Energy Conservation Program: Energy Conservation Standards for Oil, Electric, and Weatherized Gas Consumer Furnaces, 83426-83463 [2023-25869]
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Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Proposed Rules
DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE–2021–BT–STD–0031]
RIN 1904–AF19
Energy Conservation Program: Energy
Conservation Standards for Oil,
Electric, and Weatherized Gas
Consumer Furnaces
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Notification of proposed
determination and request for comment.
AGENCY:
The Energy Policy and
Conservation Act, as amended
(‘‘EPCA’’), prescribes energy
conservation standards for various
consumer products and certain
commercial and industrial equipment,
including non-weatherized oil-fired
furnaces (‘‘NWOFs’’), mobile home oilfired furnaces (‘‘MHOFs’’), weatherized
gas furnaces (‘‘WGFs’’), weatherized oilfired furnaces (‘‘WOFs’’), and electric
furnaces (‘‘EFs’’). EPCA also requires the
U.S. Department of Energy (‘‘DOE’’) to
periodically review its existing
standards to determine whether morestringent, amended standards would be
technologically feasible and
economically justified, and would result
in significant energy savings. In this
notification of proposed determination
(‘‘NOPD’’), DOE has initially determined
that amended energy conservation
standards for EFs, NWOFs, MHOFs,
WOFs, and WGFs do not need to be
amended. DOE requests comment on
this proposed determination and the
associated analyses and results.
DATES:
Meeting: DOE will hold a public
meeting webinar upon request. Please
request a public meeting webinar no
later than December 13, 2023. See
section VI, ‘‘Public Participation,’’ for
webinar registration information,
participant instructions, and
information about the capabilities
available to webinar participants.
Comments: Written comments and
information are requested and will be
accepted on or before January 29, 2024.
ADDRESSES: Interested persons are
encouraged to submit comments using
the Federal eRulemaking Portal at
www.regulations.gov under docket
number EERE–2021–BT–STD–0031.
Follow the instructions for submitting
comments.
Alternatively, interested persons may
submit comments, identified by docket
number EERE–2021–BT–STD–0031
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SUMMARY:
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and/or RIN 1904–AF19, by any of the
following methods:
Email:
OEWGFurnaces2021STD0031@
ee.doe.gov. Include the docket number
EERE–2021–BT–STD–0031 and/or RIN
1904–AF19 in the subject line of the
message.
Postal Mail: Appliance and
Equipment Standards Program, U.S.
Department of Energy, Building
Technologies Office, Mailstop EE–5B,
1000 Independence Avenue SW,
Washington, DC 20585–0121.
Telephone: (202) 287–1445. If possible,
please submit all items on a compact
disc (‘‘CD’’), in which case it is not
necessary to include printed copies.
Hand Delivery/Courier: Appliance
and Equipment Standards Program, U.S.
Department of Energy, Building
Technologies Office, 950 L’Enfant Plaza
SW, 6th Floor, Washington, DC 20024.
Telephone: (202) 287–1445. If possible,
please submit all items on a CD, in
which case it is not necessary to include
printed copies.
No telefacsimiles (‘‘faxes’’) will be
accepted. For detailed instructions on
submitting comments and additional
information on this process, see section
VII of this document (Public
Participation).
Docket: The docket, which includes
Federal Register notices, public meeting
attendee lists and transcripts,
comments, and other supporting
documents/materials, is available for
review at www.regulations.gov. All
documents in the docket are listed in
the www.regulations.gov index.
However, not all documents listed in
the index may be publicly available,
such as information that is exempt from
public disclosure.
The docket web page can be found at
www.regulations.gov/docket/EERE2021-BT-STD-0031. The docket web
page contains instructions on how to
access all documents, including public
comments, in the docket. See section
VII, ‘‘Public Participation,’’ for further
information on how to submit
comments through
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Ms. Julia Hegarty, U.S. Department of
Energy, Office of Energy Efficiency and
Renewable Energy, Building
Technologies Office, EE–5B, 1000
Independence Avenue SW, Washington,
DC 20585–0121. Telephone: (240) 597–
6737. Email:
ApplianceStandardsQuestions@
ee.doe.gov.
Mr. Eric Stas, U.S. Department of
Energy, Office of the General Counsel,
GC–33, 1000 Independence Avenue SW,
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Washington, DC 20585–0121.
Telephone: (202) 586–5827. Email:
Eric.Stas@hq.doe.gov.
For further information on how to
submit a comment or review other
public comments and the docket contact
the Appliance and Equipment
Standards Program staff at (202) 287–
1445 or by email:
ApplianceStandardsQuestions@
ee.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Determination
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemakings for
Consumer Furnaces
C. Deviation From Appendix A
III. General Discussion and Rationale
A. General Comments
1. Comments Supporting Amended
Standards
2. Comments Opposing Amended
Standards
3. Standby Mode and Off Mode
B. Scope of Coverage and Product Classes
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
E. Cost-Effectiveness
F. Energy Savings
1. Determination of Savings
2. Significance of Savings
G. Additional Considerations
IV. Methodology and Discussion of Related
Comments
A. Market and Technology Assessment
1. Scope of Coverage
a. Electric Furnaces
b. Weatherized Oil-Fired Furnaces
c. Fuel-Fired Heat Pumps
2. Technology Options
3. Screening Analysis
a. Screened-Out Technologies
b. Remaining Technologies
4. Product Classes
B. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency
b. Intermediate Efficiency Levels
c. Maximum Technology (‘‘Max-Tech’’)
Efficiency Levels
d. Summary of Efficiency Levels Analyzed
2. Cost Analysis
a. Teardown Analysis
b. Cost Estimation Method
3. Cost-Efficiency Results
C. Markups Analysis
D. Energy Use Analysis
E. Life-Cycle Cost and Payback Period
Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
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8. Energy Efficiency Distribution in the NoNew-Standards Case
9. Payback Period Analysis
F. Shipments Analysis
G. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
V. Analytical Results and Conclusions
A. Economic Impacts on Individual
Consumers
B. National Impact Analysis
1. Significance of Energy Savings
2. Net Present Value of Consumer Costs
and Benefits
C. Proposed Determination
1. Technological Feasibility
2. Cost-Effectiveness
3. Significant Conservation of Energy
4. Further Considerations
5. Summary
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866,
13563, and 14094
B. Review Under the Regulatory Flexibility
Act
C. Review Under the Paperwork Reduction
Act of 1995
D. Review Under the National
Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality
Bulletin for Peer Review
VII. Public Participation
A. Participation in the Public Meeting
Webinar
B. Submission of Comments
C. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
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I. Synopsis of the Proposed
Determination
The Energy Policy and Conservation
Act, Public Law 94–163, as amended
(‘‘EPCA’’),1 among other things,
authorizes DOE to regulate the energy
efficiency of a number of consumer
products and certain industrial
equipment. (42 U.S.C. 6291–6317, as
codified) Title III, Part B of EPCA 2
established the Energy Conservation
Program for Consumer Products Other
Than Automobiles. (42 U.S.C. 6291–
6309) These products include oil,
electric, and weatherized gas consumer
furnaces, the subject of this NOPD. (42
U.S.C. 6292(a)(5))
1 All references to EPCA in this document refer
to the statute as amended through the Energy Act
of 2020, Public Law 116–260 (Dec. 27, 2020), which
reflect the last statutory amendments that impact
Parts A and A–1 of EPCA.
2 For editorial reasons, upon codification in the
U.S. Code, Part B was redesignated Part A.
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Pursuant to EPCA, DOE is required to
review the existing energy conservation
standards for covered consumer
products, at a minimum, every six years
after issuance of any final rule
establishing or amending a standard (42
U.S.C. 6295(m)(1)). DOE is conducting
this review of the energy conservation
standards for oil, electric, and
weatherized gas consumer furnaces
under EPCA’s six-year-lookback
authority. (Id.) Pursuant to that statutory
provision, DOE must publish either a
notification of determination that
standards for the product do not need to
be amended, or a notice of proposed
rulemaking (‘‘NOPR’’) including new
proposed energy conservation standards
(proceeding to a final rule, as
appropriate). (Id.) For the reasons
explained in the paragraphs that follow
and elsewhere in this document, DOE
has tentatively determined it
appropriate to issue this NOPD for the
consumer furnaces subject to this
rulemaking.
For this proposed determination, DOE
analyzed oil, electric, and weatherized
gas consumer furnaces subject to energy
conservation standards specified in 10
CFR 430.32(e)(1).
DOE first analyzed the technological
feasibility of more energy-efficient oil,
electric, and weatherized gas furnaces
and determined that amended standards
for electric furnaces are not
technologically feasible. For those oil
and weatherized gas furnaces for which
DOE determined higher standards to be
technologically feasible, DOE evaluated
whether higher standards would be
cost-effective by conducting life-cycle
cost (‘‘LCC’’) and payback period
(‘‘PBP’’) analyses. In addition, DOE
estimated energy savings that would
result from potential energy
conservation standards by conducting a
national impacts analysis (‘‘NIA’’), in
which it estimated the net present value
(‘‘NPV’’) of the total costs and benefits
experienced by consumers.
Based on the results of the analyses,
including the consideration of impacts
on manufacturers and product
availability as summarized in section V
of this document, DOE has tentatively
determined that current standards for
oil, electric, and weatherized gas
furnaces do not need to be amended.
II. Introduction
The following section briefly
discusses the statutory authority
underlying this proposed determination,
as well as some of the historical
background relevant to the
establishment of energy conservation
standards for oil, electric, and
weatherized gas furnaces.
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A. Authority
Among other things, EPCA, Public
Law 94–163 (42 U.S.C. 6291–6317, as
codified) authorizes DOE to regulate the
energy efficiency of a number of
consumer products and certain
industrial equipment. Title III, Part B of
EPCA established the Energy
Conservation Program for Consumer
Products Other Than Automobiles.
These products include consumer
furnaces, the subject of this document.
(42 U.S.C. 6292(a)(5)) EPCA prescribed
the initial energy conservation
standards for these products (42 U.S.C.
6295(f)(1)–(2)), and directs DOE to
conduct future rulemakings to
determine whether to amend these
standards. (42 U.S.C. 6295(f)(4) and 42
U.S.C. 6295(m)(1))
The energy conservation program
under EPCA consists essentially of four
parts: (1) testing, (2) labeling, (3) the
establishment of Federal energy
conservation standards, and (4)
certification and enforcement
procedures. Relevant provisions of
EPCA specifically include definitions
(42 U.S.C. 6291), test procedures (42
U.S.C. 6293), labeling provisions (42
U.S.C. 6294), energy conservation
standards (42 U.S.C. 6295), and the
authority to require information and
reports from manufacturers (42 U.S.C.
6296).
Subject to certain criteria and
conditions, DOE is required to develop
test procedures to measure the energy
efficiency, energy use, or estimated
annual operating cost of each covered
product. (42 U.S.C. 6295(o)(3)(A) and 42
U.S.C. 6295(r)) Manufacturers of
covered products must use the
prescribed DOE test procedure as the
basis for certifying to DOE that their
products comply with the applicable
energy conservation standards adopted
under EPCA and when making
representations to the public regarding
the energy use or efficiency of those
products. (42 U.S.C. 6293(c) and 42
U.S.C. 6295(s)) Similarly, DOE must use
these test procedures to determine
whether the products comply with
standards adopted pursuant to EPCA.
(42 U.S.C. 6295(s)) The DOE test
procedures for consumer furnaces
appear at title 10 of the Code of Federal
Regulations (‘‘CFR’’) part 430, subpart B,
appendix N.
Federal energy conservation
requirements for covered products
established under EPCA generally
supersede state laws and regulations
concerning energy conservation testing,
labeling, and standards. (42 U.S.C.
6297(a)–(c)) DOE may, however, grant
waivers of federal preemption in limited
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circumstances for particular state laws
or regulations, in accordance with the
procedures and other provisions set
forth under EPCA. (42 U.S.C. 6297(d))
Pursuant to the amendments to EPCA
contained in the Energy Independence
and Security Act of 2007 (EISA 2007),
Public Law 110–140, any final rule for
new or amended energy conservation
standards promulgated after July 1,
2010, is required to address standby
mode and off mode energy use. (42
U.S.C. 6295(gg)(3)) Specifically, when
DOE adopts a standard for a covered
product after that date, it must, if
justified by the criteria for adoption of
standards under EPCA (42 U.S.C.
6295(o)), incorporate standby mode and
off mode energy use into a single
standard, or, if that is not feasible, adopt
a separate standard for such energy use
for that product. (42 U.S.C.
6295(gg)(3)(A)–(B)) DOE’s current test
procedures for oil, electric, and
weatherized gas furnaces address
standby mode and off mode energy use.
DOE’s energy conservation standards
address standby mode and off mode
energy use only for non-weatherized oilfired furnaces (including mobile home
furnaces) and electric furnaces. 10 CFR
430.32(e)(1)(iii). In this analysis, DOE
considers such energy use in its
determination of whether energy
conservation standards need to be
amended.
EPCA also requires that DOE must
periodically review its already
established energy conservation
standards for a covered product no later
than six years from the issuance of a
final rule establishing or amending a
standard for a covered product. (42
U.S.C. 6295(m)) This six-year-lookback
provision requires that DOE publish
either a notice of determination that
standards do not need to be amended or
a NOPR, including new proposed
standards (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)(1))
EPCA further provides that, not later
than 3 years after the issuance of a final
determination not to amend standards,
DOE must publish either a notification
of determination that standards for the
product do not need to be amended, or
a NOPR including new proposed energy
conservation standards (proceeding to a
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final rule, as appropriate). (42 U.S.C.
6295(m)(3)(B)) DOE must make the
analysis on which a determination is
based publicly available and provide an
opportunity for written comment. (42
U.S.C. 6295(m)(2))
A determination that amended
standards are not needed must be based
on consideration of whether amended
standards will result in significant
conservation of energy, are
technologically feasible, and are costeffective. (42 U.S.C. 6295(m)(1)(A) and
42 U.S.C. 6295(n)(2)) Additionally, any
new or amended energy conservation
standard prescribed by the Secretary for
any type (or class) of covered product
shall be designed to achieve the
maximum improvement in energy
efficiency which the Secretary
determines is technologically feasible
and economically justified. (42 U.S.C.
6295(o)(2)(A)) Among the factors DOE
considers in evaluating whether a
proposed standard level is economically
justified includes whether the proposed
standard at that level is cost-effective, as
defined under 42 U.S.C.
6295(o)(2)(B)(i)(II). Under 42 U.S.C.
6295(o)(2)(B)(i)(II), an evaluation of
cost-effectiveness requires DOE to
consider savings in operating costs
throughout the estimated average life of
the covered products in the type (or
class) compared to any increase in the
price, initial charges, or maintenance
expenses for the covered products that
are likely to result from the standard.
(42 U.S.C. 6295(n)(2) and 42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE is publishing
this NOPD in satisfaction of the sixyear-lookback review requirement in
EPCA.
B. Background
1. Current Standards
DOE most recently completed a
review of its consumer furnace
standards in a direct final rule (‘‘DFR’’)
published in the Federal Register on
June 27, 2011 (‘‘June 2011 DFR’’),
through which DOE amended the
existing energy conservation standards
for non-weatherized gas furnaces
(‘‘NWGFs’’), mobile home gas furnaces
(‘‘MHGFs’’), weatherized gas furnaces
(‘‘WGFs’’), NWOF, MHOFs, and
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weatherized oil furnaces (‘‘WOFs’’).3 76
FR 37408. The June 2011 DFR amended
the existing energy conservation
standards for NWGFs, MHGFs, and
NWOFs (which are specified in terms of
annual fuel utilization efficiency
‘‘AFUE’’), and amended the compliance
date (but left the existing standards in
place) for WGFs. The June 2011 DFR
also established electrical standby mode
and off mode standards for NWGFs,
MHGFs, NWOFs, MHOFs, and electric
furnaces. As a result of a settlement
agreement approved by the Court of
Appeals for the D.C. Circuit, the
standards established by the June 2011
DFR for NWGFs and MHGFs did not go
into effect.4 However, the court order
left in place the standards for WGFs,
NWOFs, MHOFs, WOFs, and electric
furnaces, which are the subject of this
NOPD.
The AFUE standards currently
applicable to all consumer furnaces,
including the product classes for which
DOE is conducting analyses in this
NOPD, are set forth in DOE’s regulations
at 10 CFR 430.32(e)(1)(ii). Table II.1
presents the currently applicable
standards for oil, electric, and
weatherized gas furnaces and the date
on which compliance with each such
standard was required.
3 This rulemaking was undertaken pursuant to the
voluntary remand in State of New York, et al. v.
Department of Energy, et al., 08–311–ag(L); 08–312–
ag(con) (2d Cir. Filed Jan. 17, 2008).
4 DOE confirmed the standards and compliance
dates promulgated in the June 2011 DFR in a notice
of effective date and compliance dates published in
the Federal Register on October 31, 2011 (‘‘October
2011 notice’’). 76 FR 67037. After publication of the
October 2011 notice, the American Public Gas
Association (‘‘APGA’’) sued DOE to invalidate the
rule as it pertained to NWGFs and MHGFs. Petition
for Review, American Public Gas Association, et al.
v. Department of Energy, et al., No. 11–1485 (D.C.
Cir. filed Dec. 23, 2011). On April 24, 2014, the
Court granted a motion that approved a settlement
agreement that was reached between DOE, APGA,
and the various intervenors in the case, in which
DOE agreed to a remand of the non-weatherized gas
furnace and mobile home gas furnace portions of
the June 2011 DFR in order to conduct further
notice-and-comment rulemaking. Accordingly, the
Court’s order vacated the June 2011 DFR in part
(i.e., those portions relating to non-weatherized gas
furnaces and mobile home gas furnaces) and
remanded to the agency for further rulemaking.
NWGFs and MHGFs are being addressed in a
separate rulemaking proceeding (see Docket No.
EERE–2014–BT–STD–0031).
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TABLE II.1—FEDERAL AFUE STANDARDS FOR OIL, ELECTRIC, AND WEATHERIZED GAS FURNACES
AFUE
(percent)
Product class
Non-weatherized oil-fired furnaces (not including mobile home furnaces) ................................................
Mobile home oil-fired furnaces ...................................................................................................................
Weatherized gas furnaces ..........................................................................................................................
Weatherized oil-fired furnaces ....................................................................................................................
Electric furnaces .........................................................................................................................................
Compliance date
83
75
81
78
78
May 1, 2013.
September 1, 1990.
January 1, 2015.
January 1, 1992.
January 1, 1992.
TABLE II.2—FEDERAL STANDBY MODE AND OFF MODE STANDARDS FOR OIL AND ELECTRIC FURNACES
Maximum
standby mode
electrical
power
consumption,
PW,SB
(watts)
Product class
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Non-weatherized oil-fired furnaces (including mobile home furnaces) .........................................
Electric furnaces .............................................................................................................................
2. History of Standards Rulemakings for
Consumer Furnaces
Amendments to EPCA in the National
Appliance Energy Conservation Act of
1987 (‘‘NAECA’’; Pub. L. 100–12)
established EPCA’s original energy
conservation standards for furnaces,
consisting of the minimum AFUE levels
for mobile home furnaces and for all
other furnaces except ‘‘small’’ gas
furnaces. (42 U.S.C. 6295(f)(1)–(2)) The
original standards established a
minimum AFUE of 75 percent for
mobile home furnaces and 78 percent
for all other furnaces. Pursuant to
authority conferred under 42 U.S.C.
6295(f)(1)(B), DOE subsequently
adopted a mandatory minimum AFUE
level for ‘‘small’’ furnaces through a
final rule published in the Federal
Register on November 17, 1989 (‘‘the
November 1989 Final Rule’’). 54 FR
47916. The standards established by
NAECA and the November 1989 Final
Rule for ‘‘small’’ gas furnaces are still in
effect for MHOFs, WOFs, and EFs.
Pursuant to EPCA, DOE was required
to conduct two rounds of rulemaking to
consider amended energy conservation
standards for all consumer furnaces, and
an additional round of rulemaking for
mobile home furnaces. (42 U.S.C.
6295(f)(4)(A), (B), and (C)) In
satisfaction of the first round of
amended standards rulemaking under
42 U.S.C. 6295(f)(4)(B), on November
19, 2007, DOE published in the Federal
Register a final rule (‘‘November 2007
Final Rule’’) that revised the standards
for most furnaces but left them in place
for two product classes (i.e., MHOFs and
WOFs).5 The standards amended in the
5 The November 2007 Final Rule adopted
amended standards for ‘‘oil-fired furnaces’’
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November 2007 Final Rule were to
apply to furnaces manufactured or
imported on and after November 19,
2015. 72 FR 65136 (Nov. 19, 2007). The
energy conservation standards in the
November 2007 Final Rule consist of a
minimum AFUE level for each of the six
classes of furnaces. Id. at 72 FR 65169.
Based on the market analysis for the
November 2007 Final Rule and the
standards established under that rule,
the November 2007 Final Rule
eliminated the distinction between
furnaces based on their certified input
capacity, (i.e., the standards applicable
to ‘‘small’’ furnaces were established at
the same level and as part of their
appropriate class of furnace generally).
Id.
Following DOE’s adoption of the
November 2007 Final Rule, several
parties jointly sued DOE in the United
States Court of Appeals for the Second
Circuit (‘‘Second Circuit’’) to invalidate
the rule. Petition for Review, State of
New York, et al. v. Department of
Energy, et al., Nos. 08–0311–ag(L); 08–
0312–ag(con) (2d Cir. filed Jan. 17,
2008). The petitioners asserted that the
standards for furnaces promulgated in
the November 2007 Final Rule did not
reflect the ‘‘maximum improvement in
energy efficiency’’ that ‘‘is
technologically feasible and
economically justified’’ under 42 U.S.C.
6295(o)(2)(A). On April 16, 2009, DOE
filed with the Court a motion for
generally. However, on July 28, 2008, DOE
published a technical amendment final rule in the
Federal Register that clarified that the amended
standards adopted in the November 2007 Final Rule
for oil-fired furnaces did not apply to mobile home
oil-fired furnaces and weatherized oil-fired
furnaces; rather they were only applicable for nonweatherized oil-fired furnaces. 73 FR 43611, 43613
(July 28, 2008).
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11
10
Maximum
off mode
electrical
power
consumption,
PW,OFF
(watts)
11
10
Compliance
date
May 1, 2013.
May 1, 2013.
voluntary remand that the petitioners
did not oppose. The motion did not
state that the November 2007 Final Rule
would be vacated, but it indicated that
DOE would revisit its initial
conclusions outlined in the November
2007 Final Rule in a subsequent
rulemaking action. DOE also agreed that
the final rule in that subsequent
rulemaking action would address both
regional standards for furnaces and the
effects of alternate standards on natural
gas prices. The Second Circuit granted
DOE’s motion on April 21, 2009. DOE
notes that the Second Circuit’s order did
not vacate the energy conservation
standards set forth in the November
2007 Final Rule, and during the remand,
the standards went into effect as
originally scheduled.
On June 27, 2011, DOE published a
direct final rule (‘‘DFR’’) in the Federal
Register (‘‘June 2011 DFR’’) revising the
energy conservation standards for
residential furnaces pursuant to the
voluntary remand in State of New York,
et al. v. Department of Energy, et al. 76
FR 37408. In the June 2011 DFR, DOE
considered the amendment of the same
six product classes considered in the
November 2007 Final Rule analysis plus
electric furnaces. As discussed
previously, the June 2011 DFR amended
the existing AFUE energy conservation
standards for NWGFs, MHGFs, and
NWOFs and amended the compliance
date (but left the existing standards in
place) for WGFs. The June 2011 DFR
also established electrical standby mode
and off mode energy conservation
standards for NWGFs, MHGFs, NWOFs,
MHOFs, and EFs. DOE confirmed the
standards and compliance dates
promulgated in the June 2011 DFR in a
notice of effective date and compliance
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dates published in the Federal Register
on October 31, 2011 (‘‘October 2011
Notice’’). 76 FR 67037. The November
2007 Final Rule and the June 2011 DFR
represented the first and the second
rounds, respectively, of the two
rulemakings required under 42 U.S.C.
6295(f)(4)(B)–(C) to consider amending
the energy conservation standards for
consumer furnaces.
The June 2011 DFR and October 2011
Notice of effective date and compliance
dates amended, in relevant part, the
AFUE energy conservation standards
and compliance dates for three product
classes of consumer furnaces (i.e.,
NWGFs, MHGFs, and NWOFs).6 The
existing AFUE standards were left in
place for three classes of consumer
furnaces (i.e., WOFs, MHOFs, and EFs).
For WGFs, the existing standard was left
in place, but the compliance date was
amended. Electrical standby mode and
off mode energy consumption standards
were established for non-weatherized
gas and oil-fired furnaces (including
mobile home furnaces) and EFs.
Compliance with the energy
conservation standards promulgated in
the June 2011 DFR was to be required
on May 1, 2013, for non-weatherized gas
furnaces, mobile home gas furnaces, and
non-weatherized oil furnaces, and on
January 1, 2015, for weatherized
furnaces. 76 FR 37408, 37547–37548
(June 27, 2011); 76 FR 67037, 67051
(Oct. 31, 2011). The amended energy
conservation standards and compliance
dates in the June 2011 DFR superseded
those standards and compliance dates
promulgated by the November 2007
Final Rule for NWGFs, MHGFs, and
NWOFs. Similarly, the amended
compliance date for WGFs in the June
2011 DFR superseded the compliance
date in the November 2007 Final Rule.
Following DOE’s adoption of the June
2011 DFR, the American Public Gas
Association (‘‘APGA’’) filed a petition
for review with the United States Court
of Appeals for the District of Columbia
Circuit (‘‘D.C. Circuit’’) to invalidate the
DOE rule as it pertained to NWGFs and
MHGFs. Petition for Review, American
Public Gas Association, et al. v.
Department of Energy, et al., No. 11–
1485 (D.C. Cir. filed Dec. 23, 2011). The
parties to the litigation engaged in
settlement negotiations, which
ultimately led to filing of an unopposed
motion on March 11, 2014, seeking to
vacate DOE’s rule in part and to remand
to the agency for further rulemaking.
On April 24, 2014, the Court granted
the motion and ordered that the
standards established for NWGFs and
MHGFs be vacated and remanded to
DOE for further rulemaking. As a result,
the standards established by the June
2011 DFR for NWGFs and MHGFs did
not go into effect, and, thus, required
compliance with the standards
established in the November 2007 Final
Rule for these products began on
November 19, 2015. As stated
previously, the AFUE standards for
WOFs, MHOFs, and EFs were
unchanged, and as such, the original
standards for those product classes
remain in effect. Further, the amended
standard for NWOFs was not subject to
the Court order and went into effect as
specified in the June 2011 DFR. The
AFUE standards currently applicable to
all residential furnaces,7 including the
five product classes for which DOE is
analyzing amended standards in this
NOPD, are set forth in DOE’s regulations
at 10 CFR 430.32(e)(1)(ii) and (iii).
On January 28, 2022, DOE published
in the Federal Register a request for
information (‘‘January 2022 RFI’’) to
initiate a review to determine whether
any new or amended standards would
satisfy the relevant requirements of
EPCA for a new or amended energy
conservation standard for oil, electric,
and weatherized gas consumer furnaces.
87 FR 4513. On November 29, 2022,
DOE published in the Federal Register
a notice of availability of a preliminary
technical support document (‘‘TSD’’)
(‘‘the November 2022 Preliminary
Analysis’’) that presented initial
technical analyses in the following
areas: (1) market and technology; (2)
screening; (3) engineering; (4) markups
to determine product price; (5) energy
use; (6) life-cycle cost (‘‘LCC’’) and
payback period (‘‘PBP’’); and (7)
national impacts. 87 FR 73259. DOE
held a public meeting webinar on
December 19, 2022 in order to receive
public input and information related to
the November 2022 Preliminary
Analysis for the subject furnaces.
DOE received comments in response
to the November 2022 Preliminary
Analysis from the interested parties
listed in Table II.3.
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TABLE II.3—NOVEMBER 2022 PRELIMINARY ANALYSIS PUBLIC COMMENTS
Comment No.
in the docket
Commenter(s)
Reference in this NOPD
Commenter type
Air-Conditioning, Heating, & Refrigeration Institute ..................
AHRI .......................................
23
American Gas Association ........................................................
American Gas Association, American Public Gas Association,
National Propane Gas Association, Spire Inc., Spire Missouri Inc.
Appliance Standards Awareness Project, American Council
for an Energy-Efficiency Economy, Consumer Federation of
America, Natural Resources Defense Council.
Johnson Controls International .................................................
Lennox International .................................................................
New York State Energy Research and Development Authority
Northwest Energy Efficiency Alliance .......................................
AGA ........................................
Joint Commenters ...................
* 28
24
Joint Advocates ......................
22
Efficiency Advocacy Organizations.
JCI ...........................................
Lennox ....................................
NYSERDA ...............................
NEEA ......................................
25
26
19
21
Manufacturer.
Manufacturer.
State Agency.
Efficiency Advocacy Organization.
Manufacturer Trade Association.
Utility Trade Association.
Utilities and Utility Trade Associations.
* Comment No. 28 corresponds to the transcript for the webinar held on December 19, 2022. These commenters made oral comments during
the public meeting that are summarized and discussed in this document.
6 For NWGFs and MHGFs, the standards were
amended to a level of 80-percent AFUE nationally
with a more-stringent 90-percent AFUE requirement
in the Northern Region. For NWOF furnaces, the
standard was amended to 83-percent AFUE
nationally. 76 FR 37408, 37410 (June 27, 2011).
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7 DOE divides consumer furnaces into seven
classes for the purpose of setting energy
conservation standards: (1) NWGFs, (2) MHGFs, (3)
WGFs, (4) NWOFs, (5) MHOFs, (6) WOFs, and (7)
electric furnaces. 10 CFR 430.32(e)(1)(ii). As noted
previously, DOE has been analyzing amended
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standards for NWGFs and MHGFs as part of a
separate, ongoing rulemaking (see Docket No.
EERE–2014–BT–STD–0031).
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Any oral comments provided during
the webinar that are not substantively
the same as those presented in written
comments are summarized and cited
separately. throughout this NOPD. A
parenthetical reference at the end of a
comment quotation or paraphrase
provides the location of the item in the
public record.8
C. Deviation From Appendix A
In accordance with section 3(a) of 10
CFR part 430, subpart C, appendix A
(‘‘appendix A’’), DOE notes that it is
deviating from the provision in
appendix A regarding the pre-NOPR and
NOPR stages for an energy conservation
standards rulemaking.
Section 6(a)(2) of the Process Rule
states that if DOE determines it is
appropriate to proceed with a
rulemaking, for the preliminary stages of
a rulemaking to issue or amend an
energy conservation standard, DOE will
undertake a framework document and
preliminary analysis, or an advance
notice of proposed rulemaking. While
DOE published a preliminary analysis
for this rulemaking (see 87 FR 73529
(Nov. 29, 2022)), DOE did not publish
a framework document in conjunction
with the preliminary analysis. DOE
notes, however, that chapter 2 of the
preliminary technical support document
that accompanied the preliminary
analysis—titled Analytical Framework,
Comments from Interested Parties, and
DOE Responses—describes the general
analytical framework that DOE uses in
evaluating and developing potential
amended energy conservation
standards.9 Further, DOE provided an
overview of the analysis it would use to
evaluate new or amended energy
conservation standards in the January
2022 RFI (see 87 FR 4513 (Jan. 28,
2022)). As such, publication of a
separate Framework Document would
be largely redundant of previously
published documents.
III. General Discussion and Rationale
ddrumheller on DSK120RN23PROD with PROPOSALS2
DOE developed this proposed
determination after a review of the
market for the subject furnaces,
including product listings in the DOE
Compliance Certification Database
(‘‘CCD’’) database.10 DOE also
8 The parenthetical reference provides a reference
for information located in the docket. (Docket No.
EERE–2021–BT–STD–0031, which is maintained at
www.regulations.gov). The references are arranged
as follows: (commenter name, comment docket ID
number, page of that document).
9 The preliminary technical support document is
available at www.regulations.gov/document/EERE2021-BT-STD-0031-0011.
10 U.S. Department of Energy Compliance
Certification Database. (Available at:
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considered comments, data, and
information from interested parties that
represent a variety of interests. This
NOPD addresses issues raised by these
commenters.
A. General Comments
1. Comments Supporting Amended
Standards
In response to the November 2022
Preliminary Analysis, several
commenters expressed their support of
amended energy conservation standards
for oil, electric, and weatherized gas
consumer furnaces.
The Joint Advocates stated that DOE’s
preliminary analysis demonstrates that
condensing-level standards for NWOFs
are technologically feasible and could
result in significant consumer savings.
The Joint Advocates further commented
that fuel regulations in many northern
States have helped to reduce the sulfur
content in heating oil, adding that this
results in condensing NWOFs becoming
technologically feasible and
commercially available. (Joint
Advocates, No. 22 at p. 1) The Joint
Advocates pointed out that Adams
Manufacturing commented on the
January 2022 RFI in support of a 95percent AFUE standard for NWOFs.11
(Joint Advocates, No. 22 at p. 2)
NYSERDA stated support for DOE
increasing the furnace standards,
particularly for oil furnaces and for
standby and off modes. NYSERDA
argued that there are cost-effective and
beneficial energy and associated
greenhouse gas savings available
through improvements to electric,
weatherized gas, and particularly oil
furnaces. (NYSERDA, No. 19 at p. 1)
As part of the rulemaking process,
DOE carefully considers the benefits
and burdens of amended energy
conservation standards to determine
whether such standards are the
maximum standard levels that are
technologically feasible and
economically justified and would
conserve a significant amount of energy,
as required by EPCA (see 42 U.S.C.
6295(o)(2)–(3)). Section IV of this
document outlines DOE’s approach to
analyzing various potential amended
energy conservation standard levels,
and section V of this document provides
the results of those analyses, as well as
a detailed explanation of DOE’s
weighing of the benefits and burdens.
Based upon its analysis and
www.regulations.doe.gov/certification-data/) (Last
accessed Sept. 1, 2023).
11 The comment from Adams Manufacturing, Co.
in response to the January 2022 RFI can be found
at: www.regulations.gov/comment/EERE-2021-BTSTD-0031-0010.
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consideration of the relevant statutory
criteria, DOE is proposing not to amend
the existing standards for oil, electric,
and weatherized gas furnaces at this
time. The rationale for DOE’s proposed
determination is discussed in detail in
section V of this document.
2. Comments Opposing Amended
Standards
In response to the November 2022
Preliminary Analysis, several
commenters expressed opposition to
amended energy conservation standards
for oil, electric, and weatherized gas
consumer furnaces.
The Joint Commenters stated that they
are guided by the congressional
mandate that appliance efficiency
standards should not impose unjustified
costs on consumers or deprive
consumers of gas products that are
suitable for their needs. The Joint
Commenters stated that such standards
are not authorized by statute and would
be harmful to fuel gas providers and the
consumers they serve. (Joint
Commenters, No. 24 at p. 2) AHRI
commented that DOE should adopt a
no-new-standards determination for
mobile home oil-fired and nonweatherized oil-fired furnaces, given the
burden placed on manufacturers to meet
more-stringent standards that will
provide insubstantial energy savings.
(AHRI, No. 23 at pp. 3–4)
AHRI also commented that DOE
should adopt a no-new-standards
determination for weatherized gas-fired
furnaces. The commenter argued that
DOE should adopt the same
determination for consumer
weatherized gas furnaces as was done
for commercial warm air furnaces, given
that they are technologically similar.
AHRI and Lennox commented that a
move to an AFUE greater than 90
percent for weatherized gas furnaces is
unjustified, adding that EL 1 showed a
9.1-year payback period and 45.8
percent of consumers experiencing a net
cost. (AHRI, No. 23 at p. 3; Lennox, No.
26 at p. 2)
Lennox urged DOE to consider the
cumulative regulatory burden of all
ongoing rulemakings on furnace
manufacturers. (Lennox, No. 26 at p. 9)
The commenter also stated that
weatherized gas, non-weatherized oil,
and electric furnaces are niche products
and total less than 10 percent of the
consumer furnace market. More
specifically, Lennox stated that
weatherized gas furnaces comprise
approximately 7 percent of the market,
and non-weatherized oil and electric
furnaces each account for less than 1
percent of the market. (Lennox, No. 26
at p. 1) Lennox acknowledged that
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technologies exist that could advance
the efficiency of gas and oil furnaces
included in the preliminary TSD.
However, Lennox stated that consumer
cost and utility issues render morestringent standards unjustified for the
subject oil and gas furnaces. In
particular, for weatherized gas products,
Lennox recommended that DOE find
that a no-new-standards determination
is warranted for these product
categories. (Id. at p. 6)
Lennox stated that the market
adoption of condensing weatherized
furnaces has been minimal. Lennox
estimated that condensing weatherized
furnaces are at less than 0.12 percent of
the weatherized gas market and that
there is no indication of growth in the
market. Therefore, Lennox surmised
that condensing efficiency levels would
not be appropriate for DOE to consider
as a basis for a national efficiency
standard for weatherized gas furnaces
and that DOE should not seek to
mandate WGF condensing technology.
(Lennox, No. 26 at p. 7)
Lennox stated that many consumers
have been adversely impacted by the
ongoing COVID pandemic and high
inflation, particularly consumers who
might already be struggling to afford
new furnace equipment. Accordingly,
Lennox argued that DOE increasing
furnace equipment costs with new
efficiency standards is not economically
justified at this juncture. (Lennox, No.
26 at p. 2)
In response, as discussed in section
II.A of this document, DOE must
periodically review its already
established energy conservation
standards for consumer furnaces no
later than six years from the issuance of
a final rule establishing or amending a
standard for consumer furnaces. This
six-year-lookback provision requires
that DOE publish either a determination
that standards do not need to be
amended or a NOPR, including new
proposed standards (proceeding to a
final rule, as appropriate). (42 U.S.C.
6295(m)(1)) As part of the rulemaking
process, DOE carefully considers the
benefits and burdens of amended
standards to determine whether the
amended standards are the maximum
standard levels that are technologically
feasible and economically justified and
would conserve a significant amount of
energy, as required by EPCA (see 42
U.S.C. 6295(o)(2)–(3)). Section IV of this
document outlines DOE’s approach to
analyzing various potential amended
standard levels, and section V of this
document provides the results of those
analyses. Section V also provides a
detailed explanation of DOE’s weighing
of the benefits and burdens and the
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rationale for proposing not to amend
standards for oil, electric, and
weatherized gas furnaces at this time.
Regarding DOE’s consideration of
cumulative regulatory burden, DOE is
not proposing to amend the energy
conservation standards for oil, electric,
and weatherized gas furnaces, so,
therefore, the Department does not
expect this rulemaking to contribute to
the cumulative regulatory burden of
manufactures.
3. Standby Mode and Off Mode
As discussed in section II.A of this
document, EPCA requires any final rule
for new or amended energy
conservation standards promulgated
after July 1, 2010 to address standby
mode and off mode energy use. (42
U.S.C. 6295(gg)(3))
‘‘Standby mode’’ and ‘‘off mode’’
energy use are defined in the DOE test
procedure for residential furnaces and
boilers (i.e., ‘‘Uniform Test Method for
Measuring the Energy Consumption of
Consumer Furnaces Other Than
Boilers,’’ 10 CFR part 430, subpart B,
appendix N; ‘‘appendix N’’). In that test
procedure, DOE defines ‘‘standby
mode’’ as any mode in which the
furnace is connected to a mains power
source and offers one or more of the
following space heating functions that
may persist: (a) To facilitate the
activation of other modes (including
activation or deactivation of active
mode) by remote switch (including
thermostat or remote control), internal
or external sensors, and/or timer; and
(b) Continuous functions, including
information or status displays or sensor
based functions. 10 CFR part 430,
subpart B, appendix N, section 2. ‘‘Off
mode’’ for consumer furnaces is defined
as a mode in which the furnace is
connected to a mains power source and
is not providing any active mode or
standby mode function, and where the
mode may persist for an indefinite time.
The existence of an off switch in off
position (a disconnected circuit) is
included within the classification of off
mode. 10 CFR part 430, subpart B,
appendix N, section 2. An ‘‘off switch’’
is defined as the switch on the furnace
that, when activated, results in a
measurable change in energy
consumption between the standby and
off modes. 10 CFR part 430, subpart B,
appendix N, section 2. Currently, the
standby mode and off mode energy
conservation standards for NWOFs and
EFs are outlined in 10 CFR 430.32
(e)(1)(iii) and are shown in Table II.2 of
this document. Compliance with the
Federal standards for standby mode and
off mode electricity consumption for
NWOFs, MHOFs, and EFs, as measured
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by standby power consumption in watts
(‘‘PW,SB’’) and off mode power
consumption in watts (‘‘PW,OFF’’), was
required on May 1, 2013.
In the November 2022 Preliminary
Analysis, DOE analyzed amended
standby/off mode standards for NWOFs,
MHOFs and EFs. DOE did not consider
amended standby mode and off mode
standards for WGFs and WOFs, because
DOE has previously concluded in a
direct final rule published in the
Federal Register on June 27, 2011 that
these products are packaged with either
an air conditioner or heat pump and
that the standards for those products,
specified in terms of power
consumption in watts and Seasonal
Energy Efficiency Ratio (‘‘SEER’’),
already account for the standby mode
and off mode energy consumption for
these classes of furnaces. 76 FR 37408,
37433. Based on market analysis
conducted for the November 2022
Preliminary Analysis, DOE tentatively
concludes that WGFs and WOFs
continue to be packaged with an air
conditioner or heat pump.
In the analysis for the November 2022
Preliminary Analysis, DOE established
the baseline for NWOFs, MHOFs, and
EFs as the current Federal standby mode
and off mode standards (see Table II.2).
DOE also defined and identified
baseline components as those that
consumed the most electricity during
standby mode and off mode operation.
For intermediate efficiency levels, DOE
utilized a design-option approach to
identify design options that could be
applied to the baseline design to reduce
standby mode and off mode energy
consumption. Above the baseline
efficiency level, DOE implemented
design options in the order of
incremental energy savings relative to
baseline until all available design
options were employed (i.e., at a maxtech level). DOE identified two design
options between the baseline and maxtech design that were used as the basis
for intermediate standby mode and off
mode design options. Specifically, DOE
replaced the linear transformer found in
models at the baseline with a low-loss
transformer (‘‘LL–LTX’’) for the first
intermediate efficiency level and
replaced the linear power supply found
in baseline models with a switching
mode power supply (‘‘SMPS’’) for the
second intermediate efficiency level.
The max-tech standby mode and off
mode efficiency level in the November
2022 Preliminary Analysis was based on
a combination of the two design options
that were analyzed for the intermediate
efficiency levels. To reach max-tech,
DOE analyzed using an LL–LTX in
combination with an SMPS to reach the
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minimum standby mode or off mode
power consumption (without
eliminating other consumer- or
performance-related electronic features).
For this design option, a transformer is
only needed to step down the voltage
for the thermostat because the SMPS is
able to step down the voltage for the
other components of the furnace. As
such, a smaller, lower-cost LL–LTX is
used at the max-tech level, as compared
to the LL–LTX used at EL 1 (i.e., the first
intermediate efficiency level).
In response to the November 2022
Preliminary Analysis, Lennox
commented that it is not aware of new
or improved technology options
regarding standby mode and off mode
energy use beyond those previously
identified that significantly impact the
range of efficiencies for the product
covered in this rulemaking. (Lennox,
No. 26 at p. 4) However, Lennox also
pointed out that consumers, utilities,
third-party aggregators, and regulators
through programs such as EPA ENERGY
STAR are looking to further deploy
features that enable installation
verification, ongoing monitoring,
diagnostics, and prognostic features that
can save significantly more energy than
de minimis standby power limits
achieve. (Id.)
AHRI and Lennox stated that the
following functions and components
utilize the furnace’s power supply in the
on, standby, and off modes: indoor and
outdoor air conditioner (‘‘AC’’)/heat
pump (‘‘HP’’) Motors (‘‘ECM’’); AC/HP
outdoor control board; heat pump
defrost control; indoor and outdoor
electronic expansion valve; heat pump
reversing valve; zoning systems; UV
germicidal light; humidifier;
communicating controls that aid in
proper commissioning, system
performance monitoring and reporting,
identification of faults, and consumer
interface; temperature sensors; air
pressure sensors; refrigerant pressure
sensors; gas pressure sensors; and
proprietary diagnostic-prognostic
sensors. (AHRI, No. 23, at p. 2; Lennox,
No. 26 at p. 5) Lennox further added
that thermostats utilize the furnace’s
power supply in the on, standby, and off
modes. (Lennox, No. 26 at p. 5) AHRI
added that integrated furnace controls,
gas valves, and combustion air inducers
utilize the furnace power in on, standby,
and off modes. (AHRI, No. 23, at p. 2)
AHRI and Lennox commented that
additional safety-related sensors are
being considered for furnaces that could
further render more-stringent standby
power limits impractical, including
refrigerant leak detection mitigation
sensors and CO sensors. (Lennox, No. 26
at p. 5; AHRI, No. 23, at p. 2) Lennox
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also added CO2 sensors to the list of
potential future diagnostic features and
stated that this list is likely to grow over
time. (Lennox, No. 26 at p. 5)
Lennox commented that increased
stringency in standards for standby
power levels would inhibit other
innovations that save energy and benefit
consumers. Lennox further stated that
increased stringency would also inhibit
implementation of additional safety
features. (Lennox, No. 26 at p. 2) In
addition, Lennox stated that the energy
savings for standby mode and off mode
standards for all of the products
considered in this rulemaking do not
meet the DOE criteria of significant
energy savings. (Id.) AHRI commented
that DOE should consider the standby
mode and off mode requirements of
higher technology features when
evaluating the standby mode and off
mode efficiency levels. (AHRI, No. 23 at
p. 3) AHRI and Lennox commented that
overly stringent standby mode and off
mode standards would inhibit the
integration of smart communicating
controls, installation and diagnostic
features, and zoning that can enable
much larger energy savings than the
minor savings achieved by the standby
power limit itself. Lennox stated that
these advanced features have entered
the market for fully featured
communicating products and require
more standby mode and off mode
energy than the baseline products.
(Lennox, No. 26 at p. 4; AHRI, No. 23
at p. 3)
Lennox and AHRI agreed that standby
mode and off mode power consumption
for WGFs that are part of a singlepackage air conditioner or heat pump
are captured in the PW,OFF and SEER
metrics for these products. (Lennox, No.
26 at p. 3; AHRI, No. 23 at p. 4) Lennox
stated that the current DOE metrics
capture the standby energy regardless of
the mode of operation. (Lennox, No. 26
at p. 3) Lennox commented that it is not
aware of seasonal differences in standby
mode and off mode energy
consumption. Further, Lennox
commented that a condensing standard
for WGF may force additional factory- or
field-installed components to prevent
freezing (i.e., heat tape or other) of the
condensate system, which may increase
standby energy consumption in heating
mode. (Lennox, No. 26 at p. 3)
AHRI commented that an 8.5 W
maximum standard for standby mode
and off mode power does not allow for
the addition of the aforementioned
communication, diagnostic, and safety
features. (AHRI, No. 23 at p. 2) AHRI
recommended that DOE re-evaluate the
necessary power draw for
communication and safety-related
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features and the max-tech level based
upon the use of a 20 VA LL–LTX
transformer and SMPS to meet these
utilities. (Id. at p. 3) AHRI commented
that a 20 VA transformer cannot supply
the needs of all interconnected controls
for all types of systems. AHRI added
that if the transformer cannot power the
necessary internal functions, then DOE
must reconsider the proposed 8.5-watt
standby power limit and whether the
11-watt baseline is sufficient. AHRI
further commented that if DOE must go
higher than 11 watts, DOE may need to
make allowance in future test
procedures so that the effects of safety
and other control measures do not count
against the proposed 11-watt limit. (Id.)
AHRI commented that an incorrectly
set minimum standard will drive
connected products such as thermostats,
WIFI controls, etc. to use add-on power
supplies and cause an additional
economic burden on consumers,
asserting that this would defeat the
purpose of the proposed maximum
watts limit. AHRI commented that there
are already auxiliary power supplies on
the market for thermostats and other
devices. (Id. at p. 3)
NYSERDA commented that the
technology options for standby mode
that rely on switching mode power
supply with a low-loss linear
transformer have been considered by
DOE for several years and are
anticipated to be transferable across
furnace types, including the oil and
electric furnaces addressed in this
rulemaking. NYSERDA explained that
as switch-mode power supply and lowloss linear transformers become the
standard for much of the furnace
market, it becomes more feasible for
those technologies to apply to oil and
electric furnaces as well. (NYSERDA,
No. 19 at p. 2)
NYSERDA recommended that DOE
propose the max-tech levels for standby
mode and off mode at the NOPR stage.
NYSERDA explained that, as this
rulemaking is finalized, the broader
furnace manufacturing industry is
anticipated to evolve toward technology
for standby mode that relies on
switching mode power supply with a
low-loss linear transformer. (NYSERDA,
No. 19 at p. 2)
After considering this feedback, DOE
understands that typical and baseline
levels of power consumption of
consumer furnaces in standby mode or
off mode are likely to increase in the
future as manufacturers continue to
build increasingly complex controls into
consumer furnaces, and that many of
the likely changes are related to features
such as safety sensors or to other
improvements in functionality that
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would provide utility for the consumer.
Based on these comments, DOE has
found that there is some degree of
uncertainty that exists with respect to
the appropriateness of the standby
mode/off mode efficiency levels
analyzed in the November 2022
Preliminary Analysis—particularly for
products that are in development but
also possibly in some products already
on the market. There is also uncertainty
related to the potential impacts that
standby mode and off mode power
consumption standards could have on
overall system energy consumption and
consumer utility. Consequently, DOE
has determined that it lacks the
necessary information to amend the
standby mode and off mode standards at
this time. Particularly, since some of the
functionalities at issue could have
significant safety or energy-savings
benefits, DOE does not wish to stymie
such developments through wellintentioned but ultimately
counterproductive standby mode/off
mode standards. Instead, DOE needs to
have a better understanding of the
legitimate power consumption needs of
the subject furnaces when operating in
standby mode and off mode. Although
DOE remains cognizant of the relevant
requirements of 42 U.S.C. 6295(gg)(3),
DOE has concluded that it does not
currently have the requisite evidence to
support amended standby mode and off
mode standards under the applicable
statutory criteria in EPCA. Therefore,
DOE is not proposing to amend the
standby mode/off mode power
standards for NWOFs, MHOFs, and EFs
this time, but instead, DOE will
continue to investigate these issues and
may consider such standards in a future
rulemaking.
B. Scope of Coverage and Product
Classes
This proposed determination covers
certain product classes of consumer
furnaces (i.e., ones for oil, electric, and
weatherized gas furnaces). A consumer
‘‘furnace’’ is defined as a product which
utilizes only single-phase electric
current, or single-phase electric current
or DC current in conjunction with
natural gas, propane, or home heating
oil, and which—
(A) Is designed to be the principal
heating source for the living space of a
residence;
(B) Is not contained within the same
cabinet with a central air conditioner
whose rated cooling capacity is above
65,000 Btu per hour;
(C) Is an electric central furnace,
electric boiler, forced-air central
furnace, gravity central furnace, or lowpressure steam or hot water boiler; and
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(D) Has a heat input rate of less than
300,000 Btu per hour for electric boilers
and low-pressure steam or hot water
boilers and less than 225,000 Btu per
hour for forced-air central furnaces,
gravity central furnaces, and electric
central furnaces.
10 CFR 430.2. The scope of coverage is
discussed in further detail in section
IV.A.1 of this document.
When evaluating and establishing/
amending energy conservation
standards, DOE divides covered
products into product classes by the
type of energy used or by capacity or
other performance-related features that
justify differing standards. In making a
determination whether a performancerelated feature justifies a different
standard, DOE must consider such
factors as the utility of the feature to the
consumer and other factors DOE
determines are appropriate. (42 U.S.C.
6295(q)) The product classes for this
proposed determination are discussed
in further detail in section IV.A.4 of this
document.
C. Test Procedure
EPCA sets forth generally applicable
criteria and procedures for DOE’s
adoption and amendment of test
procedures. (42 U.S.C. 6293)
Manufacturers of covered products must
use these test procedures to quantify the
efficiency of their product and as the
basis for certifying to DOE that their
product complies with energy
conservation standards and when
making representations to the public
regarding the energy use or efficiency of
the product. (42 U.S.C. 6295(s) and 42
U.S.C. 6293(c)) Similarly, DOE must use
these test procedures to determine
whether the product complies with
standards adopted pursuant to EPCA.
(42 U.S.C. 6295(s)) DOE’s current energy
conservation standards for consumer
furnaces are expressed in terms of AFUE
for all furnace product classes (i.e.,
active mode) and, for NWOFs, MHOFs,
and electric furnace product classes,
also in terms of PW,SB and PW,OFF (i.e.,
standby mode and off mode). (See 10
CFR 430.32(e)(1))
The test procedure for determining
AFUE, PW,SB, and PW,OFF is established
at 10 CFR part 430, subpart B, appendix
N. AFUE is an annualized fuel
efficiency metric that accounts for fossil
fuel consumption in active, standby,
and off modes. PW,SB and PW,OFF are
measurements of the standby mode and
off mode electrical power consumption,
respectively, in watts. The test
procedure for consumer furnaces was
last amended by a final rule published
in the Federal Register on January 15,
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2016 (‘‘January 2016 TP Final Rule’’). 81
FR 2628.12
The revisions to the consumer
furnaces test procedure in the January
2016 TP Final Rule included:
• Clarification of the electrical power
term ‘‘PE’’;
• Adoption of a smoke stick test for
determining use of minimum default
draft factors;
• Allowance for the measurement of
condensate under steady-state
conditions;
• Reference to manufacturer’s
installation and operation manual and
clarifications for when that manual does
not specify test set-up;
• Specification of duct-work
requirements for units that are installed
without a return duct;
• Specification of testing
requirements for units with multiposition configurations; and
• Revision of the requirements
regarding AFUE reporting precision.
81 FR 2628, 2629–2630 (Jan. 15, 2016).
The changes in the January 2016 TP
Final Rule were mandatory for
representations of furnace efficiency
made on or after July 13, 2016. As such,
the most current version of the test
procedure (published in January 2016)
has now been in place for several years.
D. Technological Feasibility
1. General
In evaluating potential amendments
to energy conservation standards, DOE
conducts a screening analysis based on
information gathered on all current
technology options and prototype
designs that could improve the
efficiency of the products or equipment
that are the subject of the determination.
As the first step in such an analysis,
DOE develops a list of technology
options for consideration in
consultation with manufacturers, design
engineers, and other interested parties.
DOE then determines which of those
means for improving efficiency are
technologically feasible. DOE considers
technologies incorporated in
commercially-available products or in
working prototypes to be
12 On March 13, 2023, DOE published in the
Federal Register a test procedure final rule for
consumer boilers, which are a type of furnace under
EPCA (see 42 U.S.C. 6291(23)) but are not included
within the scope of this rulemaking (see section
IV.A.1 of this document). 88 FR 15510. This test
procedure final rule separated the test method for
consumer boilers from the test method for other
types of furnaces and moved the boilers test method
to a new appendix EE to 10 CFR part 430, subpart
B. Accordingly, it amended appendix N so as to
remove provisions applicable only to boilers, but it
did not materially change the test method for the
oil, electric, and weatherized gas furnaces that are
the subject of this rulemaking.
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technologically feasible. 10 CFR part
430, subpart C, appendix A, sections
6(b)(3)(i) and 7(b)(1).
After DOE has determined that
particular technology options are
technologically feasible, it further
evaluates each technology option in
light of the following additional
screening criteria: (1) practicability to
manufacture, install, and service; (2)
adverse impacts on product utility or
availability; (3) adverse impacts on
health or safety; and (4) unique-pathway
proprietary technologies. 10 CFR part
430, subpart C, appendix A, sections
6(b)(3)(ii)–(v) and 7(b)(2)–(5). Section
IV.A.3 of this document discusses the
results of the screening analysis for oil,
electric, and weatherized gas furnaces,
particularly the design options DOE
considered, those it screened out, and
those that are the basis for the potential
standards considered in this proposed
determination.
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2. Maximum Technologically Feasible
Levels
As when DOE proposes to adopt a
new or amended standard for a type or
class of covered product, in this NOPD
analysis, DOE must determine the
maximum improvement in energy
efficiency or maximum reduction in
energy use that is technologically
feasible for the product under
consideration. (42 U.S.C. 6295(p)(1))
Accordingly, in the engineering
analysis, DOE determined the maximum
technologically feasible (‘‘max-tech’’)
improvements in energy efficiency for
oil, electric, and weatherized gas
furnaces, using the design parameters
for the most efficient products available
on the market or in working prototypes.
The max-tech levels that DOE
determined for this analysis are
described in section IV.B.1.c of this
proposed determination.
E. Cost-Effectiveness
In making a determination of whether
amended energy conservation standards
are needed, EPCA requires DOE to
consider the cost-effectiveness of
amended standards in the context of the
savings in operating costs throughout
the estimated average life of the covered
product compared to any increase in the
price of, or in the initial charges for, or
maintenance expenses of, the covered
product that are likely to result from a
standard. (42 U.S.C. 6295(m)(1)(A); 42
U.S.C. 6295(n)(2)(C); 42 U.S.C.
6295(o)(2)(B)(i)(II))
In determining cost-effectiveness of
potential amended standards for oil,
electric, and weatherized gas furnaces,
DOE conducted LCC and PBP analyses
that estimate the costs and benefits to
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users from those potential standards. To
further inform DOE’s consideration of
the cost-effectiveness of potential
amended standards, DOE considered the
NPV of total costs and benefits
estimated as part of the NIA. The inputs
for determining the NPV of the total
costs and benefits experienced by
consumers are: (1) total annual installed
cost, (2) total annual operating costs
(energy costs and repair and
maintenance costs), and (3) a discount
factor to calculate the present value of
costs and savings. The results of this
analysis are discussed in section V.C.2
of this NOPD.
F. Energy Savings
1. Determination of Savings
For each efficiency level (‘‘EL’’)
evaluated, DOE projected anticipated
energy savings from application of the
EL to the oil, electric, and weatherized
gas furnace purchased in the 30-year
period that begins in the assumed year
of compliance with the potential
standards (2030–2059). The savings are
measured over the entire lifetime of the
oil, electric, and weatherized gas
furnaces purchased in the previous 30year period. DOE quantified the energy
savings attributable to each EL as the
difference in energy consumption
between each standards case and the nonew-standards case. The no-newstandards case represents a projection of
energy consumption that reflects how
the market for a product would likely
evolve in the absence of amended
energy conservation standards. DOE
used its NIA spreadsheet model to
estimate national energy savings
(‘‘NES’’) from potential amended or new
standards for oil, electric, and
weatherized gas furnaces. The NIA
spreadsheet model (described in section
IV.G of this document) calculates energy
savings in terms of site energy, which is
the energy directly consumed by
products at the locations where they are
used. For electricity, DOE reports NES
in terms of primary energy savings,
which is the savings in the energy that
is used to generate and transmit the site
electricity. DOE also calculates NES in
terms of full-fuel-cycle (‘‘FFC’’) energy
savings. The FFC metric includes the
energy consumed in extracting,
processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum
fuels), and, thus, presents a more
complete picture of the impacts of
energy conservation standards.13 DOE’s
approach is based on the calculation of
13 The FFC metric is discussed in DOE’s
statement of policy and notice of policy
amendment. 76 FR 51281 (August 18, 2011), as
amended at 77 FR 49701 (August 17, 2012).
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an FFC multiplier for each of the energy
types used by covered products or
equipment. For more information on
FFC energy savings, see section IV.G of
this document.
2. Significance of Savings
In determining whether amended
standards are needed, DOE must
consider whether such standards will
result in significant conservation of
energy. (42 U.S.C. 6295(m)(1)(A)) The
significance of energy savings offered by
a new or amended energy conservation
standard cannot be determined without
knowledge of the specific circumstances
surrounding a given rulemaking.14 For
example, some covered products and
equipment have most of their energy
consumption occur during periods of
peak energy demand. The impacts of
these products on the energy
infrastructure can be more pronounced
than products with relatively constant
demand. Accordingly, DOE evaluates
the significance of energy savings on a
case-by-case basis. The significance of
energy savings is further discussed in
section V.B.1 of this NOPD.
G. Additional Considerations
Pursuant to EPCA, absent DOE
publishing a notification of
determination that energy conservation
standards for the subject furnaces do not
need to be amended, DOE must issue a
NOPR that includes new proposed
standards. (42 U.S.C. 6295(m)(1)(B)) The
new proposed standards in any such
NOPR must be based on the criteria
established under 42 U.S.C. 6295(o) and
follow the procedures established under
42 U.S.C. 6295(p). (42 U.S.C.
6295(m)(1)(B)) The criteria in 42 U.S.C.
6295(o) require that standards 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)) In deciding whether a
proposed standard is economically
justified, DOE must determine whether
the benefits of the standard exceed its
burdens. (42 U.S.C. 6295(o)(2)(B)(i))
DOE must make this determination after
receiving comments on the proposed
standard, and by considering, to the
greatest extent practicable, the following
seven statutory factors:
(1) The economic impact of the
standard on manufacturers and
14 The numeric threshold for determining the
significance of energy savings established in a final
rule published in the Federal Register on February
14, 2020 (85 FR 8626, 8670–8672) was subsequently
rescinded through a final rule published in the
Federal Register on December 13, 2021 (86 FR
70892, 70901–70906).
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consumers of the products subject to the
standard;
(2) The savings in operating costs
throughout the estimated average life of
the covered products in the type (or
class) compared to any increase in the
price, initial charges for, or maintenance
expenses of the covered products that
are likely to result from the standard;
(3) The total projected amount of
energy (or as applicable, water) savings
likely to result directly from the
standard;
(4) Any lessening of the utility or the
performance of the covered products
likely to result from 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 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)(I)–(VII))
IV. Methodology and Discussion of
Related Comments
This section addresses the analyses
DOE has performed for this proposed
determination with regard to oil,
electric, and weatherized gas furnaces.
Separate subsections address each
component of DOE’s analyses. DOE
used several analytical tools to estimate
the impact of potential energy
conservation standards. The first tool is
a spreadsheet that calculates the LCC
savings and PBP of potential energy
conservation standards. The NIA uses a
second spreadsheet set that provides
shipments projections and calculates
NES and net present value of total
consumer costs and savings expected to
result from potential energy
conservation standards. These
spreadsheet tools are available on the
website: www.regulations.gov/docket/
EERE-2021-BT-STD-0031.
The Joint Commenters stressed the
importance of implementing the
recommendations of the recent National
Academies of Sciences, Engineering,
and Medicine (‘‘NAS’’) report into all
appliance rulemakings. Specifically, the
Joint Commenters highlighted three
recommendations from the report that
they argued should be implemented in
rulemakings impacting WGFs: (1) DOE
should pay greater attention to the
justification for the standards, adding
that DOE should attempt to find
significant failures of private markets or
irrational behavior by consumers in the
no-new-standards case to conclude that
the standards are economically justified;
(2) DOE should place greater emphasis
on providing an argument for the
plausibility and magnitude of any
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market failure related to the energy
efficiency gap in DOE’s analysis; and (3)
DOE should give greater attention to a
broader set of potential market failures
on the supply side, further commenting
that this would include not just how
standards might reduce the number of
competing firms but also how they
might impact price discrimination,
technological diffusion, and collusion.
The Joint Commenters suggested DOE
should address these recommendations
before analyzing whether new efficiency
standards are warranted. (Joint
Commenters, No. 24 at pp. 2–3)
In response, DOE is addressing the
recommendations of the NAS report in
a separate rulemaking in parallel with
other ongoing rulemakings, including
this oil, electric, and weatherized gas
furnace NOPD. As discussed in section
V.C of this document, DOE is tentatively
proposing that standards do not need to
be amended, and the Department has
made this tentative determination
consistent with EPCA’s requirements,
including evaluation of economic
justification of standards, and
applicable Executive orders.
A. Market and Technology Assessment
DOE develops information in the
market and technology assessment that
provides an overall picture of the
market for the products concerned,
including the purpose of the products,
the industry structure, manufacturers,
market characteristics, and technologies
used in the products. This activity
includes both quantitative and
qualitative assessments, based primarily
on publicly-available information. The
subjects addressed in the market and
technology assessment for this proposed
determination include: (1) a
determination of the scope and product
classes, (2) manufacturers and industry
structure, (3) existing efficiency
programs, (4) shipments information, (5)
market and industry trends, and (6)
technologies or design options that
could improve the energy efficiency of
consumer furnaces. The key findings of
DOE’s market assessment are
summarized in the following sections.
1. Scope of Coverage
In this analysis, DOE relied on the
definition of a furnace in 10 CFR 430.2,
which defines a consumer ‘‘furnace’’ as
a product which utilizes only singlephase electric current, or single-phase
electric current or DC current in
conjunction with natural gas, propane,
or home heating oil, and which—
(A) Is designed to be the principal
heating source for the living space of a
residence;
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(B) Is not contained within the same
cabinet with a central air conditioner
whose rated cooling capacity is above
65,000 Btu per hour;
(C) Is an electric central furnace,
electric boiler, forced-air central
furnace, gravity central furnace, or lowpressure steam or hot water boiler; and
(D) Has a heat input rate of less than
300,000 Btu per hour for electric boilers
and low-pressure steam or hot water
boilers and less than 225,000 Btu per
hour for forced-air central furnaces,
gravity central furnaces, and electric
central furnaces.
Any product meeting the definition of
a ‘‘furnace’’ is included in DOE’s scope
of coverage. In the analysis for this
NOPD, DOE focused only on oil,
electric, and weatherized gas furnaces.
Non-weatherized gas furnaces and
mobile home gas furnaces are
considered in a separate rulemaking.15
a. Electric Furnaces
A basic electric furnace comprises an
electric resistance heating element and
blower assembly. (Additionally, there
are products that include electricallypowered heat pumps, but these are
separately covered products not
addressed here.) The electric resistance
heating elements of electric furnaces are
highly efficient, and the efficiency of
these units already approaches 100
percent. DOE is unaware of any
technology options that can improve the
efficiency of electric furnaces, so DOE
has tentatively determined that morestringent standards for electric furnaces
would not be technologically feasible.
Therefore, DOE anticipates that the
energy savings potential from amended
standards for EFs would be minimal.
Consequently, DOE did not consider
amended AFUE standards for electric
furnaces in the current analysis.
b. Weatherized Oil-Fired Furnaces
DOE is not aware of any WOFs on the
market, and, therefore, DOE did not
analyze amended standards for that
product class. DOE has tentatively
determined that because there are no
WOFs on the market, there would be no
potential energy savings from amended
standards.
c. Fuel-Fired Heat Pumps
NEEA commented that DOE should
consider fuel-fired heat pumps within
the broader WGF product category by
updating the definition of ‘‘central
forced-air furnace’’ in the Code of
Federal Regulations. (NEEA, No. 21 at p.
1) NEEA argued that fuel-fired heat
15 See Docket No. EERE–2014–BT–STD–0031
which can be accessed at www.regulations.gov.
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pumps with a heat input rate of less
than 225,000 Btu per hour meet all the
criteria in the EPCA definition for a
residential ‘‘furnace’’ with the exception
that the terms, ‘‘electric central furnace,
electric boiler, forced-air central
furnace, gravity central furnace, or lowpressure steam or hot water boiler’’ do
not currently cover fuel-fired heat
pumps. NEEA commented that DOE has
the authority to change those definitions
and stated that redefining ‘‘forced-air
central furnace’’ would allow fuel-fired
heat pumps to be regulated under the
energy conservation standards for oil,
electric, and weatherized gas consumer
furnaces. (Id. at p. 2) Specifically, NEEA
suggested that DOE should change the
definition of ‘‘forced air central furnace’’
to a gas or oil burning furnace designed
to supply heat through a system of ducts
with air as the heating medium. The
combustion of gas or oil generates heat
that is either transferred to the air
within a casing by conduction through
heat exchange surfaces or utilized to run
a refrigeration cycle that transfers heat
to the air and is circulated through the
duct system by means of a fan or
blower. NEEA commented that this
definition covers the two main fuel-fired
heat pump technologies: fuel-fired
absorption heat pumps and enginedriven heat pumps. (Id.) NEEA also
commented that weatherized fuel-fired
heat pumps should be considered as
another technology option within the
WGF product category. NEEA requested
that DOE consider all possible
technology options for gas-fired
furnaces to be on an even playing field.
(Id. at p. 3)
NEEA argued that fuel-fired heat
pumps are designed to replace existing
furnaces and boilers without the need to
update existing infrastructure and to
provide flexibility for decarbonized
fuels. However, NEEA stated that fuelfired heat pumps are not direct
replacements for heat pumps, since the
primary fuel sources are different.
(NEEA, No. 21 at p. 3) NEEA
commented that a 2020 case study 16 of
a pre-commercial residential fuel-fired
heat pump prepared for DOE showed
that the system can achieve over 140percent AFUE, and field demonstrations
show 36–43 percent fuel savings
compared to a condensing furnace and
46–50 percent fuel savings compared to
a non-condensing furnace. (Id.) NEEA
further commented that the 2020 case
study showed that there is significant
potential in the residential market for a
reasonably priced, gas-fired absorption
heat pump product. (Id.)
NEEA encouraged DOE to consider
the building energy simulation and
comparison to field-derived results for
fuel-fired heat pumps, published by
Purdue University in 2021.17 NEEA
commented that this report
demonstrates that fuel-fired heat pumps
provided the lowest operating cost and
highest carbon emissions savings
compared to furnaces, boilers, electric
heat pumps, and various water heating
options. NEEA commented that fuelfired heat pumps provide the same
primary heating function as
conventional fuel-to-air furnaces with
the potential for significant energy
savings. (Id.)
In response to the comments by
NEEA, DOE notes that fuel-fired heat
pumps do not meet the current
definition of ‘‘furnace,’’ as they do not
meet criteria (C) in the definition
outlined in section IV.A of this
document. As such, they were not
considered in the scope of this analysis.
Further, the current test procedure for
consumer furnaces, as outlined in
appendix N, does not include
provisions for testing fuel-fired heat
pumps. Therefore, DOE is not
considering amending the consumer
‘‘furnace’’ definition to include these
products at this time. However, DOE
will continue to investigate fuel-fired
heat pumps and may evaluate test
procedure provisions for related to fuelfired heat pumps in a future rulemaking.
16 The case study, titled ‘‘Pre-Commercial ScaleUp of a Gas-Fired Absorption Heat Pump’’ is
available at www.osti.gov/biblio/1726247 (Last
accessed June 14, 2023).
17 The Purdue report, titled ‘‘Pathways to
Decarbonization of Residential Heating,’’ is
available at docs.lib.purdue.edu/ihpbc/354/ (Last
accessed June 14, 2023).
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2. Technology Options
DOE has identified the following
components as technology options that
have the potential to improve the AFUE
rating of oil and weatherized gas
furnaces:
• Condensing secondary heat exchanger
• Heat exchanger improvements
Æ Increased heat exchanger surface
area
Æ Heat exchanger surface features
Æ Heat exchanger baffles and
turbulators
• Two-stage and modulating
combustion
• Pulse combustion
• Premix burners
• Burner derating
• Insulation improvements
Æ Increased jacket insulations
Æ Advanced forms of insulation
• Off-cycle dampers
Æ Electromechanical flue damper
Æ Electromechanical burner inlet
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•
•
•
•
•
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damper
Direct venting
Concentric venting
Low-pressure, air-atomized oil burner
High-static oil burner
Delayed-action oil pump solendoid
valve
These technology options are
described in more detail of chapter 3 of
the November 2022 Preliminary
Analysis TSD.18 As discussed in section
IV.A.1.a of this document, DOE did not
identify any technology options that
would improve the AFUE of electric
furnaces.
In response to the November 2022
Preliminary Analysis, AHRI, Lennox,
and JCI commented that WGF accounts
for a relatively small share of the overall
furnace market (∼7 percent). (AHRI, No.
23 at p. 5; Lennox, No. 26 at p. 1; JCI,
No. 25 at p. 2) 19 AHRI and JCI stated
that the maximum feasible AFUE for
WGF is 81 percent. (AHRI, No. 23 at p.
5; JCI, No. 25 at p. 2)
JCI commented that further
improvements in systems efficiency of
WGFs would require the product class
use of condensing technology. JCI
commented that this change in the
product offering is not practical and,
based on observed market share, not
justified due to system design and
application constraints. (JCI, No. 25 at p.
2) JCI argued that the practical
application of condensing WGFs creates
condensation in the heat exchangers
within the unit, which is not readily
drained. JCI added that the retained
condensate will freeze in the off cycle,
preventing further operation of the
furnace. (Id.)
Lennox stated that applicable furnace
technology has not significantly
improved to overcome barriers to
deploying higher-efficiency
noncondensing and condensing
technologies that would justify morestringent AFUE standards for WGFs.
(Lennox, No. 26 at p. 4)
In response to comments regarding
condensing WGFs, DOE notes that it has
identified WGFs available on the market
that use condensing technology to
achieve AFUE ratings up to 95 percent.
Because these types of products are
available on the market, DOE finds them
to be technologically feasible and
18 For this NOPD, DOE will not publish a
Technical Support Document (TSD) because no
amended standard is proposed. The methodology
for the analyses conducted for the NOPD is largely
the same as in the Preliminary Analysis, and, thus,
DOE references the Preliminary Analysis TSD
throughout this document.
19 JCI’s comments stated that WGFs are 7 percent
of the WGF market, but DOE interprets this
comment to mean that WGFs are 7 percent of the
overall furnace market.
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considers condensing secondary heat
exchangers to be an appropriate
technology option to analyze for these
products. Additionally, in response to
JCI, when evaluating the cost of
implementing technologies such as
condensing heat exchangers, DOE aims
to include the additional costs of other
components that may be associated with
installing a unit with such technology,
such as a condensate pump and drain
hoses. The analyses of these costs are
discussed in subsequent sections of this
document (e.g., the LCC and PBP
analyses and the NIA (see sections IV.E
and IV.G of this document,
respectively)).
During the public meeting webinar,
AGA requested clarification on how
vent dampers were applied in the
analysis for weatherized gas furnaces
and noted that the test procedure would
not give credit for a vent damper on an
outdoor weatherized gas furnace. (AGA,
Public Meeting Transcript, No. 28 at pp.
20–22) In response, dampers were not
considered for WGFs and are not part of
the design pathway for improving AFUE
for those products. (See section IV.B.1.d
of this document for the efficiency
levels and associated technology
options for WGFs.) DOE notes that
Tables ES.3.2, ES.3.3, ES.3.19, and 7.4.1
in the November 2022 Preliminary
Analysis TSD indicated that vent
dampers were included for NWOFs and
MHOFs; however, this was a
typographical error. DOE clarifies that
vent dampers also were not part of the
design pathway considered for
improving AFUE of NWOFs and
MHOFs for the preliminary analysis
(nor are they for this NOPD analysis).
In chapter 3 of the November 2022
Preliminary Analysis TSD, DOE also
considered three technology options
that could potentially reduce the
standby mode and off mode energy
consumption of NWOFs, MHOFs, and
EFs. However, for the reasons explained
in section III.A.3 of this document, DOE
has tentatively determined that it cannot
establish standby mode and off mode
standards that meet the criteria of EPCA
at this time, so such technologies and
standards are not considered further.
3. Screening Analysis
DOE uses the following five screening
criteria to determine which technology
options are suitable for further
consideration in an energy conservation
standards rulemaking:
(1) Technological feasibility.
Technologies that are not incorporated
in commercial products or in
commercially-viable, existing
prototypes will not be considered
further.
(2) Practicability to manufacture,
install, and service. If it is determined
that mass production of a technology in
commercial products and reliable
installation and servicing of the
technology could not be achieved on the
scale necessary to serve the relevant
market at the time of the projected
compliance date of the standard, then
that technology will not be considered
further.
(3) Impacts on product utility. If a
technology is determined to have a
significant adverse impact on the utility
of the product to subgroups of
consumers, or result in the
unavailability of any covered product
type with performance characteristics
(including reliability), features, sizes,
capacities, and volumes that are
substantially the same as products
generally available in the United States
at the time, it will not be considered
further.
(4) Safety of technologies. If it is
determined that a technology would
have significant adverse impacts on
health or safety, it will not be
considered further.
(5) Unique-pathway proprietary
technologies. If a technology has
proprietary protection and represents a
unique pathway to achieving a given
efficiency level, it will not be
considered further, due to the potential
for monopolistic concerns.
10 CFR part 430, subpart C, appendix A,
sections 6(b)(3) and 7(b).
In summary, if DOE determines that a
technology, or a combination of
technologies, fails to meet one or more
of the listed five criteria, it will be
excluded from further consideration in
the engineering analysis.
a. Screened-Out Technologies
DOE eliminated the technologies
listed in Table IV.1 from further
consideration as options to improve the
AFUE (as measured by the DOE test
procedure) of NWOFs, MHOFs, and
WGFs. The reasons for exclusion
associated with each technology are
marked with an X. Additional details
about the reasons for exclusion are
discussed in this section.
TABLE IV.1—SCREENED-OUT TECHNOLOGIES
Reasons for exclusion
Excluded technology
options
Applicable product
class(es)
Pulse combustion ................
Burner derating ...................
Low-pressure, air-atomized
oil burner.
WGF ...................................
WGF, NWOF, MHOF .........
NWOF, MHOF ....................
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Pulse Combustion
Pulse combustion burners operate on
self-sustaining resonating pressure
waves that alternately rarefy the
combustion chamber (drawing a fresh
fuel–air mixture into the chamber) and
pressurize it (causing ignition by
compression heating of the mixture to
its flash point). Pulse combustion
systems are capable of direct venting
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Technological
feasibility
Practicability
to
manufacture,
install, and
service
Adverse
impacts on
product utility
Adverse
impacts on
health or
safety
Uniquepathway
proprietary
technology
........................
........................
X
........................
........................
........................
........................
X
........................
X
........................
........................
........................
........................
........................
without the assistance of mechanical
draft. Because the pulse combustion
process is very efficient, pulse
combustion is generally used in
condensing appliances.
In contrast to natural draft and
induced draft furnaces, pulse
combustion furnaces generate positive
pressure in the heat exchanger.
Although these products are generally
safe, this could create a potential safety
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problem if the heat exchanger breeches,
because combustion products can
contaminate the circulation air stream.
Pulse combustion gas furnaces were
available in the United States for more
than two decades. However, they were
withdrawn from the market within the
past 20 years because manufacturers
found that competing technologies, such
as condensing secondary heat
exchangers, cost significantly less to
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manufacture and operate. In light of the
ability of furnace manufacturers to costeffectively achieve high efficiencies
without the use of pulse combustion,
the technology’s risks do not outweigh
its benefits for consumer furnace
applications. Accordingly, DOE did not
further analyze this technology option
as part of this NOPD.
Burner Derating
Decreasing the burner size to increase
the ratio of heat transfer area to fuel
input, or burner derating, can increase
the AFUE rating of furnaces. However,
because heat output rate is directly
related to burner size, derating also
reduces the amount of heated air
available to the consumer. This
reduction in heat output adversely
affects the utility to consumers.
Therefore, DOE did not consider this
technology option.
ddrumheller on DSK120RN23PROD with PROPOSALS2
Low-Pressure, Air-Atomized Oil Burner
To overcome the low input
limitations of conventional oil burners,
Brookhaven National Laboratory
developed a low-pressure, air-atomized
oil burner that can operate at firing rates
as low as 0.25 gallons of oil per hour (10
kW). In addition, it can operate with
low levels of excess combustion air (less
than 10 percent) for lean-burning, ultraclean combustion. A lower level of
excess air generally improves AFUE
rating. This burner design is also
capable of firing fuel at a high or low
input rate, which is manually actuated
by a switch, allowing the burner to
closely match the smaller heating loads
of well-insulated modern homes.
While tests performed at the
Brookhaven National Laboratory seem
to have successfully demonstrated
enhanced oil boiler AFUE performance
per the DOE test procedure for furnaces
and boilers, the prototype was never
tested on a furnace. Therefore, the
technological feasibility of the burner
prototype for incorporation into a
residential oil-fired furnace remains
unknown, so DOE does not consider
low-pressure, air-atomized oil burners
to be a viable technology for efficiency
improvement at this time.
b. Remaining Technologies
After reviewing each technology, DOE
did not screen out the following
technology options and considers them
as design options in the engineering
analysis:
• Condensing secondary heat exchanger
• Heat exchanger improvements
Æ Increased heat exchanger surface
area
Æ Heat exchanger surface features
Æ Heat exchanger baffles and
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turbulators
• Two-stage and modulating
combustion
• Premix burners
• Insulation improvements
Æ Increased jacket insulations
Æ Advanced forms of insulation
• Off-cycle dampers
Æ Electromechanical flue damper
Æ Electromechanical burner inlet
damper
• Direct venting
• Concentric venting
• High-static oil burner
• Delayed-action oil pump solendoid
valve
DOE determined that these
technology options are technologically
feasible because they are being used or
have previously been used in
commercially-available products or
working prototypes. DOE also finds that
all of the remaining technology options
meet the other screening criteria (i.e.,
practicable to manufacture/install/
service, do not result in adverse impacts
on consumer utility, product
availability, health, or safety, and do not
utilize unique-pathway proprietary
technologies).
In response to the November 2022
Preliminary Analysis, Lennox
commented that DOE has adequately
captured most of the technology options
and screened appropriately for gas and
oil products. (Lennox, No. 26 at p. 4)
However, Lennox stated that the
alternatives for insulation improvement
generally have not been demonstrated in
furnace applications and may not be
suitable for use in high-temperature
applications near combustion surfaces.
The commenter stated that insulation
used in furnace applications must meet
temperature, flame spread, and smoke
requirements per the applicable safety
standards, and that toxicity and offgassing must also be considered. Lennox
argued that just because an insulation
material has better insulating
characteristics does not mean that it is
suitable for high-temperature furnace
applications. (Lennox, No. 26 at p. 6)
In response, DOE notes that insulation
improvements may be achieved with
thicker layers of existing insulation
materials as opposed to necessarily
requiring new insulating materials.
Therefore, DOE is not screening out
insulation improvements in this NOPD.
Additionally, as outlined in section
IV.B.1 of this document, insulation
improvements are not required to meet
any of the efficiency levels analyzed in
this NOPD.
4. Product Classes
In general, when evaluating and
establishing energy conservation
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83439
standards for a type (or class) of covered
product, DOE divides the covered
product into classes by: (1) the type of
energy used; (2) the capacity of the
product, or (3) any other performancerelated feature which other products
within such type (or class) do not have
that affects energy efficiency and
justifies different standard levels,
considering factors such as consumer
utility and any other factors the
Secretary deems appropriate. (42 U.S.C.
6295(q))
In this case, DOE divides furnaces
into seven product classes based on fuel
type (gas, oil, or electric), whether the
furnace is weatherized or not, and
whether the furnace is designed for use
only in mobile homes or not. The
current product classes for furnaces are
(1) non-weatherized gas furnaces, (2)
mobile home gas furnaces, (3) nonweatherized oil-fired furnaces, (4)
mobile home oil-fired furnaces, (5)
weatherized gas furnaces, (6)
weatherized oil-fired furnaces, and (7)
electric furnaces. 10 CFR
430.32(e)(1)(ii). As noted previously,
non-weatherized gas furnaces and
mobile home gas furnaces are being
addressed in a separate rulemaking
process.20 Therefore, the product classes
that DOE considered for this NOPD are
NWOFs, MHOFs, WGFs, WOFs, and
EFs. However, for the reasons discussed
in sections IV.A.1.a and IV.A.1.b of this
document, potential amended energy
conservation standards were not
analyzed for EFs or WOFs.
In summary, DOE assessed potential
amended energy conservation standards
in terms of AFUE for the NWOF, MHOF,
and WGF product classes in this NOPD.
Again, for the reasons discussed in
section III.A.3 of this document, DOE
did not analyze new or amended
standby mode/off mode power
standards for any product classes this
time.
B. Engineering Analysis
The purpose of the engineering
analysis is to establish the relationship
between the efficiency and cost of
NWOFs, MHOFs, and WGFs. There are
two elements to consider in the
engineering analysis: (1) the selection of
efficiency levels to analyze (i.e., the
‘‘efficiency analysis’’) and (2) the
determination of product cost at each
efficiency level (i.e., the ‘‘cost
analysis’’). In determining the
performance of higher-efficiency
products, DOE considers technologies
and design option combinations not
eliminated by the screening analysis.
For each product class, DOE estimates
20 See
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the baseline cost, as well as the
incremental cost for the product at
efficiency levels above the baseline
efficiency. The output of the
engineering analysis is a set of costefficiency ‘‘curves’’ that are used in
downstream analyses (i.e., the LCC and
PBP analyses and the NIA).
1. Efficiency Analysis
DOE typically uses one of two
approaches to develop energy efficiency
levels for the engineering analysis: (1)
relying on observed efficiency levels in
the market (i.e., the efficiency-level
approach), or (2) determining the
incremental efficiency improvements
associated with incorporating specific
design options to a baseline model (i.e.,
the design-option approach). Using the
efficiency-level approach, the efficiency
levels established for the analysis are
determined based on the market
distribution of existing products (in
other words, based on the range of
efficiencies and efficiency level
‘‘clusters’’ that already exist on the
market). Using the design option
approach, the efficiency levels
established for the analysis are
determined through detailed
engineering calculations and/or
computer simulations of the efficiency
improvements from implementing
specific design options that have been
identified in the technology assessment.
DOE may also rely on a combination of
these two approaches. For example, the
efficiency-level approach (based on
actual products on the market) may be
extended using the design option
approach to interpolate to define ‘‘gap
fill’’ levels (i.e., to bridge large gaps
between other identified efficiency
levels) and/or to extrapolate to the
‘‘max-tech’’ level (particularly in cases
where the ‘‘max-tech’’ level exceeds the
maximum efficiency level currently
available on the market).
For the current analysis, DOE
generally employed an efficiency-level
approach.
a. Baseline Efficiency
For each product class, DOE generally
selects a baseline model as a reference
point for each class, and measures
anticipated changes to the product
resulting from potential energy
conservation standards against the
baseline model. The baseline model in
each product class represents the
characteristics of a product typical of
that class (e.g., capacity, physical size).
Generally, a baseline model is one that
just meets current energy conservation
standards, or, if no standards are in
place, the baseline is typically the most
common or least-efficient unit on the
market.
A basic consumer gas furnace
comprises a hot surface or direct spark
ignition system, tubular in-shot burners,
noncondensing heat exchanger, blower
assembly (including motor and forwardswept fan blade), mechanical draft
combustion fan assembly, and
automatic controls. A basic consumer
oil-fired furnace comprises an
interrupted spark ignition system,
power burner, noncondensing heat
exchanger, and blower assembly. Details
and descriptions of each of these
components can be found in chapter 3
of the November 2022 Preliminary
Analysis TSD.
The identification of baseline units
requires establishing the baseline
efficiency level. In cases where there is
an existing standard, DOE typically
defines baseline units as units with
efficiencies equal to the current Federal
energy conservation standards.
However, for MHOFs, DOE did not
identify any currently available units at
the minimum standard level (75-percent
AFUE), and, therefore, DOE analyzed
80-percent AFUE as the baseline level
for MHOFs, as it was the lowest
efficiency available on the market. The
baseline AFUE levels analyzed for the
subject NWOFs, MHOFs, and WGFs, as
measured by AFUE, along with the
typical characteristics of a baseline unit,
are shown in Table IV.2.
TABLE IV.2—BASELINE AFUE LEVELS ANALYZED
Baseline
AFUE level
(%)
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Product class
NWOF .......................................................
83
MHOF .......................................................
80
WGF ..........................................................
81
Typical characteristics
—Single-stage burner.
—Electronic ignition.
—Aluminized-steel heat exchanger.
—Indoor blower fan including PSC motor * and forward-curved blower impeller
blade.
—Single-stage burner.
—Electronic ignition.
—Aluminized-steel heat exchanger.
—Indoor blower fan including PSC motor * and forward-curved blower impeller
blade.
—Direct venting system.
—Built-in evaporator coil cabinet.
—Draft inducer.
—Single-stage burner.
—Electronic ignition.
—Aluminized-steel tubular heat exchanger.
—Indoor blower fan including BPM * motor and forward-curved blower impeller
blade.
* Residential furnace fans incorporated into NWOFs, MHOFs, and WGFs manufactured on and after July 3, 2019 must meet fan energy rating
(‘‘FER’’) standards specified in 10 CFR 430.32(y). The blower fan motor (among other factors) can affect FER. Brushless permanent magnet
(‘‘BPM’’) motors have become the predominant motor type at the baseline AFUE levels for WGFs, and permanent split capacitor (‘‘PSC’’) motors,
which are less efficient than BPM motors, are common for NWOFs and MHOFs.
Typically, baseline units are
representative of the minimum
technology and lowest-cost product that
manufacturers can produce.
Accordingly, in the teardown analysis,
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DOE examined a variety of baseline
units that incorporate the various
baseline design options for furnace
components.
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b. Intermediate Efficiency Levels
DOE also analyzed intermediate
efficiency levels for NWOFs and
MHOFs. However, for WGFs, DOE has
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not found any models on the market
between the baseline (81-percent AFUE)
and max-tech level (95-percent AFUE)
and has, therefore, not analyzed any
intermediate efficiency levels for this
product class. The intermediate
efficiency levels analyzed for NWOFs
are 85-percent and 87-percent AFUE,
and the intermediate efficiency levels
analyzed for MHOFs are 83-percent and
85-percent AFUE. To improve efficiency
from the baseline to these intermediate
efficiency levels, manufacturers
generally increase the surface area of the
heat exchanger, which increases the
heat transfer area and, thus, allows
manufacturers to achieve higher
efficiencies. The intermediate efficiency
levels analyzed are representative of
common efficiency levels available on
the market. DOE reviewed its own
Compliance Certification Database
(‘‘CCD’’), as well as AHRI’s product
certification directories,21 California
Energy Commission’s (‘‘CEC’s’’)
database,22 manufacturer catalogs, and
other publicly-available literature to
inform its selection of intermediate
efficiency levels.
In response to the November 2022
Preliminary Analysis, NYSERDA
encouraged DOE to consider an
additional efficiency level (EL) between
87-percent and 96-percent AFUE for oilfired furnaces. NYSERDA stated it
anticipates that an AFUE above 90
percent may maximize savings for
consumers. NYSERDA added that based
on its review of the preliminary TSD
material, the DOE Compliance
Certification Management System, and
AHRI’s database, NYSERDA has seen
availability of oil furnaces above DOE’s
proposed EL 2. (NYSERDA, No. 19 at p.
2)
The Joint Advocates similarly
encouraged DOE to evaluate an
intermediate condensing EL for NWOFs.
The Joint Advocates commented that
they strongly support DOE’s decision to
include a max-tech EL at 96-percent
AFUE and that DOE should also
consider an EL between EL 2 (i.e., 87percent AFUE) and EL 3 (i.e., 96-percent
AFUE). The Joint Advocates further
commented that the CCD shows
condensing models suggesting that an
intermediate EL with condensing
technology is feasible for condensing
NWOFs. (Joint Advocates, No. 22 at pp.
2–3)
21 AHRI’s Directory of Certified Product
Performance (Available at: www.ahridirectory.org/
Search/SearchHome) (Last accessed Sept. 1, 2023).
22 California Energy Commission’s MAEDbs
(Available at: cacertappliances.energy.ca.gov/
Pages/ApplianceSearch.aspx) (Last accessed Sept.
1, 2023).
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As discussed previously, DOE’s
choice of intermediate efficiency levels
was informed by publicly-available
databases and manufacturer literature,
and the chosen efficiency levels were
intended to be representative of
common efficiency levels available on
the market. In contrast, as discussed in
section III.D.2 of this document, DOE is
statutorily obligated to analyze the
efficiency level that corresponds to the
maximum improvement in energy
efficiency or maximum reduction in
energy use that is technologically
feasible for each product class. (42
U.S.C. 6295(p)(1)) However, because
there are very few condensing-level
NWOFs on the market, efficiency levels
between 87-percent and 96-percent
AFUE would not be representative of
typical efficiency levels. Therefore, DOE
is not analyzing an EL between 87percent and 96-percent AFUE for
NWOFs in this NOPD.
c. Maximum Technology (‘‘Max-Tech’’)
Efficiency Levels
As part of DOE’s analysis, the
maximum available efficiency level is
the highest efficiency unit currently
available on the market. DOE also
defines a ‘‘max-tech’’ efficiency level to
represent the maximum possible
efficiency for a given product.
DOE conducted an analysis of the
market and a technology assessment and
researched current product offerings to
determine the max-tech efficiency
levels. The max-tech level identified in
each product class corresponds to the
highest-AFUE furnace available on the
market, which DOE tentatively
concludes corresponds to the maximum
technologically feasible levels at this
time. For NWOFs, DOE identified a
design that achieves a max-tech
efficiency level of 96-percent AFUE. For
MHOFs, the maximum efficiency level
that DOE identified was 87-percent
AFUE. For WGFs, DOE identified a
max-tech efficiency level design that
achieves 95-percent AFUE. For WGFs
and NWOFs, the max-tech efficiency
level is currently achieved by use of a
condensing secondary heat exchanger.
A constant-airflow BPM indoor blower
motor was also implemented as the
motor design option for the max-tech
efficiency level for NWOFs because the
only NWOF model on the market
available at this level includes a
constant-airflow BPM motor, and it is
unclear if this level is achievable
without a constant-airflow fan. For
MHOFs, the max-tech efficiency level is
currently achieved by use of a heat
exchanger with increased surface area.
Lennox stated that the DOE
weatherized gas furnace standard of 81-
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percent AFUE is at the maximum
practical level that is economically
justified and provides reliable
performance. (Lennox, No. 26 at p. 6)
Lennox stated that, as the AFUE of
weatherized gas furnace products is
increased, heat exchanger and flue
temperatures are reduced, which
increases the risk of condensing
operation and corrosion to the heat
exchanger. (Id.) Lennox stated that
while condensing weatherized gas
furnaces are feasible, they require
secondary heat exchangers that increase
static pressure in the airstream and
pressure drop within the heat
exchanger. Further, Lennox stated that
the additional resistance must be
overcome with increased electrical
power at all operating conditions,
including cooling and ventilation mode.
(Id. at pp. 6–7) Lennox stated that the
measures to prevent freezing of
condensate in weatherized gas furnaces
and condensate disposal add cost and
consume additional energy. (Id. at p. 7)
Lennox commented that these methods
include maintaining the temperature of
the condensate system above freezing by
either conditioning the condensate
system using electric heat tape or
routing the condensate disposal system
through conditioned space. The
commenter stated that the use of heat
tape consumes additional energy.
Lennox stated that routing the
condensate disposal system through
conditioned space is not technically
feasible or economically viable for a
weatherized product that is contained
outdoors. (Id.) Lennox further
commented that another method to
prevent freezing in weatherized gas
furnaces is to install a pit or trench
condensate drainage system that
extends below the frostline and also
neutralizes the acidic condensate
created during combustion. Lennox
stated that the frost line in the United
States varies greatly by region from 5″ in
Georgia to 80″ in Minnesota. Lennox
stated that the method of installing a pit
or trench condensate drainage system
that extends below the frostline and
neutralizes the acidic condensate
created during condensing combustion
may work in some mild climates at a
reasonable cost but would be expensive
to install and maintain in colder
climates. (Id.)
In response, the Department notes the
fact that condensing weatherized gas
furnaces currently exist on the market
demonstrates that they are
technologically feasible. DOE accounts
for costs that may be associated with the
installation of condensing systems,
including additional costs of heat tape
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and/or a condensate pump suitable to
meet the need of an unconditioned
space, which is discussed further in
section IV.E of this document. The
financial feasibility of higher efficiency
levels is discussed further in section V
of this document.
JCI commented it is unaware of any
condensing MHOFs commercially
available today. (JCI, No. 25 at p. 2)
AHRI also commented that it is unaware
of any commercially-available
condensing MHOFs. (AHRI, No. 23 at p.
5) AHRI commented that the feasibility
of moving to a condensing heat
exchanger for MHOFs is low. AHRI
added that there are challenges with
maintaining airflow options and
footprint size to allow for an easy
replacement. (Id.)
In response, DOE agrees that there are
currently no condensing MHOFs on the
market, and the Department has not
considered an efficiency level for
MHOFs that requires a condensing heat
exchanger as there are no data to
indicate that it would be feasible for use
in MHOFs.
d. Summary of Efficiency Levels
Analyzed
DOE presents AFUE efficiency levels
analyzed along with the technologies
that are expected to be used to increase
energy efficiency above the baseline
efficiency level for NWOFs, MHOFs,
and WGFs in Table IV.3, Table IV.4 and
Table IV.5, respectively.
TABLE IV.3—AFUE EFFICIENCY LEVELS AND TECHNOLOGIES USED AT EACH EFFICIENCY LEVEL ABOVE BASELINE FOR
NWOFS
AFUE
(%)
Efficiency level
0—Baseline ...............................................
1 ................................................................
2 ................................................................
3—Max-tech ..............................................
Description of technologies typically incorporated
83
85
87
96
See Table IV.2 for baseline features.
Baseline EL + Increased heat exchanger area.
EL 1 + Increased heat exchanger area.
EL 2 + Addition of condensing secondary heat exchanger (and associated components, sensors, etc.) + Constant-airflow BPM motor.
TABLE IV.4—AFUE EFFICIENCY LEVELS AND TECHNOLOGIES USED AT EACH EFFICIENCY LEVEL ABOVE BASELINE FOR
MHOFS
AFUE
(%)
Efficiency level
0—Baseline ...............................................
1 ................................................................
2 ................................................................
3—Max-tech ..............................................
Description of technologies typically incorporated
80
83
85
87
See Table IV.2 for baseline features.
Baseline EL + Increased heat exchanger area.
EL 1 + Increased heat exchanger area.
EL 2 + Increased heat exchanger area.
TABLE IV.5—AFUE EFFICIENCY LEVELS AND TECHNOLOGIES USED AT EACH EFFICIENCY LEVEL ABOVE BASELINE FOR
WGFS
AFUE
(%)
EL
0—Baseline ...............................................
1—Max-tech ..............................................
81
95
ddrumheller on DSK120RN23PROD with PROPOSALS2
2. Cost Analysis
The cost analysis portion of the
Engineering Analysis is conducted
using one or a combination of cost
approaches. The selection of cost
approach depends on a suite of factors,
including the availability and reliability
of public information, characteristics of
the regulated product, and the
availability and timeliness of
purchasing the product on the market.
The cost approaches are summarized as
follows:
b Physical teardowns: Under this
approach, DOE physically dismantles a
commercially-available product,
component-by-component, to develop a
detailed bill of materials for the product.
b Catalog teardowns: In lieu of
physically deconstructing a product,
DOE identifies each component using
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Description of technologies typically incorporated
See Table IV.2 for baseline features.
Baseline EL + Addition of condensing secondary heat exchanger (and associated
components, sensors, etc.).
parts diagrams (available from
manufacturer websites or appliance
repair websites, for example) to develop
the bill of materials for the product.
b Price surveys: If neither a physical
nor catalog teardown is feasible (e.g., for
tightly integrated products such as
fluorescent lamps, which are infeasible
to disassemble and for which parts
diagrams are unavailable), costprohibitive, or otherwise impractical
(e.g., large commercial boilers), DOE
conducts price surveys using publiclyavailable pricing data published on
major online retailer websites and/or by
soliciting prices from distributors and
other commercial channels.
In the present case, DOE conducted
the analysis using a combination of
physical and catalog teardowns. DOE
estimated the manufacturer production
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cost (‘‘MPC’’) associated with each
efficiency level to characterize the costefficiency relationship of improving
consumer furnace performance, in terms
of AFUE.
The units selected for the teardown
analysis spanned a range of
manufacturers and efficiencies for
commercially-available products that
are the subject of this rulemaking.
Products were selected that have
characteristics of typical products on
the market at a representative input
capacity. WGFs selected for physical
teardown generally had input capacities
of approximately 80 thousand British
thermal units per hour (‘‘kBtu/h’’),
while oil units selected for physical
teardown generally had input capacities
of approximately 105 kBtu/h. These
capacities were determined to be a
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ddrumheller on DSK120RN23PROD with PROPOSALS2
representative input capacity for WGFs
and for NWOFs and MHOFs,
respectively, based on information
gathered as part of the market and
technology assessment (see section IV.A
of this document), as well as
discussions with manufacturers. Where
needed, catalog teardowns were also
conducted to supplement the physical
teardowns. DOE estimated the
manufacturing cost for each furnace
selected for teardown by disassembling
the furnace and developing a bill of
materials (‘‘BOM’’). The resulting BOM
provides the basis for the MPC estimates
for products at various efficiency levels
spanning the full range of efficiencies
from the baseline to max-tech.
To account for manufacturers’ nonproduction costs and profit margin, DOE
applies a non-production cost multiplier
(the manufacturer markup) to the MPC.
The resulting manufacturer selling price
(‘‘MSP’’) is the price at which the
manufacturer distributes a unit into
commerce. DOE developed an average
manufacturer markup by examining the
annual Securities and Exchange
Commission (‘‘SEC’’) 10–K reports filed
by publicly-traded manufacturers
primarily engaged in heating,
ventilation, and air conditioning
(‘‘HVAC’’) manufacturing whose
combined product range includes oil
and weatherized gas furnaces. The
manufacturer markup estimates are
consistent with the manufacturer
markups developed for a final rule for
furnace fan energy conservation
standards published in the Federal
Register on July 3, 2014. 79 FR 38130.
Specifically, DOE estimates the industry
average manufacturer markup to be 1.35
for NWOFs, 1.29 for MHOFs, and 1.27
for WGFs.
a. Teardown Analysis
For the teardown analysis, DOE used
a total of 31 teardowns of consumer
furnaces as the basis for calculating
industry MPCs. The units DOE selected
for teardown are manufactured in
considerable volume, are commonly
available, and have features that DOE
believes are representative of the most
common characteristics (i.e., input
capacity, configuration, and heat
exchanger type) of each product class.
As discussed previously, most physical
teardown units had input capacities of
approximately 80 kBtu/h for WGFs or
105 kBtu/h for NWOFs and MHOFs,
which DOE considers to be
representative of those furnace product
classes. To the extent possible, all major
efficiency levels and technologies were
captured in the selection of models for
the teardown analysis. WGF and NWOF
teardowns were considered separately.
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Due to the similarity observed in
NWOF and MHOF designs available in
the market, DOE tentatively concluded
that the costs associated with increasing
the energy efficiency of MHOFs are
equivalent to the costs for NWOFs. A
MHOF teardown was used to examine
key differences between NWOFs and
MHOFs and confirmed that the MPCs of
MHOFs could be estimated based on the
NWOF teardowns. Therefore, DOE
based MPC estimates for MHOFs at each
efficiency level analyzed largely on
teardowns of NWOFs at that efficiency
level.
Whenever possible, DOE examined
multiple models from a given
manufacturer that capture different
design options and used them as direct
points of comparison. The teardown
selections also minimized the
incorporation of non-efficiency-related
premium features, which otherwise
could inflate the incremental
manufacturing cost of achieving higher
efficiency levels.
DOE examined products with a
variety of indoor blower motor
technologies and combustion systems
(i.e., single-stage, two-stage, or
modulating). DOE also examined
products with PSC, constant-torque
BPM, and constant-airflow BPM indoor
blower motors. As further discussed in
section IV.B.2.b of this document, cost
adders were developed for these
technologies and applied in the
downstream analyses to estimate the
manufacturing cost of going from one
technology to another with higher
efficiency (e.g., using a constant-airflow
BPM instead of a constant-torque BPM,
or two-stage combustion instead of
single-stage combustion).
b. Cost Estimation Method
DOE assigned costs of labor,
materials, and overhead to each part,
whether purchased or produced inhouse. DOE then aggregated single-part
costs into major assemblies (e.g.,
packaging, cabinet assembly, heat
exchanger, burner system/gas train,
exhaust subassembly, fan system,
controls) and summarized these costs in
a spreadsheet BOM. DOE repeated this
same process for every physical and
catalog teardown in the engineering
analysis.
Analytical inputs related to
manufacturer practices and cost
structure play an important role in
estimating the final cost of a product.
DOE used inputs regarding the
manufacturing process parameters (e.g.,
equipment use, labor rates, tooling
depreciation, and cost of purchased raw
materials) to determine the value for
each furnace component. DOE collected
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83443
information on labor rates, tooling costs,
raw material prices, and other factors to
use as inputs into the cost estimates.
DOE determined values for these
parameters using internal expertise and
confidential information available to its
contractors, some of which was
obtained via confidential interviews
with manufacturers. For purchased
parts, DOE estimates the purchase price
based on volume-variable price
quotations and detailed discussions
with manufacturers and component
suppliers. DOE then summed the values
of the furnace components into
assembly costs and, finally, the total
MPC for the entire furnace.
The MPC includes material, labor,
and depreciation costs, as well as the
overhead costs associated with the
manufacturing facility. Material costs
include both raw materials and
purchased-part costs. Labor costs
include fabrication, assembly, and
indirect and overhead (burdened) labor
rates. Depreciation costs include
production equipment depreciation,
tooling depreciation, and building
depreciation. The overhead costs
associated with the manufacturing
facility include indirect process costs,
utilities, equipment and building
maintenance, and reworking defective
parts/units.
DOE determined the costs of raw
materials based on manufacturer
interviews, quotes from suppliers, and
secondary research. Past results are
updated periodically and/or inflated to
present-day prices using indices from
resources such as MEPS Intl.,23
PolymerUpdate,24 the U.S. Geologic
Survey (‘‘USGS’’),25 and the Bureau of
Labor Statistics (‘‘BLS’’).26 Metal raw
material prices, such as stainless steel
and other sheet metals, are estimated on
the basis of five-year averages to smooth
out spikes in demand. Other ‘‘raw’’
materials such as plastic resins,
insulation materials, etc. are estimated
on a current-market basis. For non-metal
raw material prices, DOE used prices
based on current market data (as of
December 2022), rather than a 5-year
average, because non-metal raw
materials have not experienced the same
23 For more information on MEPS Intl, please
visit: www.meps.co.uk/ (Last accessed Sept. 5,
2023).
24 For more information on PolymerUpdate,
please visit: www.polymerupdate.com (Last
accessed Sept. 5, 2023).
25 For more information on the USGS metal price
statistics, please visit www.usgs.gov/centers/nmic/
commodity-statistics-and-information (Last
accessed Sept. 5, 2023).
26 For more information on the BLS producer
price indices, please visit: www.bls.gov/ppi/ (Last
accessed Sept. 5, 2023).
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level of price volatility in recent years
as metal raw materials.
DOE characterized parts based on
whether manufacturers fabricated them
in-house or purchased them from
outside suppliers. For fabricated parts,
DOE estimated the price of intermediate
materials (e.g., tube, sheet metal) and
the cost of forming them into finished
parts. For purchased parts, DOE
estimated the purchase prices paid to
the original equipment manufacturers
(‘‘OEMs’’) of these parts, based on
discussions with manufacturers during
confidential interviews. Whenever
possible, DOE obtained price quotes
directly from the component suppliers
used by furnace manufacturers whose
products were examined in the
engineering analysis. DOE determined
that the components in Table IV.6 are
generally purchased from outside
suppliers.
TABLE IV.6—PURCHASED FURNACE
COMPONENTS
Assembly
Burner/Exhaust.
Blower ..........
Controls ........
Purchased sub-assemblies
Gas valve.
Spark igniter.
Draft inducer assembly.
Indoor blower fan blade.
Indoor blower fan motor.
Control boards.
Capacitors, transformers,
contactors, switches, etc.
Certain factory parameters, such as
fabrication rates, labor rates, and wages,
also affect the cost of each unit
produced. DOE factory parameter
assumptions were based on internal
expertise and manufacturer feedback.
Table IV.7 lists the factory parameter
assumptions used in the analysis. For
the engineering analysis, these factory
parameters, including production
volume, are the same at every efficiency
level. The production volume used at
each efficiency level corresponds with
the average production volume, per
manufacturer, if 100 percent of all units
manufactured were at that efficiency
level. This production volume was
estimated based on historical
shipments. These assumptions are
generalized to represent typical
production and are not intended to
model a specific factory.
TABLE IV.7—FACTORY PARAMETER ASSUMPTIONS
Parameter
Oil furnace
estimate
WGF estimate
Actual Annual Production Volume (units/year) ..........................................................................................
Purchased Parts Volume ............................................................................................................................
Workdays Per Year (days) .........................................................................................................................
Assembly Shifts Per Day (shifts) ................................................................................................................
Fabrication Shifts Per Day (shifts) .............................................................................................................
Fabrication Labor Wages ($/h) ...................................................................................................................
Assembly Labor Wages ($/h) .....................................................................................................................
Length of Shift (hrs) ....................................................................................................................................
Average Equipment Installation Cost (% of purchase price) .....................................................................
Fringe Benefits Ratio ..................................................................................................................................
Indirect to Direct Labor Ratio .....................................................................................................................
Average Scrap Recovery Value .................................................................................................................
Worker Downtime .......................................................................................................................................
Burdened Assembly Labor Wage ($/h) ......................................................................................................
Burdened Fabrication Labor Wage ($/h) ....................................................................................................
Supervisor Span (workers/supervisor) .......................................................................................................
Supervisor Wage Premium (over fabrication and assembly wage) ...........................................................
5,000 units/year ...
5,000 units/year ...
250 .......................
1 ...........................
2 ...........................
16 .........................
16 .........................
8 ...........................
10% ......................
50% ......................
33% ......................
30% ......................
10% ......................
24 .........................
24 .........................
25/1 ......................
30% ......................
500,000 units/year.
100,000 units/year.
250.
2.
2.
16.
16.
8.
10%.
50%.
33%.
30%.
10%.
24.
24.
25/1.
30%.
ddrumheller on DSK120RN23PROD with PROPOSALS2
Indoor Blower Motor Costs
As discussed in section IV.B.1.a of
this document, the baseline design for
WGFs includes a BPM motor. DOE
research suggests that the predominant
BPM indoor blower motors sold on the
market today are either a constanttorque (‘‘CT–BPM’’) or a constantairflow (‘‘CA–BPM’’) design. Both types
of motors rely on electronic variablespeed motor systems that are typically
mounted in an external chassis to the
back of the motor. CA–BPM motors
utilize feedback control to adjust torque
based on ESP in order to maintain a
desired airflow. This differentiates them
from CT–BPM motors, which will
maintain torque and likely decrease
airflow output in environments with
high ESPs. CT–BPMs are capable of
achieving airflows similar to CA–BPMs
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but are generally less expensive.
Therefore, DOE considered the baseline
design to include a CT–BPM motor for
the WGF product class and determined
the incremental cost of a CA–BPM
motor.
DOE’s review of the market showed
that PSC motors are still being used in
some NWOFs and MHOFs, so the final
MPC results are presented based on a
PSC motor at the baseline through 87percent AFUE. To account for the
variety of motor technologies available
on the market, DOE determined the
incremental cost associated with use of
various types of more-efficient BPM fan
motors as compared to baseline PSC
motors for NWOFs and MHOFs.
Additionally, for NWOFs, a constantairflow BPM indoor blower motor was
implemented as the motor design option
for the max-tech efficiency level because
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the only NWOF model on the market
available at this level includes a
constant-airflow BPM motor, and it is
unclear if this level is achievable
without a constant-airflow fan. For the
NWOF efficiency levels below max-tech
and for all MHOF efficiency levels, DOE
calculated the additional cost to switch
from a PSC blower motor to either a
constant-torque or a constant-airflow
BPM motor. As discussed in Chapter 8
of the November 2022 Preliminary
Analysis TSD, these costs are applied in
the LCC and PBP analyses to determine
the MPC of a furnace with each motor
technology in order to better represent
typical costs to consumers for NWOFs
and MHOFs. Constant-airflow BPM
blower motors are sometimes used as a
utility-enhancing feature on units below
the max-tech efficiency level. The
adders are outlined in Table IV.8.
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83445
TABLE IV.8—COST ADDERS FOR BPM BLOWER MOTORS
NWOF, MHOF .............................................................................................................................
WGF .............................................................................................................................................
slightly delay the natural gas
combustion process, which in turn
produces a cooler flame and results in
suppressed formation of NOX.28 DOE
has observed during its teardown
analysis that to achieve low-NOX
operation, manufacturers implement
low-NOX baffles. For ultralow-NOX
operation, DOE used NWGF teardowns
to approximate the cost to implement
this technology option in WGFs, as DOE
understands that the methodology
would be the same for both product
classes. Through these teardowns of
NWGFs, DOE has observed that in order
to achieve ultralow-NOX operation, the
in-shot burners typically used in
residential furnaces were replaced with
a mesh premix burner. In addition, the
model used a variable-speed BPM
inducer fan motor. DOE identified an
ultralow-NOX WGF on the market and
compared the burner construction for
the torn-down NWGF and the ultralowNOX WGF. DOE found that the
approach used for achieving ultralowNOX in WGFs is similar to that used in
NWGFs. DOE also determined that oil
units with ultralow-NOX operation were
rare and, thus, not representative of the
TABLE IV.9—MULTI-STAGING
market, so adders were not developed
INCREMENTAL COST INCREASE
for the NWOF and MHOF product
classes.
Incremental cost
Using raw material price data,
increase
for
Adder
multi-staging
teardown data from NWGFs, and
(2022$)
manufacturing expertise DOE estimated
the manufacturing cost difference
Two-Stage ......................
$21.07
Modulating ......................
75.36 between standard NOX burners and lowNOX and ultralow-NOX burners. For
low-NO
X, MPC cost values were
Low-NOX and Ultralow-NOX Furnaces
developed for the implementation of
Some furnaces are marketed as ‘‘lowlow-NOX baffles in WGFs at the
NOX,’’ which indicates that their NOX
representative input capacity of 80
emissions are less than 40 nanograms of kBtu/h. For ultralow-NOX, MPC values
NOX per joule of useful heat energy
were developed for the implementation
(‘‘ng/J’’). Certain local jurisdictions
of a mesh premix burner and variablerequire natural gas furnaces to comply
speed BPM inducer fan (along with
with NOX emissions restrictions as low
other related components necessary).
as 14 ng/J,27 which is referred to as
The resulting MPC estimates to achieve
‘‘ultralow-NOX.’’ A common method of
low-NOX and ultralow-NOX operation
reducing furnace NOX emissions is to
are shown in Table IV.10.
In the LCC and PBP analysis (see
27 Rule 1111 of the South Coast Air Quality
section IV.E of this document), DOE
Management District (‘‘SCAQMD’’) of southern
estimated the fractions of furnaces that
California currently requires that all NWGF and
ddrumheller on DSK120RN23PROD with PROPOSALS2
Multistage Furnaces
The market for WGFs contains a
significant number of two-stage furnaces
that are rated at the same efficiency as
single-stage furnaces. DOE believes
consumers sometimes choose to
purchase two-stage products for the
additional thermal comfort offered by
furnaces with multiple stages of heating
output. DOE determined that oil units
with multi-staging were rare and, thus,
not representative of the market, so
adders were not developed for the
NWOF and MHOF product classes.
Where applicable, the additional cost to
change to a two-stage furnace includes
the added cost of a two-stage gas valve,
a two-speed inducer assembly, an
additional pressure switch, and
additional controls and wiring. The
additional cost to change to a
modulating furnace includes the added
cost of a modulating gas valve, an
inducer assembly, an upgraded pressure
switch, and additional controls and
wiring. The incremental costs to
implement multi-staging in WGFs are
outlined in Table IV.9.
MHGF not exceed a 14 ng/J restriction on NOX
emissions. For more information on Rule 1111, see
www.aqmd.gov/docs/default-source/rule-book/regxi/rule-1111.pdf?sfvrsn=4 (Last accessed Sept. 5,
2023).
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28 U.S. Environmental Protection Agency. Natural
Gas Combustion (Available at: www3.epa.gov/
ttnchie1/ap42/ch01/final/c01s04.pdf) (Last
accessed June 28, 2023).
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cost increase
for BPM–CT
(2022$)
Input
capacity
(kBtu/h)
Product class
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105
80
$30.65
37.94
Incremental
cost increase
for BPM–CA
(2022$)
$80.48
59.92
are installed in jurisdictions that require
low-NOX or ultralow-NOX compliance
and applied these cost adders to those
fractions of furnace installations
accordingly. The application of these
adders is discussed in more detail in
Chapter 8 of the November 2022
Preliminary Analysis TSD.
TABLE IV.10—ADDITIONAL MPCS FOR
LOW-NOX AND ULTRALOW-NOX WGFS
Adder
Low-NOX ...............................
Ultralow-NOX ........................
Value
(2022$)
$3.10
113.68
Shipping Costs
Freight is not a manufacturing cost,
but because it is a substantial cost
incurred by the manufacturer, DOE
accounts for shipping costs separately
from other costs. DOE calculated
shipping costs based on a typical 53-foot
straight-frame trailer with a storage
volume of 4,240 cubic feet.
DOE first calculated the cost per cubic
foot of space on a trailer based on a cost
of $3,643 per shipping load and the
standard dimensions of a 53-foot trailer.
This cost was determined based on a
combination of full truck load (‘‘FTL’’)
freight quotations, manufacturer
feedback, and BLS producer price
indices for the ‘‘fuels and related
products and power’’ grouping.29 Then,
DOE examined the average sizes of
products in each product class at each
efficiency and capacity combination
analyzed. DOE estimated the shipping
costs by multiplying the product
volume by the cost per cubic foot of
space on the trailer. Furnace dimensions
typically do not change as a result of
increases in efficiency, and accordingly,
DOE’s shipping costs show no change
across efficiency levels. In determining
volumetric shipping costs, DOE also
used manufacturer feedback regarding
product mix on each trailer, packing
efficiency, and methods and equipment
used to load the trailers to revise the
shipping costs. Table IV.11 shows the
29 U.S. Department of Labor, Bureau of Labor
Statistics, Producer Price Indices (Available at:
data.bls.gov/timeseries/WPU057303?data_
tool=XGtable) (Last accessed Feb. 17, 2022).
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shipping costs for the products analyzed
in this rulemaking.
TABLE IV.11—SHIPPING COSTS PER UNIT
Representative
capacity
(kBtu/h)
Product class
WGF .....................................................................................................................................................................
NWOF ..................................................................................................................................................................
MHOF ..................................................................................................................................................................
3. Cost-Efficiency Results
Using the MPCs for individual
teardowns and adders described in
section IV.B.2.b of this document, DOE
develops aggregated MPCs for each
product class. The final results of the
AFUE engineering analysis are the
MPCs for WGFs, NWOFs, and MHOFs at
each efficiency level. The cost-efficiency
results are shown in tabular form in
Table IV.12 through Table IV.14 as
efficiency versus MPC and MSP. These
results include the furnace fan and
combustion system staging incorporated
into most furnace designs.
TABLE IV.12—COST-EFFICIENCY DATA
FOR WGFS WITH A CONSTANTTORQUE BPM INDOOR BLOWER
MOTOR AND A SINGLE-STAGE BURNER
AFUE
81 ......................
95 ......................
MPC
(2022$)
MSP
(2022$)
$1,412.32
1,505.40
$1,793.65
1,911.85
TABLE IV.13—COST-EFFICIENCY DATA
FOR NWOFS WITH A PSC INDOOR
BLOWER MOTOR AND A SINGLESTAGE BURNER
MPC
(2022$)
AFUE
ddrumheller on DSK120RN23PROD with PROPOSALS2
83
85
87
96
......................
......................
......................
......................
$700.73
730.94
761.16
1,334.85
MSP
(2022$)
$945.98
986.77
1,027.57
1,802.05
TABLE IV.14—COST-EFFICIENCY DATA
FOR MHOFS WITH A PSC INDOOR
BLOWER MOTOR AND A SINGLESTAGE BURNER
MPC
(2022$)
AFUE
80
83
85
87
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......................
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740.01
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MSP
(2022$)
$857.16
915.63
954.61
993.59
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C. Markups Analysis
The markups analysis develops
appropriate markups (e.g., retailer
markups, distributor markups,
contractor markups) in the distribution
chain and sales taxes to convert the
MSP estimates derived in the
engineering analysis to consumer prices,
which are then used in the LCC and PBP
analysis. At each step in the distribution
channel, companies mark up the price
of the product to cover business costs
and profit margin. Before developing
markups, DOE defines key market
participants and identifies distribution
channels.
For the subject consumer furnaces,
the main parties in the distribution
chains are: (1) manufacturers; (2)
wholesalers or distributors; (3) retailers;
(4) mechanical contractors; (5) builders;
(6) manufactured home manufacturers,
and (7) manufactured home dealers/
retailers. For this NOPD, DOE
maintained the same approach as in the
preliminary analysis. DOE characterized
two distribution channel market
segments to describe how NWOFs,
MHOFs, and WGFs pass from the
manufacturer to residential and
commercial consumers: 30 (1)
replacements and new owners 31 and (2)
new construction.
In replacement and new owner
market, the primary distribution
channel for NWOFs, MHOFs, and WGFs
is characterized as follow:
Manufacturer → Wholesaler →
Mechanical Contractor → Consumer
DOE estimates that the above
distribution channel applies to a
majority of the shipment of the subject
consumer furnaces.32 However, the
30 DOE estimates that five percent of WGFs and
three percent of NWOFs are installed in commercial
buildings.
31 New owners are new furnace installations in
buildings that did not previously have a NWOF,
MHOF, or WGF, or existing owners that are
installing an additional consumer furnace. These
primarily consist of households that add or switch
to these furnaces during a major remodel.
32 In the residential sector, DOE estimates that
this distribution channel is applicable to 90 percent
of the shipments for NWOFs and MHOFs, and 80
percent for WGFs; in commercial sector, it is
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80
105
105
Per-unit
shipping cost
(2022$)
55.69
19.92
19.92
retail distribution channel (including
internet sales) has grown significantly in
the last five years (previously it was
negligible), and some consumers
purchase the appliance directly and
then have contractors install it.
Accordingly, DOE considered the
following additional distribution
channels: 33
Manufacturer → Retailer → Consumer
Manufacturer → Retailer → Mechanical
Contractor → Consumer
For mobile home applications, there
is another distribution channel
considered on top of the
aforementioned, where the MHOF or
WGF is purchased via a mobile home
specialty retailer or dealer: 34
Manufacturer → Mobile Home Specialty
Retailer/Dealer → Consumer
In the new construction market, DOE
identified three primary distribution
channels that involve builders, or
manufactured home builders when
considering mobile home applications:
Manufacturer → Wholesaler →
Mechanical Contractor → Builder
→ Consumer
Manufacturer → Wholesaler → Builder
→ Consumer
Manufacturer → Mobile Home
Manufacturer → Mobile Home
Dealer → Consumer
For both the replacements and new
owners and the new construction
markets, DOE additionally considered
the national accounts or direct-frommanufacturer distribution channel,
where the manufacturer through a
wholesaler sells directly to
consumers.35
applied to 75 percent of NWOF and 70 percent of
WGF distributions.
33 In the residential sector, DOE estimates that
these two distribution channels combined are
applicable to 5 percent of the shipments for NWOFs
and MHOFs, and 15 percent for WGFs (in mobile
home applications, 10 percent of the WGFs
distributed to mobile homes is assumed to go
through these channels); in the commercial sector,
they are applied to 10 percent of NWOF and 15
percent of WGF distributions.
34 DOE estimates that 5 percent of MHOFs and 10
percent of WGFs that go to mobile homes are
distributed through this channel.
35 The national accounts channel where the buyer
is the same as the consumer is mostly applicable
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Manufacturer → Wholesaler (National
Account) → Buyer → Consumer
DOE developed baseline and
incremental markups for each
participant in the distribution chain to
ultimately determine the consumer
purchase cost. Baseline markups are
applied to the price of products with
baseline efficiency, while incremental
markups are applied to the difference in
price between baseline and higherefficiency models (the incremental cost
increase). The incremental markup is
typically less than the baseline markup
and is designed to maintain similar perunit operating profit before and after
new or amended standards.36
Lennox stated that the application of
lower incremental markups for
increased consumer furnace standard
levels considered in the TSD should be
reviewed. Lennox stated that a
significantly discounted incremental
markup for high EL levels from baseline
markup is not logical or aligned with
business practices. (Lennox, No. 26 at p.
8) Lennox added that the assumption of
reduced incremental markups for higher
efficiency standards is contrary to
normal industry practice and the
expectations of its shareholders.
(Lennox, No. 26 at p. 8)
In response, DOE’s incremental
markup approach assumes that an
increase in profitability, which is
implied by keeping a fixed markup
when the product price goes up, is
unlikely to be viable over time in
reasonably competitive markets. DOE
recognizes that actors in the distribution
chains are likely to seek to maintain the
same markup on appliances in response
to changes in manufacturer sales prices
after an amendment to energy
conservation standards. However, DOE
believes that retail pricing is likely to
adjust over time as those actors are
forced to readjust their markups to reach
a medium-term equilibrium in which
to NWOFs and WGFs installed in small to mid-size
commercial buildings, where on-site contractors
purchase equipment directly from wholesalers at
lower prices due to the large volume of equipment
purchased, and perform the installation themselves.
DOE’s analysis assumes that approximately 5 and
15 percent of NWOFs and WGFs installed in the
residential and commercial sector, respectively, use
national accounts distribution channel for
replacements. For new construction, DOE assumes
10 percent of the subject furnaces installed in
residential sector and 20 percent installed in
commercial are distributed through national
accounts.
36 Because the projected price of standardscompliant products is typically higher than the
price of baseline products, using the same markup
for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While
such an outcome is possible, DOE maintains that in
markets that are reasonably competitive, it is
unlikely that standards would lead to a sustainable
increase in profitability in the long run.
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per-unit profit is relatively unchanged
before and after standards are
implemented.
DOE acknowledges that markup
practices in response to amended
standards are complex and vary with
business conditions. However, DOE’s
analysis necessarily only considers
changes in appliance offerings that
occur in response to amended
standards. DOE continues to maintain
that its assumption that standards do
not facilitate a sustainable increase in
profitability is reasonable. Chapter 6 of
the November 2022 Preliminary
Analysis TSD provides details on DOE’s
development of markups for oil and
weatherized gas furnaces.37
D. Energy Use Analysis
The purpose of the energy use
analysis is to determine the annual
energy consumption of oil and
weatherized gas furnaces at different
efficiencies in representative U.S.
residential buildings, commercial
buildings, and residential mobile
homes, and to assess the energy savings
potential of increased oil and
weatherized gas furnace efficiency. The
energy use analysis estimates the range
of energy use of oil and weatherized gas
furnaces in the field (i.e., as they are
actually used by consumers). The
energy use analysis provides the basis
for other analyses DOE performed,
particularly assessments of the potential
energy savings and the savings in
consumer operating costs that could
result from adoption of amended or new
standards.
DOE estimated the annual energy
consumption of oil and weatherized gas
consumer furnaces at specific energy
efficiency levels across a range of
climate zones, building characteristics,
and space heating needs. The annual
energy consumption includes the
natural gas, liquid petroleum gas
(‘‘LPG’’), oil, and electricity, as
applicable, used by the furnace.
To determine the field energy use of
the subject furnaces, DOE developed a
building sample based on the Energy
Information Administration’s (‘‘EIA’’)
2015 Residential Energy Consumption
Survey (‘‘RECS 2015’’) 38 and 2012
Commercial Building Energy
Consumption Survey (‘‘CBECS
2012’’).39 40 DOE used RECS 201537 In this NOPD, DOE is referencing the November
2022 Preliminary TSD for general methodology;
note that some inputs have been updated for this
NOPD.
38 Energy Information Administration (EIA), 2015
Residential Energy Consumption Survey (RECS).
(Available at: www.eia.gov/consumption/
residential/) (Last accessed August 1, 2023).
39 Energy Information Administration (EIA), 2012
Commercial Buildings Energy Consumption Survey
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reported or CBECS 2012-reported
heating energy consumption (based on
the existing heating system) to calculate
the heating load of each household or
building. The heating load represents
the amount of heating required to keep
a housing unit or building comfortable
throughout an average year. DOE
assigned the energy efficiency of
existing systems based on the design of
the distribution systems, a historical
distribution of energy efficiencies for
NWOFs, MHOFs, and WGFs, and data
about the age of the existing furnace.
The estimation of heating loads also
required calculating the electricity
consumption of the blower, because
heat from the operation of the blower
contributes to space heating. In
addition, DOE made adjustments based
on historical weather data, projections
of building shell efficiency, and
building square footage, as well as for
homes that had secondary heating
equipment that used the same fuel as
the furnace. To complete the analysis,
DOE calculated the anticipated energy
consumption of alternative (more
energy-efficient) products if they were
to replace existing systems in each
housing unit or commercial building.
DOE also included the electricity use
of auxiliary equipment, such as
condensate pumps and heat tape, which
are sometimes installed with higherefficiency products. The electricity
consumption of the auxiliary equipment
(‘‘ElecUseAux’’) is added to the total
electricity consumption.
Chapter 7 of the November 2022
Preliminary Analysis TSD provides
details on DOE’s energy use analysis for
oil and weatherized gas furnaces.
AHRI commented that standard heat
tape has an average energy consumption
of 9 W/ft, adding that this additional
load would increase energy use and is
not accounted for in DOE’s energy use
analysis for these products. AHRI stated
that there are additional challenges
surrounding prevention of freezing
condensate for WGF units, and although
AHRI suggested that electric strip
heating could be used to overcome this
problem, such solution would add
electrical losses. (AHRI, No. 23 at p. 5)
In response, DOE accounted for heat
tape use in cases when a WGF is
installed in an outdoor environment
that could face freezing conditions. DOE
assumed that such installations would
occur in locations facing freezing
conditions based on the outdoor heating
(CBECS). (Available at: www.eia.gov/consumption/
commercial/) (Last accessed August 1, 2023).
40 At the time DOE performed the analyses
underlying this proposed determination, the RECS
2015 and CBECS 2012 were the latest available full
data releases.
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design temperature (or the 99th
percentile). For the WGF sample, which
is largely in warmer parts of the
country, DOE estimated that about 5
percent of those installations would
require heat tape, and DOE assumed
that a larger fraction (around 50 percent)
would deal with freeze protection
through other methods, such as running
the condensate lines through the ground
or inside the WGF unit and into the
building. For the energy use analysis,
DOE used on average 45 watts (or 9 W/
ft times 5 feet) for the energy
consumption of installations requiring
heat tape. For another 5 percent of
installations, DOE accounted for the use
of a condensate pump with an average
energy consumption of 60 watts. DOE
notes that any additional installation
costs would not change DOE’s tentative
decision not to amend standards for the
subject products.
E. Life-Cycle Cost and Payback Period
Analysis
DOE conducted LCC and PBP
analyses to evaluate the economic
impacts on individual consumers of
potential energy conservation standards
for oil and weatherized gas furnaces.
The effect of new or amended energy
conservation standards on individual
consumers usually involves a reduction
in operating cost and an increase in
purchase cost. DOE used the following
two metrics to measure consumer
impacts:
b Life-Cycle Cost (LCC) is the total
consumer expense of an appliance or
product over the life of that product,
consisting of total installed cost
(manufacturer selling price, distribution
chain markups, sales tax, and
installation costs) plus operating costs
(expenses for energy use, maintenance,
and repair). To compute the operating
costs, DOE discounts future operating
costs to the time of purchase and sums
them over the lifetime of the product.
b Payback Period (PBP) is the
estimated amount of time (in years) it
takes consumers to recover the
increased purchase cost (including
installation) of a more-efficient product
through lower operating costs. DOE
calculates the PBP by dividing the
change in purchase cost at higher
efficiency levels by the change in
annual operating cost for the year that
amended or new standards are assumed
to take effect.
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For any given efficiency level, DOE
measures the change in LCC relative to
the LCC in the no-new-standards case,
which reflects the estimated efficiency
distribution of oil and weatherized gas
furnaces in the absence of new or
amended energy conservation
standards. In contrast, the PBP for a
given efficiency level is measured
relative to the baseline product.
For each considered efficiency level
in each product class, DOE calculated
the LCC and PBP for a nationally
representative set of housing units and,
where appropriate, commercial
buildings. As stated previously, DOE
developed household and commercial
building samples from RECS 2015 and
CBECS 2012. For each sample
household or commercial building, DOE
determined the energy consumption for
the oil and weatherized gas furnaces
and the appropriate energy price. By
developing a representative sample of
households and commercial buildings,
the analysis captured the variability in
energy consumption and energy prices
associated with the use of oil and
weatherized gas furnaces.
Inputs to the LCC calculation include
the installed cost to the consumer,
operating expenses, the lifetime of the
product, and the discount rate that
applies to projected expenses. Inputs to
the calculation of total installed cost
include the cost of the product—which
includes MPCs, manufacturer markups,
retailer and distributor markups, and
sales taxes (where appropriate)—and
installation costs. Inputs to the
calculation of operating expenses
include annual energy consumption,
energy prices and price projections,
repair and maintenance costs, product
lifetimes, and discount rates. Inputs to
the payback period calculation include
the installed cost to the consumer and
first year operating expenses. DOE
created distributions of values for
installation cost, repair and
maintenance, product lifetime, and
discount rates with probabilities
attached to each value, to account for
their uncertainty and variability.
The computer model DOE uses to
calculate the LCC and PBP relies on a
Monte Carlo simulation to incorporate
uncertainty and variability into the
analysis. The Monte Carlo simulations
randomly sample input values from the
probability distributions and oil,
electric, and weatherized gas furnace
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user samples. For this determination,
the Monte Carlo approach is
implemented in MS Excel together with
the Crystal BallTM add-on.41 The model
calculated the LCC and PBP for
products at each efficiency level for
10,000 furnace installations in housing
units or commercial buildings per
simulation run. The analytical results
include a distribution of 10,000 data
points showing the range of LCC savings
for a given efficiency level relative to
the no-new-standards case efficiency
distribution. In performing an iteration
of the Monte Carlo simulation for a
given consumer, product efficiency is
chosen based on its probability. If the
chosen product efficiency is greater than
or equal to the efficiency of the standard
level under consideration, the LCC and
PBP calculation reveals that a consumer
is not impacted by the standard level.
By accounting for consumers who are
projected to purchase more-efficient
furnaces than the baseline furnace in the
simulation, DOE avoids overstating the
potential benefits from increasing
product efficiency.
DOE calculated the LCC and PBP for
all consumers of oil and weatherized gas
furnaces as if each were to purchase a
new product in the expected first year
of required compliance with new or
amended standards. Any amended
standards would apply to oil and
weatherized gas furnaces manufactured
five years after the date on which any
new or amended standard is published
in the Federal Register. (42 U.S.C.
6295(m)(4)(A)(ii)) For purposes of its
analysis, DOE used 2030 as the first year
of compliance with any amended
standards for oil and weatherized gas
furnaces.
Table IV.15 summarizes the approach
and data DOE used to derive inputs to
the LCC and PBP calculations. The
subsections that follow provide further
discussion. Details of the spreadsheet
model, and how all inputs to the LCC
and PBP analyses are applied, are
contained in chapter 8 of the November
2022 Preliminary Analysis TSD and its
appendices.
41 Crystal BallTM is a commercially-available
software tool to facilitate the creation of these types
of models by generating probability distributions
and summarizing results within Excel (Available at:
www.oracle.com/middleware/technologies/
crystalball.html) (Last accessed August1, 2023).
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TABLE IV.15—SUMMARY OF INPUTS AND METHODS FOR THE LCC AND PBP ANALYSIS *
Input
Source/method
Product Cost ...................................
Derived by multiplying MPCs by manufacturer and distribution chain markups and sales tax, as appropriate. Used historical data to derive a price-scaling index to project product costs.
Baseline installation cost determined with data from RSMeans 2023, manufacturer literature, and expert
consultant. DOE assumed increased installation costs for condensing furnaces.
The annual energy consumption per unit at each efficiency level (see section IV.D of this document). Variability: Based on RECS 2015 and CBECS 2012.
Natural Gas: Based on EIA’s Natural Gas Navigator data for 2022 and RECS 2015 and CBECS 2012 billing data.
Propane and Fuel Oil: Based on EIA’s State Energy Data System (‘‘SEDS’’) for 2021.
Electricity: Based on EIA’s Form 861 data for 2022 and RECS 2015 and CBECS 2012 billing data.
Variability: State energy prices determined for residential and commercial applications.
Marginal prices used for natural gas, propane, and electricity prices.
Residential and commercial prices were escalated by using EIA’s 2023 Annual Energy Outlook (AEO
2023) forecasts to estimate future energy prices. Escalation was performed at the Census Division level.
Baseline installation cost determined with data from RSMeans 2023, manufacturer literature, and expert
consultant. DOE assumed increased repair and maintenance costs for condensing furnaces.
Based on shipments data, multi-year RECS, American Housing Survey, American Home Comfort Survey
data. Average: 20.2–22.5 years
For residential end users, approach involves identifying all possible debt or asset classes that might be
used to purchase the considered appliances or might be affected indirectly. Primary data source was the
Federal Reserve Board’s Survey of Consumer Finances. For commercial end users, DOE calculates
commercial discount rates as the weighted average cost of capital using various financial data.
2030.
Installation Costs .............................
Annual Energy Use .........................
Energy Prices ..................................
Energy Price Trends .......................
Repair and Maintenance Costs ......
Product Lifetime ..............................
Discount Rates ................................
Compliance Date ............................
* Note: References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the November 2022 Preliminary Analysis TSD.
ddrumheller on DSK120RN23PROD with PROPOSALS2
1. Product Cost
To calculate consumer product costs,
DOE multiplied the MPCs developed in
the engineering analysis by the markups
described previously (along with sales
taxes). DOE used different markups for
baseline products and higher-efficiency
products, because DOE applies an
incremental markup to the increase in
MSP associated with higher-efficiency
products.
DOE estimated product prices in the
year of compliance by using a leastsquares power-law fit on the inflationadjusted, unified price index (historical
Producer Price Index (‘‘PPI’’) data for
warm-air furnaces from the Bureau of
Labor Statistics (‘‘BLS’’) spanning the
time period 1990–2018 versus
cumulative shipments.42
In order to improve real-world
representativeness, NYSERDA
recommended that DOE consider using
piecewise power-law curves for
different time intervals to estimate the
learning rate parameter in the LCC
analysis. NYSERDA provided data to
explain that prices decreased until 2017
and then started to increase. NYSERDA
added that one possible explanation for
this is that growing economies are
consuming more raw materials that go
into manufacturing furnaces, and such
an increase in global aggregate demand
for raw materials exerts upward
42 U.S. Department of Labor, Bureau of Labor
Statistics, Produce Price Indices Series ID
PCU333415333415C (Available at: www.bls.gov/
ppi/) (Last accessed August 1, 2023).
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pressure on product prices. The
commenter explained that piecewise
power-law curves are a common
approach in cases where there is a
reversal in directionality of trends and
cited an example journal article.
NYSERDA commented that using one
power-law curve before 2017 and
another after would more accurately
capture the reduction in furnace prices
in the future. (NYSERDA, No. 19 at pp.
3–4)
DOE reviewed NYSERDA’s suggestion
for an alternative price learning
approach; however, insufficient data are
available to implement the approach for
the products considered in this
rulemaking. In addition, the
recommendation to segment the curve
before and after 2017 is similar to the
alternative price scenarios that DOE
typically explores when proposing or
finalizing amended standards, but in
this case, DOE has tentatively
determined not to amend standards. For
these reasons, DOE has not changed its
methodology for this NOPD.
2. Installation Cost
The installation cost is the expense to
the consumer of installing the furnace,
in addition to the cost of the furnace
itself. Installation cost includes all
labor, overhead, and any miscellaneous
materials and parts needed that are
associated with the replacement of an
existing furnace or the installation of a
furnace in a new home, as well as
delivery of the new furnace, removal of
the existing furnace, and any applicable
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permit fees. Higher-efficiency furnaces
may require a consumer to incur
additional installation costs. DOE used
data from RSMeans,43 manufacturer
literature, and expert consultants to
estimate the installation cost, including
labor costs, for oil and weatherized gas
furnaces. DOE’s analysis of installation
costs accounted for regional differences
in labor costs by aggregating city-level
labor rates from RSMeans into the 50
distinct State plus Washington DC to
match RECS 2015 and CBECS 2012 data.
The installation cost methodology
accounts for all potential installation
cases, including when a noncondensing
furnace is replaced with a condensing
furnace, with particular attention to
venting issues in replacement
applications (see descriptions which
follow). The installation cost also
depends on the furnace installation
location, which DOE determined using
information from RECS 2015 and
CBECS 2012.
For NWOF replacement installations,
DOE included a number of additional
costs (‘‘adders’’) for a fraction of the
sample households that have particular
features. For noncondensing furnaces,
these additional costs included
updating flue vent connectors, vent
resizing, and chimney relining. For
condensing furnaces, these additional
costs included adding a new flue vent
43 RSMeans Company Inc., RSMeans Cost Data.
Kingston, MA (2023) (Available at:
www.rsmeans.com/products/books/2023-cost-databooks) (Last accessed August 1, 2023).
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(PVC), adding combustion air vent for
direct vent installations (PVC), adding
concealing vent pipes for indoor
installations, addressing an orphaned
water heater (by updating flue vent
connectors, vent resizing, or chimney
relining), and removing condensate, all
based on manufacturer installation
manuals and expert consultant input.
Freeze protection (heat tape) is
accounted for in the cost of condensate
removal for a fraction of NWOFs
installed in unconditioned attics.
For WGF installations, DOE included
additional cost adders for condensing
WGFs to dispose of the condensate
created and to prevent freezing of the
condensate, as the entire product is
outdoors based on manufacturer
installation manuals, field study reports,
and expert consultant input. DOE also
accounted for a fraction of installations
in colder climates that could require
freeze protection (heat tape), a
condensate line being buried below the
frost line, or a condensate pump.
AHRI commented that for WGFs
installed in rooftop applications, heated
drain lines are needed for winter use to
avoid building water damage. AHRI
added that condensate lines running
within the unit are difficult to access
and could have the potential to trap
condensate. (AHRI, No. 23 at p. 5) JCI
stated that while DOE considered the
use of heat tape, the practical
application/maintenance of heat tape
internal to installed systems poses an
undue installation and maintenance
burden. (JCI, No. 25 at p. 2)
As explained in section IV.D of this
document, DOE accounted for heat tape
use in cases when a WGF is installed in
an outdoor environment that could face
freezing conditions. DOE assumed that
the installation location would be facing
freezing conditions based on the
outdoor heating design temperature (or
the 99th percentile). For the WGF
sample, which is largely in warmer
parts of the country, DOE estimated that
about five percent would require heat
tape. For another five percent of
installations, DOE accounted for the use
of a condensate pump. Furthermore,
DOE accounts for other condensate costs
such as adding condensate piping,
running condensate lines through the
ground or inside the WGF unit and into
the building, using condensate
neutralizer, adding an electrical outlet
for heat tape or condensate pump,
adding a drain pan, and adding a noncorrosive drain. On average, the
installation cost adder across these
scenarios is $110.
For further information on the
derivation of installation costs, see
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chapter 7 of the November 2022
Preliminary Analysis TSD.
3. Annual Energy Consumption
For each sampled household or
commercial building, DOE determined
the energy consumption for oil and
weatherized gas furnace at different
efficiency levels using the approach
described previously in section IV.D of
this document.
4. Energy Prices
DOE derived 2022 annual residential
and commercial electricity prices by
state from EIA Form 861M data.44 DOE
obtained 2022 annual residential and
commercial natural gas prices by state
from EIA’s Natural Gas Navigator.45
DOE collected 2021 average LPG and
fuel oil prices by state from EIA’s 2021
State Energy Consumption, Price, and
Expenditures Estimates (‘‘SEDS’’) and
scaled to 2022 prices using AEO2023
data.46 To determine monthly prices for
use in the analysis, DOE developed
monthly energy price factors for each
fuel based on long-term monthly price
data. Monthly electricity and natural gas
prices were adjusted using seasonal
marginal price factors to determine
monthly marginal electricity and natural
gas prices. These marginal energy prices
were used to determine the cost to the
consumer of the change in energy
consumed. Because marginal price data
is only available for residential
electricity and natural gas, DOE only
developed marginal monthly prices for
these fuels. For LPG and fuel oil, DOE
used average monthly prices.
To estimate energy prices in future
years, DOE multiplied the 2022 energy
prices by the projection of annual
average price changes for each state
from the Reference case in AEO2023,
which has an end year of 2050.47 To
estimate price trends after 2050, DOE
used the average annual rate of change
in prices from 2046 through 2050. See
chapter 8 of the November 2022
Preliminary Analysis TSD for details.
NYSERDA recommended that DOE
consider applying a correction factor to
account for potential gaps between
44 U.S. Department of Energy-Energy Information
Administration, Form EIA–861M (formerly EIA–
826) detailed data (2022) (Available at:
www.eia.gov/electricity/data/eia861m/) (Last
accessed August 1, 2023).
45 U.S. Department of Energy-Energy Information
Administration, Natural Gas Navigator (2022)
(Available at: www.eia.gov/naturalgas/data.php)
(Last accessed August 1, 2023).
46 U.S. Department of Energy-Energy Information
Administration, 2021 State Energy Data System
(SEDS) (2021) (Available at: www.eia.gov/state/
seds/) (Last accessed August 1, 2023).
47 EIA, Annual Energy Outlook 2023 with
Projections to 2050 (Available at: www.eia.gov/
forecasts/aeo/) (Last accessed June 1, 2023).
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forecasted prices and actual prices for
energy, particularly in oil and natural
gas. NYSERDA provided data depicting
the heating oil prices within New York
over a 23-year period and noted that
there is significant variation in the time
series. The commenter encouraged DOE
to assemble multiple AEO reports for
historic forecasts to determine a
correction factor based on the
comparison of actual prices to
forecasted prices. NYSERDA added that
this correction factor could then be
applied to future forecasted prices to
produce a more accurate result while
still using EIA’s price forecasts.
(NYSERDA, No. 19 at pp. 4–5)
In response to NYSERDA, DOE
acknowledges that forecasted prices do
not always accurately predict future
prices. However, DOE does not agree
that past discrepancies between the two
can reliably be used to adjust EIA’s
forecasts, as there is not a firm basis for
assuming that historic factors will
develop in the same way in the future.
For this reason, DOE is maintaining its
practice of relying on AEO’s energy
price forecasts.
The Joint Commenters reiterated their
comments made in response to DOE’s
2022 Request for Information pertaining
to concerns with DOE’s reliance on
allegedly incorrect projections of natural
gas price trends, marginal residential
natural gas prices, and systematic
problems with DOE’s economic
analysis. The Joint Commenters added
that these earlier comments highlight
flaws in DOE’s process and stated that
these flaws must be addressed both in
this and future rulemakings before
proposing any new minimum efficiency
standards for appliances. (Joint
Commenters, No. 24 at p. 3)
In response to the Joint Commenters,
DOE acknowledges that past projections
of natural gas prices have not matched
actual prices in recent years, but DOE
maintains that this is due to factors that
were difficult to predict and not to any
flaws in the model that is used to
develop AEO energy price projections,
or to biases with regard to assumptions.
5. Maintenance and Repair Costs
Repair costs are associated with
repairing or replacing product
components that have failed in an
appliance; maintenance costs are
associated with maintaining the
operation of the product. The
maintenance and repair costs (including
labor hours, component costs, and
frequency) at each considered efficiency
level are derived based on 2023
RSMeans Facilities Maintenance and
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Repair Data,48 manufacturer literature,
consultant input, and industry reports.
DOE also accounted for regional
differences in labor costs based on these
2023 RSMeans data.
DOE assumes that condensing
furnaces have a higher maintenance cost
than noncondensing furnaces, but that
this maintenance cost is the same at all
noncondensing or condensing efficiency
levels within each product class. The
additional maintenance cost for
condensing furnaces includes
maintenance tasks related to the
condensate withdrawal system (such as
condensate pump or condensate
neutralizer filter) and additional
maintenance related to the cleaning or
checking of the heat exchanger (in
particular, for condensing oil-fired
furnaces using high-sulfur fuel oil).
DOE also assumes that condensing
furnaces have a higher repair cost than
noncondensing furnaces, but the repair
cost is the same at all non-condensing
or condensing efficiency levels within
each product class.
For more details on DOE’s
methodology for calculating
maintenance and repair costs, including
all online resources reviewed, see
appendix 8E of the November 2022
Preliminary Analysis TSD.
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6. Product Lifetime
Product lifetime is the age at which an
appliance is retired from service. DOE
conducted an analysis of furnace
lifetimes based on the methodology
described in a recent journal paper.49
For this analysis, DOE relied on RECS
1990, 1993, 2001, 2005, 2009, and
2015.50 DOE also used the U.S. Census’s
biennial American Housing Survey
(‘‘AHS’’), from 1974–2021, which
surveys all housing, noting the presence
of a range of appliances.51 DOE used the
48 RSMeans Company Inc., RSMeans Facilities
Maintenance & Repair Cost Data (2023) (Available
at: www.rsmeans.com/) (Last accessed August 1,
2023).
49 Lutz, J., A. Hopkins, V. Letschert, V. Franco,
and A. Sturges, Using national survey data to
estimate lifetimes of residential appliances,
HVAC&R Research (2011) 17(5): p. 28. (Available
at: www.tandfonline.com/doi/abs/10.1080/
10789669.2011.558166) (Last accessed August 1,
2023).
50 U.S. Department of Energy: Energy Information
Administration, Residential Energy Consumption
Survey (‘‘RECS’’), Multiple Years (1990, 1993, 1997,
2001, 2005, 2009, and 2015). (Available at:
www.eia.gov/consumption/residential/) (Last
accessed August 1, 2023).
51 U.S. Census Bureau: Housing and Household
Economic Statistics Division, American Housing
Survey, Multiple Years (1974, 1975, 1976, 1977,
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appliance age data from these surveys,
as well as the historical furnace
shipments, to generate an estimate of
the survival function. The survival
function provides a lifetime range from
minimum to maximum, as well as an
average lifetime. For oil and
weatherized gas furnaces, DOE
developed Weibull distributions
resulting in an average lifetime of 20.2
to 22.5 years (based on region).
Appendix 8F of the November 2022
Preliminary Analysis TSD provides
further details on the methodology and
sources DOE used to develop the subject
furnace lifetimes.
7. Discount Rates
The discount rate is the rate at which
future expenditures and savings are
discounted to establish their present
value. DOE estimates discount rates
separately for residential and
commercial end users.
For residential end users, DOE applies
weighted-average discount rates
calculated from consumer debt and
asset data, rather than marginal or
implicit discount rates. DOE identified
all relevant household debt or asset
classes in order to approximate a
consumer’s opportunity cost of funds
related to appliance energy cost savings.
It estimated the average percentage
shares of the various types of debt and
equity by household income group
using data from the Federal Reserve
Board’s Survey of Consumer Finances
(‘‘SCF’’). Using the SCF and other
sources, DOE developed a distribution
of rates for each type of debt and asset
by income group to represent the rates
that may apply in the year in which
amended standards would take effect.
DOE assigned each sample household a
specific discount rate drawn from one of
the distributions.
For commercial end users, DOE
estimated the weighted-average cost of
capital using data from various financial
sources. The weighted-average cost of
capital is commonly used to estimate
the present value of cash flows to be
derived from a typical company project
or investment. Most companies use both
debt and equity capital to fund
investments, so their cost of capital is
the weighted average of the cost to the
firm of equity and debt financing.
1978, 1979, 1980, 1981, 1983, 1985, 1987, 1989,
1991, 1993, 1995, 1997, 1999, 2001, 2003, 2005,
2007, 2009, 2011, 2013, 2015, 2017, 2019, and
2021). (Available at: www.census.gov/programssurveys/ahs/) (Last accessed August 1, 2023).
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83451
See appendix 8G of the November
2022 Preliminary Analysis TSD for
further details on the development of
discount rates.
8. Energy Efficiency Distribution in the
No-New-Standards Case
To accurately estimate the share of
consumers that would be affected by a
potential energy conservation standard
at a particular efficiency level, DOE’s
LCC analysis considered the projected
distribution (i.e., market shares) of
product efficiencies under the no-newstandards case (i.e., the case without
amended or new energy conservation
standards) in the compliance year
(2030). This approach reflects the fact
that some consumers may purchase
products with efficiencies greater than
the baseline levels, such that even in a
no-new-standards case, consumers will
be purchasing higher-efficiency
furnaces.
For consumer furnaces, DOE had
limited historical-shipments data by
efficiency level. For NWOFs/MHOFs,
DOE reviewed market shares from
HARDI 2013–2022 data and BRG 2007–
2022 data.52 53 The shipments data are
not disaggregated between NWOFs and
MHOFs, but DOE assigned all
shipments data below 83-percent AFUE
to MHOFs. For WGFs, DOE had
insufficient historical shipments data by
efficiency level to develop a reliable
efficiency distribution. To cover the lack
of available shipments data, DOE
referred to the DOE’s Compliance
Certification Database (‘‘CCD’’) 54 for
furnaces to develop efficiency
distributions based on available models
for WGFs.
The estimated market shares for the
no-new-standards case for oil and
weatherized gas furnaces are shown in
Table IV.16. See chapter 8 of the
November 2022 Preliminary Analysis
TSD for further information on the
derivation of the efficiency
distributions.
52 Heating, Air-conditioning and Refrigeration
Distributors International (HARDI), DRIVE portal
(HARDI Visualization Tool managed by D+R
International until 2022), proprietary Gas Furnace
Shipments Data from 2013–2022 provided to
Lawrence Berkeley National Laboratory (LBNL).
53 BRG Building Solutions. The North American
Heating & Cooling Product Markets (2022 Edition)
(Available at: www.brgbuildingsolutions.com/
reports-insights) (Last accessed August 1, 2023).
54 U.S. Department of Energy Compliance
Certification Database (‘‘CCD’’) (Available at:
www.regulations.doe.gov/certification-data/) (Last
accessed August 1, 2023).
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TABLE IV.16—NO-NEW-STANDARDS CASE ENERGY EFFICIENCY DISTRIBUTIONS IN 2030 FOR OIL AND WEATHERIZED GAS
FURNACES
Product class
Efficiency level
NWOF ......................................................................................................................................................................
Baseline .........
1 .....................
2 .....................
3 .....................
Baseline .........
1 .....................
2 .....................
3 .....................
Baseline .........
1 .....................
MHOF ......................................................................................................................................................................
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WGF ........................................................................................................................................................................
AHRI and Lennox stated that model
counts from the public database do not
reflect model or sales volume and that
a high number of models at a specific
efficiency level does not imply a large
market share of those products. (AHRI,
No. 23 at p. 4; Lennox, No. 26 at p. 3)
Lennox stated that industry data for
condensing weatherized gas furnaces
indicate that the market adoption of
these products has been de minimis.
(Lennox, No. 26 at p. 8) NYSERDA
commented that within New York’s
relatively cold climate, new sales of
electric and weatherized gas furnaces
are minimal. However, NYSERDA noted
that oil furnaces continue to be sold and
installed throughout the State, with a
2019 study suggesting that most oil
furnaces being installed are of low
efficiency. (NYSERDA, No. 19 at p. 1)
In response to AHRI and Lennox, as
stated previously, to develop an
efficiency distribution in the no-newstandards case, DOE used available
historical shipments data by efficiency
for NWOFs/MHOFs and made
assumptions to disaggregate between
NWOFs and MHOFs by AFUE. Due to
limited information for WGF, DOE
referred to CCD to develop efficiency
distributions. DOE projected that
condensing WGFs will continue to
account for a minimal share of the WGF
market in the no-new-standards case,
which aligns with Lennox’s
characterization of the industry data for
condensing weatherized gas furnaces. In
response to NYSERDA, DOE’s estimates
of efficiency distribution align with the
findings that most oil furnaces being
installed are of low efficiency. DOE
received no other data with which to
further refine the estimates of the
efficiency distribution, and as such,
DOE has not changed its existing
methodology.
9. Payback Period Analysis
The payback period is the amount of
time it takes the consumer to recover the
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additional installed cost of moreefficient products, compared to baseline
products, through energy cost savings.
Payback periods are expressed in years.
Payback periods that exceed the life of
the product mean that the increased
total installed cost is not recovered in
reduced operating expenses.
The inputs to the PBP calculation for
each efficiency level are the change in
total installed cost of the product and
the change in the first-year annual
operating expenditures relative to the
baseline. The PBP calculation uses the
same inputs as the LCC analysis, except
that discount rates are not needed.
EPCA 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 first year’s energy
savings resulting from the standard, as
calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
For each considered efficiency level,
DOE determined the value of the first
year’s energy savings by calculating the
energy savings in accordance with the
applicable DOE test procedure, and
multiplying those savings by the average
energy price projection for the year in
which compliance with the amended
standards would be required.
F. Shipments Analysis
DOE uses projections of annual
product shipments to calculate the
national impacts of potential amended
or new energy conservation standards
on energy use, NPV, and future
manufacturer cash flows.55 The
shipments model takes an accounting
approach in tracking market shares of
each product class and the vintage of
55 DOE uses data on manufacturer shipments as
a proxy for national sales, as aggregate data on sales
are lacking. In general, one would expect a close
correspondence between shipments and sales.
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Distribution
(%)
37.2
60.0
1.5
1.3
95
2
3
0
96
4
units in the stock. Stock accounting uses
product shipments as inputs to estimate
the age distribution of in-service
product stocks for all years. The age
distribution of in-service product stocks
is a key input to calculations of both the
NES and NPV, because operating costs
for any year depend on the age
distribution of the stock.
Lennox commented that DOE likely
overstates shipments for gas furnaces.
Lennox commented that the NWGF
rulemaking and this rulemaking may
significantly reduce the market shares of
these products. (Lennox, No. 26 at p. 2)
Lennox commented that NWOFs and
EFs are each less than one percent of the
consumer furnace market. (Id. at p. 1)
Lennox stated that DOE’s projections of
a growing market for residential
furnaces are inconsistent with federal
and state policy efforts to electrify space
heating in residences. (Lennox, No. 26
at p. 2) Lennox commented that
decarbonization efforts to electrify space
heating will have impacts on both the
total market for furnaces, as well as the
categories thereof. (Id.) Lennox
commented that States such as
California and New York, which
represent approximately 8 to 12 percent
of the annual furnace shipments, are
implementing plans to completely
electrify space heating as soon as 2030.
(Id.) In addition, Lennox stated that
furnace costs are likely to increase,
resulting in a reduction in the market.
(Id. at p. 3) Lennox commented that the
information presented in the
preliminary TSD similarly indicates a
growing market for furnaces, in contrast
to federal, state, and local efforts to
decarbonize space heating. Lennox
commented that gas furnace shipments
will decline in the time period
associated with this rulemaking, and
further DOE action should reflect a
substantial reduction in the market for
furnaces that consume fossil fuels. (Id.
at p. 8)
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In response, DOE notes that
assumptions made in the November
2022 Preliminary Analysis regarding
future policies encouraging
electrification of households were
speculative at that time, so such policies
were not incorporated into the
shipments projection. Consequently,
DOE’s market share and shipments
projections in the November 2022
Preliminary Analysis reflected the best
information available to DOE at that
time. For the NOPD, DOE accounted for
the 2022 update to Title 24 in
California 56 and also the decision of the
California Public Utilities Commission
to eliminate ratepayer subsidies for the
extension of new gas lines beginning in
July 2023. Together, these policies are
expected to lead to the eventual phaseout of gas furnaces in new single-family
homes in California. The California Air
Resources Board has adopted a 2022
State Strategy for the State
Implementation Plan that would
effectively ban sales of new gas furnaces
beginning in 2030.57 However, because
a final decision on a rule would not
happen until 2025, DOE did not include
this latter policy in its analysis for this
NOPD.
DOE understands that ongoing
electrification policies at the federal,
State, and local levels are likely to
encourage installation of heat pumps in
some new homes and adoption of heat
pumps in some homes that currently
use gas or oil-fired furnaces. However,
there are many uncertainties about the
timing and effects of these policies that
make it difficult to fully account for
their likely impact on gas or oil furnaces
market shares in the time frame for this
analysis (i.e., 2030 through 2059).
Nonetheless, DOE has modified some of
its projections to attempt to account for
impacts that are most likely in the
relevant time frame.58 These changes
result in a decrease of shipments in the
no-new-standards case in 2030
compared to the November 2022
Preliminary Analysis, with a
corresponding decrease in estimated
energy savings resulting from the
standards. DOE acknowledges that
electrification policies may result in a
larger decrease in shipments of gas
furnaces than projected in this NOPD,
especially if stronger policies are
adopted in coming years. However, this
would occur in the no-new amended
standards case and, thus, would only
reduce the energy savings estimated in
this NOPD.
G. National Impact Analysis
The NIA assesses the NES and the
NPV from a national perspective of total
consumer costs and savings that would
be expected to result from new or
amended energy conservation standards
at specific efficiency levels.59
(‘‘Consumer’’ in this context refers to
consumers of the product being
regulated.) DOE calculates the NES and
NPV for the potential standard levels
considered based on projections of
annual product shipments, along with
the annual energy consumption and
total installed cost data from the energy
use and LCC analyses.60 For the present
analysis, DOE projected the energy
savings, operating cost savings, product
costs, and NPV of consumer benefits
83453
over the lifetime of oil and weatherized
gas furnaces sold from 2030 through
2059.
DOE evaluates the effects of new or
amended standards by comparing a case
without such standards with standardscase projections. The no-new-standards
case characterizes energy use and
consumer costs for each product class in
the absence of new or amended energy
conservation standards. For this
projection, DOE considers historical
trends in efficiency and various forces
that are likely to affect the mix of
efficiencies over time. DOE compares
the no-new-standards case with
projections characterizing the market for
each product class if DOE adopted new
or amended standards at specific energy
efficiency levels (i.e., the ELs or
standards cases) for that class. For the
standards cases, DOE considers how a
given standard would likely affect the
market shares of products with
efficiencies greater than the standard.
DOE uses a spreadsheet model to
calculate the energy savings and the
national consumer costs and savings
from each EL. Interested parties can
review DOE’s analyses by changing
various input quantities within the
spreadsheet. The NIA spreadsheet
model uses typical values (as opposed
to probability distributions) as inputs.
Table IV.17 summarizes the inputs
and methods DOE used for the NIA
analysis for the NOPD. Discussion of
these inputs and methods follows the
table. See chapter 10 of the November
2022 Preliminary Analysis TSD for
details.
TABLE IV.17—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS
Input
Method
Shipments ...........................................................
Modeled Compliance Date of Standard .............
Efficiency Trends ................................................
Annual shipments from shipments model.
2030.
No-new-standards case: Based on historical data.
Standards cases: Roll-up in the compliance year and then DOE estimated growth in shipmentweighted efficiency in all the standards cases, except max-tech.
Annual weighted-average values are a function of energy use at each EL. Incorporates projection of future energy use based on AEO2023 projections for HDD/CDD and building shell efficiency index.
Annual weighted-average values are a function of cost at each EL.
Incorporates projection of future product prices based on historical data.
Annual weighted-average values as a function of the annual energy consumption per unit and
energy prices.
Annual weighted-average values increase for condensing levels.
AEO2023 projections (to 2050) and extrapolation after 2050.
A time-series conversion factor based on AEO2023.
Annual Energy Consumption per Unit ................
Total Installed Cost per Unit ...............................
ddrumheller on DSK120RN23PROD with PROPOSALS2
Annual Energy Cost per Unit ..............................
Repair and Maintenance Cost per Unit ..............
Energy Prices .....................................................
Energy Site-to-Primary and FFC Conversion .....
56 The 2022 update includes heat pumps as a
performance standard baseline for water heating or
space heating in single-family homes, as well as
space heating in multi-family homes. Under the
California Code, builders will need to either include
one high-efficiency heat pump in new constructions
or subject those buildings to more-stringent energy
efficiency standards.
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57 See ww2.arb.ca.gov/resources/documents/
2022-state-strategy-state-implementation-plan2022-state-sip-strategy (Last accessed June 2, 2023).
58 Based on currently adopted policies and
incentives, DOE estimated a lower saturation in the
new construction market and a higher product
switching rate for the replacement market for gas
and oil furnaces for the NOPD shipments analysis.
This change resulted in a decrease of 11 percent for
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WGFs, 62 percent for NWOF, and 68 percent for
MHOF for the no-new-standards case projection of
total shipments between 2030 and 2059 compared
to the preliminary analysis.
59 The NIA accounts for impacts in the U.S. and
U.S. territories.
60 For the NIA, DOE adjusts the installed cost data
from the LCC analysis to exclude sales tax, which
is a transfer.
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TABLE IV.17—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS—Continued
Input
Method
Discount Rate .....................................................
Present Year .......................................................
1. Product Efficiency Trends
A key component of the NIA is the
trend in energy efficiency projected for
the no-new-standards case and each of
the standards cases. Section IV.E.8 of
this document describes how DOE
developed an energy efficiency
distribution for the no-new-standards
case (which yields a shipment-weighted
average efficiency) for each of the
considered product classes for the year
of anticipated compliance with an
amended or new standard (2030).
For the standards cases, DOE used a
‘‘roll-up’’ scenario to establish the
shipment-weighted efficiency for the
year that standards are assumed to
become effective (2030). In this
scenario, the market shares of products
in the no-new-standards case that do not
meet the standard under consideration
would ‘‘roll up’’ to meet the new
standard level, and the market share of
products above the standard would
remain unchanged.
To develop standards case efficiency
trends after 2030, DOE estimated growth
in shipment-weighted efficiency in the
standards cases, except in the max-tech
standards case.
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2. National Energy Savings
The NES analysis involves a
comparison of national energy
consumption of the considered products
between each potential standards case
(EL) and the case with no new or
amended energy conservation
standards. DOE calculated the national
energy consumption by multiplying the
number of units (stock) of each product
(by vintage or age) by the unit energy
consumption (also by vintage). DOE
calculated annual NES based on the
difference in national energy
consumption for the no-new-standards
case and for each higher-efficiency
standard case. DOE estimated energy
consumption and savings based on site
energy and converted the electricity
consumption and savings to primary
energy (i.e., the energy consumed by
power plants to generate site electricity)
using annual conversion factors derived
from AEO2023. For natural gas and
LPG, DOE assumed that site energy
consumption is the same as primary
energy consumption. Cumulative energy
savings are the sum of the NES for each
year over the timeframe of the analysis.
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Three percent and seven percent.
2023.
Use of higher-efficiency products is
sometimes associated with a direct
rebound effect, which refers to an
increase in utilization of the product
due to the increase in efficiency. For oil
and weatherized gas furnaces, DOE
applied a rebound effect of 15 percent
for residential applications by reducing
the site energy savings (and the
associated primary and FFC energy
savings). However, for commercial
applications, DOE applied no rebound
effect in order to be consistent with
other recent standards rulemakings.
In 2011, in response to the
recommendations of a committee on
‘‘Point-of-Use and Full-Fuel-Cycle
Measurement Approaches to Energy
Efficiency Standards’’ appointed by the
National Academy of Sciences, DOE
announced its intention to use FFC
measures of energy use and greenhouse
gas and other emissions in the NIA and
emissions analyses included in future
energy conservation standards
rulemakings. 76 FR 51281 (August 18,
2011). After evaluating the approaches
discussed in the August 18, 2011 notice,
DOE published a statement of amended
policy in which DOE explained its
determination that EIA’s National
Energy Modeling System (‘‘NEMS’’) is
the most appropriate tool for its FFC
analysis and its intention to use NEMS
for that purpose. 77 FR 49701 (August
17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model
of the U.S. energy sector 61 that EIA uses
to prepare its Annual Energy Outlook.
The FFC factors incorporate losses in
production and delivery in the case of
natural gas (including fugitive
emissions) and additional energy used
to produce and deliver the various fuels
used by power plants. The general
approach used for deriving FFC
measures of energy use and emissions is
described in appendix 10B of the
November 2022 Preliminary Analysis
TSD.
3. Net Present Value Analysis
The inputs for determining the NPV
of the total costs and benefits
experienced by consumers are: (1) total
61 For more information on NEMS, refer to The
National Energy Modeling System: An Overview
May 2023, DOE/EIA, May 2023 (Available at:
www.eia.gov/analysis/pdfpages/
0581(2009)index.php) (Last accessed June 27,
2023).
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annual installed cost; (2) total annual
operating costs (energy costs and repair
and maintenance costs), and (3) a
discount factor to calculate the present
value of costs and savings. DOE
calculates net savings each year as the
difference between the no-newstandards case and each standards case
in terms of total savings in operating
costs versus total increases in installed
costs. DOE calculates operating cost
savings over the lifetime of each product
shipped during the projection period.
As discussed in section IV.E.1 of this
document, DOE developed oil and
weatherized gas furnace price trends
based on historical PPI data and
cumulative shipments. DOE applied the
same trends to project prices for each
product class at each considered
efficiency level. By 2059, which is the
end date of the projection period, the
average oil and weatherized gas furnace
price is projected to drop 17 percent
relative to 2022. DOE’s projection of
product prices is described further in
chapter 10 of the November 2022
Preliminary Analysis TSD.
The operating cost savings are
calculated as energy cost savings minus
any repair and maintenance cost
increases. Energy cost savings are
calculated using the estimated energy
savings in each year and the projected
price of the appropriate form of energy.
To estimate energy prices in future
years, DOE multiplied the nationalaverage energy prices derived in the
LCC analysis by the projection of annual
national-average residential (or
commercial, as appropriate) energy
price changes in the Reference case from
AEO2023, which has an end year of
2050. To estimate price trends after
2050, DOE used the average annual rate
of change in prices from 2046 through
2050. Repair and maintenance cost for
each of the efficiency levels is
calculated in the LCC, and repair and
maintenance cost increases are
calculated as the repair and
maintenance cost differential between
efficiency levels.
In calculating the NPV, DOE
multiplies the net savings in future
years by a discount factor to determine
their present value. For this NOPD, DOE
estimated the NPV of consumer benefits
using both a 3-percent and a 7-percent
real discount rate. DOE uses these
discount rates in accordance with
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guidance provided by the Office of
Management and Budget (‘‘OMB’’) to
federal agencies on the development of
regulatory analysis.62 The discount rates
for the determination of NPV are in
contrast to the discount rates used in the
LCC analysis, which are designed to
reflect a consumer’s perspective. The 7percent real value is an estimate of the
average before-tax rate of return to
private capital in the U.S. economy. The
3-percent real value represents the
‘‘social rate of time preference,’’ which
is the rate at which society discounts
future consumption flows to their
present value.
V. Analytical Results and Conclusions
The following section addresses the
results from DOE’s analyses with
respect to the considered energy
conservation standards for oil and
weatherized gas furnaces. It addresses
the ELs examined by DOE (see section
IV.B.1 of this document) and the
projected impacts of each of these levels
if adopted as energy conservation
standards for the subject furnaces.
Additional details regarding DOE’s
analyses are contained in the November
2022 Preliminary Analysis TSD
supporting this document.
A. Economic Impacts on Individual
Consumers
DOE analyzed the cost-effectiveness
(i.e., the savings in operating costs
throughout the estimated average life of
oil and weatherized gas furnaces
compared to any increase in the price
of, or in the initial charges for, or
maintenance expenses of, oil and
weatherized gas furnaces which are
likely to result from the imposition of a
standard) at an EL by considering the
LCC and PBP at each EL. These analyses
are discussed in the following sections.
In general, higher-efficiency products
can affect consumers in two ways: (1)
purchase price increases and (2) annual
operating costs decrease. Inputs used for
calculating the LCC and PBP include
total installed costs (i.e., product price
plus installation costs), and operating
costs (i.e., annual energy use, energy
prices, energy price trends, repair costs,
and maintenance costs). The LCC
calculation also uses product lifetime
and a discount rate. Chapter 8 of the
November 2022 Preliminary Analysis
83455
TSD provides detailed information on
the LCC and PBP analyses.
Table V.1 to Table V.6 show the
average LCC and PBP results for the ELs
considered in this analysis for oil and
weatherized gas furnaces, respectively.
In the first of each pair of tables, the
simple payback is measured relative to
the baseline product. In the second
table, the impacts are measured relative
to the efficiency distribution in the in
the no-new-standards case in the
compliance year (see section IV.E.8 of
this document). The LCC and PBP
results for oil and weatherized gas
furnaces include both residential and
commercial users. Because some
consumers purchase products with
higher efficiency in the no-newstandards case, the average savings are
less than the difference between the
average LCC of the baseline product and
the average LCC at each EL. The savings
refer only to consumers who are affected
by a standard at a given EL. Those who
already purchase a product with
efficiency at or above a given EL are not
affected. Consumers for whom the LCC
increases at a given EL experience a net
cost.
TABLE V.1—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR NWOF
Average costs
(2022$)
Simple
payback
(years)
Efficiency level
Installed cost
Baseline ...................................................
1 ...............................................................
2 ...............................................................
3 ...............................................................
First year’s
operating cost
Lifetime
operating cost
2,132
2,086
2,043
1,920
32,211
31,528
30,876
29,212
4,333
4,392
4,451
5,898
LCC
36,544
35,920
35,327
35,110
Average
lifetime
(years)
........................
1.3
1.3
7.4
22.2
22.2
22.2
22.2
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative
to the baseline product.
TABLE V.2—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR NWOF
Life-cycle cost savings
Efficiency level
Average LCC
savings *
(2022$)
ddrumheller on DSK120RN23PROD with PROPOSALS2
1 ...............................................................................................................................................................................
2 ...............................................................................................................................................................................
3 ...............................................................................................................................................................................
Percentage of
consumers
that
experience
net cost
(%)
608
820
1,015
Note: The savings represent the average LCC for affected consumers.
62 United States Office of Management and
Budget, Circular A–4: Regulatory Analysis (Sept. 17,
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2003) Section E (Available at: www.whitehouse.gov/
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omb/information-for-agencies/circulars/) (Last
accessed June 28, 2023).
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TABLE V.3—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR MHOF
Average costs
(2022$)
Simple
payback
(years)
Efficiency level
Installed cost
Baseline ...................................................
1 ...............................................................
2 ...............................................................
3 ...............................................................
First year’s
operating cost
Lifetime
operating cost
1,142
1,107
1,085
1,063
17,913
17,371
17,030
16,705
3,377
3,465
3,523
3,581
LCC
21,290
20,836
20,553
20,286
Average
lifetime
(years)
........................
2.5
2.5
2.6
22.6
22.6
22.6
22.6
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative
to the baseline product.
TABLE V.4—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR MHOF
Life-cycle cost savings
Efficiency level
Average LCC
savings *
(2022$)
1 ...............................................................................................................................................................................
2 ...............................................................................................................................................................................
3 ...............................................................................................................................................................................
Percentage of
consumers
that
experience
net cost
(%)
452
724
971
0.8
0.9
1.0
Note: The savings represent the average LCC for affected consumers.
TABLE V.5—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR WGF
Average costs
(2022$)
Simple
payback
(years)
Efficiency level
Installed cost
Baseline ...................................................
1 ...............................................................
First year’s
operating cost
Lifetime
operating cost
471
433
7,215
6,698
5,533
5,822
LCC
12,748
12,519
Average
lifetime
(years)
........................
7.5
20.6
20.6
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative
to the baseline product.
TABLE V.6—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR WGF
Life-cycle cost savings
Efficiency level
Average LCC
savings *
(2022$)
Percentage of
consumers
that
experience
net cost
(%)
1 ...............................................................................................................................................................................
223
40.4
ddrumheller on DSK120RN23PROD with PROPOSALS2
Note: The savings represent the average LCC for affected consumers.
NYSERDA commented that DOE does
not specifically mention the types of
consumer subgroups to be included in
the analysis of this rulemaking.
NYSERDA recommended that DOE
include low-income customers as one of
the subgroups for this analysis and
include the percentage of monthly
income spent on energy bills.
(NYSERDA, No. 19 at p. 2) NYSERDA
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mentioned that the NWGF/MHGF
rulemaking analysis found that a morestringent standard was especially
beneficial to low-income and senioronly households as compared to the
overall population. The commenter
argued that renters who pay their own
energy bills will particularly benefit.
NYSERDA encouraged DOE to continue
such analysis for this rulemaking, as it
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anticipates a similar outcome to the
NWGF/MHGF rulemaking. (Id. at pp.
2–3)
In response, because DOE has
tentatively determined that amended
standards for the products considered in
this NOPD would not be economically
justified, DOE has not conducted a
consumer subgroup analysis.
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NYSERDA encouraged DOE to report
the fraction of customers who pay less
than six percent of their monthly
income in energy bills at each EL. The
commenter asserted that such fraction
would continue to increase at each EL
with more-stringent standards, adding
that this approach presents a more
comprehensive framework to look at
energy burdens reduced by appliance
standards. NYSERDA recommended
that this statistic should be a routine
part of DOE’s LCC subgroups analysis,
especially for appliances involving
natural gas and oil. (NYSERDA, No. 19
at p. 3)
As noted previously, DOE is not
conducting a consumer subgroup
analysis for this NOPD, but the
Department may consider NYSERDA’s
recommendation as part of a future
rulemaking.
B. National Impact Analysis
This section presents DOE’s estimates
of the NES and the NPV of consumer
benefits that would result from each of
the ELs considered as potential
amended standards.
1. Significance of Energy Savings
To estimate the energy savings
attributable to potential amended
standards for oil and weatherized gas
furnaces, DOE compared their energy
consumption under the no-newstandards case to their anticipated
energy consumption under each EL. The
savings are measured over the entire
lifetime of products purchased in the
30-year period that begins in the year of
anticipated compliance with amended
standards (2030–2059). Table V.7
presents DOE’s projections of the NES
for each EL considered for oil and
weatherized gas furnaces. The savings
were calculated using the approach
described in section IV.G of this
document.
TABLE V.7—CUMULATIVE NATIONAL ENERGY SAVINGS FOR OIL AND WEATHERIZED GAS FURNACES; 30 YEARS OF
SHIPMENTS
[2030–2059]
Efficiency level
Product class
1
2
3
FFC Energy savings (quads)
Non-Weatherized Oil Furnace .....................................................................................................
Mobile Home Non-Weatherized Oil Furnace ..............................................................................
Weatherized Gas Furnace ...........................................................................................................
OMB Circular A–4 63 requires
agencies to present analytical results,
including separate schedules of the
monetized benefits and costs that show
the type and timing of benefits and
costs. Circular A–4 also directs agencies
to consider the variability of key
elements underlying the estimates of
benefits and costs. For this proposed
determination, DOE undertook a
sensitivity analysis using nine years,
rather than 30 years, of product
shipments. The choice of a nine-year
period is a proxy for the timeline in
EPCA for the review of certain energy
conservation standards and potential
revision of and compliance with such
revised standards.64 The review
timeframe established in EPCA is
generally not synchronized with the
product lifetime, product manufacturing
cycles, or other factors specific to oil
0.004
0.0004
0.66
0.01
0.001
........................
0.05
0.001
........................
and weatherized gas furnaces. Thus,
such results are presented for
informational purposes only and are not
indicative of any change in DOE’s
analytical methodology. The NES
sensitivity analysis results based on a
nine-year analytical period are
presented in Table V.8. The impacts are
counted over the lifetime of oil and
weatherized gas furnaces purchased in
2030–2038.
TABLE V.8—CUMULATIVE NATIONAL ENERGY SAVINGS FOR OIL AND WEATHERIZED GAS FURNACES; 9 YEARS OF
SHIPMENTS
[2030–2038]
Efficiency level
Product class
1
2
3
FFC Energy savings (quads)
ddrumheller on DSK120RN23PROD with PROPOSALS2
Non-Weatherized Oil Furnace .....................................................................................................
Mobile Home Non-Weatherized Oil Furnace ..............................................................................
Weatherized Gas Furnace ...........................................................................................................
63 U.S. Office of Management and Budget,
Circular A–4: Regulatory Analysis (Sept. 17, 2003)
(Available at: https://www.whitehouse.gov/omb/
information-for-agencies/circulars/) (Last accessed
June 1, 2023).
64 EPCA requires DOE to review its standards at
least once every 6 years, and requires, for certain
products, a 3-year period after any new standard is
promulgated before compliance is required, except
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that in no case may any new standards be required
within 6 years of the compliance date of the
previous standards. (42 U.S.C. 6295(m)) If DOE
makes a determination that amended standards are
not needed, it must conduct a subsequent review
within three years following such a determination.
As DOE is evaluating the need to amend the
standards, the sensitivity analysis is based on the
review timeframe associated with amended
standards. While adding a 6-year review to the 3-
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0.002
0.0002
0.20
0.01
0.0004
........................
0.02
0.001
........................
year compliance period adds up to 9 years, DOE
notes that it may undertake reviews at any time
within the 6-year period and that the 3-year
compliance date may yield to the 6-year backstop.
A 9-year analysis period may not be appropriate
given the variability that occurs in the timing of
standards reviews and the fact that for some
products, the compliance period is 5 years rather
than 3 years.
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2. Net Present Value of Consumer Costs
and Benefits
DOE estimated the cumulative NPV of
the total costs and savings for
consumers that would result from the
ELs considered for oil and weatherized
gas furnaces. In accordance with OMB’s
guidelines on regulatory analysis,65
DOE calculated NPV using both a 7-
percent and a 3-percent real discount
rate. Table V.9 shows the consumer
NPV results with impacts counted over
the lifetime of products purchased in
2030–2059.
TABLE V.9—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR OIL AND WEATHERIZED GAS FURNACES; 30
YEARS OF SHIPMENTS
[2030–2059]
Efficiency level (EL)
Discount rate
Product class
1
2
3
Billion 2022$
3% ..........................................
7% ..........................................
Non-Weatherized Oil Furnace ................................................
Mobile Home Non-Weatherized Oil Furnace ..........................
Weatherized Gas Furnace ......................................................
Non-Weatherized Oil Furnace ................................................
Mobile Home Non-Weatherized Oil Furnace ..........................
Weatherized Gas Furnace ......................................................
The NPV results based on the
aforementioned nine-year analytical
period are presented in Table V.10. The
impacts are counted over the lifetime of
oil and weatherized gas furnaces
purchased in 2030–2038. As mentioned
previously, such results are presented
for informational purposes only and are
0.06
0.01
1.88
0.02
0.002
0.45
0.20
0.01
........................
0.08
0.003
........................
0.20
0.01
........................
0.03
0.005
........................
not indicative of any change in DOE’s
analytical methodology or decision
criteria.
TABLE V.10—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR OIL AND WEATHERIZED GAS FURNACES; 9
YEARS OF SHIPMENTS
[2030–2038]
Efficiency level (EL)
Discount
rate
Product class
1
2
3
Billion 2022$
3% ..........................................
7% ..........................................
Non-Weatherized Oil Furnace ................................................
Mobile Home Non-Weatherized Oil Furnace ..........................
Weatherized Gas Furnace ......................................................
Non-Weatherized Oil Furnace ................................................
Mobile Home Non-Weatherized Oil Furnace ..........................
Weatherized Gas Furnace ......................................................
ddrumheller on DSK120RN23PROD with PROPOSALS2
C. Proposed Determination
After carefully considering the
comments on the November 2022
Preliminary Analysis and the available
data and information, DOE has
tentatively determined that the energy
conservation standards for oil, electric,
and weatherized gas furnaces do not
need to be amended, for the reasons
explained in the paragraphs
immediately following. DOE will
consider all comments received on this
proposed determination prior to issuing
the next document in this rulemaking
proceeding.
As required by EPCA, this NOPD
analyzes whether amended standards
for oil, electric, and weatherized gas
furnaces would result in significant
conservation of energy, be
65 U.S. Office of Management and Budget,
Circular A–4: Regulatory Analysis (Sept. 17, 2003)
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technologically feasible, and be costeffective. (42 U.S.C. 6295(m)(1)(A) and
42 U.S.C. 6295(n)(2)) DOE’s initial
findings under the enumerated statutory
criteria and the additional analysis are
discussed in the paragraphs that
follows. Because an analysis of potential
cost-effectiveness and energy savings
first requires an evaluation of the
relevant technology, DOE first discusses
the technological feasibility of amended
standards. DOE then addresses the costeffectiveness and energy savings
associated with potential amended
standards for the subject furnaces.
1. Technological Feasibility
EPCA mandates that DOE consider
whether amended energy conservation
standards for oil, electric, and
weatherized gas furnaces would be
0.03
0.003
0.67
0.02
0.002
0.22
0.11
0.01
........................
0.05
0.003
........................
technologically feasible. (42 U.S.C.
6295(m)(1)(A) and 42 U.S.C.
6295(n)(2)(B)) DOE has tentatively
determined that there are technology
options that would improve the
efficiency of oil and weatherized gas
furnaces. These technology options are
being used in commercially available oil
and weatherized gas furnaces and,
therefore, are technologically feasible.
(See section IV.A.3 of this document for
further information.) Hence, DOE has
tentatively determined that amended
energy conservation standards for oil
and weatherized gas furnaces are
technologically feasible. However, as
discussed in section IV.A.1.a of this
document, DOE is not aware of any
technology options that would improve
the efficiency of electric furnaces.
(Available at: obamawhitehouse.archives.gov/omb/
circulars_a004_a-4/) (Last accessed June 1, 2023).
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0.01
........................
0.02
0.004
........................
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Therefore, DOE has tentatively
determined that amended energy
conservation standards for electric
furnaces are not technologically
feasible.
ddrumheller on DSK120RN23PROD with PROPOSALS2
2. Cost-Effectiveness
EPCA requires DOE to consider
whether energy conservation standards
for oil and weatherized gas furnaces
would be cost-effective through an
evaluation of the savings in operating
costs throughout the estimated average
life of the covered product compared to
any increase in the price of, or in the
initial charges for, or maintenance
expenses of, the covered products
which are likely to result from the
imposition of an amended standard. (42
U.S.C. 6295(m)(1)(A), 42 U.S.C.
6295(n)(2)(C), and 42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducted an
LCC analysis to estimate the net costs/
benefits to users from increased
efficiency in the considered oil and
weatherized gas furnace product classes.
As shown in Table V.1 through Table
V.6, for all product classes, all of the
considered efficiency levels result in
positive LCC savings, with the
percentage of consumers experiencing
net cost ranging from 0.5 percent at EL
1 to 37 percent at max-tech for NWOF,
approximately 1 percent at all ELs for
MHOF, and 40 percent at the only
considered efficiency level for WGF.
DOE then aggregated the results from
the LCC analysis to estimate the NPV of
the total costs and benefits experienced
by the Nation. (See results in Table V.9
and Table V.10) As noted, the inputs for
determining the NPV are: (1) total
annual installed cost; (2) total annual
operating costs (energy costs and repair
and maintenance costs), and (3) a
discount factor to calculate the present
value of costs and savings.
3. Significant Conservation of Energy
EPCA also mandates that DOE
consider whether amended energy
conservation standards for oil and
weatherized gas furnaces would result
in significant conservation of energy.
(42 U.S.C. 6295(m)(1)(A) and 42 U.S.C.
6295(n)(2)(A))
To estimate the energy savings
attributable to potential amended
standards for oil and weatherized gas
furnaces, DOE compared their energy
consumption under the no-newstandards case to their anticipated
energy consumption under each
potential standard level. The savings are
measured over the entire lifetime of
products purchased in the 30-year
period that begins in the year of
anticipated compliance with amended
standards (2030–2059).
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As shown in Table V.7, DOE estimates
that amended standards would results
in FFC energy savings of 0.004 quads at
EL 1 to 0.05 quads at max-tech level for
non-weatherized oil furnaces, 0.0004
quads at EL 1 to 0.001 quads at maxtech level for mobile home nonweatherized oil furnaces, and 0.66
quads at EL 1 (max-tech level) for
weatherized gas furnaces, over a 30-year
analysis period (2030–2059).
4. Further Considerations
Oil Furnaces
DOE estimates that the shipments of
NWOFs and MHOFs have declined by
more than 70 percent over the past 20
years and only accounted for less than
one percent of the overall consumer
furnace market in the past 10 years.
DOE considered this declining trend
and the small market share for oil
furnaces in the furnace shipments
model and projected that the shipments
of NWOFs and MHOFs will continue to
decline over the analysis period (i.e.,
2030–2059). DOE also considered that
the shipments of NWOFs and MHOFs
could decline faster than current
projections, which may lead to further
reductions in energy savings from
potential amended standards.
As the oil furnace market contracted,
the industry has seen consolidation.
DOE estimates there were 11 OEMs of
NWOF selling into the U.S. market at
the time of the June 2011 DFR that set
current standard levels for oil furnaces.
Since then, manufacturers have merged,
been acquired, and left the market.
Currently there are seven OEMs of
NWOF selling into the U.S. market.
DOE estimated the NWOF market to
be approximately 36,000 units per year
and the MHOF market to be
approximately 2,000 units per year in
2023. These products together are less
than one percent of the overall U.S.
residential furnace market, which is
approximately 4.2 million shipments
per year in 2023. The size of the market
could make cost recovery challenging
for manufacturers. With the small
market size and continued trend of
diminishing sales, the timeframe for
recouping investments may be longer
than acceptable for manufacturers.
Given the small role of oil furnaces in
the overall furnace market and the low
sales relative to the consumer boiler and
consumer water heater markets,
manufacturers may de-prioritize
updates for these product classes. The
existing oil-fired furnace market
currently has a diversity of competitors;
however, the loss of a few
manufacturers could lead to shifts in
market competition.
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Weatherized Gas Furnaces
DOE estimates that the shipments of
WGFs have been approximately 0.35
million per year for the past 10 years
and accounted for approximately 7
percent of the overall consumer furnace
market over the past 20 years. DOE
considered the small market share for
WGFs in the furnace shipments model
and projected that the shipments of
WGFs will be approximately flat and
account for less than 8 percent of the
overall consumer furnace market over
the analysis period (i.e., 2030–2059).
DOE also considered that the shipments
of WGFs could be less than current
projections, which may lead to
reductions in energy savings from
potential amended standards.
WGFs have the largest potential
energy savings of the product classes in
this rulemaking. However, DOE
recognizes challenges for the industry at
the max-tech level, which requires
condensing furnace designs. DOE
identified eight OEMs of weatherized
gas furnaces. Only one OEM offers
models that can meet the max-tech
level. Models that meet the max-tech
level account for 1 percent of all WGF
listings.
All other OEMs would need to invest
in new WGF designs to meet a
condensing efficiency level. DOE
expects that developing a new
condensing model lines would require
significant investment. If manufacturers
plan to continue offering the same
diversity of models, they would need to
redesign nearly 1,500 basic models, or
99 percent of what is available on the
market today. Designing condensing
models would require the incorporation
of a secondary heat exchanger and
condensate management system.
Manufacturers would likely need to
reconfigure their existing heat
exchanger to optimize airflow over the
secondary heat exchanger, which could
require investments in product redesign
and retooling for hard-tooled portions of
the heat exchanger. Manufacturers may
also have to choose between adding the
secondary heat exchanger within the
physical limitations of the existing
chassis dimension or adopting a new
chassis size, which has the potential to
be capital intensive. The added
production of the secondary heat
exchanger could necessitate additional
floor space and increased assembly and
fabrication times.
DOE observed that the range of
heating capacities offered at EL 1 do not
cover the same range of capacities as
non-condensing models. Condensing
WGF models range from 60 to 96 kBtu/
h, whereas non-condensing WGF
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models span capacities from 40 to 150
kBtu/h. DOE is concerned that amended
standards for WGFs may limit capacity
availability for consumers.
5. Summary
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As discussed previously, a
determination that amended standards
are not needed must be based on
consideration of whether amended
standards will result in significant
conservation of energy, are
technologically feasible, and are costeffective. (42 U.S.C. 6295(m)(1)(A) and
42 U.S.C. 6295(n)(2)) Additionally, DOE
can only propose an amended standard
if it is, among other things,
economically justified. (42 U.S.C.
6295(m)(1)(B); 42 U.S.C. 6295(o)(2)(A))
As explained elsewhere in this
document, DOE has tentatively
determined that amended energy
conservation standards for electric
furnaces are not technologically
feasible. Oil-fired furnaces and WGFs
have relatively small markets and
shipments of these products are
expected to flatten or decline;
manufacturers facing increased
standards for these product categories
may opt to focus on products with larger
market shares, resulting in certain
products or capacities becoming
unavailable for consumers as well as
further consolidation of the market.
Consequently, DOE has tentatively
determined that it is unable to conclude
that amended standards for oil-fired
furnaces and WGFs would be
economically justified. For these
reasons, as well as those discussed
throughout this notice, DOE is unable to
conclude that amended standards for
furnaces at any of the efficiency levels
analyzed would meet the applicable
statutory criteria. Therefore, DOE has
tentatively determined that energy
conservation standards for oil, electric,
and weatherized gas furnaces do not
need to be amended at this time.
DOE requests comments on its
proposed determination that the
existing energy conservation standards
for oil, electric, and weatherized gas
furnaces do not need to be amended.
DOE will consider all comments
received on this proposed determination
before issuing the next document in this
proceeding.
VI. Procedural Issues and Regulatory
Review
A. Review Under Executive Orders
12866, 13563, and 14094
Executive Order (‘‘E.O.’’) 12866,
‘‘Regulatory Planning and Review,’’ 58
FR 51735 (Oct. 4, 1993), as
supplemented and reaffirmed by E.O.
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13563, ‘‘Improving Regulation and
Regulatory Review,’’ 76 FR 3821 (Jan.
21, 2011) and amended by E.O. 14094,
‘‘Modernizing Regulatory Review,’’ 88
FR 21879 (April 11, 2023), requires
agencies, to the extent permitted by law,
to: (1) propose or adopt a regulation
only upon a reasoned determination
that its benefits justify its costs
(recognizing that some benefits and
costs are difficult to quantify); (2) tailor
regulations to impose the least burden
on society, consistent with obtaining
regulatory objectives, taking into
account, among other things, and to the
extent practicable, the costs of
cumulative regulations; (3) select, in
choosing among alternative regulatory
approaches, those approaches that
maximize net benefits (including
potential economic, environmental,
public health and safety, and other
advantages; distributive impacts; and
equity); (4) to the extent feasible, specify
performance objectives, rather than
specifying the behavior or manner of
compliance that regulated entities must
adopt; and (5) identify and assess
available alternatives to direct
regulation, including providing
economic incentives to encourage the
desired behavior, such as user fees or
marketable permits, or providing
information upon which choices can be
made by the public. DOE emphasizes as
well that E.O. 13563 requires agencies to
use the best available techniques to
quantify anticipated present and future
benefits and costs as accurately as
possible. In its guidance, the Office of
Information and Regulatory Affairs
(‘‘OIRA’’) in the Office of Management
and Budget (‘‘OMB’’) has emphasized
that such techniques may include
identifying changing future compliance
costs that might result from
technological innovation or anticipated
behavioral changes. For the reasons
stated in this preamble, this proposed
regulatory action is consistent with
these principles.
Section 6(a) of E.O. 12866 also
requires agencies to submit ‘‘significant
regulatory actions’’ to OIRA for review.
OIRA has determined that this proposed
regulatory action does not constitute a
‘‘significant regulatory action’’ within
the scope of section 3(f)(1) of E.O.
12866, as amended by E.O. 14094.
Accordingly, this action was not
submitted to OIRA for review under
E.O. 12866.
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’’) and a final regulatory
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flexibility analysis (‘‘FRFA’’) for any
rule that by law must be proposed for
public comment, unless the agency
certifies that the rule, if promulgated,
will not have a significant economic
impact on a substantial number of small
entities. As required by E.O. 13272,
‘‘Proper Consideration of Small Entities
in Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
procedures and policies in the Federal
Register on February 19, 2003, to ensure
that the potential impacts of its rules on
small entities are properly considered
during the rulemaking process. 68 FR
7990. DOE has made its procedures and
policies available on the Office of the
General Counsel’s website (energy.gov/
gc/office-general-counsel).
DOE reviewed this proposed
determination under the provisions of
the Regulatory Flexibility Act and the
policies and procedures published on
February 19, 2003. Because DOE is
proposing not to amend standards for
oil, electric, and weatherized gas
furnaces, if adopted, the determination
would not amend any energy
conservation standards. On the basis of
the foregoing, DOE certifies that the
proposed determination, if adopted,
would not have a significant economic
impact on a substantial number of small
entities. Accordingly, DOE has not
prepared an IRFA for this proposed
determination. DOE will transmit this
certification and supporting statement
of factual basis to the Chief Counsel for
Advocacy of the Small Business
Administration for review under 5
U.S.C. 605(b).
C. Review Under the Paperwork
Reduction Act of 1995
This proposed determination, which
proposes to determine that amended
energy conservation standards for oil,
electric, and weatherized gas furnaces
are unneeded under the applicable
statutory criteria, would impose no new
informational or recordkeeping
requirements. Accordingly, OMB
clearance is not required under the
Paperwork Reduction Act. (44 U.S.C.
3501 et seq.)
D. Review Under the National
Environmental Policy Act of 1969
DOE is analyzing this proposed action
in accordance with the National
Environmental Policy Act of 1969
(‘‘NEPA’’) and DOE’s NEPA
implementing regulations (10 CFR part
1021). DOE’s regulations include a
categorical exclusion for actions which
are interpretations or rulings with
respect to existing regulations. 10 CFR
part 1021, subpart D, appendix A4. DOE
anticipates that this action qualifies for
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categorical exclusion A4 because it is an
interpretation or ruling in regard to an
existing regulation and otherwise meets
the requirements for application of a
categorical exclusion. See 10 CFR
1021.410. DOE will complete its NEPA
review before issuing the final action.
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E. Review Under Executive Order 13132
E.O. 13132, ‘‘Federalism,’’ 64 FR
43255 (August 10, 1999), imposes
certain requirements on federal agencies
formulating and implementing policies
or regulations that preempt state law or
that have Federalism implications. The
Executive order requires agencies to
examine the constitutional and statutory
authority supporting any action that
would limit the policymaking discretion
of the States and to carefully assess the
necessity for such actions. The
Executive order also requires agencies to
have an accountable process to ensure
meaningful and timely input by state
and local officials in the development of
regulatory policies that have federalism
implications. On March 14, 2000, DOE
published a statement of policy
describing the intergovernmental
consultation process it will follow in the
development of such regulations. 65 FR
13735. DOE has examined this proposed
determination and has tentatively
determined that it would not have a
substantial direct effect on the States, on
the relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. EPCA governs and
prescribes federal preemption of state
regulations as to energy conservation for
the products that are the subject of this
proposed determination. States can
petition DOE for exemption from such
preemption to the extent, and based on
criteria, set forth in EPCA. (42 U.S.C.
6297) Therefore, no further action is
required by E.O. 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 E.O.
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; (3) provide a clear legal
standard for affected conduct rather
than a general standard, and (4) promote
simplification and burden reduction.
Regarding the review required by
section 3(a), section 3(b) of E.O. 12988
specifically requires that Executive
agencies make every reasonable effort to
ensure that the regulation: (1) clearly
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specifies the preemptive effect, if any;
(2) clearly specifies any effect on
existing federal law or regulation; (3)
provides a clear legal standard for
affected conduct while promoting
simplification and burden reduction; (4)
specifies the retroactive effect, if any; (5)
adequately defines key terms, and (6)
addresses other important issues
affecting clarity and general
draftsmanship under any guidelines
issued by the Attorney General. Section
3(c) of Executive Order 12988 requires
Executive agencies to review regulations
in light of applicable standards in
section 3(a) and section 3(b) to
determine whether they are met or it is
unreasonable to meet one or more of
them. DOE has completed the required
review and determined that, to the
extent permitted by law, this proposed
determination meets the relevant
standards of E.O. 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
Title II of the Unfunded Mandates
Reform Act of 1995 (‘‘UMRA’’) requires
each federal agency to assess the effects
of federal regulatory actions on State,
local, and Tribal governments and the
private sector. Public Law 104–4, sec.
201 (codified at 2 U.S.C. 1531). 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 annually for
inflation), section 202 of UMRA requires
a federal agency to publish a written
statement that estimates the resulting
costs, benefits, and other effects 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 them. On March 18, 1997, DOE
published a statement of policy on its
process for intergovernmental
consultation under UMRA. 62 FR
12820. DOE’s policy statement is also
available at energy.gov/sites/prod/files/
gcprod/documents/umra_97.pdf.
DOE examined this proposed
determination according to UMRA and
its statement of policy and determined
that the proposed determination does
not contain a federal intergovernmental
mandate, nor is it expected to require
expenditures of $100 million or more in
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83461
any one year by State, local, and Tribal
governments, in the aggregate, or by the
private sector. As a result, the analytical
requirements of UMRA do not apply.
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
federal agencies to issue a Family
Policymaking Assessment for any rule
that may affect family well-being. This
proposed determination would not have
any impact on the autonomy or integrity
of the family as an institution.
Accordingly, DOE has concluded that it
is not necessary to prepare a Family
Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630,
‘‘Governmental Actions and Interference
with Constitutionally Protected Property
Rights,’’ 53 FR 8859 (March 18, 1988),
DOE has determined that this proposed
determination would not result in any
takings that might require compensation
under the Fifth Amendment to the U.S.
Constitution.
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 federal agencies to review most
disseminations of information to the
public under information quality
guidelines established by each agency
pursuant to general guidelines issued by
OMB. OMB’s guidelines were published
at 67 FR 8452 (Feb. 22, 2002), and
DOE’s guidelines were published at 67
FR 62446 (Oct. 7, 2002). Pursuant to
OMB Memorandum M–19–15,
‘‘Improving Implementation of the
Information Quality Act’’ (April 24,
2019), DOE published updated
guidelines which are available at:
www.energy.gov/sites/prod/files/2019/
12/f70/DOE%20Final%
20Updated%20IQA%20Guidelines%20
Dec%202019.pdf. DOE has reviewed
this NOPD under the OMB and DOE
guidelines and has concluded that it is
consistent with applicable policies in
those guidelines.
K. Review Under Executive Order 13211
E.O. 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 Office of Information and
Regulatory Affairs (‘‘OIRA’’) at OMB, a
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Statement of Energy Effects for any
proposed significant energy action. A
‘‘significant energy action’’ is defined as
any action by an agency that
promulgates or is expected to lead to
promulgation of a final rule, and that:
(1) is a significant regulatory action
under Executive Order 12866, or any
successor Executive Order; and (2) is
likely to have a significant adverse effect
on the supply, distribution, or use of
energy, or (3) is designated by the
Administrator of OIRA as a significant
energy action. For any proposed
significant energy action, the agency
must give a detailed statement of any
adverse effects on energy supply,
distribution, or use should the proposal
be implemented, and of reasonable
alternatives to the action and their
expected benefits on energy supply,
distribution, and use.
This proposed determination, which
does not propose to amend energy
conservation standards for oil, electric,
and weatherized gas furnaces, is not a
significant regulatory action under
Executive Order 12866. Moreover, it
would not have a significant adverse
effect on the supply, distribution, or use
of energy, nor has it been designated as
such by the Administrator at OIRA.
Therefore, it is not a significant energy
action, and accordingly, DOE has not
prepared a Statement of Energy Effects.
L. Review Under the Information
Quality Bulletin for Peer Review
On December 16, 2004, OMB, in
consultation with the Office of Science
and Technology Policy (‘‘OSTP’’),
issued its Final Information Quality
Bulletin for Peer Review (‘‘the
Bulletin’’). 70 FR 2664 (Jan. 14, 2005).
The Bulletin establishes that certain
scientific information shall be peer
reviewed by qualified specialists before
it is disseminated by the Federal
Government, including influential
scientific information related to agency
regulatory actions. The purpose of the
bulletin is to enhance the quality and
credibility of the Government’s
scientific information. Under the
Bulletin, the energy conservation
standards rulemaking analyses are
‘‘influential scientific information,’’
which the Bulletin defines as ‘‘scientific
information the agency reasonably can
determine will have, or does have, a
clear and substantial impact on
important public policies or private
sector decisions.’’ Id. at 70 FR 2667.
In response to OMB’s Bulletin, DOE
conducted formal peer reviews of the
energy conservation standards
development process and the analyses
that are typically used and has prepared
a Peer Review report pertaining to the
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energy conservation standards
rulemaking analyses.66 Generation of
this report involved a rigorous, formal,
and documented evaluation using
objective criteria and qualified and
independent reviewers to make a
judgment as to the technical/scientific/
business merit, the actual or anticipated
results, and the productivity and
management effectiveness of programs
and/or projects. Because available data,
models, and technological
understanding have changed since 2007,
DOE has engaged with the National
Academy of Sciences (‘‘NAS’’) to review
DOE’s analytical methodologies and
ascertain whether modifications are
needed to improve DOE’s analyses. DOE
is in the process of evaluating the
resulting December 2021 report.67
VII. Public Participation
A. Participation in the Public Meeting
Webinar
DOE will hold a public meeting
webinar upon receiving a request by the
deadline identified in the DATES section
at the beginning of this proposed
determination. Interested persons may
submit their request for the public
meeting webinar to the Appliance and
Equipment Standards Program at
OEWGFurnaces2021STD0031@
ee.doe.gov. If a public meeting webinar
is requested, DOE will release webinar
registration information, participant
instructions, and information about the
capabilities available to webinar
participants on DOE’s website at:
www1.eere.energy.gov/buildings/
appliance_standards/
standards.aspx?productid=59.
Participants are responsible for ensuring
their systems are compatible with the
webinar software.
B. Submission of Comments
DOE will accept comments, data, and
information regarding this proposed
determination no later than the date
provided in the DATES section at the
beginning of this proposed
determination. Interested parties may
submit comments, data, and other
information using any of the methods
described in the ADDRESSES section at
the beginning of this document.
Submitting comments via
www.regulations.gov. The
66 ‘‘Energy Conservation Standards Rulemaking
Peer Review Report’’ (2007) (Available at:
energy.gov/eere/buildings/downloads/energyconservation-standards-rulemaking-peer-reviewreport-0) (Last accessed June 26, 2023).
67 The December 2021 NAS report is available at
www.nationalacademies.org/our-work/review-ofmethods-for-setting-building-and-equipmentperformance-standards (Last accessed June 26,
2023).
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www.regulations.gov web page will
require you to provide your name and
contact information. Your contact
information will be viewable to DOE
Building Technologies staff only. Your
contact information will not be publicly
viewable except for your first and last
names, organization name (if any), and
submitter representative name (if any).
If your comment is not processed
properly because of technical
difficulties, DOE will use this
information to contact you. If DOE
cannot read your comment due to
technical difficulties and cannot contact
you for clarification, DOE may not be
able to consider your comment.
However, your contact information
will be publicly viewable if you include
it in the comment itself or in any
documents attached to your comment.
Any information that you do not want
to be publicly viewable should not be
included in your comment, nor in any
document attached to your comment.
Otherwise, persons viewing comments
will see only first and last names,
organization names, correspondence
containing comments, and any
documents submitted with the
comments.
Do not submit to www.regulations.gov
information for which disclosure is
restricted by statute, such as trade
secrets and commercial or financial
information (hereinafter referred to as
Confidential Business Information
(‘‘CBI’’)). Comments submitted through
www.regulations.gov cannot be claimed
as CBI. Comments received through the
website will waive any CBI claims for
the information submitted. For
information on submitting CBI, see the
Confidential Business Information
section.
DOE processes submissions made
through www.regulations.gov before
posting. Normally, comments will be
posted within a few days of being
submitted. However, if large volumes of
comments are being processed
simultaneously, your comment may not
be viewable for up to several weeks.
Please keep the comment tracking
number that www.regulations.gov
provides after you have successfully
uploaded your comment.
Submitting comments via email, hand
delivery/courier, or postal mail.
Comments and documents submitted
via email, hand delivery/courier, or
postal mail also will be posted to
www.regulations.gov. If you do not want
your personal contact information to be
publicly viewable, do not include it in
your comment or any accompanying
documents. Instead, provide your
contact information in a cover letter.
Include your first and last names, email
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address, telephone number, and
optional mailing address. With this
instruction followed, the cover letter
will not be publicly viewable as long as
it does not include any comments.
Include contact information each time
you submit comments, data, documents,
and other information to DOE. If you
submit via postal mail or hand delivery/
courier, please provide all items on a
CD, if feasible, in which case it is not
necessary to submit printed copies. No
telefacsimiles (faxes) will be accepted.
Comments, data, and other
information submitted to DOE
electronically should be provided in
PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file
format. Provide documents that are not
secured, that are written in English, and
that are free of any defects or viruses.
Documents should not contain special
characters or any form of encryption,
and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit
campaign form letters by the originating
organization in batches of between 50 to
500 form letters per PDF or as one form
letter with a list of supporters’ names
compiled into one or more PDFs. This
reduces comment processing and
posting time.
Confidential Business Information.
Pursuant to 10 CFR 1004.11, any person
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submitting information that he or she
believes to be confidential and exempt
by law from public disclosure should
submit via email two well-marked
copies: one copy of the document
marked ‘‘confidential’’ including all the
information believed to be confidential,
and one copy of the document marked
‘‘non-confidential’’ with the information
believed to be confidential deleted. DOE
will make its own determination about
the confidential status of the
information and treat it according to its
determination.
It is DOE’s policy that all comments
may be included in the public docket,
without change and as received,
including any personal information
provided in the comments (except
information deemed to be exempt from
public disclosure).
C. Issues on Which DOE Seeks
Comment
Although DOE has not identified any
specific issues on which it seeks
comment, DOE welcomes comments on
any aspect of this proposed
determination.
VIII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this notification of
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proposed determination and request for
comment.
Signing Authority
This document of the Department of
Energy was signed on November 17,
2023, by Jeffrey Marootian, Principal
Deputy Assistant Secretary for Energy
Efficiency and Renewable Energy,
pursuant to delegated authority from the
Secretary of Energy. That document
with the original signature and date is
maintained by DOE. For administrative
purposes only, and in compliance with
requirements of the Office of the Federal
Register, the undersigned DOE Federal
Register Liaison Officer has been
authorized to sign and submit the
document in electronic format for
publication, as an official document of
the Department of Energy. This
administrative process in no way alters
the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on November
17, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S.
Department of Energy.
[FR Doc. 2023–25869 Filed 11–28–23; 8:45 am]
BILLING CODE 6450–01–P
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[Federal Register Volume 88, Number 228 (Wednesday, November 29, 2023)]
[Proposed Rules]
[Pages 83426-83463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25869]
[[Page 83425]]
Vol. 88
Wednesday,
No. 228
November 29, 2023
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for Oil,
Electric, and Weatherized Gas Consumer Furnaces; Proposed Rule
Federal Register / Vol. 88 , No. 228 / Wednesday, November 29, 2023 /
Proposed Rules
[[Page 83426]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2021-BT-STD-0031]
RIN 1904-AF19
Energy Conservation Program: Energy Conservation Standards for
Oil, Electric, and Weatherized Gas Consumer Furnaces
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notification of proposed determination and request for comment.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including non-
weatherized oil-fired furnaces (``NWOFs''), mobile home oil-fired
furnaces (``MHOFs''), weatherized gas furnaces (``WGFs''), weatherized
oil-fired furnaces (``WOFs''), and electric furnaces (``EFs''). EPCA
also requires the U.S. Department of Energy (``DOE'') to periodically
review its existing standards to determine whether more-stringent,
amended standards would be technologically feasible and economically
justified, and would result in significant energy savings. In this
notification of proposed determination (``NOPD''), DOE has initially
determined that amended energy conservation standards for EFs, NWOFs,
MHOFs, WOFs, and WGFs do not need to be amended. DOE requests comment
on this proposed determination and the associated analyses and results.
DATES:
Meeting: DOE will hold a public meeting webinar upon request.
Please request a public meeting webinar no later than December 13,
2023. See section VI, ``Public Participation,'' for webinar
registration information, participant instructions, and information
about the capabilities available to webinar participants.
Comments: Written comments and information are requested and will
be accepted on or before January 29, 2024.
ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at www.regulations.gov under docket
number EERE-2021-BT-STD-0031. Follow the instructions for submitting
comments.
Alternatively, interested persons may submit comments, identified
by docket number EERE-2021-BT-STD-0031 and/or RIN 1904-AF19, by any of
the following methods:
Email: [email protected]. Include the docket
number EERE-2021-BT-STD-0031 and/or RIN 1904-AF19 in the subject line
of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-1445. If possible, please submit all items on a compact disc
(``CD''), in which case it is not necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (``faxes'') will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section VII of this document (Public Participation).
Docket: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at www.regulations.gov.
All documents in the docket are listed in the www.regulations.gov
index. However, not all documents listed in the index may be publicly
available, such as information that is exempt from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2021-BT-STD-0031. The docket web page contains instructions on how
to access all documents, including public comments, in the docket. See
section VII, ``Public Participation,'' for further information on how
to submit comments through www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Ms. Julia Hegarty, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(240) 597-6737. Email: [email protected].
Mr. Eric Stas, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Telephone: (202) 586-5827. Email: [email protected].
For further information on how to submit a comment or review other
public comments and the docket contact the Appliance and Equipment
Standards Program staff at (202) 287-1445 or by email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Determination
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemakings for Consumer Furnaces
C. Deviation From Appendix A
III. General Discussion and Rationale
A. General Comments
1. Comments Supporting Amended Standards
2. Comments Opposing Amended Standards
3. Standby Mode and Off Mode
B. Scope of Coverage and Product Classes
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Cost-Effectiveness
F. Energy Savings
1. Determination of Savings
2. Significance of Savings
G. Additional Considerations
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage
a. Electric Furnaces
b. Weatherized Oil-Fired Furnaces
c. Fuel-Fired Heat Pumps
2. Technology Options
3. Screening Analysis
a. Screened-Out Technologies
b. Remaining Technologies
4. Product Classes
B. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency
b. Intermediate Efficiency Levels
c. Maximum Technology (``Max-Tech'') Efficiency Levels
d. Summary of Efficiency Levels Analyzed
2. Cost Analysis
a. Teardown Analysis
b. Cost Estimation Method
3. Cost-Efficiency Results
C. Markups Analysis
D. Energy Use Analysis
E. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
[[Page 83427]]
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
F. Shipments Analysis
G. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
V. Analytical Results and Conclusions
A. Economic Impacts on Individual Consumers
B. National Impact Analysis
1. Significance of Energy Savings
2. Net Present Value of Consumer Costs and Benefits
C. Proposed Determination
1. Technological Feasibility
2. Cost-Effectiveness
3. Significant Conservation of Energy
4. Further Considerations
5. Summary
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Participation in the Public Meeting Webinar
B. Submission of Comments
C. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Synopsis of the Proposed Determination
The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ among other things, authorizes DOE to regulate
the energy efficiency of a number of consumer products and certain
industrial equipment. (42 U.S.C. 6291-6317, as codified) Title III,
Part B of EPCA \2\ established the Energy Conservation Program for
Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309) These
products include oil, electric, and weatherized gas consumer furnaces,
the subject of this NOPD. (42 U.S.C. 6292(a)(5))
---------------------------------------------------------------------------
\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
---------------------------------------------------------------------------
Pursuant to EPCA, DOE is required to review the existing energy
conservation standards for covered consumer products, at a minimum,
every six years after issuance of any final rule establishing or
amending a standard (42 U.S.C. 6295(m)(1)). DOE is conducting this
review of the energy conservation standards for oil, electric, and
weatherized gas consumer furnaces under EPCA's six-year-lookback
authority. (Id.) Pursuant to that statutory provision, DOE must publish
either a notification of determination that standards for the product
do not need to be amended, or a notice of proposed rulemaking
(``NOPR'') including new proposed energy conservation standards
(proceeding to a final rule, as appropriate). (Id.) For the reasons
explained in the paragraphs that follow and elsewhere in this document,
DOE has tentatively determined it appropriate to issue this NOPD for
the consumer furnaces subject to this rulemaking.
For this proposed determination, DOE analyzed oil, electric, and
weatherized gas consumer furnaces subject to energy conservation
standards specified in 10 CFR 430.32(e)(1).
DOE first analyzed the technological feasibility of more energy-
efficient oil, electric, and weatherized gas furnaces and determined
that amended standards for electric furnaces are not technologically
feasible. For those oil and weatherized gas furnaces for which DOE
determined higher standards to be technologically feasible, DOE
evaluated whether higher standards would be cost-effective by
conducting life-cycle cost (``LCC'') and payback period (``PBP'')
analyses. In addition, DOE estimated energy savings that would result
from potential energy conservation standards by conducting a national
impacts analysis (``NIA''), in which it estimated the net present value
(``NPV'') of the total costs and benefits experienced by consumers.
Based on the results of the analyses, including the consideration
of impacts on manufacturers and product availability as summarized in
section V of this document, DOE has tentatively determined that current
standards for oil, electric, and weatherized gas furnaces do not need
to be amended.
II. Introduction
The following section briefly discusses the statutory authority
underlying this proposed determination, as well as some of the
historical background relevant to the establishment of energy
conservation standards for oil, electric, and weatherized gas furnaces.
A. Authority
Among other things, EPCA, Public Law 94-163 (42 U.S.C. 6291-6317,
as codified) authorizes DOE to regulate the energy efficiency of a
number of consumer products and certain industrial equipment. Title
III, Part B of EPCA established the Energy Conservation Program for
Consumer Products Other Than Automobiles. These products include
consumer furnaces, the subject of this document. (42 U.S.C. 6292(a)(5))
EPCA prescribed the initial energy conservation standards for these
products (42 U.S.C. 6295(f)(1)-(2)), and directs DOE to conduct future
rulemakings to determine whether to amend these standards. (42 U.S.C.
6295(f)(4) and 42 U.S.C. 6295(m)(1))
The energy conservation program under EPCA consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly,
DOE must use these test procedures to determine whether the products
comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The
DOE test procedures for consumer furnaces appear at title 10 of the
Code of Federal Regulations (``CFR'') part 430, subpart B, appendix N.
Federal energy conservation requirements for covered products
established under EPCA generally supersede state laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of federal
preemption in limited
[[Page 83428]]
circumstances for particular state laws or regulations, in accordance
with the procedures and other provisions set forth under EPCA. (42
U.S.C. 6297(d))
Pursuant to the amendments to EPCA contained in the Energy
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140,
any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B)) DOE's current test procedures for oil, electric,
and weatherized gas furnaces address standby mode and off mode energy
use. DOE's energy conservation standards address standby mode and off
mode energy use only for non-weatherized oil-fired furnaces (including
mobile home furnaces) and electric furnaces. 10 CFR 430.32(e)(1)(iii).
In this analysis, DOE considers such energy use in its determination of
whether energy conservation standards need to be amended.
EPCA also requires that DOE must periodically review its already
established energy conservation standards for a covered product no
later than six years from the issuance of a final rule establishing or
amending a standard for a covered product. (42 U.S.C. 6295(m)) This
six-year-lookback provision requires that DOE publish either a notice
of determination that standards do not need to be amended or a NOPR,
including new proposed standards (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)(1)) EPCA further provides that, not
later than 3 years after the issuance of a final determination not to
amend standards, DOE must publish either a notification of
determination that standards for the product do not need to be amended,
or a NOPR including new proposed energy conservation standards
(proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
DOE must make the analysis on which a determination is based publicly
available and provide an opportunity for written comment. (42 U.S.C.
6295(m)(2))
A determination that amended standards are not needed must be based
on consideration of whether amended standards will result in
significant conservation of energy, are technologically feasible, and
are cost-effective. (42 U.S.C. 6295(m)(1)(A) and 42 U.S.C. 6295(n)(2))
Additionally, any new or amended energy conservation standard
prescribed by the Secretary for any type (or class) of covered product
shall be designed to achieve the maximum improvement in energy
efficiency which the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) Among the factors
DOE considers in evaluating whether a proposed standard level is
economically justified includes whether the proposed standard at that
level is cost-effective, as defined under 42 U.S.C.
6295(o)(2)(B)(i)(II). Under 42 U.S.C. 6295(o)(2)(B)(i)(II), an
evaluation of cost-effectiveness requires DOE to consider savings in
operating costs throughout the estimated average life of the covered
products in the type (or class) compared to any increase in the price,
initial charges, or maintenance expenses for the covered products that
are likely to result from the standard. (42 U.S.C. 6295(n)(2) and 42
U.S.C. 6295(o)(2)(B)(i)(II)) DOE is publishing this NOPD in
satisfaction of the six-year-lookback review requirement in EPCA.
B. Background
1. Current Standards
DOE most recently completed a review of its consumer furnace
standards in a direct final rule (``DFR'') published in the Federal
Register on June 27, 2011 (``June 2011 DFR''), through which DOE
amended the existing energy conservation standards for non-weatherized
gas furnaces (``NWGFs''), mobile home gas furnaces (``MHGFs''),
weatherized gas furnaces (``WGFs''), NWOF, MHOFs, and weatherized oil
furnaces (``WOFs'').\3\ 76 FR 37408. The June 2011 DFR amended the
existing energy conservation standards for NWGFs, MHGFs, and NWOFs
(which are specified in terms of annual fuel utilization efficiency
``AFUE''), and amended the compliance date (but left the existing
standards in place) for WGFs. The June 2011 DFR also established
electrical standby mode and off mode standards for NWGFs, MHGFs, NWOFs,
MHOFs, and electric furnaces. As a result of a settlement agreement
approved by the Court of Appeals for the D.C. Circuit, the standards
established by the June 2011 DFR for NWGFs and MHGFs did not go into
effect.\4\ However, the court order left in place the standards for
WGFs, NWOFs, MHOFs, WOFs, and electric furnaces, which are the subject
of this NOPD.
---------------------------------------------------------------------------
\3\ This rulemaking was undertaken pursuant to the voluntary
remand in State of New York, et al. v. Department of Energy, et al.,
08-311-ag(L); 08-312-ag(con) (2d Cir. Filed Jan. 17, 2008).
\4\ DOE confirmed the standards and compliance dates promulgated
in the June 2011 DFR in a notice of effective date and compliance
dates published in the Federal Register on October 31, 2011
(``October 2011 notice''). 76 FR 67037. After publication of the
October 2011 notice, the American Public Gas Association (``APGA'')
sued DOE to invalidate the rule as it pertained to NWGFs and MHGFs.
Petition for Review, American Public Gas Association, et al. v.
Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23,
2011). On April 24, 2014, the Court granted a motion that approved a
settlement agreement that was reached between DOE, APGA, and the
various intervenors in the case, in which DOE agreed to a remand of
the non-weatherized gas furnace and mobile home gas furnace portions
of the June 2011 DFR in order to conduct further notice-and-comment
rulemaking. Accordingly, the Court's order vacated the June 2011 DFR
in part (i.e., those portions relating to non-weatherized gas
furnaces and mobile home gas furnaces) and remanded to the agency
for further rulemaking. NWGFs and MHGFs are being addressed in a
separate rulemaking proceeding (see Docket No. EERE-2014-BT-STD-
0031).
---------------------------------------------------------------------------
The AFUE standards currently applicable to all consumer furnaces,
including the product classes for which DOE is conducting analyses in
this NOPD, are set forth in DOE's regulations at 10 CFR
430.32(e)(1)(ii). Table II.1 presents the currently applicable
standards for oil, electric, and weatherized gas furnaces and the date
on which compliance with each such standard was required.
[[Page 83429]]
Table II.1--Federal AFUE Standards for Oil, Electric, and Weatherized Gas Furnaces
----------------------------------------------------------------------------------------------------------------
Product class AFUE (percent) Compliance date
----------------------------------------------------------------------------------------------------------------
Non-weatherized oil-fired furnaces (not 83 May 1, 2013.
including mobile home furnaces).
Mobile home oil-fired furnaces.................. 75 September 1, 1990.
Weatherized gas furnaces........................ 81 January 1, 2015.
Weatherized oil-fired furnaces.................. 78 January 1, 1992.
Electric furnaces............................... 78 January 1, 1992.
----------------------------------------------------------------------------------------------------------------
Table II.2--Federal Standby Mode and Off Mode Standards for Oil and Electric Furnaces
----------------------------------------------------------------------------------------------------------------
Maximum Maximum off
standby mode mode
electrical electrical
Product class power power Compliance date
consumption, consumption,
PW,SB (watts) PW,OFF (watts)
----------------------------------------------------------------------------------------------------------------
Non-weatherized oil-fired furnaces (including 11 11 May 1, 2013.
mobile home furnaces).
Electric furnaces............................ 10 10 May 1, 2013.
----------------------------------------------------------------------------------------------------------------
2. History of Standards Rulemakings for Consumer Furnaces
Amendments to EPCA in the National Appliance Energy Conservation
Act of 1987 (``NAECA''; Pub. L. 100-12) established EPCA's original
energy conservation standards for furnaces, consisting of the minimum
AFUE levels for mobile home furnaces and for all other furnaces except
``small'' gas furnaces. (42 U.S.C. 6295(f)(1)-(2)) The original
standards established a minimum AFUE of 75 percent for mobile home
furnaces and 78 percent for all other furnaces. Pursuant to authority
conferred under 42 U.S.C. 6295(f)(1)(B), DOE subsequently adopted a
mandatory minimum AFUE level for ``small'' furnaces through a final
rule published in the Federal Register on November 17, 1989 (``the
November 1989 Final Rule''). 54 FR 47916. The standards established by
NAECA and the November 1989 Final Rule for ``small'' gas furnaces are
still in effect for MHOFs, WOFs, and EFs.
Pursuant to EPCA, DOE was required to conduct two rounds of
rulemaking to consider amended energy conservation standards for all
consumer furnaces, and an additional round of rulemaking for mobile
home furnaces. (42 U.S.C. 6295(f)(4)(A), (B), and (C)) In satisfaction
of the first round of amended standards rulemaking under 42 U.S.C.
6295(f)(4)(B), on November 19, 2007, DOE published in the Federal
Register a final rule (``November 2007 Final Rule'') that revised the
standards for most furnaces but left them in place for two product
classes (i.e., MHOFs and WOFs).\5\ The standards amended in the
November 2007 Final Rule were to apply to furnaces manufactured or
imported on and after November 19, 2015. 72 FR 65136 (Nov. 19, 2007).
The energy conservation standards in the November 2007 Final Rule
consist of a minimum AFUE level for each of the six classes of
furnaces. Id. at 72 FR 65169. Based on the market analysis for the
November 2007 Final Rule and the standards established under that rule,
the November 2007 Final Rule eliminated the distinction between
furnaces based on their certified input capacity, (i.e., the standards
applicable to ``small'' furnaces were established at the same level and
as part of their appropriate class of furnace generally). Id.
---------------------------------------------------------------------------
\5\ The November 2007 Final Rule adopted amended standards for
``oil-fired furnaces'' generally. However, on July 28, 2008, DOE
published a technical amendment final rule in the Federal Register
that clarified that the amended standards adopted in the November
2007 Final Rule for oil-fired furnaces did not apply to mobile home
oil-fired furnaces and weatherized oil-fired furnaces; rather they
were only applicable for non-weatherized oil-fired furnaces. 73 FR
43611, 43613 (July 28, 2008).
---------------------------------------------------------------------------
Following DOE's adoption of the November 2007 Final Rule, several
parties jointly sued DOE in the United States Court of Appeals for the
Second Circuit (``Second Circuit'') to invalidate the rule. Petition
for Review, State of New York, et al. v. Department of Energy, et al.,
Nos. 08-0311-ag(L); 08-0312-ag(con) (2d Cir. filed Jan. 17, 2008). The
petitioners asserted that the standards for furnaces promulgated in the
November 2007 Final Rule did not reflect the ``maximum improvement in
energy efficiency'' that ``is technologically feasible and economically
justified'' under 42 U.S.C. 6295(o)(2)(A). On April 16, 2009, DOE filed
with the Court a motion for voluntary remand that the petitioners did
not oppose. The motion did not state that the November 2007 Final Rule
would be vacated, but it indicated that DOE would revisit its initial
conclusions outlined in the November 2007 Final Rule in a subsequent
rulemaking action. DOE also agreed that the final rule in that
subsequent rulemaking action would address both regional standards for
furnaces and the effects of alternate standards on natural gas prices.
The Second Circuit granted DOE's motion on April 21, 2009. DOE notes
that the Second Circuit's order did not vacate the energy conservation
standards set forth in the November 2007 Final Rule, and during the
remand, the standards went into effect as originally scheduled.
On June 27, 2011, DOE published a direct final rule (``DFR'') in
the Federal Register (``June 2011 DFR'') revising the energy
conservation standards for residential furnaces pursuant to the
voluntary remand in State of New York, et al. v. Department of Energy,
et al. 76 FR 37408. In the June 2011 DFR, DOE considered the amendment
of the same six product classes considered in the November 2007 Final
Rule analysis plus electric furnaces. As discussed previously, the June
2011 DFR amended the existing AFUE energy conservation standards for
NWGFs, MHGFs, and NWOFs and amended the compliance date (but left the
existing standards in place) for WGFs. The June 2011 DFR also
established electrical standby mode and off mode energy conservation
standards for NWGFs, MHGFs, NWOFs, MHOFs, and EFs. DOE confirmed the
standards and compliance dates promulgated in the June 2011 DFR in a
notice of effective date and compliance
[[Page 83430]]
dates published in the Federal Register on October 31, 2011 (``October
2011 Notice''). 76 FR 67037. The November 2007 Final Rule and the June
2011 DFR represented the first and the second rounds, respectively, of
the two rulemakings required under 42 U.S.C. 6295(f)(4)(B)-(C) to
consider amending the energy conservation standards for consumer
furnaces.
The June 2011 DFR and October 2011 Notice of effective date and
compliance dates amended, in relevant part, the AFUE energy
conservation standards and compliance dates for three product classes
of consumer furnaces (i.e., NWGFs, MHGFs, and NWOFs).\6\ The existing
AFUE standards were left in place for three classes of consumer
furnaces (i.e., WOFs, MHOFs, and EFs). For WGFs, the existing standard
was left in place, but the compliance date was amended. Electrical
standby mode and off mode energy consumption standards were established
for non-weatherized gas and oil-fired furnaces (including mobile home
furnaces) and EFs. Compliance with the energy conservation standards
promulgated in the June 2011 DFR was to be required on May 1, 2013, for
non-weatherized gas furnaces, mobile home gas furnaces, and non-
weatherized oil furnaces, and on January 1, 2015, for weatherized
furnaces. 76 FR 37408, 37547-37548 (June 27, 2011); 76 FR 67037, 67051
(Oct. 31, 2011). The amended energy conservation standards and
compliance dates in the June 2011 DFR superseded those standards and
compliance dates promulgated by the November 2007 Final Rule for NWGFs,
MHGFs, and NWOFs. Similarly, the amended compliance date for WGFs in
the June 2011 DFR superseded the compliance date in the November 2007
Final Rule.
---------------------------------------------------------------------------
\6\ For NWGFs and MHGFs, the standards were amended to a level
of 80-percent AFUE nationally with a more-stringent 90-percent AFUE
requirement in the Northern Region. For NWOF furnaces, the standard
was amended to 83-percent AFUE nationally. 76 FR 37408, 37410 (June
27, 2011).
---------------------------------------------------------------------------
Following DOE's adoption of the June 2011 DFR, the American Public
Gas Association (``APGA'') filed a petition for review with the United
States Court of Appeals for the District of Columbia Circuit (``D.C.
Circuit'') to invalidate the DOE rule as it pertained to NWGFs and
MHGFs. Petition for Review, American Public Gas Association, et al. v.
Department of Energy, et al., No. 11-1485 (D.C. Cir. filed Dec. 23,
2011). The parties to the litigation engaged in settlement
negotiations, which ultimately led to filing of an unopposed motion on
March 11, 2014, seeking to vacate DOE's rule in part and to remand to
the agency for further rulemaking.
On April 24, 2014, the Court granted the motion and ordered that
the standards established for NWGFs and MHGFs be vacated and remanded
to DOE for further rulemaking. As a result, the standards established
by the June 2011 DFR for NWGFs and MHGFs did not go into effect, and,
thus, required compliance with the standards established in the
November 2007 Final Rule for these products began on November 19, 2015.
As stated previously, the AFUE standards for WOFs, MHOFs, and EFs were
unchanged, and as such, the original standards for those product
classes remain in effect. Further, the amended standard for NWOFs was
not subject to the Court order and went into effect as specified in the
June 2011 DFR. The AFUE standards currently applicable to all
residential furnaces,\7\ including the five product classes for which
DOE is analyzing amended standards in this NOPD, are set forth in DOE's
regulations at 10 CFR 430.32(e)(1)(ii) and (iii).
---------------------------------------------------------------------------
\7\ DOE divides consumer furnaces into seven classes for the
purpose of setting energy conservation standards: (1) NWGFs, (2)
MHGFs, (3) WGFs, (4) NWOFs, (5) MHOFs, (6) WOFs, and (7) electric
furnaces. 10 CFR 430.32(e)(1)(ii). As noted previously, DOE has been
analyzing amended standards for NWGFs and MHGFs as part of a
separate, ongoing rulemaking (see Docket No. EERE-2014-BT-STD-0031).
---------------------------------------------------------------------------
On January 28, 2022, DOE published in the Federal Register a
request for information (``January 2022 RFI'') to initiate a review to
determine whether any new or amended standards would satisfy the
relevant requirements of EPCA for a new or amended energy conservation
standard for oil, electric, and weatherized gas consumer furnaces. 87
FR 4513. On November 29, 2022, DOE published in the Federal Register a
notice of availability of a preliminary technical support document
(``TSD'') (``the November 2022 Preliminary Analysis'') that presented
initial technical analyses in the following areas: (1) market and
technology; (2) screening; (3) engineering; (4) markups to determine
product price; (5) energy use; (6) life-cycle cost (``LCC'') and
payback period (``PBP''); and (7) national impacts. 87 FR 73259. DOE
held a public meeting webinar on December 19, 2022 in order to receive
public input and information related to the November 2022 Preliminary
Analysis for the subject furnaces.
DOE received comments in response to the November 2022 Preliminary
Analysis from the interested parties listed in Table II.3.
Table II.3--November 2022 Preliminary Analysis Public Comments
----------------------------------------------------------------------------------------------------------------
Comment No. in
Commenter(s) Reference in this NOPD the docket Commenter type
----------------------------------------------------------------------------------------------------------------
Air-Conditioning, Heating, & AHRI...................... 23 Manufacturer Trade
Refrigeration Institute. Association.
American Gas Association................ AGA....................... * 28 Utility Trade Association.
American Gas Association, American Joint Commenters.......... 24 Utilities and Utility
Public Gas Association, National Trade Associations.
Propane Gas Association, Spire Inc.,
Spire Missouri Inc.
Appliance Standards Awareness Project, Joint Advocates........... 22 Efficiency Advocacy
American Council for an Energy- Organizations.
Efficiency Economy, Consumer Federation
of America, Natural Resources Defense
Council.
Johnson Controls International.......... JCI....................... 25 Manufacturer.
Lennox International.................... Lennox.................... 26 Manufacturer.
New York State Energy Research and NYSERDA................... 19 State Agency.
Development Authority.
Northwest Energy Efficiency Alliance.... NEEA...................... 21 Efficiency Advocacy
Organization.
----------------------------------------------------------------------------------------------------------------
* Comment No. 28 corresponds to the transcript for the webinar held on December 19, 2022. These commenters made
oral comments during the public meeting that are summarized and discussed in this document.
[[Page 83431]]
Any oral comments provided during the webinar that are not
substantively the same as those presented in written comments are
summarized and cited separately. throughout this NOPD. A parenthetical
reference at the end of a comment quotation or paraphrase provides the
location of the item in the public record.\8\
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\8\ The parenthetical reference provides a reference for
information located in the docket. (Docket No. EERE-2021-BT-STD-
0031, which is maintained at www.regulations.gov). The references
are arranged as follows: (commenter name, comment docket ID number,
page of that document).
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C. Deviation From Appendix A
In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (``appendix A''), DOE notes that it is deviating from the
provision in appendix A regarding the pre-NOPR and NOPR stages for an
energy conservation standards rulemaking.
Section 6(a)(2) of the Process Rule states that if DOE determines
it is appropriate to proceed with a rulemaking, for the preliminary
stages of a rulemaking to issue or amend an energy conservation
standard, DOE will undertake a framework document and preliminary
analysis, or an advance notice of proposed rulemaking. While DOE
published a preliminary analysis for this rulemaking (see 87 FR 73529
(Nov. 29, 2022)), DOE did not publish a framework document in
conjunction with the preliminary analysis. DOE notes, however, that
chapter 2 of the preliminary technical support document that
accompanied the preliminary analysis--titled Analytical Framework,
Comments from Interested Parties, and DOE Responses--describes the
general analytical framework that DOE uses in evaluating and developing
potential amended energy conservation standards.\9\ Further, DOE
provided an overview of the analysis it would use to evaluate new or
amended energy conservation standards in the January 2022 RFI (see 87
FR 4513 (Jan. 28, 2022)). As such, publication of a separate Framework
Document would be largely redundant of previously published documents.
---------------------------------------------------------------------------
\9\ The preliminary technical support document is available at
www.regulations.gov/document/EERE-2021-BT-STD-0031-0011.
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III. General Discussion and Rationale
DOE developed this proposed determination after a review of the
market for the subject furnaces, including product listings in the DOE
Compliance Certification Database (``CCD'') database.\10\ DOE also
considered comments, data, and information from interested parties that
represent a variety of interests. This NOPD addresses issues raised by
these commenters.
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\10\ U.S. Department of Energy Compliance Certification
Database. (Available at: www.regulations.doe.gov/certification-data/
) (Last accessed Sept. 1, 2023).
---------------------------------------------------------------------------
A. General Comments
1. Comments Supporting Amended Standards
In response to the November 2022 Preliminary Analysis, several
commenters expressed their support of amended energy conservation
standards for oil, electric, and weatherized gas consumer furnaces.
The Joint Advocates stated that DOE's preliminary analysis
demonstrates that condensing-level standards for NWOFs are
technologically feasible and could result in significant consumer
savings. The Joint Advocates further commented that fuel regulations in
many northern States have helped to reduce the sulfur content in
heating oil, adding that this results in condensing NWOFs becoming
technologically feasible and commercially available. (Joint Advocates,
No. 22 at p. 1) The Joint Advocates pointed out that Adams
Manufacturing commented on the January 2022 RFI in support of a 95-
percent AFUE standard for NWOFs.\11\ (Joint Advocates, No. 22 at p. 2)
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\11\ The comment from Adams Manufacturing, Co. in response to
the January 2022 RFI can be found at: www.regulations.gov/comment/EERE-2021-BT-STD-0031-0010.
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NYSERDA stated support for DOE increasing the furnace standards,
particularly for oil furnaces and for standby and off modes. NYSERDA
argued that there are cost-effective and beneficial energy and
associated greenhouse gas savings available through improvements to
electric, weatherized gas, and particularly oil furnaces. (NYSERDA, No.
19 at p. 1)
As part of the rulemaking process, DOE carefully considers the
benefits and burdens of amended energy conservation standards to
determine whether such standards are the maximum standard levels that
are technologically feasible and economically justified and would
conserve a significant amount of energy, as required by EPCA (see 42
U.S.C. 6295(o)(2)-(3)). Section IV of this document outlines DOE's
approach to analyzing various potential amended energy conservation
standard levels, and section V of this document provides the results of
those analyses, as well as a detailed explanation of DOE's weighing of
the benefits and burdens. Based upon its analysis and consideration of
the relevant statutory criteria, DOE is proposing not to amend the
existing standards for oil, electric, and weatherized gas furnaces at
this time. The rationale for DOE's proposed determination is discussed
in detail in section V of this document.
2. Comments Opposing Amended Standards
In response to the November 2022 Preliminary Analysis, several
commenters expressed opposition to amended energy conservation
standards for oil, electric, and weatherized gas consumer furnaces.
The Joint Commenters stated that they are guided by the
congressional mandate that appliance efficiency standards should not
impose unjustified costs on consumers or deprive consumers of gas
products that are suitable for their needs. The Joint Commenters stated
that such standards are not authorized by statute and would be harmful
to fuel gas providers and the consumers they serve. (Joint Commenters,
No. 24 at p. 2) AHRI commented that DOE should adopt a no-new-standards
determination for mobile home oil-fired and non-weatherized oil-fired
furnaces, given the burden placed on manufacturers to meet more-
stringent standards that will provide insubstantial energy savings.
(AHRI, No. 23 at pp. 3-4)
AHRI also commented that DOE should adopt a no-new-standards
determination for weatherized gas-fired furnaces. The commenter argued
that DOE should adopt the same determination for consumer weatherized
gas furnaces as was done for commercial warm air furnaces, given that
they are technologically similar. AHRI and Lennox commented that a move
to an AFUE greater than 90 percent for weatherized gas furnaces is
unjustified, adding that EL 1 showed a 9.1-year payback period and 45.8
percent of consumers experiencing a net cost. (AHRI, No. 23 at p. 3;
Lennox, No. 26 at p. 2)
Lennox urged DOE to consider the cumulative regulatory burden of
all ongoing rulemakings on furnace manufacturers. (Lennox, No. 26 at p.
9) The commenter also stated that weatherized gas, non-weatherized oil,
and electric furnaces are niche products and total less than 10 percent
of the consumer furnace market. More specifically, Lennox stated that
weatherized gas furnaces comprise approximately 7 percent of the
market, and non-weatherized oil and electric furnaces each account for
less than 1 percent of the market. (Lennox, No. 26 at p. 1) Lennox
acknowledged that
[[Page 83432]]
technologies exist that could advance the efficiency of gas and oil
furnaces included in the preliminary TSD. However, Lennox stated that
consumer cost and utility issues render more-stringent standards
unjustified for the subject oil and gas furnaces. In particular, for
weatherized gas products, Lennox recommended that DOE find that a no-
new-standards determination is warranted for these product categories.
(Id. at p. 6)
Lennox stated that the market adoption of condensing weatherized
furnaces has been minimal. Lennox estimated that condensing weatherized
furnaces are at less than 0.12 percent of the weatherized gas market
and that there is no indication of growth in the market. Therefore,
Lennox surmised that condensing efficiency levels would not be
appropriate for DOE to consider as a basis for a national efficiency
standard for weatherized gas furnaces and that DOE should not seek to
mandate WGF condensing technology. (Lennox, No. 26 at p. 7)
Lennox stated that many consumers have been adversely impacted by
the ongoing COVID pandemic and high inflation, particularly consumers
who might already be struggling to afford new furnace equipment.
Accordingly, Lennox argued that DOE increasing furnace equipment costs
with new efficiency standards is not economically justified at this
juncture. (Lennox, No. 26 at p. 2)
In response, as discussed in section II.A of this document, DOE
must periodically review its already established energy conservation
standards for consumer furnaces no later than six years from the
issuance of a final rule establishing or amending a standard for
consumer furnaces. This six-year-lookback provision requires that DOE
publish either a determination that standards do not need to be amended
or a NOPR, including new proposed standards (proceeding to a final
rule, as appropriate). (42 U.S.C. 6295(m)(1)) As part of the rulemaking
process, DOE carefully considers the benefits and burdens of amended
standards to determine whether the amended standards are the maximum
standard levels that are technologically feasible and economically
justified and would conserve a significant amount of energy, as
required by EPCA (see 42 U.S.C. 6295(o)(2)-(3)). Section IV of this
document outlines DOE's approach to analyzing various potential amended
standard levels, and section V of this document provides the results of
those analyses. Section V also provides a detailed explanation of DOE's
weighing of the benefits and burdens and the rationale for proposing
not to amend standards for oil, electric, and weatherized gas furnaces
at this time. Regarding DOE's consideration of cumulative regulatory
burden, DOE is not proposing to amend the energy conservation standards
for oil, electric, and weatherized gas furnaces, so, therefore, the
Department does not expect this rulemaking to contribute to the
cumulative regulatory burden of manufactures.
3. Standby Mode and Off Mode
As discussed in section II.A of this document, EPCA requires any
final rule for new or amended energy conservation standards promulgated
after July 1, 2010 to address standby mode and off mode energy use. (42
U.S.C. 6295(gg)(3))
``Standby mode'' and ``off mode'' energy use are defined in the DOE
test procedure for residential furnaces and boilers (i.e., ``Uniform
Test Method for Measuring the Energy Consumption of Consumer Furnaces
Other Than Boilers,'' 10 CFR part 430, subpart B, appendix N;
``appendix N''). In that test procedure, DOE defines ``standby mode''
as any mode in which the furnace is connected to a mains power source
and offers one or more of the following space heating functions that
may persist: (a) To facilitate the activation of other modes (including
activation or deactivation of active mode) by remote switch (including
thermostat or remote control), internal or external sensors, and/or
timer; and (b) Continuous functions, including information or status
displays or sensor based functions. 10 CFR part 430, subpart B,
appendix N, section 2. ``Off mode'' for consumer furnaces is defined as
a mode in which the furnace is connected to a mains power source and is
not providing any active mode or standby mode function, and where the
mode may persist for an indefinite time. The existence of an off switch
in off position (a disconnected circuit) is included within the
classification of off mode. 10 CFR part 430, subpart B, appendix N,
section 2. An ``off switch'' is defined as the switch on the furnace
that, when activated, results in a measurable change in energy
consumption between the standby and off modes. 10 CFR part 430, subpart
B, appendix N, section 2. Currently, the standby mode and off mode
energy conservation standards for NWOFs and EFs are outlined in 10 CFR
430.32 (e)(1)(iii) and are shown in Table II.2 of this document.
Compliance with the Federal standards for standby mode and off mode
electricity consumption for NWOFs, MHOFs, and EFs, as measured by
standby power consumption in watts (``PW,SB'') and off mode
power consumption in watts (``PW,OFF''), was required on May
1, 2013.
In the November 2022 Preliminary Analysis, DOE analyzed amended
standby/off mode standards for NWOFs, MHOFs and EFs. DOE did not
consider amended standby mode and off mode standards for WGFs and WOFs,
because DOE has previously concluded in a direct final rule published
in the Federal Register on June 27, 2011 that these products are
packaged with either an air conditioner or heat pump and that the
standards for those products, specified in terms of power consumption
in watts and Seasonal Energy Efficiency Ratio (``SEER''), already
account for the standby mode and off mode energy consumption for these
classes of furnaces. 76 FR 37408, 37433. Based on market analysis
conducted for the November 2022 Preliminary Analysis, DOE tentatively
concludes that WGFs and WOFs continue to be packaged with an air
conditioner or heat pump.
In the analysis for the November 2022 Preliminary Analysis, DOE
established the baseline for NWOFs, MHOFs, and EFs as the current
Federal standby mode and off mode standards (see Table II.2). DOE also
defined and identified baseline components as those that consumed the
most electricity during standby mode and off mode operation. For
intermediate efficiency levels, DOE utilized a design-option approach
to identify design options that could be applied to the baseline design
to reduce standby mode and off mode energy consumption. Above the
baseline efficiency level, DOE implemented design options in the order
of incremental energy savings relative to baseline until all available
design options were employed (i.e., at a max-tech level). DOE
identified two design options between the baseline and max-tech design
that were used as the basis for intermediate standby mode and off mode
design options. Specifically, DOE replaced the linear transformer found
in models at the baseline with a low-loss transformer (``LL-LTX'') for
the first intermediate efficiency level and replaced the linear power
supply found in baseline models with a switching mode power supply
(``SMPS'') for the second intermediate efficiency level.
The max-tech standby mode and off mode efficiency level in the
November 2022 Preliminary Analysis was based on a combination of the
two design options that were analyzed for the intermediate efficiency
levels. To reach max-tech, DOE analyzed using an LL-LTX in combination
with an SMPS to reach the
[[Page 83433]]
minimum standby mode or off mode power consumption (without eliminating
other consumer- or performance-related electronic features). For this
design option, a transformer is only needed to step down the voltage
for the thermostat because the SMPS is able to step down the voltage
for the other components of the furnace. As such, a smaller, lower-cost
LL-LTX is used at the max-tech level, as compared to the LL-LTX used at
EL 1 (i.e., the first intermediate efficiency level).
In response to the November 2022 Preliminary Analysis, Lennox
commented that it is not aware of new or improved technology options
regarding standby mode and off mode energy use beyond those previously
identified that significantly impact the range of efficiencies for the
product covered in this rulemaking. (Lennox, No. 26 at p. 4) However,
Lennox also pointed out that consumers, utilities, third-party
aggregators, and regulators through programs such as EPA ENERGY STAR
are looking to further deploy features that enable installation
verification, ongoing monitoring, diagnostics, and prognostic features
that can save significantly more energy than de minimis standby power
limits achieve. (Id.)
AHRI and Lennox stated that the following functions and components
utilize the furnace's power supply in the on, standby, and off modes:
indoor and outdoor air conditioner (``AC'')/heat pump (``HP'') Motors
(``ECM''); AC/HP outdoor control board; heat pump defrost control;
indoor and outdoor electronic expansion valve; heat pump reversing
valve; zoning systems; UV germicidal light; humidifier; communicating
controls that aid in proper commissioning, system performance
monitoring and reporting, identification of faults, and consumer
interface; temperature sensors; air pressure sensors; refrigerant
pressure sensors; gas pressure sensors; and proprietary diagnostic-
prognostic sensors. (AHRI, No. 23, at p. 2; Lennox, No. 26 at p. 5)
Lennox further added that thermostats utilize the furnace's power
supply in the on, standby, and off modes. (Lennox, No. 26 at p. 5) AHRI
added that integrated furnace controls, gas valves, and combustion air
inducers utilize the furnace power in on, standby, and off modes.
(AHRI, No. 23, at p. 2) AHRI and Lennox commented that additional
safety-related sensors are being considered for furnaces that could
further render more-stringent standby power limits impractical,
including refrigerant leak detection mitigation sensors and CO sensors.
(Lennox, No. 26 at p. 5; AHRI, No. 23, at p. 2) Lennox also added
CO2 sensors to the list of potential future diagnostic
features and stated that this list is likely to grow over time.
(Lennox, No. 26 at p. 5)
Lennox commented that increased stringency in standards for standby
power levels would inhibit other innovations that save energy and
benefit consumers. Lennox further stated that increased stringency
would also inhibit implementation of additional safety features.
(Lennox, No. 26 at p. 2) In addition, Lennox stated that the energy
savings for standby mode and off mode standards for all of the products
considered in this rulemaking do not meet the DOE criteria of
significant energy savings. (Id.) AHRI commented that DOE should
consider the standby mode and off mode requirements of higher
technology features when evaluating the standby mode and off mode
efficiency levels. (AHRI, No. 23 at p. 3) AHRI and Lennox commented
that overly stringent standby mode and off mode standards would inhibit
the integration of smart communicating controls, installation and
diagnostic features, and zoning that can enable much larger energy
savings than the minor savings achieved by the standby power limit
itself. Lennox stated that these advanced features have entered the
market for fully featured communicating products and require more
standby mode and off mode energy than the baseline products. (Lennox,
No. 26 at p. 4; AHRI, No. 23 at p. 3)
Lennox and AHRI agreed that standby mode and off mode power
consumption for WGFs that are part of a single-package air conditioner
or heat pump are captured in the PW,OFF and SEER metrics for
these products. (Lennox, No. 26 at p. 3; AHRI, No. 23 at p. 4) Lennox
stated that the current DOE metrics capture the standby energy
regardless of the mode of operation. (Lennox, No. 26 at p. 3) Lennox
commented that it is not aware of seasonal differences in standby mode
and off mode energy consumption. Further, Lennox commented that a
condensing standard for WGF may force additional factory- or field-
installed components to prevent freezing (i.e., heat tape or other) of
the condensate system, which may increase standby energy consumption in
heating mode. (Lennox, No. 26 at p. 3)
AHRI commented that an 8.5 W maximum standard for standby mode and
off mode power does not allow for the addition of the aforementioned
communication, diagnostic, and safety features. (AHRI, No. 23 at p. 2)
AHRI recommended that DOE re-evaluate the necessary power draw for
communication and safety-related features and the max-tech level based
upon the use of a 20 VA LL-LTX transformer and SMPS to meet these
utilities. (Id. at p. 3) AHRI commented that a 20 VA transformer cannot
supply the needs of all interconnected controls for all types of
systems. AHRI added that if the transformer cannot power the necessary
internal functions, then DOE must reconsider the proposed 8.5-watt
standby power limit and whether the 11-watt baseline is sufficient.
AHRI further commented that if DOE must go higher than 11 watts, DOE
may need to make allowance in future test procedures so that the
effects of safety and other control measures do not count against the
proposed 11-watt limit. (Id.)
AHRI commented that an incorrectly set minimum standard will drive
connected products such as thermostats, WIFI controls, etc. to use add-
on power supplies and cause an additional economic burden on consumers,
asserting that this would defeat the purpose of the proposed maximum
watts limit. AHRI commented that there are already auxiliary power
supplies on the market for thermostats and other devices. (Id. at p. 3)
NYSERDA commented that the technology options for standby mode that
rely on switching mode power supply with a low-loss linear transformer
have been considered by DOE for several years and are anticipated to be
transferable across furnace types, including the oil and electric
furnaces addressed in this rulemaking. NYSERDA explained that as
switch-mode power supply and low-loss linear transformers become the
standard for much of the furnace market, it becomes more feasible for
those technologies to apply to oil and electric furnaces as well.
(NYSERDA, No. 19 at p. 2)
NYSERDA recommended that DOE propose the max-tech levels for
standby mode and off mode at the NOPR stage. NYSERDA explained that, as
this rulemaking is finalized, the broader furnace manufacturing
industry is anticipated to evolve toward technology for standby mode
that relies on switching mode power supply with a low-loss linear
transformer. (NYSERDA, No. 19 at p. 2)
After considering this feedback, DOE understands that typical and
baseline levels of power consumption of consumer furnaces in standby
mode or off mode are likely to increase in the future as manufacturers
continue to build increasingly complex controls into consumer furnaces,
and that many of the likely changes are related to features such as
safety sensors or to other improvements in functionality that
[[Page 83434]]
would provide utility for the consumer. Based on these comments, DOE
has found that there is some degree of uncertainty that exists with
respect to the appropriateness of the standby mode/off mode efficiency
levels analyzed in the November 2022 Preliminary Analysis--particularly
for products that are in development but also possibly in some products
already on the market. There is also uncertainty related to the
potential impacts that standby mode and off mode power consumption
standards could have on overall system energy consumption and consumer
utility. Consequently, DOE has determined that it lacks the necessary
information to amend the standby mode and off mode standards at this
time. Particularly, since some of the functionalities at issue could
have significant safety or energy-savings benefits, DOE does not wish
to stymie such developments through well-intentioned but ultimately
counterproductive standby mode/off mode standards. Instead, DOE needs
to have a better understanding of the legitimate power consumption
needs of the subject furnaces when operating in standby mode and off
mode. Although DOE remains cognizant of the relevant requirements of 42
U.S.C. 6295(gg)(3), DOE has concluded that it does not currently have
the requisite evidence to support amended standby mode and off mode
standards under the applicable statutory criteria in EPCA. Therefore,
DOE is not proposing to amend the standby mode/off mode power standards
for NWOFs, MHOFs, and EFs this time, but instead, DOE will continue to
investigate these issues and may consider such standards in a future
rulemaking.
B. Scope of Coverage and Product Classes
This proposed determination covers certain product classes of
consumer furnaces (i.e., ones for oil, electric, and weatherized gas
furnaces). A consumer ``furnace'' is defined as a product which
utilizes only single-phase electric current, or single-phase electric
current or DC current in conjunction with natural gas, propane, or home
heating oil, and which--
(A) Is designed to be the principal heating source for the living
space of a residence;
(B) Is not contained within the same cabinet with a central air
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
(C) Is an electric central furnace, electric boiler, forced-air
central furnace, gravity central furnace, or low-pressure steam or hot
water boiler; and
(D) Has a heat input rate of less than 300,000 Btu per hour for
electric boilers and low-pressure steam or hot water boilers and less
than 225,000 Btu per hour for forced-air central furnaces, gravity
central furnaces, and electric central furnaces.
10 CFR 430.2. The scope of coverage is discussed in further detail in
section IV.A.1 of this document.
When evaluating and establishing/amending energy conservation
standards, DOE divides covered products into product classes by the
type of energy used or by capacity or other performance-related
features that justify differing standards. In making a determination
whether a performance-related feature justifies a different standard,
DOE must consider such factors as the utility of the feature to the
consumer and other factors DOE determines are appropriate. (42 U.S.C.
6295(q)) The product classes for this proposed determination are
discussed in further detail in section IV.A.4 of this document.
C. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
quantify the efficiency of their product and as the basis for
certifying to DOE that their product complies with energy conservation
standards and when making representations to the public regarding the
energy use or efficiency of the product. (42 U.S.C. 6295(s) and 42
U.S.C. 6293(c)) Similarly, DOE must use these test procedures to
determine whether the product complies with standards adopted pursuant
to EPCA. (42 U.S.C. 6295(s)) DOE's current energy conservation
standards for consumer furnaces are expressed in terms of AFUE for all
furnace product classes (i.e., active mode) and, for NWOFs, MHOFs, and
electric furnace product classes, also in terms of PW,SB and
PW,OFF (i.e., standby mode and off mode). (See 10 CFR
430.32(e)(1))
The test procedure for determining AFUE, PW,SB, and
PW,OFF is established at 10 CFR part 430, subpart B,
appendix N. AFUE is an annualized fuel efficiency metric that accounts
for fossil fuel consumption in active, standby, and off modes.
PW,SB and PW,OFF are measurements of the standby
mode and off mode electrical power consumption, respectively, in watts.
The test procedure for consumer furnaces was last amended by a final
rule published in the Federal Register on January 15, 2016 (``January
2016 TP Final Rule''). 81 FR 2628.\12\
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\12\ On March 13, 2023, DOE published in the Federal Register a
test procedure final rule for consumer boilers, which are a type of
furnace under EPCA (see 42 U.S.C. 6291(23)) but are not included
within the scope of this rulemaking (see section IV.A.1 of this
document). 88 FR 15510. This test procedure final rule separated the
test method for consumer boilers from the test method for other
types of furnaces and moved the boilers test method to a new
appendix EE to 10 CFR part 430, subpart B. Accordingly, it amended
appendix N so as to remove provisions applicable only to boilers,
but it did not materially change the test method for the oil,
electric, and weatherized gas furnaces that are the subject of this
rulemaking.
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The revisions to the consumer furnaces test procedure in the
January 2016 TP Final Rule included:
Clarification of the electrical power term ``PE'';
Adoption of a smoke stick test for determining use of
minimum default draft factors;
Allowance for the measurement of condensate under steady-
state conditions;
Reference to manufacturer's installation and operation
manual and clarifications for when that manual does not specify test
set-up;
Specification of duct-work requirements for units that are
installed without a return duct;
Specification of testing requirements for units with
multi-position configurations; and
Revision of the requirements regarding AFUE reporting
precision.
81 FR 2628, 2629-2630 (Jan. 15, 2016).
The changes in the January 2016 TP Final Rule were mandatory for
representations of furnace efficiency made on or after July 13, 2016.
As such, the most current version of the test procedure (published in
January 2016) has now been in place for several years.
D. Technological Feasibility
1. General
In evaluating potential amendments to energy conservation
standards, DOE conducts a screening analysis based on information
gathered on all current technology options and prototype designs that
could improve the efficiency of the products or equipment that are the
subject of the determination. As the first step in such an analysis,
DOE develops a list of technology options for consideration in
consultation with manufacturers, design engineers, and other interested
parties. DOE then determines which of those means for improving
efficiency are technologically feasible. DOE considers technologies
incorporated in commercially-available products or in working
prototypes to be
[[Page 83435]]
technologically feasible. 10 CFR part 430, subpart C, appendix A,
sections 6(b)(3)(i) and 7(b)(1).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety; and (4) unique-pathway proprietary technologies. 10
CFR part 430, subpart C, appendix A, sections 6(b)(3)(ii)-(v) and
7(b)(2)-(5). Section IV.A.3 of this document discusses the results of
the screening analysis for oil, electric, and weatherized gas furnaces,
particularly the design options DOE considered, those it screened out,
and those that are the basis for the potential standards considered in
this proposed determination.
2. Maximum Technologically Feasible Levels
As when DOE proposes to adopt a new or amended standard for a type
or class of covered product, in this NOPD analysis, DOE must determine
the maximum improvement in energy efficiency or maximum reduction in
energy use that is technologically feasible for the product under
consideration. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering
analysis, DOE determined the maximum technologically feasible (``max-
tech'') improvements in energy efficiency for oil, electric, and
weatherized gas furnaces, using the design parameters for the most
efficient products available on the market or in working prototypes.
The max-tech levels that DOE determined for this analysis are described
in section IV.B.1.c of this proposed determination.
E. Cost-Effectiveness
In making a determination of whether amended energy conservation
standards are needed, EPCA requires DOE to consider the cost-
effectiveness of amended standards in the context of the savings in
operating costs throughout the estimated average life of the covered
product compared to any increase in the price of, or in the initial
charges for, or maintenance expenses of, the covered product that are
likely to result from a standard. (42 U.S.C. 6295(m)(1)(A); 42 U.S.C.
6295(n)(2)(C); 42 U.S.C. 6295(o)(2)(B)(i)(II))
In determining cost-effectiveness of potential amended standards
for oil, electric, and weatherized gas furnaces, DOE conducted LCC and
PBP analyses that estimate the costs and benefits to users from those
potential standards. To further inform DOE's consideration of the cost-
effectiveness of potential amended standards, DOE considered the NPV of
total costs and benefits estimated as part of the NIA. The inputs for
determining the NPV of the total costs and benefits experienced by
consumers are: (1) total annual installed cost, (2) total annual
operating costs (energy costs and repair and maintenance costs), and
(3) a discount factor to calculate the present value of costs and
savings. The results of this analysis are discussed in section V.C.2 of
this NOPD.
F. Energy Savings
1. Determination of Savings
For each efficiency level (``EL'') evaluated, DOE projected
anticipated energy savings from application of the EL to the oil,
electric, and weatherized gas furnace purchased in the 30-year period
that begins in the assumed year of compliance with the potential
standards (2030-2059). The savings are measured over the entire
lifetime of the oil, electric, and weatherized gas furnaces purchased
in the previous 30-year period. DOE quantified the energy savings
attributable to each EL as the difference in energy consumption between
each standards case and the no-new-standards case. The no-new-standards
case represents a projection of energy consumption that reflects how
the market for a product would likely evolve in the absence of amended
energy conservation standards. DOE used its NIA spreadsheet model to
estimate national energy savings (``NES'') from potential amended or
new standards for oil, electric, and weatherized gas furnaces. The NIA
spreadsheet model (described in section IV.G of this document)
calculates energy savings in terms of site energy, which is the energy
directly consumed by products at the locations where they are used. For
electricity, DOE reports NES in terms of primary energy savings, which
is the savings in the energy that is used to generate and transmit the
site electricity. DOE also calculates NES in terms of full-fuel-cycle
(``FFC'') energy savings. The FFC metric includes the energy consumed
in extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, presents a more complete
picture of the impacts of energy conservation standards.\13\ DOE's
approach is based on the calculation of an FFC multiplier for each of
the energy types used by covered products or equipment. For more
information on FFC energy savings, see section IV.G of this document.
---------------------------------------------------------------------------
\13\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51281 (August 18, 2011), as
amended at 77 FR 49701 (August 17, 2012).
---------------------------------------------------------------------------
2. Significance of Savings
In determining whether amended standards are needed, DOE must
consider whether such standards will result in significant conservation
of energy. (42 U.S.C. 6295(m)(1)(A)) The significance of energy savings
offered by a new or amended energy conservation standard cannot be
determined without knowledge of the specific circumstances surrounding
a given rulemaking.\14\ For example, some covered products and
equipment have most of their energy consumption occur during periods of
peak energy demand. The impacts of these products on the energy
infrastructure can be more pronounced than products with relatively
constant demand. Accordingly, DOE evaluates the significance of energy
savings on a case-by-case basis. The significance of energy savings is
further discussed in section V.B.1 of this NOPD.
---------------------------------------------------------------------------
\14\ The numeric threshold for determining the significance of
energy savings established in a final rule published in the Federal
Register on February 14, 2020 (85 FR 8626, 8670-8672) was
subsequently rescinded through a final rule published in the Federal
Register on December 13, 2021 (86 FR 70892, 70901-70906).
---------------------------------------------------------------------------
G. Additional Considerations
Pursuant to EPCA, absent DOE publishing a notification of
determination that energy conservation standards for the subject
furnaces do not need to be amended, DOE must issue a NOPR that includes
new proposed standards. (42 U.S.C. 6295(m)(1)(B)) The new proposed
standards in any such NOPR must be based on the criteria established
under 42 U.S.C. 6295(o) and follow the procedures established under 42
U.S.C. 6295(p). (42 U.S.C. 6295(m)(1)(B)) The criteria in 42 U.S.C.
6295(o) require that standards 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)) In deciding whether a proposed standard is economically
justified, DOE must determine whether the benefits of the standard
exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this
determination after receiving comments on the proposed standard, and by
considering, to the greatest extent practicable, the following seven
statutory factors:
(1) The economic impact of the standard on manufacturers and
[[Page 83436]]
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges for, or maintenance expenses of
the covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from 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
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)(I)-(VII))
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
proposed determination with regard to oil, electric, and weatherized
gas furnaces. Separate subsections address each component of DOE's
analyses. DOE used several analytical tools to estimate the impact of
potential energy conservation standards. The first tool is a
spreadsheet that calculates the LCC savings and PBP of potential energy
conservation standards. The NIA uses a second spreadsheet set that
provides shipments projections and calculates NES and net present value
of total consumer costs and savings expected to result from potential
energy conservation standards. These spreadsheet tools are available on
the website: www.regulations.gov/docket/EERE-2021-BT-STD-0031.
The Joint Commenters stressed the importance of implementing the
recommendations of the recent National Academies of Sciences,
Engineering, and Medicine (``NAS'') report into all appliance
rulemakings. Specifically, the Joint Commenters highlighted three
recommendations from the report that they argued should be implemented
in rulemakings impacting WGFs: (1) DOE should pay greater attention to
the justification for the standards, adding that DOE should attempt to
find significant failures of private markets or irrational behavior by
consumers in the no-new-standards case to conclude that the standards
are economically justified; (2) DOE should place greater emphasis on
providing an argument for the plausibility and magnitude of any market
failure related to the energy efficiency gap in DOE's analysis; and (3)
DOE should give greater attention to a broader set of potential market
failures on the supply side, further commenting that this would include
not just how standards might reduce the number of competing firms but
also how they might impact price discrimination, technological
diffusion, and collusion. The Joint Commenters suggested DOE should
address these recommendations before analyzing whether new efficiency
standards are warranted. (Joint Commenters, No. 24 at pp. 2-3)
In response, DOE is addressing the recommendations of the NAS
report in a separate rulemaking in parallel with other ongoing
rulemakings, including this oil, electric, and weatherized gas furnace
NOPD. As discussed in section V.C of this document, DOE is tentatively
proposing that standards do not need to be amended, and the Department
has made this tentative determination consistent with EPCA's
requirements, including evaluation of economic justification of
standards, and applicable Executive orders.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this proposed determination include: (1) a determination
of the scope and product classes, (2) manufacturers and industry
structure, (3) existing efficiency programs, (4) shipments information,
(5) market and industry trends, and (6) technologies or design options
that could improve the energy efficiency of consumer furnaces. The key
findings of DOE's market assessment are summarized in the following
sections.
1. Scope of Coverage
In this analysis, DOE relied on the definition of a furnace in 10
CFR 430.2, which defines a consumer ``furnace'' as a product which
utilizes only single-phase electric current, or single-phase electric
current or DC current in conjunction with natural gas, propane, or home
heating oil, and which--
(A) Is designed to be the principal heating source for the living
space of a residence;
(B) Is not contained within the same cabinet with a central air
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
(C) Is an electric central furnace, electric boiler, forced-air
central furnace, gravity central furnace, or low-pressure steam or hot
water boiler; and
(D) Has a heat input rate of less than 300,000 Btu per hour for
electric boilers and low-pressure steam or hot water boilers and less
than 225,000 Btu per hour for forced-air central furnaces, gravity
central furnaces, and electric central furnaces.
Any product meeting the definition of a ``furnace'' is included in
DOE's scope of coverage. In the analysis for this NOPD, DOE focused
only on oil, electric, and weatherized gas furnaces. Non-weatherized
gas furnaces and mobile home gas furnaces are considered in a separate
rulemaking.\15\
---------------------------------------------------------------------------
\15\ See Docket No. EERE-2014-BT-STD-0031 which can be accessed
at www.regulations.gov.
---------------------------------------------------------------------------
a. Electric Furnaces
A basic electric furnace comprises an electric resistance heating
element and blower assembly. (Additionally, there are products that
include electrically-powered heat pumps, but these are separately
covered products not addressed here.) The electric resistance heating
elements of electric furnaces are highly efficient, and the efficiency
of these units already approaches 100 percent. DOE is unaware of any
technology options that can improve the efficiency of electric
furnaces, so DOE has tentatively determined that more-stringent
standards for electric furnaces would not be technologically feasible.
Therefore, DOE anticipates that the energy savings potential from
amended standards for EFs would be minimal. Consequently, DOE did not
consider amended AFUE standards for electric furnaces in the current
analysis.
b. Weatherized Oil-Fired Furnaces
DOE is not aware of any WOFs on the market, and, therefore, DOE did
not analyze amended standards for that product class. DOE has
tentatively determined that because there are no WOFs on the market,
there would be no potential energy savings from amended standards.
c. Fuel-Fired Heat Pumps
NEEA commented that DOE should consider fuel-fired heat pumps
within the broader WGF product category by updating the definition of
``central forced-air furnace'' in the Code of Federal Regulations.
(NEEA, No. 21 at p. 1) NEEA argued that fuel-fired heat
[[Page 83437]]
pumps with a heat input rate of less than 225,000 Btu per hour meet all
the criteria in the EPCA definition for a residential ``furnace'' with
the exception that the terms, ``electric central furnace, electric
boiler, forced-air central furnace, gravity central furnace, or low-
pressure steam or hot water boiler'' do not currently cover fuel-fired
heat pumps. NEEA commented that DOE has the authority to change those
definitions and stated that redefining ``forced-air central furnace''
would allow fuel-fired heat pumps to be regulated under the energy
conservation standards for oil, electric, and weatherized gas consumer
furnaces. (Id. at p. 2) Specifically, NEEA suggested that DOE should
change the definition of ``forced air central furnace'' to a gas or oil
burning furnace designed to supply heat through a system of ducts with
air as the heating medium. The combustion of gas or oil generates heat
that is either transferred to the air within a casing by conduction
through heat exchange surfaces or utilized to run a refrigeration cycle
that transfers heat to the air and is circulated through the duct
system by means of a fan or blower. NEEA commented that this definition
covers the two main fuel-fired heat pump technologies: fuel-fired
absorption heat pumps and engine-driven heat pumps. (Id.) NEEA also
commented that weatherized fuel-fired heat pumps should be considered
as another technology option within the WGF product category. NEEA
requested that DOE consider all possible technology options for gas-
fired furnaces to be on an even playing field. (Id. at p. 3)
NEEA argued that fuel-fired heat pumps are designed to replace
existing furnaces and boilers without the need to update existing
infrastructure and to provide flexibility for decarbonized fuels.
However, NEEA stated that fuel-fired heat pumps are not direct
replacements for heat pumps, since the primary fuel sources are
different. (NEEA, No. 21 at p. 3) NEEA commented that a 2020 case study
\16\ of a pre-commercial residential fuel-fired heat pump prepared for
DOE showed that the system can achieve over 140-percent AFUE, and field
demonstrations show 36-43 percent fuel savings compared to a condensing
furnace and 46-50 percent fuel savings compared to a non-condensing
furnace. (Id.) NEEA further commented that the 2020 case study showed
that there is significant potential in the residential market for a
reasonably priced, gas-fired absorption heat pump product. (Id.)
---------------------------------------------------------------------------
\16\ The case study, titled ``Pre-Commercial Scale-Up of a Gas-
Fired Absorption Heat Pump'' is available at www.osti.gov/biblio/1726247 (Last accessed June 14, 2023).
---------------------------------------------------------------------------
NEEA encouraged DOE to consider the building energy simulation and
comparison to field-derived results for fuel-fired heat pumps,
published by Purdue University in 2021.\17\ NEEA commented that this
report demonstrates that fuel-fired heat pumps provided the lowest
operating cost and highest carbon emissions savings compared to
furnaces, boilers, electric heat pumps, and various water heating
options. NEEA commented that fuel-fired heat pumps provide the same
primary heating function as conventional fuel-to-air furnaces with the
potential for significant energy savings. (Id.)
---------------------------------------------------------------------------
\17\ The Purdue report, titled ``Pathways to Decarbonization of
Residential Heating,'' is available at docs.lib.purdue.edu/ihpbc/354/ (Last accessed June 14, 2023).
---------------------------------------------------------------------------
In response to the comments by NEEA, DOE notes that fuel-fired heat
pumps do not meet the current definition of ``furnace,'' as they do not
meet criteria (C) in the definition outlined in section IV.A of this
document. As such, they were not considered in the scope of this
analysis. Further, the current test procedure for consumer furnaces, as
outlined in appendix N, does not include provisions for testing fuel-
fired heat pumps. Therefore, DOE is not considering amending the
consumer ``furnace'' definition to include these products at this time.
However, DOE will continue to investigate fuel-fired heat pumps and may
evaluate test procedure provisions for related to fuel-fired heat pumps
in a future rulemaking.
2. Technology Options
DOE has identified the following components as technology options
that have the potential to improve the AFUE rating of oil and
weatherized gas furnaces:
Condensing secondary heat exchanger
Heat exchanger improvements
[cir] Increased heat exchanger surface area
[cir] Heat exchanger surface features
[cir] Heat exchanger baffles and turbulators
Two-stage and modulating combustion
Pulse combustion
Premix burners
Burner derating
Insulation improvements
[cir] Increased jacket insulations
[cir] Advanced forms of insulation
Off-cycle dampers
[cir] Electromechanical flue damper
[cir] Electromechanical burner inlet damper
Direct venting
Concentric venting
Low-pressure, air-atomized oil burner
High-static oil burner
Delayed-action oil pump solendoid valve
These technology options are described in more detail of chapter 3
of the November 2022 Preliminary Analysis TSD.\18\ As discussed in
section IV.A.1.a of this document, DOE did not identify any technology
options that would improve the AFUE of electric furnaces.
---------------------------------------------------------------------------
\18\ For this NOPD, DOE will not publish a Technical Support
Document (TSD) because no amended standard is proposed. The
methodology for the analyses conducted for the NOPD is largely the
same as in the Preliminary Analysis, and, thus, DOE references the
Preliminary Analysis TSD throughout this document.
---------------------------------------------------------------------------
In response to the November 2022 Preliminary Analysis, AHRI,
Lennox, and JCI commented that WGF accounts for a relatively small
share of the overall furnace market (~7 percent). (AHRI, No. 23 at p.
5; Lennox, No. 26 at p. 1; JCI, No. 25 at p. 2) \19\ AHRI and JCI
stated that the maximum feasible AFUE for WGF is 81 percent. (AHRI, No.
23 at p. 5; JCI, No. 25 at p. 2)
---------------------------------------------------------------------------
\19\ JCI's comments stated that WGFs are 7 percent of the WGF
market, but DOE interprets this comment to mean that WGFs are 7
percent of the overall furnace market.
---------------------------------------------------------------------------
JCI commented that further improvements in systems efficiency of
WGFs would require the product class use of condensing technology. JCI
commented that this change in the product offering is not practical
and, based on observed market share, not justified due to system design
and application constraints. (JCI, No. 25 at p. 2) JCI argued that the
practical application of condensing WGFs creates condensation in the
heat exchangers within the unit, which is not readily drained. JCI
added that the retained condensate will freeze in the off cycle,
preventing further operation of the furnace. (Id.)
Lennox stated that applicable furnace technology has not
significantly improved to overcome barriers to deploying higher-
efficiency noncondensing and condensing technologies that would justify
more-stringent AFUE standards for WGFs. (Lennox, No. 26 at p. 4)
In response to comments regarding condensing WGFs, DOE notes that
it has identified WGFs available on the market that use condensing
technology to achieve AFUE ratings up to 95 percent. Because these
types of products are available on the market, DOE finds them to be
technologically feasible and
[[Page 83438]]
considers condensing secondary heat exchangers to be an appropriate
technology option to analyze for these products. Additionally, in
response to JCI, when evaluating the cost of implementing technologies
such as condensing heat exchangers, DOE aims to include the additional
costs of other components that may be associated with installing a unit
with such technology, such as a condensate pump and drain hoses. The
analyses of these costs are discussed in subsequent sections of this
document (e.g., the LCC and PBP analyses and the NIA (see sections IV.E
and IV.G of this document, respectively)).
During the public meeting webinar, AGA requested clarification on
how vent dampers were applied in the analysis for weatherized gas
furnaces and noted that the test procedure would not give credit for a
vent damper on an outdoor weatherized gas furnace. (AGA, Public Meeting
Transcript, No. 28 at pp. 20-22) In response, dampers were not
considered for WGFs and are not part of the design pathway for
improving AFUE for those products. (See section IV.B.1.d of this
document for the efficiency levels and associated technology options
for WGFs.) DOE notes that Tables ES.3.2, ES.3.3, ES.3.19, and 7.4.1 in
the November 2022 Preliminary Analysis TSD indicated that vent dampers
were included for NWOFs and MHOFs; however, this was a typographical
error. DOE clarifies that vent dampers also were not part of the design
pathway considered for improving AFUE of NWOFs and MHOFs for the
preliminary analysis (nor are they for this NOPD analysis).
In chapter 3 of the November 2022 Preliminary Analysis TSD, DOE
also considered three technology options that could potentially reduce
the standby mode and off mode energy consumption of NWOFs, MHOFs, and
EFs. However, for the reasons explained in section III.A.3 of this
document, DOE has tentatively determined that it cannot establish
standby mode and off mode standards that meet the criteria of EPCA at
this time, so such technologies and standards are not considered
further.
3. Screening Analysis
DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially-viable, existing
prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production of a technology in commercial products
and reliable installation and servicing of the technology could not be
achieved on the scale necessary to serve the relevant market at the
time of the projected compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or result in the unavailability of any covered
product type with performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as products generally available in the United States at the time,
it will not be considered further.
(4) Safety of technologies. If it is determined that a technology
would have significant adverse impacts on health or safety, it will not
be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving a
given efficiency level, it will not be considered further, due to the
potential for monopolistic concerns.
10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the listed five criteria,
it will be excluded from further consideration in the engineering
analysis.
a. Screened-Out Technologies
DOE eliminated the technologies listed in Table IV.1 from further
consideration as options to improve the AFUE (as measured by the DOE
test procedure) of NWOFs, MHOFs, and WGFs. The reasons for exclusion
associated with each technology are marked with an X. Additional
details about the reasons for exclusion are discussed in this section.
Table IV.1--Screened-Out Technologies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reasons for exclusion
----------------------------------------------------------------------------------
Practicability
Excluded technology options Applicable product to Adverse impacts Adverse impacts Unique-
class(es) Technological manufacture, on product on health or pathway
feasibility install, and utility safety proprietary
service technology
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pulse combustion........................ WGF........................ ............... .............. ............... X ..............
Burner derating......................... WGF, NWOF, MHOF............ ............... .............. X ............... ..............
Low-pressure, air-atomized oil burner... NWOF, MHOF................. X .............. ............... ............... ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pulse Combustion
Pulse combustion burners operate on self-sustaining resonating
pressure waves that alternately rarefy the combustion chamber (drawing
a fresh fuel-air mixture into the chamber) and pressurize it (causing
ignition by compression heating of the mixture to its flash point).
Pulse combustion systems are capable of direct venting without the
assistance of mechanical draft. Because the pulse combustion process is
very efficient, pulse combustion is generally used in condensing
appliances.
In contrast to natural draft and induced draft furnaces, pulse
combustion furnaces generate positive pressure in the heat exchanger.
Although these products are generally safe, this could create a
potential safety problem if the heat exchanger breeches, because
combustion products can contaminate the circulation air stream.
Pulse combustion gas furnaces were available in the United States
for more than two decades. However, they were withdrawn from the market
within the past 20 years because manufacturers found that competing
technologies, such as condensing secondary heat exchangers, cost
significantly less to
[[Page 83439]]
manufacture and operate. In light of the ability of furnace
manufacturers to cost-effectively achieve high efficiencies without the
use of pulse combustion, the technology's risks do not outweigh its
benefits for consumer furnace applications. Accordingly, DOE did not
further analyze this technology option as part of this NOPD.
Burner Derating
Decreasing the burner size to increase the ratio of heat transfer
area to fuel input, or burner derating, can increase the AFUE rating of
furnaces. However, because heat output rate is directly related to
burner size, derating also reduces the amount of heated air available
to the consumer. This reduction in heat output adversely affects the
utility to consumers. Therefore, DOE did not consider this technology
option.
Low-Pressure, Air-Atomized Oil Burner
To overcome the low input limitations of conventional oil burners,
Brookhaven National Laboratory developed a low-pressure, air-atomized
oil burner that can operate at firing rates as low as 0.25 gallons of
oil per hour (10 kW). In addition, it can operate with low levels of
excess combustion air (less than 10 percent) for lean-burning, ultra-
clean combustion. A lower level of excess air generally improves AFUE
rating. This burner design is also capable of firing fuel at a high or
low input rate, which is manually actuated by a switch, allowing the
burner to closely match the smaller heating loads of well-insulated
modern homes.
While tests performed at the Brookhaven National Laboratory seem to
have successfully demonstrated enhanced oil boiler AFUE performance per
the DOE test procedure for furnaces and boilers, the prototype was
never tested on a furnace. Therefore, the technological feasibility of
the burner prototype for incorporation into a residential oil-fired
furnace remains unknown, so DOE does not consider low-pressure, air-
atomized oil burners to be a viable technology for efficiency
improvement at this time.
b. Remaining Technologies
After reviewing each technology, DOE did not screen out the
following technology options and considers them as design options in
the engineering analysis:
Condensing secondary heat exchanger
Heat exchanger improvements
[cir] Increased heat exchanger surface area
[cir] Heat exchanger surface features
[cir] Heat exchanger baffles and turbulators
Two-stage and modulating combustion
Premix burners
Insulation improvements
[cir] Increased jacket insulations
[cir] Advanced forms of insulation
Off-cycle dampers
[cir] Electromechanical flue damper
[cir] Electromechanical burner inlet damper
Direct venting
Concentric venting
High-static oil burner
Delayed-action oil pump solendoid valve
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially-available products or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture/install/service, do not
result in adverse impacts on consumer utility, product availability,
health, or safety, and do not utilize unique-pathway proprietary
technologies).
In response to the November 2022 Preliminary Analysis, Lennox
commented that DOE has adequately captured most of the technology
options and screened appropriately for gas and oil products. (Lennox,
No. 26 at p. 4) However, Lennox stated that the alternatives for
insulation improvement generally have not been demonstrated in furnace
applications and may not be suitable for use in high-temperature
applications near combustion surfaces. The commenter stated that
insulation used in furnace applications must meet temperature, flame
spread, and smoke requirements per the applicable safety standards, and
that toxicity and off-gassing must also be considered. Lennox argued
that just because an insulation material has better insulating
characteristics does not mean that it is suitable for high-temperature
furnace applications. (Lennox, No. 26 at p. 6)
In response, DOE notes that insulation improvements may be achieved
with thicker layers of existing insulation materials as opposed to
necessarily requiring new insulating materials. Therefore, DOE is not
screening out insulation improvements in this NOPD. Additionally, as
outlined in section IV.B.1 of this document, insulation improvements
are not required to meet any of the efficiency levels analyzed in this
NOPD.
4. Product Classes
In general, when evaluating and establishing energy conservation
standards for a type (or class) of covered product, DOE divides the
covered product into classes by: (1) the type of energy used; (2) the
capacity of the product, or (3) any other performance-related feature
which other products within such type (or class) do not have that
affects energy efficiency and justifies different standard levels,
considering factors such as consumer utility and any other factors the
Secretary deems appropriate. (42 U.S.C. 6295(q))
In this case, DOE divides furnaces into seven product classes based
on fuel type (gas, oil, or electric), whether the furnace is
weatherized or not, and whether the furnace is designed for use only in
mobile homes or not. The current product classes for furnaces are (1)
non-weatherized gas furnaces, (2) mobile home gas furnaces, (3) non-
weatherized oil-fired furnaces, (4) mobile home oil-fired furnaces, (5)
weatherized gas furnaces, (6) weatherized oil-fired furnaces, and (7)
electric furnaces. 10 CFR 430.32(e)(1)(ii). As noted previously, non-
weatherized gas furnaces and mobile home gas furnaces are being
addressed in a separate rulemaking process.\20\ Therefore, the product
classes that DOE considered for this NOPD are NWOFs, MHOFs, WGFs, WOFs,
and EFs. However, for the reasons discussed in sections IV.A.1.a and
IV.A.1.b of this document, potential amended energy conservation
standards were not analyzed for EFs or WOFs.
---------------------------------------------------------------------------
\20\ See Docket No. EERE-2014-BT-STD-0031.
---------------------------------------------------------------------------
In summary, DOE assessed potential amended energy conservation
standards in terms of AFUE for the NWOF, MHOF, and WGF product classes
in this NOPD. Again, for the reasons discussed in section III.A.3 of
this document, DOE did not analyze new or amended standby mode/off mode
power standards for any product classes this time.
B. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of NWOFs, MHOFs, and WGFs.
There are two elements to consider in the engineering analysis: (1) the
selection of efficiency levels to analyze (i.e., the ``efficiency
analysis'') and (2) the determination of product cost at each
efficiency level (i.e., the ``cost analysis''). In determining the
performance of higher-efficiency products, DOE considers technologies
and design option combinations not eliminated by the screening
analysis. For each product class, DOE estimates
[[Page 83440]]
the baseline cost, as well as the incremental cost for the product at
efficiency levels above the baseline efficiency. The output of the
engineering analysis is a set of cost-efficiency ``curves'' that are
used in downstream analyses (i.e., the LCC and PBP analyses and the
NIA).
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to interpolate to define ``gap fill''
levels (i.e., to bridge large gaps between other identified efficiency
levels) and/or to extrapolate to the ``max-tech'' level (particularly
in cases where the ``max-tech'' level exceeds the maximum efficiency
level currently available on the market).
For the current analysis, DOE generally employed an efficiency-
level approach.
a. Baseline Efficiency
For each product class, DOE generally selects a baseline model as a
reference point for each class, and measures anticipated changes to the
product resulting from potential energy conservation standards against
the baseline model. The baseline model in each product class represents
the characteristics of a product typical of that class (e.g., capacity,
physical size). Generally, a baseline model is one that just meets
current energy conservation standards, or, if no standards are in
place, the baseline is typically the most common or least-efficient
unit on the market.
A basic consumer gas furnace comprises a hot surface or direct
spark ignition system, tubular in-shot burners, noncondensing heat
exchanger, blower assembly (including motor and forward-swept fan
blade), mechanical draft combustion fan assembly, and automatic
controls. A basic consumer oil-fired furnace comprises an interrupted
spark ignition system, power burner, noncondensing heat exchanger, and
blower assembly. Details and descriptions of each of these components
can be found in chapter 3 of the November 2022 Preliminary Analysis
TSD.
The identification of baseline units requires establishing the
baseline efficiency level. In cases where there is an existing
standard, DOE typically defines baseline units as units with
efficiencies equal to the current Federal energy conservation
standards. However, for MHOFs, DOE did not identify any currently
available units at the minimum standard level (75-percent AFUE), and,
therefore, DOE analyzed 80-percent AFUE as the baseline level for
MHOFs, as it was the lowest efficiency available on the market. The
baseline AFUE levels analyzed for the subject NWOFs, MHOFs, and WGFs,
as measured by AFUE, along with the typical characteristics of a
baseline unit, are shown in Table IV.2.
Table IV.2--Baseline AFUE Levels Analyzed
------------------------------------------------------------------------
Baseline AFUE
Product class level (%) Typical characteristics
------------------------------------------------------------------------
NWOF........................... 83 --Single-stage burner.
--Electronic ignition.
--Aluminized-steel heat
exchanger.
--Indoor blower fan
including PSC motor *
and forward-curved
blower impeller blade.
MHOF........................... 80 --Single-stage burner.
--Electronic ignition.
--Aluminized-steel heat
exchanger.
--Indoor blower fan
including PSC motor *
and forward-curved
blower impeller blade.
--Direct venting
system.
--Built-in evaporator
coil cabinet.
WGF............................ 81 --Draft inducer.
--Single-stage burner.
--Electronic ignition.
--Aluminized-steel
tubular heat
exchanger.
--Indoor blower fan
including BPM * motor
and forward-curved
blower impeller blade.
------------------------------------------------------------------------
* Residential furnace fans incorporated into NWOFs, MHOFs, and WGFs
manufactured on and after July 3, 2019 must meet fan energy rating
(``FER'') standards specified in 10 CFR 430.32(y). The blower fan
motor (among other factors) can affect FER. Brushless permanent magnet
(``BPM'') motors have become the predominant motor type at the
baseline AFUE levels for WGFs, and permanent split capacitor (``PSC'')
motors, which are less efficient than BPM motors, are common for NWOFs
and MHOFs.
Typically, baseline units are representative of the minimum
technology and lowest-cost product that manufacturers can produce.
Accordingly, in the teardown analysis, DOE examined a variety of
baseline units that incorporate the various baseline design options for
furnace components.
b. Intermediate Efficiency Levels
DOE also analyzed intermediate efficiency levels for NWOFs and
MHOFs. However, for WGFs, DOE has
[[Page 83441]]
not found any models on the market between the baseline (81-percent
AFUE) and max-tech level (95-percent AFUE) and has, therefore, not
analyzed any intermediate efficiency levels for this product class. The
intermediate efficiency levels analyzed for NWOFs are 85-percent and
87-percent AFUE, and the intermediate efficiency levels analyzed for
MHOFs are 83-percent and 85-percent AFUE. To improve efficiency from
the baseline to these intermediate efficiency levels, manufacturers
generally increase the surface area of the heat exchanger, which
increases the heat transfer area and, thus, allows manufacturers to
achieve higher efficiencies. The intermediate efficiency levels
analyzed are representative of common efficiency levels available on
the market. DOE reviewed its own Compliance Certification Database
(``CCD''), as well as AHRI's product certification directories,\21\
California Energy Commission's (``CEC's'') database,\22\ manufacturer
catalogs, and other publicly-available literature to inform its
selection of intermediate efficiency levels.
---------------------------------------------------------------------------
\21\ AHRI's Directory of Certified Product Performance
(Available at: www.ahridirectory.org/Search/SearchHome) (Last
accessed Sept. 1, 2023).
\22\ California Energy Commission's MAEDbs (Available at:
cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx) (Last
accessed Sept. 1, 2023).
---------------------------------------------------------------------------
In response to the November 2022 Preliminary Analysis, NYSERDA
encouraged DOE to consider an additional efficiency level (EL) between
87-percent and 96-percent AFUE for oil-fired furnaces. NYSERDA stated
it anticipates that an AFUE above 90 percent may maximize savings for
consumers. NYSERDA added that based on its review of the preliminary
TSD material, the DOE Compliance Certification Management System, and
AHRI's database, NYSERDA has seen availability of oil furnaces above
DOE's proposed EL 2. (NYSERDA, No. 19 at p. 2)
The Joint Advocates similarly encouraged DOE to evaluate an
intermediate condensing EL for NWOFs. The Joint Advocates commented
that they strongly support DOE's decision to include a max-tech EL at
96-percent AFUE and that DOE should also consider an EL between EL 2
(i.e., 87-percent AFUE) and EL 3 (i.e., 96-percent AFUE). The Joint
Advocates further commented that the CCD shows condensing models
suggesting that an intermediate EL with condensing technology is
feasible for condensing NWOFs. (Joint Advocates, No. 22 at pp. 2-3)
As discussed previously, DOE's choice of intermediate efficiency
levels was informed by publicly-available databases and manufacturer
literature, and the chosen efficiency levels were intended to be
representative of common efficiency levels available on the market. In
contrast, as discussed in section III.D.2 of this document, DOE is
statutorily obligated to analyze the efficiency level that corresponds
to the maximum improvement in energy efficiency or maximum reduction in
energy use that is technologically feasible for each product class. (42
U.S.C. 6295(p)(1)) However, because there are very few condensing-level
NWOFs on the market, efficiency levels between 87-percent and 96-
percent AFUE would not be representative of typical efficiency levels.
Therefore, DOE is not analyzing an EL between 87-percent and 96-percent
AFUE for NWOFs in this NOPD.
c. Maximum Technology (``Max-Tech'') Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product.
DOE conducted an analysis of the market and a technology assessment
and researched current product offerings to determine the max-tech
efficiency levels. The max-tech level identified in each product class
corresponds to the highest-AFUE furnace available on the market, which
DOE tentatively concludes corresponds to the maximum technologically
feasible levels at this time. For NWOFs, DOE identified a design that
achieves a max-tech efficiency level of 96-percent AFUE. For MHOFs, the
maximum efficiency level that DOE identified was 87-percent AFUE. For
WGFs, DOE identified a max-tech efficiency level design that achieves
95-percent AFUE. For WGFs and NWOFs, the max-tech efficiency level is
currently achieved by use of a condensing secondary heat exchanger. A
constant-airflow BPM indoor blower motor was also implemented as the
motor design option for the max-tech efficiency level for NWOFs because
the only NWOF model on the market available at this level includes a
constant-airflow BPM motor, and it is unclear if this level is
achievable without a constant-airflow fan. For MHOFs, the max-tech
efficiency level is currently achieved by use of a heat exchanger with
increased surface area.
Lennox stated that the DOE weatherized gas furnace standard of 81-
percent AFUE is at the maximum practical level that is economically
justified and provides reliable performance. (Lennox, No. 26 at p. 6)
Lennox stated that, as the AFUE of weatherized gas furnace products is
increased, heat exchanger and flue temperatures are reduced, which
increases the risk of condensing operation and corrosion to the heat
exchanger. (Id.) Lennox stated that while condensing weatherized gas
furnaces are feasible, they require secondary heat exchangers that
increase static pressure in the airstream and pressure drop within the
heat exchanger. Further, Lennox stated that the additional resistance
must be overcome with increased electrical power at all operating
conditions, including cooling and ventilation mode. (Id. at pp. 6-7)
Lennox stated that the measures to prevent freezing of condensate in
weatherized gas furnaces and condensate disposal add cost and consume
additional energy. (Id. at p. 7) Lennox commented that these methods
include maintaining the temperature of the condensate system above
freezing by either conditioning the condensate system using electric
heat tape or routing the condensate disposal system through conditioned
space. The commenter stated that the use of heat tape consumes
additional energy. Lennox stated that routing the condensate disposal
system through conditioned space is not technically feasible or
economically viable for a weatherized product that is contained
outdoors. (Id.) Lennox further commented that another method to prevent
freezing in weatherized gas furnaces is to install a pit or trench
condensate drainage system that extends below the frostline and also
neutralizes the acidic condensate created during combustion. Lennox
stated that the frost line in the United States varies greatly by
region from 5'' in Georgia to 80'' in Minnesota. Lennox stated that the
method of installing a pit or trench condensate drainage system that
extends below the frostline and neutralizes the acidic condensate
created during condensing combustion may work in some mild climates at
a reasonable cost but would be expensive to install and maintain in
colder climates. (Id.)
In response, the Department notes the fact that condensing
weatherized gas furnaces currently exist on the market demonstrates
that they are technologically feasible. DOE accounts for costs that may
be associated with the installation of condensing systems, including
additional costs of heat tape
[[Page 83442]]
and/or a condensate pump suitable to meet the need of an unconditioned
space, which is discussed further in section IV.E of this document. The
financial feasibility of higher efficiency levels is discussed further
in section V of this document.
JCI commented it is unaware of any condensing MHOFs commercially
available today. (JCI, No. 25 at p. 2) AHRI also commented that it is
unaware of any commercially-available condensing MHOFs. (AHRI, No. 23
at p. 5) AHRI commented that the feasibility of moving to a condensing
heat exchanger for MHOFs is low. AHRI added that there are challenges
with maintaining airflow options and footprint size to allow for an
easy replacement. (Id.)
In response, DOE agrees that there are currently no condensing
MHOFs on the market, and the Department has not considered an
efficiency level for MHOFs that requires a condensing heat exchanger as
there are no data to indicate that it would be feasible for use in
MHOFs.
d. Summary of Efficiency Levels Analyzed
DOE presents AFUE efficiency levels analyzed along with the
technologies that are expected to be used to increase energy efficiency
above the baseline efficiency level for NWOFs, MHOFs, and WGFs in Table
IV.3, Table IV.4 and Table IV.5, respectively.
Table IV.3--AFUE Efficiency Levels and Technologies Used at Each
Efficiency Level Above Baseline for NWOFs
------------------------------------------------------------------------
Description of
Efficiency level AFUE (%) technologies typically
incorporated
------------------------------------------------------------------------
0--Baseline.................... 83 See Table IV.2 for
baseline features.
1.............................. 85 Baseline EL + Increased
heat exchanger area.
2.............................. 87 EL 1 + Increased heat
exchanger area.
3--Max-tech.................... 96 EL 2 + Addition of
condensing secondary
heat exchanger (and
associated components,
sensors, etc.) +
Constant-airflow BPM
motor.
------------------------------------------------------------------------
Table IV.4--AFUE Efficiency Levels and Technologies Used at Each
Efficiency Level Above Baseline for MHOFs
------------------------------------------------------------------------
Description of
Efficiency level AFUE (%) technologies typically
incorporated
------------------------------------------------------------------------
0--Baseline.................... 80 See Table IV.2 for
baseline features.
1.............................. 83 Baseline EL + Increased
heat exchanger area.
2.............................. 85 EL 1 + Increased heat
exchanger area.
3--Max-tech.................... 87 EL 2 + Increased heat
exchanger area.
------------------------------------------------------------------------
Table IV.5--AFUE Efficiency Levels and Technologies Used at Each
Efficiency Level Above Baseline for WGFs
------------------------------------------------------------------------
Description of
EL AFUE (%) technologies typically
incorporated
------------------------------------------------------------------------
0--Baseline.................... 81 See Table IV.2 for
baseline features.
1--Max-tech.................... 95 Baseline EL + Addition
of condensing
secondary heat
exchanger (and
associated components,
sensors, etc.).
------------------------------------------------------------------------
2. Cost Analysis
The cost analysis portion of the Engineering Analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
product, and the availability and timeliness of purchasing the product
on the market. The cost approaches are summarized as follows:
[ballot] Physical teardowns: Under this approach, DOE physically
dismantles a commercially-available product, component-by-component, to
develop a detailed bill of materials for the product.
[ballot] Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
[ballot] Price surveys: If neither a physical nor catalog teardown
is feasible (e.g., for tightly integrated products such as fluorescent
lamps, which are infeasible to disassemble and for which parts diagrams
are unavailable), cost-prohibitive, or otherwise impractical (e.g.,
large commercial boilers), DOE conducts price surveys using publicly-
available pricing data published on major online retailer websites and/
or by soliciting prices from distributors and other commercial
channels.
In the present case, DOE conducted the analysis using a combination
of physical and catalog teardowns. DOE estimated the manufacturer
production cost (``MPC'') associated with each efficiency level to
characterize the cost-efficiency relationship of improving consumer
furnace performance, in terms of AFUE.
The units selected for the teardown analysis spanned a range of
manufacturers and efficiencies for commercially-available products that
are the subject of this rulemaking. Products were selected that have
characteristics of typical products on the market at a representative
input capacity. WGFs selected for physical teardown generally had input
capacities of approximately 80 thousand British thermal units per hour
(``kBtu/h''), while oil units selected for physical teardown generally
had input capacities of approximately 105 kBtu/h. These capacities were
determined to be a
[[Page 83443]]
representative input capacity for WGFs and for NWOFs and MHOFs,
respectively, based on information gathered as part of the market and
technology assessment (see section IV.A of this document), as well as
discussions with manufacturers. Where needed, catalog teardowns were
also conducted to supplement the physical teardowns. DOE estimated the
manufacturing cost for each furnace selected for teardown by
disassembling the furnace and developing a bill of materials (``BOM'').
The resulting BOM provides the basis for the MPC estimates for products
at various efficiency levels spanning the full range of efficiencies
from the baseline to max-tech.
To account for manufacturers' non-production costs and profit
margin, DOE applies a non-production cost multiplier (the manufacturer
markup) to the MPC. The resulting manufacturer selling price (``MSP'')
is the price at which the manufacturer distributes a unit into
commerce. DOE developed an average manufacturer markup by examining the
annual Securities and Exchange Commission (``SEC'') 10-K reports filed
by publicly-traded manufacturers primarily engaged in heating,
ventilation, and air conditioning (``HVAC'') manufacturing whose
combined product range includes oil and weatherized gas furnaces. The
manufacturer markup estimates are consistent with the manufacturer
markups developed for a final rule for furnace fan energy conservation
standards published in the Federal Register on July 3, 2014. 79 FR
38130. Specifically, DOE estimates the industry average manufacturer
markup to be 1.35 for NWOFs, 1.29 for MHOFs, and 1.27 for WGFs.
a. Teardown Analysis
For the teardown analysis, DOE used a total of 31 teardowns of
consumer furnaces as the basis for calculating industry MPCs. The units
DOE selected for teardown are manufactured in considerable volume, are
commonly available, and have features that DOE believes are
representative of the most common characteristics (i.e., input
capacity, configuration, and heat exchanger type) of each product
class. As discussed previously, most physical teardown units had input
capacities of approximately 80 kBtu/h for WGFs or 105 kBtu/h for NWOFs
and MHOFs, which DOE considers to be representative of those furnace
product classes. To the extent possible, all major efficiency levels
and technologies were captured in the selection of models for the
teardown analysis. WGF and NWOF teardowns were considered separately.
Due to the similarity observed in NWOF and MHOF designs available
in the market, DOE tentatively concluded that the costs associated with
increasing the energy efficiency of MHOFs are equivalent to the costs
for NWOFs. A MHOF teardown was used to examine key differences between
NWOFs and MHOFs and confirmed that the MPCs of MHOFs could be estimated
based on the NWOF teardowns. Therefore, DOE based MPC estimates for
MHOFs at each efficiency level analyzed largely on teardowns of NWOFs
at that efficiency level.
Whenever possible, DOE examined multiple models from a given
manufacturer that capture different design options and used them as
direct points of comparison. The teardown selections also minimized the
incorporation of non-efficiency-related premium features, which
otherwise could inflate the incremental manufacturing cost of achieving
higher efficiency levels.
DOE examined products with a variety of indoor blower motor
technologies and combustion systems (i.e., single-stage, two-stage, or
modulating). DOE also examined products with PSC, constant-torque BPM,
and constant-airflow BPM indoor blower motors. As further discussed in
section IV.B.2.b of this document, cost adders were developed for these
technologies and applied in the downstream analyses to estimate the
manufacturing cost of going from one technology to another with higher
efficiency (e.g., using a constant-airflow BPM instead of a constant-
torque BPM, or two-stage combustion instead of single-stage
combustion).
b. Cost Estimation Method
DOE assigned costs of labor, materials, and overhead to each part,
whether purchased or produced in-house. DOE then aggregated single-part
costs into major assemblies (e.g., packaging, cabinet assembly, heat
exchanger, burner system/gas train, exhaust subassembly, fan system,
controls) and summarized these costs in a spreadsheet BOM. DOE repeated
this same process for every physical and catalog teardown in the
engineering analysis.
Analytical inputs related to manufacturer practices and cost
structure play an important role in estimating the final cost of a
product. DOE used inputs regarding the manufacturing process parameters
(e.g., equipment use, labor rates, tooling depreciation, and cost of
purchased raw materials) to determine the value for each furnace
component. DOE collected information on labor rates, tooling costs, raw
material prices, and other factors to use as inputs into the cost
estimates. DOE determined values for these parameters using internal
expertise and confidential information available to its contractors,
some of which was obtained via confidential interviews with
manufacturers. For purchased parts, DOE estimates the purchase price
based on volume-variable price quotations and detailed discussions with
manufacturers and component suppliers. DOE then summed the values of
the furnace components into assembly costs and, finally, the total MPC
for the entire furnace.
The MPC includes material, labor, and depreciation costs, as well
as the overhead costs associated with the manufacturing facility.
Material costs include both raw materials and purchased-part costs.
Labor costs include fabrication, assembly, and indirect and overhead
(burdened) labor rates. Depreciation costs include production equipment
depreciation, tooling depreciation, and building depreciation. The
overhead costs associated with the manufacturing facility include
indirect process costs, utilities, equipment and building maintenance,
and reworking defective parts/units.
DOE determined the costs of raw materials based on manufacturer
interviews, quotes from suppliers, and secondary research. Past results
are updated periodically and/or inflated to present-day prices using
indices from resources such as MEPS Intl.,\23\ PolymerUpdate,\24\ the
U.S. Geologic Survey (``USGS''),\25\ and the Bureau of Labor Statistics
(``BLS'').\26\ Metal raw material prices, such as stainless steel and
other sheet metals, are estimated on the basis of five-year averages to
smooth out spikes in demand. Other ``raw'' materials such as plastic
resins, insulation materials, etc. are estimated on a current-market
basis. For non-metal raw material prices, DOE used prices based on
current market data (as of December 2022), rather than a 5-year
average, because non-metal raw materials have not experienced the same
[[Page 83444]]
level of price volatility in recent years as metal raw materials.
---------------------------------------------------------------------------
\23\ For more information on MEPS Intl, please visit:
www.meps.co.uk/ (Last accessed Sept. 5, 2023).
\24\ For more information on PolymerUpdate, please visit:
www.polymerupdate.com (Last accessed Sept. 5, 2023).
\25\ For more information on the USGS metal price statistics,
please visit www.usgs.gov/centers/nmic/commodity-statistics-and-information (Last accessed Sept. 5, 2023).
\26\ For more information on the BLS producer price indices,
please visit: www.bls.gov/ppi/ (Last accessed Sept. 5, 2023).
---------------------------------------------------------------------------
DOE characterized parts based on whether manufacturers fabricated
them in-house or purchased them from outside suppliers. For fabricated
parts, DOE estimated the price of intermediate materials (e.g., tube,
sheet metal) and the cost of forming them into finished parts. For
purchased parts, DOE estimated the purchase prices paid to the original
equipment manufacturers (``OEMs'') of these parts, based on discussions
with manufacturers during confidential interviews. Whenever possible,
DOE obtained price quotes directly from the component suppliers used by
furnace manufacturers whose products were examined in the engineering
analysis. DOE determined that the components in Table IV.6 are
generally purchased from outside suppliers.
Table IV.6--Purchased Furnace Components
------------------------------------------------------------------------
Assembly Purchased sub-assemblies
------------------------------------------------------------------------
Burner/Exhaust................... Gas valve.
Spark igniter.
Draft inducer assembly.
Blower........................... Indoor blower fan blade.
Indoor blower fan motor.
Controls......................... Control boards.
Capacitors, transformers, contactors,
switches, etc.
------------------------------------------------------------------------
Certain factory parameters, such as fabrication rates, labor rates,
and wages, also affect the cost of each unit produced. DOE factory
parameter assumptions were based on internal expertise and manufacturer
feedback. Table IV.7 lists the factory parameter assumptions used in
the analysis. For the engineering analysis, these factory parameters,
including production volume, are the same at every efficiency level.
The production volume used at each efficiency level corresponds with
the average production volume, per manufacturer, if 100 percent of all
units manufactured were at that efficiency level. This production
volume was estimated based on historical shipments. These assumptions
are generalized to represent typical production and are not intended to
model a specific factory.
Table IV.7--Factory Parameter Assumptions
----------------------------------------------------------------------------------------------------------------
Parameter Oil furnace estimate WGF estimate
----------------------------------------------------------------------------------------------------------------
Actual Annual Production Volume (units/ 5,000 units/year.................. 500,000 units/year.
year).
Purchased Parts Volume.................. 5,000 units/year.................. 100,000 units/year.
Workdays Per Year (days)................ 250............................... 250.
Assembly Shifts Per Day (shifts)........ 1................................. 2.
Fabrication Shifts Per Day (shifts)..... 2................................. 2.
Fabrication Labor Wages ($/h)........... 16................................ 16.
Assembly Labor Wages ($/h).............. 16................................ 16.
Length of Shift (hrs)................... 8................................. 8.
Average Equipment Installation Cost (% 10%............................... 10%.
of purchase price).
Fringe Benefits Ratio................... 50%............................... 50%.
Indirect to Direct Labor Ratio.......... 33%............................... 33%.
Average Scrap Recovery Value............ 30%............................... 30%.
Worker Downtime......................... 10%............................... 10%.
Burdened Assembly Labor Wage ($/h)...... 24................................ 24.
Burdened Fabrication Labor Wage ($/h)... 24................................ 24.
Supervisor Span (workers/supervisor).... 25/1.............................. 25/1.
Supervisor Wage Premium (over 30%............................... 30%.
fabrication and assembly wage).
----------------------------------------------------------------------------------------------------------------
Indoor Blower Motor Costs
As discussed in section IV.B.1.a of this document, the baseline
design for WGFs includes a BPM motor. DOE research suggests that the
predominant BPM indoor blower motors sold on the market today are
either a constant-torque (``CT-BPM'') or a constant-airflow (``CA-
BPM'') design. Both types of motors rely on electronic variable-speed
motor systems that are typically mounted in an external chassis to the
back of the motor. CA-BPM motors utilize feedback control to adjust
torque based on ESP in order to maintain a desired airflow. This
differentiates them from CT-BPM motors, which will maintain torque and
likely decrease airflow output in environments with high ESPs. CT-BPMs
are capable of achieving airflows similar to CA-BPMs but are generally
less expensive. Therefore, DOE considered the baseline design to
include a CT-BPM motor for the WGF product class and determined the
incremental cost of a CA-BPM motor.
DOE's review of the market showed that PSC motors are still being
used in some NWOFs and MHOFs, so the final MPC results are presented
based on a PSC motor at the baseline through 87-percent AFUE. To
account for the variety of motor technologies available on the market,
DOE determined the incremental cost associated with use of various
types of more-efficient BPM fan motors as compared to baseline PSC
motors for NWOFs and MHOFs. Additionally, for NWOFs, a constant-airflow
BPM indoor blower motor was implemented as the motor design option for
the max-tech efficiency level because the only NWOF model on the market
available at this level includes a constant-airflow BPM motor, and it
is unclear if this level is achievable without a constant-airflow fan.
For the NWOF efficiency levels below max-tech and for all MHOF
efficiency levels, DOE calculated the additional cost to switch from a
PSC blower motor to either a constant-torque or a constant-airflow BPM
motor. As discussed in Chapter 8 of the November 2022 Preliminary
Analysis TSD, these costs are applied in the LCC and PBP analyses to
determine the MPC of a furnace with each motor technology in order to
better represent typical costs to consumers for NWOFs and MHOFs.
Constant-airflow BPM blower motors are sometimes used as a utility-
enhancing feature on units below the max-tech efficiency level. The
adders are outlined in Table IV.8.
[[Page 83445]]
Table IV.8--Cost Adders for BPM Blower Motors
----------------------------------------------------------------------------------------------------------------
Incremental Incremental
Input capacity cost increase cost increase
Product class (kBtu/h) for BPM-CT for BPM-CA
(2022$) (2022$)
----------------------------------------------------------------------------------------------------------------
NWOF, MHOF...................................................... 105 $30.65 $80.48
WGF............................................................. 80 37.94 59.92
----------------------------------------------------------------------------------------------------------------
Multistage Furnaces
The market for WGFs contains a significant number of two-stage
furnaces that are rated at the same efficiency as single-stage
furnaces. DOE believes consumers sometimes choose to purchase two-stage
products for the additional thermal comfort offered by furnaces with
multiple stages of heating output. DOE determined that oil units with
multi-staging were rare and, thus, not representative of the market, so
adders were not developed for the NWOF and MHOF product classes. Where
applicable, the additional cost to change to a two-stage furnace
includes the added cost of a two-stage gas valve, a two-speed inducer
assembly, an additional pressure switch, and additional controls and
wiring. The additional cost to change to a modulating furnace includes
the added cost of a modulating gas valve, an inducer assembly, an
upgraded pressure switch, and additional controls and wiring. The
incremental costs to implement multi-staging in WGFs are outlined in
Table IV.9.
Table IV.9--Multi-Staging Incremental Cost Increase
------------------------------------------------------------------------
Incremental cost
increase for
Adder multi-staging
(2022$)
------------------------------------------------------------------------
Two-Stage............................................ $21.07
Modulating........................................... 75.36
------------------------------------------------------------------------
Low-NOX and Ultralow-NOX Furnaces
Some furnaces are marketed as ``low-NOX,'' which
indicates that their NOX emissions are less than 40
nanograms of NOX per joule of useful heat energy (``ng/J'').
Certain local jurisdictions require natural gas furnaces to comply with
NOX emissions restrictions as low as 14 ng/J,\27\ which is
referred to as ``ultralow-NOX.'' A common method of reducing
furnace NOX emissions is to slightly delay the natural gas
combustion process, which in turn produces a cooler flame and results
in suppressed formation of NOX.\28\ DOE has observed during
its teardown analysis that to achieve low-NOX operation,
manufacturers implement low-NOX baffles. For ultralow-
NOX operation, DOE used NWGF teardowns to approximate the
cost to implement this technology option in WGFs, as DOE understands
that the methodology would be the same for both product classes.
Through these teardowns of NWGFs, DOE has observed that in order to
achieve ultralow-NOX operation, the in-shot burners
typically used in residential furnaces were replaced with a mesh premix
burner. In addition, the model used a variable-speed BPM inducer fan
motor. DOE identified an ultralow-NOX WGF on the market and
compared the burner construction for the torn-down NWGF and the
ultralow-NOX WGF. DOE found that the approach used for
achieving ultralow-NOX in WGFs is similar to that used in
NWGFs. DOE also determined that oil units with ultralow-NOX
operation were rare and, thus, not representative of the market, so
adders were not developed for the NWOF and MHOF product classes.
---------------------------------------------------------------------------
\27\ Rule 1111 of the South Coast Air Quality Management
District (``SCAQMD'') of southern California currently requires that
all NWGF and MHGF not exceed a 14 ng/J restriction on NOX
emissions. For more information on Rule 1111, see www.aqmd.gov/docs/default-source/rule-book/reg-xi/rule-1111.pdf?sfvrsn=4 (Last
accessed Sept. 5, 2023).
\28\ U.S. Environmental Protection Agency. Natural Gas
Combustion (Available at: www3.epa.gov/ttnchie1/ap42/ch01/final/c01s04.pdf) (Last accessed June 28, 2023).
---------------------------------------------------------------------------
Using raw material price data, teardown data from NWGFs, and
manufacturing expertise DOE estimated the manufacturing cost difference
between standard NOX burners and low-NOX and
ultralow-NOX burners. For low-NOX, MPC cost
values were developed for the implementation of low-NOX
baffles in WGFs at the representative input capacity of 80 kBtu/h. For
ultralow-NOX, MPC values were developed for the
implementation of a mesh premix burner and variable-speed BPM inducer
fan (along with other related components necessary). The resulting MPC
estimates to achieve low-NOX and ultralow-NOX
operation are shown in Table IV.10.
In the LCC and PBP analysis (see section IV.E of this document),
DOE estimated the fractions of furnaces that are installed in
jurisdictions that require low-NOX or ultralow-
NOX compliance and applied these cost adders to those
fractions of furnace installations accordingly. The application of
these adders is discussed in more detail in Chapter 8 of the November
2022 Preliminary Analysis TSD.
Table IV.10--Additional MPCs for Low-NOX and Ultralow-NOX WGFs
------------------------------------------------------------------------
Adder Value (2022$)
------------------------------------------------------------------------
Low-NOX................................................. $3.10
Ultralow-NOX............................................ 113.68
------------------------------------------------------------------------
Shipping Costs
Freight is not a manufacturing cost, but because it is a
substantial cost incurred by the manufacturer, DOE accounts for
shipping costs separately from other costs. DOE calculated shipping
costs based on a typical 53-foot straight-frame trailer with a storage
volume of 4,240 cubic feet.
DOE first calculated the cost per cubic foot of space on a trailer
based on a cost of $3,643 per shipping load and the standard dimensions
of a 53-foot trailer. This cost was determined based on a combination
of full truck load (``FTL'') freight quotations, manufacturer feedback,
and BLS producer price indices for the ``fuels and related products and
power'' grouping.\29\ Then, DOE examined the average sizes of products
in each product class at each efficiency and capacity combination
analyzed. DOE estimated the shipping costs by multiplying the product
volume by the cost per cubic foot of space on the trailer. Furnace
dimensions typically do not change as a result of increases in
efficiency, and accordingly, DOE's shipping costs show no change across
efficiency levels. In determining volumetric shipping costs, DOE also
used manufacturer feedback regarding product mix on each trailer,
packing efficiency, and methods and equipment used to load the trailers
to revise the shipping costs. Table IV.11 shows the
[[Page 83446]]
shipping costs for the products analyzed in this rulemaking.
---------------------------------------------------------------------------
\29\ U.S. Department of Labor, Bureau of Labor Statistics,
Producer Price Indices (Available at: data.bls.gov/timeseries/WPU057303?data_tool=XGtable) (Last accessed Feb. 17, 2022).
Table IV.11--Shipping Costs Per Unit
------------------------------------------------------------------------
Representative Per-unit
Product class capacity (kBtu/ shipping cost
h) (2022$)
------------------------------------------------------------------------
WGF................................... 80 55.69
NWOF.................................. 105 19.92
MHOF.................................. 105 19.92
------------------------------------------------------------------------
3. Cost-Efficiency Results
Using the MPCs for individual teardowns and adders described in
section IV.B.2.b of this document, DOE develops aggregated MPCs for
each product class. The final results of the AFUE engineering analysis
are the MPCs for WGFs, NWOFs, and MHOFs at each efficiency level. The
cost-efficiency results are shown in tabular form in Table IV.12
through Table IV.14 as efficiency versus MPC and MSP. These results
include the furnace fan and combustion system staging incorporated into
most furnace designs.
Table IV.12--Cost-Efficiency Data for WGFs With a Constant-Torque BPM
Indoor Blower Motor and a Single-Stage Burner
------------------------------------------------------------------------
AFUE MPC (2022$) MSP (2022$)
------------------------------------------------------------------------
81............................................ $1,412.32 $1,793.65
95............................................ 1,505.40 1,911.85
------------------------------------------------------------------------
Table IV.13--Cost-Efficiency Data for NWOFs With a PSC Indoor Blower
Motor and a Single-Stage Burner
------------------------------------------------------------------------
AFUE MPC (2022$) MSP (2022$)
------------------------------------------------------------------------
83............................................ $700.73 $945.98
85............................................ 730.94 986.77
87............................................ 761.16 1,027.57
96............................................ 1,334.85 1,802.05
------------------------------------------------------------------------
Table IV.14--Cost-Efficiency Data for MHOFs With a PSC Indoor Blower
Motor and a Single-Stage Burner
------------------------------------------------------------------------
AFUE MPC (2022$) MSP (2022$)
------------------------------------------------------------------------
80............................................ $664.47 $857.16
83............................................ 709.79 915.63
85............................................ 740.01 954.61
87............................................ 770.23 993.59
------------------------------------------------------------------------
C. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analysis. At each step in the distribution channel, companies
mark up the price of the product to cover business costs and profit
margin. Before developing markups, DOE defines key market participants
and identifies distribution channels.
For the subject consumer furnaces, the main parties in the
distribution chains are: (1) manufacturers; (2) wholesalers or
distributors; (3) retailers; (4) mechanical contractors; (5) builders;
(6) manufactured home manufacturers, and (7) manufactured home dealers/
retailers. For this NOPD, DOE maintained the same approach as in the
preliminary analysis. DOE characterized two distribution channel market
segments to describe how NWOFs, MHOFs, and WGFs pass from the
manufacturer to residential and commercial consumers: \30\ (1)
replacements and new owners \31\ and (2) new construction.
---------------------------------------------------------------------------
\30\ DOE estimates that five percent of WGFs and three percent
of NWOFs are installed in commercial buildings.
\31\ New owners are new furnace installations in buildings that
did not previously have a NWOF, MHOF, or WGF, or existing owners
that are installing an additional consumer furnace. These primarily
consist of households that add or switch to these furnaces during a
major remodel.
---------------------------------------------------------------------------
In replacement and new owner market, the primary distribution
channel for NWOFs, MHOFs, and WGFs is characterized as follow:
Manufacturer [rarr] Wholesaler [rarr] Mechanical Contractor [rarr]
Consumer
DOE estimates that the above distribution channel applies to a
majority of the shipment of the subject consumer furnaces.\32\ However,
the retail distribution channel (including internet sales) has grown
significantly in the last five years (previously it was negligible),
and some consumers purchase the appliance directly and then have
contractors install it. Accordingly, DOE considered the following
additional distribution channels: \33\
---------------------------------------------------------------------------
\32\ In the residential sector, DOE estimates that this
distribution channel is applicable to 90 percent of the shipments
for NWOFs and MHOFs, and 80 percent for WGFs; in commercial sector,
it is applied to 75 percent of NWOF and 70 percent of WGF
distributions.
\33\ In the residential sector, DOE estimates that these two
distribution channels combined are applicable to 5 percent of the
shipments for NWOFs and MHOFs, and 15 percent for WGFs (in mobile
home applications, 10 percent of the WGFs distributed to mobile
homes is assumed to go through these channels); in the commercial
sector, they are applied to 10 percent of NWOF and 15 percent of WGF
distributions.
Manufacturer [rarr] Retailer [rarr] Consumer
Manufacturer [rarr] Retailer [rarr] Mechanical Contractor [rarr]
Consumer
For mobile home applications, there is another distribution channel
considered on top of the aforementioned, where the MHOF or WGF is
purchased via a mobile home specialty retailer or dealer: \34\
---------------------------------------------------------------------------
\34\ DOE estimates that 5 percent of MHOFs and 10 percent of
WGFs that go to mobile homes are distributed through this channel.
Manufacturer [rarr] Mobile Home Specialty Retailer/Dealer [rarr]
---------------------------------------------------------------------------
Consumer
In the new construction market, DOE identified three primary
distribution channels that involve builders, or manufactured home
builders when considering mobile home applications:
Manufacturer [rarr] Wholesaler [rarr] Mechanical Contractor [rarr]
Builder [rarr] Consumer
Manufacturer [rarr] Wholesaler [rarr] Builder [rarr] Consumer
Manufacturer [rarr] Mobile Home Manufacturer [rarr] Mobile Home Dealer
[rarr] Consumer
For both the replacements and new owners and the new construction
markets, DOE additionally considered the national accounts or direct-
from-manufacturer distribution channel, where the manufacturer through
a wholesaler sells directly to consumers.\35\
---------------------------------------------------------------------------
\35\ The national accounts channel where the buyer is the same
as the consumer is mostly applicable to NWOFs and WGFs installed in
small to mid-size commercial buildings, where on-site contractors
purchase equipment directly from wholesalers at lower prices due to
the large volume of equipment purchased, and perform the
installation themselves. DOE's analysis assumes that approximately 5
and 15 percent of NWOFs and WGFs installed in the residential and
commercial sector, respectively, use national accounts distribution
channel for replacements. For new construction, DOE assumes 10
percent of the subject furnaces installed in residential sector and
20 percent installed in commercial are distributed through national
accounts.
[[Page 83447]]
---------------------------------------------------------------------------
Manufacturer [rarr] Wholesaler (National Account) [rarr] Buyer [rarr]
Consumer
DOE developed baseline and incremental markups for each participant
in the distribution chain to ultimately determine the consumer purchase
cost. Baseline markups are applied to the price of products with
baseline efficiency, while incremental markups are applied to the
difference in price between baseline and higher-efficiency models (the
incremental cost increase). The incremental markup is typically less
than the baseline markup and is designed to maintain similar per-unit
operating profit before and after new or amended standards.\36\
---------------------------------------------------------------------------
\36\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive, it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------
Lennox stated that the application of lower incremental markups for
increased consumer furnace standard levels considered in the TSD should
be reviewed. Lennox stated that a significantly discounted incremental
markup for high EL levels from baseline markup is not logical or
aligned with business practices. (Lennox, No. 26 at p. 8) Lennox added
that the assumption of reduced incremental markups for higher
efficiency standards is contrary to normal industry practice and the
expectations of its shareholders. (Lennox, No. 26 at p. 8)
In response, DOE's incremental markup approach assumes that an
increase in profitability, which is implied by keeping a fixed markup
when the product price goes up, is unlikely to be viable over time in
reasonably competitive markets. DOE recognizes that actors in the
distribution chains are likely to seek to maintain the same markup on
appliances in response to changes in manufacturer sales prices after an
amendment to energy conservation standards. However, DOE believes that
retail pricing is likely to adjust over time as those actors are forced
to readjust their markups to reach a medium-term equilibrium in which
per-unit profit is relatively unchanged before and after standards are
implemented.
DOE acknowledges that markup practices in response to amended
standards are complex and vary with business conditions. However, DOE's
analysis necessarily only considers changes in appliance offerings that
occur in response to amended standards. DOE continues to maintain that
its assumption that standards do not facilitate a sustainable increase
in profitability is reasonable. Chapter 6 of the November 2022
Preliminary Analysis TSD provides details on DOE's development of
markups for oil and weatherized gas furnaces.\37\
---------------------------------------------------------------------------
\37\ In this NOPD, DOE is referencing the November 2022
Preliminary TSD for general methodology; note that some inputs have
been updated for this NOPD.
---------------------------------------------------------------------------
D. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of oil and weatherized gas furnaces at different
efficiencies in representative U.S. residential buildings, commercial
buildings, and residential mobile homes, and to assess the energy
savings potential of increased oil and weatherized gas furnace
efficiency. The energy use analysis estimates the range of energy use
of oil and weatherized gas furnaces in the field (i.e., as they are
actually used by consumers). The energy use analysis provides the basis
for other analyses DOE performed, particularly assessments of the
potential energy savings and the savings in consumer operating costs
that could result from adoption of amended or new standards.
DOE estimated the annual energy consumption of oil and weatherized
gas consumer furnaces at specific energy efficiency levels across a
range of climate zones, building characteristics, and space heating
needs. The annual energy consumption includes the natural gas, liquid
petroleum gas (``LPG''), oil, and electricity, as applicable, used by
the furnace.
To determine the field energy use of the subject furnaces, DOE
developed a building sample based on the Energy Information
Administration's (``EIA'') 2015 Residential Energy Consumption Survey
(``RECS 2015'') \38\ and 2012 Commercial Building Energy Consumption
Survey (``CBECS 2012'').39 40 DOE used RECS 2015-reported or
CBECS 2012-reported heating energy consumption (based on the existing
heating system) to calculate the heating load of each household or
building. The heating load represents the amount of heating required to
keep a housing unit or building comfortable throughout an average year.
DOE assigned the energy efficiency of existing systems based on the
design of the distribution systems, a historical distribution of energy
efficiencies for NWOFs, MHOFs, and WGFs, and data about the age of the
existing furnace. The estimation of heating loads also required
calculating the electricity consumption of the blower, because heat
from the operation of the blower contributes to space heating. In
addition, DOE made adjustments based on historical weather data,
projections of building shell efficiency, and building square footage,
as well as for homes that had secondary heating equipment that used the
same fuel as the furnace. To complete the analysis, DOE calculated the
anticipated energy consumption of alternative (more energy-efficient)
products if they were to replace existing systems in each housing unit
or commercial building.
---------------------------------------------------------------------------
\38\ Energy Information Administration (EIA), 2015 Residential
Energy Consumption Survey (RECS). (Available at: www.eia.gov/consumption/residential/) (Last accessed August 1, 2023).
\39\ Energy Information Administration (EIA), 2012 Commercial
Buildings Energy Consumption Survey (CBECS). (Available at:
www.eia.gov/consumption/commercial/) (Last accessed August 1, 2023).
\40\ At the time DOE performed the analyses underlying this
proposed determination, the RECS 2015 and CBECS 2012 were the latest
available full data releases.
---------------------------------------------------------------------------
DOE also included the electricity use of auxiliary equipment, such
as condensate pumps and heat tape, which are sometimes installed with
higher-efficiency products. The electricity consumption of the
auxiliary equipment (``ElecUseAux'') is added to the total
electricity consumption.
Chapter 7 of the November 2022 Preliminary Analysis TSD provides
details on DOE's energy use analysis for oil and weatherized gas
furnaces.
AHRI commented that standard heat tape has an average energy
consumption of 9 W/ft, adding that this additional load would increase
energy use and is not accounted for in DOE's energy use analysis for
these products. AHRI stated that there are additional challenges
surrounding prevention of freezing condensate for WGF units, and
although AHRI suggested that electric strip heating could be used to
overcome this problem, such solution would add electrical losses.
(AHRI, No. 23 at p. 5)
In response, DOE accounted for heat tape use in cases when a WGF is
installed in an outdoor environment that could face freezing
conditions. DOE assumed that such installations would occur in
locations facing freezing conditions based on the outdoor heating
[[Page 83448]]
design temperature (or the 99th percentile). For the WGF sample, which
is largely in warmer parts of the country, DOE estimated that about 5
percent of those installations would require heat tape, and DOE assumed
that a larger fraction (around 50 percent) would deal with freeze
protection through other methods, such as running the condensate lines
through the ground or inside the WGF unit and into the building. For
the energy use analysis, DOE used on average 45 watts (or 9 W/ft times
5 feet) for the energy consumption of installations requiring heat
tape. For another 5 percent of installations, DOE accounted for the use
of a condensate pump with an average energy consumption of 60 watts.
DOE notes that any additional installation costs would not change DOE's
tentative decision not to amend standards for the subject products.
E. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
oil and weatherized gas furnaces. The effect of new or amended energy
conservation standards on individual consumers usually involves a
reduction in operating cost and an increase in purchase cost. DOE used
the following two metrics to measure consumer impacts:
[ballot] Life-Cycle Cost (LCC) is the total consumer expense of an
appliance or product over the life of that product, consisting of total
installed cost (manufacturer selling price, distribution chain markups,
sales tax, and installation costs) plus operating costs (expenses for
energy use, maintenance, and repair). To compute the operating costs,
DOE discounts future operating costs to the time of purchase and sums
them over the lifetime of the product.
[ballot] Payback Period (PBP) is the estimated amount of time (in
years) it takes consumers to recover the increased purchase cost
(including installation) of a more-efficient product through lower
operating costs. DOE calculates the PBP by dividing the change in
purchase cost at higher efficiency levels by the change in annual
operating cost for the year that amended or new standards are assumed
to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of oil and weatherized gas furnaces
in the absence of new or amended energy conservation standards. In
contrast, the PBP for a given efficiency level is measured relative to
the baseline product.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units and, where appropriate, commercial buildings. As stated
previously, DOE developed household and commercial building samples
from RECS 2015 and CBECS 2012. For each sample household or commercial
building, DOE determined the energy consumption for the oil and
weatherized gas furnaces and the appropriate energy price. By
developing a representative sample of households and commercial
buildings, the analysis captured the variability in energy consumption
and energy prices associated with the use of oil and weatherized gas
furnaces.
Inputs to the LCC calculation include the installed cost to the
consumer, operating expenses, the lifetime of the product, and the
discount rate that applies to projected expenses. Inputs to the
calculation of total installed cost include the cost of the product--
which includes MPCs, manufacturer markups, retailer and distributor
markups, and sales taxes (where appropriate)--and installation costs.
Inputs to the calculation of operating expenses include annual energy
consumption, energy prices and price projections, repair and
maintenance costs, product lifetimes, and discount rates. Inputs to the
payback period calculation include the installed cost to the consumer
and first year operating expenses. DOE created distributions of values
for installation cost, repair and maintenance, product lifetime, and
discount rates with probabilities attached to each value, to account
for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on
a Monte Carlo simulation to incorporate uncertainty and variability
into the analysis. The Monte Carlo simulations randomly sample input
values from the probability distributions and oil, electric, and
weatherized gas furnace user samples. For this determination, the Monte
Carlo approach is implemented in MS Excel together with the Crystal
BallTM add-on.\41\ The model calculated the LCC and PBP for
products at each efficiency level for 10,000 furnace installations in
housing units or commercial buildings per simulation run. The
analytical results include a distribution of 10,000 data points showing
the range of LCC savings for a given efficiency level relative to the
no-new-standards case efficiency distribution. In performing an
iteration of the Monte Carlo simulation for a given consumer, product
efficiency is chosen based on its probability. If the chosen product
efficiency is greater than or equal to the efficiency of the standard
level under consideration, the LCC and PBP calculation reveals that a
consumer is not impacted by the standard level. By accounting for
consumers who are projected to purchase more-efficient furnaces than
the baseline furnace in the simulation, DOE avoids overstating the
potential benefits from increasing product efficiency.
---------------------------------------------------------------------------
\41\ Crystal BallTM is a commercially-available
software tool to facilitate the creation of these types of models by
generating probability distributions and summarizing results within
Excel (Available at: www.oracle.com/middleware/technologies/crystalball.html) (Last accessed August1, 2023).
---------------------------------------------------------------------------
DOE calculated the LCC and PBP for all consumers of oil and
weatherized gas furnaces as if each were to purchase a new product in
the expected first year of required compliance with new or amended
standards. Any amended standards would apply to oil and weatherized gas
furnaces manufactured five years after the date on which any new or
amended standard is published in the Federal Register. (42 U.S.C.
6295(m)(4)(A)(ii)) For purposes of its analysis, DOE used 2030 as the
first year of compliance with any amended standards for oil and
weatherized gas furnaces.
Table IV.15 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and how
all inputs to the LCC and PBP analyses are applied, are contained in
chapter 8 of the November 2022 Preliminary Analysis TSD and its
appendices.
[[Page 83449]]
Table IV.15--Summary of Inputs and Methods for the LCC and PBP Analysis
*
------------------------------------------------------------------------
Input Source/method
------------------------------------------------------------------------
Product Cost...................... Derived by multiplying MPCs by
manufacturer and distribution chain
markups and sales tax, as
appropriate. Used historical data
to derive a price-scaling index to
project product costs.
Installation Costs................ Baseline installation cost
determined with data from RSMeans
2023, manufacturer literature, and
expert consultant. DOE assumed
increased installation costs for
condensing furnaces.
Annual Energy Use................. The annual energy consumption per
unit at each efficiency level (see
section IV.D of this document).
Variability: Based on RECS 2015 and
CBECS 2012.
Energy Prices..................... Natural Gas: Based on EIA's Natural
Gas Navigator data for 2022 and
RECS 2015 and CBECS 2012 billing
data.
Propane and Fuel Oil: Based on EIA's
State Energy Data System (``SEDS'')
for 2021.
Electricity: Based on EIA's Form 861
data for 2022 and RECS 2015 and
CBECS 2012 billing data.
Variability: State energy prices
determined for residential and
commercial applications.
Marginal prices used for natural
gas, propane, and electricity
prices.
Energy Price Trends............... Residential and commercial prices
were escalated by using EIA's 2023
Annual Energy Outlook (AEO 2023)
forecasts to estimate future energy
prices. Escalation was performed at
the Census Division level.
Repair and Maintenance Costs...... Baseline installation cost
determined with data from RSMeans
2023, manufacturer literature, and
expert consultant. DOE assumed
increased repair and maintenance
costs for condensing furnaces.
Product Lifetime.................. Based on shipments data, multi-year
RECS, American Housing Survey,
American Home Comfort Survey data.
Average: 20.2-22.5 years
Discount Rates.................... For residential end users, approach
involves identifying all possible
debt or asset classes that might be
used to purchase the considered
appliances or might be affected
indirectly. Primary data source was
the Federal Reserve Board's Survey
of Consumer Finances. For
commercial end users, DOE
calculates commercial discount
rates as the weighted average cost
of capital using various financial
data.
Compliance Date................... 2030.
------------------------------------------------------------------------
* Note: References for the data sources mentioned in this table are
provided in the sections following the table or in chapter 8 of the
November 2022 Preliminary Analysis TSD.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
DOE estimated product prices in the year of compliance by using a
least-squares power-law fit on the inflation-adjusted, unified price
index (historical Producer Price Index (``PPI'') data for warm-air
furnaces from the Bureau of Labor Statistics (``BLS'') spanning the
time period 1990-2018 versus cumulative shipments.\42\
---------------------------------------------------------------------------
\42\ U.S. Department of Labor, Bureau of Labor Statistics,
Produce Price Indices Series ID PCU333415333415C (Available at:
www.bls.gov/ppi/) (Last accessed August 1, 2023).
---------------------------------------------------------------------------
In order to improve real-world representativeness, NYSERDA
recommended that DOE consider using piecewise power-law curves for
different time intervals to estimate the learning rate parameter in the
LCC analysis. NYSERDA provided data to explain that prices decreased
until 2017 and then started to increase. NYSERDA added that one
possible explanation for this is that growing economies are consuming
more raw materials that go into manufacturing furnaces, and such an
increase in global aggregate demand for raw materials exerts upward
pressure on product prices. The commenter explained that piecewise
power-law curves are a common approach in cases where there is a
reversal in directionality of trends and cited an example journal
article. NYSERDA commented that using one power-law curve before 2017
and another after would more accurately capture the reduction in
furnace prices in the future. (NYSERDA, No. 19 at pp. 3-4)
DOE reviewed NYSERDA's suggestion for an alternative price learning
approach; however, insufficient data are available to implement the
approach for the products considered in this rulemaking. In addition,
the recommendation to segment the curve before and after 2017 is
similar to the alternative price scenarios that DOE typically explores
when proposing or finalizing amended standards, but in this case, DOE
has tentatively determined not to amend standards. For these reasons,
DOE has not changed its methodology for this NOPD.
2. Installation Cost
The installation cost is the expense to the consumer of installing
the furnace, in addition to the cost of the furnace itself.
Installation cost includes all labor, overhead, and any miscellaneous
materials and parts needed that are associated with the replacement of
an existing furnace or the installation of a furnace in a new home, as
well as delivery of the new furnace, removal of the existing furnace,
and any applicable permit fees. Higher-efficiency furnaces may require
a consumer to incur additional installation costs. DOE used data from
RSMeans,\43\ manufacturer literature, and expert consultants to
estimate the installation cost, including labor costs, for oil and
weatherized gas furnaces. DOE's analysis of installation costs
accounted for regional differences in labor costs by aggregating city-
level labor rates from RSMeans into the 50 distinct State plus
Washington DC to match RECS 2015 and CBECS 2012 data. The installation
cost methodology accounts for all potential installation cases,
including when a noncondensing furnace is replaced with a condensing
furnace, with particular attention to venting issues in replacement
applications (see descriptions which follow). The installation cost
also depends on the furnace installation location, which DOE determined
using information from RECS 2015 and CBECS 2012.
---------------------------------------------------------------------------
\43\ RSMeans Company Inc., RSMeans Cost Data. Kingston, MA
(2023) (Available at: www.rsmeans.com/products/books/2023-cost-data-books) (Last accessed August 1, 2023).
---------------------------------------------------------------------------
For NWOF replacement installations, DOE included a number of
additional costs (``adders'') for a fraction of the sample households
that have particular features. For noncondensing furnaces, these
additional costs included updating flue vent connectors, vent resizing,
and chimney relining. For condensing furnaces, these additional costs
included adding a new flue vent
[[Page 83450]]
(PVC), adding combustion air vent for direct vent installations (PVC),
adding concealing vent pipes for indoor installations, addressing an
orphaned water heater (by updating flue vent connectors, vent resizing,
or chimney relining), and removing condensate, all based on
manufacturer installation manuals and expert consultant input. Freeze
protection (heat tape) is accounted for in the cost of condensate
removal for a fraction of NWOFs installed in unconditioned attics.
For WGF installations, DOE included additional cost adders for
condensing WGFs to dispose of the condensate created and to prevent
freezing of the condensate, as the entire product is outdoors based on
manufacturer installation manuals, field study reports, and expert
consultant input. DOE also accounted for a fraction of installations in
colder climates that could require freeze protection (heat tape), a
condensate line being buried below the frost line, or a condensate
pump.
AHRI commented that for WGFs installed in rooftop applications,
heated drain lines are needed for winter use to avoid building water
damage. AHRI added that condensate lines running within the unit are
difficult to access and could have the potential to trap condensate.
(AHRI, No. 23 at p. 5) JCI stated that while DOE considered the use of
heat tape, the practical application/maintenance of heat tape internal
to installed systems poses an undue installation and maintenance
burden. (JCI, No. 25 at p. 2)
As explained in section IV.D of this document, DOE accounted for
heat tape use in cases when a WGF is installed in an outdoor
environment that could face freezing conditions. DOE assumed that the
installation location would be facing freezing conditions based on the
outdoor heating design temperature (or the 99th percentile). For the
WGF sample, which is largely in warmer parts of the country, DOE
estimated that about five percent would require heat tape. For another
five percent of installations, DOE accounted for the use of a
condensate pump. Furthermore, DOE accounts for other condensate costs
such as adding condensate piping, running condensate lines through the
ground or inside the WGF unit and into the building, using condensate
neutralizer, adding an electrical outlet for heat tape or condensate
pump, adding a drain pan, and adding a non-corrosive drain. On average,
the installation cost adder across these scenarios is $110.
For further information on the derivation of installation costs,
see chapter 7 of the November 2022 Preliminary Analysis TSD.
3. Annual Energy Consumption
For each sampled household or commercial building, DOE determined
the energy consumption for oil and weatherized gas furnace at different
efficiency levels using the approach described previously in section
IV.D of this document.
4. Energy Prices
DOE derived 2022 annual residential and commercial electricity
prices by state from EIA Form 861M data.\44\ DOE obtained 2022 annual
residential and commercial natural gas prices by state from EIA's
Natural Gas Navigator.\45\ DOE collected 2021 average LPG and fuel oil
prices by state from EIA's 2021 State Energy Consumption, Price, and
Expenditures Estimates (``SEDS'') and scaled to 2022 prices using
AEO2023 data.\46\ To determine monthly prices for use in the analysis,
DOE developed monthly energy price factors for each fuel based on long-
term monthly price data. Monthly electricity and natural gas prices
were adjusted using seasonal marginal price factors to determine
monthly marginal electricity and natural gas prices. These marginal
energy prices were used to determine the cost to the consumer of the
change in energy consumed. Because marginal price data is only
available for residential electricity and natural gas, DOE only
developed marginal monthly prices for these fuels. For LPG and fuel
oil, DOE used average monthly prices.
---------------------------------------------------------------------------
\44\ U.S. Department of Energy-Energy Information
Administration, Form EIA-861M (formerly EIA-826) detailed data
(2022) (Available at: www.eia.gov/electricity/data/eia861m/) (Last
accessed August 1, 2023).
\45\ U.S. Department of Energy-Energy Information
Administration, Natural Gas Navigator (2022) (Available at:
www.eia.gov/naturalgas/data.php) (Last accessed August 1, 2023).
\46\ U.S. Department of Energy-Energy Information
Administration, 2021 State Energy Data System (SEDS) (2021)
(Available at: www.eia.gov/state/seds/) (Last accessed August 1,
2023).
---------------------------------------------------------------------------
To estimate energy prices in future years, DOE multiplied the 2022
energy prices by the projection of annual average price changes for
each state from the Reference case in AEO2023, which has an end year of
2050.\47\ To estimate price trends after 2050, DOE used the average
annual rate of change in prices from 2046 through 2050. See chapter 8
of the November 2022 Preliminary Analysis TSD for details.
---------------------------------------------------------------------------
\47\ EIA, Annual Energy Outlook 2023 with Projections to 2050
(Available at: www.eia.gov/forecasts/aeo/) (Last accessed June 1,
2023).
---------------------------------------------------------------------------
NYSERDA recommended that DOE consider applying a correction factor
to account for potential gaps between forecasted prices and actual
prices for energy, particularly in oil and natural gas. NYSERDA
provided data depicting the heating oil prices within New York over a
23-year period and noted that there is significant variation in the
time series. The commenter encouraged DOE to assemble multiple AEO
reports for historic forecasts to determine a correction factor based
on the comparison of actual prices to forecasted prices. NYSERDA added
that this correction factor could then be applied to future forecasted
prices to produce a more accurate result while still using EIA's price
forecasts. (NYSERDA, No. 19 at pp. 4-5)
In response to NYSERDA, DOE acknowledges that forecasted prices do
not always accurately predict future prices. However, DOE does not
agree that past discrepancies between the two can reliably be used to
adjust EIA's forecasts, as there is not a firm basis for assuming that
historic factors will develop in the same way in the future. For this
reason, DOE is maintaining its practice of relying on AEO's energy
price forecasts.
The Joint Commenters reiterated their comments made in response to
DOE's 2022 Request for Information pertaining to concerns with DOE's
reliance on allegedly incorrect projections of natural gas price
trends, marginal residential natural gas prices, and systematic
problems with DOE's economic analysis. The Joint Commenters added that
these earlier comments highlight flaws in DOE's process and stated that
these flaws must be addressed both in this and future rulemakings
before proposing any new minimum efficiency standards for appliances.
(Joint Commenters, No. 24 at p. 3)
In response to the Joint Commenters, DOE acknowledges that past
projections of natural gas prices have not matched actual prices in
recent years, but DOE maintains that this is due to factors that were
difficult to predict and not to any flaws in the model that is used to
develop AEO energy price projections, or to biases with regard to
assumptions.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. The
maintenance and repair costs (including labor hours, component costs,
and frequency) at each considered efficiency level are derived based on
2023 RSMeans Facilities Maintenance and
[[Page 83451]]
Repair Data,\48\ manufacturer literature, consultant input, and
industry reports. DOE also accounted for regional differences in labor
costs based on these 2023 RSMeans data.
---------------------------------------------------------------------------
\48\ RSMeans Company Inc., RSMeans Facilities Maintenance &
Repair Cost Data (2023) (Available at: www.rsmeans.com/) (Last
accessed August 1, 2023).
---------------------------------------------------------------------------
DOE assumes that condensing furnaces have a higher maintenance cost
than noncondensing furnaces, but that this maintenance cost is the same
at all noncondensing or condensing efficiency levels within each
product class. The additional maintenance cost for condensing furnaces
includes maintenance tasks related to the condensate withdrawal system
(such as condensate pump or condensate neutralizer filter) and
additional maintenance related to the cleaning or checking of the heat
exchanger (in particular, for condensing oil-fired furnaces using high-
sulfur fuel oil).
DOE also assumes that condensing furnaces have a higher repair cost
than noncondensing furnaces, but the repair cost is the same at all
non-condensing or condensing efficiency levels within each product
class.
For more details on DOE's methodology for calculating maintenance
and repair costs, including all online resources reviewed, see appendix
8E of the November 2022 Preliminary Analysis TSD.
6. Product Lifetime
Product lifetime is the age at which an appliance is retired from
service. DOE conducted an analysis of furnace lifetimes based on the
methodology described in a recent journal paper.\49\ For this analysis,
DOE relied on RECS 1990, 1993, 2001, 2005, 2009, and 2015.\50\ DOE also
used the U.S. Census's biennial American Housing Survey (``AHS''), from
1974-2021, which surveys all housing, noting the presence of a range of
appliances.\51\ DOE used the appliance age data from these surveys, as
well as the historical furnace shipments, to generate an estimate of
the survival function. The survival function provides a lifetime range
from minimum to maximum, as well as an average lifetime. For oil and
weatherized gas furnaces, DOE developed Weibull distributions resulting
in an average lifetime of 20.2 to 22.5 years (based on region).
---------------------------------------------------------------------------
\49\ Lutz, J., A. Hopkins, V. Letschert, V. Franco, and A.
Sturges, Using national survey data to estimate lifetimes of
residential appliances, HVAC&R Research (2011) 17(5): p. 28.
(Available at: www.tandfonline.com/doi/abs/10.1080/10789669.2011.558166) (Last accessed August 1, 2023).
\50\ U.S. Department of Energy: Energy Information
Administration, Residential Energy Consumption Survey (``RECS''),
Multiple Years (1990, 1993, 1997, 2001, 2005, 2009, and 2015).
(Available at: www.eia.gov/consumption/residential/) (Last accessed
August 1, 2023).
\51\ U.S. Census Bureau: Housing and Household Economic
Statistics Division, American Housing Survey, Multiple Years (1974,
1975, 1976, 1977, 1978, 1979, 1980, 1981, 1983, 1985, 1987, 1989,
1991, 1993, 1995, 1997, 1999, 2001, 2003, 2005, 2007, 2009, 2011,
2013, 2015, 2017, 2019, and 2021). (Available at: www.census.gov/programs-surveys/ahs/) (Last accessed August 1, 2023).
---------------------------------------------------------------------------
Appendix 8F of the November 2022 Preliminary Analysis TSD provides
further details on the methodology and sources DOE used to develop the
subject furnace lifetimes.
7. Discount Rates
The discount rate is the rate at which future expenditures and
savings are discounted to establish their present value. DOE estimates
discount rates separately for residential and commercial end users.
For residential end users, DOE applies weighted-average discount
rates calculated from consumer debt and asset data, rather than
marginal or implicit discount rates. DOE identified all relevant
household debt or asset classes in order to approximate a consumer's
opportunity cost of funds related to appliance energy cost savings. It
estimated the average percentage shares of the various types of debt
and equity by household income group using data from the Federal
Reserve Board's Survey of Consumer Finances (``SCF''). Using the SCF
and other sources, DOE developed a distribution of rates for each type
of debt and asset by income group to represent the rates that may apply
in the year in which amended standards would take effect. DOE assigned
each sample household a specific discount rate drawn from one of the
distributions.
For commercial end users, DOE estimated the weighted-average cost
of capital using data from various financial sources. The weighted-
average cost of capital is commonly used to estimate the present value
of cash flows to be derived from a typical company project or
investment. Most companies use both debt and equity capital to fund
investments, so their cost of capital is the weighted average of the
cost to the firm of equity and debt financing.
See appendix 8G of the November 2022 Preliminary Analysis TSD for
further details on the development of discount rates.
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (i.e., market shares) of product efficiencies under the
no-new-standards case (i.e., the case without amended or new energy
conservation standards) in the compliance year (2030). This approach
reflects the fact that some consumers may purchase products with
efficiencies greater than the baseline levels, such that even in a no-
new-standards case, consumers will be purchasing higher-efficiency
furnaces.
For consumer furnaces, DOE had limited historical-shipments data by
efficiency level. For NWOFs/MHOFs, DOE reviewed market shares from
HARDI 2013-2022 data and BRG 2007-2022 data.52 53 The
shipments data are not disaggregated between NWOFs and MHOFs, but DOE
assigned all shipments data below 83-percent AFUE to MHOFs. For WGFs,
DOE had insufficient historical shipments data by efficiency level to
develop a reliable efficiency distribution. To cover the lack of
available shipments data, DOE referred to the DOE's Compliance
Certification Database (``CCD'') \54\ for furnaces to develop
efficiency distributions based on available models for WGFs.
---------------------------------------------------------------------------
\52\ Heating, Air-conditioning and Refrigeration Distributors
International (HARDI), DRIVE portal (HARDI Visualization Tool
managed by D+R International until 2022), proprietary Gas Furnace
Shipments Data from 2013-2022 provided to Lawrence Berkeley National
Laboratory (LBNL).
\53\ BRG Building Solutions. The North American Heating &
Cooling Product Markets (2022 Edition) (Available at:
www.brgbuildingsolutions.com/reports-insights) (Last accessed August
1, 2023).
\54\ U.S. Department of Energy Compliance Certification Database
(``CCD'') (Available at: www.regulations.doe.gov/certification-data/
) (Last accessed August 1, 2023).
---------------------------------------------------------------------------
The estimated market shares for the no-new-standards case for oil
and weatherized gas furnaces are shown in Table IV.16. See chapter 8 of
the November 2022 Preliminary Analysis TSD for further information on
the derivation of the efficiency distributions.
[[Page 83452]]
Table IV.16--No-New-Standards Case Energy Efficiency Distributions in
2030 for Oil and Weatherized Gas Furnaces
------------------------------------------------------------------------
Distribution
Product class Efficiency level (%)
------------------------------------------------------------------------
NWOF............................ Baseline.............. 37.2
1..................... 60.0
2..................... 1.5
3..................... 1.3
MHOF............................ Baseline.............. 95
1..................... 2
2..................... 3
3..................... 0
WGF............................. Baseline.............. 96
1..................... 4
------------------------------------------------------------------------
AHRI and Lennox stated that model counts from the public database
do not reflect model or sales volume and that a high number of models
at a specific efficiency level does not imply a large market share of
those products. (AHRI, No. 23 at p. 4; Lennox, No. 26 at p. 3) Lennox
stated that industry data for condensing weatherized gas furnaces
indicate that the market adoption of these products has been de
minimis. (Lennox, No. 26 at p. 8) NYSERDA commented that within New
York's relatively cold climate, new sales of electric and weatherized
gas furnaces are minimal. However, NYSERDA noted that oil furnaces
continue to be sold and installed throughout the State, with a 2019
study suggesting that most oil furnaces being installed are of low
efficiency. (NYSERDA, No. 19 at p. 1)
In response to AHRI and Lennox, as stated previously, to develop an
efficiency distribution in the no-new-standards case, DOE used
available historical shipments data by efficiency for NWOFs/MHOFs and
made assumptions to disaggregate between NWOFs and MHOFs by AFUE. Due
to limited information for WGF, DOE referred to CCD to develop
efficiency distributions. DOE projected that condensing WGFs will
continue to account for a minimal share of the WGF market in the no-
new-standards case, which aligns with Lennox's characterization of the
industry data for condensing weatherized gas furnaces. In response to
NYSERDA, DOE's estimates of efficiency distribution align with the
findings that most oil furnaces being installed are of low efficiency.
DOE received no other data with which to further refine the estimates
of the efficiency distribution, and as such, DOE has not changed its
existing methodology.
9. Payback Period Analysis
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more-efficient products,
compared to baseline products, through energy cost savings. Payback
periods are expressed in years. Payback periods that exceed the life of
the product mean that the increased total installed cost is not
recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. The
PBP calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
EPCA 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 first year's energy savings resulting from the standard, as
calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the amended standards
would be required.
F. Shipments Analysis
DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\55\
The shipments model takes an accounting approach in tracking market
shares of each product class and the vintage of units in the stock.
Stock accounting uses product shipments as inputs to estimate the age
distribution of in-service product stocks for all years. The age
distribution of in-service product stocks is a key input to
calculations of both the NES and NPV, because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------
\55\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------
Lennox commented that DOE likely overstates shipments for gas
furnaces. Lennox commented that the NWGF rulemaking and this rulemaking
may significantly reduce the market shares of these products. (Lennox,
No. 26 at p. 2) Lennox commented that NWOFs and EFs are each less than
one percent of the consumer furnace market. (Id. at p. 1) Lennox stated
that DOE's projections of a growing market for residential furnaces are
inconsistent with federal and state policy efforts to electrify space
heating in residences. (Lennox, No. 26 at p. 2) Lennox commented that
decarbonization efforts to electrify space heating will have impacts on
both the total market for furnaces, as well as the categories thereof.
(Id.) Lennox commented that States such as California and New York,
which represent approximately 8 to 12 percent of the annual furnace
shipments, are implementing plans to completely electrify space heating
as soon as 2030. (Id.) In addition, Lennox stated that furnace costs
are likely to increase, resulting in a reduction in the market. (Id. at
p. 3) Lennox commented that the information presented in the
preliminary TSD similarly indicates a growing market for furnaces, in
contrast to federal, state, and local efforts to decarbonize space
heating. Lennox commented that gas furnace shipments will decline in
the time period associated with this rulemaking, and further DOE action
should reflect a substantial reduction in the market for furnaces that
consume fossil fuels. (Id. at p. 8)
[[Page 83453]]
In response, DOE notes that assumptions made in the November 2022
Preliminary Analysis regarding future policies encouraging
electrification of households were speculative at that time, so such
policies were not incorporated into the shipments projection.
Consequently, DOE's market share and shipments projections in the
November 2022 Preliminary Analysis reflected the best information
available to DOE at that time. For the NOPD, DOE accounted for the 2022
update to Title 24 in California \56\ and also the decision of the
California Public Utilities Commission to eliminate ratepayer subsidies
for the extension of new gas lines beginning in July 2023. Together,
these policies are expected to lead to the eventual phase-out of gas
furnaces in new single-family homes in California. The California Air
Resources Board has adopted a 2022 State Strategy for the State
Implementation Plan that would effectively ban sales of new gas
furnaces beginning in 2030.\57\ However, because a final decision on a
rule would not happen until 2025, DOE did not include this latter
policy in its analysis for this NOPD.
---------------------------------------------------------------------------
\56\ The 2022 update includes heat pumps as a performance
standard baseline for water heating or space heating in single-
family homes, as well as space heating in multi-family homes. Under
the California Code, builders will need to either include one high-
efficiency heat pump in new constructions or subject those buildings
to more-stringent energy efficiency standards.
\57\ See ww2.arb.ca.gov/resources/documents/2022-state-strategy-state-implementation-plan-2022-state-sip-strategy (Last accessed
June 2, 2023).
---------------------------------------------------------------------------
DOE understands that ongoing electrification policies at the
federal, State, and local levels are likely to encourage installation
of heat pumps in some new homes and adoption of heat pumps in some
homes that currently use gas or oil-fired furnaces. However, there are
many uncertainties about the timing and effects of these policies that
make it difficult to fully account for their likely impact on gas or
oil furnaces market shares in the time frame for this analysis (i.e.,
2030 through 2059). Nonetheless, DOE has modified some of its
projections to attempt to account for impacts that are most likely in
the relevant time frame.\58\ These changes result in a decrease of
shipments in the no-new-standards case in 2030 compared to the November
2022 Preliminary Analysis, with a corresponding decrease in estimated
energy savings resulting from the standards. DOE acknowledges that
electrification policies may result in a larger decrease in shipments
of gas furnaces than projected in this NOPD, especially if stronger
policies are adopted in coming years. However, this would occur in the
no-new amended standards case and, thus, would only reduce the energy
savings estimated in this NOPD.
---------------------------------------------------------------------------
\58\ Based on currently adopted policies and incentives, DOE
estimated a lower saturation in the new construction market and a
higher product switching rate for the replacement market for gas and
oil furnaces for the NOPD shipments analysis. This change resulted
in a decrease of 11 percent for WGFs, 62 percent for NWOF, and 68
percent for MHOF for the no-new-standards case projection of total
shipments between 2030 and 2059 compared to the preliminary
analysis.
---------------------------------------------------------------------------
G. National Impact Analysis
The NIA assesses the NES and the NPV from a national perspective of
total consumer costs and savings that would be expected to result from
new or amended energy conservation standards at specific efficiency
levels.\59\ (``Consumer'' in this context refers to consumers of the
product being regulated.) DOE calculates the NES and NPV for the
potential standard levels considered based on projections of annual
product shipments, along with the annual energy consumption and total
installed cost data from the energy use and LCC analyses.\60\ For the
present analysis, DOE projected the energy savings, operating cost
savings, product costs, and NPV of consumer benefits over the lifetime
of oil and weatherized gas furnaces sold from 2030 through 2059.
---------------------------------------------------------------------------
\59\ The NIA accounts for impacts in the U.S. and U.S.
territories.
\60\ For the NIA, DOE adjusts the installed cost data from the
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------
DOE evaluates the effects of new or amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
product class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each product class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the ELs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each EL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.17 summarizes the inputs and methods DOE used for the NIA
analysis for the NOPD. Discussion of these inputs and methods follows
the table. See chapter 10 of the November 2022 Preliminary Analysis TSD
for details.
Table IV.17--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Input Method
------------------------------------------------------------------------
Shipments.................... Annual shipments from shipments model.
Modeled Compliance Date of 2030.
Standard.
Efficiency Trends............ No-new-standards case: Based on
historical data.
Standards cases: Roll-up in the
compliance year and then DOE estimated
growth in shipment-weighted efficiency
in all the standards cases, except max-
tech.
Annual Energy Consumption per Annual weighted-average values are a
Unit. function of energy use at each EL.
Incorporates projection of future energy
use based on AEO2023 projections for HDD/
CDD and building shell efficiency index.
Total Installed Cost per Unit Annual weighted-average values are a
function of cost at each EL.
Incorporates projection of future product
prices based on historical data.
Annual Energy Cost per Unit.. Annual weighted-average values as a
function of the annual energy
consumption per unit and energy prices.
Repair and Maintenance Cost Annual weighted-average values increase
per Unit. for condensing levels.
Energy Prices................ AEO2023 projections (to 2050) and
extrapolation after 2050.
Energy Site-to-Primary and A time-series conversion factor based on
FFC Conversion. AEO2023.
[[Page 83454]]
Discount Rate................ Three percent and seven percent.
Present Year................. 2023.
------------------------------------------------------------------------
1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.E.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered product classes for the year of anticipated compliance with
an amended or new standard (2030).
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2030). In this scenario, the market
shares of products in the no-new-standards case that do not meet the
standard under consideration would ``roll up'' to meet the new standard
level, and the market share of products above the standard would remain
unchanged.
To develop standards case efficiency trends after 2030, DOE
estimated growth in shipment-weighted efficiency in the standards
cases, except in the max-tech standards case.
2. National Energy Savings
The NES analysis involves a comparison of national energy
consumption of the considered products between each potential standards
case (EL) and the case with no new or amended energy conservation
standards. DOE calculated the national energy consumption by
multiplying the number of units (stock) of each product (by vintage or
age) by the unit energy consumption (also by vintage). DOE calculated
annual NES based on the difference in national energy consumption for
the no-new-standards case and for each higher-efficiency standard case.
DOE estimated energy consumption and savings based on site energy and
converted the electricity consumption and savings to primary energy
(i.e., the energy consumed by power plants to generate site
electricity) using annual conversion factors derived from AEO2023. For
natural gas and LPG, DOE assumed that site energy consumption is the
same as primary energy consumption. Cumulative energy savings are the
sum of the NES for each year over the timeframe of the analysis.
Use of higher-efficiency products is sometimes associated with a
direct rebound effect, which refers to an increase in utilization of
the product due to the increase in efficiency. For oil and weatherized
gas furnaces, DOE applied a rebound effect of 15 percent for
residential applications by reducing the site energy savings (and the
associated primary and FFC energy savings). However, for commercial
applications, DOE applied no rebound effect in order to be consistent
with other recent standards rulemakings.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the NIA and emissions analyses
included in future energy conservation standards rulemakings. 76 FR
51281 (August 18, 2011). After evaluating the approaches discussed in
the August 18, 2011 notice, DOE published a statement of amended policy
in which DOE explained its determination that EIA's National Energy
Modeling System (``NEMS'') is the most appropriate tool for its FFC
analysis and its intention to use NEMS for that purpose. 77 FR 49701
(August 17, 2012). NEMS is a public domain, multi-sector, partial
equilibrium model of the U.S. energy sector \61\ that EIA uses to
prepare its Annual Energy Outlook. The FFC factors incorporate losses
in production and delivery in the case of natural gas (including
fugitive emissions) and additional energy used to produce and deliver
the various fuels used by power plants. The general approach used for
deriving FFC measures of energy use and emissions is described in
appendix 10B of the November 2022 Preliminary Analysis TSD.
---------------------------------------------------------------------------
\61\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview May 2023, DOE/EIA, May 2023 (Available
at: www.eia.gov/analysis/pdfpages/0581(2009)index.php) (Last
accessed June 27, 2023).
---------------------------------------------------------------------------
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are: (1) total annual installed cost; (2)
total annual operating costs (energy costs and repair and maintenance
costs), and (3) a discount factor to calculate the present value of
costs and savings. DOE calculates net savings each year as the
difference between the no-new-standards case and each standards case in
terms of total savings in operating costs versus total increases in
installed costs. DOE calculates operating cost savings over the
lifetime of each product shipped during the projection period.
As discussed in section IV.E.1 of this document, DOE developed oil
and weatherized gas furnace price trends based on historical PPI data
and cumulative shipments. DOE applied the same trends to project prices
for each product class at each considered efficiency level. By 2059,
which is the end date of the projection period, the average oil and
weatherized gas furnace price is projected to drop 17 percent relative
to 2022. DOE's projection of product prices is described further in
chapter 10 of the November 2022 Preliminary Analysis TSD.
The operating cost savings are calculated as energy cost savings
minus any repair and maintenance cost increases. Energy cost savings
are calculated using the estimated energy savings in each year and the
projected price of the appropriate form of energy. To estimate energy
prices in future years, DOE multiplied the national-average energy
prices derived in the LCC analysis by the projection of annual
national-average residential (or commercial, as appropriate) energy
price changes in the Reference case from AEO2023, which has an end year
of 2050. To estimate price trends after 2050, DOE used the average
annual rate of change in prices from 2046 through 2050. Repair and
maintenance cost for each of the efficiency levels is calculated in the
LCC, and repair and maintenance cost increases are calculated as the
repair and maintenance cost differential between efficiency levels.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
NOPD, DOE estimated the NPV of consumer benefits using both a 3-percent
and a 7-percent real discount rate. DOE uses these discount rates in
accordance with
[[Page 83455]]
guidance provided by the Office of Management and Budget (``OMB'') to
federal agencies on the development of regulatory analysis.\62\ The
discount rates for the determination of NPV are in contrast to the
discount rates used in the LCC analysis, which are designed to reflect
a consumer's perspective. The 7-percent real value is an estimate of
the average before-tax rate of return to private capital in the U.S.
economy. The 3-percent real value represents the ``social rate of time
preference,'' which is the rate at which society discounts future
consumption flows to their present value.
---------------------------------------------------------------------------
\62\ United States Office of Management and Budget, Circular A-
4: Regulatory Analysis (Sept. 17, 2003) Section E (Available at:
www.whitehouse.gov/omb/information-for-agencies/circulars/) (Last
accessed June 28, 2023).
---------------------------------------------------------------------------
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for oil
and weatherized gas furnaces. It addresses the ELs examined by DOE (see
section IV.B.1 of this document) and the projected impacts of each of
these levels if adopted as energy conservation standards for the
subject furnaces. Additional details regarding DOE's analyses are
contained in the November 2022 Preliminary Analysis TSD supporting this
document.
A. Economic Impacts on Individual Consumers
DOE analyzed the cost-effectiveness (i.e., the savings in operating
costs throughout the estimated average life of oil and weatherized gas
furnaces compared to any increase in the price of, or in the initial
charges for, or maintenance expenses of, oil and weatherized gas
furnaces which are likely to result from the imposition of a standard)
at an EL by considering the LCC and PBP at each EL. These analyses are
discussed in the following sections.
In general, higher-efficiency products can affect consumers in two
ways: (1) purchase price increases and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., product price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the November
2022 Preliminary Analysis TSD provides detailed information on the LCC
and PBP analyses.
Table V.1 to Table V.6 show the average LCC and PBP results for the
ELs considered in this analysis for oil and weatherized gas furnaces,
respectively. In the first of each pair of tables, the simple payback
is measured relative to the baseline product. In the second table, the
impacts are measured relative to the efficiency distribution in the in
the no-new-standards case in the compliance year (see section IV.E.8 of
this document). The LCC and PBP results for oil and weatherized gas
furnaces include both residential and commercial users. Because some
consumers purchase products with higher efficiency in the no-new-
standards case, the average savings are less than the difference
between the average LCC of the baseline product and the average LCC at
each EL. The savings refer only to consumers who are affected by a
standard at a given EL. Those who already purchase a product with
efficiency at or above a given EL are not affected. Consumers for whom
the LCC increases at a given EL experience a net cost.
Table V.1--Average LCC and PBP Results by Efficiency Level for NWOF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 4,333 2,132 32,211 36,544 .............. 22.2
1....................................................... 4,392 2,086 31,528 35,920 1.3 22.2
2....................................................... 4,451 2,043 30,876 35,327 1.3 22.2
3....................................................... 5,898 1,920 29,212 35,110 7.4 22.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.2--Average LCC Savings Relative to the No-New-Standards Case for
NWOF
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
Percentage of
Efficiency level Average LCC consumers that
savings * experience net
(2022$) cost (%)
------------------------------------------------------------------------
1....................................... 608 0.5
2....................................... 820 1.4
3....................................... 1,015 37.0
------------------------------------------------------------------------
Note: The savings represent the average LCC for affected consumers.
[[Page 83456]]
Table V.3--Average LCC and PBP Results by Efficiency Level for MHOF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 3,377 1,142 17,913 21,290 .............. 22.6
1....................................................... 3,465 1,107 17,371 20,836 2.5 22.6
2....................................................... 3,523 1,085 17,030 20,553 2.5 22.6
3....................................................... 3,581 1,063 16,705 20,286 2.6 22.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.4--Average LCC Savings Relative to the No-New-Standards Case for
MHOF
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
Percentage of
Efficiency level Average LCC consumers that
savings \*\ experience net
(2022$) cost (%)
------------------------------------------------------------------------
1....................................... 452 0.8
2....................................... 724 0.9
3....................................... 971 1.0
------------------------------------------------------------------------
Note: The savings represent the average LCC for affected consumers.
Table V.5--Average LCC and PBP Results by Efficiency Level for WGF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 5,533 471 7,215 12,748 .............. 20.6
1....................................................... 5,822 433 6,698 12,519 7.5 20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.6--Average LCC Savings Relative to the No-New-Standards Case for
WGF
------------------------------------------------------------------------
Life-cycle cost savings
---------------------------------
Percentage of
Efficiency level Average LCC consumers that
savings * experience net
(2022$) cost (%)
------------------------------------------------------------------------
1..................................... 223 40.4
------------------------------------------------------------------------
Note: The savings represent the average LCC for affected consumers.
NYSERDA commented that DOE does not specifically mention the types
of consumer subgroups to be included in the analysis of this
rulemaking. NYSERDA recommended that DOE include low-income customers
as one of the subgroups for this analysis and include the percentage of
monthly income spent on energy bills. (NYSERDA, No. 19 at p. 2) NYSERDA
mentioned that the NWGF/MHGF rulemaking analysis found that a more-
stringent standard was especially beneficial to low-income and senior-
only households as compared to the overall population. The commenter
argued that renters who pay their own energy bills will particularly
benefit. NYSERDA encouraged DOE to continue such analysis for this
rulemaking, as it anticipates a similar outcome to the NWGF/MHGF
rulemaking. (Id. at pp. 2-3)
In response, because DOE has tentatively determined that amended
standards for the products considered in this NOPD would not be
economically justified, DOE has not conducted a consumer subgroup
analysis.
[[Page 83457]]
NYSERDA encouraged DOE to report the fraction of customers who pay
less than six percent of their monthly income in energy bills at each
EL. The commenter asserted that such fraction would continue to
increase at each EL with more-stringent standards, adding that this
approach presents a more comprehensive framework to look at energy
burdens reduced by appliance standards. NYSERDA recommended that this
statistic should be a routine part of DOE's LCC subgroups analysis,
especially for appliances involving natural gas and oil. (NYSERDA, No.
19 at p. 3)
As noted previously, DOE is not conducting a consumer subgroup
analysis for this NOPD, but the Department may consider NYSERDA's
recommendation as part of a future rulemaking.
B. National Impact Analysis
This section presents DOE's estimates of the NES and the NPV of
consumer benefits that would result from each of the ELs considered as
potential amended standards.
1. Significance of Energy Savings
To estimate the energy savings attributable to potential amended
standards for oil and weatherized gas furnaces, DOE compared their
energy consumption under the no-new-standards case to their anticipated
energy consumption under each EL. The savings are measured over the
entire lifetime of products purchased in the 30-year period that begins
in the year of anticipated compliance with amended standards (2030-
2059). Table V.7 presents DOE's projections of the NES for each EL
considered for oil and weatherized gas furnaces. The savings were
calculated using the approach described in section IV.G of this
document.
Table V.7--Cumulative National Energy Savings for Oil and Weatherized Gas Furnaces; 30 Years of Shipments
[2030-2059]
----------------------------------------------------------------------------------------------------------------
Efficiency level
Product class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
FFC Energy savings (quads)
-----------------------------------------------
Non-Weatherized Oil Furnace..................................... 0.004 0.01 0.05
Mobile Home Non-Weatherized Oil Furnace......................... 0.0004 0.001 0.001
Weatherized Gas Furnace......................................... 0.66 .............. ..............
----------------------------------------------------------------------------------------------------------------
OMB Circular A-4 \63\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this proposed
determination, DOE undertook a sensitivity analysis using nine years,
rather than 30 years, of product shipments. The choice of a nine-year
period is a proxy for the timeline in EPCA for the review of certain
energy conservation standards and potential revision of and compliance
with such revised standards.\64\ The review timeframe established in
EPCA is generally not synchronized with the product lifetime, product
manufacturing cycles, or other factors specific to oil and weatherized
gas furnaces. Thus, such results are presented for informational
purposes only and are not indicative of any change in DOE's analytical
methodology. The NES sensitivity analysis results based on a nine-year
analytical period are presented in Table V.8. The impacts are counted
over the lifetime of oil and weatherized gas furnaces purchased in
2030-2038.
---------------------------------------------------------------------------
\63\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (Sept. 17, 2003) (Available at: https://www.whitehouse.gov/omb/information-for-agencies/circulars/) (Last
accessed June 1, 2023).
\64\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. (42 U.S.C.
6295(m)) If DOE makes a determination that amended standards are not
needed, it must conduct a subsequent review within three years
following such a determination. As DOE is evaluating the need to
amend the standards, the sensitivity analysis is based on the review
timeframe associated with amended standards. While adding a 6-year
review to the 3-year compliance period adds up to 9 years, DOE notes
that it may undertake reviews at any time within the 6-year period
and that the 3-year compliance date may yield to the 6-year
backstop. A 9-year analysis period may not be appropriate given the
variability that occurs in the timing of standards reviews and the
fact that for some products, the compliance period is 5 years rather
than 3 years.
Table V.8--Cumulative National Energy Savings for Oil and Weatherized Gas Furnaces; 9 Years of Shipments
[2030-2038]
----------------------------------------------------------------------------------------------------------------
Efficiency level
Product class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
FFC Energy savings (quads)
-----------------------------------------------
Non-Weatherized Oil Furnace..................................... 0.002 0.01 0.02
Mobile Home Non-Weatherized Oil Furnace......................... 0.0002 0.0004 0.001
Weatherized Gas Furnace......................................... 0.20 .............. ..............
----------------------------------------------------------------------------------------------------------------
[[Page 83458]]
2. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the ELs considered for oil and
weatherized gas furnaces. In accordance with OMB's guidelines on
regulatory analysis,\65\ DOE calculated NPV using both a 7-percent and
a 3-percent real discount rate. Table V.9 shows the consumer NPV
results with impacts counted over the lifetime of products purchased in
2030-2059.
---------------------------------------------------------------------------
\65\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (Sept. 17, 2003) (Available at:
obamawhitehouse.archives.gov/omb/circulars_a004_a-4/) (Last accessed
June 1, 2023).
Table V.9--Cumulative Net Present Value of Consumer Benefits for Oil and Weatherized Gas Furnaces; 30 Years of
Shipments
[2030-2059]
----------------------------------------------------------------------------------------------------------------
Efficiency level (EL)
Discount rate Product class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
Billion 2022$
-----------------------------------------------
3%.................................... Non-Weatherized Oil 0.06 0.20 0.20
Furnace.
Mobile Home Non- 0.01 0.01 0.01
Weatherized Oil Furnace.
Weatherized Gas Furnace. 1.88 .............. ..............
7%.................................... Non-Weatherized Oil 0.02 0.08 0.03
Furnace.
Mobile Home Non- 0.002 0.003 0.005
Weatherized Oil Furnace.
Weatherized Gas Furnace. 0.45 .............. ..............
----------------------------------------------------------------------------------------------------------------
The NPV results based on the aforementioned nine-year analytical
period are presented in Table V.10. The impacts are counted over the
lifetime of oil and weatherized gas furnaces purchased in 2030-2038. As
mentioned previously, such results are presented for informational
purposes only and are not indicative of any change in DOE's analytical
methodology or decision criteria.
Table V.10--Cumulative Net Present Value of Consumer Benefits for Oil and Weatherized Gas Furnaces; 9 Years of
Shipments
[2030-2038]
----------------------------------------------------------------------------------------------------------------
Efficiency level (EL)
Discount rate Product class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
Billion 2022$
-----------------------------------------------
3%.................................... Non-Weatherized Oil 0.03 0.11 0.12
Furnace.
Mobile Home Non- 0.003 0.01 0.01
Weatherized Oil Furnace.
Weatherized Gas Furnace. 0.67 .............. ..............
7%.................................... Non-Weatherized Oil 0.02 0.05 0.02
Furnace.
Mobile Home Non- 0.002 0.003 0.004
Weatherized Oil Furnace.
Weatherized Gas Furnace. 0.22 .............. ..............
----------------------------------------------------------------------------------------------------------------
C. Proposed Determination
After carefully considering the comments on the November 2022
Preliminary Analysis and the available data and information, DOE has
tentatively determined that the energy conservation standards for oil,
electric, and weatherized gas furnaces do not need to be amended, for
the reasons explained in the paragraphs immediately following. DOE will
consider all comments received on this proposed determination prior to
issuing the next document in this rulemaking proceeding.
As required by EPCA, this NOPD analyzes whether amended standards
for oil, electric, and weatherized gas furnaces would result in
significant conservation of energy, be technologically feasible, and be
cost-effective. (42 U.S.C. 6295(m)(1)(A) and 42 U.S.C. 6295(n)(2))
DOE's initial findings under the enumerated statutory criteria and the
additional analysis are discussed in the paragraphs that follows.
Because an analysis of potential cost-effectiveness and energy savings
first requires an evaluation of the relevant technology, DOE first
discusses the technological feasibility of amended standards. DOE then
addresses the cost-effectiveness and energy savings associated with
potential amended standards for the subject furnaces.
1. Technological Feasibility
EPCA mandates that DOE consider whether amended energy conservation
standards for oil, electric, and weatherized gas furnaces would be
technologically feasible. (42 U.S.C. 6295(m)(1)(A) and 42 U.S.C.
6295(n)(2)(B)) DOE has tentatively determined that there are technology
options that would improve the efficiency of oil and weatherized gas
furnaces. These technology options are being used in commercially
available oil and weatherized gas furnaces and, therefore, are
technologically feasible. (See section IV.A.3 of this document for
further information.) Hence, DOE has tentatively determined that
amended energy conservation standards for oil and weatherized gas
furnaces are technologically feasible. However, as discussed in section
IV.A.1.a of this document, DOE is not aware of any technology options
that would improve the efficiency of electric furnaces.
[[Page 83459]]
Therefore, DOE has tentatively determined that amended energy
conservation standards for electric furnaces are not technologically
feasible.
2. Cost-Effectiveness
EPCA requires DOE to consider whether energy conservation standards
for oil and weatherized gas furnaces would be cost-effective through an
evaluation of the savings in operating costs throughout the estimated
average life of the covered product compared to any increase in the
price of, or in the initial charges for, or maintenance expenses of,
the covered products which are likely to result from the imposition of
an amended standard. (42 U.S.C. 6295(m)(1)(A), 42 U.S.C. 6295(n)(2)(C),
and 42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducted an LCC analysis to
estimate the net costs/benefits to users from increased efficiency in
the considered oil and weatherized gas furnace product classes. As
shown in Table V.1 through Table V.6, for all product classes, all of
the considered efficiency levels result in positive LCC savings, with
the percentage of consumers experiencing net cost ranging from 0.5
percent at EL 1 to 37 percent at max-tech for NWOF, approximately 1
percent at all ELs for MHOF, and 40 percent at the only considered
efficiency level for WGF.
DOE then aggregated the results from the LCC analysis to estimate
the NPV of the total costs and benefits experienced by the Nation. (See
results in Table V.9 and Table V.10) As noted, the inputs for
determining the NPV are: (1) total annual installed cost; (2) total
annual operating costs (energy costs and repair and maintenance costs),
and (3) a discount factor to calculate the present value of costs and
savings.
3. Significant Conservation of Energy
EPCA also mandates that DOE consider whether amended energy
conservation standards for oil and weatherized gas furnaces would
result in significant conservation of energy. (42 U.S.C. 6295(m)(1)(A)
and 42 U.S.C. 6295(n)(2)(A))
To estimate the energy savings attributable to potential amended
standards for oil and weatherized gas furnaces, DOE compared their
energy consumption under the no-new-standards case to their anticipated
energy consumption under each potential standard level. The savings are
measured over the entire lifetime of products purchased in the 30-year
period that begins in the year of anticipated compliance with amended
standards (2030-2059).
As shown in Table V.7, DOE estimates that amended standards would
results in FFC energy savings of 0.004 quads at EL 1 to 0.05 quads at
max-tech level for non-weatherized oil furnaces, 0.0004 quads at EL 1
to 0.001 quads at max-tech level for mobile home non-weatherized oil
furnaces, and 0.66 quads at EL 1 (max-tech level) for weatherized gas
furnaces, over a 30-year analysis period (2030-2059).
4. Further Considerations
Oil Furnaces
DOE estimates that the shipments of NWOFs and MHOFs have declined
by more than 70 percent over the past 20 years and only accounted for
less than one percent of the overall consumer furnace market in the
past 10 years. DOE considered this declining trend and the small market
share for oil furnaces in the furnace shipments model and projected
that the shipments of NWOFs and MHOFs will continue to decline over the
analysis period (i.e., 2030-2059). DOE also considered that the
shipments of NWOFs and MHOFs could decline faster than current
projections, which may lead to further reductions in energy savings
from potential amended standards.
As the oil furnace market contracted, the industry has seen
consolidation. DOE estimates there were 11 OEMs of NWOF selling into
the U.S. market at the time of the June 2011 DFR that set current
standard levels for oil furnaces. Since then, manufacturers have
merged, been acquired, and left the market. Currently there are seven
OEMs of NWOF selling into the U.S. market.
DOE estimated the NWOF market to be approximately 36,000 units per
year and the MHOF market to be approximately 2,000 units per year in
2023. These products together are less than one percent of the overall
U.S. residential furnace market, which is approximately 4.2 million
shipments per year in 2023. The size of the market could make cost
recovery challenging for manufacturers. With the small market size and
continued trend of diminishing sales, the timeframe for recouping
investments may be longer than acceptable for manufacturers. Given the
small role of oil furnaces in the overall furnace market and the low
sales relative to the consumer boiler and consumer water heater
markets, manufacturers may de-prioritize updates for these product
classes. The existing oil-fired furnace market currently has a
diversity of competitors; however, the loss of a few manufacturers
could lead to shifts in market competition.
Weatherized Gas Furnaces
DOE estimates that the shipments of WGFs have been approximately
0.35 million per year for the past 10 years and accounted for
approximately 7 percent of the overall consumer furnace market over the
past 20 years. DOE considered the small market share for WGFs in the
furnace shipments model and projected that the shipments of WGFs will
be approximately flat and account for less than 8 percent of the
overall consumer furnace market over the analysis period (i.e., 2030-
2059). DOE also considered that the shipments of WGFs could be less
than current projections, which may lead to reductions in energy
savings from potential amended standards.
WGFs have the largest potential energy savings of the product
classes in this rulemaking. However, DOE recognizes challenges for the
industry at the max-tech level, which requires condensing furnace
designs. DOE identified eight OEMs of weatherized gas furnaces. Only
one OEM offers models that can meet the max-tech level. Models that
meet the max-tech level account for 1 percent of all WGF listings.
All other OEMs would need to invest in new WGF designs to meet a
condensing efficiency level. DOE expects that developing a new
condensing model lines would require significant investment. If
manufacturers plan to continue offering the same diversity of models,
they would need to redesign nearly 1,500 basic models, or 99 percent of
what is available on the market today. Designing condensing models
would require the incorporation of a secondary heat exchanger and
condensate management system. Manufacturers would likely need to
reconfigure their existing heat exchanger to optimize airflow over the
secondary heat exchanger, which could require investments in product
redesign and retooling for hard-tooled portions of the heat exchanger.
Manufacturers may also have to choose between adding the secondary heat
exchanger within the physical limitations of the existing chassis
dimension or adopting a new chassis size, which has the potential to be
capital intensive. The added production of the secondary heat exchanger
could necessitate additional floor space and increased assembly and
fabrication times.
DOE observed that the range of heating capacities offered at EL 1
do not cover the same range of capacities as non-condensing models.
Condensing WGF models range from 60 to 96 kBtu/h, whereas non-
condensing WGF
[[Page 83460]]
models span capacities from 40 to 150 kBtu/h. DOE is concerned that
amended standards for WGFs may limit capacity availability for
consumers.
5. Summary
As discussed previously, a determination that amended standards are
not needed must be based on consideration of whether amended standards
will result in significant conservation of energy, are technologically
feasible, and are cost-effective. (42 U.S.C. 6295(m)(1)(A) and 42
U.S.C. 6295(n)(2)) Additionally, DOE can only propose an amended
standard if it is, among other things, economically justified. (42
U.S.C. 6295(m)(1)(B); 42 U.S.C. 6295(o)(2)(A))
As explained elsewhere in this document, DOE has tentatively
determined that amended energy conservation standards for electric
furnaces are not technologically feasible. Oil-fired furnaces and WGFs
have relatively small markets and shipments of these products are
expected to flatten or decline; manufacturers facing increased
standards for these product categories may opt to focus on products
with larger market shares, resulting in certain products or capacities
becoming unavailable for consumers as well as further consolidation of
the market. Consequently, DOE has tentatively determined that it is
unable to conclude that amended standards for oil-fired furnaces and
WGFs would be economically justified. For these reasons, as well as
those discussed throughout this notice, DOE is unable to conclude that
amended standards for furnaces at any of the efficiency levels analyzed
would meet the applicable statutory criteria. Therefore, DOE has
tentatively determined that energy conservation standards for oil,
electric, and weatherized gas furnaces do not need to be amended at
this time.
DOE requests comments on its proposed determination that the
existing energy conservation standards for oil, electric, and
weatherized gas furnaces do not need to be amended. DOE will consider
all comments received on this proposed determination before issuing the
next document in this proceeding.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821
(Jan. 21, 2011) and amended by E.O. 14094, ``Modernizing Regulatory
Review,'' 88 FR 21879 (April 11, 2023), requires agencies, to the
extent permitted by law, to: (1) propose or adopt a regulation only
upon a reasoned determination that its benefits justify its costs
(recognizing that some benefits and costs are difficult to quantify);
(2) tailor regulations to impose the least burden on society,
consistent with obtaining regulatory objectives, taking into account,
among other things, and to the extent practicable, the costs of
cumulative regulations; (3) select, in choosing among alternative
regulatory approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity); (4) to the
extent feasible, specify performance objectives, rather than specifying
the behavior or manner of compliance that regulated entities must
adopt; and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public. DOE
emphasizes as well that E.O. 13563 requires agencies to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible. In its guidance, the
Office of Information and Regulatory Affairs (``OIRA'') in the Office
of Management and Budget (``OMB'') has emphasized that such techniques
may include identifying changing future compliance costs that might
result from technological innovation or anticipated behavioral changes.
For the reasons stated in this preamble, this proposed regulatory
action is consistent with these principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this proposed regulatory action does not constitute a
``significant regulatory action'' within the scope of section 3(f)(1)
of E.O. 12866, as amended by E.O. 14094. Accordingly, this action was
not submitted to OIRA for review under E.O. 12866.
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'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published procedures
and policies in the Federal Register on February 19, 2003, to ensure
that the potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's website (energy.gov/gc/office-general-counsel).
DOE reviewed this proposed determination under the provisions of
the Regulatory Flexibility Act and the policies and procedures
published on February 19, 2003. Because DOE is proposing not to amend
standards for oil, electric, and weatherized gas furnaces, if adopted,
the determination would not amend any energy conservation standards. On
the basis of the foregoing, DOE certifies that the proposed
determination, if adopted, would not have a significant economic impact
on a substantial number of small entities. Accordingly, DOE has not
prepared an IRFA for this proposed determination. DOE will transmit
this certification and supporting statement of factual basis to the
Chief Counsel for Advocacy of the Small Business Administration for
review under 5 U.S.C. 605(b).
C. Review Under the Paperwork Reduction Act of 1995
This proposed determination, which proposes to determine that
amended energy conservation standards for oil, electric, and
weatherized gas furnaces are unneeded under the applicable statutory
criteria, would impose no new informational or recordkeeping
requirements. Accordingly, OMB clearance is not required under the
Paperwork Reduction Act. (44 U.S.C. 3501 et seq.)
D. Review Under the National Environmental Policy Act of 1969
DOE is analyzing this proposed action in accordance with the
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA
implementing regulations (10 CFR part 1021). DOE's regulations include
a categorical exclusion for actions which are interpretations or
rulings with respect to existing regulations. 10 CFR part 1021, subpart
D, appendix A4. DOE anticipates that this action qualifies for
[[Page 83461]]
categorical exclusion A4 because it is an interpretation or ruling in
regard to an existing regulation and otherwise meets the requirements
for application of a categorical exclusion. See 10 CFR 1021.410. DOE
will complete its NEPA review before issuing the final action.
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (August 10, 1999), imposes
certain requirements on federal agencies formulating and implementing
policies or regulations that preempt state law or that have Federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by state and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this proposed determination
and has tentatively determined that it would not have a substantial
direct effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. EPCA governs
and prescribes federal preemption of state regulations as to energy
conservation for the products that are the subject of this proposed
determination. States can petition DOE for exemption from such
preemption to the extent, and based on criteria, set forth in EPCA. (42
U.S.C. 6297) Therefore, no further action is required by E.O. 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 E.O. 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; (3) provide a clear legal standard for affected
conduct rather than a general standard, and (4) promote simplification
and burden reduction. Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that Executive
agencies make every reasonable effort to ensure that the regulation:
(1) clearly specifies the preemptive effect, if any; (2) clearly
specifies any effect on existing federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms, and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
Executive Order 12988 requires Executive agencies to review regulations
in light of applicable standards in section 3(a) and section 3(b) to
determine whether they are met or it is unreasonable to meet one or
more of them. DOE has completed the required review and determined
that, to the extent permitted by law, this proposed determination meets
the relevant standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each federal agency to assess the effects of federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
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 annually for inflation), section 202 of UMRA requires a
federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects 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 them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE examined this proposed determination according to UMRA and its
statement of policy and determined that the proposed determination does
not contain a federal intergovernmental mandate, nor is it expected to
require expenditures of $100 million or more in any one year by State,
local, and Tribal governments, in the aggregate, or by the private
sector. As a result, the analytical requirements of UMRA do not apply.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This proposed determination would not have any impact on the autonomy
or integrity of the family as an institution. Accordingly, DOE has
concluded that it is not necessary to prepare a Family Policymaking
Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
18, 1988), DOE has determined that this proposed determination would
not result in any takings that might require compensation under the
Fifth Amendment to the U.S. Constitution.
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 federal agencies to review
most disseminations of information to the public under information
quality guidelines established by each agency pursuant to general
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446
(Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, ``Improving
Implementation of the Information Quality Act'' (April 24, 2019), DOE
published updated guidelines which are available at: www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this NOPD under the OMB and DOE guidelines and has concluded
that it is consistent with applicable policies in those guidelines.
K. Review Under Executive Order 13211
E.O. 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 Office of
Information and Regulatory Affairs (``OIRA'') at OMB, a
[[Page 83462]]
Statement of Energy Effects for any proposed significant energy action.
A ``significant energy action'' is defined as any action by an agency
that promulgates or is expected to lead to promulgation of a final
rule, and that: (1) is a significant regulatory action under Executive
Order 12866, or any successor Executive Order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use.
This proposed determination, which does not propose to amend energy
conservation standards for oil, electric, and weatherized gas furnaces,
is not a significant regulatory action under Executive Order 12866.
Moreover, it would not have a significant adverse effect on the supply,
distribution, or use of energy, nor has it been designated as such by
the Administrator at OIRA. Therefore, it is not a significant energy
action, and accordingly, DOE has not prepared a Statement of Energy
Effects.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (``OSTP''), issued its Final Information
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan.
14, 2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' Id. at 70 FR 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and has prepared a Peer Review report
pertaining to the energy conservation standards rulemaking
analyses.\66\ Generation of this report involved a rigorous, formal,
and documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences (``NAS'') to review DOE's analytical methodologies and
ascertain whether modifications are needed to improve DOE's analyses.
DOE is in the process of evaluating the resulting December 2021
report.\67\
---------------------------------------------------------------------------
\66\ ``Energy Conservation Standards Rulemaking Peer Review
Report'' (2007) (Available at: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0) (Last
accessed June 26, 2023).
\67\ The December 2021 NAS report is available at
www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards (Last accessed June 26,
2023).
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VII. Public Participation
A. Participation in the Public Meeting Webinar
DOE will hold a public meeting webinar upon receiving a request by
the deadline identified in the DATES section at the beginning of this
proposed determination. Interested persons may submit their request for
the public meeting webinar to the Appliance and Equipment Standards
Program at [email protected]. If a public meeting
webinar is requested, DOE will release webinar registration
information, participant instructions, and information about the
capabilities available to webinar participants on DOE's website at:
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=59. Participants are responsible for ensuring
their systems are compatible with the webinar software.
B. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed determination no later than the date provided in the DATES
section at the beginning of this proposed determination. Interested
parties may submit comments, data, and other information using any of
the methods described in the ADDRESSES section at the beginning of this
document.
Submitting comments via www.regulations.gov. The
www.regulations.gov web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (``CBI'')). Comments submitted
through www.regulations.gov cannot be claimed as CBI. Comments received
through the website will waive any CBI claims for the information
submitted. For information on submitting CBI, see the Confidential
Business Information section.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or postal
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If
you do not want your personal contact information to be publicly
viewable, do not include it in your comment or any accompanying
documents. Instead, provide your contact information in a cover letter.
Include your first and last names, email
[[Page 83463]]
address, telephone number, and optional mailing address. With this
instruction followed, the cover letter will not be publicly viewable as
long as it does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via postal mail
or hand delivery/courier, please provide all items on a CD, if
feasible, in which case it is not necessary to submit printed copies.
No telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption, and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email two well-marked copies: one copy of the document marked
``confidential'' including all the information believed to be
confidential, and one copy of the document marked ``non-confidential''
with the information believed to be confidential deleted. DOE will make
its own determination about the confidential status of the information
and treat it according to its determination.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
C. Issues on Which DOE Seeks Comment
Although DOE has not identified any specific issues on which it
seeks comment, DOE welcomes comments on any aspect of this proposed
determination.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this
notification of proposed determination and request for comment.
Signing Authority
This document of the Department of Energy was signed on November
17, 2023, by Jeffrey Marootian, Principal Deputy Assistant Secretary
for Energy Efficiency and Renewable Energy, pursuant to delegated
authority from the Secretary of Energy. That document with the original
signature and date is maintained by DOE. For administrative purposes
only, and in compliance with requirements of the Office of the Federal
Register, the undersigned DOE Federal Register Liaison Officer has been
authorized to sign and submit the document in electronic format for
publication, as an official document of the Department of Energy. This
administrative process in no way alters the legal effect of this
document upon publication in the Federal Register.
Signed in Washington, DC, on November 17, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2023-25869 Filed 11-28-23; 8:45 am]
BILLING CODE 6450-01-P
