[Federal Register Volume 74, Number 66 (Wednesday, April 8, 2009)]
[Rules and Regulations]
[Pages 16040-16096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7545]
[[Page 16039]]
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Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for Certain
Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and
Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial
and Industrial Equipment (Commercial Clothes Washers); Final Rule
Federal Register / Vol. 74, No. 66 / Wednesday, April 8, 2009 / Rules
and Regulations
[[Page 16040]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[Docket Number: EERE-2006-STD-0127]
RIN 1904-AB49
Energy Conservation Program: Energy Conservation Standards for
Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens,
and Electric and Gas Kitchen Ranges and Ovens) and for Certain
Commercial and Industrial Equipment (Commercial Clothes Washers)
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The Department of Energy (DOE) is announcing that it is
amending energy conservation standards pertaining to the cooking
efficiency of residential gas kitchen ranges and ovens, because it has
determined that such standards would be technologically feasible and
economically justified and would result in significant conservation of
energy, the three primary statutory criteria for adoption of standards
under the Energy Policy and Conservation Act (EPCA). DOE is not
adopting energy conservation standards pertaining to the cooking
efficiency of residential electric kitchen ranges and ovens and
microwave ovens, because it has determined that such standards would
not be technologically feasible and economically justified. At this
point, DOE has decided to defer its decision regarding adoption of
amended energy conservation standards for the energy efficiency of
commercial clothes washers and standby mode and off mode power
consumption by microwave ovens, pending further rulemaking. Finally,
DOE is not adopting amended standards for dishwashers and dehumidifiers
in this rulemaking, because recent amendments to EPCA have already set
standards for those products.
DATES: The effective date of this rule is June 8, 2009. Compliance with
the standards set by today's final rule is required on April 9, 2012.
ADDRESSES: For access to the docket to read background documents, the
technical support document, transcripts of the public meetings in this
proceeding, or comments received, visit the U.S. Department of Energy,
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza,
SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m.
and 4 p.m., Monday through Friday, except Federal holidays. Please call
Ms. Brenda Edwards at the above telephone number for additional
information regarding visiting the Resource Room. You may also obtain
copies of certain previous rulemaking documents in this proceeding
(i.e., framework document, advance notice of proposed rulemaking,
notice of proposed rulemaking), draft analyses, public meeting
materials, and related test procedure documents from the Office of
Energy Efficiency and Renewable Energy's Web site at http://www1.eere.energy.gov/buildings/appliance_standards/residential/cooking_products.html
FOR FURTHER INFORMATION CONTACT: Mr. Stephen Witkowski, U.S. Department
of Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington,
DC 20585-0121. Telephone: (202) 586-7463. E-mail:
[email protected].
Mr. Eric Stas or Mr. Michael Kido, U.S. Department of Energy,
Office of the General Counsel, GC-72, 1000 Independence Avenue, SW.,
Washington, DC 20585-0121. Telephone: (202) 586-9507. E-mail:
[email protected] or [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule
A. The Standard Levels
1. Statutorily Set Standard Levels for Dehumidifiers and
Dishwashers
2. The Standard Levels for the Energy Efficiency of Residential
Cooking Products
3. Further Rulemaking for Commercial Clothes Washers and
Microwave Ovens
B. Current Federal Standards
C. Benefits and Burdens to Purchasers of Cooking Products
D. Impact on Manufacturers
E. National Benefits
F. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for the Two Appliance
Products
3. Further Rulemaking To Consider Energy Conservation Standards
for Microwave Oven Standby Mode and Off Mode Power Use and for
Commercial Clothes Washers
III. General Discussion
A. Standby Power for Cooking Products
B. Test Procedures
C. Technological Feasibility
1. General
2. Gas Cooking Products--Alternatives to Line-Powered Electronic
Ignition Systems
3. Maximum Technologically Feasible Levels
D. Energy Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Consumers and Manufacturers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need of the Nation to Conserve Energy
2. Rebuttable Presumption
IV. Methodology and Discussion of Comments on Methodology
A. Market and Technology Assessment
1. Product Classes
2. Technology Options
3. Excluded Product Classes and Technologies
B. Engineering Analysis
1. Efficiency Levels
2. Manufacturing Costs
C. Life-Cycle Cost and Payback Period Analyses
1. Product Prices
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Repair and Maintenance Costs
6. Product Lifetime
7. Discount Rates
8. Effective Date of the Amended Standards
9. Product Energy Efficiency in the Base Case
10. Inputs to Payback Period Analysis
11. Rebuttable Presumption Payback Period
D. National Impact Analysis--National Energy Savings and Net
Present Value
1. General
2. Shipments
a. New Construction Shipments
b. Replacements
c. Purchase Price, Operating Cost, and Household Income Impacts
d. Fuel Switching
3. Other Inputs
a. Base-Case Forecasted Efficiencies
b. Standards-Case Forecasted Efficiencies
c. Annual Energy Consumption
d. Site-to-Source Conversion
e. Total Installed Costs and Operating Costs
f. Discount Rates
g. Effects of Standards on Energy Prices
E. Consumer Subgroup Analysis
F. Manufacturer Impact Analysis
G. Employment Impact Analysis
H. Utility Impact Analysis
I. Environmental Assessment
V. Discussion of Other Comments
A. Burdens and Benefits
1. Consideration of the Value of Avoided Environmental Impacts
B. Other Comments
1. Proposed Standards for Conventional Cooking Products
VI. Analytical Results and Conclusions
A. Trial Standard Levels
B. Significance of Energy Savings
C. Economic Justification
1. Economic Impact on Consumers
a. Life-Cycle Costs and Payback Period
b. Consumer Subgroup Analysis
2. Economic Impact on Manufacturers
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a. Industry Cash-Flow Analysis Results
b. Impacts on Manufacturer Employment
c. Impacts on Manufacturers That Are Small Businesses
d. Cumulative Regulatory Burden
3. Net Present Value of Consumer Impacts and National Employment
Impacts
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
D. Conclusion
1. Overview
2. Conventional Cooking Products
3. Microwave Ovens
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
1. Reasons for the Final Rule
2. Objectives of, and Legal Basis for, the Rule
3. Description and Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements
5. Significant Issues Raised by Public Comments
6. Steps DOE Has Taken To Minimize the Economic Impact on Small
Manufacturers
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VIII. Approval of the Office of the Secretary
I. Summary of the Final Rule
A. The Standard Levels
DOE notes that this rulemaking originally bundled four separate
residential and commercial products (dishwashers, dehumidifiers,
electric and gas kitchen ranges and ovens and microwave ovens, and
commercial clothes washers). However, as explained in further detail
below, various events occurred during the course of the rulemaking
which resulted in the consideration of a number of these products
separately. For example, Congress set efficiency levels by statute for
dishwashers and dehumidifiers, which DOE codified in its regulations
through a separate rulemaking (along with numerous other statutory
changes). At the notice of proposed rulemaking (NOPR) stage, public
commenters made DOE aware of problems with the efficiency data for
certain commercial clothes washer models upon which DOE had relied in
its analyses. For microwave ovens, public commenters urged DOE to await
the impending finalization of the industry standard for measurement of
microwave oven standby mode and off mode power consumption before
adopting a corresponding DOE test procedure (a prerequisite for an
energy conservation standard addressing standby power). DOE believes
that both of these developments warrant further rulemaking action. For
these reasons, today's final rule is limited to addressing energy
conservation standards for the cooking efficiency of electric and gas
kitchen ranges and ovens and microwave ovens.
1. Statutorily Set Standard Levels for Dehumidifiers and Dishwashers
As explained in detail in the NOPR in this proceeding, the Energy
Policy and Conservation Act, as amended (42 U.S.C. 6291 et seq.; EPCA
or the Act), initially contained energy conservation standards for
dehumidifiers and residential dishwashers, as well as requirements for
DOE to amend those standards, and DOE announced it would consider such
amendments to those standards in this rulemaking. 73 FR 62034, 62036-40
(Oct. 17, 2008) (the October 2008 NOPR). However, the Energy
Independence and Security Act of 2007 (EISA 2007), Public Law No. 110-
40, subsequently amended these EPCA provisions in two ways pertinent
here. First, EISA 2007 prescribed efficiency standards for
dehumidifiers manufactured on or after October 1, 2012 and removed the
requirement for a rulemaking to amend the EPCA standards for this
product. Second, EISA 2007 prescribed maximum energy and water use
levels for residential dishwashers manufactured on or after January 1,
2010, and required completion of a final rule no later than January 1,
2015 to consider amendment of these dishwasher standards. 73 FR 62034,
62038-40 (Oct. 17, 2008). (EISA 2007, section 311(a)(1)-(2); 42 U.S.C.
6295(g)(10) and (cc)) DOE notes that although EISA 2007 did not
formally remove the requirement to conduct the current rulemaking, the
statutory standards for dishwashers are to become effective well before
the effective date of any amended standards that would have arisen from
the present rulemaking. Consequently, DOE has not conducted further
analysis in this rulemaking of standards for dehumidifiers and
residential dishwashers. 73 FR 62034, 62040 (Oct. 17, 2008). Instead,
DOE has incorporated into its regulations all of the energy
conservation standards prescribed by EISA 2007 for various products and
equipment, including those for dehumidifiers and residential
dishwashers, in a separate rulemaking notice. 74 FR 12058 (March 23,
2009).
2. The Standard Levels for the Energy Efficiency of Residential Cooking
Products
Pursuant to EPCA, any amended energy conservation standard that DOE
prescribes for cooking products \1\ or commercial clothes washers
(collectively referred to in this final rule as ``the two appliance
products'') must be designed to ``achieve the maximum improvement in
energy efficiency * * * which the Secretary determines is
technologically feasible and economically justified.'' (42 U.S.C.
6295(o)(2)(A) and 6316(a)) Furthermore, the new standard must ``result
in significant conservation of energy.'' (42 U.S.C. 6295(o)(3)(B) and
6316(a)) In today's final rule, DOE has decided to adopt amended energy
conservation standards pertaining to the cooking efficiency of
residential gas kitchen ranges and ovens pursuant to these criteria.
Today's final rule requires that residential gas kitchen ranges and
ovens without an electrical supply cord manufactured after April 9,
2012 must not be equipped with a constant burning pilot light. DOE has
decided not to adopt energy conservation standards pertaining to the
cooking efficiency of residential electric kitchen ranges and ovens and
microwave ovens. As explained in further detail below, no cooking
efficiency standards for these products were found to be
technologically feasible and economically justified.
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\1\ The term ``cooking products'' as used in this notice refers
to residential electric and gas kitchen ranges and ovens, including
microwave ovens.
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3. Further Rulemaking for Commercial Clothes Washers and Microwave
Ovens
DOE has decided to defer its decision regarding whether to adopt
amended energy conservation standards for the energy efficiency of
commercial clothes washers (CCWs) and for the standby mode and off mode
power consumption of microwave ovens, pending further rulemaking. The
reasons for DOE's decision are summarized below.
In the October 2008 NOPR, DOE tentatively concluded for CCWs that a
standard of 1.76 modified energy factor (MEF) and 8.3 water consumption
factor (WF) for top-loading CCWs and a standard of 2.0 MEF and 5.5 WF
for front-loading CCWs are technologically feasible and economically
justified. 73 FR 62034, 62036 (Oct. 17, 2008). As
[[Page 16042]]
discussed in more detail in section II.B.3, DOE received comments on
the October 2008 NOPR that questioned the validity of the maximum
technologically feasible (max-tech) level that was used in the analysis
of top-loading CCWs. DOE has concluded that additional information is
required to verify whether the max-tech level specified in the NOPR is
appropriate.
Likewise, the October 2008 NOPR tentatively concluded that a
standard for microwave oven standby mode and off mode energy
consumption would be technologically feasible and economically
justified. Therefore, concurrent with the standards NOPR, DOE published
in the Federal Register a test procedure NOPR for microwave ovens to
provide for the measurement of standby mode and off mode power
consumption by these products. 73 FR 61134 (Oct. 17, 2008). As
discussed in section II.B.3, DOE received comments on the October 2008
NOPR that objected to certain definitions that were included in the
proposed microwave oven test procedure amendments. The commenters
supported the incorporation of definitions provided in a revision of an
industry standard for measuring standby power consumption expected to
be completed later this year. DOE has concluded that it should defer
consideration of microwave oven energy conservation standards until the
revised industry standard becomes available for consideration in the
microwave oven test procedure amendments.
DOE intends to complete the rulemaking process for these products
and equipment as expected once additional key data and information
become available, keeping in mind the relevant statutory deadlines. As
discussed in the October 2008 NOPR, 73 FR 62034, 62041 (Oct. 17, 2008),
the EISA 2007 amendments to EPCA require DOE to amend the ranges and
ovens and microwave oven test procedure to incorporate standby and off
mode energy consumption no later than March 31, 2011. (42 U.S.C.
6295(gg)(2)(B)(vi)) For CCWs, EPCA requires that DOE issue a final rule
by January 1, 2010, to determine whether the existing energy
conservation standards should be amended. (42 U.S.C. 6313(e)(2)(A))
B. Current Federal Standards
DOE established the current energy conservation standards for
dishwashers manufactured on or after May 14, 1994, in a final rule
published in the Federal Register on May 14, 1991 (56 FR 22250). These
standards include a requirement that the energy factor (EF) of a
standard-size dishwasher must not be less than 0.46 cycles per
kilowatt-hour (kWh) and that the EF of a compact-size dishwasher must
not be less than 0.62 cycles per kWh. (10 CFR 430.32(f)) Section
311(a)(2) of EISA 2007 established maximum energy and water use levels
for dishwashers manufactured on or after January 1, 2010. (42 U.S.C.
6295(g)(10)) Under the amended statute, a standard-size dishwasher
shall not exceed 355 kWh/year and 6.5 gallons of water per cycle, and a
compact-size dishwasher shall not exceed 260 kWh/year and 4.5 gallons
of water per cycle.
EPCA, as amended by the Energy Policy Act of 2005 (EPACT 2005),
Public Law 109-58, prescribes the current energy conservation standard
for dehumidifiers, shown in Table I.1. (42 U.S.C. 6295(cc)(1); 10 CFR
430.32(v)) Section 311(a)(1) of EISA 2007 amended EPCA to prescribe
minimum efficiency levels for dehumidifiers manufactured on or after
October 1, 2012. (42 U.S.C. 6295(cc)(2))
Table I.1--Federal Standards for Residential Dehumidifiers
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EPACT 2005 standards effective October 1, 2007 EISA 2007 standards effective October 1, 2012
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Dehumidifier capacity pints/day EF liters/kWh Dehumidifier capacity pints/day EF liters/kWh
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25.00 or less................................. 1.00 Up to 35.00..................... 1.35
25.01-35.00................................... 1.20 35.01-45.00..................... 1.50
35.01-54.00................................... 1.30 45.01-54.00..................... 1.60
54.01-74.99................................... 1.50 54.01-75.00..................... 1.70
75.00 or more................................. 2.25 Greater than 75.00.............. 2.5
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EPCA prescribes the current energy conservation standard for
cooking products, which includes a requirement that gas ranges and
ovens with an electrical supply cord that are manufactured on or after
January 1, 1990, not be equipped with a constant burning pilot light.
(42 U.S.C. 6295(h)(1); 10 CFR 430.32(j)) Currently, no mandatory
Federal energy conservation standards exist for conventional electric
ranges and ovens or for microwave ovens.
EPCA also prescribes standards for CCWs manufactured on or after
January 1, 2007, requiring that CCWs have an MEF of at least 1.26 and a
WF of not more than 9.5. (42 U.S.C. 6313(e)(1); 10 CFR 431.156)
C. Benefits and Burdens to Purchasers of Cooking Products
In the October 2008 NOPR, DOE considered the impacts on consumers
of several trial standard levels (TSLs) related to the cooking
efficiency of conventional cooking products and microwave ovens. 73 FR
62034, 62037, 62084-90 (Oct. 17, 2008). In the October 2008 NOPR, DOE
tentatively concluded that none of the TSLs for microwave oven cooking
efficiency were economically justified. 73 FR 62034, 62119 (Oct. 17,
2008). DOE has reached the same conclusion in today's final rule.
Therefore, at this time, DOE is not adopting standards for microwave
oven cooking efficiency (EF), so there will be no positive or negative
impacts on purchasers of these products.
Also in the October 2008 NOPR, DOE determined that at TSL 1, the
economic impacts (i.e., the average life-cycle cost (LCC) savings) on
consumers of the proposed standards for conventional cooking products
would be positive. (TSL 1 prohibits constant burning pilots for gas
appliances but does not change standards for the other product
classes.) DOE has reached the same conclusion in today's final rule.
Table I.2 presents the impacts on consumers of the energy conservation
standards adopted in today's final rule.
[[Page 16043]]
Table I.2--Implications of Amended Standards for Consumers
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Gas cooktops Gas standard ovens
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New average installed cost.. $332................ $464.
Estimated installed cost $22................. $34.
increase.
Lifetime operating cost $37................. $43.
savings.
Average payback period...... 3.3 years........... 7.0 years.
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The typical baseline gas cooktop has an installed price of $310 and
an average lifetime operating cost of $561, resulting in a total life-
cycle cost of $871. To meet the new standards, DOE estimates that the
installed price of this product will be $332, an increase of $22. This
price increase will be offset by lifetime operating cost savings of
$37, resulting in life-cycle cost savings of $15. For gas standard
ovens, the typical baseline product has an installed price of $430 and
an annual average lifetime operating cost of $406, resulting in a total
life-cycle cost of $836. To meet the new standards, DOE estimates that
the installed price of this product will be $464, an increase of $34.
This price increase will be offset by lifetime operating cost savings
of $43, resulting in life-cycle cost savings of $9.
For the subgroup of consumers who do not have access to the
electrical grid or whose religious and cultural practices prohibit the
use of grid electricity, the amended standards would require use of
technologies (e.g., a battery-powered spark-ignition device) that have
not yet been certified to meet applicable safety standards. See 42
U.S.C. 6295(o)(2)(B)(i)(VII) and 10 CFR part 430, subpart C, appendix
A, sections 4(a)(4)(i) and (iv), and 5(b)(1) and (4). (See sections
III.C.2 and VI.D.2 of this notice for further discussion.) Based on its
research, DOE expects that certification of such technologies under
applicable safety standards will likely be completed when these
standards become effective.
D. Impact on Manufacturers
Using a real corporate discount rate of 7.2 percent, DOE estimates
the industry net present value (INPV) in 2006$ of the gas cooktop, gas
oven, and microwave oven industries to be $288 million, $469 million,
and $1.46 billion, respectively, in the absence of new or amended
standards. DOE estimates the impact of the cooking efficiency standards
adopted in today's final rule on the INPV of manufacturers of these
products to be between a 1.73-percent loss and a 4.11-percent loss (-$5
million to -$12 million) for gas cooktop manufacturers and between a
1.56-percent loss and a 2.10-percent loss (-$7 million to -$10 million)
for gas oven manufacturers. Because DOE is not adopting standards for
cooking efficiency of conventional electric cooking products or
microwave ovens (and because consideration of a standby mode and off
mode standard for microwave ovens has been deferred), this final rule
will have no net impact on manufacturers of these products.
Based on DOE's interviews with manufacturers of cooking products
and on comments received on the October 2008 NOPR, DOE determined that
two small businesses that manufacture gas cooking products could be
disproportionately affected by standards. (See section VII.B of this
notice for further discussion.)
E. National Benefits
DOE estimates the standards will save approximately 0.14 quads
(quadrillion (1015) British thermal units (BTU)) of energy
over 30 years (2012-2042). This is equivalent to 2.9 days of U.S.
gasoline use.
By 2042, DOE expects the energy savings from the standards to
eliminate the need for approximately 62 megawatts (MW) of generating
capacity.\2\ These energy savings will result in cumulative
(undiscounted) greenhouse gas emission reductions of approximately 13.7
million tons (Mt) of carbon dioxide (CO2). Based on a
methodology developed during 2008, these emission reductions were
estimated to represent domestic benefits of $0 to $109 million using a
7-percent discount rate and $0 to $241 million using a 3-percent
discount rate, cumulative from 2012 to 2042 in 2007$. The methodology
used to develop these estimates is now under review.
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\2\ Because the amended standards affect solely residential gas
consumption, the installed power plant generating capacity change
represents only 0.005 percent of the total installed generating
capacity forecasted for the year 2030. Therefore, both the installed
capacity change and its associated emission reductions are
negligible. Although effectively negligible, installed generation
capacity and emission impacts are still reported in section VI of
today's final rule for TSL 1 (the amended standards).
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Additionally, the standards will help alleviate air pollution by
resulting in approximately 6.1 kilotons (kt)) of nitrogen oxides
(NOX) cumulative emission reductions at the sites where
appliances are used from 2012 through 2042. In addition, the standards
would result in power plant NOX emissions reductions of 0.6
kt from 2012 to 2042. The total NOX emissions reductions at
these locations would be an amount equal to $0.7 to $7.3 million using
a 7-percent discount rate and $1.5 to $15.4 million using a 3-percent
discount rate, in 2006$. The standards would also possibly result in
power plant mercury (Hg) emissions reductions of up to 0.15 tons (t)
from 2012 to 2042, or an amount equal to $0 to $1.3 million using a 7-
percent discount rate and $0 to $2.6 million using a 3-percent discount
rate, in 2006$.
The national NPV of the standards is $254 million using a 7-percent
discount rate and $706 million using a 3-percent discount rate,
cumulative from 2012 to 2042 in 2006$. This is the estimated total
value of future savings minus the estimated increased equipment costs,
discounted to 2007.
The benefits and costs of today's final rule to the Nation can also
be expressed in terms of annualized [2006$] values over the forecast
period (2012 through 2042). Using a 7-percent discount rate for the
annualized cost analysis, the cost of the standards established in
today's final rule is $17 million per year in increased product and
installation costs, while the annualized benefits are $37 million per
year in reduced product operating costs. Using a 3-percent discount
rate, the cost of the standards established in today's final rule is
$28 million per year and the benefits are $85 million per year.
F. Conclusion
DOE has evaluated the benefits (energy savings, consumer LCC
savings, positive national NPV, and emissions reductions) to the Nation
of amended energy conservation standards for gas cooking products and
of new cooking efficiency standards for conventional electric cooking
products and microwave ovens, as well as the costs of such standards
(loss of manufacturer INPV and consumer LCC increases for some users of
the cooking products). Based on all available information, DOE has
determined that the benefits to the
[[Page 16044]]
Nation of the standards for gas cooking products outweigh their costs.
Today's standards also represent the maximum improvement in energy
efficiency that is technologically feasible and economically justified,
and will result in significant energy savings. At present, gas cooking
products that meet the amended standard levels are commercially
available or, for the subgroup of consumers without access to the
electrical grid or whose religious or cultural practices prohibit the
use of grid electricity, are likely to be commercially available at the
time the standards become effective.
II. Introduction
A. Authority
Title III of EPCA sets forth a variety of provisions designed to
improve energy efficiency. Part A \3\ of Title III (42 U.S.C. 6291-
6309) provides for the ``Energy Conservation Program for Consumer
Products Other Than Automobiles.'' The program covers consumer products
and certain commercial products (all of which are referred to hereafter
as ``covered products''), including electric and gas kitchen ranges and
ovens. (42 U.S.C. 6292(10), 6295(h)) Part A-1 \4\ of Title III (42
U.S.C. 6311-6317) establishes a similar program for ``Certain
Industrial Equipment'' (referred to hereafter as ``covered
equipment''), including commercial clothes washers. (42 U.S.C. 6312,
6313(e)) Part A of Title III provides for test procedures, labeling,
and energy conservation standards for residential cooking products and
certain other types of products, and it authorizes DOE to require
information and reports from manufacturers.
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\3\ This part was originally titled Part B. It was redesignated
Part A in the United States Code for editorial reasons.
\4\ This part was originally titled Part C. It was redesignated
Part A-1 in the United States Code for editorial reasons.
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The National Appliance Energy Conservation Act of 1987 (NAECA),
Pub. L. 100-12, amended EPCA to establish prescriptive standards for
cooking products. NAECA requires gas ranges and ovens with an
electrical supply cord that are manufactured on or after January 1,
1990, not to be equipped with a constant burning pilot light, and
requires DOE to conduct two cycles of rulemakings for ranges and ovens
to determine if the standards established should be amended. (42 U.S.C.
6295(h)(1)-(2)) The test procedures for cooking products appear at 10
CFR part 430, subpart B, appendix I.
DOE is conducting the present rulemaking for cooking products
pursuant to the authority set forth above. The following paragraphs
discuss some of the key provisions of EPCA relevant to the standards-
setting rulemaking.
EPCA provides criteria for prescribing new or amended standards for
covered products. As indicated above, any new or amended standard for
cooking products must be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A)) Additionally, DOE may not
prescribe an amended or new standard if DOE determines by rule that
such a standard would not result in ``significant conservation of
energy,'' or ``is not technologically feasible or economically
justified.'' (42 U.S.C. 6295(o)(3)(B) and 6316(a))
EPCA also provides that in deciding whether such a standard is
economically justified for covered products, DOE must, after receiving
comments on the proposed standard, determine whether the benefits of
the standard exceed its burdens by considering, to the greatest extent
practicable, the following seven factors:
1. The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of 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 imposition of the standard;
3. The total projected amount of energy savings likely to result
directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the products
likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
6. The need for national energy conservation; and
7. Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a))
In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and
6316(a)), establishes a rebuttable presumption that any standard for
covered products is economically justified if the Secretary finds that
``the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy (and as applicable, water) savings during
the first year that the consumer will receive as a result of the
standard,'' as calculated under the test procedure in place for that
standard.
EPCA also contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6295(o)(1) and 6316(a)) This
provision mandates that the Secretary not prescribe any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
EPCA further provides that the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is ``likely to result
in the unavailability in the United States of any product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States at the time of
the Secretary's finding.'' (42 U.S.C. 6295(o)(4) and 6316(a))
Section 325(q)(1) of EPCA is applicable to promulgating standards
for any type or class of covered product that has two or more
subcategories. (42 U.S.C. 6295(q)(1) and 6316(a)) Under this provision,
DOE must specify a different standard level than that which applies
generally to such type or class of product for any group of products
``which have the same function or intended use, if * * * products
within such group--(A) consume a different kind of energy from that
consumed by other covered products within such type (or class); or (B)
have a capacity or other performance-related feature which other
products within such type (or class) do not have and such feature
justifies a higher or lower standard'' than applies or will apply to
the other products. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining
whether a performance-related feature justifies such a different
standard for a group of products, DOE must consider ``such factors as
the utility to the consumer of such a feature'' and other factors DOE
deems appropriate. (42 U.S.C. 6295(q)(1)) Any rule prescribing such a
standard must include an explanation of the basis on which DOE
established such higher or lower level. (See 42 U.S.C. 6295(q)(2)).
Federal energy conservation standards for covered products
generally supersede State laws or regulations concerning energy
conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)
and 6316(a)) DOE can, however, grant waivers of preemption for
particular State laws or regulations, in accordance with the procedures
and
[[Page 16045]]
other provisions of section 327(d) of the Act. (42 U.S.C. 6297(d) and
6316(a))
B. Background
1. Current Standards
As described in greater detail in the October 2008 NOPR, 73 FR
62034, 62039-40 (Oct. 17, 2008), the current energy conservation
standards in EPCA for dishwashers apply to all products manufactured on
or after May 14, 1994 (10 CFR 430.32(f)); for dehumidifiers, to all
products manufactured on or after October 1, 2007 (42 U.S.C.
6295(cc)(1); 10 CFR 430.32(v)); for cooking products, to all products
manufactured on or after January 1, 1990, (42 U.S.C. 6295(h)(1); 10 CFR
430.32(j)); and for CCWs to all equipment manufactured on or after
January 1, 2007 (42 U.S.C. 6313(e)(1); 10 CFR 431.156). In addition,
EISA 2007 established standards for dishwashers manufactured on or
after January 1, 2010 (42 U.S.C. 6295(g)(10)) and for dehumidifiers
manufactured on or after October 1, 2012 (42 U.S.C. 6295(cc)(2)). These
standards are discussed in section I.B.
2. History of Standards Rulemaking for the Two Appliance Products
As noted above, this rulemaking originally bundled four products
(dishwashers, dehumidifiers, residential cooking products, and
commercial clothes washers). However, during the course of this
rulemaking, Congress set energy conservation standard levels by statute
for dishwashers and dehumidifiers as part of EISA 2007. Accordingly,
the regulatory history provided below focuses on the two remaining
appliance products--residential cooking products and commercial clothes
washers.
NAECA amended EPCA to establish the current prescriptive standard
requiring gas ranges and ovens with an electrical supply cord not to be
equipped with a constant burning pilot light. (42 U.S.C. 6295(h)(1)) In
a rulemaking undertaken pursuant to EPCA (42 U.S.C. 6295(h)(2)), DOE
issued a final rule in which it found that standards were not justified
for electric cooking products and, partially due to the difficulty of
conclusively demonstrating the economic impacts of standards for gas-
fired ranges and ovens, did not include amended standards for gas-fired
ranges and ovens in the final rule. 63 FR 48038 (Sept. 8, 1998).
Section 136(a) and (e) of the Energy Policy Act of 2005 (EPACT
2005), Public Law 109-58, amended EPCA to add CCWs as covered
equipment, establish the current standards for such equipment, and
require that DOE do two cycles of rulemakings to determine whether
these standards should be amended. (42 U.S.C. 6311(1) and 6313(e)) DOE
has incorporated these standards into its regulations. 70 FR 60407,
60416 (Oct. 18, 2005); 10 CFR 431.156.
DOE commenced this rulemaking on March 15, 2006, by publishing its
framework document for the rulemaking, and then gave notice of a public
meeting and of the availability of the document. 71 FR 15059 (March 27,
2006). The framework document described the approaches DOE anticipated
using and issues to be resolved in the rulemaking. DOE held the public
meeting on April 27, 2006, to present the contents of the framework
document, describe the analyses DOE planned to conduct during the
rulemaking, obtain public comment on these subjects, and facilitate the
public's involvement in the rulemaking. DOE also allowed the submission
of written statements after the public meeting. In response, DOE
received 11 written statements.
On December 4, 2006, DOE posted two spreadsheet tools for this
rulemaking on its Web site. The tools included calculation of the
impacts of the candidate standard levels developed for the two
appliance products. One tool calculates LCC and payback periods (PBPs);
the other--the National Impact Analysis (NIA) Spreadsheet--calculates
shipments, national energy savings (NES), and NPV.
On November 15, 2007, DOE published an advance notice of proposed
rulemaking (ANOPR) in this proceeding. 72 FR 64432 (November 2007
ANOPR). In the November 2007 ANOPR, DOE described and sought comment on
the analytical framework, models, and tools that DOE was using to
analyze the impacts of energy conservation standards for the relevant
appliance products. In addition, DOE published on its Web site the
complete ANOPR technical support document (TSD), which included the
results of DOE's preliminary analyses in this rulemaking. In the
November 2007 ANOPR, DOE requested oral and written comments on these
preliminary results and on a range of other issues, including the
measurement of microwave oven standby power consumption and potential
CCW product classes. DOE held a public meeting in Washington, DC, on
December 13, 2007, to present the methodology and results of the ANOPR
analyses, and to receive oral comments from those who attended. The
oral and written comments DOE received focused on DOE's assumptions,
approach, and analytical results, and were addressed in detail in the
October 2008 NOPR.
In the October 2008 NOPR, DOE proposed new energy conservation
standards for the two appliance products. 73 FR 62034, 62134 (Oct. 17,
2008). It also provided additional background information on the
history of this rulemaking. Id. at 62040-41. In conjunction with the
October 2008 NOPR, DOE also published on its Web site the complete TSD
for the proposed rule, which incorporated the analyses DOE conducted
and technical documentation for each analysis. The LCC spreadsheets,
national impact analysis spreadsheets, Government Regulatory Impact
Model (GRIM) spreadsheets, and regulatory impact analysis (RIA)
spreadsheets are also available on DOE's Web site.\5\ The standards
proposed for the two appliance products are presented in Table II.1.
---------------------------------------------------------------------------
\5\ Available online at DOE's Web site: http://www1.eere.energy.gov/buildings/appliance_standards/residential/home_appl_analysis.html.
Table II.1--October 2008 Proposed Energy Efficiency Standards
----------------------------------------------------------------------------------------------------------------
Product class Proposed energy conservation standards
----------------------------------------------------------------------------------------------------------------
Kitchen ranges and ovens:
Gas cooktops/conventional burners.. No constant burning pilot lights.
Electric cooktops/low or high No standard.
wattage open (coil) elements.
Electric cooktops/smooth elements.. No standard.
Gas ovens/standard oven............ No constant burning pilot lights.
Gas ovens/self-clean oven.......... No change to existing standard.
Electric ovens..................... No standard.
[[Page 16046]]
Microwave ovens.................... Maximum standby power = 1.0 watt.
Commercial clothes washers:
Top-loading commercial clothes 1.76 Modified Energy Factor/8.3 Water Factor.
washers.
Front-loading commercial clothes 2.00 Modified Energy Factor/5.5 Water Factor.
washers.
----------------------------------------------------------------------------------------------------------------
In the October 2008 NOPR, DOE discussed and invited comment
specifically on the following topics: (1) The proposed standards for
residential gas kitchen ranges and ovens, microwave ovens, and CCWs, as
well as DOE's tentative conclusion that standards for residential
electric kitchen ranges and ovens other than microwave ovens and gas
self-cleaning ovens are not technologically feasible and economically
justified; (2) whether battery-powered spark ignition modules are a
viable alternative to standing pilots for manufacturers of gas ranges,
ovens, and cooktops; (3) the technical feasibility of incorporating
microwave oven cooking efficiency with standby mode and off mode power
into a single metric for the purpose of developing energy conservation
standards; (4) input and data regarding off mode power for microwave
ovens; (5) input and data on the utility provided by specific features
that contribute to microwave oven standby power, particularly display
technologies and cooking sensors that do not require standby power; (6)
input and data on control strategies available to allow manufacturers
to make design tradeoffs between incorporating standby-power-consuming
features such as displays or cooking sensors and including a function
to turn power off to these components during standby mode, as well as
on the viability and cost of microwave oven control board circuitry
that could accommodate transistors to switch off cooking sensors and
displays; (7) whether switching or similar modern power supplies can
operate successfully inside a microwave oven and the associated
efficiency impacts on standby power; (8) the selection of microwave
oven standby standard levels for the engineering analysis; (9) input
and data on the estimated incremental manufacturing costs, the assumed
approaches to achieve each standby level for microwave ovens, and
whether any intellectual property or patent infringement issues are
associated with the design options presented in the TSD to achieve each
standby level; (10) input and data on the estimated market share of
microwave ovens at different standby power consumption levels; (11) the
appropriateness of using other discount rates in addition to 7 percent
and 3 percent real to discount future emissions reductions; and (12)
the determination of the anticipated environmental impacts of the
proposed rule, particularly with respect to the methods for valuing the
expected carbon dioxide (CO2) and oxides of nitrogen
(NOX) emissions savings due to the proposed standards. 73 FR
62034, 62133 (Oct. 17, 2008).
In addition to these topics on which it requested comment
specifically, DOE addressed four topics in the October 2008 NOPR: (1)
The determination of product classes for both cooking products and
CCWs; (2) the adequacy of the residential clothes washer test procedure
for CCWs; (3) small business impacts of the proposed cooking products
standards; and (4) impacts of the proposed CCW standards on the
competitive landscape.
DOE held a public meeting in Washington, DC, on November 13, 2008,
to hear oral comments on and solicit information relevant to the
proposed rule.
3. Further Rulemaking To Consider Energy Conservation Standards for
Microwave Oven Standby Mode and Off Mode Power Use and for Commercial
Clothes Washers
Among the responses to the October 2008 NOPR, DOE received a number
of comments from interested parties that presented information and
arguments for continuing the rulemaking process to consider standards
for microwave oven standby mode and off mode power consumption, as well
as standards for CCWs. These comments and DOE's response are discussed
below.
Regarding microwave oven standby mode and off mode power
consumption, interested parties raised concerns over issues associated
with the concurrent microwave oven test procedure rulemaking. As
mentioned above and discussed in detail in section III.B of today's
notice, DOE proposed to amend the microwave oven (MWO) test procedure
to incorporate by reference specific clauses of International
Electrotechnical Commission (IEC) Standard 62301, Household electrical
appliances--Measurement of standby power. DOE would have adopted
definitions for ``standby mode'' and ``off mode'' in accordance with
the EISA 2007 amendments to EPCA. 73 FR 62134 (Oct. 17, 2008) (MWO test
procedure NOPR).
The Association of Home Appliance Manufacturers (AHAM) raised
concerns about the ``robustness'' of these proposed microwave oven test
procedure amendments, and supported continuing the microwave oven
energy conservation standards rulemaking to allow additional time for
DOE to collect data and to clarify the test procedure. (AHAM, No. 47 at
pp. 3 and 5) \6\ Whirlpool Corporation (Whirlpool) stated that DOE
could perform better data gathering and analysis for a microwave oven
standby power standard if DOE used the entire time until the EISA 2007
deadline of March 31, 2011 for a test procedure amendment to
incorporate measurement of standby mode and off mode power consumption.
Whirlpool and GE Consumer & Industrial (GE) requested that DOE halt the
current microwave oven energy conservation standards rulemaking and
work with industry to gather and analyze more comprehensive energy
performance data. (Whirlpool, No. 50 at pp. 1-2; GE, No. 48 at p. 2) GE
further stated that DOE's approach to standby mode and off mode power
consumption for microwave ovens could have important implications for
other covered products, and that the microwave oven energy conservation
standards rulemaking should be postponed to allow DOE to address
standby power issues for covered products either through negotiation or
through a rulemaking that considers how the definition of ``standby
power'' will affect all appliances, not just microwave ovens. (GE, No.
48 at p. 4)
---------------------------------------------------------------------------
\6\ A notation in the form ``AHAM, No. 47 at pp. 3 and 5''
identifies a written comment (1) made by AHAM; (2) recorded in
document number 47 that is filed in the docket of this rulemaking
(Docket No. EE-2006-STD-0127) and maintained in the Resource Room of
the Building Technologies Program; and (3) which appears on pages 3
and 5 of document number 47.
---------------------------------------------------------------------------
AHAM raised four other concerns about the proposed microwave oven
test procedure amendments: (1) Which microwave ovens are covered
products; (2) the incorporation of the EPCA
[[Page 16047]]
definitions for ``standby mode'' and ``off mode,'' which AHAM claims
are outdated; (3) the conditions for standby power testing; and (4) the
test period for measuring standby power. AHAM stated that there is
considerable confusion regarding the definition of microwave ovens as
covered products. DOE stated in the microwave oven test procedure NOPR
that the test procedure amendments would apply to microwave ovens for
which the primary source of heating energy is electromagnetic
(microwave) energy, including microwave ovens with or without browning
thermal elements designed for surface browning of food. The proposed
test procedure amendments would not cover combination ovens (i.e.,
ovens consisting of a single compartment in which microwave energy and
one or more other technologies, such as thermal or halogen cooking
elements or convection systems, contribute to cooking the food). 73 FR
62134, 62137 (Oct. 17, 2008). AHAM stated that it had been working to
set up negotiations on a microwave oven standby power standard, but
that confusion caused by DOE's definition of microwave ovens required
AHAM to cancel its efforts until the definition is clarified. (AHAM,
No. 47 at p. 3) Whirlpool concurred that the definition of microwave
ovens needs to be clarified. It claimed that DOE appears to be creating
a new product definition without properly engaging interested parties.
(Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29; Whirlpool,
No. 50, at pp. 1-2) \7\
---------------------------------------------------------------------------
\7\ A notation in the form ``Whirlpool, Public Meeting
Transcript, No. 40.5 at p. 29'' identifies an oral comment that DOE
received during the November 13, 2008, NOPR public meeting, was
recorded in the public meeting transcript in the docket for this
rulemaking (Docket No. EE-2006-STD-0127), and is maintained in the
Resource Room of the Building Technologies Program. This particular
notation refers to a comment (1) made by Whirlpool during the public
meeting; (2) recorded in document number 40.5, which is the public
meeting transcript that is filed in the docket of this rulemaking;
and (3) which appears on page 29 of document number 40.5.
---------------------------------------------------------------------------
The Appliance Standards Awareness Project (ASAP) commented that it
appreciates DOE accelerating development of the microwave oven test
procedure ahead of the EISA 2007 deadline of 2011 so that standby power
savings can be captured in this round of rulemaking for cooking
products. (ASAP, Public Meeting Transcript, No. 40.5 at p. 32)
Regarding definitions of ``standby mode'' and ``off mode,'' AHAM
and Whirlpool recognize that DOE is using the definitions provided
under the EISA 2007 amendments to EPCA, but stated that DOE should
consider IEC's recent work in developing the second edition of IEC
Standard 62301, particularly the clarifications of the definitions of
``standby mode'' and ``off mode.'' AHAM cited the case in which a
microwave oven would be plugged in and only energize a light-emitting
diode (LED) or some other indication that the unit is in ``off mode.''
AHAM commented that this would represent a different way for the
product to communicate with the consumer that might not be covered
under the proposed mode definitions. (AHAM, Public Meeting Transcript,
No. 40.5 at pp. 58-60; Whirlpool, Public Meeting Transcript, No. 40.5
at pp. 60-61) In contrast, ASAP stated that the EISA 2007 language
defining ``standby mode'' and ``off mode'' was reviewed and agreed to
by AHAM, and jointly recommended by AHAM and efficiency advocates to
Congress. Therefore, ASAP asserted that DOE has definitions that were
recommended by interested parties. (ASAP, Public Meeting Transcript,
No. 40.5 at p. 64)
In the November 2007 ANOPR, DOE proposed considering a single
product class for microwave ovens, encompassing microwave ovens with
and without browning (thermal) elements. This product class did not
include microwave ovens that incorporate convection systems. DOE stated
that it was unaware of any data evaluating the efficiency
characteristics of microwave ovens incorporating convection systems,
and sought comments and information that would help it evaluate the
performance of such products. 72 FR 64432, 64445, 64513 (Nov. 15,
2007). AHAM commented in response that the single product class should
be broken up into subcategories according to features that may be
different than when the standard was first put into effect. 73 FR
62034, 62049 (Oct. 17, 2008). However, in the October 2008 NOPR, DOE
concluded, based on data supplied by AHAM and its own testing, that no
features or utilities were uniquely correlated with efficiency that
would warrant defining multiple product classes for microwave ovens.
Id. Therefore, for the purposes of the NOPR analyses, DOE retained a
single product class for microwave ovens. No additional data or
information was submitted in response to the October 2008 NOPR that
would justify amending the definition of the microwave oven product
class.
DOE agrees with commenters that it is beneficial to harmonize,
where possible, its standards and test procedures with those of other
countries and international agencies, particularly in the area of
standby power. DOE recognizes that IEC Standard 62301 is an
internationally accepted test standard for the measurement of standby
power in residential appliances, and that it would be beneficial to
many manufacturers to be required to meet only a single standby power
standard because they produce microwave ovens for markets in multiple
countries. In considering a standby power standard for microwave ovens,
along with associated amendments to the microwave oven test procedure,
DOE proposed to incorporate language for definitions of ``active
mode,'' ``standby mode,'' and ``off mode'' as provided by the EISA 2007
amendments to EPCA. (42 U.S.C. 6295(gg)(1)(A)) However, in directing
DOE to amend its test procedures to address standby and off mode power
consumption, the EISA 2007 amendments to EPCA allow DOE to amend the
EPCA definitions of these modes, while requiring that DOE take ``into
consideration the most current versions'' of IEC Standard 62301 and IEC
Standard 62087. (42 U.S.C. 6295(gg)(1)(B) and (2)(A)) In light of these
statutory provisions and recognizing the benefits of harmonization, DOE
has decided to continue this rulemaking, as to microwave oven standby
power standards, until the second edition of IEC Standard 62301 is
finalized, which is expected to occur by July 2009. At such time, DOE
will consider further modifications to DOE's microwave oven test
procedure, particularly the ``standby mode'' and ``off mode''
definitions, and, on the basis of such amended test procedures, DOE
will analyze potential energy conservation standards for microwave oven
standby mode and off mode energy consumption. DOE invites data and
information that will allow it to further conduct the analysis for
standby and off mode power consumption of microwave ovens. DOE
anticipates issuing supplemental notices of proposed rulemaking
(SNOPRs) for microwave oven energy conservation standards and the
microwave oven test procedure in order to obtain public input on DOE's
updated proposals. As part of such SNOPRs, DOE will carefully consider
and address any microwave oven-related comments on the October 2008
NOPR that remain relevant.
For CCWs, interested parties raised questions at the November 13,
2008, NOPR public meeting and in written comments on the max-tech level
that DOE had identified in the October 2008 NOPR for top-loading units.
(See section III.C.3 of this notice for additional discussion of max-
tech levels.)
[[Page 16048]]
Specifically, at the public meeting, Alliance Laundry Systems
(Alliance) questioned the validity of the certification data for the
CCW model on which DOE based the max-tech level for top-loading
machines. Alliance recommended that DOE, at a minimum, test and confirm
the performance of the max-tech model before using it as the basis for
assessing technical feasibility for the proposed standards. (Alliance,
Public Meeting Transcript, No. 40.5 at pp. 90-92) GE responded that it
produces the model in question, and its internal testing confirms that
the model meets the max-tech level. (GE, No. 48 at pp. 4-5) GE and
Alliance agreed that there would not be consumer acceptance of the
technology required to achieve the max-tech level (i.e., whether CCWs
incorporating advanced controls in a lightweight, non-rugged platform
would be able to withstand the harsher usage in a laundromat or multi-
family housing setting compared to a residential installation). (GE,
Public Meeting Transcript, No. 40.5 at pp. 173-174; Alliance, Public
Meeting Transcript, No. 40.5 at p. 23; Alliance, No. 45 at p. 1;
Alliance, No. 45.1 at pp. 3, 7, 13) GE stated that it had received
anecdotal consumer questions on the water levels and clothing turnover
(i.e., rotation of the clothing from top to bottom in the wash basket)
during the cycle utilized by its CCW that meets the top-loading max-
tech level. According to GE, while this CCW has achieved the max-tech
level during actual use in the on-premises laundry segment,\8\ it has
not yet been justified as sustainable in commercial laundromats where
the units are subject to much tougher conditions, such as overloading.
(GE, No. 48 at p. 4)
---------------------------------------------------------------------------
\8\ This segment refers to commercial clothes washers that are
installed in multi-family housing.
---------------------------------------------------------------------------
The Multi-Housing Laundry Association (MLA) commented that there is
no acceptable CCW currently that can meet the top-loading max-tech
level presented in the October 2008 NOPR. According to MLA, previous
non-agitator CCWs that could achieve max-tech performance have had poor
load capacity, poor wash results, and high maintenance costs. MLA
believes that the only way to meet the max-tech requirements would be
to have either a cold water wash or such limited amounts of hot water
that the clothes would not be effectively cleaned. According to MLA, to
meet the max-tech requirements, water in the rinse cycle would be so
limited that some soils, detergents, and sand would not be removed.
(MLA, No. 49 at p. 4) ASAP stated that DOE's conclusion in the TSD on
the max-tech model (i.e., that all higher-efficiency residential
clothes washers are impeller-type or do not have traditional agitators)
is erroneous, commenting that there are agitator-type residential
clothes washers on the market today that perform at higher levels than
the CCW max-tech level that DOE has presented in the October 2008 NOPR.
(ASAP, Public Meeting Transcript, No. 40.5 at p. 203) Whirlpool
commented that the max-tech level cannot be achieved with the
technologies implemented on current CCW models, but it believes that
technology exists to develop such products by the time standards would
become effective. (Whirlpool, No. 50 at p. 3)
EPCA requires DOE to consider the max-tech level in the analysis of
efficiency levels for CCW energy conservation standards. (42 U.S.C.
6295(o)(2)(A) and 6316(a)) In the NOPR analysis, DOE determined that
the max-tech level for top-loading CCWs, which was analyzed as part of
TSL 3, is technologically feasible and economically justified. 73 FR
62034, 62122 (Oct. 17, 2008). However, the comments submitted by
Alliance in response to the October 2008 NOPR raised questions on the
validity of the max-tech level. (Alliance, Public Meeting Transcript,
No. 40.5 at pp. 90-92; Alliance, No. 45 at p. 1; Alliance, No. 45.1 at
pp. 4-5) In light of this uncertainty surrounding the performance of
the CCW model upon which the top-loading max-tech level was based, DOE
tested several units of that model. Preliminary results indicate that
the MEF and WF of these units are below and above, respectively, the
max-tech levels. Therefore, DOE has decided that it will continue the
CCW rulemaking to further evaluate what an appropriate max-tech level
should be for top-loading CCWs, and it will revise its analyses for
this product class as necessary. DOE anticipates issuing an SNOPR to
obtain public input on DOE's updated proposal regarding CCW standards.
As part of such SNOPR, DOE will carefully consider and address any CCW-
related comments on the October 2008 NOPR that remain relevant.
III. General Discussion
A. Standby Power for Cooking Products
An issue in this rulemaking has been whether DOE should consider
power use in the standby and off modes in adopting energy conservation
standards for cooking products. As discussed in greater detail in the
October 2008 NOPR,\9\ EISA 2007 amended EPCA to require that DOE
address standby mode and off mode energy consumption both in adopting
standards for all covered products (for final rules for new or amended
standards adopted after July 1, 2010), including residential ranges and
ovens and microwave ovens, and in test procedures for covered products
(by March 31, 2011, for cooking products). (42 U.S.C. 6295(gg)) As
noted above, these provisions are not yet operative as requirements for
residential cooking products. Id.
---------------------------------------------------------------------------
\9\ 73 FR 62034, 62041 (Oct. 17, 2008).
---------------------------------------------------------------------------
Nonetheless, DOE has examined in this rulemaking whether to
incorporate standby mode and off mode power consumption in its energy
conservation standards for residential cooking products. 73 FR 62034,
62041 (Oct. 17, 2008). Specifically, in the October 2008 NOPR, DOE
stated that it does not intend to pursue revision of its standards and
test procedures to include standby power use by conventional cooking
products at this time, because it lacks data indicating the potential
for significant energy savings with respect to such power use. Id. at
62041, 62044. Accordingly, DOE tentatively decided to consider test
procedure amendments for conventional cooking products in a later
rulemaking that meets the March 31, 2011, deadline set by EISA 2007
under 42 U.S.C. 6295(gg)(2)(B). 73 FR 62034, 62041, 62044 (Oct. 17,
2008).
However, DOE did state its intention in the October 2008 NOPR to
amend its test procedure for microwave ovens to incorporate a
measurement of standby power and to consider inclusion of such power as
part of the energy conservation standards rulemaking for the following
reasons: (1) Energy use in this mode is a significant proportion of
microwave oven energy consumption; and (2) currently, the range of
standby power use among microwave ovens suggests that a standard would
result in significant energy savings. Id. at 62041-42. As already
discussed in sections II.B.2 and II.B.3, DOE proposed standards for
microwave oven standby power use. Id. at 62120, 62134.
In response to the October 2008 NOPR, Whirlpool stated that no test
procedure has yet been proposed for conventional cooking product
standby power, and that Whirlpool does not have experience with or data
available on standby power in these products. It further stated that
DOE should request such data promptly to allow adequate time to develop
it, noting that display technologies will be an issue. (Whirlpool,
Public Meeting Transcript, No. 40.5 at p. 30) DOE expects to
[[Page 16049]]
evaluate standby power for conventional cooking products in a future
test procedure rulemaking that will meet the EPCA deadline of March 31,
2011, set forth in 42 U.S.C. 6295(gg)(2)(B). 73 FR 62034, 62041 (Oct.
17, 2008). DOE welcomes relevant data to support this rulemaking
activity.
Edison Electric Institute (EEI) commented that standby power could
effectively be addressed in gas cooking products with constant burning
pilots by a performance standard for the energy consumption of the
pilot, rather than by a prescriptive standard that would eliminate
constant burning pilots altogether. EEI argued that even though energy
savings would be reduced using this approach, such savings could still
be fairly significant, and manufacturers would have more flexibility in
meeting the energy conservation standards. (EEI, Public Meeting
Transcript, No. 40.5 at pp. 19-20 and 50-51; EEI, No. 56 at p. 2)
In response, DOE notes as a preliminary matter that it considered
EEI's suggestion of reduced input rate pilots as a technology option
separately in section IV.A.2. The following responds to EEI's
suggestion to consider an energy conservation standard for standby
power consumption of ranges and ovens by regulating the performance of
constant burning pilots. For standby power in conventional cooking
products, the current DOE test procedures already provide a means for
measurement of certain standby energy use (i.e., pilot gas consumption
in gas cooking products and clock energy consumption in ovens), which
is included in the relevant EF metric. However, as explained above, to
measure additional standby mode and off mode energy use as directed by
EISA 2007, DOE would need to amend the test procedure to provide for
more comprehensive measurement of standby mode and off mode power
consumption. As discussed above, DOE is not contemplating revision of
its standards and test procedures to address standby power use for
conventional cooking products at this time. DOE plans to consider such
revisions to the test procedure in a later rulemaking which meets the
EPCA deadline of March 31, 2011. (42 U.S.C. 6295(gg)(2)(B)(vi)). DOE
will also consider standby mode and off mode energy use in its next
energy conservation standards rulemaking, as required by the EISA 2007
amendments to EPCA. (42 U.S.C. 6295(gg)(3)).
Further, even if DOE were to implement in this rulemaking the
requirements of the EISA 2007 amendments to EPCA regarding standby mode
and off mode energy use to conventional cooking products, DOE would be
unable to prescribe a separate standard for pilot energy consumption in
gas cooking products. The EISA 2007 amendments require that any final
rule establishing or revising a standard for a covered product, adopted
after July 1, 2010, shall incorporate standby mode and off mode energy
use into a single amended or new standard, if feasible. If not
feasible, the final rule shall establish a separate standard for
standby mode and off mode energy consumption, if justified under 42
U.S.C. 6295(o). (42 U.S.C. 6295(gg)(3)) Because gas cooking product EF
already incorporates gas consumption of the pilot by means of the
calculation of annual energy consumption (10 CFR 430.23(i) and 10 CFR
part 430, subpart B, appendix I, sections 4.1.2 and 4.2.2), the
feasibility of a single metric integrating both active mode and standby
mode energy use has clearly been demonstrated. AHAM stated that it
strongly advocates, for products other than microwave ovens, that
standby power be incorporated in active energy standards as directed by
EISA 2007. (AHAM, No. 47 at p. 4) DOE expects to address standby mode
and off mode power consumption in future test procedure and standards
rulemakings for products other than microwave ovens in accordance with
the requirements of the EISA 2007 amendments to EPCA. At such time, DOE
will determine whether standby mode and off mode energy use can be
incorporated into a new or amended energy conservation standard as
directed by 42 U.S.C. 6295(gg)(3).
For microwave ovens, DOE separately considered whether it is
feasible to incorporate standby mode and off mode energy use into a
single metric. DOE tentatively concluded in the October 2008 NOPR that
although it may be mathematically possible to combine energy
consumption into a single metric encompassing active (cooking),
standby, and off modes, it is not technically feasible to do so at this
time because of the high variability in the current cooking efficiency
measurement from which the active mode EF and annual energy consumption
are derived, and because of the significant contribution of standby
power to overall microwave oven energy use. 73 FR 62034, 62042-43 (Oct.
17, 2008). AHAM, Whirlpool, ASAP, and EEI individually, as well as
ASAP, American Council for an Energy-Efficient Economy (ACEEE),
American Rivers (AR), Natural Resources Defense Council (NRDC),
Northeast Energy Efficiency Partnerships (NEEP), Northwest Power and
Conservation Council (NPCC), Southern California Gas Company (SCG), San
Diego Gas and Electric Company (SDG&E), Southern California Edison
(SCE), and Earthjustice (EJ) jointly (hereafter ``Joint Comment'')
supported the determination that a combined energy metric for microwave
ovens is technically infeasible. (AHAM, Public Meeting Transcript, No.
40.5 at pp. 27 and 54-55; Whirlpool, Public Meeting Transcript, No.
40.5 at p. 29; ASAP, Public Meeting Transcript, No. 40.5 at p. 53; EEI,
Public Meeting Transcript, No. 40.5 at p. 55; Whirlpool, No. 50 at p.
4; AHAM, No. 47 at p. 4; Joint Comment, No. 44 at p. 10)
Giving consideration to its previous findings and this general
support from interested parties, DOE expects to maintain the approach,
consistent with its preliminary determination, that a separate standby
mode and off mode energy use metric should be developed in the
continuation of the microwave oven energy conservation standards
rulemaking, as discussed in section II.B.3 of this notice.
B. Test Procedures
For the reasons set forth in the October 2008 NOPR, DOE is not
pursuing modification of its test procedures for cooking products in
conjunction with this rulemaking, other than an amendment to address
the standby power consumption of microwave ovens. 73 FR 62034, 62043-44
(Oct. 17, 2008). As to the latter, DOE published an MWO test procedure
NOPR in which it proposed (1) to incorporate by reference into its
microwave oven test procedure specific clauses from IEC Standard 62301
as to methods for measuring average standby mode and average off mode
power consumption; (2) to incorporate into that test procedure
pertinent definitions that are set forth in EISA 2007 amendments to
EPCA; and (3) to adopt language to clarify the application of certain
of the clauses that DOE proposes to incorporate by reference from IEC
Standard 62301. 73 FR 62134 (Oct. 17, 2008). In the MWO test procedure
NOPR, DOE also proposed a technical correction to an equation in the
existing microwave oven test procedure, which concerns energy use in
the active mode. Id. at 62137, 62141-42.
Largely because of the issues surrounding the MWO test procedure,
DOE is continuing the energy conservation standards rulemaking for
microwave oven standby mode and off mode power consumption. Therefore,
DOE is also continuing to consider microwave oven test procedure
amendments that would reflect clarified and expanded definitions of
``standby
[[Page 16050]]
mode'' and ``off mode'' power, which are expected to be incorporated in
the second edition of IEC Standard 62301.
C. Technological Feasibility
1. General
As stated above, any standards that DOE establishes for cooking
products must be technologically feasible. (42 U.S.C. 6295(o)(2)(A) and
(o)(3)(B)) DOE considers a design option to be technologically feasible
if it is in use by the respective industry or if research has
progressed to the development of a working prototype. ``Technologies
incorporated in commercial products or in working prototypes will be
considered technologically feasible.'' 10 CFR part 430, subpart C,
appendix A, section 4(a)(4)(i).
This final rule considers the same design options as those
evaluated in the October 2008 NOPR. (See the final rule TSD
accompanying this notice, chapters 3 and 4.) All the evaluated
technologies have been used (or are being used) in commercially
available products or working prototypes. DOE also has determined that
there are products either on the market or in working prototypes at all
of the efficiency levels analyzed in this notice. Therefore, DOE has
determined that all of the efficiency levels evaluated in this notice
are technologically feasible.
2. Gas Cooking Products--Alternatives to Line-Powered Electronic
Ignition Systems
For gas cooking products, TSL 1 corresponds to the replacement of
baseline constant burning (standing) pilots with electronic ignition
systems. Line-powered electronic ignition systems are incorporated into
many gas cooking products currently on the market, and, thus, this
prescriptive standard is clearly technologically feasible. For the
consumer subgroup consisting of households without access to
electricity, however, TSL 1 would require a battery-powered ignition
system. In the October 2008 NOPR, DOE stated that DOE research suggests
that battery-powered ignition systems could be incorporated by
manufacturers at a modest cost if manufacturers' market research
suggested that a substantial number of consumers found such a product
attribute to be important. DOE noted that such systems have been
incorporated successfully in a range of related appliances, such as
instantaneous water heaters. Further, DOE stated it believed that there
is nothing in the applicable safety standards that would prohibit such
ignition systems from being implemented on gas cooking products.
Therefore, DOE stated in the October 2008 NOPR that households that use
gas for cooking and are without electricity would likely have
technological options that would enable them to continue to use gas
cooking if standing pilot ignition systems were eliminated. 73 FR
62034, 62048, 62075, 62130 (Oct. 17, 2008). Numerous interested parties
objected to DOE's tentative conclusion for the following reasons.
Safety. AHAM, Whirlpool, and GE commented that DOE did not address
potential safety concerns of eliminating standing pilots, and expressed
concern that battery-powered ignition systems would not meet the
applicable safety standard, American National Standards Institute
(ANSI) Standard Z21.1, ``American National Standard for Household
Cooking Gas Appliances'' (ANSI Z21.1). (AHAM, Public Meeting
Transcript, No. 40.5 at pp. 15-16, 48-49; AHAM, No. 47 at p. 2;
Whirlpool, No. 50 at p. 4; GE, No. 48 at p. 2) AHAM believes that ANSI
Z21.1 would need to be revised to incorporate battery-powered ignition
systems for unattended units (i.e., gas ovens), and this would not
likely take place before the proposed 2012 effective date of potential
standards. (AHAM, No. 47 at p. 2 and p. 4)
The American Gas Association (AGA) and AHAM commented that battery-
powered ignition systems are not viable on a residential range because
of cost and safety, particularly regarding the need for battery
replacement. If a battery is not readily available, these commenters
argued that consumers may attempt to light the range with a match or
use an extension cord. Furthermore, these commenters suggested that if
battery-powered ignition systems are not on the market, the reason may
be economics. AGA recommended that DOE use caution before determining
viability of such systems. (AGA, Public Meeting Transcript, No. 40.5 at
pp. 44-45; AHAM, No. 47 at p. 4) Whirlpool noted that battery-powered
ignition systems are subject to failure when the battery is weak or
dead, and that the consumer cannot determine battery status. According
to Whirlpool, using matches as a backup for ignition is unsafe and
would also lead to making matches more accessible to small children.
(Whirlpool, No. 50 at p. 4) U.S. Representatives Joseph Pitts and Bill
Shuster (Pitts and Shuster) also commented that a safety concern exists
if a consumer tries to light a range with matches when the batteries in
the ignition system are dead. (Pitts and Shuster, No. 57 at p. 2)
Whirlpool, AHAM, and GE expressed concern about the viability of using
ignition systems typically designed for outdoor grills in an indoor
application, primarily for reasons of potential gas leakage and
reliability. (Whirlpool, No. 50 at p. 4; AHAM, No. 47 at p. 4; AHAM,
Public Meeting Transcript, No. 40.5 at p. 49; GE, No. 48 at p. 2)
Whirlpool stated that, in outdoor applications such as grills, air
movement would likely disperse gas if the unit failed to ignite.
However, in indoor applications, dispersion is unlikely, thereby
resulting in an elevated threat of explosion or suffocation.
(Whirlpool, No. 50 at p. 4) Sempra Utilities (Sempra) agreed with AGA
about potential safety issues, particularly for low-income consumers.
(Sempra, Public Meeting Transcript, No. 40.5 at p. 46) Pacific Gas and
Electric (PG&E) responded to Sempra's comment by stating that although
DOE cannot compromise safety in considering battery-powered ignition
systems, frequently initial cost is weighted too much relative to
operating cost. (PG&E, Public Meeting Transcript, No. 40.5 at p. 47)
DOE understands PG&E's comment to mean that, even for low-income
consumers, a higher cost for a safe, reliable battery-powered ignition
system may be economically justified. GE stated there are currently no
proven safe, reliable alternative to standing pilots, and until such
time as a proven alternative exists, standing pilots should be
retained. (GE, No. 48 at pp. 1-2)
Commercial Availability. AGA and Sempra questioned whether battery-
powered ignition systems have been applied to other residential
products, such as instantaneous water heaters or furnaces. AGA, Pitts
and Shuster, and the National Propane Gas Association (NPGA) recognized
that there are recreational vehicle (RV) water heaters and furnaces
which use a 12-volt (V) battery ignition system, but they believe this
specialty application would be difficult to apply to a domestic range
due to cost, safety certification, and other issues. (AGA, Public
Meeting Transcript, No. 40.5 at pp. 18, 44, and 93; Sempra, Public
Meeting Transcript, No. 40.5 at p. 46; NPGA, No. 52 at p. 2; AGA, No.
46 at p. 2; Pitts and Shuster, No. 57 at p. 2)
EEI asked if there are battery-powered ignition systems in any
commercially available indoor gas cooking products on the market. (EEI,
Public Meeting Transcript, No. 40.5 at p. 43) AGA and NPGA stated that
there are currently no design-certified and listed household products
available that incorporate battery-powered ignition systems. According
to AGA and NPGA, any presumption that such systems could be
incorporated into covered products
[[Page 16051]]
raises a host of uncertainties regarding safety, certification, and
other issues, and, therefore, goes beyond the scope of this rulemaking.
(AGA, No. 46 at p. 2; NPGA, No. 52 at p. 2) Pitts and Shuster commented
that battery-powered ignitions systems are not currently on the market
because they are not cost effective. (Pitts and Shuster, No. 57 at p.
2) AHAM and GE do not see that there are any other viable technologies
to eliminate standing pilots. (AHAM, Public Meeting Transcript, No.
40.5 at p. 48; GE, No. 48 at p. 2) LG Electronics (LG) asked whether
DOE considered technologies and products available in other parts of
the world. (LG, Public Meeting Transcript, No. 40.5 at p. 47)
Households Without Electricity. GE and Peerless-Premier Appliance
Company (Peerless-Premier) stated that standing pilots provide consumer
utility for customers without line power for economic, religious, or
other reasons. (GE, Public Meeting Transcript, No. 40.5 at p. 31; GE,
No. 48 at p. 2; Peerless Letter, No. 57 \10\ at pp. 1-2) AGA and NPGA
also questioned DOE's assertion that consumer subgroups that are
prohibited from using electricity would be allowed to use battery-
powered ignition. (AGA, No. 46 at p. 2; NPGA, No. 52 at p. 2)
---------------------------------------------------------------------------
\10\ In addition to its comments submitted to DOE, entered into
the docket as comment number 42, Peerless-Premier Appliance Co.
submitted a letter (Peerless Letter) to Congressman Whitfield of
Kentucky regarding the October 2008 NOPR. A copy of the letter was
entered into the docket as comment number 55 for this rulemaking in
addition to comments that Peerless-Premier submitted directly to
DOE.
---------------------------------------------------------------------------
DOE Response to Comments. In response to these comments, DOE
conducted additional research on battery-powered ignition systems for
residential gas cooking products. As an initial matter, DOE could not
identify any indoor ranges incorporating such ignition systems that are
on the market in the United States. DOE was able to identify a single
gas range for sale in the United Kingdom (U.K.) that incorporates a
battery-powered ignition system that appeared to meet the functional
safety requirements of ANSI Z21.1 (i.e., that the oven main burner is
lit by an intermittent gas pilot that is in turn lit by a battery-
powered spark igniter.) This ignition system does not require the user
to push a separate ``light'' button at the same time as the control
knob is turned to allow pilot gas flow. Such a separate operation would
be prohibited under ANSI Z21.1. However, further DOE research
determined that the ignition system does not include a safety device to
shut off the main gas valve in the event that no flame is detected,
which is required by the ANSI standard.
However, as noted from interested parties' comments, there are gas
cooking products with battery-powered ignition for RV applications that
are available in the United States. DOE determined that the sections in
the ANSI safety standards for RV gas cooking products and residential
gas cooking products that relate to the ignition system are equivalent.
Thus, it could be inferred that a battery-powered ignition system
designed for an RV gas range could be integrated into a residential gas
range that could meet ANSI Z21.1 requirements. Such certification,
though, does not appear to have been obtained thus far. In addition,
these ignition systems are powered by 12 V automotive-type batteries
and consume enough energy during operation to preclude the use of
typical household-scale batteries, such a 1.5 V ``AA'' or 9 V
batteries. Since 12 V batteries must be periodically recharged, this
approach would likely not be viable for consumers without household
electricity.
DOE next investigated the possibility that battery-powered ignition
systems used in other indoor residential appliances in the United
States could meet the requirements of ANSI Z21.1, even though they are
not currently being incorporated in gas cooking products. DOE
identified several such appliances, including a remote-controlled gas
fireplace and instantaneous gas water heaters. For these products, the
battery-powered ignition systems are required to meet the same or
equivalent component-level ANSI safety standards as are required for
automatic ignition systems in gas cooking products. DOE contacted
several manufacturers of gas cooking products, fireplaces, and
instantaneous water heaters, as well as ignition component suppliers,
to investigate the technological feasibility of integrating these
existing battery-powered ignition systems into gas cooking products
that would meet ANSI Z21.1. None of these manufacturers could identify
insurmountable technological impediments to the development of such a
product. Based on its research, DOE determined that the primary barrier
to commercialization of battery-powered ignition systems in gas cooking
products has been lack of market demand and economic justification
rather than technological feasibility. Therefore, DOE concludes that a
gas range incorporating one of these ignition systems could meet ANSI
Z21.1. In addition, DOE research suggests that the market niche for gas
cooking products equipped with battery-powered ignition systems, which
would be created by the proposed gas cooking product standards, would
likely attract entrants among ignition component suppliers.
After considering issues regarding safety and commercial
availability, DOE concludes that technologically feasible alternative
ignition systems to standing pilots in gas cooking products for the
small subgroup of households without electricity will likely be
available at the time these energy conservation standards are
effective. For more information, see chapter 3 of the TSD accompanying
this notice.
3. Maximum Technologically Feasible Levels
As required by EPCA under 42 U.S.C. 6295(p)(2), in developing the
October 2008 NOPR, DOE identified the design options that would
increase the energy efficiency of cooking products. 73 FR 62034, 62045
(Oct. 17, 2008). (See chapter 5 of the NOPR TSD.) DOE did not receive
any comments on the maximum technologically feasible levels in the
October 2008 proposed rule that would lead DOE to consider changes to
these levels. Therefore, for today's final rule, the max-tech levels
for all cooking product classes are the max-tech levels identified in
the October 2008 NOPR. These levels are provided in Table III.1 below.
Table III.1--October 2008 Proposed Max-Tech Levels for Cooking Products
------------------------------------------------------------------------
Product Max-Tech EF
------------------------------------------------------------------------
Gas Cooktops.............................................. 0.42
Electric Open (Coil) Cooktops............................. 0.769
Electric Smooth Cooktops.................................. 0.753
Gas Standard Ovens........................................ 0.0583
Gas Self-Clean Ovens...................................... 0.0632
Electric Standard Ovens................................... 0.1209
Electric Self-Clean Ovens................................. 0.1123
Microwave Ovens........................................... 0.602
------------------------------------------------------------------------
D. Energy Savings
DOE forecasted energy savings in its NES analysis through the use
of an NES spreadsheet tool, as discussed in the October 2008 NOPR. 73
FR 62034, 62045-46, 62068-74, 62104-05 (Oct. 17, 2008).
One criterion that governs DOE's adoption of standards for cooking
products is that the standard must result in ``significant conservation
of energy.'' (42 U.S.C. 6295(o)(3)(B)) While EPCA does not define the
term ``significant,'' a U.S. Court of Appeals, in Natural Resources
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985),
indicated that Congress
[[Page 16052]]
intended ``significant'' energy savings in this context to be savings
that were not ``genuinely trivial.'' DOE's estimates of the energy
savings for energy conservation standards at each of the TSLs
considered for cooking products for today's rule indicate that the
energy savings each would achieve are nontrivial. Therefore, DOE
considers these savings ``significant'' within the meaning of section
325 of EPCA.
E. Economic Justification
1. Specific Criteria
As noted earlier, EPCA provides seven factors to evaluate in
determining whether an energy conservation standard for covered
products is economically justified. (42 U.S.C. 6295(o)(2)(B)(i) The
following sections discuss how DOE has addressed these factors in
evaluating efficiency standards for cooking products.
a. Economic Impact on Consumers and Manufacturers
DOE considered the economic impact of potential standards on
consumers and manufacturers of cooking products. For consumers, DOE
measured the economic impact as the change in installed cost and life-
cycle operating costs (i.e., the LCC.) (See sections IV.C of this
notice and chapter 8 of the TSD accompanying this notice.) DOE
investigated the impacts on manufacturers through the manufacturer
impact analysis (MIA). (See sections IV.F and VI.C.2 of this notice and
chapter 13 of the TSD accompanying this notice.) This factor is
discussed in detail in the October 2008 NOPR. 73 FR 62034, 62046,
62057-68, 62075-81, 62085-104, 62128-30 (Oct. 17, 2008).
b. Life-Cycle Costs
DOE considered life-cycle costs of cooking products, as discussed
in the October 2008 NOPR. 73 FR 62034, 62046, 62057-68, 62085-91 (Oct.
17, 2008). DOE calculated the sum of the purchase price and the
operating expense--discounted over the lifetime of the product--to
estimate the range in LCC benefits that consumers would expect to
achieve due to standards.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA also
requires DOE to consider the total projected energy savings that are
expected to result directly from a proposed standard in determining the
economic justification of that standard. (42 U.S.C.
6295(o)(2)(B)(i)(III)) As in the October 2008 NOPR (73 FR 62034, 62045-
46, 62068-74, 62104-05 (Oct. 17, 2008)), DOE used the NES spreadsheet
results for today's final rule in its consideration of total projected
savings that are directly attributable to the standard levels DOE
considered.
d. Lessening of Utility or Performance of Products
In considering standard levels, DOE sought to avoid new standards
for cooking products that would lessen the utility or performance of
such products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) 73 FR 62034, 62046-47,
62107 (Oct. 17, 2008).
e. Impact of Any Lessening of Competition
DOE considers any lessening of competition that is likely to result
from standards. Accordingly, as discussed in the October 2008 NOPR (73
FR 62034, 62047, 62107 (Oct. 17, 2008)), DOE requested that the
Attorney General transmit to the Secretary a written determination of
the impact, if any, of any lessening of competition likely to result
from the standards proposed in the October 2008 NOPR, including those
for cooking products, together with an analysis of the nature and
extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
To assist the Attorney General in making such a determination, DOE
provided the Department of Justice (DOJ) with copies of the October
2008 proposed rule and the TSD for review. The Attorney General's
response is discussed in section VI.C.5 and is reprinted at the end of
this rule. (DOJ, No. 53 at pp. 1-2)
f. Need of the Nation To Conserve Energy
In considering standards for cooking products, the Secretary must
consider the need of the Nation to conserve energy. (42 U.S.C.
6295(o)(2)(B)(i)(VI)) The Secretary recognizes that energy conservation
benefits the Nation in several important ways. The non-monetary
benefits of standards are likely to be reflected in improvements to the
security and reliability of the Nation's energy system. Standards
generally are also likely to result in environmental benefits. As
discussed in the proposed rule, DOE has considered these factors in
considering whether to adopt standards for cooking products. 73 FR
62034, 62047, 62081-84, 62107-62113, 62130-31 (Oct. 17, 2008).
2. Rebuttable Presumption
Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable
presumption that an energy conservation standard is economically
justified if the additional cost to the consumer of a product that
meets the standard level is less than three times the value of the
first-year energy (and, as applicable, water) savings resulting from
the standard, as calculated under the applicable DOE test procedure.
(42 U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC and PBP analyses generate
values that calculate the payback period for consumers of a product
meeting potential energy conservation standards, which includes, but is
not limited to, the 3-year payback period contemplated under the
rebuttable presumption test discussed above. (See chapter 8 of the TSD
that accompanies this notice.) However, DOE routinely conducts a full
economic analysis that considers the full range of impacts, including
those to the consumer, manufacturer, Nation, and environment, as
required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis
serve as the basis for DOE to definitively evaluate the economic
justification for a potential standard level (thereby supporting or
rebutting the results of any preliminary determination of economic
justification).
IV. Methodology and Discussion of Comments on Methodology
DOE used several analytical tools that it developed previously and
adapted for use in this rulemaking. One is a spreadsheet that
calculates LCC and PBP. Another tool calculates national energy savings
and national NPV. DOE also used the GRIM, along with other methods, in
its MIA. Finally, DOE developed an approach using the National Energy
Modeling System (NEMS) to estimate impacts of energy efficiency
standards for residential cooking products on electric utilities and
the environment. The TSD appendices discuss each of these analytical
tools in detail. As a basis for this final rule, DOE has continued to
use the spreadsheets and approaches explained in the October 2008 NOPR.
DOE used the same general methodology as applied in the October 2008
NOPR, but revised some of the assumptions and inputs for the final rule
in response to interested parties' comments. The following paragraphs
discuss these revisions.
A. Market and Technology Assessment
When beginning an energy conservation standards rulemaking, DOE
develops information that provides an overall picture of the market for
the products concerned, including the purpose of the products, the
industry structure, and market characteristics. This activity includes
both quantitative
[[Page 16053]]
and qualitative assessments based primarily on publicly available
information. DOE presented various subjects in the market and
technology assessment for this rulemaking. (See the October 2008 NOPR
and chapter 3 of the NOPR TSD.) These include product definitions,
product classes, manufacturers, quantities and types of products sold
and offered for sale, retail market trends, and regulatory and
nonregulatory programs.
1. Product Classes
In general, when evaluating and establishing energy conservation
standards, DOE divides covered products into classes by the type of
energy used, capacity, or other performance-related features that
affect consumer utility and efficiency. (42 U.S.C. 6295(q)) Different
energy conservation standards may apply to different product classes.
Id.
For cooking products, DOE based its product classes on energy
source (e.g., gas or electric) and cooking method (e.g., cooktops,
ovens, and microwave ovens). DOE identified five categories of cooking
products: gas cooktops, electric cooktops, gas ovens, electric ovens,
and microwave ovens. The following discussion provides clarification
regarding DOE's selection of product classes for residential cooking
products.
In its regulations implementing EPCA, DOE defines a ``conventional
range'' as ``a class of kitchen ranges and ovens which is a household
cooking appliance consisting of a conventional cooking top and one or
more conventional ovens.'' 10 CFR 430.2. The November 2007 ANOPR
presented DOE's reasons for not treating gas and electric ranges as a
distinct product category and for not basing its product classes on
that category, primarily based upon DOE's determination that, because
ranges consist of both a cooktop and oven, any potential cooktop and
oven standards would apply to the individual components of the range.
72 FR 64432, 64443 (Nov. 15, 2007). In the November 2007 ANOPR, DOE
defined a single product class for gas cooktops as gas cooktops with
conventional burners. 72 FR 64432, 64443-44 (Nov. 15, 2007) For gas
ovens, DOE defined two product classes--gas standard ovens with or
without a catalytic line and gas self-cleaning ovens. 72 FR 64432,
64445 (Nov. 15, 2007) These product class definitions were maintained
in the October 2008 NOPR. 73 FR 62034, 62048 (Oct. 17, 2008).
DOE tentatively concluded in the November 2007 ANOPR that standing
pilot ignition systems are not performance-related features that
provide unique utility and would, therefore, not warrant a separate
product class. 72 FR 64432, 64463 (Nov. 15, 2007). In response to
interested parties' comments on this proposed determination, DOE noted
in the October 2008 NOPR that the purpose of ignition systems is to
ignite the gas when burner operation is needed for cooking, and either
standing pilot or electronic ignition provides this function. In
addition, DOE concluded from previous analysis that the ability to
operate in the event of an electric power outage is not a utility
feature that affects performance of gas cooking products. 73 FR 62034,
62048 (Oct. 17, 2008).
DOE notes that the EISA 2007 amendments to EPCA provide an
exception from the residential boiler energy conservation standards for
``[a] boiler that is manufactured to operate without any need for
electricity or any electric connection, electric gauges, electric
pumps, electric wires, or electric devices. * * *'' (42 U.S.C.
6295(f)(3)(C)) Such units are typically equipped with a standing pilot.
The October 2008 NOPR referred indirectly to this exception by stating
that DOE addressed it in its residential furnace and boiler rulemaking.
73 FR 62034, 62048 (Oct. 17, 2008). DOE is clarifying this statement in
today's final rule as follows. DOE's full rulemaking analysis
(conducted prior to passage of EISA 2007) did not result in such an
exception in its most recent energy conservation standards rulemaking
for residential furnaces and boilers. 72 FR 65136 (Nov. 19, 2007).
However, DOE subsequently published a final rule in the form of a
technical amendment whose sole purpose was to codify the EISA 2007
amendments to EPCA pertaining to residential furnace and boiler
standards set by statute, including the exception above. 73 FR 43611,
43613 (July 28, 2008). Because the July 28, 2008, rule implemented
statutory provisions over which the Department had no rulemaking
discretion, DOE did not conduct any supporting analysis or provide any
input on this boiler exclusion. Congress incorporated this exclusion in
the energy conservation standards for boilers, but Congress chose not
to include a similar provision for gas cooking products with standing
pilots. Accordingly, DOE used the applicable EPCA provisions for
determining whether performance-related features warrant separate
energy conservation standards (42 U.S.C. 6295(q)(1)), and DOE
determined in the October 2008 NOPR that it would be unable to create a
similar exception for gas cooking products because there is no unique
utility associated with gas cooking products equipped with standing
pilot ignition, compared to those with electronic ignition. 73 FR
62034, 62048 (Oct. 17, 2008). DOE based this understanding on its
tentative conclusion that there is not expected to be any appreciable
difference in cooking performance between gas cooking products with or
without a standing pilot and that battery-powered electronic ignitions
systems could provide ignition in the absence of line power (i.e.,
electricity from the utility grid). Id.
Through market research for the October 2008 NOPR, DOE determined
that battery-powered electronic ignition systems have been implemented
in other products, such as instantaneous gas water heaters, barbeques,
furnaces, and other appliances, and the use of such ignition systems
appeared acceptable under ANSI Z21.1. Therefore, subgroups that
prohibit the use of line electricity, or that do not have line
electricity available, could still use gas cooking products without
standing pilots, assuming gas cooking products would be made available
with battery-powered ignition. Thus, DOE concluded that standing pilot
ignition systems do not provide a distinct utility and that a separate
class for standing pilot ignition systems would not be warranted under
42 U.S.C. 6295(q). 73 FR 62034, 62048 (Oct. 17, 2008).
In response to the October 2008 NOPR, AGA commented that DOE should
assign a separate product class to gas cooking products with standing
pilots. According to AGA, NPGA, and Pitts and Shuster, DOE acknowledged
in the October 2008 NOPR that some religious groups do not allow
electricity or adopt it in their area, and that DOE made an exception
in EISA 2007 to allow standing pilots for gravity-fed gas boilers for
such consumers. These commenters believe that gas ranges with standing
pilots should remain available due to their unique utility. (AGA,
Public Meeting Transcript, No. 40.5 at pp. 16-18; AGA, No. 46 at p. 2;
NPGA, No. 52 at p. 2; Pitts and Shuster, No. 57 at p. 1) NPGA also
objected to DOE's determination in the October 2008 NOPR that gas
ranges incorporating pilot ignition systems do not provide a unique
utility to gas customers, as well as DOE's determination that power
outages are not frequent or long enough for residential electricity
customers to be affected by the inability to cook food. NPGA and AGA
stated that the utility of having an appliance with a standing pilot is
important, especially for that segment of the population that cannot
use electricity due to religious or
[[Page 16054]]
cultural practices or current economic status, or for whom electrical
service is unavailable (such as for hunting cabins). (NPGA, No. 52 at
p. 2; AGA, No. 46 at p. 2) AGA also stated that the unique consumer
utility of an ignition system is conveyed by the installed environment
(i.e., whether line electricity is present) rather than by the ignition
technology itself. According to AGA, EPCA addresses consumer utility
associated with the covered product, not with a specific system or
technology used in the product. (AGA, No. 46 at p. 2)
As discussed above, Congress created the exception to the standards
in EPCA for residential boilers which operate without the need for
electricity (i.e., ``gravity-fed gas boilers''). Such an exception was
not based on analysis in DOE's most recent energy conservation
standards rulemaking for residential furnaces and boilers. Congress did
not provide a similar exclusion for gas cooking products with standing
pilots. Certain consumer subgroups currently use such gas cooking
products due to religious or cultural practices or a lack of access to
electrical service. However, DOE continues to believe that the consumer
utility that would need to be maintained for these subgroups is the
same as for all consumers (i.e., the ability to ignite the cooking
product under the nominal conditions of installation, which for these
consumer subgroups includes the absence of electrical service.) DOE
also considered whether additional utility is conferred by the ability
to provide ignition during an atypical event such as a loss of line
power for those consumers who have electrical service, but DOE did not
receive additional information regarding duration and frequency of
power outages that would lead it to conclude that the ability to
operate during such an event represents significant utility. Therefore,
DOE maintains that there is no unique utility provided by standing
pilot ignition systems, and that a separate product class for gas
cooking products incorporating standing pilots is not warranted under
42 U.S.C. 6295(q). In making this determination, however, DOE
recognizes that achieving safe ignition in gas cooking products for
consumer subgroups without electricity in the home in the absence of
standing pilot ignition requires an alternative ignition technology
that does not rely on line power. As discussed in section III.C.2 of
today's notice and chapter 3 of the TSD accompanying it, DOE identified
battery-powered ignition systems as a potential alternative to standing
pilots, and believes that such systems will likely be commercially
available to these consumer subgroups by the time the energy
conservation standards are effective.
2. Technology Options
As discussed above in section III.A, EEI suggested that DOE
consider methods to reduce the input rate of standing pilot ignition
systems in gas cooking products, thereby lowering the product's overall
energy consumption, rather than strictly considering a ban on the use
of standing pilots. EEI stated that DOE should create a performance
standard for standing pilot lights, similar to what was proposed in the
October 2008 NOPR for microwave ovens. EEI claimed a performance
standard restricting the input rate of standing pilots could save a
large fraction of standby energy usage in gas cooking products, while
still providing flexibility to manufacturers. (EEI, Public Meeting
Transcript, No. 40.5 at pp. 19-20 and 50-51; EEI, No. 56 at p. 2)
In the framework document for this rulemaking, DOE requested
comment on a list of technologies, based on its 1996 analysis in the
``Technical Support Document for Residential Cooking Products'' \11\
(1996 TSD), that it would consider for improving the efficiency of
cooking products. These technologies did not include the one EEI now
suggests (i.e., one reducing the input rate of standing pilot ignition
systems.) In response, several interested parties submitted comments on
the framework document that indicated the list of technology options
was still relevant because there have been no major technological
breakthroughs in conventional cooking products since 1996. 72 FR 64432,
64452 (Nov. 15, 2007) No interested parties suggested any additional
technologies for DOE to consider. DOE presented this list again in the
November 2007 ANOPR, along with the analyses based on efficiency levels
derived from the same technology options. 72 FR 64432, 64451-52, 64463-
64 (Nov. 15, 2007). DOE did not receive any comments in response to the
November 2007 ANOPR which suggested analyzing additional technology
options for conventional cooking products. Furthermore, EEI's comments
in response to the October 2008 NOPR provided no supporting information
to validate the technological feasibility of reduced pilot input rate
for improving the energy usage of gas cooking products equipped with
standing pilots. DOE research did not identify any commercially
available pilots suitable for gas range applications that operate at
input rates substantially lower than that assumed for the baseline
efficiency levels (117 British thermal units per hour (Btu/h) for gas
cooktops and 175 Btu/h for gas ovens.) These baseline pilot input rates
are based upon data DOE received as inputs to its analyses presented in
the 1996 TSD, and the baseline values are intended to represent average
input rates for the distribution of pilots incorporated in baseline
ovens and cooktops. DOE does not have information on the distribution
of pilot input rates that are associated with the range of ovens and
cooktops currently on the market, but DOE believes that pilot
capacities are closely related to the specific burner system(s) in each
cooking product. DOE concluded that specifying a maximum pilot input
rate without consideration of the diversity of such systems would
likely raise utility issues, wherein the pilot could potentially fail
to perform its required ignition function in some cooking products. For
these reasons, DOE is not considering reduced pilot input rates in this
rulemaking.
---------------------------------------------------------------------------
\11\ Available online at DOE's Web site: http://www.eere.energy.gov/buildings/appliance_standards/residential/cooking_products_0998_r.html.
---------------------------------------------------------------------------
3. Excluded Product Classes and Technologies
DOE stated in the November 2007 ANOPR that it lacks efficiency data
to determine whether certain designs (e.g., commercial-style cooking
products) and certain technologies (e.g., induction cooktops) should be
excluded from the rulemaking. 72 FR 64432, 64444-45, 64460 (Nov. 15,
2007). Due to a lack of public comments or other information that would
counter DOE's tentative decision to exclude these products and
technologies, DOE maintained these proposed exclusions in the October
2008 NOPR. 73 FR 62034, 62048 (Oct. 17, 2008).
AHAM and Whirlpool agree with the proposal to exclude commercial-
style cooking products and induction technology. (AHAM, No. 47 at p. 3;
Whirlpool, No. 50 at p. 1) In light of these comments in support of the
proposal and in the absence of any new information, DOE has decided not
to include commercial-style cooking products and induction technology
in today's final rule.
B. Engineering Analysis
1. Efficiency Levels
In the November 2007 ANOPR, DOE reviewed and updated the design
options and efficiency levels published in the 1996 TSD analysis, an
approach generally supported by interested parties. DOE did not receive
any
[[Page 16055]]
comments on the November 2007 ANOPR regarding omitted cooking
technologies and retained all the cooking technologies, design options,
and efficiency levels for cooking product energy factor as part of the
October 2008 NOPR. 73 FR 62034, 62052 (Oct. 17, 2008).
AGA commented in response to the October 2008 NOPR that DOE did not
consider alternative technologies to banning standing pilots, which
places a great burden on the justification of pilot ignition products
as the baseline technology. AGA stated that DOE had difficulty in
defining reasonable design options for these gas products, but that
does not justify defining standing pilots as the baseline product.
(AGA, No. 46 at p. 3)
In response, DOE notes that baseline products refer to a model or
models that have features and technologies typically found in products
currently offered for sale. The baseline model in each product class
represents the characteristics of products in that class, and typically
achieves minimum energy efficiency performance. In the case of gas
cooking products that are not equipped with an electrical cord (i.e.,
gas cooktops and gas standard ovens), minimum energy efficiency
performance is associated with products equipped with standing pilot
ignition systems. DOE research has not revealed any other design
options that would support the definition of different baseline
efficiency levels for gas cooktops and gas standard ovens, and DOE did
not receive any information on alternative technologies or design
options. Therefore, DOE is maintaining the baseline efficiency levels
associated with standing pilots for gas cooktops and gas standard ovens
in today's final rule.
2. Manufacturing Costs
In the November 2007 ANOPR, DOE estimated a manufacturing cost at
each efficiency level in this rulemaking by scaling the manufacturing
costs that were provided in the 1996 TSD by the producer price index
(PPI).\12\ 72 FR 64432, 64467-69 (Nov. 15, 2007). DOE retained these
same manufacturing costs in the October 2008 NOPR and is also retaining
them in today's final rule because it has determined that there has
been no significant change in the PPI since the analysis for the
November 2007 ANOPR, which used the PPI from 2006. For electric cooking
products (including microwave ovens), the PPI increased 1.4 percent
between 2006 and 2007, the most recent year for which final PPI values
are available from the U.S. Department of Labor's Bureau of Labor and
Statistics. The PPI for gas cooking products increased 2.9 percent in
that same time period.
---------------------------------------------------------------------------
\12\ Please see the following Web site for further information:
http://www.bls.gov/pPI.
---------------------------------------------------------------------------
As discussed in the October 2008 NOPR, AGA had commented that DOE
underestimated the incremental manufacturing cost of electronic
ignition, which for gas cooking products corresponds to efficiency
level 1. According to AGA, the Harper-Wyman Co., in 1998 comments to
DOE, provided an incremental retail price of $150 for a gas range with
electronic ignition relative to a gas range with standing pilot
ignition system. AGA argued that this retail price increment stands in
sharp contrast to the $37 incremental manufacturing cost estimated by
DOE. 73 FR 62034, 62054 (Oct. 17, 2008).
In response to AGA's comments on the November 2007 ANOPR, DOE
contacted component suppliers of gas cooking product ignition systems
to validate DOE's manufacturing cost estimates. DOE believes that the
information collected verified that the costs in the November 2007
ANOPR represented current costs and, therefore, continued in the
October 2008 NOPR to characterize the incremental manufacturing costs
for the non-standing pilot ignition systems with the estimates
developed for the November 2007 ANOPR. Id.
In response to the October 2008 NOPR, AGA stated it disagrees with
DOE's approach for estimating incremental manufacturing costs for
electronic ignition. AGA commented that DOE's use of survey data on
appliance prices is a poor proxy for manufacturing cost because pricing
policy is based on a host of factors (including marginal product
demand), not strictly on manufactured cost. Therefore, the commenter
stated that it disagrees with DOE's estimate of $37 in incremental cost
for electronic ignition. Instead, AGA believes that DOE should use a
figure closer to the estimate of $150 previously provided by AGA, which
was based on manufacturer estimates for redesign of pilot ignition
products. AGA also stated that DOE should examine the impact on
consumers, not on the manufacturer's costs. (AGA, Public Meeting
Transcript, No. 40.5 at pp. 17-18; AGA, No. 46 at p. 4)
For this final rule, DOE conducted further research regarding
retail prices for comparable gas ranges with standing pilot and
electronic ignition systems. A comparison of manufacturer suggested
retail prices for four brands showed a price differential ranging from
$0 to $50 for a consumer to purchase a gas range with an electronic
ignition system, rather than a standing pilot, from the same
manufacturer. (See chapter 3 of the TSD accompanying this notice.) DOE
recognizes that manufacturer pricing takes many factors into account,
but the consistency of the price increments among four different
manufacturers suggests that DOE's estimate of $37 for a manufacturing
cost increment to eliminate standing pilots in a gas range has greater
validity than an increment of $150. DOE further notes that, according
to AGA's comments on the November 2007 ANOPR, the $150 estimate was
provided by Harper-Wyman Co. in 1998. DOE believes that its own
discussions with ignition component suppliers during the ANOPR phase of
this rulemaking may represent more current technologies and costs.
Therefore, DOE has decided to retain the proposed incremental
manufacturing costs in today's final rule.
C. Life-Cycle Cost and Payback Period Analyses
The purpose of the LCC and PBP analyses is to evaluate the economic
impacts of possible new energy conservation standards for cooking
products on individual consumers. The LCC is the total consumer expense
over the life of the product, including purchase and installation
expense and operating costs (energy expenditures, repair costs, and
maintenance costs). The PBP is the number of years it would take for
the consumer to recover the increased costs of purchasing a higher
efficiency product through energy savings. To calculate LCC, DOE
discounted future operating costs to the time of purchase and summed
them over the lifetime of the product. DOE measured the change in LCC
and the change in PBP associated with a given efficiency level relative
to a base-case forecast of product efficiency. The base-case forecast
reflects the market in the absence of amended mandatory energy
conservation standards.
As part of the LCC and PBP analyses, DOE developed data that it
used to establish product prices, installation costs, annual household
energy consumption, energy prices, maintenance and repair costs,
product lifetime, and discount rates.
DOE calculated the LCC and payback periods for cooking products for
a nationally representative set of housing units, which was selected
from the Energy Information Administration (EIA) Residential Energy
Consumption
[[Page 16056]]
Survey (RECS).\13\ Similar to the October 2008 NOPR, the analysis for
today's final rule used the 2001 RECS. (EIA had not yet released the
2005 RECS when the analysis was performed. Although DOE was unable to
use the most recent RECS, the 2001 version still offers a relatively
recent national representation of how consumers utilize cooking
products. Also, no other public survey provides a representative
national household sample indicating how frequently consumers use their
cooking appliances.) By using a representative sample of households,
the analysis captured the variability in energy consumption and energy
prices associated with cooking product use.
---------------------------------------------------------------------------
\13\ U.S. Department of Energy--Energy Information
Administration, Residential Energy Consumption Survey, 2001 Public
Use Data Files (2001). Available at: http://www.eia.doe.gov/emeu/recs/recs2001/publicuse2001.html.
---------------------------------------------------------------------------
For each sample household, DOE determined the energy consumption
for the cooking product and the energy price. DOE calculated the LCC
associated with a baseline cooking product for each household. To
calculate the LCC savings and PBP associated with products meeting
higher efficiency standards, DOE substituted the baseline unit with a
more efficient design.
Table IV.1 summarizes the approaches and data DOE used to derive
the inputs to the LCC and PBP calculations for the October 2008 NOPR,
and the changes it made for today's final rule. For this final rule,
DOE did not introduce changes to the LCC and PBP analyses methodology
described in the October 2008 NOPR. However, DOE revised its energy
prices and energy price forecasts based upon the most recently
available data from EIA. Chapter 8 of the TSD accompanying this notice
contains detailed discussion of the methodology utilized for the LCC
and PBP analyses, as well as the inputs developed for the analyses.
Table IV.1--Summary of Inputs and Key Assumptions in the LCC and PBP
Analyses
------------------------------------------------------------------------
Changes for the
Inputs October 2008 NOPR final rule
------------------------------------------------------------------------
Affecting Installed Costs
------------------------------------------------------------------------
Product Price............... Derived by No change.
multiplying
manufacturer cost
by manufacturer,
retailer markups
and sales tax.
Installation Cost........... Baseline cost based No change.
on RS Means
Mechanical Cost
Data, 2008.\14\
Based the
percentage of
households with gas
cooking products
that would need to
install an
electrical outlet
on requirements in
the National
Electrical Code
(NEC). Determined
that only
households built
before 1960 would
require the
installation of an
outlet. Overall,
estimated that 10
percent of
households with gas
standard ovens and
4 percent of
households with gas
cooktops would need
to install an
electrical outlet
to accommodate
designs that
require
electricity. Based
electrical outlet
installation costs
on requirements in
the NEC.
------------------------------------------------------------------------
Affecting Operating Costs
------------------------------------------------------------------------
Annual Energy Use........... Based on recent No change.
estimates from the
2004 ``California
Residential
Appliance
Saturation Survey''
\15\ (RASS) and the
Florida Solar
Energy Center \16\
(FSEC). Used 2001
RECS data to
establish the
variability of
annual cooking
energy consumption.
Included standby
power consumption
for microwave ovens.
Energy Prices............... Electricity: Based Electricity: Updated
on EIA's 2006 Form using EIA's 2007
861 data.\17\. Form 861 data.
Natural Gas: Based Natural Gas: Updated
on EIA's 2006 using EIA's 2007
Natural Gas Monthly Natural Gas
\18\. Monthly.
Variability: Variability: No
Regional energy change.
prices determined
for 13 regions.
Energy Price Trends......... Forecasted with Reference Case
EIA's Annual Energy forecasts updated
Outlook (AEO) 2008. with EIA's AEO2009
Early Release.\19\
AEO2009 Early
Release does not
provide High-Growth
and Low-Growth
forecasts, Scaled
AEO2008 High-Growth
and Low-Growth
forecasts by the
ratio of AEO2009
and AEO2008
Reference Case
forecasts to
estimate high-
growth and low-
growth price
trends.
Repair and Maintenance Costs For gas cooktops and No change.
standard ovens,
accounted for
increased costs
associated with glo-
bar or electronic
spark ignition
systems relative to
standing pilot
ignition systems.
For all standard
levels for all
other product
classes, estimated
no change in costs
between products
more efficient than
baseline products.
------------------------------------------------------------------------
Affecting Present Value of Annual Operating Cost Savings
------------------------------------------------------------------------
Product Lifetime............ Based on data from No change.
Appliance
Magazine,\20\ past
DOE TSDs, and the
California
Measurement
Advisory Committee
(CALMAC).\21\
Variability and
uncertainty
characterized with
Weibull probability
distributions.
[[Page 16057]]
Discount Rates.............. Approach based on No change.
the finance cost of
raising funds to
purchase appliances
either through the
financial cost of
any debt incurred
to purchase
products, or the
opportunity cost of
any equity used to
purchase products.
Primary data source
is the Federal
Reserve Board's
Survey of Consumer
Finances (SCF) for
1989, 1992, 1995,
1998, 2001, and
2004 \22\.
------------------------------------------------------------------------
Affecting Installed and Operating Costs
------------------------------------------------------------------------
Effective Date of New or 2012................ No change.
Amended Standards.
Base-Case Efficiency Gas cooktops: 7% at No change.
Distributions. baseline; 93% with
electronic spark
ignition.
Gas standard ovens: No change.
18% at baseline;
74% with glo-bar
ignition; 8% with
electronic spark
ignition.
Microwave ovens: No change.
100% at baseline EF.
All other cooking No change.
products: 100% at
baseline.
------------------------------------------------------------------------
1. Product Prices
To calculate the product prices faced by consumers, DOE multiplied
the manufacturing costs developed from the engineering analysis by the
supply chain markups it developed (along with sales taxes). To
calculate the final installed prices, DOE added installation costs to
the consumer product prices. In response to the October 2008 NOPR,
interested parties provided no additional comment on DOE's methods for
establishing consumer product prices. As a result, DOE used the same
supply chain markups for the final rule that were developed for the
October 2008 NOPR. See chapter 7 of the TSD accompanying this notice
for additional information.
---------------------------------------------------------------------------
\14\ RS Means, Mechanical Cost Data (30th Annual Edition)
(2008). Available for purchase at http://www.rsmeans.com/bookstore/.
\15\ Please see the following Web site for further information:
http://www.energy.ca.gov/appliances/rass/.
\16\ Please see the following Web site for further information:
http://www.fsec.ucf.edu/en/.
\17\ Please see the following Web site for further information:
http://www.eia.doe.gov.
\18\ Please see the following Web site for further information:
http://www.eia.doe.gov.
\19\ Please see the following Web site for further information:
http://www.eia.doe.gov/oiaf/aeo/index.html?featureclicked=1&.
\20\ Please see the following Web site for further information:
http://www.appliancemagazine.com.
\21\ Please see the following Web site for further information:
http://www.calmac.org.
\22\ Please see the following Web site for further information:
http://www.federalreserve.gov.
---------------------------------------------------------------------------
2. Installation Cost
Installation costs include labor, overhead, and any miscellaneous
materials and parts. For the October 2008 NOPR and today's final rule,
DOE used data from the ``RS Means Mechanical Cost Data, (2008),'' on
labor requirements to estimate installation costs for cooking products.
For the October 2008 NOPR, DOE did not include an installation cost
for microwave ovens. Electrolux stated that over-the-range (OTR)
microwave ovens do have an installation cost. (Electrolux, Public
Meeting Transcript, No. 40.5 at p. 123) DOE acknowledges that OTR
microwave ovens incur installation costs. However, as noted below,
because DOE estimated that the installation cost does not change with
product efficiency, the omission of this cost for microwave ovens has
no effect on the LCC saving and PBP results.
For many cooking products, DOE estimated that installation costs
would be the same for different efficiency levels. For gas cooktops and
gas standard ovens, DOE evaluated the impact that eliminating standing
pilot ignition systems would have on the installation cost. Peerless-
Premier stated that eliminating pilots would affect customers who live
in older houses, apartments, and manufactured homes without a power
receptacle located at the range site. (Peerless-Premier, No. 42 at pp.
1-2) For the October 2008 NOPR and today's final rule, DOE considered
the percentage of households with gas ranges, cooktops, and ovens that
would require the installation of an electrical outlet in the kitchen
to accommodate a gas cooking product without standing pilot ignition,
as well as the cost of installing an electrical outlet.
For the October 2008 NOPR, DOE reviewed the gas oven and gas
cooktop household samples to establish which houses may require
installation of an outlet. DOE was able to determine the composition of
the household sample of particular vintage (year built) groupings by
conducting an assessment of National Electrical Code (NEC) requirements
over time to help determine which homes may need an electrical outlet
to accommodate a gas cooking product that requires electricity. Because
the NEC requires spacing electrical outlets every 6 feet for homes
built since 1960, DOE concluded that homes built after 1959 would not
need an additional outlet. Pre-1960 homes represent 57 percent of the
standard gas oven sample and 54 percent of the gas cooktop sample.
Based on shipments data of gas cooking products indicating that fewer
than 7 percent and 18 percent of gas cooktops and standard ovens,
respectively, came equipped with standing pilots, DOE also concluded
that many pre-1960 homes already have a gas cooking product without
standing pilot ignition, which implies that they would not need to
install an additional outlet.
The Joint Comment asserted that DOE erroneously assumed that 100
percent of pre-1960 homes with gas cooktops and ovens do not have
adequate electrical outlets, without regard to the extensive number of
kitchens that have been remodeled since 1960. (Joint Comment, No. 44 at
p. 11) EEI made a similar point. (EEI, Public Meeting Transcript, No.
40.5 at pp. 111-112) In response, DOE did not assume that all pre-1960
homes with gas cooktops and gas ovens would require an electrical
outlet. Rather, it concluded that only those households that currently
have a gas cooking product with standing pilot ignition would need to
install an electrical outlet to accommodate a gas cooking product
without standing pilot ignition. Based on the percentage of recent
shipments of gas cooking products with standing pilots and the fraction
of the household sample built
[[Page 16058]]
before 1960, DOE estimated that 10 percent of the overall gas standard
oven household sample would need to install an electrical outlet to
accommodate a gas standard oven that requires electricity to operate.
It is worth noting that some portion of gas cooking products with
standing pilot ignition is evidently purchased by consumers in post-
1959 homes, even though they have an electrical outlet adequate to
accommodate a gas cooking product without standing pilot ignition.
AGA and AHAM stated that DOE's approach should not consider all gas
cooking product consumers, but only the market for gas cooking products
that utilize standing pilot ignition systems. They believe the
resulting weighted-average installation cost for all gas cooking
products would be greater than DOE's estimate. (AGA, No. 46 at pp. 3-4;
AHAM, No. 47 at p. 2) As described above, DOE did estimate the share of
the gas oven and gas cooktop household samples that still use standing
pilot ignition systems, and further estimated the fraction of those
homes that may require installation of an outlet to accommodate a gas
cooking product that requires electricity to operate. DOE correctly
calculated the respective weighted-average installation costs for all
homes with either gas cooktops or ovens, although the weighted averages
are reported for informational purposes only and do not directly figure
into the LCC calculations. For further details on the development of
the electrical outlet installation cost and the percentage of
households requiring an outlet, see chapter 8 of the TSD accompanying
this notice.
3. Annual Energy Consumption
In the October 2008 NOPR, DOE based its estimates of annual energy
use for cooking products (except microwave ovens) on results from the
2004 California Residential Appliance Saturation Survey (RASS) and the
Florida Solar Energy Center (FSEC.). For today's final rule, DOE
continued to rely on these sources, because they are the latest
available public sources describing the field consumption of cooking
products. In addition, DOE continued to use the 2001 RECS data to
establish the variability of annual energy consumption for cooktops and
ovens. The 2001 RECS is the most recently available public data source
that indicates the variability of cooking product usage in U.S.
households.
For microwave ovens, DOE used the 2004 RASS to estimate the
product's annual energy consumption, and it used the 2001 RECS data to
establish the variability of annual cooking energy consumption. For
today's final rule, DOE continued to use the above approaches. As noted
above, the 2004 RASS is the latest available public data source
describing the average field consumption of microwave ovens, and the
2001 RECS is the most recently available public data source that
indicates the variability of microwave oven usage in U.S. households.
See chapter 6 of the TSD accompanying this notice for further details.
4. Energy Prices
DOE derived average electricity and natural gas prices for 13
geographic areas consisting of the nine U.S. Census divisions, with
four large States (New York, Florida, Texas, and California) treated
separately. For Census divisions containing one of these large States,
DOE calculated the regional average values minus the data for the large
State.
DOE estimated residential electricity prices for each of the 13
geographic areas based on data from EIA Form 861, Annual Electric Power
Industry Report. DOE calculated an average residential electricity
price by first estimating an average residential price for each utility
by dividing the residential revenues by residential kilowatt-hour sales
and then calculating a regional average price by weighting each utility
with customers in a region by the number of residential consumers
served in that region. The calculations for today's final rule used the
most recent available data from 2007.
DOE estimated residential natural gas prices in each of the 13
geographic areas based on data from the EIA publication Natural Gas
Monthly. For the October 2008 NOPR, DOE used the data for 2006 to
calculate an average summer and winter price for each area. For today's
final rule, DOE used 2007 data from the same source. DOE calculated an
average natural gas price by first calculating the average prices for
each State, and then calculating a regional price by weighting each
State in a region by its population. This method differs from the
method used to calculate electricity prices, because EIA does not
provide consumer-level or utility-level data on gas consumption and
prices.
To estimate the trends in electricity and natural gas prices for
the October 2008 NOPR, DOE used the price forecasts in EIA's Annual
Energy Outlook (AEO) 2008. To arrive at prices in future years, DOE
multiplied the average prices described above by the forecast of annual
average price changes in AEO2008. For today's final rule, DOE updated
its energy price forecasts to those in the AEO2009 Early Release.
Because the AEO forecasts prices only to 2030, DOE followed past
guidelines provided to the Federal Energy Management Program by EIA and
used the average rate of change during 2020-2030 to estimate the price
trends after 2030.
The spreadsheet tools used to conduct the LCC and PBP analyses
allow users to select either the AEO's high-growth case or low-growth
case price forecasts to estimate the sensitivity of the LCC and PBP to
different energy price forecasts. The AEO2009 Early Release provides
only forecasts for the reference case. Therefore, for the final rule,
DOE scaled the AEO2008 high-growth case or low-growth forecasts by the
ratio of AEO2009 and AEO2008 reference case forecasts to estimate high-
growth and low-growth price trends.
The Joint Comment recommended that DOE conduct a sensitivity
analysis using other forecasts in addition to the AEO, as they believe
that the AEO has estimated lower electricity prices than most other
forecasts. (Joint Comment, No. 44 at p. 11) As mentioned above, DOE
included the AEO's high-growth case and low-growth case price forecasts
in its spreadsheet tools to estimate the sensitivity of the LCC and PBP
results to different energy price forecasts. AEO's high-economic-growth
and low-economic-growth cases show the effects of alternative economic
growth assumptions on the energy market projections. In the high-growth
case, real gross domestic product (GDP) growth averages 3.0 percent per
year, as a result of higher assumed growth rates for the labor force,
non-farm employment, and non-farm labor productivity. With higher
productivity gains and employment growth, inflation and interest rates
are lower than in the reference case. In the low-growth case, growth in
real GDP is 1.8 percent per year, as a result of lower assumed growth
rates for the labor force, non-farm employment, and labor productivity.
Consequently, the low-growth case shows higher inflation and interest
rates and slower growth in industrial output and employment than are
projected in the reference case. DOE believes the AEO alternative
forecasts provide a suitable range that brackets the forecasts
resulting from other energy-economy models. In addition, the Joint
Comment provides no specific information on any other forecasts or on
why AEO's high-growth and low-growth cases do not provide a reasonable
range of forecasts. As a result, DOE has concluded that AEO's high-
growth and low-growth cases provide an adequate basis to examine the
sensitivity of LCC and PBP results to other price forecasts.
[[Page 16059]]
The Joint Comment stated that to realistically depict energy prices
in the future, DOE must consider the impact of carbon control
legislation, since such legislation is very likely. The Joint Comment
also noted that there are regional cap-and-trade programs in effect in
the Northeast (Regional Greenhouse Gas Initiative (RGGI)) and the West
(Western Climate Initiative (WCI)) that will affect the price of
electricity but are not reflected in the AEO energy price forecasts.
(Joint Comment, No. 44 at p. 12) Earthjustice stated that Federal caps
will likely be in place by the time new standards become effective, so
DOE should increase its electricity prices to reflect the cost of
complying with emission caps. (Earthjustice, Public Meeting Transcript,
No. 40.5 at pp. 195-196) In response, DOE notes that the shape of
Federal carbon control legislation, and the ensuing cost of carbon
mitigation to electricity generators, is as yet too uncertain to
incorporate into the energy price forecasts that DOE uses. The costs of
carbon mitigation to electricity generators resulting from the regional
programs are also very uncertain over the forecast period for this
rulemaking. Even so, EIA did include the effect of the RGGI in its
AEO2009 Early Release energy price forecasts, but WCI did not provide
sufficient detail for EIA to model the impact of the WCI on energy
price forecasts. Therefore, the energy price forecasts used in today's
final rule do include the impact of one of the two regional cap-and-
trade programs to the extent possible.
5. Repair and Maintenance Costs
Repair costs are associated with repairing or replacing components
that have failed in the appliance, whereas maintenance costs are
associated with maintaining the operation of the product.
For the October 2008 NOPR, DOE contacted six contractors in
different States to estimate whether repair and maintenance costs
differ between standing pilot and non-standing pilot ignition systems.
Based on the contractors' input, DOE determined that standing pilots
are less costly to repair and maintain than either electric glo-bar/hot
surface ignition systems (used in most gas ovens) or electronic spark
ignition systems (used in gas cooktops and a small percentage of gas
ovens); that standing pilot ignition systems require repair and
maintenance every 10 years to clean valves; and that electric glo-bar/
hot surface ignition systems require glo-bar replacement approximately
every 5 years. 73 FR 62034, 62064 (Oct. 17, 2008). Electrolux stated
that its testing indicates that glo-bar ignition systems tend to hold
their life, but it did not provide data to support this point.
(Electrolux, Public Meeting Transcript, No. 40.5 at p. 112) In the
absence of new data from Electrolux, DOE decided to continue to use the
information provided by the contractors from which it collected data.
In the case of electronic ignition systems, control modules tend to
last about 10 years. The electrodes/igniters can fail because of hard
contact from pots or pans, although failures are rare.
Based on the above findings, DOE estimated an average cost
comprised of a mix of maintenance and repair costs. For standing pilot
ignition systems, DOE estimated a cost of $126 occurring in the tenth
year of the product's life. For electric glo-bar/hot surface ignition
systems, DOE estimated an average cost of $147 occurring every fifth
year during the product's lifetime. For electronic spark ignition
systems, DOE estimated an average cost of $178 occurring in the tenth
year of the product's life. AGA generally agreed with DOE's approach
for consideration of maintenance of standing pilots and electronic
ignition systems. However, AGA suggested that DOE use the incremental
manufacturing cost for electronic ignition systems as a basis for
developing the maintenance costs for these systems. Using this
approach, AGA reasoned that the resultant maintenance costs would be
higher than DOE estimated. (AGA, No. 46 at p. 4) DOE's approach
resulted in a combined maintenance and repair cost that is well above
the incremental manufacturing cost for electronic ignition systems.
Therefore, DOE retained its approach for estimating electronic ignition
maintenance costs for today's final rule as it captures more costs than
solely the manufacturing costs of the electronic ignition components.
See chapter 8 of the TSD accompanying this notice for further
information regarding these estimates.
6. Product Lifetime
For the October 2008 NOPR and today's final rule, DOE used a
variety of sources to establish low, average, and high estimates for
product lifetime. DOE established average product lifetimes of 19 years
for conventional electric and gas cooking products and 9 years for
microwave ovens. DOE characterized residential cooking product
lifetimes with Weibull probability distributions. See chapter 8 of the
TSD accompanying this notice for further details on the sources used to
develop product lifetimes, as well as the use of Weibull distributions.
7. Discount Rates
To establish discount rates for cooking products for the October
2008 NOPR and today's final rule, DOE derived estimates of the finance
cost of purchasing these appliances. Because the purchase of products
for new homes entails different finance costs for consumers than the
purchase of replacement products, DOE used different discount rates for
new construction and replacement installations.
DOE estimated discount rates for new-housing purchases using the
effective real (after inflation) mortgage rate for homebuyers. This
rate corresponds to the interest rate after deduction of mortgage
interest for income tax purposes and after adjusting for inflation. DOE
used the Federal Reserve Board's Survey of Consumer Finances (SCF) for
1989, 1992, 1995, 1998, and 2001 mortgage interest rates. After
adjusting for inflation and interest tax deduction, effective real
interest rates on mortgages across the six surveys averaged 3.2
percent.
For replacement purchases, DOE's approach for deriving discount
rates involved identifying all possible debt or asset classes that
might be used to purchase replacement products, including household
assets that might be affected indirectly. DOE estimated the average
shares of the various debt and equity classes in the average U.S.
household equity and debt portfolios using data from the SCFs from 1989
to 2004. DOE used the mean share of each class across the six sample
years (1989, 1992, 1995, 1998, 2001, 2004) as a basis for estimating
the effective financing rate for replacement products. DOE estimated
interest or return rates associated with each type of equity and debt
using SCF data and other sources. The mean real effective rate across
the classes of household debt and equity, weighted by the shares of
each class, is 5.6 percent.
See chapter 8 of the TSD accompanying this notice for further
details on the development of discount rates for cooking products.
8. Effective Date of the Amended Standards
The effective date is the future date when parties subject to the
requirements of a new standard must begin compliance. DOE assumes that
any new energy conservation standards adopted in this rulemaking would
become effective 3 years after the final rule is published in the
Federal Register. Therefore, for the purpose of the analysis, the
amended standard is
[[Page 16060]]
assumed to be effective March 2012. DOE calculated the LCC for the
appliance consumers as if they would purchase a new product in the year
the standard takes effect.
9. Product Energy Efficiency in the Base Case
For the LCC and PBP analyses, DOE analyzes candidate standard
levels relative to a baseline efficiency level. However, some consumers
may already purchase products with efficiencies greater than the
baseline product levels. Thus, to accurately estimate the percentage of
consumers that would be affected by a particular standard level, DOE
considered the distribution of product efficiencies that consumers are
expected to purchase under the base case (i.e., the case without new
energy conservation standards). DOE refers to this distribution of
product of efficiencies as a base-case efficiency distribution.
Using the base-case efficiency distributions, DOE assigned a
specific product efficiency to each sample household. If a household
were assigned a product efficiency greater than or equal to the
efficiency of a specific standard level under consideration, the LCC
calculation would show that this household would not be affected by
that standard level.
Unfortunately, little is known about the distribution of cooking
product efficiencies that consumers currently purchase. Whirlpool
stated that it is not aware of data on the number of consumers
purchasing electric cooking products that are more efficient than the
baseline products in the analysis. (Whirlpool, No. 50 at p. 4) In the
absence of any additional data for electric cooking products and gas
self-cleaning ovens, DOE continued to estimate that 100 percent of the
market will be at the baseline efficiency levels in 2012.
For gas cooktops and gas standard ovens, available data allowed DOE
to estimate the percentage of units sold that have standing pilot
lights. DOE developed the market share of gas standard ovens with
standing pilots based on actual shipments data, the most recent being
data from the Appliance Recycling Information Center (ARIC) for 1997,
2000, and 2004.\23\ Based on the ARIC data, the entire market share of
products without standing pilots should be allocated to standard level
1 (products with glo-bar ignition). But based on information collected
from contractors, DOE estimated that 10 percent of products without
standing pilots use spark ignition systems. As a result, DOE allocated
90 percent of the market share of products without standing pilots to
standard level 1 (with glo-bar ignition) and the remaining 10 percent
to standard level 1a (with spark ignition).
---------------------------------------------------------------------------
\23\ Appliance Recycling Information Center, INFOBulletin
8, ``Applications in Appliances'' (March 2005). Please see
the following Web site for further information: http://www.aham.org/industry/ht/action/GetDocumentAction/id/5370.
---------------------------------------------------------------------------
Table IV.2 shows the market shares of the efficiency levels in the
base case for gas cooktops and gas standard ovens. Standard level 1
represents products without standing pilot light ignition systems.
Table IV.2--Gas Cooktops and Gas Standard Ovens: Base Case Market Shares
----------------------------------------------------------------------------------------------------------------
Gas cooktops Gas standard ovens
----------------------------------------------------------------------------------------------------------------
Market
Standard level EF share Standard level EF Market share %
%
----------------------------------------------------------------------------------------------------------------
Baseline......................... 0.156 6.8 Baseline............ 0.0298 17.6
1................................ 0.399 93.2 1*.................. 0.0536 74.2
2................................ 0.420 0 2................... 0.0566 0
.............. ...... 3................... 0.0572 0
.............. ...... 4................... 0.0593 0
.............. ...... 5................... 0.0596 0
.............. ...... 6................... 0.0600 0
.............. ...... 1a*................. 0.0583 8.2
----------------------------------------------------------------------------------------------------------------
* For gas standard ovens, candidate standard levels 1 and 1a correspond to designs that are used for the same
purpose--to eliminate the need for a standing pilot--but the technologies for each design are different.
Candidate standard level 1 is a hot surface ignition device, whereas candidate standard level 1a is a spark
ignition device.
For microwave ovens, very little is known about the distribution of
product efficiencies that consumers currently purchase. For the October
2008 NOPR and the final rule, DOE estimated that 100 percent of the
microwave oven market is at the baseline efficiency level (EF = 0.557).
10. Inputs to Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more
efficient products through operating cost savings compared to baseline
products. The simple payback period does not account for changes in
operating expense over time or the time value of money. Payback periods
greater than the life of the product mean that the increased total
installed costs are not recovered in reduced operating expenses.
The inputs to the PBP calculation are the total installed cost of
the product to the customer for each efficiency level and the annual
(first-year) operating expenditures for each efficiency level. The PBP
calculation uses the same inputs as the LCC analysis, except that
energy price trends and discount rates are not needed.
11. Rebuttable Presumption Payback Period
As noted above, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and
6316(a)), establishes a rebuttable presumption that a standard is
economically justified if the Secretary finds that ``the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy (and as applicable, water) savings during the first year
that the consumer will receive as a result of the standard,'' as
calculated under the test procedure in place for that standard. For
each TSL, DOE determined the value of the first year's energy savings
by calculating the quantity of those savings in accordance with DOE's
test procedure, and multiplying that amount by the average energy price
forecast for the year in which a new standard would be expected to take
effect--in this case, 2012.
[[Page 16061]]
DOE also received comments addressing the topic of using a
rebuttable presumption payback period to establish the economic
justification of an energy conservation standard level. The Joint
Comment and Earthjustice stated that DOE's view that consideration of a
full range of impacts is necessary because the rebuttable presumption
payback period criterion is not sufficient for determining economic
justification does not reflect the extent to which the rebuttable
presumption analysis constrains DOE's authority to reject standards
based on economic impacts. (Joint Comment, No. 44 at appendix B, p. 1;
Earthjustice, Public Meeting Transcript, No. 40.5 at p. 130) The Joint
Comment claimed that in 42 U.S.C. 6295(o)(2)(B)(iii), Congress erected
a significant barrier to DOE's rejection, on the basis of economic
justifiability, of standard levels to which the rebuttable presumption
applies. These commenters also claimed that the fact that DOE seems to
prefer to proceed under the seven-factor test contained in 42 U.S.C.
6295(o)(2)(B)(i) is not pertinent. The Joint Comment agreed with DOE
that analysis under the seven factor test is necessary and has
typically supported standards with paybacks longer than 3 years.
However, the Joint Comment stated that DOE's decision-making must
reflect the expressed intent of Congress that the highest standard
level resulting in cost recovery within 3 years constitutes the
presumptive lowest standard level that DOE must adopt (Joint Comment,
No. 44 at appendix B, pp. 1-2)
DOE does consider both the rebuttable presumption payback criteria,
as well as a full analysis including all seven relevant statutory
criteria under 42 U.S.C. 6295(o)(2)(B)(i) when examining potential
standard levels. However, DOE believes that the commenters are
misinterpreting the statutory provision in question. The Joint Comment
and Earthjustice present one possible reading of an ambiguous provision
(i.e., that DOE need not look beyond the results of the rebuttable
presumption inquiry), but DOE believes that such an approach is neither
required nor appropriate, because it would ask the agency to
potentially ignore other relevant information that would bear on the
selection of the most stringent standard level that meets all
applicable statutory criteria. The commenters' interpretation would
essentially restrict DOE from being able to rebut the findings of the
preliminary presumptive analysis. However, the statute contains no such
restriction, and such an approach would hinder DOE's efforts to base
its regulations on the best available information.
Similarly, DOE believes that the Joint Comment misreads the statute
in calling for a level that meets the rebuttable presumption test to
serve as a minimum level when setting the final energy conservation
standard. To do so would not only eliminate the ``rebuttable'' aspect
of the presumption but would also lock in place a level that may not be
economically justified based upon the full complement of statutory
criteria. DOE is already obligated under EPCA to select the most
stringent standard level that meets the applicable statutory criteria,
so there is no need to tie the same requirement to the rebuttable
presumption.
D. National Impact Analysis--National Energy Savings and Net Present
Value
1. General
DOE's NIA assesses the national energy savings, as well as the
national NPV of total consumer costs and savings, expected to result
from new standards at specific efficiency levels. DOE applied the NIA
spreadsheet to perform calculations of energy savings and NPV using the
annual energy consumption and total installed cost data from the LCC
analysis. DOE forecasted the energy savings, energy cost savings,
product costs, and NPV for each product class from 2012 through 2042.
The forecasts provide annual and cumulative values for all four
parameters. In addition, DOE incorporated into its NIA spreadsheet the
ability to analyze sensitivity of the results to forecasted energy
prices and product efficiency trends.
Table IV.3 summarizes the approach and data DOE used to derive the
inputs to the NES and NPV analyses for the October 2008 NOPR and the
changes made in the analyses for today's final rule. A discussion of
the inputs and the changes follows. (See chapter 11 of the TSD
accompanying this notice for further details.)
Table IV.3--Approach and Data Used to Derive the Inputs to the National
Energy Savings and NPV Analyses
------------------------------------------------------------------------
Changes for the
Inputs October 2008 NOPR final rule
------------------------------------------------------------------------
Shipments................... Annual shipments See Table IV.4.
from Shipments
Model.
Effective Date of Standard.. 2012................ No change.
Base-Case Forecasted Shipment-weighted No change.
Efficiencies. efficiency (SWEF)
determined in the
year 2005. SWEF
held constant over
forecast period of
2005-2042.
Standards-Case Forecasted ``Roll-up'' scenario No change.
Efficiencies. used for
determining SWEF in
the year 2012 for
each standards
case. SWEF held
constant over
forecast period of
2012-2042.
Annual Energy Consumption Annual weighted- No change.
per Unit. average values as a
function of SWEF.
Total Installed Cost per Annual weighted- No change.
Unit. average values as a
function of SWEF.
Energy Cost per Unit........ Annual weighted- No change.
average values a
function of the
annual energy
consumption per
unit and energy
prices.
Repair Cost and Maintenance Incorporated changes No change.
Cost per Unit. in repair costs for
non-standing pilot
ignition systems.
Escalation of Energy Prices. AEO2008 forecasts Updated to AEO2009
(to 2030) and Early Release
extrapolation to forecasts for the
2042. Reference Case.
AEO2009 Early
Release does not
provide High-Growth
and Low-Growth
forecasts; scaled
AEO2008 High-Growth
and Low-Growth
forecasts by the
ratio of AEO2009
and AEO2008
Reference Case
forecasts to
estimate high-
growth and low-
growth price
trends.
[[Page 16062]]
Energy Site-to-Source Conversion varies No change.
Conversion. yearly and is
generated by DOE/
EIA's National
Energy Modeling
System (NEMS)
program (a time-
series conversion
factor; includes
electric
generation,
transmission, and
distribution
losses).
Effect of Standards on Determined but found No change.
Energy Prices. not to be
significant.
Discount Rate............... 3 and 7 percent real No change.
Present Year................ Future expenses are No change.
discounted to year
2007.
------------------------------------------------------------------------
2. Shipments
The shipments portion of the NIA spreadsheet is a model that uses
historical data as a basis for projecting future shipments of the
appliance products that are the subject of this rulemaking. In
projecting shipments, DOE accounted for three market segments: (1) New
construction, (2) existing buildings (i.e., replacing failed products),
and (3) early replacements. DOE used the early replacement market
segment to calibrate the shipments model to historical shipments data.
For purposes of estimating the impacts of prospective standards on
product shipments (i.e., forecasting standards-case shipments), DOE
considered the combined effects of changes in purchase price, annual
operating cost, and household income on the magnitude of shipments.
Table IV.4 summarizes the approach and data DOE used to derive the
inputs to the shipments analysis for the October 2008 NOPR and the
changes it made for today's final rule. A discussion of the inputs and
the changes follows.
---------------------------------------------------------------------------
\24\ Association of Home Appliance Manufacturers, 2005 Major
Appliance Fact Book. Available for purchase at http://www.aham.org/ht/d/ProductDetails/sku/40471101603.
Table IV.4--Approach and Data Used To Derive the Inputs to the Shipments
Analysis
------------------------------------------------------------------------
Changes for the
Inputs October 2008 NOPR final rule
------------------------------------------------------------------------
Number of Product Classes... Seven classes for No change.
conventional
cooking products;
one class for
microwave ovens.
New Construction Shipments.. Determined by No change in
multiplying housing approach. Housing
forecasts by forecasts updated
forecasted with EIA AEO2009
saturation of Early Release
cooking products forecasts for the
for new housing. Reference Case.
Housing forecasts AEO2009 Early
based on AEO2008 Release does not
projections. New provide High-Growth
housing product and Low-Growth
saturations based forecasts, Scaled
on EIA's 2001 RECS. AEO2008 High-Growth
Forecasted and Low-Growth
saturations forecasts by the
maintained at 2001 ratio of AEO2009
levels. and AEO2008
Reference Case
forecasts to
estimate high-
growth and low-
growth housing
trends.
Replacements................ Determined by No change.
tracking total
product stock by
vintage and
establishing the
failure of the
stock using
retirement
functions from the
LCC and PBP
analysis.
Retirement
functions revised
to be based on
Weibull lifetime
distributions.
Early Replacements.......... Used to calibrate No change.
Shipments Model to
historical
shipments data; 2
percent of the
surviving stock per
year is retired
early.
Historical Shipments........ Data sources include No change.
AHAM data
submittal, AHAM
Fact Book,\24\ and
Appliance Magazine.
Purchase Price, Operating For microwave ovens No change.
Cost, and Household Income only, used purchase
Impacts Due to Efficiency price and
Standards. efficiency data
specific to
residential
refrigerators,
clothes washers,
and dishwashers
between 1980 and
2002 to determine a
``relative price''
elasticity of
demand.
Fuel Switching.............. Not considered...... No change.
------------------------------------------------------------------------
a. New Construction Shipments
To determine new construction shipments, DOE used a forecast of
housing starts coupled with product market saturation data for new
housing. For new housing completions and mobile home placements, DOE
adopted the projections from EIA's AEO2008 through 2030 for the October
2008 NOPR. For today's final rule, DOE used the projections from EIA's
AEO2009 Early Release Reference Case. Because EIA had not yet released
the 2005 RECS when the analysis was performed, DOE continued to use the
2001 RECS to establish cooking product market saturations for new
housing.
b. Replacements
DOE estimated replacements using product retirement functions
developed from product lifetimes. For the October 2008 NOPR and today's
final rule, DOE used retirement functions based on Weibull
distributions.
To calibrate each shipments model against historical shipments, DOE
established an early replacement market segment. For the October 2008
NOPR and today's final rule, DOE determined that 2 percent of the
surviving stock per year was replaced early.
[[Page 16063]]
c. Purchase Price, Operating Cost, and Household Income Impacts
To estimate the combined effects on microwave oven shipments of
increases in product purchase price and decreases in product operating
costs due to new efficiency standards, DOE conducted a literature
review and a statistical analysis on appliance price, efficiency, and
shipments data for the October 2008 NOPR. DOE used purchase price and
efficiency data specific to residential refrigerators, clothes washers,
and dishwashers between 1980 and 2002 from AHAM Fact Books \25\ to
conduct regression analyses. DOE chose this particular set of
appliances because of the availability of data to determine a price
elasticity. These data indicate that there has been a rise in appliance
shipments and a decline in appliance purchase price and operating costs
over the time period. Household income has also risen during this time.
To simplify the analysis, DOE combined the available economic
information into one variable, termed the ``relative price,'' and used
this variable in an analysis of market trends and to conduct a
regression analysis. DOE's regression analysis suggests that the
relative short-run price elasticity of demand, averaged over the three
appliances, is -0.34. For example, a relative price increase of 10
percent results in a shipments decrease of 3.4 percent. Because the
relative price elasticity incorporates the impacts from three effects
(i.e., purchase price, operating cost, and household income), the
impact from any single effect is mitigated by changes in the other two
effects.
---------------------------------------------------------------------------
\25\ DOE used average purchase price and efficiency data
provided in the 1987, 1988, 1993, 1995, 2000, and 2003 Fact Books.
---------------------------------------------------------------------------
Because DOE's forecast of shipments and national impacts due to
standards spans 30 years, DOE also considered how the relative price
elasticity is affected once a new standard takes effect. After the
purchase price change, price elasticity becomes more inelastic over the
years until it reaches a terminal value. For the October 2008 NOPR, DOE
incorporated a relative price elasticity change that resulted in a
terminal value of approximately one-third of the short-run elasticity.
In other words, DOE determined that consumer purchase decisions become
less sensitive over time to the initial change in the product's
relative price. As implemented in the modeling of shipments forecasts,
DOE estimates that the initial increase in purchase price due to a
standard will have a more significant impact on product shipments in
the short term than over the long term (i.e., fewer consumers will
forego appliance purchases years after the standards have been in place
than when the standards initially take effect.) DOE received no
comments on its analysis to estimate the combined effects of increases
in product purchase price and decreases in operating costs on microwave
oven shipments and, therefore, retained the approach for the final
rule.
In contrast, DOE determined that the combined market of
conventional electric and gas cooking products (i.e., other than
microwave ovens) is completely saturated. Thus, DOE assumed for the
October 2008 NOPR that the considered standard levels would neither
affect shipments nor cause shifts in electric and gas conventional
cooking product market shares. 73 FR 62034, 62071 (Oct. 17, 2008).
Because DOE received no comments on its approach, it continued to use
it for today's final rule.
d. Fuel Switching
In the October 2008 NOPR, DOE concluded that the probability that
the considered standard levels would cause shifts in electric and gas
conventional cooking product market shares was sufficiently low that it
was not necessary to consider it. 73 FR 62034, 62071-72 (Oct. 17,
2008). DOE received no comments on this issue and, therefore, retained
the approach for today's final rule.
3. Other Inputs
a. Base-Case Forecasted Efficiencies
A key input to the calculations of NES and NPV are the energy
efficiencies that DOE forecasts for the base case (without new
standards). The forecasted efficiencies represent the annual shipment-
weighted energy efficiency (SWEF) of the products under consideration
over the forecast period (i.e., from the estimated effective date of a
new standard to 30 years after that date).
For the October 2008 NOPR, DOE first determined the distribution of
product efficiencies currently in the marketplace to develop a SWEF for
each product class for 2005. Using the SWEF as a starting point, DOE
developed base-case efficiencies based on estimates of future
efficiency increase. From 2005 to 2012 (2012 being the estimated
effective date of a new standard), DOE estimated that there would be no
change in the SWEF (i.e., no change in the distribution of product
efficiencies). Because there are no historical data to indicate how
product efficiencies have changed over time, DOE estimated that
forecasted efficiencies would remain at the 2012 level until the end of
the forecast period, with one exception. Because historical data
indicates a declining trend in the percentage of gas standard ranges
equipped with standing pilot lights, DOE did forecast a decline in the
market share of gas standard ranges equipped with standing pilot lights
both to 2012 and after 2012. DOE recognizes the possibility that
product efficiencies may change over time (e.g., due to voluntary
efficiency programs such as ENERGY STAR), but without historical
information, DOE had no basis for estimating how much the product
efficiencies may change. Thus, for the final rule, DOE maintained its
forecast that efficiencies remain at the level estimated for 2012 for
residential cooking products.
b. Standards-Case Forecasted Efficiencies
For its determination of each of the cases with alternative
standard levels (``standards cases''), DOE used a ``roll-up'' scenario
to establish the SWEF for 2012. DOE assumed that product efficiencies
in the base case that do not meet the standard level under
consideration would roll up to meet the new standard level. Also, DOE
assumed that all product efficiencies in the base case that were above
the standard level under consideration would not be affected by the
standard. DOE made the same assumption regarding forecasted standards-
case efficiencies as for the base case, namely, that forecasted
efficiencies remained at the 2012 efficiency level until the end of the
forecast period.
Again, DOE had no data to reasonably estimate how such efficiency
levels might change over the next 30 years. By maintaining the same
rate of increase for forecasted efficiencies in the standards case as
in the base case (i.e., no change), DOE retained a constant efficiency
difference between the two cases over the forecast period. Although the
assumed no-change trends may not reflect what would happen to base-case
and standards-case product efficiencies in the future, DOE believes
that maintaining a constant efficiency difference between the base case
and standards case provides a reasonable estimate of the impact that
standards have on product efficiency. It is more important to
accurately estimate the efficiency difference between the standards
case and base case than to accurately estimate the actual product
efficiencies in the standards and base cases. Therefore, DOE retained
the approach used in the October 2008 NOPR for the final rule.
[[Page 16064]]
c. Annual Energy Consumption
The annual energy consumption per unit depends directly on product
efficiency. DOE used the SWEFs associated with the base case and each
standards case, in combination with the annual energy data, to estimate
the shipment-weighted average annual per-unit energy consumption under
the base case and standards cases. The national energy consumption is
the product of the annual energy consumption per unit and the number of
units of each vintage, which depends on shipments.
As noted in section IV.D.2.c, DOE used a relative price elasticity
to estimate standards-case shipments for microwave ovens, but not for
conventional cooking products. As a result, shipments of microwave
ovens forecasted under the standards cases are lower than under the
base case. To avoid the inclusion of energy savings from reduced
shipments of microwave ovens, DOE used the standards-case shipments
projection and the standards-case stock to calculate the annual energy
consumption for the standards cases.
d. Site-to-Source Conversion
To estimate the national energy savings expected from appliance
standards, DOE uses a multiplicative factor to convert site energy
consumption (energy use at the location where the appliance is
operated) into primary or source energy consumption (the energy
required to deliver the site energy). In the case of electrical energy,
primary consumption includes the energy required for generation,
transmission, and distribution. For the October 2008 NOPR and today's
final rule, DOE used annual site-to-source conversion factors based on
the version of NEMS that corresponds to AEO2008. These conversion
factors account for natural gas losses from pipeline leakage and
natural gas used for pumping energy and transportation fuel. For
electricity, the conversion factors vary over time due to projected
changes in generation sources (i.e., the power plant types projected to
provide electricity to the country). Since the AEO does not provide
energy forecasts beyond 2030, DOE used conversion factors that remain
constant at the 2030 values throughout the remainder of the forecast.
e. Total Installed Costs and Operating Costs
The increase in total annual installed cost is equal to the
difference in the per-unit total installed cost between the base case
and standards case, multiplied by the shipments forecasted in the
standards case.
The annual operating cost savings per unit includes changes in
energy, repair, and maintenance costs. DOE forecasted energy prices for
the October 2008 NOPR based on AEO2008; it updated the forecasts for
the final rule using data from AEO2009 Early Release. For the October
2008 NOPR and today's final rule, DOE accounted for the repair and
maintenance costs associated with the ignition systems in gas cooking
products.
f. Discount Rates
DOE multiplies monetary values in future years by the discount
factor to determine their present value. DOE estimated national impacts
using 3- and 7-percent real discount rates, in accordance with guidance
provided by the Office of Management and Budget (OMB) to Federal
agencies on the development of regulatory analysis (OMB Circular A-4
(Sept. 17, 2003), section E, ``Identifying and Measuring Benefits and
Costs'').
The Joint Comment stated that DOE should use a 2- to 3-percent real
discount rate for the national impact analyses. (Joint Comment, No. 44
at p. 11) It noted that societal discount rates are the subject of
extensive academic research and the weight of academic opinion is that
the appropriate societal discount rate is 3 percent or less. It urged
DOE to give primary weight to results based on the lower of the
discount rates recommended by OMB.
On this point, DOE notes that OMB Circular A-4 references an
earlier Circular A-94, which states that a real discount rate of 7
percent should be used as a base case for regulatory analysis. The 7-
percent rate is an estimate of the average before-tax rate of return to
private capital in the U.S. economy. It approximates the opportunity
cost of capital and, according to Circular A-94, is the appropriate
discount rate whenever the main effect of a regulation is to displace
or alter the use of capital in the private sector. OMB revised Circular
A-94 in 1992 after extensive internal review and public comment. OMB
found that the average rate of return to capital remains near the 7-
percent rate estimated in 1992. Circular A-4 also states that when
regulation primarily and directly affects private consumption, a lower
discount rate is appropriate. ``The alternative most often used is
sometimes called the social rate of time preference * * * the rate at
which `society' discounts future consumption flows to their present
value.'' \26\ It suggests that the real rate of return on long-term
government debt may provide a fair approximation of the social rate of
time preference, and states that over the last 30 years, this rate has
averaged around 3 percent in real terms on a pre-tax basis. It
concludes that ``for regulatory analysis, [agencies] should provide
estimates of net benefits using both 3 percent and 7 percent.'' \27\
DOE finds that the guidance from OMB is reasonable, and thus it did not
give primary weight to results derived using a 3-percent discount rate.
---------------------------------------------------------------------------
\26\ OMB Circular A-4, ``Regulatory Analysis,'' Sept. 17, 2003,
p. 33. Please see the following Web site for further information:
http://www.whitehouse.gov/omb/circulars/index.html.
\27\ OMB Circular A-4, ``Regulatory Analysis,'' Sept. 17, 2003,
p. 34. Please see the following Web site for further information:
http://www.whitehouse.gov/omb/circulars/index.html.
---------------------------------------------------------------------------
The Joint Comment stated that DOE should not apply a discount rate
to physical units of measure, such as tons of emissions or quads of
energy. (Joint Comment, No. 44 at p. 11) Consistent with Executive
Order 12866, ``Regulatory Planning and Review,'' 58 FR 51735, 51737
(Oct. 4, 1993), DOE discounts the monetized value of these emissions
reductions using 3-percent and 7-percent discount rates in order to
determine their present value for rulemaking purposes. Similarly, DOE
discounts energy savings using 3-percent and 7-percent discount rates
since the timing of the energy savings, like money saved, have value to
consumers and the Nation. DOE recognizes that while financial
investments can grow with time, physical quantities such as energy do
not, so there are costs and benefits to the Nation associated with the
timing of when of consuming the energy. In doing so, DOE follows the
guidance of OMB regarding methodologies and procedures for regulatory
impact analysis that affect more than one agency. Thus, DOE has
reported both discounted and undiscounted values for the energy and
environmental benefits from energy conservation standards.
g. Effects of Standards on Energy Prices
For the October 2008 NOPR, DOE conducted an analysis of the impact
of reduced energy demand associated with possible standards on cooking
products on natural gas and electricity prices. The analysis found that
gas and electric demand reductions resulting from max-tech standards
for residential cooking products would have no detectable change on the
U.S. average wellhead natural gas price or the average user price of
electricity. Therefore, DOE concluded that residential cooking
[[Page 16065]]
product standards will not provide additional economic benefits
resulting from lower energy prices.
E. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on
individual consumers, DOE evaluates the impact on identifiable
subgroups of consumers that may be disproportionately affected by a
national standard level. For the October 2008 NOPR, DOE used RECS data
to analyze the potential effect of standards for residential cooking
products on two consumer subgroups: (1) Households with low income
levels, and (2) households comprised of seniors.
DOE also considered specific consumer subgroups that do not use or
have access to electricity and could be affected by the elimination of
standing pilot ignition systems, such as Amish and some Native American
communities. DOE's market research for the October 2008 NOPR found that
battery-powered electronic ignition systems have been implemented in
other products, such as instantaneous gas water heaters, barbeques, and
furnaces, and the use of such products is not expressly prohibited by
applicable safety standards such as ANSI Z21.1. As noted in section
III.C.2, DOE's research determined that, although there are currently
no alternative ignition systems to standing pilots in gas cooking
products that have been certified to ANSI Z21.1, DOE believes such
certification could be attained and that gas cooking products suitable
for households without electricity would likely be commercially
available by the time these standards are in effect.
More details on the consumer subgroup analysis can be found in
chapter 12 of the TSD accompanying this notice.
F. Manufacturer Impact Analysis
In determining whether a standard for cooking products is
economically justified, the Secretary of Energy is required to consider
``the economic impact of the standard on the manufacturers and on the
consumers of the products subject to such standard.'' (42 U.S.C.
6295(o)(2)(B)(i)(I)) The statute also calls for an assessment of the
impact of any lessening of competition as determined by the Attorney
General. (42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE conducted the MIA to
estimate the financial impact of higher efficiency standards on
manufacturers of cooking products, and to assess the impact of such
standards on employment and manufacturing capacity.
The MIA has both quantitative and qualitative aspects. The
quantitative part of the MIA relies on the GRIM, an industry cash-flow
model customized for this rulemaking. The GRIM inputs characterize the
industry cost structure, shipments, and revenues. This includes
information from many of the analyses described above, such as
manufacturing costs and prices from the engineering analysis and
shipments forecasts. The key GRIM output is the INPV, which estimates
the value of the industry on the basis of cash flows, expenditures, and
investment requirements as a function of TSLs. Different sets of
assumptions (scenarios) will produce different results. The qualitative
part of the MIA addresses factors such as product characteristics,
characteristics of particular firms, and market and product trends, and
it includes an assessment of the impacts of standards on subgroups of
manufacturers that could be disproportionately affected by these
standards.
For the October 2008 NOPR, DOE identified three manufacturers of
gas-fired ovens, ranges, and cooktops with standing pilot lights. Two
of the three are classified as small businesses under criteria
prescribed by the Small Business Administration (SBA).\28\ The SBA
classifies a residential cooking appliance manufacturer as a small
business if it has fewer than 750 employees. DOE categorized the two
small businesses into their own subgroup as a result of their size and
their concentration in the manufacture of residential cooking products.
Each small manufacturer produces gas-fired cooking products with
standing pilot ignition systems and derives over 25 percent of its
total revenue from these appliances. Both small manufacturers produce
only residential cooking appliances and have annual sales of $50
million to $60 million, whereas the third is a large, diversified
appliance manufacturer. The two small cooking businesses are privately
held and each company has fewer than 300 employees. 73 FR 62034, 62076
(Oct. 17, 2008). DOE interviewed one of these manufacturers, and also
obtained from larger manufacturers information about the impacts of
standards on these small manufacturers of conventional cooking
products. 73 FR 62034, 62128 (Oct. 17, 2008). In addition, DOE received
comments from one of the small manufacturers regarding the potential
impacts of standards. (Peerless-Premier, No. 42 at pp. 1-2) See section
VII.B for a discussion of DOE's determination of the economic impacts
of today's final rule on small entities.
---------------------------------------------------------------------------
\28\ For more information, see http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
---------------------------------------------------------------------------
For the final rule, DOE updated the MIA results based on the total
shipments and efficiency distributions estimated in the final rule NIA.
For details of the MIA, see chapter 13 of the TSD accompanying this
notice.
G. Employment Impact Analysis
Employment impacts include direct and indirect impacts. Direct
employment impacts are changes in the number of employees for
manufacturers of the appliance products that are subject to standards,
their suppliers, and related service firms. The MIA addresses these
impacts. Indirect employment impacts from standards consist of the jobs
created or eliminated in the national economy, other than in the
manufacturing sector being regulated, due to (1) reduced spending by
end users on energy, (2) reduced spending on new energy supply by the
utility industry, (3) increased consumer spending on the purchase of
new products, and (4) the effects of those three factors throughout the
economy.
In developing the October 2008 NOPR and today's final rule, DOE
estimated indirect national employment impacts using an input/output
model of the U.S. economy called Impact of Sector Energy Technologies
(ImSET). ImSET \29\ is a spreadsheet model of the U.S. economy that
focuses on 188 sectors most relevant to industrial, commercial, and
residential building energy use. ImSET is a special-purpose version of
the ``U.S. Benchmark National Input-Output'' (I-O) model designed to
estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer-based I-O model
with structural coefficients to characterize economic flows among the
188 sectors. ImSET's national economic I-O structure is based on a 1997
U.S. benchmark table, especially aggregated to those sectors. For
further details, see chapter 15 of the TSD accompanying this notice.
---------------------------------------------------------------------------
\29\ Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact
of Sector Energy Technologies (PNNL-15273 Pacific Northwest National
Laboratory) (2005). Available at http://www.pnl.gov/main/publications/external/technical_reports/PNNL-15273.pdf.
---------------------------------------------------------------------------
The Joint Comment stated that when weighing the economic costs and
benefits of stronger efficiency standards, DOE must consider that
adopting standards will increase employment. (Joint Comment, No. 44 at
p. 13) As described in section VI.C.3, DOE uses ImSet to consider
indirect employment
[[Page 16066]]
impacts when evaluating alternative standard levels. Direct employment
impacts on the manufacturers that produce cooking products are analyzed
in the manufacturer impact analysis, as discussed in section IV.F.
H. Utility Impact Analysis
The utility impact analysis determines the changes to energy supply
and demand that result from the end-use energy savings due to
standards. DOE calculated these changes using the NEMS-BT computer
model.\30\ The analysis output includes a forecast of the total
electricity generation capacity at each TSL.
---------------------------------------------------------------------------
\30\ EIA approves the use of the name NEMS to describe only an
official AEO version of the model without any modification to code
or data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name NEMS-BT refers to the model
as used here. (``BT'' stands for DOE's Building Technologies
Program.) For more information on NEMS, refer to ``The National
Energy Modeling System: An Overview,'' DOE/EIA-0581 (98) (Feb.
1998). Available at http://tonto.eia.doe.gov/ftproot/forecasting/058198.pdf.
---------------------------------------------------------------------------
DOE obtained the energy savings inputs associated with electricity
and natural gas consumption savings from the NIA. Chapter 14 of the TSD
accompanying this notice presents details on the utility impact
analysis.
I. Environmental Assessment
DOE prepared an environmental assessment (EA) pursuant to the
National Environmental Policy Act and the requirements of 42 U.S.C.
6295(o)(2)(B)(i)(VI) to determine the environmental impacts of
standards for cooking products. Specifically, DOE estimated the
reduction in total emissions of CO2 and NOX using
the NEMS-BT computer model. DOE also calculated a range of estimates
for reduction in mercury (Hg) emissions using power sector emission
rates. DOE also calculated the possible monetary benefit of
CO2, NOX, and Hg reductions. Cumulative monetary
benefits were determined using discount rates of 3 and 7 percent. The
EA does not include the estimated reduction in power sector impacts of
sulfur dioxide (SO2), because DOE has determined that any
such reduction resulting from an energy conservation standard would not
affect the overall level of SO2 emissions in the United
States due to the presence of national caps on SO2
emissions. These topics are addressed further below; see chapter 16 of
the TSD for additional detail.
NEMS-BT is run similarly to the AEO2008 NEMS, except that cooking
product energy use is reduced by the amount of energy saved (by fuel
type) due to the trial standard levels. The inputs of national energy
savings come from the NIA analysis. For the EA, the output is the
forecasted physical emissions. The net benefit of a standard is the
difference between emissions estimated by NEMS-BT and the AEO2008
Reference Case. The NEMS-BT tracks CO2 emissions using a
detailed module that provides results with broad coverage of all
sectors and inclusion of interactive effects.
The Clean Air Act Amendments of 1990 set an emissions cap on
SO2 for all power generation. The attainment of the
emissions cap is flexible among generators and is enforced through the
use of emissions allowances and tradable permits. Because
SO2 emissions allowances have value, they will almost
certainly be used by generators, although not necessarily immediately
or in the same year a standard is in place. In other words, with or
without a standard, total cumulative SO2 emissions will
always be at or near the ceiling, and there may be some timing
differences among yearly forecasts. Thus, it is unlikely that there
will be reduced overall SO2 emissions from standards as long
as the emissions ceilings are enforced. Although there may be no actual
reduction in SO2 emissions, there still may be an economic
benefit from reduced demand for SO2 emission allowances.
Electricity savings decrease the generation of SO2 emissions
from power production, which can lessen the need to purchase
SO2 emissions allowance credits, and thereby decrease the
costs of complying with regulatory caps on emissions.
Future emissions of NOX would have been subject to
emissions caps under the Clean Air Interstate Rule (CAIR) issued by the
U.S. Environmental Protection Agency on March 10, 2005.\31\ 70 FR 25162
(May 12, 2005). CAIR would have permanently capped emissions in 28
eastern States and the District of Columbia (D.C.). As with the
SO2 emissions cap, a cap on NOX emissions would
have meant that energy conservation standards are not likely to have a
physical effect on NOX emissions in States covered by the
CAIR caps. However, prior to the publication of the October 2008 NOPR,
the CAIR was vacated by the U.S. Court of Appeals for the District of
Columbia Circuit (DC Circuit) in its July 11, 2008 decision in North
Carolina v. Environmental Protection Agency.\32\ Therefore, for the
October 2008 NOPR, DOE established a range of NOX reductions
based on low and high emission rates (in metric kilotons of
NOX emitted per terawatt-hour (TWh) of electricity
generated) derived from the AEO2008. However, on December 23, 2008, the
DC Circuit decided to allow CAIR to remain in effect until it is
replaced by a rule consistent with the court's earlier opinion.\33\ As
a result, DOE used the NEMS-BT model for today's final rule to estimate
the NOX emissions reductions due to standards. For the 28
eastern States and DC where CAIR is in effect, no NOX
emissions reductions will occur due to the permanent cap. Under caps,
physical emissions reductions in those States would not result from the
energy conservation standards under consideration by DOE, but standards
might have produced an environmentally related economic impact in the
form of lower prices for emissions allowance credits, if they were
large enough. However, DOE determined that in the present case, such
standards would not produce an environmentally related economic impact
in the form of lower prices for emissions allowance credits, because
the estimated reduction in NOX emissions or the
corresponding allowance credits in States covered by the CAIR cap would
be too small to affect allowance prices for NOX under the
CAIR. In contrast, new or amended energy conservation standards would
reduce NOX emissions in those 22 States that are not
affected by CAIR. As a result, the NEMS-BT does forecast emission
reductions from the cooking product standards considered in today's
final rule.
---------------------------------------------------------------------------
\31\ See http://www.epa.gov/cleanairinterstaterule/.
\32\ 531 F.3d 896 (D.C. Cir. 2008).
\33\ North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008).
---------------------------------------------------------------------------
Similar to SO2 and NOX, future emissions of
Hg would have been subject to emissions caps under the Clean Air
Mercury Rule \34\ (CAMR), which would have permanently capped emissions
of mercury for new and existing coal-fired plants in all States by
2010, but the CAMR was vacated by the D.C. Circuit in its decision in
New Jersey v. Environmental Protection Agency \35\ prior to publication
of the October 2008 NOPR. However, the NEMS-BT model DOE used to
estimate the changes in emissions for the proposed rule assumed that Hg
emissions would be subject to CAMR emission caps. Because the emissions
caps specified by CAMR would have applied to the entire country, DOE
was unable to use the NEMS-BT model to estimate any changes in the
quantity of mercury
[[Page 16067]]
emissions that would result from standard levels it considered for the
proposed rule. Instead, DOE used an Hg emission rate (in metric tons of
Hg per energy produced) based on the AEO2008. Because virtually all
mercury emitted from electricity generation is from coal-fired power
plants, DOE based the emission rate on the metric tons of mercury
emitted per TWh of coal-generated electricity. To estimate the
reduction in mercury emissions, DOE multiplied the emission rate by the
reduction in coal-generated electricity associated with the standards
considered. Because the CAMR has been vacated, DOE continued to use the
approach it used for the October 2008 NOPR to estimate the Hg emission
reductions due to standards for today's final rule.
---------------------------------------------------------------------------
\34\ 70 FR 28606 (May 18, 2005).
\35\ 517 F 3d 574 (D.C. Cir. 2008).
---------------------------------------------------------------------------
In addition to electricity, the operation of gas cooking products
requires use of fossil fuels and results in emissions of CO2
and NOX at the sites where the appliances are used. NEMS-BT
provides no means for estimating such emissions. Therefore, DOE
calculated separate estimates of the effect of the potential standards
on site emissions of CO2 and NOX based on
emissions factors derived from the literature. Natural gas was the only
fossil fuel DOE accounted for in its analysis of standards for cooking
products. Because natural gas combustion does not yield SO2
emissions, DOE did not report the effect of the proposed standards on
site emissions of SO2.
For the October 2008 NOPR, DOE monetized reductions in
CO2 emissions due to standards based on a range of monetary
values drawn from studies that attempt to estimate the present value of
the marginal economic benefits likely to result from reducing
greenhouse gas emissions. Several parties provided comments regarding
the economic valuation of CO2 for the October 2008 NOPR.
Whirlpool did not support an attempt to value those emissions as part
of this rulemaking. (Whirlpool, No. 50 at p. 8) EEI commented that
utilities have embedded the cost of complying with existing
environmental legislation in their price for electricity, and a similar
approach may be reasonable for valuing reduced CO2
emissions. (EEI, Public Meeting Transcript, No. 40.5 at pp. 194-195)
The Joint Comment stated that DOE's valuation of avoided CO2
emissions should use EIA's analysis of the Climate Security Act; the
core scenario of this analysis yields a $17 price per ton of
CO2, with an annual 7.4 percent increase. (Joint Comment,
No. 44 at p. 12) As discussed in section VI.C.6, DOE has continued to
use the approach described in the October 2008 NOPR (73 FR 62034, 62107
(Oct. 17, 2008)) for its monetization of environmental emissions
reductions for today's rule.
Although this rulemaking does not affect SO2 emissions
or NOX emissions in the 28 eastern States and D.C. where
CAIR is in effect, there are markets for SO2 and
NOX emissions allowances. The market clearing price of
SO2 and NOX emissions allowances is roughly the
marginal cost of meeting the regulatory cap, not the marginal value of
the cap itself. Further, because national SO2 and
NOX emissions are regulated by a cap-and-trade system, the
cost of meeting these caps is included in the price of energy. Thus,
the value of energy savings already includes the value of
SO2 and NOX control for those consumers
experiencing energy savings. The economic cost savings associated with
SO2 and NOX emissions caps is approximately equal
to the change in the price of traded allowances resulting from energy
savings multiplied by the number of allowances that would be issued
each year. That calculation is uncertain because the energy savings
from new or amended standards for cooking products would be so small
relative to the entire electricity generation market that the resulting
emissions savings would have almost no impact on price formation in the
allowances market. These savings would most likely be outweighed by
uncertainties in the marginal costs of compliance with SO2
and NOX emissions caps.
V. Discussion of Other Comments
Since DOE opened the docket for this rulemaking, it has received
more than 42 comments from a diverse set of parties, including
manufacturers and their representatives, members of Congress, energy
conservation advocates, private citizens, and electric and gas
utilities. Comments on the analytic methodologies DOE used are
discussed in section IV of this preamble. Other comments DOE received
in response to the October 2008 NOPR, limited to those pertaining to
standards for cooking products, are addressed in this section.
A. Burdens and Benefits
1. Consideration of the Value of Avoided Environmental Impacts
The Joint Comment stated that DOE has not incorporated the value of
CO2 emissions reductions into the LCC and NPV analyses. The
Joint Comment argues that, because the value of CO2
emissions reductions affects the economic justification of standards,
DOE must incorporate these effects into the LCC and NPV analyses.
(Joint Comment, No. 44 at p. 12)
After consideration of this comment, DOE decided to continue to
report these benefits separately from the direct benefits of energy
savings (i.e., the NPV of consumer net benefits). Neither EPCA nor the
National Environmental Policy Act (NEPA) requires that the economic
value of emissions reductions be incorporated in the net present value
analysis of energy savings. However, DOE believes that considering the
value of environmental emissions reductions separately from other
impacts, when weighing the benefits and burdens of standards, provides
the Department with a more robust understanding of the potential
impacts of standards.
Similarly, for other emissions currently not priced (Hg nationwide
and NOX in those States not covered by CAIR), only ranges of
estimated economic values based on environmental damage studies of
varying quality and applicability are available. DOE has also weighed
these values separately from the direct benefits of energy savings.
B. Other Comments
1. Proposed Standards for Conventional Cooking Products
The Joint Comment stated that TSL 3 should be adopted for
conventional cooking products rather than TSL 1. The Joint Comment
specifically calls attention to the standard level for electric
standard ovens under TSL 3, and states that this standard level
satisfies the rebuttable presumption payback period. As a result, the
Joint Comment concluded that TSL 3 is presumptively economically
justified. (Joint Comment, No. 44 at p. 11) Earthjustice also stated
that TSL 3 should be adopted but on grounds that it provided consumers
with an economic benefit greater than TSL 1. (Earthjustice, Public
Meeting Transcript, No. 40.5, p. 200)
As described in section VI.A, TSL 3 for conventional cooking
products consists of performance standards for electric standard ovens,
gas self-cleaning ovens, and electric coil cooktops, in addition to the
presciptive requirements in TSL 1 of eliminating standing pilots in gas
cooktops and gas standard ovens. Although the performance standards for
electric standard ovens and electric cooktops at TSL 3 satisfy the
rebuttable presumption payback period, as noted in section IV.C.11, DOE
considers the
[[Page 16068]]
full range of criteria including impacts on consumers, manufacturers,
and the environment, when determining whether these standards are
economically justisfied.
VI. Analytical Results and Conclusions
A. Trial Standard Levels
DOE analyzed the benefits and burdens of a number of TSLs for the
cooking products that are the subject of today's final rule. For the
October 2008 NOPR, DOE based the TSLs on efficiency levels explored in
the November 2007 ANOPR, and selected the TSLs on consideration of
economic factors and current market conditions. DOE received no
comments on the composition of the TSLs. Accordingly, for today's final
rule, DOE considered the same TSLs it considered for the October 2008
NOPR.
Table VI.1 shows the TSLs and the corresponding product class
efficiencies for conventional cooking products. As discussed in section
III.C, DOE determined the design options that are technologically
feasible and can be considered as measures to improve product
efficiency. However, as discussed in chapters 3 and 4 of the TSD
accompanying this notice, there are few design options available for
improving the efficiency of these cooking products due to physical
limitations on energy transfer to the food being cooked. This is
particularly true for all cooktop and self-cleaning oven product
classes. For electric cooktops, DOE was able to identify only a single
design change for analysis. For gas cooktops and electric self-cleaning
ovens, DOE was able to identify two design options for analysis. For
gas self-cleaning ovens, DOE was able to identify three design options
for analysis. Although DOE considered several design options for
standard ovens, none significantly increased product efficiency with
the exception of eliminating standing pilots for gas standard ovens.
Eliminating standing pilots reduces an oven's overall gas consumption
by more than 50 percent, whereas all other design options reduce gas
consumption by approximately 2 percent. Therefore, DOE gave further
consideration to only four TSLs for conventional cooking products, as
described below.
TSL 1 represents the elimination of standing pilot ignition systems
from gas cooking products. All other product classes are unaffected by
TSL 1, including gas self-cleaning ovens. EPCA does not allow gas self-
cleaning ovens to use standing pilot ignition systems because they
already use electricity and come equipped with power cords to enable
the self-cleaning cycle. Under TSL 1, the current prescriptive standard
that prohibits the use of standing pilot ignition systems in gas
cooking pilots equipped with power cords would be extended to all gas
cooking products, regardless of whether the appliance is equipped with
a power cord. Under TSL 1, DOE would not regulate the EF of any of the
conventional cooking product classes and only standing pilot ignition
systems would be affected.
TSL 2 for conventional cooking products consists of the candidate
standard levels from each of the product classes that provide an
economic benefit to a majority of consumers who are affected by the
standard. Based on this criterion, only electric coil cooktops and
electric standard ovens have candidate standard levels that differ from
those in TSL 1. For the remaining five product classes, the results
indicate that no candidate standard level provides an economic benefit
to a majority of consumers.
TSL 3 for conventional cooking products consists of the same
candidate standard levels as TSL 2, with one exception: the gas self-
cleaning oven product class. For these ovens, the design option that
provides, on average, a small level of economic benefit to consumers is
included.
TSL 4 is the maximum technologically feasible efficiency level.
Table VI.1--Trial Standard Levels for Conventional Cooking Products
----------------------------------------------------------------------------------------------------------------
TSLs
Product class --------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Electric Coil Cooktops......... No Standard....... EF=0.769.......... EF=0.769.......... EF=0.769
Electric Smooth Cooktops....... No Standard....... No Standard....... No Standard....... EF=0.753
Gas Cooktops................... No Pilot.......... No Pilot.......... No Pilot.......... EF=0.420
Electric Standard Ovens........ No Standard....... EF=0.1163......... EF=0.1163......... EF=0.1209
Electric Self-Cleaning Ovens... No Standard....... No Standard....... No Standard....... EF=0.1123
Gas Standard Ovens............. No Pilot.......... No Pilot.......... No Pilot.......... EF=0.0600
Gas Self-Cleaning Ovens........ No Change to No Change to EF=0.0625......... EF=0.0632
Existing Existing
Standard*. Standard*.
----------------------------------------------------------------------------------------------------------------
* Existing Standard = No Pilot.
As discussed in section III.A, DOE has concluded that it is not
technically feasible to combine cooking efficiency (or EF) into a new
efficiency metric with standby power consumption in microwave ovens.
For the October 2008 NOPR, DOE considered two sets of TSLs--one set
comprised solely of EF levels and a second set comprised solely of
standby power levels. As discussed in section II.B.3, DOE has decided
to continue this rulemaking to further consider microwave oven energy
conservation standards pertaining to standby power consumption.
Therefore, for today's final rule, DOE is considering only EF standards
for microwave ovens.
Table VI.2 shows the TSLs for the regulation of microwave oven
cooking efficiency, which is expressed in terms of EF. The TSLs refer
only to the EF and specify no standard regarding standby power use. TSL
4 corresponds to the maximum technologically feasible EF level.
[[Page 16069]]
Table VI.2--Trial Standard Levels for Microwave Oven Energy Factor
----------------------------------------------------------------------------------------------------------------
TSLs
-------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
EF.......................................... 0.586 0.588 0.597 0.602
----------------------------------------------------------------------------------------------------------------
B. Significance of Energy Savings
To estimate the energy savings through 2042 attributable to
potential standards, DOE compared the energy consumption of cooking
products under the base case (no standards) to energy consumption of
these products under each standards case (each TSL, or set of new
standards, that DOE has considered). Tables VI.3 and VI.4 show DOE's
NES estimates for each TSL for conventional cooking products and
microwave ovens, respectively. Chapter 11 of the TSD accompanying this
notice describes these estimates in more detail. In the TSD, DOE
reports both undiscounted and discounted values of energy savings.
Discounted energy savings represent a policy perspective in which
energy savings farther in the future are less significant than energy
savings closer to the present.\36\
---------------------------------------------------------------------------
\36\ Consistent with Executive Order 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), DOE follows OMB
guidance regarding methodologies and procedures for regulatory
impact analysis that affect more than one agency. In reporting
energy and environmental benefits from energy conservation
standards, DOE will report both discounted and undiscounted (i.e.,
zero discount rate) values.
Table VI.3--Cumulative National Energy Savings for Conventional Cooking Products
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings quads
-----------------------------------------------------------------------------------------------
TSL Electric Electric Electric Electric Gas Gas self-
coil smooth Gas standard self-clean standard clean Total
cooktops cooktops cooktops ovens ovens ovens ovens
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 0.00 0.00 0.10 0.00 0.00 0.05 0.00 0.14
2....................................................... 0.04 0.00 0.10 0.05 0.00 0.05 0.00 0.23
3....................................................... 0.04 0.00 0.10 0.05 0.00 0.05 0.09 0.32
4....................................................... 0.04 0.02 0.15 0.07 0.04 0.09 0.10 0.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.4--Cumulative National Energy Savings for Microwave Ovens
(Energy Factor)
------------------------------------------------------------------------
National Energy
TSL Savings quads
------------------------------------------------------------------------
1..................................................... 0.18
2..................................................... 0.19
3..................................................... 0.23
4..................................................... 0.25
------------------------------------------------------------------------
C. Economic Justification
1. Economic Impact on Consumers
a. Life-Cycle Costs and Payback Period
Consumers affected by new or amended standards usually experience
higher purchase prices and lower operating costs. Generally, these
impacts are best captured by changes in life-cycle costs and payback
period. Therefore, DOE calculated the LCC and PBP for the standard
levels considered in this rulemaking. DOE's LCC and PBP analyses
provided key outputs for each TSL, which are reported by product in
Tables VI.5 through VI.12. In each table, the first three outputs are
average LCC and its components (the average installed price and the
average operating cost). The next four outputs are the average LCC
savings along with the proportions of purchases of cooking products
under three different scenarios in which purchasing a product that
complies with the TSL would create (1) a net life-cycle cost, (2) no
impact, or (3) a net life-cycle savings for the purchaser.
The last two outputs are the median and average PBP for the
consumer purchasing a design that complies with the TSL. The PBP is the
number of years it would take for the purchaser to recover, as a result
of energy savings, the increased costs of higher efficiency products
based on the operating cost savings from the first year of ownership.
DOE based its complete PBP analysis for cooking products on energy
consumption under conditions of actual use of each type of product by
purchasers. However, as required by EPCA (42 U.S.C.
6295(o)(2)(B)(iii)), DOE based the rebuttable presumption PBP test on
consumption as determined under conditions prescribed by the DOE test
procedure. While DOE examined the rebuttable presumption criterion (see
TSD chapter 8), it considered whether the standard levels considered
for today's rule are economically justified through a more detailed
analysis of the economic impacts of these levels pursuant to section
325(o)(2)(B)(i) of EPCA. (42 U.S.C. 6295(o)(2)(B)(i))
Tables VI.5, VI.6, and VI.7 show the LCC and PBP results for
cooktops. To illustrate the role of the base-case forecast in the case
of gas cooktops (Table VI.7), TSL 1 shows an average LCC savings of
$15. The average savings are relatively low because 93.5 percent of the
households in the base case already purchase a gas cooktop at the TSL 1
level, and thus have zero savings due to the standard. In this example,
the base case includes a significant number of households that would
not be affected by a standard set at TSL 1. DOE determined the median
and average values of the PBPs shown below by excluding the households
not affected by the standard.
[[Page 16070]]
Table VI.5--Electric Coil Cooktops: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
--------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................. 0.737 $272 $183 $455 ......... ......... ......... ......... ......... .........
============
1......................................... 0.737 272 183 455 No change from baseline
============
2, 3, 4................................... 0.769 276 175 451 $4 27.1% 0.0% 72.9% 7.2 18.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.6--Electric Smooth Cooktops: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
--------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................. 0.742 $309 $183 $492 ......... ......... ......... ......... ......... .........
============
1, 2, 3................................... 0.742 309 183 492 No change from baseline
============
4......................................... 0.753 550 180 730 -$238 100.0% 0.0% 0.0% 1,498 3,736
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.7--Gas Cooktops: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
----------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................ 0.106 $310 $561 $871 ......... ......... ......... ......... .......... ..........
1, 2, 3................................. 0.399 332 240 572 $15 0.1% 93.5% 6.4% 4.3 3.3
4....................................... 0.420 361 234 595 -8 93.5% 0.0% 6.5% 73 258
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tables VI.8 through VI.11 show the LCC and PBP results for ovens
(other than microwave ovens). For gas standard ovens, the base case
includes a significant number of households that would not be affected
by a standard at TSLs 1 through 3. DOE determined the median and
average values of the PBPs shown below by excluding the percentage of
households not affected by the standard. The large difference in the
average and median values for TSL 4 for all ovens is due to households
with excessively long PBPs in the distribution of results. The LCC
analysis for TSL 4 yielded a few results with PBPs of thousands of
years, leading to an average PBP that is very long. In these cases, the
median PBP is a more representative value to gauge the length of the
PBP.
Table VI.8--Electric Standard Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
---------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................. 0.1066 $414 $231 $645 ......... ......... ......... ......... .......... .........
============
1........................................ 0.1066 414 231 645 No change from baseline
============
2, 3..................................... 0.1163 421 213 634 $11 42.7% 0.0% 57.3% 8.0 309
4........................................ 0.1209 489 206 695 -59 94.4% 0.0% 5.6% 61 2,325
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.9--Electric Self-Cleaning Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
--------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................. 0.1099 $485 $243 $728 ......... ......... ......... ......... ......... .........
============
1, 2, 3................................... 0.1099 485 243 728 No change from baseline
============
[[Page 16071]]
4......................................... 0.1123 548 239 787 -$143 78.5% 0.0% 21.5% 236 1256
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.10--Gas Standard Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
----------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................ 0.0298 $430 $406 $837 ......... ......... ......... ......... .......... ..........
1, 2, 3................................. 0.0583 464 266 730 $9 5.1% 82.3% 12.6% 9.0 7.0
4....................................... 0.0600 507 484 991 -81 93.2% 0.0% 6.8% 25 368
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.11--Gas Self-Cleaning Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
--------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................. 0.0540 $550 $614 $1,164 ......... ......... ......... ......... ......... .........
�������������������������������������������
1, 2...................................... 0.0540 550 614 1,164 No change from baseline
============
3......................................... 0.0625 566 595 1,161 $3 56.1% 0.0% 43.9% 11 391
4......................................... 0.0632 574 593 1,168 -4 65.0% 0.0% 35.0% 16 461
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.12 shows the LCC and PBP results for microwave ovens.
Results are presented for TSLs pertaining to EF. Because DOE estimated
that the entire market is at the baseline level, the average LCC
savings reported for each of the four TSLs are equal to the average LCC
of the TSL minus the average LCC of the baseline.
Table VI.12--Microwave Ovens: Life-Cycle Cost and Payback Period Results for EF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost Life-cycle cost savings Payback period years
--------------------------------------------------------------------------------------------------
Households with
TSL EF Average Average Average Average ---------------------------------
installed operating LCC savings Net Median Average
price cost Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................. 0.557 $220 $124 $344 ......... ......... ......... ......... ......... .........
1......................................... 0.586 232 119 351 -$7 90.6% 0.0% 9.4% 30 76
2......................................... 0.588 246 119 364 -21 97.6% 0.0% 2.4% 58 147
3......................................... 0.597 267 117 384 -40 99.2% 0.0% 0.8% 83 210
4......................................... 0.602 294 116 410 -66 99.8% 0.0% 0.2% 117 296
--------------------------------------------------------------------------------------------------------------------------------------------------------
b. Consumer Subgroup Analysis
DOE estimated consumer subgroup impacts by determining the LCC
impacts of the TSLs on low-income and senior-only households. DOE found
that the LCC impacts on these subgroups and the payback periods are
similar to the LCC impacts and payback periods on the full sample of
residential consumers. Thus, the proposed standards would have an
impact on low-income and senior-only households that would be similar
to the impact on the general population of residential consumers.
Chapter 12 of the TSD accompanying this notice presents the detailed
results of that analysis.
2. Economic Impact on Manufacturers
DOE determined the economic impacts on manufacturers of the TSLs
considered for today's rule, as described in the October 2008 NOPR. 73
FR 62034, 62075-81, 62091-62104, 62128-30 (Oct. 17, 2008). The results
of these economic analyses are summarized below. For a more complete
description of the anticipated economic impacts on manufacturers, see
chapter 13 of the TSD accompanying this notice.
a. Industry Cash-Flow Analysis Results
Using two different markup scenarios--a preservation of gross
margin \37\ (percentage) scenario and a preservation of gross margin
(in absolute dollars) scenario--DOE estimated the impact of potential
new standards for conventional cooking products and for the cooking
efficiency of microwave ovens on the INPV of the industries that
manufacture these products. 73 FR 62034, 62077-78, 62092-99 (Oct. 17,
2008).
---------------------------------------------------------------------------
\37\ ``Gross margin'' is defined as ``revenues minus cost of
goods sold.'' On a unit basis, gross margin is selling price minus
manufacturer production cost. In the GRIMs, markups determine the
gross margin because various markups are applied to the manufacturer
production costs to reach manufacturer selling price.
---------------------------------------------------------------------------
[[Page 16072]]
Under the preservation of gross margin scenario, DOE applied a
single uniform ``gross margin percentage'' markup across all efficiency
levels. As production cost increases with efficiency, this scenario
implies that the absolute dollar markup will increase. In their
interviews, all manufacturers stated that it is optimistic to assume
that they would be able to maintain the same gross margin percentage
markup as their production costs increase in response to an energy
conservation standard. Therefore, DOE believes that this scenario
represents a high bound to industry profitability under an energy
conservation standard. In the ``preservation of gross margin (absolute
dollars)'' scenario, gross margin is defined as ``revenues less cost of
goods sold.'' The implicit assumption behind this markup scenario is
that the industry will lower its markups in response to the standards
to maintain only its gross margin (in absolute dollars).
The impact of new standards on INPV consists of the difference
between the INPV in the base case and the INPV in the standards case.
INPV is the primary metric used in the MIA and it represents one
measure of the fair value of an industry in today's dollars. For each
industry affected by today's rule, DOE calculated INPV by summing all
of the net cash flows, discounted at the industry's cost of capital or
discount rate.
For each type of product under consideration in this rulemaking,
Tables VI.13 through VI.22 show the changes in INPV under both markup
scenarios that DOE estimates would result from the TSLs considered for
this final rule. The tables also present the product conversion costs
and capital conversion costs that the industry would incur at each TSL.
Product conversion costs include engineering, prototyping, testing, and
marketing expenses incurred by a manufacturer as it prepares to come
into compliance with a standard. Capital investments are the one-time
outlays for equipment and buildings required for the industry to comply
(i.e., capital conversion costs).
Table VI.13--Manufacturer Impact Analysis for Electric Cooktops Under the Preservation of Gross Margin Percentage Markup Scenario
[Preservation of gross margin percentage markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 359 359 357 357 437
Change in INPV............................ 2006$ millions.............. .............. 0 (2) (2) 78
%........................... .............. 0 -0.55 -0.55 21.76
Amended Energy Conservation Standards 2006$ millions.............. .............. 0 9.6 9.6 21.8
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 0 0 0 73.1
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 0 9.6 9.6 94.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.14--Manufacturer Impact Analysis for Electric Cooktops Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
[Preservation of gross margin absolute dollars markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 359 359 348 348 (26)
Change in INPV............................ 2006$ millions.............. .............. 0 (11) (11) (385)
%........................... .............. 0 -3.18 -3.18 -107.19
Amended Energy Conservation Standards 2006$ millions.............. .............. 0 9.6 9.6 21.8
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 0 0 0 73.1
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 0 9.6 9.6 94.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.15--Manufacturer Impact Analysis for Gas Cooktops Under the Preservation of Gross Margin Percentage Markup Scenario
[Preservation of gross margin percentage markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 288 283 283 283 316
Change in INPV............................ 2006$ millions.............. .............. (5) (5) (5) 28
%........................... .............. -1.73 -1.73 -1.73 9.88
[[Page 16073]]
Amended Energy Conservation Standards 2006$ millions.............. .............. 9.4 9.4 9.4 20.8
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 2.2 2.2 2.2 3.3
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 11.5 11.5 11.5 24.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.16--Manufacturer Impact Analysis for Gas Cooktops Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
[Preservation of gross margin absolute dollars markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 288 276 276 276 146
Change in INPV............................ 2006$ millions.............. .............. (12) (12) (12) (99)
%........................... .............. -4.11 -4.11 -4.11 -34.45
Amended Energy Conservation Standards 2006$ millions.............. .............. 9.4 9.4 9.4 20.8
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 2.2 2.2 2.2 3.3
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 11.5 11.5 11.5 24.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.17--Manufacturer Impact Analysis for Electric Ovens Under the Preservation of Gross Margin Percentage Markup Scenario
[Preservation of gross margin percentage markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 797 797 789 789 788
Change in INPV............................ 2006$ millions.............. .............. 0 (8) (8) (9)
%........................... .............. 0 -0.98 -0.98 -1.17
Amended Energy Conservation Standards 2006$ millions.............. .............. 0 20.8 20.8 67.6
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 0 0.8 0.8 179.8
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 0 21.6 21.6 247.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.18--Manufacturer Impact Analysis for Electric Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
[Preservation of gross margin absolute dollars markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 797 797 778 778 326
Change in INPV............................ 2006$ millions.............. .............. 0 (19) (19) (471)
%........................... .............. 0.00 -2.43 -2.43 -59.07
Amended Energy Conservation Standards 2006$ millions.............. .............. 0.0 20.8 20.8 67.6
Product Conversion Expenses.
[[Page 16074]]
Amended Energy Conservation Standards 2006$ millions.............. .............. 0.0 0.8 0.8 179.8
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 0.0 21.6 21.6 247.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.19--Manufacturer Impact Analysis for Gas Ovens Under the Preservation of Gross Margin Percentage Markup Scenario
[Preservation of gross margin percentage markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 469 461 461 462 422
Change in INPV............................ 2006$ millions.............. .............. (7) (7) (6) (46)
%........................... .............. -1.56 -1.56 -1.36 -9.91
Amended Energy Conservation Standards 2006$ millions.............. .............. 9.4 9.4 18.7 100.3
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 1.8 1.8 7.6 72.0
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 11.1 11.1 26.4 172.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.20--Manufacturer Impact Analysis for Gas Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario
[Preservation of gross margin absolute dollars markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 469 459 459 428 287
Change in INPV............................ 2006$ millions.............. .............. (10) (10) (41) (182)
%........................... .............. -2.10 -2.10 -8.68 -38.74
Amended Energy Conservation Standards 2006$ millions.............. .............. 9.4 9.4 18.7 100.3
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 1.8 1.8 7.6 72.0
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 11.1 11.1 26.4 172.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.21--Manufacturer Impact Analysis for Microwave Ovens Under the Preservation of Gross Margin Percentage Markup Scenario (Energy Factor)
[Preservation of gross margin percentage markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1a 2a 3a 4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 1,456 1,501 1,575 1,695 1,726
Change in INPV............................ 2006$ millions.............. .............. 45 118 238 270
%........................... .............. 3.06 8.11 16.37 18.53
Amended Energy Conservation Standards 2006$ millions.............. .............. 60.0 75.0 90.0 225.0
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 0.0 0.0 0.0 75.0
Capital Investments.
[[Page 16075]]
Total Investment Required................. 2006$ millions.............. .............. 60.0 75.0 90.0 300.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
Table VI.22--Manufacturer Impact Analysis for Microwave Ovens Under the Preservation of Gross Margin Absolute Dollars Markup Scenario (Energy Factor)
[Preservation of gross margin percentage markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case ---------------------------------------------------------------
1a 2a 3a 4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2006$ millions.............. 1,456 1,256 1,068 778 285
Change in INPV............................ 2006$ millions.............. .............. (200) (388) (679) (1,171)
%........................... .............. -13.75 -26.64 -46.60 -80.42
Amended Energy Conservation Standards 2006$ millions.............. .............. 60.0 75.0 90.0 225.0
Product Conversion Expenses.
Amended Energy Conservation Standards 2006$ millions.............. .............. 0.0 0.0 0.0 75.0
Capital Investments.
Total Investment Required................. 2006$ millions.............. .............. 60.0 75.0 90.0 300.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.
As noted above, the October 2008 NOPR provides a detailed
discussion of the estimated impact of new standards for cooking
products on INPV. 73 FR 62034, 62091-99 (Oct. 17, 2008).
b. Impacts on Manufacturer Employment
As discussed in the October 2008 NOPR, DOE expects that employment
by manufacturers would increase under all of the TSLs considered for
today's rule, although this does not take into account any relocation
of domestic jobs to countries with lower labor costs that might be
influenced by the level of investment required by new standards. 73 FR
62034, 62100-03 (Oct. 17, 2008). For today's final rule, DOE estimates
that the increase in the number of production employees in 2012 due to
standards (depending on the TSL) could be 7 to 577 for conventional
cooking product manufacturers and 16 to 97 for microwave oven
manufacturers. Further support for these conclusions regarding direct
employment impacts is provided in chapter 13 of the TSD. Indirect
employment impacts from standards, consisting of the jobs created in or
eliminated from the national economy other than in the manufacturing
sector being regulated, are discussed in section IV.G.
c. Impacts on Manufacturers That Are Small Businesses
As discussed in section IV.F and in the October 2008 NOPR, DOE
identified two small manufacturers of residential, conventional cooking
products. Both manufacture gas-fired ovens, ranges, and cooktops with
standing pilot lights, and these products comprise 25 percent or more
of their production. 73 FR 62034, 62076, 62095, 62103 (Oct. 17, 2008).
Impacts of today's standards on these two small businesses are
discussed in section VII.B of this notice.
As explained in the October 2008 NOPR, there are no small
businesses that manufacture microwave ovens. 73 FR 62034, 62130 (Oct.
17, 2008).
d. Cumulative Regulatory Burden
The October 2008 NOPR notes that one aspect of DOE's assessment of
manufacturer burden is the cumulative impact of multiple DOE standards
and other regulatory actions that affect manufacture of the same
covered products and other equipment produced by the same manufacturers
or their parent companies. 73 FR 62034, 62104 (Oct. 17, 2008). In
addition to DOE's energy conservation regulations for cooking products,
DOE identified other regulations that manufacturers face for cooking
and other products and equipment they manufacture within 3 years before
and 3 years after the anticipated effective date of the amended DOE
regulations. Id. The most significant of these additional regulations
include Federal standby power requirements, several additional Federal
and State energy conservation standards, the Restriction of Hazardous
Substance Directive (RoHS), State-by-State restrictions on mercury
(which affect gas cooking appliances), and international energy
conservation standards and test procedures. Id. As noted in the October
2008 NOPR, the last three of these requirements do not affect the
standards DOE considered for today's final rule. Most manufacturers DOE
interviewed stated that they already comply with the RoHS directive,
and most gas cooking appliance manufacturers have already eliminated
mercury switches or have plans to do so. In addition, although
manufacturers may incur a substantial cost if there are overlapping
testing and certification requirements in other markets besides the
United States, DOE only accounts for domestic compliance costs in its
calculation of product conversion expenses for products covered in this
rulemaking. Id.
EISA 2007 directs DOE to publish final rules to modify its test
procedures to measure and account for standby mode and off mode energy
consumption for various products (including kitchen ranges and ovens
and microwave ovens) by statutorily prescribed dates. 42 U.S.C.
6295(gg)(2)(B). In addition, EISA
[[Page 16076]]
2007 provides that any final rule prescribing amended or new energy
conservation standards adopted after July 1, 2010 must account for
standby mode and off mode energy use. 42 U.S.C 6295(gg)(3)(A). DOE has
determined that some manufacturers of cooking products also produce
other residential appliances that will be subject to EISA 2007
regulations on standby and off mode power. In interviews that DOE
conducted for the October 2008 NOPR, manufacturers stated that these
requirements will impose a heavy burden on their testing facilities
going forward. In addition, manufacturers expressed a concern that EISA
2007's standby power requirements could create many overlapping
regulatory compliance costs in the future.
In the analyses conducted for the October 2008 NOPR, DOE also
identified numerous Federal and State energy conservation standards
regulations that could affect cooking product manufacturers that
produce other residential and commercial equipment. (See chapter 13 of
the NOPR TSD.) Additional investments necessary to meet these potential
standards could have significant impacts on manufacturers of the
covered products.
Chapter 13 of the TSD accompanying this notice addresses in greater
detail the issue of cumulative regulatory burden.
3. Net Present Value of Consumer Impacts and National Employment
Impacts
The NPV analysis estimates the cumulative NPV to the Nation of
total consumer costs and savings that would result from particular
standard levels. Tables VI.23 and VI.24 provide an overview of the NPV
results for each TSL considered for conventional cooking products and
microwave ovens, respectively, using both a 7-percent and a 3-percent
real discount rate. See chapter 11 of the TSD accompanying this notice
for more detailed NPV results.
Table VI.23--Cumulative Net Present Value for Conventional Cooking Products
[Impacts for units sold from 2012 to 2042]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NPV billion 2006$
--------------------------------------------------------------------------------------------------------------------------------------------------
Electric coil Electric smooth Gas cooktops Electric Electric self- Gas standard Gas self-clean Total
cooktops cooktops ------------------ standard ovens clean ovens ovens ovens -------------------
TSL ------------------------------------- Discount rate ------------------------------------------------------------------------ Discount rate
Discount rate Discount rate ------------------ Discount rate Discount rate Discount rate Discount rate -------------------
------------------------------------- ------------------------------------------------------------------------
7% 3% 7% 3% 7% 3% 7% 3% 7% 3% 7% 3% 7% 3% 7% 3%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................ 0.00 0.00 0.00 0.00 0.22 0.56 0.00 0.00 0.00 0.00 0.03 0.14 0.00 0.00 0.25 0.71
2............................................ 0.09 0.30 0.00 0.00 0.22 0.56 0.13 0.43 0.00 0.00 0.03 0.14 0.00 0.00 0.48 1.43
3............................................ 0.09 0.30 0.00 0.00 0.22 0.56 0.13 0.43 0.00 0.00 0.03 0.14 0.01 0.25 0.49 1.68
4............................................ 0.09 0.30 -7.30 -13.95 -0.69 -1.01 -0.78 -1.26 -2.77 -5.18 -0.89 -1.72 -0.11 0.03 -12.46 -22.79
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.24--Cumulative Net Present Value for Microwave Oven Energy
Factor
[Impacts for units sold from 2012 to 2042]
------------------------------------------------------------------------
NPV billion 2006$
-------------------------------
TSL 7% Discount 3% Discount
rate rate
------------------------------------------------------------------------
1....................................... -1.23 -2.06
2....................................... -3.33 -6.05
3....................................... -6.32 -11.68
4....................................... -10.05 -18.70
------------------------------------------------------------------------
DOE also estimated the national employment impacts that would
result from each TSL. As Table VI.25 shows, DOE estimates that any net
monetary savings from standards would be redirected to other forms of
economic activity. DOE also expects these shifts in spending and
economic activity would affect the demand for labor. DOE estimated that
net indirect employment impacts from energy conservation standards for
cooking products would be positive (see Table VI.25), but very small
relative to total national employment. This increase would likely be
sufficient to fully offset any adverse impacts on employment that might
occur in the cooking products industries. For details on the employment
impact analysis methods and results, see chapter 15 of the TSD
accompanying this notice.
Table VI.25--Net National Change in Indirect Employment, Thousands of Jobs in 2042
----------------------------------------------------------------------------------------------------------------
Thousands of jobs in 2042
-----------------------------------------------------------------------------------------------------------------
Conventional cooking
Trial standard level products Trial standard level Microwave oven EF
----------------------------------------------------------------------------------------------------------------
1................................. 0.26 1 2.06
2................................. 0.94 2 2.07
3................................. 1.03 3 2.44
4................................. 1.21 4 2.47
----------------------------------------------------------------------------------------------------------------
4. Impact on Utility or Performance of Products
As indicated in sections III.E.1.d and V.B.4 of the October 2008
NOPR, DOE has concluded that the TSLs it has considered for cooking
products would not lessen the utility or performance of any cooking
products. 73 FR 62034, 62046-47, 62107 (Oct. 17, 2008).
5. Impact of Any Lessening of Competition
As discussed in the October 2008 NOPR (73 FR 62034, 62047, 62107
(Oct. 17, 2008)) and in section III.D.1.e of this preamble, DOE
considers any lessening of competition likely to result from proposed
energy conservation standards. The Attorney General also provides DOE
with a written determination of the impact, if any, of any such
lessening of competition. DOE considers the Attorney General's
determination when preparing the final rule for the standards
rulemaking and publishes this written determination as an attachment to
the final rule.
[[Page 16077]]
The DOJ concluded that the cooking products standards contained in
the proposed rule could substantially limit consumer choice by
eliminating the cooking appliance that most closely meets the needs of
certain consumers, including those with religious and cultural
practices that prohibit the use of line electricity, those without
access to line electricity, and those whose kitchens do not have
appropriate electrical outlets. The DOJ recommended that to maintain
competition, DOE should consider setting a ``no standard'' standard for
residential gas cooking products with constant burning pilots to
address the potential for certain customers to be stranded without an
economical product alternative. (DOJ, No. 53 at p. 2)
As discussed in section VI.D.2 above, DOE conducted additional
research on battery-powered ignition systems for residential gas
cooking products. DOE was able to identify a gas range for sale in the
United Kingdom (U.K.) that incorporates a battery-powered ignition
system that appears to meet the functional safety requirements of ANSI
Z21.1 (i.e., that the oven main burner is lit by an intermittent gas
pilot that is in turn lit by a battery-powered spark igniter). This
ignition system meets the requirements of ANSI Z21.1 in that it does
not require the user to push a separate ``light'' button at the same
time as the control knob is turned to allow pilot gas flow. However,
this ignition system does not include a safety device to shut off the
main gas valve in the event that no flame is detected, which is
required by the ANSI standard.
However, DOE found that there are gas cooking products with
battery-powered ignition for RV applications available in the United
States that meet similar ANSI safety standards for RV gas cooking
products and as found in ANSI safety standards for residential gas
cooking products. Thus, DOE believes, that a battery-powered ignition
system designed for an RV gas range could be integrated into a
residential gas range that could meet ANSI Z21.1 requirements.
DOE next investigated the possibility that battery-powered ignition
systems used in other indoor residential appliances in the United
States could meet the requirements of ANSI Z21.1, even though they are
not currently being incorporated in gas cooking products. DOE
identified several such appliances, including a remote-controlled gas
fireplace and instantaneous gas water heaters. For these products, the
battery-powered ignition systems are required to meet the same or
equivalent component-level ANSI safety standards as are required for
automatic ignition systems in gas cooking products. DOE contacted
several manufacturers of gas cooking products, fireplaces, and
instantaneous water heaters, as well as ignition component suppliers,
to investigate the technological feasibility of integrating these
existing battery-powered ignition systems into gas cooking products
that would meet ANSI Z21.1. None of these manufacturers could identify
insurmountable technological impediments to the development of such a
product. Based on its research, DOE determined that the primary barrier
to commercialization of battery-powered ignition systems in gas cooking
products has been lack of market demand and economic justification
rather than technological feasibility. Therefore, DOE concludes that a
gas range incorporating one of these ignition systems could meet ANSI
Z21.1. In addition, DOE research suggests that the market niche for gas
cooking products equipped with battery-powered ignition systems, which
would be created by the proposed gas cooking product standards, would
likely attract entrants among ignition component suppliers. Therefore,
in consideration of the above, DOE concludes that technologically
feasible alternative ignition systems to standing pilots in gas cooking
products exist and that consumer choice will not be limited by
eliminating pilot lights of gas ranges and ovens without electrical
supply cords.
6. Need of the Nation to Conserve Energy
Improving the energy efficiency of cooking products, where
economically justified, would likely improve the security of the
Nation's energy system by reducing overall demand for energy, thus
reducing the Nation's reliance on foreign sources of energy. Reduced
demand would also likely improve the reliability of the electricity
system, particularly during peak-load periods.
Energy savings from higher standards for cooking products would
also produce environmental benefits in the form of reduced emissions of
air pollutants and greenhouse gases associated with energy production,
and with household and building use of fossil fuels at sites where gas
cooking products are used. Table VI.26 provides DOE's estimate of
cumulative CO2, NOX, and Hg emissions reductions
that would result from the TSLs considered in this rulemaking. The
expected energy savings from new standards for cooking products may
also reduce the cost of maintaining nationwide emissions standards and
constraints. In the environmental assessment (chapter 16 of the TSD
accompanying this notice), DOE reports estimated annual changes in
CO2, NOX, and Hg emissions attributable to each
TSL.
Table VI.26--Cumulative CO2, and Other Emissions Reductions (Cumulative
Reductions for Products Sold From 2012 to 2042)
------------------------------------------------------------------------
------------------------------------------------------------------------
Emissions Reductions for Conventional Cooking Products
------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4
-------------------------------------------
CO2 (Mt).................... 13.74 15.46 23.39 34.96
NOX (kt).................... 6.71 6.88 10.82 16.07
Hg (t)...................... 0-0.15 0-0.19 0-0.28 0-0.41
------------------------------------------------------------------------
Emissions Reductions for Microwave Ovens Energy Factor
------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4
-------------------------------------------
CO2 (Mt).................... 22.88 33.46 53.89 74.67
NOX (kt).................... 2.55 3.75 6.06 8.42
Hg (t)...................... 0-0.46 0-0.68 0-1.10 0-1.52
------------------------------------------------------------------------
Mt = million metric tons.
kt = thousand metric tons.
t = metric tons.
[[Page 16078]]
As discussed in section IV.I of this final rule, DOE does not
report SO2 emissions reductions from power plants because
reductions from an energy conservation standard would not affect the
overall level of SO2 emissions in the United States due to
the emissions caps for SO2.
For the October 2008 NOPR, DOE's NEMS-BT modeling assumed that
NOX would be subject to the CAIR, issued by the U.S.
Environmental Protection Agency on March 10, 2005. 70 FR 25162 (May 12,
2005). On July 11, 2008, the U.S. Court of Appeals for the District of
Columbia Circuit (D.C. Circuit) issued its decision in North Carolina
v. Environmental Protection Agency, in which the court vacated CAIR.
531 F.3d 896 (DC Cir. 2008). Because the NEMS-BT model could no longer
be used to estimate NOX emissions, DOE estimated a range of
NOX reductions that would result from the trial standard
levels being considered for the October 2008 NOPR based on low and high
NOX emission rates. DOE multiplied these emission rates by
the reduction in electricity generation due to the potential amended
energy conservation standards considered to calculate the expected
reduction in NOX emissions. The October 2008 NOPR describes
these calculations in greater detail. 73 FR 62034, 62108-09 (Oct. 17,
2008).
On December 23, 2008, after the publication of the October 2008
NOPR, the D.C. Circuit decided to allow CAIR to remain in effect until
it is replaced by a rule consistent with the court's earlier opinion.
North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) (remand of
vacatur). As a result, for today's final rule, DOE was able to use the
NEMS-BT model to estimate the NOX emissions reductions that
standards would cause. CAIR permanently caps emissions of
NOX for 28 eastern States and D.C. This means that any new
or amended energy conservation standards for cooking products would be
unlikely to result in any reduction of NOX emissions in
those States covered by the CAIR caps. Under caps, physical emissions
reductions in those States would not result from the energy
conservation standards under consideration by DOE, but standards might
have produced an environmentally related economic impact in the form of
lower prices for emissions allowance credits, if large enough. However,
DOE determined that in the present case, such standards would not
produce an environmentally-related economic impact in the form of lower
prices for emissions allowance credits, because the estimated reduction
in NOX emissions or the corresponding allowance credits in
States covered by the CAIR cap would be too small to affect allowance
prices for NOX under the CAIR. In contrast, new or amended
energy conservation standards would reduce NOX emissions in
those 22 States that are not affected by CAIR. As a result, the NEMS-BT
does forecast NOX emission reductions from energy sources in
those 22 States from the cooking product standards considered in
today's final rule.
As noted in section IV.I, DOE was able to estimate the changes in
Hg emissions associated with an energy conservation standard as
follows. DOE notes that the NEMS-BT model, used as an integral part of
today's rulemaking, does not estimate Hg emission reductions due to new
energy conservation standards, as it assumed that Hg emissions would be
subject to EPA's CAMR.\38\ CAMR would have permanently capped emissions
of mercury for new and existing coal-fired plants in all States by
2010. As with SO2 and NOX, DOE assumed that under
such a system, energy conservation standards would have resulted in no
physical effect on these emissions, but might have resulted in an
environmentally related economic benefit in the form of a lower price
for emissions allowance credits if those credits were large enough. DOE
estimated that the change in the Hg emissions from energy conservation
standards would not be large enough to influence allowance prices under
CAMR.
---------------------------------------------------------------------------
\38\ 70 FR 28606 (May 18, 2005).
---------------------------------------------------------------------------
On February 8, 2008, the D.C. Circuit issued its decision in New
Jersey v. Environmental Protection Agency \39\ to vacate CAMR. In light
of this development and because the NEMS-BT model could not be used to
directly calculate Hg emission reductions, DOE used the Hg emission
rates discussed above to calculate emissions reductions.
---------------------------------------------------------------------------
\39\ 517 F.3d 574 (D.C. Cir. 2008).
---------------------------------------------------------------------------
Therefore, rather than using the NEMS-BT model, DOE established a
range of Hg rates to estimate the Hg emissions that could be reduced
through standards. DOE's low estimate assumed that future standards
would displace electrical generation only from natural gas-fired power
plants, thereby resulting in an effective emission rate of zero. (Under
this scenario, coal-fired power plant generation would remain
unaffected.) The low-end emission rate is zero because natural gas-
fired power plants have virtually zero Hg emissions associated with
their operation.
DOE's high estimate, which assumed that standards would displace
only coal-fired power plants, was based on a nationwide mercury
emission rate from AEO2008. (Under this scenario, gas-fired power plant
generation would remain unaffected.) Because power plant emission rates
are a function of local regulation, scrubbers, and the mercury content
of coal, it is extremely difficult to identify a precise high-end
emission rate. Therefore, the most reasonable estimate is based on the
assumption that all displaced coal generation would have been emitting
at the average emission rate for coal generation as specified by
AEO2008. As noted previously, because virtually all mercury emitted
from electricity generation is from coal-fired power plants, DOE based
the emission rate on the tons of mercury emitted per TWh of coal-
generated electricity. Based on the emission rate for 2006, DOE derived
a high-end emission rate of 0.0255 tons per TWh. To estimate the
reduction in mercury emissions, DOE multiplied the emission rate by the
reduction in coal-generated electricity due to the standards considered
in the utility impact analysis. These changes in Hg emissions are
extremely small, ranging from 0.03 to 0.27 percent of the national
base-case emissions forecast by NEMS-BT, depending on the TSL.
In the October 2008 NOPR, DOE considered accounting for a monetary
benefit of CO2 emission reductions associated with
standards. To put the potential monetary benefits from reduced
CO2 emissions into a form that would likely be most useful
to decisionmakers and interested parties, DOE used the same methods it
used to calculate the net present value of consumer cost savings. DOE
converted the estimated yearly reductions in CO2 emissions
into monetary values, which were then discounted over the life of the
affected equipment to the present using both 3-percent and 7-percent
discount rates.
In the October 2008 NOPR, DOE proposed to use the range $0 to $20
per ton for the year 2007 in 2007$. 73 FR 62034, 62110 (Oct. 17, 2008).
These estimates were based on a previous analysis that used a range of
no benefit to an average benefit value reported by the
Intergovernmental Panel on Climate Change (IPCC).\40\ DOE derived the
IPCC
[[Page 16079]]
estimate used as the upper bound value from an estimate of the mean
value of worldwide impacts due to climate change and not just the
effects likely to occur within the United States. This previous
analysis assumed that the appropriate value should be restricted to a
representation of those costs and benefits likely to be experienced in
the United States. DOE explained in the October 2008 NOPR that it
expects such domestic values would be lower than comparable global
values; however, there currently are no consensus estimates for the
U.S. benefits likely to result from CO2 emission reductions.
Because U.S.-specific estimates were unavailable and DOE did not
receive any additional information that would help narrow the proposed
range of domestic benefits, DOE used the global mean value as an upper
bound U.S. value.
---------------------------------------------------------------------------
\40\ During the preparation of its most recent review of the
state of climate science, the IPCC identified various estimates of
the present value of reducing CO2 emissions by 1 ton over
the life that these emissions would remain in the atmosphere. The
estimates reviewed by the IPCC spanned a range of values. Absent a
consensus on any single estimate of the monetary value of
CO2 emissions, DOE used the estimates identified by the
study cited in ``Summary for Policymakers,'' prepared by Working
Group II of the IPCC's ``Fourth Assessment Report,'' to estimate the
potential monetary value of CO2 reductions likely to
result from standards considered in this rulemaking. According to
IPCC, the mean social cost of carbon (SCC) reported in studies
published in peer-reviewed journals was $43 per ton of carbon. This
translates into about $12 per ton of CO2. The literature
review (Tol 2005) from which this mean was derived did not report
the year in which these dollars were denominated. However, DOE
understands this estimate was for the year 1995 denominated in
1995$. Updating that estimate to 2007$ yields a SCC for the year
1995 of $15 per ton of CO2.
---------------------------------------------------------------------------
The Joint Comment asserted that DOE should use the EIA analysis of
the Climate Security Act from April 2008, including future price
escalation, to estimate the cost of avoiding CO2 emissions.
The core scenario of this analysis specifies a $17 price per ton of
CO2 with an annual 7.4 percent yearly increase forecast.
(Joint Comment, No. 44 at p. 12) Whirlpool stated that the regulation
of CO2 should be restricted to the regulation of power
plants and, therefore, does not support an attempt to value those
emissions as part of this rulemaking. (Whirlpool, No. 50 at p. 8)
The Department of Energy, together with other Federal agencies, is
currently reviewing various methodologies for estimating the monetary
value of reductions in CO2 and other greenhouse gas
emissions. This review will consider the comments on this subject that
are part of the public record for this and other rulemakings, as well
as other methodological assumptions and issues, such as whether the
appropriate values should represent domestic U.S. or global benefits
(and costs). Given the complexity of the many issues involved, this
review is ongoing. However, consistent with DOE's legal obligations,
and taking into account the uncertainty involved with this particular
issue, DOE has included in this rulemaking the values and analyses
previously conducted.
Given the uncertainty surrounding estimates of the social cost of
carbon, DOE previously concluded that relying on any single estimate
may be inadvisable because that estimate will depend on many
assumptions. Working Group II's contribution to the ``Fourth Assessment
Report'' of the IPCC notes the following:
The large ranges of SCC are due in the large part to differences
in assumptions regarding climate sensitivity, response lags, the
treatment of risk and equity, economic and non-economic impacts, the
inclusion of potentially catastrophic losses, and discount
rates.\41\
---------------------------------------------------------------------------
\41\ ``Climate Change 2007--Impacts, Adaptation and
Vulnerability.'' Contribution of Working Group II to the ``Fourth
Assessment Report'' of the IPCC, 17. Available at http://www.ipcc.ch/ipccreports/ar4-wg2.htm (last accessed Aug. 7, 2008).
Because of this uncertainty, DOE previously used the SCC value from
Tol (2005), which was presented in the IPCC's ``Fourth Assessment
Report'' and provided a comprehensive meta-analysis of estimates for
the value of SCC. Tol released an update of his 2005 meta-analysis in
September 2007 that reported an increase in the mean estimate of SCC
from $43 to $71 per ton carbon. Although the Tol study was updated in
2007, the IPCC has not adopted the update. As a result, DOE previously
decided to continue to rely on the study cited by the IPCC. DOE notes
that the conclusions of Tol in 2007 are similar to the conclusions of
Tol in 2005. In 2007, Tol continues to indicate that there is no
consensus regarding the monetary value of reducing CO2
emissions by 1 ton. The broad range of values in both Tol studies are
the result of significant differences in the methodologies used in the
studies Tol summarized. According to Tol, all of the studies have
shortcomings, largely because the subject is inherently complex and
uncertain and requires broad multidisciplinary knowledge. Thus, it was
not certain that the values reported in Tol in 2007 are more accurate
or representative than the values reported in Tol in 2005.
For today's final rule, DOE continues to use the range of values
proposed in the October 2008 NOPR, which was based on the values
presented in Tol (2005) as proposed. Additionally, DOE applied an
annual growth rate of 2.4 percent to the value of SCC, as suggested by
the IPCC Working Group II (2007, p. 822). This growth rate is based on
estimated increases in damage from future emissions that published
studies have reported. Because the values in Tol (2005) were presented
in 1995 dollars, DOE calculated more current values, assigning a range
for SCC of $0 to $20 (2007$) per ton of CO2 emissions.
The upper bound of the range DOE used is based on Tol (2005), which
reviewed 103 estimates of SCC from 28 published studies. Tol concluded
that when only peer-reviewed studies published in recognized journals
are considered, ``climate change impacts may be very uncertain but [it]
is unlikely that the marginal damage costs of carbon dioxide emissions
exceed $50 per ton carbon [comparable to a 2007 value of $20 per ton
carbon dioxide when expressed in 2007 U.S. dollars with a 2.4 percent
growth rate].''
In setting a lower bound, DOE previous analysis agreed with the
IPCC Working Group II (2007) report that ``significant warming across
the globe and the locations of significant observed changes in many
systems consistent with warming is very unlikely to be due solely to
natural variability of temperatures or natural variability of the
systems'' (p. 9), and thus tentatively concluded that a global value of
zero for the SCC cannot be justified. However, DOE previously concluded
that it is reasonable to allow for the possibility that the SCC for the
United States may be quite low. In fact, some of the studies examined
by Tol (2005) reported negative values for the SCC. As stated in the
October 2008 NOPR, DOE assumed that it was most appropriate to use U.S.
benefit values rather than world benefit values in its analysis, and
U.S. values will likely be lower than the global values. As indicated
above, DOE, together with other Federal agencies, is now reviewing
whether this previous analysis should be modified. However, it is very
unlikely that possible changes in this methodology would affect the
conclusions reached in this rulemaking.
Table VI.27 presents the resulting estimates of the potential range
of net present value benefits associated with reducing CO2
emissions.
[[Page 16080]]
Table VI.27--Estimates of Value of CO2 Emissions Reductions Under Trial Standard Levels at Seven-Percent and
Three-Percent Discount Rates
----------------------------------------------------------------------------------------------------------------
Estimated cumulative CO2 Value at 7% discount Value at 3% discount
Conventional cooking product TSL emission reductions Mt rate million 2007$ rate million 2007$
----------------------------------------------------------------------------------------------------------------
1................................. 13.74 $0 to $109 $0 to $241.
2................................. 15.46 $0 to $122 $0 to $270.
3................................. 23.39 $0 to $182 $0 to $408.
4................................. 34.96 $0 to $269 $0 to $610.
----------------------------------------------------------------------------------------------------------------
Estimated cumulative CO2 Value at 7% discount Value at 3% discount
Microwave oven energy factor TSL emission reductions Mt rate million 2007$ rate million 2007$
----------------------------------------------------------------------------------------------------------------
1................................. 22.88 $0 to $192 $0 to $404.
2................................. 33.46 $0 to $277 $0 to $589.
3................................. 53.89 $0 to $443 $0 to $948.
4................................. 74.67 $0 to $612 $0 to $1313.
----------------------------------------------------------------------------------------------------------------
DOE also investigated the potential monetary benefit of reduced
SO2, NOX, and Hg emissions from the TSLs it
considered. As previously stated, DOE's initial analysis assumed the
presence of nationwide emission caps on SO2 and Hg, and caps
on NOX emissions in the 28 States covered by CAIR. In the
presence of these caps, DOE concluded that no physical reductions in
power sector emissions would occur, but that the standards could put
downward pressure on the prices of emissions allowances in cap-and-
trade markets. Estimating this effect is very difficult because of
factors such as credit banking, which can change the trajectory of
prices. DOE has concluded that the effect from energy conservation
standards on SO2 allowance prices is likely to be negligible
based on runs of the NEMS-BT model. See chapter 16 of the TSD
accompanying this notice for further details.
Because the courts have decided to allow the CAIR rule to remain in
effect, projected annual NOX allowances from NEMS-BT are
relevant. As noted above, standards would not produce an economic
impact in the form of lower prices for emissions allowance credits in
the 28 eastern States and DC covered by the CAIR cap. New or amended
energy conservation standards would reduce NOX emissions in
those 22 States that are not affected by CAIR. For the area of the
United States not covered by CAIR, DOE estimated the monetized value of
NOX emissions reductions resulting from each of the TSLs
considered for today's final rule based on environmental damage
estimates from the literature. Available estimates suggest a very wide
range of monetary values for NOX emissions, ranging from
$370 per ton to $3,800 per ton of NOX from stationary
sources, measured in 2001$ (equivalent to a range of $421 per ton to
$4,326 per ton in 2006$).\42\
---------------------------------------------------------------------------
\42\ Office of Management and Budget Office of Information and
Regulatory Affairs, ``2006 Report to Congress on the Costs and
Benefits of Federal Regulations and Unfunded Mandates on State,
Local, and Tribal Entities,'' Washington, DC (2006).
---------------------------------------------------------------------------
For Hg emissions reductions, DOE estimated the national monetized
values resulting from the TSLs considered for today's rule based on
environmental damage estimates from the literature. DOE conducted
research for today's final rule and determined that the impact of
mercury emissions from power plants on humans is considered highly
uncertain. However, DOE identified two estimates of the environmental
damage of mercury based on two estimates of the adverse impact of
childhood exposure to methyl mercury on IQ for American children, and
subsequent loss of lifetime economic productivity resulting from these
IQ losses. The high-end estimate is based on an estimate of the current
aggregate cost of the loss of IQ in American children that results from
exposure to mercury of U.S. power plant origin ($1.3 billion per year
in year 2000$), which works out to $31.7 million per ton emitted per
year (2006$).\43\ The low-end estimate is $0.66 million per ton emitted
(in 2004$) or $0.71 million per ton in 2006$. DOE derived this estimate
from a published evaluation of mercury control using different methods
and assumptions from the first study, but also based on the present
value of the lifetime earnings of children exposed.\44\ Table VI.28 and
Table VI.29 present the resulting estimates of the potential range of
present value benefits associated with reduced national NOX
and Hg emissions from the TSLs DOE considered.
---------------------------------------------------------------------------
\43\ Trasande, L., et al., ``Applying Cost Analyses to Drive
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911
(2006).
\44\ Ted Gayer and Robert Hahn, ``Designing Environmental
Policy: Lessons from the Regulation of Mercury Emissions,''
Regulatory Analysis 05-01, AEI-Brookings Joint Center for Regulatory
Studies, Washington, DC (2004). A version of this paper was
published in the Journal of Regulatory Economics in 2006. The
estimate was derived by back-calculating the annual benefits per ton
from the net present value of benefits reported in the study.
Table VI.28--Estimates of Monetary Value of Reductions of Hg and NOX by Trial Standard Level at a Seven-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of estimated Hg
Conventional cooking product TSL Cumulative NOX emission Value of NOX emission Estimated cumulative Hg emission reductions
reductions kt reductions million 2006$ emission reductions t million 2006$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................... 6.71 0.7 to 7.3 0 to 0.15 0 to 1.3.
2............................................... 6.88 0.7 to 7.5 0 to 0.19 0 to 1.6.
3............................................... 10.82 1.1 to 11.5 0 to 0.28 0 to 2.2.
[[Page 16081]]
4............................................... 16.07 1.6 to 16.8 0 to 0.41 0 to 3.3.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of estimated Hg
Microwave oven energy factor TSL Cumulative NOX emission Value of NOX emission Estimated cumulative Hg emission reductions
reductions kt reductions million 2006$ emission reductions t million 2006$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................... 2.55 0.3 to 3.2 0 to 0.46 0 to 3.7
2............................................... 3.75 0.4 to 4.6 0 to 0.68 0 to 5.4
3............................................... 6.06 0.7 to 7.3 0 to 1.10 0 to 8.6
4............................................... 8.42 1.0 to 10.2 0 to 1.52 0 to 11.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.29--Estimates of Monetary Value of Reductions of Hg and NOX by Trial Standard Level at a Three-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of estimated Hg
Conventional cooking product TSL Cumulative NOX emission Value of NOX emission Estimated cumulative Hg emission reductions
reductions kt reductions million 2006$ emission reductions t million 2006$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................... 6.71 1.5 to 15.4 0 to 0.15 0 to 2.6.
2............................................... 6.88 1.5 to 15.7 0 to 0.19 0 to 3.3.
3............................................... 10.82 2.4 to 24.5 0 to 0.28 0 to 4.6.
4............................................... 16.07 3.5 to 36.1 0 to 0.41 0 to 6.9.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of estimated Hg
Microwave oven energy factor TSL Cumulative NOX emission Value of NOX emission Estimated cumulative Hg emission reductions
reductions kt reductions million 2006$ emission reductions t million 2006$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................... 2.55 0.6 to 6.1 0 to 0.46 0 to 7.8.
2............................................... 3.75 0.9 to 8.9 0 to 0.68 0 to 11.3.
3............................................... 6.06 1.4 to 14.4 0 to 1.10 0 to 18.2.
4............................................... 8.42 1.9 to 19.9 0 to 1.52 0 to 25.2.
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Conclusion
1. Overview
EPCA contains criteria for prescribing new or amended energy
conservation standards. It provides that any such standard for a
covered product must be designed to achieve the maximum improvement in
energy efficiency that the Secretary determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In
determining whether a standard is economically justified, the Secretary
must determine whether the benefits of the standard exceed its burdens,
to the greatest extent practicable, considering the seven factors
previously discussed in section II.A of today's final rule. (42 U.S.C.
6295(o)(2)(B)(i)) A determination of whether a standard level is
economically justified is not made based on any one of these factors in
isolation. The Secretary must weigh each of these seven factors in
total in determining whether a standard is economically justified.
Further, the Secretary may not establish a new or amended standard if
such standard would not result in ``significant conservation of
energy,'' or ``is not technologically feasible or economically
justified.'' (42 U.S.C. 6295(o)(3)(B))
In deciding whether to adopt amended or new energy conservation
standards for conventional cooking products, and for the cooking
efficiency of microwave ovens, respectively, DOE started by examining
the maximum technologically feasible levels to determine whether those
levels were economically justified. Upon finding that the maximum
technologically feasible levels were not economically justified, DOE
analyzed the next lower TSL to determine whether that level was
economically justified. DOE follows this procedure until it identifies
a TSL that is economically justified, or determines that no TSL is
economically justified.
Below are tables that summarize the results of DOE's quantitative
analysis for each of the TSLs it considered for today's final rule.
These tables present the results for each TSL, and will aid the reader
in the discussion of costs and benefits of each TSL. The range of
values for industry impacts represents the results for the different
markup scenarios that DOE used to estimate manufacturer impacts.
In addition to the quantitative results, DOE also considered other
burdens and benefits that affect economic justification. In the case of
conventional cooking products, DOE considered the burden on the
industry associated with complying with performance standards.
Currently, conventional cooking products are not rated for efficiency
because DOE has promulgated only prescriptive standards for gas cooking
products. Therefore, any proposed performance standards would require
the industry to test, rate, and label these cooking products, a
significant burden that the industry currently does not bear. In the
specific case of gas cooking products, DOE also considered the safety
and commercial availability of battery-powered ignition devices as a
replacement for standing pilot ignition systems.
2. Conventional Cooking Products
Table VI.30 summarizes the results of DOE's quantitative analysis
for the TSLs it considered for conventional cooking products for
today's final rule. The impacts at each TSL are measured relative to a
no-standards base case.
[[Page 16082]]
Table VI.30--Summary of Quantitative Results for Conventional Cooking Products *
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads):
0% Discount Rate........................................ 0.14 0.23 0.32 0.50
7% Discount Rate........................................ 0.04 0.06 0.08 0.12
3% Discount Rate........................................ 0.08 0.12 0.17 0.26
Generation Capacity Reduction (GW) **....................... 0.062 0.081 0.120 0.184
NPV of Consumer Impacts (2006$ billion):
7% Discount Rate........................................ 0.254 0.475 0.486 (12.456)
3% Discount Rate........................................ 0.706 1.432 1.684 (22.787)
Industry Impacts:
Gas Cooktops
Industry NPV (2006$ million)........................ (5)-(12) (5)-(12) (5)-(12) 28-(99)
Industry NPV (% Change)............................. (2)-(4) (2)-(4) (2)-(4) 10-(34)
Electric Cooktops
Industry NPV (2006$ million)........................ 0 (2)-(11) (2)-(11) 78-(385)
Industry NPV (% Change)............................. 0 (1)-(3) (1)-(3) 22-(107)
Gas Ovens
Industry NPV (2006$ million)........................ (7)-(10) (7)-(10) (6)-(41) (46)-(182)
Industry NPV (% Change)............................. (2) (2) (1)-(9) (10)-(39)
Electric Ovens
Industry NPV (2006$ million)........................ 0 (8)-(19) (8)-(19) (9)-(471)
Industry NPV (% Change)............................. 0 (1)-(2) (1)-(2) (1)-(59)
Cumulative Emissions Reductions: [dagger]
CO2 (Mt)................................................ 13.74 15.46 23.39 34.96
NOX (kt)................................................ 6.71 6.88 10.82 16.07
Hg (t).................................................. 0-0.15 0-0.19 0-0.28 0-0.41
Value of Emissions Reductions:
CO2 (2007$ million)
7% Discount Rate.................................... 0-109 0-122 0-182 0-269
3% Discount Rate.................................... 0-241 0-270 0-408 0-610
NOX (2006$ million)
7% Discount Rate.................................... 0.7-7.3 0.7-7.5 1.1-11.5 1.6-16.8
3% Discount Rate.................................... 1.5-15.4 1.5-15.7 2.4-24.5 3.5-36.1
Hg (2006$ million)
7% Discount Rate.................................... 0-1.3 0-1.6 0-2.2 0-3.3
3% Discount Rate.................................... 0-2.6 0-3.3 0-4.6 0-6.9
Mean LCC Savings * (2006$):
Gas Cooktop/Conventional Burners........................ 15 15 15 (8)
Electric Cooktop/Low or High Wattage Open (Coil) ........... 4 4 4
Elements...............................................
Electric Cooktop/Smooth Elements........................ ........... ........... ........... (238)
Gas Oven/Standard Oven with or w/o a Catalytic Line..... 9 9 9 (81)
Gas Oven/Self-Clean Oven................................ ........... ........... 3 (4)
Electric Oven/Standard Oven with or w/o a Catalytic Line ........... 11 11 (50)
Electric Oven/Self-Clean Oven........................... ........... ........... ........... (143)
Median PBP (years):
Gas Cooktop/Conventional Burners........................ 4.3 4.3 4.3 73.0
Electric Cooktop/Low or High Wattage Open (Coil) ........... 7.2 7.2 7.2
Elements...............................................
Electric Cooktop/Smooth Elements........................ ........... ........... ........... 1,498
Gas Oven/Standard Oven with or w/o a Catalytic Line..... 9.0 9.0 9.0 25.3
Gas Oven/Self-Clean Oven................................ ........... ........... 11.0 15.6
Electric Oven/Standard Oven with or w/o a Catalytic Line ........... 8.0 8.0 60.7
Electric Oven/Self-Clean Oven........................... ........... ........... ........... 236
LCC Consumer Impacts:
Gas Cooktop/Conventional Burners
Net Cost (%)........................................ 0.1 0.1 0.1 93.5
No Impact (%)....................................... 93.5 93.5 93.5 0.0
Net Benefit (%)..................................... 6.4 6.4 6.4 6.5
Electric Cooktop/Low or High Wattage Open (Coil)
Elements
Net Cost (%)........................................ ........... 27.1 27.1 27.1
No Impact (%)....................................... ........... 0.0 0.0 0.0
Net Benefit (%)..................................... ........... 72.9 72.9 *72.9
Electric Cooktop/Smooth Elements
Net Cost (%)........................................ ........... ........... ........... 100.0
No Impact (%)....................................... ........... ........... ........... 0.0
Net Benefit (%)..................................... ........... ........... ........... 0.0
Gas Oven/Standard Oven with or w/o a Catalytic Line
Net Cost (%)........................................ 5.1 5.1 5.1 93.2
No Impact (%)....................................... 82.3 82.3 82.3 0.0
Net Benefit (%)..................................... 12.6 12.6 12.6 6.8
Gas Oven/Self-Clean Oven
Net Cost (%)........................................ ........... ........... 56.1 65.0
No Impact (%)....................................... ........... ........... 0.0 0.0
Net Benefit (%)..................................... ........... ........... 43.9 35.0
[[Page 16083]]
Electric Oven/Standard Oven with or w/o a Catalytic Line
Net Cost (%)........................................ ........... 42.7 42.7 94.4
No Impact (%)....................................... ........... 0.0 0.0 0.0
Net Benefit (%)..................................... ........... 57.3 57.3 5.6
Electric Oven/Self-Clean Oven
Net Cost (%)........................................ ........... ........... ........... 78.5
No Impact (%)....................................... ........... ........... ........... 0.0
Net Benefit (%)..................................... ........... ........... ........... 21.5
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC by the amount
indicated.
** Changes in installed generation capacity in gigawatts (GW) by 2042 based on the AEO2008 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants and at households. NOX emissions
impacts include physical reductions at power plants and at households.
First, DOE considered TSL 4, the max-tech level. TSL 4 would likely
save 0.50 quads of energy through 2042, an amount DOE considers
significant. Discounted at 7 percent, the projected energy savings
through 2042 would be 0.12 quads. TSL 4 would result in a decrease of
$12.5 billion in the NPV of consumer benefits, using a discount rate of
7 percent. The emissions reductions at TSL 4 are 34.96 Mt of
CO2, 16.07 kt of NOX, and 0 t to 0.41 t of Hg
with a corresponding value of $0 to $269 million for CO2,
$1.6 to $16.8 million for NOX, and $0 to $3.3 million for
Hg, using a discount rate of 7 percent. Total generating capacity in
2042 is estimated to decrease by 0.184 gigawatts (GW) under TSL 4.
At TSL 4, DOE projects that the average conventional cooking
product consumer would experience an increase in LCC, with the
exception of consumers of electric coil cooktops. In the case of the
latter, the average consumer would save $4 in LCC. With the exception
of electric coil cooktop consumers, DOE estimated LCC increases at TSL
4 for at least 65 percent of consumers in the Nation that purchase
conventional cooking products. The median payback period of each
product class, with the exception of electric coil cooktops and gas
self-cleaning ovens, is projected to be substantially longer than the
mean lifetime of the product.
DOE estimates that the technology needed to attain TSL 4 for
electric cooktops (improved contact conductance) may not provide energy
savings under field conditions. 73 FR 62034, 62115 (Oct. 17, 2008).
Measured efficiency gains from improved contact conductance have been
obtained under DOE test procedure conditions using an aluminum test
block. To ensure consistent and repeatable testing, the aluminum test
block is used to establish cooktop efficiency by measuring the
increased heat content of the block during a test measurement. Because
the test block is much flatter than actual cooking vessels and, thus,
allows for a higher degree of thermal contact between the block and
coil element, the efficiency gains with an actual cooking vessel likely
may not be as large or may not even be achievable. Therefore, DOE
doubts that electric cooktop consumers may actually realize savings
with products at TSL 4.
DOE estimated the projected change in INPV at TSL 4 for each of the
following four general categories of conventional cooking products: Gas
cooktops, electric cooktops, gas ovens, and electric ovens. The
projected change in INPV ranges from an increase of $28 million to a
decrease of $99 million for gas cooktops, an increase of $78 million to
a decrease of $385 million for electric cooktops, a decrease of $46
million to a decrease of $182 million for gas ovens, and a decrease of
$9 million to a decrease of $471 million for electric ovens. At TSL 4,
DOE recognizes the risk of very large negative impacts if
manufacturers' expectations about reduced profit margins are realized.
In particular, if the high end of the range of negative impacts is
reached as DOE expects, TSL 4 could result in a net loss of 34 percent
in INPV to gas cooktop manufacturers, a net loss of 107 percent in INPV
to electric cooktop manufacturers, a net loss of 39 percent to gas oven
manufacturers, and a net loss of 59 percent to electric oven
manufacturers.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 4, DOE concludes that the potential benefits of
energy savings and emissions reductions are outweighed by the potential
multi-million dollar negative net economic cost to the Nation's
consumers, the economic burden on many individual consumers, and the
large capital conversion costs that could result in a reduction in INPV
for manufacturers. In addition, because conventional cooking products
are not rated for efficiency, TSL 4 would significantly impact the
industry in terms of the added cost of testing, rating, and labeling
these products. Consequently, DOE concludes that TSL 4 is not
economically justified.
Next, DOE considered TSL 3, which yielded primary energy savings
estimated at 0.32 quads of energy through 2042, an amount which DOE
considers to be significant. Discounted at 7 percent, the energy
savings through 2042 would be 0.08 quads. TSL 3 would result in an
increase of $486 million in the NPV of consumer benefit, using a
discount rate of 7 percent. The emissions reductions are projected to
be 23.39 Mt of CO2, 10.82 kt of NOX, and 0 t to
0.28 t of Hg with a corresponding value of $0 to $182 million for
CO2, $1.1 to $11.5 million for NOX, and $0 to
$2.2 million for Hg, using a discount rate of 7 percent. Total
generating capacity in 2042 under TSL 3 is estimated to decrease by
0.120 GW.
For electric smooth cooktops and electric self-cleaning ovens, TSL
3 does not alter the current absence of a standard because none of the
candidate standard levels for these products provide economic savings
to consumers. However, average gas and electric coil cooktop consumers
would save $15 and $4 in LCC, respectively, at TSL 3. Average consumers
of gas standard ovens, gas self-cleaning ovens, and electric standard
ovens would realize LCC savings of $9, $3, and $11, respectively, at
TSL 3. The median payback period of each product class impacted by TSL
3 is projected to be shorter than the mean lifetime of the products (19
years). For example, at TSL 3 the projected payback period is 4.3 years
for average consumers of gas cooktops, whereas the projected payback
period is 11.0 years for average consumers of gas self-cleaning ovens.
Although TSL 3 provides LCC savings to the average consumer, DOE
estimates a significant percentage of consumers of gas self-cleaning
ovens and electric standard ovens would be burdened by
[[Page 16084]]
the standard (i.e., experience increases in their LCC). DOE estimates
that 56 percent of consumers of gas self-cleaning ovens and 43 percent
of consumers of electric standard ovens would be burdened by TSL 3. In
the case of electric standard ovens, almost 50 percent of consumers
would be burdened. In the case of gas cooktops, 94 percent of consumers
are not impacted by TSL 3 (they already purchase cooktops at TSL 3). Of
the remaining 6 percent of gas cooktop consumers who are impacted by
TSL 3, nearly all would realize LCC savings. For gas standard ovens, 82
percent consumers are not impacted by TSL 3. Of the remaining 18
percent of gas standard oven consumers who are affected by TSL 3, two-
thirds realize LCC savings. In the case of electric coil cooktops, more
than 70 percent of consumers have a decrease in their LCC. However, the
efficiency gain achieved at TSL 3 would be achieved through the same
technological change as TSL 4 (improved contact conductance). As noted
for TSL 4, DOE has significant doubt that electric cooktop consumers
would actually realize economic savings at TSL 3.
At TSL 3, the projected change in INPV for each of the four general
categories of conventional cooking products range from a decrease of $5
million to a decrease of $12 million for gas cooktops, a decrease of $2
million to a decrease of $11 million for electric cooktops, a decrease
of $6 million to a decrease of $41 million for gas ovens, and a
decrease of $8 million to a decrease of $19 million for electric ovens.
At TSL 3, DOE recognizes the risk of negative impacts if manufacturers'
expectations about reduced profit margins are realized. In particular,
if the high end of the range of impacts is reached as DOE expects, TSL
3 could result in maximum net losses of up to 4 percent in INPV for gas
cooktop manufacturers, 3 percent for electric cooktop manufacturers, 9
percent for gas oven manufacturers, and 2 percent for electric oven
manufacturers.
Although DOE recognizes the economic benefits to the Nation's
consumers that could result from TSL 3, DOE concludes that the benefits
of a standard at TSL 3 would be outweighed by the economic burden on
conventional cooking product consumers. The economic savings realized
by average consumers are outweighed by the significant percentage of
gas self-cleaning oven and electric standard oven consumers who are
burdened by the standard. Considering that TSL 3 also adversely impacts
manufacturers' INPV and would place a significant burden on
manufacturers to comply with the standards, the benefits of energy
savings and emissions reductions are not significant enough to outweigh
the burdens of the standard. Consequently, DOE concludes that TSL 3 is
not economically justified.
DOE next considered TSL 2. TSL 2 would save 0.23 quads of energy
through 2042, an amount DOE considers significant. Discounted at 7
percent, the projected energy savings through 2042 would be 0.06 quads.
DOE projects TSL 2 to yield an NPV of consumer benefit of $475 million,
using a discount rate of 7 percent. The estimated emissions reductions
are 15.46 Mt of CO2, 6.88 kt to of NOX, and 0 t
to 0.19 t of Hg with a corresponding value of $0 to $122 million for
CO2, $0.7 to $7.5 million for NOX, and $0 to $1.6
million for Hg, using a discount rate of 7 percent. Total generating
capacity in 2042 under TSL 2 would likely decrease by 0.081 GW.
The candidate standard levels for each of the product classes that
comprise TSL 2 are the same as TSL 3 except for gas self-cleaning
ovens. DOE did not alter the current standard and establish an
efficiency level for gas self-cleaning ovens for TSL 2 because, as
described for TSL 3, efficiency levels that go beyond the baseline
level do not yield LCC savings to a majority of gas self-cleaning
consumers. For all other product classes, the impacts to consumers at
TSL 3 are identical to those at TSL 2.
At TSL 2, the projected change in INPV for each of the four general
categories of conventional cooking products range from a decrease of $5
million to a decrease of $12 million for gas cooktops, a decrease of $2
million to a decrease of $11 million for electric cooktops, a decrease
of $7 million to a decrease of $10 million for gas ovens, and a
decrease of $8 million to a decrease of $19 million for electric ovens.
At TSL 2, DOE recognizes the risk of negative impacts if manufacturers'
expectations about reduced profit margins are realized. In particular,
if the high end of the range of impacts is reached as DOE expects, TSL
2 could result in a net loss of 4 percent in INPV to gas cooktop
manufacturers, a net loss of 3 percent in INPV to electric cooktop
manufacturers, a net loss of 2 percent to gas oven manufacturers, and a
net loss of 2 percent to electric oven manufacturers.
Although DOE recognizes the economic benefits to the Nation's
consumers that could result from TSL 2, DOE concludes that the benefits
of a standard at TSL 2 would be outweighed by the economic burden that
would be placed upon conventional cooking product consumers. The
potential economic savings realized by average consumers are outweighed
by the significant percentage of electric standard oven consumers who
are burdened by the standard and by the significant risk that consumers
of electric coil cooktops would not realize the savings projected for
that product. TSL 2 would also adversely impact manufacturer INPV and
would place a significant burden on manufacturers to comply with the
standards. Consequently, the benefits of energy savings and emissions
impacts of TSL 2 are not significant enough to outweigh the burdens
that would be created by the standard. Consequently, DOE concludes that
TSL 2 is not economically justified.
DOE next considered TSL 1. With TSL 1, only amended energy
conservation standards consisting of prescriptive requirements to
eliminate standing pilots for gas cooktops and gas standard ovens would
be promulgated. DOE projects that TSL 1 would save 0.14 quads of energy
through 2042, an amount DOE considers significant. Discounted at 7
percent, the projected energy savings through 2042 would be 0.04 quads.
DOE projects TSL 1 to yield an NPV of consumer benefit of $254 million,
using a discount rate of 7 percent. The estimated emissions reductions
are 13.74 Mt of CO2, 6.71 kt of NOX, and 0 t to
0.15 t of Hg with a corresponding value of $0 to $109 million for
CO2, $0.7 to $7.3 million for NOX, and $0 to $1.3
million for Hg, using a discount rate of 7 percent. Total generating
capacity in 2042 under TSL 1 would decrease by 0.062 GW.
At TSL 1, average gas cooktop and gas standard oven consumers would
save $13 and $6 in LCC, respectively. DOE estimates that 94 percent of
gas cooktop consumers and 82 percent of gas standard oven consumers
would not be affected at TSL 1. Of the remaining impacted consumers,
DOE estimates that nearly all gas cooktop consumers and over 70 percent
of gas standard oven consumers would realize LCC savings due to the
elimination of standing pilots. The median payback period for the
impacted consumers is 4.3 years for gas cooktop consumers and 9.0 years
for gas standard oven consumers.
At TSL 1, the projected change in INPV ranges from a decrease of $5
million to a decrease of $12 million for gas cooktops and a decrease of
$7 million to a decrease of $10 million for gas ovens. At TSL 1, DOE
recognizes the risk of negative impacts if
[[Page 16085]]
manufacturers' expectations about reduced profit margins are realized.
In particular, if the high end of the range of impacts is reached as
DOE expects, TSL 1 could result in a net loss of 4 percent in INPV to
gas cooktop manufacturers and a net loss of 2 percent to gas oven
manufacturers. Although DOE estimates that TSL 1 would lead to some net
loss in INPV to gas cooktop and gas oven manufacturers, because TSL 1
is comprised of prescriptive requirements, the industry would not face
the additional costs associated with complying with performance
requirements. Currently, only prescriptive standards for conventional
cooking products are in effect requiring that gas cooking products with
an electrical supply cord not be equipped with a constant burning
pilot. As a result, conventional cooking product manufacturers are not
currently subject to the costs of testing the rated performance of
their products to label and comply with performance-based energy
conservation standards. Because TSL 1 effectively extends the existing
prescriptive requirement to all gas cooking products regardless of
whether the products have an electrical supply cord, DOE avoids
burdening manufacturers with testing, labeling, and compliance costs
that they currently do not bear.
As stated in the October 2008 NOPR, DOE recognizes that there is a
small subgroup of consumers that use gas cooking products but are
without household electricity. 73 FR 62034, 62116 (Oct. 17, 2008).
Under TSL 1, these consumers are likely to be affected because they
would be required to use an electrical source for cooking products to
operate the ignition system. For the October 2008 NOPR, DOE market
research demonstrated that battery-powered electronic ignition systems
have been implemented in other products, such as instantaneous gas
water heaters, barbeques, and furnaces, and the use of such products is
not expressly prohibited by applicable safety standards for gas cooking
products. Id. Therefore, DOE tentatively concluded for the October 2008
NOPR that households that use gas for cooking and are without
electricity would likely have technological options that would enable
them to continue to use gas cooking if standing pilot ignition systems
are eliminated. Id.
However, as detailed in section III.C.2 of today's final rule,
numerous interested parties objected to the above conclusion, and in
particular, commenters argued that there are currently no commercially
available gas cooking products with battery-powered electronic ignition
systems that have been certified to applicable U.S. safety standards.
In response to these comments, DOE conducted additional research on
battery-powered ignition systems for residential gas cooking products,
which confirmed commenters' statements regarding the absence of any gas
cooking products with battery-powered electronic ignition systems
currently certified to applicable U.S. safety standards. However, DOE
concludes that the primary barrier to commercialization of battery-
powered ignition systems in gas cooking products has been lack of
market demand and economic justification rather than technological
feasibility. DOE further concludes that a gas range incorporating one
of these ignition systems could meet the requirements of ANSI Z21.1. In
addition, DOE research suggests that the market niche for gas cooking
products equipped with battery-powered ignition systems, which would be
created by a standard at TSL 1, would likely attract entrants among
ignition component suppliers and, therefore, that technologically
feasible alternative ignition systems to standing pilots in gas cooking
products for households without electricity will likely be available by
the time these energy conservation standards are effective.
Although DOE recognizes the economic impact that a standard at TSL
1 would have upon a small subgroup of consumers of gas cooking
products, DOE concludes that the benefits to the significant majority
of the Nation's consumers that could result from TSL 1 would outweigh
the economic burden that would be placed upon this subgroup. Although
TSL 1 would adversely impact manufacturer INPV, DOE has concluded that
it would not place a significant burden on manufacturers to comply with
the standards in terms of changes to existing manufacturing processes
and certification testing. Therefore, the benefits of energy savings
and emissions impacts of TSL 1 are significant enough to outweigh the
burdens that would be created by the standard. Consequently, DOE
concludes that TSL 1 is economically justified.
In sum, after carefully considering the analysis, the comments on
the October 2008 NOPR, and the benefits and burdens of each of the TSLs
DOE considered, the Secretary concludes that amended standards for
cooking efficiency of conventional cooking products, consisting of a
prohibition of constant burning pilots for all gas kitchen ranges and
ovens, will save a significant amount of energy and are technologically
feasible and economically justified. In addition, the Secretary also
concludes that no amended cooking efficiency standard is both
technologically feasible and economically justified for residential
electric kitchen ranges and ovens. Therefore, DOE is not adopting any
energy conservation standards for residential electric kitchen ranges
and ovens.
3. Microwave Ovens
Table VI.31 presents a summary of the quantitative results for the
microwave oven TSLs pertaining to cooking efficiency. The impacts at
each TSL are measured relative to a no-standards base case.
Table VI.31--Summary of Quantitative Results for Microwave Oven Energy Factor
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads):
0% Discount Rate........................................ 0.18 0.19 0.23 0.25
7% Discount Rate........................................ 0.05 0.05 0.07 0.07
3% Discount Rate........................................ 0.10 0.10 0.13 0.14
Generation Capacity Reduction (GW) **....................... 0.137 0.207 0.340 0.477
NPV of Consumer Impacts (2006$ billion):
7% Discount Rate........................................ (1.23) (3.33) (6.32) (10.05)
3% Discount Rate........................................ (2.06) (6.05) (11.68) (18.70)
Industry Impacts:
Industry NPV (2006$ million)............................ 45-(200) 118-(388) 238-(679) 270-(1171)
Industry NPV (% Change)................................. 3-(14) 8-(27) 16-(47) 19-(80)
Cumulative Emissions Impacts: [dagger]
[[Page 16086]]
CO2 (Mt)................................................ 22.88 33.46 53.89 74.67
NOX (kt)................................................ 2.55 3.75 6.06 8.42
Hg (t).................................................. 0-0.46 0-0.68 0-1.10 0-1.52
Value of Emissions Reductions:
CO2 (2007$ million)
7% Discount Rate.................................... 0-192 0-277 0-443 0-612
3% Discount Rate.................................... 0-404 0-589 0-948 0-1313
NOX (2006$ million)
7% Discount Rate.................................... 0.3-3.2 0.4-4.6 0.7-7.3 1.0-10.2
3% Discount Rate.................................... 0.6-6.1 0.9-8.9 1.4-14.4 1.9-19.9
Hg (2006$ million)
7% Discount Rate.................................... 0-3.7 0-5.4 0-8.6 0-11.8
3% Discount Rate.................................... 0-7.8 0-11.3 0-18.2 0-25.2
Mean LCC Savings * (2006$).................................. (7) (21) (40) (66)
Median PBP (years).......................................... 29.9 58.1 82.8 116.6
LCC Consumer Impacts:
Net Cost (%)............................................ 90.6 97.6 99.2 99.8
No Impact (%)........................................... 0.0 0.0 0.0 0.0
Net Benefit (%)......................................... 9.4 2.4 0.8 0.2
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC by the amount
indicated.
** Changes in installed generation capacity by 2042 based on the AEO2008 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include
physical reductions at power plants.
First, DOE considered TSL 4, the max-tech level for microwave oven
cooking efficiency. TSL 4 would save 0.25 quads of energy through 2042,
an amount DOE considers significant. Discounted at 7 percent, the
projected energy savings through 2042 would be 0.07 quads. TSL 4 would
result in a decrease of $10.05 billion in the NPV of consumer impacts,
using a discount rate of 7 percent. The emissions reductions at TSL 4
are 74.67 Mt of CO2, 8.42 kt of NOX, and 0 t to
1.52 t of Hg with a corresponding value of $0 to $612 million for
CO2, $1.0 to $10.2 million for NOX, and $0 to
$11.8 million for Hg, using a discount rate of 7 percent. Total
generating capacity in 2042 is estimated to decrease compared to the
reference case by 0.477 GW.
At TSL 4, DOE projects that the average microwave oven consumer
would experience an increase in LCC. The median payback period for the
average consumer is projected to be substantially longer than the mean
lifetime of the product.
DOE estimated the projected change in INPV ranges at TSL 4 from an
increase of $270 million to a decrease of $1.171 billion. At TSL 4, DOE
recognizes the risk of very large negative impacts if manufacturers'
expectations about reduced profit margins are realized. In particular,
if the high end of the range of negative impacts is reached, as DOE
expects, TSL 4 could result in a net loss of 80 percent in INPV to
microwave oven manufacturers.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 4, DOE concludes that the benefits of energy savings
and emissions reductions would be outweighed by a large decrease in the
NPV of consumer impacts, the economic burden on many consumers, and the
large capital conversion costs that could result in a reduction in INPV
for manufacturers. Consequently, DOE concludes that TSL 4 is not
economically justified.
DOE next considered TSL 3. Primary energy savings are estimated at
0.23 quads of energy through 2042, which DOE considers significant.
Discounted at 7 percent, the energy savings through 2042 would be 0.07
quads. TSL 3 would result in a decrease of $6.32 billion in the NPV of
consumer benefit, using a discount rate of 7 percent. The emissions
reductions are projected to be 53.89 Mt of CO2, 6.06 kt of
NOX, and 0 t to 1.10 t of Hg with a corresponding value of
$0 to $443 million for CO2, $0.7 to $7.3 million for
NOX, and $0 to $8.6 million for Hg, using a discount rate of
7 percent. Total generating capacity in 2042 under TSL 3 is estimated
to decrease by 0.340 GW.
At TSL 3, DOE projects that the average microwave oven consumer
would experience an increase in LCC. The median payback period of the
average consumer is projected to be substantially longer than the mean
lifetime of the product.
DOE estimated the projected change in INPV ranges from an increase
of $238 million to a decrease of $679 million. At TSL 3, DOE recognizes
the risk of very large negative impacts if manufacturers' expectations
about reduced profit margins are realized. In particular, if the high
end of the range of negative impacts is reached, as DOE expects, TSL 3
could result in a net loss of 47 percent in INPV to microwave oven
manufacturers.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 3, DOE concludes that the benefits of energy savings
and emissions reductions would be outweighed by the large decrease in
the NPV of consumer impacts, the economic burden on many consumers, and
the large capital conversion costs that could result in a reduction in
INPV for manufacturers. Consequently, DOE concludes that TSL 3 is not
economically justified.
DOE next considered TSL 2. DOE projects that TSL 2 would save 0.19
quads of energy through 2042, an amount DOE considers significant.
Discounted at 7 percent, the projected energy savings through 2042
would be 0.05 quads. DOE projects TSL 2 to result in a decrease in the
NPV of consumer impacts of $3.33 billion. The estimated emissions
reductions are 33.46 Mt of CO2, 3.75 kt of NOX,
and 0 t to 0.68 t of Hg with a corresponding value of $0 to $227
million for CO2, $0.4 to $4.6 million for NOX,
and $0 to $5.4 million for Hg, using a discount rate of 7 percent.
Total generating capacity in 2042 under TSL 2 would likely decrease by
0.207 GW.
At TSL 2, DOE projects that the average microwave oven consumer
would experience an increase in LCC. The median payback period of the
average consumer is projected to be substantially longer than the mean
lifetime of the product.
At TSL 2, the projected change in INPV ranges from an increase of
$118 million to a decrease of $388 million. At
[[Page 16087]]
TSL 2, DOE recognizes the risk of negative impacts if manufacturers'
expectations about reduced profit margins are realized. In particular,
if the high end of the range of negative impacts is reached, as DOE
expects, TSL 2 could result in a net loss of 27 percent in INPV to
microwave oven manufacturers.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 2, DOE concludes that the benefits of energy savings
and emissions reductions would be outweighed by the large decrease in
the NPV of consumer impacts, the economic burden on many consumers, and
the large capital conversion costs that could result in a reduction in
INPV for manufacturers. Consequently, DOE concludes that TSL 2 is not
economically justified.
DOE next considered TSL 1. DOE projects that TSL 1 would save 0.18
quads of energy through 2042, an amount DOE considers significant.
Discounted at 7 percent, the projected energy savings through 2042
would be 0.05 quads. For the Nation as a whole, DOE projects TSL 1 to
result in a decrease in the NPV of consumer impacts of $1.23 billion.
The estimated emissions reductions are 22.88 Mt of CO2, 2.55
kt of NOX, and 0 t to 0.46 t of Hg with a corresponding
value of $0 to $192 million for CO2, $0.3 to $3.2 million
for NOX, and $0 to $3.7 million for Hg, using a discount
rate of 7 percent. Total generating capacity in 2042 under TSL 1 would
likely decrease by 0.137 GW.
At TSL 1, DOE projects that the average microwave oven consumer
would experience an increase in LCC. The median payback period of the
average consumer is projected to be substantially longer than the mean
lifetime of the product.
At TSL 1, the projected change in INPV ranges from a decrease of
$45 million to a decrease of $200 million. At TSL 1, DOE recognizes the
risk of negative impacts if manufacturers' expectations about reduced
profit margins are realized. In particular, if the high end of the
range of impacts is reached, as DOE expects, TSL 1 could result in a
net loss of 14 percent in INPV to microwave oven manufacturers.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 1, DOE concludes that the benefits of energy savings
and emissions reductions would be outweighed by the large decrease in
the NPV of consumer impacts, the economic burden on many consumers, and
the large capital conversion costs that could result in a reduction in
INPV for manufacturers. Consequently, DOE concludes that TSL 1 is not
economically justified.
In sum, after carefully considering the analysis, the comments on
the October 2008 NOPR, and the benefits and burdens of each of the TSLs
DOE considered, the Secretary concludes that no amended standard is
both technologically feasible and economically justified for microwave
oven EF. Therefore, DOE is not adopting any energy conservation
standard for microwave oven EF.
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
Today's regulatory action has been determined to be a ``significant
regulatory action'' under section 3(f)(1) of Executive Order 12866,
``Regulatory Planning and Review.'' 58 FR 51735 (Oct. 4, 1993).
Accordingly, this action was subject to review under the Executive
Order by the Office of Information and Regulatory Affairs (OIRA) in the
Office of Management and Budget.
The Executive Order requires each agency to identify in writing the
specific market failure or other specific problem that it intends to
address that warrants agency action, as well as to assess the
significance of that problem in evaluating whether any new regulation
is warranted. Executive Order 12866, section 1(b)(1).
The October 2008 NOPR evaluated the market failure that the
proposed rule would address. 73 FR 62034, 62122-23 (Oct. 17, 2008).
DOE's analysis for some residential gas cooking products explicitly
quantifies and accounts for the percentage of consumers that already
purchase more efficient equipment and takes these consumers into
account when determining the national energy savings associated with
various TSLs. The analysis suggests that accounting for the market
value of energy savings alone (i.e., excluding any possible additional
``externality'' benefits such as those noted below) would produce
enough benefits to yield net benefits across a wide array of products
and circumstances. In the October 2008 NOPR, DOE requested additional
data (including the percentage of consumers purchasing more efficient
cooking products and the extent to which consumers of all product types
will continue to purchase more efficient equipment), in order to test
the existence and extent of these consumer actions. 73 FR 62034, 62123
(Oct. 17, 2008). DOE received no such data from interested parties in
response to the October 2008 NOPR.
DOE believes that there is a lack of consumer information and/or
information processing capability about energy efficiency opportunities
in the home appliance market. If this is the case, DOE would expect the
energy efficiency for cooking products to be randomly distributed
across key variables such as energy prices and usage levels. DOE has
already identified the percentage of consumers that already purchase
more efficient gas cooktops and gas standard ovens. However, DOE does
not correlate the consumer's usage pattern and energy price with the
efficiency of the purchased product. In the October 2008 NOPR, DOE
sought data on the efficiency levels of existing cooking products by
how often they are used (e.g., how many times or hours the product is
used) and their associated energy prices (and/or geographic regions of
the country). Id. DOE received no such data from interested parties in
response to the October 2008 NOPR. Therefore, DOE was unable to test
for today's final rule the extent to which purchasers of cooking
products behave as if they are unaware of the costs associated with
their energy consumption.
A related issue is asymmetric information (one party to a
transaction has more and better information than the other) and/or high
transactions costs (costs of gathering information and effecting
exchanges of goods and services). In many instances, the party
responsible for an appliance purchase may not be the one who pays the
cost to operate it. For example, home builders in large-scale
developments often make decisions about appliances without input from
home buyers and do not offer options to upgrade those appliances. Also,
apartment owners normally make decisions about appliances, but renters
often pay the utility bills. If there were no transactions costs, it
would be in the home builders' and apartment owners' interest to
install appliances that buyers and renters would choose. For example,
one would expect that a renter who knowingly faces higher utility bills
from low-efficiency appliances would be willing to pay less in rent,
and the apartment owner would indirectly bear the higher utility cost.
However, this information is not readily available, and it may not be
in the renter's interest to take the time to develop it, or, in the
case of the landlord who installs a high-efficiency appliance, to
convey that information to the renter.
[[Page 16088]]
To the extent that asymmetric information and/or high transactions
costs are problems, one would expect to find certain outcomes for
appliance energy efficiency. For example, all things being equal, one
would not expect to see higher rents for apartments with high-
efficiency appliances. Conversely, if there were symmetric information,
one would expect appliances with higher energy efficiency in rental
units where the rent includes utilities compared to those where the
renter pays the utility bills separately. Similarly, for single-family
homes, one would expect higher energy efficiency levels for replacement
units than for appliances installed in new construction. Within the new
construction market, one would expect to see appliances with higher
energy efficiency levels in custom-built homes (where the buyer has
more say in appliance choices) than in comparable homes built in large-
scale developments.
DOE received no data from interested parties in response to the
October 2008 NOPR on the issue of asymmetric information and/or high
transactions costs. Therefore, DOE was unable to determine for today's
final rule the extent to which asymmetric information and/or high
transaction costs are a market failure.
In addition, this rulemaking is likely to yield certain external
benefits resulting from improved energy efficiency of cooking products
that are not captured by the users of such equipment. These benefits
include externalities related to environmental protection and energy
security that are not reflected in energy prices, such as reduced
emissions of greenhouse gases. The TSLs which DOE evaluated resulted in
CO2, NOX, and Hg emissions reductions. DOE also
determined a range of possible monetary benefits associated with the
emissions reductions. DOE considered both the emissions reductions and
their possible monetary benefit in determining the economic feasibility
of the TSLs.
DOE conducted an RIA and, under the Executive Order, was subject to
review by the Office of Information and Regulatory Affairs (OIRA) in
the OMB. DOE presented to OIRA the draft final rule and other documents
prepared for this rulemaking, including the RIA, and has included these
documents in the rulemaking record. They are available for public
review in the Resource Room of the Building Technologies Program, 950
L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024, (202) 586-9127,
between 9 a.m. and 4 p.m., Monday through Friday, except Federal
holidays.
The RIA is contained as chapter 17 in the TSD prepared for the
rulemaking. The RIA consists of (1) a statement of the problem
addressed by this regulation, and the mandate for government action;
(2) a description and analysis of the feasible policy alternatives to
this regulation; (3) a quantitative comparison of the impacts of the
alternatives; and (4) the national economic impacts of today's
standards. In today's final rule DOE is not adopting any standards for
microwave ovens. Therefore, DOE performed an RIA solely for
conventional cooking products for today's final rule.
The RIA calculates the effects of feasible policy alternatives to
energy conservation standards for conventional cooking products and
provides a quantitative comparison of the impacts of the alternatives.
DOE evaluated each alternative in terms of its ability to achieve
significant energy savings at reasonable costs, and compared it to the
effectiveness of the proposed rule. DOE analyzed these alternatives
using a series of regulatory scenarios as input to the NIA Spreadsheets
for the two appliance products, which it modified to allow inputs for
voluntary measures. For more details on how DOE modified the NIA
spreadsheets to determine the impacts due to the various non-regulatory
alternatives to standards, refer to chapter 17 of the TSD accompanying
this notice.
As shown in Table VII.1 below, DOE identified the following major
policy alternatives for achieving increased energy efficiency in
conventional cooking products:
No new regulatory action;
Financial incentives;
[rtrif] Consumer rebates;
[rtrif] Consumer tax credits;
[rtrif] Manufacturer tax credits;
Voluntary energy efficiency targets;
Bulk government purchases;
Early replacement; and
The proposed approach (national performance and
prescriptive standards).
Table VII.1--Non-Regulatory Alternatives to Standards for Conventional Cooking Products
----------------------------------------------------------------------------------------------------------------
Net present value** billion $
Energy -------------------------------
Policy alternatives savings* quads 7% Discount 3% Discount
rate rate
----------------------------------------------------------------------------------------------------------------
No New Regulatory Action........................................ 0 0 0
Consumer Rebates................................................ 0.12 0.21 0.60
Consumer Tax Credits............................................ 0.05 0.08 0.27
Manufacturer Tax Credits........................................ 0.01 0.02 0.06
Early Replacement............................................... 0.01 0.07 0.12
Today's Standards at TSL 1...................................... 0.14 0.25 0.71
----------------------------------------------------------------------------------------------------------------
* Energy savings are in source quads.
** Net present value is the value in the present of a time series of costs and savings. DOE determined the net
present value from 2012 to 2042 in billions of 2006 dollars.
*** Voluntary energy efficiency target and bulk government purchase alternatives are not considered because the
percentage of the market at TSL 1 (today's standard) is well over the market adoption target level that each
alternative strives to attain.
The net present value amounts shown in Table VII.1 refer to the NPV for
consumers. The costs to the government of each policy (such as rebates
or tax credits) are not included in the costs for the NPV since, on
balance, consumers would be both paying for (through taxes) and
receiving the benefits of the payments. The following paragraphs
discuss each of the policy alternatives listed in Table VII.1. (See the
TSD accompanying this notice, chapter 17.)
No New Regulatory Action. The case in which no regulatory action is
taken with regard to conventional cooking products constitutes the
``base case'' (or ``No Action'') scenario. In this case, between 2012
and 2042, conventional cooking products are expected to use 10.3 quads
of primary energy. Since this
[[Page 16089]]
is the base case, energy savings and NPV are zero by definition.
Consumer Rebates. Consumer rebates cover a portion of the
incremental installed cost difference between products meeting baseline
efficiency levels and those meeting higher efficiency levels, which
generally result in a higher percentage of consumers purchasing more
efficient models. DOE utilized market penetration curves from a study
that analyzed the potential of energy efficiency in California.\45\ The
penetration curves are a function of benefit-cost ratio (i.e., lifetime
operating costs savings divided by increased total installed costs) to
estimate the increased market share of more efficient products given
incentives by a rebate program. Using specific rebate amounts, DOE
calculated, for each of the considered products, the benefit-cost ratio
of the more efficient appliance with and without the rebate to project
the increased market penetration of the product due to a rebate
program.
---------------------------------------------------------------------------
\45\ Rufo, M. and F. Coito, California's Secret Energy Surplus:
The Potential for Energy Efficiency (prepared for The Energy
Foundation and The Hewlett Foundation by Xenergy, Inc.) (2002).
---------------------------------------------------------------------------
For conventional cooking products meeting the efficiency levels in
TSL 1 (i.e., gas cooking products without constant burning pilot
lights), DOE estimated that the annual increase in consumer purchases
of these products due to consumer rebates would be 7.8 percent. DOE
selected the portion of the incremental costs covered by the rebate
(i.e., 100 percent) using data from rebate programs conducted by 88 gas
utilities, electric utilities, and other State government agencies.\46\
DOE estimated that the impact of this policy would be to permanently
transform the market so that the increased market share seen in the
first year of the program would be maintained throughout the forecast
period. At the estimated participation rates, consumer rebates would be
expected to provide 0.12 quads of national energy savings and an NPV of
$0.21 billion (at a 7-percent discount rate).
---------------------------------------------------------------------------
\46\ Because DOE was not able to identify consumer rebate
programs specific to conventional cooking products, rebate amounts
for another kitchen appliance, dishwashers, were used to estimate
the impact from a rebate program providing incentives for more
efficient cooking products.
---------------------------------------------------------------------------
Although DOE estimated that consumer rebates would provide national
benefits for conventional cooking products, these benefits would be
smaller than the benefits resulting from national performance standards
at the proposed levels. Thus, DOE rejected consumer rebates as a policy
alternative to national performance standards.
Consumer Tax Credits. Consumer tax credits cover a percentage of
the incremental installed cost difference between products meeting
baseline efficiency levels and those with higher efficiencies. Consumer
tax credits are considered a viable non-regulatory market
transformation program as evidenced by the inclusion of Federal
consumer tax credits in EPACT 2005 for various residential appliances.
(Section 1333 of EPACT 2005; codified at 26 U.S.C. 25C) DOE reviewed
the market impact of tax credits offered by the Oregon Department of
Energy (ODOE) (ODOE, No. 35 at p. 1) and Montana Department of Revenue
(MDR) (MDR, No. 36 at p. 1) to estimate the effect of a national tax
credit program. To help estimate the impacts from such a program, DOE
also reviewed analyses prepared for the California Public Utilities
Commission,\47\ the Northwest Energy Efficiency Alliance,\48\ and the
Energy Foundation/Hewlett Foundation.\49\ For each of the appliance
products considered for this rulemaking, DOE estimated that the market
effect of a tax credit program would gradually increase over a time
period until it reached its maximum impact. Once the tax credit program
attained its maximum effect, DOE assumed the impact of the policy would
be to permanently transform the market at this level.
---------------------------------------------------------------------------
\47\ Itron and KEMA, 2004/2005 Statewide Residential Retrofit
Single-Family Energy Efficiency Rebate Evaluation (prepared for the
California Public Utilities Commission, Pacific Gas And Electric
Company, San Diego Gas and Electric Company, Southern California
Edison, Southern California Gas Company, CPUC-ID 1115-04)
(2007).
\48\ KEMA, Consumer Product Market Progress Evaluation Report 3
(prepared for Northwest Energy Efficiency Alliance, Report
07-174) (2007).
\49\ Rufo, M., and F. Coito, op. cit.
---------------------------------------------------------------------------
For conventional cooking products, DOE estimated that the market
share of efficient products meeting TSL 1 would increase by 0.7 percent
in 2012 and increase over a 6-year period to an annual maximum of 2.8
percent in 2020. At these estimated participation rates, consumer tax
credits would be expected to provide 0.05 quads of national energy
savings and an NPV of $0.08 billion (at a 7-percent discount rate).\50\
---------------------------------------------------------------------------
\50\ Because DOE was not able to identify consumer tax credit
programs specific to conventional cooking products, increased market
penetrations for another kitchen appliance, dishwashers, were used
to estimate the impact from a tax credit program providing
incentives for more efficient conventional cooking products and
microwave ovens.
---------------------------------------------------------------------------
DOE estimated that while consumer tax credits would yield national
benefits for conventional cooking products, these benefits would be
much smaller than the benefits from the proposed national performance
standards. Thus, DOE rejected consumer tax credits as a policy
alternative to national performance standards.
Manufacturer Tax Credits. Manufacturer tax credits are considered a
viable non-regulatory market transformation program as evidenced by the
inclusion of Federal tax credits in EPACT 2005 for manufacturers of
residential appliances. (Section 1334 of EPACT 2005; codified at 26
U.S.C. 45M) Similar to consumer tax credits, manufacturer tax credits
would effectively result in lower product prices to consumers by an
amount that covered part of the incremental price difference between
products meeting baseline efficiency levels and those meeting higher
efficiency levels. Because these tax credits would go to manufacturers
instead of consumers, research indicates that fewer consumers would be
affected by a manufacturer tax credit program than by consumer tax
credits.51 52 Although consumers would benefit from price
reductions passed through to them by the manufacturers, research
demonstrates that approximately half the consumers who would benefit
from a consumer tax credit program would be aware of the economic
benefits of more efficient technologies included in an appliance
manufacturer tax credit program. In other words, research estimates
that half of the effect from a consumer tax credit program is due to
publicly available information or promotions announcing the benefits of
the program. This effect, referred to as the ``announcement effect,''
is not part of a manufacturer tax credit program. Therefore, DOE
estimated that the effect of a manufacturer tax credit program would be
only half of the maximum impact of a consumer tax credit program.
---------------------------------------------------------------------------
\51\ K. Train, Customer Decision Study: Analysis of Residential
Customer Equipment Purchase Decisions (prepared for Southern
California Edison by Cambridge Systematics, Pacific Consulting
Services, The Technology Applications Group, and California Survey
Research Services) (1994).
\52\ Lawrence Berkeley National Laboratory, End-Use Forecasting
Group. Analysis of Tax Credits for Efficient Equipment (1997).
Available at http://enduse.lbl.gov/Projects/TaxCredits.html. (Last
accessed April 24, 2008.)
---------------------------------------------------------------------------
For conventional cooking products, the percentage of consumers
purchasing products meeting TSL 1 would be expected to increase by 0.6
percent due to a manufacturer tax credit program.\53\ DOE assumed that
the impact of the manufacturer tax credit policy would be to
permanently transform the market so
[[Page 16090]]
that the increased market share seen in the first year of the program
would be maintained throughout the forecast period.
---------------------------------------------------------------------------
\53\ DOE assumed that the manufacturer tax credit program would
affect only consumers of gas cooking products, who did not need
electric outlets installed; therefore the increased percentage
impact includes only those consumers.
---------------------------------------------------------------------------
At the above estimated participation rates, manufacturer tax
credits would provide 0.01 quads of national energy savings and an NPV
of $0.02 billion (at a 7-percent discount rate) for conventional
cooking products.
DOE estimated that while manufacturer tax credits would yield
national benefits for conventional cooking products, these benefits
would be much smaller than the benefits from national performance
standards. Thus, DOE rejected manufacturer tax credits as a policy
alternative to the proposed national performance standards.
Voluntary Energy Efficiency Targets. DOE estimates the impact of
voluntary energy efficiency targets by reviewing the historical and
projected market transformation performance of past and current ENERGY
STAR programs. However, DOE did not analyze the potential impacts of
voluntary energy efficiency targets for conventional cooking products
because over 85 percent of the gas range market already meets TSL 1.
The ENERGY STAR program typically targets products where a maximum of
approximately 25 percent of the existing market meets the target
efficiency level.\54\ Since the market for gas ranges are well above
the 25-percent threshold, DOE did not consider this approach for
conventional cooking products.
---------------------------------------------------------------------------
\54\ Sanchez, M. and A. Fanara, ``New Product Development: The
Pipeline for Future ENERGY STAR Growth,'' Proceedings of the 2000
ACEEE Summer Study on Energy Efficiency in Buildings (2000) Vol. 6,
pp. 343-354.
---------------------------------------------------------------------------
Early Replacement. The early replacement policy alternative
envisions a program to replace old, inefficient units with models
meeting efficiency levels higher than baseline equipment. Under an
early replacement program, State governments or electric and gas
utilities would provide financial incentives to consumers to retire the
appliance early in order to hasten the adoption of more efficient
products. For all of the considered products, DOE modeled this policy
by applying a 4-percent increase in the replacement rate above the
natural rate of replacement for failed equipment. DOE based this
percentage increase on program experience with the early replacement of
appliances in the State of Connecticut.\55\ DOE assumed the program
would continue for as long as it would take to ensure that the eligible
existing stock in the year that the program began (2012) was completely
replaced.
---------------------------------------------------------------------------
\55\ Nexus and RLW Analytics, Impact, Process, and Market Study
of the Connecticut Appliance Retirement Program: Overall Report,
Final. (Submitted to Northeast Utilities--Connecticut Light and
Power and the United Illuminating Company by Nexus Market Research,
Inc. and RLW Analytics, Inc.) (2005).
---------------------------------------------------------------------------
For conventional cooking products, this policy alternative would
replace old, inefficient units with models meeting the efficiency
levels in TSL 1. DOE estimated that such an early replacement program
would be expected to provide 0.01 quads of national energy savings and
an NPV of $0.07 billion (at a 7-percent discount rate).
Although DOE estimated that the above early replacement programs
for each of the considered products would provide national benefits,
they would be much smaller than the benefits resulting from national
performance standards. Thus, DOE rejected early replacement incentives
as a policy alternative to national performance standards.
Bulk Government Purchases. Under this policy alternative, the
government sector would be encouraged to shift their purchases to
products that meet the target efficiency levels above baseline levels.
Aggregating public sector demand could provide a market signal to
manufacturers and vendors that some of their largest customers sought
suppliers with products that met an efficiency target at favorable
prices. This program also could induce ``market pull'' impacts through
manufacturers and vendors achieving economies of scale for high-
efficiency products. Under such a program, DOE would assume that
Federal, State, and local government agencies would administer it. At
the Federal level, such a program would add more efficient products for
which the Federal Energy Management Program (FEMP) has energy efficient
procurement specifications.
However, DOE did not analyze the potential impacts of bulk
government purchases for conventional cooking products because over 85
percent of the gas range market already meets TSL 1. FEMP procurement
specifications typically promote products in the top 25 percent of the
existing product offerings in terms of efficiency. Since most of the
gas ranges sold in the base case already comply with such
specifications, DOE was not able to consider this program as a source
of data for conventional cooking products.
National Performance Standards (TSL 1 for conventional cooking
products). As indicated in the paragraphs above, none of the
alternatives DOE examined would save as much energy as the amended
energy conservation standards. Therefore, DOE will adopt the efficiency
levels listed in section VI.D.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, and a final
regulatory flexibility analysis (FRFA) for any such rule that an agency
adopts as a final rule, unless the agency certifies that the rule, if
promulgated, will not have a significant economic impact on a
substantial number of small entities. A regulatory flexibility analysis
examines the impact of the rule on small entities and considers
alternative ways of reducing negative impacts. Also, as required by
Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's Web site: http://www.gc.doe.gov.
The Small Business Administration (SBA) classifies manufacturers of
household cooking appliances as small businesses if they have 750 or
fewer employees. DOE used these small business size standards,
published at 61 FR 3286 (Jan. 31, 1996) and codified at 13 CFR part
121, to determine whether any small entities would be required to
comply with today's rule. The size standards are listed by North
American Industry Classification System (NAICS) code and industry
description. Household cooking appliance manufacturing is classified
under NAICS 335221.
Bearing in mind the relevant NAICS classification above, DOE
determined that none of the manufacturers of microwave ovens sold in
the U.S. are small businesses under these SBA classifications. 73 FR
62034, 62130 (Oct. 17, 2008). However, DOE identified two domestic
manufacturers of conventional cooking appliances that meet the SBA
small business definition and are affected by this rulemaking. Id. at
62128. DOE interviewed one of these manufacturers, and also obtained
from larger manufacturers information about the impacts of standards on
these small manufacturers of conventional cooking products. Id. DOE
reviewed the proposed rule under the provisions of the Regulatory
Flexibility Act and the
[[Page 16091]]
procedures and policies published on February 19, 2003. Id. On the
basis of this review, DOE determined that it could not certify that its
proposed standards for conventional cooking products (TSL 1), if
promulgated, would have no significant economic impact on a substantial
number of small entities. Id. at 62128-29. DOE made this determination
due to the potential impact on manufacturers of gas cooking products
generally, including small businesses, of the proposed standard's
elimination of standing pilot lights. Id.
Because of these potential impacts on small manufacturers, DOE
prepared an IRFA during the NOPR stage of this rulemaking. DOE provided
the IRFA in its entirety in the October 2008 NOPR (73 FR 62034, 62129-
30 (Oct. 17, 2008)), and also transmitted a copy to the Chief Counsel
for Advocacy of the SBA for review. Chapter 13 of the TSD accompanying
this notice contains more information about the impact of this
rulemaking on manufacturers.
DOE has prepared a FRFA for this rulemaking, which is presented in
the following discussion. DOE is transmitting a copy of this FRFA to
the Chief Counsel for Advocacy of the SBA. The FRFA below is written in
accordance with the requirements of the Regulatory Flexibility Act.
1. Reasons for the Final Rule
Title III of EPCA sets forth a variety of provisions designed to
improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309)
provides for the ``Energy Conservation Program for Consumer Products
Other Than Automobiles.'' The program covers consumer products and
certain commercial products (all of which are referred to hereafter as
``covered products''), including residential cooking products. (42
U.S.C. 6292(10)) DOE publishes today's final rule to amend energy
conservation standards for conventional cooking appliances by
eliminating standing pilot ignition systems.
2. Objectives of, and Legal Basis for, the Rule
EPCA provides criteria for prescribing new or amended standards for
covered products and equipment. As indicated above, any new or amended
standard for conventional cooking products must be designed to achieve
the maximum improvement in energy efficiency that is technologically
feasible and economically justified (42 U.S.C. 6295(o)(2)(A)), although
EPCA precludes DOE from adopting any standard that would not result in
significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) Moreover,
DOE may not prescribe a standard (1) for certain products, if no test
procedure has been established for the product; or (2) if DOE
determines by rule that the standard is not technologically feasible or
economically justified. (42 U.S.C. 6295(o)(3)) The Act (42 U.S.C.
6295(o)(2)(B)(i)) also provides that, in deciding whether a standard is
economically justified, DOE must, after receiving comments on the
proposed standard, determine whether the benefits of the standard
exceed its burdens by considering, to the greatest extent practicable,
weighing seven factors as described in section II.A of the preamble.
EPCA directs DOE to undertake energy conversation standards rulemakings
for cooking products according to the schedules established in 42
U.S.C. 6295(h)(2).
3. Description and Estimated Number of Small Entities Regulated
Through market research, interviews with manufacturers of all
sizes, and discussions with trade groups, DOE was able to identify two
small businesses that manufacture conventional cooking appliances which
would be affected by today's rule.
4. Description and Estimate of Compliance Requirements
Potential impacts on all manufacturers of conventional cooking
appliances vary by TSL. Margins for all businesses could be impacted
negatively by the adoption of any TSL, since all manufacturers have
expressed an inability to pass on cost increases to retailers and
consumers. The two small domestic businesses under discussion differ
from their competitors in that they are focused on cooking appliances
and are not diversified appliance manufacturers. Therefore, any rule
affecting products manufactured by these small businesses will impact
them disproportionately because of their size and their focus on
cooking appliances. However, due to the low number of competitors that
agreed to be interviewed, DOE was not able to characterize this
industry segment with a separate cash-flow analysis due to concerns
about maintaining confidentiality and uncertainty regarding the
quantitative impact on revenues of a standing pilot ban.
At TSL 1 for gas ovens and gas cooktops, the elimination of
standing pilot lights would eliminate one of the niches that these two
small businesses serve in the cooking appliance industry. Both
businesses also manufacture ovens and cooktops with electronic ignition
systems, but the ignition source would no longer be a differentiator
within the industry as it is today. The result would be a potential
loss of market share since consumers would be able to choose from a
wider variety of competitors, all of which operate at much higher
production scales.
For all other TSLs concerning conventional cooking appliances
(which have not been selected in today's final rule), the impact on
small, focused business entities would be proportionately greater than
for their competitors since these businesses lack the scale to afford
significant R&D expenses, capital expansion budgets, and other
resources when compared to larger entities. The exact extent to which
smaller entities would be affected, however, is hard to gauge, because
manufacturers did not respond to questions regarding all investment
requirements by TSL during interviews. Notwithstanding this limitation,
research associated with other small entities in prior rulemakings
suggests that many costs associated with complying with rulemakings are
fixed, regardless of production volume.
Since all domestic manufacturers already manufacture all of their
conventional cooking appliances with electronic ignition modules as a
standard feature or as an option for consumers, the cost of converting
the remaining three domestic manufacturers exclusively to electronic
ignition modules would be relatively modest. However, given their focus
and scale, any conventional cooking appliance rule would affect these
two domestic small businesses disproportionately compared to their
larger and more diversified competitor.
5. Significant Issues Raised by Public Comments
Peerless-Premier commented in response to the October 2008 NOPR
that it is a privately held company that employs about 300 people
located at two manufacturing plants. Peerless-Premier focuses on the
value segment of the market, with a large percentage of its business
attributable to standing pilot ranges, which represent half of the gas
ranges it produces. That company stated that DOE's proposed ban on
standing pilot ranges would have a disastrous effect on Peerless-
Premier's business. It commented that it has remained competitive
largely because of niche positioning in the market, and that many
customers choose its product line because of the standing pilot ranges.
Without this ``sell benefit,'' Peerless-Premier believes much of its
business could go elsewhere, which would ultimately result in
significant job losses
[[Page 16092]]
at its two manufacturing sites. (Peerless-Premier, No. 42 at pp. 1-2;
Peerless Letter, No. 55 at p. 1) AGA expressed concern that, in
response to the November 2007 ANOPR, several manufacturers indicated
they would be harmed if standing pilots were eliminated, but AGA felt
that small business impacts were not adequately addressed. (AGA, Public
Meeting Transcript, No. 40.5 at p. 17)
As described earlier, DOE contacted two small manufacturers of
conventional cooking products to determine the extent that eliminating
standing pilot lights would affect their businesses. Both companies
stated they would experience material harm. However, because they did
not provide supporting detail, DOE was not able to quantify the exact
extent to which smaller entities would be affected. Therefore, DOE
cannot verify their claims that they would be severely impacted by a
standard that eliminates standing pilot lights. Furthermore, as
discussed in section VI.D.2 above, DOE believes alternatives to
standing pilot lights exist that would meet the standard in today's
final rule, and the Department does not believe manufacturers will be
more severely impacted than estimated in the Manufacturers Impact
Analysis.
6. Steps DOE Has Taken To Minimize the Economic Impact on Small
Manufacturers
In today's final rule, the only TSL under consideration for
conventional cooking appliances is the elimination of standing pilot
ignition systems for gas ovens and gas cooktops. All manufacturers of
such appliances with standing pilot systems stated during interviews
that there are no known alternatives on the market today that would
allow their appliances to meet safety standards (such as ANSI Z21.1),
while not using a line-powered ignition system or standing pilots.
Although battery-powered ignition systems have found application in a
few cooking products such as the outdoor gas barbeque market, none of
such systems have yet to find application in indoor cooking appliances.
During an MIA interview, one manufacturer expressed doubt that any
third-party supplier would develop such a solution, given the small,
and shrinking market that standing pilot-equipped ranges represent.
Another manufacturer stated, however, that while the market share of
gas cooking products with standing pilot ignition systems has been
declining, a substantial market is still served by such appliances. DOE
research suggests that battery-powered ignition systems could be
incorporated by manufacturers at a modest cost if manufacturer's market
research suggested that a substantial number of consumers found such a
product attribute important, and that ignition system manufacturers may
consider battery-powered ignitions systems a viable niche product when
these standards are effective. DOE notes that such systems have been
incorporated successfully in a range of related appliances, such as
instantaneous water heaters and gas fireplaces. Further, DOE believes
that there is nothing in the applicable safety standards that would
prohibit such ignition systems from being implemented on gas cooking
products. Therefore, DOE believes that households that use gas for
cooking and are without electricity will likely have technological
options that would enable them to continue to use gas cooking products
without standing pilot ignition systems.
In addition to the TSL being considered, the TSD associated with
this final rule includes a report referred to in section VII.A in the
preamble as the RIA (discussed earlier in this report and in detail in
chapter 17 of the TSD accompanying this notice). For conventional
cooking appliances, this report discusses the following policy
alternatives: (1) No standard, (2) consumer rebates, (3) consumer tax
credits, (4) manufacturer tax credits, and (5) early replacement. With
the exception of consumer rebates, the energy savings of these
regulatory alternatives are at least three times smaller than those
expected from the standard levels under consideration. The economic
impacts mirror these regulatory alternatives.
The conventional cooking appliance industry is very competitive.
The two small businesses differentiate their products from most of
their larger competitors by offering their products in non-traditional
sizes and with standing pilot ignition systems. Three primary consumer
groups purchasing standing pilot-equipped products were identified by
manufacturers in their MIA interviews: (1) Consumers without line power
near the range (or in the house); (2) consumers who prefer appliances
without line power for religious reasons; and (3) consumers seeking the
lowest initial appliance cost. Manufacturers could not identify the
size of the respective market segments, but demographics suggest that
initial price is the primary reason that consumers are opting for
standing pilot-equipped ranges. Consumer subgroups that eschew line
power and homes without line power cannot alone explain why up to 18
percent of gas cooking appliances are bought with standing pilot
ignition systems. Furthermore, all manufacturers already make gas
ranges with electronic ignition, including the high-volume domestic
manufacturer of conventional cooking appliances with standing pilots.
Thus, the primary benefit of standing pilot ignition systems appears to
be the differentiation of the small businesses from most higher-volume
competitors. While the actual revenue benefit is hard to quantify, both
small business manufacturers stated during interviews that the company
would expect to experience material economic harm if standing pilot
ignition systems were eliminated.
Due to the low number of small business respondents to DOE
inquiries and the uncertainty regarding the potential impact of TSL 1
on small conventional cooking appliance manufacturers, DOE was not able
to conduct a separate small business impact analysis.
As mentioned above, the other policy alternatives (no standard,
consumer rebates, consumer tax credits, manufacturer tax credits, and
early replacement) are described in section VII.A of the preamble and
in the regulatory impact analysis (chapter 17 of the TSD accompanying
this notice). Since the impacts of these policy alternatives are lower
than the impacts described above for the proposed standard levels, DOE
expects that the impacts to small manufacturers would also be less than
the impacts described above for the proposed standard level.
DOE has reviewed today's final rule under the provisions of the
Regulatory Flexibility Act and the policies and procedures published on
February 19, 2003. The previous discussion describes how small business
impacts entered into DOE's selection of today's standards for
conventional cooking products. DOE made its decision regarding
standards by beginning with the highest level considered (TSL 4) and
successively eliminating TSLs until it found a TSL that is both
technically feasible and economically justified, taking into account
other EPCA criteria. As discussed previously, DOE did not receive
detailed data from small manufacturers to quantify the impacts of
today's standards on small manufacturers of conventional cooking
products.
C. Review Under the Paperwork Reduction Act
DOE stated in the October 2008 NOPR that this rulemaking would
impose no new information and recordkeeping requirements, and that OMB
clearance
[[Page 16093]]
is not required under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
et seq.). 73 FR 62034, 62130 (Oct. 17, 2008). DOE received no comments
on this in response to the October 2008 NOPR and, as with the proposed
rule, today's rule imposes no information and recordkeeping
requirements. Therefore, DOE has taken no further action in this
rulemaking with respect to the Paperwork Reduction Act.
D. Review Under the National Environmental Policy Act
DOE prepared an environmental assessment of the impacts of the
potential standards it considered for today's final rule which it has
published as chapter 16 within the TSD for the final rule. DOE found
the environmental effects associated with today's standard levels for
conventional cooking products to be insignificant. Therefore, DOE is
issuing a Finding of No Significant Impact (FONSI) pursuant to the
National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et
seq.), the regulations of the Council on Environmental Quality (40 CFR
parts 1500-1508), and DOE's regulations for compliance with the NEPA
(10 CFR part 1021). The FONSI is available in the docket for this
rulemaking.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4,
1999), imposes certain requirements on agencies formulating and
implementing policies or regulations that preempt State law or that
have Federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have Federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735.
In accordance with DOE's statement of policy describing the
intergovernmental consultation process it will follow in the
development of regulations that have Federalism implications, DOE
examined the proposed rule and determined that the rule 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. 73 FR
62034, 62131 (Oct. 17, 2008). DOE received no comments on this issue in
response to the October 2008 NOPR, and its conclusions on this issue
are the same for the final rule as they were for the proposed rule.
Therefore, DOE is taking no further action in today's final rule with
respect to Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal
agencies the general duty to adhere to the following requirements: (1)
Eliminate drafting errors and ambiguity; (2) write regulations to
minimize litigation; and (3) provide a clear legal standard for
affected conduct rather than a general standard and promote
simplification and burden reduction. Section 3(b) of Executive Order
12988 specifically requires that Executive agencies make every
reasonable effort to ensure that the regulation (1) clearly specifies
the preemptive effect, if any; (2) clearly specifies any effect on
existing Federal law or regulation; (3) provides a clear legal standard
for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses other important issues affecting
clarity and general draftsmanship under any 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, the final regulations meet the relevant standards of
Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
As indicated in the October 2008 NOPR, DOE reviewed the proposed
rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4) (UMRA), which imposes requirements on Federal agencies when
their regulatory actions will have certain types of impacts on State,
local, and Tribal governments and the private sector. 73 FR 62034,
62131 (Oct. 17, 2008). DOE concluded that, although the proposed rule
would not contain an intergovernmental mandate, it might result in
expenditure of $100 million or more in one year by the private sector.
Id. Therefore, in the October 2008 NOPR, DOE addressed the UMRA
requirements that it prepare a statement as to the basis, costs,
benefits, and economic impacts of the proposed rule, and that it
identify and consider regulatory alternatives to the proposed rule. Id.
DOE received no comments concerning the UMRA in response to the October
2008 NOPR. However, as explained above, a number of products originally
bundled in this rulemaking have either had standards set separately or
will be subject to further rulemaking action. Consequently, this final
rule will not result in the expenditure of $100 million or more in any
one year. Therefore, DOE is taking no further action in today's final
rule with respect to the UMRA.
H. Review Under the Treasury and General Government Appropriations Act,
1999
DOE determined that, for this rulemaking, it need not prepare a
Family Policymaking Assessment under Section 654 of the Treasury and
General Government Appropriations Act, 1999 (Pub. L. 105-277). Id. DOE
received no comments concerning Section 654 in response to the October
2008 NOPR, and, therefore, takes no further action in today's final
rule with respect to this provision.
I. Review Under Executive Order 12630
DOE determined under Executive Order 12630, ``Governmental Actions
and Interference with Constitutionally Protected Property Rights'' 53
FR 8859 (March 18, 1988), that the proposed rule would not result in
any takings which might require compensation under the Fifth Amendment
to the U.S. Constitution. 73 FR 62034, 62131 (Oct. 17, 2008). DOE
received no comments concerning Executive Order 12630 in response to
the October 2008 NOPR, and, therefore, takes no further action in
today's final rule with respect to this Executive Order.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most
disseminations of information to the public under guidelines
established by each agency pursuant to general guidelines issued by
OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and
DOE's guidelines were published at 67 FR
[[Page 16094]]
62446 (Oct. 7, 2002). DOE has reviewed today's final rule under the OMB
and DOE guidelines and has concluded that it is consistent with
applicable policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001) requires Federal agencies to prepare and submit to OIRA
a Statement of Energy Effects for any significant energy action. DOE
determined that the proposed rule was not a ``significant energy
action'' within the meaning of Executive Order 13211. 73 FR 62034,
62132 (Oct. 17, 2008). Accordingly, it did not prepare a Statement of
Energy Effects on the proposed rule. DOE received no comments on this
issue in response to the October 2008 NOPR. As with the proposed rule,
DOE has concluded that today's final rule is not a significant energy
action within the meaning of Executive Order 13211, and has not
prepared a Statement of Energy Effects on the rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, the OMB, in consultation with the Office of
Science and Technology, issued its ``Final Information Quality Bulletin
for Peer Review'' (the Bulletin), which was published in the Federal
Register on January 14, 2005. 70 FR 2664. The purpose of the Bulletin
is to enhance the quality and credibility of the Federal government's
scientific information. The Bulletin establishes that certain
scientific information shall be peer reviewed by qualified specialists
before it is disseminated by the Federal government. As indicated in
the October 2008 NOPR, this includes influential scientific information
related to agency regulatory actions, such as the analyses in this
rulemaking. 73 FR 62034, 62132 (Oct. 17, 2008).
As more fully set forth in the October 2008 NOPR, DOE held formal
in-progress peer reviews of the types of analyses and processes that
DOE has used in considering energy conservation standards as part of
this rulemaking, and issued a report on these peer reviews. Id.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will submit to Congress a report
regarding the issuance of today's final rule. The report will state
that it has been determined that the rule is not a ``major rule'' as
defined by 5 U.S.C. 804.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's final
rule.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Energy Conservation test
procedures, Household appliances, Imports.
Issued in Washington, DC, on March 31, 2009.
Steven G. Chalk,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable
Energy.
0
For the reasons stated in the preamble, chapter II, subchapter D, of
Title 10 of the Code of Federal Regulations, Part 430 is amended to
read as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Section 430.32 of subpart C is amended by revising paragraph (j) to
read as follows:
Sec. 430.32 Energy and water conservation standards and effective
dates.
* * * * *
(j) Cooking Products. (1) Gas cooking products with an electrical
supply cord shall not be equipped with a constant burning pilot light.
This standard is effective on January 1, 1990.
(2) Gas cooking products without an electrical supply cord shall
not be equipped with a constant burning pilot light. This standard is
effective on April 9, 2012.
* * * * *
Appendix
[The following letter from the Department of Justice will not appear
in the Code of Federal Regulations.]
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[FR Doc. E9-7545 Filed 4-7-09; 8:45 am]
BILLING CODE 6450-01-C