[Federal Register Volume 79, Number 27 (Monday, February 10, 2014)]
[Rules and Regulations]
[Pages 7846-7932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-02560]
[[Page 7845]]
Vol. 79
Monday,
No. 27
February 10, 2014
Part III
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for External
Power Supplies; Final Rule
Federal Register / Vol. 79, No. 27 / Monday, February 10, 2014 /
Rules and Regulations
[[Page 7846]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[Docket No. EERE-2008-BT-STD-0005]
RIN 1904-AB57
Energy Conservation Program: Energy Conservation Standards for
External Power Supplies
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: Pursuant to the Energy Policy and Conservation Act of 1975
(EPCA), as amended, today's final rule amends the energy conservation
standards that currently apply to certain external power supplies and
establishes new energy conservation standards for other external power
supplies that are currently not required to meet such standards.
Through its analysis, DOE has determined that these changes satisfy
EPCA's requirements that any new and amended energy conservation
standards for these products result in the significant conservation of
energy and be both technologically feasible and economically justified.
DATES: The effective date of this rule is April 11, 2014. Compliance
with the new and amended standards established for EPSs in today's
final rule is February 10, 2016.
The incorporation by reference of a certain publication listed in
this rule is approved by the Director of the Federal Register on April
11, 2014.
ADDRESSES: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at regulations.gov. All
documents in the docket are listed in the regulations.gov index.
However, some documents listed in the index, such as those containing
information that is exempt from public disclosure, may not be publicly
available.
The docket can be accessed from the regulations.gov homepage by
searching for Docket ID EERE-2008-BT-STD-0005. The regulations.gov Web
page contains simple instructions on how to access all documents,
including public comments, in the docket.
For further information on how to review the docket, contact Ms.
Brenda Edwards at (202) 586-2945 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Dommu, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington,
DC 20585-0121. Telephone: (202) 586-9870. Email: [email protected].
Mr. Michael Kido, U.S. Department of Energy, Office of the General
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-8145. Email: [email protected].
SUPPLEMENTARY INFORMATION: This final rule incorporates by reference
into part 430 the following industry standard:
International Efficiency Marking Protocol for External Power Supplies,
Version 3.0
The above referenced document has been added to the docket for this
rulemaking and can be downloaded from Docket EERE-2008-BT-STD-0005 on
Regulations.gov.
The document is discussed in section IV.O of this notice.
Table of Contents
I. Summary of the Final Rule and Its Benefits
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for EPSs
III. General Discussion
A. Compliance Date
B. Product Classes and Scope of Coverage
1. General
2. Definition of Consumer Product
3. Power Supplies for Solid State Lighting
4. Medical Devices
5. Security and Life Safety Equipment
6. Service Parts and Spare Parts
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion
A. Market and Technology Assessment
1. Market Assessment
2. Product Classes
a. Proposed EPS Product Classes
b. Differentiating Between Direct and Indirect Operation EPSs
c. Multiple-Voltage
d. Low-Voltage, High-Current EPSs
e. Final EPS Product Classes
3. Technology Assessment
a. EPS Efficiency Metrics
b. EPS Technology Options
c. High-Power EPSs
d. Power Factor
B. Screening Analysis
C. Engineering Analysis
1. Representative Product Classes and Representative Units
2. EPS Candidate Standard Levels (CSLs)
3. EPS Engineering Analysis Methodology
4. EPS Engineering Results
5. EPS Equation Scaling
6. Proposed Standards
a. Product Classes B, C, D, and E
b. Product Class X
c. Product Class H
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analyses
1. Manufacturer Selling Price
2. Markups
3. Sales Tax
4. Installation Cost
5. Maintenance Cost
6. Product Price Forecast
7. Unit Energy Consumption
8. Electricity Prices
9. Electricity Price Trends
10. Lifetime
11. Discount Rate
12. Sectors Analyzed
13. Base Case Market Efficiency Distribution
14. Compliance Date
15. Payback Period Inputs
G. Shipments Analysis
1. Shipment Growth Rate
2. Product Class Lifetime
3. Forecasted Efficiency in the Base Case and Standards Cases
H. National Impact Analysis
1. Product Price Trends
2. Unit Energy Consumption and Savings
3. Unit Costs
4. Repair and Maintenance Cost per Unit
5. Energy Prices
6. National Energy Savings
7. Discount Rates
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Manufacturer Production Costs
2. Product and Capital Conversion Costs
3. Markup Scenarios
4. Impacts on Small Businesses
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
c. Current Approach and Key Assumptions
2. Valuation of Other Emissions Reductions
M. Utility Impact Analysis
N. Employment Impact Analysis
O. Marking Requirements
V. Analytical Results
A. Trial Standards Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
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a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impact on Manufacturers
a. Industry Cash Flow Analysis Results
b. Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Manufacturer Subgroups
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impact on Employment
4. Impact on Utility and Performance of the Products
5. Impact on Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusions
1. Benefits and Burdens of Trial Standard Levels Considered for
EPS Product Class B
2. Benefits and Burdens of Trial Standard Levels Considered for
EPS Product Class X
3. Benefits and Burdens of Trial Standard Levels Considered for
EPS Product Class H
4. Summary of Benefits and Costs (Annualized) of the Proposed
Standards
5. Stakeholder Comments on Alternatives to Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 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
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Summary of the Final Rule and Its Benefits
Today's notice announces the Department of Energy's (DOE's) amended
and new energy conservation standards for certain classes of external
power supplies (EPSs). These standards, which are based on a series of
mathematical equations that vary based on output power, will affect a
wide variety of EPSs used in a wide variety of consumer applications.
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified), established the Energy Conservation Program for Consumer
Products Other Than Automobiles.\2\ Pursuant to EPCA, any new and
amended energy conservation standard that DOE prescribes for certain
products, such as EPSs, shall be designed to achieve the maximum
improvement in energy efficiency that DOE determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A))
Furthermore, the new and amended standard must result in significant
conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with
these provisions, DOE is amending the standards for certain EPSs--those
devices that are already regulated by standards enacted by Congress in
2007--and establishing new standards for EPSs that have not yet been
regulated by DOE. These standards, which prescribe a minimum average
efficiency during active mode (i.e. when an EPS is plugged into the
main electricity supply and is supplying power in response to a load
demand from another connected device) and a maximum power consumption
level during no-load mode (i.e. when an EPS is plugged into the main
electricity supply but is not supplying any power in response to a
demand load from another connected device), are expressed as a function
of the nameplate output power (i.e. the power output of the EPS). These
standards are shown in Table I-1. and will apply to all products listed
in Table I.1 and manufactured in, or imported into, the United States
starting on February 10, 2016.
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\2\ All references to EPCA in this document refer to the statute
as amended through the American Energy Manufacturing Technical
Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012).
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The new and amended standards being adopted today apply to all
direct operation EPSs, both Class A and non-Class A, with the
exceptions noted in the footnote to Table I-1. These exemptions are
discussed in more detail in Section IV.A.2.d and Section B.5. Note that
the standards established by Congress for Class A EPSs will continue in
force for all Class A EPSs, including indirect operation EPSs.
Therefore, all indirect operation Class A EPSs must continue to meet
the standards established by Congress at efficiency level IV (discussed
in Section II.B.1), while direct operation Class A EPSs will be
required to meet the more stringent standards being adopted today.
A. Benefits and Costs to Consumers
Table I-2 presents DOE's evaluation of the economic impacts of
today's standards on EPS consumers, as measured by the average life-
cycle cost (LCC) savings, the median payback period, and the average
lifetime. The average LCC savings are positive and the median payback
periods are less than the average lifetimes for all product classes for
which consumers are impacted by the standards.
[GRAPHIC] [TIFF OMITTED] TR10FE14.004
B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2013 to 2044). Using a real discount rate of 7.1
percent, DOE estimates that the industry net present value (INPV) for
manufacturers of EPSs is $274.0 million in 2012$. Under today's
standards, DOE expects that manufacturers may lose up to 18.7 percent
of their INPV, which is approximately $51.2 million. Additionally,
based on DOE's interviews with the manufacturers of EPSs no domestic
OEM EPS manufacturers were identified and therefore, DOE does not
expect any plant closings or significant loss of employment.
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C. National Benefits \3\
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\3\ All monetary values in this section are expressed in 2012
dollars and are discounted to 2013.
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DOE's analyses indicate that today's standards would save a
significant amount of energy. The lifetime savings for EPSs purchased
in the 30-year period that begins in the year of compliance with new
and amended standards (2015-2044) amount to 0.94 quads. The annual
energy savings in 2030 amount to 0.15 percent of total residential
energy use in 2012.\4\
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\4\ Total residential energy use in 2012 was 20.195 quads. See:
http://www.eia.gov/totalenergy/data/monthly/?src=Total-f3#
consumption
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The estimated cumulative net present value (NPV) of total consumer
costs and savings of today's standards for EPSs ranges from $1.9
billion (at a 7-percent discount rate) to $3.8 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product costs for
products purchased in 2015-2044.
In addition, today's standards are projected to yield significant
environmental benefits. The energy savings would result in cumulative
greenhouse gas emission reductions of approximately 47.0 million metric
tons (Mt) \5\ of carbon dioxide (CO2), 81.7 thousand tons of
sulfur dioxide (SO2), 15.0 thousand tons of nitrogen oxides
(NOX) and 0.1 tons of mercury (Hg).\6\ Through 2030, the
estimated energy savings would result in cumulative emissions
reductions of 23.6 Mt of CO2.
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\5\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are presented in short tons.
\6\ DOE calculated emissions reductions relative to the Annual
Energy Outlook 2013 (AEO 2013) Reference case, which generally
represents current legislation and environmental regulations for
which implementing regulations were available as of December 31,
2012.
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The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC) developed and recently updated by an
interagency process.\7\ The derivation of the SCC values is discussed
in section IV.L. DOE estimates that the net present monetary value of
the CO2 emissions reductions is between $0.4 billion and
$4.7 billion. DOE also estimates that the net present monetary value of
the NOX emissions reductions is $0.014 billion at a 7-
percent discount rate and $0.024 billion at a 3-percent discount
rate.\8\
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\7\ Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866. Interagency Working
Group on Social Cost of Carbon, United States Government. May 2013;
revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf
\8\ DOE is currently investigating valuation of avoided Hg and
SO2 emissions.
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Table I-3 summarizes the national economic costs and benefits
expected to result from today's standards for EPSs.
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[GRAPHIC] [TIFF OMITTED] TR10FE14.005
The benefits and costs of today's standards, for products sold in
2015-2044, can also be expressed in terms of annualized values. The
annualized monetary values are the sum of (1) the annualized national
economic value of the benefits from operating the product (consisting
primarily of operating cost savings from using less energy, minus
increases in equipment purchase and installation costs, which is
another way of representing consumer NPV), plus (2) the annualized
monetary value of the benefits of emission reductions, including
CO2 emission reductions.\9\
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\9\ 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 2013, 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 three and seven 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.3. From the present value, DOE then calculated the
fixed annual payment over a 30-year period (2013 through 2042) 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 is a steady stream of
payments.
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Although adding the value of consumer savings to the value 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
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 EPSs shipped in 2015-2044. The SCC
values, on the other hand, reflect the present value of all future
climate-related impacts resulting from the emission of one metric ton
of carbon dioxide in each year. These impacts continue well beyond
2100.
[[Page 7852]]
Estimates of annualized benefits and costs of today's standards are
shown in Table I-4. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction, for which DOE used a 3-percent discount
rate along with the average SCC series that uses a 3-percent discount
rate, the cost of the standards in today's rule is $147 million per
year in increased equipment costs to consumers, while the benefits are
$293 million per year in reduced equipment operating costs to
consumers, $77 million in CO2 reductions, and $1.1 million
in reduced NOX emissions. In this case, the net benefit
amounts to $223 million per year. Using a 3-percent discount rate for
all benefits and costs and the average SCC series, the cost of the
standards in today's rule is $162 million per year in increased
equipment costs, while the benefits are $350 million per year in
reduced operating costs, $77 million in CO2 reductions, and
$1.2 million in reduced NOX emissions. In this case, the net
benefit amounts to $266 million per year.
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D. Conclusion
Based on the analyses culminating in this final rule, DOE found the
benefits to the Nation of the standards (energy savings, consumer LCC
savings, positive NPV of consumer benefit, and emission reductions)
outweigh the burdens (loss of INPV and LCC increases for some users of
these products). DOE has concluded that the standards in today's final
rule represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, and would result
in significant conservation of energy.
II. Introduction
The following section briefly discusses the statutory authority
underlying today's final rule, as well as some of the relevant
historical background related to the establishment of standards for
EPSs.
A. Authority
Title III, Part B \10\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified) established the Energy Conservation Program for Consumer
Products Other Than Automobiles, a program covering most major
household appliances (collectively referred to as ``covered
products''),\11\ which includes the types of EPSs that are the subject
of this rulemaking. (42 U.S.C. 6295(u)) (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 must occur
no later than six years from the issuance of a final rule establishing
or amending a standard for a covered product.)
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\10\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\11\ All references to EPCA in this document refer to the
statute as amended through the American Energy Manufacturing
Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18,
2012).
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Pursuant to EPCA, 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
remainder of the program. The labeling of EPSs, however, is one of the
few exceptions for which either agency may establish requirements as
needed. See 42 U.S.C. 6294(a)(5)(A). Subject to certain criteria and
conditions, DOE is required to develop test procedures to measure the
energy efficiency, energy use, or estimated annual operating cost of
each covered product. (42 U.S.C. 6293) Manufacturers of covered
products must use the prescribed DOE test procedure as the basis for
certifying to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use
these test procedures to determine whether the products comply with
standards adopted pursuant to EPCA. Id. The DOE test procedures for
EPSs currently appear at title 10 of the Code of Federal Regulations
(CFR) part 430, subpart B, appendix Z. See also 76 FR 31750 (June 1,
2011) (finalizing the most recent amendment to the test procedures for
EPSs).
DOE must follow specific statutory criteria for prescribing new and
amended standards for covered products. As indicated above, any new and
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, DOE may not adopt any standard that would not result in
the significant conservation of energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard: (1) For certain products,
including EPSs, if no test procedure has been established for the
product, or (2) if DOE determines by rule that the new and amended
standard is not technologically feasible or economically justified. (42
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a new and amended
standard is economically justified, DOE must determine whether the
benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must make this determination after receiving
comments on the proposed standard and by considering, to the greatest
extent practicable, the following seven 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)(I)-(VII))
EPCA, as codified, 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.
[[Page 7855]]
6295(o)(1)) Also, the Secretary may not prescribe a new and amended
standard if interested persons have established by a preponderance of
the evidence that the standard is likely to result in the
unavailability in the United States of any covered product type (or
class) having performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6295(o)(4))
Further, EPCA, as codified, 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 product for
any group of covered products that have the same function or intended
use if DOE determines that 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. (42 U.S.C. 6295(q)(1)) 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 preempt State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions set forth under 42
U.S.C. 6297(d). The energy conservation standards established in this
rule will preempt relevant State laws or regulations on February 10,
2016.
Also, pursuant to the amendments contained in section 310(3) of
EISA 2007, any final rule for new and amended energy conservation
standards promulgated after July 1, 2010, are required to address
standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3))
Specifically, when DOE adopts a standard for a covered product after
that date, it must, if justified by the criteria for adoption of
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and
off mode energy use into the standard, or, if that is not feasible,
adopt a separate standard for such energy use for that product. (42
U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures and standards
for EPSs address standby mode and off mode energy use, as do the
standards adopted in this final rule.
Finally, Congress created a series of energy conservation
requirements for certain types of EPSs--those EPSs that meet the
``Class A'' criteria. See 42 U.S.C. 6295(u)(3) (establishing standards
for Class A EPSs) and 6291(36)(C) (defining what a Class A EPS is).
Congress clarified the application of these standards in a subsequent
revision to EPCA by creating an exclusion for certain types of Class A
EPSs. In particular, EPSs that are designed to be used with security or
life safety alarm or surveillance system that are manufactured prior to
2017 are not required to meet the no-load mode requirements. See 42
U.S.C. 6295(u)(3)(E) (detailing criteria for satisfying the exclusion
requirements). The standards in today's final rule are consistent with
these Congressionally-enacted provisions.
B. Background
1. Current Standards
Section 301 of EISA 2007 established minimum energy conservation
standards for Class A EPSs, which became effective on July 1, 2008. (42
U.S.C. 6295(u)(3)(A)). Class A EPSs are types of EPSs defined by
Congress that meet certain design criteria and that are not devices
regulated by the Food and Drug Administration as medical devices or
that power the charger of a detachable battery pack or the battery of a
product that is fully or primarily motor operated. See 42 U.S.C.
6291(36)(C)(i)-(ii). The current standards for Class A EPSs are set
forth in Table II.1.
[GRAPHIC] [TIFF OMITTED] TR10FE14.008
Currently, there are no Federal energy conservation standards for
EPSs falling outside of Class A.
2. History of Standards Rulemaking for EPSs
Section 135 of the Energy Policy Act of 2005 (EPACT 2005), Public
Law 109-58 (Aug. 8, 2005), amended sections 321 and 325 of EPCA by
defining the term ``external power supply.'' That provision also
directed DOE to prescribe test procedures related to the energy
consumption of EPSs and to issue a final rule that determines whether
[[Page 7856]]
energy conservation standards shall be issued for EPSs or classes of
EPSs. (42 U.S.C. 6295(u)(1)(A) and (E))
On December 8, 2006, DOE complied with the first of these
requirements by publishing a final rule that prescribed test procedures
for a variety of products, including EPSs. 71 FR 71340. See also 10 CFR
part 430, Subpart B, Appendix Z (``Uniform Test Method for Measuring
the Energy Consumption of External Power Supplies'') (codifying the EPS
test procedure).
On December 19, 2007, Congress enacted EISA 2007, which, among
other things, amended sections 321, 323, and 325 of EPCA (42 U.S.C.
6291, 6293, and 6295). As part of these amendments, EISA 2007
supplemented the EPS definition, which the statute defines as an
external power supply circuit ``used to convert household electric
current into DC current or lower-voltage AC current to operate a
consumer product.'' (42 U.S.C. 6291(36)(A)) In particular, Section 301
of EISA 2007 created a subset of EPSs called ``Class A External Power
Supplies,'' which consists of, among other elements, those EPSs that
can convert to only 1 AC or DC output voltage at a time and have a
nameplate output power of no more than 250 watts (W). The Class A
definition, as noted earlier, excludes any device requiring Federal
Food and Drug Administration (FDA) listing and approval as a medical
device in accordance with section 513 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360(c)) along with devices that power the
charger of a detachable battery pack or that charge the battery of a
product that is fully or primarily motor operated. (42 U.S.C.
6291(36)(C)) Section 301 of EISA 2007 also established energy
conservation standards for Class A EPSs that became effective on July
1, 2008, and directed DOE to conduct an energy conservation standards
rulemaking to review those standards.
Additionally, section 309 of EISA 2007 amended section 325(u)(1)(E)
of EPCA (42 U.S.C. 6295(u)(1)(E)) by directing DOE to issue a final
rule prescribing energy conservation standards for battery chargers or
classes of battery chargers or to determine that no energy conservation
standard is technologically feasible and economically justified. To
satisfy these requirements, along with those for EPSs, as noted later,
DOE chose to bundle the rulemakings for these separate products
together into a single rulemaking effort. The rulemaking requirements
contained in sections 301 and 309 of EISA 2007 also effectively
superseded the prior determination analysis that EPACT 2005 required
DOE to conduct.
Section 309 of EISA 2007 also instructed DOE to issue a final rule
to determine whether DOE should issue energy conservation standards for
EPSs or classes of EPSs by no later than two years after EISA 2007's
enactment. (42 U.S.C. 6295(u)(1)(E)(i)(I)) Because Congress had already
set standards for Class A devices, DOE interpreted this determination
requirement as applying solely to assessing whether energy conservation
standards would be warranted for EPSs that fall outside of the Class A
definition, i.e., non-Class A EPSs. Non-Class A EPSs include those
devices that (1) have a nameplate output power greater than 250 watts,
(2) are able to convert to more than one AC or DC output voltage
simultaneously, and (3) are specifically excluded from coverage under
the Class A EPS definition in EISA 2007 by virtue of their application
(i.e. EPSs used with medical devices or that power chargers of
detachable battery packs or batteries of products that are motor-
operated).\12\
---------------------------------------------------------------------------
\12\ To help ensure that the standards Congress set were not
applied in an overly broad fashion, DOE applied the statutory
exclusion not only to those EPSs that require FDA listing and
approval but also to any EPS that provides power to a medical
device.
---------------------------------------------------------------------------
Finally, section 310 of EISA 2007 established definitions for
active, standby, and off modes, and directed DOE to amend its existing
test procedures for EPSs to measure the energy consumed in standby mode
and off mode. (42 U.S.C. 6295(gg)(2)(B)(i)) Consequently, DOE published
a final rule incorporating standby- and off-mode measurements into the
DOE test procedure. See 74 FR 13318 (March 27, 2009) DOE later amended
its test procedure for EPSs by including a measurement method for
multiple-voltage EPSs and clarified certain definitions within the
single voltage EPS test procedure. See 76 FR 31750 (June 1, 2011)
DOE initiated its current rulemaking effort for these products by
issuing the Energy Conservation Standards Rulemaking Framework Document
for Battery Chargers and External Power Supplies (the framework
document), which explained, among other things, the issues, analyses,
and process DOE would follow in developing potential standards for non-
Class A EPSs and amended standards for Class A EPSs. See http://www.regulations.gov/#!documentDetail;D=EERE-2008-BT-STD-0005-0005. 74
FR 26816 (June 4, 2009). DOE also published a notice of proposed
determination regarding the setting of standards for non-Class A EPSs.
74 FR 56928 (November 3, 2009). These notices were followed by a final
determination published on May 14, 2010, 75 FR 27170, which concluded
that energy conservation standards for non-Class A EPSs appeared to be
technologically feasible and economically justified, and would be
likely to result in significant energy savings. Consequently, DOE
decided to include non-Class A EPSs in the present energy conservation
standards rulemaking for battery chargers and EPSs.\13\
---------------------------------------------------------------------------
\13\ See http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/23.
---------------------------------------------------------------------------
On September 15, 2010, having considered comments from interested
parties, gathered additional information, and performed preliminary
analyses for the purpose of developing potential amended energy
conservation standards for Class A EPSs and new energy conservation
standards for battery chargers and non-Class A EPSs, DOE announced a
public meeting and the availability on its Web site of a preliminary
technical support document (preliminary TSD). 75 FR 56021. The
preliminary TSD discussed the comments DOE had received in response to
the framework document and described the actions DOE had taken up to
this point, the analytical framework DOE was using, and the content and
results of DOE's preliminary analyses. Id. at 56023, 56024. DOE
convened the public meeting to discuss and receive comments on: (1) The
product classes DOE analyzed, (2) the analytical framework, models, and
tools that DOE was using to evaluate potential standards, (3) the
results of the preliminary analyses performed by DOE, (4) potential
standard levels that DOE might consider, and (5) other issues
participants believed were relevant to the rulemaking. Id. at 56021,
56024. DOE also invited written comments on these matters. The public
meeting took place on October 13, 2010. Many interested parties
participated by submitting written comments.
DOE published a notice of proposed rulemaking (NOPR) on March 27,
2012. 77 FR 18478. Shortly after, DOE also published on its Web site
the complete TSD for the proposed rule, which incorporated the complete
analyses DOE conducted and technical documentation for each analysis.
The NOPR TSD included the LCC spreadsheet, the national impact analysis
spreadsheet, and the manufacturer impact analysis (MIA) spreadsheet--
all of which are available in the docket for this rulemaking. In the
March 2012 NOPR, in addition to proposing potential standards for
battery chargers, DOE
[[Page 7857]]
proposed amended energy conservation standards for EPSs as follows:
[GRAPHIC] [TIFF OMITTED] TR10FE14.009
[[Page 7858]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.010
In the March 2012 NOPR, DOE identified 36 specific issues related
to battery chargers and EPSs on which it was particularly interested in
receiving comments. Id. at 18642-18644. DOE also sought comments and
data that would allow DOE to further bring clarity to the issues
surrounding battery chargers and EPSs, and determine how the issues
discussed in the March 2012 NOPR could be adequately addressed. DOE
also held a public meeting in Washington, DC, on May 2, 2012, to
solicit comment and information from the public relevant to the
proposed rule. Finally, DOE received many written comments on these and
other issues in response to the March 2012 NOPR. All commenters, along
with their corresponding abbreviations and organization type, are
listed in Table II-3. In today's notice, DOE summarizes and addresses
the issues these commenters raised that relate to EPSs. The March 2012
NOPR included additional, detailed background information on the
history of this rulemaking. See id. at 18493- 18495.
Table II-3--List of Commenters
------------------------------------------------------------------------
Organization Abbreviation Organization type
------------------------------------------------------------------------
ARRIS Group, Inc................ ARRIS Group....... Manufacturer.
ASAP, ASE, ACEEE, CFA, NEEP, and ASAP, et al....... Energy Efficiency
NEEA. Advocates.
Association of Home Appliance AHAM.............. Industry Trade
Manufacturers. Association.
Brother International Brother Manufacturer.
Corporation. International.
California Energy Commission.... California Energy State Entity.
Commission.
California Investor-Owned CA IOUs........... Utilities.
Utilities.
Cobra Electronics Corporation... Cobra Electronics. Manufacturer.
Consumer Electronics Association CEA............... Industry Trade
Association.
Delta-Q Technologies Corp....... Delta-Q Manufacturer.
Technologies.
Dual-Lite, a Division of Hubbell Dual-Lite......... Manufacturer.
Lighting, Inc..
Duracell........................ Duracell.......... Manufacturer.
Eastman Kodak Company........... Eastman Kodak..... Manufacturer.
Flextronics Power............... Flextronics....... Manufacturer.
GE Healthcare................... GE Healthcare..... Manufacturer.
Information Technology Industry ITI............... Industry Trade
Council. Association.
Jerome Industries, a subsidiary Jerome Industries. Manufacturer.
of Astrodyne.
Korean Agency for Technology and Republic of Korea. Foreign
Standards. Government.
Logitech Inc.................... Logitech.......... Manufacturer.
Microsoft Corporation........... Microsoft......... Manufacturer.
Motorola Mobility, Inc.......... Motorola Mobility. Manufacturer.
National Electrical NEMA.............. Industry Trade
Manufacturers Association. Association.
Natural Resources Defense NRDC.............. Energy Efficiency
Council. Advocate.
Nintendo of America Inc......... Nintendo of Manufacturer.
America.
Nokia Inc....................... Nokia............. Manufacturer.
Northeast Energy Efficiency NEEP.............. Energy Efficiency
Partnerships. Advocate.
Northwest Energy Efficiency NEEA and NPCC..... Energy Efficiency
Alliance and the Northwest Advocates.
Power and Conservation Council.
NRDC, ACEEE, ASAP, CFA, NRDC, et al....... Energy Efficiency
Earthjustice, MEEA, NCLC, NEEA, Advocates.
NEEP, NPCC, Sierra Club, SEEA,
SWEEP.
Panasonic Corporation of North Panasonic......... Manufacturer.
America.
PG&E and SDG&E.................. PG&E and SDG&E.... Utilities.
Philips Electronics............. Philips........... Manufacturer.
Plantronics..................... Plantronics....... Manufacturer.
Power Sources Manufacturers PSMA.............. Industry Trade
Association. Association.
Power Tool Institute, Inc....... PTI............... Industry Trade
Association.
Salcomp Plc..................... Salcomp........... Manufacturer.
Schneider Electric.............. Schneider Electric Manufacturer.
Security Industry Association... SIA............... Industry Trade
Association.
Telecommunications Industry TIA............... Industry Trade
Association. Association.
[[Page 7859]]
Wahl Clipper Corporation........ Wahl Clipper...... Manufacturer.
------------------------------------------------------------------------
III. General Discussion
A. Compliance Date
The compliance date is the date when a new standard becomes
operative, i.e., the date by which EPS manufacturers must manufacture
products that comply with the standard. EISA 2007 directed DOE to
complete a rulemaking to amend the Class A EPS standards by July 1,
2011, with compliance required by July 1, 2013, i.e., giving
manufacturers a two-year lead time to satisfy those standards. (42
U.S.C. 6295(u)(3)(D)(i)) There are no similar requirements for non-
Class A EPSs. DOE used a compliance date of 2013 in the analysis it
prepared for its March 2012 NOPR. As a result, some interested parties
assumed in their comments to DOE that the compliance date would be July
1, 2013.
Many parties submitted comments on the duration of the compliance
period for EPS standards. Nokia and Plantronics requested 18 to 24
months; AHAM, CEA, Eastman Kodak, Flextronics, ITI, Microsoft, and
Salcomp requested two years; Panasonic requested a minimum of two years
and preferably three years; Nintendo of America requested four years;
and Motorola Mobility requested at least five years. These commenters
cited the need to make engineering design changes, conduct reliability
evaluations, and obtain regulatory approvals for safety, EMC, and other
global standards. (Nokia, No. 132 at p. 2; Plantronics, No. 156 at p.
1; AHAM, No. 124 at p. 5; CEA, No. 106 at p. 6; Eastman Kodak, No. 125
at p. 1; Flextronics, No. 145 at p. 1; ITI, No. 131 at p. 6; Microsoft,
No. 110 at p. 3; Salcomp, No. 73 at p. 2; Panasonic, No. 120 at p. 5;
Nintendo of America, No. 135 at p. 1; Motorola Mobility, No. 121 at p.
2) NEMA also cautioned that the broad scope and severe limits in the
proposed rule would force the withdrawal of systems from the
marketplace until testing is concluded and threaten the availability of
certain consumer products if insufficient lead time is provided. (NEMA,
No. 134 at p. 2) CEA and Panasonic later submitted supplemental
comments in response to DOE's March 2013 Request for Information
requesting that DOE require compliance in 2017, to harmonize with the
standards the European Union has proposed adopting. (CEA, No. 208 at p.
4; Panasonic, No. 210 at p. 2)
Consistent with the two-year lead time provided in EPCA, and in
light of the passing of the statutorily-prescribed 2013 effective date,
DOE will provide manufacturers with a lead-time of the same duration as
prescribed by statute to comply with the new and amended standards set
forth in today's final rule. EISA 2007 directed DOE to publish a final
rule for EPSs by July 1, 2011 and further stipulated that any amended
standards would apply to products manufactured on or after July 1,
2013, two years later. (42 U.S.C. 6295(u)) In DOE's view, Congress
created this two-year interval to ensure that manufacturers would have
sufficient time to meet any new and amended standards that DOE may set
for EPSs. In effect, DOE is preserving the original compliance period
length contained in EISA 2007 and ensuring that manufacturers will have
sufficient time to transition to the new and amended standards.
B. Product Classes and Scope of Coverage
1. General
When evaluating and establishing energy conservation standards, DOE
may divide covered products into product classes by the type of energy
used or by capacity or other performance-related features that would
justify a different standard. In making a determination whether a
performance-related feature justifies a different standard, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE determines are appropriate. See 42 U.S.C. 6295(q)
(outlining the criteria by which DOE may set different standards for a
product). EPS product classes are discussed in section IV.A.2.
An ``external power supply'' is an external power supply circuit
that is used to convert household electric current into DC current or
lower-voltage AC current to operate a consumer product. (42 U.S.C.
6291(36)(A)) EPCA, as amended by EISA 2007, also prescribes the
criteria for a subcategory of EPSs--those classified as Class A EPSs
(or in context, ``Class A''). Under 42 U.S.C. 6291(36)(C)(i), a Class A
EPS is a device that:
1. Is designed to convert line voltage AC input into lower voltage
AC or DC output;
2. is able to convert to only one AC or DC output voltage at a
time;
3. is sold with, or intended to be used with, a separate end-use
product that constitutes the primary load;
4. is contained in a separate physical enclosure from the end-use
product;
5. is connected to the end-use product via a removable or hard-
wired male/female electrical connection, cable, cord, or other wiring;
and
6. has nameplate output power that is less than or equal to 250
watts.
The Class A definition excludes any device that either (a) requires
Federal Food and Drug Administration listing and approval as a medical
device in accordance with section 513 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360(c)) or (b) powers the charger of a
detachable battery pack or charges the battery of a product that is
fully or primarily motor operated. See 42 U.S.C. 6291(36)(C)(ii).
Based on DOE's examination of product information, all EPSs appear
to share four of the six criteria under the Class A definition in that
all are:
Designed to convert line voltage AC input into lower
voltage AC or DC output;
sold with, or intended to be used with, a separate end-use
product that constitutes the primary load;
contained in a separate physical enclosure from the end-
use product; and
connected to the end-use product via a removable or hard-
wired male/female electrical connection, cable, cord, or other wiring.
Examples of devices that fall outside of Class A (in context,
``non-Class A'') include EPSs that can convert power to more than one
output voltage at a time (multiple voltage), EPSs that have nameplate
output power exceeding 250 watts (high-power), EPSs used to power
medical devices, and EPSs that provide power to the battery chargers of
motorized applications and detachable battery packs (MADB). After
examining the potential for energy savings that could result from
standards for non-Class A devices, DOE concluded that standards for
these devices would be likely to result in significant energy savings
and be technologically feasible and economically justified. 75 FR 27170
(May 14, 2010). With today's notice, DOE is amending the current
standards for Class A EPSs and adopting new
[[Page 7860]]
standards for multiple-voltage and high-power EPSs.
NEMA commented in response to the NOPR that combining battery
chargers and EPSs into a single rulemaking created burden on
manufacturers in terms of being able to process the standards proposed
in the NOPR. NEMA recommended that DOE delay the announcement of new
and amended standards for EPSs and begin a new rulemaking process
dedicated solely to EPSs after publishing a final rule for battery
chargers. According to NEMA, EISA 2007 allows DOE to opt out of
amending standards at this time if those standards are not warranted
and instead revisit the possibility of amending EPS standards as part
of a second rulemaking cycle. (NEMA, No. 134 at p. 6)
With respect to battery chargers, DOE issued a Request for
Information (RFI) on March 26, 2013, in which DOE sought additional
information. (78 FR 18253) The RFI sought, among other things,
information on battery chargers that manufacturers had certified as
compliant with the California Energy Commission (CEC) standards that
became effective on February 1, 2013. The notice also offered
commenters the opportunity to raise for comment any other issues
relevant to the proposal.
Several efficiency advocates submitted comments in response to
DOE's RFI, requesting that DOE split the combined battery charger and
EPS rulemaking into two separate rulemakings and issue EPS standards as
soon as possible. (NRDC, et al., No. 209 at p. 2; CA IOUs, No. 197 at
p. 9; California Energy Commission, No. 199 at p. 14; NEEA and NPCC,
No. 200 at p. 2) These commenters gave three reasons for quickly
finalizing the EPS rule: (1) The significant energy and economic
savings expected to result from the EPS standard, (2) the need to move
quickly to finalize standards before the underlying technical data
become outdated, and (3) the statutory deadline of July 1, 2011 for
publishing the EPS final rule. In response to DOE's March 2013 Request
for Information, Dual-Lite, a division of Hubbell Lighting, commented
that it ``challenges the DOE to adopt a bias towards action in
rulemakings, whereby initial rules are performed with a cant towards
getting a more modest rule out the door in a timely manner, versus
chasing every 0.01 watt of potential savings . . . and delaying actual
energy savings by months or years.'' (Dual-Lite, No. 189 at p. 3)
As explained above, this rulemaking initially addressed both
battery chargers and EPSs. After proposing standards for both product
types in March 2012, and giving careful consideration to the complexity
of the issues related to the setting of standards for battery chargers,
DOE has decided to adopt energy conservation standards for EPSs while
weighing for further consideration the promulgation of energy
conservation standards for battery chargers at a later date. The
battery charger rulemaking has been complicated by a number of factors,
including the setting of standards by the CEC, which other states have
chosen to follow.\14\ Because the California standards have already
become effective, manufacturers are already required to meet that
battery charger standard. DOE has previously indicated that the facts
before it did not indicate that it would be likely manufacturers would
continue to create separate products for California and the rest of the
country. See 77 FR at 18502. The likelihood of this split-approach
occurring is even less likely, given that other states have adopted the
California standards. As a result, DOE believes that manufacturers are
already making efforts to meet the levels set by California. To avoid
unnecessary disruptions to the market, provide some level of
consistency and stability to affected entities, and to further evaluate
the impacts associated with the California-based standards, DOE is
deferring the setting of battery charger standards at this time.
Consequently, today's notice focuses solely on the standards that are
being adopted today for EPSs, along with the detailed product classes
that will apply. For further detail, see the March 2013 Request for
Information.
---------------------------------------------------------------------------
\14\ Oregon has adopted the California standards; Washington,
Connecticut and New Jersey are considering doing the same.
---------------------------------------------------------------------------
2. Definition of Consumer Product
As noted above, the term ``external power supply'' refers to an
external power supply circuit that is used to convert household
electric current into DC current or lower-voltage AC current to operate
a consumer product.
DOE received comments from a number of stakeholders seeking
clarification on the definition of a consumer product. Schneider
Electric commented that the definition of consumer product is
``virtually unbounded'' and ``provides no definitive methods to
distinguish commercial or industrial products from consumer products.''
(Schneider Electric, No. 119 at p. 2) ITI commented that a more narrow
definition of a consumer product is needed to determine which state
regulations are preempted by federal standards. (ITI, No. 131 at p. 2)
NEMA commented that the FAQ on the DOE Web site is insufficient to
resolve its members' questions. (NEMA, No. 134 at p. 2) NEMA further
sought clarification on whether EPSs that power building system
components are within the scope of this rulemaking. According to NEMA,
such EPSs typically are permanently installed in electrical rooms near
the electrical entrance to the building and power such things as
communication links, central processors for building or lighting
management systems, and motorized shades. (NEMA, No. 134 at pp. 6-7)
These stakeholders suggested ways that DOE could clarify the definition
of a consumer product:
Adopt the ENERGY STAR battery charger definition.
Limit the scope to products marketed as compliant with the
FCC's Class B emissions limits.
Define consumer products as ``pluggable Type A Equipment
(as defined by IEC 60950-1), with an input rating of less than or equal
to 16A.''
Lutron Electronics commented that it does not believe that the EPSs
that power components of the lighting control systems and window
shading systems it manufactures are within the scope of the EPS
rulemaking because EPSs that meet the special requirements of such
applications and meet the proposed standards are not commercially
available. (Lutron Electronics, No. 141 at p. 2) DOE also received
comments from NEMA and Philips regarding how DOE would treat
illuminated exit signs and egress lighting. (NEMA, No. 134 at p. 6;
Philips, No. 128 at p. 2)
EPCA defines a consumer product as any article of a type that
consumes or is designed to consume energy and which, to any significant
extent, is distributed in commerce for personal use or consumption by
individuals. See 42 U.S.C. 6291(1). Manufacturers are advised to use
this definition (in conjunction with the EPS definition) to determine
whether a given device shall be subject to EPS standards. Additional
guidance is contained in the FAQ document that NEMA referred to, which
can be downloaded from DOE's Web site.\15\
---------------------------------------------------------------------------
\15\ http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/cce_faq.pdf.
---------------------------------------------------------------------------
Consistent with the statutory language and guidance noted above,
DOE notes that Congress treated EPSs, along with illuminated exit
signs, as consumer products. See 42 U.S.C. 6295(u) and (w) (provisions
related to requirements for EPSs and illuminated exit signs, both of
[[Page 7861]]
which are located in Part A of EPCA, which addresses residential
consumer products). In light of this treatment, by statute, EPSs are
considered consumer products under EPCA. Accordingly, DOE is treating
these products in a manner consistent with the framework established by
Congress.
3. Power Supplies for Solid State Lighting
NEMA and Philips commented that power supplies for solid state
lighting (SSL) should not be included in the scope of this rulemaking.
(NEMA, No. 134 at pp. 3-7; Philips, No. 128 at p. 2) They offered the
following arguments against the inclusion of SSL power supplies:
SSL is often used in commercial applications, and
therefore should not be considered a consumer product;
SSL power supplies are considered a part of the system as
a whole and typically tested as such;
SSL power supplies perform other functions in addition to
power conversion, such as dimming;
SSL is an emerging technology and increasing efficiency
could lead to costs that are prohibitive to most consumers; and
Regulating components of SSL could contradict DOE's other
efforts, which include promoting the adoption of SSL.
DOE notes that Congress prescribed the criteria for an EPS to meet
in order to be considered a covered product. A device meeting those
criteria is an EPS under the statute and subject to the applicable EPS
standards. DOE has no authority to alter these statutorily-prescribed
criteria.
Further, all Class A EPSs are subject to the current Class A EPS
standards, and those that are direct operation EPSs will be subject to
the amended EPS standards being adopted today. The fact that a given
type of product, such as SSL products, is often used in commercial
applications does not mean that it is not a consumer product, as
explained above. DOE recognizes that many EPSs are considered an
integral part of the consumer products they power and may be tested as
such; however, this does not obviate the need to ensure that the EPS
also meets applicable EPS standards. DOE has determined that there are
no technical differences between the EPSs that power certain SSL
(including LED) products and those that are used with other end-use
applications. And as DOE indicated in its proposal, although it did not
initially include these devices as part of its NOPR analysis, DOE
indicated that it may consider revising this aspect of its analysis. 77
FR at 18503. Therefore, DOE believes that subjecting SSL EPSs to EPS
standards will not adversely impact SSL consumers, since these devices
should be able to satisfy the standards. DOE notes that following this
approach is also consistent with DOE's other efforts, including those
to promote the broader adoption of SSL technologies.
4. Medical Devices
As explained above, EPSs for medical devices are not subject to the
current standards created by Congress in December 2007. In its May 2010
determination, DOE initially determined that standards for EPSs used to
power medical devices were warranted because they would result in
significant energy savings while being technologically feasible and
economically justified. As a result, in the March 2012 NOPR, DOE
proposed standards for these devices.
DOE subsequently received comments from GE Healthcare and Jerome
Industries, which manufactures power supplies for medical devices.
These commenters gave several reasons not to apply standards to these
products. The commenters noted that the design, manufacture,
maintenance, and post-market monitoring of medical devices is highly
regulated by the U.S. FDA, and EPS standards would only add to this
already quite substantial regulatory burden. They also commented that
there are a large number of individual medical device models, each of
which must be tested along with its component EPS to ensure compliance
with applicable standards; redesign of the EPS to meet DOE standards
would require that all of these models be retested and reapproved, at a
significant per-unit cost, especially for those devices that are
produced in limited quantities. Jerome Industries also expressed
concern that the proposed EPS standards are inconsistent with the
reliability and safety requirements incumbent on some medical devices,
i.e., asserting that an EPS cannot be engineered to meet the proposed
standards and these other requirements. Lastly, Jerome Industries noted
that medical EPSs are exempt from EPS standards in other jurisdictions,
including Europe, Australia, New Zealand, and California. (GE
Healthcare, No. 142 at p. 2; Jerome Industries, No. 191 at pp. 1-2)
Given these concerns, DOE has reevaluated its proposal to set
energy conservation standards for medical device EPSs. While DOE
believes, based on available data, that standards for these devices may
result in energy savings, DOE also wishes to avoid any action that
could potentially impact reliability and safety. In the absence of
sufficient data on this issue, and consistent with DOE's obligation to
consider such adverse impacts when identifying and screening design
options for improving the efficiency of a product, DOE has decided to
refrain from setting standards for medical EPSs at this time. See 42
U.S.C. 6295(o)(2)(b)(i)(VII). See also 10 CFR part 430, subpart C,
appendix A, (4)(a)(4) and (5)(b)(4) (collectively setting out DOE's
policy in evaluating potential energy conservation standards for a
product).
5. Security and Life Safety Equipment
The Security Industry Association sought confirmation that
``security or life safety alarms or surveillance systems'' would
continue to be excluded from the no-load power requirements that were
first established in EISA 2007. (SIA, No. 115 at pp. 1-2) See also 42
U.S.C. 6295(u)(3)(E). This exclusion applies only to the no-load mode
standard established in EISA 2007 for Class A EPSs. Consistent with
this temporary exemption, DOE is not requiring these devices to meet a
no-load mode requirement. Therefore, life safety and security system
EPSs will, until the statutorily-prescribed sunset date of July 1,
2017, not be required to meet a no-load standard. At the appropriate
time, DOE will re-examine this exemption and may opt to prescribe no-
load standards for these products in the future.
6. Service Parts and Spare Parts
Several commenters requested a temporary exemption from the
standards being finalized today for service part and spare part EPSs.
(CEA, No. 106 at p. 7; Eastman Kodak, No. 125 at p. 2; ITI, No. 131 at
p. 9; Motorola Mobility, No. 121 at p. 11; Nintendo of America, No. 135
at p. 2) Panasonic commented that ``a seven-year exemption is necessary
for manufacturers to meet their legal and customer service obligations
to stock and supply spare parts for sale, product servicing, and
warranty claims for existing products.'' (Panasonic, No. 120 at p. 6)
Panasonic later requested a 9-year exemption, in response to DOE's
March 2013 Request for Information. (Panasonic, No. 210 at p. 2)
Brother International cited the added cost and unnecessary electronic
waste that would result from having to stockpile a sufficient quantity
of legacy EPSs to meet future needs for service or spare parts.
(Brother International, No. 111 at p. 2)
[[Page 7862]]
EPCA exempts Class A EPSs from meeting the statutorily prescribed
standards if the devices are manufactured before July 1, 2015, and are
made available by the manufacturer as service parts or spare parts for
end-use consumer products that were manufactured prior to the end of
the compliance period (July 1, 2008). (42 U.S.C. 6295(u)(3)(B))
Congress created this limited (and temporary) exemption as part of a
broad range of amendments under EISA 2007. The provision does not grant
DOE with the authority to expand or extend the length of this exemption
and Congress did not grant DOE with the general authority to exempt any
already covered product from the requirements set by Congress.
Accordingly, DOE cannot grant the relief sought by these commenters.
C. Technological Feasibility
Energy conservation standards promulgated by DOE must be
technologically feasible. This section addresses the manner in which
DOE assessed the technological feasibility of the new and amended
standards being adopted today.
1. General
In each standards rulemaking, DOE conducts a screening analysis
based on information gathered on all current technology options and
prototype designs that could improve the efficiency of the products or
equipment that are the subject of the rulemaking. As the first step in
such an analysis, DOE develops a list of technology options for
consideration in consultation with manufacturers, design engineers, and
other interested parties. DOE then determines which of those means for
improving efficiency are technologically feasible. DOE considers
technologies incorporated in commercially available products or in
working prototypes to be technologically feasible. 10 CFR part 430,
subpart C, appendix A, section 4(a)(4)(i).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, or service; (2) adverse impacts
on product utility or availability; and (3) adverse impacts on health
or safety. Section IV.B of this notice discusses the results of the
screening analysis for EPSs, particularly the designs DOE considered,
those it screened out, and those that are the basis for the trial
standard levels (TSLs) analyzed in this rulemaking. For further detail,
see chapter 4 of the technical support document (TSD), which
accompanies this final rule and can be found in the docket on
regulations.gov.
2. Maximum Technologically Feasible Levels
When proposing an amended standard for a type or class of covered
product, DOE must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for EPSs
using the design parameters for the most efficient products available
on the market or in working prototypes. (See chapter 5 of the final
rule TSD.) The max-tech levels that DOE determined for this rulemaking
are described in section IV.C of this final rule.
D. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the products that
are the subject of this rulemaking purchased in the 30-year period that
begins in the year of compliance with new and amended standards (2015-
2044). The savings are measured over the entire lifetime of products
purchased in the 30-year period.\16\ DOE quantified the energy savings
attributable to each TSL as the difference in energy consumption
between each standards case and the base case. The base case represents
a projection of energy consumption in the absence of new and amended
mandatory efficiency standards, and considers market forces and
policies that affect demand for more efficient products.
---------------------------------------------------------------------------
\16\ In the past DOE presented energy savings results for only
the 30-year period that begins in the year of compliance. In the
calculation of economic impacts, however, DOE considered operating
cost savings measured over the entire lifetime of products purchased
in the 30-year period. DOE has chosen to modify its presentation of
national energy savings to be consistent with the approach used for
its national economic analysis.
---------------------------------------------------------------------------
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from new and amended standards for the products
that are the subject of this rulemaking. The NIA spreadsheet model
(described in section IV.H of this notice) calculates energy savings in
site energy, which is the energy directly consumed by products at the
locations where they are used. For electricity, DOE reports national
energy savings in terms of the savings in the energy that is used to
generate and transmit the site electricity. To calculate this quantity,
DOE derives annual conversion factors from the model used to prepare
the Energy Information Administration's (EIA) Annual Energy Outlook
(AEO).
DOE has also begun to estimate full-fuel-cycle energy savings. 76
FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (August 17, 2012).
The full-fuel-cycle (FFC) metric includes the energy consumed in
extracting, processing, and transporting primary fuels, and thus
presents a more complete picture of the impacts of energy efficiency
standards. For this final rule, DOE did not include the FFC in the NIA.
However, DOE developed a sensitivity analysis that estimates these
additional impacts from production activities. DOE's approach is based
on calculation of an FFC multiplier for each of the energy types used
by covered products.
2. Significance of Savings
As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting
a standard for a covered product unless such standard would result in
``significant'' energy savings. Although the term ``significant'' is
not defined in the Act, the U.S. Court of Appeals, in Natural Resources
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985),
indicated that Congress intended ``significant'' energy savings in this
context to be savings that were not ``genuinely trivial.'' The energy
savings for all of the TSLs considered in this rulemaking (presented in
section V.B.3) are nontrivial, and, therefore, DOE considers them
``significant'' within the meaning of section 325 of EPCA.
E. Economic Justification
1. Specific Criteria
EPCA provides seven factors to be evaluated in determining whether
a potential energy conservation standard is economically justified. (42
U.S.C. 6295(o)(2)(B)(i)) This section discusses how DOE has addressed
each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a new and amended standard on
manufacturers, DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term
[[Page 7863]]
assessment over a 30-year period. The industry-wide impacts analyzed
include industry net present value (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, including 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 various DOE regulations and
other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in life-cycle cost (LCC) and payback period (PBP) associated
with new and amended standards. The LCC, which is specified separately
in EPCA as one of the seven factors to be considered in determining the
economic justification for a new and amended standard, 42 U.S.C.
6295(o)(2)(B)(i)(II), is discussed in the following section. For
consumers in the aggregate, DOE also calculates the national net
present value of the economic impacts applicable to a particular
rulemaking.
b. Life-Cycle Costs
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC savings for the considered efficiency levels are
calculated relative to a base case that reflects projected market
trends in the absence of new and amended standards. The LCC analysis
requires a variety of inputs, such as product prices, product energy
consumption, energy prices, maintenance and repair costs, product
lifetime, and consumer discount rates. For its analysis, DOE assumes
that consumers will purchase the considered products in the first year
of compliance with new and amended standards.
To account for uncertainty and variability in specific inputs, such
as product lifetime and discount rate, DOE uses a distribution of
values, with probabilities attached to each value. DOE identifies the
percentage of consumers estimated to receive LCC savings or experience
an LCC increase, in addition to the average LCC savings associated with
a particular standard level. DOE also evaluates the LCC impacts of
potential standards on identifiable subgroups of consumers that may be
affected disproportionately by a national standard.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H, DOE uses the NIA spreadsheet to project
national energy savings.
d. Lessening of Utility or Performance of Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE evaluates
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) DOE received no
comments that EPS standards would increase their size and reduce their
convenience nor have any other significant adverse impacts on consumer
utility. Thus, DOE believes that the standards adopted in today's final
rule will not reduce the utility or performance of the products under
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from the imposition of a standard. (42 U.S.C.
6295(o)(2)(B)(i)(V) It also directs the Attorney General to determine
the impact, if any, of any lessening of competition likely to result
from a 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)(ii)) DOE transmitted a copy of its proposed rule to the
Attorney General with a request that the Department of Justice (DOJ)
provide its determination on this issue. DOJ did not file any comments
or determination with DOE on the proposed rule.
f. Need for National Energy Conservation
The energy savings from new and amended standards are likely to
provide improvements to the security and reliability of the nation's
energy system. Reductions in the demand for electricity also may result
in reduced costs for maintaining the reliability of the nation's
electricity system. DOE conducts a utility impact analysis to estimate
how standards may affect the nation's needed power generation capacity.
The new and amended standards also are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases associated with energy production. DOE
reports the emissions impacts from today's standards and from each TSL
it considered in section V.B.6 of this notice. DOE also reports
estimates of the economic value of emissions reductions resulting from
the considered TSLs.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential new and
amended energy conservation standards would have on the payback period
for consumers. These analyses include, but are not limited to, the 3-
year payback period contemplated under the rebuttable-presumption test.
In addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in sections IV.F.15 and V.B.1.c of this final rule.
IV. Methodology and Discussion
A. Market and Technology Assessment
For the market and technology assessment, DOE develops information
[[Page 7864]]
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, and market characteristics. This activity includes both
quantitative and qualitative assessments, based primarily on publicly
available information. The subjects addressed in the market and
technology assessment for this rulemaking include product classes and
manufacturers; quantities and types of products sold and offered for
sale; retail market trends; regulatory and non-regulatory programs; and
technologies or design options that could improve the energy efficiency
of the products under examination. See chapter 3 of the TSD for further
detail.
1. Market Assessment
To characterize the market for EPSs, DOE gathered information on
the products that use them. DOE refers to these products as end-use
consumer products or EPS ``applications.'' This method was chosen for
two reasons. First, EPSs are nearly always bundled with or otherwise
intended to be used with a given application; therefore, the demand for
applications drives the demand for EPSs. Second, because most EPSs are
not stand-alone products, their shipments, lifetimes, usage profiles,
and power requirements are all determined by the associated
application.
DOE analyzed the products offered by online and brick-and-mortar
retail outlets to determine which applications use EPSs and which EPS
technologies are most prevalent. The list of applications analyzed and
a full explanation of the market assessment methodology can be found in
chapter 3 of the TSD.
While DOE identified the majority of EPS applications, some may not
have been included in the NOPR analysis. This is due in part because
the EPS market is dynamic and constantly evolving. As a result some
applications that use EPSs were not found because they either made up
an insignificant market share or were introduced to the market after
the NOPR analysis was conducted. The EPSs for any other applications
not explicitly analyzed in the market assessment will still be subject
to the standards announced in today's notice as long as they meet the
definition of a covered product outlined in the previous section. That
is, DOE's omission of any particular EPS application from its analysis
is not by itself an indication that the EPSs that power that
application are not subject to EPS standards.
DOE relied on published market research to estimate base-year
shipments for all applications. DOE estimated that in 2009 a total of
345 million EPSs were shipped for final sale in the United States.
DOE did not receive any comments on its assumptions for total base
year (2009) EPS shipments, but did receive comments on its efficiency
distributions. ARRIS Group commented that it is nearly impossible to
purchase EPSs at level IV (the current federal standard level) because
nearly all products comply with the ENERGY STAR standard (level V);
ARRIS Group, however, provided no data in support of this claim.\17\
(ARRIS Group, No. 105 at p. 1) To determine the distribution of
shipments at different efficiency levels, DOE relied on EPS testing
conducted as part of the Engineering Analysis. Of the products DOE
tested, 61% were below level V. DOE assumed that half of the EPSs below
level V would improve in efficiency up to level V by the beginning of
the analysis period in 2015, leaving 30% at level IV and the remaining
70% at level V or higher. When the ENERGY STAR program for EPSs ended
in 2010, EPA estimated that over 50% of the market had reached level V
efficiency or higher.\18\ DOE appreciates ARRIS Group's input on this
subject, but has maintained its estimate from the NOPR because it is in
line with the available data.
---------------------------------------------------------------------------
\17\ By statute, Class A EPSs be marked with a Roman numeral IV.
See 42 U.S.C. 6295(u)(3)(C). Since the enactment of that
requirement, EPA adopted the Roman numeral V mark for products that
meet the ENERGY STAR criteria (version 2.0). These Roman numerals
correspond to higher levels of efficiency--i.e. V denotes a higher
level of efficiency than IV.
\18\ U.S. Environmental Protection Agency, May 26, 2010,
Accessed at http://www.energystar.gov/ia/partners/prod_development/revisions/downloads/eps_eup_sunset_stakeholder_proposal.pdf?6ec1-54bb
---------------------------------------------------------------------------
2. Product Classes
When necessary, DOE divides covered products into classes by the
type of energy used, the capacity of the product, and any other
performance-related feature that justifies different standard levels,
such as features affecting consumer utility. (42 U.S.C. 6295(q)) DOE
then conducts its analysis and considers establishing or amending
standards to provide separate standard levels for each product class.
a. Proposed EPS Product Classes
In the NOPR, DOE proposed dividing EPSs into those that can
directly operate an end-use consumer product and those that cannot,
termed ``direct operation EPSs'' and ``indirect operation EPSs,''
respectively. DOE proposed standards only for direct operation EPSs.
There exist both Class A and non-Class A indirect operation EPSs.
DOE believes that these two groups of devices are technically
equivalent, i.e., there is no difference in performance-related
features between the two groups that would justify different standard
levels for the two groups. (42 U.S.C. 6295(q)) Because of this
technical equivalency, DOE grouped these EPSs into one product class
for analysis, product class N.
DOE proposed to divide direct operation EPSs into six product
classes. Two of these six product classes were treated as non-Class A
EPSs: Product class X for multiple-voltage EPSs (multiple simultaneous
output currents) and product class H for high-output power EPSs
(nameplate output power > 250 Watts). All other direct operation EPSs
were divided among the remaining four product classes (B, C, D, and E)
and are largely composed of Class A EPSs.
These classes, however, also contain some non-Class A EPSs,
specifically direct operation EPSs for battery charged motorized
applications. Medical EPSs were previously included, but have since
been removed, as explained in section IV.A.1 above. While these devices
are functionally the same as Class A devices, they were excluded from
the Class A definition through Congressional action. See 42 U.S.C.
6291(36).
The primary criteria for determining which of these four product
classes a given EPS falls into are the type of output current (AC or
DC) and the nameplate output voltage (low-voltage or basic-voltage).
These are the same parameters used by the former ENERGY STAR program,
which DOE used to develop a framework for its EPS analysis. DOE
proposed adopting the ENERGY STAR definitions for low-voltage and
standard voltage EPSs with minor variations. According to these
definitions, if a device has a nameplate output voltage of less than 6
volts and its nameplate output current is greater than or equal to 550
milliamps, DOE considers that device a low-voltage EPS. A product that
does not meet the criteria for being a low-voltage EPS is classified as
a standard-voltage EPS. DOE proposed to use the term ``basic voltage''
in place of ``standard voltage.''
DOE also proposed definitions for AC-DC and AC-AC EPSs. If an EPS
converts household electrical current into DC output, DOE classifies
that product as an AC-DC EPS. Conversely, a device that converts
household electrical current into a lower voltage AC output is an AC-AC
EPS. Using these parameters, DOE was able to outline the specific
requirements for its
[[Page 7865]]
product classes included in the EPS rulemaking.
The next two subsections summarize comments DOE received on the
proposed product classes and explain how DOE has addressed these
comments. The subsection that follows contains a list of the product
classes and definitions being adopted today.
b. Differentiating Between Direct and Indirect Operation EPSs
An indirect operation EPS is an EPS that cannot power a consumer
product (other than a battery charger) without the assistance of a
battery. In other words, if an end-use product only functions when
drawing power from a battery, the EPS associated with that product is
classified as an indirect operation EPS. Because the EPS must first
deliver power and charge the battery before the end-use product can
function as intended, DOE considers this device an indirect operation
EPS and defined a separate product class, N, for all such devices.
Conversely, if the battery's charge status does not impact the end-use
product's ability to operate as intended, and the end-use product can
function using only power from the EPS, DOE considers that device a
direct operation EPS.
DOE's initial approach for determining whether a given EPS has
direct operation capability involved removing the battery from the
application and attempting to operate the application using only power
from the EPS. While this approach gave the most definitive EPS
classifications, this procedure had the potential to create
complications during testing since it frequently requires the removal
of integral batteries prior to testing. The removal of such batteries
can often require access to internal circuitry via sealed moldings
capable of shattering and damaging the application. DOE also considered
revising this method to account for removable and integral batteries,
but believed it might create an overly burdensome process for
manufacturers to follow.
DOE then developed a new method to distinguish between direct and
indirect operation EPSs that minimizes both the risk of damage to the
application and the complexity associated with the removal of internal
batteries. This approach requires manufacturers to determine whether an
EPS can operate its end-use product once the associated battery has
been fully discharged. Based on its close examination of a variety of
products, DOE believes that direct operation EPSs are able to power the
application regardless of the state of the battery, while indirect-
operation EPSs need to charge the battery before the application can be
used as intended. Comparing the time required for an application to
operate once power is applied during fully discharged and fully charged
battery conditions would provide a reliable indication of whether a
given EPS is an indirect or direct operation device. Recording the time
for the application to reach its intended functionality is necessary
because certain applications, such as smartphones, contain firmware
that can delay the EPS from operating the end-use product as expected.
If the application takes significantly longer to operate once the
battery has been fully discharged, DOE views this EPS as one that
indirectly operates the end-use consumer product and classifies it as
part of product class N. Using this methodology, one can readily
determine whether a given device is a direct or indirect operation EPS.
See Chapter 5 and Appendix 3C of the TSD for further details.
DOE received several comments on its proposed method for
identifying indirect operation EPSs. Philips suggested that DOE allow
manufacturers to submit data showing that their products are rarely
powered directly from the AC mains despite being designed with such
capability and asked that the EPSs used with these products be
classified as indirect operation EPSs. (Philips, No. 128 at pp. 3-4)
AHAM and Wahl Clipper requested that DOE explicitly define what is
considered to be a ``fully discharged'' battery for determining whether
a given device is a direct operation EPS. (AHAM, No. 124 at p. 6: Wahl
Clipper, No. 153 at p. 2)
The method for determining whether a device is an indirect
operation EPS was developed to separate EPSs into direct operation
product classes and the indirect operation product class N, with the
emphasis specifically on MADB products. It was developed based on the
technical capabilities of the EPS and battery charging systems. Any
product's classification determination must be based on the observable
technical characteristics of that product. The method evaluates whether
the EPS can power the product when the battery is depleted to the point
that the battery can no longer operate the end-use consumer product as
it was intended to be used. DOE considers this point to be when a
battery is ``fully discharged.''
NRDC commented that DOE's proposed method for determining whether a
given device is an indirect operation EPS ``incorrectly captures
products, such as mobile, smart phones and MP3 players, that have
firmware delays on [detection of a] dead battery, but are otherwise
capable of operating without the battery.'' (NRDC, No. 114 at p. 15)
NRDC proposed an alternative method that first checks whether the end-
use consumer product has a removable battery, similar to the first
approach considered by DOE in evaluating whether a particular device is
an indirect operation EPS. If the device to which the EPS connects has
a removable battery, NRDC suggested removing the battery, connecting
the EPS, and attempting to use the product as it was intended. If it
operates, NRDC believes it should be considered a direct operation EPS,
but if it does not it should be considered an indirect operation EPS.
If the battery in the end-use product is not capable of being removed,
NRDC suggested using DOE's proposed method but with one modification.
Rather than use the five second delay period DOE proposed in the NOPR,
NRDC suggested that the delay period be extended to a longer period of
time closer to five minutes to ``give enough time for firmware
functions to complete and avoid any temptation to game the system by
introducing artificial delays.'' (NRDC, No. 114 at p. 15)
Based on the stakeholder comments, DOE has chosen to partially
adopt NRDC's proposed method for determining indirect operation with
the exception that the determination delay remains five seconds in all
cases. DOE closely examined the operational behavior of several smart
phones, beard trimmers, and shavers in developing the indirect
operation determination method it proposed in the March 2012 NOPR.
Based on its analysis, DOE believes that five seconds is an acceptable
tolerance for the indirect operation determination method because there
was a clear dividing point among the test data that reflected the
ability of the battery to operate the end-use products based on the
operating time. See Appendix 3C for the full test results from the
indirect operation determination. During charging, batteries initially
enter a bulk charge mode where a float voltage, or fast-charge voltage,
is applied to the battery and the initial charge current is high
compared to the average charging current throughout the duration of the
charge cycle. DOE believes that this initial cycle could be enough to
operate the end-use consumer product after a short period of time, but
it does not change the fact that the product is still drawing power
from the battery rather than drawing power directly from the EPS
itself. No product DOE examined that met the indirect operation
criteria
[[Page 7866]]
under the determination method came close to operating near the five-
second buffer. Instead, the indirect operation EPSs took as little as
three times longer (15 seconds) to operate after being discharged and
much longer in several cases (85 seconds). DOE believes the 5-second
buffer accurately distinguishes between indirect and direct operation
EPSs. As NRDC did not provide any data supporting its view that a 5-
minute delay was necessary, DOE sees no reason to modify its proposed
method in the manner suggested by NRDC.
Regarding NRDC's contention that a longer delay would reduce the
risk of gaming, DOE will continue to monitor the operation of these
products as part of its periodic review of the test procedures required
under 42 U.S.C. 6293. Should DOE discover any anomalies suggesting a
manufacturer is circumventing the applicable standards, DOE will make
the necessary adjustments to prevent this from occurring.
As part of today's final rule, DOE is combining its proposed
methods for determining indirect operation into a single method. DOE
previously considered such a hybrid approach, but initially believed
the testing might become too burdensome for manufacturers. In light of
the comments submitted by interested parties, however, DOE believes the
hybrid approach will reduce the complexity involved in examining
consumer products that contain a removable battery. There may also be
side benefits, outside of identifying whether a device is an indirect
or direct operation EPS, including reducing possible ambiguity with the
test procedure. See appendix 3C to the TSD for the determination method
for indirect operation EPSs.
c. Multiple-Voltage
A multiple-voltage EPS is defined as ``an external power supply
that is designed to convert line voltage AC input into more than one
simultaneous lower-voltage output.'' See 10 CFR Part 430 Subpart B
Appendix Z. Direct operation EPSs that meet this definition are
considered multiple-voltage EPSs and will be evaluated using the
multiple-voltage EPS test procedure. These products must comply with
the new standards being adopted today for multiple-voltage EPSs. An EPS
cannot be in more than one product class, so such an EPS need not also
comply with the standards being adopted today for product classes B, C,
D, E, or H.
In response to the NOPR regarding multiple-voltage EPSs, Cobra
Electronics commented that an EPS with multiple simultaneous outputs
but only one output voltage would be considered both a multiple-voltage
EPS and a Class A EPS and, thus, in its view, would have to be tested
according to DOE's multiple-voltage and single-voltage EPS test
procedures. (Cobra Electronics, No. 130 at p. 3)
Cobra correctly deduced that an EPS with multiple simultaneous
outputs, but only one output voltage could be treated either as a
multiple-voltage EPS or a Class A EPS. The term ``class A external
power supply'' means a device that, among other things, is able to
convert to only one AC or DC output voltage at a time. See 42 U.S.C.
6291(36)(C)(i). As such, an EPS of this type must meet the current
standards for Class A EPSs prescribed by Congress in EISA 2007. DOE
notes, however, that the new standards being adopted today for
multiple-voltage EPSs are more stringent than the current Class A
standards. Therefore, any EPS that is tested and shown to comply with
the new multiple-voltage EPS standards will be presumed to also comply
with the Class A EPS standards prescribed by Congress in EISA 2007.
d. Low-Voltage, High-Current EPSs
PTI supported DOE's efforts to discern which MADB products should
be regulated as EPSs and which should be treated as part of a battery
charger. According to PTI, the inclusion of product class N ``fulfills
one of PTI's longstanding concerns that components of battery chargers
and battery chargers themselves should not both be regulated, as this
`double indemnity' creates a situation where designs are over-
constrained with no incremental consumer benefit.'' (PTI, No. 133 at p.
3) AHAM and Wahl Clipper, however, submitted identical comments taking
issue with the classification of MADB direct operation EPSs and the
CSLs DOE considered for these types of products. Instead, both
stakeholders suggested DOE split product class C, where their products
would fall, into two classes. The first would encompass all direct
operation, low-voltage EPSs with a nameplate output voltage rating of
3-6 volts and a current rating of 550-1000 mA. The second class would
include all direct operation, low-voltage EPSs with a nameplate output
voltage rating of less than 3 volts and a current rating greater than
1000mA. Under the stakeholders' alternative approach, the first group
would need to comply with the standard level established in today's
amended EPS standards, and the second class would not. These
suggestions were based on the stakeholders' shared concern that the
standards DOE proposed for product class C were too stringent and
beyond the achievable efficiency for low-voltage, high-current EPSs.
(Wahl Clipper, No. 153 at p. 2; AHAM, No. 124 at p. 6) Duracell also
commented on the proposed standards for direct operation EPSs,
expressing concern that EPSs that charge the batteries of motor-
operated products such as shavers, epilators, hair clippers, and stick
mixers would not be able to meet the proposed minimum active-mode
efficiency requirements. (Duracell, No. 109 at pp. 2-3)
The commenters' concern relates to those EPSs that are designed
both to charge multiple low-voltage battery cells in parallel and to
directly operate an end-use consumer product such as a shaver or beard
trimmer. These are often called ``cord-cordless'' products. The ability
to operate an end-use product directly from mains is a distinct
consumer utility, as it enables the consumer to use the end-use product
when the battery contains insufficient charge. However, having multiple
cells generally means that the charging currents are higher and that
these types of MADB EPSs will incur significantly greater resistive
power losses than other similar direct operation EPSs, as power
consumption grows exponentially with an increase in the output current.
Recognizing this technical difference, DOE has introduced an
additional criterion for classifying direct operation EPSs that
recognizes that certain devices with low-voltage and high-current
outputs have a distinct consumer utility, yet would have extreme
difficulty meeting the standards being adopted today. Thus, DOE is
subdividing product class C, splitting out certain low-voltage, high-
current EPSs into a separate product class, product class C-1.\19\
Product classes C and C-1 together encompass all direct operation, AC-
DC EPSs with nameplate output voltage less than 6 volts and nameplate
output current greater than or equal to 550 milliamps (``low-
voltage''). Any product in this group that also has nameplate output
voltage less than 3 volts and nameplate output current greater than or
equal to 1,000 milliamps and charges the battery of a product that is
fully or primarily motor operated is in product class C-1. All others
remain in product class C.
---------------------------------------------------------------------------
\19\ In the NOPR analysis, DOE mistakenly placed the EPSs for
cord-cordless products in product class B, which contains basic-
voltage EPSs. Based on public comments, DOE now recognizes that the
EPSs in question are low-voltage EPSs and should have been placed in
product class C.
---------------------------------------------------------------------------
Given the differences in these low-voltage, high-current EPSs from
the other products falling into product class C, DOE believes there is
merit in
[[Page 7867]]
treating them as a separate product class and is currently gathering
additional information about this subset of EPSs. In the meantime, DOE
is not adopting standards for EPSs in product class C-1 today, but
intends to study these products further and may elect to propose
efficiency standards for them in a future rulemaking. DOE will issue
appropriate notices when undertaking studies to evaluate this class of
products. To the extent that any products may be regulated as both a
battery charger and an EPS, DOE may consider the treatment of those
products as part of its further consideration of these energy
conservation standards.
e. Final EPS Product Classes
DOE is establishing eight product classes for EPSs for the reasons
discussed above. The eight EPS product classes are listed in Table IV-
1.
Table IV-1--External Power Supply Product Classes
------------------------------------------------------------------------
Class ID Product class
------------------------------------------------------------------------
B............................. Direct Operation, AC-DC, Basic-Voltage.
C............................. Direct Operation, AC-DC, Low-Voltage
(except those with nameplate output
voltage less than 3 volts and nameplate
output current greater than or equal to
1,000 milliamps that charge the battery
of a product that is fully or primarily
motor operated).
C-1........................... Direct Operation, AC-DC, Low-Voltage
with nameplate output voltage less than
3 volts and nameplate output current
greater than or equal to 1,000
milliamps and charges the battery of a
product that is fully or primarily
motor operated.
D............................. Direct Operation, AC-AC, Basic-Voltage.
E............................. Direct Operation, AC-AC, Low-Voltage.
X............................. Direct Operation, Multiple-Voltage.
H............................. Direct Operation, High-Power.
N............................. Indirect Operation.
------------------------------------------------------------------------
DOE is also adopting definitions for the following terms: Basic-
voltage external power supply, direct operation external power supply,
indirect operation external power supply, and low-voltage external
power supply. These definitions will appear at 10 CFR 430.2. DOE
proposed, but is not adopting, definitions for AC-AC external power
supply, AC-DC external power supply, and multiple-voltage external
power supply because similar terms have already been codified. See
definitions for single-voltage external AC-AC power supply, single-
voltage external AC-DC power supply, and multiple-voltage external
power supply at 10 CFR 430 Subpart B Appendix Z.
3. Technology Assessment
In the technology assessment, DOE identifies technology options
that appear to be feasible to improve product efficiency. This
assessment provides the technical background and structure on which DOE
bases its screening and engineering analyses. The following discussion
provides an overview of the technology assessment for EPSs. Chapter 3
of the TSD provides additional detail and descriptions of the basic
construction and operation of EPSs, followed by a discussion of
technology options to improve their efficiency and power consumption in
various modes.
a. EPS Efficiency Metrics
DOE used its EPS test procedures as the basis for evaluating EPS
efficiency over the course of the standards rulemaking for EPSs. These
procedures, which are codified in appendix Z to subpart B of 10 CFR
Part 430 (``Uniform Test Method for Measuring the Energy Consumption of
EPSs''), include a means to account for the energy consumption from
single-voltage EPSs, switch-selectable EPSs, and multiple-voltage EPSs.
On December 8, 2006, DOE codified a test procedure final rule for
single output-voltage EPSs. See 71 FR 71340. On June 1, 2011, DOE added
a test procedure to cover multiple output-voltage EPSs. See 76 FR
31750. DOE's test procedures yield two measurements: Active mode
efficiency and no-load mode (standby mode) power consumption.
Active-mode efficiency is the ratio of output power to input power.
For single-voltage EPSs, the DOE test procedure averages the efficiency
at four loading conditions--25, 50, 75, and 100 percent of maximum
rated output current--to assess the performance of an EPS when powering
diverse loads. For multiple-voltage EPSs, the test procedure provides
those four metrics individually, which DOE averages to measure the
efficiency of these types of devices. The test procedure also specifies
how to measure the power consumption of the EPS when disconnected from
the consumer product, which is termed ``no-load'' power consumption
because the EPS outputs zero percent of the maximum rated output
current to the application.
To develop the analysis and to help establish a framework for
setting EPS standards, DOE considered both combining average active-
mode efficiency and no-load power into a single metric, such as unit
energy consumption (UEC), and maintaining separate metrics for each.
DOE chose to evaluate EPSs using the two metrics separately. Using a
single metric that combines active-mode efficiency and no-load power
consumption to determine the standard may inadvertently permit the
``backsliding'' of the standards established by EISA 2007.
Specifically, because a combined metric would regulate the overall
energy consumption of the EPS as the aggregation of active-mode
efficiency and no-load power, that approach could permit the
performance of one metric to drop below the EISA 2007 level if it is
sufficiently offset by an improvement in the other metric. Such a
result would, in DOE's view, constitute a backsliding of the standards
and would violate EPCA's prohibition from setting such a level. DOE's
approach seeks to avoid this result.
The DOE test procedure for multiple-voltage EPSs yields five
values: no-load power consumption as well as efficiency at 25, 50, 75,
and 100 percent of maximum load. In the March 2012 standards NOPR, DOE
proposed averaging the four efficiency values to create an average
efficiency metric for multiple-voltage EPSs, similar to the approach
followed for single-voltage EPSs. Alternatively, DOE introduced the
idea of averaging the efficiency measurements at 50 percent and 75
percent of maximum load because the only known application that
currently uses a multiple-voltage EPS, a video game console, operates
most often between those loading conditions. DOE sought comment from
interested parties on these two approaches.
Microsoft commented that setting a standard based on arbitrary
loads that do not represent the intended loading
[[Page 7868]]
point of the end-use application is counterproductive because EPSs are
designed to be most efficient under the loading conditions they operate
in most frequently. Instead, Microsoft believes that ``to optimize
energy savings in real life, loading requirements in energy
conservation standards should be based on the expected product load.''
(Microsoft, No. 110 at p. 2)
Although it is aware of only one currently available consumer
product using multiple-voltage EPSs, DOE believes that evaluating
multiple-voltage EPSs using an average-efficiency metric (based on the
efficiencies at 25%, 50%, 75%, and 100% of each output's normalized
maximum nameplate output power) would allow the standard to be applied
to a diverse range of future products that may operate under different
loading conditions. In addition, DOE's test data of the only product
that currently falls into the multiple-voltage product class indicate
that there is only a fractional percentage difference in the average
active-mode efficiency when comparing DOE's weighting of the efficiency
loading measurements and the alternative approach of averaging the
efficiencies at 50% and 75% load where the console is most likely to
operate. Therefore, DOE evaluated multiple-voltage EPSs using no-load
mode power consumption and an average active-mode efficiency metric
based on the measured efficiencies at 25%, 50%, 75%, and 100% of rated
output power in developing the new energy conservation standards for
these products. This loading point averaging methodology is consistent
with the calculation of average active-mode efficiency for single-
voltage external supplies as outlined in Appendix Z to Subpart B of 10
CFR Part 430.
b. EPS Technology Options
DOE considered seven technology options, fully detailed in Chapter
3 of the TSD, which may improve the efficiency of EPSs: (1) Improved
Transformers, (2) Switched-Mode Power Supplies, (3) Low-Power
Integrated Circuits, (4) Schottky Diodes and Synchronous Rectification,
(5) Low-Loss Transistors, (6) Resonant Switching, and (7) Resonant
(``Lossless'') Snubbers.
During its analysis, DOE found that some technology options affect
both efficiency and no-load performance and that the individual
contributions from these options cannot be separated from each other in
a cost analysis. Given this finding, DOE adopted a ``matched pairs''
approach for defining the EPS CSLs. This approach used selected test
units to characterize the relationship between average active-mode
efficiency and no-load power dissipation. In the matched pairs
approach, EPS energy consumption decreases as you move from one CSL to
the next higher CSL either through higher active mode efficiency, lower
no-load mode power consumption, or both. If DOE allowed one metric to
decrease in stringency between CSLs, then the cost-efficiency results
might have shown cost reductions at higher CSLs and skewed the true
costs associated with increasing the efficiency of EPSs. To avoid this
result, DOE used an approach that increases the stringency of both
metrics for each CSL considered during the process of amending the EISA
standard for EPSs.
DOE considered all technology options when developing CSLs for all
four EPS representative units in product class B. DOE considered the
same efficiency improvements in its analysis for EPSs in product
classes X and H as it did for Class A EPSs. Where representative units
were not explicitly analyzed (i.e., product classes C, D, and E), DOE
extended its analysis from a directly analyzed class. As a result, all
design options that could apply to these products were implicitly
considered because the efficiency levels of the analyzed product class
will be scaled to other product classes, an approach supported by
interested parties throughout the rulemaking process. The equations
were structured based on the relationships between product classes C,
D, and E and representative product class B such that the technology
options not implemented by the other classes were accounted for in the
proposed candidate standard levels. For example, AC-AC EPSs (product
classes C and E) tend to have higher no-load power dissipation than AC-
DC EPSs because they do not use switched-mode topologies (see Chapter 3
of the TSD for a full technical description). Therefore, to account for
this characteristic in these products, DOE used higher no-load power
metrics when generating CSLs for these product classes than are found
in the corresponding CSLs for the representative product class B.
c. High-Power EPSs
DOE examined the specific design options for high-power EPSs as
they relate to ham radios, the sole consumer application for these
EPSs. DOE found that high-power EPSs are unique because both linear and
switched-mode versions are available as cost-effective options, but the
linear EPSs are more expensive and inherently limited in their
achievable efficiency despite sharing some of the same possible
efficiency improvements as EPSs in other product classes.\20\
Interested parties have expressed concern that setting an efficiency
standard higher than a linear EPS can achieve would reduce the utility
of these devices because ham radios are sensitive to the
electromagnetic interference (EMI) generated by switched-mode EPSs. In
some cases, EMI can couple through the EPS to the transmitter of ham
radios and be transmitted on top of the intended signal causing
distortion.
---------------------------------------------------------------------------
\20\ A linear mode or linear regulated EPS is an EPS that has
its resistance regulated and results in a constant output voltage.
In contrast, a switched mode EPS is an EPS that switches on and off
to maintain an average value of output voltage.
---------------------------------------------------------------------------
DOE sought comment on the impacts of excessive EMI in amateur radio
applications using EPSs with switched-mode topologies. PTI acknowledged
that EMI generated from switched-mode power supplies is more of a
factor in radio applications, but could not definitively attest to any
adverse impacts on consumer utility due to the changeover from linear
power supplies. (PTI, No. 133 at p. 4)
DOE believes there is no reduction in utility because EPSs used in
telecommunication applications are required to meet the EMI regulations
of the Federal Communications Commission (47 CFR part 15, subpart B),
regardless of the underlying technology. These regulations specifically
limit the amount of EMI for ``unintentional radiators'', which are
devices that are not intended to generate radio frequency signals but
do to some degree due to the nature of their design. Many such devices
limit the amount of EMI coupled to the end use product through EMI
filters and proper component arrangement on the printed circuit board
(PCB). As part of its engineering analysis, DOE constructed the high
power cost-efficiency curves using two teardown units including one
that utilized switched-mode technology and made use of similar EMI-
limiting techniques. This switched-mode design complied with the FCC
requirements with no reduction in utility or performance despite a
higher efficiency than the baseline design DOE analyzed. Given the
presence of switched-mode designs that comply with the FCC regulations
and the existence of EMI-limiting technology, DOE does not believe that
the new standard will negatively affect the consumer utility of high-
power EPSs.
d. Power Factor
Power factor is a relative measure of transmission losses between
the power plant and a consumer product or the
[[Page 7869]]
ratio of real power to the total power drawn by the EPS. Due to
nonlinear and energy-storage circuit elements such as diodes and
inductors, respectively, electrical products often draw currents that
are not proportional to the line voltage. These currents are either
distorted or out of phase in relation to the line voltage, resulting in
no real power drawn by the EPS or transmitted to the load. However,
although the EPS itself consumes no real power, these currents are real
and cause power dissipation from conduction losses in the transmission
and distribution wiring. For a given nameplate output power and
efficiency, products with a lower power factor cause greater power
dissipation in the wiring, an effect that also becomes more pronounced
at higher input powers. DOE examined the issue of power factor in
section 3.6 of the May 2009 framework document for the present
rulemaking and noted that certain ENERGY STAR specifications limit
power factor.
DOE notes that regulating power factor includes substantial
challenges, such as quantifying transmission losses that depend on the
length of the transmission wires, which differ for each residential
consumer. Further, DOE has not yet conclusively analyzed the benefits
and burdens from regulating power factor. While DOE plans to continue
analyzing power factor and the merits of its inclusion as part of a
future rulemaking, it is DOE's view that the above factors weigh in
favor of not setting a power factor-based standard at this time.
B. Screening Analysis
DOE uses the following four screening criteria to determine which
design options are suitable for further consideration in a standards
rulemaking:
1. Technological feasibility. DOE considers technologies
incorporated in commercial products or in working prototypes to be
technologically feasible.
2. Practicability to manufacture, install, and service. If mass
production and reliable installation and servicing of a technology in
commercial products could be achieved on the scale necessary to serve
the relevant market at the time the standard comes into effect, then
DOE considers that technology practicable to manufacture, install, and
service.
3. Adverse impacts on product utility or product availability. If
DOE determines a technology would have significant adverse impact on
the utility of the product to significant subgroups of consumers, or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not
consider this technology further.
4. Adverse impacts on health or safety. If DOE determines that a
technology will have significant adverse impacts on health or safety,
it will not consider this technology further. See 10 CFR part 430,
subpart C, appendix A, (4)(a)(4) and (5)(b).
For EPSs, DOE did not screen out any technology options after
considering the four criteria. For additional details, see chapter 4 of
the TSD.
Brother International commented that the design options DOE
considered for lowering no-load power consumption could adversely
impact the health and safety of consumers as manufacturers might
eliminate existing safety controls to comply with the amended
standards. Specifically, citing to one example, Brother pointed to the
lack of a device to discharge residual charge from one of their
candidate EPS designs, which they believed was removed in order to
comply with the proposed no-load requirements from the NOPR. Brother
believes this omission could impact safety to consumers and that DOE
should not lower the no-load requirements for EPSs below the current
federal maximum of 0.5 watts. However, they did not elaborate on the
component involved or state that removing said component was the only
design option in order to meet the proposed standard. (Brother
International, No. 111 at p. 3)
DOE conducts a screening analysis on all the technology options it
identifies during the technology assessment portion of the rulemaking
by applying a strict set of statutory criteria. At no point during
interviews with manufacturers or DOE's independent testing, was there
concern expressed over the no-load levels DOE was analyzing. The no-
load power metric for each CSL DOE considered was supported by data
compiled from already commercially available units, which posed no such
health or safety risk to consumers. While Brother International did not
expand on its concerns, DOE is aware of certain components in general
EPS design, such as X capacitors and bleeder resistors. EPS designers
typically use X capacitors on the input filter stages to protect the
EPS against line voltage spikes and bleeder resistors to bleed off the
residual charge from the devices when the EPS is disconnected. It is
common design to practice to include these components; however, should
the resistor be omitted, the capacitors will still discharge within
seconds of the power being removed. In any case, based on its
examination of this issue, DOE does not believe these design practices
present any shock hazard to consumers provided they do not attempt to
physically tear down or otherwise destroy the EPS under live power
conditions. As a result, DOE did not screen out any additional
technology options based on adverse impacts to health and safety
associated with decreasing the no-load power consumption through the
amended EPS standards.
Additionally, DOE notes that it has received no comments from
interested parties regarding patented technologies and proprietary
designs that would inhibit manufacturers from achieving the energy
conservation standards adopted in today's rule. DOE believes that those
standards will not mandate the use of any such technologies.
C. Engineering Analysis
In the engineering analysis (detailed in chapter 5 of the TSD), DOE
describes the relationship between the manufacturer selling price (MSP)
and increases in EPS efficiency. The efficiency values range from that
of an inefficient EPS sold today (the baseline) to the maximum
technologically feasible efficiency level. For each efficiency level
examined, DOE determines the MSP; this relationship is referred to as a
cost-efficiency curve.
DOE structured its engineering analysis around two methodologies:
(1) Test and teardowns, which involves testing products for efficiency
and determining cost from a detailed bill of materials derived from
tear-downs and (2) the efficiency-level approach, where the cost of
achieving increases in energy efficiency at discrete levels of
efficiency are estimated using information gathered in manufacturer
interviews supplemented by, and verified through, technology reviews
and subject matter experts (SMEs). When analyzing the cost of each
CSL--whether based on existing or theoretical designs--DOE
distinguishes between the cost of the EPS and the cost of the
associated end-use product.
1. Representative Product Classes and Representative Units
DOE selected representative product class B (AC to DC conversion,
basic-voltage EPSs), which contains most Class A EPSs and some MADB
EPSs that can directly power an application, as the focus of its
engineering analysis because it constituted the majority of shipments
and national energy
[[Page 7870]]
consumption related to EPSs. Within product class B, DOE analyzed four
representative units with output powers of 2.5 watts, 18 watts, 60
watts, and 120 watts because the associated consumer applications for
these, and similar, EPSs constitute a significant portion of shipments
and energy consumption. Based on DOE's analysis of product class B, DOE
was able to scale the results for product classes C, D, and E. EPSs in
each have inherent technical limitations that prevent them from meeting
the same efficiency and no-load levels as EPSs in product class B. The
lower-voltage product classes C and E typically have higher loss ratios
than EPSs in product class B due to their lower nameplate output
voltages and higher nameplate output currents. Therefore, it was
necessary for DOE to scale down the efficiency levels established in
product class B to more technically achievable levels for product
classes C and E.
Similarly, EPSs in product class D do not possess control circuitry
to lower the no-load power consumption. DOE found that including such
circuitry would increase the no-load consumption while increasing the
overall cost of EPSs in product class D. DOE subsequently scaled the
no-load power consumption results established from the analysis of
product class B to adjust for this limitation of EPSs in product class
D. Despite the comparatively small percentage of EPSs in product
classes C, D, and E compared to those in product class B, DOE has taken
steps to ensure that the standards for each class are technically
feasible for EPSs in each product class. More detail on DOE's scaling
methodology can be found in chapter 5 of the final rule TSD.
Some interested parties supported DOE's approach in creating and
analyzing representative product classes and representative units
during the rulemaking process. The California IOUs agreed with using
product class B as the representative product class and scaling to
other product classes because of their inherent similarities. (CA IOUs,
No. 138 at p. 13) Although no specific data were provided, the
California IOUs also commented in support of the four representative
units within the product class, noting that their own research \21\
into the power supply market corroborates DOE's selections. (CA IOUs,
No. 138 at p. 13) ARRIS Group, however, claimed that ``by analyzing
EPSs at the 18W representative unit, DOE overstates annual power cost
savings'' and suggested that averaging energy savings across output
powers is more accurate. (ARRIS Group, No. 105 at p. 2) Both of the
methodologies DOE presented during the NOPR public meeting were
identical to those originally drafted as part of the preliminary
analysis.
---------------------------------------------------------------------------
\21\ http://www.energy.ca.gov/appliances/archive/2004rulemaking/documents/case_studies/CASE_Power_Supplies.pdf.
---------------------------------------------------------------------------
The representative units DOE selected align with a wide range of
EPS output powers for consumer applications. The purpose was to select
units that capture the most common output voltages and output powers
available on the market. In most cases, as output power increases,
nameplate output voltage also increases, but DOE found that most EPS
designs tended to cluster around certain common output voltage and
output power levels. DOE used this trend in EPS design to categorize
its four representative units. DOE was also able to test several EPS
units that exactly met the representative units' specifications and
scaled units with small variations based on output power, output
voltage, cord length, and/or cost as described in chapter 5 of the
final rule TSD. While the costs are analyzed on an individual unit
basis, the standard levels considered by DOE, and ultimately the energy
savings, are examined across the entire range of EPSs. National energy
savings (NES) and consumer NPV are calculated for an entire product
class, not an individual representative unit. To date, stakeholders
have supported this approach and the overall engineering analysis
methodology. Therefore, DOE elected to maintain its selections for the
EPS representative units and its methodology for estimating the cost
savings from the standards adopted today.
2. EPS Candidate Standard Levels (CSLs)
DOE applied the same methodology to establish CSLs in today's final
rule as it did for its proposal and preliminary analysis. DOE created
CSLs as pairs of EPS efficiency metrics for each representative unit
with increasingly stringent standards having higher-numbered CSLs. The
CSLs were generally based on (1) voluntary (e.g. ENERGY STAR)
specifications or mandatory (i.e., those established by EISA 2007)
standards that either require or encourage manufacturers to develop
products at particular efficiency levels; (2) the most efficient
products available in the market; and (3) the maximum technologically
feasible (``max tech'') level. These CSLs are summarized for each
representative unit in Table IV-2. In section IV.C.5, DOE discusses how
it developed equations to apply the CSLs from the representative units
to all EPSs.
Table IV-2--Summary of EPS CSLs for Product Classes B, C, D, and E
------------------------------------------------------------------------
CSL Reference Basis
------------------------------------------------------------------------
0..................... EISA 2007............ EISA 2007 equations for
efficiency and no-load
power.
1..................... ENERGY STAR 2.0...... ENERGY STAR 2.0 equations
for efficiency and no-
load power.
2..................... Intermediate......... Interpolation between
test data points.
3..................... Best-in-Market....... Most efficient test data
points.
4..................... Max Tech............. Maximum technologically
feasible efficiency.
------------------------------------------------------------------------
DOE conducted several rounds of interviews with manufacturers who
produce EPSs, integrated circuits for EPSs, and applications using
EPSs. All of the manufacturers interviewed identified ways that EPSs
could be modified to achieve efficiencies higher than those available
with current products. These manufacturers also described the costs of
achieving those efficiency improvements, which DOE examines in detail
in chapter 5 of the TSD. DOE independently verified the accuracy of the
information described by manufacturers.\22\ Verifying this information
required examining and testing products at the best-in-market
efficiency level and determining what
[[Page 7871]]
design options could still be added to improve their efficiency. By
comparing the improved best-in-market designs (using predicted
performance and cost) to the estimates provided by manufacturers, DOE
was able to assess the reasonableness of the max-tech levels developed.
---------------------------------------------------------------------------
\22\ In confirming this information, DOE obtained technical
assistance from two subject matter experts--These two experts were
selected after having been found through the Institute of Electrical
and Electronics Engineers (IEEE). Together, they have over 30-years
of combined experience with power supply design. The experts relied
on their experience to evaluate the validity of both the design and
the general cost of the max-tech efficiency levels provided by
manufacturers.
---------------------------------------------------------------------------
DOE created the max-tech candidate standard level (CSL 4) equations
for average efficiency and no-load power using curve-fits (i.e.,
creating a continuous mathematical expression to represent the trend of
the data as accurately as possible) of the aggregated manufacturer data
(see chapter 5 of the TSD for details on curve fits). DOE created the
equations for no-load power based on a curve fit of the no-load power
among the four representative units. For both the average efficiency
and no-load power CSL equations, DOE used equations similar to those
for CSL 1, involving linear and logarithmic terms in the nameplate
output power. DOE chose the divisions at 1 watt and 49 watts in the CSL
4 equations to ensure consistency with the nameplate output power
divisions between the equations for CSL 1.
DOE evaluated EPSs using the two EPS efficiency metrics, no-load
power consumption and active-mode average efficiency, which it grouped
into ``matched pairs.'' Under the matched pairs approach, each CSL
would increase in stringency in at least one of the metrics and no
metric would ever be lowered in moving to a higher CSL. DOE's goal in
using this approach was to ensure that when it associated costs with
the CSLs, that the costs would reflect the complete costs of increased
efficiency. If DOE followed an approach that permitted a decrease in
stringency for a given metric, the result might be a projected
reduction in EPS cost, which would mask the full cost of increasing EPS
efficiency.
Interested parties supported DOE's matched pairs approach for EPS
CSLs. Stakeholders, such as the California Energy Commission, commented
that DOE's approach focused directly on what is measured rather than
introducing usage assumptions to weight the values of standby mode and
active-mode power consumption. The California Energy Commission
believes that regulating active-mode efficiency and no-load power
consumption rather than a combined unit energy consumption (UEC) metric
is the most appropriate course of action for DOE (California Energy
Commission, No. 117 at p. 17). While supportive of DOE's approach,
interested parties, including the California IOUs, also cautioned DOE
to avoid setting levels for no-load power that were too stringent when
compared to active-mode efficiency improvements. (CA IOUs, No. 138 at
p. 13)
DOE received additional comments regarding its EPS CSLs. NRDC and
ASAP both urged DOE to ``evaluate an intermediate level for EPS product
class B between CSL 3 and CSL 4'', suggesting that there may be a more
stringent standard that is cost-effective between DOE's estimates for
the best-in-market and maximum technologically feasible CSLs. (NRDC,
No. 114 at p. 12; ASAP, et al., No. 136 at p. 10)
As discussed above, DOE's CSL equations are a function of nameplate
output power and are based on existing standards, incentive programs,
the most efficient tested units on the market, intermediate levels
between those points, and a maximum technologically feasible or ``max-
tech'' level. No-load requirements were carefully considered consistent
in light of the submitted comments. The difference in performance
between the CSLs noted by NRDC corresponds to the difference between
the best-in-market level, which is supported by test data, and the
``max-tech'' level, which is theoretical and based on estimates from
manufacturers and industry experts. DOE's comprehensive engineering
analysis selected specific CSLs based on real world data and
discussions with manufacturers. NRDC did not provide any additional
data to support its recommendation that DOE examine more stringent
standard. Instead, it asserted that DOE did not find more efficient
EPSs on the market above the CSL proposal because market demand is
shaped primarily by the efficiency marking protocol and there is
currently little incentive for the market to demand efficiencies higher
than Level V. (NRDC, No. 114 at p. 12)
In DOE's view, adopting NRDC's approach would create a standard
based entirely on theoretical design improvements to the most efficient
EPSs already on the market today. Such an approach would not be
supportable by any actual data--whether market-based or through the
testing of available products. DOE notes that since a second
determination is required in 2015, any further analysis of efficiency
levels beyond the current best-in-market CSL would likely occur as part
of that effort. As a result, based on currently available information,
DOE chose to maintain its CSLs in the engineering analysis for today's
final rule.
Brother International expressed concern that requiring more
efficient EPSs in line with the proposed minimum efficiency active-mode
limits would disrupt the stable product supply due to the lack of non-
proprietary semiconductors (Brother International, No. 111 at p. 3). It
noted that there is one key component needed to meet the proposed
efficiency levels for EPSs, and that it has been told by EPS suppliers
that there are a small number of component manufacturers that can
produce this patented technology. Brother International did not provide
any evidence to support this. However, during manufacturer interviews,
DOE was consistently told the candidate standard levels (CSLs) analyzed
for EPSs were technically achievable without the use of patented
technologies. Each component manufacturer, original design manufacturer
(ODMs), or those that design and manufacturer EPSs based on a set of
specifications, and original equipment manufacturers (OEMs), or those
that purchase EPSs from ODMs to be solid in retail markets, interviewed
had different pathways to achieving the proposed standard suggesting
there are multiple design options to lower EPS energy consumption. At
no point in discussions with manufacturers has DOE been told that a
patented technology would be required to meet a CSL for any of the
product classes, even at the maximum technologically feasible level.
DOE also maintained the same CSLs for multiple-voltage EPSs
(product class X) as it proposed in the NOPR because it received no
comments and has no new information that would merit a change in the
CSLs for this product class. The CSLs are shown in Table IV-3.
Table IV-3--Summary of EPS CSLs for Product Class X
------------------------------------------------------------------------
CSL Reference Basis
------------------------------------------------------------------------
0........................ Market Bottom...... Test data of the least
efficient unit in the
market.
1........................ Mid-Market......... Test data of the typical
unit in the market.
2........................ Best-in-Market..... Manufacturer's data.
[[Page 7872]]
3........................ Max Tech........... Maximum technologically
feasible efficiency.
------------------------------------------------------------------------
DOE received no comments concerning the CSLs for high-power EPSs in
response to the NOPR. Therefore, DOE maintained its selections for CSLs
from the NOPR in the engineering analysis for today's final rule. The
CSLs for product class H are listed in Table IV-4.
Table IV-4--Summary of EPS CSLs for Product Class H
----------------------------------------------------------------------------------------------------------------
CSL Reference Basis
----------------------------------------------------------------------------------------------------------------
0...................... Line Frequency... Test data of a low-efficiency unit in the market.
1...................... Switched-Mode Low Test data of a high-efficiency unit in the market.
Level.
2...................... Switched-Mode Manufacturers' theoretical maximum efficiency.
High Level.
3...................... Scaled Best-in- Scaled from 120W EPS CSL 3.
Market.
4...................... Scaled Max Tech.. Scaled from 120W EPS CSL 4.
----------------------------------------------------------------------------------------------------------------
3. EPS Engineering Analysis Methodology
DOE relied upon data gathered from manufacturer interviews to
construct its engineering analysis for EPSs. DOE's cost-efficiency
analysis for each of the representative units in product class B was
generated using aggregated manufacturer cost data. DOE attempted to
corroborate these estimates by testing and tearing down several EPSs on
the market. For those products that did not exactly match its
representative units, DOE scaled the test results for output power,
output voltage, and cord length as necessary to align with the
representative unit specifications. The units were then torn down by
iSuppli to estimate the manufacturer selling price (MSP) and create a
unique cost-efficiency curve entirely based on measurable results. The
test and teardown data were inconclusive and generally showed
decreasing costs with increasing efficiency. DOE previously presented
both sets of cost-efficiency data to stakeholders for comment and
consistently received support for using the manufacturer data as the
basis for any standard setting action. Stakeholders argued that the
negative cost-efficiency trends seen in the teardown data were not
representative of the EPS market and that the manufacturer data was
much more consistent and reliable since the data were more
comprehensive. Stakeholders indicated that the data collected from
manufacturer interviews better reflected the industry trends because it
was derived from the estimates of manufacturers who produce EPSs in
volume rather than backed out from an overall BOM cost by iSuppli.
Therefore, in section IV.C of the NOPR, DOE proposed to use only the
data gathered from manufacturers for its engineering analysis.
With respect to the scaled test results, Salcomp disagreed with
DOE's results, stating that the ``scaled average efficiency results in
the reference data are not in line with theoretical calculations
related to 5V/1A EPSs'' and that ``it appears that the real effects of
the cable have not been taken into account.'' Salcomp also proposed
that USB-A EPS products be measured without the cable, as EPS
manufacturers do not know anything about the cables that are ultimately
supplied with the product. (Salcomp, No. 73 at p. 1)
NRDC suggested that the teardowns commissioned by DOE for the cost-
efficiency curves were not conducted on EPSs of comparable utility, but
commented that up-to-date manufacturer data should be sufficient to
conduct an accurate cost-efficiency analysis going forward. (NRDC, No.
114 at p. 11)
As stated in DOE's test procedure for single-voltage EPSs, ``power
supplies must be tested in their final, completed configuration in
order to represent their measured efficiency on product labels or
specification sheets.'' (74 FR 13318) USB-A EPSs must, therefore, be
tested with the USB cable, as supplied by the manufacturer of the EPS,
connected. DOE took this into account as part of its engineering
analysis methodology and established a representative DC cable length
to help scale the measured efficiency of an EPS based on its nameplate
output power and output voltage. As described in chapter 5 of the TSD,
the resistivity of a wire is dependent on the resistivity of the copper
used, the length of the wire, and the cross-sectional area of the wire.
With all other factors the same, a longer cord length would increase
the resistivity of the wire and subsequently increase the losses
associated with the output cord, ultimately lowering the conversion
efficiency of the EPS. Scaling the measured efficiency using a standard
cable length meant that DOE needed to factor in any expected resistive
losses associated with the current provided by the EPS in question.
However, the scaling was applied not to correct for potential cable
losses, but to take efficiency data measured with the manufactured
cable and adjust it to the standard length. In all cases, the output
cord loss was taken into account in the efficiency results of the EPSs
DOE tested. Ultimately, these data were only used to support DOE's CSLs
and not directly factored into the cost-efficiency curves DOE used to
select standard levels for EPSs. DOE relied only on manufacturer
interview data in its cost-efficiency analysis.
4. EPS Engineering Results
DOE characterized the cost-efficiency relationship of the four
representative units in product class B as shown in Table IV-5, Table
IV-6, Table IV-7, and Table IV-8. During interviews, manufacturers
indicated that their switched-mode EPSs currently meet CSL 1, the
ENERGY STAR 2.0 specification level. This factor is reflected in the
analysis by setting the incremental MSP for the 18W, 60W, and 120W EPSs
to $0 at CSL 1, which means that there is no incremental cost above the
baseline to achieve CSL 1. Costs for the 2.5W EPS, however, are
estimated at $0.15 for CSL 1. This result occurs because of DOE's
assumption (based on available information) that the lowest cost
solution for improving the efficiency of the 2.5W EPS is through the
use of linear EPSs, which are manufactured both at the EISA 2007
[[Page 7873]]
level as well as the ENERGY STAR 2.0 level. Specifically, as commenters
suggested, DOE examined linear EPSs and found that they might be a
cost-effective solution at CSL 0 and CSL 1 for 2.5W EPSs. Thus, $0.15
indicates the incremental cost for a 2.5W linear EPS to achieve higher
efficiency. For all four representative units, the more stringent
CSLs--CSL 2, CSL 3, and CSL 4--correspond to switched-mode EPSs
designed during the same design cycle, which would cause their costs to
increase with increased efficiency as more efficient designs require
more efficient and more expensive components.
[GRAPHIC] [TIFF OMITTED] TR10FE14.011
NRDC had a number of comments on DOE's cost-efficiency results from
the NOPR. In general, NRDC asserted that DOE had overestimated the cost
of efficiency improvements for the 2.5 watt, 18 watt, and 60 watt
representative units, based on NRDC's own discussions with industry
professionals. (NRDC, No. 114 at p. 11) In some cases, DOE's estimates
for the incremental MSPs are nearly three times greater than NRDCs
estimates. ASAP, who echoed these concerns, stated that the costs of
highly efficient EPSs are rapidly declining and that DOE should
reevaluate its estimates to reflect the most recent price trends.
(ASAP, et al., No. 136 at p. 10)
While ASAP and NRDC had comments concerning the cost-efficiency
relationships of several representative units, many stakeholders
mentioned the 60 watt representative unit cost-efficiency curves as
being particularly skewed. NRDC stated that the fact that the 60 watt
costs were higher than the 120 watt costs for most CSLs was not
accurate, as higher power EPSs require higher material costs. They
noted that perhaps DOE's analysis of the 60 watt unit included features
unrelated to efficiency, which would explain the higher than expected
costs for the lower order CSLs. (NRDC, No. 114 at p. 11) The PSMA
submitted similar comments stating that the incremental costs for EPSs
increase ``steadily and predictably with power supply size'' such that
the 60 watt incremental costs should be lower than those for the 120
watt
[[Page 7874]]
representative unit. (PSMA, No. 147 at p. 2) NEEP commented that the
LCC results derived from the cost-efficiency curves for the 60 watt
representative unit show unexplained irregularities that were
attributed to manufacturer-provided cost data and suggested DOE conduct
an additional independent engineering analysis on the 60 watt
discrepancy. (NEEP, No. 160 at p. 2) These comments were based on the
negative weighted-average LCC savings for the 60W representative unit
at all CSLs above the baseline. DOE believes these results were due to
the large incremental cost associated with moving from CSL 1 to CSL 2
and the relatively small increases in cost for the higher order CSLs.
DOE aggregated costs from OEMs, ODMs and component manufacturers to
reflect the costs associated with incremental improvements in the
energy efficiency of four representative units within product class B.
Those costs were presented as the manufacturer selling price (MSP), or
the price that the OEM pays the ODM for an EPS that meets its
specifications. These costs were estimated through a series of
manufacturer interviews to establish a range of average markups and
incremental costs for efficiency improvements. The MSPs gleaned from
interviews included only improvements to efficiency-related components
over the manufacturer's baseline EPS model. Therefore, the incremental
costs in DOE's analyses are only representative of improvements to the
energy efficiency of EPSs.
DOE took the stakeholder comments into consideration when revising
its engineering analysis for today's final rule. NRDC's assertion that
the costs are overestimated for the 2.5W EPS representative unit fails
to acknowledge that certain linear power supplies are still cost-
effective and technically feasible for efficiencies up to CSL 1 for low
power EPSs. The final cost-efficiency curve incorporates not only
changes to switched-mode designs for higher efficiencies, but costs
incurred by manufacturers of linear power supplies to improve the
efficiency over the current designs. The result of this aggregation
shows higher overall costs than estimated by NRDC for this
representative unit.
In revisiting the cost-efficiency curves, DOE noted that the 60W
cost aggregation contained the largest concentration of data from
manufacturer interviews conducted during the preliminary analysis.
Since the LCC results for the 60W representative unit largely depend on
the cost changes between the CSLs and the efficiency distribution of
the current products on the market, DOE decided to revise its
aggregation using only the most recent data gathered from manufacturer
interviews to generate the cost-efficiency curves presented in today's
final rule. DOE believes that these curves better reflect the cost
impacts of improving the efficiency of 60W EPSs and notes they align
with NRDC's incremental MSP estimates for achieving the efficiency
level of the amended standard. The resulting cost-efficiency curve
shows a substantially smaller incremental cost at the proposed standard
level of $0.33 compared to $1.29 in the NOPR. This modification caused
the life-cycle cost savings at the proposed standard level for the 60W
representative unit to turn strongly positive from the negative result
depicted in the NOPR. The full LCC impacts can be found in Section
V.B.1.a. For the 2.5W, 18W, and 120W representative units, DOE
maintained its cost estimates from the NOPR because they represent the
aggregated results from DOE's most recent data gathering efforts.
Unlike product class B, DOE analyzed only a single 203W
representative unit for multiple-voltage EPSs. In Chapter 5 of the TSD,
DOE outlines the cost-efficiency relationship for 203W multiple-voltage
EPSs that it developed as part of the non-Class A EPS determination
analysis. DOE received no comments on its engineering results for this
product class and, therefore, maintained the same results in today's
final rule. The results for the 203W multiple-voltage EPS product class
are shown in Table IV-9.
[GRAPHIC] [TIFF OMITTED] TR10FE14.012
Similar to the analysis of multiple-voltage EPSs, DOE analyzed one
345W representative unit for high-power EPSs. In chapter 5 of the NOPR
TSD, DOE indicated that it was considering applying the cost-efficiency
relationship for 345W high-power single-voltage EPSs that it developed
as part of the non-Class A EPS determination analysis to high-power
EPSs. In the determination analysis, DOE derived costs for CSL 0 and
CSL 1 from test and teardown data, whereas costs for CSL 2 and CSL 3
came from manufacturer and component supplier interviews. DOE did not
receive comments on this aspect of its approach in the NOPR. Hence, DOE
used the results from the determination analysis to characterize the
costs of the less-efficient CSLs for 345W high-power EPSs (CSL 0 and
CSL 1) for today's final rule.
After discussions with its subject matter experts (SMEs), DOE
believes that a 345W EPS can achieve higher efficiencies based on a
theoretical model of a 360W EPS that exhibits the properties of three
120W EPSs connected in parallel. This model essentially demonstrates a
``black box'' approach that supplies the representative unit output
voltage at a higher output current than a single 120W unit would be
able to provide. As each EPS in this system would be operating at an
identical efficiency, the system as a whole would meet the same
efficiency as any one EPS and, therefore, the 345W unit can be modeled
as several 120W EPSs connected in parallel.
These higher output devices are typically used with amateur radio
equipment, which often transmit at power levels between 100 and 200
watts while simultaneously providing power to other components. DOE
developed its costs for the higher-efficiency CSLs (CSL 2, CSL 3, and
CSL 4) based on its 120W EPS analysis. DOE received no comments on this
approach and thus retained the cost-efficiency relationship for the
345W EPS shown in Table IV-10 for today's final rule.
[[Page 7875]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.013
5. EPS Equation Scaling
In support of the NOPR, DOE presented an approach to deriving the
average efficiency and no-load power consumption requirements for each
CSL over the full range of output power for Class A EPSs in chapter 5
of the NOPR TSD. Mathematical equations define each CSL as a pair of
relationships that are functions of nameplate output power: (1) Average
active-mode efficiency and (2) no-load mode power consumption. These
equations allowed DOE to describe a CSL for any nameplate output power
and served as the basis for its proposed standards. A complete
description of the equations can be found in chapter 5 of the TSD.
For the baseline CSL and CSL 1, DOE relied on equations from EISA
2007 and ENERGY STAR 2.0, respectively, rather than developing new
equations. DOE took this approach because EISA created a mandatory
standard that established a baseline for DOE's analysis while the
ENERGY STAR voluntary program served as an incentive for manufacturers
to produce more efficient products in order to brand their products as
ENERGY STAR compliant, a quality that that many consumers recognize and
seek. Both equations are defined over ranges of output power, although
the divisions between ranges are slightly different. EISA 2007 created
divisions by establishing efficiency equations with breakpoints at 1
watt and 51 watts; ENERGY STAR 2.0 creates similar divisions at 1 watt
and 49 watts. See 42 U.S.C. 6295(u)(3)(A) (creating nameplate output
categories of under 1 watt, 1 watt to not more than 51 watts, and over
51 watts) and ``ENERGY STAR Program Requirements for Single Voltage
External AC-DC and AC-AC Power Supplies'' (creating nameplate output
categories of less than or equal to 1 watt, 1 watt to not more than 49
watts, and greater than 49 watts). DOE developed equations for all
other CSLs and for consistency and simplicity used the ENERGY STAR 2.0
divisions at 1 watt and 49 watts for all CSLs. These divisions were
created in conjunction with the EPS product classes discussed in
section IV.A.2.a as part of a complete analysis by the EPA when it
drafted the ENERGY STAR program requirements for single-voltage
external AC-DC and AC-AC power supplies.
DOE derived CSL 2, CSL 3, and CSL 4 by fitting equations to the
efficiency values of their respective manufacturer and test data points
for each representative unit. DOE used an equation of the form Y =
a*ln(Pout) + b*Pout + c, for each of the
nameplate output power ranges, where Y indicates the efficiency
requirement; Pout indicates the nameplate output power; and
a, b, and c represent variables defined for each CSL. DOE ensured that
the equations met three conditions:
(1) The distance to each point was minimized.
(2) The equation did not exceed the tested efficiencies.
(3) DOE further restricted the parameter choice in order to ensure
that the CSL curves adhered to a matched pairs approach fully detailed
in chapter 5 of the TSD.
For the NOPR, DOE derived a revised max-tech scaling equation from
data points obtained during manufacturer interviews as noted in section
III.B.2.a. DOE received no comments averse to the revised max tech CSL
equation. Therefore, DOE has maintained all of its CSL equations from
the NOPR in today's final rule.
As in the NOPR, DOE scaled the CSL equations from product class B
to the product classes representing low-voltage AC-DC and all AC-AC
EPSs (product classes C, D, and E). See Chapter 5 of the TSD to today's
final rule for more information regarding DOE's scaling methodology.
The scaling for these equations was based on ENERGY STAR 2.0, which
separates AC-DC conversion and AC-AC conversion into ``basic-voltage''
and ``low-voltage'' categories. ENERGY STAR 2.0 sets less stringent
efficiency levels for low-voltage EPSs because they cannot typically
achieve the same efficiencies as basic-voltage EPSs due to inherent
design limitations. Similarly, ENERGY STAR 2.0 sets less stringent no-
load standards for AC-AC EPSs because the devices do not use the
overhead circuitry found in AC-DC EPSs to limit no-load power
dissipation. As previously stated, the power consumed by the additional
AC-AC EPS circuitry would actually increase their no-load power
consumption. DOE used this approach to develop CSLs other than the
baseline CSL for product classes C, D, and E. Because the EISA 2007
standard applies to all Class A EPSs, which comprise most of product
classes B, C, D, and E, the baseline CSL is exactly the same for all
four product classes.
As described throughout the EPS rulemaking, DOE created less
stringent CSLs for product classes C, D, and E based on the technical
differences outlined in Section III.A. The efficiency equations for CSL
1 come directly from the ENERGY STAR 2.0 low-voltage equation because
of the impact the ENERGY STAR 2.0 levels had on the EPS market. The
low-voltage curves for CSL 2, CSL 3, and CSL 4 were created by using
their respective CSL 2, CSL 3, and CSL 4 basic-voltage efficiency
curves, and altering all equation parameters by the difference in the
coefficients between the CSL 1 basic-voltage and low-voltage equations.
This approach had the effect of shifting the CSL 2, CSL 3, and CSL 4
low-voltage curves downward from their corresponding basic-voltage CSL
2, CSL 3, and CSL 4 curves, by a similar amount as the shift seen in
the ENERGY STAR 2.0 equations. Today's amended standards for product
classes C, D, and E were established using this methodology.
Eastman Kodak commented that the no-load equations should be a
continuous function of output power for EPSs with nameplate output
powers less than 250 watts. (Eastman Kodak, No. 125 at p. 2) However,
as explained, DOE's approach is consistent with the EISA 2007 standards
and the former ENERGY STAR 2.0 program for EPSs. In both cases, the no-
load power requirement is a step function based on
[[Page 7876]]
the power output of the EPS. Using that assumption, DOE conducted an
engineering analysis and found no strong correlation between no-load
power and output power that would warrant deviating from the analytical
structure of these programs. The equations for no-load power and
active-mode efficiency formed the foundation of DOE's standards
analysis, and the approach has been largely supported by stakeholders
throughout the course of the rulemaking. Therefore, DOE maintained its
step function equations for no-load power in amending the standards for
EPSs in today's final rule.
After applying the approach described above and analyzing the
products at issue, DOE believes that the ENERGY STAR 2.0 low-voltage
standard equation for AC-DC conversion is an appropriate standard for
multiple-voltage EPSs because lower power EPSs tend to be less
efficient. DOE took into account that fact and has created an equation
that scales with output power, should any low-power multiple-voltage
EPSs enter the market in the future. As detailed in chapter 5 of the
TSD, the ENERGY STAR 2.0 low-voltage equation matches the CSL equation
DOE is adopting for the multiple-voltage EPS standard at the
representative unit's output power of 203 watts, but also sets less
stringent efficiency standards for lower power EPSs. DOE applied the
same constraints when fitting the equation to the test data as it did
for product classes B, C, D, and E. DOE received no comments on this
approach in setting a standard for multiple-voltage EPSs.
For product class H (high-power EPSs), DOE set a discrete standard
for all EPSs greater than 250 watts. DOE believes this is appropriate
for two main reasons: (1) DOE is aware of only one application for
high-power EPSs (amateur radios) and (2) this approach is consistent
with the standard for product class B, which is a discrete level for
all EPSs with nameplate output powers greater than 49 watts. In light
of these facts, setting a single efficiency level as the standard for
all EPSs with output power greater than 250 watts (high-power EPSs)
appears to be a reasonable approach to ensure a minimal level of energy
efficiency while minimizing the overall level of burden on
manufacturers. DOE received no comments on this approach in setting a
standard for high power EPSs.
6. Proposed Standards
a. Product Classes B, C, D, and E
In the NOPR, DOE proposed standard levels for all the product
classes that were analyzed as part of the EPS engineering analysis. For
product classes B, C, D, and E, which contained Class A, medical, and
some MADB EPSs broken out by type of power conversion and nameplate
output voltage, DOE proposed CSL 3, or the best-in-market CSL. To
develop the proposed standard level, DOE ``curve fit'' an equation to
test results of the most efficient EPSs it could find on the market at
each representative output power.\23\ DOE announced its intention to
designate the proposed level ``Level VI'' in a revised and updated
version of the International Efficiency Marking Protocol for EPSs. DOE
received many comments on the proposed standard levels for product
classes B, C, D, and E.
---------------------------------------------------------------------------
\23\ The term ``curve fit'' refers to generating an equation
based on a set of data in order to describe the information
mathematically.
---------------------------------------------------------------------------
Panasonic, Cobra Electronics, ITI, Salcomp, Duracell, the Republic
of Korea, and Eastman Kodak all commented that DOE should forgo setting
an EPS standard at level VI and adopt the current level V requirement
as the Federal standard to harmonize with the E.U. and other
international efficiency programs. (Panasonic, No. 120 at p. 2; Cobra
Electronics, No. 130 at p. 8; ITI, No. 131 at p. 4, Salcomp, No. 73 at
p. 2; Duracell, No. 109 at p. 4; Republic of Korea, No. 148 at p. 1;
Eastman Kodak, No. 125 at p. 2) ITI stated that DOE's proposed standard
``breaks away from global harmonization efforts and would require
significant industry-wide redesign,'' and called it ``unjustifiable.''
(ITI, No. 131 at p. 4) AHAM also supported harmonization efforts and
asserted that level V is ``the most stringent level that is
technologically feasible.'' (AHAM, No. 124 at p. 7) These statements
were supported by Philips, which suggested that DOE should adopt Level
V, which is known to be technologically feasible, and contemplate
higher levels in a later rule. (Philips, No. 128 at p. 3) ITI also
suggested such a phased approach, in which DOE would first adopt a
standard at Level V for Class A EPSs and later investigate mandatory or
voluntary standards for non-Class A EPSs. (ITI, No. 131 at p. 5) Nokia
claimed that the DOE standards proposal ``lacks sufficient economic
justification to warrant such swift and demanding changes.'' (Nokia,
No. 132 at p. 2) For all the reasons suggested by other stakeholders,
the CEA noted that ``further analysis is needed before DOE promulgates
an amended energy conservation standard for Class A external power
supplies.'' (CEA, No. 106 at p. 5)
Some interested parties made specific comments about the no-load
power equation of the proposed standard. Flextronics claimed that with
a compliance date two years from the publication of today's final rule,
DOE should decrease the no-load power proposal from 100mW to 50mW for
EPSs for mobile phones. (Flextronics, No. 145 at p. 1) Conversely,
Logitech argued that they had just undergone costly design improvements
to meet the no-load power requirement for the former ENERGY STAR
program for EPSs and the E.U., which is 300 mW. (Logitech, No. 157 at
p. 1)
DOE received support from energy efficiency advocates in favor of
the standards proposed in the NOPR. NEEP noted that DOE's proposal
represents a strong push toward rapidly increasing the energy
efficiency of EPSs. (NEEP, No. 160 at p. 2) ARRIS Group also supported
DOE's conclusion that ``changing to a code V energy efficiency
requirement will have little to no material cost impact since the
majority of EPS products already comply.'' (ARRIS Group, No. 105 at p.
1)
In any efficiency standards rulemaking, DOE seeks to identify the
most stringent standard that is economically justified and technically
feasible. In the NOPR for EPSs, DOE proposed to amend the EISA 2007
regulations and increase the minimum efficiency standards to the best-
in-market levels identified in the engineering analysis.
The comments submitted by manufacturers suggest that DOE has
overestimated the capabilities of EPSs and that it should propose Level
V as the federal standard (or equivalently to harmonize with the EU
standards). The most recent EPS standards in the E.U. came into effect
in 2011 and are equal to the Level V efficiency standard. However, more
recent E.U. documents on EPS standards indicate a proposal to revise
those standards to match the levels proposed by DOE in the NOPR by 2017
for the no-load, 25%, 50%, 75%, and 100% loading scenarios. The E.U. is
also considering an additional 10% loading requirement outside the
average efficiency metric from the other four loading conditions.\24\
Other standards for EPSs outside the United States, including those in
Canada and New Zealand, have set less stringent standards equal to the
EISA 2007 level
[[Page 7877]]
(level IV). In addition, the E.U. instituted standby power consumption
standards in 2010 and will revise those standards effective 2013. DOE
notes that current international efficiency standards for EPSs are not
all harmonized around efficiency level V, but it is possible that
efficiency standards in the U.S. and E.U. may harmonize around the
standards announced in today's final rule within the next several
years. For more detail, see section IV.G.3 below and chapter 9 of the
TSD.
---------------------------------------------------------------------------
\24\ ``Review Study on Commission Regulation (EC) No. 278/2009
External Power Supplies: Draft Final Report.'' March 13, 2012.
Prepared for European Commission--Directorate-General for Energy.
http://www.powerint.com/sites/default/files/greenroom/docs/EPSReviewStudy_DraftFinalReport.pdf.
---------------------------------------------------------------------------
As stakeholders have said, and as is shown in DOE's engineering
analysis, the majority of EPSs already meet or exceed the Level V
requirements so, in addition to the most recent E.U. standards, the
incremental cost to manufacturers to achieve this level is nearly zero
and any additional energy savings beyond today's market would be
negligible. (ARRIS Group, No. 105 at p. 1). The DOE analysis of EPS
shipments projects a base case assumption of the efficiency of EPSs
that would be shipped in the future if DOE did not issue today's final
rule. DOE only accounts for the energy savings and incremental costs
that occur between this base case projection and the standards case
that results from issuing today's final rule. In the base case
projection, DOE presumes that 69% of all EPSs sold in the United States
in 2015 would meet or exceed Level V, while 31% would only meet the
Level IV requirements. This assumption is equal to the shipments-
weighted average distribution for product classes B, C, D, and E, and
is based on test results from the engineering analysis and assumptions
about increases in product efficiency that would occur as a result of
the ENERGY STAR program and mandatory standards in the European Union.
Chapters 3 and 9 of the TSD describe DOE's efficiency distribution
assumptions in greater detail. While DOE believes the baseline
efficiency levels used in today's final rule are justified, DOE
conducted an additional sensitivity analysis using different
assumptions about the base case efficiency of EPSs that will be on the
market in 2015. The results of this sensitivity analysis, presented in
Appendix 10-A of the TSD, depict the national economic and energy
impacts that would occur under alternative scenarios.
Commenters also claimed, without providing any supporting data,
that any standard that is more stringent than Level V is technically
infeasible and economically unjustifiable despite DOE's detailed
analysis. The proposal put forth by DOE in the NOPR clearly points out
that the selected standard level can be supported by products on the
market and is not ``technically infeasible''. DOE outlines its complete
analysis of the current EPS market as well as pathways to higher
efficiencies based on information gathered from manufacturers and
independent consultants in chapter 5 of the TSD to today's final rule.
Concerning the no-load mode proposal, DOE created matched pairings
of efficiency and no-load power for all representative units, as
discussed in section IV.C.2. Under that structure, any standard would
match a continuous active-mode efficiency equation with a no-load step
function. While DOE's analysis shows that 50 mW is technically
achievable, which is equivalent to Flextronic's recommendation, it is
only achievable for lower power EPSs (e.g., those for cell phones), and
would not be applicable as a flat standard for all EPSs as outlined in
Chapter 5 of the TSD. Therefore, in today's final rule, DOE is not
adopting a no-load power requirement that is flat and equivalent to 50
mW across all nameplate output powers and instead is adopting a step
function equation that sets a specific no-load power limit for EPSs
based on output power.
DOE is not adopting a standard for either average active-mode
efficiency or no-load power consumption for EPSs in product class C-1
in today's final rule. DOE believes the low-voltage high-current output
inherent in the design of these products limits their achievable
efficiencies due to input rectification voltage drops relative to the
output voltage, resistive losses in the higher current outputs, and the
potential to decrease the utility of these products to improve
efficiency by forcing manufacturers to utilize more expensive and
larger components to meet the proposed standards.
NRDC commented that indirect operation EPSs should be subject to
the same standards as direct operation EPSs, citing a lack of technical
differences between the two groups of products. NRDC asserted that the
proposed battery charger standards, if adopted, might be insufficient
to increase the efficiency of indirect operation EPSs to the levels
shown in the EPS standards analysis to be cost-effective. NRDC also
expressed concern that because there is no obvious way to visually
distinguish between direct and indirect operation EPSs, a manufacturer
could circumvent standards by misrepresenting a direct operation EPS as
an indirect operation EPS. (NRDC, No. 114 at p. 16) The California IOUs
concurred with NRDC's comments. (CA IOUs, No. 138 at p. 20)
DOE continues to believe that a distinction between indirect and
direct operation EPSs is justified. DOE recognizes that some wall
adapters that are part of battery charging systems serve a different
purpose than ``regular'' EPSs, have different design constraints, and
should be regulated differently from each other.
In the determination analysis and in the standards preliminary
analysis, the characteristic that distinguished this group of devices
was the presence of ``charge control.'' (Non-Class A EPS Determination
Final Rule, 75 FR 27170, May 14, 2010; Preliminary Analysis TSD, No. 31
at p. 78, September 2010) DOE concluded from this analysis that
standards would be warranted for non-Class A EPSs based in part on its
understanding that devices with charge control were outside the scope
of analysis because they were intended to charge batteries and
therefore not considered EPSs. This understanding carried over into the
analyses conducted as part of the present standards rulemaking.
This general approach has received support from manufacturers and
utilities throughout the rulemaking process. For example, AHAM, PTI,
and Wahl Clipper commented in response to the preliminary analysis that
MADB wall adapters should be regulated as battery charger components,
but not as EPSs. (AHAM, No. 42 at pp. 2, 3, 13; PTI, No. 45 at p. 4;
Wahl Clipper, No. 53 at p. 1) Similarly, PG&E, two other energy
utilities, and five efficiency advocates submitted a joint comment
expressing their support for requiring wall adapters that perform
charge control functions to be regulated as battery charger components,
but not as EPSs. (PG&E, et al., No. 47 at pp. 3-4) In the March 2012
NOPR, DOE maintained this approach but altered the specific criteria
for differentiating between the two types of devices by proposing that
those EPSs that cannot operate an end-use product directly would not be
subject to the proposed standards. DOE continues to believe that it
would be inappropriate to require indirect operation EPSs to meet the
new and amended standards being adopted today.
DOE notes that battery charger standards will be handled separately
from EPSs. And while NRDC asserts that DOE's proposed standards for
battery chargers would not compel manufacturers to increase the
efficiency of indirect operation EPSs, any battery charger standards
DOE may adopt would need to achieve the maximum
[[Page 7878]]
improvement in energy efficiency that is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) These standards would
be evaluated based on the expected improvements in the energy
efficiency of battery chargers, not of the EPSs--for which Congress has
created a separate regulatory scheme. Manufacturers would have the
flexibility to decide how to modify their products to achieve the
improvements in energy efficiency necessitated by any battery charger
standard DOE might adopt. The available choices could include using
more efficient EPSs or other alternative design paths.
As for NRDC's concern that manufacturers might mistakenly or
intentionally misrepresent direct operation EPSs as indirect operation
EPSs and circumvent any applicable standards, DOE notes that it has
created a regulatory framework for EPSs that meet statutory
requirements while minimizing complexity. To that end, DOE developed a
straightforward method (discussed above) for identifying indirect
operation EPSs. DOE believes it has developed a method that is simple
enough that any manufacturer can use it to determine whether a given
EPS is an indirect operation EPS. Furthermore, Class A indirect
operation EPSs continue to be required to meet the standards in EISA
2007 established by Congress.
b. Product Class X
DOE proposed adopting the ENERGY STAR specification for low-voltage
EPSs as its standard for multiple-voltage EPSs. In DOE's view, this
standard would be economically justified because DOE's analysis
indicated that the standard would provide the greatest accumulation of
net social benefits for the one product DOE analyzed in product class X
(see section V.C.1.b of the NOPR). The equation on which this standard
was based provided a means to apply the standard using a continuous
function of output power that would readily enable a manufacturer to
determine what efficiency level it would need to meet for any future
multiple-voltage products that might be produced. DOE sought comment on
this proposal from interested parties.
Microsoft commented that DOE's proposed standard for multiple-
voltage EPSs does not yield results that are comparable or
representative of actual use citing the fact that the game console EPS
that would be required to meet the proposed standard is most efficient
between the loading points it operates in most frequently, roughly
between 46 and 63 percent load. Microsoft believes that because DOE's
test procedure requires averaging the efficiency over multiple loading
points beyond that range, the procedure would not accurately capture
real world efficiency and energy savings potential of its game console
EPS. (Microsoft, No. 110 at p. 2) The CEA agreed, stating that the
``standard for multiple-voltage EPSs is inappropriate for the one
product impacted by it.'' (CEA, No. 106 at p. 6) NRDC suggested that,
in lieu of DOE's proposed standard, multiple-voltage EPSs should be
required to meet only the efficiency level of their lowest output
voltage. (NRDC, No. 114 at p. 14)
In the case of multiple-voltage EPSs, DOE's intent was to propose a
continuous standard as a function of output power similar to the
single-voltage EPS proposal. While only one product currently falls
into this class, this situation may not always be the case. To account
for the possibility of additional types of multiple-voltage EPSs
becoming commercially available, DOE proposed using an average
efficiency metric over the four loading conditions identified in the
multiple-voltage test procedure. Using the current methodology, any
future products that are sold with multiple-voltage EPSs will have a
universal test method and set of measurable efficiency metrics to
evaluate against the new federal standard.
Adopting the NRDC approach (i.e. setting requirements only on the
lowest output voltage) would not ensure that the lowest voltage bus
would provide any significant power to the end-use product in a real-
world application. Consequently, the overall efficiency of the EPS
could be far less than testing would indicate. In such a situation, a
highly efficient lower voltage output would have a negligible impact on
the overall system efficiency should the higher voltage output provide
significantly more power to the end-use consumer product. For instance,
the low-voltage output on the EPS in question provides only 2.5 percent
of the overall system power at full load. While the output may be
highly efficient, its overall impact on the system is minimal and using
NRDC's method would not allow DOE to properly capture the additional
energy usage of the EPS.
Manufacturers of multiple-voltage EPSs could also take advantage of
such a loophole by designing a highly efficient low-voltage output
despite its contribution, or lack thereof, to the overall energy
consumption of the EPS while paying little attention to the higher
voltage output(s). There are several ways manufacturers can design
multiple output EPSs (i.e. multiple transformer taps, separate filter
stages, paralleling several outputs of a single voltage) and there is
no guarantee that improving one output bus would result in improvements
to any other outputs. In any case where DOE does not measure all
outputs, the reported energy consumption of the EPS (based on NRDC's
approach) would not be an accurate representation of how much energy a
given device would use. In light of the potential for this problematic
result, DOE is opting to adopt its proposed approach to ensure (1) the
universal applicability of its procedure and the standard and (2)
reasonably accurate measurements of energy efficiency for these
products.
c. Product Class H
To develop the efficiency standard level proposed in the NOPR for
product class H (high power) EPSs, DOE scaled the CSLs from the 120W
representative unit to the 345W representative unit in the high power
product class. Like the proposed standards for the other EPS product
classes, DOE chose the most stringent level that was technologically
feasible and economically justified. DOE sought comment on the
methodology for selecting a standard for high power EPSs, and received
only one comment.
NRDC recommended that ``DOE set the same efficiency levels for
class H as for class B instead of the current proposal of 87.5%.''
(NRDC, No. 114 at p. 14) However, like multiple-voltage EPSs, there is
only one product (amateur radios) that DOE could identify that uses
high power EPSs. The 120W products in product class B have a
representative nameplate output voltage of 19 volts while the high
power EPSs in product class H have a representative nameplate output
voltage of 13 volts. While the EPSs in product class B do not have
higher nameplate output powers than 250 watts, the high power product
class H covers all EPSs above 250 watts. In comparing the 120 watt unit
at 19 volts to the 345 watt unit at 13 volts, DOE found that the high
power EPSs have much higher output currents since the nameplate output
power (i.e. watts) is the product of nameplate output current and
nameplate output voltage. Higher output currents create greater
resistive losses associated with the output cord and secondary side
filtering. When scaling the 120W results to the 345W representative
unit, DOE adjusted for this disparity using the voltage scaling
techniques it developed during its EPS testing, as detailed in chapter
5 of the TSD, and ultimately proposed an efficiency standard slightly
lower than
[[Page 7879]]
the direct operation EPSs below 250W nameplate output power. This
technical limitation on the achievable efficiency remains and the
standards adopted in today's final rule accounts for this limitation.
D. Markups Analysis
The markups analysis develops appropriate markups in the
distribution chain to convert the MSP estimates derived in the
engineering analysis to consumer prices. At each step in the
distribution chain, companies mark up the price of the product to cover
business costs and profit margin. Given the variety of products that
use EPSs, distribution varies depending on the product class and
application. As such, DOE assumed that the dominant path to market
establishes the retail price and, thus, the markup for a given
application. The markups applied to end-use products that use EPSs are
approximations of the EPS markups.
In the case of EPSs, the dominant path to market typically involves
an end-use product manufacturer (i.e. OEM) and retailer. DOE developed
OEM and retailer markups by examining annual financial filings, such as
Securities and Exchange Commission (SEC) 10-K reports, from more than
80 publicly traded OEMs, retailers, and distributors engaged in the
manufacturing and/or sales of consumer applications that use EPSs.
DOE typically calculates two markups for each product in the
markups analysis. These are: a markup applied to the baseline component
of a product's cost (referred to as a baseline markup) and a markup
applied to the incremental cost increase that results from standards
(referred to as an incremental markup). The incremental markup relates
the change in the MSP of higher-efficiency models (the incremental cost
increase) to the change in the retailer's selling price.
Commenting on retail markups, Phillips, Schumacher, and Wahl
Clipper stated that the concept of margins is very significant to
retailers, and it is not realistic to predict that retailers
voluntarily will act in a way that reduces their margins. (Philips, No.
128 at p. 6; Schumacher, No. 182 at p. 6; Wahl Clipper, No 153 at p. 2)
Motorola commented that retailers will not be willing to lower their
markups because product efficiency has increased. (Motorola Mobility,
No. 121 at p. 4) In contrast, PTI stated that DOE's estimates of
markups are sufficient for the purposes of the analysis. (PTI, No. 133
at p. 6)
DOE recognizes that retailers may seek to preserve margins.
However, DOE's approach assumes that appliance retail markets are
reasonably competitive, so that an increase in the manufacturing cost
of appliances is not likely to contribute to a proportionate rise in
retail profits, as would be expected to happen if markups remained
constant. DOE's methodology for estimating markups is based on a mix of
economic theory, consultation with industry experts, and data from
appliance retailers.\25\ In conducting research, DOE has found that
empirical evidence is lacking with respect to appliance retailer markup
practices when a product increases in cost (due to increased efficiency
or other factors). DOE understands that real-world retailer markup
practices vary depending on market conditions and on the magnitude of
the change in cost of goods sold (CGS) associated with an increase in
appliance efficiency. DOE acknowledges that detailed information on
actual retail practices would be helpful in evaluating change in
markups on products after appliance standards take effect. For this
rulemaking, DOE requested data from stakeholders in support of
alternative approaches to markups, as well as any data that shed light
on actual practices by retailers; however, no such data was provided.
Thus, DOE continues to use an approach that is consistent with economic
theory of firm behavior in competitive markets.
---------------------------------------------------------------------------
\25\ An extensive discussion of the methodology and
justification behind DOE's general approach to markups calculation
is presented in Larry Dale, et al. 2004. ``An Analysis of Price
Determination and Markups in the Air-Conditioning and Heating
Equipment Industry.'' LBNL-52791. Available for download at http://eetd.lbl.gov/sites/all/files/an_analysis_of_price_determiniation_and_markups_in_the_air_conditioning_and_heating_equipment_industry_lbnl-52791.pdf.
---------------------------------------------------------------------------
Chapter 6 of the TSD provides additional detail on the markups
analysis.
E. Energy Use Analysis
The energy use analysis provides estimates of the annual energy
consumption of EPSs at the considered efficiency levels. DOE uses these
values in the LCC and PBP analyses and in the NIA. DOE estimated the
annual energy use of EPSs in the field as they are used by consumers.
EPSs are power conversion devices that transform input voltage to a
suitable voltage for the end-use application they are powering. A
portion of the energy that flows into an EPS flows out to an end-use
product and, thus, cannot be considered to be consumed by the EPS.
However, to provide the necessary output power, other factors
contribute to EPS energy consumption, e.g., internal losses and
overhead circuitry.\26\ Therefore, the traditional method for
calculating energy consumption--by measuring the energy a product draws
from mains while performing its intended function(s)--is not
appropriate for EPSs because that method would not factor in the energy
delivered by the EPS to the end-use application, and thus would
overstate EPS energy consumption. Instead, DOE considered energy
consumption to be the energy dissipated by the EPS (losses) and not
delivered to the end-use product as a more accurate means to determine
the energy consumption of these products. Once the energy and power
requirements of those end-use products were determined, DOE considered
them fixed, and DOE focused its analysis on how standards would affect
the energy consumption of EPSs themselves.
---------------------------------------------------------------------------
\26\ Internal losses are energy losses that occur during the
power conversion process. Overhead circuitry refers to circuits and
other components of the EPS, such as monitoring circuits, logic
circuits, and LED indicator lights, that consume power but do not
directly contribute power to the end-use application.
---------------------------------------------------------------------------
Applying a single usage profile to each application, DOE calculated
the unit energy consumption for EPSs. In addition, DOE examined the
usage profiles of multiple user types for applications where usage
varies widely (for example, a light user and a heavy user or an amateur
user and professional user). By examining these usage profiles DOE
provided stakeholders with greater transparency in its energy
consumption calculation, such that they could provide specific comments
where DOE's estimates were incorrect.
AHAM voiced support for the usage profiles presented by DOE in the
NOPR. While AHAM commented that DOE could more accurately capture the
usage of infrequently used product classes, it largely supported DOE's
efforts to consider the variation in usage for EPSs. AHAM recommended
that DOE reevaluate these usage profiles in the future to more
accurately quantify the usage profiles for infrequently charged
products. (AHAM, No. 124 at p. 7) No other feedback was received on
this issue. In light of the support expressed for its approach, and for
the technical reasons explained above, DOE continued to apply the same
approach.
With respect to the various loading points DOE used to estimate
energy usage, NRDC commented that DOE overestimated its loading point
assumption for laptop computer EPSs in the ``operating'' application
state, which, given the reduced EPS efficiency at lower loading point
levels, would lead to an understatement of energy
[[Page 7880]]
losses. (These EPSs fall in product class B.) NRDC pointed to a recent
EPA dataset underlying the ENERGY STAR v6.0 Computer Specification
Revision \27\ that showed loading points for a comparable application
state of approximately 10-20% for most products. This loading point
range, however, differs from DOE's test data, which showed the
``operating'' loading point to be at 28%. (NRDC, No. 114 at p. 18)
---------------------------------------------------------------------------
\27\ https://www.energystar.gov/products/specs/node/143 (last
accessed October 23, 2012).
---------------------------------------------------------------------------
To address this comment, DOE worked with the EPA to better
understand the data that it used to estimate the loading point. DOE
learned that EPA's estimate was based on a separate set of empirical
data from Ecma International (formerly the European Computer
Manufacturers Association) in which measurements were taken from 17
notebook computers operating in real-world scenarios. DOE analyzed
these data and found that idle loading points were approximately 30%,
an estimate that is very much in line with DOE's estimated loading
point of 28%. Therefore, in developing the final standards, DOE relied
on the loading points presented in the NOPR.
DOE also explored high- and low-savings scenarios in an LCC
sensitivity analysis. As part of the sensitivity analysis, DOE
considered alternate usage profiles and loading points to account for
uncertainty in the average usage profiles and explore the effect that
usage variations might have on energy consumption, life-cycle cost, and
payback. Additional information on this sensitivity analysis is
contained in appendix 8B to the TSD.
DOE does not assume the existence of a rebound effect, in which
consumers would increase use in response to an increase in energy
efficiency and resulting decrease in operating costs. For EPSs, DOE
expects that, in light of the small amount of savings expected to flow
to each individual consumer over the course of the year, the rebound
effect is likely to be negligible because consumers are unlikely to be
aware of the efficiency improvements or notice the decrease in
operating costs that would result from new standards for these
products. DOE analyzed the impacts on individual consumers in its Life-
Cycle Cost and Payback Period Analyses described below.
F. Life-Cycle Cost and Payback Period Analyses
This section describes the LCC and payback period analyses and the
spreadsheet model DOE used for analyzing the economic impacts of
possible standards on individual consumers. Details of the spreadsheet
model, and of all the inputs to the LCC and PBP analyses, are contained
in chapter 8 and appendix 8A of the TSD. DOE conducted the LCC and PBP
analyses using a spreadsheet model developed in Microsoft Excel. When
combined with Crystal Ball (a commercially-available software program),
the LCC and PBP model generates a Monte Carlo simulation \28\ to
perform the analysis by incorporating uncertainty and variability
considerations.
---------------------------------------------------------------------------
\28\ Monte Carlo simulations model uncertainty by utilizing
probability distributions instead of single values for certain
inputs and variables.
---------------------------------------------------------------------------
The LCC analysis estimates the impact of a standard on consumers by
calculating the net cost of an EPS under a base-case scenario (in which
no new energy conservation standard is in effect) and under a
standards-case scenario (in which the proposed energy conservation
standard is applied). The base-case scenario is determined by the
efficiency level that a sampled consumer currently purchases, which may
be above the baseline efficiency level. The life-cycle cost of a
particular EPS is composed of the total installed cost (which includes
manufacturer selling price, distribution chain markups, sales taxes,
and any installation cost), operating expenses (energy and any
maintenance costs), product lifetime, and discount rate. As noted in
the NOPR, DOE considers installation costs to be zero for EPSs.
The payback period is the change in purchase expense due to a more
stringent energy conservation standard, divided by the change in annual
operating cost that results from the standard. Stated more simply, the
payback period is the time period it takes to recoup the increased
purchase cost of a more-efficient product through energy savings. DOE
expresses this period in years.
Table IV-11 summarizes the approach and data that DOE used to
derive the inputs to the LCC and PBP calculations for the NOPR and the
changes made for today's final rule. The following sections discuss
these inputs and comments DOE received regarding its presentation of
the LCC and PBP analyses in the NOPR, as well as DOE's responses
thereto.
[[Page 7881]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.014
[[Page 7882]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.015
1. Manufacturer Selling Price
In the preliminary analysis, DOE used a combination of test and
teardown results and manufacturer interview results to develop
manufacturer selling prices. For the final rule, DOE maintained the
manufacturer selling prices used in the NOPR analysis, with the
exception of the 60-Watt representative unit, as discussed in section
IV.C. Further detail on the MSPs can be found in chapter 5 of the TSD.
Examination of historical price data for a number of appliances
that have been subject to energy conservation standards indicates that
an assumption of constant real prices and costs may overestimate long-
term trends in appliance prices. Economic literature and historical
data suggest that the real costs of these products may in fact trend
downward over time according to ``learning'' or ``experience'' curves.
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. In the NODA, DOE
proposed that when sufficiently long-term data are available on the
cost or price trends for a given product, it would analyze the
available data to forecast future trends.
To forecast a price trend for the NOPR, DOE considered the
experience curve approach, in which an experience rate parameter is
derived using two historical data series on price and cumulative
production, but in the absence of historical data on shipments of EPSs
and of sufficient historical Producer Price Index (PPI) data for small
electrical appliance manufacturing from the Bureau of Labor Statistics
(BLS),\29\ DOE could not use this approach. This situation is partially
due to the nature of EPS design. EPSs are made up of many electrical
components whose size, cost, and performance rapidly change, which
leads to relatively short design lifetimes. DOE also considered
performing an exponential fit on the deflated AEO's Projected Price
Indexes that most narrowly include EPSs. However, DOE believes that
these indexes are too broad to accurately capture the trend for EPSs.
Furthermore, EPSs are not typical consumer products; they are more like
a commodity that OEMs purchase.
---------------------------------------------------------------------------
\29\ Series ID PCU33521-33521; http://www.bls.gov/ppi/.
---------------------------------------------------------------------------
Given the uncertainty, DOE did not incorporate product price
changes into the NOPR analysis and is not including them in today's
final rule. For the NIA, DOE also analyzed the sensitivity of results
to two alternative EPS price forecasts. Appendix 10-B of the NOPR TSD
describes the derivation of alternative price forecasts.
2. Markups
DOE applies a series of markups to the MSP to account for the
various distribution chain markups applied to the analyzed product.
These markups are evaluated for each application individually,
depending on its path to market. Additionally, DOE splits its markups
into ``baseline'' and ``incremental'' markups. The baseline markup is
applied to the entire MSP of the baseline product. The incremental
markups are then applied to the marginal increase in MSP over the
baseline's MSP. The approach used for markups in the NOPR was
maintained for the final rule. Further detail on the markups can be
found in section IV.D above and in chapter 6 of the TSD.
3. Sales Tax
As in the NOPR, DOE obtained State and local sales tax data from
the Sales Tax Clearinghouse for the final rule. The data represented
weighted averages that include county and city rates. DOE used the data
to compute population-weighted average tax values for each Census
division and four large States (New York, California, Texas, and
Florida). For the final rule, DOE retained this methodology and used
updated sales tax data from the Sales Tax Clearinghouse.\30\ DOE also
obtained up-to-date population estimates from the U.S. Census Bureau
for today's final rule.\31\
---------------------------------------------------------------------------
\30\ Sales Tax Clearinghouse, Aggregate State Tax Rates. https://thestc.com/STRates.stm.
\31\ The U.S. Census Bureau. Annual Estimates of the Population
for the United States, Regions, States, and Puerto Rico: April 1,
2000 to July 1, 2009 http://www.census.gov/popest/data/state/totals/2009/tables/NST-EST2009-01.xls.
---------------------------------------------------------------------------
4. Installation Cost
As detailed in the NOPR, DOE considered installation costs to be
zero for EPSs because installation would typically entail a consumer
simply unpacking the EPS from the box in which it was sold and
connecting the device to mains power and its associated product.
Because the cost of this ``installation'' (which may be considered
temporary, as intermittently used devices might be unplugged for
storage) is not quantifiable in dollar terms, DOE considered the
installation cost to be zero.
[[Page 7883]]
In response to the NOPR, NEMA noted that no installation costs were
accounted for in the LCC and PBP calculations. NEEA pointed out that
the LCC focuses on incremental costs, rather than overall costs. It
noted that it would be very difficult to find data supporting an
installation cost that increases with increasing efficiency levels.
(NEEA, Pub. Mtg. Transcript, No. 104 at p. 189) DOE agrees with the
comments made by NEEA and has maintained zero installation costs for
the final rule analysis.
5. Maintenance Cost
In the NOPR analysis, DOE did not consider repair or maintenance
costs for EPSs. In making this decision, DOE recognized that the
service life of an EPS typically exceeds that of the consumer product
it powers. Furthermore, DOE noted that the cost to repair the EPS might
exceed the initial purchase cost as these products are relatively low
cost. Thus, DOE estimated that it would be extremely unlikely that a
consumer would incur repair or maintenance costs for an EPS. Also, if
an EPS failed, DOE expects that consumers would typically discard the
EPS and purchase a replacement. DOE received no comments challenging
this assumption and has continued relying on this assumption for
purposes of calculating the final rule's potential costs and benefits.
6. Product Price Forecast
As noted in section IV.F.1, to derive its central estimates DOE
assumed no change in EPS prices over the 2015-2044 period. In addition,
DOE conducted a sensitivity analysis using two alternative price trends
based on AEO indexes. These price trends, and the NPV results from the
associated sensitivity cases, are described in appendix 10-B of the
TSD.
7. Unit Energy Consumption
The final rule analysis uses the same approach for determining UECs
as the one used in the NOPR. The UEC was determined for each
application based on estimated loading points and usage profiles.
Further detail on the UEC calculations can be found in section IV.E
above and in chapter 7 of the TSD.
8. Electricity Prices
DOE determined energy prices by deriving regional average 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. The derivation of prices was based on data in EIA's
Form EIA-861. For the final rule, DOE updated to EIA's Form EIA-861
2011.
9. Electricity Price Trends
In the NOPR analysis, DOE used data from EIA's Annual Energy
Outlook (AEO) 2010 to project electricity prices to the end of the
product lifetime.\32\ For the final rule, DOE used the final release of
the AEO 2013,\33\ which contained reference, high- and low-economic-
growth scenarios. DOE received no comments on the electricity price
forecasts it used in its analyses.
---------------------------------------------------------------------------
\32\ U.S. Department of Energy. Energy Information
Administration. Annual Energy Outlook 2010. November, 2010.
Washington, DC http://www.eia.doe.gov/oiaf/aeo/.
\33\ U.S. Department of Energy. Energy Information
Administration. Annual Energy Outlook 2013. June, 2013. Washington,
DC http://www.eia.doe.gov/oiaf/aeo/.
---------------------------------------------------------------------------
10. Lifetime
For the NOPR analysis, DOE considered the lifetime of an EPS to be
from the moment it is purchased for end-use up until the time when it
is permanently retired from service. Because the typical EPS is
purchased for use with a single associated application, DOE assumed
that it would remain in service for as long as the application does.
Even though many of the technology options to improve EPS efficiencies
may result in an increased useful life for the EPS, the lifetime of the
EPS is still directly tied to the lifetime of its associated
application. With the exception of EPSs for mobile phones and
smartphones (see below), the typical consumer will not continue to use
an EPS once its application has been discarded. For this reason, DOE
used the same lifetime estimate for the baseline and standard level
designs of each application for the LCC and PBP analyses. DOE
maintained this approach in the final rule analysis. Further detail on
product lifetimes and how they relate to applications can be found in
chapter 3 of the TSD.
The one exception to this approach (i.e. that EPSs do not exceed
the lifetime of their associated end-use products) is the lifetime of
EPSs for mobile phones and smartphones. While the typical length of a
mobile phone contract is two years, and many phones are replaced and no
longer used after two years, DOE assumed that the EPSs for these
products will remain in use for an average of four years. This
assumption is based on an expected standardization of the market around
micro-USB plug technology, driven largely by the GSMA Universal
Charging Solution.\34\ However, Motorola Mobility commented that DOE
incorrectly assumed that the mobile phone market is standardizing
around a micro-USB plug. Motorola Mobility stated that as batteries
increase in storage capacity, manufacturers may need to abandon micro-
USB technology because of the limits it places on charge currents.
(Motorola Mobility, No. 121 at p. 7)
---------------------------------------------------------------------------
\34\ The GSMA Universal Charging Solution is an agreement
between 17 mobile operators and manufacturers to have the majority
of all new mobile phones support a universal charging connector by
January 1, 2012. The press release for the agreement can be accessed
here: http://www.gsma.com/newsroom/mobile-industry-unites-to-drive-universal-charging-solution-for-mobile-phones/.
_____________________________________-
To verify that this evolution towards micro-USB plug technology is
in fact taking place, DOE examined more than 30 top-selling basic
mobile phone and smartphone models offered online by Amazon.com,
Sprint, Verizon Wireless, T-Mobile, and AT&T. DOE found that all of the
newest smartphone models, other than the Apple iPhone, use micro-USB
plug technology. DOE expects the micro-USB market to increase as more
phones comply with the IEC 62684-2011. This standard mandates the use
of common micro-USB chargers for all cellphones and is aimed at
standardizing EPSs across all mobile phone manufacturers for the
benefit of the consumer.
If new EPSs are compatible with a wide range of mobile phone and
smartphone models, a consumer may continue to use the EPS from their
old phone after upgrading to a new phone. Even though it is currently
standard practice to receive a new EPS with a phone upgrade, DOE
assumes that in the near future consumers will no longer expect
manufacturers to include an EPS with each new phone.
For the NOPR analysis, DOE compared LCC results for each CSL for
mobile and smartphones with a two-year lifetime, to those with a four-
year lifetime. Assuming a lifetime of two (rather than four) years for
mobile phone and smartphone EPSs resulted in lower life-cycle cost
savings (or greater net costs) for consumers of those products.
However, the net effect on Product Class B as a whole was negligible
because mobile phones and smartphones together comprise only 7 percent
of shipments in Product Class B. DOE did not receive any comments on
this approach following the NOPR publication, and therefore retained
the same lifetime approach used in the NOPR for the final rule
analysis. LCC results for these and all other applications in Product
Class B are shown in chapter 11 of the TSD.
DOE notes that the lifetime of the EPS is directly tied to the
lifetime of its
[[Page 7884]]
associated application, even if many of the technology options to
improve EPS efficiencies may result in a longer useful life for the
EPS. The typical consumer will not use the EPS once the application has
been discarded. For this reason, the baseline and standard level
designs use the same lifetime estimate for the LCC and PBP analysis.
See chapter 8 of the TSD for more details.
11. Discount Rate
In the NOPR analysis, DOE derived residential discount rates by
identifying all possible debt or asset classes that might be used to
purchase and operate products, including household assets that might be
affected indirectly. DOE estimated the average shares of the various
debt and equity classes in the average U.S. household equity and debt
portfolios using data from the Survey of Consumer Finances (SCF) \35\
from 1989 to 2007. DOE used the mean share of each class across the
seven sample years as a basis for estimating the effective financing
rate for products. DOE estimated interest or return rates associated
with each type of equity and debt using SCF data and other sources. The
mean real effective rate across the classes of household debt and
equity, weighted by the shares of each class, is 5.1 percent.
---------------------------------------------------------------------------
\35\ http://ww.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------
For the commercial sector, DOE derived the discount rate from the
cost of capital of publicly-traded firms falling in the categories of
products that involve the purchase of EPSs. To obtain an average
discount rate value for the commercial sector, DOE used the share of
each category in total paid employees provided by the U.S. Census
Bureau \36\ and Federal,\37\ State, and local \38\ governments. By
multiplying the discount rate for each category by its share of paid
employees, DOE derived a commercial discount rate of 7.1 percent.
---------------------------------------------------------------------------
\36\ U.S. Census Bureau. The 2010 Statistical Abstract. Table
607--Employment by Industry. http://www.census.gov/compendia/statab/2010/tables/10s0607.xls.
\37\ U.S. Census Bureau. The 2010 Statistical Abstract. Table
484--Federal Civilian Employment and Annual Payroll by Branch.
http://www.census.gov/compendia/statab/2010/tables/10s0484.xls.
\38\ U.S. Census Bureau. Government Employment and Payroll. 2008
State and Local Government. http://www2.census.gov/govs/apes/08stlall.xls.
---------------------------------------------------------------------------
For the final rule, DOE used the same methodology as the
preliminary analysis and NOPR with applicable updates to data sources.
When deriving the residential discount rates, DOE added the 2010 Survey
of Consumer Finances to their data set. For all time-series data, DOE
evaluated rates over the 30-year time period of 1983-2012. The new
discount rates were derived as 5.2 percent and 5.1 percent in the
residential and commercial sectors, respectively. For further details
on discount rates, see chapter 8 and appendix 8D of the TSD.
12. Sectors Analyzed
The NOPR analysis included an examination of a weighted average of
the residential and commercial sectors as the reference case scenario.
Additionally, all application inputs were specified as either
residential or commercial sector data. Using these inputs, DOE then
sampled each application based on its shipment weighting and used the
appropriate residential or commercial inputs based on the sector of the
sampled application. This approach provided more specificity as to the
appropriate input values for each sector, and permitted an examination
of the LCC results for a given representative unit or product class in
total. DOE maintained this approach in the final rule. For further
details on sectors analyzed, see chapter 8 of the TSD.
13. Base Case Market Efficiency Distribution
For purposes of conducting the LCC analysis, DOE analyzed candidate
standard levels relative to a base case (i.e., a case without new
federal energy conservation standards). This analysis required an
estimate of the distribution of product efficiencies in the base case
(i.e., what consumers would have purchased in 2015 in the absence of
new federal standards). Rather than analyzing the impacts of a
particular standard level assuming that all consumers will purchase
products at the baseline efficiency level, DOE conducted the analysis
by taking into account the breadth of product energy efficiencies that
consumers are expected to purchase under the base case.
In preparing the NOPR analysis, DOE derived base case market
efficiency distributions that were specific to each application where
it had sufficient data to do so. This approach helped to ensure that
the market distribution for applications with fewer shipments was not
disproportionately skewed by the market distribution of the
applications with the majority of shipments. As a result, the updated
analysis more accurately accounted for LCC and PBP impacts. For today's
final rule, DOE maintained the base case market efficiency
distributions used in the NOPR analysis.
14. Compliance Date
The compliance date is the date when a new standard becomes
operative, i.e., the date by which EPS manufacturers must manufacture
products that comply with the standard. DOE calculated the LCC savings
for all consumers as if each would purchase a new product in the year
that manufacturers would be required to meet the new standard. DOE used
a compliance date of 2013 in the analysis it prepared for its March
2012 NOPR and a compliance date of 2015 in the final rule analysis.
15. Payback Period Inputs
The PBP is the amount of time a consumer needs to recover the
assumed additional costs of a more-efficient product through lower
operating costs. As in the NOPR, DOE used a ``simple'' PBP for the
final rule, because the PBP does not take into account other changes in
operating expenses over time or the time value of money. As inputs to
the PBP analysis, DOE used the incremental installed cost of the
product to the consumer for each efficiency level, as well as the
first-year annual operating costs for each efficiency level. The
calculation requires the same inputs as the LCC, except for energy
price trends and discount rates; only energy prices for the year the
standard becomes required for compliance (2015 in this case) are
needed.
DOE received multiple comments on its payback period analysis. ITI
pointed out that the NOPR stated ``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.'' (ITI, No. 131 at p. 6) ITI further noted that
it was aware of preliminary cost-benefit analyses that indicate costs
of the proposal exceeding the benefits to consumers by more than 10
times during the first year. Id. As ITI did not provide any data, DOE
was unable to verify this claim.
Cobra Electronics also asserted that the projected energy savings
would yield benefits for a minority of consumers and viewed the payback
period as requiring that the price the consumer pays for a product will
not increase more than three times what the value of the energy savings
will be during the first year after its purchase. (Cobra Electronics,
No. 130 at p. 7)
DOE notes that under 42 U.S.C. 6295(o)(2)(B)(iii), if the
additional cost to the consumer of purchasing the product complying
with an energy conservation standard level will be less
[[Page 7885]]
than three times the value of the energy savings during the first year
that the consumer will receive as a result of the standard, there shall
be a rebuttable presumption that such standard level is economically
justified. In essence, the statute creates a presumption that a
standard level satisfying this condition would be economically
justified. It does not, however, indicate that the standard is
necessarily economically justified if the payback period is under three
years, nor does it indicate that the rebuttable presumption is the only
methodology to show economic justification. DOE notes that it does not
perform a stand-alone rebuttable presumption analysis, as it is already
embodied in the LCC and PBP analysis. The rebuttable presumption is an
alternative to the consideration of the seven factors set forth in 42
U.S.C. 6295(o)(2)(B)(i)(I)-(VII) for establishing economic
justification. The LCC and PBP analyses DOE conducted as part of the
NOPR show that the standard levels proposed for EPSs in product class B
are economically justified. Furthermore, DOE notes that in today's
final rule, three out of four of the representative units for product
class B have payback periods under three years, qualifying the adopted
standard level for these representative units as economically justified
under the rebuttable presumption. (The rebuttable presumption payback
period is discussed further in section III.E.2 above, section V.B.1.c
below, and in chapter 8 of the TSD.)
ARRIS Group also expressed concern over the payback periods
presented in the NOPR. It noted that adjusting to a Level V baseline
and averaging cost savings across all output powers would more than
double the payback period to around 7 years, which would exceed the
product's lifetime and provide no justified savings for the user.
(ARRIS Group, No. 105 at p. 2)
As noted in section IV.A.1, level IV is the current federal
standard, and therefore, units that meet level IV efficiency are
currently permitted to be sold in the United States. While voluntary
programs and efficiency standards outside the United States are driving
the improvement of EPSs so that many EPSs sold in the United States
meet level V, DOE has observed that EPSs that meet level IV currently
exist in the marketplace. Therefore, as discussed in section C.6, DOE
does not believe that adjusting the baseline assumption for all EPSs to
level V would be appropriate. LCC savings estimates are weighted
averages of the savings from improving efficiency from each efficiency
level below the standard level up to the standard level. Thus, DOE's
analysis accounts for the large percentage of units that would already
be at level V in the absence of amended federal standards.
G. Shipments Analysis
Projections of product shipments are needed to predict the impacts
standards will have on the Nation. DOE develops shipment projections
based on an analysis of key market drivers for each considered product.
In DOE's shipments model, shipments of products were calculated based
on current shipments of product applications powered by EPSs. For the
National Impact Analysis, DOE built an inventory model to track
shipments over their lifetime to determine the vintage of units in the
installed base for each year of the analysis period.
1. Shipment Growth Rate
In the NOPR, DOE noted that the market for EPSs had grown
tremendously in the previous ten years. Additionally, DOE found that
many market reports had predicted enormous future growth for the
applications that employ EPSs. However, in projecting the size of these
markets over the next 30-years, DOE considered the possibility that
much of the market growth associated with EPSs had already occurred. In
many reports predicting growth of applications that employ EPSs, DOE
noted that growth was predicted for new applications, but older
applications were generally not included. That is, EPS demand did not
grow, but the products using these devices have transitioned to a new
product mix. For example, during its initial market assessment, DOE
identified mobile phones, digital cameras, personal digital assistants,
and MP3 players as applications that use EPSs. However, in the past
several years, the use of smart phones, which can function as all four
of these individual applications, has accelerated, and these individual
products may no longer be sold in large volumes in the near future. A
quantitative example of this is shown in Table IV-12.
Table IV-12--Example of Product Transition
----------------------------------------------------------------------------------------------------------------
Application 2007 Shipments 2008 Shipments 2009 Shipments
----------------------------------------------------------------------------------------------------------------
Smart Phones........................................... 19,500,000 28,555,000 41,163,000
Mobile Phones.......................................... 101,500,000 102,775,000 94,239,000
Personal Digital Assistants............................ 2,175,000 1,977,000 1,750,000
MP3 Players............................................ 48,020,000 43,731,000 40,101,000
--------------------------------------------------------
Total.............................................. 171,195,000 177,038,000 177,253,000
----------------------------------------------------------------------------------------------------------------
With this in mind, DOE based its shipments projections such that
the per-capita consumption of EPSs will remain steady over time, and
that the overall number of individual units that use EPSs will grow at
the same rate as the U.S. population.
In the NOPR analysis, to estimate future market size while assuming
no change in the per-capita EPS purchase rate, DOE used the projected
population growth rate as the compound annual market growth rate.
Population growth rate values were obtained from the U.S. Census Bureau
2009 National Projections, which forecast U.S. resident population
through 2050. DOE took the average annual population growth rate, 0.75
percent, and applied this rate to all EPS product classes.
NRDC commented that EPS shipments had been growing significantly
faster than the growth shown in the NOPR, driven in part by growth in
consumer electronics and portable appliances over the previous few
years. They attributed the slower shipment growth in 2009 and 2010 to
the recession. By 2042, NRDC projected that annual shipments would grow
to 1.3 billion units, 32% higher than DOE's projection of 1.0 billion
units. (NRDC, No. 114 at p. 19) The California Investor-Owned Utilities
also asserted that EPS stocks would grow faster than the population.
These faster growth rates would increase the energy savings
attributable to the standards. The CA IOU's stated that they supported
the conclusions of NRDC, but did not present additional data of their
own. (CA IOUs, No. 138 at p. 20)
[[Page 7886]]
DOE recognizes that shipments for certain applications are
increasing very rapidly. However, DOE researched product growth trends
dating back to 2006 and found that other products, like digital
cameras, have seen flat shipments. Some critical applications have even
had shipments decline year-over-year. There is also significant
convergence in the consumer electronics industry, in which one new
device may replace multiple retired devices (such as a single smart
phone replacing a mobile phone, digital camera, GPS device, and PDA).
DOE seeks to forecast shipments for EPSs as a whole, but given the
complexity of these markets, any attempts to forecast behavior of the
market will be inherently inexact. Therefore, in today's final rule,
DOE decided to maintain its assumption of 0.75% growth per year from
the NOPR. In its shipment forecasts, DOE projects that by 2044,
shipments of EPSs will be 30 percent greater than they were in 2009.
2. Product Class Lifetime
For the NOPR, DOE calculated product class lifetime profiles using
the percentage of shipments of applications within a given product
class, and the lifetimes of those applications. These values were
combined to estimate the percentage of units of a given vintage
remaining in use in each year following the initial year in which those
units were shipped and placed in service.
DOE received no comments regarding this methodology and maintained
this methodology for the Final Rule. For more information on the
calculation of product class lifetime profiles, see chapter 10 of the
TSD.
3. Forecasted Efficiency in the Base Case and Standards Cases
A key component of the NIA is the trend in energy efficiency
forecasted for the base case (without new and amended standards) and
each of the standards cases. Chapter 3 of the TSD explains how DOE
developed efficiency distributions (which yield shipment-weighted
average efficiency) for EPS product classes for the first year of the
forecast period. To project the trend in efficiency over the entire
forecast period, DOE considered recent standards, voluntary programs
such as ENERGY STAR, and other trends.
DOE found two programs that could influence domestic EPS efficiency
in the short term: (1) The ENERGY STAR program for EPSs (called
``external power adapters''), which specified that EPSs be at or above
CSL 1 and (2) the European Union's (EU's) Eco-design Requirements on
Energy Using Products. When the Preliminary Analysis was published, the
ENERGY STAR program was very active, with more than 3,300 qualified
products as of May 2010.\39\ However, EPA announced that this program
would end on December 31, 2010.\40\ The EU program requires that EPSs
sold in the EU be at or above CSL 1, effective April 2011. This program
applies primarily to Class A EPSs. Recently published documents
indicate that the EU is currently considering an update to its
Ecodesign requirements for EPSs which would bring them to a level
between levels V and VI by 2015. These documents also indicate that the
EU's approach would bring the EU into harmony with DOE's proposed level
VI standards by 2017. This approach, however, has not been finalized by
the EU. The same documents also include a proposal for a more efficient
standard--approximately 0.25% more efficient than level VI--to come
into effect in 2019.\41\
---------------------------------------------------------------------------
\39\ EPA, ``ENERGY STAR External Power Supplies AC-DC Product
List,'' May 24, 2010 and EPA, ``ENERGY STAR External Power Supplies
AC-AC Product List,'' May 24, 2010. Both documents last retrieved on
May 28, 2010 from http://www.energystar.gov/index.cfm?fuseaction=products_for_partners.showEPS.
\40\ EPA, ``ENERGY STAR EPS EUP Sunset Decision Memo,'' July 19,
2010. Last retrieved on July 8, 2011 from http://www.energystar.gov/ia/partners/prod_development/revisions/downloads/eps_eup_sunset_decision_july2010.pdf.
\41\ ``Review Study on Commission Regulation (EC) No. 278/2009
External Power Supplies: Draft Final Report.'' March 13, 2012.
Prepared for European Commission--Directorate-General for Energy.
http://www.powerint.com/sites/default/files/greenroom/docs/EPSReviewStudy_DraftFinalReport.pdf.
---------------------------------------------------------------------------
Because Europe currently represents approximately one-third of the
global EPS market, DOE believes that standards established by the EU
will affect the U.S. market, due to the global nature of EPS design,
production, and distribution. With the EU and previous ENERGY STAR
programs in mind, DOE's NOPR analysis assumed that approximately half
of the Class A EPS market at CSL 0 in 2009 would transition to CSL 1 by
2013 and that there would be no further improvement in the market in
the absence of standards. Any EU standards that would come into effect
after the beginning of the analysis period in 2015 have not been
announced officially; therefore, DOE's analysis does not account for
any additional improvement in EPS efficiency beyond the above discussed
improvements. Aside from the comments from ARRIS Group addressed above
in sections IV.A.2 and IV.C.6, DOE did not receive comments on the
improvement of EPS efficiency between 2009 and the beginning of the
analysis period in 2015, or other factors that may affect EPS
efficiency after 2015 in the absence of federal standards. Therefore,
DOE is maintaining this assumption for the Final Rule.
To estimate efficiency trends in the standards cases, DOE has used
``roll-up'' and/or ``shift'' scenarios in its standards rulemakings.
Under the ``roll-up'' scenario, DOE assumes: (1) Product efficiencies
in the base case that do not meet the standard level under
consideration would ``roll-up'' to meet the new standard level; and (2)
product efficiencies above the standard level under consideration would
not be affected. Under the ``shift'' scenario, DOE reorients the
distribution above the new minimum energy conservation standard.
In the NOPR, DOE proposed to use the ``roll-up'' scenario and
solicited comments from stakeholders on whether such an approach is
appropriate for EPSs. Delta-Q Technologies agreed with DOE's
methodology (Delta-Q Technologies, No. 113 at p. 1). PTI commented that
the ENERGY STAR program could provide an incentive for products to
improve their efficiency (PTI, No 133 at p. 5). Because the ENERGY STAR
program for EPS ended, it will not impact the EPS market going forward;
therefore, DOE has maintained the ``roll-up'' approach for the final
rule. For further details about the forecasted efficiency
distributions, see chapter 9 of the TSD.
H. National Impact Analysis
The National Impact Analysis (NIA) assesses the national energy
savings (NES) and the net present value (NPV) of total consumer costs
and savings that would be expected to result from new and amended
standards at specific efficiency levels. DOE calculates the NES and NPV
based on projections of annual unit shipments, along with the annual
energy consumption and total installed cost data from the energy use
and LCC analyses. DOE projected the energy savings, operating cost
savings, product costs, and NPV of net consumer benefits for products
sold over a 30-year period--from 2015 through 2044.
CEA commented that it is unreasonable for DOE to project shipments,
energy savings, and emissions reductions over a 30-year period. Product
lifecycles for many of the covered products are typically measured in
months, so it can be difficult to make projections years out. (CEA, No.
106 at p. 9) Although the 30-year analysis period is longer than the
average lifetime of EPSs, DOE estimates that the considered standard
levels
[[Page 7887]]
analyzed will transform the market to higher energy efficiencies than
in the base-case, therefore realizing energy and emission savings
throughout the analysis period. Further, DOE has conducted a
sensitivity analysis that projects NIA results out over nine years of
shipments instead of 30 years. Results of this sensitivity analysis are
available in section V.B.3 of this notice.
As in the LCC analysis, DOE evaluates the national impacts of new
and amended standards by comparing base-case projections with
standards-case projections. The base-case projections characterize
energy use and consumer costs for each product class in the absence of
new and amended energy conservation standards. DOE compares these
projections with projections characterizing the market for each product
class if DOE adopted new and amended standards at specific energy
efficiency levels (i.e., the TSLs or standards cases) for that class.
To make the analysis more accessible and transparent to all
interested parties, DOE used an MS Excel spreadsheet model to calculate
the energy savings and the national consumer costs and savings from
each TSL. The TSD and other documentation that DOE provides during the
rulemaking help explain the models and how to use them, and interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses average values
as inputs (as opposed to probability distributions).
For today's final rule, the NIA used projections of energy prices
from the AEO 2013 Reference case. In addition, DOE analyzed scenarios
that used inputs from the AEO 2013 High Economic Growth, and Low
Economic Growth cases. These cases have higher or lower energy price
trends compared to the Reference case. NIA results based on these cases
are presented in appendix 10A to the TSD.
Table IV-13 summarizes the inputs and key assumptions DOE used in
the NIA. Discussion of these inputs and changes follows the table. See
chapter 10 of the TSD for further details.
Table IV-13--Summary of Inputs, Sources and Key Assumptions for the
National Impact Analysis
------------------------------------------------------------------------
Changes for Final
Inputs NOPR description rule
------------------------------------------------------------------------
Base Year Shipments......... Annual shipments No change.
from Market
Assessment.
Shipment Growth Rate........ 0.75 percent No change.
annually, equal to
population growth.
Lifetimes................... EPS lifetime is No changes in
equal to the methodology.
lifetime of the end- Product Class
use product it lifetimes were
powers. revised based on
removal of Product
Class C-1 and
medical products.
Base Year Efficiencies...... From Market No change.
Assessment.
Base-Case Forecasted Efficiency No change.
Efficiencies. distributions
remain unchanged
throughout the
forecast period.
Standards-Case Forecasted ``Roll-up'' scenario No change.
Efficiencies.
Annual Energy Consumption Annual shipment No change in the
per Unit. weighted-average methodology. Inputs
marginal energy to the calculation
consumption values were revised based
for each product on removal of
class. Product Class C-1
and medical
products.
Improvement Cost per Unit... From the Engineering No change.
Analysis.
Markups..................... From Markups No change.
Analysis.
Repair and Maintenance Cost Assumed to be zero.. No change.
per Unit.
Energy Prices............... AEO 2010 projections Updated to AEO 2013.
(to 2035) and
extrapolation for
2044 and beyond.
Electricity Site-to-Source Based on AEO 2010... Updated to AEO 2013.
Conversion Factor.
Present Year................ 2011................ 2013.
Discount Rate............... 3% and 7% real...... No change.
Compliance Date of Standard 2013................ 2015.
(Start of Analysis Period).
------------------------------------------------------------------------
1. Product Price Trends
As noted in section IV.F.6, DOE assumed no change in EPS pricing
over the 2015-2044 period in the reference case. AHAM commented that it
opposes the use of ``experience curves'' to project price trends and
agreed that DOE should not use that approach. (AHAM, No. 124 at p. 9)
In contrast, PG&E and SDG&E supported DOE's consideration of falling
costs in its NIA sensitivity and recommended that falling costs be
incorporated into the reference case, given past declines in the costs
of electronic products. (PG&E and SDG&E, No. 163 at p. 1) PSMA agreed,
stating that while improvements to overall power supply efficiency do
entail cost premiums, these premiums are often reduced as volumes
increase and manufacturing technologies improve. (PSMA, No. 147 at p.
2)
As discussed in section IV.G.1, it is difficult to predict the
consumer electronics market far in advance. To derive a price trend for
EPSs, DOE did not have any historical shipments data or sufficient
historical Producer Price Index (PPI) data for small electrical
appliance manufacturing from the Bureau of Labor Statistics (BLS).\42\
Therefore, DOE also examined a projection based on the price indexes
that were projected for AEO2012. DOE performed an exponential fit on
two deflated projected price indexes that may include the products that
EPSs are components of: information equipment (Chained price index--
investment in non-residential equipment and software--information
equipment), and consumer durables (Chained price index--other durable
goods). However, DOE believes that these indexes are too broad to
accurately capture the trend for EPSs. Furthermore, most EPSs are
unlike typical consumer products in that they are typically not
purchased independently by consumers. Instead, they are similar to
other commodities and typically bundled with end-use products.
---------------------------------------------------------------------------
\42\ Series ID PCU33521-33521; http://www.bls.gov/ppi/.
---------------------------------------------------------------------------
Given the above considerations, DOE decided to use a constant price
assumption as the default price factor index to project future EPSs
prices in 2015. While a more conservative method, following this
approach helped ensure that DOE did not understate the
[[Page 7888]]
incremental impact of standards on the consumer purchase price. Thus,
DOE's product prices forecast for the LCC and PBP analysis for the
final rule's analysis were held constant for each efficiency level in
each product class. DOE also conducted a sensitivity analysis using
alternative price trends based on AEO indexes. These price trends, and
the NPV results from the associated sensitivity cases, are described in
Appendix 10-B of the TSD.
2. Unit Energy Consumption and Savings
DOE uses the efficiency distributions for the base case along with
the annual unit energy consumption values to estimate shipment-weighted
average unit energy consumption under the base and standards cases,
which are then compared against one another to yield unit energy
savings values for each CSL.
To better evaluate actual energy savings when calculating unit
energy consumption for a product class at a given CSL, DOE considered
only those units that would actually be at that CSL and did not
consider any units already at higher CSLs. That is, the shipment-
weighted average unit energy consumption for a CSL ignored any
shipments from higher CSLs.
In addition, when calculating unit energy consumption for a product
class, DOE used marginal energy consumption, which was taken to be the
consumption of a unit above the minimum energy consumption possible for
that unit. Marginal unit energy consumption values were calculated by
subtracting the unit energy consumption values for the highest
considered CSL from the unit energy consumption values at each CSL.
As discussed in section IV.G.3, DOE assumes that energy efficiency
will not improve after 2015 in the base case. Therefore, the projected
UEC values in the analysis, as well as the unit energy savings values,
do not vary over time. Per the roll-up scenario, the analysis assumes
that manufacturers would respond to a standard by improving the
efficiency of underperforming products but not those that already meet
or exceed the standard.
DOE received no comments on its methodology for calculating unit
energy consumption and savings in the NOPR and maintained its
methodology in the final rule. For further details on the calculation
of unit energy savings for the NIA, see chapter 10 of the TSD.
3. Unit Costs
DOE uses the efficiency distributions for the base case along with
the unit cost values to estimate shipment-weighted average unit costs
under the base and standards cases, which are then compared against one
another to give incremental unit cost values for each CSL. In addition,
when calculating unit costs for a product class, DOE uses that product
class's marginal costs--the costs of a given unit above the minimum
costs for that unit.
DOE received no comments on its methodology for calculating unit
costs in the NOPR and maintained its methodology in the final rule. For
further details on the calculation of unit costs for the NIA, see
chapter 10 of the TSD.
4. Repair and Maintenance Cost per Unit
In the preliminary analysis and NOPR, DOE did not consider repair
or maintenance costs for EPSs because the vast majority cannot be
repaired and do not require any maintenance. DOE received no comments
on this approach, and maintained this assumption for the Final Rule.
5. Energy Prices
While the focus of this rulemaking is on consumer products,
typically found in the residential sector, DOE is aware that many
products that employ EPSs are located within commercial buildings.
Given this fact, the NOPR analysis relied on calculated energy cost
savings from such products using commercial sector electricity rates,
which are lower in value than residential sector rates. DOE used this
approach so as to not overstate energy cost savings in calculating the
NIA.
In order to determine the energy usage split between the
residential and commercial sector, DOE first separated products into
residential-use and commercial-use categories. Then, for each product
class, using shipment values for 2015, average lifetimes, and base-case
unit energy consumption values, DOE calculated the approximate annual
energy use split between the two sectors. DOE applied the resulting
ratio to the electricity pricing to obtain a sector-weighted energy
price for each product class. This ratio was held constant throughout
the period of analysis.
DOE received no comments on its methodology for calculating energy
costs in the NOPR and maintained its approach for the final rule. For
further details on the determination of energy prices for the NIA, see
chapter 10 of the TSD.
6. National Energy Savings
For each year in the forecast period, DOE calculates the national
energy savings for each standard level by multiplying the shipments of
EPSs affected by the energy conservation standards by the per-unit
annual energy savings. Cumulative energy savings are the sum of the NES
for all products shipped during the analysis period, 2015-2044. Site
energy savings were converted to primary energy savings using annual
conversion factors derived from the AEO 2013 version of the National
Energy Modeling System (NEMS).
DOE has historically presented NES in terms of primary energy
savings, as it did in the March 2012 NOPR. However, on August 17, 2012,
DOE published a statement of amended policy in which it determined that
all rulemakings that reach the NOPR stage after that date must present
energy savings in terms of full-fuel-cycle (FFC). 77 FR 49701. Because
the NOPR was published prior to August 17, 2012, DOE is maintaining its
use of primary energy savings today's final rule; however, it has also
decided to present FFC savings as a sensitivity analysis in order to be
consistent with DOE's current standard practice. The FFC multipliers
that were applied and the results of that analysis are described in
appendix 10-C of the TSD.
For further details about the calculation of national energy
savings, see chapter 10 of the TSD.
7. Discount Rates
The inputs for determining the NPV of the total costs and benefits
experienced by consumers of EPSs are: (1) Total increased product cost,
(2) total annual savings in operating costs, and (3) a discount factor.
For each standards case, DOE calculated net savings each year as total
savings in operating costs less total increases in product costs,
relative to the base case. DOE calculated operating cost savings over
the life of each product shipped from 2015 through 2044.
DOE multiplied the net savings in future years by a discount factor
to determine their present value. DOE estimated the NPV of consumer
benefits using both a 3-percent and a 7-percent real discount rate. DOE
uses these discount rates in accordance with guidance provided by the
Office of Management and Budget (OMB) to Federal agencies on the
development of regulatory analysis.\43\ The 7-percent real value is an
estimate of the average before-tax rate of return to private
[[Page 7889]]
capital in the U.S. economy. The 3-percent real value represents the
``societal rate of time preference,'' which is the rate at which
society discounts future consumption flows to their present value.
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\43\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying
and Measuring Benefits and Costs. Available at: http://www.whitehouse.gov/omb/memoranda/m03-21.html.
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For further details about the calculation of net present value, see
chapter 10 of the TSD.
I. Consumer Subgroup Analysis
In analyzing the potential impacts of new and amended standards,
DOE evaluates the impacts on identifiable subgroups of consumers (e.g.,
low-income households or small businesses) that may be
disproportionately affected by a national standard. In the NOPR, DOE
analyzed four consumer subgroups of interest--low-income consumers,
small businesses, top marginal electricity price tier consumers, and
consumers of specific applications within a representative unit or
product class. For each subgroup, DOE considered variations on the
standard inputs.
DOE defined low-income consumers as residential consumers with
incomes at or below the poverty line, as defined by the U.S. Census
Bureau. DOE found that these consumers face electricity prices that are
0.2 cents per kWh lower, on average, than the prices faced by consumers
above the poverty line.
For small businesses, DOE analyzed the potential impacts of
standards by conducting the analysis with different discount rates, as
small businesses do not have the same access to capital as larger
businesses. DOE estimated that for businesses purchasing EPSs, small
companies have an average discount rate that is 4.5 percent higher than
the industry average.
For top tier marginal electricity price consumers, DOE researched
inclined marginal block rates for the residential and commercial
sectors. DOE found that top tier marginal rates for general usage in
the residential and commercial sectors were $0.306 and $0.221,
respectively.
Lastly, for the application-specific subgroup, DOE used the inputs
from each application for lifetime, markups, market efficiency
distribution, and UEC to calculate LCC and PBP results. DOE's subgroup
analysis for consumers of specific applications considered the LCC
impacts of each application within a representative unit or product
class. This approach allowed DOE to consider the LCC impacts of
individual applications when choosing the proposed standard level,
regardless of the application's weighting in the calculation of average
impacts. The impacts of the standard on the cost of the EPS as a
percentage of the application's total purchase price are not relevant
to DOE's LCC analysis. The LCC considers the incremental cost between
different standard levels. DOE used the cost of the EPS component, not
the final price of the application, in the LCC. Therefore, a $2,000 and
$20 product are assumed to have the same cost for a EPS (e.g., $5) if
they are within the same CSL of the same representative unit or product
class. The application-specific subgroup analyses represent an estimate
of the marginal impacts of standards on consumers of each application
within a representative unit or product class.
DOE received no comments on its methodology for the Consumer
Subgroup Analysis in the NOPR and maintained its approach in the final
rule. Chapter 11 of the TSD contains further information on the LCC
analyses for all subgroups.
J. Manufacturer Impact Analysis
DOE conducted a manufacturer impact analysis (MIA) on EPSs to
estimate the financial impact of new and amended energy on this
industry. The MIA is both a quantitative and qualitative analysis. The
quantitative part of the MIA relies on the Government Regulatory Impact
Model (GRIM), an industry cash flow model customized for EPSs covered
in this rulemaking. The key MIA output is industry net present value,
or INPV. DOE used the GRIM to calculate cash flows using standard
accounting principles and to compare the difference in INPV between the
base case and various TSLs (the standards case). The difference in INPV
between the base and standards cases represents the financial impact of
the new and amended standards on EPS manufacturers. Different sets of
assumptions (scenarios) produce different results.
DOE calculated the MIA impacts of new and amended energy
conservation standards by creating a GRIM for EPS ODMs. In the GRIM,
DOE grouped similarly impacted products to better analyze the effects
that the new and amended standards will have on each industry. DOE
presented the EPS impacts by grouping the four representative units in
product class B (with output powers at 2.5, 18, 60, and 120 Watts) to
characterize the results for product classes B, C, D, and E. The
results for product classes X and H are presented separately.
DOE outlined its complete methodology for the MIA in the NOPR. The
complete MIA is presented in chapter 12 of the final rule TSD.
1. Manufacturer Production Costs
Through the MIA, DOE attempts to model how changes in efficiency
impact the manufacturer production costs (MPCs). The MPCs and the
corresponding prices for which fully assembled EPSs are sold to OEMs
(frequently referred to as ``factory costs'' in the industry) are major
factors in industry value calculations. DOE's MPCs include the cost of
components (including integrated circuits), other direct materials of
the finalized EPS, the labor to assemble all parts, factory overhead,
and all other costs borne by the ODM to fully assemble the EPS.
In the engineering analysis presented in the NOPR, DOE developed
and subsequently analyzed cost-efficiency curves for four
representative units in product class B and for representative units in
product classes X and H. The MPCs are calculated in one of two ways,
depending on product class. For the product class B representative
units, DOE based its MPCs on information gathered during manufacturer
interviews. In these interviews, manufacturers described the costs they
would have to incur to achieve increases in energy efficiency. For
product classes X and H, the engineering analysis created a complete
bill of materials (BOM) derived from the disassembly of the units
selected for teardown; BOM costs were used to calculate MPCs.
NRDC commented that DOE overestimated the incremental MPCs in the
NOPR analysis for EPSs, particularly product class B EPSs, which caused
DOE to overstate the negative financial impacts reported in the NOPR
MIA. (NRDC, No. 114 at p. 21) NRDC, however, did not give any specific
data supporting its view. DOE derived its MPCs from either tear-downs
or direct manufacturer input. These estimates represent the most
accurate and comprehensive cost data available to DOE. Accordingly, DOE
continued to rely on these data in conducting its analysis and did not
alter the MPCs for the final rule.
2. Product and Capital Conversion Costs
New and amended standards will cause manufacturers to incur one-
time conversion costs to bring their production facilities and product
designs into compliance with those standards. For the NOPR MIA, DOE
classified these one-time conversion costs into two major groups: (1)
Product conversion costs and (2) capital conversion costs. Product
conversion costs are one-time investments in research, development,
testing,
[[Page 7890]]
marketing, and other non-capitalized costs focused on making product
designs comply with the new and amended energy conservation standards.
Capital conversion costs are one-time investments in property, plant,
and equipment to adapt or change existing production facilities so that
new product designs can be fabricated and assembled.
In response to the NOPR, NEMA commented that the results of the
manufacturer impact analysis did not accurately reflect the impact to
industry, as the cost of compliance was consistently underestimated
resulting in an overestimation of net savings. NEMA stated the cost to
manufacturers fails to include safety and reliability testing and these
testing processes are required to ensure long term efficiency gains.
(NEMA, No. 134 at p. 2) DOE notes that it included the cost of safety
and reliability testing as well as certification in the estimated
product conversion costs for the NOPR. See chapter 12 of the TSD for a
complete explanation of the conversion costs. Since NEMA did not
provide any data on the costs of safety and reliability testing, DOE
was unable to verify if the safety and reliability testing cost used in
the NOPR were underestimated.
NRDC commented that DOE overestimated the conversion costs
associated with EPS standards, which caused the MIA results to
overstate the negative financial impacts on EPS manufacturers. NRDC
believes the changes required by the selected standards for EPSs are
simple and will only require limited capital conversion costs. (NRDC,
No. 114 at p. 21) In contrast, Dell commented that DOE may have
underestimated the conversion costs related to production. (Dell, Pub.
Mtg. Transcript, No. 104 at p. 242) After reviewing the EPS conversion
costs, DOE agrees it overstated the capital and product conversion
costs because it overestimated the length of the product design cycle
of the covered products. In the final rule MIA, DOE corrected its
estimate of the length of the product design cycle, which reduced the
EPS conversion costs by approximately 50 percent from the initial
estimated conversion costs in the NOPR. See chapter 12 of this final
rule TSD for further explanation.
3. Markup Scenarios
For the NOPR, DOE modeled two standards case markup scenarios in
the MIA: (1) A flat markup scenario and (2) a preservation of operating
profit scenario. These two scenarios represent the uncertainty
regarding the potential impacts on prices and profitability for
manufacturers following the implementation of new and amended energy
conservation standards. Each scenario leads to different markup values,
which when applied to the inputted MPCs, result in varying revenue and
cash flow impacts.
In the flat markup scenario, DOE assumes that the cost of goods
sold for each product is marked up by a flat percentage to cover SG&A
expenses, R&D expenses, and profit. In the standards case for the flat
markup scenario, manufacturers are able to fully pass the additional
costs that are caused by standards through to their customers.
DOE also modeled the preservation of operating profit scenario in
the NOPR MIA. During manufacturer interviews, ODMs and OEMs indicated
that the electronics industry is extremely price sensitive throughout
the distribution chain. Because of the highly competitive market, this
scenario models the case in which ODMs' higher production costs for
more efficient EPSs cannot be fully passed through to OEMs. In this
scenario, the manufacturer markups are lowered such that manufacturers
are only able to maintain the base case total operating profit in
absolute dollars in the standards case, despite higher product costs
and required investment. DOE implemented this scenario in the GRIM by
lowering the manufacturer markups at each TSL to yield approximately
the same earnings before interest and taxes in both the base case and
standards cases in the year after the compliance date for the new and
amended standards. This scenario generally represents the lower-bound
of industry profitability following new and amended energy conservation
standards because in this scenario higher production costs and the
investments required to comply with new and amended energy conservation
standards do not yield additional operating profit.
During the NOPR public meeting, ECOVA commented that DOE should
consider a markup scenario where manufacturers can pass on the one-time
conversion costs associated with new and amended energy standards.
(ECOVA, Pub. Mtg. Transcript, No. 104 at p. 294) Based on the EPS
market pricing conditions described during manufacturer interviews, DOE
concludes that the markup scenario recommended by ECOVA is realistic
and should be incorporated into the MIA. Therefore, DOE examined the
INPV impacts of a return on invested capital markup scenario in the
final rule MIA as a result of ECOVA's comment. The results of this
markup scenario are displayed in section V.B.2.a, along with the rest
of the manufacturer INPV results.
In the return on invested capital scenario, manufacturers earn the
same percentage return on total capital in both the base case and
standards cases in the year after the compliance date for the new and
amended standards. This scenario models the situation in which
manufacturers maintain a similar level of profitability from the
investments required by new and amended energy conservation standards
as they do from their current business operations. In the standards
case under this scenario, manufacturers have higher net operating
profit after taxes, but also have greater working capital and
investment requirements. This scenario generally represents the upper-
bound of industry profitability following new and amended energy
conservation standards.
4. Impacts on Small Businesses
Cobra Electronics commented that it, and other small companies,
were excluded from DOE's small business impacts analysis. Cobra stated
that while it does not manufacture EPSs, it manufactures products that
use EPSs and should have been included in DOE's small business impacts
analysis. (Cobra Electronics, No. 130 at p. 2) DOE took into
consideration only small businesses that either are directly impacted
by these standards and/or manufacture EPSs domestically and found none
that would be adversely affected by this rule. DOE believes that
electronics manufacturers, like Cobra, that source their EPSs from
other companies should not be directly examined, as the EPSs are simply
one component of their products. DOE does not expect there to be any
direct employment impacts on these application manufacturers that do
not manufacture or design the EPSs used with their applications.
Further, if these companies are not involved in the redesign or
manufacturing of the EPS, they will not have significant conversion
costs associated with this EPS standard. DOE acknowledges that the
application price could increase due to the use of more expensive EPSs,
which could negatively affect small business application manufacturers
using EPSs. These price increases are the subject of the markups
analysis, which is discussed in section IV.D above.
K. Emissions Analysis
In the emissions analysis, DOE estimated the reduction in power
sector emissions of carbon dioxide (CO2), nitrogen oxides
(NOX), sulfur dioxide
[[Page 7891]]
(SO2), and mercury (Hg) from potential energy conservation
standards for EPSs. In addition, for today's final rule, DOE developed
a sensitivity analysis that estimates additional emissions impacts in
production activities (extracting, processing, and transporting fuels)
that provide the energy inputs to power plants. These are referred to
as ``upstream'' emissions. Together, these emissions account for the
full-fuel-cycle (FFC). In accordance with DOE's FFC Statement of Policy
(76 FR 51282 (Aug. 18, 2011)), the FFC analysis includes impacts on
emissions of methane (CH4) and nitrous oxide
(N2O), both of which are recognized as greenhouse gases. The
results of this FFC sensitivity analysis are described in appendix 13A
of the final rule TSD.
DOE conducted the emissions analysis using emissions factors that
were derived from data in EIA's Annual Energy Outlook 2013 (AEO 2013),
supplemented by data from other sources. DOE developed separate
emissions factors for power sector emissions and upstream emissions.
The method that DOE used to derive emissions factors is described in
chapter 13 of the final rule TSD.
EIA prepares the Annual Energy Outlook using the National Energy
Modeling System (NEMS). Each annual version of NEMS incorporates the
projected impacts of existing air quality regulations on emissions. AEO
2013 generally represents current legislation and environmental
regulations, including recent government actions, for which
implementing regulations were available as of December 31, 2012.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous States and the
District of Columbia (DC). SO2 emissions from 28 eastern
states and DC were also limited under the Clean Air Interstate Rule
(CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based
trading program that operates along with the Title IV program. CAIR was
remanded to the U.S. Environmental Protection Agency (EPA) by the U.S.
Court of Appeals for the District of Columbia Circuit but it remained
in effect. See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008);
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2011
EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule
(CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the DC
Circuit issued a decision to vacate CSAPR. See EME Homer City
Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012). The court
ordered EPA to continue administering CAIR.\44\ The AEO 2013 emissions
factors used for today's NOPR assumes that CAIR remains a binding
regulation through 2040.
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\44\ On June 24, 2013, the Supreme Court granted certiorari in
EME Homer City. EPA v. EME Homer City Generation, LP, 133 S.Ct. 2857
(2013), and has heard oral arguments on this matter on December 10,
2013. DOE notes that while the outcome of this litigation may
eventually have an impact on the manner in which DOE calculates
emissions impacts, accounting for those changes in the context of
the present rule would be speculative given the uncertainty of the
case's outcome at this time.
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The attainment of emissions caps is typically 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 adoption of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by any regulated EGU.
In past rulemakings, DOE recognized that there was uncertainty about
the effects of efficiency standards on SO2 emissions covered
by the existing cap-and-trade system, but it concluded that negligible
reductions in power sector SO2 emissions would occur as a
result of standards.
Beginning in 2015, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants,
which were announced by EPA on December 21, 2011. 77 FR 9304 (Feb. 16,
2012). In the final MATS rule, EPA established a standard for hydrogen
chloride as a surrogate for acid gas hazardous air pollutants (HAP),
and also established a standard for SO2 (a non-HAP acid gas)
as an alternative equivalent surrogate standard for acid gas HAP. The
same controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions will be reduced as a result of the control
technologies installed on coal-fired power plants to comply with the
MATS requirements for acid gas. AEO 2013 assumes that, in order to
continue operating, coal plants must have either flue gas
desulfurization or dry sorbent injection systems installed by 2015.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO2 emissions. Under the MATS, NEMS shows a reduction
in SO2 emissions when electricity demand decreases (e.g., as
a result of energy efficiency standards). Emissions will be far below
the cap established by CAIR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by any regulated EGU. Therefore,
DOE believes that efficiency standards will reduce SO2
emissions in 2015 and beyond.
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia. Energy conservation standards are
expected to have little effect on NOX emissions in those
States covered by CAIR because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions. However,
standards would be expected to reduce NOX emissions in the
States not affected by the caps, so DOE estimated NOX
emissions reductions from the standards considered in today's final
rule for these States.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would likely reduce Hg emissions. DOE estimated mercury
emissions reduction using emissions factors based on AEO 2013, which
incorporates the MATS.
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of the proposed rule, DOE considered the
estimated monetary benefits 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 benefits, 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
reduction estimates and presents the values considered in this
rulemaking.
For today's final rule, DOE did not receive any comments on this
section of the analysis and retained the same approach as in the NOPR.
DOE is relying on a set of values for the social cost of carbon (SCC)
that was developed by an interagency process. A summary of the basis
for these values is provided below, and a more detailed description of
the methodologies used is provided as an appendix to chapter 14 of the
final rule TSD.
1. Social Cost of Carbon
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
[[Page 7892]]
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. 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.
Under section 1(b)(6) of Executive Order 12866, ``Regulatory
Planning and Review,'' 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
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 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.
Despite the serious limits of both quantification and monetization,
SCC estimates can be useful in estimating the social benefits of
reducing carbon dioxide 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 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 the 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 rulemaking,
however.
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. 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
Economic analyses for Federal regulations have used a wide range of
values to estimate the benefits associated with reducing carbon dioxide
emissions. In the final model year 2011 CAFE rule, the U.S. Department
of Transportation (DOT) used both a ``domestic'' SCC value of $2 per
metric ton of CO2 and a ``global'' SCC value of $33 per
metric ton of CO2 for 2007 emission reductions (in 2007$),
increasing both values at 2.4 percent per year. DOT also included a
sensitivity analysis at $80 per metric ton of CO2.\45\ A
2008 regulation proposed by DOT assumed a domestic SCC value of $7 per
metric ton of CO2 (in 2006$) for 2011 emission reductions
(with a range of $0-$14 for sensitivity analysis), also increasing at
2.4 percent per year.\46\ 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 $20 per metric ton
CO2 for 2007 emission reductions (in 2007$). 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 $40 per metric ton CO2 for
discount rates of approximately 2 percent and 3 percent, respectively
(in 2006$ for 2007 emissions).
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\45\ 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)
(Last accessed December 2012).
\46\ 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) (Last accessed December 2012).
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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 metric ton of CO2. These interim values
represented 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.
[[Page 7893]]
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.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: the FUND, DICE, and PAGE models. 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.
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 sets of SCC values for use in
regulatory analyses.\47\ Three sets of 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 set, 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 climate change further out in the tails of the SCC distribution.
The 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 calculate domestic effects,
although preference is given to consideration of the global benefits of
reducing CO2 emissions. Table IV-14 presents the values in the 2010
interagency group report, which is reproduced in appendix 14-A of the
final rule TSD.
---------------------------------------------------------------------------
\47\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government, February 2010. http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.
Table IV-14--Annual SCC Values from 2010 Interagency Report, 2010-2050
[In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------
5 3 2.5 3
Year ---------------------------------------------------------------
95th
Average Average Average 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
----------------------------------------------------------------------------------------------------------------
The SCC values used for today's final rule were generated using the
most recent versions of the three integrated assessment models that
have been published in the peer-reviewed literature.\48\ Table IV-15
shows the updated sets of SCC estimates in five-year increments from
2010 to 2050. Appendix 14-B of the final rule TSD provides the full set
of values. The central value that emerges is the average SCC across
models at a 3-percent discount rate. However, for purposes of capturing
the uncertainties involved in regulatory impact analysis, the
interagency group emphasizes the importance of including all four sets
of SCC values.
---------------------------------------------------------------------------
\48\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government.
May 2013; revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
Table IV-15--Annual SCC Values from 2013 Interagency Update, 2010-2050
[In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------
5 3 2.5 3
Year ---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 11 32 51 89
2015............................................ 11 37 57 109
2020............................................ 12 43 64 128
2025............................................ 14 47 69 143
2030............................................ 16 52 75 159
2035............................................ 19 56 80 175
[[Page 7894]]
2040............................................ 21 61 86 191
2045............................................ 24 66 92 206
2050............................................ 26 71 97 220
----------------------------------------------------------------------------------------------------------------
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 Federal agencies participating in the
interagency process to estimate the SCC. The interagency group intends
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 summary, in considering the potential global benefits resulting
from reduced CO2 emissions from today's rule, DOE used the
values from the 2013 interagency report, adjusted to 2012$ using the
Gross Domestic Product price deflator. For each of the four cases
specified, the values used for emissions in 2015 were $11.8, $39.7,
$61.2, and $117 per metric ton CO2 avoided (values expressed
in 2012$). DOE derived values after 2050 using the relevant growth rate
for the 2040-2050 period in the interagency update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. 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.
2. Valuation of Other Emissions Reductions
DOE investigated the potential monetary benefit of reduced
NOX emissions from the TSLs it considered. As noted above,
DOE has taken into account how new and amended energy conservation
standards would reduce NOx emissions in those 22 states not affected by
the CAIR. DOE estimated the monetized value of NOX emissions
reductions resulting from each of the TSLs considered for today's final
rule based on estimates found in the relevant scientific literature.
Available estimates suggest a very wide range of monetary values per
ton of NOx from stationary sources, ranging from $468 to $4,809 per ton
(in 2012$).\49\ DOE calculated monetary benefits using a medium value
for NOX emissions of $2,639 per short ton (in 2012$), and
real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------
\49\ 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.
---------------------------------------------------------------------------
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. It has not included this monetization in the current
analysis.
The California Investor-Owned Utilities and ECOVA asked that DOE
take into account the decreased cost of complying with sulfur dioxide
emission regulations as a result of standards. (CA IOUs, No. 138 at p.
19; ECOVA, Pub. Mtg. Transcript, No. 104 at pp. 292-293) As discussed
in section IV.L, under the MATS, SO2 emissions are expected
to be far below the cap established by CSAPR. Thus, it is unlikely that
the reduction in electricity demand resulting from energy efficiency
standards would have any impact on the cost of complying with the
regulations.
For the final rule, DOE retained the same approach as in the NOPR
for monetizing the emissions reductions from new and amended standards.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the power
generation industry that would result from the adoption of new and
amended energy conservation standards. In the utility impact analysis,
DOE analyzes the changes in electric installed capacity and generation
that result for each trial standard level. The utility impact analysis
uses a variant of NEMS,\50\ which is a public domain, multi-sectored,
partial equilibrium model of the U.S. energy sector. DOE uses a variant
of this model, referred to as NEMS-BT,\51\ to account for selected
utility impacts of new and amended energy conservation standards. DOE's
analysis consists of a comparison between model results for the most
recent AEO Reference Case and for cases in which energy use is
decremented to reflect the impact of potential standards. The energy
savings inputs associated with each TSL come from the NIA. For today's
final rule, DOE did not receive any comments on this section of the
analysis and retained the same approach as in the NOPR. Chapter 15 of
the TSD describes the utility impact analysis in further detail.
---------------------------------------------------------------------------
\50\ For more information on NEMS, refer to the U.S. Department
of Energy, Energy Information Administration documentation. A useful
summary is National Energy Modeling System: An Overview 2003, DOE/
EIA-0581(2003) (March, 2003).
\51\ DOE/EIA approves use of the name NEMS to describe only an
official version of the model without any modification to code or
data. Because this analysis entails some minor code modifications
and the model is run under various policy scenarios that are
variations on DOE/EIA assumptions, DOE refers to it by the name
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under
whose aegis this work has been performed).
---------------------------------------------------------------------------
N. Employment Impact Analysis
Employment impacts from new and amended energy conservation
standards include direct and indirect impacts. Direct employment
impacts are any changes in the number of employees of manufacturers of
the equipment subject to standards; the MIA addresses those impacts.
Indirect employment impacts are changes in national employment that
occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more efficient equipment. Indirect
employment impacts from standards consist of the jobs created or
eliminated
[[Page 7895]]
in the national economy, other than in the manufacturing sector being
regulated, due to: (1) Reduced spending by end users on energy; (2)
reduced spending on new energy supply by the utility industry; (3)
increased consumer spending on the purchase of new equipment; and (4)
the effects of those three factors throughout the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Department of Labor's 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 this same economic activity. Data from BLS indicate that
expenditures in the utility sector generally create fewer jobs (both
directly and indirectly) than expenditures in other sectors of the
economy. There are many reasons for these differences, including wage
differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. 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 efficiency 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 service sectors). Thus, based
on the BLS data alone, DOE believes net national employment may
increase because of shifts in economic activity resulting from amended
standards.
For the standard levels considered in the final rule, DOE estimated
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, which was 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 that characterize economic flows among the 187
sectors. ImSET's national economic I-O structure is based on a 2002
U.S. benchmark table, specially aggregated to the 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. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run. For the final rule, DOE used ImSET only to
estimate short-term employment impacts.
The California Energy Commission disagreed with DOE's NOPR
employment impact analysis, which shows that increasing energy
efficiency causes U.S. job losses. (California Energy Commission, No.
117 at p. 33) The California Energy Commission's argument was based on
an assumed ratio of jobs in the consumer goods sector versus the
utility sector. The California Energy Commission, however, did not
provide independent data sources or references to support the
assumption. As a result, DOE is maintaining its current methodology to
estimate employment impacts.
DOE's employment impact analysis is designed to estimate indirect
national job creation or elimination resulting from possible standards,
due to reallocation of the associated expenditures for purchasing and
operating EPSs. There are two cost changes to consider: reduction in
energy costs from use of the product due to efficiency increase, and
change in manufacturing cost to improve product energy efficiency.
Energy cost savings bring a reduction in spending on energy, which
has a negative impact on employment in electric utilities and directly
related sectors. Energy cost savings are assumed to be redirected
according to average U.S. spending patterns; this increase in spending
on all other goods and services leads to an increase in employment in
all other sectors. As electric utilities are generally capital-
intensive compared to the average of all sectors, the aggregate
employment impact of energy cost savings is positive.
In contrast, with increased manufacturing costs, which lead to
higher purchase prices, funds will be diverted from general spending,
increasing spending in product manufacturing and directly related
sectors. In the case of EPSs, almost all manufacturing takes place in
other countries, so money flows from general spending (reducing
employment across all U.S. sectors) to pay for these imported products.
However, a portion of the money spent on imports returns to the U.S.
when U.S. exports are sold. Because U.S. exports tend to be less labor-
intensive than the average of general spending on goods and services,
the aggregate impact of increased manufacturing cost is expected to be
a decrease in U.S. employment.
The employment analysis in the NOPR TSD only presented impacts in
the short run (2015 and 2020). In the short run, the effect from
increased cost is larger than the effect from energy cost savings,
which accrue over time. For this reason, DOE kept the same approach
when developing the employment impact analysis for the final rule.
Although DOE does not currently quantify long-run employment impacts
due to modeling uncertainty, DOE anticipates that net labor market
impacts will in general be negligible over time.
O. Marking Requirements
Under 42 U.S.C. 6294(a)(5), Congress granted DOE with the authority
to establish labeling or marking requirements for a number of consumer
products, including EPSs. DOE notes that EISA 2007 set standards for
Class A EPSs and required that all Class A EPSs shall be clearly and
permanently marked in accordance with the ``International Efficiency
Marking Protocol for External Power Supplies'' (the ``Marking
Protocol'').\52\ (42 U.S.C. 6295(u)(3)(C))
---------------------------------------------------------------------------
\52\ U.S. EPA, ``International Efficiency Marking Protocol for
External Power Supplies,'' October 2008, available at Docket No. 62.
---------------------------------------------------------------------------
The Marking Protocol, developed by the EPA in consultation with
stakeholders both within and outside the United States, was originally
designed in 2005 and updated in 2008 to meet the needs of those
voluntary and regulatory programs in place at those times. In
particular, the Marking Protocol defines efficiency mark ``IV'', which
corresponds to the current Federal standard for Class A EPSs, and
efficiency mark ``V'', which corresponds to ENERGY STAR version 2.0.
(The ENERGY STAR program for EPSs ended on December 31, 2010.) In the
2008 version of the Marking Protocol, these marks apply only to single-
voltage EPSs with nameplate output power less than 250 watts, but not
to multiple-voltage or high-power EPSs. In the March 2012 NOPR, DOE
indicated that it would work with the EPA and other stakeholder groups
to update the Marking Protocol to accommodate any revised EPS standards
it might adopt.
Brother, Panasonic, and ITI urged DOE to ensure that its marking
requirements for EPSs align with the International Efficiency Marking
Protocol. (Brother International, No. 111 at p. 3; ITI, No. 131 at p.
8; Panasonic, No. 120 at p. 4)
[[Page 7896]]
As noted above, EISA 2007 required all Class A EPSs to be clearly
and permanently marked in accordance with the Marking Protocol--but
without any reference to a particular version of that protocol.\53\ In
the absence of any definitive language pointing to the use of a
particular version of the Marking Protocol, in DOE's view, the statute
contemplated that the marking requirements would evolve over time as
needed. This view is supported by the authority Congress gave to DOE in
setting any necessary labeling requirements for EPSs. See 42 U.S.C.
6294(a)(5). Consistent with this authority, and the statutory
foundation laid out by Congress, DOE proposed to revise the marking
requirements for EPSs to accommodate the standards being adopted today.
In particular, applying the already existing nomenclature pattern set
out by the Marking Protocol, DOE proposed a new mark (Roman numeral VI)
to denote compliance with the proposed standards. DOE has revised the
Marking Protocol in collaboration with the EPA and those stakeholder
groups around the world that contributed to earlier versions.
---------------------------------------------------------------------------
\53\ ``Marking.-- Any class A external power supply manufactured
on or after the later of July 1, 2008 or December 19, 2007, shall be
clearly and permanently marked in accordance with the External Power
Supply International Efficiency Marking Protocol, as referenced in
the `Energy Star Program Requirements for Single Voltage External
AC-DC and AC-AC Power Supplies, version 1.1' published by the
Environmental Protection Agency.'' 42 U.S.C. 6295(u)(3)(C). The
ENERGY STAR Program Requirements v. 1.1 were announced March 1,
2006. The initial version of the International Efficiency Marking
Protocol for EPSs was in effect at that time.
---------------------------------------------------------------------------
DOE received comments requesting that it not extend marking
requirements to products for which such requirements do not already
exist. AHAM opposed adding a marking requirement for EPSs that do not
already have such requirements, noting that the usual purposes for
markings--informing consumers, differentiating products in instances
where there are two standards, and differentiating products that use a
voluntary standard--are not served here. (AHAM, No. 124 at p. 8) AHAM
and ITI commented that DOE can verify compliance with the standard by
reviewing the certification and compliance statements manufacturers are
already required to file with DOE, obviating the need for marking
requirements, which impose additional cost and production burdens on
manufacturers and result in marks that, ITI added, ``consumers are
likely to ignore anyway.'' (Id.; ITI, No. 131 at p. 8) Panasonic and
AHAM commented that efficiency marking requirements for battery
chargers and EPSs are unnecessary and superfluous as the covered
products must comply with standards as a condition of sale in the
United States. (Panasonic, No. 120 at pp. 3, 4; AHAM, No. 124 at p. 8)
DOE acknowledges that manufacturers are required to certify
compliance with standards using the Compliance Certification Management
System (CCMS) \54\ and that, in general, markings have limited
effectiveness in ensuring compliance. At the same time, DOE recognizes
that manufacturers and retailers could use efficiency markings or
labels to help ensure that the end-use consumer products they sell
comply with all applicable standards. However, DOE has not received
requests from such parties requesting additional marking requirements
for such purposes. As a result, with the exception of multiple-voltage
and high-power EPSs, DOE is not extending marking requirements to
additional products at this time.
---------------------------------------------------------------------------
\54\ The CCMS is an online system that permits manufacturers and
third party representatives to create, submit, and track
certification reports using product-specific templates. See https://www.regulations.doe.gov/ccms.
---------------------------------------------------------------------------
DOE also received comments from several manufacturers and industry
associations requesting that it permit any required marking to be
placed on the product's package or within accompanying documentation in
lieu of placing the marking on the product itself. Specific reasons
cited included: (1) Limited space on battery chargers and EPSs for
additional markings, as devices have become smaller in recent years and
must already have certain existing markings; (2) wide array of products
of different types and sizes; (3) package labeling is less costly than
marking the product itself; (4) package labeling is more visible than
product markings at point of sale and at customs; (5) manufacturers
would prefer to have this flexibility for product design and branding
reasons; (6) such flexibility would be consistent with recent
government directives on regulatory reform; and (7) product markings
consume additional energy and resources. (AHAM, No. 124 at p. 9; Apple,
No. 177 at p. 1; CEA, No. 137 at pp. 7-8; California Energy Commission,
No. 199 at p. 12; Motorola Mobility, No. 121 at p. 16; Panasonic, No.
120 at p. 4; Philips, No. 128 at p. 6; TIA, No. 127 at p. 9)
In today's final rule, DOE is amending its marking requirements to
permit any required marking to be placed on the product's package or
accompanying documentation in lieu of the product itself. DOE believes
that the most compelling reason for permitting more flexibility in the
placement of the label is that the efficiency of the EPS can still be
ascertained at any point in the distribution chain by reviewing the
packaging or accompanying documentation, while allowing manufacturers
to choose where to place the marking.
Several interested parties commented on the proposed marking
requirements for EPSs in product class N. ITI and Panasonic commented
that they see no need to require a marking on products for which
standards do not apply and for which there is no provision in the
Marking Protocol, i.e., non-Class A EPSs in product class N. (ITI, No.
131 at p. 9; Panasonic, No. 120 at p. 4) Panasonic further expressed
concern that requiring both a Roman numeral and the letter ``N'' on
Class A EPSs in product class N would create confusion and recommended
requiring only the Roman numeral [as required at present]. (Panasonic,
No. 120 at p. 4) Lastly, AHAM, NRDC, Panasonic, and Wahl Clipper all
suggested ways of simplifying the marking scheme DOE proposed for EPSs
in product class N. (AHAM, No. 124 at p. 8; NRDC, No. 114 at p. 17;
Panasonic, No. 120 at p. 4; Wahl Clipper, Pub. Mtg. Transcript, No. 104
at p. 265)
In light of these comments, including those requesting that DOE not
extend marking requirements to products for which such requirements do
not already exist, DOE is not establishing a special mark for EPSs for
product class N in today's final rule. For those EPSs that are already
subject to standards (Class A EPSs), the Roman numeral marking
requirement continues in force. For those EPSs in product class N not
subject to standards (non-Class A EPSs), no efficiency marking is
required. However, to ensure consistency and avoid confusion, DOE is
extending the efficiency marking requirement only to those non-Class A
EPSs subject to the direct operation EPS standards being adopted today,
i.e., multiple-voltage and high-power EPSs and the EPSs for certain
battery operated motorized applications. Thus, the marking will be
required for all devices that are subject to EPS standards and not
required for any devices that are not subject to EPS standards.
Congress amended EPCA to exclude EPSs for certain security and life
safety equipment from the no-load mode efficiency standards. Public Law
111-360 (Jan. 4, 2011) (codified at 42 U.S.C. 6295(u)(3)). The
exclusion applies to AC-AC EPSs manufactured before July 1, 2017, that
have (1) nameplate output
[[Page 7897]]
of 20 watts or more and (2) are certified as being designed to be
connected to a security or life safety alarm or surveillance system
component (as defined in the law). The provision also requires that
once an EPS International Efficiency Marking Protocol is established to
identify these types of EPSs, they should be permanently labeled with
the appropriate mark. 42 U.S.C. 6295(u)(3)(E). Currently, no such
distinguishing mark exists within the Marking Protocol. Once this mark
is established, an EPS would have to be so marked to qualify for the
exemption.\55\
---------------------------------------------------------------------------
\55\ Note that the failure to add such a mark to the Marking
Protocol or create a DOE requirement for such a mark has no bearing
on the ability of such products to qualify for the exemption.
---------------------------------------------------------------------------
The CEC commented that ``DOE should not add EPS security marking to
the international marking protocol,'' adding that efficiency markings
are intended to identify ``holistically'' efficient products, covering
all modes of operation. The CEC continued, ``If DOE decides to adopt a
marking for these products, the Energy Commission recommends using an
``S'' in a circle with a sunset date of July 1, 2017. This requirement
should be added only to 10 CFR 430 and not to the international marking
protocol.'' (California Energy Commission, No. 117 at p. 30) NRDC
recommended that DOE adopt a marking for these products that consists
of the letter ``S'' followed by a hyphen and the appropriate Roman
numeral marking, e.g., ``S-VI''. (NRDC, No. 114 at p. 17)
In light of the exemption's limited scope and duration, the
uncertainty about which mark to use, concerns over requiring the mark,
and the irrelevance of a DOE marking requirement to determining
eligibility for the exemption, DOE has decided not to adopt a special
marking for the EPSs in question.
Table IV-16 summarizes the EPS marking requirements. The revised
Marking Protocol (version 3.0) has been added to the docket for this
rulemaking and can be downloaded from Docket EERE-2008-BT-STD-0005 on
Regulations.gov.
Table IV-16 EPS Marking Requirements by Product Class*
------------------------------------------------------------------------
Class ID Product class Marking requirement
------------------------------------------------------------------------
B................... Direct Operation, AC-DC, Roman numeral VI.
Basic-Voltage.
C................... Direct Operation, AC-DC, Roman numeral VI.
Low-Voltage (except
those with nameplate
output voltage less
than 3 volts and
nameplate output
current greater than or
equal to 1,000
milliamps that charge
the battery of a
product that is fully
or primarily motor
operated).
C-1................. Direct Operation, AC-DC, No marking requirement.
Low-Voltage with
nameplate output
voltage less than 3
volts and nameplate
output current greater
than or equal to 1,000
milliamps and charges
the battery of a
product that is fully
or primarily motor
operated.
D................... Direct Operation, AC-AC, Roman numeral VI.
Basic-Voltage.
E................... Direct Operation, AC-AC, Roman numeral VI.
Low-Voltage.
X................... Direct Operation, Roman numeral VI.
Multiple-Voltage.
H................... Direct Operation, High- Roman numeral VI.
Power.
N................... Indirect Operation...... Class A: Roman numeral
IV or higher.
Non-Class A: No marking
requirement.
------------------------------------------------------------------------
* An EPS not subject to standards need not be marked.
V. Analytical Results
A. Trial Standards Levels
DOE analyzed the benefits and burdens of multiple TSLs for the
products that are the subject of today's rule. A description of each
TSL DOE analyzed is provided below. DOE attempted to limit the number
of TSLs considered for the NOPR by excluding efficiency levels that do
not exhibit significantly different economic and/or engineering
characteristics from the efficiency levels already selected as a TSL.
While the NOPR presents only the results for those efficiency levels in
TSL combinations, the TSD contains a fuller discussion and includes
results for all efficiency levels that DOE examined.
Table V-1 presents the TSLs for EPSs and the corresponding
efficiency levels. DOE chose to analyze product class B directly and
scale the results from the engineering analysis to product classes C,
D, and E. As a result, the TSLs for these three product classes
correspond to the TSLs for product class B. DOE created separate TSLs
for the multiple-voltage (product class X) and high-power (product
class H) EPSs to determine their standards.
[GRAPHIC] [TIFF OMITTED] TR10FE14.016
[[Page 7898]]
For product class B, DOE examined three TSLs corresponding to each
candidate standard level of efficiency developed in the engineering
analysis. TSL 1 is an intermediate level of performance above ENERGY
STAR, which offers the greatest consumer NPV. TSL 2 is equivalent to
the best-in-market CSL and represents an incremental rise in energy
savings over TSL 1. TSL 3 is the max-tech level and corresponds to the
greatest NES.
For product class X, DOE examined three TSLs above the baseline.
TSL 1 is an intermediate level of performance above the baseline. TSL 2
is equivalent to the best-in-market CSL and corresponds to the maximum
consumer NPV. TSL 3 is the max-tech level and corresponds to the
greatest NES.
For product class H, DOE examined three TSLs above the baseline.
TSL 1 corresponds to an intermediate level of efficiency. TSL 2 is the
scaled best-in-market CSL and corresponds to the maximum consumer NPV.
TSL 3 is the scaled max-tech level, which provides the highest NES.
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
For individual consumers, measures of economic impact include the
changes in LCC and the PBP associated with new and amended standards.
The LCC, which is also separately specified as one of the seven factors
to be considered in determining the economic justification for a new
and amended standard (42 U.S.C. 6295(o)(2)(B)(i)(II)), is discussed in
the following section. For consumers in the aggregate, DOE also
calculates the net present value from a national perspective of the
economic impacts on consumers over the forecast period used in a
particular rulemaking.
a. Life-Cycle Cost and Payback Period
As in the NOPR phase, DOE calculated the average LCC savings
relative to the base case market efficiency distribution for each
representative unit and product class. DOE's projections indicate that
a new standard would affect different EPS consumers differently,
depending on the market segment to which they belong and their usage
characteristics. Section IV.F discusses the inputs used for calculating
the LCC and PBP. Inputs used for calculating the LCC include total
installed costs, annual energy savings, electricity rates, electricity
price trends, product lifetime, and discount rates.
The key outputs of the LCC analysis are average LCC savings for
each product class for each considered efficiency level, relative to
the base case, as well as a probability distribution of LCC reduction
or increase. The LCC analysis also estimates, for each product class or
representative unit, the fraction of consumers for which the LCC will
either decrease (net benefit), or increase (net cost), or exhibit no
change (no impact) relative to the base case forecast. No impacts occur
when the product efficiencies of the base case forecast already equal
or exceed the considered efficiency level. EPSs are used in
applications that can have a wide range of operating hours. EPSs that
are used more frequently will tend to have a larger net LCC benefit
than those that are used less frequently because of the greater
operating cost savings.
Another key output of the LCC analysis is the median payback period
at each TSL. DOE presents the median payback period rather than the
mean payback period because it is more robust in the presence of
outliers in the data.\56\ These outliers skew the mean payback period
calculation but have little effect on the median payback period
calculation. A small change in operating costs, which derive the
denominator of the payback period calculation, can sometimes result in
a very large payback period, which skews the mean payback period
calculation. For example, consider a sample of PBPs of 2, 2, 2, and 20
years, where 20 years is an outlier. The mean PBP would return a value
of 6.5 years, whereas the median PBP would return a value of 2 years.
Therefore, DOE considers the median payback period, which is not skewed
by occasional outliers. Table V-2 shows the results for the
representative units and product classes analyzed for EPSs. Additional
detail for these results, including frequency plots of the
distributions of life-cycle costs and payback periods, are available in
chapter 8 of the TSD.
---------------------------------------------------------------------------
\56\ DOE notes that it uses the median payback period to reduce
the effect of outliers on the data. This method, however, does not
eliminate the outliers from the data.
[GRAPHIC] [TIFF OMITTED] TR10FE14.017
For EPS product class B (basic-voltage, AC-DC, direct operation
EPSs), each representative unit has a unique value for LCC savings and
median PBP. The 2.5W and 60W representative units both have positive
LCC savings at all TSLs considered. The 18W and 120W representative
units have positive LCC savings through TSL 2, but turn negative at TSL
3.
The non-Class A EPSs have varying LCC results at each TSL. The 203W
multiple-voltage unit (product class X) has positive LCC savings
through TSL 2. DOE notes that for this product class, the LCC savings
remain largely the same for TSL 1 and 2 because the difference in LCC
is approximately $0.01, and 95 percent of this market consists of
purchased products that are already at TSL 1. Therefore, the effects
are largely from the movement of the 5 percent of the market up from
the baseline. The 345W high-power unit (product class H) has positive
LCC savings for each TSL. This projection is largely attributable to
[[Page 7899]]
the installed price of the baseline unit, a linear switching device,
which is more costly than higher efficiency switch-mode power devices,
so as consumers move to higher efficiencies, the purchase price
actually decreases, resulting in savings.
b. Consumer Subgroup Analysis
Certain consumer subgroups may be disproportionately affected by
standards. DOE performed LCC subgroup analyses in this final rule for
low-income consumers, small businesses, top tier marginal electricity
price consumers, and consumers of specific applications. See section
IV.F of this final rule for a review of the inputs to the LCC analysis.
The following discussion presents the most significant results from the
LCC subgroup analysis.
Low-Income Consumers
For low-income consumers, the LCC impacts and payback periods are
different than for the general population. This subgroup considers only
the residential sector, and uses an adjusted electricity price from the
reference case scenario. DOE found that low-income consumers below the
poverty line typically paid electricity prices that were 0.2 cents per
kWh lower than the general population. To account for this difference,
DOE adjusted electricity prices by a factor of 0.9814 to derive
electricity prices for this subgroup. Table V-3 shows the LCC impacts
and payback periods for low-income consumers purchasing EPSs.
The LCC savings and PBPs of low-income consumers is similar to that
of the total population of consumers. In general, low-income consumers
experience slightly reduced LCC savings, particularly in product
classes dominated by residential applications. However, product classes
with a large proportion of commercial applications experience less of
an effect under the low-income consumer scenario, which is specific to
the residential sector, and sometimes have greater LCC savings than the
reference case results. None of the changes in LCC savings move a TSL
from positive to negative LCC savings, or vice versa.
[GRAPHIC] [TIFF OMITTED] TR10FE14.018
Small Businesses
For small business consumers, the LCC impacts and payback periods
are different than for the general population. This subgroup considers
only the commercial sector, and uses an adjusted discount rate from the
reference case scenario. DOE found that small businesses typically have
a cost of capital that is 4.36 percent higher than the industry
average, which was applied to the discount rate for the small business
consumer subgroup.
The small business consumer subgroup LCC results are not directly
comparable to the reference case LCC results because this subgroup only
considers commercial applications. In the reference case scenario, the
LCC results are strongly influenced by the presence of residential
applications, which typically comprise the majority of application
shipments. For product class B, the LCC savings become negative at TSL
2 and TSL 3 for the 2.5W representative unit under the small business
scenario, and at TSL3 for the 60W unit. None of the savings for other
representative units change from positive to negative, or vice versa.
This observation indicates that small business consumers would
experience similar LCC impacts as the general population.
Table V-4 shows the LCC impacts and payback periods for small
businesses purchasing EPSs. DOE did not identify any commercial
applications for non-Class A EPSs, and, consequently, did not evaluate
these products as part of the small business consumer subgroup
analysis.
[GRAPHIC] [TIFF OMITTED] TR10FE14.019
[[Page 7900]]
Top Tier Marginal Electricity Price Consumers
For top tier marginal electricity price consumers, the LCC impacts
and payback periods are different than for the general population. The
analysis for this subgroup considers a weighted-average of the
residential and commercial sectors and uses an adjusted electricity
price from the reference case scenario. DOE used an upper tier inclined
marginal block rate for the electricity price in the residential and
commercial sectors, resulting in a price of $0.326 and $0.236 per kWh,
respectively.
Table V-5 shows the LCC impacts and payback periods for top tier
marginal electricity price consumers purchasing EPSs.
Consumers in the top tier marginal electricity price bracket
experience greater LCC savings than those in the reference case
scenario. This result occurs because these consumers pay more for their
electricity than other consumers, and, therefore, experience greater
savings when using products that are more energy efficient. This
subgroup analysis increased the LCC savings of most of the
representative units significantly. For the 203W multiple-voltage
representative unit, the LCC savings at TSL 3 flipped from negative to
positive. In product class B, for the 60W and 120W representative
units, the savings also flipped from negative to positive. All other
savings remained positive.
[GRAPHIC] [TIFF OMITTED] TR10FE14.020
Consumers of Specific Applications
DOE performed an LCC and PBP analysis on every application within
each representative unit and product class. This subgroup analysis used
the application's specific inputs for lifetime, markups, base case
market efficiency distribution, and UEC. Many applications in each
representative unit or product class experienced LCC impacts and
payback periods that were different from the average results across the
representative unit or product class. Because of the large number of
applications considered in the analysis, some of which span multiple
representative units or product classes, DOE did not present
application-specific LCC results here. Detailed results on each
application are available in chapter 11 of the TSD.
For product class B, the application-specific LCC results indicate
that most applications will experience similar levels of LCC savings as
the representative unit's average LCC savings. The 2.5W representative
unit has positive LCC savings for each TSL, but specific applications,
such as wireless headphones (among others), experience negative LCC
savings. Similarly, DOE's projections for the 18W representative unit
has projected positive LCC savings at TSL 1 and TSL 2, but other
applications using EPSs, such as portable DVD players and camcorders,
have negative savings. For the 60W representative unit, all
applications follow the shipment-weighted average trends, except for at
TSL 3, where two applications have negative LCC savings. For the 120W
representative unit, all applications follow the shipment-weighted
averages. See chapter 11 of the TSD for further detail.
c. Rebuttable Presumption Payback
As discussed in section IV.F.15, EPCA provides a rebuttable
presumption that a given standard is economically justified if the
increased purchase 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. However, DOE routinely conducts a full economic
analysis that considers the full range of impacts, including those to
the customer, manufacturer, Nation, and environment, as required under
42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1). The results of
this analysis serve as the basis for DOE to evaluate definitively the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). Therefore, if the rebuttable presumption is
not met, DOE may justify its standard on another basis.
For EPSs, energy savings calculations in the LCC and PBP analyses
used both the relevant test procedures as well as the relevant usage
profiles. Because DOE calculated payback periods using a methodology
consistent with the rebuttable presumption test for EPSs in the LCC and
payback period analyses, DOE did not perform a stand-alone rebuttable
presumption analysis, as it was already embodied in the LCC and PBP
analyses.
2. Economic Impact on Manufacturers
For the MIA in the March 2012 NOPR, DOE used changes in INPV to
compare the direct financial impacts of different TSLs on
manufacturers. DOE used the GRIM to compare the INPV of the base case
(no new and amended energy conservation standards) to that of each TSL.
The INPV is the sum of all net cash flows discounted by the industry's
cost of capital (discount rate) to the base year. The difference in
INPV between the base case and the standards case estimates the
economic impact of implementing that standard on the entire EPS
industry. For today's final rule, DOE continues to use the methodology
presented in the NOPR and in section IV.J of the final rule.
a. Industry Cash Flow Analysis Results
DOE modeled three different markup scenarios using a different set
of markup assumptions for each scenario after an energy conservation
standard goes into effect. These assumptions produce the bounds of a
range of market responses that DOE anticipates could occur in the
standards case. Each markup scenario results in a unique set of cash
flows and corresponding INPV at each TSL.
[[Page 7901]]
The first scenario DOE modeled is a flat markup scenario, or a
preservation of gross margin markup scenario. The flat markup scenario
assumes that in the standards case manufacturers would be able to pass
the higher production costs required to manufacture more efficient
products on to their customers. DOE also modeled the return on invested
capital markup scenario. In this markup scenario, manufacturers
maintain a similar level of profitability from the investments required
by new and amended energy conservation standards as they do from their
current business operations. To assess the higher (more severe) end of
the range of potential impacts, DOE modeled the preservation of
operating profit markup scenario. In this scenario, markups in the
standards case are lowered such that manufacturers are only able to
maintain their total base case operating profit in absolute dollars,
despite higher product costs and investment. DOE used the main NIA
shipment scenario for all MIA scenarios that were used to characterize
the potential INPV impacts.
Product Classes B, C, D, and E
Table V-6 through Table V-8 present the projected results for
product classes B, C, D, and E under the flat, return on invested
capital, and preservation of operating profit markup scenarios. DOE
examined four representative units in product class B and scaled the
results to product classes C, D, and E using the most appropriate
representative unit for each product class.
[GRAPHIC] [TIFF OMITTED] TR10FE14.021
[[Page 7902]]
At TSL 1, DOE estimates impacts on INPV to range from -$6.1 million
to -$32.3 million, or a change in INPV of -2.6 percent to -14.1
percent. At this level, industry free cash flow is estimated to
decrease by approximately 89.5 percent to $1.4 million, compared to the
base case value of $13.6 million in the year leading up to when the
amended energy conservation standards would need to be met.
At TSL 1, manufacturers of product class B, C, D, and E EPSs face a
slight to moderate loss in INPV. For these product classes, the
required efficiencies at TSL 1 correspond to an intermediate level
above the ENERGY STAR 2.0 levels but below the best in market
efficiencies. The conversion costs are a major contribution of the
decrease in INPV because the vast majority of the product class B, C,
D, and E EPS shipments fall below CSL 2.\57\ Manufacturers will incur
product and capital conversion costs of approximately $30.7 million at
TSL 1. In 2015, approximately 84 percent of product class B, C, D, and
E shipments are projected to fall below the proposed amended energy
conservation standards. In addition, 94 percent of the products for the
2.5W representative unit are projected to fall below the proposed
efficiency standard, and would likely require more substantial
conversion costs because meeting the efficiency standard would require
2.5W representative units to switch from linear to switch mode
technology. This change would increase the conversion costs for these
2.5W representative units, which account for approximately half of all
the product class B, C, D, and E shipments.
---------------------------------------------------------------------------
\57\ For a mapping of CSLs to TSLs, please see Table V-1.
---------------------------------------------------------------------------
At TSL 1, the MPC increases 45 percent for the 2.5W representative
units (a representative unit for product class B and all shipments of
product classes C and E), 5 percent for the 18 Watt representative
units (a representative unit for product class B and all shipments of
product class D), 2 percent for the 60W representative units, and 3
percent for the 120W representative units over the baseline. The
conversion costs are significant enough to cause a slight negative
industry impact even if manufacturers are able to maintain a similar
return on their invested capital, as they do in the return on invest
capital scenario. Impacts are more significant under the preservation
of operating profit scenario because under this scenario manufacturers
would be unable to pass on the full increase in the product cost to
OEMs.
At TSL 2, DOE estimates impacts on INPV to range from -$7.8 million
to -$44.5 million, or a change in INPV of -3.4 percent to -19.4
percent. At this level, industry free cash flow is estimated to
decrease by approximately 105.2 percent to -$0.7 million, compared to
the base case value of $13.6 million in the year before the compliance
date.
TSL 2 represents the best-in-market efficiencies for product class
B, C, D, and E EPSs. The increase in conversion costs and production
costs at TSL 2 make the INPV impacts slightly worse than TSL 1. The
product conversion costs increase by $2.5 million and the capital
conversion costs increase by $2.8 million from TSL 1 because now even
more products, 95 percent, fall below the efficiency requirements at
TSL 2 than at TSL 1. Also, at TSL 2, the MPC increases 60 percent for
the 2.5W representative units (a representative unit for product class
B and all shipments of product classes C and E), 18 percent for the 18
Watt representative units (this is a representative unit for product
class B and all shipments of product class D), 5 percent for the 60W
representative units, and 4 percent for the 120W representative units
over the baseline. However, the similar conversion costs and relatively
minor additional incremental conversion costs make the industry impacts
at TSL 2 similar to those at TSL 1.
At TSL 3, DOE estimates impacts on INPV to range from $40.0 million
to -$82.7 million, or a change in INPV of 17.4 percent to -36.1
percent. At this level, industry free cash flow is estimated to
decrease by approximately 110.5 percent to -$1.4 million, compared to
the base case value of $13.6 million in the year before the compliance
date.
TSL 3 represents the max-tech CSL for product class B, C, D, and E
EPSs. At TSL 3, DOE modeled a wide range of industry impacts because
the very large increases in per-unit production costs lead to a wide
range of potential impacts depending on who captures the additional
value in the distribution chain. No existing product meets the
efficiency requirements at TSL 3. However, since most of the products
at TSL 2 also fall below the standard level, there is only a slight
difference between the conversion costs at TSL 2 and TSL 3. The
different INPV impacts occur due to the large changes in incremental
MPCs at the max-tech level. At TSL 3, the MPC increases 69 percent for
the 2.5W representative unit (this is a representative unit for product
class B and all shipments for product classes C and E), 80 percent for
the 18 Watt representative units (this is a representative unit for
product class B and all shipments for product class D), 24 percent for
the 60W representative units, and 53 percent for the 120W
representative units over the baseline. If manufacturers are able to
fully pass on these costs to OEMs (the flat markup scenario), the
increase in cash flow from operations is enough to overcome the
conversion costs to meet the max-tech level and INPV increases
moderately. However, if the manufacturers are unable to pass on these
costs and only maintain the current operating profit (the preservation
of operating profit markup scenario), there is a significant negative
impact on INPV, because substantial increases in working capital drain
operating cash flow. The conversion costs associated with switching the
entire market, the large increase in incremental MPCs, and the extreme
pressure from OEMs to keep product prices down make it more likely that
ODMs will not be able to fully pass on these costs to OEMs and the ODMs
would face a substantial loss instead of a moderate gain in INPV at TSL
3.
Product Class X
Table V-9 through Table V-11 present the projected results for
product class X under the flat, return on invested capital, and
preservation of operating profit markup scenarios.
[[Page 7903]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.022
At TSL 1, DOE estimates impacts on INPV to range from -$0.1 million
to -$0.4 million, or a change in INPV of -0.2 percent to -1.0 percent.
At this level, industry free cash flow is estimated to decrease by
approximately 5.5 percent to $2.5 million, compared to the base case
value of $2.7 million in the year before the compliance date.
At TSL 1, manufacturers of product class X face a very slight
decline in INPV because most of the market already meets TSL 1. The
total conversion costs are approximately $0.4 million. Conversion costs
are low because 95 percent of the products already meet the TSL 1
efficiency requirements.
At TSL 2, DOE estimates impacts on INPV to range from -$1.3 million
to -$6.6 million, or a change in INPV of -3.0 percent to -14.8 percent.
At this level, industry free cash flow is estimated to decrease by
approximately 109.3 percent to -$0.3 million, compared to the base case
value of $2.7 million in the year leading up to when the new energy
conservation standards would need to be met.
At TSL 2, manufacturers range from a slight to moderate decrease in
INPV. DOE estimates that manufacturers will incur total product and
capital conversion costs of $7.3 million at TSL 2. The conversion costs
increase at TSL 2 because the entire market falls below the efficiency
requirements at TSL 2. Also, the total impacts are driven by the
incremental MPCs at TSL 2. At TSL 2, the MPC increases 16 percent over
the baseline.
At TSL 3, DOE estimates impacts on INPV to range from $1.7 million
to -$11.8 million, or a change in INPV of 3.8 percent to -26.4 percent.
At this level, industry free cash flow is estimated to decrease by
approximately 109.3 percent to -$0.3 million, compared to the base case
value of $2.7
[[Page 7904]]
million in the year before the compliance date.
TSL 3 impacts range from a slight increase to a moderate decrease
in INPV. As with TSL 2, the entire market falls below the required
efficiency at TSL 3 and total industry conversion costs are also $7.3
million. However, the main difference at TSL 3 is the increase in the
MPC. At TSL 3, the MPC increases 46 percent over the baseline. If the
ODMs can pass on the higher price of these products to the OEMs at TSL
3, the gains from the additional revenue are outweighed by conversion
costs, so manufacturers experience a slight increase in INPV. However,
if ODMs cannot pass on these higher MPCs to OEMs, manufacturer
experience a moderate loss in INPV. The conversion costs associated
with switching the entire market, the large increase in incremental
MPCs, and the extreme pressure from OEMs to keep product prices down
make it more likely that ODMs will not be able to fully pass on these
costs to OEMs and the ODMs would face a moderate loss instead of a
slight gain in INPV at TSL 3.
Product Class H
Table V-12 through Table V-14 present the projected results for
product class H under the flat, return on invested capital, and
preservation of operating profit markup scenarios.
[GRAPHIC] [TIFF OMITTED] TR10FE14.023
At TSL 1, DOE estimates impacts on INPV to range from less than -
$10,000 to -$0.03 million, or a change in INPV of -3.3 percent to -26.4
percent. At this level, industry free cash flow is estimated to
decrease by approximately
[[Page 7905]]
145.7 percent to less than -$10,000, compared to the base case value of
$0.01 million in the year before the compliance date.
At TSL 1, manufacturers of product class H EPSs face a slight to
significant loss in industry value. The base case industry value of
$110,000 is low and since DOE estimates that total conversion costs at
TSL 1 would be approximately $20,000, the conversion costs represent a
substantial portion of total industry value. The conversion costs are
high relative to the base case INPV because the entire market in 2015
is projected to fall below an efficiency standard set at TSL 1. This
means that all products in product class H would have to be redesigned
to meet the efficiency level at TSL 1, leading to total conversion
costs that are large relative to the base case industry value. In
addition, the MPC at TSL 1 declines by 21 percent compared to the
baseline since the switching technology that would be required to meet
this efficiency level is less costly to manufacture than improving the
efficiency of baseline products that continue to use linear technology.
This situation results in a lower MSP and lower revenues for
manufacturers of baseline products, which exacerbates the impacts on
INPV from new energy conservation standards for these products.
At TSL 2, DOE estimates impacts on INPV to range from less than -
$10,000 to -$0.03 million, or a change in INPV of -3.4 percent to -24.9
percent. At this level, industry free cash flow is estimated to
decrease by approximately 145.7 percent to less than -10,000, compared
to the base case value of $0.01 million in the year before the
compliance date.
The impacts on INPV at TSL 2 are similar to TSL 1. The conversion
costs are the same since the entire market in 2015 would fall below the
required efficiency at both TSL 1 and TSL 2. Also, the MPC is projected
to decrease by 19 percent at TSL 2 compared to the baseline, which is
similar to the 21 percent decrease at TSL 1. Overall, the similar
conversion costs and lower industry revenue for the minimally compliant
products make the INPV impacts at TSL 2 similar to TSL 1.
At TSL 3, DOE estimates impacts on INPV to range from -0.01 million
to -$0.03 million, or a change in INPV of -4.9 percent to -28.2
percent. At this level, industry free cash flow is estimated to
decrease by approximately 145.7 percent to less than -10,000, compared
to the base case value of $0.01 million in the year leading up to when
the new energy conservation standards would need to be met.
Impacts on INPV range from slightly to substantially negative at
TSL 3. As with TSL 1 and TSL 2, the entire market falls below the
required efficiency and the total industry conversion costs estimated
by DOE remain at $20,000. However, the MPC increases 8 percent at TSL 3
relative to the estimated cost of the baseline unit and changes the
possible impacts on INPV at TSL 3. If ODMs can maintain a similar
return on invested capital in TSL 3 as in the base case, like
manufacturers do in the return on invested capital scenario, the
decline in INPV is only slightly negative. However, if the ODMs cannot
fully pass on the higher MPCs to OEMs, as would occur in the
preservation of operating profit, then the loss in INPV is much more
substantial.
b. Impacts on Employment
As discussed in the March 2012 NOPR, as part of the direct
employment impact analysis, DOE attempted to quantify the number of
domestic workers involved in EPS manufacturing. Based on manufacturer
interviews and DOE's research, DOE believes that all major EPS ODMs are
foreign owned and operated. DOE did identify a few smaller niche EPS
ODMs based in the U.S. and attempted to contact these companies. All of
the companies DOE reached indicated their EPS manufacturing takes place
abroad. During manufacturer interviews, large manufacturers also
indicated the vast majority, if not all, EPS production takes place
overseas. DOE also requested comment in the NOPR about the existence of
any domestic EPS production and did not receive any comments. Because
DOE was unable to identify any EPS ODMs with domestic manufacturing,
DOE has concluded there are no EPSs currently manufactured
domestically.
DOE also recognizes there are several OEMs or their domestic
distributors that have employees in the U.S. that work on design,
technical support, sales, training, certification, and other
requirements. However, in interviews manufacturers generally did not
expect any negative changes in the domestic employment of the design,
technical support, or other departments of EPS OEMs located in the U.S.
in response to new and amended energy conservation standards.
c. Impacts on Manufacturing Capacity
As discussed in the March 2012 NOPR, DOE does not anticipate the
standards in today's final rule would adversely impact manufacturer
capacity. EISA 2007 set a statutory compliance date for EPSs, and the
EPS industry is characterized by rapid product development lifecycles.
Therefore, DOE believes the compliance date in today's final rule
provides sufficient time for manufacturers to ramp up capacity to meet
the standards for EPSs.
d. Impacts on Manufacturer Subgroups
As discussed in the March 2012 NOPR, using average cost assumptions
to develop an industry cash flow estimate is not adequate for assessing
differential impacts among manufacturer subgroups. Small manufacturers,
niche equipment manufacturers, and manufacturers exhibiting a cost
structure substantially different from the industry average could be
affected disproportionately. DOE did not identify any EPS manufacturer
subgroups that would require a separate analysis in the MIA.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of recent or impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. In addition
to energy conservation standards, other regulations can significantly
affect manufacturers' financial operations. Multiple regulations
affecting the same manufacturer can strain profits and lead companies
to abandon product lines or markets with lower expected future returns
than competing products. For these reasons, DOE conducts an analysis of
cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.
During previous stages of this rulemaking, DOE identified a number
of requirements, in addition to new and amended energy conservation
standards for EPSs, that manufacturers of these products will face for
products and equipment they manufacture within approximately three
years prior to and after the anticipated compliance date of the new and
amended standards. DOE discusses these and other requirements,
including the energy conservation standards that take effect beginning
in 2012, in its full cumulative regulatory burden analysis in chapter
12 of the TSD.
3. National Impact Analysis
a. Significance of Energy Savings
For each TSL, DOE projected energy savings for EPSs purchased in
the 30-
[[Page 7906]]
year period that begins in the year of compliance with amended
standards (2015-2044). The savings are measured over the entire
lifetime of products purchased in the 30-year period. DOE quantified
the energy savings attributable to each TSL as the difference in energy
consumption between each standards case and the base case. Table V-15
presents the estimated energy savings for each considered TSL, and
Table V-16 presents the estimated FFC energy savings for each
considered TSL. The approach used is further described in section
IV.G.\58\
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\58\ Chapter 10 of the TSD 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.
[GRAPHIC] [TIFF OMITTED] TR10FE14.024
Circular A-4 requires agencies to present analytical results,
including separate schedules of the monetized benefits and costs that
show the type and timing of benefits and costs. Circular A-4 also
directs agencies to consider the variability of key elements underlying
the estimates of benefits and costs. For this rulemaking, DOE undertook
a sensitivity analysis using nine rather than 30-years of product
shipments. The choice of a 9-year period is a proxy for the timeline in
EPCA for the review of energy conservation standards and represents
DOE's standard practice. We would note that the review timeframe
established in EPCA generally does not overlap with the product
lifetime, product manufacturing cycles or other factors specific to
EPSs. In particular, DOE notes that EPS standards may be further
amended and require compliance within 9 years. However, this
information is presented for informational purposes only and is not
indicative of any change in DOE's analytical methodology for this
rulemaking. The NES results based on a 9-year analytical period are
presented in Table V-17. The impacts are counted over the lifetime of
products purchased in 2015-2023.
[[Page 7907]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.025
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for EPSs. In
accordance with OMB's guidelines on regulatory analysis,\59\ DOE
calculated the 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. This discount rate approximates the opportunity cost of
capital in the private sector (OMB analysis has found the average rate
of return on capital to be near this rate). The 3-percent rate reflects
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. It can be approximated by the
real rate of return on long-term government debt (i.e., yield on United
States Treasury notes), which has averaged about 3 percent for the past
30-years.
---------------------------------------------------------------------------
\59\ OMB Circular A-4, section E (Sept. 17, 2003). Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------
Table V-18 shows the consumer NPV results for each TSL considered
for EPSs. In each case, the impacts cover the lifetime of products
purchased in 2015-2044.
[GRAPHIC] [TIFF OMITTED] TR10FE14.026
The NPV results based on this 9-year analytical period are
presented in Table V-19. The impacts are counted over the lifetime of
products purchased in 2015-2023. As mentioned previously, this
information is presented for informational purposes only and is not
indicative of any change in DOE's analytical methodology or decision
criteria.
[[Page 7908]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.027
c. Indirect Impact on Employment
From its analysis, DOE expects energy conservation standards for
EPSs to reduce energy costs for consumers 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.N, DOE used an input/output model of the U.S.
economy to estimate indirect employment impacts of the TSLs 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 near-term time frames (2015-2044), where these
uncertainties are reduced.
The results suggest that today's 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 16 of the final rule TSD presents detailed results.
4. Impact on Utility and Performance of the Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE evaluates
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) DOE examined
several classes of EPSs in its engineering analysis and used the
parameters of the screening analysis to determine whether the new and
amended standards would impact the utility or performance of the end-
use products. Based on the results gathered for each of the EPS product
classes, DOE believes that the standards adopted in today's final rule
will not reduce the utility or performance of the products under
consideration in this rulemaking.
5. Impact on Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition that is
likely to result from standards. It also 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 direct final rule and simultaneously
published 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)) To
assist the Attorney General in making a determination for EPS
standards, DOE provided the Department of Justice (DOJ) with copies of
the NOPR and the TSD for review. DOE received no adverse comments from
DOJ regarding the proposal.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts or costs of energy production. Reduced
electricity demand due to energy conservation standards is also likely
to reduce the cost of maintaining the reliability of the electricity
system, particularly during peak-load periods. As a measure of this
reduced demand, chapter 15 in the final rule TSD presents the estimated
reduction in generating capacity in 2044 for the TSLs that DOE
considered in this rulemaking.
Energy savings from standards for EPSs could also produce
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases associated with electricity production.
Table V-20 to Table V-23 provide DOE's estimate of cumulative
CO2, SO2, NOX, and Hg emission
reductions projected to result from the TSLs considered in this
rulemaking. DOE reports annual CO2, SO2,
NOX, and Hg emission reductions for each TSL in chapter 13
of the final rule TSD.
[[Page 7909]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.028
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX that DOE estimated for each of the TSLs considered.
As discussed in section IV.M, DOE used
[[Page 7910]]
values for the SCC developed by an interagency process. The four sets
of SCC values resulting from that process (expressed in 2012$) are
represented by $11.8/metric ton (the average value from a distribution
that uses a 5-percent discount rate), $39.7/metric ton (the average
value from a distribution that uses a 3-percent discount rate), $61.2/
metric ton (the average value from a distribution that uses a 2.5-
percent discount rate), and $117/metric 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 2015; the values for
later years are higher due to increasing damages as the projected
magnitude of climate change increases.
Table V-24 to Table V-27 present the global value of CO2
emission reductions at each TSL for EPSs. 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.
DOE calculated domestic values as a range from 7 percent to 23 percent
of the global values, and these results are presented in chapter 14 of
the final rule TSD.
[[Page 7911]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.029
[[Page 7912]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.030
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other greenhouse gas (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 on reducing CO2 emissions in this rulemaking 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 final rule the
most recent values and analyses resulting from the ongoing interagency
review process.
DOE also estimated a range for the cumulative monetary value of the
economic benefits associated with NOX emissions reductions
anticipated to result from amended standards for EPSs. The value that
DOE used is discussed in section IV.L. Table V-28 to Table V-31 present
the cumulative present values for each TSL calculated using seven-
percent and three-percent discount rates.
[[Page 7913]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.031
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 standards in
this final rule.
8. Summary of National Economic Impacts
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-
32 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 for EPSs, at
both a three-percent and seven-percent discount rate. The
CO2 values used in the columns of each table correspond to
the four sets of SCC values discussed above.
[[Page 7914]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.032
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 2015-2044. The SCC
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of
CO2 in each year. These impacts continue well beyond 2100.
[[Page 7915]]
C. Conclusions
When considering proposed standards, the new and 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 of Energy 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 by, to the greatest extent practicable,
considering the seven statutory factors discussed previously. (42
U.S.C. 6295(o)(2)(B)(i)) The new and amended standard must also
``result in significant conservation of energy.'' (42 U.S.C.
6295(o)(3)(B))
For today's rulemaking, DOE considered the impacts of standards at
each TSL, beginning with the max-tech 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 technologically feasible, economically justified and
saves a significant amount of energy.
To aid the reader in understanding the benefits and/or burdens of
each TSL, tables in this section summarize the quantitative analytical
results for each TSL, based on the assumptions and methodology
discussed herein. The efficiency levels contained in each TSL are
described in section V.A. In addition to the quantitative results
presented in the tables below, DOE also considers other burdens and
benefits that affect economic justification. These include the impacts
on identifiable subgroups of consumers who may be disproportionately
affected by a national standard, and impacts on employment. Section
V.B.1.b presents the estimated impacts of each TSL for the considered
subgroups. DOE discusses the impacts on employment in external power
supply manufacturing in section V.B.2.b and discusses the indirect
employment impacts in section V.B.3.c.
1. Benefits and Burdens of Trial Standard Levels Considered for EPS
Product Class B
Table V-33 and Table V-34 summarize the quantitative impacts
estimated for each TSL for product class B. As explained in section
IV.C.5, DOE is extending the TSLs for product class B to product
classes C, D, and E because product class B was the only one directly
analyzed and interested parties supported this approach because of the
technical similarities among these products. The efficiency levels
contained in each TSL are described in section V.A.
[[Page 7916]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.033
[[Page 7917]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.044
DOE first considered TSL 3, which represents the max-tech
efficiency level. TSL 3 would save 1.2 quads of energy, an amount DOE
considers significant. Under TSL 3, the NPV of consumer benefits would
be $-0.8 billion, using a discount rate of 7 percent, and $-0.7
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 62.3 million
metric tons of CO2, 20.0 thousand tons of NOX,
108 thousand tons of SO2, and 0.1 tons of Hg. The estimated
monetary value of the cumulative CO2 emissions reductions at
TSL 3 ranges from $476 million to $6,316 million.
At TSL 3, the average LCC impact is a gain (consumer savings) of
$0.17 for the 2.5W unit, and $0.60 for the 60W unit and a loss (LCC
savings decrease) of $0.91 for the 18W unit, and $4.95 for the 120W
unit. The median payback period is 3.7 years for the 2.5W unit, 8.1
years for the 18W unit, 3.1 years for the 60W unit, and 8.0 years for
the 120W unit. The fraction of consumers experiencing an LCC benefit is
55.2 percent for the 2.5W unit, 29.2 percent for the 18W unit, 65.4
percent for the 60W unit, and 0.0 percent for the 120W unit. The
fraction of consumers experiencing an LCC cost is 44.8 percent for the
2.5W unit, 70.8 percent for the 18W unit, 34.7 percent for the 60W
unit, and 100 percent for the 120W unit.
At TSL 3, the projected change in INPV for direct operation product
classes B, C, D, and E as a group ranges from a decrease of $82.7
million to an increase of $40.0 million. At TSL 3, DOE recognizes the
risk of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. If the high end of the
range of impacts is reached, as DOE expects, TSL 3 could result in a
net loss of 36.1 percent in INPV to manufacturers of EPSs in these
product classes. However, as DOE has not identified any domestic
manufacturers of direct operation EPSs, it does not project any
immediate negative impacts on direct domestic jobs.
The Secretary concludes that at TSL 3 for EPSs in product class B,
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the large increases in product
cost, and the capital conversion costs and profit margin impacts that
could result in a very large reduction in INPV outweigh the benefits of
energy savings, emission reductions, and the estimated monetary value
of the CO2 emissions reductions. Consequently, the Secretary
has concluded that TSL 3 is not economically justified.
DOE then considered TSL 2. TSL 2 would save 0.7 quads of energy, an
amount DOE considers significant. Under TSL 2, the NPV of consumer
benefits would be $1.5 billion, using a discount rate of 7 percent, and
$2.8 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 34.2 million
metric tons of CO2, 11.0 thousand tons of NOX,
59.1 thousand tons of SO2, and 0.1 tons of Hg. The estimated
monetary value of the cumulative CO2 emissions reductions at
TSL 2 ranges from $261 million to $3,467 million.
At TSL 2, the average LCC impact is a gain (consumer savings) of
$0.17 for the 2.5W unit, $0.81 for the 18W unit, $0.90 for the 60W
unit, and $0.79 for the 120W unit. The median payback period is 3.7
years for the 2.5W unit, 2.9 years for the 18W unit, 1.3 years for the
60W unit, and 1.7 years for the 120W unit. The fraction of consumers
experiencing an LCC benefit is 55.3 percent for the 2.5W unit, 53.6
percent for the 18W unit, 98.6 percent for the 60W unit, and 94.9
percent for the 120W unit. The fraction of consumers experiencing an
LCC cost is 42.8 percent for the 2.5W unit, 35.3 percent for the 18W
unit, 0.0 percent for the 60W unit, and 2.2 percent for the 120W unit.
At TSL 2, the projected change in INPV for product classes B, C, D,
and E as a group ranges from a decrease of $44.5 million to a decrease
of $7.8 million. DOE recognizes the risk of large negative impacts if
manufacturers' expectations concerning reduced profit margins are
realized. If the high end of the range of impacts is reached, as DOE
expects, TSL 2 could result in a net loss of 19.4 percent in INPV to
manufacturers of EPSs in these product classes.
[[Page 7918]]
The Secretary concludes that at TSL 2 for EPSs in product class B,
the benefits of energy savings, positive NPV of consumer benefits,
emission reductions, and the estimated monetary value of the
CO2 emissions reductions outweigh the economic burden on a
significant fraction of consumers due to the increases in product cost
and the capital conversion costs and profit margin impacts that could
result in a reduction in INPV to manufacturers.
After considering the analysis, public comments on the NOPR, and
the benefits and burdens of TSL 2, the Secretary concludes that this
TSL will offer the maximum improvement in efficiency that is
technologically feasible and economically justified and will result in
the significant conservation of energy. Therefore, DOE today is
adopting standards at TSL 2 for EPSs in product class B and, by
extension, for EPSs in product classes C, D, and E. The new and amended
energy conservation standards for these EPSs, expressed as equations
for minimum average active-mode efficiency and maximum no-load input
power, are shown in Table V-35.
[[Page 7919]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.034
[[Page 7920]]
2. Benefits and Burdens of Trial Standard Levels Considered for EPS
Product Class X
Table V-36 and Table V-37 present a summary of the quantitative
impacts estimated for each TSL for multiple-voltage EPSs. The
efficiency levels contained in each TSL are described in section V.A.
[GRAPHIC] [TIFF OMITTED] TR10FE14.036
DOE first considered TSL 3, which represents the max-tech
efficiency level. TSL 3 would save 0.14 quads of energy, an amount DOE
considers significant. Under TSL 3, the NPV of consumer benefits would
be $-0.25 billion, using a discount rate of 7 percent, and $-0.32
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 7.2 million metric
tons of CO2, 2.3 thousand tons of NOX, 12.5
thousand tons of SO2, and 0.01 tons of Hg. The estimated
monetary value of the
[[Page 7921]]
cumulative CO2 emissions reductions at TSL 3 ranges from
$54.2 million to $722 million.
At TSL 3, the average LCC impact is a cost (LCC savings decrease)
of $2.45. The median payback period is 11.3 years. The fraction of
consumers experiencing an LCC benefit is 5.0 percent while the fraction
of consumers experiencing an LCC cost is 95.0 percent.
At TSL 3, the projected change in INPV ranges from a decrease of
$11.8 million to an increase of $1.7 million. At TSL 3, DOE recognizes
the risk of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. If the high range of
impacts is reached, as DOE expects, TSL 3 could result in a net loss of
26.4 percent in INPV to manufacturers of multiple-voltage EPSs.
However, as DOE has not identified any domestic manufacturers of
multiple-voltage EPSs, it does not project any immediate negative
impacts on direct domestic jobs.
The Secretary concludes that at TSL 3 for multiple-voltage EPSs,
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the large increases in product
cost, and the capital conversion costs and profit margin impacts that
could result in a very large reduction in INPV outweigh the benefits of
energy savings, emission reductions, and the estimated monetary value
of the CO2 emissions reductions. Consequently, the Secretary
has concluded that TSL 3 is not economically justified.
DOE then considered TSL 2. TSL 2 would save 0.07 quads of energy,
an amount DOE considers significant. Under TSL 2, the NPV of consumer
benefits would be $0.24 billion, using a discount rate of 7 percent,
and $0.44 billion, using a discount rate of 3 percent.
At TSL 2, the average LCC impact is a gain (consumer savings) of
$2.88. The median payback period is 4.0 years. The fraction of
consumers experiencing an LCC benefit is 74.6 percent while the
fraction of consumers experiencing an LCC cost is 25.5 percent.
The cumulative emissions reductions at TSL 2 are 3.5 million metric
tons of CO2, 1.1 thousand tons of NOX, 6.1
thousand tons of SO2, and less than 0.01 tons of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 2 ranges from $26.4 million to $353 million.
At TSL 2, the projected change in INPV ranges from a decrease of
$6.6 million to a decrease of $1.3 million. At TSL 2, DOE recognizes
the risk of large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. If the high end of the
range of impacts is reached, as DOE expects, TSL 2 could result in a
net loss of 14.8 percent in INPV to manufacturers of multiple-voltage
EPSs.
The Secretary concludes that at TSL 2 for multiple-voltage EPSs,
the benefits of energy savings, positive NPV of consumer benefits,
emission reductions, and the estimated monetary value of the
CO2 emissions reductions outweigh the economic burden on a
significant fraction of consumers due to the increases in product cost
and the capital conversion costs and profit margin impacts that could
result in a reduction in INPV for manufacturers.
After considering the analysis, public comments on the NOPR, and
the benefits and burdens of TSL 2, the Secretary concludes that this
TSL will offer the maximum improvement in efficiency that is
technologically feasible and economically justified and will result in
the significant conservation of energy. Therefore, DOE today is
adopting standards at TSL 2 for multiple-voltage EPSs. The new energy
conservation standards for these EPSs, expressed as equations for
minimum average active-mode efficiency and maximum no-load input power,
are shown in Table V-38.
[GRAPHIC] [TIFF OMITTED] TR10FE14.037
3. Benefits and Burdens of Trial Standard Levels Considered for EPS
Product Class H
Table V-39 and Table V-40 present a summary of the quantitative
impacts estimated for each TSL for high-power EPSs. The efficiency
levels contained in each TSL are described in section V.A.
[[Page 7922]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.038
DOE first considered TSL 3, which represents the max-tech
efficiency level. TSL 3 would save 0.0015 quads of energy, an amount
DOE considers significant. Under TSL 3, the NPV of consumer benefits
would be $0.004 billion, using a discount rate of 7 percent, and $0.009
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 0.07 million
metric tons of CO2, 0.02 thousand tons of NOX,
0.1 thousand tons of SO2, and less than 0.001 tons of Hg.
The estimated monetary value of the cumulative CO2 emissions
reductions at TSL 3 ranges from less than $0.52 to $7.09 million.
At TSL 3, the average LCC impact is a gain (consumer savings) of
$107.67. The median payback period is 0.8 years. The fraction of
consumers experiencing an LCC benefit is 90.3 percent while the
fraction of consumers experiencing an LCC cost is 9.7 percent.
At TSL 3, the projected change in INPV ranges from a decrease of
$0.03 million to a decrease of $0.01 million. At TSL 3, DOE recognizes
the risk of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. If the high end of the
range of impacts is reached, as DOE expects, TSL 3 could
[[Page 7923]]
result in a net loss of 28.2 percent in INPV to manufacturers of high-
power EPSs. However, as DOE has not identified any domestic
manufacturers of high-power EPSs, it does not project any immediate
negative impacts on direct domestic jobs.
The Secretary concludes that at TSL 3 for high-power EPSs, the
additional considerations of the potential negative impacts of a
standard at this max-tech TSL outweigh the benefits of energy savings,
emission reductions, and the estimated monetary value of the
CO2 emissions reductions. DOE notes that it scaled results
from product class B to estimate the cost and efficiency of this max-
tech CSL. Consequently, DOE is unaware of any product that can achieve
this efficiency level in either product class B or H. Thus, although
DOE's analysis indicates that the max-tech efficiency level is
achievable, there is a risk that unforeseen obstacles remain to
creating an EPS at this efficiency level.
Additionally, setting a standard at TSL 3 would create a
discontinuity in the active mode efficiency standards for EPSs. For
product class B devices, the active mode efficiency standard is
constant for nameplate output power ratings greater than 49 watts up to
250 watts. At 250 watts, where product class H begins, the active mode
efficiency standard would increase by 4 percentage points if DOE set
standards for this product class at the max-tech CSL. This
discontinuity in efficiency between the two product classes would be
the result of the standards for product class B being equivalent to the
best-in-market CSL equation while the standards for product class H
would be equivalent to the max-tech CSL equation for high-power EPSs.
In contrast, by applying the same level of stringency, scaled for
the representative unit voltage, to all EPSs with output power greater
than 250 watts, the achievable efficiency in EPS designs that have an
output power above 49 watts remains nearly constant. This result occurs
because the switching and conduction losses associated with the EPS
remain proportionally the same with the increase in output power, which
creates a relatively flat achievable efficiency above 49 watts. If DOE
were to adopt a level that created a discontinuity in the efficiency
levels, it would ignore this trend and set a higher efficiency standard
between two product classes despite numerous technical similarities.
Consequently, the Secretary has concluded that TSL 3 is not justified.
DOE then considered TSL 2. TSL 2 would save 0.0013 quads of energy
an amount DOE considers significant. Under TSL 2, the NPV of consumer
benefits would be $0.005 billion, using a discount rate of 7 percent,
and $0.0011 billion, using a discount rate of 3 percent.
At TSL 2, the average LCC impact is a gain (consumer savings) of
$142.18. The median payback period is 0.0 years. The fraction of
consumers experiencing an LCC benefit is 100.0 percent while the
fraction of consumers experiencing an LCC cost is 0.0 percent.
The cumulative emissions reductions at TSL 2 are 0.07 million
metric tons of CO2, 0.02 thousand tons of NOX,
0.12 thousand tons of SO2, and less than 0.001 tons of Hg.
The estimated monetary value of the cumulative CO2 emissions
reductions at TSL 2 ranges from less than $0.46 to $6.38 million.
At TSL 2, the projected change in INPV ranges from a decrease of
$0.03 million to a decrease of less than $10,000. At TSL 2, DOE
recognizes the risk of large negative impacts if manufacturers'
expectations concerning reduced profit margins are realized. If the
high end of the range of impacts is reached, as DOE expects, TSL 2
could result in a net loss of 24.9 percent in INPV to manufacturers of
high-power EPSs.
The Secretary concludes that at TSL 2 for high-power EPSs, the
benefits of energy savings, positive NPV of consumer benefits, positive
LCC savings for all consumers, emission reductions, and the estimated
monetary value of the CO2 emissions reductions outweigh the
economic burden of the capital conversion costs and profit margin
impacts that could result in a reduction in INPV for manufacturers.
After considering the analysis, public comments on the NOPR, and
the benefits and burdens of TSL 2, the Secretary concludes that this
TSL will offer the maximum improvement in efficiency that is
technologically feasible and economically justified and will result in
the significant conservation of energy. Therefore, DOE today is
adopting standards at TSL 2 for EPSs in product class H. The new energy
conservation standards for these EPSs, expressed as a minimum average
active-mode efficiency value and a maximum no-load input power value,
are shown in Table V-41.
[GRAPHIC] [TIFF OMITTED] TR10FE14.039
4. Summary of Benefits and Costs (Annualized) of the Proposed Standards
The benefits and costs of today's standards, for products sold in
2015-2044, can also be expressed in terms of annualized values. The
annualized monetary values are the sum of (1) the annualized national
economic value of the benefits from operating the product (consisting
primarily of operating cost savings from using less energy, minus
increases in equipment purchase and installation costs, which is
another way of representing consumer NPV), plus (2) the annualized
monetary value of the benefits of emission reductions, including
CO2 emission reductions.\60\
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\60\ 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 2013, 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 three and seven 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.3. From the present value, DOE then calculated the
fixed annual payment over a 30-year period (2015 through 2044) 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 is a steady stream of
payments.
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Although adding the value of consumer savings to the value of
[[Page 7924]]
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
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 EPSs shipped in 2015-2044. The SCC
values, on the other hand, reflect the present value of all future
climate-related impacts resulting from the emission of one metric ton
of carbon dioxide in each year. These impacts continue well beyond
2100.
Estimates of annualized benefits and costs of today's standards are
shown in Table V-42. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction, for which DOE used a 3-percent discount
rate along with the average SCC series that uses a 3-percent discount
rate, the cost of the standards in today's rule is $147 million per
year in increased equipment costs, while the benefits are $293 million
per year in reduced equipment operating costs, $77 million in
CO2 reductions, and $1.1 million in reduced NOX
emissions. In this case, the net benefit amounts to $223 million per
year. Using a 3-percent discount rate for all benefits and costs and
the average SCC series, the cost of the standards in today's rule is
$162 million per year in increased equipment costs, while the benefits
are $350 million per year in reduced operating costs, $77 million in
CO2 reductions, and $1.2 million in reduced NOX
emissions. In this case, the net benefit amounts to $266 million per
year.
[[Page 7925]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.040
[[Page 7926]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.041
5. Stakeholder Comments on Alternatives to Standards
Cobra Electronics commented that the ENERGY STAR program is an
effective means for encouraging the development of more efficient
technologies. Furthermore, the use of a voluntary program would allow
DOE to comply with Executive Order 13563, which directed federal
agencies to ``identify and assess available alternatives to direct
regulation.'' (Cobra Electronics, No. 130 at p. 8) Executive Order
13563 also states that regulations should be adopted ``only upon a
reasoned determination that its benefits justify its costs.'' Because
the selected standard levels are technologically feasible and
economically justified, DOE has fulfilled its statutory obligations as
well as the directives in Executive Order 13563. In addition, DOE
considered the impacts of a voluntary program as part of the Regulatory
Impact Analysis and found that such a program would save less energy
than standards (see chapter 17 of the TSD).
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 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 standards address are as follows:
(1) There are external benefits resulting from improved energy
efficiency of EPSs 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. DOE
attempts to quantify some of the external benefits through use of
Social Cost of Carbon values.
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 the Office of Information and Regulatory Affairs
(OIRA) in the Office of Management and Budget (OMB) 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 technical support document
for this rulemaking.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011 (76 FR 3281 (Jan. 21, 2011)). EO
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 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 final 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.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, and a final
regulatory flexibility analysis (FRFA) for any such rule that an agency
adopts as a final rule, unless the agency certifies that the rule, if
promulgated, will not have a significant economic impact on a
substantial number of small entities. As required by Executive Order
13272, ``Proper Consideration of Small Entities in Agency Rulemaking,''
67 FR 53461 (August 16, 2002), DOE published procedures and policies on
February 19, 2003, to ensure that the potential impacts of its rules on
small entities are properly considered during the rulemaking process.
68 FR 7990. DOE has made its procedures and policies available on the
Office of the General Counsel's Web site (http://energy.gov/gc/office-general-counsel).
[[Page 7927]]
For manufacturers of EPSs, 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,
30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (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/summary-size-standards-industry. EPS manufacturing is classified under NAICS
335999, ``All Other Miscellaneous Electrical Equipment and Component
Manufacturing.'' The SBA sets a threshold of 500 employees or less for
an entity to be considered as a small business for this category.
As discussed in the March 2012 NOPR, DOE was unable to identify any
EPS ODMs with domestic manufacturing. Information obtained from
manufacturer interviews and DOE's research; indicate that all EPS
manufacturing takes place abroad. DOE notes that it also sought comment
on this issue. While DOE received comments from small businesses
application manufacturers who import EPSs (see discussion in J.4), DOE
did not receive any comments from any small business EPS ODMs or any
comments challenging the view that all EPS manufacturing is conducted
abroad. Since DOE was not able to find any small EPS ODMs, DOE
certifies that today's final rule will not have a significant impact on
a substantial number of small entities and that a regulatory
flexibility analysis is not required.
C. Review Under the Paperwork Reduction Act
Manufacturers of EPSs must certify to DOE that their products
comply with any applicable energy conservation standards. In certifying
compliance, manufacturers must test their products according to the DOE
test procedures for EPSs, including any amendments adopted for those
test procedures (76 FR 12422 (March 7, 2011). DOE has established
regulations for the certification and recordkeeping requirements for
all covered consumer products and commercial equipment, including
Class-A EPSs. (cite 429.37) DOE will modify the certification
requirements specific to non-class A EPSs (multiple-voltage and high-
voltage) in a separate certification rulemaking prior to the effective
date for the standards prescribed in today's rule. 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 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,
DOE has determined that the 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 Part 1021, App. B,
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The 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 rule. DOE's CX
determination for this 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 final
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 final 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 regulatory action likely to result in a
[[Page 7928]]
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
``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. DOE's policy
statement is also available at http://energy.gov/gc/office-general-counsel.
DOE has concluded that this final rule would likely require
expenditures of $100 million or more on the private sector. Such
expenditures may include: (1) Investment in research and development
and in capital expenditures by EPS manufacturers in the years between
the final rule and the compliance date for the new standards, and (2)
incremental additional expenditures by consumers to purchase higher-
efficiency EPSs, starting at the compliance date for the applicable
standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the final 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 the notice of final rulemaking and
the ``Regulatory Impact Analysis'' chapter of the final rule TSD
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(d),
(f), and (o), 6313(e), and 6316(a), today's final rule would establish
energy conservation standards for EPSs that are designed to achieve the
maximum improvement in energy efficiency that DOE has determined to be
both technologically feasible and economically justified. A full
discussion of the alternatives considered by DOE is presented in the
``Regulatory Impact Analysis'' chapter of the final rule TSD.
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 Federal 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 final rule under the OMB and DOE
guidelines and has concluded that it is consistent with applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any 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 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 concluded that today's regulatory action, which sets forth
energy conservation standards for EPSs, is not a significant energy
action because the 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 final 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 Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as scientific information the
agency reasonably can determine will have, or does have, a clear and
substantial impact on important public policies or private sector
decisions. 70 FR 2667.
In response to OMB's Bulletin, 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
[[Page 7929]]
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: www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's final
rule.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovernmental relations, and Small
businesses.
Issued in Washington, DC, on February 3, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, DOE amends part 430 of
chapter II, of title 10 of the Code of Federal Regulations, as set
forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Section 430.2 is amended by:
0
a. Redesignating paragraphs (a), (b), and (c) in the definition for
Annual fuel utilization efficiency as paragraphs (1), (2), and (3),
respectively;
0
b. Adding in alphabetical order definitions for Basic-voltage external
power supply and Direct operation external power supply;
0
c. Redesignating paragraphs (a), (b), (c), and (d) in the definition
for Furnace as paragraphs (1), (2), (3), and (4), respectively;
0
d. Adding in alphabetical order definitions for Indirect operation
external power supply and Low-voltage external power supply;
0
e. Redesignating paragraphs (a), (b), and (c) in the definition for
Water heater as paragraphs (1), (2), and (3), respectively.
The additions read as follows:
Sec. 430.2 Definitions.
* * * * *
Basic-voltage external power supply means an external power supply
that is not a low-voltage external power supply.
* * * * *
Direct operation external power supply means an external power
supply that can operate a consumer product that is not a battery
charger without the assistance of a battery.
* * * * *
Indirect operation external power supply means an external power
supply that cannot operate a consumer product that is not a battery
charger without the assistance of a battery as determined by the steps
in paragraphs (1)(i) through (v) of this definition:
(1) If the external power supply (EPS) can be connected to an end-
use consumer product and that consumer product can be operated using
battery power, the method for determining whether that EPS is incapable
of operating that consumer product directly is as follows:
(i) If the end-use product has a removable battery, remove it for
the remainder of the test and proceed to the step in paragraph (1)(v)
of this definition. If not, proceed to the step in paragraph (1)(ii).
(ii) Charge the battery in the application via the EPS such that
the application can operate as intended before taking any additional
steps.
(iii) Disconnect the EPS from the application. From an off mode
state, turn on the application and record the time necessary for it to
become operational to the nearest five second increment (5 sec, 10 sec,
etc.).
(iv) Operate the application using power only from the battery
until the application stops functioning due to the battery discharging.
(v) Connect the EPS first to mains and then to the application.
Immediately attempt to operate the application. If the battery was
removed for testing and the end-use product operates as intended, the
EPS is not an indirect operation EPS and paragraph 2 of this definition
does not apply. If the battery could not be removed for testing, record
the time for the application to become operational to the nearest five
second increment (5 seconds, 10 seconds, etc.).
(2) If the time recorded in paragraph (1)(v) of this definition is
greater than the summation of the time recorded in paragraph (1)(iii)
of this definition and five seconds, the EPS cannot operate the
application directly and is an indirect operation EPS.
* * * * *
Low-voltage external power supply means an external power supply
with a nameplate output voltage less than 6 volts and nameplate output
current greater than or equal to 550 milliamps.
* * * * *
0
3. Section 430.3 is amended by revising paragraph (p) introductory text
and adding paragraph (p)(3) to read as follows:
* * * * *
Sec. 430.3 Materials incorporated by reference.
* * * * *
(p) U.S. Department of Energy, Office of Energy Efficiency and
Renewable Energy. Resource Room of the Building Technologies Program,
950 L'Enfant Plaza SW., 6th Floor, Washington, DC 20024, 202-586-2945,
(Energy Star materials are also found at http://www.energystar.gov.)
* * * * *
(3) International Efficiency Marking Protocol for External Power
Supplies, Version 3.0, September 2013, IBR approved for Sec. 430.32.
* * * * *
0
4. Section 430.32 is amended by revising paragraph (w) to read as
follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(w) External power supplies. (1)(i) Except as provided in
paragraphs (w)(2) and (5) of this section, all Class A external power
supplies manufactured on or after July 1, 2008, shall meet the
following standards:
------------------------------------------------------------------------
Active Mode
-------------------------------------------------------------------------
Required efficiency (decimal
Nameplate output equivalent of a percentage)
------------------------------------------------------------------------
Less than 1 watt....................... 0.5 times the Nameplate output.
[[Page 7930]]
From 1 watt to not more than 51 watts.. The sum of 0.09 times the
Natural Logarithm of the
Nameplate Output and 0.5.
Greater than 51 watts.................. 0.85.
Not more than 250 watts................ 0.5 watts.
------------------------------------------------------------------------
(ii) Except as provided in paragraphs (w)(5), (w)(6), and (w)(7) of
this section, all direct operation external power supplies manufactured
on or after February 10, 2016, shall meet the following standards:
[[Page 7931]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.042
[[Page 7932]]
[GRAPHIC] [TIFF OMITTED] TR10FE14.043
(2) A Class A external power supply shall not be subject to the
standards in paragraph (w)(1)(i) of this section if the Class A
external power supply is--
(i) Manufactured during the period beginning on July 1, 2008, and
ending on June 30, 2015, and
(ii) Made available by the manufacturer as a service part or a
spare part for an end-use product--
(A) That constitutes the primary load; and
(B) Was manufactured before July 1, 2008.
(3) The standards described in paragraph (w)(1) of this section
shall not constitute an energy conservation standard for the separate
end-use product to which the external power supply is connected.
(4) Any external power supply subject to the standards in paragraph
(w)(1) of this section shall be clearly and permanently marked in
accordance with the International Efficiency Marking Protocol for
External Power Supplies (incorporated by reference; see Sec. 430.3),
published by the U.S. Department of Energy.
(5) Non-application of no-load mode requirements. The no-load mode
energy efficiency standards established in paragraph (w)(1) of this
section shall not apply to an external power supply manufactured before
July 1, 2017, that--
(i) Is an AC-to-AC external power supply;
(ii) Has a nameplate output of 20 watts or more;
(iii) Is certified to the Secretary as being designed to be
connected to a security or life safety alarm or surveillance system
component; and
(iv) On establishment within the External Power Supply
International Efficiency Marking Protocol, as referenced in the
``Energy Star Program Requirements for Single Voltage External Ac-Dc
and Ac-Ac Power Supplies'' (incorporated by reference, see Sec.
430.3), published by the Environmental Protection Agency, of a
distinguishing mark for products described in this clause, is
permanently marked with the distinguishing mark.
(6) An external power supply shall not be subject to the standards
in paragraph (w)(1) of this section if it is a device that requires
Federal Food and Drug Administration (FDA) listing and approval as a
medical device in accordance with section 513 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 360(c)).
(7) A direct operation, AC-DC external power supply with nameplate
output voltage less than 3 volts and nameplate output current greater
than or equal to 1,000 milliamps that charges the battery of a product
that is fully or primarily motor operated shall not be subject to the
standards in paragraph (w)(1)(ii) of this section.
* * * * *
[FR Doc. 2014-02560 Filed 2-7-14; 8:45 am]
BILLING CODE 6450-01-P