[Federal Register Volume 76, Number 177 (Tuesday, September 13, 2011)]
[Notices]
[Pages 56413-56425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23236]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
[Docket No. EERE-2011-BT-BC-0046]
Building Energy Codes Cost Analysis
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Request for information.
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SUMMARY: The U.S. Department of Energy (DOE) is soliciting public input
on how it may improve the methodology DOE intends to use for assessing
cost effectiveness (which includes an energy savings assessment) of
changes to residential building energy codes. DOE supports the
development of the International Code Council's (ICC) International
Energy Conservation Code (IECC), the national model code adopted by or
forming the basis of residential energy codes promulgated by a majority
of U.S. states, as well as other voluntary building energy codes. DOE
performs a cost effectiveness analysis of proposed modifications to the
codes as part of that support. DOE also performs an analysis of cost
effectiveness of new code versions. DOE is interested in public input
on its methodology, preferred data sources, and parameter assumptions.
DOE is publishing this request for information to allow interested
parties to provide suggestions, comments, and other information. This
notice identifies several areas in which DOE is particularly interested
in receiving information; however, any input and suggestions considered
relevant to the topic are welcome.
DATES: Written comments and information are requested by October 13,
2011.
ADDRESSES: Interested persons may submit comments in writing,
identified by docket number EERE-2011-BT-BC-0046, by any of the
following methods:
E-mail: [email protected]. Include EERE-2011-BT-BC-
0046 in the subject line of the message.
Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building
Technologies Program, Mailstop EE-2J, Building Energy Codes, 1000
Independence Avenue, SW., Washington, DC 20585-0121. Phone (202) 586-
2945. Please submit one signed paper original.
Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, 6th Floor, 950 L'Enfant Plaza,
SW., Washington, DC 20024. Phone: (202) 586-2945. Please submit one
signed paper original.
Internet: http://www.regulations.gov/#!docketDetail;dct=FR+PR+N+O+SR+PS;rpp=250;so=DESC;sb=postedDate;po=0;D=
EERE-2011-BT-BC-0046. Please use the input form and complete all
required fields.
Instructions: All submissions received must include the agency name
and docket number.
Docket: For access to the docket to read background documents, or
comments received, visit the U.S. Department of Energy, Resource Room
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite
600, Washington, DC 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.
FOR FURTHER INFORMATION CONTACT: Mr. Robert Dewey, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW.,
Washington, DC 20585-0121, Telephone: (202) 287-1354, E-mail:
[email protected].
Ms. Kavita Vaidyanathan, U.S. Department of Energy, Office of the
General Counsel, Forrestal Building, Mailstop GC-71, 1000 Independence
Ave., SW., Washington, DC 20585, Telephone: (202) 586-0669, E-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Authority and Background
Section 307(b) of the Energy Conservation and Production Act (ECPA,
Public Law 102-486), as amended, directs DOE to support voluntary
building energy codes by periodically reviewing the technical and
economic basis of the voluntary building energy codes and ``seek
adoption of all technologically feasible and economically justified
energy efficiency measures; and * * * otherwise participate in any
industry process for review and modification of such codes.'' \1\
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\1\ 42 U.S.C. 6836(b)(2) and (3).
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This Request for Information (RFI) seeks public input on DOE's
methodology for assessing the cost effectiveness of proposed changes to
residential building energy codes and new editions of such codes.
Historically, DOE's analyses have been conducted in an ad hoc manner,
with the methodology selected based on the type of code change
contemplated and the nature of ongoing stakeholder debates on the
topic. Because residential energy codes lagged advances in residential
efficiency measures, DOE relied on successes in relevant research,
demonstration, and voluntary beyond-code programs (e.g., Building
America, ENERGY STAR) rather than directly calculating the cost
effectiveness of code changes. However, recent advances in the IECC and
other voluntary building energy codes have improved the energy
performance of buildings and building components to levels that in many
cases rival those of the beyond-code programs. Consequently, for its
future efforts advancing and promoting voluntary building energy codes,
DOE sees the need for a consistent and transparent methodology for
assessing the cost effectiveness of code change proposals and for
assessing the cost effectiveness of new code versions.
DOE intends to use the methodology described in this document to
address DOE's legislative direction related to
[[Page 56414]]
building energy codes. DOE also intends to use this methodology to
inform its participation in the update processes of the IECC and other
building energy codes, both in developing code-change proposals and in
assessing the proposals of others when necessary. DOE further intends
to use this methodology in assessing the cost effectiveness of new code
versions in lieu of prior versions or existing state energy efficiency
codes.
The focus of this RFI is residential buildings, which DOE defines
in a manner consistent with the IECC--one- and two-family dwellings,
townhouses, and low-rise (three stories or less above grade)
multifamily residential buildings.
The cost effectiveness methodology is separate from the statutory
requirement that DOE issue a determination ``whether such revision
would improve energy efficiency in residential buildings'' whenever the
IECC (as successor to the 1992 Model Energy Code) is revised (42 U.S.C.
6833(a)(5)). The determinations under 42 U.S.C. 6833 are required only
for the IECC, not any other building energy codes; require analysis of
only energy savings, not cost effectiveness; and may be based on
qualitative assessments of energy efficiency improvements rather than
quantitative analysis of energy savings.
DOE's methodology is intended to assess cost effectiveness based on
a 30-year period of analysis, assuming a home buyer takes out a 30-year
mortgage to purchase the home. This approach is intended to represent
the economic perspective of a typical home owner or sequence of owners
who own the home over the 30-year analysis period. The perspective of a
single 30-year owner allows consideration of economic impacts on home
buyers as well as consideration of long-term energy savings.
Steps Included in Assessing Cost Effectiveness of Code Changes
Assessing the cost effectiveness of a proposed code change or a
newly revised code involves three primary steps:
1. Estimating the energy savings of the changed code provision(s),
2. Estimating the first cost of the changed provision(s), and
3. Calculation of the corresponding economic impacts of the changed
provision(s).
These steps are the focus of this Request for Information and are
described in the sections that follow.
Estimating Energy Savings of Code Changes
The first step is estimating the energy savings of code changes. In
estimating the energy impact of a code change DOE will usually employ
computer simulation analysis (situations in which other analysis
approaches might be preferred are discussed later). DOE may also rely
on extant studies that directly address the building elements involved
in a proposed change if such can be identified. When evaluating code
changes proposed by entities other than DOE,\2\ DOE may rely on energy
estimates provided by the proponent(s) if DOE deems the calculations
credible. Where credible energy savings estimates are not available,
DOE intends to conduct analysis using an appropriate building energy
estimation tool. DOE intends to use the EnergyPlus \3\ software for its
analyses unless the code change at hand involves a building component
or strategy that is outside the scope of that software. Such code
changes would be addressed case by case.
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\2\ All code change proposals are publicly available and are
published by the ICC months before the code hearings (open to the
public) that determine whether the code changes are approved for
addition to the next edition of the IECC.
\3\ http://www.energyplus.gov/.
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Code changes affecting a particular climate zone would be simulated
in a weather location representative of that zone. Where a code change
affects multiple climate zones, DOE intends to produce an aggregate
(national) energy impact estimate based on simulation results from
weather locations representative of each zone, weighted to account for
estimated housing starts by zone and other factors representing the
fraction of homes that would be affected by the code change (building
types, foundation types, fuel/equipment types). These methodologies,
weighting factors, and other assumptions are described in the sections
that follow.
Building Energy Use Simulation Assumptions and Methodology
The energy performance of most energy-efficiency measures in the
scope of building energy codes can be estimated by computer simulation.
In estimating the energy performance of pre- and post-revision codes,
two prototype buildings would be analyzed--one that exactly complies
with the pre-revision code and an otherwise identical building that
exactly complies with the revised code under analysis.\4\ These two
buildings would be simulated in a variety of locations to estimate the
overall (national average) energy impact of the new code. The inputs
and assumptions used in those simulations are discussed in the
following sections.
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\4\ ``Exactly complies'' means that the prototype complies with
the primary prescriptive manifestation of the code's requirements.
DOE will address codes without such primary requirements (e.g., a
purely performance code) on a case by case bais.
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Energy Simulation Tool
DOE intends to use an hour-by-hour simulation tool to calculate
annual energy consumption for relevant end uses. For most situations,
the EnergyPlus software, developed by DOE, would be the tool of choice.
EnergyPlus provides for detailed hour-by-hour simulation of a home's
energy consumption throughout a full year, based on typical weather
data for a location. It covers almost all aspects of residential
envelopes, HVAC equipment and systems, water heating equipment and
systems, and lighting systems. Depending on how building energy codes
evolve, it may be necessary to identify additional tools to estimate
the impacts of some changes.
Prototypes
Separate simulations would be conducted for single-family and
multifamily buildings. The prototypes used in the simulations are
intended to represent a typical new one- or two-family home or
townhouse and a low-rise multifamily building (apartment, cooperative,
or condominium). Five foundation types would be examined for single-
family homes: Vented crawlspace, unvented (conditioned) crawlspace,
slab-on-grade, heated basement with wall insulation, and unheated
basement with insulation in the floor above the basement. Table 1 shows
the characteristics DOE intends to assume for the single-family
prototype. Note that any of these characteristics may be modified if a
code change impacts it.
[[Page 56415]]
Table 1--Single-Family Prototype Characteristics
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Parameter Assumption Notes
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Conditioned floor area...... 2400 ft\2\.......... Characteristics of
New Housing, U.S.
Census Bureau.
Footprint and height........ 30 ft by 40 ft, two-
story, 8.5 ft high
ceilings.
Area above unconditioned 1200 ft\2\.......... Over a vented
space. crawlspace or
unconditioned
basement.
Area below roof/ceilings.... 1200 ft\2\, 70% with
attic, 30%
cathedral.
Perimeter length............ 140 ft..............
Gross wall area............. 2380 ft\2\..........
Window area (relative to 15%.................
gross wall area).
Door area................... 42 ft\2\............
Internal gains.............. 91,436 Btu/day...... 2006 IECC, Section
404.
Heating system.............. Natural gas furnace. Efficiency will be
based on prevailing
federal minimum
manufacturing
standards. Where
relevant code
changes impact
different heating
system types
differently,
additional types
will be simulated
(see below for
equipment type
weightings).
Cooling system.............. Central electric air Minimum
conditioning (AC). manufacturing
standards.
Water heating............... Natural gas.........
------------------------------------------------------------------------
For the multifamily building prototype, U.S. Census data (2006) \5\
show that the size and number of dwelling units per building in new
construction varies greatly. The median number of dwelling units per
building is in the range of 20 to 29 with the median floor area per
unit in the range of 1000 to 1199 ft\2\. The multifamily prototype
characteristics intended to be used for DOE's analyses are:
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\5\ U.S. Census Bureau. 2006 Characteristics of New Housing.
http://www.census.gov/const/www/charindex.html.
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A rectangular two-story building containing dwelling units
with 1200 ft\2\ of conditioned floor area.
600 ft\2\ floor area and roof/ceiling area per dwelling
unit.
The average exterior wall perimeter per dwelling unit is
43 ft, which is set to a 20 by 23 ft rectangle in the simulations. With
8.5 ft ceilings, the wall area is 731 ft\2\ per dwelling unit. The 43
ft perimeter is based on assuming a 20-unit building that is 30-ft wide
and 400-ft long, yielding an 860-ft perimeter, which averages 43 ft per
dwelling unit. (The dimensions used here represent average values of
both middle and end units, yielding a hypothetical dwelling unit with
dimensions that do not exactly match the conditioned floor area.).
42 ft\2\ of exterior door area per dwelling unit.
54668 Btu/day internal gains per dwelling unit (2006
IECC).
Window area is estimated at 14% of the conditioned floor
area.
The heating, cooling, and water heating system characteristics are
the same as for the single-family prototype (each dwelling unit is
assumed to have its own separate heating and cooling equipment).
Weather Locations
Simulations (and other analyses as appropriate) would be conducted
in one weather location per climate zone in the code, including a
separate location for each moisture regime, for a total of 15 climate
locations.\6\ Simulation results from the climate zones would be
weighted based on new residential building permit data obtained from
the U.S. Census Bureau. Table 2 shows the shares of national
construction by IECC primary climate zone based on year-2000 Census
data. More than 90% of the construction occurred in climate zones 2
through 5. Climate zones 7 and 8 are combined here, because zone 8
(northern Alaska) represents only a small fraction of the national
construction activity.
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\6\ The IECC has eight temperature-oriented climate zones
crossed with three moisture regimes, for a theoretical total of 24
distinct climate zones. However, only 15 of the possible zones occur
within the U.S.
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Within a climate zone, simulation results from different moisture
regimes would be weighted based on population densities estimated from
USGS Populated Places data. Table 3 shows the climate locations, each
of which is represented by a Typical Meteorological Year (TMY2) \7\
file. The final column shows the final weight intended to be applied to
each TMY2 location, based on a combination of the within-zone weight of
the previous column and the by-zone housing starts of Table 2.
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\7\ See http://rredc.nrel.gov/solar/old_data/nsrdb/tmy2/.
Table 2--Housing Start Shares by Climate Zone
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Percentage of
Climate zone building permits
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1.................................................... 2
2.................................................... 19
3.................................................... 27
4.................................................... 19
5.................................................... 27
6.................................................... 6
7 & 8................................................ 0.3
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Table 3--Climate Locations Used in Energy Simulations With Climate Zone and Moisture Regime Weights
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Representative location Regime weight Overall
Climate zone Moisture regime ---------------------------------------------------------------------------- within zone location weight
State City HDD(65) * CDD(65) ** (percent) (percent)
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1.................... Moist............... Florida............. Miami............... 139 4157 100 2
2.................... Dry................. Arizona............. Phoenix............. 1350 4162 17 3.2
Moist............... Texas............... Houston............. 1371 3012 83 15.8
3.................... Dry................. Texas............... El Paso............. 2708 2094 47 12.7
[[Page 56416]]
Marine.............. California.......... San Francisco....... 3005 65 13 3.5
Moist............... Tennessee........... Memphis............. 3082 2118 40 10.8
4.................... Dry................. New Mexico.......... Albuquerque......... 4562 941 3 0.6
Marine.............. Oregon.............. Salem............... 4927 247 10 1.9
Moist............... Maryland............ Baltimore........... 4068 1608 87 16.5
5.................... Dry................. Idaho............... Boise............... 5861 754 13 3.5
Moist............... Illinois............ Chicago............. 5753 989 87 23.5
6.................... Dry................. Montana............. Helena.............. 8031 386 11 0.7
Moist............... Vermont............. Burlington.......... 7771 388 89 5.3
7.................... .................... Minnesota........... Duluth.............. 9169 223 100 0.2
8.................... .................... Alaska.............. Fairbanks........... 13697 44 100 0.1
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* HDD = heating degree-days, base 65F.
** CDD = cooling degree-days, base 65F.
The locations in Table 3 were selected to be reasonably
representative of their respective climate zones by Briggs et al.
(2002).\8\
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\8\ Briggs, R. S., R. G. Lucas, and Z. T. Taylor. 2002. Climate
Classification for Building Energy Codes and Standards: Part 2--Zone
Definitions, Maps, and Comparisons. ASHRAE Transactions, Vol. 109,
Part 1. Atlanta, Georgia.
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Note that the above assumes that the climate basis of the revised
code is the same as that of the previous code. Revisions that change
the climate zones or switch to a new climate basis would require
development of a custom procedure to capture the impacts on residential
energy efficiency.
Default Assumptions
Input values for building components that do not differ between the
two subject codes would be set to match a shared code requirement if
one exists, to match standard reference design specifications from the
code's performance path if the component has such specifications, or to
match best estimates of typical practice otherwise. Because such
component inputs are used in both pre- and post-revision simulations,
their specific values are of secondary importance and it is important
only that they be reasonably typical of the construction types being
evaluated.
Weighting Factors
Building Types
Building permit data for 2006 through 2010 indicate that 22% of new
construction in terms of total dwelling units is multifamily (Census
2011).\9\ However, only 60% of these dwelling units are ``low-rise''
units, the other 40% being in buildings of four stories or more in
height and therefore falling under the IECC's nonresidential
provisions.\10\ Therefore, about 13.2% (0.22 x 0.60) of all residential
dwelling units are in multifamily buildings that fall under the purview
of the residential requirements of the IECC. About 8.8% (0.22 x 0.4) of
all residential dwelling units fall under the nonresidential IECC
classification. Thus, low-rise multifamily dwelling units account for
about 14.5% (0.132/(1 - 0.088)) of dwelling units classified as
residential in the IECC. This figure would be used to aggregate results
from DOE's single-family and multifamily simulation results.
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\9\ http://www.census.gov/const/www/charindex.html.
\10\ Ibid.
Table 4--Building Type Shares [Percent]
------------------------------------------------------------------------
Weighting
Building type factor
(percent)
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Single-Family........................................... 84
Multifamily............................................. 16
------------------------------------------------------------------------
Foundation Types
Simulations would be based on a vented crawlspace foundation except
in cases that deal explicitly with changes to requirements for other
foundation types. In the latter cases, foundation-specific energy
changes would be weighted by an estimate of foundation shares in each
climate zone. These shares are estimated from the Census Bureau data
for 2004 housing characteristics data (Census 2006) \11\ shown in Table
5.
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\11\ Ibid.
Table 5--Foundation Type Shares (percent) by Census Zone
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Zone Basement Slab Crawlspace
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Northeast....................................................... 84 13 3
Midwest......................................................... 76 17 6
South........................................................... 12 70 17
West............................................................ 15 65 20
Total........................................................... 31 54 15
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The data in Table 5 provide the fraction of new residences having
basements, but do not distinguish conditioned from unconditioned
basements. DOE estimates the shares of conditioned and unconditioned
basements based on data from the DOE Residential Energy Consumption
Survey (DOE 2005).\12\
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\12\ U.S. DOE. 2005. Residential Energy Consumption Survey
(Table HC5.2). http://www.eia.doe.gov/emeu/recs2005/hc2005 tables/
detailed tables2005.html.
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Because foundation share data is available only for census zones,
not
[[Page 56417]]
IECC climate zones, it is necessary to estimate the climate zone shares
from census data and general knowledge about regional construction
techniques (e.g., basements are almost never used in the far south).
Table 6 shows the shares DOE intends to assume.
Table 6--Foundation Type Shares (percent) by 2006 IECC Climate Zone
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Heated Unheated
Climate zone basement Crawlspace Slab-on-grade basement
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1............................................... 0 0 100 0
2............................................... 0 5 95 0
3............................................... 10 15 70 5
4............................................... 30 20 40 10
5............................................... 45 20 20 15
6............................................... 65 10 5 20
7 & 8........................................... 70 5 5 20
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Equipment/Fuel Types and Energy Costs
The impacts of code changes would be estimated for multiple fuel/
equipment types and the results weighted by equipment type shares
derived from Census construction data for new houses. 55% of new
single-family homes in 2010 used natural gas for heating, 39% used
electric heat pumps, and 6% used electric resistance furnaces.\13\ For
new multifamily dwellings, 36% used natural gas for heating, 49% used
electric heat pumps, and 15% used electric resistance furnaces. Only 1%
of new single-family and multifamily used oil, so this heating type
would not be analyzed separately for national-average analyses as it
does not have a significant share of the national market. These shares
would be used to weight results for all residential buildings. Electric
central air conditioning would be assumed in all climates.
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\13\ http://www.census.gov/const/www/charindex.html.
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Provisions Requiring Special Consideration
Some building components and/or energy conservation measures do not
lend themselves to straightforward pre- and post-change simulation of
energy consumption. For example, the use of hourly simulation was of
dubious value in assessing the energy savings of duct testing required
by the 2009 IECC because the prior edition of the IECC had no testing
requirement from which a meaningful baseline leakage rate could be
established. In this case, the majority of the uncertainty was in the
decision of what pre-2009 leakage rate should be used as a baseline.
This type of uncertainty arises from any code change that expands the
scope of the code. Rather than comparing one code to another, a new
code must be compared to an unstated prior condition.\14\
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\14\ In DOE's proposal to add duct testing requirements to the
2009 IECC energy savings was approximated based on findings from
extant post-occupancy studies of duct leakage rather than by
simulation. These studies include: Washington State University.
2001. Washington State Energy Code Duct Leakage Study Report.
WSUCEEP01105. Washington State University Cooperative Extension
Energy Program, Olympia, Washington. Hales, D., A. Gordon, and M.
Lubliner. 2003. 2003. Duct Leakage in New Washington State
Residences: Findings and Conclusions. ASHRAE transactions. KC-2003-
1-3. Hammon, R. W., and M. P. Modera. 1999. ``Improving the
Efficiency of Air Distribution Systems in New California Homes-
Updated Report.'' Consol. Stockton, California. Journal of Light
Construction. April 2003. ``Pressure-Testing Ductwork.'' Michael
Uniacke. Sherman et al. 2004. Instrumented HERS and Commissioning.
Xenergy. 2001. Impact Analysis Of The Massachusetts 1998 Residential
Energy Code Revisions. http://www.mass.gov/Eeops/docs/dps/inf/inf_bbrs_impact_analysis_final.pdf.
Where better data on the distribution of actual leakage rates
available, a more rigorous analysis might have been contemplated.
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In the case of a scope expansion, it is sometimes inappropriate to
compare a new code's requirement against an average or typical pre-code
level, because doing so tends to understate the savings of the new
requirement. Returning to the example of a new requirement for testing
the duct leakage rate, consider Figure 1. The curve represents a
hypothetical distribution of leakage rates prior to the code's
regulation of leakage rates. Even if the new code requirement were set
equal to or worse than the pre-change average rate, savings would
accrue from houses that would have had higher leakage rates.\15\ DOE
intends to evaluate scope expansions case by case to determine the most
appropriate way to estimate energy savings. DOE seeks public input on
this topic.
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\15\ Although this is a hypothetical illustration, a similar
issue did arise in DOE's proposal to add duct testing requirements
to the 2009 IECC described in Footnote 14.
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[[Page 56418]]
[GRAPHIC] [TIFF OMITTED] TN13SE11.000
A second situation requiring special consideration is accounting
for code changes that induce additional, unwritten requirements. An
example is an envelope air tightness requirement that results in
leakage rates so low that a home would need supplemental mechanical
ventilation to avoid moisture and other air quality problems. In such a
case a proper cost effectiveness assessment might require accounting
for the cost and energy penalty of the mechanical ventilation system
even though the code didn't require it. DOE would evaluate such changes
case by case to determine whether implied requirements must be assumed.
DOE seeks public input on this topic.
Estimating the First Cost of Code Changes
The second step in assessing the cost effectiveness of a proposed
code change or a newly revised code is estimating the first cost of the
changed provision(s). The ``first cost'' of a code change refers to the
marginal cost of implementing one or more changed code provisions. For
DOE's analyses, it refers to the retail cost (the cost to a home buyer)
prior to amortizing the cost over multiple years through the home
mortgage, and includes the full price paid by the home buyer, including
materials, labor, overhead, and profit, minus any tax rebates or other
incentives generally available to home buyers when the new code takes
effect.
DOE recognizes that estimating the cost of a code change can be
challenging, and will attempt to identify credible cost estimates from
multiple sources when possible. Judgment is often required to determine
an appropriate cost for energy code analysis when multiple credible
sources of construction cost data yield a range of first costs. Cost
data would be obtained from existing sources such as cost estimating
publications such as R.S. Means, industry sources such as Lowes or Home
Depot, and other resources including journal articles and research
studies. DOE has also issued a subcontract specifically to collect cost
data for residential energy efficiency measures. DOE would utilize all
of these resources to determine the most appropriate construction cost
assumptions based on factors including the applicability and
thoroughness of the data source.
Historical Approach to Cost Data Collection
For code changes that impact many insulation and/or construction
assembly elements of a home, DOE consults the national construction
cost estimation publication RS Means Residential Cost Data,\16\ which
provides a wide variety of construction cost data. This is appropriate
for many code changes that impact the construction of the home (e.g.,
switching from 2x4 to 2x6 walls) such that both materials and labor
differ. RS Means, however, covers only a portion of potential code
changes. It does not, for example, have detailed costs on improved duct
sealing or building envelope sealing, and its costs for fenestration
products (windows, doors, and skylights) are focused on aesthetic
features rather than energy efficiency.
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\16\ http://www.rsmeans.com/.
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When a code change impacts only the materials used in a home,
without impacting labor, cost data can often be obtained from national
home hardware suppliers, such as Home Depot and Lowe's Home
Improvement. These sources can have the advantage of providing recent
costs and the costs can
[[Page 56419]]
be localized if a state or local analysis is needed. However, these
sources do not provide all the specific energy efficiency measure
improvements that are typically needed for code improvement analyses.
As needed, DOE conducts literature searches of specialized building
science research publications that assess the costs of new or esoteric
efficiency measures that are not covered in other data sources.
Examples include reports from DOE's own Building America \17\ program,
those generated from the Environmental Protection Agency's Energy Star
\18\ program, and buildings-oriented research publications such as
ASHRAE Transactions.
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\17\ http://www.buildingamerica.gov/.
\18\ http://www.energystar.gov/.
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A Plan for the Future
DOE anticipates that as building energy codes advance and
incorporate more energy features, the traditional cost sources will be
less useful in estimating the first costs of code changes. To support
analysis of codes going forward, DOE has tasked Pacific Northwest
National Laboratory with placing a subcontract for professional cost-
estimating services to help populate a publicly available online
database of building construction costs. A Request for Proposals (RFP)
was issued in May 2011 and calls for the services of a professional
cost-estimating firm to provide cost data for equipment and components
related to building envelope systems, building lighting systems,
building mechanical systems, and building renewable energy systems. The
database would differentiate cost data to the extent practicable by
building type, building location, and building size, and would provide
both national-average and regional/local costs to the extent such are
available.
Addressing Code Changes With Multiple Approaches to Compliance
One of the challenges of estimating the costs of energy code
changes is selecting an appropriate characterization of new code
requirements. A requirement for an improved wall R-value, for example,
might be met with higher-density insulation within the between-stud
cavities, with standard-density insulation in a thicker wall (e.g.,
moving from 2x4 to 2x6 construction), adding a layer of insulating
sheathing to the wall, or switching to an entirely different
construction approach (e.g., straw bale). Each approach will have
different costs and may be subject to differing constraints depending
on the situation. Some construction approaches, for example, may be
inappropriate in regions subject to high winds or high probabilities of
seismic activity. Some approaches may open the possibility for new and
less expensive construction approaches. A change that forces a move
from 2x4 to 2x6 wall construction, for example, opens the possibility
of placing wall studs on 24-inch centers rather than the more common
16-inches. This can reduce both material and labor costs, but requires
other changes that may exact additional costs or restrict designs, such
as ``stack framing,'' in which ceiling joists/rafters are aligned
directly over wall studs.
It is difficult for DOE to anticipate either the types of code
changes that will emerge in future building energy codes or the manner
in which builders will choose to meet the new requirements. It is DOE's
intent, however, to evaluate changes on a case by case basis and seek
the least-first cost way to achieve compliance unless that approach is
deemed inappropriate in a large percentage of new home situations. For
code changes that touch on techniques with which there is recent
research experience (e.g., through DOE's Building America program), DOE
would consult the relevant publications for advice on appropriate
construction assumptions. DOE is seeking public input on this matter.
DOE anticipates that some new code provisions may have
significantly different first costs depending on unrelated aesthetic
choices. For example, a requirement for overhangs on south-facing
windows might be more costly on a two-story home than on a one-story
home. Limits on west-facing glazing might have substantial effect or no
effect depending on the lot orientation. Again, DOE cannot anticipate
all future changes, and will address each one individually. DOE is
seeking public input on the proper approach to assessing the cost
effectiveness of such changes.
Finally, some new code provisions may come with no specific
construction changes at all, but rather be expressed purely as a
performance requirement. It has been suggested, for example, that a new
IECC might require all homes to comply with the energy performance
path, with a requirement that calculated energy consumption be shown to
be some predetermined percentage below that implied by the prescriptive
specifications. It is also conceivable that a code could be expressed
simply as an energy use intensity (EUI), in which the requirement is a
limit on energy use per square foot of conditioned floor area. DOE
intends to evaluate any such code changes on a case by case basis and
will search the research literature and/or conduct new analyses to
determine the reasonable construction changes that could be expected to
emerge in response to such new requirements. DOE is seeking public
input on this issue.
Economies of Scale and Market Transformation Effects
Construction costs often show substantial differences between
regions, sometimes based primarily on local preferences and the
associated economies of scale. Because new code changes may push
building construction to new and potentially unfamiliar techniques in
some locations, local cost estimates may overstate the long-term costs
of implementing the change. Similar issues may arise where
manufacturers produce large quantities of a product that just meets a
current energy code requirement, giving that product a relatively low
price in the market. Should the code requirement increase, it is likely
that manufacturers will increase production of a conforming product,
lowering its price relative to the current situation.
DOE intends to evaluate new code changes case by case to determine
whether it is appropriate to adjust current costs for anticipated
market transformation after a new code takes effect. DOE intends to
evaluate specific new or proposed code provisions to determine whether
and how prices might be expected to follow an experience curve with the
passage of time. See, for example, DOE's Notice of Data Availability
published in the Federal Register on February 22, 2011 (76 FR 9696)
(http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/rf_noda_fr_notice.pdf) for information on projecting future costs in the
manufacture of new refrigeration products. It is noted that site-built
construction may involve several types of efficiency improvements. The
real cost of code changes requiring new technologies may drop in the
future as manufacturers learn to produce them more efficiently. The
real cost of code changes that involve new techniques may likewise drop
as builders and subcontractors learn to implement them in the field
more efficiently and with less labor. Finally, code changes that simply
require more of a currently used technology or technique may have
relatively stable real costs, with prices generally following inflation
over time. DOE is seeking public input on this issue.
[[Page 56420]]
Estimating the Cost Effectiveness of Code Changes
Economic Metrics To Be Calculated
The last step in assessing the cost effectiveness of a proposed
code change or a newly revised code is calculating the corresponding
economic impacts of the changed provision(s). In evaluating code change
proposals as part of the IECC consensus process, assessing new editions
of the IECC published by the ICC, and participating in the development
of other voluntary building energy codes, DOE intends to calculate
three metrics.
Life-cycle cost.
Simple payback period.
Cash flow.
Life-cycle cost (LCC) is the primary metric DOE intends to use to
evaluate whether a particular code change is cost effective. Any code
change that results in a net LCC less than or equal to zero (i.e.,
monetary benefits exceed costs) will be considered cost effective. The
payback period and cash flow analyses provide additional information
DOE believes is helpful to other participants in code-change processes
and to states and jurisdictions considering adoption of new codes.
These metrics are discussed further below.
Life-Cycle Cost
Life-cycle cost (LCC) is a robust cost-benefit metric that sums the
costs and benefits of a code change over a specified time period.
Sometimes referred to as net present value analysis or engineering
economics, LCC is a well-known approach to assessing cost
effectiveness. Because the key feature of LCC analysis is the summing
of costs and benefits over multiple years, it requires that cash flows
in different years be adjusted to a common year for comparison. This is
done with a discount rate that accounts for the time value of money.
Like most LCC implementations, DOE's sums cash flows in year-zero
dollars, which allows the use of standard discounting formulas. Cash
flows adjusted to year zero are termed present values. The procedure
described herein combines concepts from two ASTM International standard
practices, E917 \19\ and E1074.\20\ The resultant procedure is both
straightforward and comprehensive and is in accord with the methodology
recommended and used by the National Institute of Standards and
Technology (NIST).\21\
---------------------------------------------------------------------------
\19\ ASTM International. ``Practice for Measuring Life-Cycle
Costs of Buildings and Building Systems,'' E917, Annual Book of ASTM
Standards: 2010, Vol. 4.11. West Conshohocken, PA: ASTM
International.
\20\ ASTM International. ``Practice for Measuring Net Benefits
and Net Savings for Investments in Buildings and Building Systems,''
E1074, Annual Book of ASTM Standards: 2010, Vol. 4.11. West
Conshohocken, PA: ASTM International.
\21\ For a detailed discussion of LCC and related economic
evaluation procedures specifically aimed at private sector analyses,
see Ruegg and Petersen (Ruegg, Rosalie T., and Petersen, Stephen R.
1987. Comprehensive Guide to Least-Cost Energy Decisions, NBS
Special Publication 709. Gaithersburg, MD: National Bureau of
Standards).
---------------------------------------------------------------------------
Present values can be calculated in either nominal or real terms.
In a nominal analysis all compounding rates (discount rate, mortgage
rate, fuel escalation rate, etc.) include the effect of inflation,
while in a real analysis, inflation is removed from those rates. The
two approaches are algebraically equivalent, but DOE intends to
generally conduct economic analyses of residential energy codes in
nominal terms because accounting for mortgage cash flows and associated
income tax effects is more straightforward.
LCC is defined formally as the present value of all costs and
benefits summed over the period of analysis. Because it is defined in
terms of costs, the LCC of a code change must be zero or negative for
the change to be considered cost effective, as shown in Equation 1.
[GRAPHIC] [TIFF OMITTED] TN13SE11.001
A future cash flow (positive or negative) is brought into the
present by assuming a discount rate (D). The discount rate is an
annually compounding rate \22\ by which future cash flows are
discounted in value. It represents the minimum rate of return demanded
of the investment in energy-saving measures. It is sometimes referred
to as an alternative investment rate. Thus the present value, (PV) of a
cash flow in year Y (CFy) is defined as
---------------------------------------------------------------------------
\22\ The analysis can be done for other periods of time (e.g.,
monthly), but for simplicity DOE uses annual periods for the subject
analyses.
[GRAPHIC] [TIFF OMITTED] TN13SE11.002
The present value of a stream of annual cash flows over the period
of analysis, L years, is then the sum of all of those discrete cash
flows:
[GRAPHIC] [TIFF OMITTED] TN13SE11.003
For an annualized stream of cash flows A that is the same from year
to year, such as a mortgage payment lasting L years, Equation (3) is
equivalent to the following.
[GRAPHIC] [TIFF OMITTED] TN13SE11.004
For an annualized stream of cash flows that is escalating with
time, such as the energy cost savings ES that increases from year to
year because of escalations in fuel prices, Equation (5)
[[Page 56421]]
can be used (EF--is the fuel price escalation rate):
[GRAPHIC] [TIFF OMITTED] TN13SE11.005
Because DOE intends to compute and publish annual cash flow
impacts, Equation (3) will generally be preferred to Equations (4) and
(5) because it allows presentation and analysis of all the yearly cash
flows during the LCC analysis. Equations (4) and (5) are algebraically
equivalent and useful when year-by-year cash flows are not needed.
There are seven primary cash flows that are relevant to LCC
analysis of energy code changes, summarized in Table 7. The down
payment cost associated with the code changes is the down payment rate
(RD) multiplied by the total cost of the code changes (C)
and is incurred at the onset (year 0). On top of the down payment is a
mortgage fee, which is the cost of the code changes multiplied by the
mortgage fee rate (RM). Property tax occurs every year,
starting on year 1, and is the property tax rate (RP)
multiplied by C, and further adjusted by a factor of
(1+EH)\Y\ to take into account a compounding home price
escalation rate (EH). This assumes that the tax assessment
of the house increases exactly the amount of the code-related cost
increase, and that the tax assessment increases in step with the home
price. Energy savings occur every year, starting at year 1, and are
equal to the modeled energy cost savings at year 0, adjusted by a
factor of (1+EF)\Y\ to take into account a compounding fuel
(electricity and natural gas) price escalation rate (EF).
Mortgage payments occur every year of the term of the mortgage (ML),
are constant payments, and is equal to 12 times the monthly payment, as
calculated using the industry standard equation shown in Table 7. Tax
deductions for mortgage interest payments and property tax payments
begin in year 1 and continue through the end of the analysis period L.
They are calculated as the marginal income tax rate (RI)
multiplied by the sum of mortgage interest payments and property tax
payments each year. Finally, the residual value, incurred at the end of
the analysis period, is the cost of the code changes, adjusted for the
home's price appreciation, multiplied by the fraction of the lifetime
(i.e., value) of the code changes still remaining at resale
(RR). This is a rough number, but is meant to encapsulate an
average of the remaining lifetime of all of the components. DOE intends
to assume RR is 50% at the end of 30 years, which would
roughly correspond to straight-line depreciation of home features with
a 60-year life.
Additional rigor can be required to account for the shorter
lifetimes of certain equipment (e.g., 12-15 years for water heaters,
15-20 years for HVAC equipment). However, because the efficiencies of
most residential equipment generally are preemptively regulated by
federal rulemakings, DOE does not expect the IECC to impose specific
equipment efficiency requirements. Nonetheless, high-efficiency
equipment is likely to be a common alternative approach to energy code
compliance, so the shorter lifetimes of equipment would be accounted
for. While equipment will undoubtedly be replaced at the end of its
useful life, there is no guarantee that it will be replaced with
equipment of comparable efficiency. Because DOE cannot predict either
minimum code requirements or homeowner preferences in the future, it
will assume that replacement equipment efficiency will be unaffected by
the initial efficiency of the equipment--that is, replacement equipment
will be the same regardless of the initial efficiency. This implies
that the energy savings resulting from high-efficiency equipment will
accrue only for the life of the equipment, not the full 30-year period
of analysis, and that there will be no equipment replacement costs at
the end of its useful life. Thus, when estimating energy savings of
high-efficiency equipment, a home would be simulated twice, once with
and once without the high-efficiency equipment.
[[Page 56422]]
[GRAPHIC] [TIFF OMITTED] TN13SE11.006
Simple Payback Period
The simple payback period is a straightforward metric that includes
only the costs and benefits directly related to the implementation of
the energy-saving measures associated with a code change. It represents
the number of years required for the energy savings to pay for the cost
of the measures, without regard for changes in fuel prices, tax
effects, measure replacements, resale values, etc. The payback period
P, which has units of years, is defined as the marginal cost of
compliance with a new code (C, the ``first costs'' above and beyond the
baseline code), divided by the annual marginal benefit from compliance
(ES0, the energy cost savings in year 0), as shown in
Equation 6.
[GRAPHIC] [TIFF OMITTED] TN13SE11.007
[[Page 56423]]
The simple payback period is a metric useful for its simplicity and
ubiquity. Because it focuses on the two primary characterizations of a
code change--cost and energy performance--it allows an assessment of
cost effectiveness that is easy to compare with other investment
options and requires a minimum of input data. The simple payback period
is used in many contexts, and is written into some state laws governing
the adoption of new energy codes, hence DOE would calculate the payback
period when it assesses the cost effectiveness of code changes.
However, because it ignores many of the longer-term factors in the
economic performance of an energy efficiency investment, DOE does not
intend to use the payback period as a primary indicator of cost
effectiveness for its own decision making purposes.
Cash Flow Analysis
In the process of calculating LCC, year-by-year cash flows are
computed. These can be useful in assessing a code change's impact on
consumers and will be shown by DOE for the code changes it analyzes.
The cash-flow analysis simply shows each year's net cash flow (costs
minus benefits) separately (in nominal dollars), including any time-
zero cash flows such as a down payment. By publishing the net cash flow
value for each year, reviewers will be able to calculate various
metrics of interest, such as net cumulative cash flow, the year in
which cumulative benefits exceed cumulative costs, etc. DOE believes
this information will be useful to some stakeholders.
Economic Parameters and Other Assumptions
Calculating the metrics described above requires defining various
economic parameters. Table 8 shows the primary parameters of interest
and how they apply to the three metrics.
Table 8--Economic Parameters for Cost Effectiveness Metrics
------------------------------------------------------------------------
Parameter Needed for
------------------------------------------------------------------------
First costs............................... Payback.
Fuel prices............................... Cash flow.
LCC.
Fuel price escalation rates............... Cash flow.
Mortgage parameters....................... LCC.
Inflation rate............................
Tax rates (property, income)..............
Period of analysis........................
Residual value............................
Discount rate............................. LCC.
------------------------------------------------------------------------
These parameters are chosen to be representative of a typical home
buyer who purchases a home with a 30-year mortgage. DOE intends to
consult appropriate sources of information to establish assumptions for
each financial, economic, and fuel price assumption. Whenever possible,
economic assumptions will be taken from the published sources discussed
below. DOE notes that most values vary across time, location, markets,
institutions, circumstances, and individuals. Where multiple sources
for any parameter are identified, DOE will prefer recent values from
sources DOE deems best documented and reliable. DOE intends to update
parameters for future analyses to account for changing conditions.
First Cost
As discussed earlier, the first cost represents the full cost of
code-related energy features to a home buyer. It represents the full
(retail) cost of such features, including materials, labor, builder
overhead and profit, etc., but excludes any future costs such as for
maintenance.
Mortgage Parameters
The majority of homes purchased are financed. Indeed, the 2010
Characteristics of New Housing report from the Census Bureau reports
that 91% of new homes were purchased using a loan while only 9% were
purchased with cash. Accordingly, for purposes of the analysis of the
economic benefits to the home buyer for improved energy efficiency, DOE
intends to assume that a home is purchased using a loan.
Mortgage Interest Rate (i)
DOE intends to use recent mortgage rates in cost/benefit analyses,
and would consult Freddie Mac and the Federal Home Finance
Administration to determine a representative rate for each analysis.
Currently, Freddie Mac reports that conventional 30-year real estate
loans have averaged about 5% since the beginning of 2009 (http://www.freddiemac.com/pmms/pmms30.htm) though historical rates have been
higher. FHFA (http://www.fhfa.gov/Default.aspx?Page=252) reports
similar rates. Thus DOE intends to use a mortgage rate of 5% for cost/
benefit analyses at this time.
An alternative approach would be to evaluate historical mortgage
rates and identify a real rate that approximates a long-term average,
then use that rate in a real analysis or combine it with a recent (and
anticipated future) inflation rate in a nominal analysis. DOE intends
to use the former approach on the theory that recent rates are a better
indicator of near-term future rates that will be in effect when a new
code goes into effect.
Loan Term (ML)
For real estate loans, 30 years is by far the most common term and
is the value DOE intends to use in its analyses. According to the 2009
American Housing Survey (U.S. Census), Table 3-15, approximately 75% of
all home loans have a term between 28 and 32 years, with 30 being the
median.
Down Payment (RD)
The 2009 American Housing Survey reports a wide range of down
payment amounts for loans for new homes (see Table 9). DOE intends to
assume a down payment of 10%. Among the possible rates, this is low
enough that it is likely to favor the experience of first-time and
younger home buyers (who have little significant equity to bring
forward from a previous home) and is among the more common rates (the
6-10% block, at 13.6% of all mortgages, is the most populous block
except for ``no down payment''). Almost half (47.1%) of all loans have
a down payment at or below 10%.
Table 9--Down Payment--2009 American Housing Survey, Table 3-14
------------------------------------------------------------------------
Percentage
Percent of purchase price of homes
------------------------------------------------------------------------
No down payment........................................... 16.3
Less than 3 percent....................................... 6.4
3-5 percent............................................... 10.8
6-10 percent.............................................. 13.6
11-15 percent............................................. 4.7
16-20 percent............................................. 12.2
21-40 percent............................................. 10.4
41-99 percent............................................. 6.1
Bought outright........................................... 6.9
Not reported.............................................. 12.6
------------------------------------------------------------------------
Points and Loan Fees (RM)
Points represent an up-front payment to buy down the mortgage
interest rate. As such they are tax deductible. DOE assumes all
interest is accounted for by the mortgage rate, so the points are taken
to be zero. The loan fee is likewise paid up front in addition to the
down payment and varies from loan to loan. DOE assumes the loan fee to
be 0.7% of the mortgage amount, based on recent data from Freddie Mac
Weekly Primary Mortgage Market Survey: http://www.freddiemac.com/pmms/.
Discount Rate (D)
The purpose of the discount rate is to reflect the time value of
money. Because DOE's economic perspective is that of a home buyer, that
time value is determined primarily by the consumer's
[[Page 56424]]
best alternative investment at similar risk to the energy features
being considered.
The discount rate is chosen to represent the desired perspective of
the economic analysis, in this case a typical home buyer who holds a
home throughout a 30-year mortgage term.
DOE intends to set the discount rate to be equivalent to the
mortgage interest rate in nominal terms. Because mortgage prepayment is
an investment available to consumers who purchase homes using
financing, the mortgage interest rate is a reasonable estimate of a
consumer's alternative investment rate. That the home buyer has
borrowed money at that rate demonstrates that his or her implicit
discount rate must be at least that high.
Period of Analysis (L)
DOE's economic analysis is intended to examine the costs and
benefits impacting all the consumers who live in the house. Because
energy efficiency features generally last longer than the average
length of ownership for the initial home buyer, a longer analysis
period than the initial ownership period is used. Assuming a single
owner keeps the house throughout the analysis period accounts for long-
term energy benefits without requiring complex accounting for resale
values at home turnover.
Homes will typically last 50 years or more. However, some energy
efficiency measures may not last as long as the house does. DOE intends
to assume a 30-year lifetime to match the typical mortgage term.
Although 30 years is less than the life of the home, some efficiency
measures, equipment in particular, may require replacement during that
timeframe. As discussed earlier, when equipment efficiencies are
analyzed, energy savings will be limited to the life of the equipment.
This will impact the present value of energy savings only--all other
cash flow streams will accrue over the entire period of analysis. The
impact of the selection of an analysis term is significantly moderated
by the effect of the discount rate in reducing the value of costs and
benefits far into the future.
Property Tax Rate (RP)
Property taxes vary widely within and among states. The median
property tax rate reported by the 2007 \23\ American Housing Survey
(U.S. Census Bureau 2007, Table 1A-7) for all homes is $9 per $1,000 in
home value. Therefore, for purposes of code analysis, DOE intends to
assume a property tax rate of 0.9%. For state-level analyses, state-
specific rates will be used.
---------------------------------------------------------------------------
\23\ The 2007 survey was used as financial charcteristic data is
not available in the 2009 survey.
---------------------------------------------------------------------------
Income Tax Rate (RI)
The marginal income tax rate paid by the homeowner determines the
value of the mortgage tax deduction. The 2009 American Housing Survey
(http://www.census.gov/hhes/www/housing/ahs/ahs09/ahs09.html) on
``income characteristics'' reports a median income of $70,200 for
purchasers of new homes. The Internal Revenue Service SOI Tax Stats,
Table 2.1 for 2008 (latest year available) reported that of the tax
filers in this income bracket, most itemize deductions. DOE intends to
account for income tax deductions for mortgage interest in the cost/
benefit analyses. A family earning $70,200 in 2011, with a married-
filing-jointly filing status, would have a marginal tax rate of 25%,
which is DOE's current assumption. Where state income taxes apply,
rates will be taken from state sources or collections of state data
such as provided by the Federation of Tax Administrators (http://www.taxadmin.org).
Inflation Rate (RINF)
The inflation rate RINF is necessary only to give proper
scale to the mortgage payments so that interest fractions can be
estimated for tax deduction purposes. It does not affect the present
values of cash flows because all other rates are expressed in nominal
terms (i.e., are already adjusted to match the inflation rate). The
assumed inflation rate must be chosen to match the assumed mortgage
interest rate (i.e., be estimated from a comparable time period).
Estimates of the annual inflation rate would be taken from the most
recent Consumer Price Index (CPI) data published by the Bureau of Labor
Statistics (http://www.bls.gov/), which currently lists the most recent
annualized CPI to be 1.6%.
Residual Value
The residual value of energy features is the value assumed to be
returned to the home buyer upon sale of the home (after 30 years). As
shown earlier it is calculated from an assumed home price escalation
rate and an assumed fraction of the original market value that remains
and is recoverable at sale.
Home Price Escalation Rate (EH)
DOE intends to assume that home prices have a real escalation rate
of 0%, which is equivalent to a nominal escalation rate equal to the
general rate of inflation. While many homes do experience nonzero
increases in value over time, the factors that influence future home
prices (location, style, availability of land, etc.) are too varied and
situation-specific to warrant direct accounting in this methodology.
Resale Value Fraction (RR)
DOE intends to assume that 50% of the original value of code-
related energy features remains at the end of 30 years (after adjusting
for the Home Price Escalation Rate). This is roughly equivalent to
assuming straight-line depreciation of features with a 60-year service
life.
Fuel Prices
Fuel prices over the length of the period of analysis are needed to
determine the energy cost savings from improved energy efficiency. Both
current fuel prices and fuel price escalation rates are needed to
establish estimated fuel prices in future years.
DOE intends to use the most recently available national average
residential fuel prices from the DOE Energy Information Administration.
If fuel prices from the most recent year(s) are unusually high or low,
DOE may consider using a longer-term average of past fuel prices, such
as the average from the past 5 years. However, DOE notes that fuel
price escalation rates (see below) may be tied to specific recent-year
prices, so departures from the recent-year prices will be approached
with caution. For air conditioning, fuel prices from the summer would
be used, and for space heating winter prices would be used.
Fuel price escalation rates would be obtained from the most recent
Annual Energy Outlook to account for projected changes in energy
prices.
[[Page 56425]]
Table 10--Summary of Current Economic Parameter Estimates
------------------------------------------------------------------------
Parameter Symbol Current estimate
------------------------------------------------------------------------
Mortgage Interest Rate......... I.............. 5%.
Loan Term...................... ML............. 30 years.
Down Payment Rate.............. RD............. 10% of home price.
Points and Loan Fees........... RM............. 0.7% (nondeductible).
Discount Rate.................. D.............. 5% (equal to Mortgage
Interest Rate).
Period of Analysis............. L.............. 30 years.
Property Tax Rate.............. RP............. 0.9% of home price/
value.
Income Tax Rate................ RI............. 25% federal, state
values vary.
Home Price Escalation Rate..... EH............. Equal to Inflation
Rate.
Inflation Rate................. RINF........... 1.6% annual.
Fuel Prices and Escalation ............... Latest national
Rates. average prices based
on current DOE EIA
data and projections
\24\ (as of July
2011, 12 cents/kwh
for electricity,
$0.963/therm for
natural gas); price
escalation rates
taken from latest
Annual Energy Outlook
------------------------------------------------------------------------
Public Participation
A. Submission of Information
DOE will accept information in response to this notice under the
timeline provided in the DATES section above. Information submitted to
the Department by e-mail should be provided in WordPerfect, Microsoft
Word, PDF, or text file format. Those responding should avoid the use
of special characters or any form of encryption, and wherever possible,
comments should include the electronic signature of the author.
Comments submitted to the Department by mail or hand delivery/courier
should include one signed original paper copy. No telefacsimiles will
be accepted. Comments submitted in response to this notice will become
a matter of public records and will be made publicly available.
---------------------------------------------------------------------------
\24\ U.S. Department of Energy.2011a. Electric Power Monthly.
DOE/EIA-0226. Washington, DC. U.S. Department of Energy.2011b.
Natural Gas Monthly. DOE/EIA-0130. Washington, DC.
---------------------------------------------------------------------------
B. Issues on Which DOE Seeks Information
DOE is particularly interested in receiving information on the
following issues/topics:
General comments on DOE's use of cost effectiveness
calculations to evaluate code-change proposals and new code versions.
The appropriateness of DOE's energy simulation methodology
for evaluating the energy savings of code changes.
[cir] DOE's tool choice (EnergyPlus).
[cir] The default assumptions to be used in conducting energy
simulations.
[cir] The methodology for assessing climatic/regional variation in
code impacts.
[cir] Approaches to assessing energy savings of code changes that
expand the scope of the code, imply the need for additional measures
not directly required in the new code, or are otherwise difficult to
evaluate in a straightforward pre-post simulation analysis.
The appropriateness of DOE's approach to assessing the
first cost of new code requirements
[cir] Preferred cost data sources.
[cir] Arbitrating among differing costs from multiple data sources.
[cir] Assessing costs where a new or changed requirement can be met
by multiple construction approaches with varying cost implications.
[cir] Desirable features for DOE's planned public cost database.
[cir] Adjusting current costs for likely market transformation
impacts (economies of scale, learning curves, etc.).
The appropriateness and sufficiency of DOE's cost
effectiveness methodology
[cir] The appropriateness of the economic metrics to be calculated
(life-cycle cost, annual cash flows, simple payback period).
[cir] The appropriateness of life-cycle cost as the primary metric
for DOE's cost effectiveness determinations.
[cir] Whether DOE should consider constraints on payback period
and/or cash flow metrics in addition to its life-cycle cost requirement
in making decisions on cost effectiveness and, if so, on appropriate
threshold values for those metrics
[cir] The appropriateness of the economic perspective (that of a
home buyer with a 30-year loan) of DOE's life-cycle cost analysis and
of the economic parameters chosen to represent that perspective.
[cir] The appropriateness of the identified data sources for
economic parameters.
Input on how DOE's methodology and process should evolve
in response to changing economic and social conditions.
Issued in Washington, DC, on September 2, 2011.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Office of Technology
Development, Energy Efficiency and Renewable Energy.
[FR Doc. 2011-23236 Filed 9-12-11; 8:45 am]
BILLING CODE 6450-01-P