Federal Register, Volume 77 Issue 30 (Tuesday, February 14, 2012)

[Federal Register Volume 77, Number 30 (Tuesday, February 14, 2012)]
[Proposed Rules]
[Pages 8525-8574]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-2784]

[[Page 8525]]

Vol. 77

Tuesday,

No. 30

February 14, 2012

Part IV

Department of Energy

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10 CFR Parts 429 and 430

Energy Conservation Program: Energy Conservation Standards for Standby
Mode and Off Mode for Microwave Ovens; Proposed Rule

Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 /
Proposed Rules

[[Page 8526]]

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2011-BT-STD-0048]
RIN 1904-AC07

Energy Conservation Program: Energy Conservation Standards for
Standby Mode and Off Mode for Microwave Ovens

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.

ACTION: Supplemental Notice of Proposed Rulemaking (SNOPR) and public
meeting.

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SUMMARY: The Energy Policy and Conservation Act (EPCA) prescribes
energy conservation standards for various consumer products and
commercial and industrial equipment. Microwave ovens are covered
products under EPCA, although there are no existing microwave oven
standards. EPCA requires the U.S. Department of Energy (DOE) to
determine whether amended, more stringent, standards are
technologically feasible and economically justified, and would save a
significant amount of energy. Additionally, the Energy Independence and
Security Act of 2007 (EISA 2007) amended EPCA to require any final rule
adopted after July 1, 2010 establishing or revising energy conservation
standards for covered products, including microwave ovens, to address
standby mode and off mode energy use. On October 17, 2008, DOE issued a
Notice of Proposed Rulemaking (NOPR) in which DOE proposed amendments
to the energy conservation standards for several residential and
commercial products, including microwave ovens. In response to the
NOPR, DOE received comment expressing concern and encouraging the
Department to re-examine standby mode and off mode of microwave ovens
as a part of DOE's rulemaking analyses. Additionally, DOE received
comment alleging certain data problems affecting DOE's rulemaking
analyses. DOE's preliminary assessment suggested that the concerns
might be valid, thereby necessitating additional, supplemental
rulemaking analyses. In this notice, DOE responds to the comments
received on the NOPR and proposes amended energy conservation standards
for microwave oven standby mode and off mode. The notice also announces
a public meeting to receive comment on these proposed standards and
associated analyses and results.

DATES: DOE will hold a public meeting on March 14, 2012, from 9 a.m. to
4 p.m., in Washington, DC. The meeting will also be broadcast as a
Webinar. See section VIII, ``Public Participation,'' for Webinar
registration information, participant instructions, and information
about the capabilities available to Webinar participants.
DOE will accept comments, data, and information regarding this
SNOPR before and after the public meeting, but no later than April 16,
2012. See section VIII, ``Public Participation,'' for details.

ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW.,
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at
(202) 586-2945. Please note that foreign nationals visiting DOE
Headquarters are subject to advanced security screening procedures. Any
foreign national wishing to participate in the meeting should advise
DOE as soon as possible by contacting Ms. Brenda Edwards at (202) 586-
2945 to initiate the necessary procedures.
Any comments submitted must identify the SNOPR for Energy
Conservation Standards for Microwave Oven Standby Mode and Off Mode and
must provide docket number EERE-2011-BT-STD-0048 and/or regulatory
information number (RIN) 1904-AC07. Comments may be submitted using any
of the following methods.
1. Federal eRulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: MWO-2011-BT-STD-0048@ee.doe.gov Include the docket number
and/or RIN in the subject line of the message.
3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW.,
Washington, DC 20585-0121. If possible, please submit all items on a
CD. It is not necessary to include printed copies.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible,
please submit all items on a CD. It is not necessary to include printed
copies.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in this
proposed rule may be submitted to Office of Energy Efficiency and
Renewable Energy through the methods listed above and by email to
Christine_J._Kymn@omb.eop.gov.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section VIII of this
document (``Public Participation'').
Docket: The docket is available for review at regulations.gov,
including Federal Register notices, framework documents, public meeting
attendee lists and transcripts, comments, and other supporting
documents/materials. All documents in the docket are listed in the
regulations.gov index. However, not all documents listed in the index
may be publicly available, such as information that is exempt from
public disclosure.
A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;dct=FR+PR+N+O+SR;rpp=10;po=0;D=EERE-
2011-BT-STD-0048. This Web page will contain a link to the docket for
this notice on the regulations.gov site. The regulations.gov Web page
will contain simple instructions on how to access all documents,
including public comments, in the docket. See section VIII for
information on how to submit comments through regulations.gov.
For further information on how to submit or review public comments
or participate in the public meeting, contact Ms. Brenda Edwards at
(202) 586-2945 or email: Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:
Mr. Wes Anderson, U.S. Department of Energy, Energy Efficiency and
Renewable Energy, Building Technologies Program, EE-2J, 1000
Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202)
586-7335. Email: wes.anderson@ee.doe.gov.
Mr. Ari Altman, Esq., U.S. Department of Energy, Office of the
General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 287-6307. Email: Ari.Altman@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Microwave Ovens
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels

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C. Energy Savings
1. Determination of Energy Savings
2. Significance of Savings
D. Economic Justification
1. Specific Criteria
2. Rebuttable Presumption
IV. Methodology and Revisions to the Analyses Employed in the
October 2008 Proposed Rule
A. Product Classes
B. Technology Assessment
1. Cooking Sensors
2. Display Technologies
3. Power Supply and Control Boards
4. Power-Down Options
C. Engineering Analysis
1. Energy Use Metric
2. Standby Power Levels
3. Manufacturing Costs
D. Life-Cycle Cost and Payback Period Analysis
1. Product Costs
2. Annual Energy Consumption
3. Energy Prices
4. Repair and Maintenance Costs
5. Product Lifetime
6. Discount Rates
7. Effective Date of New Standards
8. Product Energy Efficiency in the Base Case
9. Inputs to Payback Period Analysis
10. Rebuttable-Presumption Payback Period
E. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. General
2. Shipments
3. Purchase Price, Operating Cost, and Income Impacts
4. Other Inputs
5. Effects of Standards on Energy Prices
F. Consumer Subgroup Analysis
G. Manufacturer Impact Analysis
H. Employment Impact Analysis
I. Utility Impact Analysis
J. Emissions Analysis
K. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
2. Valuation of Other Emissions Reductions
L. Discussion of Other Comments
1. Off Mode Power Consumption
2. Proposed Standards for Microwave Oven Standby Mode and Off
Mode Energy Use
3. Manufacturer Tax Credits Impact on Market Adoption of More
Efficient Products
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Consumers
2. Economic Impacts on Manufacturers
3. National Impact Analysis
4. Impact on Utility or Performance of Product
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
C. Proposed Standard
1. Benefits and Burdens of TSLs Considered for Microwave Ovens
2. Summary of Benefits and Costs (Annualized) of the Proposed
Standards
VI. Additional Technical Corrections to 10 CFR 430.32
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VIII. Public Participation
A. Attendance at Public Meeting
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
IX. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

The Energy Policy and Conservation Act (42 U.S.C. 6291 et seq.;
EPCA or the Act), as amended, provides that any amended energy
conservation standard DOE prescribes for certain consumer products,
such as microwave ovens, shall be designed to ``achieve the maximum
improvement in energy efficiency * * * which the Secretary determines
is technologically feasible and economically justified.'' (42 U.S.C.
6295(o)(2)(A)) The new or amended standard must ``result in significant
conservation of energy.'' (42 U.S.C. 6295(o)(3)(B)) In accordance with
these and other statutory provisions discussed in this notice, DOE
proposes amended energy conservation standards for microwave oven
standby mode and off mode. The proposed standards, which prescribe the
maximum allowable energy use when a product is in standby mode, are
shown in Table I.1.\1\ These proposed standards, if adopted, would
apply to all products listed in Table I.1 and manufactured in, or
imported into, the United States on or after April 1, 2014.
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\1\ DOE considered energy use in off mode for microwave ovens,
but is not proposing a maximum allowable off mode power because it
is unaware of any current microwave ovens that are capable of
operating in such a mode.

Table I.1--Proposed Energy Conservation Standards for Microwave Oven Standby Mode and Off Mode
[Compliance Starting in 2014]
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Product classes Proposed energy conservation standard
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Microwave-Only Ovens and Countertop Combination Maximum Standby Power = 1.0 watt.
Microwave Ovens.
Built-In and Over-the-Range Combination Maximum Standby Power = 2.2 watts.
Microwave Ovens.
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DOE's analyses indicate that the proposed standards would save a
significant amount of energy-an estimated 0.41 quads over 30 years
(2014 through 2043). According to the Energy Information
Administration's (EIA's) Annual Energy Outlook 2010 (AEO 2010), total
residential energy consumption is projected to be 21.3 quads in 2015.
The amount of energy saved per year is equivalent to 0.06 percent of
the projected household energy use.
The cumulative national net present value (NPV) of total consumer
costs and savings of the proposed standards for products shipped in
2014-2043, in 2010$, ranges from $1.82 billion (at a 7-percent discount
rate) to $3.59 billion (at a 3-percent discount rate).\2\ The NPV is
the estimated total value of future operating-cost savings during the
analysis period, minus the estimated increased product costs,
discounted to 2011. The industry net present value (INPV) is the sum of
the discounted cash flows to the industry from the base

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year through the end of the analysis period (2014 to 2043). Using a
real discount rate of 7.2 percent, DOE estimates that INPV for
manufacturers of all microwave ovens in the base case is $1.1 billion
in 2010$. If DOE adopts the proposed standard, it expects manufacturers
will lose 4.7 to 6.5 percent of their INPV, or approximately $52.9
million to $73.6 million. Using a 7-percent discount rate, the NPV of
consumer costs and savings from today's proposed standards would amount
to 25 to 34 times the total estimated industry losses. Using a 3-
percent discount rate, the NPV would amount to 49 to 68 times the total
estimated industry losses.
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\2\ DOE uses discount rates of 7 and 3 percent based on guidance
from the Office of Management and Budget (OMB Circular A-4, section
E, September 17, 2003). See section IV.E for further information.
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The projected economic impacts of the proposed standards on
individual consumers are positive. For example, for Microwave-Only and
Countertop Combination Microwave Ovens (Product Class 1), the estimated
average life-cycle cost (LCC) savings in 2010$ are $13, and all
consumers of these products would have positive economic impacts. For
Built-In and Over-the-Range Combination Microwave Ovens (Product Class
2), the estimated average LCC savings in 2010$ are $4, and most
consumers of this product would have positive economic impacts.
In addition, the proposed standards would have significant
environmental benefits. The energy savings projected from the proposed
standards would result in cumulative greenhouse gas emission reductions
of 31.48 million metric tons (Mt) \3\ of carbon dioxide
(CO2) in 2014-2043. During this period, the proposed
standards would result in emissions reductions of 25.6 tons of nitrogen
oxides (NOX), and have a negligible impact on emissions of
mercury (Hg).\4\ DOE estimates the present monetary value of the
CO2 emissions reduction is between $139 million and $2,118
million, expressed in 2010$. DOE also estimates the present monetary
value of the NOX emissions reduction, expressed in 2010$, is
between $3.82 million and $39.3 million at a 7-percent discount rate,
and between $7.44 million and $76.4 million at a 3-percent discount
rate.\5\
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\3\ Results for NOX and Hg are presented in short
tons. A metric ton is equivalent to 1.1 short tons.
\4\ DOE calculates emissions reductions relative to the most
recent version of the Annual Energy Outlook (AEO) Reference case
forecast. This forecast accounts for emissions reductions from in-
place regulations, including the Clean Air Interstate Rule (CAIR, 70
FR 25162 (May 12, 2005)), but not the Clean Air Mercury Rule (CAMR,
70 FR 28606 (May 18, 2005)). Subsequent regulations, including the
Cross-State Air Pollution rule issued on July 6, 2011, do not appear
in the forecast at this time.
\5\ DOE is aware of multiple agency efforts to determine the
appropriate range of values used in evaluating the potential
economic benefits of reduced Hg emissions. DOE has decided to await
further guidance regarding consistent valuation and reporting of Hg
emissions before it once again monetizes Hg in its rulemakings.
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The benefits and costs of today's proposed standards can also be
expressed in terms of annualized values over a 30-year period. The
annualized monetary values are the sum of (1) the annualized national
economic value of the benefits from operating products that meet the
proposed standards (consisting primarily of operating cost savings from
using less energy, minus increases in product purchase costs, which is
another way of representing consumer NPV), and (2) the monetary value
of the benefits of emission reductions, including CO2
emission reductions.\6\ The value of the CO2 reductions,
otherwise known as the Social Cost of Carbon (SCC), is calculated using
a range of values per metric ton of CO2 developed by a
recent interagency process. The monetary costs and benefits of
cumulative emissions reductions are reported in 2010$ to permit
comparisons with the other costs and benefits in the same dollar units.
The derivation of the SCC values is discussed in section IV.K.
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\6\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE
calculated a present value in the same year used for discounting the
NPV of total consumer costs and savings. To calculate the present
value, DOE used discount rates of 3 and 7 percent for all costs and
benefits except for the value of CO2 reductions. For the
latter, DOE used a range of discount rates, as shown in Table I.2.
From the present value, DOE then calculated the corresponding time-
series of fixed annual payments over a 30-year period starting in
the same year used for discounting the NPV of total consumer costs
and savings. The fixed annual payment is the annualized value.
Although DOE calculated annualized values, this does not imply that
the time-series of cost and benefits from which the annualized
values were determined would be a steady stream of payments.
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Although combining the values of operating savings and
CO2 reductions provides a useful perspective, two issues
should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions, whereas the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for analysis. The national operating
cost savings is measured for the lifetime of microwave ovens shipped in
2014-2043. The SCC values, on the other hand, reflect the present value
of all future climate-related impacts resulting from the emission of
one ton of CO2 in each year. These impacts continue well
beyond 2100.
Table I.2 shows the annualized values for today's proposed
standards, expressed in 2010$. The results under the primary estimate
are as follows. Using a 7-percent discount rate for benefits and costs
other than CO2 reductions, for which DOE used a 3-percent
discount rate along with the SCC series corresponding to a value of
$22.3/ton in 2010, the cost of the standards proposed in today's rule
is $20.3 million per year in increased product costs, while the
annualized benefits are $167 million in reduced product operating
costs, $35.4 million in CO2 reductions, and $1.74 million in
reduced NOX emissions. In this case, the net benefit amounts
to $184 million per year. Using a 3-percent discount rate for all
benefits and costs and the SCC series corresponding to a value of
$22.3/ton in 2010, the cost of the standards proposed in today's rule
is $21.6 million per year in increased product costs, while the
annualized benefits are $205 million in reduced operating costs, $35.4
million in CO2 reductions, and $2.14 million in reduced
NOX emissions. In this case, the net benefit amounts to $221
million per year.

Table I.2--Annualized Benefits and Costs of Proposed Standards for Microwave Oven Standby Mode and Off Mode for
Products Sold in 2014-2043
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Discount rate Primary Low benefits High benefits
estimate * estimate * estimate *
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.................... Monetized (million 2010$/year)
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Benefits
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Operating Cost Savings................. 7% 167 150 185

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3% 205 182 229
CO2 Reduction at $4.9/t **............. 5% 9.02 8.49 9.55
CO2 Reduction at $22.3/t **............ 3% 35.4 33.3 37.6
CO2 Reduction at $36.5/t **............ 2.5% 55.9 52.5 59.3
CO2 Reduction at $67.6/t **............ 3% 108.0 101.5 114.6
NOX Reduction at $2,537/t **........... 7% 1.74 1.65 1.82
3% 2.14 2.02 2.26
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Total[dagger]...................... 7% plus CO2 ran178 to 277 160 to 253 196 to 301
7% 204 185 224
3% 243 217 269
3% plus CO2 ran216 to 315 193 to 286 241 to 346
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Costs
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Incremental Product Costs.............. 7% 20.32 23.39 20.25
3% 21.59 25.48 21.48
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Total Net Benefits
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Total[dagger]...................... 7% plus CO2 ran157 to 256 137 to 230 176 to 281
7% 184 162 204
3% 221 192 247
3% plus CO2 ran195 to 294 167 to 260 219 to 324
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* The Primary, Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from
the AEO2010 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
addition, incremental product costs reflect a declining trend (default learning rate) for product prices in
the Primary Estimate, constant prices (no learning rate) for product prices in the Low Estimate, and a
declining trend (high learning rate) in the High Estimate. The derivation and application of learning rates
for product prices is explained in section IV.D.1.
** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 under several
scenarios. The values of $4.9, $22.3, and $36.5 per ton are the averages of SCC distributions calculated using
5-percent, 3-percent, and 2.5-percent discount rates, respectively. The value of $67.6 per ton represents the
95th percentile of the SCC distribution calculated using a 3-percent discount rate. The value for NOX (in
2010$) is the average of the low and high values used in DOE's analysis.
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the SCC value calculated at
a 3-percent discount rate, which is $22.3/ton in 2010 (in 2010$). In the rows labeled as ``7% plus CO2 range''
and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate,
and those values are added to the full range of CO2 values.

DOE has made an initial determination that the proposed standards
represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, while maintaining
product utility in the form of a continual clock display, and would
result in the significant conservation of energy. DOE further notes
that products achieving these standard levels are already commercially
available for one of the product classes covered by today's
proposal.\7\ Based on the analyses described above, DOE found the
benefits of the proposed standards to the Nation (energy savings,
positive NPV of consumer benefits, consumer LCC savings, and emission
reductions) outweigh the burdens (loss of INPV for manufacturers).
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\7\ Products in the Microwave-Only Ovens and Countertop
Combination Microwave Ovens product class that meet the proposed
standards are currently commercially available. The Built-In and
Over-the-Range Combination Microwave Ovens class does not currently
comprise products that meet the proposed standards, primarily
because of the larger components necessary for the convection system
and the more complex displays. However, DOE believes it is
technologically feasible for all microwave ovens to meet the
proposed standards.
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Based on consideration of the public comments DOE receives in
response to this supplemental notice and related information collected
and analyzed during the course of this rulemaking effort, DOE may adopt
energy use levels presented in this notice that are either higher or
lower than the proposed standards, or some combination of level(s) that
incorporate the proposed standards in part. In particular, DOE is
proposing TSL 3 for built-in products as the level which it has
tentatively concluded meet the applicable statutory criteria (i.e., the
highest level that is technologically feasible, economically justified,
and would result in significant conservation of energy). Based upon
public comments and any accompanying data submissions, DOE would
consider finalizing other TSLs (as presented in this NOPR or at some
level in between), including the option of not finalizing the standard
for built-ins proposed in this rule. Accordingly, DOE is presenting a
variety of issues throughout today's notice upon which it is seeking
comment, which will bear upon its consideration of standards for built-
ins in the final rule.

II. Introduction

The following section briefly discusses the statutory authority
underlying today's proposal as well as some of the relevant historical
background related to the establishment of energy conservation
standards for microwave oven standby mode and off mode.

A. Authority

Title III of EPCA sets forth various provisions designed to improve
energy efficiency. Part B of Title III (42 U.S.C. 6291-6309) provides
for the Energy Conservation Program for Consumer Products Other Than
Automobiles.\8\ EPCA covers consumer products and certain commercial
equipment (referred to collectively hereafter as ``covered products''),
including the microwave

[[Page 8530]]

ovens that are the subject of this rulemaking. (42 U.S.C. 6292(a)(10))
\9\
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\8\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\9\ DOE notes that under 42 U.S.C. 6295(m), the agency must
periodically review its already established energy conservation
standards for a covered product. Under this requirement, the next
review that DOE would need to conduct would occur no later than 6
years from the issuance of a final rule establishing or amending a
standard for a covered product.
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Under the Act, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing, (2) labeling,
(3) the establishment of Federal energy conservation standards, and (4)
certification and enforcement procedures. The Federal Trade Commission
(FTC) is primarily responsible for labeling, and DOE implements the
rest of the program. Section 323 of the Act authorizes DOE, subject to
certain criteria and conditions, to develop test procedures to measure
the energy efficiency, energy use, or estimated annual operating cost
of each covered product. (42 U.S.C. 6293) The National Appliance Energy
Conservation Act of 1987 (NAECA), Public Law 100-12, amended EPCA to
establish prescriptive standards for cooking products, specifically gas
cooking products. No standards were established for microwave ovens.
Manufacturers of covered products must use the prescribed DOE test
procedure as the basis for certifying to DOE that their products comply
with the applicable energy conservation standards adopted under EPCA
(42 U.S.C. 6295(s)) and when making representations to the public
regarding the energy use or efficiency of those products. (42 U.S.C.
6293(c)) Similarly, DOE must use these test procedures to determine
whether the products comply with standards adopted under EPCA. (42
U.S.C. 6295(s)) The test procedure for microwave ovens currently
appears at title 10, Code of Federal Regulations (CFR), part 430,
subpart B, appendix I.
EPCA provides criteria for prescribing amended standards for
covered products. As indicated above, any amended standard for a
covered product 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)) Furthermore, EPCA precludes DOE
from adopting any standard for certain products, including microwave
ovens, if no test procedure has been established for the product. (42
U.S.C. 6295(o)(3)(A)) Moreover, DOE may not prescribe a standard: (1)
If it would not result in the significant conservation of energy, or
(2) if DOE determines by rule that the proposed standard is not
technologically feasible or economically justified. (42 U.S.C.
6295(o)(3)(B)) The Act also provides that, in deciding whether a
proposed standard is economically justified, DOE must determine whether
the benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must do so after receiving comments on the
proposed standard, and 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 the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the imposition of the
standard;
3. The total projected amount of energy, or as applicable, water,
savings likely to result directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the covered
products likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
6. The need for national energy and water conservation; and
7. Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if the Secretary finds that interested persons have
established by a preponderance of the evidence that the standard is
likely to result in the unavailability in the United States of any
covered 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))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).
Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when
promulgating a standard for a type or class of covered product that has
two or more subcategories. DOE must specify a different standard level
than that which applies generally to such type or class of products for
any group of covered 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 within that type or class. Id. In determining
whether a performance-related feature justifies 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. Id. Any rule prescribing such a standard must include an
explanation of the basis on which such higher or lower level was
established. (42 U.S.C. 6295(q)(2))
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions of section 327(d)
of the Act. (42 U.S.C. 6297(d))
Finally, section 310(3) of the Energy Independence and Security Act
of 2007 (EISA 2007; Pub. L. 110-140) amended EPCA to require that
energy conservation standards address standby mode and off mode energy
use. (42 U.S.C. 6295(gg)) Specifically, when DOE adopts a standard for
a covered product after July 1, 2010, it must, pursuant to criteria for
adoption of standards at 42 U.S.C. 6295(o), incorporate standby mode
and off mode energy use into the standard, if feasible, or adopt a
separate standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)) These provisions in EISA 2007 do not preclude DOE from
considering standards for standby mode and off mode energy use in a
rulemaking that does not consider standards for active

[[Page 8531]]

mode energy use. In this rulemaking, DOE intends to incorporate standby
mode and off mode energy use into any standard it adopts in the final
rule.
It is pursuant to the authority set forth above that DOE is
conducting the present SNOPR rulemaking for standby mode and off mode
electricity consumption of microwave ovens.
DOE has also reviewed this regulation pursuant to Executive Order
13563. (76 FR 3281, Jan. 21, 2011). Executive Order 13563 is
supplemental to and explicitly reaffirms the principles, structures,
and definitions governing regulatory review established in Executive
Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing
that some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative
regulations; (3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent
feasible, specify performance objectives, rather than specifying the
behavior or manner of compliance that regulated entities must adopt;
and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
``to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible.'' In its
guidance, the Office of Information and Regulatory Affairs (OIRA) has
emphasized that such techniques may include ``identifying changing
future compliance costs that might result from technological innovation
or anticipated behavioral changes.'' For the reasons stated in the
preamble, DOE believes that today's proposed rule is consistent with
these principles, including the requirement that, to the extent
permitted by law, benefits justify costs and that net benefits are
maximized. Consistent with Executive Order 13563, and the range of
impacts analyzed in this rulemaking, the energy efficiency standards
proposed herein by DOE achieve maximum net benefits.

B. Background

1. Current Standards
Section 310 of EISA 2007 amends section 325 of EPCA to require DOE
to regulate standby mode and off mode energy use for all covered
products, including microwave ovens, as part of energy conservation
standards for which a final rule is adopted after July 10, 2010. (42
U.S.C. 6295(gg)(3)(A))
Based on its ongoing analyses and comments from interested parties,
DOE decided not to amend energy conservation standards for microwave
oven energy factor (microwave oven operation in active mode), but
instead develop a separate energy use metric for standby mode and off
mode. 74 FR 16040 (Apr. 8, 2009).
2. History of Standards Rulemaking for Microwave Ovens
On March 15, 2006, DOE published on its Web site a document titled,
``Rulemaking Framework for Commercial Clothes Washers and Residential
Dishwashers, Dehumidifiers, and Cooking Products'' (Framework
Document).\10\ 71 FR 15059. The Framework Document described the
procedural and analytical approaches that DOE anticipated using to
evaluate energy conservation standards for these products, and
identified various issues to be resolved in conducting the rulemaking.
On December 4, 2006, DOE posted on its Web site two spreadsheet tools
for this rulemaking.\11\ The first tool calculates life-cycle cost
(LCC) and payback periods (PBPs). The second tool--the national impact
analysis (NIA) spreadsheet--calculates the impacts on shipments and the
national energy savings (NES) and NPV at various candidate standard
levels. DOE subsequently published the advance notice of proposed
rulemaking (ANOPR) for this rulemaking (72 FR 64432 (Nov. 15, 2007),
the November 2007 ANOPR) and on December 13, 2007, held a public
meeting to present and seek comment on the analytical methodology and
results in the ANOPR (the December 2007 Public Meeting).
---------------------------------------------------------------------------

\10\ This document is available on the DOE Web site at:
www.eere.energy.gov/buildings/appliance_standards/residential/dehumidifiers.html. (Last accessed March 18, 2011.)
\11\ These spreadsheets are available on the DOE Web site at:
http://www1.eere.energy.gov/buildings/appliance_standards/residential_products.html. (Last accessed March 18, 2011.)
---------------------------------------------------------------------------

At the December 2007 Public Meeting, DOE invited comment in
particular on the following issues concerning microwave ovens: (1)
Incorporation of the International Electrotechnical Commission (IEC)
test standard IEC Standard 62301 \12\ into DOE's microwave oven test
procedure to measure standby mode and off mode power; (2) IEC Standard
62301 test conditions; and (3) a requirement that if the measured
standby mode power varies as a function of the time displayed, the
standby mode power test would run for 12 hours, with an initial clock
setting of 12:00.
---------------------------------------------------------------------------

\12\ IEC standards are available for purchase at: http://www.iec.ch/.
---------------------------------------------------------------------------

Interested parties' comments presented during the December 2007
Public Meeting and submitted in response to the November 2007 ANOPR
addressed the standby mode and off mode energy use of microwave ovens
and the ability to combine that energy use into a single metric with
cooking energy use. Those concerns lead DOE to thoroughly investigate
standby mode, off mode, and active mode power consumption of microwave
ovens.
On October 17, 2008, DOE published a NOPR (the October 2008 NOPR)
for cooking products and commercial clothes washers in the Federal
Register proposing amended energy conservation standards. 73 FR 62034.
In the October 2008 NOPR, DOE tentatively concluded that a standard for
microwave oven standby mode and off mode energy use would be
technologically feasible and economically justified. Id. at 62120.
Therefore, concurrent with the standards NOPR, DOE published in the
Federal Register a test procedure NOPR for microwave ovens to
incorporate a measurement of standby mode and off mode power and to
consider inclusion of such power as part of the energy conservation
standards rulemaking. 73 FR 62134 (Oct. 17, 2008).
In conjunction with the October 2008 NOPR, DOE posted on its Web
site the associated technical support document (TSD). The TSD included
the results of DOE's analyses, including: (1) The market and technology
assessment, (2) screening analysis, (3) engineering analysis, (4)
energy and water use determination, (5) markups analysis to determine
product price, (6) LCC and PBP analyses, (7) shipments analysis, (8)
NES and NIA, and (9) manufacturer impact analysis (MIA). The
engineering analysis spreadsheet, the LCC spreadsheets, the national
and regional impact analysis spreadsheets, and the MIA spreadsheet were
all made available at www.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.

[[Page 8532]]

In the October 2008 NOPR, DOE concluded based on its additional
investigations 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 * * *.'' 73 FR 62034, 62043 (Oct. 17, 2008). The
separate prescriptive standby mode and off mode energy conservation
standards proposed in the October 2008 NOPR for microwave ovens were as
shown in Table II.1.

Table II.1--October 2008 NOPR Proposed Energy Conservation Standards for
Microwave Oven Standby Mode and Off Mode
------------------------------------------------------------------------
Product class Proposed energy conservation standard
------------------------------------------------------------------------
Microwave Ovens............. Maximum Standby Power = 1.0 watt
------------------------------------------------------------------------

In the October 2008 NOPR, DOE described and sought further comment
on the analytical framework, models, and tools (e.g., LCC and NIA
spreadsheets) it was using to analyze the impacts of energy
conservation standards for this product. DOE held a public meeting in
Washington, DC, on November 13, 2008 (the November 2008 Public
Meeting), to present the methodologies and results for the October 2008
NOPR analyses.
Multiple interested parties commented in response to the October
2008 NOPR that insufficient data and information were available to
complete this rulemaking, and requested that it be postponed to allow
DOE to gather such inputs on which to base its analysis. Whirlpool
Corporation (Whirlpool) commented that DOE should work with industry to
gather comprehensive data. Whirlpool stated that DOE and industry must
ensure the product is useful to the consumer at the standards adopted,
which could mean delaying standards until the next round of rulemaking.
(Whirlpool, No. 50 at p. 2; Whirlpool, Public Meeting Transcript, No.
40.5 at p. 63) \13\ GE Consumer & Industrial (GE) stated that DOE's
approach could have important implications for how standby power is
approached for other covered products, and thus it is essential that
DOE take the time to address these issues. GE commented that DOE should
postpone the microwave oven standby mode and off mode energy
conservation standards rulemaking to allow standby power issues for
covered products to be addressed either through negotiation or through
a rulemaking that considers how the definition of standby power would
affect all appliances, not just microwave ovens. GE further commented
that if the microwave oven standby mode and off mode energy
conservation standards rulemaking was not postponed, DOE should issue a
``no standard'' standard for microwave oven standby power. (GE, No. 48,
at pp. 2, 4)
---------------------------------------------------------------------------

\13\ A notation in the form ``Whirlpool, No. 50 at p. 2''
identifies a written comment that DOE has received and has included
in the docket of the standards rulemaking for microwave ovens
(Docket No. EE-2006-STD-0127). This particular notation refers to a
comment (1) submitted by Whirlpool, (2) recorded in document number
50 in the docket of this rulemaking, and (3) which appears on page 2
of document number 50. A notation in the form ``Whirlpool, Public
Meeting Transcript, No. 40.5 at p. 63'' identifies an oral comment
that DOE received during the November 13, 2008 NOPR public meeting
and which was recorded in the public meeting transcript in the
docket for this rulemaking (Docket No. EE-2006-STD-0127), available
on www.regulations.gov. 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 63 of document number 40.5.
---------------------------------------------------------------------------

DOE agreed with these commenters that additional information would
improve its analysis and, in April 2009, it concluded that it should
defer a decision regarding amended energy conservation standards for
standby mode and off mode energy use for microwave ovens pending
further rulemaking. FR 16040, 16042 (Apr. 8, 2009). In the interim, DOE
proceeded with consideration of energy conservation standards for
microwave oven active mode energy use based on its proposals in the
October 2008 NOPR, and its analysis determined that no new standards
for microwave oven active mode (as to cooking efficiency) were
technologically feasible and economically justified. Therefore, in a
final rule published on April 8, 2009, DOE maintained the ``no
standard'' standard for microwave oven active mode energy use. Id. at
16087. The final rule is available on DOE's Web site at:
www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/74fr16040.pdf.
After continuing its analysis of microwave oven standby mode and
off mode through additional testing, research, and consideration of an
updated version of IEC Standard 62301, DOE developed this SNOPR to
enable interested parties to comment on the revised standby power
levels proposed for microwave oven standby mode and off mode energy
use.
The effective date of any new energy conservation standards for
this product would be 3 years after the final rule is published in the
Federal Register.

III. General Discussion

A. Test Procedures

The test procedures for cooking products including microwave ovens
initially appeared at 10 CFR part 430, subpart B, appendix I. Those
test procedures were part of a May 10, 1978 final rule that first
established test procedures for conventional ranges, cooktops, and
ovens (including microwave ovens). 43 FR 20108. DOE later revised its
test procedures for cooking products to measure their efficiency and
energy use more accurately, publishing a final rule on October 3, 1997.
62 FR 51976. The 1997 rule incorporated parts of IEC Standard 705-1998
and Amendment 2-1993, ``Methods for Measuring the Performance of
Microwave Ovens for Households and Similar Purposes.'' It measured
microwave oven cooking efficiency, but did not address energy use in
the standby mode or off mode.
Section 310 of EISA 2007 amended EPCA to require DOE to amend the
test procedures for covered products to address energy consumption of
standby mode and off mode. If technically infeasible, DOE must
prescribe a separate standby mode and off mode energy use test
procedure. (42 U.S.C. 6295(gg)(2)(A))
As discussed previously, DOE published a notice of proposed
rulemaking in October 2008 to amend the microwave oven test procedure
to provide for measuring standby mode and off mode power consumption,
(73 FR 62134 (Oct. 17, 2008)) and held a public meeting on the proposed
rulemaking on November 14, 2008. DOE received comments from interested
parties both in written responses to the October 2008 NOPR and at the
November 2008 Public Meeting.

[[Page 8533]]

After considering stakeholder comments and additional information,
DOE issued an SNOPR for the test procedure for measuring microwave oven
standby mode and off mode power consumption. 75 FR 42612 (July 22,
2010). In that SNOPR, DOE proposed adopting definitions of modes based
on relevant provisions from IEC Standard 62301 Second Edition,
Committee Draft for Vote (IEC Standard 62301 CDV), as well as language
to clarify application of those provisions for measuring microwave oven
standby mode and off mode power consumption. Id. Also on July 22, 2010,
DOE issued a repeal final rule (the July 2010 TP Final Rule)
eliminating the active mode cooking efficiency provisions in the
microwave oven test procedure after it determined that those provisions
did not produce accurate and repeatable results. 75 FR 42579. DOE held
a public meeting on September 16, 2010, and accepted comments, data,
and information regarding the test procedure SNOPR no later than
October 4, 2010. DOE also invited inputs on microwave active mode test
procedures for a potential new test procedure rulemaking. After
consideration of these comments, an interim final rule for a microwave
oven test procedure addressing standby mode and off mode power was
published in the Federal Register on March 9, 2011 (the March 2011 TP
Interim Final Rule). 76 FR 12825. DOE provided a 180-day comment period
on the March 2011 TP Interim Final Rule, during which it received
several comments on potential improvements to the microwave oven test
procedure recently adopted. DOE is currently considering these
comments, but does not believe that any of the suggested amendments
would impact the analysis in today's notice.

B. Technological Feasibility

1. General
DOE considers a design option to be technologically feasible if it
is in use by the associated industry or if research has progressed to
development of a working prototype. In each standards rulemaking,
therefore, DOE conducts a screening analysis, based on information it
has gathered regarding existing technology options and prototype
designs. In consultation with manufacturers, design engineers, and
other stakeholders, DOE develops a list of design options for
consideration in the rulemaking. After DOE determines that particular
design options are technologically feasible, the first of the screening
criteria, it evaluates each option in light of the following three
additional criteria: (a) Practicability to manufacture, install, and
service; (b) adverse impacts on product utility or availability; and
(c) adverse impacts on health or safety. 10 CFR part 430, subpart C,
appendix A, section 4(a)(3) and (4). All technologically feasible
design options that pass the three additional screening criteria are
candidates for further assessment in the engineering and subsequent
analyses in the NOPR stage. DOE may amend the list of retained design
options in SNOPR analyses based on comments received on the NOPR and on
further research.
DOE published a list of evaluated microwave oven technologies in
the November 2007 ANOPR. 72 FR 64432 (Nov. 15, 2007). DOE identified
lower-power display technologies, improved power supplies and
controllers, and alternative cooking sensor technologies as options to
reduce standby power. DOE conducted this research when it became aware
of the likelihood of EISA 2007 being signed, which DOE understood was
to contain provisions pertaining to standby mode and off mode energy
use. Therefore, DOE presented details of each design option to
stakeholders at the December 2007 Public Meeting even though the
results were not available in time for publication in the November 2007
ANOPR. DOE believes all of these options are technologically feasible,
and in the ANOPR invited comment on technology options that reduce
standby power in microwave ovens. 72 FR 64432, 64513 (Nov. 15, 2007).
For more details of these technology options and stakeholder comments,
see section IV.B of this notice.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt, or to decline to adopt, an amended or
new standard for a type (or class) of product such as microwave ovens,
it must ``determine the maximum improvement in energy efficiency or
maximum reduction in energy use that is technologically feasible'' for
such a product. (42 U.S.C. 6295(p)(1)) Using the design parameters that
lead to creation of the highest available product efficiencies, in the
engineering analysis DOE determined the maximum technologically
feasible (``max-tech'') standby power levels \14\ for microwave ovens,
as shown in Table III.1. (See chapter 3 in the SNOPR TSD.) The max-tech
microwave oven standby power level corresponds to a unit equipped with
a default automatic power-down function that shuts off certain power-
consuming components after a specified period of user inactivity. The
max-tech microwave oven standby power level was determined in the
October 2008 NOPR to be 0.02 watts (W). 73 FR 62052 (Oct. 17, 2008).
Based upon additional analyses for today's SNOPR, DOE is proposing that
this max-tech level applies to the product class of microwave-only
ovens and countertop combination microwave ovens. For built-in and
over-the-range combination microwave ovens, DOE proposes, based on its
analysis, a max-tech standby power level of 0.04 W. For more details of
the max-tech levels and stakeholder comments, see section IV.C of this
notice.
---------------------------------------------------------------------------

\14\ As noted previously, DOE is unaware of any microwave ovens
currently available that can operate in off mode. Therefore,
efficiency levels for the purposes of evaluating standby mode and
off mode energy use in microwave ovens are defined on the basis of
standby power only.

Table III.1--Proposed Max-Tech Microwave Oven Standby Power Levels
------------------------------------------------------------------------
Product class Max-Tech standby power level
------------------------------------------------------------------------
Microwave-Only Ovens and Countertop 0.02 watts
Combination Microwave Ovens.
Built-In and Over-the-Range Combination 0.04 watts
Microwave Ovens.
------------------------------------------------------------------------

C. Energy Savings

1. Determination of Energy Savings
DOE used its NIA spreadsheet tool to estimate energy savings from
amended standards for standby mode and off mode energy use for
microwave ovens. (Section IV.E of today's supplemental notice and
chapter 10 of the SNOPR TSD describe the NIA spreadsheet model.) DOE
forecasted energy savings throughout the period of analysis (beginning
in 2014, the year that amended standards would go into effect, and
ending in 2043) for each TSL,

[[Page 8534]]

relative to the base case, which represents the forecast of energy
consumption in the absence of amended energy conservation standards.
DOE quantified the energy savings attributable to amended energy
conservation standards as the difference in energy consumption between
each standards case and the base case. The base case incorporates
market demand for more efficient products.
The NIA spreadsheet tool calculates the electricity savings in
``site energy'' expressed in kilowatt-hours (kWh). Site energy is the
energy consumed directly on location by an individual product. DOE
reports national energy savings on an annual basis in terms of the
aggregated source energy savings, which is the savings in energy used
to generate and transmit the energy consumed at the site. To convert
site energy to source energy, DOE derived conversion factors, which
change with time, from the AEO 2010. (See SNOPR TSD chapter 10 for
further details.)
2. Significance of Savings
EPCA, as amended, prohibits DOE from adopting a standard for a
product if that standard would not result in ``significant'' energy
savings. (42 U.S.C. 6295(o)(3)(B)) Although EPCA does not define the
term ``significant,'' the U.S. Court of Appeals for the District of
Columbia Circuit, in Natural Resources Defense Council v. Herrington,
768 F.2d 1355, 1373 (DC Cir. 1985), indicated that Congress intended
``significant'' energy savings in this context to be savings that were
not ``genuinely trivial.'' The energy savings for energy conservation
standards at the TSL considered in this rulemaking are nontrivial, and,
therefore, DOE considers them ``significant'' within the meaning of 42
U.S.C. 6295(o)(3)(B).

D. Economic Justification

1. Specific Criteria
As noted earlier, EPCA provides seven factors to be evaluated in
determining whether an energy conservation standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)) The following sections describe
how DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impacts on Manufacturers and Consumers
In determining the impacts of an amended standard on manufacturers,
DOE first determines the quantitative impacts using an annual cash-flow
approach. This step includes both a short-term assessment--based on the
cost and capital requirements during the period between the issuance of
a regulation and when entities must comply with the regulation--and a
long-term assessment over a 30-year analysis period. The industry-wide
impacts analyzed include INPV (which values the industry on the basis
of expected future cash flows), cash flows by year, changes in revenue
and income, and other measures of impact, as appropriate. Second, DOE
analyzes and reports the impacts on different types of manufacturers,
paying particular attention to impacts on small manufacturers. Third,
DOE considers the impact of standards on domestic manufacturer
employment and manufacturing capacity, as well as the potential for
standards to result in plant closures and loss of capital investment.
Finally, DOE takes into account cumulative impacts of different DOE
regulations and other regulatory requirements on manufacturers. For
more details on the MIA, see section IV.G and chapter 12 of the SNOPR
TSD.
For consumers, measures of economic impact include the changes in
life-cycle cost (LCC) and payback period for the product at each TSL.
Under EPCA, the LCC is one of seven factors to be considered in
determining economic justification. (42 U.S.C. 6295(o)(2)(B)(i)(II)) It
is discussed in detail in the following section.
b. Life-Cycle Cost
The LCC is the sum of the purchase price of product (including any
installation) and the operating expense (including energy and
maintenance expenditures), discounted over the lifetime of the product.
In this rulemaking, DOE calculated both LCC and LCC savings for
various power consumption levels in standby and off modes. DOE
established the variability and uncertainty in energy use by defining
the uncertainty and variability in the standby and off modes (hours per
day) of the product. The variability in energy prices was characterized
by use of regional energy prices. To account for uncertainty and
variability in other inputs, such as product lifetime and discount
rate, DOE used a distribution of values with probabilities attached to
each value. For each consumer with a microwave oven, DOE sampled the
values of those inputs from the probability distributions.
DOE's analysis produced a range of LCCs. In addition to providing
the average LCC savings or average payback for a standard, this
approach enables DOE to identify the percentage of consumers achieving
LCC savings or attaining certain payback values due to an energy
conservation standard. DOE presents the LCC savings as a distribution,
with a mean value and a range. In the analysis prepared for the October
2008 NOPR, DOE assumed that consumers will purchase the product in
2012. For today's SNOPR, that assumption has been changed to 2014, as
this is the expected first year of compliance. See section IV.D for
more details on the LCC and PBP analysis.
c. Energy Savings
Significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard. Additionally,
EPCA requires DOE, in determining the economic justification of a
proposed standard, to consider the total energy savings that are
projected to result directly from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(III)) As noted in the October 2008 NOPR, DOE used the
NIA spreadsheet to estimate total energy savings attributable to the
considered standard levels. 73 FR 62034, 62046 (Oct. 17, 2008). See
section IV.E and chapter 10 of the SNOPR TSD for more details on this
analysis.
d. Lessening of Utility or Performance of Product
In preparing the NOPR, DOE considered whether the evaluated design
options likely would lessen the utility or performance of the standby
mode and off mode of microwave ovens. (42 U.S.C. 6295(o)(2)(B)(i)(IV))
In the October 2008 NOPR, DOE determined that none of the considered
TSLs would reduce the utility or performance of microwave ovens; all
consumer utility features that affect standby power, such as a clock
display and a cooking sensor, would be retained. 73 FR 62034, 62047
(Oct. 17, 2008).
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition likely to
result from standards. It directs the Attorney General of the United
States (Attorney General) to determine the impact, if any, of any
lessening of competition likely to result from a proposed standard and
to transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)).
DOE received the Attorney General's determination, dated December 16,
2008, on standards proposed in the October 2008 NOPR. The Attorney
General's determination for October 2008 NOPR did not mention microwave
oven standards. (DOJ, No. 53 at pp. 1-

[[Page 8535]]

2). DOE has transmitted a copy of today's proposed rule to the Attorney
General and has requested that the Department of Justice provide its
determination on this issue.
f. Need of the Nation To Conserve Energy
The non-monetary benefits of proposed standards are likely to be
reflected in improvements to the reliability of the Nation's energy
system--namely, reductions in the demand for energy will result in
reduced costs for maintaining reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to estimate how
standards may impact the Nation's needed power generation capacity.
This analysis captures the effects of efficiency improvements on
electricity consumption by the product that is the subject of this
rulemaking.
Proposed standards also likely result in improvements to the
environment. In quantifying those improvements, DOE has calculated
emission reductions based on the estimated level of power generation
displaced by each TSL for microwave oven standby power. DOE reports the
environmental effects from the proposed standards in an environmental
assessment in chapter 15 of the SNOPR TSD. (42. U.S.C.
6295(o)(2)(B)(i)(VI) and 6316(a)) See section IV.J for more details on
this analysis.
g. Other Factors
The Secretary, in determining whether a standard is economically
justified, may consider other factors that the Secretary deems to be
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In considering amended
standards for today's supplemental notice of proposed rulemaking, the
Secretary found no relevant factors other than those identified
elsewhere in today's SNOPR.
2. Rebuttable Presumption
As set forth under 42 U.S.C. 6295(o)(2)(B)(iii), there is a
rebuttable presumption that an energy conservation standard is
economically justified if the increased installed cost for a product
that meets the standard is less than three times the value of the
first-year energy savings resulting from the standard. DOE's LCC and
PBP analyses generate values that calculate the payback period for
consumers of products that meet potential energy conservation
standards. Included is the 3-year payback period contemplated under the
rebuttable presumption test. DOE routinely conducts a full economic
analysis that considers the full range of impacts, however, including
those to the consumer, manufacturer, Nation, and environment, as
required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis
serve as the basis for DOE to definitively evaluate the economic
justification for a potential standard level (thereby supporting or
rebutting the results of any preliminary determination of economic
justification). Section V.B.1.c of today's supplemental notice and
chapter 8 of the SNOPR TSD address the calculation of rebuttable-
presumption payback.

IV. Methodology and Revisions to the Analyses Employed in the October
2008 Proposed Rule

In weighing the benefits and burdens of amended standards for
microwave oven standby mode and off mode energy use, DOE used economic
models to estimate the impacts of each TSL. The life-cycle cost (LCC)
spreadsheet calculates the LCC impacts and payback periods for
potential amended energy conservation standards. DOE used the
engineering spreadsheet to develop the relationship between cost and
efficiency and to calculate the simple payback period for purposes of
addressing the rebuttable presumption that a standard with a payback
period of less than 3 years is economically justified. The NIA
spreadsheet provides shipments forecasts and then calculates NES and
NPV impacts of potential amended energy conservation standards. DOE
also assessed manufacturer impacts, largely through use of the
Government Regulatory Impact Model (GRIM).
Additionally, DOE estimated the impacts of potential amended energy
conservation standards on utilities and the environment. DOE used a
version of the EIA's National Energy Modeling System (NEMS) for the
utility and environmental analyses. The EIA has developed the NEMS
model, which simulates the energy economy of the United States, over
several years primarily for the purpose of preparing the AEO. The NEMS
produces forecasts for the United States energy situation that are
available in the public domain. The version of NEMS used for appliance
standards analysis is called NEMS-BT.\15\ The NEMS-BT offers a
sophisticated picture of the effect of standards, because it accounts
for the interactions among the various energy supply and demand sectors
and the economy as a whole.
---------------------------------------------------------------------------

\15\ The EIA approves the use of the name NEMS to describe only
an AEO version of the model without any modification to code or
data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the model used here has been named
NEMS-BT. (``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). (Last
accessed March 18, 2011.)
---------------------------------------------------------------------------

A. 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); 6316(a))
Different energy conservation standards may apply to different product
classes. Id.
At the time of the October 2008 NOPR, DOE's regulations codified at
10 CFR 430.2 defined a microwave oven as a class of kitchen ranges and
ovens which is a household cooking appliance consisting of a
compartment designed to cook or heat food by means of microwave energy.
In the October 2008 NOPR, DOE proposed a single product class for
microwave ovens that would encompass microwave ovens with and without
browning (thermal) elements, but would not include microwave ovens that
incorporate convection systems. 73 FR 62034, 62048 (Oct. 17, 2008).
Whirlpool commented that DOE's proposed definition of covered
products creates a new product definition without proper engagement of
interested parties by covering microwave ovens with or without thermal
elements designed for surface browning of food. Whirlpool also
commented that DOE stated combination microwave ovens, which were
previously undefined, are not products covered by the microwave oven
test procedure or standard. Whirlpool stated that DOE's proposed
definition of covered products is inconsistent with the regulatory
definition of a microwave oven provided in 10 CFR part 430 because
there is no mention of thermal elements designed for browning food, and
furthermore is not clear and should be clarified. (Whirlpool, No. 50 at
pp. 1-2; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 29) GE
also commented that DOE should clarify what products are considered
covered products. GE stated that DOE should review data for different
product types, and exclude those for which there is insufficient data
to support DOE's analysis. (GE, No. 48 at pp. 2-3)
As part of its microwave oven test procedure rulemaking, DOE
reassessed what products would be considered microwave ovens under the
regulatory definition, and whether multiple product classes would be
appropriate. As discussed in the March 2011 TP

[[Page 8536]]

Interim Final Rule, DOE amended the definition of microwave oven in 10
CFR 430.2 to clarify that it includes microwave ovens with or without
thermal elements designed for surface browning of food and combination
ovens. DOE also discussed its determination that all ovens equipped
with microwave capability would be considered a covered product,
regardless of which cooking mode (i.e., radiant heating or microwave
energy) is primary. Based on its preliminary analysis, DOE concluded
that the general standby mode and off mode operation for microwave
ovens that incorporate other means of cooking food does not differ from
that of microwave-only units. As a result, DOE amended the microwave
oven test procedure to require that the same standby mode and off mode
testing methods be used for all microwave ovens. 76 FR 12825, 12828-30
(Mar. 9, 2011).
In order to determine whether specific types of microwave ovens
should be separated into different product classes, DOE investigated
whether there are any performance related features that would justify
the establishment of a separate energy conservation standard. As
discussed in the October 2008 NOPR, DOE tested a sample of 32
countertop microwave-only units and measured standby mode power ranging
from 1.2 W to 5.8 W. 73 FR 62034, 62042 (Oct. 17, 2008). None of these
units was capable of operation in off mode, nor, as noted previously,
is DOE aware of any other current microwave ovens capable of such
operation. As discussed below in section IV.B, DOE noted that standby
power consumption for microwave-only units largely depended on the
presence of a cooking sensor, the display technology, the power supply
and control board, and implementation of a power-down feature. With
regards to display technologies, DOE noted that microwave-only units
incorporated Light Emitting Diode (LED) displays, Liquid Crystal
Displays (LCDs), and Vacuum Fluorescent Displays (VFDs).
Based on comments received in response to the October 2008 NOPR
(Association of Home Appliance Manufacturers (AHAM), No. 47 at p. 6;
Whirlpool, No. 50 at p. 1), DOE conducted a survey of over-the-range
microwave-only units available on the U.S. market. DOE determined that
the display technologies used are similar to those used in countertop
microwave-only units (i.e., LED displays, LCDs, and VFDs). DOE also
conducted in-store standby mode testing on a limited sample of over-
the-range microwave-only units which showed similar standby power
consumption as countertop microwave-only units. For these reasons, DOE
tentatively concludes that over-the-range microwave-only units would
not warrant a separate product class. DOE understands that over-the-
range microwave-only units may have additional components that are
energized during active mode operation (i.e., exhaust fan motors).
However, DOE's testing showed that the presence of such features did
not increase the standby power consumption to warrant establishing a
separate product class.
DOE also conducted standby power testing on a sample of 13
representative combination microwave ovens, including 5 countertop
combination microwave ovens, 6 over-the-range combination microwave
ovens, and 2 built-in combination microwave ovens. DOE's testing showed
that the countertop combination microwave ovens use similar display
technologies as countertop microwave-only units (i.e., LED displays,
LCDs, and VFDs), and had standby power consumption ranging from 1.2 W
to 4.7 W, which is similar to the standby power consumption for
countertop microwave-only units. As a result, DOE tentatively concludes
that countertop combination microwave ovens would not warrant a product
class separate from microwave-only ovens.
DOE's testing of built-in and over-the-range combination microwave
ovens showed that the standby power consumption for these products
ranged from 4.1 W to 8.8 W, which is higher than the standby power
consumption for other microwave oven product types (i.e., countertop
microwave-only, over-the-range microwave-only, and countertop
combination microwave ovens). DOE's reverse-engineering analysis
suggests that the additional features in built-in and over-the-range
combination microwave ovens required to handle the thermal loads
associated with their installation and to provide consumer utility,
such as additional exhaust fan motors, convection fan motors and
heaters, and additional lights, require a significant number of
additional relays on the control board, and thus require a larger power
supply for the control of such relays. While the relays themselves do
not consume power in standby mode, they increase the total power supply
requirements of the control board and thus increase the standby losses
of the power supply. As a result, DOE believes that a separate product
class should be established for built-in and over-the-range combination
microwave ovens. DOE recognizes that built-in and over-the-range
microwave-only units may similarly require some additional relays for
exhaust fans and lights, and that countertop combination microwave
ovens would require some additional relays for convection fans and
heaters. However, DOE's product testing and reverse-engineering
analyses indicated that these product types use similar-sized power
supplies as those found in countertop microwave-only units, and as a
result would not warrant a separate product class from countertop
microwave-only units. Details of standby power testing for the
determination of product classes is presented in chapter 5 of the SNOPR
TSD.
In summary, DOE proposes to establish the following two product
classes for microwave ovens:

Table IV.1--Microwave Oven Product Classes
------------------------------------------------------------------------
Product class
-------------------------------------------------------------------------
1. Microwave-Only Ovens and Countertop Combination Microwave Ovens.
2. Built-in and Over-the-Range Combination Microwave Ovens.
------------------------------------------------------------------------

DOE determined that separate product classes for the purposes of
setting energy conservation standards addressing standby mode and off
mode energy use are warranted on the basis of different standby power
performance. DOE did not evaluate whether the same product class
distinction would also be appropriate for any active mode energy use
standards because DOE eliminated the regulatory provisions establishing
the cooking efficiency test procedure for microwave ovens in the July
2010 TP Final Rule. 75 FR 42579 (July 22, 2010). If DOE adopts
amendments to the microwave oven test procedure to include provisions
for measuring active mode cooking efficiency, DOE may reevaluate these
product classes as part of a future microwave oven energy conservation
standards rulemaking. At that time, DOE may consider dividing
countertop combination microwave ovens and over-the-range/built-in
microwave-only units into separate product classes to account for the
energy performance of heating components other than the microwave
portion.

B. Technology Assessment

Product teardowns performed by DOE for this and past rulemakings
gave DOE an insight into the strategies a manufacturer could adopt to
achieve higher energy conservation standards. In the October 2008 NOPR,
DOE asked stakeholders to provide data and information that would help
DOE

[[Page 8537]]

evaluate the utility provided by specific features that contribute to
microwave oven standby power. In addition, DOE conducted additional
research on several microwave oven technologies that significantly
affect standby power, including cooking sensors, display technologies,
and control strategies and associated control boards. In the October
2008 NOPR, DOE determined that control strategies are available that
enable manufacturers to make design tradeoffs between incorporating
features that consumer standby power (such as displays or cooking
sensors) and including a function to turn power off to those components
during standby mode. 73 FR 62034, 62052 (Oct. 17, 2008).
As discussed above, DOE believes that the standby power
characteristics for countertop combination microwave ovens and over-
the-range microwave-only units are similar to that of counter-top
microwave-only units, and therefore, the same technology options would
apply to these products. Additional testing on over-the range
combination microwave ovens conducted by DOE also showed that standby
power in these products depends largely on the same factors. The
following sections discuss each of these technology options.
1. Cooking Sensors
In the October 2008 NOPR, DOE reported that its teardown analysis
had revealed one cooking sensor technology with no standby power
consumption used in microwave ovens on the U.S. market: A piezoelectric
steam sensor. DOE also found that infrared and weight sensors, which
require little to no warm-up time or standby power, had been applied
successfully in Japanese-market microwave ovens. Furthermore, DOE
identified relative humidity sensors with no standby power consumption
as a feasible microwave oven cooking sensor technology, but found no
microwave ovens using these sensors at the time. Finally, DOE learned
that a major microwave oven supplier to the U.S. market was preparing
to introduce microwave ovens using a new type of absolute humidity
sensor with no standby power requirement and no cost premium over that
of a conventional absolute humidity sensor. 73 FR 62034, 62051 (Oct.
17, 2008). DOE requested input and data on the utility provided by
specific microwave oven features, including in relevant part cooking
sensors that do not require standby power. Id. at 62133.
AHAM agreed with DOE that some manufacturers in certain areas of
the world have already started to incorporate some of the cooking
sensor design options into microwave ovens. (AHAM, Public Meeting
Transcript, No. 40.5 at pp. 78-79) AHAM expressed two concerns about
these sensors: That reliability and accuracy of the sensors have not
been fully proved through testing, and that there is limited
availability of those sensors to microwave oven manufacturers due to
intellectual property protections. (AHAM, Public Meeting Transcript,
No. 40.5 at pp. 69-70) AHAM further requested that DOE provide data on
the availability, reliability, and functionality of the cooking sensors
that consume no standby power. AHAM stated that data collection for
such sensors provides an additional rationale for postponing the
rulemaking or not adopting a standby power standard for microwave
ovens. (AHAM, No. 47 at p. 5)
Whirlpool agreed with DOE that cooking sensors with no standby
power consumption are becoming available, though experience with them
is limited. According to Whirlpool, there is a lack of necessary data
regarding reliability, accuracy and intellectual property status.
(Whirlpool, No. 50 at p. 7)
GE similarly commented that cooking sensors with no standby power
consumption, while in limited use at that time, had not been fully
tested and evaluated as appropriate alternatives. GE also requested
that DOE provide data on the availability, reliability, and
functionality of the sensors discussed in the October 2008 NOPR,
relative to sensors currently in use. (GE, No. 48 at p. 3) GE also
commented that absolute humidity sensors with standby power consumption
offer greater resolution than relative humidity sensors with no standby
power consumption and therefore offer consumer utility. (GE, Public
Meeting Transcript, No. 40.5 at pp. 74-75) Furthermore, GE suggested
that some of the sensor technologies described in the October 2008
NOPR, such as infrared and weight sensors, are not feasible
alternatives to the absolute humidity sensors used today. For instance,
infrared sensors are easily fouled by contaminants and condensation. GE
commented that DOE should provide further information about absolute
humidity sensors with no standby power consumption and no cost premium
over that of a conventional absolute humidity sensor. GE stated that it
needed to review performance parameters and any associated intellectual
property issues associated with these sensors. (GE, No. 48, pp. 3-4)
DOE requested comment on whether any intellectual property or
patent infringement issues are associated with the cooking sensor
technologies discussed above; however, DOE did not receive any such
data. In addition, DOE is not currently aware of any intellectual
property or patent infringement issues for infrared sensors, weight
sensors, piezoelectric sensors, or relative humidity sensors. With
respect to the accuracy and reliability of low- and zero-standby power
cooking sensors, DOE notes that a significant number of microwave oven
models using the alternate cooking sensor technologies discussed above
are available on the international market, and have been available for
a number of years. As discussed above, DOE is also aware of one zero-
standby power cooking sensor technology used in microwave ovens on the
U.S. market. DOE is not aware of any data indicating that the
reliability and accuracy associated with these low- and zero-standby
power cooking sensors significantly differs from that of the absolute
humidity sensors currently employed in microwave ovens on the U.S.
market. DOE is also unaware of data showing that fouling of infrared
cooking sensors, as commented by GE, would significantly differ from
that of absolute humidity sensors, or data on the decreased accuracy
due to fouling as compared to the fouling of absolute humidity sensors.
DOE recognizes GE's concern regarding the use of relative humidity
sensors in microwave ovens. Because DOE is not aware of any relative
humidity cooking sensors used in microwave ovens currently on the
market, DOE is not aware of any data regarding the accuracy of these
sensors for detecting the state of the cooking load to adjust the
cooking time. However, DOE notes that multiple other cooking sensor
technology options exist that have been employed in microwave ovens in
place of an absolute humidity cooking sensor. For these reasons, DOE
tentatively concludes that the low- and zero-standby-power cooking
sensor technologies discussed above are viable design options, and has
analyzed them for this SNOPR. DOE requests data and information on the
accuracy and reliability of low- and zero-standby power cooking sensors
as compared to absolute humidity cooking sensors currently used in
microwave ovens on the U.S. market, and whether these technologies
would affect how consumers use their microwave ovens or their
satisfaction in using them due to any lessening of the utility or the
performance of microwaves imposed by the standard. DOE also seeks
information on the current commercial availability of this technology,
the

[[Page 8538]]

likelihood of future adoption, and the potential impact on the
lessening of competition amongst manufacturers. DOE also continues to
request comment on whether any intellectual property or patent
infringement issues are associated with the cooking sensor technologies
discussed above.
With respect to GE's comment that DOE should provide further
information on absolute humidity sensors with no standby power
consumption and no cost premium over that of a conventional absolute
humidity sensor, because DOE was made aware of this information during
interviews with microwave oven manufacturers, DOE is unable to provide
further information regarding this absolute humidity cooking sensor.
Edison Electric Institute (EEI) stated that due to the reduction in
cooking time and thus energy consumption made possible by use of a
cooking sensor, it is important to retain this feature in microwave
ovens. (EEI, Public Meeting Transcript, No 40.5 at pp. 71-72) Also, EEI
expressed concern about the recovery time of a cooking sensor after a
full microwave oven power-down and the impacts on consumer utility of a
slow recovery time. (EEI, Public Meeting Transcript, No. 40.5 at pp.
77-78) As discussed in the October 2008 NOPR, low- and zero-standby-
power cooking sensor technologies require little to no warm-up time. 73
FR 62034, 62050-51 (Oct. 17, 2008). As a result, DOE believes that low-
and zero-standby-power cooking sensor technologies can be used in
microwave ovens without impacting consumer utility.
2. Display Technologies
DOE stated in the October 2008 NOPR that it would consider three
display technologies for reducing microwave oven standby power
consumption: LED displays, LCDs with and without backlighting, and
VFDs. DOE stated that LED displays and LCDs consume less power than
VFDs. DOE also stated that each identified display technology provides
acceptable consumer utility, including brightness, viewing angle, and
ability to display complex characters. 73 FR 62034, 62051 (Oct. 17,
2008). DOE requested input and data on the utility provided by specific
microwave oven features, including, in relevant part, display
technologies. Id. at 62133.
EEI commented that consumer utility is associated with an
electronic display and timer rather than a mechanical timer. (EEI,
Public Meeting Transcript, No. 40.5 at pp. 63-64). As discussed in the
October 2008 NOPR, DOE was not aware of any microwave ovens currently
available on the U.S. market using electromechanical controls (73 FR
62034, 62051 (Oct. 17, 2008)), and thus has considered only electronic
controls (including displays) in determining standby power levels. In
addition, DOE is not considering electromechanical controls as a design
option to reduce standby power consumption.
AHAM, GE, and Whirlpool suggested that not all microwave oven
display technologies considered by DOE will maintain consumer utility
in all applications. Whirlpool stated that limiting the information
displayed and/or reducing the size of the clock reduces standby power
consumption at the expense of consumer utility. AHAM and Whirlpool
expressed concerns about the reliability of LED displays, particularly
in over-the-range microwave oven applications. According to AHAM, GE,
and Whirlpool, for over-the-range microwave oven applications, VFDs are
generally preferred over other display technologies such as backlit
LCDs or LED displays, as VFDs: (1) Have greater reliability when
exposed to the higher heat encountered above a cooking surface; (2)
allow a wider viewing angle and have greater visibility; and (3) are
available in more sizes and colors as demanded by the consumers of
higher-end products, also allowing a manufacturer to provide a ``family
look'' to product suites. (AHAM, No. 47 at p. 5; AHAM, Public Meeting
Transcript, No. 40.5 at pp. 70-71; GE, No. 48 at p. 3; GE, Public
Meeting Transcript, No 40.5, p. 75; Whirlpool, No. 50 at pp. 6-7).
As discussed above, DOE's research suggests that multiple over-the-
range microwave ovens with low power displays, including the LED and
LCD types, are currently available on the U.S. market. DOE has also
found that manufacturer temperature ratings for the three types of
displays are comparable. Furthermore, DOE has found that LED displays
and LCDs in both countertop and over-the-range microwave ovens offer
acceptable consumer utility features, including brightness, viewing
angle, and ability to display complex characters. DOE found no
microwave oven display technologies with intermittent backlighting or
other features that impair consumer utility. As a result, DOE believes
that LED displays and LCDs can be integrated into any countertop or
over-the-range microwave oven, with proper heat shielding and without
significant loss of consumer utility.
3. Power Supply and Control Boards
In the October 2008 NOPR, DOE found several technologies available
to increase power supply and control board efficiency that would reduce
microwave oven standby power consumption. DOE found some microwave
ovens on the U.S. market using switching power supplies with up to 75-
percent conversion efficiencies and 0.2 W or less no-load standby
losses, though these models came with a higher cost, higher part count,
and greater complexity. DOE stated that switching power supplies are as
yet unproven in long-term microwave oven applications, and the greater
complexity of these power supplies may also lower overall reliability.
DOE was also aware of high efficiency power supply and control board
components that could be used to reduce standby power consumption, but
these were not found on commercially available microwave ovens at the
time. 73 FR 62034, 62051 (Oct. 17, 2008). DOE requested comments on the
ability of switching or similar modern power supplies to operate
successfully inside a microwave oven and on the impacts of the
efficiency of such power supplies on microwave oven standby power. Id.
at 62133.
AHAM commented that switching power supplies can operate
successfully in microwave ovens, but that associated reliability is
still relatively unknown. (AHAM, No. 47 at p. 6) Whirlpool cited
limited data suggesting that the costs and potential reliability issues
associated with switching power supplies do not support their economic
viability. (Whirlpool, No. 50 at p. 8) Nevertheless, Whirlpool stated
that it sells products with switching power supplies outside of the
U.S. (Whirlpool, Public Meeting Transcript, No. 40.5 at pp. 81-82) DOE
observes that switching power supplies are found in products such as
computers, battery chargers, clothes washers, and clothes dryers,
suggesting that the reliability and durability of switching power
supplies has been proven in residential appliance applications. DOE
notes that microwave ovens incorporating switching power supplies have
been available for multiple years and are still used, as evidenced by
such power supplies being observed in DOE's most recent test sample of
combination microwave ovens. DOE is also unaware of data indicating
that the reliability of switching power supplies is significantly worse
than conventional linear power supplies over the lifetime of the
product.
Whirlpool suggested that switching power supplies are modestly more
efficient than conventional power supplies. (Whirlpool, No. 50 at p. 8)
Pacific Gas and Electric (PG&E) commented that switching power

[[Page 8539]]

supplies can have efficiency exceeding 90 percent and those in
computers are routinely exceeding 95 percent. (PG&E, Public Meeting
Transcript, No. 40.5 at p. 81) DOE believes that the application of
power supplies is very different for computers and microwave ovens, and
DOE research indicates that switching power supplies for appliance
applications in sizes similar to those utilized in microwave ovens
achieve no greater than 75-percent efficiency.\16\ Furthermore, DOE
notes that the most efficient power supplies available for consumer
computer use typically do not exceed 92-percent efficiency.\17\
---------------------------------------------------------------------------

\16\ Information on the design and efficiency of switch mode
power supplies can be found at http://www.powerint.com/en/applications/major-appliances.
\17\ Information can be found at http://www.plugloadsolutions.com/80PlusPowerSupplies.aspx.
---------------------------------------------------------------------------

AHAM expressed concern that electromechanical controls may be
necessary in order to meet standby power requirements. (AHAM, Public
Meeting Transcript, No. 40.5 at p. 58) As discussed above, DOE is not
aware of any microwave ovens currently on the market with
electromechanical controls. As a result, DOE has considered only
microwave ovens with electronic controls in determining standby power
levels. DOE does not believe that electromechanical controls would be
required to achieve any of the standby power levels presented in
section IV.D.
4. Power-Down Options
In the October 2008 NOPR, DOE determined that control strategies
are available that allowed microwave oven manufacturers to make design
tradeoffs between incorporating power-consuming features such as
displays or cooking sensors and including a function to cut power to
those components during standby. DOE found that a large number of
microwave ovens incorporating this automatic power-down feature were
available in other markets such as Japan. 73 FR 62034, 62051-52 (Oct.
17, 2008). DOE requested input and data on these control strategies as
well as comments on the viability and cost of microwave oven control
board circuitry that could accommodate transistors to switch off
cooking sensors and displays. Id. at 62133.
AHAM commented that the industry lacks data on control board
circuitry to allow for a function to cut off power during standby mode.
According to AHAM, such features must be reliable in high-temperature
environments. AHAM noted that DOE has allowed no time for manufacturers
to evaluate the viability or feasibility of the proposed technologies.
(AHAM, No. 47 at pp. 3, 6) DOE research has not identified any
technical barrier that would prevent microwave oven manufacturers from
successfully integrating such control board circuitry with proper heat
shielding and other design elements. DOE is also aware of similar
automatic power-down control technologies incorporated in products such
as clothes washers and clothes dryers, which utilize an additional
transformerless power supply to provide just enough power to maintain
the microcontroller chip while the unit is powered down, resulting in
very low standby power levels. Therefore, DOE continues to believe that
an automatic power-down feature is technically feasible in microwave
applications.
AHAM commented that it is concerned with a reduction in consumer
utility and how the consumer interfaces with the unit. AHAM added that
evaluating the impacts on consumer utility will require substantial
consumer research. (AHAM, No. 47 at p. 6) AHAM suggested that an
indicator light may be desirable in a microwave oven with the automatic
power-down feature to communicate the product's status to the user.
(AHAM, Public Meeting Transcript, No. 40.5 at p. 59) Whirlpool stated
that an automatic power-down feature in microwave ovens may cause
consumer confusion and complaints and could require significant
consumer education efforts. (Whirlpool, Public Meeting Transcript, No.
40.5 at pp. 65-66) Whirlpool commented that control technologies are
available to dim or turn off a display after a period of inactivity has
elapsed but that Whirlpool does not currently incorporate such a
technology into its products. (Whirlpool, No. 50 at p. 7) Whirlpool and
ASAP both commented that there could be a variety of ways to implement
a power-down feature, including consumer-activated or fuzzy logic-based
power response. (ASAP, Public Meeting Transcript, No. 40.5 at p. 79;
Whirlpool, Public Meeting Transcript, No. 40.5 at p. 80) DOE has
considered consumer utility issues in the determination of the proposed
standby mode and off mode energy conservation standards. (See section
V.C of today's supplemental notice and chapter 5 of the SNOPR TSD for
additional discussion of this topic.) DOE welcomes further comments
regarding consumer utility issues associated with each of the
technology options, and in particular the low- and zero-standby power
cooking sensors and display technologies, considered in this analysis.
The comment filed jointly (hereafter, the Joint Comment) by ASAP,
American Council for an Energy-Efficient Economy, American Rivers,
Natural Resources Defense Council, Northeast Energy Efficiency
Partnerships, Northwest Power and Conservation Council, Southern
California Gas Company, San Diego Gas and Electric Company, Southern
California Edison, and Earthjustice (EJ), stated that DOE should
analyze user-activated controls to turn the display on and off, in
addition to automatic power-down features. According to these
commenters, a microwave oven equipped with such controls would meet the
EPCA definition of operating in standby or off mode, and would give
consumers the ability to reduce energy use below the proposed standby
power standard level. The Joint Comment asserted that this type of
switch is similar to power switches found on many computers, copiers,
printers, televisions, and other products sold outside of the U.S.
(Joint Comment, No. 44 at p. 10)
ASAP requested clarification whether an on/off switch, particularly
a consumer-activated one, would be considered as a design option.
(ASAP, Public Meeting Transcript, No. 40.5 at pp. 66, 73-74) GE
questioned whether a microwave oven would be in standby mode or off
mode if the display is turned off. (GE, Public Meeting Transcript, No.
40.5 at p. 73)
Under the mode definitions adopted by the amended microwave oven
test procedure (76 FR 12825, 12834-37 (Mar. 9, 2011)), a product for
which an on/off switch has turned off the display would be considered
to be in off mode, unless other energy consuming features associated
with standby mode remain energized (i.e., features to facilitate the
activation of other modes by remote switch, internal sensor, or timer;
or continuous functions, including other information or status displays
or sensor-based features). In the latter case, the microwave oven would
remain in standby mode even with the display turned off.
DOE is not aware of any products incorporating a user-activated
control to turn the display on or off. Further, DOE does not have
information to evaluate how often consumers might make use of this
feature. Therefore, at this time DOE is unable to analyze such a
control as a design option. DOE agrees that such a feature, if
provided, could result in decreased energy usage in standby mode or off
mode, and remains open to consideration of such a design option in
future rulemakings. DOE also notes that manufacturers would not be
precluded

[[Page 8540]]

from incorporating such a feature in their products under the proposed
standards.

C. Engineering Analysis

The purpose of the engineering analysis is to characterize the
relationship between the energy use and the cost of standby mode
features of microwave ovens. DOE used this standby power/cost
relationship as input to the payback period, LCC, and NIA analyses. The
engineering analysis provides data that can be used to establish the
manufacturer selling price of more efficient products. Those data
include manufacturing costs and manufacturer markups.
DOE has identified three basic methods for generating manufacturing
costs: (1) The design-option approach, which provides the incremental
costs of adding to a baseline model design options that will improve
its efficiency (i.e., lower its energy use in standby mode and off
mode); (2) the efficiency-level approach, which provides the
incremental costs of moving to higher energy efficiency levels (in this
case, levels of reduced standby power), without regard to the
particular design option(s) used to achieve such increases; and (3) the
cost-assessment (or reverse engineering) approach, which provides
``bottom-up'' manufacturing cost assessments for achieving various
levels of increased efficiency, based on detailed data on costs for
parts and material, labor, shipping/packaging, and investment for
models that operate at particular efficiency levels. DOE conducted the
engineering analysis for this rulemaking using the efficiency-level
approach. For this analysis, DOE relied on laboratory testing of
representative microwave ovens. DOE supplemented the standby power data
with data gained through reverse-engineering analysis and primary and
secondary research, as appropriate. To identify microwave oven design
options, DOE performed a reverse engineering analysis on a
representative sample of microwave ovens. Details of the engineering
analysis are in chapter 5 of the SNOPR TSD.
1. Energy Use Metric
In the October 2008 NOPR, DOE explored whether it would be
technically feasible to combine the existing measure of energy
efficiency during the cooking cycle per use with standby mode and off
mode energy use over time to form a single metric, as required by EISA
2007. (42 U.S.C. 6295(gg)(2)(A)) DOE tentatively concluded that,
although it may be mathematically possible to combine energy
consumption into a single metric encompassing active, standby, and off
modes, it is not technically feasible to do so due to the high
variability in the cooking efficiency measurement based on the
microwave oven test procedure at that time and because of the
significant contribution of standby power to overall microwave oven
energy use. Therefore, DOE proposed a separate metric to measure
standby power as provided by EISA 2007. 73 FR 62034, 62042-43 (Oct. 17,
2008).
ASAP, EEI, the Joint Comment, and Whirlpool agree with DOE's
determination that it is not technically feasible to integrate standby
and off mode energy use into a single efficiency metric for microwave
ovens. (ASAP, Public Meeting Transcript, No. 40.5 at pp. 53; EEI,
Public Meeting Transcript, No. 40.5 at p. 55; Joint Comment, No. 44 at
p. 10; Whirlpool, No. 50 at p. 4; Whirlpool, Public Meeting Transcript,
No. 40.5 at p. 29) AHAM stated that an integrated energy descriptor,
while technically feasible, is not practical. (AHAM, No. 47 at p. 4;
AHAM, Public Meeting Transcript, No. 40.5 at pp. 27, 54-55) ASAP
questioned whether there was any legal prohibition on a prescriptive
standard for microwave oven standby power, especially since DOE was at
that time proposing a prescriptive standard for standing pilots in gas
cooking products. (ASAP, Public Meeting Transcript, No. 40.5 at pp. 64-
65)
As noted previously, DOE eliminated the active mode cooking
efficiency provisions in the July 2010 TP Final Rule after it
determined that those provisions did not produce accurate and
repeatable results. 75 FR 42579 (July 22, 2010). Therefore, the absence
of active mode provisions results in a de facto separate energy use
descriptor for microwave oven standby mode and off mode energy use.
2. Standby Power Levels
DOE is considering standby mode and off mode standards based on a
maximum average standby power, in W, for microwave ovens. For the
reasons noted previously, the standards do not include off mode power.
For the October 2008 NOPR, DOE's analysis estimated the incremental
manufacturing cost for microwave ovens having standby power consumption
less than the baseline level of 4 W. For the purposes of that analysis,
a baseline microwave oven was considered to incorporate an absolute
humidity cooking sensor. To analyze the cost-energy use relationship
for microwave oven standby power, DOE defined standby power levels
expressed as a maximum average standby power in W. To analyze the
impacts of standards, DOE defined the following four standby power
levels for analysis: (1) The Federal Energy Management Program (FEMP)
procurement efficiency recommendation; (2) the International Energy
Agency's (IEA's) 1-Watt Plan; (3) a standby power level as a gap-fill
between the FEMP Procurement Efficiency Recommendation and IEA 1-Watt
Plan; and (4) the current maximum microwave oven standby technology
(max-tech; i.e., lowest standby power) that DOE believes is or could be
commercially available when the energy conservation standards become
effective, based on a review of microwave ovens currently on the market
worldwide. Table IV.2 provides the microwave oven standby power levels
and the reference source for each level that DOE analyzed for the
October 2008 NOPR. For more details on the determination of standby
power levels, see chapter 5 of the SNOPR TSD.

Table IV.2--October 2008 NOPR Proposed Microwave Oven Standby Power
Levels
------------------------------------------------------------------------
Standby
Standby power level (TSL) Source power (W)
------------------------------------------------------------------------
Baseline............................ Baseline.............. 4.0
1................................... FEMP Procurement 2.0
Efficiency
Recommendation.
2................................... Gap Fill.............. 1.5
3................................... IEA 1-Watt Program.... 1.0
4................................... Max Tech.............. 0.02
------------------------------------------------------------------------

[[Page 8541]]

In the October 2008 NOPR, DOE requested comments and views of
interested parties concerning the selection of microwave oven standby
power levels for the engineering analysis. 73 FR 62034, 62133 (Oct. 17,
2008). As discussed in section V.A, due to the definition of only four
standby power levels, a TSL was defined for each standby power level
and thus standby power levels may also be referred to as TSLs.
AHAM commented that the microwave oven standby power TSLs are
appropriate. In particular, AHAM asserted that much of the worldwide
industry is moving towards the IEA 1-Watt Program, which corresponds to
one of the TSLs. However, AHAM stated that DOE's engineering analysis
based on these TSLs is incomplete and inaccurate. For example, none of
the 32 units tested by DOE were over-the-range units, whereas six of
the 21 units in the AHAM sample were over-the-range units. According to
AHAM, it is important to include over-the-range microwave ovens in the
analysis because most of these units likely include a VFD, which is the
most reliable display type in high temperature conditions. (AHAM, No.
47 at p. 3; AHAM, Public Meeting Transcript, No. 40.5 at p. 83)
As previously discussed, DOE research found that multiple over-the-
range microwave ovens are currently available on the market that
incorporate low-power display technologies, including LEDs and LCDs.
DOE has also found that manufacturer temperature ratings for the three
types of displays are comparable, and that LED displays and LCDs in
both countertop and over-the-range microwave ovens offer acceptable
consumer utility features, including brightness, viewing angle, and
ability to display complex characters. Due to these findings, DOE
believes that the TSLs and the associated analyses are still valid.
Additionally, AHAM stated that each microwave oven standby power
TSL should be set in a way that allows manufacturers a variety of
pathways to reduce standby power consumption to that level. While some
manufacturers are already starting to incorporate some of the standby
power consumption-reducing design options identified by DOE, little or
no data is available on some of the design trade-offs and reliability.
(AHAM, Public Meeting Transcript, No. 40.5 at pp. 78-79) DOE believes
that multiple pathways exist, based on the selection of the (1) display
technology, (2) power supply/control boards, (3) cooking sensors, and
(4) the possible incorporation of algorithms to automatically reduce
standby power after a period of inactivity, as stated in the October
2008 NOPR.
Whirlpool commented that it is unaware of technologies that would
allow microwave ovens equipped with VFDs to meet the 1-W standby power
consumption limit of TSL 3 while keeping the display energized during
standby mode. (Whirlpool, No. 50 at p. 7) GE stated that it has
significant concerns about retaining all features associated with VFDs
that impact consumer utility while reducing microwave oven standby
power consumption to TSL 3. As a result, GE believes TSL 3 would reduce
the utility or performance of microwave ovens. (GE, Public Meeting
Transcript, No. 40.5 at p. 89) DOE has determined that microwave oven
manufacturers can meet TSL 3 in microwave ovens with VFDs by
incorporating an automatic power-down feature. In addition, DOE
research suggests that LED displays and LCDs in both countertop and
over-the-range microwave ovens offer acceptable consumer utility
features, including brightness, viewing angle, and ability to display
complex characters. Additional issues related to consumer utility are
addressed in section V.C, which discusses the TSLs considered for
proposed standby mode and off mode standards.
AHAM requested additional information about the functionality
associated with the microwave oven max-tech level, including response
time from power-down. (AHAM, Public Meeting Transcript, No. 40.5 at p.
84) EEI also requested information about the max-tech level, such as
whether it has as many display features and includes all the features
of the baseline model. (EEI, Public Meeting Transcript, No. 40.5 at p.
84)
As discussed in the October 2008 NOPR, the max-tech microwave oven
standby power level of 0.02 W corresponds to a unit equipped with a
default automatic power-down function that shuts off certain power-
consuming components after a specified period of user inactivity. The
standby power at max-tech was obtained from a microwave oven currently
on the market in Korea which incorporates such a feature. 73 FR 62034,
62045 (Oct. 17, 2008). Although DOE does not have operational
information on this specific model, DOE has analyzed the components
necessary to achieve an automatic power-down function, and does not
believe such a feature would limit the selection of display
technologies or other features that provide consumer utility. DOE
analysis suggests that response times for startup will be short enough
(less than 1 second) to be acceptable to consumers.
For the reasons discussed above in section IV.A, DOE also analyzed
a separate product class for over-the-range combination microwave
ovens. DOE's analysis estimates the incremental manufacturing cost for
built-in and over-the-range combination microwave ovens having standby
power consumption less than the baseline value of 4.5 W. To determine
that baseline level, DOE measured the standby power consumption of a
representative sample of built-in and over-the-range combination
microwave ovens currently on the market. For the purpose of this
standby power analysis, a baseline built-in/over-the-range combination
microwave oven is considered to incorporate an absolute humidity
cooking sensor. In order to analyze the cost-energy use relationship
for this product class, DOE defined each standby power level as a
maximum average standby power in watts.
To determine the maximum average standby power at each level, DOE
reverse-engineered a representative sample of built-in and over-the-
range combination microwave ovens to analyze the various components
that contribute to the standby power consumption of the unit. DOE also
measured the standby power consumed by these components individually.
In its analysis, DOE observed that the absolute humidity cooking sensor
used in these combination microwave ovens on average consume 0.9 W of
standby power. For Standby Power Level (SL) 1, DOE believes that
standby power can be reduced by incorporating a zero-standby cooking
sensor. For SL 2, DOE analyzed potential improvements to the power
supply design. DOE noted that microwave ovens at the baseline standby
energy use incorporate a linear power supply. DOE measured the standby
power consumption of the power supply and found that the transformer
used to step down the line input voltage contributes most significantly
to the standby power consumption. DOE then performed a power budget
analysis to determine the size of the transformer needed to operate a
microwave at full load, and the results suggest that replacing the
conventional linear power supply with a more efficient switch mode
power supply will eliminate the need for a large transformer and
effectively reduce the standby power associated with the power supply.
DOE thus estimated the standby power for SL 2 based on the improvement
associated with changing from a conventional linear power supply with
an efficiency of 55 percent

[[Page 8542]]

to a switch mode power supply with an efficiency of 75 percent. DOE
developed this estimate for the efficiency of a switch mode power
supply based on research of such power supply designs for appliance
applications.\18\ For SL 3, DOE analyzed the impact relays have in
determining the size of a power supply. DOE compared the power budget
of a control board with electromechanical relays to that with solid
state relays, and observed that the power requirement of a control
board, with similar input and load, is lower with solid state relays
than with electromechanical relays. Therefore, DOE estimated the
standby power at SL 3 based on design improvements associated with
using more efficient components in a switch mode power supply that
incorporates solid state relays. For SL 4, DOE analyzed an automatic
function that turns off power to standby power consuming components
after a certain period of inactivity and that uses a transformerless
power supply to maintain the microcontroller chip while the microwave
oven is not powered on. DOE estimated the standby power at SL 4 based
on the standby power requirements of the controller microcontroller
chip.
---------------------------------------------------------------------------

\18\ Information on the design and efficiency of switch mode
power supplies can be found at http://www.powerint.com/en/applications/major-appliances.
---------------------------------------------------------------------------

Table IV.3 provides the proposed standby power levels for the two
product classes considered for today's SNOPR. Details of the
engineering analysis are in chapter 5 of the SNOPR TSD.

Table IV.3--Proposed Microwave Oven Standby Power Levels
------------------------------------------------------------------------
Standby power (W)
-------------------------------
Standby power level Microwave-only Built-in and
and countertop over-the-range
combination combination
------------------------------------------------------------------------
Baseline................................ 4.0 4.5
1....................................... 2.0 3.7
2....................................... 1.5 2.7
3....................................... 1.0 2.2
4....................................... 0.02 0.04
------------------------------------------------------------------------

3. Manufacturing Costs
In this rulemaking DOE estimates a manufacturing cost for microwave
ovens at each standby power level. The manufacturing costs are the
basis of inputs for other analyses, including the LCC, national impact,
and GRIM analyses.
For microwave oven standby mode and off mode energy use, DOE
estimated a cost-energy use relationship (or ``curve'') in the form of
the incremental manufacturing costs associated with incremental
reductions in baseline standby power. In the October 2008 NOPR, DOE
determined that microwave oven standby power depends on, among other
factors, the display technology used, the associated power supplies and
controllers, and the presence or lack of a cooking sensor. From testing
and reverse engineering, DOE observed correlations between (1) specific
components and technologies, or combinations thereof, and (2) measured
standby power. DOE obtained preliminary incremental manufacturing costs
associated with standby power levels by considering combinations of
those components as well as other technology options identified to
reduce standby power. In the October 2008 NOPR, DOE presented
manufacturing cost estimates based on quotes obtained from suppliers,
interviews with manufacturers, interviews with subject matter experts,
research and literature review, and numerical modeling. 73 FR 62034,
62055 (Oct. 17, 2008). They are shown in Table IV.4.

Table IV.4--October 2008 NOPR Proposed Microwave Oven Standby Power
Incremental Manufacturing Costs
------------------------------------------------------------------------
Incremental
Standby power level Standby cost
power (W) 2007$)
------------------------------------------------------------------------
Baseline..................................... 4.0 NA
1............................................ 2.0 0.30
2............................................ 1.5 0.67
3............................................ 1.0 1.47
4............................................ 0.02 5.13
------------------------------------------------------------------------

Based on DOE's research, interviews with subject matter experts,
and discussions with manufacturers, DOE believes that all consumer
utility (display, cooking sensor, etc.) could be maintained by standby
power consumption down to SL 3 (1.0 W). At the max-tech level, DOE
would expect implementation of an automatic power-down feature that
would, among other things, shut off the display after a period of
inactivity, potentially impacting consumer utility.
DOE observed several different cooking sensor technologies. Follow-
on testing after the December 2007 public meeting showed that some
sensors are zero-standby (relative humidity) cooking sensors. During
the MIA interview for the NOPR, one manufacturer indicated that its
supplier of cooking sensors had developed zero-standby absolute
humidity cooking sensors that would have the same manufacturing cost as
the higher-standby power devices they would replace. Based on the
number of available approaches to zero-standby cooking sensors from
which manufacturers can choose, DOE believes that all manufacturers can
and likely will implement zero-standby cooking sensors by the effective
date of standby mode and off mode energy conservation standards, and
maintain the consumer utility of a cooking sensor without affecting
unit cost. DOE believes that a standard at standby power levels of 1 or
2 W would not affect consumer utility, because all display types could
continue to be used. At SL 3 for VFDs and SL 4 for all display
technologies, DOE analysis suggests the need for a separate controller
(automatic power-down) that automatically turns off all other power-
consuming components during standby mode. Such a feature would affect
the consumer utility of having a clock display only if the consumer
could not opt out of auto power-down.
DOE requested input and data from interested parties on the
estimated incremental manufacturing costs, as well as the assumed
approaches, to achieve each microwave oven standby power level. DOE
also requested comment on whether any intellectual property or patent
infringement issues are associated with the design options

[[Page 8543]]

presented in the NOPR TSD to achieve each standby power level. 73 FR
62034, 62133 (Oct. 17, 2008).
AHAM questioned the source of the incremental cost data associated
with each standby power level presented by DOE, since some microwave
oven manufacturers cannot recall providing this information to DOE.
AHAM commented on the need for incremental manufacturing costs to
reflect both a one-time cost as well as the possibility of multiple
paths to achieve each TSL. (AHAM, Public Meeting Transcript, No. 40.5
at p. 87) GE commented that the cost associated with upgrading power
supplies to reach TSL 3 is a question. (GE, Public Meeting Transcript,
No. 40.5 at pp. 75-76)
As described in chapter 5 of the TSD published with the October
2008 NOPR, DOE developed incremental cost estimates for each standby
power level using the design-option approach. (One-time costs are
evaluated as part of the MIA.) DOE estimated costs for each of the
components and technologies based on quotes from component suppliers,
interviews with manufacturers, interviews with subject matter experts,
research and literature review, and numerical modeling. The incremental
manufacturing costs for each standby power level were determined by
considering different combinations of these components as well as other
technology options identified to reduce standby power.
DOE is aware that manufacturers may employ a number of strategies
to achieve the different standby power levels. The estimated
manufacturing costs for each standby power level represent the approach
DOE believes manufacturers would most likely use to achieve the standby
power at each level. For each level, DOE assumed manufacturers would
implement design options with the lowest associated manufacturing cost.
If DOE determined there were multiple paths with similar costs to reach
a certain level, it assumed manufacturers would be equally likely to
choose either strategy.
Whirlpool commented that its market research suggests high costs
associated with consumer education on proper operation of microwave
ovens with automatic power-down features. Whirlpool clarified that the
marketing costs it submitted for the ANOPR did not include these costs,
estimated at $10 million, including retailer training, point-of-
purchase material, product tags, telephone support, and possibly more.
(Whirlpool, No. 50 at p. 7) AHAM also commented that DOE did not
complete a rigorous analysis on manufacturing costs. According to AHAM,
DOE obtained component costs, but did not account for the cost
implications on appliance manufacturers. AHAM stated that this includes
variables such as component reliability and/or utility, both of which
will impact manufacturer cost. (AHAM, No. 47 at p. 6)
DOE considered any conversion costs associated with changes to
consumer utility and reliability in the manufacturer impact analysis,
discussed in section IV.G. However, as previously discussed, DOE found
no reliability or consumer utility concerns with switching from VFD to
LCD or LED displays. Through discussions with manufacturers and OEMs,
DOE believes that zero-standby cooking sensors could be implemented
with no effect on consumer utility or reliability. DOE is aware that an
automatic power-down feature required at SL 3 for VFDs and at SL 4 for
all display types could affect consumer utility, and considered these
impacts in the selection of the proposed standards.
For the reasons described above, DOE believes the standby power
levels and corresponding incremental manufacturing costs presented in
the October 2008 NOPR remain fundamentally valid for the microwave-only
and countertop combination microwave oven product class. DOE is unaware
of any technologies that have become available since the publishing of
the October 2008 NOPR that would alter the incremental cost for any
standby power level. However, the costs presented in the October 2008
NOPR are in 2008 dollars. DOE scaled these costs to 2010 dollars using
the producer price index (PPI) to reflect more current values.\19\ The
relevant PPI for microwave ovens is a subset of the household cooking
appliance manufacturing industry, specifically for electric (including
microwave) household ranges, ovens, surface cooking units, and
equipment. Table IV.5 shows the revised incremental costs for each
standby power level for Product Class 1, scaled to 2010 dollars.
---------------------------------------------------------------------------

\19\ Information on the PPI databases can be found at http://www.bls.gov/ppi/data.htm. (Last accessed March 18, 2011.)

Table IV.5--Microwave Oven Product Class 1 Standby Power Incremental
Manufacturing Costs
------------------------------------------------------------------------
Standby Incremental
Standby power level power (W) cost (2010$)
------------------------------------------------------------------------
Baseline.................................... 4.0 NA
1........................................... 2.0 $0.27
2........................................... 1.5 0.60
3........................................... 1.0 1.31
4........................................... 0.02 4.58
------------------------------------------------------------------------

As discussed in section IV.A, for today's SNOPR, DOE is proposing
two product classes for microwave ovens. While the analysis presented
in the October 2008 NOPR remains relevant for the microwave-only and
countertop combination microwave oven product class, DOE conducted
analyses on a test sample of 13 combination microwave ovens for this
SNOPR to evaluate the built-in and over-the-range combination microwave
oven product class. DOE again used the design-option approach to
determine the incremental manufacturing costs of combination microwave
ovens for each standby power level.
DOE estimated the incremental cost associated with reductions in
baseline standby power of built-in and over-the-range combination
microwave ovens. DOE performed engineering teardowns and control board
cost analyses to determine the cost of the baseline control board used
in these units. DOE estimated the cost associated with each standby
power level by using quotes from various component suppliers to
determine the cost of the components used in each design option.
For SL 1, DOE estimated that the manufacturing cost of a zero-
standby cooking sensor would be the same as that of the cooking sensor
with high standby power. To estimate the manufacturing cost for SL 2,
DOE used reverse engineering to determine the cost of the components
used in a design of a switch mode power supply capable of delivering
the same output power as the baseline conventional linear power supply.
In its analysis for the manufacturing cost of SL 3, DOE determined the
cost of the components used to design a control board with a switch
mode power supply and solid state relays capable of driving the same
loads as the electromechanical relays. DOE estimated the manufacturing
cost for SL 4 based on the cost of the components needed to design an
automatic power-down function that uses a transformerless power supply.
The results of these new analyses are summarized in Table IV.6. For
the detailed cost-energy use analysis, including descriptions of design
options and design changes to meet standby

[[Page 8544]]

power levels, see chapter 5 of the SNOPR TSD.

Table IV.6--Microwave Oven Product Class 2 Standby Power Incremental
Manufacturing Costs
------------------------------------------------------------------------
Standby Incremental
Standby power level power (W) cost (2010$)
------------------------------------------------------------------------
Baseline.................................... 4.5 NA
1........................................... 3.7 $0
2........................................... 2.7 2.29
3........................................... 2.2 9.44
4........................................... 0.04 5.18
------------------------------------------------------------------------

D. Life-Cycle Cost and Payback Period Analysis

In response to the requirements of section 325(o)(2)(B)(i) of the
Act, DOE conducted LCC and PBP analyses to evaluate the economic
impacts of possible amended energy conservation standards for consumers
of microwave ovens having standby mode and off mode features. (42
U.S.C. 6295(o)(2)(B)(i)) DOE conducted the analyses using a spreadsheet
model developed in Microsoft (MS) Excel for Windows 2007. (See chapter
8 of the SNOPR TSD.)
The LCC represents the total consumer expense over the life of a
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 a higher-efficiency product through energy
savings. To calculate the LCC, DOE discounts future operating costs to
the time of purchase and sums them over the lifetime of the product.
DOE forecasts the change in LCC and the change in PBP associated with a
given efficiency level relative to the base-case 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 develops data that it uses to establish product prices,
annual energy consumption, energy prices, maintenance and repair costs,
product lifetime, and discount rates.
DOE developed a consumer sample for microwave ovens having standby
mode and off mode features from EIA's 2005 Residential Energy
Consumption Survey (RECS). It used this sample to establish the
variability and uncertainty in microwave oven electricity use. The
variability in electricity pricing was characterized by incorporating
regional energy prices. DOE calculated the LCC associated with a
baseline microwave oven having standby mode and off mode features. To
calculate the LCC savings and PBP associated with products that could
meet potential amended energy conservation standards, DOE substituted
the baseline unit with more efficient designs.
Table IV.7 summarizes the approaches and data DOE used to derive
the inputs to the LCC and PBP calculations for the October 2008 NOPR,
and the changes it made for today's SNOPR. DOE did not introduce
changes to the LCC and PBP analysis methodology described in the
October 2008 NOPR. As the following sections discuss in more detail,
however, DOE revised some of the inputs to the analysis. Chapter 8 of
the SNOPR TSD contains a detailed discussion of the methodology
utilized for the LCC and PBP analysis as well as the inputs developed
for the analysis.

Table IV.7--Summary of Inputs and Key Assumptions in LCC and PBP
Analyses
------------------------------------------------------------------------
Changes for the
Inputs October 2008 NOPR SNOPR
------------------------------------------------------------------------
Affecting Installed Costs
------------------------------------------------------------------------
Product Cost................ Derived by Used experience
multiplying curve fits to
manufacturer cost forecast a price
by manufacturer, scaling index to
distributor markups forecast product
and sales tax. costs.
------------------------------------------------------------------------
Affecting Operating Costs
------------------------------------------------------------------------
Annual Energy Use........... Annual energy use No change.
determined from the
annual usage
(average daily use
cycles).
Energy Prices............... Electricity: Updated Electricity: Updated
using EIA's 2006 using EIA's 2009
Form 861 data. Form 861 data.
Variability: Variability: No
Regional energy change.
prices determined
for 13 regions.
Energy Price Trends......... Energy: Forecasts Reference Case, High
updated with EIA's Growth, and Low
Annual Energy Growth forecasts
Outlook 2008 (AEO updated with EIA's
2008). AEO 2010 May
Release.
Repair and Maintenance Costs Assumed no repair or No change.
maintenance costs.
------------------------------------------------------------------------
Affecting Present Value of Annual Operating Cost Savings
------------------------------------------------------------------------
Product Lifetime............ Estimated using No change.
survey results from
RECS (1990, 1993,
1997, 2001, 2005)
and the U.S. Census
American Housing
Survey (2005,
2007), along with
historic data on
appliance shipments.
Discount Rates.............. Variability: No change.
Characterized using
Weibull probability
distributions.
------------------------------------------------------------------------
Affecting Installed and Operating Costs
------------------------------------------------------------------------
Effective Date of New 2012................ 2014.
Standard.
------------------------------------------------------------------------

[[Page 8545]]

1. Product Costs
To calculate the product costs paid by microwave oven purchasers,
DOE multiplied the manufacturing selling prices developed from the
engineering analysis by the supply chain markups it developed (along
with sales taxes). DOE used the same supply chain markups for today's
SNOPR that were developed for the October 2008 NOPR. See chapter 6 of
the SNOPR TSD for additional information. For the October 2008 NOPR,
DOE analyzed only countertop models of microwave ovens and considered
installation costs to be zero. For today's SNOPR, DOE analyzed both
countertop and over-the-range microwave ovens and considered
installation costs to be zero.
On February 22, 2011, DOE published a Notice of Data Availability
(NODA, 76 FR 9696) stating that DOE may consider improving regulatory
analysis by addressing equipment price trends. Consistent with the
NODA, DOE examined historical producer price indices (PPI) for electric
cooking equipment generally and microwave ovens specifically and found
a consistent, long-term declining real price trend. Consistent with the
method proposed in the NODA, DOE used experience curve fits to develop
a price scaling index to forecast product costs for this rulemaking.
DOE also considered the public comments that were received in
response to the NODA and refined its experience curve trend forecasting
estimates. Many commenters were supportive of DOE moving from an
assumption-based equipment price trend forecasting method to a data-
driven methodology for forecasting price trends. Other commenters were
skeptical that DOE could accurately forecast price trends given the
many variables and factors that can complicate both the estimation and
the interpretation of the numerical price trend results and the
relationship between price and cost. DOE evaluated these concerns and
determined that retaining the assumption-based approach of a constant
real price trend was not consistent with the historical data for the
products covered in this rule (though this scenario does represent a
reasonable upper bound on the future equipment price trend). DOE also
performed an initial evaluation of the possibility of other factors
complicating the estimation of the long-term price trend, and developed
a range of potential price trend values that was consistent with the
available data and justified by the amount of data that was available
to DOE at this time. DOE recognizes that its price trend forecasting
methods are likely to be modified as more data and information becomes
available to enhance the statistical certainty of the trend estimate
and the completeness of the model. Additional data should enable an
improved evaluation of the potential impacts of more of the factors
that can influence equipment price trends over time.
To evaluate the impact of the uncertainty of the price trend
estimates, DOE performed price trend sensitivity calculations in the
national impact analysis to examine the dependence of the analysis
results on different analytical assumptions. DOE also included a
constant real price trend assumption as a sensitivity scenario
representing an upper bound on the forecast price trend.
A more detailed discussion of DOE's price trend modeling and
calculations is provided in appendix 8-E of the SNOPR TSD.
2. Annual Energy Consumption
DOE determined the annual energy consumption of the standby mode
and off mode of microwave ovens by estimating the number of hours of
operation throughout the year and assuming that the unit would be in
standby mode or off mode the rest of the time. DOE estimated the number
of operating hours relative to the baseline of 71 hours calculated in
the NOPR. DOE subtracted the number of calculated operating hours from
the total number of hours in a year and multiplied by the standby mode
and off mode power usage to determine yearly standby mode and off mode
energy consumption.
3. Energy Prices
DOE derived average electricity prices for 13 geographic areas
consisting of the nine U.S. Census divisions, with four large States
(New York, Florida, Texas, and California) treated separately. DOE
estimated 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, and
then calculating a regional average price by weighting each utility
having customers in a region by the number of residential customers
served in that region. The calculations for today's SNOPR used the most
recent available data (2009).
To estimate trends in electricity prices for the October 2008 NOPR,
DOE used the price forecasts in EIA's 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 AEO 2008. For today's
supplemental notice, DOE updated its energy price forecasts using those
in the AEO 2010 May Release. Because the AEO forecasts prices only to
2035, DOE followed past guidelines that EIA provided to the Federal
Energy Management Program and used the average rate of change during
2020-2035 to estimate price trends beyond 2035.
The spreadsheet tools used to conduct the LCC and PBP analysis
allow users to select energy price forecasts for either the AEO's High
economic growth case or Low economic growth case to estimate the
sensitivity of the LCC and PBP to different energy price forecasts.
DOE received comment regarding the inputs to the energy price
forecasts. The Joint Comment recommended that DOE conduct a sensitivity
analysis using a basket of other forecasts besides the AEO. (Joint
Comment, No. 44 at p. 11) As mentioned above, DOE considered price
forecasts from the AEO's High and Low economic growth cases to estimate
the sensitivity of the LCC and PBP results to different energy price
forecasts. The alternative forecasts from the AEO provide a suitable
range to examine the sensitivity of LCC and PBP results to different
energy price forecasts.
The Joint Comment also stated that to realistically depict energy
prices in the future, DOE must consider the impact of carbon control
legislation, because such legislation is likely. It 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,
which was not yet reflected in the AEO energy price forecasts. (Joint
Comment, No. 44 at p. 12) EJ stated that caps likely will be in place
by the time new standards become effective, so DOE should increase its
electricity prices to reflect the cost of complying with emission caps.
(EJ, Public Meeting Transcript, No. 40.5 at pp. 105-106)
In response, DOE believes that the shape of Federal carbon control
legislation, and the ensuing cost to electricity generators of carbon
mitigation, is too uncertain to incorporate into the energy price
forecasts that DOE uses. The costs to electricity generators of carbon
mitigation resulting from the regional programs are also uncertain over
the forecast period for this rulemaking. That being said, EIA included
the effect of

[[Page 8546]]

the RGGI in its energy price forecasts for the AEO 2010 May Release.
(WCI did not provide sufficient detail to EIA in order for them to
model WCI's impact on energy price forecasts.) Therefore, the energy
price forecasts used in today's supplemental notice include the impact
of one of the two regional cap-and-trade programs in the United States.
4. Repair and Maintenance Costs
Repair costs are those associated with repairing or replacing
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. For the
October 2008 NOPR, DOE did not include repair or maintenance costs in
its analyses. DOE maintained the same approach for this SNOPR.
5. Product Lifetime
For the October 2008 NOPR and today's SNOPR, DOE used a variety of
sources to establish low, average, and high estimates for product
lifetime. The average microwave oven lifetime used was 9.3 years. DOE
used a Weibull probability distribution to characterize microwave oven
lifetime.
6. Discount Rates
In the calculation of LCC, DOE applies discount rates to estimate
the present value of future operating costs. DOE estimated a
distribution of residential discount rates for microwave ovens. See
chapter 8 in the SNOPR TSD for further details on the development of
consumer discount rates.
To establish residential discount rates for the LCC analysis in the
October 2008 NOPR and today's SNOPR, DOE identified all debt or asset
classes that consumers might use to purchase household appliances,
including household assets that might be affected indirectly. It
estimated average percentage shares of the various debt or asset
classes for the average U.S. household using data from the Federal
Reserve Board's ``Survey of Consumer Finances'' (SCF) for 1989, 1992,
1995, 1998, 2001, 2004, and 2007. Using the SCF and other sources, DOE
then developed a distribution of rates for each type of debt and asset
to represent the rates that may apply in the year in which new
standards would take effect. DOE assigned each sample household a
specific discount rate drawn from one of the distributions. The average
rate across all types of household debt and equity, weighted by the
shares of each class, is 5.1 percent. DOE used the same approach for
today's supplemental notice.
7. Effective Date of New Standards
The effective date is the future date when parties subject to the
requirements of a new energy conservation standard must begin
compliance. For the NOPR, DOE assumed that any new standards adopted in
this rulemaking would become effective in March 2012, 3 years after the
month when it expected the final rule would be published in the Federal
Register. For today's SNOPR, DOE expects that the final rule will be
published in 2011, with new standards requiring compliance three years
later. Thus, DOE calculated the LCC for appliance consumers as if they
would purchase new products in 2014.
8. Product Energy Efficiency in the Base Case
For the LCC and PBP analysis, DOE analyzes higher efficiency levels
relative to a base case (i.e., the case without new energy conservation
standards). However, some consumers may already purchase products
having 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 estimates the distribution of
product efficiencies that consumers are expected to purchase under the
base case. DOE refers to this distribution of product energy
efficiencies as a base-case efficiency distribution. For the October
2008 NOPR and today's SNOPR, DOE used the current shares of available
models at specific standby power levels to establish the base-case
efficiency distributions. Table IV.8 presents the market shares of the
standby power levels in the base case for standby mode and off mode
energy use of microwave ovens.

Table IV.8--Microwave Ovens: Base-Case Market Shares
----------------------------------------------------------------------------------------------------------------
Product Class 1 Product Class 2
---------------------------------------------------
Level Standby 2005 Share Standby 2005 Share
power (W) (%) power (W) (%)
----------------------------------------------------------------------------------------------------------------
Baseline.................................................... 4.00 46.2 4.50 100.0
TSL1 \*\.................................................... 2.00 34.6 3.70 0.0
TSL 2....................................................... 1.50 19.2 2.70 0.0
TSL 3....................................................... 1.00 0.0 2.20 0.0
TSL 4....................................................... 0.02 0.0 0.04 0.0
----------------------------------------------------------------------------------------------------------------
* TSL = Trial Standard Level.

9. Inputs to Payback Period Analysis
The PBP is the amount of time (expressed in years) it takes the
consumer to recover the additional installed cost of a more efficient
product through operating cost savings, compared to the baseline
product. The simple payback period does not account for changes in
operating expenses over time or the time value of money. The inputs to
the PBP calculation are the total installed cost of the product to the
consumer for each efficiency level and the annual (first-year)
operating expenditures for each efficiency level. For the October 2008
NOPR and today's SNOPR, the PBP calculation uses the same inputs as the
LCC analysis, except that energy price trends and discount rates are
not needed.
10. Rebuttable-Presumption Payback Period
As noted above, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii))
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
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 first would be effective--in this case, 2014.

[[Page 8547]]

DOE received comments addressing the topic of using a rebuttable-
presumption payback period to establish the economic justification of
an energy conservation standard. The Joint Comment and EJ stated that
DOE's view that it is necessary to consider a full range of impacts
because the rebuttable presumption criterion is insufficient for
determining economic justification does not reflect the extent to which
the rebuttable-presumption analysis constrains DOE's authority to
reject standards based on economic impacts. (Joint Comment, No. 44 at
appendix B, p. 1; EJ, Public Meeting Transcript, No. 40.5 at p. 130)
The Joint Comment stated that in 42 U.S.C. 6295(o)(2)(B)(iii), Congress
erected a significant barrier to DOE's rejection, on the basis of
economic justifiability, of standard levels to which the rebuttable
presumption applies. Further, EJ and the Joint Comment stated DOE's
preference 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
typically has supported standards having 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)
In response, when examining potential standard levels DOE considers
both the rebuttable-presumption payback criteria, as well as a full
analysis that includes all seven relevant statutory criteria under 42
U.S.C. 6295(o)(2)(B)(i). DOE believes, however, that the commenters are
misinterpreting the statutory provision in question. The Joint Comment
and EJ state that DOE need not look beyond the results of the
rebuttable-presumption analysis, but DOE believes that the statute
contains no such restriction, and following this approach would
potentially force the agency to ignore other relevant information that
would bear on the selection of the most stringent standard level that
meets all applicable statutory criteria. 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 also would
lock in place a level that may not be economically justified based on a
full review of statutory criteria. EPCA already obligates DOE to select
the most stringent standard level that meets the applicable statutory
criteria.

E. National Impact Analysis--National Energy Savings and Net Present
Value Analysis

1. General
DOE's NIA assesses the national energy savings, as well as the
national NPV, of total consumer costs and savings expected to result
from new or amended standards at specific efficiency levels. DOE
applied the NIA spreadsheet to calculate 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 the two product classes from 2014 to 2043.
The forecasts provide annual and cumulative values for all four
parameters. In addition, DOE incorporated into its NIA spreadsheet the
capability to analyze sensitivity of the results to forecasted energy
prices and product efficiency trends. Table IV.9 summarizes the
approach and data DOE used to derive the inputs to the NES and NPV
analyses for the October 2008 NOPR and the changes made in the analyses
for today's SNOPR. A discussion of the 2008 inputs and the changes
follows. (See chapter 10 of the SNOPR TSD for further details.)

Table IV.9--Approach and Data Used To Derive Inputs to the National
Energy Savings and NPV Analyses
------------------------------------------------------------------------
2008 NOPR Changes for the
Inputs Description SNOPR
------------------------------------------------------------------------
Shipments................... Annual shipments See Table IV.10.
from shipments
model.
Compliance Date of Standard. 2012................ 2014.
Base-Case Forecasted Shipment-weighted No change.
Efficiencies. efficiency (SWEF)
determined in 2005.
SWEF held constant
over forecast
period.
Standards-Case Forecasted Analyzed as one Analyzed as two
Efficiencies. product class. Roll- product classes.
up scenario used Roll-up scenario
for determining used for
SWEF in the year determining SWEF in
that standards the year that
become effective standards become
for each standards effective for each
case. SWEF held standards case.
constant over SWEF held constant
forecast period. over forecast
period
Annual Energy Consumption Annual weighted- No change.
per Unit. average values as a
function of SWEF.
Total Installed Cost per Annual weighted- Incorporated
Unit. average values as a learning rate to
function of SWEF. forecast product
prices.
Energy Cost per Unit........ Annual weighted- No change.
average values as a
function of the
annual energy
consumption per
unit and energy
(and water) prices.
Repair Cost and Maintenance Incorporated changes No change.
Cost per Unit. in repair costs as
a function of
standby power.
Escalation of Energy Prices. AEO 2008 forecasts Updated to AEO 2010
(to 2030); May release
extrapolated to forecasts (to
2042. 2035); extrapolated
to 2043.
Energy Site-to-Source Conversion varies No change.
Conversion. yearly and is
generated by DOE/
EIA's NEMS program
(a time-series
conversion factor;
includes electric
generation,
transmission, and
distribution
losses).
Discount Rate............... 3 and 7 percent real No change.
Present Year................ Future expenses Future expenses
discounted to 2007. discounted to 2011.
------------------------------------------------------------------------

[[Page 8548]]

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
products that are the subject of this rulemaking. In projecting
microwave oven shipments, DOE accounted for two market segments: (1)
New construction; and (2) replacement of failed products. Because
shipments for new construction and replacements were not enough to
account for all product shipments, DOE developed another market segment
to calibrate its shipments model. In addition to normal replacements,
DOE's shipments model also assumed that a small fraction of the stock
would be replaced early. It also considered retired units not replaced.
DOE used the non-replacement market segment to calibrate the shipments
model to historical shipments data.
To estimate the impacts of prospective standards on product
shipments (i.e., to forecast 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.10 summarizes the approach and data DOE used to derive the
inputs to the shipments analysis for the October 2008 NOPR, and the
changes it made for today's SNOPR. The general approach for forecasting
microwave shipments for today's SNOPR remains unchanged from the NOPR.

Table IV.10--Approach and Data Used To Derive Inputs to the Shipments
Analysis
------------------------------------------------------------------------
2008 NOPR Changes for the
Inputs description SNOPR
------------------------------------------------------------------------
Number of Product Classes... One product class. Two product classes:
Market share data (1) All microwave
provided by AHAM. oven-only and
countertop
microwave oven-
combination; (2)
over-the-range
microwave oven-
combination. Market
share data provided
by AHAM; 99%
product class
1 and 1%
product class
2. Product
class market shares
held constant over
forecast period.
New Construction Shipments.. Housing forecasts No change in
updated with EIA approach. Housing
AEO 2009 April forecasts updated
release forecasts with EIA AEO 2010
for the Reference forecasts for the
case, High growth Reference case,
case, and Low High growth case,
growth case. and Low growth
case.
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.
Retired Units not Replaced Used to calibrate No change.
(i.e., non-replacements). shipments model to
historical
shipments data.
Historical Shipments........ Data sources include No change.
AHAM data submittal
and Appliance
magazine.
Purchase Price, Operating Developed ``relative No change.
Cost, and Household Income price'' elasticity,
Impacts due to Efficiency which accounts for
Standards. the purchase price
and the present
value of operating
cost savings
divided by
household income.
Used purchase price
and efficiency data
specific to
residential
refrigerators,
clothes washers,
and dishwashers
between 1980 and
2002 to determine a
``relative price''
elasticity of
demand of -0.34.
Fuel Switching.............. Not applicable...... No change.
------------------------------------------------------------------------

a. New Construction Shipments
To estimate shipments for new construction, DOE used forecasts of
housing starts coupled with microwave oven saturation data. In other
words, to forecast the shipments for new construction in any given
year, DOE multiplied the housing forecast by the forecasted saturation
of microwave ovens for new housing.
New housing comprises single- and multi-family units (also referred
to as ``new housing completions'') and mobile home placements. DOE
forecasted new housing based on EIA's AEO 2010 for 2005-2035. AEO 2010
provides three sets of forecasts: the Reference case, the High economic
growth case, and the Low economic growth case. DOE used the forecasts
from the Reference case for the NIA results reported in this notice.
For the Reference case, the forecast shows a decline in housing
completions from 2.2 million in 2005 to 1.7 million by 2030. For 2035-
2043, DOE froze completions at the level in 2035.
b. Replacements and Non-Replacements
To determine shipments for the replacement market, DOE used an
accounting method that tracks the total stock of units by vintage. DOE
estimated a stock of microwave ovens by vintage by integrating
historical shipments starting from 1972. Over time, some units are
retired and removed from the stock, triggering the shipment of a
replacement unit. Depending on the vintage, a certain percentage of
each type of unit will fail and need to be replaced. To determine when
a microwave oven fails, DOE used data from RECS and AHS to estimate a
product survival function. This function was modeled as a Weibull
distribution. Based on this method, the average calculated microwave
oven lifetime is 9.3 years. For a more complete discussion of microwave
lifetimes, refer to section 8.2.3 of chapter 8 of the SNOPR TSD.
3. Purchase Price, Operating Cost, and Income Impacts
To estimate the combined effects of increases in product purchase
price and decreases in product operating costs on microwave oven
shipments, for the October 2008 NOPR DOE used a

[[Page 8549]]

literature review and a statistical analysis on a limited set of
appliance price, efficiency, and shipments data. DOE used purchase
price and efficiency data specific to microwave ovens between 1980 and
2002 to conduct regression analyses. DOE's analysis suggested that the
relative short-run price elasticity of demand is -0.34.
Because DOE's forecast of shipments and national impacts
attributable to standards spans more than 30 years, DOE also considered
how the relative price elasticity is affected once a new standard takes
effect. After the purchase price changes, price elasticity becomes more
inelastic over the years until it reaches a terminal value. For the
October 2008 NOPR and today's SNOPR, 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, in time, become less sensitive to the
initial change in the product's relative price.
4. Other Inputs
a. 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 product under consideration
during the forecast period (i.e., from the estimated effective date of
a new standard to 30 years after that date). Because DOE had no data to
reasonably estimate how microwave oven standby power levels might
change during the next 30 years, it assumed that forecasted
efficiencies will stay at the 2014 standby power levels until the end
of the forecast period.
For its determination of the cases under alternative standard
levels (``standards cases''), DOE used a ``roll-up'' scenario in the
October 2008 NOPR to establish the SWEF for 2012. For today's SNOPR,
DOE established the SWEF for 2014 and 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. 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 efficiencies will
remain at the 2014 standby power level until the end of the forecast
period. 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 throughout the forecast period. Although the 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 each standards case
provides a reasonable estimate of the impact that standards would 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. DOE retained the approach used in the October 2008 NOPR
for today's SNOPR. Because the effective date of the standard is now
assumed to be 2014, DOE applied the ``roll-up'' scenario in the year
2014 to establish the SWEF for each standards case.
b. Annual Energy Consumption
The annual energy consumption per unit depends directly on product
efficiency. For the October 2008 NOPR and today's SNOPR, DOE used the
SWEFs associated with the base case and each standards case, in
combination with the annual energy use data, to estimate the shipment-
weighted average annual per-unit energy consumption under the base case
and standards cases. The national energy consumption is the product of
the annual energy consumption per unit and the number of units of each
vintage, which depends on shipments.
As noted above, DOE used a relative price elasticity to estimate
standards-case shipments for microwave ovens. To avoid the inclusion of
energy savings from any reduction in shipments attributable to a
standard, DOE used the standards-case shipments projection and the
standards-case stock to calculate the annual energy consumption in the
base case. For microwave ovens, DOE assumed that any drop in shipments
caused by standards would result in the purchase of used machines. DOE
retained the use of the base-case shipments to determine the annual
energy consumption in the base case for today's SNOPR.
c. Site-to-Source Energy Conversion
To estimate the national energy savings expected from appliance
standards, DOE uses a multiplicative factor to convert site energy
consumption (energy use at the location where the appliance is
operated) into primary or source energy consumption (the energy
required to deliver the site energy). For the October 2008 NOPR, DOE
used annual site-to-source conversion factors based on the version of
NEMS that corresponds to AEO 2008. For today's SNOPR, DOE used AEO
2010. For electricity, the conversion factors vary over time because of
projected changes in generation sources (i.e., the types of power
plants projected to provide electricity to the country). Because the
AEO does not provide energy forecasts beyond 2035, DOE used conversion
factors that remain constant at the 2035 values throughout the rest of
the forecast.
d. 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.
In the NOPR analysis, DOE assumed that the manufacturer costs and
retail prices of products meeting various efficiency levels remain
fixed, in real terms, throughout the period of the analysis. As
discussed in section IV.F.1, examination of historical price data for
certain appliances that have been subject to energy conservation
standards indicates that the assumption of constant real prices and
costs may, in many cases, over-estimate long-term appliance price
trends.
For the SNOPR, DOE applied a learning rate of 28.9 percent to
forecast the prices of microwave ovens sold in each year in the
forecast period (2014-2043). The learning rate expresses the change in
price associated with a doubling in cumulative production. The price in
each year is a function of the learning rate and the cumulative
production of microwave ovens forecast in each year. DOE applied the
same values to forecast prices for each product class at each
considered efficiency level. Learning curve analysis characterizes the
reduction in production cost mainly associated with labor-based
performance improvement and higher investment in new capital equipment
at the microeconomic level. Experience curve analysis tends to focus
more on entire industries and aggregates over various casual factors at
the macroeconomic level: ``Experience curve'' and ``progress function''
typically represent generalizations of the learning concept to
encompass behavior of all inputs to production and cost (i.e., labor,
capital, and materials).'' The economic literature often uses these two
terms interchangeably. The term

[[Page 8550]]

``learning'' is used here to broadly cover these general macroeconomic
concepts. The ``experience'' curve developed for microwave ovens is
based solely on shipments and PPI data specific to the United States.
Because all microwave ovens are manufactured outside of the country,
the changes observed in the PPI data are a result of efficiency gains
realized in production outside of the country. In other words,
``experience'' is currently a dynamic of global production and
distribution and is the cause for the changes observed in the PPI data.
To evaluate the impact of the uncertainty of the price trend
estimates, DOE performed price trend sensitivity calculations to
examine the dependence of the analysis results on different analytical
assumptions. DOE considered four learning rate sensitivities: (1) A
``high learning'' rate (34.7 percent); (2) a ``low learning'' rate
(21.3 percent); (3) a ``no learning'' rate (constant real prices); and
(4) a ``microwave oven only'' rate. The ``microwave oven only'' is
based on a limited set of historical price data specifically for
microwave ovens, and the learning rate is 39.6 percent.
The annual operating cost savings per unit include changes in
energy, repair, and maintenance costs. DOE forecasted energy prices for
the October 2008 NOPR based on AEO 2008; it updated the forecasts for
the SNOPR using data from AEO 2010. For the October 2008 NOPR and
today's SNOPR, DOE assumed no increases in repair and maintenance costs
for more efficient standby mode and off mode features of microwave
ovens.
e. Discount Rates
DOE multiplies monetary values in future years by a discount factor
to determine their present value. DOE estimated national impacts using
both a 3-percent and a 7-percent real discount rate, in accordance with
guidance provided by the Office of Management and Budget (OMB) to
Federal agencies on the development of regulatory 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-percent to 3-percent real discount rate for national impact analyses.
(Joint Comment, No. 44 at p. 11) It noted that societal discount rates
are the subject of extensive academic research, and the weight of
academic opinion is that the appropriate societal discount rate is 3
percent or less. It urged DOE to give primary weight to results based
on the lower of the discount rates recommended by OMB.
In response, DOE notes that OMB Circular A-4 references an earlier
Circular A-94, which states that a real discount rate of 7 percent
should be used as a base case for regulatory analysis. The 7-percent
rate is an estimate of the average before-tax rate of return to private
capital in the U.S. economy. It approximates the opportunity cost of
capital, and, according to Circular A-94, it is the appropriate
discount rate whenever the primary effect of a regulation is to
displace or alter the use of capital in the private sector. OMB later
found that the average rate of return to capital remains near the 7-
percent rate estimated in 1992. Circular A-4 also states that when
regulation primarily and directly affects private consumption, a lower
discount rate is appropriate. ``The alternative most often used is
sometimes called the social rate of time preference * * * the rate at
which `society' discounts future consumption flows to their present
value.'' It suggests that the real rate of return on long-term
government debt may provide a fair approximation of the social rate of
time preference, and states that during the past 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.'' In
accordance with the guidance from OMB Circular A-4, DOE did not give
primary weight to results derived using a 3-percent discount rate.
5. Effects of Standards on Energy Prices
The Joint Comment stated that the proposed standard's mitigation
effects on electricity prices should be documented and the value of
reduced electricity bills to all consumers quantified as a benefit.
(Joint Comment, No. 44 at p. 11) For the October 2008 NOPR, DOE
examined the impact of reduced energy demand associated with possible
cooking products standards on prices of electricity. DOE found that
reductions in electricity demand resulting from possible standards for
cooking products would produce no detectable change on the average user
price of electricity in the United States. DOE concluded that microwave
oven standby mode and off mode standards will not provide additional
economic benefits resulting from lower energy prices. Thus, for today's
SNOPR DOE has made no change to its assumptions about the effects of
microwave oven standards on energy prices.

F. Consumer Subgroup Analysis

In the October 2008 NOPR, DOE analyzed the potential effects of
microwave oven standby mode and off mode standards on two subgroups:
(1) Low-income consumers, and (2) consumers living in senior-only
households. DOE used the same approach for today's SNOPR.

G. Manufacturer Impact Analysis

DOE performed an MIA to estimate the financial impact of standby
mode and off mode energy conservation standards on microwave oven
manufacturers, and to calculate the impact of such standards on
domestic employment and manufacturing capacity. The MIA has both
quantitative and qualitative aspects. The quantitative part of the MIA
primarily relies on the GRIM--an industry-cash-flow model customized
for this rulemaking. The GRIM inputs are data characterizing the
industry cost structure, shipments, and revenues. The key output is the
industry net present value. 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 also includes
an assessment of the impacts of standards on subgroups of
manufacturers. DOE outlined its methodology for the MIA in the October
2008 NOPR. 73 FR 62034, 62075-81 (Oct. 17, 2008). The complete MIA is
presented in chapter 12 of the SNOPR TSD.
For today's SNOPR, DOE updated the MIA results based on several
changes to other analyses that impact the MIA. DOE revised the analysis
to account for the impacts on manufacturers resulting from standby mode
and off mode standards for Product Class 1 (Microwave-Only Ovens and
Countertop Combination Microwave Ovens) and Product Class 2 (Built-In
and Over-the-Range Combination Microwave Ovens). As discussed in
section IV.C.3, based on the engineering analysis, DOE included updated
manufacturer production costs (MPCs) for Product Class 1 and new MPCs
for Product Class 2. For the SNOPR DOE updated its engineering analysis
to 2010$ using the PPI. DOE also incorporated price trends into the
analysis. Incorporating prices trends rather than assuming prices
remain fixed in real terms throughout the analysis also impacts the MIA
results. DOE used the default prices trends in the NIA starting in the
base year of the analysis (2011) and continuing through the end of the
analysis period (2043). DOE also assumed that MPCs and MSPs were
similarly impacted by price trends in both the base case and standards
cases. See section IV.D.1 for a

[[Page 8551]]

description of how DOE implemented prices trends into the analysis.
The total shipments and efficiency distributions were updated using
the new estimates outlined in the SNOPR NIA. The MIA also uses the new
analysis period in the NIA (2013-2043) and has updated the base year to
2011. See section IV.E for a description of the changes to the NIA.
To segment total product and capital conversion costs between
Product Class 1 and Product Class 2, DOE used the same split between
these two product classes as used in the NIA. DOE used the same per-
platform costs at each standby power level for both product classes,
but converted these product and capital conversion costs to 2010$ using
the PPI. As described below, DOE also updated the product conversion
costs in response to comments from interested parties.
As noted in section IV.C.2, Whirlpool commented that its market
research suggests high costs associated with consumer education on
proper operation of microwave ovens with automatic power-down features.
Whirlpool clarified that the marketing costs it submitted for the ANOPR
did not include these costs, estimated at $10 million, including
retailer training, point-of-purchase material, product tags, telephone
support, and possibly more. (Whirlpool, No. 50 at p. 7) AHAM also
commented that DOE did not account for the all cost implications on
appliance manufacturers, including variables such as component
reliability and/or utility, both of which will impact manufacturer
cost. (AHAM, No. 47 at p. 6)
As part of the MIA conducted for the October 2008 NOPR, DOE
considered product and capital conversion costs associated with the
analyzed TSLs. Product conversion costs are one-time investments in
research, development, testing, and marketing, focused on making
product designs comply with new energy conservation standards. DOE
investigated available product information to estimate the number of
product platforms that would need to be updated at each TSL to
determine conversion costs for the entire industry. DOE also used
manufacturer interviews to verify the estimates used to determine
product conversion costs. For each TSL, DOE assumed that most of the
product conversion costs would be used for product development
expenses. To account for the majority of the cost to upgrade the
designs of product platforms that did not meet the standby power
requirements at each TSL, DOE estimated a per-platform cost for
engineering time, reliability testing, and product development that
varied depending on the complexity of the design options. In response
to Whirlpool's comment, DOE notes that the normal product cycle of
microwave ovens is less the 3-year period between the announcement and
the compliance date of the final rule, and some of these marketing
costs for rolling-out new products would have been incurred without
standards. However, to conservatively account for any of these
extraordinary marketing costs in that period, DOE also estimated for
the SNOPR a per-platform cost where it analyzed a power-down design
option to achieve the required standby power level. The marketing cost
equaled half the estimated engineering expense per platform. Chapter 12
of the SNOPR TSD contains more detailed information on the product
conversion costs for microwave oven manufacturers.
DOE also received a comment about the MIA results during the
October 2008 NOPR public meeting. In response to a discussion about
different possible design paths that might be taken by manufacturers to
reach higher efficiencies, LG questioned why the range of impacts on
INPV was great if DOE had trouble contacting some overseas
manufacturers. (LG, Public Meeting Transcript, No. 40.5 at p. 167-169).
Additional information and interviewing a greater number of
manufacturers would not affect the range of INPV impacts shown in the
NOPR. Rather, the range of potential impacts on microwave oven
manufacturers in the NOPR MIA analysis depended on two factors: The
magnitude of the conversion costs and the ability of manufacturers to
pass through the additional production costs to consumers at higher
TSLs. The production cost at the max-tech standby power level (TSL 4)
in the NOPR added $5.13 to the baseline MPC. If manufacturers could
fully pass through these additional production costs to consumers for
lower standby power, the additional cash flow from operations in the
NOPR MIA analysis would still not be enough to overcome the substantial
product and capital conversion costs, resulting in a loss of $35
million in INPV. If manufacturers could only pass through a portion of
the increased production costs, the lower per-unit profit lowered cash
flow from operations and resulted in a loss of $172 million in INPV. 73
FR 62034, 62096-99 (Oct. 17, 2008). Hence, feedback from manufacturers
was valuable to determine the standby power conversion costs and to
determine which scenarios were appropriate to calculate the potential
impacts on INPV.

H. Employment Impact Analysis

DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed standard. Employment impacts include
direct and indirect impacts. Direct employment impacts are changes in
the number of employees for manufacturers of the products subject to
standards, their suppliers, and related service firms. The MIA
addresses those 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 on energy by end users, (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.
One method for assessing the possible effects such shifts in
economic activity may have on the demand for labor is to compare
sectoral employment statistics developed by the Bureau of Labor
Statistics (BLS). BLS regularly publishes its estimates of the number
of jobs per million dollars of economic activity in different sectors
of the economy, as well as the jobs created elsewhere in the economy by
that same economic activity. Data from BLS indicate that expenditures
in the utility sector generally create fewer jobs (both directly and
indirectly) than do expenditures in other sectors of the economy.\20\
There are many reasons for the differences, including wage differences
and the fact that the utility sector is more capital-intensive and less
labor-intensive than many other sectors. Energy conservation standards
have the effect of reducing consumer utility bills. Because reduced
consumer expenditures for energy likely lead to increased expenditures
in other sectors of the economy, the general effect of energy
conservation standards is to shift economic activity from a less labor-
intensive sector (i.e., the utility sector) to more labor-intensive
sectors (e.g., the retail and manufacturing sectors). Thus, based on
the BLS data alone, DOE believes net national employment will increase
due to shifts in economic activity resulting from new standby mode and
off mode standards for microwave ovens.
---------------------------------------------------------------------------

\20\ See Bureau of Economic Analysis, ``Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II),'' Washington, DC, U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------

In developing the October 2008 NOPR and today's SNOPR, DOE
estimated

[[Page 8552]]

indirect national employment impacts using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies version 3.1.1
(ImSET). 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 having structural
coefficients to characterize economic flows among 187 sectors most
relevant to industrial, commercial, and residential building energy
use.
DOE notes that ImSET is not a general equilibrium forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis.\4\ Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run for this rule. Because ImSET predicts small
job impacts resulting from this rule, regardless of these
uncertainties, the actual job impacts are likely to be negligible in
the overall economy. DOE may consider the use of other modeling
approaches for examining long run employment impacts. DOE also notes
that the employment impacts estimated with ImSET for the entire economy
differ from the employment impacts in the microwaves manufacturing
sector estimated using the Government Regulatory Impact Model (GRIM) in
chapter 12 of the TSD. The methodologies used and the sectors analyzed
in the ImSET and GRIM models are different. Please see chapter 13 of
the TSD for additional details on the range of results generated from
the ImSET model.
EJ and the Joint Comment stated that DOE must consider its own
projections that an increase in employment will result from the
adoption of standards in weighing the economic costs and benefits of
more stringent energy conservation standards. (EJ Comment, Public
Meeting Transcript, No. 40.5 at p. 186; Joint Comment, No. 44 at p. 13)
As described above, when evaluating alternative standard levels DOE
considers the indirect employment impacts estimated using ImSet. Direct
employment impacts on the manufacturers that produce microwave ovens
are analyzed in the MIA, as discussed in section IV.G. For today's
SNOPR, DOE made no change to its method for estimating employment
impacts. EEI requested clarification on the methodology used to
estimate the national employment impacts when the majority of microwave
ovens are manufactured overseas. (EEI, Public Meeting Transcript at p.
185) The employment impacts analysis considers only the indirect
employment impacts expected to result from appliance standards. The
employment impacts in the affected appliance manufacturing industry are
assessed in the MIA. For the purposes of the employment impacts
analysis described in this section, the location of the manufacturing
facilities is not relevant. For further details, see chapter 13 of the
SNOPR TSD.

I. Utility Impact Analysis

The utility impact analysis estimates the change in the forecasted
power generation capacity for the Nation that would be expected to
result from adoption of new or amended standards. The analysis
determines the changes to electricity supply as a result of electricity
consumption savings due to standards. For the October 2008 NOPR and
today's SNOPR, DOE used the NEMS-BT computer model to calculate these
changes. The analysis output provides a forecast for the needed
generation capacities at each TSL. The estimated net benefit of a
standard is the difference between the generation capacities forecasted
by NEMS-BT and the AEO Reference case. DOE obtained the energy savings
inputs from the NIA. Those inputs reflect the effects of standby mode
and off mode energy use reduction on electricity consumption of
microwave ovens. Chapter 14 of the SNOPR TSD presents results of the
utility impact analysis.

J. Emissions Analysis

In the emissions analysis, DOE estimated the reduction in power
sector emissions of CO2, NOX, and Hg from energy
conservation standards for microwave oven standby mode and off mode
energy use. DOE used the NEMS-BT computer model, which is run similarly
to the AEO NEMS, except that microwave oven standby mode and off mode
energy use is reduced by the amount of energy saved at each TSL. The
inputs of national energy savings come from the NIA spreadsheet model,
while the output is the forecasted physical emissions. The net benefit
of each TSL in today's proposed rule is the difference between the
forecasted emissions estimated by NEMS-BT at each TSL and the AEO 2010
Reference case. NEMS-BT tracks CO2 emissions using a
detailed module that provides results with broad coverage of all
sectors and inclusion of interactive effects. For today's SNOPR, DOE
used AEO 2010. For the final rule, DOE intends to revise the emissions
analysis using the most current version of NEMS.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap and trading
programs, and DOE has preliminarily determined that these programs
create uncertainty about the standards' impact on SO2
emissions. Title IV of the Clean Air Act sets an annual emissions cap
on SO2 for affected EGUs in all 50 States and the District
of Columbia (DC). SO2 emissions from 28 eastern States and
DC are also limited under the Clean Air Interstate Rule (CAIR, 70 FR
25162 (May 12, 2005)), which created an allowance-based trading program
that would gradually replace the Title IV program in those States and
DC. Although CAIR was remanded to EPA by the U.S. Court of Appeals for
the District of Columbia Circuit (DC Circuit), see North Carolina v.
EPA, 550 F.3d 1176 (DC Cir. 2008), it remained in effect temporarily,
consistent with the DC Circuit's earlier opinion in North Carolina v.
EPA, 531 F.3d 896 (DC Cir. 2008). On July 6, 2010, EPA issued the
Transport Rule proposal, a replacement for CAIR (75 FR 45210 (Aug. 2,
2010)); and on July 6, 2011 EPA issued the final Transport Rule,
entitled the Cross-State Air Pollution Rule. 76 FR 48208 (Aug. 8,
2011). On December 30, 2011, however, the DC Circuit stayed the new
rules while a panel of judges reviews them, and told EPA to continue
enforcing CAIR (see EME Homer City Generation v. EPA, No. 11-1302,
Order at *2 (DC Cir. Dec. 30, 2011)). The AEO 2011 NEMS-BT used for
today's NOPR assumes the implementation of CAIR.
The attainment of emissions caps typically is flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the imposition of an energy conservation standard could be used to
permit offsetting increases in SO2 emissions by any
regulated EGU. However, if the standard resulted in a permanent
increase in the quantity of unused emissions allowances, there would be
an overall reduction in SO2 emissions from the standards.
While there remains some uncertainty about the ultimate effects of
energy conservation standards on SO2 emissions covered by
the existing cap-and-trade system, the NEMS-BT modeling system that DOE
uses to forecast emissions reductions currently indicates that no
physical reductions in power sector emissions would occur for
SO2.

[[Page 8553]]

As discussed above, the version of NEMS-BT used for today's SNOPR
assumes the implementation of CAIR, which established a cap on
NOX emissions in 28 eastern States and the District of
Columbia. With CAIR in effect, the energy conservation standards for
microwave oven standby mode and off mode energy use are expected to
have little or no physical effect on these emissions in those States
covered by CAIR, for the same reasons that they may have little effect
on SO2 emissions. However, the standards would be expected
to reduce NOX emissions in those 22 States not affected by
the CAIR. For these 22 States, DOE used NEMS-BT to estimate
NOX emission reductions from the standards that are
considered in today's SNOPR.
On December 21, 2011, EPA announced national emissions standards
for hazardous air pollutants (NESHAPs) for mercury and certain other
pollutants emitted from coal and oil-fired EGUs. (See http://epa.gov/mats/pdfs/20111216MATSfinal.pdf.) The NESHAPs do not include a trading
program and, as such, DOE's energy conservation standards would likely
reduce Hg emissions. For the emissions analysis for this rulemaking,
DOE estimated mercury emissions reductions using NEMS-BT based on
AEO2010, which does not incorporate the NESHAPs. DOE expects that
future versions of the NEMS-BT model will reflect the implementation of
the NESHAPs.

K. Monetizing Carbon Dioxide and Other Emissions Impacts

As part of the development of this proposed rule, DOE considered
the estimated monetary benefits likely to result from the reduced
emissions of CO2 and NOX that are expected to
result from each of the TSLs considered. In order to make this
calculation similar to the calculation of the NPV of consumer benefit,
DOE considered the reduced emissions expected to result over the
lifetime of products shipped in the forecast period for each TSL. This
section summarizes the basis for the monetary values used for each of
these emissions and presents the values considered in this rulemaking.
For today's SNOPR, DOE is relying on a set of values for the SCC
that was developed by an interagency process. A summary of the basis
for those values is provided below, and a more detailed description of
the methodologies used is provided as an appendix to chapter 16 of the
SNOPR TSD.

1. Social Cost of Carbon

Under section 1(b)(6) of Executive Order 12866, 58 FR 51735 (Oct.
4, 1993), agencies must, to the extent permitted by law, ``assess both
the costs and the benefits of the intended regulation and, recognizing
that some costs and benefits are difficult to quantify, propose or
adopt a regulation only upon a reasoned determination that the benefits
of the intended regulation justify its costs.'' The purpose of the SCC
estimates presented here is to allow agencies to incorporate the
monetized social benefits of reducing CO2 emissions into
cost-benefit analyses of regulatory actions that have small, or
``marginal,'' impacts on cumulative global emissions. The estimates are
presented with an acknowledgement of the many uncertainties involved
and with a clear understanding that they should be updated over time to
reflect increasing knowledge of the science and economics of climate
impacts.
As part of the interagency process that developed the SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) changes in net agricultural
productivity, human health, property damages from increased flood risk,
and the value of ecosystem services. Estimates of the SCC are provided
in dollars per metric ton of carbon dioxide.
When attempting to assess the incremental economic impacts of
carbon dioxide emissions, the analyst faces a number of serious
challenges. A recent report from the National Research Council \21\
points out that any assessment will suffer from uncertainty,
speculation, and lack of information about (1) future emissions of
greenhouse gases, (2) the effects of past and future emissions on the
climate system, (3) the impact of changes in climate on the physical
and biological environment, and (4) the translation of these
environmental impacts into economic damages. As a result, any effort to
quantify and monetize the harms associated with climate change will
raise serious questions of science, economics, and ethics and should be
viewed as provisional.
---------------------------------------------------------------------------

\21\ National Research Council. ``Hidden Costs of Energy:
Unpriced Consequences of Energy Production and Use.'' National
Academies Press: Washington, DC 2009.
---------------------------------------------------------------------------

Despite the serious limits of both quantification and monetization,
SCC estimates can be useful in estimating the social benefits of
reducing carbon dioxide emissions. Consistent with the directive quoted
above, the purpose of the SCC estimates presented here is to make it
possible for agencies to incorporate the social benefits from reducing
carbon dioxide emissions into cost-benefit analyses of regulatory
actions that have small, or ``marginal,'' impacts on cumulative global
emissions. Most Federal regulatory actions can be expected to have
marginal impacts on global emissions.
For such policies, the agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC value
appropriate for that year. The net present value of the benefits can
then be calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years. This
approach assumes that the marginal damages from increased emissions are
constant for small departures from the baseline emissions path, an
approximation that is reasonable for policies that have effects on
emissions that are small relative to cumulative global carbon dioxide
emissions. For policies that have a large (non-marginal) impact on
global cumulative emissions, there is a separate question of whether
the SCC is an appropriate tool for calculating the benefits of reduced
emissions. This concern is not applicable to this notice, and DOE does
not attempt to answer that question here.
At the time of the preparation of this supplemental notice, the
most recent interagency estimates of the potential global benefits
resulting from reduced CO2 emissions in 2010, expressed in
2010$, were $4.9, $22.3, $36.5, and $67.6 per metric ton avoided. For
emissions reductions that occur in later years, these values grow in
real terms over time. Additionally, the interagency group determined
that a range of values from 7 percent to 23 percent should be used to
adjust the global SCC to

[[Page 8554]]

calculate domestic effects,\22\ although preference is given to
consideration of the global benefits of reducing CO2
emissions.
---------------------------------------------------------------------------

\22\ It is recognized that this calculation for domestic values
is approximate, provisional, and highly speculative. There is no a
priori reason why domestic benefits should be a constant fraction of
net global damages over time.
---------------------------------------------------------------------------

It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. Specifically, the interagency group has set a preliminary
goal of revisiting the SCC values within 2 years or at such time as
substantially updated models become available, and to continue to
support research in this area. In the meantime, the interagency group
will continue to explore the issues raised by this analysis and
consider public comments as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
To date, economic analyses for Federal regulations have used a wide
range of values to estimate the benefits associated with reducing
carbon dioxide emissions. In the model year 2011 CAFE final rule, the
Department of Transportation (DOT) used both a ``domestic'' SCC value
of $2 per ton of CO2 and a ``global'' SCC value of $33 per
ton of CO2 for 2007 emission reductions (in 2007$),
increasing both values at 2.4 percent per year. It also included a
sensitivity analysis at $80 per ton of CO2. See Average Fuel
Economy Standards Passenger Cars and Light Trucks Model Year 2011, 74
FR 14196 (March 30, 2009) (Final Rule); Final Environmental Impact
Statement Corporate Average Fuel Economy Standards, Passenger Cars and
Light Trucks, Model Years 2011-2015 at 3-90 (Oct. 2008) (Available at:
http://www.nhtsa.gov/fuel-economy). A domestic SCC value is meant to
reflect the value of damages in the United States resulting from a unit
change in carbon dioxide emissions, while a global SCC value is meant
to reflect the value of damages worldwide.
A 2008 regulation proposed by DOT assumed a domestic SCC value of
$7 per ton of CO2 (in 2006$) for 2011 emission reductions
(with a range of $0 to $14 for sensitivity analysis), also increasing
at 2.4 percent per year. See Average Fuel Economy Standards, Passenger
Cars and Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 2008)
(Proposed Rule); Draft Environmental Impact Statement Corporate Average
Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years
2011-2015 at 3-58 (June 2008) (Available at: http://www.nhtsa.gov/fuel-economy). A regulation for packaged terminal air conditioners and
packaged terminal heat pumps finalized by DOE in October of 2008 used a
domestic SCC range of $0 to $20 per ton CO2 for 2007
emission reductions (in 2007$). 73 FR 58772, 58814 (Oct. 7, 2008). In
addition, EPA's 2008 Advance Notice of Proposed Rulemaking on
Regulating Greenhouse Gas Emissions Under the Clean Air Act identified
what it described as ``very preliminary'' SCC estimates subject to
revision. 73 FR 44354 (July 30, 2008). EPA's global mean values were
$68 and $40 per ton CO2 for discount rates of approximately
2 percent and 3 percent, respectively (in 2006$ for 2007 emissions).
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across agencies, the Administration sought to
develop a transparent and defensible method, specifically designed for
the rulemaking process, to quantify avoided climate change damages from
reduced CO2 emissions. The interagency group did not
undertake any original analysis. Instead, it combined SCC estimates
from the existing literature to use as interim values until a more
comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33,
$19, $10, and $5 per ton of CO2. These interim values
represent the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules and were offered for public comment in connection with
proposed rules, including the joint EPA-DOT fuel economy and
CO2 tailpipe emission proposed rules.
c. Current Approach and Key Assumptions
Since the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates, which
were considered for this proposed rule. Specifically, the group
considered public comments and further explored the technical
literature in relevant fields. The interagency group relied on three
integrated assessment models (IAMs) commonly used to estimate the SCC:
The FUND, DICE, and PAGE models.\23\ These models are frequently cited
in the peer-reviewed literature and were used in the last assessment of
the Intergovernmental Panel on Climate Change. Each model was given
equal weight in the SCC values that were developed.
---------------------------------------------------------------------------

\23\ The models are described in appendix 15-A of the SNOPR TSD.
---------------------------------------------------------------------------

Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
The interagency group selected four SCC values for use in
regulatory analyses. Three values are based on the average SCC from
three integrated assessment models, at discount rates of 2.5 percent, 3
percent, and 5 percent. The fourth value, which represents the 95th
percentile SCC estimate across all three models at a 3-percent discount
rate, is included to represent higher-than-expected impacts from
temperature change further out in the tails of the SCC distribution.
For emissions (or emission reductions) that occur in later years, these
values grow in real terms over time, as depicted in Table IV.11.

[[Page 8555]]

Table IV.11--Social Cost of CO2, 2010-2050
[In 2007 dollars per metric ton]
----------------------------------------------------------------------------------------------------------------
Discount Rate %
--------------------------------------------------
Year 5 3 2.5 3
--------------------------------------------------
Average Average Average 95th Percentile
----------------------------------------------------------------------------------------------------------------
2010......................................................... 4.7 21.4 35.1 64.9
2015......................................................... 5.7 23.8 38.4 72.8
2020......................................................... 6.8 26.3 41.7 80.7
2025......................................................... 8.2 29.6 45.9 90.4
2030......................................................... 9.7 32.8 50.0 100.0
2035......................................................... 11.2 36.0 54.2 109.7
2040......................................................... 12.7 39.2 58.4 119.3
2045......................................................... 14.2 42.1 61.7 127.8
2050......................................................... 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------

It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable since they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned above points out that there is tension between
the goal of producing quantified estimates of the economic damages from
an incremental ton of carbon and the limits of existing efforts to
model these effects. There are a number of concerns and problems that
should be addressed by the research community, including research
programs housed in many of the agencies participating in the
interagency process to estimate the SCC.
DOE recognizes the uncertainties embedded in the estimates of the
SCC used for cost-benefit analyses. As such, DOE and others in the U.S.
Government intend to periodically review and reconsider those estimates
to reflect increasing knowledge of the science and economics of climate
impacts, as well as improvements in modeling. In this context,
statements recognizing the limitations of the analysis and calling for
further research take on exceptional significance.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the most recent values
identified by the interagency process, adjusted to 2010$ using the GDP
price deflator. For each of the four cases specified, the values used
for emissions in 2010 were $4.9, $22.3, $36.5, and $67.6 per metric ton
avoided (values expressed in 2010$).\24\ To monetize the CO2
emissions reductions expected to result from amended standards for
microwave ovens, DOE used the values identified in Table A1 of the
``Social Cost of Carbon for Regulatory Impact Analysis Under Executive
Order 12866,'' which is reprinted in appendix 16-A of the SNOPR TSD,
appropriately escalated to 2010$. To calculate a present value of the
stream of monetary values, DOE discounted the values in each of the
four cases using the specific discount rate that had been used to
obtain the SCC values in each case.
---------------------------------------------------------------------------

\24\ Table A1 presents SCC values through 2050. For DOE's
calculation, it derived values after 2050 using the 3-percent per
year escalation rate used by the interagency group.
---------------------------------------------------------------------------

Several parties provided comments regarding the economic valuation
of CO2 for the October 2008 NOPR. Whirlpool does not support
an attempt to value those emissions as part of this rulemaking.
(Whirlpool, No. 50 at p. 8) DOE believes that, in keeping with
Executive Order 12866, placing an economic value on avoided
CO2 emissions is necessary for a proper assessment of the
costs and benefits of energy efficiency standards. For this SNOPR, DOE
has updated its valuation of emission reductions based on the most
recent recommendations from the interagency group. DOE has considered a
wide range of values per ton of avoided CO2. As stated
previously, the estimates are presented with an acknowledgement of the
many uncertainties involved and with a clear understanding that they
should be updated over time to reflect increasing knowledge of the
science and economics of climate impacts.
2. Valuation of Other Emissions Reductions
DOE investigated the potential monetary benefit of reduced
NOX emissions from the TSLs it considered. As noted above,
new or amended energy conservation standards would reduce
NOX emissions in those 22 States that are not affected by
the CAIR. DOE estimated the monetized value of NOX emissions
reductions resulting from each of the TSLs considered for today's SNOPR
based on environmental damage estimates found in the relevant
scientific literature. Available estimates suggest a very wide range of
monetary values, ranging from $370 per ton to $3,800 per ton of
NOX from stationary sources, measured in 2001$ (equivalent
to a range of $450 to $4,623 per ton in 2010$).\25\ In accordance with
OMB guidance, DOE conducted two calculations of the monetary benefits
derived using each of the economic values used for NOX, one
using a real discount rate of 3 percent and the other using a real
discount rate of 7 percent.\26\
---------------------------------------------------------------------------

\25\ For additional information, refer to U.S. 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
\26\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------

DOE is aware of multiple agency efforts to determine the
appropriate range of values used in evaluating the potential economic
benefits of reduced Hg emissions. DOE has decided to await further
guidance regarding consistent valuation and reporting of Hg emissions
before it once again monetizes Hg in its rulemakings.

L. Discussion of Other Comments

1. Off Mode Power Consumption
In the October 2008 NOPR, DOE determined that a microwave oven
would be considered to be in off mode if it is plugged in to a main
power source, is not being used for an active function such as cooking
or defrosting, and is not consuming power for any standby mode
function. 73 FR 62034, 62042 (Oct. 17, 2008). Hypothetically, a
microwave with mechanical controls and no display or cooking sensor but
that consumes power for components such as a power supply when the unit

[[Page 8556]]

is not activated would be considered to be in off mode. DOE believed no
such microwave ovens were available on the market, and was unaware of
any microwave ovens available that could operate in off mode.
Therefore, DOE proposed no off-mode power consumption energy
conservation standard. DOE requested input and data regarding off mode
power for microwave ovens.
Despite DOE's test results indicating that no current microwave
oven can operate in off mode, AHAM recommended that some level of power
should be allowed in off mode for the following reasons:
(1) Harmonization, particularly with Europe, which is implementing
a 0.5 W standard on off mode in 2013;
(2) Consistency in standby mode and off mode definitions among all
NAECA-covered products;
(3) Off mode and standby mode are linked, in that standby power
requirements may result in previously unused features, such as a small
LED indicating that power is running to the unit, but the unit is in
standby mode; and
(4) Power use and conversion concerns (i.e., harmonics \27\) may
necessitate some protective capability, which falls into the definition
of off mode.
---------------------------------------------------------------------------

\27\ Harmonics are waveforms of voltage or current that are
multiples of the fundamental main power frequency. Harmonics can
cause disruption to equipment connected to the main power and lead
to component failures.
---------------------------------------------------------------------------

AHAM urged DOE to consider adopting AHAM's proposed clarifications
and examples for off mode power included in Exhibit 1. These guidelines
allow for a single definition to be used for all products. (AHAM, No.
47 at p. 5)
Whirlpool commented that the addition of off mode to the proposed
rule is very important to assure that all power consumption is properly
accounted for. (Whirlpool, No. 50 at p. 4)
DOE generally agrees with the topics addressed in these comments.
Consistency between covered products and international harmonization
are important issues to be considered in energy conservation standards
rulemakings, as is properly accounting for all power consumption.
However, DOE received no comments indicating that any microwave ovens
with off mode capability are currently available or expected to become
available on the market. In the concurrent microwave oven test
procedure rulemaking, DOE investigated the potential for microwave
ovens with an on/off switch to operate in off mode. DOE determined that
microwave ovens with such a configuration would be capable of operating
in off mode, but that operation in off mode due to the activation of an
on/off switch would be associated with zero energy consumption.
Therefore, DOE continues to propose no standard for off mode power in
microwave ovens because it believes there would be no benefit
associated with such a standard.
2. Proposed Standards for Microwave Oven Standby Mode and Off Mode
Energy Use
For the October 2008 NOPR, DOE made the preliminary determination
that a maximum standby power standard of 1.0 W for microwave ovens is
technologically feasible and economically justified. 73 FR 62034, 62120
(Oct. 17, 2008). DOE requested comments and views of interested parties
on the proposed standards for microwave ovens. Id. at 62133.
EEI stated that the proposed standard of 1.0 W is too aggressive
because typical microwave ovens have standby power consumption of 2 to
4 W. This power is used for functions that consumers find useful (such
as clocks and cooking sensors). EEI noted that DOE should work with
AHAM to set a different standard that does not compromise
functionality. EEI suggested a standard of 2.0 to 3.0 W, which should
provide more flexibility to manufacturers and provide national energy
savings. (EEI, No. 56 at p. 2)
As discussed in the October 2008 NOPR and this SNOPR, DOE is aware
of various strategies manufacturers could employ to reduce standby
power consumption while maintaining consumer utility. DOE's analysis in
today's SNOPR indicates that a 1-W standard for microwave-only ovens
and countertop combination microwave ovens would be technically
feasible and economically justified. DOE is not proposing a 1-W
standard for built-in and over-the-range combination microwave ovens
because such a level was not found to be technically feasible while
maintaining consumer utility (i.e., automatic power-down would be
necessary to meet that standby power level).
The Joint Comment and ASAP support the proposed standard. According
to the Joint Comment, the proposal is in keeping with national and
international efforts to limit product standby power. (Joint Comment,
No. 44 at p. 10; ASAP, Public Meeting Transcript, No. 40.5 at p. 32)
AHAM stated that it believes all the TSLs are appropriate,
including the TSL on which the proposed standard is based. AHAM stated
that much of the world is moving towards the IEA 1-Watt Program. (AHAM,
Public Meeting Transcript, No. 40.5 at p. 83) Nevertheless, AHAM stated
its opposition to the proposed standard, due in part to the lack of
sufficient time for manufacturers to evaluate the viability or
feasibility of the proposed technologies. AHAM proposed that DOE issue
a ``no standard'' standard on microwave ovens or postpone the current
rulemaking on microwave oven standby power until a robust test
procedure is published and data are collected using the clarified test
procedure to define potential standby power requirements. If the ``no
standard'' standard is issued, standby power may be addressed during
the next cooking products rulemaking or through negotiation. (AHAM, No.
47 at pp. 3-4) AHAM also commented that the proposed standard's
effective date of 2012 is inconsistent with the timing in the rest of
the world. (AHAM, Public Meeting Transcript, No. 40.5 at p. 27) GE
recommended that DOE should postpone the microwave oven standby power
rulemaking until a robust test procedure is published or, in the
alternative, issue a ``no standard'' standard on microwave ovens. GE
further stated that it believes there are critical gaps in the
engineering analysis used to justify the proposed standard. (GE, No. 48
at p. 2) GE commented that if the microwave oven standby and off mode
rulemaking is not postponed, DOE should issue a ``no standard''
standard on microwave ovens. (GE, No. 48 at p. 2)
Whirlpool commented that it does not support the proposed standard.
(Whirlpool, No. 50 at p. 1) Further, Whirlpool stated that DOE's
rulemaking timeline should take into account international changes in
microwave oven standards. According to Whirlpool, any changes in U.S.
policy that coincided with changes in policy around the world would be
significantly advantageous to manufacturers. (Whirlpool, Public Meeting
Transcript, No. 40.5 at p. 29)
Since the publication of the October 2008 NOPR, DOE has amended the
microwave oven test procedure for microwave ovens to measure standby
mode and off mode power consumption. These amendments appear in the
March 2011 TP Interim Final Rule. 76 FR 12825 (Mar. 9, 2011). The
amendments incorporate by reference certain provisions of IEC Standard
62301 First Edition, 2005-06, which is an international test procedure
addressing standby mode and off mode power measurement. In addition, in
order to

[[Page 8557]]

ensure that the amended test procedure adequately addresses the EISA
2007 requirement to consider the most recent version of IEC Standard
62301 (42 U.S.C. 6295(gg)(2)(A)), and recognizing that the IEC was
expected to issue IEC Standard 62301 (Second Edition) in the same
timeframe as DOE was planning to publish the amended test procedure,
DOE issued the microwave oven test procedure on an interim final basis.
The March 2011 TP Interim Final Rule offered a 180-day comment period,
and to the extent necessary, DOE is considering appropriate adjustments
based on comments received. Also since the publication of the October
2008 NOPR, DOE conducted further analyses in support of this energy
conservation standards rulemaking, including the evaluation of
combination microwave ovens.
In considering standards for today's SNOPR, DOE is proposing two
product classes for microwave ovens: (1) Microwave-only ovens and
countertop combination microwave ovens; and (2) built-in and over-the-
range combination microwave ovens. DOE believes the analyses conducted
for microwave ovens in the October 2008 NOPR remains valid for the
microwave-only oven and countertop combination microwave oven product
class. However, these analyses have been updated to reflect more
current results, where applicable. DOE conducted additional analyses
for the built-in and over-the-range combination microwave oven product
class. The approach and results for proposed standard levels for
today's SNOPR are discussed in section IV.
3. Manufacturer Tax Credits Impact on Market Adoption of More Efficient
Products
Whirlpool commented that the analysis cites dated studies which
suggest that the consumer sees little economic benefit of manufacturer
tax credits. Not covered in this analysis is that the tax credits
provide manufacturers some of the cash flow necessary to invest in the
development of ever more efficient products. Thus, the consumer sees
significant benefit in the form of increasingly energy and water
efficient products in the marketplace. (Whirlpool, No. 50 at p. 9)
As described in chapter 17 of the SNOPR TSD on the Regulatory
Impact Analysis (RIA), DOE analyzed non-regulatory alternatives to
minimum energy conservation standards, including manufacturer tax
credits. The RIA assesses the national energy savings and economic
impacts (i.e., NPV) of the non-regulatory alternatives relative to the
national impacts from minimum energy conservation standards. In the
case of manufacturer tax credits, DOE agrees that they provide
manufacturers the financial means to develop and sell more efficient
products and that the resulting consumer purchase price would be
partially mitigated by the tax credits. However, DOE estimated that tax
credits would be paid for by consumers in another form (such as
additional taxes), and therefore did not include them as a consumer
benefit for the purposes of calculating the national NPV. DOE did
estimate that manufacturer tax credits will lead to an increase in the
sales of more energy-efficient products. DOE determined, however, that
the rate of adoption of more efficient products due to manufacturer tax
credits is not as great as that from mandatory minimum energy
conservation standards. For more details on DOE's analysis of
manufacturer tax credits and all non-regulatory alternatives, refer to
chapter 17 of the SNOPR TSD.

V. Analytical Results

A. Trial Standard Levels

DOE analyzed the benefits and burdens of a number of TSLs for the
microwave oven standby mode and off mode energy use that are the
subject of today's proposed rule. For the October 2008 NOPR, DOE based
the TSLs on standby power levels explored in the November 2007 ANOPR,
and selected the TSLs on consideration of economic factors and current
market conditions. As discussed previously in section IV, given the
small number of standby power levels analyzed, DOE maintained all four
of the standby power levels to consider as TSLs.
Table V.1 shows the TSLs for microwave oven standby mode and off
mode energy use. In all, DOE has considered four TSLs. TSL 1
corresponds to the first candidate standard level from each product
class and represents the standby power level for each class with the
least significant design change. TSL 4 corresponds to the max-tech
efficiency levels. TSLs 2 and 3 are intermediate levels between TSL 1
and TSL 4.

Table V.1--Trial Standard Levels for Microwave Oven Standby Mode and Off
Mode Energy Use
------------------------------------------------------------------------
Standby power (W)
---------------------------------------
Product Class 1: Product Class 2:
Trial standard level Microwave-only and Built-in and over-
countertop the-range
combination combination
------------------------------------------------------------------------
TSL 1........................... 2.00 3.70
TSL 2........................... 1.50 2.70
TSL 3........................... 1.00 2.20
TSL 4........................... 0.02 0.04
------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
To evaluate the net economic impact of standards on consumers, DOE
conducted LCC and PBP analyses for each TSL. In general, a higher-
efficiency product would affect consumers in two ways: (1) Annual
operating expense would decrease; and (2) purchase price would
increase. Section IV.D of this notice discusses the inputs DOE used for
calculating the LCC and PBP.
The key outputs of the LCC analysis are a mean LCC savings relative
to the baseline product design, as well as a probability distribution
or likelihood of LCC reduction or increase, for each TSL and product
class. The LCC analysis also estimates the fraction of consumers for
which the LCC will decrease (net benefit), increase (net cost), or
exhibit no change (no impact) relative to the base-case product
forecast. No impacts occur when the product efficiencies of the base-
case forecast already equal or exceed the efficiency at a given TSL.
Table V.2 and Table V.3 show the LCC and PBP results for both
microwave oven product classes. Note that for built-in and over-the-
range combination

[[Page 8558]]

microwave ovens, 100 percent of consumers of such products in 2014 are
assumed to be using a combination microwave oven in the base case. Any
decrease in standby power would affect 100 percent of the market.

Table V.2--Microwave-Only Ovens and Countertop Combination Microwave Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost ($) Life-cycle cost savings
------------------------------------------------------------------------------ Payback
Standby % Households with period
TSL power (W Average Average Average Average ------------------------------ (years)
installed operating LCC savings $ No Net Median
price cost Net cost impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................................... 4.00 $223 $31 $254 NA 0 100 0 NA
1................................................. 2.00 224 15 239 7 0 54 46 0.2
2................................................. 1.50 224 12 236 10 0 19 81 0.4
3................................................. 1.00 225 8 233 13 0 0 100 1.1
4................................................. 0.02 230 0 230 15 0 0 100 2.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table V.3--Built-in and Over-the-Range Combination Microwave Ovens: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost ($) Life-cycle cost savings
------------------------------------------------------------------------------ Payback
Standby % Households with period
TSL power (W) Average Average Average Average ------------------------------ (years)
installed operating LCC Savings No Net median
price cost Net cost impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................................... 4.50 $482 $35 $517 NA 0 100 0 NA
1................................................. 3.70 482 29 511 $6 0 0 100 0.0
2................................................. 2.70 486 21 506 11 0 0 100 1.9
3................................................. 2.20 496 17 513 4 21 0 79 6.3
4................................................. 0.04 490 0 490 27 0 0 100 1.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Consumer Subgroup Analysis
Using the LCC spreadsheet model, DOE determined the impact of the
standards on the following microwave oven consumer subgroups: senior-
only households and low-income households. Table V.4 and Table V.5
compare the average LCC savings for senior-only households and low-
income households with those for all households. The LCC impacts for
senior-only and low-income households are essentially the same as they
are for the general population.

Table V.4--Microwave-Only Ovens and Countertop Combination Microwave Ovens: Comparison of Average LCC Savings
for Consumer Subgroups and All Households
----------------------------------------------------------------------------------------------------------------
Standby Senior-only Low-income All
TSL power (W) households households households
----------------------------------------------------------------------------------------------------------------
1........................................................... 2.00 $7 $7 $7
2........................................................... 1.50 10 10 10
3........................................................... 1.00 12 12 13
4........................................................... 0.02 15 15 15
----------------------------------------------------------------------------------------------------------------

Table V.5--Built-In and Over-the-Range Combination Microwave Ovens: Comparison of Average LCC Savings for
Consumer Subgroups and All Households
----------------------------------------------------------------------------------------------------------------
Standby Senior-only Low-income All
TSL power (W) households households households
----------------------------------------------------------------------------------------------------------------
1........................................................... 3.70 $6 $6 $6
2........................................................... 2.70 10 10 11
3........................................................... 2.20 4 4 4
4........................................................... 0.04 27 27 27
----------------------------------------------------------------------------------------------------------------

c. Rebuttable-Presumption Payback
As discussed above, EPCA establishes a rebuttable presumption that,
in essence, an energy conservation standard is economically justified
if the increased purchase cost for product that meets the standard is
less than three times the value of the first-year energy savings
resulting from the standard. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE
calculated a rebuttable-presumption payback period for each TSL to
determine whether DOE could presume that a standard at that level is
economically justified. Table V.6 shows the rebuttable-presumption
payback periods for the microwave oven standby mode and off mode TSLs.
Because only a single, average value is necessary for establishing the
rebuttable-presumption payback period, rather than using distributions
for input values, DOE used discrete values. As required by EPCA, DOE
based the calculation on the assumptions in the DOE test procedures for
microwave ovens. (42 U.S.C. 6295(o)(2)(B)(iii)) As a result, DOE

[[Page 8559]]

calculated a single rebuttable-presumption payback value, and not a
distribution of payback periods, for each TSL.

Table V.6--Rebuttable-Presumption Payback Periods for Microwave Oven
Standby Mode and Off Mode
------------------------------------------------------------------------
Payback period (years)
-------------------------------------
Microwave-only Built-in and
TSL ovens and over-the-range
countertop combination
combination ovens microwave ovens
------------------------------------------------------------------------
1................................. 0.2 0.0
2................................. 0.3 1.8
3................................. 0.6 5.6
4................................. 1.6 1.6
------------------------------------------------------------------------

With the exception of TSL 3 for built-in and over-the-range
combination microwave ovens, all the TSLs in the above tables have
rebuttable-presumption payback periods of less than 3 years. DOE
believes that the rebuttable-presumption payback period criterion
(i.e., a limited payback period) is not sufficient for determining
economic justification. Therefore, DOE has considered a full range of
impacts, including those to consumers, manufacturers, the Nation, and
the environment. Section IV.D provides a complete discussion of how DOE
considered the range of impacts to select its proposed standards.
2. Economic Impacts on Manufacturers
For the October 2008 NOPR, DOE used INPV to compare the financial
impacts of different TSLs on microwave oven manufacturers. 73 FR 62034,
62096-99 (Oct. 17, 2008). The INPV is the sum of all net cash flows
discounted by the industry's cost of capital (discount rate). DOE used
the GRIM to compare the INPV of the base case (no new energy
conservation standards) to that of each TSL for the microwave oven
industry. To evaluate the range of cash-flow impacts on the microwave
oven industry, DOE constructed different scenarios using different
markups that correspond to the range of anticipated market responses.
Each scenario results in a unique set of cash flows and corresponding
industry value at each TSL. These steps allowed DOE to compare the
potential impacts on the industry as a function of TSLs in the GRIM.
The difference in INPV between the base case and the standards case is
an estimate of the economic impacts that implementing that standard
level would have on the entire industry. For today's supplemental
notice, DOE continues to use the above methodology and presents the
results in the subsequent sections. See chapter 12 for additional
information on MIA methodology and results.
a. Industry Cash-Flow Analysis Results
To assess the lower end of the range of potential impacts for the
microwave oven industry, DOE considered the scenario reflecting the
preservation of gross margin percentage. As production cost increases
with efficiency, this scenario implies manufacturers will be able to
maintain gross margins as a percentage of revenues. To assess the
higher end of the range of potential impacts for the microwave oven
industry, DOE considered the scenario reflecting preservation of gross
margin in absolute dollars. Under this scenario, DOE assumed that the
industry can maintain its gross margin in absolute dollars after the
compliance date of the energy conservation standard. The industry would
do so by lowering their gross margin as a percentage of revenue so that
the gross margin in absolute dollars does not increase above the base-
case gross margin. Table V.7 through Table V.12 show MIA results for
standby mode and off mode energy conservation standards using both
markup scenarios described above for microwave oven manufacturers.

Table V.7--Product Class 1 Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case -----------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in INPV................................ 2010$ millions.................. 1,103.4 1,076.6 1,058.6 1,050.6 1,013.9
Change in INPV................................ 2010$ millions.................. - (26.8) (44.9) (52.8) (89.6)
%............................... - (2.4) (4.1) (4.8) (8.1)
Product Conversion Costs...................... 2010$ millions.................. - 39.2 70.5 89.1 172.3
Capital Conversion Costs...................... 2010$ millions.................. - 3.9 4.3 4.7 7.8
Total Investment Required..................... 2010$ millions.................. - 43.1 74.8 93.8 180.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

Table V.8--Product Class 1 Manufacturer Impact Analysis Under the Preservation of Gross Margin in Absolute Dollars Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case -----------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in INPV................................ 2010$ millions.................. 1,103.4 1,074.4 1,051.8 1,031.6 939.5
Change in INPV................................ 2010$ millions.................. - (29.0) (51.7) (71.9) (163.9)
%............................... - (2.6) (4.7) (6.5) (14.9)
Product Conversion Costs...................... 2010$ millions.................. - 39.2 70.5 89.1 172.3
Capital Conversion Costs...................... 2010$ millions.................. - 3.9 4.3 4.7 7.8
Total Investment Required..................... 2010$ millions.................. - 43.1 74.8 93.8 180.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

[[Page 8560]]

Table V.9--Product Class 2 Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case -----------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in INPV................................ 2010$ millions.................. 24.0 23.8 23.7 23.9 23.2
Change in INPV................................ 2010$ millions.................. - (0.3) (0.4) (0.1) (0.9)
%............................... - (1.2) (1.5) (0.3) (3.6)
Product Conversion Costs...................... 2010$ millions.................. - 0.4 0.7 0.9 1.7
Capital Conversion Costs...................... 2010$ millions.................. - 0.0 0.0 0.0 0.1
Total Investment Required *................... 2010$ millions.................. - 0.4 0.8 0.9 1.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The total values may differ from the sum of the product conversion costs and capital conversion costs due to the rounding to one decimal place.

Table V.10--Product Class 2 Manufacturer Impact Analysis Under the Preservation of Gross Margin in Absolute Dollars Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case -----------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in INPV................................ 2010$ millions.................. 24.0 23.8 23.3 22.3 22.3
Change in INPV................................ 2010$ millions.................. - (0.3) (0.8) (1.7) (1.8)
%............................... - (1.2) (3.1) (7.1) (7.3)
Product Conversion Costs...................... 2010$ millions.................. - 0.4 0.7 0.9 1.7
Capital Conversion Costs...................... 2010$ millions.................. - 0.0 0.0 0.0 0.1
Total Investment Required *................... 2010$ millions.................. - 0.4 0.8 0.9 1.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The total values may differ from the sum of the product conversion costs and capital conversion costs due to the rounding to one decimal place.

Table V.11--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario for Product Class 1 and 2 Combined
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case -----------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in INPV................................ 2010$ millions.................. 1,127.5 1,100.4 1,082.2 1,074.5 1,037.0
Change in INPV................................ 2010$ millions.................. - (27.1) (45.2) (52.9) (90.4)
%............................... - (2.4) (4.0) (4.7) (8.0)
Product Conversion Costs...................... 2010$ millions.................. - 39.6 71.2 90.0 174.0
Capital Conversion Costs...................... 2010$ millions.................. - 4.0 4.4 4.7 7.9
Total Investment Required*.................... 2010$ millions.................. - 43.5 75.5 94.7 181.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The total values may differ from the sum of the product conversion costs and capital conversion costs due to the rounding to one decimal place.

Table V.12--Manufacturer Impact Analysis Under the Preservation of Gross Margin in Absolute Dollars Markup Scenario for Product Class 1 and 2 Combined
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
Units Base case -----------------------------------------------------------
1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in INPV................................ 2010$ millions.................. 1,127.5 1,098.2 1,075.0 1,053.9 961.8
Change in INPV................................ 2010$ millions.................. - (29.3) (52.4) (73.6) (165.7)
%............................... - (2.6) (4.6) (6.5) (14.7)
Product Conversion Costs...................... 2010$ millions.................. - 39.6 71.2 90.0 174.0
Capital Conversion Costs...................... 2010$ millions.................. - 4.0 4.4 4.7 7.9
Total Investment Required*.................... 2010$ millions.................. - 43.5 75.5 94.7 181.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

[[Page 8561]]

* The total values may differ from the sum of the product conversion costs and capital conversion costs due to the rounding to one decimal place.

TSL 1 represents an improvement in standby power from the baseline
level of 4.0 W to 2.0 W for Product Class 1 and an improvement in
standby power from the baseline level of 4.5 W to 3.7 W for Product
Class 2. At TSL 1, the impact on INPV and cash flow varies depending on
the manufacturers' ability to pass on increases in MPCs to their
customers. DOE estimated the impacts in INPV at TSL 1 to range -$27.1
million to -$29.3 million, or a change in INPV of -2.4 percent to -2.6
percent. At this level, the industry cash flow decreases by
approximately 14.0 percent, to $72.3 million, compared to the base-case
value of $84.2 million in the year leading up to the standards.
TSL 2 represents an improvement in standby power from the baseline
level of 4.0 W to 1.5 W for Product Class 1 and an improvement in
standby power from the baseline level of 4.5 W to 2.7 W for Product
Class 2. At TSL 2, the impact on INPV and cash flow would be similar to
TSL 1 and depend on whether manufacturers can fully recover the
increases in MPCs from their customers. DOE estimated the impacts in
INPV at TSL 2 to range from -$45.2 million to -$52.4 million, or a
change in INPV of -4.0 percent to -4.6 percent. At this level, the
industry cash flow decreases by approximately 24.0 percent, to $64.0
million, compared to the base-case value of $84.2 million in the year
leading up to the standards.
TSL 3 represents an improvement in standby power from the baseline
level of 4.0 W to 1.0 W for Product Class 1 and an improvement in
standby power from the baseline level of 4.5 W to 2.2 W for Product
Class 2. At TSL 3, the impact on INPV and cash flow continues to vary
depending on the manufacturers and their ability to pass on increases
in MPCs to their customers. DOE estimated the impacts in INPV at TSL 3
to range from approximately -$52.9 million to -73.6 million, or a
change in INPV of -4.7 percent to -6.5 percent. At this level, the
industry cash flow decreases by approximately 29.9 percent, to $59.0
million, compared to the base-case value of $84.2 million in the year
leading up to the standards.
TSL 4 represents an improvement in standby power from the baseline
level of 4.0 W to 0.02 W for Product Class 1 and an improvement in
standby power from the baseline level of 4.5 W to 0.04 W for Product
Class 2. At TSL 4, DOE estimated the impacts in INPV to range from
approximately -$90.4 million to -$165.7 million, or a change in INPV of
-8.0 percent to -14.7 percent. At this level, the industry cash flow
decreases by approximately 57.3 percent, to $35.9 million, compared to
the base-case value of $84.2 million in the year leading up to the
standards. At higher TSLs, manufacturers have a harder time fully
passing on larger increases in MPCs to their customers. At TSL 4, the
conversion costs are higher than the other TSLs because the design of
all microwave platforms must be more significantly altered.
For new standby mode and off mode energy conservation standards,
conversion costs increase at higher TSLs as the complexity of further
lowering standby power increases, substantially driving up engineering
time and also increasing the testing and product development time. If
the increased production costs are fully passed on to consumers (the
preservation of gross margin percentage scenario), the operating
revenue from higher prices is still not enough to overcome the negative
impacts from the substantial conversion costs. The incremental costs
are small for each TSL, meaning the positive impact on cash flows is
small compared to the conversion costs required to achieve these
efficiencies. As a result of the small incremental costs and large
conversion expenses, INPV is negative for all TSLs under the
preservation of gross margin percentage scenario. If the incremental
costs are not fully passed along to customers (the preservation of
gross margin (absolute dollars) scenario), the negative impacts on INPV
are amplified at each TSL.
b. Employment Impacts
DOE discussed the domestic employment impacts on the microwave oven
industry in the October NOPR. DOE concluded that since more than 95
percent of microwave ovens are already imported and the employment
impacts in the GRIM are small, the actual impacts on domestic
employment would depend on whether any U.S. manufacturer decided to
shift remaining U.S. production to lower-cost countries. 73 FR 62034,
62101-02 (Oct. 17, 2008).
c. Impacts on Manufacturing Capacity
As stated in the NOPR, minor tooling changes would be necessary at
all TSLs for standby mode and off mode standards. For all standby power
levels, the most significant conversion costs are the research and
development, testing, and certification of products with more-efficient
components, which does not affect production line capacity. Thus, DOE
believes manufacturers will be able to maintain manufacturing capacity
levels and continue to meet market demand under new energy conservation
standards. 73 FR 62034, 62103 (Oct. 17, 2008).
d. Impacts on Subgroups of Manufacturers
DOE used the results of the industry characterization to group
manufacturers exhibiting similar characteristics. However, DOE did not
identify any manufacturer subgroups for microwave ovens that would
justify a separate manufacturer subgroup.
e. Cumulative Regulatory Burden
During previous stages of this rulemaking DOE identified a number
of requirements with which manufacturers of these microwave ovens must
comply and which take effect within 3 years of the anticipated
compliance date of the proposed new standards. DOE discusses these and
other requirements, and includes the full details of the cumulative
regulatory burden, in chapter 12 of the SNOPR TSD.
3. National Impact Analysis
a. Significance of Energy Savings
To estimate the energy savings through 2043 attributable to
potential standards for microwave oven standby mode and off mode, DOE
compared the energy consumption of those products under the base case
to their energy consumption under each TSL. Table V.13 presents the
forecasted NES for each TSL for microwave oven standby mode and off
mode. The savings were calculated using the approach described in
section IV.E.

[[Page 8562]]

Table V.13--Cumulative National Energy Savings for Microwave Oven Standby Mode and Off Mode Power in 2014-2043
----------------------------------------------------------------------------------------------------------------
Microwave-only Built-in and
ovens and over-the-range
TSL countertop combination Total *
combination microwave ovens (quads)
ovens (quads) (quads)
----------------------------------------------------------------------------------------------------------------

1.............................................................. 0.21 0.00 0.21
2.............................................................. 0.30 0.00 0.30
3.............................................................. 0.41* 0.01* 0.41
4.............................................................. 0.62 0.01 0.63
----------------------------------------------------------------------------------------------------------------
* The total values may differ from the sum of the product class sub-totals due to the rounding to two decimal
places.

Chapter 10 of the SNOPR TSD provides additional details on the NES
values reported in Table V.13, and also presents tables that show the
magnitude of the energy savings discounted at rates of 3 percent and 7
percent. Discounted energy savings represent a policy perspective in
which energy savings realized farther in the future are less
significant than energy savings realized in the nearer term.
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV to the Nation of the total costs
and savings for consumers that would result from particular standard
levels for microwave oven standby mode and off mode. In accordance with
the OMB's guidelines on regulatory analysis,\28\ DOE calculated NPV
using both a 7-percent and a 3-percent real discount rate. The 7-
percent rate is an estimate of the average before-tax rate of return on
private capital in the U.S. economy, and reflects the returns on real
estate and small business capital as well as corporate capital. DOE
used this discount rate to approximate the opportunity cost of capital
in the private sector, because recent OMB analysis has found the
average rate of return on capital to be near this rate. DOE used the 3-
percent rate to capture the potential effects of standards on private
consumption (e.g., through higher prices for products and reduced
purchases of energy). This rate represents the rate at which society
discounts future consumption flows to their present value. This rate
can be approximated by the real rate of return on long-term government
debt (i.e., yield on Treasury notes minus annual rate of change in the
Consumer Price Index), which has averaged about 3 percent on a pre-tax
basis for the past 30 years.
---------------------------------------------------------------------------

\28\ OMB Circular A-4, section E (Sept. 17, 2003). Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4. (Last accessed
March 18, 2011.)
---------------------------------------------------------------------------

Table V.14 shows the consumer NPV results for each TSL DOE
considered for both product classes of microwave ovens, using both a 7-
percent and a 3-percent discount rate. In each case, the impacts, i.e.,
discounted operating cost savings and discounted incremental equipment
costs, cover the lifetime of products purchased in 2014-2043. For
Product Class 1 (microwave-only and countertop combination microwave
ovens), the benefit-to-cost ratio is greater than or equal to nine for
TSLs 1, 2, and 3 and greater than three for TSL 4, irrespective of
discount rate. For Product Class 2 (built-in and over-the-range
combination microwave ovens), TSLs 2 and 4 have benefit-to-cost ratios
of approximately five, irrespective of discount rate, while TSL 1,
which incurs no additional cost relative to the baseline, has a
limitless benefit-to-cost ratio. At TSL3, the benefits are 30 percent
and 50 percent greater than the costs at discount rates of 7-percent
and 3-percent, respectively. See chapter 10 of the SNOPR TSD for more
detailed NPV results.

Table V.14--Cumulative Net present Value of Consumer Benefits for Microwave Oven Standby Mode and Off Mode for
Units Sold 2014-2043
----------------------------------------------------------------------------------------------------------------
Net present value (billion 2010$)
-----------------------------------------------------------------------
Microwave-only ovens Built-in and over-the- Total*
and countertop range combination -----------------------
combination microwave microwave ovens
TSL ovens ------------------------
------------------------ 7% 3%
7% 3% 7% 3% Discount Discount
Discount Discount Discount Discount rate rate
rate rate rate rate
----------------------------------------------------------------------------------------------------------------
1....................................... 1.01 1.97 0.01 0.02 1.02 1.98
2....................................... 1.41 2.75 0.02 0.03 1.42 2.78
3....................................... 1.81 3.58 0.01 0.02 1.82 3.59
4....................................... 2.21 4.53 0.04 0.08 2.25 4.60
----------------------------------------------------------------------------------------------------------------
* The total values may differ from the sum of the product class sub-totals due to the rounding to two decimal
places.

The NPV results presented in Table V.14 are based on a learning
rate of 28.9 percent, which is referred to as the ``default'' learning
rate. DOE investigated the impact of different learning rates for
product prices for the TSLs considered for microwave oven standby mode
and off mode. DOE considered four learning rate sensitivities: (1) A
``high learning'' rate (37.0 percent); (2) a ``low learning'' rate
(19.2 percent); (3) a ``no learning'' rate

[[Page 8563]]

(constant real prices); and (4) a ``microwave oven only'' rate. The
``microwave oven only'' is based on limited set of historical price
data specifically for microwave ovens. DOE also analyzed a sensitivity
based on the ``chained price index--other consumer durable goods except
ophthalmic'' that was forecasted for use in AEO2010. This index is the
most disaggregated category that includes appliances. Refer to appendix
8-E of the SNOPR TSD for details on the development of the above
learning sensitivities.
Table V.15 provides the annualized NPV of consumer benefits at a 3-
percent discount rate, combined with the annualized present value of
monetized benefits from CO2 and NOX emissions
reductions, for each of the TSLs for the ``default'' learning rate and
the sensitivity cases. Table V.16 provides the annualized NPVs using a
7-percent discount rate for consumer NPV. Section V.B.6 provides a
complete description and summary of the monetized benefits from
CO2 and NOX emissions reductions. For most of the
TSLs, the difference between the default results and the sensitivities
is insignificant.

Table V.15--Microwave Oven Standby Mode and Off Mode: Annualized Net Present Value of Consumer Benefits (3
Percent Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
for Products Shipped in 2014-2043*
----------------------------------------------------------------------------------------------------------------
No
learning AEO2010
Default LR Low High LR = 0% Microwave chained
Trial standard level =28.9% learning learning (constant ovens only price
LR =19.2% LR =37.0% real LR = 39.6% index
prices) forecast
----------------------------------------------------------------------------------------------------------------
Billion 2010$
----------------------------------------------------------------------------------------------------------------
1................................. 0.12 0.12 0.12 0.12 0.12 0.12
2................................. 0.17 0.17 0.17 0.17 0.17 0.17
3................................. 0.22 0.22 0.22 0.22 0.22 0.22
4................................. 0.29 0.29 0.30 0.27 0.30 0.30
----------------------------------------------------------------------------------------------------------------
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.3/metric ton in 2010
(in 2010$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
NOX emissions were calculated using a value of $2,537/ton (in 2010$), which is the average of the low and high
values used in DOE's analysis, and a 3-percent discount rate. Because the discounted equipment cost increases
at each TSL are very small relative to the discounted operating cost savings and the discounted monetized
benefits of the emission reductions, the NPV as a function of learning rate does not change appreciably. In
fact, the learning rate has a significant effect only on the NPV for TSL 4 where discounted equipment cost
increases are relatively more significant.

Table V.16--Microwave Oven Standby Mode and Off Mode: Annualized Net Present Value of Consumer Benefits (7
Percent Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
for Products Shipped in 2014-2043*
----------------------------------------------------------------------------------------------------------------
No learning
Low High LR = 0% Sensitivity AEO2010
Trial standard level Default LR learning LR learning LR (constant (microwave chained
=28.9% =19.2% =37.0% real ovens only) price index
prices) LR = 39.6% forecast
----------------------------------------------------------------------------------------------------------------
Billion 2010$
----------------------------------------------------------------------------------------------------------------
1................................. 0.10 0.10 0.10 0.10 0.10 0.10
2................................. 0.14 0.14 0.14 0.14 0.14 0.14
3................................. 0.18 0.18 0.18 0.18 0.19 0.18
4................................. 0.24 0.23 0.24 0.22 0.25 0.24
----------------------------------------------------------------------------------------------------------------
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.3/metric ton in 2010
(in 2010$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
NOX emissions were calculated using a value of $2,537/ton (in 2010$), which is the average of the low and high
values used in DOE's analysis, and a 7-percent discount rate. Because the discounted equipment cost increases
at each TSL are very small relative to the discounted operating cost savings and the discounted monetized
benefits of the emission reductions, the NPV as a function of learning rate does not change appreciably. In
fact, the learning rate has a significant effect only on the NPV for TSL 4 where discounted equipment cost
increases are relatively more significant.

c. Indirect Impacts on Employment
DOE develops estimates of the indirect employment impacts of
proposed standards on the economy in general. As discussed above, DOE
expects energy conservation standards for microwave ovens to reduce
energy bills for consumers of those products, and the resulting net
savings to be redirected to other forms of economic activity. Those
shifts in spending and economic activity could affect the demand for
labor. As described in section IV.H, to estimate those effects, DOE
used an input/output model of the U.S. economy. DOE estimated the
indirect employment impacts for the TSLs for both product classes of
microwave ovens that DOE considered in this rulemaking. DOE understands
that there are uncertainties involved in projecting employment impacts,
especially changes in the later years of the analysis. Therefore, DOE
generated results for intermediate timeframes, such as 2015, where
these uncertainties are reduced.
The results suggest the proposed standards are likely to have
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 13 of the SNOPR TSD presents the detailed results.

[[Page 8564]]

4. Impact on Utility or Performance of Product
For the reasons stated in section III.D.1.d, DOE believes that for
purposes of 42 U.S.C. 6295(o)(2)(B)(i)(IV), the standby power level
considered in this supplemental notice does not reduce the utility or
performance of the microwave oven products under consideration in this
rulemaking.
5. Impact of Any Lessening of Competition
In weighing the promulgation of any proposed standards, DOE is
required to consider any lessening of competition that is likely to
result from the adoption of those standards. The determination of the
likely competitive impacts stemming from a proposed standard is made by
the Attorney General, who transmits this determination, along with an
analysis of the nature and extent of the impact, to the Secretary of
Energy. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and (B)(ii))
The Attorney General's determination for the October 2008 NOPR
included cooking products but did not mention microwave oven standards.
(DOJ, No. 53 at pp. 1-2). To assist the Attorney General in making such
a determination for the proposed standby mode and off mode standards,
DOE has provided the Attorney General with copies of this notice and
the TSD for review. DOE will consider the Attorney General's opinion on
the proposed rule in preparing the final rule.
6. Need of the Nation To Conserve Energy
Improving the energy consumption of microwave oven standby mode and
off mode, where economically justified, would likely improve the
security of the Nation's energy system by reducing overall demand for
energy. Reduced electricity demand may also improve the reliability of
the electricity system. As a measure of this reduced demand, Table V.17
presents the estimated reduction in national generating capacity for
the TSLs that DOE considered in this rulemaking.

Table V.1717--Reduction in National Installed Electricity Generation
Capacity Under Microwave Oven Standby Mode and Off Mode Trial Standard
Levels
------------------------------------------------------------------------
Gigawatts
TSL ---------------------
2030 2043
------------------------------------------------------------------------
1................................................. 0.190 0.196
2................................................. 0.274 0.284
3................................................. 0.377 0.390
4................................................. 0.581 0.601
------------------------------------------------------------------------

Energy savings from more stringent microwave oven standby mode and
off mode standards would also produce environmental benefits in the
form of reduced emissions of air pollutants and greenhouse gases
associated with electricity production. Table V.18 provides DOE's
estimate of cumulative CO2 and NOX emissions
reductions that would result from the TSLs considered in this
rulemaking. (Hg emission impacts are negligible and therefore not
reported here.) In the environmental assessment (chapter 15 of the
SNOPR TSD), DOE reports estimated annual changes in CO2,
NOX, and Hg emissions attributable to each TSL.

Table V.18--Cumulative Emissions Reductions Under Microwave Oven Standby Mode and Off Mode Trial Standard Levels
in 2014-2043
----------------------------------------------------------------------------------------------------------------
TSL
---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------

CO2 (Mt).................................................... 15.84 22.88 31.48 48.46
NOX (1,000 tons)............................................ 12.88 18.61 25.60 39.42
----------------------------------------------------------------------------------------------------------------
Mt = million metric tons. Values for NOX emissions reductions refer to short tons.

As discussed in section IV.J of this supplemental notice, DOE has
not reported SO2 emissions reductions from power plants
because there is uncertainty about the effect of energy conservation
standards on the overall level of SO2 emissions in the
United States due to SO2 emissions caps. DOE also did not
include NOX emissions reduction from power plants in States
subject to CAIR because an energy conservation standard would not
affect the overall level of NOX emissions in those States
due to the emissions caps mandated by CAIR.
DOE also estimated monetary benefits likely to result from the
reduced emissions of CO2 and NOX that DOE
estimated for each of the TSLs considered for microwave oven standby
mode and off mode. In order to make this calculation similar to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in
2014-2043. Thus, the emissions reductions extend past 2043.
As discussed in section IV.K, DOE used values for the SCC developed
by an interagency process. The four values for CO2 emissions
reductions resulting from that process (expressed in 2010$) are $4.9/
ton (the average value from a distribution that uses a 5-percent
discount rate), $22.3/ton (the average value from a distribution that
uses a 3-percent discount rate), $36.5/ton (the average value from a
distribution that uses a 2.5-percent discount rate), and $67.6/ton (the
95th-percentile value from a distribution that uses a 3-percent
discount rate). These values correspond to the value of emission
reductions in 2010; the values for later years are higher due to
increasing damages as the magnitude of climate change increases. For
each of the four cases, DOE calculated a present value of the stream of
annual values using the same discount rate as was used in the studies
upon which the dollar-per-ton values are based. Table V.19 presents the
global values of CO2 emissions reductions at each TSL. DOE
calculated domestic values as a range from 7 percent to 23 percent of
the global values, and these results are presented in chapter 16 of the
SNOPR TSD.

[[Page 8565]]

Table V.19--Estimates of Present Value of CO2 Emissions Reductions Under Microwave Oven Standby Mode and Off
Mode Trial Standard Levels for Products Sold in 2014-2043
----------------------------------------------------------------------------------------------------------------
Million 2010$
---------------------------------------------------------------
TSL 3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average* rate, average* rate, average* percentile*
----------------------------------------------------------------------------------------------------------------
1............................................... $70 $349 $589 $1,066
2............................................... 101 505 851 1,539
3............................................... 139 694 1,170 2,118
4............................................... 213 1,069 1,801 3,259
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution.

DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
world economy continues to evolve rapidly. Thus, any value placed in
this rulemaking on reducing CO2 emissions is subject to
change. DOE, together with other Federal agencies, will continue to
review various methodologies for estimating the monetary value of
reductions in CO2 and other GHG emissions. This ongoing
review will consider the comments on this subject that are part of the
public record for this and other rulemakings, as well as other
methodological assumptions and issues. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this proposed rule the
most recent values resulting from the ongoing interagency review
process.
DOE also estimated a range for the cumulative monetary value of the
economic benefits associated with NOX emissions reductions
anticipated to result from new standby mode and off mode standards for
microwave ovens. The dollar-per-ton values that DOE used are discussed
in section IV.K. Table V.20 presents the cumulative present values for
each TSL calculated using 7-percent and 3-percent discount rates.

Table V.20--Estimates of Present Value of NOX Emissions Reductions Under
Microwave Oven Standby Mode and Off Mode Trial Standard Levels for
Products Sold in 2014-2043
------------------------------------------------------------------------
3% discount rate 7% discount rate
TSL Million 2010$ Million 2010$
------------------------------------------------------------------------
1............................ 3.74 to 38.46....... 1.92 to 19.76
2............................ 5.41 to 55.56....... 2.78 to 28.55
3............................ 7.44 to 76.44....... 3.82 to 39.28
4............................ 11.45 to 117.7...... 5.89 to 60.5
------------------------------------------------------------------------

The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table
V.21 and Table V.22 presents the NPV values that result from adding the
estimates of the potential economic benefits resulting from reduced
CO2 and NOX emissions in each of four valuation
scenarios to the NPV of consumer savings calculated for each TSL
considered in this rulemaking, at both a 7-percent and 3-percent
discount rate. The CO2 values used in the columns of each
table correspond to the four scenarios for the valuation of
CO2 emission reductions presented in section IV.K.

Table V.21--Results of Adding Net Present Value of Consumer Savings (at 7-Percent Discount Rate) to Net Present
Value of Monetized Benefits from CO2 and NOX Emissions Reductions for Microwave Oven Standby Mode and Off Mode
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with:
---------------------------------------------------------------
SCC Value of SCC Value of SCC Value of SCC Value of
$4.9/metric $22.3/metric $36.5/metric $67.6/metric
TSL ton CO2* and ton CO2* and ton CO2* and ton CO2* and
low value for medium value medium value high value for
NOX** billion for NOX** for NOX** NOX** billion
2010$ billion 2010$ billion 2010$ 2010$
----------------------------------------------------------------------------------------------------------------
1............................................... 1.09 1.38 1.62 2.10
2............................................... 1.52 1.94 2.29 2.99
3............................................... 1.96 2.53 3.01 3.98
4............................................... 2.47 3.35 4.08 5.57
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2010, in 2010$. The present values have been calculated with
scenario-consistent discount rates.

[[Page 8566]]

** Low value corresponds to $450 per ton of NOX emissions. Medium value corresponds to $2,537 per ton of NOX
emissions. High Value corresponds to $4,623 per ton of NOX emissions.

Table V.22--Results of Adding Net Present Value of Consumer Savings (at 3-Percent Discount Rate) to Net Present
Value of Monetized Benefits from CO2 and NOX Emissions Reductions for Microwave Oven Standby Mode and Off Mode
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with:
---------------------------------------------------------------
SCC Value of SCC Value of SCC Value of SCC Value of
$4.9/metric $22.3/metric $36.5/metric $67.6/metric
TSL ton CO2* and ton CO2* and ton CO2* and ton CO2* and
low value for medium value medium value high value for
NOX** billion for NOX** for NOX** NOX** billion
2010$ billion 2010$ billion 2010$ 2010$
----------------------------------------------------------------------------------------------------------------
1............................................... 2.06 2.35 2.59 3.09
2............................................... 2.89 3.31 3.66 4.37
3............................................... 3.74 4.33 4.81 5.79
4............................................... 4.83 5.74 6.47 7.98
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2010, in 2010$. The present values have been calculated with
scenario-consistent discount rates.
** Low value corresponds to $450 per ton of NOX emissions. Medium value corresponds to $2,537 per ton of NOX
emissions. High Value corresponds to $4,623 per ton of NOX emissions.

Although adding the value of consumer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating cost savings are domestic
U.S. consumer monetary savings that occur as a result of market
transactions, while the value of CO2 reductions is based on
a global value. Second, the assessments of operating cost savings and
the SCC are performed with different methods that use quite different
time frames for analysis. The national operating cost savings is
measured for the lifetime of products shipped in 2014-2043. The SCC
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one ton of
CO2 in each year. These impacts continue well beyond 2100.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI))) DOE
has not considered other factors in development of the proposed
standards in this SNOPR.

C. Proposed Standard

When considering proposed standards, the new or amended energy
conservation standard that DOE adopts for any type (or class) of
covered product shall 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, in light of the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also ``result in significant conservation of
energy.'' (42 U.S.C. 6295(o)(3)(B))
For today's SNOPR, DOE considered the impacts of standards at each
TSL, beginning with the maximum technologically feasible level, to
determine whether that level was economically justified. Where the max-
tech level was not justified, DOE then considered the next most
efficient level and undertook the same evaluation until it reached the
highest efficiency level that is both technologically feasible and
economically justified and saves a significant amount of energy.
To aid the reader in understanding the benefits and/or burdens of
each TSL, Table V.24 summarizes the quantitative analytical results for
each TSL, based on the assumptions and methodology discussed herein. In
addition to the quantitative results presented in the table, DOE also
considers other burdens and benefits that affect economic
justification. These include the impacts on identifiable subgroups of
consumers, such as low-income households and seniors, who may be
disproportionately affected by a national standard. Section V.B.1
presents the estimated impacts of each TSL for these subgroups.
In addition to the quantitative results, DOE also considered
harmonization of microwave oven standby mode and off mode standards
with international standby power programs such as Korea's e-standby
program,\29\ Australia's standby program,\30\ and Japan's Top Runner
Program.\31\ Those programs seek to establish standby power ratings
through the International Energy Agency's (IEA) 1-Watt Program, which
seeks to lower standby power below 1 W for microwave ovens.\32\ Korea
published a mandatory standby power standard of 1 W that became
effective in 2010 and Australia will publish mandatory standby power
standards of 1 W by 2012. In accordance with Japan's Top Runner
Program, Japanese appliance manufacturers made a voluntary declaration
to reduce standby power of microwave ovens that lack a timer to as
close to zero as possible and that of microwave ovens that have a timer
to 1 W or lower.
---------------------------------------------------------------------------

\29\ Refer to: http://www.kemco.or.kr/new_eng/pg02/pg02100300.asp. (Last accessed March 18, 2011.)
\30\ Refer to: http://www.energyrating.gov.au/standby.html.
(Last accessed March 18, 2011.)
\31\ Refer to: http://www.eccj.or.jp/top_runner/index.html.
(Last accessed March 18, 2011.)
\32\ IEA Energy Information Centre. Standby Power Use and the
IEA ``1-Watt Plan.'' Available at: http://www.iea.org/subjectqueries/standby.asp. (Last accessed March 18, 2011.)
---------------------------------------------------------------------------

DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. This undervaluation suggests that
regulation that promotes energy efficiency can produce significant net
private gains (as well as producing social gains by, for example,
reducing pollution). There is evidence that consumers undervalue future

[[Page 8567]]

energy savings as a result of (1) a lack of information; (2) a lack of
sufficient salience of the long-term or aggregate benefits; (3) a lack
of sufficient savings to warrant delaying or altering purchases (for
example, an inefficient ventilation fan in a new building or the
delayed replacement of a water pump); (4) excessive focus on the short
term, in the form of inconsistent weighting of future energy cost
savings relative to available returns on other investments; (5)
computational or other difficulties associated with the evaluation of
relevant tradeoffs; and (6) a divergence in incentives (that is, renter
versus owner; builder vs. purchaser). Other literature indicates that
with less than perfect foresight and a high degree of uncertainty about
the future, consumers may trade off these types of investments at a
higher than expected rate between current consumption and uncertain
future energy cost savings.
In its current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways: (1) If consumers forego a purchase
of a product in the standards case, this decreases sales for product
manufacturers and the cost to manufacturers is included in the MIA, and
(2) DOE accounts for energy savings attributable only to products
actually used by consumers in the standards case; if a regulatory
option decreases the number of products used by consumers, this
decreases the potential energy savings from an energy conservation
standard. DOE provides detailed estimates of shipments and changes in
the volume of product purchases in chapter 9 of the SNOPR TSD.
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE seeks comments on how to more fully assess the potential impact of
energy conservation standards on consumer choice and how to quantify
this impact in its regulatory analysis in future rulemakings.
1. Benefits and Burdens of TSLs Considered for Microwave Ovens
Table V.23 summarizes the quantitative impacts estimated for each
TSL for microwave ovens. The efficiency levels contained in each TSL
are described in section V.A.

Table V.23--Summary of Results for Trial Standard Levels for Microwave Oven Standby Mode and Off Mode Energy Use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads).. 0.21........................ 0.30........................ 0.41........................ 0.63
NPV of Consumer Benefits (2010$
billion)
7% discount rate............. 1.02........................ 1.42........................ 1.82........................ 2.25
3% discount rate............. 1.98........................ 2.78........................ 3.59........................ 4.60
Manufacturer Impacts
Industry NPV (2010$ million). (27.1) to (29.3)............ (45.2) to (52.4)............ (52.9) to (73.6)............ (90.4) to (165.7)
Industry NPV (% change)...... (2.4) to (2.6).............. (4.0) to (4.6).............. (4.7) to (6.5).............. (8.0) to (14.7)
Cumulative Emissions Reduction
CO2 (Mt)......................... 15.84....................... 22.88....................... 31.48....................... 48.46
NOX (thousand tons).............. 12.88....................... 18.61....................... 25.60....................... 39.42
Value of Emissions Reductions
CO2 (2010$ million)*......... 70 to 1,066................. 101 to 1,539................ 139 to 2,118................ 213 to 3,259
NOX--3% discount rate (2010$ 3.74 to 38.5................ 5.41 to 55.6................ 7.44 to 76.4................ 11.5 to 118
million).
NOX--7% discount rate (2010$ 1.92 to 19.8................ 2.78 to 28.6................ 3.82 to 39.3................ 5.89 to 60.5
million).
Consumer Mean LCC Savings (2010$)
Product Class 1.............. 7........................... 10.......................... 13.......................... 15
Product Class 2.............. 6........................... 11.......................... 4........................... 27
Consumer Median PBP (years)
Product Class 1.............. 0.2......................... 0.4......................... 1.1......................... 2.4
Product Class 2.............. 0.0......................... 1.9......................... 6.3......................... 1.8
Distribution of Consumer LCC
Impacts
Product Class 1
Net Cost (%)............. 0........................... 0........................... 0........................... 0
No Impact (%)............ 54.......................... 19.......................... 0........................... 0
Net Benefit (%).......... 46.......................... 81.......................... 100......................... 100
Product Class 2
Net Cost (%)............. 0........................... 0........................... 21.......................... 0
No Impact (%)............ 0........................... 0........................... 0........................... 0
Net Benefit (%).......... 100......................... 100......................... 79.......................... 100
Reduction in Generation Capacity 0.196....................... 0.284....................... 0.390....................... 0.601
in 2043 (GW).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. For NPVs, a negative value means a decrease in NPV.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.

First, DOE considered TSL 4, the max-tech level for microwave oven
standby mode and off mode energy use. TSL 4 likely would save 0.63
quads of energy through 2043, an amount DOE considers significant.
Under TSL 4, the estimated NPV of consumer benefit is $2.25 billion,
using a discount rate of 7 percent, and $4.60 billion, using a discount
rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 48.46 Mt of
CO2 and 39.42 thousand tons of NOX, with a
negligible impact on Hg emissions. The estimated monetary value of the
CO2 emissions reductions at TSL 4 ranges from $213 million
to $3,259 million. Total generating capacity in 2043 is estimated to
decrease by 0.601 GW.
DOE projects that at TSL 4 for microwave-only ovens and countertop
combination microwave ovens (Product Class 1), the average microwave
oven consumer would experience a decrease in LCC of $15. DOE also
estimates that all consumers who purchase these

[[Page 8568]]

microwave ovens would realize some LCC savings. The median payback
period at TSL 4 is projected to be 2.4 years, substantially shorter
than the lifetime of the product. DOE projects that at TSL 4 for built-
in and over-the-range combination microwave ovens (Product Class 2),
the average microwave oven consumer would experience a decrease in LCC
of $27, and all consumers who purchase these microwave ovens would
realize some LCC savings. The median payback period at TSL 4 is
projected to be 1.8 years, substantially shorter than the lifetime of
the product.
Although DOE estimates that all microwave oven consumers would
benefit economically from TSL 4, the reduction in standby power
consumption at TSL 4 would result in the loss of certain functions that
provide utility to consumers, specifically the continuous clock
display. Because it is uncertain how greatly consumers value this
function, DOE is concerned that TSL 4 may result in significant loss of
consumer utility.
For manufacturers of microwave ovens, DOE estimated a decrease in
INPV that ranges from $90.4 million to $165.7 million. DOE recognizes
that TSL 4 poses the risk of large 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
4 could result in a net loss of 14.7 percent in INPV to microwave oven
manufacturers.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 4, the Secretary has reached the following initial
conclusion: At TSL 4, the benefits of energy savings, NPV of consumer
benefit, positive consumer LCC impacts, and emissions reductions would
be outweighed by the potential burden on consumers from loss of product
utility and the large capital conversion costs that could result in a
reduction in INPV for manufacturers.
DOE then considered TSL 3. Primary energy savings are estimated to
be 0.41 quads of energy through 2043, which DOE considers significant.
Under TSL 3, the estimated NPV of consumer benefit is $1.82 billion,
using a discount rate of 7 percent, and $3.59 billion, using a discount
rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 31.48 Mt of
CO2 and 25.60 thousand tons of NOX, with a
negligible impact on Hg emissions. The estimated monetary value of the
CO2 emissions reductions at TSL 3 ranges from $139 million
to $2,118 million. Total generating capacity in 2043 under TSL 3 is
estimated to decrease by 0.390 GW.
For microwave-only ovens and countertop combination microwave
ovens, DOE projects that at TSL 3 the average consumer would experience
a decrease in LCC of $13, and all consumers who purchase these
microwave ovens would realize some LCC savings. At TSL 3 the median
payback period is projected to be 1.1 years, substantially shorter than
the lifetime of the product. In addition, DOE estimates that the
reduction in standby power consumption under TSL 3 (to no greater than
1.0 W) would not impact consumer utility. The continuous clock display
that would be lost under TSL 4 would be retained at TSL 3.
For built-in and combination microwave ovens, DOE projects that at
TSL 3 the average consumer would experience a decrease in LCC of $4,
and 79 percent of consumers who purchase these microwave ovens would
realize some LCC savings. At TSL 3 the median payback period is
projected to be 6.3 years, shorter than the lifetime of the product.
For manufacturers of microwave ovens, DOE estimated that the
projected decrease in INPV under TSL 3 would range from $52.9 million
to $73.6 million. DOE recognizes the risk of large negative impacts at
TSL 3 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 a net loss of 6.5
percent in INPV to microwave oven manufacturers.
After considering the analysis and weighing the benefits and the
burdens, DOE has tentatively concluded that the benefits of energy
savings, NPV of consumer benefit, positive consumer LCC impacts, and
emissions reductions would outweigh the capital conversion costs that
could result in a reduction in INPV for manufacturers. In particular,
the Secretary has concluded that TSL 3 would save a significant amount
of energy and is technologically feasible and economically justified.
Therefore, DOE today proposes to adopt the energy conservation
standards for microwave oven standby mode and off mode at TSL 3. Table
V.23 presents the proposed standby mode and off mode energy
conservation standards for microwave ovens.

Table V.23--Proposed Energy Conservation Standards for Microwave Oven
Standby and Off Mode
------------------------------------------------------------------------
Proposed energy conservation
Product classes standard
------------------------------------------------------------------------
Microwave-Only Ovens and Countertop Maximum Standby Power = 1.0
Combination Microwave Ovens. watt.
Built-In and Over-the-Range Combination Maximum Standby Power = 2.2
Microwave Ovens. watts.
------------------------------------------------------------------------

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards
The benefits and costs of today's proposed standards can also be
expressed in terms of annualized values. The annualized monetary values
are the sum of (1) the annualized national economic value, expressed in
2010$, of the benefits from operating products that meet the proposed
standards (consisting primarily of operating cost savings from using
less energy, minus increases in equipment purchase costs, which is
another way of representing consumer NPV), and (2) the monetary value
of the benefits of emission reductions, including CO2
emission reductions.\33\ The value of the CO2 reductions is
calculated using a range of values per metric ton of CO2
developed by a recent interagency process. The monetary costs and
benefits of cumulative emissions reductions are reported in 2010$ to
permit comparisons with the other costs and benefits in the same dollar
units.
---------------------------------------------------------------------------

\33\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2011, the year used for discounting
the NPV of total consumer costs and savings, for the time-series of
costs and benefits using discount rates of 3 and 7 percent for all
costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates, as
shown in Table V.26. From the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in 2011, that
yields the same present value. The fixed annual payment is the
annualized value. Although DOE calculated annualized values, this
does not imply that the time-series of cost and benefits from which
the annualized values were determined would be a steady stream of
payments.
---------------------------------------------------------------------------

Although combining the values of operating savings and
CO2 reductions provides a useful perspective, two issues
should be considered. First, the national operating savings are
domestic

[[Page 8569]]

U.S. consumer monetary savings that occur as a result of market
transactions while the value of CO2 reductions is based on a
global value. Second, the assessments of operating cost savings and SCC
are performed with different methods that use different time frames for
analysis. The national operating cost savings is measured for the
lifetime of products shipped in 2014-2043. The SCC values, on the other
hand, reflect the present value of future climate-related impacts
resulting from the emission of one ton of CO2 in each year.
These impacts continue well beyond 2100.
Table V.24 shows the annualized values for the proposed standards
for microwave oven standby mode and off mode energy use. The results
for the primary estimate are as follows. Using a 7-percent discount
rate for benefits and costs other than CO2 reductions, for
which DOE used a 3-percent discount rate along with the SCC series
corresponding to a value of $22.3/ton in 2010, the cost of the
standards proposed in today's rule is $20.3 million per year in
increased product costs, while the annualized benefits are $167 million
in reduced product operating costs, $35.4 million in CO2
reductions, and $1.74 million in reduced NOX emissions. In
this case, the net benefit amounts to $184 million per year. Using a 3-
percent discount rate for all benefits and costs and the SCC series
corresponding to a value of $22.3/ton in 2010, the cost of the
standards proposed in today's rule is $21.6 million per year in
increased product costs, while the annualized benefits are $205 million
in reduced operating costs, $35.4 million in CO2 reductions,
and $2.14 million in reduced NOX emissions. In this case,
the net benefit amounts to $221 million per year.

Table V.24--Annualized Benefits and Costs of Proposed Standards (TSL 3) for Microwave Ovens Sold in 2014-2043
--------------------------------------------------------------------------------------------------------------------------------------------------------
Monetized (million 2010$/year)
Benefits Discount rate ----------------------------------------------------------------------------------------
Primary estimate\*\ Low benefits estimate\*\ High benefits estimate\*\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings........... 7%.......................... 167......................... 150......................... 185
3%.......................... 205......................... 182......................... 229
CO2 Reduction at $4.9/t **....... 5%.......................... 9.02........................ 8.49........................ 9.55
CO2 Reduction at $22.3/t **...... 3%.......................... 35.4........................ 33.3........................ 37.6
CO2 Reduction at $36.5/t **...... 2.5%........................ 55.9........................ 52.5........................ 59.3
CO2 Reduction at $67.6/t **...... 3%.......................... 108.0....................... 101.5....................... 114.6
NOX Reduction at $2,537/t **..... 7%.......................... 1.74........................ 1.65........................ 1.82
3%.......................... 2.14........................ 2.02........................ 2.26
Total[dagger].................... 7% plus CO2 range........... 178 to 277.................. 160 to 253.................. 196 to 301
7%.......................... 204......................... 185......................... 224
3%.......................... 243......................... 217......................... 269
3% plus CO2 range........... 216 to 315.................. 193 to 286.................. 241 to 346
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental Product Costs........ 7%.......................... 20.32....................... 23.39....................... 20.25
3%.......................... 21.59....................... 25.48....................... 21.48
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total[dagger].................... 7% plus CO2 range........... 157 to 256.................. 137 to 230.................. 176 to 281
7%.......................... 184......................... 162......................... 204
3%.......................... 221......................... 192......................... 247
3% plus CO2 range........... 195 to 294.................. 167 to 260.................. 219 to 324
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The Primary, Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from the AEO 2010 Reference case, Low
Economic Growth case, and High Economic Growth case, respectively. In addition, the Low estimate uses incremental product costs that reflects constant
prices (no learning rate) for product prices, and the High estimate uses incremental product costs that reflects a declining trend (high learning
rate) for product prices.
** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and
$36.5 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6 per ton
represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2010$) is the average of the low and
high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.3/ton in 2010 (in
2010$). In the rows labeled as ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
discount rate, and those values are added to the full range of CO2 values.

VI. Additional Technical Corrections to 10 CFR 430.32

In today's SNOPR, DOE is also proposing the following technical
corrections to the language contained in 10 CFR 430.32. DOE notes that
the title of 10 CFR 430.32, ``Energy and water conservation standards
and their effective dates'' contains dates required for compliance with
energy and water conservation standards rather than the effective dates
of such standards. As a result, DOE is proposing to revise the title of
10 CFR 430.32 to read ``Energy and water conservation standards and
their compliance dates.'' DOE also notes that the current energy
conservation standards for cooking products found at 10 CFR
430.32(j)(1)-(2) should be revised to more accurately reflect the date
required for compliance with energy conservation standards. DOE is
proposing to revise the language in 10 CFR 430.32(j)(1)-(2) to state
that products manufactured on or after the compliance date must meet
the required energy conservation standard.

[[Page 8570]]

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and 13563

Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The problems that today's proposed standards address are as follows:
(1) There is a lack of consumer information and/or information
processing capability about energy efficiency opportunities in the home
appliance market.
(2) There 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).
(3) There are external benefits resulting from improved energy
efficiency of microwave ovens 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.
In addition, DOE has determined that today's regulatory action is
an ``economically significant regulatory action'' under section 3(f)(1)
of Executive Order 12866. Accordingly, section 6(a)(3) of the Executive
Order requires that DOE prepare a regulatory impact analysis (RIA) on
today's rule and that OIRA review this rule. DOE presented to OIRA for
review the draft rule and other documents prepared for this rulemaking,
including the RIA, and has included these documents in the rulemaking
record. The assessments prepared pursuant to Executive Order 12866 can
be found in the TSD for this rulemaking, available at
www1.eere.energy.gov/buildings/appliance_standards/residential/cooking_products.html.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011).
Executive Order 13563 is supplemental to and explicitly reaffirms the
principles, structures, and definitions governing regulatory review
established in Executive Order 12866. To the extent permitted by law,
agencies are required by Executive Order 13563 to: (1) Propose or adopt
a regulation only upon a reasoned determination that its benefits
justify its costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor regulations to impose the least
burden on society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent practicable,
the costs of cumulative regulations; (3) select, in choosing among
alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity);
(4) to the extent feasible, specify performance objectives, rather than
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
``to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible.'' In its
guidance, OIRA has emphasized that such techniques may include
``identifying changing future compliance costs that might result from
technological innovation or anticipated behavioral changes.'' For the
reasons stated in the preamble, DOE believes that today's SNOPR is
consistent with these principles, including the requirement that, to
the extent permitted by law, benefits justify costs and that net
benefits are maximized.

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, unless the
agency certifies that the rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
As required by Executive Order 13272, ``Proper Consideration of Small
Entities in Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE
published procedures and policies on February 19, 2003, to ensure that
the potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990 DOE has made its
procedures and policies available on the Office of the General
Counsel's Web site (www.gc.doe.gov).
For manufacturers of microwave ovens, the Small Business
Administration (SBA) has set a size threshold, which defines those
entities classified as ``small businesses'' for the purposes of the
statute. DOE used the SBA's small business size standards to determine
whether any small entities would be subject to the requirements of the
rule. 65 FR 30836, 30850 (May 15, 2000), as amended at 65 FR 53533,
53545 (Sept. 5, 2000) and codified at 13 CFR part 121. The size
standards are listed by North American Industry Classification System
(NAICS) code and industry description and are available at http://www.sba.gov/content/table-small-business-size-standards. DOE used the
size standards the SBA published on November 5, 2010, as amended, to
determine whether any small entities would be required to comply with
the rule. Microwave oven manufacturing is classified under NAICS
335221, ``Manufacturers of Household Cooking Appliances.'' The SBA sets
a threshold of 750 employees or less for an entity to be considered as
a small business for this category.
The microwave oven industry consists of seven manufacturers that
have a market share greater than 3 percent. Most are large, foreign
companies that import microwave ovens into the United States. There are
U.S. facilities that partly assemble microwave ovens. However, no
domestic facilities are small businesses. Furthermore none of the
microwave oven manufacturers are small business manufacturers. Thus,
DOE did not conduct an initial regulatory flexibility analysis.

C. Review Under the Paperwork Reduction Act

Manufacturers of microwave ovens must certify to DOE that their
product complies with any applicable energy conservation standard. In
certifying compliance, manufacturers must test their product according
to the DOE test procedure for microwave ovens, including any amendments
adopted for that test procedure. DOE has established regulations for
the certification and recordkeeping requirements for all covered
consumer products and commercial equipment, including microwave ovens.
75 FR 56796 (Sept. 16, 2010). The collection-of-information requirement
for the certification and recordkeeping is subject to review and
approval by OMB under the Paperwork Reduction Act (PRA). This
requirement has been approved by OMB under OMB control number 1910-
1400. Public reporting burden for the certification is estimated to
average 20 hours per

[[Page 8571]]

response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

Pursuant to the National Environmental Policy Act (NEPA) of 1969,
as amended (42 U.S.C. 4321 et seq.), DOE has determined that the
proposed rule fits within the category of actions included in
Categorical Exclusion (CX) B5.1 and otherwise meets the requirements
for application of a CX. (See 10 CFR 1021.410(b) and Appendix B to
Subpart D) The proposed rule fits within this category of actions
because it is a rulemaking that establishes energy conservation
standards for consumer products or industrial equipment, and for which
none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE
has made a CX determination for this rulemaking, and DOE does not need
to prepare an Environmental Assessment or Environmental Impact
Statement for this proposed rule. DOE's CX determination for this
proposed rule is available at http://cxnepa.energy.gov.

E. Review Under Executive Order 13132

Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have Federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. EPCA governs and
prescribes Federal preemption of State regulations as to energy
conservation for the products that are the subject of today's proposed
rule. States can petition DOE for exemption from such preemption to the
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) No
further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 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. 61 FR
4729 (Feb. 7, 1996). 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, this proposed rule
meets the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a proposed regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a proposed ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect small governments. On March 18, 1997,
DOE published a statement of policy on its process for
intergovernmental consultation under UMRA. 62 FR 12820; also available
at http://www.gc.doe.gov.
Although today's proposed rule does not contain a Federal
intergovernmental mandate, it may require expenditures of $100 million
or more on the private sector. Specifically, the proposed rule will
likely result in a final rule that could require expenditures of $100
million or more. Such expenditures may include (1) investment in
research and development and in capital expenditures by microwave oven
manufacturers in the years between the final rule and the compliance
date for the new standard, and (2) incremental additional expenditures
by consumers to purchase higher-efficiency microwave ovens, starting in
2014.
Section 202 of UMRA authorizes an agency to respond to the content
requirements of UMRA in any other statement or analysis that
accompanies the proposed rule. 2 U.S.C. 1532(c). The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this supplemental notice of
proposed rulemaking and the ``Regulatory Impact Analysis,'' chapter 17
of the TSD for this supplemental proposed rule, respond to those
requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. 2 U.S.C. 1535(a). DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise or the selection of such an alternative
is inconsistent with law. As required by 42 U.S.C. 6295(h) and (o),
today's proposed rule would establish energy conservation standards for
microwave

[[Page 8572]]

oven standby mode and off mode that are designed to achieve the maximum
improvement in energy use that DOE has determined to be both
technologically feasible and economically justified. A full discussion
of the alternatives considered by DOE is presented in chapter 17 of the
TSD for today's supplemental proposed rule.

H. Review Under the Treasury and General Government Appropriations Act,
1999

Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

DOE has determined, under Executive Order 12630, ``Governmental
Actions and Interference with Constitutionally Protected Property
Rights'' 53 FR 8859 (March 18, 1988), that this regulation would not
result in any takings that might require compensation under the Fifth
Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act,
2001

Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for 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 62446 (Oct. 7, 2002). DOE has
reviewed today's SNOPR 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
at OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgates or is expected to lead to promulgation of
a final rule, and that (1) is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use.
DOE has tentatively concluded that today's regulatory action, which
sets forth energy conservation standards for microwave oven standby
mode and off mode, is not a significant energy action because the
proposed standards are not likely to have a significant adverse effect
on the supply, distribution, or use of energy, nor has it been
designated as such by the Administrator at OIRA. Accordingly, DOE has
not prepared a Statement of Energy Effects on the proposed rule.

L. Review Under the Information Quality Bulletin for Peer Review

On December 16, 2004, OMB, in consultation with the Office of
Science and Technology (OSTP), issued its Final Information Quality
Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 2005).
The Bulletin establishes that certain scientific information shall be
peer reviewed by qualified specialists before it is disseminated by the
Federal Government, including influential scientific information
related to agency regulatory actions. The purpose of the bulletin is to
enhance the quality and credibility of the Government's scientific
information. Under the Bulletin, the energy conservation standards
rulemaking analyses are ``influential scientific information,'' which
the Bulletin defines as ``scientific information the agency reasonably
can determine will have or does have a clear and substantial impact on
important public policies or private sector decisions.'' 70 FR 2664,
2667.
In response to OMB's Bulletin and as more fully set forth in the
October 2008 NOPR, DOE conducted formal in-progress peer reviews of the
energy conservation standards development process and analyses and has
prepared a Peer Review Report pertaining to the energy conservation
standards rulemaking analyses. Generation of this report involved a
rigorous, formal, and documented evaluation using objective criteria
and qualified and independent reviewers to make a judgment as to the
technical/scientific/business merit, the actual or anticipated results,
and the productivity and management effectiveness of programs and/or
projects. The ``Energy Conservation Standards Rulemaking Peer Review
Report'' dated February 2007 has been disseminated and is available at
the following Web site: http://www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

VIII. Public Participation

A. Attendance at Public Meeting

The time, date, and location of the public meeting are listed in
the DATES and ADDRESSES sections at the beginning of this document. If
you plan to attend the public meeting, please notify Ms. Brenda Edwards
at (202) 586-2945 or Brenda.Edwards@ee.doe.gov. As explained in the
ADDRESSES section, foreign nationals visiting DOE Headquarters are
subject to advance security screening procedures.
In addition, you can attend the public meeting via Webinar. Webinar
registration information, participant instructions, and information
about the capabilities available to Webinar participants will be
published on the following Web site https://www1.gotomeeting.com/register/507099585. Participants are responsible for ensuring their
systems are compatible with the Webinar software.

B. Procedure for Submitting Prepared General Statements for
Distribution

Any person who has plans to present a prepared general statement
may request that copies of his or her statement be made available at
the public meeting. Such persons may submit requests, along with an
advance electronic copy of their statement in PDF (preferred),
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to
the appropriate address shown in the ADDRESSES section at the beginning
of this notice. The request and advance copy of statements must be
received at least one week before the public meeting and may be
emailed, hand-delivered, or sent by mail. DOE prefers to receive
requests and advance copies via email. Please include a telephone
number to enable DOE staff to make a follow-up contact, if needed.

C. Conduct of Public Meeting

DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with section 336 of EPCA

[[Page 8573]]

(42 U.S.C. 6306). A court reporter will be present to record the
proceedings and prepare a transcript. DOE reserves the right to
schedule the order of presentations and to establish the procedures
governing the conduct of the public meeting. After the public meeting,
interested parties may submit further comments on the proceedings as
well as on any aspect of the rulemaking until the end of the comment
period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this rulemaking. Each participant will be allowed
to make a general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will permit, as time
permits, other participants to comment briefly on any general
statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this rulemaking. The official conducting the public
meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be included in the docket,
which can be viewed as described in the Docket section at the beginning
of this notice. In addition, any person may buy a copy of the
transcript from the transcribing reporter.

D. Submission of Comments

DOE will accept comments, data, and information regarding this
proposed rule before or after the public meeting, but no later than the
date provided in the DATES section at the beginning of this proposed
rule. Interested parties may submit comments using any of the methods
described in the ADDRESSES section at the beginning of this notice.
Submitting comments via regulations.gov, the regulations.gov Web
page will require you to provide your name and contact information.
Your contact information will be viewable to DOE Building Technologies
staff only. Your contact information will not be publicly viewable
except for your first and last names, organization name (if any), and
submitter representative name (if any). If your comment is not
processed properly because of technical difficulties, DOE will use this
information to contact you. If DOE cannot read your comment due to
technical difficulties and cannot contact you for clarification, DOE
may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment or in any documents attached to your comment.
Any information that you do not want to be publicly viewable should not
be included in your comment, nor in any document attached to your
comment. Persons viewing comments will see only first and last names,
organization names, correspondence containing comments, and any
documents submitted with the comments.
Do not submit to regulations.gov information for which disclosure
is restricted by statute, such as trade secrets and commercial or
financial information (hereinafter referred to as Confidential Business
Information (CBI)). Comments submitted through regulations.gov cannot
be claimed as CBI. Comments received through the Web site will waive
any CBI claims for the information submitted. For information on
submitting CBI, see the Confidential Business Information section.
DOE processes submissions made through regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery, or mail. Comments and
documents submitted via email, hand delivery, or mail also will be
posted to regulations.gov. If you do not want your personal contact
information to be publicly viewable, do not include it in your comment
or any accompanying documents. Instead, provide your contact
information on a cover letter. Include your first and last names, email
address, telephone number, and optional mailing address. The cover
letter will not be publicly viewable as long as it does not include any
comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. Email submissions are
preferred. If you submit via mail or hand delivery, please provide all
items on a CD, if feasible. It is not necessary to submit printed
copies. No facsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, written in English and are free of any defects or
viruses. Documents should not contain special characters or any form of
encryption and, if possible, they should carry the electronic signature
of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. According to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email, postal mail, or hand delivery two well-marked copies: One copy
of the document marked confidential including all the information
believed to be confidential, and one copy of the document marked non-
confidential with the information believed to be confidential deleted.
Submit these documents via email or on a CD, if feasible. DOE will make
its own determination about the confidential status of the information
and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by or available from other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person which would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except

[[Page 8574]]

information deemed to be exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
1. Input and data regarding off mode power for microwave ovens;
2. Input and data on the utility provided by specific features that
contribute to microwave oven standby power. In particular, DOE seeks
information on any lessening of the utility or the performance of
microwave display technologies and low- and zero-standby power cooking
sensors as compared to absolute humidity cooking sensors currently used
in microwave ovens on the U.S. market.
3. Input and data on control strategies available to enable
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. DOE also seeks comment on the viability and cost of
microwave oven control board circuitry that could accommodate
transistors to switch off cooking sensors and displays;
4. Whether switching or similar modern power supplies can operate
successfully inside a microwave oven and the associated efficiency
impacts on standby power;
5. Input and data on the estimated incremental manufacturing costs,
as well as the assumed approaches to achieve TSL 3 for microwave oven
standby mode and off mode. DOE also seeks comment on whether any
intellectual property or patent infringement issues are associated with
the design options presented in the SNOPR TSD to achieve TSL 3. In
particular, DOE seeks comment on any lessening of competition due to
intellectual property or patent infringement issues associated with
low- and zero-standby power cooking sensors;
6. Input and data on the estimated market share of microwave ovens
at the standby power consumption stipulated by TSL 3.
7. Information on any utility or performance impacts to built-ins
at the standard level proposed by DOE.

IX. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today's
proposed rule.

List of Subjects in 10 CFR Part 430

Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Reporting and
recordkeeping requirements, and Small businesses.

Issued in Washington, DC, on January 31, 2012.
Henry Kelly,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

For the reasons stated in the preamble, DOE proposes to amend parts
429 and 430, of title 10 of the Code of Federal Regulations, as set
forth below.

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

1. The authority citation for part 429 continues to read as
follows:

Authority: 42 U.S.C. 6291-6317.

2. In Sec. 429.23 revise paragraph (b)(2) to read as follows:

Sec. 429.23 Conventional cooking tops, conventional ovens, microwave
ovens.

* * * * *
(b) * * *
(2) Pursuant to Sec. 429.12(b)(13), a certification report shall
include the following public product-specific information: For
conventional cooking tops and conventional ovens: the type of pilot
light and a declaration that the manufacturer has incorporated the
applicable design requirements. For microwave ovens, the average
standby power in watts.

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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.

2. In Sec. 430.23 revise paragraph (i)(3) to read as follows:

Sec. 430.23 Test procedures for the measurement of energy and water
consumption.

* * * * *
(i) * * *
(3) The standby power for microwave ovens shall be determined
according to 3.2.4 of appendix I to this subpart. The standby power
shall be rounded off to the nearest 0.1 watt.
* * * * *
3. In Sec. 430.32 revise the heading and paragraph (j) to read as
follows:

Sec. 430.32 Energy and water conservation standards and their
compliance dates.

* * * * *
(j) Cooking Products (1) Gas cooking products with an electrical
supply cord manufactured on or after January 1, 1990, shall not be
equipped with a constant burning pilot light.
(2) Gas cooking products without an electrical supply cord
manufactured on or after April 9, 2012, shall not be equipped with a
constant burning pilot light.
(3) Microwave-only ovens and countertop combination microwave ovens
manufactured on or after [date 3 years after final rule Federal
Register publication] shall have an average standby power not more than
1.0 watt. Built-in and over-the-range combination microwave ovens
manufactured on or after [date 3 years after final rule Federal
Register publication] shall have an average standby power not more than
2.2 watts.
* * * * *
[FR Doc. 2012-2784 Filed 2-13-12; 8:45 am]
BILLING CODE 6450-01-P