underscores the
interchangeability between top-loading
and front-loading CCWs in a
commercial setting and that this
interchangeability could be so broad
and substantial that it would facilitate
potential recapture of market share by
less efficient but less expensive toploaders. ASAP stated that the real
distinction between top-loaders and
front-loaders is price point rather than
any specific consumer utility. Therefore,
ASAP and the Joint Comment
recommended a single equipment class
for CCWs. ASAP also stated that route
operators are operating in a one
equipment class environment today,
and managing the issues that Whirlpool
identified. (ASAP, Public Meeting
Transcript, No. 67.4 at pp. 46, 99–102;
Joint Comment, No. 67.6 at pp. 2–3)
ASAP and the Joint Comment stated
that the standard proposed for frontloaders is already met by almost 97
percent of the front-loaders on the
market, and since DOE has seldom, if
ever, proposed a standard that has such
a low impact on the marketplace, ASAP
suggests there are some difficulties in
going forward with two equipment
classes. (ASAP, Public Meeting
Transcript, No. 67.4 at pp. 53–54; Joint
Comment, No. 67.6 at p. 2) The
California Utilities estimated that a
single equipment class with standards
set at 2.35 MEF/4.4 WF would achieve
50 percent more energy savings and
over 200 percent more water savings
over the next 30 years than the
standards proposed in the November
2009 SNOPR, and that additional energy
and water savings would be captured in
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future CCW rulemakings. (California
Utilities, No. 67.10 at pp. 3–4)
Regarding impacts to competition as
these impacts relate to the equipment
class issue, EJ stated that it would not
agree with DOE if the Department
determines that a single standard cannot
be adopted because of impacts to the
manufacturers and impacts on
competition. EJ and the Joint Comment
believe those impacts are overstated. (EJ,
Public Meeting Transcript, No. 67.4 at
pp. 30–31; Joint Comment, No. 67.6 at
pp. 4–5; see also California Utilities, No.
67.10 at pp. 4–5) EJ asserted that it is
not only the lessening in competition,
but rather the effects of such lessening,
that DOE must consider. EJ stated that
the DOJ, in its letter to DOE on this
rulemaking, failed to consider low
barriers to entry into the CCW market in
its analysis of the impacts to
competition, and that consequently, it
would be irrational for DOE to conclude
that a single standard would result in
any significant impact on competition
in the CCW market. (EJ, No. 67.5 at p.
9) EJ, ASAP, and the Joint Comment
also asserted that DOE must consider
adopting a tiered standard, or granting
Alliance a temporary waiver, as ways to
minimize any impacts on competition
that may result from imposition of a
single standard. (EJ, No. 67.5 at 9–10;
ASAP, Public Meeting Transcript, No.
67.4 at pp. 166–167; Joint Comment, No.
67.6 at p. 6; see also California Utilities,
No. 67.10 at pp. 4–5)
In response to the above comments,
DOE notes that EPCA provides the
criteria under which DOE may define
classes for covered equipment:
A rule prescribing an energy conservation
standard for a type (or class) of covered
products shall specify a level of energy use
or efficiency higher or lower than that which
applies (or would apply) for such type (or
class) for any group of covered products
which have the same function or intended
use, if the Secretary determines that covered
products within such group—
• Consume a different kind of energy from
that consumed by other covered products
within such type (or class); or
• Have a capacity or other performancerelated feature which other products within
such type (or class) do not have and such
feature justifies a higher or lower standard
from that which applies (or will apply) to
other products within such type (or class).
In making a determination under this
paragraph concerning whether a
performance-related feature justifies the
establishment of a higher or lower standard,
the Secretary shall consider such factors as
the utility to the consumer of such a feature,
and such other factors as the Secretary deems
appropriate.
42 U.S.C. 6295(q); see also 6316(a).
As stated above, DOE concluded
preliminarily in the October 2008 NOPR
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and the November 2009 SNOPR that
separate equipment classes for toploading and front-loading CCWs were
warranted because the method of
loading had been previously determined
to be a ‘‘feature’’ under rulemakings for
RCWs and a single standard would
eliminate top-loading CCWs from the
market. DOE analysis for this final rule,
including evaluation of comments
submitted by interested parties, has
identified at least one consumer utility
related to the method of loading clothes,
specifically for CCWs, which represents
a ‘‘feature’’ for purposes of 42 U.S.C.
6295(o)(4). Consequently, DOE has
retained two equipment classes for
CCWs for this standard.
Specifically, DOE believes that the
longer cycle times of front-loading
CCWs versus cycle times for top-loaders
are likely to significantly impact
consumer utility. In commercial and
multi-housing settings, it is beneficial to
consumers with multiple, sequential
laundry loads to approximately match
CCW cycle times to those of the dryers
to maximize throughput and minimize
wait times, and wash times of 70–115
minutes would be longer than most
drying cycles. Because the longer wash
cycle times for front-loaders arise from
the reduced mechanical action of
agitation as compared to top-loaders,
DOE believes such longer cycles may be
required to achieve the necessary
cleaning, and thereby constitute a
performance-related utility of frontloading CCWs versus top-loading CCWs
under the meaning of 42 U.S.C. 6295(q).
DOE notes that access without
stooping is not a consumer utility that
would warrant the definition of separate
equipment classes. DOE agrees that toploaders eliminate the need for stooping,
while front-loaders, in the absence of a
pedestal, require such action. DOE
further notes, however, that commercial
clothes dryers are front-loading as well,
so it believes that those consumers that
dry their clothing loads are already
accustomed to stooping. In addition,
DOE observes that many laundromat
and multi-housing applications have
installed the CCWs on a platform to
effect the same elevation as a
manufacturer-supplied pedestal would,
and that the cost of installing such a
platform in the event that the owner/
operator decides that preventing
stooping is important is likely to be
minimal.
DOE is aware that a top-loading,
horizontal-axis CCW had been available
previously. Due to the inherently higher
efficiency of a horizontal-axis platform,
it is likely that such a design could
achieve a higher MEF and lower WF
than the max-tech top-loading CCW
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efficiency level assumed for this
analysis. DOE research determined,
however, that this particular washer
platform was withdrawn from the
market based on a lack of suitability for
commercial settings. However, even if a
top-loading, horizontal-axis CCW was
again marketed, it is likely that such
washers would have cycle times similar
to those of other horizontal-axis
machines and, therefore, would not
likely provide substantially the same
consumer utility as top-loading,
vertical-axis machines.
DOE also does not consider first cost
a ‘‘feature’’ that provides consumer
utility for purposes of EPCA. DOE
acknowledges that price is an important
consideration to consumers, but DOE
accounts for such consumer impacts in
the LCC and PBP analyses conducted in
support of this rulemaking.
Given the above discussion on cycle
times, DOE concludes, consistent with
its preliminary conclusion in the
October 2007 NOPR and November
2008 SNOPR, that top-loading involves
consumer utilities that, in the context of
CCWs, are a feature for purposes of 42
U.S.C. 6295(o)(4). For the reasons stated
in section VI.D of the preamble, DOE
believes that the standards established
for top-loading and front-loading CCWs
achieve the maximum improvements in
energy efficiency that are
technologically feasible and
economically justified. DOE further
believes that the top-loading standard,
set at the max-tech efficiency level, can
be achieved by all manufacturers by the
time compliance with the standards is
required. Therefore, DOE concludes that
top-loading CCWs would not be
eliminated from the market by the
amended energy conservation
standards.
In response to the comments related
to impacts on competition, DOE
believes its analysis accurately describes
the impacts of the various TSLs,
including the standards established
today, on the low-volume manufacturer
(LVM). See section VI.C.2 of the
preamble for further discussion of these
impacts. In addition, EPCA does not
permit DOE to establish a tiered
standard for CCWs. 42 U.S.C.
6313(e)(2)(A)(ii) states that an amended
standard for CCWs ‘‘shall apply to
products manufactured 3 years after the
date on which the final amended
standard is published.’’ DOE interprets
this provision to mean that the amended
standard must apply to all CCWs
manufactured 3 years after the date of
publication of this final rule, and that
imposing some intermediate standard at
that time (i.e., 2013) and the final
amended standard at some future date
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(i.e., 2015) is not authorized. In contrast,
42 U.S.C. 6295(g)(4)(C) states in relevant
part that amendments to the standards
‘‘shall apply to products manufactured
after a date which is five years after’’ the
effective date of the previous
amendment. DOE believes that the
phrase ‘‘after a date which is 5 years
after’’ (emphasis added) may allow more
flexibility for a tiered standard. DOE
also believes that the provisions of 42
U.S.C. 7194 that allow for the grant of
an exemption from an energy
conservation standard promulgated by
DOE are not an appropriate justification
for the promulgation of a particular
efficiency standard in the first instance.
B. Technology Assessment
For the technology assessment in the
November 2009 NOPR analyses, DOE
considered all RCW and CCW
technology options that it was aware
have been incorporated into working
prototypes or commercially available
clothes washers at the time of the
analysis. DOE noted in the November
2009 SNOPR that it considered as
design options many technologies that
are found in both RCWs and CCWs. Of
the technology options screened out,
only suds-saving 13 has appeared
previously as a feature in commercially
available RCWs. DOE concluded in the
November 2009 SNOPR that sudssavings was an RCW feature that was
appropriately screened out for the CCW
analysis. 74 FR 57738, 57747 (Nov. 9,
2009).
For the November 2009 SNOPR, DOE
also gathered and analyzed data
published by CEC, CEE, and the
ENERGY STAR Program to provide an
overview of the energy efficiency levels
achieved in CCWs and RCWs. DOE
found that all front-loading CCWs on
the market at that time were more
efficient than top-loading CCW models.
No top-loading CCW listed in these
databases had an MEF greater than 1.76,
whereas the majority of front-loading
CCWs were listed as having MEFs
greater than 2.0. Similarly, no toploading CCWs were rated as having a
WF below 8.0, whereas the majority of
front-loading CCWs had rated WFs
below 7.0. In contrast, DOE research
suggested that the most efficient
vertical-axis RCWs achieved efficiency
13 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.
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levels comparable to some horizontalaxis CCWs.14 High efficiency, verticalaxis platforms that do not employ an
agitator have been sold into the RCW
market for several years, but have yet to
be released in a CCW form. DOE noted
in the November 2009 SNOPR that it
expected manufacturers would continue
to introduce new features first in the
higher-volume residential markets
before transitioning them to commercial
applications. However, DOE noted that
it 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. DOE concluded in the
November 2009 SNOPR that it believed
it had adequately considered RCW
technologies that may be applicable to
CCWs in its technology assessment. 74
FR 57738, 57747–48 (Nov. 9, 2009).
Because DOE did not receive any
comments on the technology options
analyzed in the November 2009 SNOPR,
DOE continues to conclude in today’s
final rule that it has adequately
considered RCW technologies that may
be applicable to CCWs in its technology
assessment.
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. As
discussed in the November 2009
SNOPR, DOE conducted the engineering
analysis for this rulemaking using the
efficiency-level 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. 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 engineering analysis, and
14 Typically, vertical-axis clothes washers are
accessed from the top (also known as ‘‘top-loaders’’),
while horizontal-axis clothes washers are accessed
from the front (also known as ‘‘front-loaders’’).
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 ‘‘front-loading.’’
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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primary and secondary research. 74 FR
57738, 57748–51 (Nov. 9, 2009). Chapter
5 of the TSD contains a detailed
discussion of the engineering analysis
methodology.
1. Efficiency Levels
In the November 2009 SNOPR, DOE
proposed the following efficiency levels
for CCWs, shown in Table IV.1, in
which the max-tech top-loading level
was designated at efficiency level 2
(1.60 MEF/8.5 WF). The top-loading
max-tech efficiency level representated
1135
a change from the max-tech level
proposed in the October 2008 NOPR,
based on DOE testing and analysis of the
max-tech top-loading CCW model. No
changes were made to the efficiency
levels proposed in the October 2008
NOPR for front-loading CCWs in the
November 2009 SNOPR.
TABLE IV.1—COMMERCIAL CLOTHES WASHER EFFICIENCY LEVELS PROPOSED FOR THE NOVEMBER 2009 SNOPR
Modified energy factor, ft3/kWh/water
factor, gal/ft3
Efficiency level
Top-loading
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2 ...................................................................................................................................................................
3 ...................................................................................................................................................................
4 ...................................................................................................................................................................
DOE noted in the November 2009
SNOPR that the max-tech top-loading
CCW is currently marketed only to onpremise laundry facilities and is not yet
offered with a coin-box or smart card
reader option for laundromat or multihousing laundry use. DOE research
indicated that the max-tech CCW is
based on a standard vertical-axis RCW
platform (i.e., one with an agitator) with
similar construction and components as
the CCW models marketed by that
manufacturer to commercial
laundromats. No proprietary
technologies were observed, and, thus,
DOE stated in the November 2009
SNOPR that it believes that all CCW
manufacturers could market verticalaxis clothes washers with similar
performance in time for the compliance
date of the proposed rule. 74 FR 57738,
57749–50 (Nov. 9, 2009).
DOE research, conducted as part of
the November 2009 SNOPR, also
suggested that commercial acceptance
depends on wash performance. DOE
recognized that any amended energy
conservation standard could result in a
lessening of certain equipment utility
and hence interviewed interested
parties for the November 2009 SNOPR
to better understand the potential
impacts of energy efficiency strategies
that manufacturers might employ in
their equipment. Although interested
parties suggested that the max-tech
model does not provide acceptable
washing and rinsing performance
targets, especially when overloaded,
they did not submit evidence of such
performance degradation. 74 FR 57738,
57750 (Nov. 9, 2009).
EJ commented that, if top-loading
CCWs are required to be retained in the
commercial market under amended
standards, DOE must consider a third
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standard level based on the performance
of Alliance’s best-performing top-loader.
Alliance stated that, while no
industry standard performance test
procedure exists for CCWs, it believes
wash and rinse performance would be
affected at the top-loading max-tech
level, because the max-tech model does
not allow true hot or warm water, unlike
existing traditional CCWs which offer
site-supplied hot water typically of 120
degrees Fahrenheit (°F) and above and
user-acceptable 90 °F to 110 °F warm
water. Alliance stated that the max-tech
top-loading model only provides 108 °F
to 112 °F water when the hot setting is
selected, which Alliance considers to be
warm water. Similarly, Alliance stated
that when the user selects a warm
setting on the max-tech top-loader, the
unit only provides 71 °F to 73 °F wash
water, which Alliance considers to be
cold water. Alliance believes that CCW
users that pay for hot water should
receive hot water. Otherwise, CCW
users could not clean clothes as well as
consumers with access to RCWs.
Further, Alliance commented that
rinsing is minimal for the max-tech toploader, unlike typical complete
submersion of the clothes load that
would allow sand, heavy sediment, or
suds trapped between the layers to be
properly removed. Alliance stated that
the max-tech top-loading model has
received almost no acceptance by the
industry, based on comments it received
from its top 20 multi-housing
customers, and that DOE has not tested
its ability to clean clothes. Therefore,
Alliance believes that max-tech toploader model is not appropriate for the
commercial laundry market. (Alliance,
Public Meeting Transcript, No. 67.4 at
pp. 22–23, 29); Alliance, No. 66.4 at pp.
4, 7, 9; Alliance, No. 67.8 at p. 3).
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1.26/9.5
1.42/9.5
1.60/8.5
N/A
N/A
Front-loading
1.72/8.0
1.80/7.5
2.00/5.5
2.20/5.1
2.35/4.4
Alliance stated that the front-loading
max-tech efficiency level should have a
WF of 5.0 rather than 4.4. Alliance
stated that it tested a competitive frontloading CCW model that had a WF of
4.5 and found that it did not wet the
center of the clothes load during the
wash tumble portion of the cycle.
Therefore, Alliance stated that
consumer utility would be negatively
affected. (Alliance, Public Meeting
Transcript, No. 67.4 at pp. 139–140;
Alliance, No. 67.8 at p. 3). Alliance
further stated that consumer utility in a
CCW must go beyond just getting
clothes wetted, applying some
mechanical action and then extraction
of the moisture. Alliance commented
that DOE did not assess if the proposed
max-tech CCW cleans clothes to user
expectations. According to Alliance, the
ability of a CCW to clean clothes
sufficiently is a central issue in this
rulemaking, and stated that ‘‘A
rulemaking will be overturned as
arbitrary and capricious if ‘the [agency]
has failed to respond to specific
challenges that are sufficiently central to
its decision.’ ’’ Horsehead Resource Dev.
Co. v. Browner, 16 F.3d 1246, 1263 (DC
Cir 1994) (citations omitted). (Alliance,
No. 66.4 at pp. 6–7).
GE commented that, while it supports
the standards proposed in the November
2009 SNOPR for top-loading and frontloading CCWs, it is concerned that the
max-tech top-loading CCW model is
designed for on-premises laundry,
which is a relatively limited segment of
the commercial market. GE stated that
the max-tech model has not been shown
to be viable in the harsher laundromat
environment where CCWs are subject to
tougher conditions such as overloading.
GE also requested DOE’s test data on the
max-tech top-loader model. (GE, Public
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Meeting Transcript, No. 67.4 at p. 58;
GE, No. 67.9 at pp. 1–2).
Whirlpool stated that a top-loading
CCW max-tech level of 1.76 MEF/8.3
WF can be attained with sufficient
investment of financial and human
capital. However, Whirlpool considers
this level a considerable stretch target
that it has not achieved even in a
prototype platform. Whirlpool believes
that the front-loading CCW max-tech
level could be slightly higher, since the
CEE database lists a model at 2.23 MEF/
4.3 WF. Whirlpool believes this level is
at or near the capabilities of known
technologies that are viable in the
commercial environment. (Whirlpool,
No. 67.11 at p. 2). Northwest Power and
Conservation Council (NPCC) asked
whether, because the max-tech toploading CCW model did not meet its
rated MEF and WF, DOE would
consider testing units at other levels,
particularly high-efficiency models, to
make sure the performance is as
advertised. (NPCC, Public Meeting
Transcript, No. 67.4 at pp. 57–59).
In response, DOE notes that, in the
absence of an accepted, standardized
test procedure for CCW wash and rinse
performance, it cannot evaluate the
cleaning capabilities of various
considered max-tech models. DOE
agrees that proper wetting and
distribution of the detergent and rinse
water in the machine is critical for
cleaning performance. However, DOE
did not receive any evidence that the
max-tech top-loading model does not
achieve such action, only the inference
that, because the unit employs spray
rinse, that it would not exhibit
acceptable rinse performance. DOE
further notes that it did not receive any
evidence that somewhat reduced water
temperatures at hot and cold settings
would preclude acceptable cleaning
performance. DOE notes the existence of
multiple wash and rinse performance
standards such as AHAM HLW–1, but
the industry has yet to come to a
consensus regarding the minimum wash
and rinse performance that an RCW or
CCW should achieve. In the interim,
DOE relies on manufacturers to market
and sell only those products that they
feel perform adequately.
DOE concluded for the November
2009 SNOPR that the performance of the
top-loading CCW model was 1.63 MEF/
8.4 MEF instead of the rated value of
1.76 MEF/8.3 WF on which the maxtech level for the October 2008 NOPR
was based. DOE does not have evidence
to suggest that any other CCWs
currently on the market can achieve
1.76 MEF/8.3 WF, nor that technology
exists to do so without significantly
impacting cleaning performance. DOE
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based the selection of the top-loading
max-tech level at efficiency level 2 on
test results for the max-tech model and
its belief that 1.60 MEF/8.5 WF
represented the maximum CCW
performance achievable by all
manufacturers without material harm.
At the time of the analysis, Alliance’s
highest efficiency top-loading CCW was
rated at 1.55 MEF/8.6 WF. DOE believes
that Alliance’s model and the max-tech
model incorporate similar technologies,
and that the energy and water usage of
the two models are not sufficiently
different as to warrant the inclusion of
an additional efficiency level slightly
below the max-tech level. Given the
constraints of the rulemaking schedule,
DOE cannot evaluate an undetermined
number of CCW models in order to
confirm that no other unit which is
rated at lower efficiencies than the
proposed max-tech model could in
actuality achieve higher performance,
nor does DOE have any evidence,
particularly regarding durability, to
demonstrate that the max-tech toploading CCW model, while designed for
on-premises laundry applications,
cannot be utilized successfully in other
commercial laundry facilities such as
laundromats or multi-family housing
settings. Therefore, DOE has retained
the max-tech top-loader efficiency level
for today’s final rule based on the maxtech top-loading CCW model proposed
in the November 2009 SNOPR.
ASAP suggested that DOE should not
limit consideration of max-tech models
to CCWs, but that DOE should also
consider clothes washer products from
the residential market. According to
ASAP, the distinctive nature of the CCW
market has been characterized by the
need for durability and resistance to
overloading and misuse, which is
typical of laundromats and multihousing laundry rooms. But CCWs for
on-premises laundry facilities are also
being considered in this rulemaking,
and they typically are subject to less
harsh conditions than models destined
for laundromats and multi-family
housing, Thus, ASAP questioned why
RCWs would not be considered for the
max-tech levels if CCWs designed for
on-premises laundry are. (ASAP, Public
Meeting Transcript, No. 67.4 at pp. 61–
62, 64–65) Southern California Gas
Company (SCG) commented that DOE
should consider durability as well as
efficiency in selecting the max-tech
models. (SCG, Public Meeting
Transcript, No. 67.4 at p. 63) Additional
comments regarding the applicability of
RCWs in CCW application were
received (along with other comments)
from 20 route operators: All Valley
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Washer Services, Inc; Angel Coin
Service, Inc.; Automatic Industries;
Automatic Laundry Services Co., Inc.;
B&H Coin Laundry Service; Caldwell
and Gregory, LLC; CALECO; Cincinnati
Coin Laundry, Inc.; Coin Meter
Company; Commercial Laundries, Inc.;
Continental Laundry Systems
Incorporated; Excalibur Laundries, Inc.;
F&B Coin Laundry Route; Family Pride
Laundries; FMB Laundry, Inc.; Jetz
Service Co., Inc.; Launderama, LLC;
Laundry Equipment Corp.; National
Coin Washer and Service Company,
Inc.; and San Diego Laundry Equipment
Co. (the Multiple Route Operators).
These comments were originally sent to
DOJ in response to the October 2008
NOPR, and were resubmitted by
Alliance along with its own comments
in response to the November 2009
SNOPR. Ninety-five percent of all route
operators who commented on the
November 2009 SNOPR stated that they
did not consider RCWs suitable for CCW
applications. The principal reasons
given were the lack of durability, lack of
resistance to vandalism, and other
specified and unspecified performance
issues. Most of the Multiple Route
Operators expressed reluctance to try
high efficiency top-loading clothes
washers due to perceived wash
performance issues. Additionally,
several of the Multiple Route Operators
stated that had tried out such washers
and replaced them with regular toploading clothes washers due to
consumer complaints regarding wash
performance and other issues. (Multiple
Route Operators, No. 67.8, pp. 1–3 15)
DOE notes that multiple
manufacturers stated during interviews
that high efficiency RCWs utilize
technologies that are not suitable in
harsher commercial settings such as
laundromats and multi-family housing
due to environmental factors such as
overloading and abuse. Among these
manufacturers were suppliers of high
efficiency top-loading RCWs, i.e.,
manufacturers that would face the
lowest conversion costs in the industry
to modify a given RCW model for CCW
use. Additionally, DOE considered the
comments submitted by the Multiple
Route Operators with experience
15 The Multiple Route Operators’ letters were
attached to the Alliance letter, comment number
67.8, in response to the November 2009 SNOPR. A
notation in the form ‘‘Multiple Route Operators, No.
67.8 at pp. 1–3’’ identifies a written comment (1)
made by some or all of the Multiple Route
Operators, (2) recorded in document number 67.8
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 pages 1–3 of
each of the letters submitted by the Multiple Route
Operators.
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utilizing high efficiency top-loading
clothes washers in a commercial setting.
Lastly, DOE received no evidence that
all the technologies used in a max-tech
top-loading RCW can be expected to be
ready for inclusion in CCWs by the
compliance date of today’s final rule
while offering similar or better wash
performance, given the very different
operational environments (short wash
cycles, among other factors). Hence,
DOE concludes that high efficiency toploading RCW models should not be
considered representative of the
efficiency levels that top-loading CCWs
can achieve until the technologies
required to achieve such efficiency
levels have been successfully
demonstrated in CCWs.
For front-loaders, DOE observes that
multiple models from several
manufacturers, including Alliance, are
rated with a WF of 4.5 or lower. DOE
believes that the presence of these CCW
models on the commercial market
suggests that sufficient cleaning
performance is able to be achieved at
such WF levels. Further, DOE did not
receive any evidence that the max-tech
model, rated at a 4.4 WF, could not
demonstrate wash performance on par
with consumer utility requirements, nor
if, in fact, it did not, that a WF of 5.0
would provide wash performance that
would be deemed suitable, DOE notes
that the max-tech level proposed in the
November 2009 SNOPR had
approximately 5 percent higher MEF
and 2 percent higher WF than the model
that Whirlpool suggests. While the
proposed max-tech level therefore was
slightly less stringent in terms of water
consumption than the level Whirlpool
suggested, DOE believes that the higher
energy consumption of the proposed
level is the primary factor to consider in
defining a max-tech level. Therefore,
DOE concluded that the max-tech levels
proposed in the November 2009 SNOPR
are technologically feasible, and it has
retained the efficiency levels shown in
Table IV.1 for today’s final rule.
DOE received comments in response
to the October 2008 NOPR that frontloading CCWs with electric heaters have
an MEF of 1.96, which would not meet
the proposed front-loading standards.
According to these comments,
consumers in some parts of the northern
United States need such heaters to
supplement their hot water supply in
order to maintain proper wash
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temperatures despite very cold water
supply temperatures. DOE indicated in
the November 2009 SNOPR that it had
received no data on the extent or size of
this impact or of the affected
population. DOE sought comment,
including population and efficiency
impact data, to describe this issue. 74
FR 57738, 57750 (Nov. 9, 2009)
Alliance and NPCC discussed
whether a water heating CCW would be
measured as having higher water
heating energy consumption under the
DOE clothes washer test procedure than
a non-water heating CCW, given the
inlet water temperature requirements.
Alliance stated that the test procedure
would require measurement of energy
consumption with the heater on.
(Alliance, Public Meeting Transcript,
No. 67.4 at pp. 66–72)
Whirlpool stated that it does not
produce any water heating CCWs and
does not believe this is a significant
segment of the market. In the absence of
further data on the affected population
or efficiency impacts, DOE is adopting
energy conservation standards for frontloading CCWs both with and without
electric heaters for the reasons
discussed in section VI.D.
DOE did not receive further
information regarding the market share
or efficiency impact of water heating
CCWs, but agrees that it likely does not
represent a significant segment of the
CCW market. In the absence of
additional data, DOE determined that it
will retain the max-tech front-loading
CCW level that was proposed in the
November 2009 SNOPR.
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, 62055–56
(Oct. 17, 2008). These 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 an LVM operates
in both the residential and CCW
markets. DOE considers this
manufacturer to be low-volume because
its annual shipments in the combined
RCW and CCW market are significantly
lower than those of its larger
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1137
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.16 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 in
response to the October 2008 NOPR 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. 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. 74 FR 57738, 57762 (Nov. 9, 2009).
DOE research, conducted as part of
the November 2009 SNOPR, suggests
that the proposed efficiency level for
vertical-axis clothes washers can be met
with conventional, non-proprietary
technology that is on the market today.
Since the October 17, 2008 NOPR
meeting, DOE received no further
comments on the manufacturing cost
curves. For the November 2009 SNOPR,
DOE 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) between 2007 and 2008
to update the costs in the October 2008
NOPR to 2008$.17 These are shown in
Table IV.2.
16 SEC documents pertaining to the LVM are
available online at https://sec.gov/.
17 PPI data is maintained by the Bureau of Labor
Statistics and is available at https://www.bls.gov/ppi/
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Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules and Regulations
TABLE IV.2—COMMERCIAL CLOTHES WASHER INCREMENTAL MANUFACTURING COSTS PROPOSED IN NOVEMBER 2009
SNOPR
Modified energy factor ft3/kWh/
water factor gal/ft3
Efficiency level
Top-loading
Baseline ...................................................................................................
1 ...............................................................................................................
2 ...............................................................................................................
3 ...............................................................................................................
4 ...............................................................................................................
Because DOE did not receive any new
information on the manufacturing cost
curves, DOE retained all the incremental
Front-loading
1.26/9.5
1.42/9.5
1.60/8.5
N/A
N/A
1.72/8.0
1.80/7.5
2.00/5.5
2.20/5.1
2.35/4.4
manufacturing costs presented in the
November 2009 SNOPR at the retained
Incremental cost $
Top-loading
Front-loading
0.00
77.60
134.99
N/A
N/A
0.00
0.00
14.21
39.34
66.16
efficiency levels for today’s final rule.
Table IV.3 shows these costs.
TABLE IV.3—COMMERCIAL CLOTHES WASHER INCREMENTAL MANUFACTURING COSTS
Modified energy factor ft3/kWh/
water factor gal/ft3
Efficiency level
Top-loading
Baseline ...................................................................................................
1 ...............................................................................................................
2 ...............................................................................................................
3 ...............................................................................................................
4 ...............................................................................................................
rmajette on DSK29S0YB1PROD with RULES2
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 on CCW consumers. This
section of the notice describes these
analyses. DOE conducted the analysis
using a spreadsheet model developed in
Microsoft (MS) Excel for Windows 2007.
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
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,
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12:56 Jan 08, 2010
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Front-loading
1.26/9.5
1.42/9.5
1.60/8.5
N/A
N/A
maintenance and repair costs,
equipment lifetime, and discount rates.
Commenting on DOE’s use of LCC and
PBP results to evaluate the economic
impacts of possible amended energy
conservation standards on CCW
consumers, Mr. Gayer stated that if the
private benefits to consumers of a more
efficient CCW outweigh the private
costs of a more efficient CCW, then
there will be a market for high efficiency
CCWs and regulation would not be
necessary. He added that if consumers
are unwilling to purchase a high
efficiency CCW without the regulation,
then this suggests they are not willing
to pay the higher CCW price in order to
accrue lower future energy costs. (Gayer,
No. 67.7 at p. 1)
DOE agrees with the observation that
many CCW purchasers are unwilling to
pay the higher cost of a more efficient
CCW in the face of potential operating
savings benefits. DOE disagrees that this
implies that it is using the wrong cost
of capital in its analysis. DOE does not
in general assume in its analysis that
unregulated markets will equilibrate to
a state where consumer decisions are
perfectly aligned with private benefits
and costs. DOE estimated the cost of
capital based on information regarding
the cost of borrowing and the
opportunity cost of investment for CCW
owners. Based on this cost of capital,
DOE found that the operating cost
benefits for many CCWs exceed the
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1.72/8.0
1.80/7.5
2.00/5.5
2.20/5.1
2.35/4.4
Incremental cost $
Top-loading
0.00
77.60
134.99
N/A
N/A
Front-loading
0.00
0.00
14.21
39.34
66.16
burden of increased initial costs for
more efficient CCWs for many
consumers who are currently using lowcost, low-efficiency CCWs. There are
several possible reasons for the disparity
between observed consumer behavior
and the results of DOE’s consumer
financial analysis which may include:
(1) Limited consumer information and
information processing capabilities and
(2) the high transaction costs of fully
evaluating LCC and other characteristics
of available CCWs prior to purchase or
lease. In addition, there remain a
number of environmental externalities
that are not currently reflected in energy
and water prices, which cannot be
considered by consumers and which are
not included in DOE’s LCC and PBP
analyses.. DOE did not receive or obtain
sufficient information to provide a
detailed explanation of why CCW
purchasers tend to minimize first costs
in the face of financially feasible gains
that are likely to accrue from increased
energy efficiency. DOE believes that its
use of LCC and PBP results to evaluate
the economic impacts of possible
amended energy conservation standards
on CCW consumers is appropriate given
the information that is available.
DOE was unable to develop a surveybased consumer sample for CCWs
because the U.S. Energy Information
Administration’s (EIA) Commercial
Building Energy Consumption Survey
(CBECS) does not provide the necessary
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Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules and Regulations
data to develop one.18 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 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 IV.4 summarizes the
approaches and data DOE used to derive
the inputs to the LCC and PBP
calculations for the November 2009
1139
SNOPR. For today’s final rule, DOE did
not introduce changes to either the LCC
and PBP analyses methodology
described in the November 2009 SNOPR
or the inputs to the analysis. Chapter 8
of the TSD contains detailed discussion
of the methodology utilized for the LCC
and PBP analyses as well as the inputs
developed for the analyses.
TABLE IV.4—SUMMARY OF INPUTS AND KEY ASSUMPTIONS IN THE LCC AND PBP ANALYSES
Inputs
Changes for
the final rule
November 2009 SNOPR
Affecting Installed Costs
Equipment Price ........................................
Installation Cost .........................................
Derived by multiplying manufacturer cost by manufacturer, distributor markups, and
sales tax.
Baseline cost updated with RS Means Mechanical Cost Data, 2008 ..........................
No change.
No change
Affecting Operating Costs
Annual Energy and Water Use .................
Energy and Water/Wastewater Prices ......
Energy and
Trends.
Water/Wastewater
Prices
Repair and Maintenance Costs .................
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 MLA19 and the Coin Laundry Association20
(CLA). Different use cycles determined for multi-family and laundromat equipment
applications.
Electricity: Updated using EIA’s 2007 Form 861 data ..................................................
Natural Gas: Updated using EIA’s 2007 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: 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: Linear extrapolation of 1970–2008 historical trends in national
water price index. For the four years after 2008, fixed the annual price to the
value in 2008 to prevent a dip in the forecasted prices.
Estimated annualized repair costs for each efficiency level based on half the equipment lifetime divided by the equipment lifetime.
No change.
No change.
No change.
No change.
Affecting Present Value of Annual Operating Cost Savings
Equipment Lifetime ....................................
Discount Rates ..........................................
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 Online.21
No change.
No change.
Affecting Installed and Operating Costs
Effective Date of New Standard ................
Base-Case Efficiency Distributions ...........
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: 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.
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.
No change.
No change.
19 Please
see the following Web site for further information: https://www.mla-online.com/.
see the following Web site for further information: https://www.coinlaundry.org/.
21 Please see the following Web site for further information: https://pages.stern.nyu.edu/∼adamodar/.
rmajette on DSK29S0YB1PROD with RULES2
20 Please
1. Equipment Prices
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 final rule that were developed
18 Available online at: https://www.eia.doe.gov/
emeu/cbecs/.
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for the November 2009 SNOPR. See
chapter 7 of the TSD for additional
information. To calculate the final
installed prices, DOE added installation
cost to the equipment prices.
2. Installation Cost
Installation costs include labor,
overhead, and any miscellaneous
materials and parts. For the November
2009 SNOPR and today’s final rule, DOE
used data from the RS Means
Mechanical Cost Data, 2008 on labor
requirements to estimate installation
costs for CCWs.22 DOE estimates that
installation costs do not increase with
equipment efficiency.
3. Annual Energy Consumption
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 November 2009
SNOPR, DOE concluded that the use of
the existing RCW test procedure
provides a representative basis for rating
and estimating the per-cycle energy use
of CCWs. For today’s final rule, DOE
maintained the same approach.
rmajette on DSK29S0YB1PROD with RULES2
4. Energy and Water Prices
a. Energy Prices
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.
For the November 2009 SNOPR and
today’s final rule, DOE estimated
commercial electricity prices for each of
the 13 geographic areas based on 2007
data from EIA Form 861, Annual
Electric Power Industry Report.23 DOE
calculated an average commercial
electricity price by first estimating an
average commercial price for each
utility, and then calculated a regional
average price by weighting each utility
with consumers in a region by the
number of commercial consumers
served in that region.
For the November 2009 SNOPR and
today’s final rule, DOE estimated
average commercial natural gas prices in
each of the 13 geographic areas based on
2007 data from the EIA publication
Natural Gas Monthly. 24 DOE calculated
an average natural gas price for each
area by first calculating the average
prices for each State, and then
22 Available
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
November 2009 SNOPR and today’s
final rule, DOE used the 2006 Water and
Wastewater Rate Survey.26 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)
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)
online at: https://www.rsmeans.com/
bookstore/.
23 Available online at: https://www.eia.doe.gov/
cneaf/electricity/page/eia861.html.
24 Available online at: https://www.eia.doe.gov/
oil_gas/natural_gas/data_publications/
natural_gas_monthly/ngm.html.
VerDate Nov<24>2008
calculating a regional price by weighting
each State in a region by its population.
To estimate the trends in electricity
and natural gas prices for the November
2009 SNOPR and today’s final rule, DOE
used the price forecasts in the AEO 2009
April Release.25 To arrive at prices in
future years, DOE multiplied the
average prices described above by the
forecast of annual average price
changes. 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 the November 2009
SNOPR and today’s final rule, DOE used
the AEO 2009 March Release highgrowth case or low-growth forecasts to
estimate high-growth and low-growth
price trends.
12:56 Jan 08, 2010
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25 All AEO publications are available online at:
https://www.eia.doe.gov/oiaf/aeo/.
26 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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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. For the SNOPR, DOE continued to
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.
Beyond the 4-year time period, DOE
used the extrapolated trend to forecast
prices out to the year 2043. DOE
continued to use the above approach for
today’s final rule.
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. DOE was unable to gather
any empirical data specific to CCWs to
estimate repair and maintenance cost.
For the October 2008 NOPR and the
November 2009 SNOPR, 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.27 This algorithm
calculates annualized repair costs by
dividing half of the equipment retail
price over the equipment lifetime. In the
absence of better data, DOE retained its
approach from the November 2009
SNOPR for today’s final rule.
6. Equipment Lifetime
For the November 2009 SNOPR and
today’s final rule, 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.
27 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://
www.eere.energy.gov/buildings/
appliance_standards/residential/
ac_central_1000_r.html.
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7. Discount Rates
To establish discount rates for CCWs
for the November 2009 SNOPR and
today’s final rule, 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.
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 November 2009
SNOPR, DOE expected 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. For today’s
final rule, DOE used the same date for
compliance. DOE calculated the LCC for
CCW 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
1141
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 IV.A, DOE decided to analyze
CCWs with two equipment classes—toploading CCWs and front-loading CCWs.
For the November 2009 SNOPR and
today’s final rule, DOE used the number
of available models within each
equipment class to establish the basecase efficiency distributions. Table IV.5
presents the market shares of the
efficiency levels in the base case for
CCWs. See chapter 8 of the TSD for
further details on the development of
CCW base-case market shares.
TABLE IV.5—COMMERCIAL CLOTHES WASHERS: BASE CASE MARKET SHARES
Top-loading
Standard level
MEF
Baseline ................
1 ............................
2 ............................
Front-loading
1.26
1.42
1.60
9.50
9.50
8.50
rmajette on DSK29S0YB1PROD with RULES2
10. Split Incentive Between CCW
Consumers and Users
Under a split incentive situation, the
party purchasing more efficient and
presumably more expensive equipment
(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. Such a situation exists in
segments of the CCW market. In
comments on the October 2008 NOPR,
Whirlpool and Alliance stated that those
who own CCWs (usually route
operators) often do not incur the
operating costs as do, generally,
laundromats and owners of multi-family
dwellings. 73 FR 62067 (Oct. 17, 2008).
Recognizing this, DOE evaluated the
ability of CCW consumers to pass on the
higher purchase costs of more expensive
CCWs and concluded that few route
operators would allow themselves to be
held to a lease agreement that would
prevent them from recovering the cost of
more efficient CCW equipment. That is,
DOE believes that these CCW consumers
would be able to realize a significant
share of the operating cost savings from
VerDate Nov<24>2008
12:56 Jan 08, 2010
Market share
%
WF
Jkt 220001
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33.8
1.4
Standard level
Baseline ................
1 ............................
2 ............................
3 ............................
4 ............................
more-efficient equipment. The Joint
Comment stated that contracts between
route operators and multi-housing
property owners are subject to revision
and renewal, and that the division of
coin-box revenue may be renegotiated to
allow for the savings achieved by moreefficient CCWs to be equitably shared
between the purchasers/owners of the
machines (route operators) and the
parties responsible for paying electric,
gas, water, and sewer bills (property
owners). (Joint Comment, No. 67.6 at p.
3) DOE agrees with the above comment,
and continues to conclude that CCW
consumers would be able to realize a
significant share of the operating cost
savings from more-efficient equipment.
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 indicates that there is
no rebound effect for RCWs, although
the consumer may choose to purchase
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%
WF
1.72
1.80
2.00
2.20
2.34
8.00
7.50
5.50
5.10
4.40
3.5
0.0
73.7
22.8
0.0
larger models with more features that
would result in higher energy use.28
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 RCWs, DOE did not include a
rebound effect in its analysis of CCW
standards.
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 consumer for each
efficiency level and the annual (first28 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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year) operating expenditures for each
efficiency level. For the November 2009
SNOPR and today’s final rule, the PBP
calculation uses the same inputs as the
LCC analysis, except that energy price
trends and discount rates are not
needed.
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.
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
and equipment efficiency trends. Table
IV.6 summarizes the approach and data
DOE used to derive the inputs to the
NES and NPV analyses for the
November 2009 SNOPR. DOE made no
changes to the analyses for today’s final
rule. (See chapter 11 of the final rule
TSD for further details.)
TABLE IV.6—APPROACH AND DATA USED TO DERIVE THE INPUTS TO THE NATIONAL ENERGY SAVINGS AND NPV
ANALYSES
Changes for the
final rule
Inputs
2009 SNOPR Description
Shipments ...........................................
Effective Date of Standard .................
Base-Case Forecasted Efficiencies ...
Annual shipments from Shipments Model ......................................................................
2013 .................................................................................................................................
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 as a function of the annual energy consumption per
unit and energy (and water) prices.
Incorporated changes in repair costs as a function of efficiency ...................................
Standards-Case
ciencies.
Forecasted
Effi-
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 .......................................
Energy Prices: Updated to AEO 2009 April Release forecasts for the Reference
Case. AEO 2009 April Release does not provide High-Growth and Low-Growth
forecasts; used AEO 2009 March Release High-Growth and Low-Growth forecasts
to estimate high- and low-growth price trends.
Water/Wastewater Prices: Linear extrapolation of 1970–2008 historical trends in national water price index. For the four years following 2013, fixed the annual price to
the value in 2008 to prevent a dip in the forecasted prices.
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 .....................................................................
3% and 7% real ...............................................................................................................
Future expenses discounted to year 2009 .....................................................................
rmajette on DSK29S0YB1PROD with RULES2
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
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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.
Table IV.7 summarizes the approach
and data DOE used to derive the inputs
to the shipments analysis for the
November 2009 SNOPR, and the
changes it made for today’s final rule.
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No change.
No change.
The general approach for forecasting
CCW shipments for today’s final rule
remains unchanged from the November
2009 SNOPR. That is, all CCW
shipments (for both equipment classes)
were estimated for the new
construction, replacement, and nonreplacement markets. DOE then
allocated shipments to each of the two
equipment classes based on the market
share of each class. For the November
2009 SNOPR, DOE estimated that toploading washers comprise 70 percent of
the market while front-loading washers
E:\FR\FM\08JAR2.SGM
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comprise 30 percent. DOE estimated
that the equipment class market shares
1143
would remain unchanged over the time
period 2005–2043.
TABLE IV.7—APPROACH AND DATA USED TO DERIVE THE INPUTS TO THE SHIPMENTS ANALYSIS
Inputs
Number of Equipment
Classes.
New Construction Shipments.
Replacements ...............
Retired Units not Replaced (i.e., non-replacements).
Historical Shipments .....
rmajette on DSK29S0YB1PROD with RULES2
Purchase Price, Operating Cost, and
Household Income
Impacts due to efficiency standards.
Fuel Switching ...............
Two: top-loading washers and front-loading 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. 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.
Determined by multiplying multi-housing forecasts by forecasted saturation of CCWs for new
multi-housing. Multi-housing forecasts with AEO 2009 April Release forecasts for the Reference Case. 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 2007ƒ2043 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. Relative market shares of the
two equipment applications, common-area laundry facilities in multi-family housing and
laundromats, estimated to be over time at 85 and 15 percent, respectively.
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 .............................................................................................................................
DOE based its Shipments Model for
CCWs 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,
common-area laundry facilities in multifamily housing and laundromats, are
constant over time at 85 and 15 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, and understates the
energy, water, and dollar savings that
would be achieved by all of the standard
levels under consideration. It cited
information from Alliance’s Form 10–K
for 2008, which, the Joint Comment
asserted, suggested that the ratio of
multi-family to laundromat shipments is
about 40 percent to 60 percent. It noted
that because some laundromats
purchase a limited number of larger
capacity washers not found in multi-
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family settings, the commenters believe
a split of roughly 45 percent for multifamily venues and 55 percent for
laundromats is reasonable, and should
be evaluated by DOE for the final rule.
(Joint Comment, No. 67.6 at p. 3)
Whirlpool commented that it believes
the industry mix is not nearly as heavily
weighted toward the multi-family
channel as DOE assumed. (Whirlpool,
No. 67.11 at p. 4). In contrast, Alliance
stated that it believes that the split of
the distribution channels of laundromat
versus multi-family housing commonarea laundry rooms of 15 percent and 85
percent respectively is generally
representative of the industry. (Alliance,
No. 67.8 at p. 2)
In response, DOE believes that the
interpretation by the Joint Comment of
information from Alliance’s Form 10–K
for 2008 understates the importance of
equipment other than CCWs. The total
2008 revenues from Alliance’s sales to
the commercial laundry industry are
$338 million, and sales to laundromats
and multi-family housing amount to
$240 million. However, based on data
gathered for its MIA, DOE estimated that
the total sales of CCWs by Alliance
amount to only $73 million. Therefore,
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Conducted a sensitivity
analysis based on
relative market
shares of 66 percent
for multi-family housing and a 34-percent
share for laundromats.
No change.
No change.
it seems evident that a large fraction of
the sales to laundromats and multifamily housing are accounted for by
equipment other than CCWs. This
unaccounted-for equipment would
include clothes dryers in addition to
washer-extractors and tumblers, which
are large-capacity, higher-performance
washing machines, and matching largecapacity dryers, respectively.
Laundromats account for much more of
the larger equipment than multi-family
housing, and this type of equipment is
more expensive than CCWs. Therefore,
the laundromat share of sales to the
North American commercial laundry
industry by Alliance is as high as it is
primarily due to sales of larger
equipment. Thus, the revenue share
between the multi-family and
laundromat markets is not a good
indicator of the share of laundromats in
sales of CCWs.
The CCW unit shipment shares of 85
percent for multi-family housing and 15
percent for laundromats used in the
SNOPR were based upon the input of
industry experts consulted in a
comprehensive study conducted by the
Consortium for Energy Efficiency in
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1998.29 Although the report was
conducted over 10 years ago, it was the
most reliable data source for developing
a market split for CCW shipments that
was available. DOE notes that Alliance
believes that this split is generally
representative of the industry. However,
because the assumed shares of
laundromats and multi-family housing
in shipments have a significant effect on
the NIA results, DOE conducted a
sensitivity analysis in which it used the
data in Alliance’s 2008 10K report,
coupled with a number of assumptions
and input from Whirlpool, to estimate
the shares of laundromats and multifamily housing in shipments of CCWs in
2008. The analysis, which is described
in appendix 11C of the final rule TSD,
yields an estimate of a 66 percent share
for multi-family housing and a 34
percent share for laundromats. Using
these shares increases national energy
savings by approximately 9 percent
(compared to the savings when using
the 15 percent and 85 percent shares),
and increases the NPV of consumer
benefit by approximately 12 percent
under TSLs 3, 4, and 5.
rmajette on DSK29S0YB1PROD with RULES2
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 2009
April Release Reference Case through
2030 for the November 2009 SNOPR
and today’s final rule. For CCWs, DOE
relied on new construction market
saturation data from the abovementioned CEE report.
b. Replacements and Non-Replacements
DOE estimated replacements using
equipment retirement functions
developed from equipment lifetimes.
For the November 2009 SNOPR and
today’s final rule, DOE used retirement
functions based on Weibull
distributions. 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
29 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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12:56 Jan 08, 2010
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period. The effect of maintaining nonreplacements at 18 percent results in
forecasted CCW shipments staying
relatively flat during the forecast period.
c. Impacts of Standards on Shipments
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
relied on a literature review and a
statistical analysis that it has conducted
on a limited set of appliance price,
efficiency, and shipments data. 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 impacts due to standards spans over
30 years, DOE also considered how the
relative price elasticity is affected once
a new standard takes effect. After the
purchase price change, price elasticity
becomes more inelastic over the years
until it reaches a terminal value. DOE
incorporated a change in relative price
elasticity change that resulted in a
terminal value of approximately onethird of the short-run elasticity. In other
words, DOE determined that consumer
purchase decisions, in time, become less
sensitive to the initial change in the
equipment’s relative price.
NPCC suggested that it might be
useful for DOE to compare the relative
price elasticity approach used for CCWs
with the shipments model that was used
in the previous rulemaking for RCWs.
(NPCC, Public Meeting Transcript, No.
67.4 at pp. 97–98) The approach that
was used in the previous rulemaking for
RCWs modeled consumer purchase
decisions in terms of probabilities that
typically depend on the type of stock,
the age of the clothes washer, the
incremental cost of the decision, and
market conditions. The dependence of
decision probabilities on price and
market conditions was given by a
standard econometric logic equation. In
the present rulemaking for CCWs, DOE
did not use such an approach, in part
because it requires detailed information
on consumer decision making, which is
not available in the case of CCWs.
For its November 2009 SNOPR as well
as today’s final rule, DOE estimated that
price increases due to standards 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 the
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other. Because the price impacts for
more efficient top-loaders are higher
than those for more efficient frontloaders, DOE estimated that sales would
decrease more for top-loading CCWs
than for front-loaders.
DOE did not explicitly model
potential switching between top-loaders
and front-loaders due to lack of
information on the appropriate crossprice elasticity. Whirlpool commented
that there are considerable betweenclass switching costs which would act
against class switching by purchasers of
commercial clothes washers.
(Whirlpool, No. 67.11 at p. 2) DOE notes
the comment by Whirlpool but it
believes that there is uncertainty
regarding the extent of switching that
could result from changes in the price
differential between top-loaders and
front-loaders.
3. Other Inputs
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 November 2009 SNOPR, 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
final rule, DOE maintained its estimate
that the SWEF would remain constant
from 2005 through the end of the
forecast period.
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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 November 2009
SNOPR to establish the SWEF for 2013.
In a roll-up 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 November 2009
SNOPR for today’s final rule.
rmajette on DSK29S0YB1PROD with RULES2
c. Annual Energy Consumption
The annual energy consumption per
unit depends directly on equipment
efficiency. For the November 2009
SNOPR and today’s final rule, 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 IV.D, DOE
used a relative price elasticity to
estimate standards-case shipments for
CCWs. As a result, shipments forecasted
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under the standards cases are lower
than under the base case. To avoid the
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 November
2009 SNOPR for today’s final rule.
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 November 2009 SNOPR
and today’s final rule, DOE used annual
site-to-source conversion factors based
on the version of NEMS that
corresponds to the AEO 2009 March
Release version. 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 2005.30 The fundamental task
before the committee was to evaluate
the methodology used for setting energy
30 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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1145
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.
rmajette on DSK29S0YB1PROD with RULES2
e. Energy Used in Water and Wastewater
Treatment and Delivery
In the October 2008 NOPR and the
November 2009 SNOPR, DOE did not
include the energy required for water
treatment and delivery in its analysis. 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 concluded that it does not have the
authority to consider embedded energy
(i.e., the energy required for water
treatment and delivery) in the analysis.
It added that, even if DOE had the
authority, it does not believe adequate
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analytical tools exist to conduct such an
evaluation.31
In response, the California Utilities
stated that DOE should account for
energy savings associated with energy
embedded in water. (California Utilities,
No. 67.10 at p. 5) For the reason stated
above, DOE did not include the energy
required for water treatment and
delivery in its analysis of energy savings
from amended CCW standards.
EJ commented that two of the
additional rationales provided by DOE
for not including the energy required for
water treatment and delivery in its
analysis were not convincing. In
reference to DOE’s statement that
‘‘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;’’ EJ stated that DOE has
offered no explanation for why
consideration of the energy embedded
in the water used in equipment’s
operation would mandate this much
wider expansion of the Department’s
analysis. Regarding DOE’s contention
that its analysis already reflects the cost
of the energy embedded in water
because the cost of the energy used in
treating and delivering water is a
component of the cost of water for
clothes washer consumers, EJ stated that
the outcome of the life-cycle cost
analysis is not the only factor DOE must
consider in determining whether a
standard level is economically justified,
and DOE must consider, to the
maximum extent practicable, ‘‘the total
projected amount of energy * * *
savings likely to result directly from the
imposition of the standard.’’ 42 U.S.C.
6295(o)(2)(B)(i)(III). (EJ, No. 67.5 at p.
12)
In response, DOE notes that neither of
the additional rationales on which EJ
commented is central to its conclusion
that it does not have the authority to
consider the energy required for water
treatment and delivery in the analysis.
In the first instance, DOE was simply
31 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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pointing out that it is difficult to select
what should be included once one
deviates from the aforementioned EPCA
definition of ‘‘energy use.’’ In the second
instance, DOE was noting that its
analysis does include some aspects of
the energy embedded in water delivered
to CCWs. DOE agrees that the outcome
of the life-cycle cost analysis is not the
only factor DOE must consider in
determining whether a standard level is
economically justified; however, it
believes that in considering the energy
savings likely to result directly from the
imposition of the standard, the
appropriate course is to follow the
EPCA definition of ‘‘energy use.’’
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. For the November
2009 SNOPR and today’s final rule, DOE
forecasted energy prices using data from
AEO 2009 April Release. For today’s
final rule, DOE maintained the approach
it used to develop repair and
maintenance costs for more efficient
CCWs in the November 2009 SNOPR.
Commenting on valuation of energy
savings, the California Utilities urged
DOE to assess the energy impacts from
the proposed standard such that the
analysis captures the value of energy
over time. It noted that California has
developed an energy costing analysis for
standards, called Time-Dependent
Valuation of savings (TDV), which
places a high value on energy savings
that occur during high-cost times of the
day and year. It added that water and
wastewater can also have timedependent values, which should be
accounted for in DOE’s analysis.
(California Utilities, No. 67.10 at p. 6) In
response, DOE acknowledges that the
approach suggested by the California
Utilities has merits, but it believes that
the amount of effort and time required
to develop time-dependent values of
energy savings (as well as water and
wastewater savings) at a diversity of
locations across the nation would it
make it impossible to implement this
approach within the context of the
present rulemaking.
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
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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
analysis (OMB Circular A–4 (Sept.17,
2003), section E, ‘‘Identifying and
Measuring Benefits and Costs’’).32
The California Utilities stated that
DOE should give primary weight to
calculations based on the 3-percent
discount rate for its national impact
analysis. (California Utilities, No. 67.10
at p. 6) In response, DOE notes that
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 before-tax 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. Circular A–4
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 3percent discount rate.
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 analysis
found that gas and electric demand
reductions resulting from max-tech
standards for CCWs would have no
detectable change on the U.S. average
wellhead natural gas price or the
average user price of electricity.
Therefore, DOE concluded that CCW
32 OMB circulars are available online at: https://
www.whitehouse.gov/omb/circulars/.
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standards will not provide additional
economic benefits resulting from lower
energy prices. For today’s final rule,
DOE has made no change to its
conclusions about the effects of CCW
standards on energy prices.
F. Consumer Subgroup Analysis
For the November 2009 SNOPR and
today’s final rule, 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 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.
More details on the consumer
subgroup analysis can be found in
chapter 12 of the final rule 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
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.
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For the November 2009 SNOPR, 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
SNOPR MIA also used the same analysis
period as in the NIA (2013–2043) and
updated the base year to 2009. DOE also
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). Additionally, DOE
updated the GRIM to allow the
inclusion of Federal production tax
credits. 74 FR 57738, 57762 (Nov. 9,
2009).
For today’s final rule, DOE continued
to use the GRIM and revised the MIA
results from the November 2009
SNOPR. For details of the MIA, see
chapter 13 of the TSD. The following
sections describe the revisions made to
the MIA for today’s final rule.
For the November 2009 SNOPR, DOE
used publicly available information,
recent SEC filings, and the information
published in chapter 13 and appendix
13A of the October 2008 NOPR to
estimate the likely Federal production
tax credits for which the CCW industry
would be eligible. 74 FR 57738, 57764
(Nov. 9, 2009). For today’s final rule,
DOE used tax and earnings information
published in SEC filings for the LVM
and the same methodology described in
appendix 13C to revise the estimated
Federal production tax credits for 2009
and 2010. For details on the Federal
production tax credits, see appendix
13C of the TSD.
For the November 2009 SNOPR, DOE
received a number of comments from
interested parties in response to the
distribution and usage patterns for
commercial laundry, which affect the
shipment analysis. In response, DOE
modeled a sensitivity analysis to
account for the slightly different
shipment results. Shipments affect MIA
results because they directly influence
the value of the INPV estimated in the
GRIM. For today’s final rule, the GRIM
was revised to include an alternative
shipment scenario based on the
sensitivity analysis. See appendix 11C
for details on the sensitivity analysis,
including the INPV results from the
analysis.
DOE received a number of comments
from interested parties in response to
the MIA analysis presented in the
November 2009 SNOPR. At the SNOPR
public meeting and in its written
comments, Alliance stated that DOE’s
belief that all manufacturers can achieve
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a top-loading standard greater than or
equal to 1.60 MEF and a water factor
less than or equal to 8.5 is flawed.
(Alliance, No. 66.4 at p. 5 33; Alliance,
Public Meeting Transcript, No. 67.4 at
pp. 24, 57) SCG also inquired if
manufacturers can comply with the
revised standard proposed in the
November 2009 SNOPR. (SCG, Public
Meeting Transcript, No. 67.4 at p. 57)
Alliance stated that while it currently
markets a top-loading CCW that is close
to meeting the proposed top-loading
standard in the November 2009 SNOPR,
that model was developed to allow
some customers to earn an ENERGY
STAR rating and a CEE rebate. Alliance
stated that this model is not accepted by
all customers, as some reject the watersaving features required to achieve its
rated efficiency level. Since all CCWs
currently marketed at or near the
proposed top-loading energy
conservation standard use similar watersaving techniques, Alliance stated that it
would not be appropriate to set a
minimum efficiency standard at the
level proposed in the November 2009
SNOPR and proposed setting the
standard at 1.42 MEF/9.5 WF for toploading CCWs instead. (Alliance, Public
Meeting Transcript, No. 67.4 at p. 139;
Alliance, No. 66.4 at p. 9) Whirlpool
and GE stated that they are supportive
of all standard levels proposed for
CCWs in the November 2009 SNOPR.
However, Whirlpool also stated that
energy and water consumption levels
more restrictive than 1.60 MEF/8.5 WF
for top-loading CCWs and 2.20 MEF/5.5
WF for front-loading CCWs would likely
lead to poor wash performance, poor
rinse performance, or both. GE noted
that its max-tech top-loading CCW
(which meets the proposed top-loading
standard) was designed for the onpremise laundry market, a relatively
small sub-segment of the CCW market
and said that model has not yet
demonstrated viability in laundromats.
(Whirlpool, No. 67.11 at p. 3 and GE,
No. 67.9 at p. 1) Many of the Multiple
Route Operators stated opposition to
any efficiency level above the baseline
for CCWs on the basis of poor wash
performance. Additionally, most of the
Multiple Route Operators stated that
they had experimented with high
efficiency top-loading CCWs (i.e.,
agitator-less models) and encountered
sufficient operational and wash
33 A notation in the form ‘‘Alliance, No. 66.4 at
p. 5’’ identifies page 5 of a written comment
submitted by Alliance entitled ‘‘Response to DOE
Commercial Clothes Washer SNOPR.’’ This
document was entered as comment number 66.4 in
the docket for this rulemaking, along with a letter
submitted by Alliance entitled ‘‘Is Top-Loading a
Feature Within the Meaning of EPCA?’’
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performance issues to abandon such
models and replace them with
traditional top-loading CCWs.
Additionally, most of the Multiple
Route Operators stated that they would
be reluctant to utilize high efficiency
top-loading CCWs based on reports of
consumer dissatisfaction with such
units. Lastly, the Multiple Route
Operators strongly oppose the toploading standard level proposed in the
October 2008 NOPR (i.e., 1.76 MEF/8.3
WF) (Multiple Route Operators, No. 67.8
at pp. 1–3).
DOE proposed a 1.60 MEF/8.5 WF
standard for top-loading CCWs in the
November 2009 SNOPR in response to
these and other concerns voiced by
interested parties. For the November
2009 SNOPR, DOE stated it believed the
proposed top-loading level could be met
by all competitors because the unit
would be based on a standard toploading platform that uses a traditional
agitator and no proprietary technology.
74 FR 57738, 57762–63 (Nov. 9, 2009).
The model that the LVM references in
its comment meets a 1.55 MEF/8.6 WF,
and DOE research suggests that this
model could be modified to meet the
amended energy conversation standard.
DOE notes that the LVM has not refuted
that this model could be modified to
meet the amended energy conservation
standard, and while a manufacturer may
develop higher efficiency models in
order to qualify for energy star, tax
credits, and similar rebates, DOE
believes it is unlikely that a
manufacturer would purposely risk its
reputation and release a non-functional
product onto the market. DOE has noted
throughout the rulemaking that the
heavy concentration of earnings from
CCWs relative to its total clothes washer
business, its overall focus on
commercial laundry, and its relatively
low revenue base compared to its
principal CCW competitors would lead
to the LVM being impacted
disproportionately by any amended
efficiency standard for CCWs. DOE also
notes that TSL 3 avoids requiring
manufacturers, including the LVM, to
make concurrent, substantial
investments in both top-loading and
front-loading platforms. DOE continues
to believe that the benefits of the
amended energy conservation standard
outweigh the burdens, including the
negative impacts on manufacturers (see
section VI.D).
Alliance stated that its most recent
SEC 10–Q for the quarter ending
September 30, 2009, shows that its longterm debt bank covenants limit
additional borrowing to $19.2 million,
that its current credit facility must be
refinanced before January 27, 2011, and
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that it expects tighter credit terms.
Alliance estimates that an $18.4 million
investment would be required to modify
its facilities to manufacture top-loading
CCWs at the max-tech efficiency level,
double the total annual capital
expenditures for the entire company.
Alliance stated that, even if the funds
were available for a dramatic redesign of
its top-loading CCWs, it would not be
approved for funding by its investors
regardless of the method used to
calculate the financial payback because
the equipment does not meet customers’
minimum requirements. (Alliance, No.
66.4 at p. 5; Alliance, Public Meeting
Transcript, No. 67.4 at pp. 24–25)
Alliance also stated that it would need
to redesign the inner and outer tubs to
match the max-tech top-loading CCW’s
larger capacity. These changes might not
be possible to its existing tub fabrication
cells while simultaneously meeting
demand, and could require a new
building due to lack of space to ‘‘shoehorn’’ fabrication and to avoid shutting
down. Alliance stated that its customers
do not want larger capacity washers
because its tub size has been designed
to match commercial laundry users’
needs and load sizes, as evidenced by
decades of sales and customer
experience. (Alliance, No. 67.8 at p. 4)
DOE estimates that the total
conversion costs for the industry to
meet the top-loading amended energy
conservation standard will be
approximately $16.6 million. DOE
research thus suggests that the LVM’s
production facilities could be modified
at a more modest cost than projected by
the LVM to make a sufficient number of
top-loading CCWs that would meet the
amended energy conservation
standards. DOE estimates that the
majority of the conversion costs will
consist of product development,
engineering, testing, marketing, and
other costs required to make equipment
designs comply with energy
conservation standards while
addressing consumer acceptance issues
raised by the LVM. As of December 31,
2008, Alliance stated in its SEC filings
that its principal line of credit was
limited to an additional $16.2 million of
borrowing and that a substantial portion
of its long term debt is due concurrently
with the compliance date of the final
rule. DOE agrees with the LVM that the
company’s current debt structure makes
it more difficult to finance additional
product development and capital
expense. In response to these and other
concerns voiced by the LVM, DOE
revised the proposed top-loading CCW
energy conservation standard to a level
which a current top-loading LVM model
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almost attains. Thus, the negative
impacts on the LVM have been weighed
in DOE’s consideration of the amended
energy conservation standard.
Alliance stated that the standards
proposed in the November 2009 SNOPR
place 292 union laborers in its Ripon,
WI plant at risk of losing their jobs. Of
these 292 laborers, 150 union laborers
are attributed to CCW production and
142 laborers are associated with
companion commercial clothes dryers.
The standards proposed in the
November 2009 SNOPR could also
eliminate an additional 40 nonproduction jobs. (Alliance, Public
Meeting Transcript, No. 67.4 at p. 25;
Alliance, No. 66.4 at p. 8)
For the October 2008 NOPR, DOE
calculated the direct employment
impacts using the GRIM and
information gathered from interviews
with manufacturers. DOE estimated that
there would be positive employment
impacts among domestic CCW
manufacturers for TSL 1 through TSL 5.
Because the LVM had previously stated
it could be eliminated from the
commercial market, DOE also
specifically investigated the LVM
employment using its CCW revenues
and additional employment estimates.
DOE estimated that if the LVM ceased
to produce soft-mount dryers and CCWs
that this would lead to a loss of 292
production jobs. DOE estimated that a
complete closure of the Ripon, WI
facility would result in the dismissal of
approximately 600 factory employees.
73 FR 60234, 62102–03 (Oct. 17, 2008).
For the November 2009 SNOPR, DOE
stated that it believes that the proposed
energy conservation standard would
allow the LVM to continue to produce
top-loading CCWs, mitigating any
potential closure of its domestic
manufacturing facility. 74 FR 57738,
57763 (Nov. 9, 2009). DOE did not
receive any additional comments that
suggest technical barriers would prevent
manufacturers from meeting the energy
conservation standards and notes that
two competitors support the proposed
amended energy conservation standards
for top-loading CCWs. Thus, for today’s
final rule, DOE estimates that the LVM
would be able to continue to produce
top-loading CCWs, and that significant
impacts on LVM manufacturing
employment due to today’s final rule are
hence unlikely. Further discussion of
the LVM and the potential impacts on
direct employment for the CCW
industry is presented in chapter 13 of
the TSD.
ASAP stated that much of the SNOPR
analysis was driven by DOE’s concern
for the precarious position of the LVM.
ASAP stated that it remains somewhat
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unconvinced that the numbers are as
stark as presented in the revised MIA.
(ASAP, Public Meeting Transcript, No.
67.4 at p. 33) ASAP and the Joint
Comment questioned DOE’s estimates of
the potential impacts on the LVM if the
market were to shift entirely to frontloading CCWs. ASAP and the Joint
Comment stated that the green-field
assumption in this analysis was not
valid, especially considering that the
LVM is already making a substantial
number of front-loading washers, and
since new buildings are costly and
depreciate over a much longer schedule
than new equipment. The Joint
Comment argues that these assumptions
disproportionately increase the
annualized financial cost of conversion.
(ASAP, Public Meeting Transcript, No.
67.4 at pp. 140–142; Joint Comment, No.
67.6 at pp. 5–6) ASAP also inquired if
a shift to only front-loading production
would involve a green-field
manufacturing facility even if toploading production is ceasing. (ASAP,
Public Meeting Transcript, No. 67.4 at p.
143) ASAP and the Joint Comment
stated that a shift to only front-loading
washer production would not force the
LVM to completely redesign washers
nor incur expenses such as research and
development. Both ASAP and the Joint
Comment argue that, because frontloading washers currently represent 25
to 30 percent of the LVM’s unit
shipments, the LVM will have the
operating experience to gradually
reduce production costs and improve
production designs without a complete
redesign. (ASAP, Public Meeting
Transcript, No. 67.4 at p. 146; Joint
Comment, No. 67.6 at p. 5)
DOE research confirms that the LVM
has been gradually increasing its
production of front-loading CCWs.
However, the LVM’s production of toploading CCWs still heavily outweighs its
production of front-loading CCWs. DOE
believes a complete shift to frontloading CCWs would represent a radical
departure from the much more gradual
market transition that has been
occurring. As illustrated in chapter 13 of
the TSD, such a market disruption
would disproportionately impact the
LVM since the LVM would have to
increase front-loader manufacturing
capacity by multiples, while its
competitors would have to increase
their overall front-loader manufacturing
capacity by less than 5 percent to fully
transition their CCW production to only
front-loading washers. Since top-loaders
and front-loaders share few parts and
require separate assembly lines, subassembly stations, etc., DOE concluded
that the LVM would have to build an
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annex to house the expanded frontloader fabrication and assembly lines as
long as top-loading clothes washer
production continues. For example, the
LVM could continue to manufacture
top-loading RCWs even after ceasing
top-loading CCW production. While
some equipment and space could
potentially be re-purposed towards
fabricating front-loader components
(i.e., large presses, machining centers,
etc.), DOE research suggests that much
of the space currently occupied by hardtooled top-loading clothes washer
assembly lines in the LVM facility will
remain unavailable until the LVM
ceases to produce top-loading clothes
washers altogether. DOE expects the
LVM to continue to produce top-loading
clothes washers as long as it can to
fulfill customer demand. Consequently,
the space currently occupied by the toploading clothes washer lines will likely
continue to be occupied on the
compliance date of today’s final rule,
necessitating an annex in which to
house expanded front-loader assembly
and fabrication. Alliance agreed that its
existing facility could not accommodate
the new equipment for front-loading
production and continue to produce its
current volumes of top-loading washers.
(Alliance, Public Meeting Transcript,
No. 67.4 at pp. 145–146) As illustrated
in chapter 13 of the TSD, a complete
transition to front-loading CCWs would
likely lead to a market disruption since
switching costs for customers would be
minimized. Consequently, DOE research
suggests that the LVM would be
required to redesign its front-loader
platform to become more costcompetitive.
In appendix 13C of the SNOPR TSD,
DOE estimated that the LVM would be
eligible for about $4.1 million in Federal
production tax credits between 2007
and 2010. ASAP and the Joint Comment
questioned DOE’s conclusion that
additional tax credits in 2010 are
unlikely. The Joint Comment estimated
that additional credits in 2010 are likely
as production of front-loaders ramps up
further (ASAP, Public Meeting
Transcript, No. 67.4 at pp. 126–129;
Joint Comment, No. 67.6, at p. 6) ASAP
questioned if DOE believed that the
LVM was reaching a limit on the
number of front-loading washers that it
could sell or produce. (ASAP, Public
Meeting Transcript, No. 67.4 at pp. 126–
129) ASAP also asked if there was an
analysis to support the estimate of the
cap on machines that would qualify for
the Federal production tax credit, and if
such tax credits for 2007 were included
in the analysis. (ASAP, Public Meeting
Transcript, No. 67.4 at p. 129, 135)
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Finally, the Joint Comment stated that,
even though DOE’s analysis of the
Federal production tax credits has
relatively little impact on the industry
as a whole, the Federal production tax
credits will mitigate a significant
portion of the conversion costs borne by
the LVM to convert their entire
production to front-loading washers.
(Joint Comment, No. 67.6 at p. 6).
Alliance stated, while it has earned tax
credits for qualifying washers, these tax
credits have not been used for a cash
benefit. (Alliance, No. 67.8 at p. 4)
For the November 2009 SNOPR, DOE
accounted 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).
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
publicly 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 and
calculated the Federal production tax
credits for qualifying shipments. In the
November 2009 SNOPR, DOE estimated
that the LVM would likely not qualify
for any Federal production tax credits in
2010. 74 FR 57738, 57763–64 (Nov. 9,
2009) DOE’s estimate was not based on
a cap on the number of qualifying
washers the LVM could sell or produce;
rather, it was based on statements in the
LVM’s 10–Q filing for the quarter
ending March 31, 2009. The 10–Q at
that time suggested that the LVM’s
front-loading production in 2010 would
not increase significantly to qualify for
additional Federal production tax
credits.
For today’s final rule, DOE updated
its estimates using the most recent,
publicly available information to
calculate the likely benefit to the LVM
from the tax credit provisions. DOE
updated the assumptions for the
estimated Federal production tax credit
for 2009 and 2010 based on the LVM’s
recent SEC filings. The LVM’s 10–Q
filing for the quarter ending September
30, 2009, reported higher tax benefits
from the energy efficiency tax program
compared to the 10–Q filing for the
quarter ending March 31, 2009. DOE
revised its figures for 2009 based on this
new information and used the LVM’s
most recent historical estimate for the
growth rate of the commercial laundry
industry to estimate LVM shipments for
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2010.34 The revised estimates suggest
that the LVM will collect approximately
$4.0 million in Federal production tax
credits from 2008–2010 from the
provisions updated by EIEA 2008 and a
total of $5.3 million from the program
from 2007–2010. The revised estimate
for today’s final rule is approximately
$1.2 million higher than the estimate
published in the November 2009
SNOPR.
In the GRIM, DOE accounts for the
Federal production tax credit as a direct
cash benefit in the base and standards
cases that directly increases INPV.
Because 2009 is the base year to which
industry cash flows are discounted, any
Federal production tax credit from 2007
and 2008 is not counted towards the
INPV analysis because it falls outside
the analysis period. However, any tax
benefit in 2009 and 2010 falls within the
analysis period and hence increases
industry value (potentially decreasing
the impacts on manufacturers due to
energy conservation standards). DOE’s
revised Federal production tax credit
estimates for the LVM are
approximately $1.2 million and $0.4
million for 2009 and 2010, respectively.
These revised figures do not
significantly impact the INPV calculated
by DOE nor do they come close to
paying for a facility conversion to frontload only CCW production. DOE
estimates that a wholesale conversion to
only front-loading CCW production
would cost the LVM approximately 12
times the total Federal production tax
credit benefit DOE expects the LVM to
collect over the life of the program. (See
chapter 13 of the TSD for further
details.) While DOE research suggests
that Federal production tax credits
could help the LVM implement gradual
changes to its production facilities, such
tax credits would not substantially
defray wholesale plant conversion costs.
Whirlpool commented that the ability
of a manufacturer to use an earned tax
credit is a function of the earnings
situation for that manufacturer and that
many manufacturers cannot use earned
tax credits in some years due to current
economic conditions. (Whirlpool, No.
67.11 at p. 3) Because the LVM reported
earnings from the tax credit and stated
that it expected to earn a benefit from
the tax credits in 2009, DOE calculated
the expected tax credits for the LVM in
2009 and 2010 and assumed that the
LVM would benefit in those years.
Whirlpool agreed with DOE’s
conclusion that the past tax credits have
only offset a small fraction of the costs
34 See https://www.comlaundry.com/investors/
relations/sec-filings.asp for a list of Alliance
Laundry System’s SEC filings.
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necessary to produce high efficiency
equipment. Whirlpool also stated that if
tax credits were offered in between the
issuance of the final rule and the
compliance date, they could have an
impact on the ability of individual
manufacturers to make the capital
investment in new product platforms.
(Whirlpool, No. 67.11 at p. 3)
DOE agrees that tax credits that were
effective between the issuance of the
final rule and the compliance date of the
amended standards could have an
impact on the ability of manufacturers
to fund capital investments. However,
because most of the benefit from the
EIEA 2008 takes place outside of the
analysis period, DOE believes it is
unlikely that manufacturers could use
the credits to fund much of their capital
conversion costs.
EJ recommended that DOE review its
Federal production tax credit
projections for 2010 if it adopts a strong
standard that applies to all CCWs. EJ
added that such a standard would likely
cause manufacturers to ramp up
production of qualifying washers over
time, not just beginning in 2013. (EJ,
Public Meeting Transcript, No. 67.4 at
pp. 137–138)
For today’s final rule, DOE revised its
Federal production tax credit
projections for 2010 using the LVM’s
most recent SEC filings. Based on the
LVM’s 10–Q for the quarter ending
September 30, 2009, DOE revised its
estimates to include Federal production
tax credits for 2010. DOE continues to
believe that it is unlikely that
manufacturers would shift their clothes
washer production to exclusively
manufacture front-loading washers in
response to the Federal production tax
credits or the energy conservation
standards in today’s final rule. Thus,
DOE relied on the forward-looking
projections published by the LVM to
estimate CCW sales that qualify for the
production tax credits.
Alliance and White & Case (W&C)
cited DOJ’s letter in response to the
October 2008 NOPR that stated there
appeared to be a real risk that at least
one manufacturer could not meet the
proposed amended energy conservation
standard for top-loading CCWs. Both
Alliance and W&C stated that DOE’s
response in the November 2009 SNOPR
ignored DOJ’s conclusion that DOE
should consider keeping the existing
standard in place for top-loading CCWs
to maintain competition. (Alliance, No.
66.4 at p. 3; W&C, Public Meeting
Transcript, No. 67.4 at pp. 26–27)
Alliance stated that DOJ’s
recommendation to keep the existing
standard in place for top-loading CCWs
was the appropriate course of action for
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this rulemaking. (Alliance, No. 66.4 at p.
9; Alliance, Public Meeting Transcript,
No. 67.4 at pp. 29–30) In addition,
Multiple Route Operators stated they
were concerned that the standards
proposed in the October 2008 NOPR
could force Alliance to exit the
manufacture of top-loading CCWs,
which would cause them significant
harm because they would pay more for
washers. Multiple Route Operators
urged DOE to adopt a standard that
would enable Alliance to remain the
lowest-cost CCW provider. (Multiple
Route Operators, No. 67.8 at pp. 1–3)
In the October 2008 NOPR, DOE
proposed amended standards of 1.76
MEF/8.3 WF for top-loading CCWs. 73
FR 62034, 62036 (Oct. 17, 2008). In
response, DOJ found that there was a
real risk that one or more CCW
manufacturers could not meet the
proposed standard for top-loading
CCWs. DOJ stated that it was concerned
that meeting the proposed standards
could require substantial investment in
the development of new technology that
some suppliers of top-loading CCWs
might not find economically justifiable.
74 FR 57738, 57802 (Nov. 9, 2009). In
response to the concerns raised by DOJ
and other concerns raised by interested
parties, DOE proposed a top-loading
CCW standard of 1.60 MEF/8.5 WF in
the November 2009 SNOPR. 74 FR
57738, 57763 (Nov. 9, 2009). In today’s
final rule, DOE determined that 1.60
MEF/8.5 WF is the maximum toploading CCW efficiency level that is
economically justified and
technologically feasible while being
sensitive to concerns raised by DOJ and
the LVM.
EJ stated that DOE failed to consider
the low barriers to entry in the CCW
market in its analysis of the competition
issue. While there are currently only
three CCW manufacturers, if the
departure of any of these manufacturers
increases markups significantly, higher
profits would allow RCW manufacturers
or small players to expand into the
commercial market. EJ asserted that,
because these manufacturers would not
have to design completely new
equipment or construct a new
manufacturing facility to begin selling
CCWs, it would be ‘‘irrational’’ for DOE
to contend that there would be any
significant adverse impact on
competition in the commercial market.
EJ stated that DOE must explain why
new entrants would be unable to gain a
foothold in the CCW market by taking
advantage of this disturbance in the
status quo if one manufacturer exited
the market. (EJ, No. 67.5 at. pp. 8–9;
Public Meeting Transcript, No. 67.4 at p.
138) Multiple Route Operators believe
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they would face higher prices if
Alliance were eliminated from the
market. (Multiple Route Operators, No.
67.8 at pp. 1–3)
In response to the October 2008
NOPR, DOJ found that there was a real
risk that one or more of the
manufacturers could not meet the
proposed standard for top-loading
CCWs. 74 FR 57738, 57802 (Nov. 9,
2009) DOE revised its proposed
standards in part to ease these
competitive concerns raised by the DOJ
and other interested parties. 74 FR
57738, 57763 (Nov. 9, 2009).
In chapter 13 of the TSD, DOE offers
multiple reasons why it believes the
LVM has succeeded in the CCW market
despite low overall production volumes:
(1) Well-depreciated machinery and
legacy design; (2) effective customer and
service networks; (3) a large installed
base of top-loading CCWs; and (4) stock
of repair parts that ensures a large
market for replacement machines.
Multiple Route Operators confirmed
many of these advantages, stating that
they believe Alliance offers CCWs with
the lowest total cost of ownership
because its washers have the longest
functional life. In addition, Multiple
Route Operators stated that the quality,
service, and unique products with CCW
features separate Alliance from other
manufacturers. (Multiple Route
Operators, No. 67.8 at pp. 1–3) DOE
believes that route operators’ and
distributors’ large inventory of service
parts and repair knowledge represent a
significant switching cost, discouraging
customers from adopting rival
platforms. As long as the LVM can
continue to produce replacement toploading CCWs, DOE does not believe the
LVM will be placed at a substantial
disadvantage relative to its larger
competitors. However, due to the
relatively small stock of front-loading
clothes washers installed in the CCW
market, DOE believes that a wholesale
conversion of the CCW market to frontloading machines would eliminate most
of the LVM’s advantages that have
allowed it to remain competitive.
DOE research suggests that, while the
cost of entering the CCW market may be
construed as low, statements by
multiple manufacturers indicate that
actual success in the CCW market
depends on many factors. For example,
DOE notes that a top-loading,
horizontal-axis clothes washer used to
be marketed into the CCW market but
that it was withdrawn for a number of
reasons. Additionally, converting
residential platforms for commercial use
is not as simple as adding a coin box;
substantial investments are required to
integrate a variety of payment systems.
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1151
Custom user interfaces are required,
both for compliance with the Americans
with Disabilities Act, and to facilitate
consumer education. Resultant
conversion costs have to be amortized
across a much lower production volume
than is typically found in the residential
market, and critical parts and service
personnel have to be present in the
territory of any route operator that is
going to consider a rival. Hence, while
entering the CCW market may not
represent significant technical hurdles,
the operational and financial challenges
are sufficient to limit the market to a
small number of competitors.
DOE also received comment regarding
its characterization of Alliance as an
LVM. The Joint Comment argued that
DOE’s characterization of Alliance as an
LVM is a significant misnomer, as the
LVM reported revenues equivalent to
approximately half of the total CCW
industry revenue and claims to be the
leading manufacturer of stand-alone
commercial laundry equipment in North
America. (Joint Comment, No. 67.6 at p.
5)
For the October 2008 NOPR, DOE
presented a separate analysis of the
LVM. 73 FR 62034, 62103–04 (Oct. 17,
2008). Although DOE continues to agree
with the Joint Comment that the LVM
has a significant share of the CCW
industry based on reported revenues,
DOE maintains 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
hence be characterized as an LVM in the
context of this rulemaking. 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
comprise part of the total unit cost. The
majority of capital expenditures related
to tooling, equipment, and other
machinery in a plant can typically 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 platform
upgrades. A manufacturer with a highvolume residential line can cost justify
much more capital-intensive solutions if
they are applicable in both markets,
whereas an LVM could lack the scale
and capital to make such investments.
Thus, an LVM may be required to
purchase upgrade options from thirdparty vendors instead of developing inhouse solutions that reduce costs at
higher volumes. In the CCW market, the
most direct competitor to the LVM has
over 60 times the overall shipment
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volumes of the LVM. This scale
difference also affects purchasing power
because a large, diversified appliance
manufacturer can use its production
scale to achieve better prices for raw
materials and commonly purchased
components such as 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. Therefore, DOE
concludes that an LVM is unlikely to be
able to compete solely on manufacturing
cost.
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
directly and indirectly) than
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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 November 2009
SNOPR, DOE estimated indirect
national employment impacts using an
input/output model of the U.S. economy
called Impact of Sector Energy
Technologies (ImSET).35 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
VI.C.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 IV.G. For today’s final rule, DOE
has made no change to its method for
estimating employment impacts. For
further details, see chapter 15 of the
final rule TSD.
35 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 that
would be expected to result from
adoption of new standards. For the
November 2009 SNOPR and today’s
final rule, DOE calculated this change
using the NEMS–BT computer model.
NEMS–BT models certain policy
scenarios such as the effect of reduced
energy consumption by fuel type. The
analysis output provides a forecast for
the needed generation capacities at each
TSL. The estimated net benefit of the
standard in today’s final rule 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 efficiency
improvement on CCW energy
consumption electricity and natural gas
from the NIA. These inputs reflect the
effects of both fuel (natural gas) and
electricity consumption savings.
Chapter 14 of the final rule TSD
presents results of the utility impact
analysis.
In its November 2009 SNOPR, DOE
did not estimate impacts on water and
wastewater utilities because the water
and wastewater utility sector exhibits 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). EJ
commented that given the water supply
and water and wastewater infrastructure
concerns that are affecting and will
continue to affect many parts of the
country, it would be arbitrary and
capricious for the Department to fail to
address the impact on water and
wastewater utilities of reduced water
consumption resulting from commercial
clothes washer standards. (EJ, No. 67.5
at p. 13)
In response, DOE refers again to the
diversity of the water and wastewater
utility sector. Whereas in the case of the
electric utility sector DOE has a tool and
data set that allows estimation of
impacts on infrastructure (in terms of
installed generation capacity), DOE does
not have (and is not aware of) a
comparable tool and data set that would
allow estimation of impacts on
infrastructure in the water and
wastewater utility sector resulting from
commercial clothes washer standards.
Therefore, for today’s final rule, DOE
did not estimate impacts to the water
and wastewater utility sector.
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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 standards for CCWs in today’s
final rule, which it has included as
chapter 16 of the TSD. DOE found that
the environmental effects associated
with the standards for CCWs were not
significant. 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
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, NOX, and Hg using the NEMS–BT
computer model. Because the on-site
operation of CCWs requires use of fossil
fuels and results in emissions of CO2
and NOX, DOE also accounted for the
reduction in these emissions due to the
standards.
In the EA, NEMS–BT is run similarly
to the AEO 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; the
output is the forecasted physical
emissions. The estimated net benefit of
the standard in today’s final rule is the
difference between the forecasted
emissions by NEMS–BT at each TSL
and the AEO 2009 April Release
Reference Case. NEMS–BT tracks CO2
emissions using a detailed module that
provides results with broad coverage of
all sectors and inclusion of interactive
effects.
DOE has determined that sulfur
dioxide (SO2) emissions from affected
Electric Generating Units (EGUs) are
subject to nationwide and regional
emissions cap and trading programs that
create uncertainty about the impact of
energy conservation standards on SO2
emissions. Title IV of the Clean Air Act
sets an annual emissions cap on SO2 for
all affected EGUs. SO2 emissions from
28 eastern States and the District of
Columbia (D.C.) are also limited under
the Clean Air Interstate Rule (CAIR,
published in the Federal Register on
May 12, 2005; 70 FR 25162 (May 12,
2005), which creates an allowancebased trading program that will
gradually replace the Title IV program
in those States and D.C. (The recent
legal history surrounding CAIR is
discussed below.) The attainment of the
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emissions caps is flexible among EGUs
and is enforced through the use of
emissions allowances and tradable
permits. Energy conservation standards
could lead EGUs to trade allowances
and increase SO2 emissions that offset
some or all SO2 emissions reductions
attributable to the standard. DOE is not
certain that there will be reduced
overall SO2 emissions from the
standards. The NEMS–BT modeling
system that DOE uses to forecast
emissions reductions currently indicates
that no physical reductions in power
sector emissions would occur for SO2.
The above considerations prevent DOE
from estimating SO2 reductions from
standards at this time.
Even though DOE is not certain that
there will be reduced overall emissions
from the standard, there may be an
economic benefit from reduced demand
for SO2 emission allowances. Electricity
savings from standards decrease the
generation of SO2 emissions from power
production, which can lessen the need
to purchase emissions allowance
credits, and thereby decrease the costs
of complying with regulatory caps on
emissions.
Much like SO2 emissions, NOX
emissions from 28 eastern States and the
District of Columbia (D.C.) are limited
under the CAIR. 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.
531 F.3d 896 (D.C. Cir. 2008); see also
North Carolina v. EPA, 550 F.3d 1176
(D.C. Cir. 2008). These court positions
were taken into account in the
November 2009 SNOPR and in today’s
final rule. 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.
In the 28 eastern States and D.C.
where CAIR is in effect, DOE’s forecasts
indicate that no NOX emissions
reductions will occur due to energy
conservation standards because of the
permanent cap. Energy conservation
standards have the potential to produce
an economic impact in the form of
lower prices for NOX emissions
allowances, if their impact on electricity
demand is large enough. However, DOE
has concluded that the standards in
today’s final rule will not have such an
effect because the estimated reduction
in electricity demand in States covered
by the CAIR cap would be too small to
affect allowance prices for NOX under
the CAIR.
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1153
New or amended energy conservation
standards would reduce NOX emissions
in those 22 States that are not affected
by the CAIR. DOE used the NEMS–BT
to forecast emission reductions from the
CCW standards in today’s final rule.
Similar to emissions of SO2 and NOX,
future emissions of Hg would have been
subject to emissions caps. The Clean Air
Mercury Rule (CAMR) would have
permanently capped emissions of Hg
from new and existing coal-fired plants
in all States beginning in 2010 (70 FR
28606). 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.
Thus, after CAMR was vacated, DOE
was unable to use the NEMS–BT model
to estimate any changes in the physical
quantity of Hg emissions 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 the
standard levels considered. DOE
continued to use the above approach,
updated for the AEO 2009 April Release,
to estimate the Hg emission reductions
due to standards for the SNOPR. For
today’s final rule, however, DOE used
the latest version of NEMS–BT, which
reflects CAMR being vacated and does
not incorporate CAMR emission caps, to
estimate the reduction in Hg emissions.
In addition to electricity generation,
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 November 2009 SNOPR or today’s
final rule the effect of the proposed
standards on site emissions of SO2.
For its November 2009 SNOPR, DOE
conducted a separate analysis of
wastewater discharge impacts as part of
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the environmental assessment for
commercial clothes washers. 73 FR
62034, 62112–13 (Oct. 17, 2008). For
today’s final rule, DOE retained the
same analysis method for estimating
wastewater discharge impacts.
EJ commented that given the water
supply concerns that are affecting and
will continue to affect many parts of the
country, it would be arbitrary and
capricious for the Department to fail to
address the environmental benefits of
reduced water consumption resulting
from commercial clothes washer
standards. (EJ, No. 67.5 at p. 13) In
response, DOE notes that the
environmental impacts of reduced water
use are highly variable across the
country. DOE has neither an analytical
tool that could estimate such impacts
nor sufficient information to draw
definitive conclusions about such
impacts. Therefore, it was not able to
account for potential environmental
benefits of reduced water consumption
resulting from the commercial clothes
washer standards considered for today’s
final rule.
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K. Monetizing Carbon Dioxide and
Other Emissions Impacts
For the November 2009 SNOPR, DOE
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 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 cost 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.
In the October 2008 NOPR, DOE used
the range $0 to $20 per ton CO2 for
reductions in the year 2007 in 2007$.
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
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 the November 2009 SNOPR
and today’s final rule, DOE is relying on
a new set of values recently developed
by an interagency process that
conducted a thorough review of existing
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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 turn out to be
significant in the sense that they 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 global SCC
value of $33/t CO2 (with sensitivity
analysis at $80/t CO2), increasing at 2.4
percent per year thereafter.
In recent months, a variety of agencies
have worked to develop an objective
methodology for selecting a range of
interim SCC estimates to use in
regulatory analyses until improved SCC
estimates are developed. The following
summary reflects the initial results of
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these efforts and proposes ranges and
values for interim social costs of carbon
used in this rule. It should be
emphasized that the analysis described
below is preliminary. These complex
issues are of course undergoing a
process of continuing review. Relevant
agencies will be evaluating and seeking
comment on all of the scientific,
economic, and ethical issues before
establishing final estimates for use in
future rulemakings.
The interim judgments resulting from
the recent interagency review process
can be summarized as follows: (a) DOE
and other Federal agencies should
consider the global benefits associated
with the reductions of CO2 emissions
resulting from efficiency standards and
other similar rulemakings, rather than
continuing the previous focus on
domestic benefits; (b) these global
benefits should be based on SCC
estimates (in 2007$) of $55, $33, $19,
$10, and $5 per ton of CO2 equivalent
emitted (or avoided) in 2007 (in
calculating the benefits reported in this
notice, DOE has escalated the 2007$
values to 2008$ for consistency with
other dollar values presented in this
notice); (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
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
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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 $1/t CO2
(2007 value, 2007$), 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 to5 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.
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 meta-
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analysis in Richard S. J. Tol’s, ‘‘The
Social Cost of Carbon: Trends, Outliers,
and Catastrophes, Economics: The
Open-Access, Open-Assessment EJournal,’’ Vol. 2, 2008-25. https://
www.economics-ejournal.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
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
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1155
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
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,
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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 Standard & Poor’s
500 Index). In the climate setting, the 5percent 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).
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 a 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, ‘‘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 IV.8.
These estimates are reported separately
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 $5 per
t CO2 with a 5-percent discount rate.
TABLE IV.8—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/t CO2 IN 2007 IN 2007$), BASED ON 3% AND 5%
DISCOUNT RATES *
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
............
............
Model
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1
2
3
4
5
6
7
8
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
.....................................
9 .....................................
10 ...................................
11 ...................................
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FUND
FUND
FUND
FUND
FUND
FUND
FUND
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¥1
3
2
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0
¥1
0
7
7
8
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Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules and Regulations
TABLE IV.8—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/t CO2 IN 2007 IN 2007$), BASED ON 3% AND 5%
DISCOUNT RATES *—Continued
Model
Climate
scenario
Study
Summary
3%
Model-weighted mean .............
5%
33
5
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et
al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent annual growth
rate in the SCC, and adjusted for inflation using GDP deflator.
DOE used the model-weighted mean
values of $33 and $5 per ton (2007$), as
these represent the estimates associated
with the 3-percent and 5-percent
discount rates, respectively. The 3percent and 5-percent estimates have
independent appeal and at this time a
clear preference for one over the other
is not warranted. These values were
then escalated to 2008$ and rounded to
$34 and $5. Thus, DOE has also
included—and centered its current
attention on—the average of the
estimates associated with these discount
rates, which is approximately $20 (in
2008$). (Based on the $20 global value,
the domestic value would be
approximately $1 per ton of CO2
equivalent.)
It is true that there is uncertainty
about interest rates over long time
horizons. Recognizing that point,
Newell and Pizer have made a careful
effort to adjust for that uncertainty. See
Newell and Pizer, supra. This is a
relatively recent contribution to the
literature.
There are several concerns with using
this approach in this context. First, it
would be a departure from current OMB
guidance. Second, an approach that
would average what emerges from
discount rates of 3 percent and 5
percent reflects uncertainty about the
discount rate, but based on a different
model of uncertainty. The Newell-Pizer
approach models discount rate
uncertainty as something that evolves
over time; in contrast, one alternative
approach would assume that there is a
single discount rate with equal
probability of 3 percent and 5 percent.
Table IV.9 reports on the application
of the Newell-Pizer adjustments. The
precise numbers depend on the
assumptions about the data generating
process that governs interest rates.
Columns (1a) and (1b) assume that
‘‘random walk’’ model best describes the
data and uses 3-percent and 5-percent
discount rates, respectively. Columns
(2a) and (2b) repeat this, except that it
assumes a ‘‘mean-reverting’’ process. As
Newell and Pizer report, there is
stronger empirical support for the
random walk model.
TABLE IV.9—GLOBAL SOCIAL COST OF CARBON ESTIMATES ($/t CO2 IN 2007 IN 2007$),* USING NEWELL & PIZER
ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY **
Randomwalk model
Model
Study
Climate scenario
Meanreverting
model
3%
5%
(1a)
(1b)
3%
1
2
3
4
5
6
7
8
...............
...............
...............
...............
...............
...............
...............
...............
9 ...............
10 .............
11 .............
FUND
FUND
FUND
FUND
FUND
FUND
FUND
FUND
5%
(2a)
(2b)
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 ....................
Summary
FUND default .......................
SRES A1b ............................
SRES A2 ..............................
No THC ................................
THC continues .....................
Constant PRTP ....................
Gollier discount 1 .................
Gollier discount 2 .................
FUND Mean .........................
A2-scen ................................
..............................................
..............................................
10
2
15
20
20
9
14
7
12
97
............
............
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
Model-weighted mean ..........
...................................
...................................
...................................
...................................
...................................
...................................
...................................
...................................
55
10
36
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* 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
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$55, with the 3-percent and 5-percent
discount rates, respectively. The
application of the mean-reverting
adjustment yields estimates of $6 and
$36 (2007$). Since the random walk
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model has greater support from the data,
DOE also used the SCC values of $10
and $55 (2007$). When escalated to
2008$, these values are approximately
$10 and $56.
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In summary, in considering the
potential global benefits resulting from
reduced CO2 emissions, DOE used
values based on a social cost of carbon
of approximately $5, $10, $20, $34 and
$56 per metric ton avoided in 2007
(values expressed in 2008$). DOE also
calculated the domestic benefits based
on a value of approximately $1 per
metric ton avoided in 2007. To value the
CO2 emissions reductions expected to
result from amended standards for
CCWs in 2013–2043, DOE escalated the
above values for 2007 using a 3-percent
escalation rate. As indicated in the
discussion above, estimates of SCC are
assumed to increase over time since
future emissions are expected to
produce larger incremental damages as
physical and economic systems become
more stressed as the magnitude of
climate change increases. Although
most studies that estimate economic
damages caused by increased GHG
emissions in future years produce an
implied growth rate in the SCC, neither
the rate itself nor the information
necessary to derive its implied value is
commonly reported. However, applying
a rate of 3 percent per year is consistent
with the range recommended by IPCC
(2007).
DOE also investigated the potential
monetary benefit of reduced NOX and
Hg emissions from the TSLs it
considered. As noted above, new or
amended energy conservation standards
would reduce NOX emissions in those
22 States that are not affected by CAIR,
in addition to the reduction in site NOX
emissions nationwide. DOE estimated
the monetized value of NOX emissions
reductions resulting from each of the
TSLs considered for today’s final rule
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 $442 to $4,540 per ton in
2008$). 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 rule based on environmental
damage estimates from the literature.
The impact of mercury emissions from
power plants on humans is considered
highly uncertain. However, DOE
identified two estimates of the
environmental damage of Hg based on
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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 of $1.3
billion per year in 2000$ (which works
out to $33.3 million per ton emitted per
year in 2008$) 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.36 DOE’s low-end estimate of
$0.66 million per ton emitted in 2004$
($0.745 million per ton in 2008$) was
derived 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 to Hg.37
As previously stated, DOE’s analysis
assumed the presence of nationwide
emission caps on SO2 and caps on NOX
emissions in the 28 States covered by
CAIR. In the presence of these caps, the
NEMS–BT modeling system that DOE
used to forecast emissions reduction
indicated that no physical reductions in
power sector emissions would occur
(although there remains uncertainty
about whether physical reduction of
SO2 will occur), but that the standards
could put slight downward pressure on
the prices of emissions allowances in
cap-and-trade markets. Estimating this
effect is very difficult because factors
such as credit banking can change the
trajectory of prices. From its modeling
to date, DOE is unable to estimate a
benefit from energy conservation
standards on the prices of emissions
allowances at this time. See the
environmental assessment in the final
rule TSD for further details.
V. Discussion of Other Comments
Since DOE opened the docket for this
rulemaking, it has received more than
44 written comments from a diverse set
of parties, including manufacturers and
their representatives, wholesalers and
distributors, energy conservation
advocates, State officials and agencies,
and electric utilities. Section IV of this
preamble discusses comments DOE
received on the analytic methodologies
it used. Additional comments DOE
36 Trasande, L., et al., ‘‘Applying Cost Analyses to
Drive Policy that Protects Children,’’ 1076 Ann.
N.Y. Acad. Sci. 911 (2006).
37 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
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.
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received in response to the November
2009 SNOPR addressed the burdens and
benefits associated with new energy
efficiency standards, the information
DOE used in its analyses, results of and
inferences drawn from the analyses,
impacts of standards, the merits of the
different TSLs and standards options
DOE considered, other issues affecting
adoption of standards for CCWs, and the
DOE rulemaking process. DOE
addresses these comments in this
section.
A. Proposed Trial Standard Levels
(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
IV.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 November 2009 SNOPR, 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
opposes the standard proposed for toploading CCWs, noting that it is based on
a ‘‘residential construction’’ product
with almost no acceptance in the
marketplace, instead of a true
‘‘commercial construction’’ product
meeting the needs of the U.S.
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commercial clothes washer market
segment. It stated that the proposed
standard is inappropriate because
equipment meeting the standard would
not provide true hot water (120 °F or
greater), true warm water (80 °F to 120
°F), or adequate rinsing. Alliance
commented that WEB Service Company,
California’s largest multi-housing route
operator, deployed an all-spray-rinse
top-loading CCW in the late 1990’s and
was forced to take back all deployed
units because they didn’t meet the
needs of the users. It stated that it could
support a top-loading class standard of
MEF ≥ 1.42/WF ≤ 9.5 (TSL 2), and that
it supports the proposed standard for
front-loading CCWs. (Alliance, No. 66.4
at p. 4; Alliance, No. 67.8 at pp. 1, 4)
Whirlpool commented that it supports
both the top-loading and front-loading
standards proposed in the November
2009 SNOPR. It stated that energy and
water consumption levels that are more
restrictive than these will likely lead to
poor wash performance, poor rinse
performance, or both. (Whirlpool, No.
67.11 at p. 3) AHAM and GE stated
support for the proposed MEF and water
factor levels that DOE proposed for
front-loading CCWs. (AHAM, No. 67.12
at p. 3; GE, No. 67.9 at p. 1) GE added
that it supports DOE’s proposed MEF
and WF requirements for front-load
commercial clothes washers. In
addition, GE expressed support for
DOE’s proposed MEF and WF
requirements for top-load commercial
clothes washers, but stated its concern
that the max-tech model on which this
level is based is designed for a relatively
limited segment of the market (the onpremises laundry commercial segment),
and that this model has not yet been
demonstrated as sustainable in the
harsher environment of laundromats,
where the units are subject to tougher
conditions such as overloading. (GE, No.
67.9 at p. 1)
EJ and the California Utilities
advocated adoption of a single set of
energy and water efficiency standards
for all commercial clothes washers,
which will deliver greater energy and
water savings than separate standards
for top-loading and front-loading
commercial washers. The California
Utilities stated that its preliminary
analysis suggests that over the next 30
years, DOE could save as much as 50
percent more in energy savings and over
200 percent more in water savings with
a single equipment class standard (set at
levels of MEF 2.35/WF 4.4) than the
standard that DOE has proposed in the
SNOPR. (EJ, No. 67.5 at pp. 10–11;
California Utilities, No. 67.10 at pp. 3–
4) EJ stated that the proposed separate
standards for front-loaders would
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increase the installed price differential
between front-loaders and top-loaders,
which could result in increased energy
and water consumption to the extent
that the increased installed price
differential would encourage the market
to shift from front-loaders to less
efficient top-loaders. It noted that the
modest energy and water savings that
DOE has estimated for its proposed
separate front-loader standards could be
exceeded by that standard’s impact on
the relative shipments of top-loading
and front-loading washers. It added that
if DOE’s standards were to necessitate
design changes to top-loaders
exclusively, the resulting increase in
installed costs for top-loaders would
foster the market’s transition to frontloaders, increasing the net energy and
water savings produced by the standard.
(EJ, No. 67.5 at pp. 10–11)
EJ and the California Utilities also
noted the availability of flexible
regulatory approaches that would
facilitate adoption of a strong, uniform
set of standards for all commercial
washers and also minimize any adverse
impacts on competition. They stated
that DOE could adopt a tiered approach
to standards, maintaining a 2013
compliance date for initial energy and
water efficiency standards, while
phasing in stronger requirements later.
This approach, they said, would give
the LVM (Alliance) and other
manufacturers additional time to raise
needed capital and to optimize product
designs and manufacturing processes to
meet strong standards at a lower cost.
(EJ, No. 67.5 at pp. 9–10; California
Utilities, No. 67.10 at pp. 4–5) EJ added
that alternatively, DOE could
accommodate Alliance’s key concerns
by granting a temporary waiver from
compliance with revised standards. This
would enable DOE to adopt effective
standards while giving Alliance an
extended compliance period in which to
raise needed capital and optimize its
product designs and manufacturing
processes. (EJ, No. 67.5 at p. 9–10)
The Joint Comment stated that DOE’s
proposed rule establishing two product
classes for CCWs is not satisfactory for
either of the proposed classes, as it
would require manufacturers to make
substantial investments to achieve
modest improvements in the efficiency
of a protected class of inherently lessefficient top-loaders, while establishing
a standard for front-loaders that 97
percent of the front-loading models on
the market today already meet. It noted
that a stronger standard for front-loaders
would widen the price differential
between front-loaders and top-loaders,
which would encourage a portion of the
market to shift from front-loaders back
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1159
to less efficient top-loaders. The Joint
Comment recommended that a standard
be set for CCWs as a single product
class, with performance levels that are
readily achievable by today’s highefficiency front-loading washers. It
stated that the highest standard level
identified for front-loaders (MEF 2.35/
WF 4.4) maximizes energy and life-cycle
cost savings when applied to all
commercial washers, and thus should
be the strongest candidate for adoption.
Regarding the problems that the
recommended standards could pose for
the LVM (i.e., Alliance), the Joint
Comment stated that the standard
should take effect in stages, allowing
most capital conversion costs to be
deferred for an additional two years. It
added that the manufacturer hardship
waiver process in current law remains
open to Alliance should unforeseen
circumstances arise making compliance
impossible. (Joint Comment, No. 67.6 at
p. 1)
In considering standards for today’s
final rule, DOE first notes that it has
retained separate equipment classes for
top-loading and front-loading CCWs, for
reasons discussed in section IV.A. DOE
has retained the analyses of standards
for both equipment classes that it
conducted for the SNOPR, which are
described in section IV. Section VI
presents a discussion of DOE’s reasons
for adopting the standard levels in
today’s final rule.
VI. Analytical Results and Conclusions
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
final 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 in section
IV.C.1.a, DOE eliminated the maximum
technologically efficiency level of 1.76
MEF/8.3 WF for the top-loading
equipment class in the November 2009
SNOPR. For today’s final rule, DOE
considered the same TSLs it considered
for the November 2009 SNOPR.
Table VI.1 presents the TSLs analyzed
for today’s final rule and the efficiency
levels (consisting of a combination of
MEF and WF) within each TSL for each
class of equipment. 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
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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 meet or exceed the second
candidate standard level for frontloading washers. In the case of the
second candidate standard level for toploading washers, a significant
percentage 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, top-loading washers
are retained at their maximum
efficiency level while front-loading
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 from
TSL 1 to TSL 5, the LCC savings, NES,
and NPV all increase. TSL 5 represents
the level with the minimum LCC and
maximum NES and NPV.
TABLE VI.1—TRIAL STANDARD LEVELS FOR COMMERCIAL CLOTHES WASHERS
TSL 1
Top-Loading:
MEF ....................................................................
WF ......................................................................
Front-Loading:
MEF ....................................................................
WF ......................................................................
B. Significance of Energy Savings
To estimate the energy savings
through 2043 due to amended energy
conservation standards, DOE compared
the energy consumption of equipment
under the base case to energy
consumption of this equipment under
each TSL that DOE considered for
TSL 2
TSL 3
TSL 4
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
CCWs. Table VI.2 shows DOE’s NES
estimates (and national water savings
results) for each TSL. The table also
shows the magnitude of the savings if
they are discounted at 7-percent and
3-percent discount rates. Discounted
energy savings represent a policy
perspective where energy savings
further in the future are less significant
than energy savings closer to the
present. Each TSL considered in this
rulemaking would result in significant
energy savings, and the amount of
savings increases with higher energy
conservation standards (ranging from an
estimated 0.04 quads to 0.12 quads,
undiscounted, for TSLs 1 through 5).
TABLE VI.2—SUMMARY OF CUMULATIVE NATIONAL ENERGY AND WATER SAVINGS FOR CCWS
[Savings for Units Sold from 2013 to 2043]
Undiscounted
Trial standard level
1
2
3
4
5
National energy savings,
quads
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
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1. Economic Impacts on Commercial
Customers
a. Life-Cycle Cost and Payback Period
To evaluate the net economic impact
of standards on CCW customers, DOE
conducted LCC and PBP analyses for
each TSL. More efficient CCWs affect
customers in two ways: (1) Purchase
price is expected to increase; and (2)
annual operating expense is expected to
decrease. DOE analyzed the net effect by
calculating the LCC. Inputs used for
calculating the LCC include total
installed costs, annual energy savings,
average electricity prices, energy price
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National water
savings, trillion
gallons
0.04
0.04
0.10
0.11
0.12
C. Economic Justification
3% Discounted
National energy savings,
quads
0.00
0.01
0.14
0.16
0.21
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National water
savings, trillion
gallons
0.02
0.02
0.06
0.06
0.07
trends, repair and maintenance costs,
equipment lifetime, and discount rates.
Table VI.3 and Table VI.4 show the
LCC and PBP results for each CCW
application for the top-loading
equipment class, and Table VI.5 and
Table VI.6 show the results for the frontloading equipment class. DOE’s LCC
and PBP analyses provided five outputs
for each considered TSL. The first three
outputs are the percentages of standardcompliant machine purchases that
would result in (1) a net LCC increase,
(2) no impact, or (3) a net LCC savings
for the customer. The fourth output is
the average net LCC savings from
standard-compliant equipment. The
7% Discounted
0.00
0.00
0.08
0.09
0.11
National energy savings,
quads
0.01
0.01
0.03
0.03
0.03
National water
savings, trillion
gallons
0.00
0.00
0.04
0.04
0.06
fifth output is the average PBP for the
customer purchasing a design that
complies with the TSL.
For the top-loading equipment class,
the highest average LCC savings and
shortest PBP occur at TSLs 3, 4, and 5.
At these TSLs, 85 percent of multifamily customers have a net benefit, and
96 percent of laundromat customers
have a net benefit. For the front-loading
equipment class, the highest average
LCC savings occur at TSL 5, and the
PBP is lower than at TSL 4. TSLs 1
through 3 have little impact because
most of the market is already at or above
this level in the base case.
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TABLE VI.3—COMMERCIAL CLOTHES WASHERS, TOP-LOADING, MULTI-FAMILY APPLICATION: LIFE-CYCLE COST AND
PAYBACK PERIOD RESULTS
Life-cycle cost
TSL
MEF/WF
Baseline .....................................................
1, 2 ............................................................
3, 4, 5 ........................................................
Life-cycle cost savings
Payback period
years
Customers with
Average
installed
price
$
Average
operating
cost
$
Average
LCC $
Average
savings
$
Net cost
%
No
impact
%
Net
benefit
%
Median
Average
760
883
974
3,263
3,153
2,873
4,023
4,036
3,847
................
¥8.1
178.6
................
43.3
13.8
................
35.3
1.2
................
21.5
85.0
................
11.7
4.6
................
17.3
5.6
1.26/9.50
1.42/9.50
1.60/8.50
TABLE VI.4—COMMERCIAL CLOTHES WASHERS, TOP-LOADING, LAUNDROMAT APPLICATION: LIFE-CYCLE COST AND
PAYBACK PERIOD RESULTS
Life-cycle cost
TSL
MEF/WF
Baseline .....................................................
1, 2 ............................................................
3, 4, 5 ........................................................
Life-cycle cost savings
Payback period
years
Customers with
Average
installed
price
$
Average
operating
cost
$
Average
LCC $
Average
savings
$
Net cost
%
No
impact
%
Net
benefit
%
Median
Average
760
883
974
3,422
3,326
3,025
4,182
4,209
3,999
................
¥17.7
190.0
................
51.4
2.9
................
35.3
1.2
................
13.3
95.9
................
7.9
2.8
................
9.1
3.0
1.26/9.50
1.42/9.50
1.60/8.50
TABLE VI.5—COMMERCIAL CLOTHES WASHERS, FRONT-LOADING, MULTI-FAMILY APPLICATION: LIFE-CYCLE COST AND
PAYBACK PERIOD RESULTS
Life-cycle cost
TSL
MEF/WF
Baseline .....................................................
1 ................................................................
2, 3 ............................................................
4 ................................................................
5 ................................................................
Life-cycle cost savings
Payback period
years
Customers with
Average
installed
price
$
Average
operating
cost
$
Average
LCC $
Average
savings
$
Net cost
%
No
impact
%
Net
benefit
%
Median
Average
1,365
1,365
1,388
1,428
1,470
2,855
2,855
2,726
2,302
2,168
4,220
4,091
3,690
3,596
3,484
................
4.7
19.5
91.5
202.7
................
0.0
0.0
1.4
1.1
................
96.3
96.3
23.1
0.0
................
3.7
3.7
75.5
98.9
................
0.0
0.4
3.0
2.9
................
0.0
0.4
3.2
3.1
1.72/8.00
1.80/7.50
2.00/5.50
2.20/5.10
2.35/4.40
TABLE VI.6—COMMERCIAL CLOTHES WASHERS, FRONT-LOADING, LAUNDROMAT APPLICATION: LIFE-CYCLE COST AND
PAYBACK PERIOD RESULTS
Life-cycle cost
TSL
MEF/WF
Baseline .....................................................
1 ................................................................
2, 3 ............................................................
4 ................................................................
5 ................................................................
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Using the LCC spreadsheet model,
DOE estimated the impact of the
considered TSLs on the following CCW
customer subgroups: (1) Small business
owners, and (2) customers without
municipal water and sewer.
For customers without municipal
water and sewer, the LCC impacts and
PBPs are similar to the LCC impacts and
PBPs for the full sample of CCW
customers. But for small business
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Payback period
years
Customers with
Average
installed
price
$
Average
operating
cost
$
Average
LCC $
Average
savings
$
Net cost
%
No
impact
%
Net
benefit
%
Median
Average
1,365
1,365
1,388
1,428
1,470
2,014
3,014
2,874
2,400
2,267
4,380
4,240
3,787
3,695
3,572
................
5.2
22.0
93.4
216.1
................
0.0
0.0
0.0
0.0
................
96.3
96.3
23.1
0.0
................
3.7
3.7
76.9
100.0
................
0.0
0.2
1.8
1.6
................
0.0
0.2
1.9
1.7
1.72/8.00
1.80/7.50
2.00/5.50
2.20/5.10
2.35/4.40
b. Commercial Consumer Subgroup
Analysis
Life-cycle cost savings
owners (small multi-family property
owners and small laundromats), the
LCC impacts and PBPs are different
from those associated with the general
population.
For the top-loading equipment class,
Table VI.7 shows the LCC impacts and
PBPs for small multi-family property
owners and small laundromats, while
Table VI.8 shows the same for the frontloading equipment class. For all TSLs
for both equipment classes, both sets of
small business owners, on average,
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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
equipment classes, a larger percentage
of the general population benefits from
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standards than do 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.
TABLE VI.7—COMMERCIAL CLOTHES WASHERS, TOP-LOADING: LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR
SMALL BUSINESS OWNERS
Life-cycle cost
TSL
MEF/WF
Average
installed
price
$
Average
operating
cost
$
Life-cycle cost savings
Payback period
years
Households with
Average
LCC
$
Average
savings
$
Net cost
$
No
impact
%
Net
benefit
%
Median
Average
................
50.7
21.2
................
35.6
1.5
................
13.7
77.4
................
11.7
4.5
................
17.7
5.6
................
58.6
5.6
................
35.6
1.5
................
5.8
92.9
................
7.8
2.8
................
9.2
3.0
Multi-Family Application
Baseline .....................................................
1, 2 ............................................................
3, 4, 5 ........................................................
1.26/9.50
1.42/9.50
1.60/8.50
760
883
974
2,659
2,569
2,341
3,419
3,452
3,315
................
(22.0)
112.6
Laundromat Application
Baseline .....................................................
1, 2 ............................................................
3, 4, 5 ........................................................
1.26/9.50
1.42/9.50
1.60/8.50
760
883
974
2,963
2,880
2,620
3,723
3,764
3,594
................
(26.1)
140.9
Note: Numbers in parentheses indicate negative values.
TABLE VI.8—COMMERCIAL CLOTHES WASHERS, FRONT-LOADING: LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR
SMALL BUSINESS OWNERS
Life-cycle cost
TSL
MEF/WF
Average
installed
price
$
Average
operating
cost
%
Life-cycle cost savings
Payback period
years
Households with
Average
LCC
$
Average
savings
$
Net cost
%
No
impact
%
Net
benefit
%
Median
Average
................
0.0
0.0
4.1
4.2
................
96.4
96.4
22.2
0.0
................
3.6
3.6
73.7
95.8
................
0.0
0.4
3.0
2.9
................
0.0
0.5
3.2
3.1
................
0.0
0.0
0.0
0.0
................
96.4
96.4
22.2
0.0
................
3.6
3.6
77.7
100.0
................
0.0
0.2
1.8
1.6
................
0.0
0.2
1.9
1.7
Multi-Family Application
Baseline .....................................................
1 ................................................................
2, 3 ............................................................
4 ................................................................
5 ................................................................
1.72/8.00
1.80/7.50
2.00/5.50
2.20/5.10
2.35/4.40
1,365
1,365
1,388
1,428
1,470
2,327
2,327
2,222
1,877
1,768
3,693
3,587
3,265
3,196
3,113
................
3.7
14.9
69.1
151.7
Laundromat Application
Baseline .....................................................
1 ................................................................
2, 3 ............................................................
4 ................................................................
5 ................................................................
1.72/8.00
1.80/7.50
2.00/5.50
2.20/5.10
2.35/4.40
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
less than three times the value of the
1,365
1,365
1,388
1,428
1,470
1,643
2,611
2,490
2,079
1,964
3,977
3,855
3,467
3,392
3,291
................
4.2
17.6
75.9
176.4
first-year energy savings resulting from
the standard. (42 U.S.C.
6295(o)(2)(B)(iii)) DOE calculated a
rebuttable-presumption PBP for each
TSL to determine whether DOE could
presume that a standard at that level is
economically justified. Table VI.9 shows
the rebuttable-presumption PBPs for
CCWs. As required by EPCA, DOE based
the 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 PBPs, for each TSL.
TABLE VI.9—REBUTTABLE-PRESUMPTION PAYBACK PERIODS FOR COMMERCIAL CLOTHES WASHERS
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Payback period, years
Top-loading
TSL
Multi-family
application
1 ...............................................................................................
2 ...............................................................................................
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>100
>100
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>100
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Laundromat
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0
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TABLE VI.9—REBUTTABLE-PRESUMPTION PAYBACK PERIODS FOR COMMERCIAL CLOTHES WASHERS—Continued
Payback period, years
Top-loading
TSL
Multi-family
application
3 ...............................................................................................
4 ...............................................................................................
5 ...............................................................................................
With the exception of TSLs 1 to 3 for
front-loading CCWs, the TSLs in Table
VI.9 do not have rebuttable-presumption
PBPs of less than 3 years. As stated
above, in addition to calculating the
rebuttable-presumption PBP 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 IV.D provides a
complete discussion of how DOE
considered the range of impacts to select
the standards in today’s final rule.
2. Economic Impacts on Manufacturers
For the November 2009 SNOPR, DOE
used the INPV in the MIA to compare
the financial impacts of different TSLs
on CCW manufacturers. 74 FR 57738,
57773–76 (Nov. 9, 2009). 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
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
Front-loading
Lauundromat
application
24.0
24.0
24.0
Multi-family
application
>100
>100
>100
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 final rule notice, DOE continues
to use the above methodology and
presents the results in the subsequent
sections. See chapter 13 of the TSD for
additional information on MIA
methodology and results.
a. Industry Cash-Flow Analysis Results
Using scenarios based on two
shipment projections from the NIA,
DOE estimated the impact of amended
energy conservation standards for CCWs
on the INPV of the CCW industry. The
impact consists of the difference
between INPV in the base case and
INPV in the standards case. INPV is the
primary metric used in the MIA, and
represents one measure of the fair value
of the industry in today’s dollars. DOE
calculated the INPV by summing all of
the net cash flows, discounted at the
CCW industry’s cost of capital or
discount rate.
As discussed in section IV.G of
today’s final rule, 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
$5.3 million. Because DOE discounts
the industry cash flows to the 2009 base
year, DOE estimates that approximately
$1.6 million of the total benefit from the
tax credits will occur during the
Laundromat
application
1.2
9.4
10.0
1.3
17.3
17.6
analysis period. In the scenario that
considers the benefits of the tax credits,
the base case INPV increases by
approximately $1.6 million. As
previously stated, although the basecase 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.
Also discussed in section IV.G of
today’s final rule, DOE incorporated a
sensitivity analysis from the NIA that
impacts shipments in the MIA. The
methodology and subsequent INPV
results from the sensitivity analysis are
found in appendix 11C of the TSD.
To assess the lower end of the range
of potential impacts for the CCW
industry, DOE considered a scenario
wherein unit shipments will not be
impacted regardless of new 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
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
to maintain the same gross margins (as
a percentage of revenues) that are
currently obtained in the base case.
Table VI.10 through Table VI.11 show
the changes in INPV that DOE estimates
would result from the TSLs DOE
considered for this final rule.
rmajette on DSK29S0YB1PROD with RULES2
TABLE VI.10—MANUFACTURER IMPACT ANALYSIS FOR COMMERCIAL CLOTHES WASHERS WITH BASE-CASE SHIPMENTS.
NOT INCLUDING DOE’S ESTIMATES OF FEDERAL PRODUCTION TAX CREDITS
[Preservation of gross margin percentage markup with base-case shipments]
Base
case
Units
INPV ................................................................
Change in INPV ..............................................
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2008$ millions* ...........
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................
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Trial standard level
1
2
65
4
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57
(5)
5
54
(8)
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TABLE VI.10—MANUFACTURER IMPACT ANALYSIS FOR COMMERCIAL CLOTHES WASHERS WITH BASE-CASE SHIPMENTS.
NOT INCLUDING DOE’S ESTIMATES OF FEDERAL PRODUCTION TAX CREDITS—Continued
[Preservation of gross margin percentage markup with base-case shipments]
Base
case
Units
Amended Energy Conservation Standards
Equipment Conversion Expenses.
Amended Energy Conservation Standards
Capital Investments.
Total Investment Required ..............................
Trial standard level
1
2
3
4
5
% ................................
2008$ millions ............
................
................
5.97
0.00
2.24
3.12
¥7.81
18.72
¥12.73
22.56
¥33.09
35.87
2008$ millions ............
................
0.00
0.62
1.66
2.44
5.09
2008$ millions ............
................
0.0
3.7
20.4
25.0
41.0
* Parentheses indicate negative (¥) values.
TABLE VI.11—MANUFACTURER IMPACT ANALYSIS FOR COMMERCIAL CLOTHES WASHERS WITH BASE-CASE SHIPMENTS.
PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP WITH BASE-CASE SHIPMENTS
[Not including DOE’s estimates of Federal production tax credits]
Base
case
Units
INPV ................................................................
Change in INPV ..............................................
Amended Energy Conservation Standards
Equipment Conversion Expenses.
Amended Energy Conservation Standards
Capital Investments.
Total Investment Required ..............................
Trial standard level
1
2
3
4
5
2008$ millions ............
2008$ millions* ...........
% ................................
2008$ millions ............
62
................
................
................
64
2.8
4.50
0.00
62
0.5
0.76
3.12
55
(7.0)
¥11.39
18.72
51
(10.2)
¥16.57
22.56
39
(23.0)
¥37.30
35.87
2008$ millions ............
................
0.00
0.62
1.66
2.44
5.09
2008$ millions ............
................
0.0
3.7
20.4
25.0
41.0
* Parentheses indicate negative (¥) values.
The November 2009 SNOPR discusses
the estimated impact of amended CCW
standards on INPV for each equipment
class. 74 FR 57738, 57775–76 (Nov. 9,
2009). See chapter 13 of the TSD for
details.
b. Cumulative Regulatory Burden
While any one regulation may not
impose a significant burden on
manufacturers, the combined effects of
several regulations may have serious
consequences for some manufacturers,
groups of manufacturers, or an entire
industry. Assessing the impact of a
single regulation may overlook this
cumulative regulatory burden.
DOE recognizes that each regulation
can significantly affect manufacturers’
financial operations. Multiple
regulations affecting the same
manufacturer can reduce manufacturers’
profits and possibly cause
manufacturers to exit from the market.
DOE did not identify any additional
DOE regulations that would affect the
manufacturers of CCW apart from the
ones discussed in the October 2008
NOPR. 73 FR 62034, 62104 (Oct. 17,
2008). These included other DOE
regulations, State regulations, and
international standards. For further
information about the cumulative
regulatory burden on the CCW industry,
see chapter 13 of the TSD.
c. 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 38 (2006
ASM) and 2006 Current Industry
Report 39 (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.
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 final rule estimates the impacts
on U.S. production workers in the CCW
industry impacted by energy
conservation standards as shown in
Table VI.12.
TABLE VI.12—CHANGE IN TOTAL NUMBER OF DOMESTIC PRODUCTION EMPLOYEES IN 2013 IN THE COMMERCIAL
CLOTHES WASHER INDUSTRY
rmajette on DSK29S0YB1PROD with RULES2
Baseline
Total Number of Domestic Production Workers in 2013 .............................................
Change in Total Number of Domestic Production Workers in 2013 ...........................
38 The 2006 Annual Survey of Manufactures is
available online at: https://www.census.gov/mcd/
asmhome.html.
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TSL 2
TSL 3
TSL 4
TSL 5
188
................
204
16
204
16
222
33
224
36
228
40
39 The 2006 Current Industry Report is available
online at: https://www.census.gov/cir/www/
alpha.html.
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The November 2009 SNOPR
discussed the estimated impacts of
amended CCW standards on
manufacturing employment. 74 FR
57738, 57776–77 (Nov. 9, 2009). A
further discussion of the potential
impacts of amended energy
conservation standards on
manufacturing employment for the CCW
industry at each TSLs are presented in
chapter 13 of the TSD.
d. Impacts on Manufacturing Capacity
According to the majority of CCW
manufacturers, amended energy
conservation standards could
potentially impact manufacturers’
production capacity depending on the
efficiency level required. For today’s
final rule, DOE continues to believe
manufacturers will be able to maintain
manufacturing capacity levels and
continue to meet market demand under
amended energy conservation standards
as long as manufacturers can continue
to offer top-loading and front-loading
CCWs.
As stated in the November 2009
SNOPR, a very high efficiency standard
for top-loading CCWs could potentially
cause one or more manufacturer(s) to
abandon further manufacture of toploading CCWs after the compliance date
(due to concerns about wash quality, for
example). Instead of manufacturing toploading CCWs, manufacturers could
elect to switch their entire production
over to front-loading CCWs. Since toploading and front-loading CCWs share
few, if any parts, are built on completely
separate assembly lines, and are built at
very different production volumes, a
manufacturer may not be able to make
a platform switch from top-loading to
front-loading CCWs without significant
impacts on equipment development and
capital expenses, along with capacity
constraints. 74 FR 57738, 57777 (Nov. 9,
2009). However, for today’s final rule,
DOE estimates that the energy
conservation standard in today’s final
rule for top-loading CCWs mitigates that
risk.
As reported in the November 2009
SNOPR, multiple manufacturers stated
during interviews that front-loading
CCWs represent a relatively small
segment of their total production
volumes. Depending on the
manufacturer, front-loading production
capacity may need to be substantially
expanded to meet the demand that toploading 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 front-loading 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. 74 FR
57738, 57777 (Nov. 9, 2009). DOE
research continues to suggest that the
energy conservation standards in
today’s final rule 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.
A further discussion of the potential
impacts of amended energy
conservation standards on
manufacturing capacity for the CCW
industry is presented in chapter 13 of
the TSD.
e. Impacts on Subgroups of
Manufacturers
As discussed in the November 2009
SNOPR, 74 FR 57738, 57777 (Nov. 9,
2009), DOE evaluated the impacts of
amended energy conservation standards
on subgroups of manufacturers. As
outlined earlier, an LVM that
concentrates on building laundry
equipment will be affected
disproportionately by any energy
efficiency regulation regarding CCWs.
The LVM’s business is focused mostly
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, the LVM
is at greater risk of material harm to its
business due to any regulation that
affects commercial laundry products
than its competitors, regardless of the
TSL chosen.
For today’s final rule, DOE
reevaluated the CCW energy
conservation standards proposed in the
November 2009 SNOPR in response to
comments received from interested
parties. DOE continues to believe that
the energy conservation standards
adopted in today’s final rule greatly
lessen 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.
3. National Impact Analysis
a. Amount and Significance of Energy
Savings
To estimate the energy savings
through 2043 that would be expected to
result from amended CCW energy
conservation standards, DOE compared
the projected energy consumption of
CCWs under the base case to energy
consumption of this equipment under
each of the considered TSLs. The energy
consumption calculated in the NIA
takes into account energy losses in the
generation and transmission of
electricity as discussed in section VI.B.
Table VI.13 and Table VI.14 show the
forecasted national energy and water
savings at each TSL for top-loading and
front-loading CCWs, respectively. In
addition to undiscounted savings, the
tables show the magnitude of the
estimated energy and water savings if
the savings are discounted at 7-percent
and 3-percent discount rates. Each TSL
considered in this rulemaking would
result in significant energy and water
savings, and the amount of savings
increases with higher energy
conservation standards. See chapter 11
of the TSD for details of the NIA.
TABLE VI.13—SUMMARY OF CUMULATIVE NATIONAL ENERGY AND WATER SAVINGS FOR TOP-LOADING COMMERCIAL
CLOTHES WASHERS (2013 TO 2043)
Undiscounted
rmajette on DSK29S0YB1PROD with RULES2
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1
2
3
4
5
National energy savings,
quads
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
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savings, trillion
gallons
0.04
0.04
0.10
0.10
0.10
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Frm 00045
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quads
0.00
0.00
0.14
0.14
0.14
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National water
savings, trillion
gallons
0.02
0.02
0.05
0.05
0.05
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0.00
0.00
0.08
0.08
0.08
08JAR2
National energy savings,
quads
0.01
0.01
0.03
0.03
0.03
National water
savings, trillion
gallons
0.00
0.00
0.04
0.04
0.04
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TABLE VI.14—CUMULATIVE NATIONAL ENERGY AND WATER SAVINGS FOR FRONT-LOADING COMMERCIAL CLOTHES
WASHERS (2013 TO 2043)
Undiscounted
Trial standard level
1
2
3
4
5
National energy savings,
quads
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
National water
savings, trillion
gallons
0.00
0.00
0.00
0.01
0.02
b. Net Present Value of Customer Costs
and Benefits
The NPV of customer costs and
benefits is a measure of the cumulative
impact of energy conservation
standards. In accordance with the
OMB’s guidelines on regulatory analysis
(OMB Circular A–4, section E, Sept. 17,
2003), DOE calculated an estimated
NPV using both a 7-percent and a 3percent real discount rate. The 7-percent
rate is an estimate of the average beforetax rate of return on private capital in
the U.S. economy, and reflects the
3% Discounted
National energy savings,
quads
0.00
0.01
0.01
0.03
0.07
7% Discounted
National water
savings, trillion
gallons
0.00
0.00
0.00
0.01
0.01
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 reduced amounts of energy).
This rate represents the rate at which
society discounts future consumption
flows to their present value. This rate
National energy savings,
quads
0.00
0.00
0.00
0.01
0.04
National water
savings, trillion
gallons
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.01
0.02
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 VI.15 shows the forecasted NPV
at each TSL for CCWs. At both 7-percent
and 3-percent discount rates, TSLs 1
through 5 show positive cumulative
NPVs. The highest NPV is provided by
TSL 5: $0.51 billion with 7-percent
discount rate, and $1.25 billion with 3percent discount rate.
TABLE VI.15—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR COMMERCIAL CLOTHES WASHERS (IMPACTS FOR
UNITS SOLD FROM 2013 TO 2043)
NPV, billion 2008$
Top-loading
TSL
7% Discount
rate
1
2
3
4
5
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
rmajette on DSK29S0YB1PROD with RULES2
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 CCWs to
reduce energy bills for commercial
customers, with the resulting net
savings being redirected to other forms
of economic activity. The impacts
concern a variety of businesses not
directly involved in the decision to
make, operate, or pay the utility bills for
CCWs. Thus, they are ‘‘indirect.’’
To estimate these indirect
employment impacts, DOE used an
input/output model of the U.S. economy
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3% Discount
rate
0.01
0.01
0.34
0.34
0.34
c. Impacts on Employment
Front-loading
7% Discount
rate
0.07
0.07
0.86
0.86
0.86
PO 00000
3% Discount
rate
0.00
0.01
0.01
0.07
0.17
using BLS data (described in section
IV.H). In this input/output model, the
spending of the money saved on utility
bills when more efficient CCWs are
deployed is centered in economic
sectors that create more jobs than are
lost in electric utilities when spending
is shifted from electricity to other
products and services. As Table VI.16
shows, DOE estimates that net indirect
employment impacts from the
considered TSLs are likely to be very
small. Furthermore, neither the BLS
data nor the input/output model DOE
uses include the quality or wage level of
the jobs.
Total
7% Discount
rate
0.01
0.03
0.03
0.17
0.39
0.01
0.02
0.36
0.41
0.51
3% Discount
rate
0.08
0.10
0.89
1.03
1.25
TABLE VI.16—NET NATIONAL INDIRECT
EMPLOYMENT IMPACTS UNDER COMMERCIAL CLOTHES WASHER TSLS
TSL
1
2
3
4
5
............................................
............................................
............................................
............................................
............................................
Net national
change in jobs
in 2043, thousands
0.07
0.08
0.46
0.52
0.62
4. Impact on Utility or Performance of
Equipment
As indicated in section II.G.1.d of the
November 2009 SNOPR, the amended
standards DOE is adopting today will
not lessen the utility or performance of
equipment under consideration in this
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Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules and Regulations
rulemaking. 74 FR 57738, 57745 (Nov.
9, 2009).
5. Impact of Any Lessening of
Competition
As discussed in the November 2009
SNOPR, 74 FR 57738, 57779 (Nov. 9,
2009), and in section III.D.1.e of this
preamble, DOE considers any lessening
of competition likely to result from
standards. The Attorney General
determines the impact, if any, of any
lessening of competition.
DOE carefully considered the
determination received from DOJ in
response to the October 2008 NOPR,
and accordingly chose efficiency levels
for the November 2009 SNOPR that
appear achievable by all CCW
manufacturers using existing equipment
platforms and technologies. As such,
DOE stated that there should be
minimal impact on the CCW market and
hence its manufacturers. To assist the
Attorney General in making a
determination for the November 2009
SNOPR, DOE provided DOJ with copies
of the supplemental notice and the TSD
for review. The DOJ did not provide a
response to the November 2009 SNOPR.
Therefore, DOE considers the impact of
any lessening of competition for today’s
final rule based, in part, on the Attorney
General’s earlier response, which is
reprinted at the end of today’s
rulemaking.
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, potentially
reducing the Nation’s reliance on
foreign sources of energy. Reduced
electricity demand would also likely
improve the reliability of the electricity
system, particularly during peak-load
periods. 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.
The energy savings from the standards
for CCWs also produce environmental
benefits in the form of reduced
emissions of air pollutants and
greenhouse gases associated with energy
production, and with use of fossil fuels
at sites where CCWs are used. Table
VI.17 provides DOE’s estimate of
cumulative CO2, NOX, and Hg emissions
reductions that would result from the
TSLs considered in this rulemaking. In
the environmental assessment (chapter
16 of the TSD), DOE reports estimated
annual changes in CO2, NOX, and Hg
emissions attributable to each TSL.
TABLE VI.17—CUMULATIVE EMISSIONS REDUCTIONS UNDER COMMERCIAL CLOTHES WASHER TSLS (IN 2013 TO 2043)
TSL
Emissions
1
CO2, Mt ....................................................................................................
NOX, kt .....................................................................................................
Hg, t .........................................................................................................
2
3
4
5
2.36
1.43
0.0002
2.39
1.45
0.0002
5.07
3.04
0.0003
5.66
3.39
0.0004
6.11
3.66
0.0004
Mt = million metric tons.
kt = thousand metric tons.
t = metric tons.
As discussed in section IV.J of this
final rule, DOE does not report SO2
emissions reductions from power plants
because there is uncertainty about the
effect of energy conservation standards
on the overall level of SO2 emissions in
the United States due to SO2 emissions
caps. DOE also did not include NOX
emissions reduction from power plants
in States subject to CAIR because an
energy conservation standard would
likely not affect the overall level of NOX
emissions in those States due to the
emissions caps mandated by CAIR.
Table VI.18 presents the estimated
wastewater discharge reductions due to
the TSLs for CCWs. In chapter 16 of the
TSD, DOE reports annual changes in
wastewater discharge attributable to
each TSL.
TABLE VI.18—CUMULATIVE WASTEWATER DISCHARGE REDUCTIONS UNDER COMMERCIAL CLOTHES WASHER TRIAL
STANDARD LEVELS
[For 2013ƒ2043]
TSL
1
rmajette on DSK29S0YB1PROD with RULES2
Wastewater Discharge Reduction, trillion gallons ...............
As discussed in section IV.J of this
final rule, DOE estimated the
cumulative monetary value of the
economic benefits associated with CO2
emissions reductions expected to result
from amended standards for CCWs. In
considering the potential global benefits
resulting from reduced CO2 emissions,
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2
3
4
5
0.00
0.01
0.14
0.16
0.21
DOE used values based on a social cost
of carbon of approximately $5, $10, $20,
$34 and $56 per metric ton avoided in
2007 (values expressed in 2008$). DOE
also calculated the domestic benefits
based on a value of approximately $1
per metric ton avoided in 2007. To
value the CO2 emissions reductions
PO 00000
Frm 00047
Fmt 4701
Sfmt 4700
expected to result from amended
standards for CCWs in 2013–2043, DOE
escalated the above values for 2007
using a 3-percent escalation rate. Table
VI.19 and Table VI.20 present the
cumulative monetary value for each TSL
using 7-percent and 3-percent discount
rates, respectively.
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TABLE VI.19—ESTIMATES OF VALUE OF CO2 EMISSIONS REDUCTIONS UNDER COMMERCIAL CLOTHES WASHER TRIAL
STANDARD LEVELS AT 7-PERCENT DISCOUNT RATE
Value of CO2 emission reductions, million 2008$ *
Estimated
cumulative
CO2 emission reductions, Mt
TSL
1
2
3
4
5
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
Domestic
Global
CO2 Value
$1/metric
ton CO2
2.36
2.39
5.07
5.66
6.11
CO2 Value
$5/metric
ton CO2
1
1
3
3
3
CO2 Value
$20/metric
ton CO2
CO2 Value
$10/metric
ton CO2
6
6
13
14
15
12
12
25
28
31
CO2 Value
$34/metric
ton CO2
22
23
48
54
58
CO2 Value
$56/metric
ton CO2
39
40
84
93
101
65
66
140
156
168
* Unit values are approximate and are based on escalating 2007$ to 2008$ for consistency with other values presented in this notice.
TABLE VI.20—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
1
2
3
4
5
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
Domestic
Global
CO2 Value
$1/metric
ton CO2
2.36
2.39
5.07
5.66
6.11
CO2 Value
$5/metric
ton CO2
3
3
6
7
8
CO2 Value
$10/metric
ton CO2
13
13
28
31
33
CO2 Value
$20/metric
ton CO2
26
26
55
61
66
CO2 Value
$34/metric
ton CO2
49
49
105
117
126
CO2 Value
$56/metric
ton CO2
84
86
182
202
219
141
143
303
337
364
* Unit values are approximate and are based on escalating 2007$ to 2008$ for consistency with other values presented in this notice.
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
reducing CO2 emissions is subject to
change. DOE, together with other
Federal agencies, will continue to
review various methodologies for
estimating the monetary value of
reductions in CO2 and other GHG
emissions. This ongoing review will
consider the comments on this subject
that are part of the public record for this
and other rulemakings, as well as other
methodological assumptions and issues.
However, consistent with DOE’s legal
obligations, and taking into account the
uncertainty involved with this
particular issue, DOE has included in
this rule the most recent values and
analyses resulting from the ongoing
interagency review process.
DOE also estimated a range for the
cumulative monetary value of the
economic benefits associated with NOX
and Hg emissions reductions
anticipated to result from amended
standards for CCWs. The dollar per ton
values that DOE used are discussed in
section IV.J of this final rule. Table
VI.21 and Table VI.22 present the
estimates calculated using 7-percent and
3-percent discount rates, respectively.
TABLE VI.21—ESTIMATES OF VALUE OF REDUCTIONS OF NOX AND HG EMISSIONS UNDER COMMERCIAL CLOTHES
WASHER TRIAL STANDARD LEVELS AT A 7-PERCENT DISCOUNT RATE
Commercial clothes washer TSL
rmajette on DSK29S0YB1PROD with RULES2
1
2
3
4
5
Cumulative NOX
emission reductions, kt
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
1.43
1.45
3.04
3.39
3.66
Value of 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
Cumulative Hg
emission reductions, t
........................................
........................................
........................................
........................................
........................................
0.0002
0.0002
0.0003
0.0004
0.0004
Value of Hg emission
reductions, million
2008$
0.00
0.00
0.00
0.00
0.00
to
to
to
to
to
0.03.
0.03.
0.06.
0.07.
0.08.
TABLE VI.22—ESTIMATES OF VALUE OF REDUCTIONS OF NOX AND HG EMISSIONS UNDER COMMERCIAL CLOTHES
WASHER TRIAL STANDARD LEVELS AT A 3-PERCENT DISCOUNT RATE
Commercial clothes washer TSL
Cumulative NOX
emission reductions, kt
1 ..........................................................
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1.43
PO 00000
Value of NOX emission reductions,
million 2008$
Cumulative Hg
emission reductions, t
0.38 to 3.92 ........................................
Frm 00048
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E:\FR\FM\08JAR2.SGM
0.0002
08JAR2
Value of Hg emission
reductions, million
2008$
0.00 to 0.03.
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Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules and Regulations
TABLE VI.22—ESTIMATES OF VALUE OF REDUCTIONS OF NOX AND HG EMISSIONS UNDER COMMERCIAL CLOTHES
WASHER TRIAL STANDARD LEVELS AT A 3-PERCENT DISCOUNT RATE—Continued
Commercial clothes washer TSL
2
3
4
5
Cumulative NOX
emission reductions, kt
..........................................................
..........................................................
..........................................................
..........................................................
1.45
3.04
3.39
3.66
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 VI.23 presents the
NPV values for CCWs that would result
if DOE were to add the low-end and
high-end 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-percent and 3-percent discount
rate. For CO2, only the low and high
Cumulative Hg
emission reductions, t
Value of NOX emission reductions,
million 2008$
0.39
0.81
0.91
0.98
to
to
to
to
3.98 ........................................
8.36 ........................................
9.31 ........................................
10.04 ......................................
global benefit values are used for these
tables ($5 and $56 in 2008$).
Although adding 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 emissions
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
0.0002
0.0003
0.0004
0.0004
Value of Hg emission
reductions, million
2008$
0.00
0.00
0.00
0.00
to
to
to
to
0.03.
0.06.
0.07.
0.07.
and emission-related benefits are
performed with different computer
models, leading to different time frames
for the analyses. For CCWs, the present
value of national consumer savings is
measured for the period in which units
shipped from 2013 to 2043 continue to
operate. However, the time frames of the
benefits associated with the emission
reductions differ. For example, the
value of CO2 emissions reductions is
meant to reflect the present value of all
future climate-related impacts, even
those beyond 2065.
TABLE VI.23—ESTIMATES OF ADDING NPV OF CONSUMER SAVINGS TO NPV OF LOW- AND HIGH-END GLOBAL MONETIZED BENEFITS FROM CO2, NOX, AND HG EMISSIONS REDUCTIONS AT ALL TSLS FOR COMMERCIAL CLOTHES
WASHERS
CO2 Value of
$5/metric ton
CO2 * and low
values for NOX
and Hg ** billion
2008$
TSL
1
2
3
4
5
...............................................................................................................
...............................................................................................................
...............................................................................................................
...............................................................................................................
...............................................................................................................
CO2 Value of $56/metric ton CO2 * and high values
for NOX and Hg *** billion 2008$
7-percent
discount rate
3-percent
discount rate
7-percent
discount rate
0.09
0.11
0.92
1.06
1.28
0.08
0.09
0.50
0.57
0.68
0.22
0.25
1.20
1.38
1.62
0.02
0.03
0.37
0.42
0.53
* These values per ton represent the global negative externalities of CO2.
** Low Values correspond to $442 per ton of NOX emissions and $0.745 million per ton of Hg emissions.
*** High Values correspond to $4,540 per ton of NOX emissions and $33.3 million per ton of Hg emissions.
7. Other Factors
EPCA allows the Secretary of Energy,
in determining whether a standard is
economically justified, to consider any
other factors that the Secretary deems to
be relevant. (42 U.S.C.
6295(o)(2)(B)(i)(VII) and 6316(a)) In
adopting today’s amended standards,
the Secretary found no relevant factors
other than those identified elsewhere in
today’s final rule.
rmajette on DSK29S0YB1PROD with RULES2
D. Conclusion
EPCA contains criteria for prescribing
new or amended energy conservation
standards. It provides that any such
standard for CCWs must be designed to
achieve the maximum improvement in
energy efficiency that the Secretary
determines is technologically feasible
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Jkt 220001
and economically justified. (42 U.S.C.
6295(o)(2)(A) and 42 U.S.C. 6316(a)) As
stated above, in determining whether a
standard is economically justified, the
Secretary must determine whether the
benefits of the standards exceed its
burdens considering the seven factors
discussed in section II.B. A
determination of whether a standard
level is economically justified is not
made based on any one of these factors
in isolation. The Secretary must weigh
each of these seven factors in total in
determining whether a standard is
economically justified. Further, the
Secretary may not establish an amended
standard if such standard would not
result in ‘‘significant conservation of
energy,’’ or ‘‘is not technologically
feasible or economically justified.’’ (42
PO 00000
Frm 00049
Fmt 4701
Sfmt 4700
U.S.C. 6295(o)(3)(B) and 42 U.S.C.
6316(a))
In selecting today’s energy
conservation standards for CCWs, 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
identified an economically justified
TSL.
To aid the reader in understanding
the benefits and/or burdens of each TSL,
Table VI.24 summarizes the quantitative
analytical results for each TSL, based on
the assumptions and methodology
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Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules and Regulations
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 standard levels for the
equipment that is the subject of this
rulemaking reflect DOE’s careful
balancing of the relevant statutory
factors under EPCA.
TABLE VI.24—SUMMARY OF RESULTS FOR COMMERCIAL CLOTHES WASHERS
rmajette on DSK29S0YB1PROD with RULES2
Category
TSL 1
Primary Energy Saved, quads ...................................
7% Discount Rate ...............................................
3% Discount Rate ...............................................
Primary Water Saved, trillion gallons ........................
7% Discount Rate ...............................................
3% Discount Rate ...............................................
Generation Capacity Reduction, gigawatts ** ............
NPV of Customer Benefit, 2008$ billion:
7% Discount Rate ...............................................
3% Discount Rate ...............................................
Industry Impacts:
Industry NPV, 2008$ million ...............................
Industry NPV, % change ....................................
Emissions Impacts: †
CO2, Mt ...............................................................
NOX, kt ...............................................................
Hg, t ....................................................................
Value of Emission Reductions:
CO2, 2008$ million:††
7% Discount Rate ........................................
3% Discount Rate ........................................
NOX, 2008$ million:
7% Discount Rate ........................................
3% Discount Rate ........................................
Hg, 2008$ million:
7% Discount Rate ........................................
3% Discount Rate ........................................
Wastewater Discharge Impacts, trillion gallons .........
Mean LCC Savings,* 2008$:
Top-Loading, Multi-Family ..................................
Top-Loading, Laundromat ..................................
Front-Loading, Multi-Family ................................
Front-Loading, Laundromat ................................
Median PBP, years:
Top-Loading, Multi-Family ..................................
Top-Loading, Laundromat ..................................
Front-Loading, Multi-Family ................................
Front-Loading, Laundromat ................................
LCC Customer Impacts:
Top-Loading:
Multi-Family:
Net Cost, % ..........................................
No Impact, % ........................................
Net Benefit, % ......................................
Laundromat:
Net Cost, % ..........................................
No Impact, % ........................................
Net Benefit, % ......................................
Front-Loading:
Multi-Family:
Net Cost, % ..........................................
No Impact, % ........................................
Net Benefit, % ......................................
Laundromat:
Net Cost, % ..........................................
No Impact, % ........................................
Net Benefit, % ......................................
TSL 2
TSL 3
TSL 4
TSL 5
0.04
0.01
0.02
0.00
0.00
0.00
0.005
0.04
0.01
0.02
0.01
0.00
0.00
0.005
0.10
0.03
0.06
0.14
0.04
0.08
0.010
0.11
0.03
0.06
0.16
0.04
0.09
0.011
0.12
0.03
0.07
0.21
0.06
0.11
0.012
0.01
0.08
0.02
0.10
0.36
0.89
0.41
1.03
0.51
1.25
4–3
6.0–4.5
1–0
2.2–0.8
(5)–(7)
(7.8)–(11.4)
(8)–(10)
(12.7)–(16.6)
(20)–(23)
(33.1)–(37.3)
2.36
1.43
0.0002
2.39
1.45
0.0002
5.07
3.04
0.0003
5.66
3.39
0.0004
6.11
3.66
0.0004
6–65
13–141
6–66
13–143
13–140
28–303
14–156
31–337
15–168
33–364
0.2–2.0
0.4–3.9
0.2–2.0
0.4–4.0
0.4–4.2
0.8–8.4
0.5–4.6
0.9–9.3
0.5–5.0
1.0–10.0
0.00–0.03
0.00–0.03
0.00
0.00–0.03
0.00–0.03
0.01
0.00–0.06
0.00–0.06
0.14
0.00–0.07
0.00–0.07
0.16
0.00–0.08
0.00–0.07
0.21
(8.1)
(17.7)
4.7
5.2
(8.1)
(17.7)
19.5
22.0
179
190
19.5
22.0
179
190
91
93
179
190
203
216
11.7
7.9
0.0
0.0
11.7
7.9
0.4
0.2
4.6
2.8
0.4
0.2
4.6
2.8
3.0
1.8
4.6
2.8
2.9
1.6
43.3
35.3
21.5
43.3
35.3
21.5
13.8
1.2
85.0
13.8
1.2
85.0
13.8
1.2
85.0
51.4
35.3
13.3
51.4
35.3
13.3
2.9
1.2
95.9
2.9
1.2
95.9
2.9
1.2
95.9
0.0
96.3
3.7
0.0
96.3
3.7
0.0
96.3
3.7
1.4
23.1
75.5
1.1
0.0
98.9
0.0
96.3
3.7
0.0
96.3
3.7
0.0
96.3
3.7
0.0
23.1
76.9
0.0
0.0
100.0
* Parentheses indicate negative (¥) values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Changes in installed generation capacity by 2043 based on AEO 2009 April Release Reference Case.
† Emissions impacts include physical reductions at power plants and at buildings where the appliance is being used.
†† Range of the economic value of CO2 reductions based on global estimates of the benefit of reduced CO2 emissions.
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First, DOE considered TSL 5, the maxtech level. TSL 5 would likely save 0.12
quads of energy and 0.21 trillion gallons
of water through 2043, an amount DOE
considers significant. DOE projects that
TSL 5 would result in a net increase of
$0.51 billion in NPV of customer
benefits using a discount rate of 7
percent, and of $1.25 billion using a
discount rate of 3 percent. The
emissions reductions at TSL 5 are 6.11
Mt of CO2, 3.66 kt of NOX, and 0.0004
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 customer
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 customers
that purchase top-loading CCWs—85
percent of customers in multi-family
applications and 96 percent of
customers in laundromats. The median
PBP of the average consumer at TSL 5
in multi-family 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 customers
that purchase front-loading CCWs—99
percent of customers in multi-family
applications and 100 percent of
customers in laundromats. The median
PBP 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.
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Although DOE recognizes the
increased economic benefits that could
result from TSL 5, DOE has concluded
that the benefits of a standard at TSL 5
would be outweighed by the potential
for disincentivizing customers 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 top-loading 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
customers of front-loading CCWs would
choose to purchase a less efficient toploading unit.
As described in section IV.E.2.c, DOE
did analyze the impacts of increased
purchase prices for each equipment
class, but considered each
independently of the other. Because the
price impacts for more efficient toploaders 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 did not have
sufficient data to estimate the crossprice elasticity of demand between the
two equipment classes to determine the
extent to which customers of frontloadings CCWs would switch to less
expensive top-loaders.
If potential front-loading CCW
customers 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, it
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 believes that the values in Table
VI.24 represent the high end of the
potential energy and water savings for
these TSLs. Taking into account crossprice 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
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maximum technologically feasible
levels.
After carefully considering the
analysis and weighing the benefits and
burdens of TSL 5, the Secretary has
reached the following conclusion: At
TSL 5, the benefits of energy savings,
economic benefit, and emissions
reductions would be outweighed by the
potential for giving customers 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. DOE projects that TSL 4
would result in a net increase of $0.41
billion in NPV of customer benefits
using a discount rate of 7 percent, and
of $1.03 billion using a discount rate of
3 percent. The emissions reductions at
TSL 4 are 5.66 Mt of CO2, 3.39 kt of
NOX, and 0.0004 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 3-percent 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 customers will
experience the same LCC impacts and
PBPs as TSL 5. At TSL 4 for frontloading 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 customers that purchase
front-loading CCWs—76 percent of
customers in multi-family applications
and 77 percent of customers in
laundromats. The median PBP of the
average consumer at TSL 4 in multifamily 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
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is so dependent on CCW sales, DOE is
concerned that TSL 4 will materially
harm the LVM.
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 customers 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 customers of frontloading CCWs would be more likely to
purchase a top-loading CCW, which is
less efficient. If potential front-loading
CCW customers 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 conclusion: At
TSL 4, the benefits of energy savings,
economic benefit, and emissions
reductions would be outweighed by the
potential for giving customers 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. DOE projects that TSL 3
would result in a net increase of $0.36
billion in NPV of customer benefits
using a discount rate of 7 percent, and
of $0.89 billion using a discount rate of
3 percent. The emissions reductions at
TSL 3 are 5.07 Mt of CO2, 3.04 kt of
NOX, and 0.0003 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 7-percent discount rate, and
$28 million to $303 million at a 3percent discount rate. Total generating
capacity in 2043 is estimated to
decrease compared to the reference case
by 0.010 GW under TSL 3.
At TSL 3, top-loading CCWs have the
same efficiency as at TSL 5. Therefore,
top-loading CCW customers would
experience the same LCC impacts and
PBPs as TSL 5. At TSL 3 for frontloading 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 customers that
do not already purchase front-loading
CCWs with an efficiency meeting TSL 3.
The median PBP 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. 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 customers 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.
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 customers 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 percentage of the front-loading
market is already 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 concluded that the benefits of
a TSL 3 standard outweigh the burdens.
In particular, the Secretary has
concluded that TSL 3 saves a significant
amount of energy and is technologically
feasible and economically justified.
Further, benefits from carbon dioxide
reductions (at a central value of $20)
would increase NPV by $48 million
(2008$) at a 7% discount rate and $105
million at a 3% discount rate. These
benefits from carbon dioxide emission
reductions, when considered in
conjunction with the consumer savings
NPV and other factors described above
support DOE’s conclusion that TSL 3 is
economically justified. Therefore, DOE
establishes TSL 3 as the energy
conservation standards for CCWs in this
final rule. Table VI.25 lists today’s
energy conservation standards for
CCWs. DOE’s amended energy
conservation standards for CCWs at TSL
3 reflect its 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.
TABLE VI.25—AMENDED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL CLOTHES WASHERS
Equipment class
Amended energy conservation standards
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Top-Loading ...........................................................................................................................
Front-Loading .........................................................................................................................
DOE also calculated the annualized
values for certain benefits and costs
under the considered TSLs. The
annualized values refer to consumer
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operating cost savings, consumer
incremental product and installation
costs, the quantity of emissions
reductions for CO2, NOX, and Hg, and
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1.60 Modified Energy Factor/8.5 Water Factor.
2.00 Modified Energy Factor/5.5 Water Factor.
the monetary value of CO2 emissions
reductions (using a value of $20/t CO2,
which is in the middle of the values
considered by DOE for valuing the
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potential global benefits resulting from
reduced CO2 emissions).
DOE used a two-step calculation
process to convert the time-series 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
3 or 7 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.
Table VI.26 presents the annualized
values for each TSL considered for
CCWs. The tables also present the
annualized net benefit resulting from
summing the two monetary benefits and
subtracting the consumer incremental
product and installation costs. Although
summing the value of operating savings
with the value of CO2 reductions
provides a valuable perspective, please
note the following. The operating cost
savings are domestic U.S. consumer
monetary savings found in market
transactions while the CO2 value is
based on an estimate of imputed
marginal SCC, which is meant to reflect
the global benefits of CO2 reductions. In
addition, the SCC value considers a
longer time frame than the period
considered for operating cost savings.
TABLE VI.26—ANNUALIZED BENEFITS AND COSTS FOR COMMERCIAL CLOTHES WASHERS BY TRIAL STANDARD LEVEL
TSL
Category
Primary estimate
(AEO reference
case)
Unit
7%
1 ..........
Low estimate
(AEO low
growth case)
High estimate
(high
growth case)
3%
7%
3%
7%
3%
15.32
0.07
0.044
0.000
2.73
11.25
0.07
0.041
0.000
2.35
13.46
0.07
0.044
0.000
2.73
14.63
0.07
0.041
0.000
2.35
17.70
0.07
0.044
0.000
2.73
11.06
10.67
10.19
12.01
11.65
6.99
2.93
6.01
4.97
8.79
16.79
0.07
0.045
0.000
2.77
12.43
0.07
0.042
0.000
2.38
14.86
0.07
0.045
0.000
2.77
15.90
0.07
0.042
0.000
2.38
19.23
0.07
0.045
0.000
2.77
11.11
10.72
10.23
12.06
11.70
8.45
4.09
7.40
6.22
10.30
72.82
0.16
0.094
0.001
5.88
54.87
0.14
0.087
0.001
5.05
65.33
0.16
0.094
0.001
5.88
66.59
0.14
0.087
0.001
5.05
80.43
0.16
0.094
0.001
5.88
22.67
21.85
20.87
24.61
23.87
Benefits
Monetized Operating Cost Savings ...
Quantified Emissions Reductions ......
Monetized Avoided CO2 Value (at
$20/t).
Million 2008$ ..........
CO2, Mt ..................
NOX, kt ..................
Hg, t .......................
Million 2008$ ..........
12.75
0.07
0.041
0.000
2.35
Costs
Monetized Incremental Product and
Installation Costs.
Million 2008$ .........
11.44
Net Benefits
Monetized Value ................................
Million 2008$ ..........
3.66
2 ..........
Benefits
Monetized Operating Cost Savings ...
Quantified Emissions Reductions ......
Monetized Avoided CO2 Value (at
$20/t).
Million 2008$ ..........
CO2, Mt ..................
NOX, kt ..................
Hg, t .......................
Million 2008$ ..........
13.98
0.07
0.042
0.000
2.38
Costs
Monetized Incremental Product and
Installation Costs.
Million 2008$ .........
11.49
Net Benefits
Monetized Value ................................
Million 2008$ ..........
4.87
3 ..........
Benefits
Monetized Operating Cost Savings ...
Quantified Emissions Reductions ......
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Monetized Avoided CO2 Value (at
$20/t).
Million 2008$ ..........
CO2, Mt ..................
NOX, kt ..................
Hg, t .......................
Million 2008$ ..........
60.62
0.14
0.087
0.001
5.05
Costs
Monetized Incremental Product and
Installation Costs.
Million 2008$ .........
23.44
Net Benefits
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TABLE VI.26—ANNUALIZED BENEFITS AND COSTS FOR COMMERCIAL CLOTHES WASHERS BY TRIAL STANDARD LEVEL—
Continued
TSL
Category
Primary estimate
(AEO reference
case)
Unit
Low estimate
(AEO low
growth case)
High estimate
(high
growth case)
7%
Monetized Value ................................
4 ..........
7%
3%
7%
3%
42.23
Million 2008$ ..........
3%
56.04
38.07
50.34
47.04
62.44
82.66
0.17
0.105
0.001
6.56
62.65
0.16
0.097
0.001
5.63
74.62
0.17
0.105
0.001
6.56
75.33
0.16
0.097
0.001
5.63
90.94
0.17
0.105
0.001
6.56
24.62
23.81
22.75
26.67
25.87
64.60
44.47
58.43
54.29
71.63
97.52
0.19
0.113
0.001
7.08
74.46
0.17
0.105
0.001
6.08
88.77
0.19
0.113
0.001
7.08
88.24
0.17
0.105
0.001
6.08
106.51
0.19
0.113
0.001
7.08
27.26
26.47
25.30
29.47
28.57
77.34
54.08
70.55
64.86
85.02
Benefits
Monetized Operating Cost Savings ...
Quantified Emissions Reductions ......
Monetized Avoided CO2 Value (at
$20/t).
Million 2008$ ..........
CO2, Mt ..................
NOX, kt ..................
Hg, t .......................
Million 2008$ ..........
68.83
0.16
0.097
0.001
5.63
Costs
Monetized Incremental Product and
Installation Costs.
Million 2008$ .........
25.45
Net Benefits
Monetized Value ................................
Million 2008$ ..........
49.01
5 ..........
Benefits
Monetized Operating Cost Savings ...
Quantified Emissions Reductions ......
Monetized Avoided CO2 Value (at
$20/t).
Million 2008$ ..........
CO2, Mt ..................
NOX, kt ..................
Hg, t .......................
Million 2008$ ..........
81.19
0.17
0.105
0.001
6.08
Costs
Monetized Incremental Product and
Installation Costs.
Million 2008$ .........
28.19
Net Benefits
Monetized Value ................................
VII. Procedural Issues and Regulatory
Review
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A. Review Under Executive Order 12866
Executive Order 12866 requires that
each agency identify in writing the
problem the agency intends to address
that warrants new agency action
(including, where applicable, the
failures of private markets or public
institutions), as well as assess the
significance of that problem to
determine whether any new regulation
is necessary. Executive Order 12866,
section 1(b)(1).
Because today’s regulatory action is a
‘‘significant regulatory action’’ under
section 3(f)(1) of Executive Order 12866,
section 6(a)(3) of the Executive Order
requires DOE to prepare and submit for
review to the Office of Information and
Regulatory Affairs (OIRA) in OMB an
assessment of the costs and benefits of
today’s rule. Accordingly, DOE
presented to the Office of Information
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Million 2008$ ..........
59.08
and Regulatory Affairs (OIRA) in the
Office of Management and Budget for
review the draft final rule and other
documents prepared for this
rulemaking, including a regulatory
impact analysis (RIA). These documents
are included in the rulemaking record
and 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) 586–2945, between 9 a.m.
and 4 p.m. Monday through Friday,
except Federal holidays.
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
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).
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DOE believes that there is a lack of
consumer information and/or
information processing capability about
energy efficiency opportunities in the
CCW market. If this is the case, DOE
would expect the energy efficiency for
CCWs to be randomly distributed across
key variables such as energy prices and
usage levels. DOE is not able to correlate
the consumer’s usage pattern and energy
price with the efficiency of the
purchased equipment, however. In the
October 2008 NOPR, DOE sought data
on the efficiency levels of existing
CCWs by how often they are used and
their associated energy prices (and/or
geographic regions of the country). 73
FR 62034, 62123 (Oct. 17, 2008). DOE
received no such data from interested
parties. Therefore, DOE was unable to
test for today’s final rule the extent to
which purchasers of CCWs behave as if
they lack information about the costs
associated with CCW energy
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consumption and/or the benefits of
more-efficient equipment.
In addition, this rulemaking addresses
the problem that certain external
benefits resulting from improved energy
efficiency of CCWs are not captured by
the users of such equipment and thus
may not play a role in their purchase
decisions. These benefits include
externalities related to environmental
protection and energy security, such as
reduced emissions of greenhouse gases.
The TSLs that 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.
The November 2009 SNOPR
contained a summary of the RIA, which
evaluated the extent to which major
alternatives to standards for CCWs
could achieve significant energy savings
at reasonable cost, as compared to the
effectiveness of the proposed rule. The
complete RIA (Regulatory Impact
Analysis for Proposed Energy
Conservation Standards for Commercial
Clothes Washers) is contained in the
TSD prepared for today’s rule. 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 standards.
As shown in Table VII.1 below, DOE
identified the following major policy
alternatives for achieving increased
energy efficiency in 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 approach (national
performance standards).
TABLE VII.1—NON-REGULATORY ALTERNATIVES TO COMMERCIAL CLOTHES WASHER STANDARDS
Energy
savings,*
quads
Policy alternatives
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 ............................................................................................
0
0.06
0.01
0.00
0.02
0.01
0.00
0.10
Water
savings,
trillion
gallons
0
0.07
0.01
0.01
0.02
0.01
0.01
0.14
Net present value**
billion 2008$
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
rmajette on DSK29S0YB1PROD with RULES2
* Energy savings are in source quads.
** DOE determined the net present value for shipments in 2013–2043.
*** 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 is well over the market adoption target level that each alternative strives to attain.
The net present value amounts shown
in Table VII.1 refer to the NPV for CCW
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. As explained in detail in
section VI of the November 2009
SNOPR, none of the alternatives DOE
examined would save as much energy or
have an NPV as high as the proposed
standards. The same conclusion applies
to the standards in today’s rule. Also,
several of the alternatives would require
new enabling legislation, because DOE
does not have authority to implement
those alternatives. Additional detail on
the regulatory alternatives is found in
the RIA chapter in the TSD.
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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 (IRFA) for any rule that by law
must be proposed for public comment,
and a final regulatory flexibility analysis
(FRFA) for any such rule that an agency
adopts as a final rule, unless the agency
certifies that the rule, if promulgated,
will not have a significant economic
impact on a substantial number of small
entities. A regulatory flexibility analysis
examines the impact of the rule on
small entities and considers alternative
ways of reducing negative impacts.
Also, 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
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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.
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.pdf. Because all CCW
manufacturers also produce RCWs,
limits for both categories are presented
in Table VII.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 VII.2—SBA AND NAICS CLASSIFICATION OF SMALL BUSINESSES POTENTIALLY AFFECTED BY THIS RULE
Industry description
Revenue limit
Residential Laundry Equipment Manufacturing ............................................................
Commercial Laundry Equipment Manufacturing ..........................................................
N/A ...................................
N/A ...................................
As explained in the November 2009
SNOPR, 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
November 2009 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 final
rule will not have a significant impact
on a substantial number of small entities
and that a regulatory flexibility analysis
is not required.
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 or
the November 2009 SNOPR, and, as
with the proposed rule, today’s final
rule imposes no information and
recordkeeping requirements. Therefore,
DOE has taken no further action in this
rulemaking with respect to the
Paperwork Reduction Act.
rmajette on DSK29S0YB1PROD with RULES2
D. Review Under the National
Environmental Policy Act
DOE prepared an environmental
assessment of the impacts of today’s
standards which it published as chapter
16 within the TSD for the final rule.
DOE found the environmental effects
associated with today’s various standard
levels for CCWs to be insignificant.
Therefore, DOE is issuing a FONSI
pursuant to NEPA (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 NEPA (10 CFR part
1021). The FONSI is available in the
docket for this rulemaking.
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E. Review Under Executive Order 13132
DOE reviewed this rule pursuant to
Executive Order 13132, ‘‘Federalism,’’ 64
FR 43255 (Aug. 4, 1999), which imposes
certain requirements on agencies
formulating and implementing policies
or regulations that preempt State law or
that have Federalism implications. In
accordance with DOE’s statement of
policy describing the intergovernmental
consultation process it will follow in the
development of regulations that have
federalism implications, 65 FR 13735
(March 14, 2000), DOE examined the
November 2009 proposed rule and
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. 74 FR 57738,
57798 (Nov. 9, 2009). DOE received no
comments on this issue in response to
the November 2009 SNOPR, and its
conclusions on this issue are the same
for the final rule as they were for the
proposed rule. Therefore, DOE has taken
no further action in today’s final rule
with respect to 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
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
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Employee limit
1,000
500
NAICS
335224
333312
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
final regulations meet the relevant
standards of Executive Order 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
As indicated in the November 2009
SNOPR, DOE reviewed the proposed
rule under title II of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4) (UMRA), which imposes
requirements on Federal agencies when
their regulatory actions will have certain
types of impacts on State, local and
Tribal governments and the private
sector. 74 FR 57738, 57798–99 (Nov. 9,
2009). 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
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 final
rule 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
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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 final rule
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 final rule.
has taken no further action in today’s
final rule 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
today’s final rule under the OMB and
DOE guidelines and has concluded that
it is consistent with applicable policies
in those guidelines.
rmajette on DSK29S0YB1PROD with RULES2
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 November 2009 SNOPR,
and, therefore, takes no further action in
today’s final rule with respect to this
provision.
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 final rule 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
final rule.
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 today’s rule
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 or
November 2009 SNOPR, and, therefore,
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
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1177
Government. As indicated in the
November 2009 SNOPR, this includes
influential scientific information related
to agency regulatory actions, such as the
analyses in this rulemaking. 74 FR
57738, 57799 (Nov. 9, 2009).
As more fully set forth in the
November 2009 SNOPR, DOE held
formal in-progress peer reviews of the
types of analyses and processes that
DOE has used to develop the energy
conservation standards in today’s rule,
and issued a report on these peer
reviews. The report is available at
https://www.eere.energy.gov/buildings/
appliance_standards/peer_review.html.
Id.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will
submit to Congress a report regarding
the issuance of today’s final rule prior
to the effective date set forth at the
outset of this notice. The report will
state that it has been determined that
the rule is a ‘‘major rule’’ as defined by
5 U.S.C. 804(2). DOE also will submit
the supporting analyses to the
Comptroller General in the U.S.
Government Accountability Office
(GAO) and make them available to each
House of Congress.
VIII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of today’s final rule.
List of Subjects in 10 CFR Part 431
Administrative practice and
procedure, Energy conservation,
Household appliances.
Issued in Washington, DC, on December
18, 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 amended to read as set forth
below:
■
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.
2. Section 431.156 of subpart I is
revised to read as follows:
■
§ 431.156 Energy and water conservation
standards and effective dates.
Each CCW manufactured on or after
January 8, 2013, shall have a modified
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energy factor no less than and a water
factor no greater than:
Equipment class
Modified energy
factor,
cu. ft./kWh/cycle
Water factor,
gal./cu. ft./cycle
Top-Loading .....................................................................................................................................................
Front-Loading ...................................................................................................................................................
1.60
2.00
8.5
5.5
Appendix
[The following letter from the Department of
Justice will not appear in the Code of Federal
Regulations.]
DEPARTMENT OF JUSTICE
rmajette on DSK29S0YB1PROD with RULES2
Antitrust Division
DEBORAH A. GARZA
Acting Assistant Attorney General
Main Justice Building, 950 Pennsylvania
Avenue, NW., Washington, DC 20530–
0001, (202) 514–2401/(202) 616–2645
(Fax), E-mail: antitrust@usdoj.gov, Web
site: https://www.usdoj.gov/atr.
December 16, 2008.
Warren Belmar, Esq., Deputy General
Counsel for Energy Policy, Department of
Energy, Washington, DC 20585.
Dear Deputy General Counsel Belmar: I am
responding to your October 1, 2008, letter
seeking the views of the Attorney General
about the potential impact on competition of
proposed amended energy conservation
standards for residential kitchen ranges and
ovens, microwave ovens, and commercial
clothes washers (CCWs). Your request was
submitted under Section 325(0)(2)(B)(i)(V) of
the Energy Policy and Conservation Act, as
amended, (‘‘ECPA’’), 42 U.S.C.
§ 6295(0)(B)(i)(V), which requires the
Attorney General to make a determination of
the impact of any lessening of competition
that is likely to result from the imposition of
proposed energy conservation standards. The
Attorney General’s responsibility for
responding to requests from other
departments about the effect of a program on
competition has been delegated to the
Assistant Attorney General for the Antitrust
Division in 28 CFR § 0.40(g).
In conducting its analysis the Antitrust
Division examines whether a proposed
standard may lessen competition, for
example, by substantially limiting consumer
choice, leaving consumers with fewer
competitive alternatives, placing certain
manufacturers of a product at an unjustified
competitive disadvantage compared to other
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manufacturers, or by inducing avoidable
inefficiencies in production or distribution of
particular products.
We have reviewed the proposed standards
contained in the Notice of Proposed
Rulemaking (73 Fed. Reg. 62034, October 17,
2008) and supplementary information
submitted to the Attorney General. We also
attended the November 13 public meeting on
the proposed standards and conducted
interviews with industry members. Based on
this review, we have determined that
legitimate issues arise as to whether the
proposed standards adversely effect
competition and consumer choice with
respect to (1) gas cooking products with
standing pilot lights and (2) top-loading
CCWs.
The proposed standards would extend the
ban on constant burning pilot lights,
currently applicable to cooking appliances
equipped with electrical supply cords, to
appliances that are not equipped with
electrical supply cords. As the notice
regarding the proposed standards recognizes,
certain consumers, including those with
religious and cultural practices that prohibit
the use of line electricity, those without
access to line electricity, and those whose
kitchens do not have appropriate electrical
outlets, rely on gas cooking appliances with
standing pilots in lieu of electrical ignition
devices. For these consumers, gas cooking
appliances with electronic ignition are not a
reasonable substitute. The notice states that
gas cooking appliances may become available
with technological options such as batterypowered ignition to replace a standing pilot
light. However, it is unclear whether such
battery-powered devices have been tested for
indoor use and whether they are in
compliance with safety standards for such
use. If these options prove not to be feasible,
then the proposed standard could
substantially limit consumer choice by
eliminating the cooking appliance that most
closely meets these consumers’ needs.
As to top-loading CCWs, it appears that
meeting the proposed standards may require
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substantial investment in the development of
new technology that some suppliers of toploading CCWs may not find it economical to
make. CCWs are used primarily in multihousing laundries, with top-loading
machines accounting for approximately 80
percent of machines in these locations. The
remaining 20 percent are front-loading
machines, which are more energy efficient
but significantly more expensive than toploading models. There are only three
manufacturers of top-loading CCWs selling in
the United States. It appears that there is a
real risk that one or more of these
manufacturers cannot meet the proposed
standard. In such a case, CCW purchasers
would have fewer competitive alternatives
for top-loading machines, potentially
resulting in purchasers facing higher prices
from the remaining top-loading manufacturer
or manufacturers.
Although the Department of Justice is not
in a position to judge whether manufacturers
will be able to meet the proposed standards,
we urge the Department of Energy to take
into account these possible impacts on
competition and the availability of options to
consumers in determining its final energy
efficiency standard for CCWs and residential
gas cooking appliances with constant burning
pilots. To maintain competition, the
Department of Energy should consider
keeping the existing standard in place for
top-loading CCWs. The Department of Energy
may wish to consider setting a ‘‘no standard’’
standard for residential gas cooking products
with constant burning pilots to address the
potential for certain customers to be stranded
without an economical product alternative.
The Department of Justice does not believe
that the proposed standards for other
products listed in the NOPR would likely
lead to an adverse effect on competition.
Sincerely,
Deborah A. Garza.
[FR Doc. E9–30891 Filed 1–7–10; 8:45 am]
BILLING CODE 6450–01–P
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]]>Agencies
[Federal Register Volume 75, Number 5 (Friday, January 8, 2010)]
[Rules and Regulations]
[Pages 1122-1178]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30891]
[[Page 1121]]
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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); Final Rule
Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules
and Regulations
[[Page 1122]]
-----------------------------------------------------------------------
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Department of Energy (DOE) is adopting amended energy
conservation standards for commercial clothes washers (CCWs). DOE has
determined that amended energy conservation standards for these types
of equipment would result in significant conservation of energy, and
are technologically feasible and economically justified.
DATES: The effective date of this rule is March 9, 2010. The standards
established in today's final rule will be applicable starting January
8, 2013.
ADDRESSES: For access to the docket to read background documents, the
technical support document, transcripts of the public meetings in this
proceeding, or comments received, visit the U.S. Department of Energy,
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza,
SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m.
and 4 p.m., Monday through Friday, except Federal holidays. Please call
Brenda Edwards at the above telephone number for additional information
regarding visiting the Resource Room. (Note: DOE's Freedom of
Information Reading Room no longer houses rulemaking materials.) You
may also obtain copies of certain previous rulemaking documents in this
proceeding (i.e., framework document, advance notice of proposed
rulemaking, notice of proposed rulemaking, supplemental notice of
proposed rulemaking), draft analyses, public meeting materials, and
related test procedure documents from the Office of Energy Efficiency
and Renewable Energy's Web site at https://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.
FOR FURTHER INFORMATION CONTACT: Stephen Witkowski, U.S. Department of
Energy, Energy Efficiency and Renewable Energy, Building Technologies
Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585
Telephone: (202) 586-7463. E-mail: Stephen.Witkowski@ee.doe.gov.
Francine Pinto, Esq. or Betsy Kohl, Esq., U.S. Department of
Energy, Office of General Counsel, GC-71/72, 1000 Independence Avenue,
SW., Washington, DC 20585. Telephone: (202) 586-7432, (202) 586-7796.
E-mail: Francine.Pinto@hq.doe.gov, Elizabeth.Kohl@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
B. Current Federal Standards for Commercial Clothes Washers
C. Benefits to Consumers of Commercial Clothes Washers
D. Impact on Manufacturers
E. National Benefits
F. Conclusion
II. Introduction
A. Consumer Overview
B. Authority
C. Background
1. Current Standards
2. History of Standards Rulemaking
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Commercial Consumers and Manufacturers
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
IV. Methodology and Discussion of Comments on Methodology
A. Equipment Classes
B. Technology Assessment
C. Engineering Analysis
1. Efficiency Levels
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. Split Incentive Between CCW Consumers and Users
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. Impacts of Standards on Shipments
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
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
V. Discussion of Other Comments
A. Proposed Trial Standard Levels (TSLs) for Commercial Clothes
Washers
B. Proposed Standards for Commercial Clothes Washers
VI. Analytical Results and Conclusions
A. Trial Standard Levels
B. Significance of Energy Savings
C. Economic Justification
1. Economic Impacts on Commercial Customers
a. Life-Cycle Cost and Payback Period
b. Commercial Consumer Subgroup Analysis
c. Rebuttable-Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Cumulative Regulatory Burden
c. Impacts on Employment
d. Impacts on Manufacturing Capacity
e. Impacts on Subgroups of Manufacturers
3. National Impact Analysis
a. Amount and Significance of Energy Savings
b. Net Present Value of Customer Costs and Benefits
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
7. Other Factors
D. Conclusion
VII. 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
[[Page 1123]]
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
M. Congressional Notification
VIII. Approval of the Office of the Secretary
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
The Energy Policy and Conservation Act \1\ (EPCA), as amended (42
U.S.C. 6291 et seq.; EPCA), directs the Department of Energy (DOE) to
consider amended mandatory energy conservation standards for CCWs. (42
U.S.C. 6313(e)(2)(A)) Any such amended energy conservation standard
must 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)) The standards in today's final rule, which apply to all CCWs,
satisfy these and other statutory criteria discussed in this notice.
---------------------------------------------------------------------------
\1\ 42 U.S.C. 6291 et seq.
---------------------------------------------------------------------------
Table I.1 shows the amended standard levels that DOE is adopting
today. These standards will apply to all CCWs manufactured for sale in
the United States, or imported to the United States, on or after
January 8, 2013.
Table I.1--Amended Energy Conservation Standards for Commercial Clothes
Washers
------------------------------------------------------------------------
Amended energy conservation
Equipment class standards
------------------------------------------------------------------------
Top-loading commercial clothes washers.... 1.60 Modified Energy Factor/
8.5 Water Factor.
Front-loading commercial clothes washers.. 2.00 Modified Energy Factor/
5.5 Water Factor.
------------------------------------------------------------------------
B. Current Federal Standards for Commercial Clothes Washers
EPCA, as amended by the Energy Policy Act of 2005 (EPACT 2005),
prescribes standards for CCWs manufactured on or after January 1, 2007.
(42 U.S.C. 6313(e)) These standards require that CCWs have a modified
energy factor (MEF) of at least 1.26 and a water factor (WF) of not
more than 9.5. (Id.; 10 CFR 431.156)
C. Benefits to Consumers of Commercial Clothes Washers
Table I.2 indicates the impacts on commercial consumers of today's
amended standards. The economic impacts of the amended CCW standards on
commercial consumers as measured by the average life-cycle cost (LCC)
savings are positive, even though the standards may increase some
initial costs. For example, typical top-loading CCWs--the most common
type currently being sold--have an average installed price of $760 and
average lifetime operating costs (discounted) of $3,286. To meet the
amended standards, DOE estimates that the average installed price of
such equipment will increase by $214, which will be more than offset by
savings of $394 in average lifetime operating costs (discounted).
Table I.2--Implications of Amended Standards for Commercial Consumers
----------------------------------------------------------------------------------------------------------------
Average Average Median
Energy conservation Average installed life-cycle payback
Equipment class standard installed price cost period
price * $ increase $ savings $ years
----------------------------------------------------------------------------------------------------------------
Top-loading CCWs................. 1.60 Modified Energy 974 214 180 4.3
Factor/8.5 Water Factor.
Front-loading CCWs............... 2.00 Modified Energy 1,365 23 ** 20 ** 0.4
Factor/5.5 Water Factor.
----------------------------------------------------------------------------------------------------------------
* For a baseline model.
** DOE estimates that 96 percent of front-loading CCW consumers would purchase a model at the standard level
even without amended standards. The values refer to average impacts for the 4 percent of consumers who would
be affected by the standard.
D. Impact on Manufacturers
Using a real corporate discount rate of 7.2 percent, DOE estimates
the industry net present value (INPV) of the CCW industry to be
approximately $62 million in 2008$. DOE expects the impact of today's
standards on the INPV of manufacturers of CCWs to be a loss of between
7.8 percent and 11.4 percent of the INPV, which is approximately $5 to
$7 million. Based on DOE's interviews with the manufacturers of CCWs,
DOE expects possible loss of employment for one manufacturer as a
result of the standards.
E. National Benefits
DOE estimates that the energy conservation standards will 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, DOE estimates the standards for CCWs will save over 143
billion gallons of cumulative water consumption over 30 years (2013-
2043).
The national net present value (NPV) of CCW consumer benefit
resulting from the standards, considering the impacts of equipment sold
in 2013-2043, is $0.4 billion using a 7-percent discount rate and $0.9
billion using a 3-percent discount rate, in 2008$. This is the
estimated total value of future operating cost savings minus the
estimated increased equipment costs, discounted to 2009. The NPV for
consumers (at the 7-percent discount rate) would exceed industry
losses, discussed above, due to energy efficiency standards by at least
80 times.
By 2043, DOE expects the energy savings from the standards to
eliminate the need for approximately 18 MW of electricity generating
capacity. The energy savings will result in cumulative greenhouse gas
emissions reductions in 2013-2043 of approximately 5.1 million tons
(Mt) of carbon dioxide (CO2), or an amount equal to that
produced by approximately 5.1 million new cars in a year. Additionally,
the standards will help alleviate air pollution by resulting in
approximately 3.0 kilotons (kt) of cumulative nitrogen oxide
(NOX) emission reductions and 0.0003 tons of cumulative
mercury (Hg) emission reductions. The estimated net present monetary
values of these emissions reductions at a 7-percent discount rate
(discounted to 2009 and expressed in 2008$) are between $13 and $140
million for CO2, between $0.4 and $4.2
[[Page 1124]]
million for NOX, and between $0.0 and $0.6 million for Hg.
At a 3-percent discount rate, the estimated net present values of these
emissions reductions (discounted to 2009 and expressed in 2008$) are
between $28 and $303 million for CO2, between $0.8 million
and $8.4 million for NOX, and between $0.0 and $0.6 million
for Hg.
The benefits and costs of today's final rule can also be expressed
in terms of annualized values. Estimates of annualized values for three
economic growth cases are shown in Table I.3. The annualized monetary
values are the sum of the annualized national economic value of
operating savings benefits (energy, maintenance and repair), plus the
monetary values of the benefits of carbon dioxide emission reductions,
monetized using a value of $20 per metric ton of carbon dioxide. The
$20 value is a central interim value from a recent interagency process,
as discussed in section VI.C.6. Although summing the value of operating
savings to the values of CO2 reductions provides a valuable
perspective, please note the following. 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, which are meant to
reflect the global benefits of CO2 reductions. Furthermore,
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
considers the impacts of equipment sold in 2013-2043. The value of
CO2, on the other hand is meant to reflect the present value
of all future climate-related impacts, which go well beyond the
lifetime of the equipment sold in the forecast period.
Using a 7-percent discount rate for the annualized cost analysis,
the cost of the standards established in today's final rule 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 $56.0 million per year.
Table I.3--Annualized Benefits and Costs of Amended Standards for Commercial Clothes Washers (TSL 3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary estimate (AEO Low estimate (AEO low- High estimate (AEO high-
reference case) growth case) growth case)
Category Unit -----------------------------------------------------------------------------
7% 3% 7% 3% 7% 3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Monetized Operating Cost Savings........... Million 2008$................ 60.6 72.8 54.9 65.3 66.6 80.4
Quantified Emissions Reductions............ CO2 (Mt)..................... 0.14 0.16 0.14 0.16 0.14 0.16
NOX (kt)..................... 0.087 0.194 0.087 0.194 0.087 0.194
Hg (t)....................... 0.0002 0.0001 0.0002 0.0001 0.0002 0.0001
Monetized Avoided Emissions Reductions * CO2.......................... 5.1 5.9 5.1 5.9 5.1 5.9
(Million 2008$).
NOX.......................... 0.2 0.3 0.2 0.3 0.2 0.3
Hg........................... 0.0 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Monetized Incremental Product and Million 2008$................ 23.4 22.7 21.9 20.9 24.6 23.9
Installation Costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Monetized Value............................ Million 2008$................ 42.5 56.3 38.3 50.6 47.3 62.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For CO2, benefits reflect value of $20/t, which is in the middle of the values considered by DOE for valuing the potential global benefits resulting
from reduced CO2 emissions. For NOX and Hg, the benefits reflect values of $2,491/t and $17 million/t, respectively. These values are the midpoint of
the range considered by DOE.
F. Conclusion
The benefits (energy savings, LCC savings for CCW consumers,
positive national NPV, and emissions reductions) to the Nation of the
standards outweigh their costs (loss of manufacturer INPV and LCC
increases for some CCW consumers). Today's standards also represent the
maximum improvement in energy efficiency that is technologically
feasible and economically justified, and will result in significant
energy savings. At present, CCWs that meet the amended standard levels
are commercially available.
II. Introduction
A. Consumer Overview
DOE is amending in today's final rule energy conservation standard
levels for CCWs as shown in Table I.1. These standards apply to
equipment manufactured or imported on or after January 8, 2013.
DOE research suggests that commercial consumers will see benefits
from today's 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 (PBP)
for the more efficient, higher-priced equipment will range from 0.2 to
5.6 years, depending on the equipment class.
[[Page 1125]]
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, the subject of this rulemaking. (42 U.S.C. 6312; 6313(e)) DOE
publishes today's final rule pursuant to Part A-1 of Title III, which
provides for test procedures, labeling, and energy conservation
standards for CCWs and certain other equipment, and authorizes DOE to
require information and reports from manufacturers. The test procedures
for CCWs appear at 10 CFR part 430, subpart B, appendix J1 (pursuant to
10 CFR 431.154).
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.\2\ (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.)
---------------------------------------------------------------------------
\2\ Under the statute, a CCW must have an MEF of at least 1.26
and a WF of not more than 9.5.
---------------------------------------------------------------------------
EPCA provides criteria for prescribing amended standards for
covered products and equipment.\3\ As indicated above, any amended
standard for this equipment 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))
Additionally, EPCA provides specific prohibitions on prescribing such
standards. DOE may not prescribe an amended or new standard for any
equipment for which DOE has not established a test procedure. (42
U.S.C. 6295(o)(3)(A) and 6316(a)). Further, DOE may not prescribe an
amended standard if DOE determines by rule that such standard would not
result in ``significant conservation of energy'' or ``is not
technologically feasible or economically justified.'' (42 U.S.C.
6295(o)(3)(B) and 6316(a))
---------------------------------------------------------------------------
\3\ 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.
---------------------------------------------------------------------------
EPCA also provides that, in deciding whether such a standard is
economically justified for equipment such as CCWs, 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))
In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and
6316(a)), establishes a rebuttable presumption that any standard for
covered products 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. See section III.D.2.
Furthermore, EPCA contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6295(o)(1) and 6316(a)) 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.
EPCA further provides that the Secretary may not prescribe an amended
standard if 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
volumes 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) and 6316(a))
Section 325(q)(1) of EPCA is applicable to promulgating standards
for most types or classes of equipment, including CCWs, that have two
or more subcategories. (42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(a))
Under this provision, DOE must specify a different standard level than
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)(A) and (B)) 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. (42 U.S.C.
6295(q)(1)) Any rule prescribing such a standard must include an
explanation of the basis on which DOE established such higher or lower
level. (See 42 U.S.C. 6295(q)(2))
Federal energy conservation requirements for commercial equipment,
including CCWs, generally supersede State laws or regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c); 42 U.S.C. 6316(a)) 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); 42 U.S.C.
6316(a)) DOE must prescribe a rule granting the petition if the
Secretary finds that the
[[Page 1126]]
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); 42 U.S.C. 6316(a))
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
As discussed in the supplemental notice of proposed rulemaking
(SNOPR), 74 FR 57738 (Nov. 9, 2009) (the November 2009 SNOPR), the
EPACT 2005 amendments to EPCA require that DOE issue a final rule by
January 1, 2010, to determine whether standards for CCWs 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.)
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).\4\ 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.
---------------------------------------------------------------------------
\4\ This document is available on the DOE Web site at: https://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.
---------------------------------------------------------------------------
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 in this
rulemaking. 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.
Table II.1--Commercial Clothes Washer Energy Conservation Standards
Proposed in the October 2008 NOPR
------------------------------------------------------------------------
Modified energy Water factor gal/
Equipment factor ft\3\/kWh ft\3\
------------------------------------------------------------------------
Top-loading CCWs.................. 1.76 8.3
Front-loading CCWs................ 2.00 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 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. 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
[[Page 1127]]
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 the November 2009
SNOPR. DOE subsequently tested the max-tech unit at an independent test
facility, revised the max-tech level, updated the analysis, and
published the November 2008 SNOPR to allow interested parties to
comment on the revised efficiency level proposals. 74 FR 57738 (Nov. 9,
2009).
In the November 2009 SNOPR, DOE revised the proposed energy
conservation standards for CCWs. 74 FR 57738 (Nov. 9, 2009). In
conjunction with the November 2009 SNOPR, DOE also published on its Web
site the complete TSD for the proposed rule, which incorporated the
final analyses that DOE conducted, and contained technical
documentation for each step of the analysis. The TSD included the
engineering analysis spreadsheets, the LCC spreadsheet, and the
national impact analysis spreadsheet. The revised energy conservation
standards proposed in the November 2009 SNOPR for CCWs are shown in
Table II.2.
Table II.2--Commercial Clothes Washer Energy Conservation Standards
Proposed in the November 2009 SNOPR
------------------------------------------------------------------------
Modified energy Water factor gal/
Equipment factor ft\3\/kWh ft\3\
------------------------------------------------------------------------
Top-loading CCWs.................. 1.60 8.5
Front-loading CCWs................ 2.00 5.5
------------------------------------------------------------------------
In the November 2009 SNOPR, DOE identified issues on which it was
particularly interested in receiving comments and views of interested
parties. These included the following: (1) Whether the method of
``loading'' clothes washers, or any other characteristic commonly
associated with traditional ``top-loading'' 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; (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
manufacturer impacts, including the effects of manufacturer tax credits
and competitive concerns; (5) the determination of environmental
impacts; and (6) the newly proposed energy conservation standards. 74
FR 57738, 57800 (Nov. 9, 2009) After the publication of the November
2009 SNOPR, DOE also held a public meeting in Washington, DC, on
November 16, 2009 (referred to as the ``November 2009 public
meeting''), to hear oral comments on and solicit information relevant
to the revised proposed rule. The November 2009 SNOPR included
additional background information on the history of this rulemaking. 74
FR 57738, 57742-43 (Nov. 9, 2009).
Comments presented by interested parties during the November 2009
public meeting and submitted in response to the November 2009 NOPR
concerning the sensitivity of the analyses to the estimated market
share split of CCW shipments among laundromats, multi-family housing,
and on-premises laundry applications led DOE to conduct a sensitivity
analysis for today's final rule. See appendix 11C of the TSD.
III. General Discussion
A. 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, 62043-44 (Oct. 17, 2008). While DOE believes
commercial laundry practices likely differ from residential
practices,\5\ 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, interested
parties agreed with DOE's conclusion that the DOE clothes washer test
procedure is adequate for rating CCWs. DOE did not receive any comments
objecting to the use of the DOE clothes washer test procedure for CCWs.
Therefore, for the November 2009 SNOPR, DOE continued to consider the
existing DOE test procedure adequate to measure energy and water
consumption of CCWs. 74 FR 57738, 57743 (Nov. 9, 2009).
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\5\ CCWs are typically used more frequently and filled with a
larger load than RCWs.
---------------------------------------------------------------------------
The Appliance Standards Awareness Project (ASAP) commented that DOE
is currently reviewing its clothes washer test procedure, and noted
that there may be revisions as a result of that rulemaking. ASAP asked
whether, under EPACT 2005, those potential changes in the test
procedure would apply to the determinations of compliance with this
standard that is currently proposed for CCWs. (ASAP, Public Meeting
Transcript, No. 67.4 at pp. 13-16 \6\) EPCA states that ``[w]ith
respect to commercial clothes washers, the test procedures shall be the
same as the test procedures established by the Secretary for RCWs under
section 6295(g) of this title.'' (42 U.S.C. 6314(a)(8)) Therefore, CCWs
will be required to be tested to the DOE clothes washer test procedure
that is effective at the time the testing is conducted.
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\6\ A notation in the form ``ASAP, Public Meeting Transcript,
No. 67.4 at pp. 13-16'' identifies an oral comment that DOE received
during the November 16, 2009, SNOPR public meeting and which was
recorded in the public meeting transcript in the docket for this
rulemaking (Docket No. EE-2006-STD-0127), maintained in the Resource
Room of the Building Technologies Program. This particular notation
refers to a comment (1) made by the Appliance Standards Awareness
Project (ASAP) during the public meeting, (2) recorded in document
number 67.4, which is the public meeting transcript that is filed in
the docket of this rulemaking, and (3) which appears on pages 13-16
of document number 67.4.
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B. Technological Feasibility
1. General
As stated above, any standards that DOE establishes for CCWs must
be technologically feasible. (42 U.S.C.
[[Page 1128]]
6295(o)(2)(A) and (o)(3)(B); 42 U.S.C. 6316(a)) 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. ``Technologies incorporated in commercial products or in
working prototypes will be considered technologically feasible.'' 10
CFR part 430, subpart C, appendix A, section 4(a)(4)(i). 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 the November 2007 ANOPR and in chapter 4 of the 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 the November 2009 SNOPR, DOE
did not screen 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 considered the
same design options in the November 2009 SNOPR as those evaluated in
the October 2008 NOPR. 74 FR 57738, 57743-44 (Nov. 9, 2009).
This final rule considers the same design options as those
evaluated in the November 2009 SNOPR. All the evaluated technologies
have been used (or are being used) in commercially available equipment
or working prototypes. DOE also has determined that there is equipment
either in the market or in working prototypes at all of the efficiency
levels analyzed in this notice. Therefore, DOE has determined that all
of the efficiency levels evaluated in this final rule, 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 TSD.
2. Maximum Technologically Feasible Levels
When DOE considers an amended 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.) For the October 2008 NOPR, DOE proposed the max-tech
levels shown in Table III.1. 73 FR 62034, 62036 (Oct. 17, 2008).
Table III.1--Commercial Clothes Washer Max-Tech Efficiency Levels
Proposed in the October 2008 NOPR
------------------------------------------------------------------------
Max-tech level
Equipment class -------------------------------------
MEF, ft 3/kW WF, gal/ft3
------------------------------------------------------------------------
Top-Loading CCWs.................. 1.76 8.3
Front-Loading CCWs................ 2.35 4.4
------------------------------------------------------------------------
DOE received comments in response to the October 2008 NOPR
questioning the max-tech top-loading CCW efficiency rating presented in
the November 2009 SNOPR. DOE examined the max-tech efficiency level for
top-loading CCWs, contracting an independent testing laboratory to
verify the performance ratings for the max-tech top-loading CCW model.
The laboratory results (based on a 3-unit sample) suggested that the
max-tech model achieves 1.63 MEF/8.4 WF. Based on this information, DOE
revised the max-tech top-loading CCW level in the November 2009 SNOPR
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 concluded in the November
2009 SNOPR is attainable by the max-tech CCW model. For the November
2009 SNOPR, the proposed front-loading max-tech level was the same as
in the October 2008 NOPR, whereas the proposed top-loading max-tech
level was revised to 1.60 MEF/8.5 WF based on the independent test
results. 74 FR 57738, 57744 (Nov. 9, 2009).
DOE received comments in response to the November 2009 SNOPR that
objected to the max-tech efficiency level for top-loading CCWs based on
lack of wash performance and consumer acceptance of the max-tech top-
loading CCW model in a commercial laundry setting. DOE agrees that
inherent in a determination of technological feasibility is performance
related to the equipment's primary function (i.e., cleaning clothes),
but DOE considers as evidence of sufficient performance and consumer
acceptance of the highest efficiency top-loading CCWs the presence on
the market of two such models at or near the max-tech level proposed in
the November 2009 SNOPR. Therefore, for today's final rule, the max-
tech levels for both classes are the max-tech levels identified in the
November 2009 SNOPR. These levels are shown in Table III.2 below. For
more details on this selection of max-tech levels, see section IV.C.1.a
of today's final rule.
[[Page 1129]]
Table III.2--Commercial Clothes Washer Max-Tech Efficiency Levels
------------------------------------------------------------------------
Max-tech level
Equipment class -------------------------------------
MEF, ft\3\/kW WF, gal/ft\3\
------------------------------------------------------------------------
Top-Loading CCWs.................. 1.60 8.5
Front-Loading CCWs................ 2.35 4.4
------------------------------------------------------------------------
C. Energy Savings
DOE forecasted energy savings in its national energy savings (NES)
analysis through the use of an NES spreadsheet tool, as discussed in
the November 2009 SNOPR. 74 FR 57738, 57744 (Nov. 9, 2009).
One criterion that governs DOE's adoption of standards for CCWs is
the standard must result in ``significant'' energy savings. (42 U.S.C.
6295(o)(3)(B) and 42 U.S.C. 6316(a)) While EPCA 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, 1373 (D.C. Cir. 1985), indicated that Congress intended
``significant'' energy savings in this context to be savings that were
not ``genuinely trivial.'' DOE's estimates of the energy savings for
the energy conservation standards adopted in today's final rule are
nontrivial. Therefore, DOE considers them ``significant'' within the
meaning of section 325 of EPCA.
D. 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) and 42 U.S.C. 6316(a)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Commercial Consumers and Manufacturers
DOE considered the economic impact of the amended CCW standards on
commercial consumers and manufacturers. For consumers, DOE measured the
economic impact as the change in installed cost and life-cycle
operating costs, i.e., the LCC. (See sections IV.D and IV.E and chapter
8 of the TSD.) DOE investigated the impacts on manufacturers through
the manufacturer impact analysis (MIA). (See sections IV.G and VI.C.2,
and chapter 13 of the TSD.) The economic impact on commercial consumers
and manufacturers is discussed in detail in the November 2009 SNOPR. 74
FR 57738, 57751-55, 57761-65, 57769-77 (Nov. 9, 2009).
b. Life-Cycle Costs
DOE considered life-cycle costs of CCWs, as discussed in the
November 2009 SNOPR. 74 FR 57738, 57751-55 (Nov. 9, 2009). DOE
calculated the sum of the purchase price and the operating expense--
discounted over the lifetime of the equipment--to estimate the range in
LCC benefits that commercial consumers would expect to achieve due to
the standards.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA also
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) and 42 U.S.C. 6316(a)). As in the November 2009
SNOPR (74 FR 57738, 57755-61 (Nov. 9, 2009)), for today's final rule,
DOE used the NIA spreadsheet results in its consideration of total
projected savings that are directly attributable to the standard levels
DOE considered.
d. Lessening of Utility or Performance of Equipment
In selecting today's standard levels, DOE sought to avoid new
standards for CCWs that would lessen the utility or performance of that
equipment (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316(a)). As
with the November 2009 SNOPR (74 FR 57738, 57745 (Nov. 9, 2009)),
today's standards do not involve changes in equipment design or unusual
installation requirements that would reduce the utility or performance
of CCWs.
e. Impact of Any Lessening of Competition
DOE considers any lessening of competition likely to result from
standards. Accordingly, as discussed in the November 2009 SNOPR (74 FR
57738, 57745, 57762-63 (Nov. 9, 2009)), DOE requested that the Attorney
General transmit to the Secretary a written determination of the
impact, if any, of lessening of competition likely to result from the
proposed standards, 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) and 42 U.S.C.
6316(a)).
To assist the Attorney General in making such a determination, DOE
provided the U.S. Department of Justice (DOJ) with copies of the
November 2009 proposed rule and the TSD for review. The Attorney
General's response is discussed in section VI.C.5 below, and is
reprinted at the end of this rule. Impacts on manufacturers are also
discussed in section IV.G below.
f. Need of the Nation to Conserve Energy
In considering standards for CCWs, the Secretary must consider the
need of the Nation to conserve energy (42 U.S.C. 6295(o)(2)(B)(i)(VI)
and 42 U.S.C. 6316(a)). The Secretary recognizes that energy
conservation benefits the Nation in several important ways. The non-
monetary benefits of the standards are likely to be reflected in
improvements to the security and reliability of the Nation's energy
system. Today's standards will also result in environmental benefits.
As discussed in the November 2009 SNOPR, DOE has considered these
factors in adopting today's standards. 74 FR 57738, 57765-67 (Nov. 9,
2009).
g. Other Factors
In determining whether a standard is economically justified, EPCA
directs the Secretary to consider any other factors deemed relevant (42
U.S.C. 6295(o)(2)(B)(i)(VII) and 42 U.S.C. 6316(a)). In adopting
today's amended standards, the Secretary found no relevant factors
other than those identified elsewhere in today's final rule.
2. Rebuttable Presumption
Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable
presumption that an energy conservation standard is economically
justified if the additional cost to the consumer that meets the
standard level 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), as calculated under the
applicable DOE test procedure (42 U.S.C. 6295(o)(2)(B)(iii) and 42
U.S.C. 6316(a)).
[[Page 1130]]
DOE's LCC and PBP analyses generate values that calculate the PBP for
consumers of equipment meeting potential energy conservation standards,
which includes, but is not limited to, the 3-year PBP contemplated
under the rebuttable presumption test discussed above. (See chapter 8
of the TSD.) 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) and 42 U.S.C. 6316(a). 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).
IV. Methodology and Discussion of Comments on Methodology
DOE used several previously developed analytical tools in setting
today's standard. Each was adapted for this rule. One of these
analytical tools is a spreadsheet that calculates LCC and PBP. Another
calculates national energy savings and national NPV. A third tool is
the Government Regulatory Impact Model (GRIM), the results of which are
the basis for the MIA, among other methods. In addition, DOE developed
an approach using the National Energy Modeling System (NEMS) to
estimate impacts of energy efficiency standards for CCWs on electric
utilities and the environment. The TSD appendices discuss each of these
analytical tools in detail.
As a basis for this final rule, DOE has continued to use the
spreadsheets and approaches explained in the November 2009 SNOPR. DOE
used the same general methodology but has revised some of the
assumptions and inputs for this final rule in response to comments from
interested parties. The following paragraphs discuss these revisions.
A. Equipment Classes
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).
DOE determined in the October 2008 NOPR that two equipment classes were
warranted because the method of ``loading'' had been previously
determined, under DOE rulemakings for residential clothes washers, to
be a ``feature,'' as defined by EPCA, and because an amended standard
for a single equipment class might set the MEF for all CCWs at a level
significantly higher than what the max-tech for top-loading machines
can attain today, and effectively eliminate top-loading CCWs from the
market. 73 FR 62034, 62049-50 (Oct. 17, 2008). This determination
remained unchanged in the November 2009 SNOPR, 74 FR 57738, 57746-47,
although DOE sought comment as to (1) whether the method of ``loading''
clothes washers, or any other characteristic commonly associated with
traditional ``top-loading'' or ``front-loading'' clothes washers, such
as presence or absence of agitators, ability to interrupt cycles, and
possibly others, are ``features'' within the meaning of 42 U.S.C.
6295(o)(4) in EPCA; and (2) whether the availability of such feature(s)
would likely be affected by eliminating the separate classes for these
equipment types previously established by DOE. DOE received comments in
response to the November 2009 SNOPR both in support of and opposed to
establishing two equipment classes for CCWs. These comments are
described in more detail in the following paragraphs.
The Association of Home Appliance Manufacturers (AHAM), GE Consumer
& Industrial (GE),\7\ Whirlpool Corporation (Whirlpool), and Alliance
Laundry Systems (Alliance) stated that they support the definition of
separate equipment classes for top-loading and front-loading CCWs.
(AHAM, Public Meeting Transcript, No. 67.4 at p. 33; AHAM, No. 67.12 at
p. 2;\8\; GE, Public Meeting Transcript, No. 67.4 at p. 44; GE, No.
67.9 at p. 1) Whirlpool, Public Meeting Transcript, No. 67.4 at p. 45;
Whirlpool, No. 67.11 at p. 1; Alliance, Public Meeting Transcript, No.
67.4 at p. 46. AHAM stated that EPACT 2005 allows DOE to establish
different classes, directing DOE to create ``classes of products,
depending on their energy use or performance characteristics.'' AHAM
noted that there is a bimodal distribution of efficiencies between top-
loading and front-loading CCWs. According to AHAM, the standards
proposed for the front-load equipment class in terms of MEF and WF are
beyond the capability of a traditional, or even a non-traditional, top-
load CCW. (AHAM, Public Meeting Transcript, No. 67.4 at pp. 39-40;
AHAM, No. 67.12 at pp. 2-3) GE, Whirlpool, and Alliance agree that DOE
has the ability to define two CCW equipment classes. (GE, Public
Meeting Transcript, No. 67.4 at p. 44; Whirlpool, Public Meeting
Transcript, No. 67.4 at p. 45; Alliance, Public Meeting Transcript, No.
67.4 at p. 46). AHAM further stated that if DOE moves forward with a
single equipment class, top-loading CCWs would not be able to meet a
standard that would be fairly easy for front-loaders to achieve. With
two equipment classes, energy and water savings could be achieved by
both top-loaders and front-loaders, albeit at a different level.
According to AHAM, this reduces the possibility that consumers would
repair older, less efficient top-loading CCWs, because new high
efficiency top-loaders would be available. (AHAM, Public Meeting
Transcript, No. 67.4 at pp. 40-41; AHAM, No. 67.12 at p. 2.)
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\7\ In its December 9, 2009, letter, GE states that it
``adopt[s] by reference the comments on the SNOPR that [it]
understand[s] will be submitted by the Association of Home Appliance
Manufacturers (AHAM) * * * '' Therefore, comments submitted by AHAM,
designated by comment number 67.12 in the docket for this
rulemaking, should be interpreted as representing GE's and well as
AHAM's views.
\8\ A notation in the form ``AHAM, No. 67.12 at p. 2''
identifies a written comment (1) made by the Association of Home
Appliance Manufacturers (AHAM), (2) recorded in document number
67.12 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 2 of document
number 67.12.
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Alliance commented that `` `top-loading' is a `feature' within the
meaning of 42 U.S.C. 6295, because it provides consumers the
opportunity to purchase lower cost CCWs.'' Alliance stated that
purchase cost is a primary reason why top-loading clothes washers hold
an approximate 65-percent market share, since consumers can choose the
lower-cost
