[Federal Register Volume 79, Number 28 (Tuesday, February 11, 2014)]
[Proposed Rules]
[Pages 8122-8129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-02823]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[Docket No. EERE-2012-BT-STD-0047]
RIN 1904-AC88
Energy Conservation Standards for Residential Boilers:
Availability of Analytical Results and Modeling Tools
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of data availability.
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SUMMARY: The U.S. Department of Energy (DOE) has completed a
provisional analysis that estimates the potential economic impacts and
energy savings that could result from promulgating amended energy
conservation standards for residential boilers. At this time, DOE is
not proposing any amendments to the energy conservation standards for
residential boilers. However, it is publishing this analysis so
stakeholders can review the analytical output, the underlining
assumptions, and the calculations that might ultimately support amended
standards. DOE encourages interested parties to provide any additional
data or information that may improve the analysis.
DATES: Comments: DOE will accept comments, data, and information
regarding this notice of data availability (NODA) no later than March
13, 2014.
ADDRESSES: Any comments submitted must identify the NODA for Energy
Conservation Standards for Residential Boilers, and provide docket
number EERE-2012-BT-STD-0047 and/or regulatory information number (RIN)
number 1904-AC88. Comments may be submitted using any of the following
methods:
1. Federal Rulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: [email protected]. Include the docket
number EERE-2012-BT-STD-0047 and/or RIN 1904-AC88 in the subject line
of the message. Submit electronic comments in WordPerfect, Microsoft
Word, PDF, or ASCII file format, and avoid the use of special
characters or any form of encryption.
3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy,
Building Technologies Office, Mailstop EE-2J, 1000 Independence Avenue
SW., Washington, DC 20585-0121. If possible, please submit all items on
a compact disc (CD), in which case it is not necessary to include
printed copies.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible,
please submit all items on a CD, in which case it is not necessary to
include printed copies.
No telefacsimilies (faxes) will be accepted.
Docket: The docket, EERE-2012-BT-STD-0047, is available for review
at www.regulations.gov, including Federal Register notices, comments,
and other supporting documents/materials. All documents in the docket
are listed in the www.regulations.gov index. However, not all documents
listed in the index may be publicly available, such as information that
is exempt from public disclosure.
A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0047. The
regulations.gov Web page contains instructions on how to access all
documents in the docket, including public comments.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section IV, ``Public
Participation,'' of this document. For further information on how to
submit a comment or review other public comments and the docket,
contact Ms. Brenda Edwards at (202) 586-2945 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies, EE-2J, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 287-1692. Email [email protected].
Mr. Eric Stas, U.S. Department of Energy, Office of the General
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-9507. Email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. History of Energy Conservation Standards Rulemaking for
Residential Boilers
II. Current Status
III. Summary of the Analysis Performed by DOE
A. Market and Technology Assessment
B. Screening Analysis
C. Engineering Analysis
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Inputs to Installed Cost
2. Inputs to Operating Cost
3. Base-Case Distributions by Efficiency Levels
G. Shipments Analysis
H. National Impact Analysis
I. Preliminary Manufacturer Impact Analysis
IV. Public Participation
A. Submission of Comments
I. History of Energy Conservation Standards Rulemaking for Residential
Boilers
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), sets
forth a variety of provisions designed to improve energy efficiency and
established the Energy Conservation Program for Consumer Products Other
Than Automobiles, a program covering most major household appliances
and certain industrial and commercial equipment.\2\ The National
Appliance Energy Conservation Act of 1987 (NAECA), Public Law 100-12,
amended EPCA to establish energy conservation standards for residential
furnaces and boilers, and set requirements to conduct two cycles of
rulemaking to determine whether these standards should be amended. (42
U.S.C. 6295(f)).
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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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On November 19, 2007, DOE published a final rule in the Federal
Register (hereafter referred to as the ``November 2007 final rule'')
revising the energy conservation standards for furnaces and boilers,
which addressed the first required review of minimum standards for
boilers under 42 U.S.C. 6295(f)(4)(B). 72 FR 65136. Compliance with the
standards in the November 2007 final rule would have been required by
November 19, 2015. However, on December 19, 2007, the Energy
Independence and Security Act of 2007 (EISA 2007), Public Law 110-
[[Page 8123]]
140, was signed into law, which further revised the energy conservation
standards for residential boilers. More specifically, EISA 2007 revised
the minimum annual fuel utilization efficiency (AFUE) requirements for
residential boilers and set several design requirements for each
product class (42 U.S.C. 6295(f)(3)). EISA 2007 required compliance
with the amended energy conservation standards for residential boilers
beginning on September 1, 2012.
Only July 15, 2008, DOE issued a final rule technical amendment to
the 2007 furnaces and boilers final rule, which was published in the
Federal Register on July 28, 2008, to codify the energy conservation
standard levels, the design requirements, and compliance dates for
residential boilers outlined EISA 2007. 73 FR 43611. For gas-fired hot
water boilers, oil-fired hot water boilers, and electric hot water
boilers, EISA 2007 requires that residential boilers manufactured after
September 2012 have an automatic means for adjusting water temperature.
10 CFR 430.32(e)(2)(ii)-(iv). The automatic means for adjusting water
temperature must automatically adjust the water temperature of the
water supplied by the boiler to ensure that an incremental change in
the inferred heat load produces a corresponding incremental change in
the temperature of the water supplied. EISA 2007 also disallows the use
of constant-burning pilot lights in gas-fired hot water boilers and
gas-fired steam boilers.
DOE initiated this rulemaking pursuant to 42 U.S.C. 6295(f)(4)(C),
which requires DOE to conduct a second round of amended standards
rulemaking for residential boilers. EPCA, as amended by EISA 2007, also
requires that not later than 6 years after issuance of any final rule
establishing or amending a standard, DOE must publish either a notice
of the determination that standards for the product do not need to be
amended, or a notice of proposed rulemaking including new proposed
energy conservation standards. (42 U.S.C. 6295(m)(1)) As noted above,
DOE's last final rule for residential boilers was issued on July 15,
2008, so DOE must act by July 15, 2014. This rulemaking will satisfy
both statutory provisions.
Furthermore, EISA 2007 amended EPCA to require that any new or
amended energy conservation standard adopted after July 1, 2010, shall
address standby mode and off mode energy use pursuant to 42 U.S.C.
6295(o). (42 U.S.C. 6295(gg)(3)) DOE will consider standby mode and off
mode energy use as part of this rulemaking for residential boilers.
II. Current Status
In initiating this rulemaking, DOE prepared a Framework Document,
``Energy Conservation Standards Rulemaking Framework Document for
Residential Boilers,'' which describes the procedural and analytical
approaches DOE anticipates using to evaluate energy conservation
standards for residential boilers. DOE published a notice that
announced both the availability of the Framework Document and a public
meeting to discuss the proposed analytical framework for the
rulemaking. That notice also invited written comments from the public.
78 FR 9631 (Feb. 11, 2013). This document is available at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0047.
DOE held a public meeting on March 13, 2013, at which time it
described the various analyses DOE would conduct as part of the
rulemaking, such as the engineering analysis, the life-cycle cost (LCC)
and payback period (PBP) analyses, and the national impact analysis
(NIA). Representatives for manufacturers, trade associations,
environmental and energy efficiency advocates, and other interested
parties attended the meeting.
Comments received since publication of the Framework Document have
helped DOE identify and resolve issues related to the analyses
performed for this NODA. A discussion of these comments and DOE's
responses is available at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0047 (see chapter 2 of the supporting
documentation).
At this time, DOE is not proposing any amended energy conservation
standards for residential boilers. DOE encourages stakeholders to
provide any additional data or information that may improve DOE's
analysis. DOE may revise the analysis presented in today's notice based
on any new or updated information or data it obtains between now and
the publication of a notice of proposed rulemaking (NOPR).
III. Summary of the Analysis Performed by DOE
This section provides a description of the analytical framework
that DOE is using to evaluate potential amended energy conservation
standards for residential boilers. This section sets forth the
methodology, analytical tools, and relationships among the various
analyses that are part of this rulemaking.
The analyses performed in preparation for this NODA are listed
below.
A market and technology assessment to characterize the
relevant products, their markets, and technology options for improving
their energy efficiency, including prototype designs.
A screening analysis to review each technology option and
determine if it is technologically feasible; is practicable to
manufacture, install, and service; would adversely affect product
utility or product availability; or would have adverse impacts on
health and safety.
An engineering analysis to develop relationships that show
the manufacturer's cost of achieving increased efficiency.
A markups analysis to develop distribution channel markups
that relate the manufacturer selling price to the cost to the consumer.
An energy use analysis to determine the annual energy use
of the considered products in a representative set of users.
A LCC and PBP analysis to calculate the anticipated
savings in operating costs at the consumer level throughout the life of
the covered products compared with any increase in the installed cost
for the products likely to result directly from standards.
A shipments analysis to forecast product shipments, which
are then used to calculate the national impacts of standards on energy,
net present value (NPV), and future manufacturer cash flows.
A national impact analysis (NIA) to assess the aggregate
impacts at the national level of potential amended energy conservation
standards for the considered products, as measured by the NPV of total
consumer economic impacts and the national energy savings (NES).
A preliminary manufacturer impact analysis (MIA) to assess
the potential impacts of amended energy conservation standards on
manufacturers' capital conversion expenditures, marketing costs,
shipments, and research and development costs.
The tools used in preparing several of the above analyses (life-
cycle cost and national impacts) are available at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0047. Each
individual spreadsheet includes an introduction describing the various
inputs and outputs to the analysis, as well as operation instructions.
Details regarding the methods and data used in the analyses may be
found at the same Web site.
The sections below present an overview of the analyses DOE has
conducted for residential boilers. Using the methods described in this
NODA, DOE calculated results pertaining to
[[Page 8124]]
potential amended energy efficiency standard levels for residential
boilers. The results may be found at the same Web site.
A. Market and Technology Assessment
When DOE begins an energy conservation standards rulemaking, it
develops information that provides an overall picture of the market for
the products considered, including the nature of the products, market
characteristics, and industry structure. This activity consists of both
quantitative and qualitative efforts based primarily on publicly-
available information. The market assessment examined manufacturers,
trade associations, and the quantities and types of products offered
for sale.
DOE reviewed relevant literature and interviewed manufacturers to
develop an overall picture of the residential boiler industry in the
United States. Industry publications and trade journals, government
agencies, and trade organizations provided the bulk of the information,
including: (1) Manufacturers and their approximate market shares; (2)
shipments by product type (e.g., gas-fired hot water, oil-fired hot
water); (3) product information; and (4) industry trends.
DOE developed a list of technologically feasible design options for
the considered products through consultation with manufacturers of
components and systems, and from trade publications and technical
papers. Since many options for improving product efficiency are
available in existing units, product literature and direct examination
provided additional information.
B. Screening Analysis
The purpose of the screening analysis is to evaluate the
technologies identified in the technology assessment to determine which
technologies to consider further and which technologies to screen out.
DOE consulted with industry, technical experts, and other interested
parties in developing a list of energy-saving technologies for the
technology assessment. DOE then applied the screening criteria to
determine which technologies were unsuitable for further consideration
in this rulemaking.
The screening analysis examines whether various technologies: (1)
Are technologically feasible; (2) are practicable to manufacture,
install, and service; (3) have an adverse impact on product utility or
availability; and (4) have adverse impacts on health and safety. If an
answer to the first two criteria is ``no,'' or an answer to the second
two criteria is ``yes,'' DOE will not consider that technology further.
In consultation with interested parties, DOE reviewed the list of
residential boiler technologies according to these criteria. In the
engineering analysis, DOE further considers the efficiency-enhancement
technologies that it did not eliminate in the screening analysis.
C. Engineering Analysis
The engineering analysis establishes the relationship between
manufacturing production cost and efficiency levels for each
residential boiler product class. This relationship serves as the basis
for cost-benefit calculations in terms of individual consumers,
manufacturers, and the Nation. To determine the cost to consumers of
residential boilers at various efficiency levels, DOE estimated
manufacturing costs, markups in the distribution chain, installation
costs, and maintenance costs.
DOE typically structures its engineering analysis around one of
three methodologies: (1) The design-option approach, which calculates
the incremental costs of adding specific design options to a baseline
model; (2) the efficiency-level approach, which calculates the relative
costs of achieving increases in energy efficiency levels without regard
to the particular design options used to achieve such increases; and/or
(3) the reverse-engineering or cost-assessment approach, which involves
a ``bottom-up'' manufacturing cost assessment based on a detailed bill
of materials derived from tear-downs of the equipment being analyzed.
For this analysis, DOE conducted the engineering analysis for
residential boilers using a combination of the efficiency level and
cost-assessment approaches for analysis of various energy efficiency
levels. More specifically, DOE identified the efficiency levels for
analysis and then used the cost-assessment approach to determine the
manufacturing costs at those levels. This approach involved physically
disassembling commercially-available products, consulting with outside
experts, reviewing publicly-available cost and performance information,
and modeling equipment cost.
D. Markups Analysis
DOE uses manufacturer-to-customer markups (e.g., manufacturer
markups, retailer markups, distributors markups, contractor markups
(where appropriate), and sales taxes) to convert the manufacturer
selling price estimates from the engineering analysis to customer
prices, which are then used in the LCC and PBP analysis and in the
manufacturer impact analysis.
Before developing markups, DOE defines key market participants and
identifies distribution channels. DOE used three types of distribution
channels to describe how most residential boilers pass from the
manufacturer to the consumer: (1) Replacement market; (2) new
construction, and (3) national accounts.\3\
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\3\ The national accounts channel is an exception to the usual
distribution channel that is only applicable to those residential
boilers installed in the small to mid-size commercial buildings
where the on-site contractor staff purchase equipment directly from
the wholesalers at lower prices due to the large volume of equipment
purchased, and perform the installation themselves.
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After defining the participants and channels, DOE also determined
the existence and magnitude of differences between markups for baseline
products (baseline markups) and higher-efficiency products (incremental
markups), in order to transform the manufacturer selling price into a
consumer product price. The development of the markups relied on data
from both government and industry sources. DOE uses the baseline
markups, which cover all of a distributor's or contractor's costs, to
determine the sales price of baseline models. Incremental markups are
coefficients that DOE applies to the incremental cost of higher-
efficiency models. Because companies mark up the price at each point in
the distribution channel, both baseline and incremental markups are
dependent on the particular distribution channel.
E. Energy Use Analysis
The energy use analysis determines the annual energy consumption of
residential boilers used in representative U.S. single-family homes,
multi-family residences, and commercial buildings, and assesses the
energy savings potential of increased boiler efficiency. DOE estimated
the annual energy consumption of residential boilers at specified
energy efficiency levels across a range of climate zones, building
characteristics, and heating applications. The annual energy
consumption includes the natural gas, liquid petroleum gas (LPG), oil,
and/or electricity use by the boiler for space and water heating. The
annual energy consumption of residential boilers is used in subsequent
analyses, including the LCC and PBP analysis and the NIA.
For the residential sector, DOE consulted the Energy Information
Administration's (EIA) 2009 Residential Energy Consumption Survey (RECS
[[Page 8125]]
2009) to establish a sample of households using residential boilers for
each boiler product class.\4\ The RECS data provide information on the
vintage of the home, as well as heating energy use in each household.
DOE used the household samples not only to determine boiler annual
energy consumption, but also as the basis for conducting the LCC and
PBP analysis. DOE projected household weights and household
characteristics in 2020, the expected compliance date of any amended
energy conservation standards for residential boilers.
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\4\ U.S. Department of Energy: Energy Information
Administration, Residential Energy Consumption Survey: 2009 RECS
Survey Data (2013) (Available at: <http://www.eia.gov/consumption/residential/data/2009/>) (Last accessed March, 2013).
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DOE accounted for applications of residential boilers in multi-
family housing and commercial buildings because the intent of the
analysis of consumer impacts is to capture the full range of usage
conditions for these products. DOE considered that the definition of
``residential boiler'' is limited only by its capacity and not by the
application type. DOE determined that these applications represent
about 14 percent of the residential gas-fired boiler market and 11
percent of the residential oil-fired boiler market.
For the commercial building sample, DOE used the EIA's 2003
Commercial Building Energy Consumption Survey \5\ (CBECS 2003) to
establish a sample of commercial buildings using residential boilers
for each boiler product class. Criteria were developed to help size
these boilers using several variables, including building square
footage and estimated supply water temperature. For boilers used in
multi-family housing, DOE used the RECS 2009 sample discussed above,
accounting for situations where more than one residential boiler is
used to heat a building.
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\5\ U.S. Department of Energy: Energy Information
Administration, Commercial Buildings Energy Consumption Survey
(2003) (Available at: <http://www.eia.gov/consumption/commercial/data/2003/index.cfm?view=microdata>) (Last accessed November, 2013).
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To estimate the annual energy consumption of boilers meeting higher
efficiency levels, DOE first calculated the heating load based on the
RECS and CBECS estimates of the annual energy consumption of the boiler
for each household. DOE estimated the house heating load by reference
to the existing boiler's characteristics, specifically its capacity and
efficiency (AFUE), as well as by the heat generated from the electrical
components. The AFUE of the existing boilers was determined using the
boiler vintage (the year of installation of the equipment) from RECS
and historical data on the market share of boilers by AFUE. DOE then
used the house heating load to determine the burner operating hours,
which are needed to calculate the fossil fuel consumption and
electricity consumption based on the DOE residential furnace and boiler
test procedure. To calculate pump and other auxiliary components'
electricity consumption, DOE utilized data from manufacturer product
literature.
Additionally, DOE adjusted the energy use to normalize for weather
by using long-term heating degree-day data for each geographical
region.\6\ DOE also accounted for change in building shell
characteristics between 2009 and 2020 by applying the building shell
efficiency indexes in the National Energy Modeling System (NEMS) based
on EIA's Annual Energy Outlook 2013 (AEO 2013).\7\
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\6\ National Oceanic and Atmospheric Administration, NNDC
Climate Data Online (Available at: http://www7.ncdc.noaa.gov/CDO/CDODivisionalSelect.jsp) (Last accessed March 15, 2013).
\7\ U.S. Department of Energy-Energy Information Administration,
Annual Energy Outlook 2013 with Projections to 2040 (Available at:
<http://www.eia.gov/forecasts/aeo/>).
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DOE is aware that some residential boilers have the ability to
provide both space heating and domestic water heating and that these
products are widely available and may vary greatly in design. For these
applications, DOE accounted for the boiler energy used for domestic
water heating, which is part of the total annual boiler energy use. To
accomplish this, DOE used the RECS 2009 and/or CBECS data to identify
those boiler households or buildings that use the same fuel type for
space and water heating and then assumed that a fraction of these
identified households/buildings used the boiler for both applications.
To calculate the annual water-heating energy use for each boiler
efficiency level, DOE first calculated the water-heating load by
multiplying the annual fuel consumption for water heating (derived from
RECS or CBECS) by the AFUE of the existing boiler, adjusted for the
difference between AFUE and recovery efficiency for water heating. DOE
then calculated the boiler energy use for each efficiency level by
multiplying the water-heating load by the AFUE of the selected
efficiency level, adjusted for the difference between AFUE and recovery
efficiency for water heating.
The Department calculated boiler electricity consumption for the
circulating pump, the draft inducer,\8\ and the ignition system. If a
household required a condensate pump, which is sometimes installed with
higher-efficiency equipment, DOE assumed that the pump consumes 60
watts and operated at the same time as the burner. For single-stage
boilers, the Department calculated the electricity consumption as the
sum of the electrical energy used during boiler operation for both
space heating, water heating, and standby energy consumption. For two-
stage and modulating equipment, this formula includes parameters for
the operation at full, modulating, and reduced load.
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\8\ In the case of modulating condensing boilers, to accommodate
lower firing rates, the inducer will provide lower combustion
airflow to regulate the excess air in the combustion process. DOE
assumed that modulating condensing boilers are equipped with inducer
fans with PSC motors and two-stage controls. The inducers are
assumed to run at a 70-percent airflow rate when the modulating unit
operates at low-fire.
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The Department calculated boiler standby mode and off mode
electricity consumption for times when the boiler is not in use.
A rebound effect occurs when a more-efficient piece of equipment is
used more intensively, such that the expected energy savings from the
efficiency improvement may not be fully realized. DOE conducted a
review of information that included a 2009 study examining empirical
estimates of the rebound effect for various energy-using products.\9\
Based on this review, DOE has tentatively concluded that the inclusion
of a rebound effect of 20 percent for residential boilers is warranted
for this analysis. DOE incorporates this effect in the NIA.
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\9\ S. Sorrell, J. D., and M. Sommerville, ``Empirical estimates
of the direct rebound effect: A review,'' Energy Policy (2009) 37:
pp. 1356-71.
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F. Life-Cycle Cost and Payback Period Analysis
In determining whether an energy efficiency standard is
economically justified, DOE considers the economic impact of potential
standards on consumers. The effect of new or amended standards on
individual consumers usually includes a reduction in operating cost and
an increase in purchase cost. DOE used the following two metrics to
measure consumer impacts:
LCC (life-cycle cost) is the total consumer cost of an
appliance or product, generally over the life of the appliance or
product, including purchase and operating costs. The latter consist of
maintenance, repair, and energy costs. Future operating costs are
discounted to the time of purchase and
[[Page 8126]]
summed over the lifetime of the appliance or product.
PBP (payback period) measures the amount of time it takes
consumers to recover the assumed higher purchase price of a more
energy-efficient product through reduced operating costs.
DOE analyzed the net effect of potential amended boiler standards
on consumers by calculating the LCC and PBP using the engineering
performance data, the energy-use data, and the markups. Inputs to the
LCC calculation include the installed cost to the consumer (purchase
price, including sales tax where appropriate, plus installation cost),
operating expenses (energy expenses, repair costs, and maintenance
costs), the lifetime of the product, and a discount rate. Inputs to the
payback period calculation include the installed cost to the consumer
and first-year operating costs.
DOE performed the LCC and PBP analyses using a spreadsheet model
combined with Crystal Ball (a commercially-available software program
used to conduct stochastic analysis using Monte Carlo simulation and
probability distributions) to account for uncertainty and variability
among the input variables. Each Monte Carlo simulation consists of
10,000 LCC and PBP calculations using input values that are either
sampled from probability distributions and household samples or
characterized with single point values. The analytical results include
a distribution of 10,000 data points showing the range of LCC savings
and PBPs for a given efficiency level relative to the base case
efficiency forecast. In performing an iteration of the Monte Carlo
simulation for a given consumer, product efficiency is chosen based on
its probability. If the chosen product efficiency is greater than or
equal to the efficiency of the standard level under consideration, the
LCC and PBP calculation reveals that a consumer is not impacted by the
standard level. By accounting for consumers who already purchase more-
efficient products, DOE avoids overstating the potential benefits from
increasing product efficiency.
1. Inputs to Installed Cost
The total installed cost to the consumer is the sum of the product
price, including sales tax where appropriate, and installation cost
(labor and materials cost).
DOE estimated the costs associated with installing a boiler in a
new housing unit or as a replacement for an existing boiler.
Installation costs account for labor and material costs and any
additional costs, such as venting and piping modifications and
condensate disposal that might be required when installing equipment at
various efficiency levels.
For replacement installations, DOE included a number of additional
costs (``adders'') for a fraction of the sample households. For non-
condensing boilers, these additional costs may account for updating of
flue vent connectors, vent resizing, chimney relining, and, for a
fraction of installations, the costs for a stainless steel vent. For
condensing boilers, these additional costs included adding a new flue
vent (polyvinylchloride (PVC)), combustion air venting for direct vent
installations (PVC), concealing vent pipes for indoor installations,
addressing an orphaned water heater (by updating flue vent connectors,
vent resizing, or chimney relining), and condensate removal.
DOE also included installation adders for new construction
installations. For non-condensing boilers, the only adder is a new flue
vent (metal, including a fraction with stainless steel venting). For
condensing gas boilers, the adders include a new flue vent (PVC),
combustion air venting for direct vent installations (PVC), accounting
for a commonly vented water heater, and condensate removal.
With regards to all near-condensing boiler installations, DOE has
accounted for the installation costs of the ``near-condensing''
products by considering the additional cost of using stainless steel
venting.
2. Inputs to Operating Cost
The calculation of energy costs at each considered efficiency level
makes use of the annual energy use derived in the energy use analysis,
along with appropriate energy prices. DOE assigned an appropriate
energy price to each household or commercial building in the sample,
depending on its location. For future prices, DOE used the projected
annual changes in average residential and commercial natural gas, LPG,
electricity, and fuel oil prices in AEO 2013.\10\
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\10\ DOE plans to use the Annual Energy Outlook 2014 when it
becomes available.
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DOE estimated maintenance and repair costs for residential boilers
at each considered efficiency level using a variety of sources,
including 2013 RS Means,\11\ manufacturer literature, and information
from expert consultants. DOE estimated the frequency of annual
maintenance using data from a proprietary consumer survey.\12\ DOE also
accounted for the difference in the maintenance practices for the oil
boiler market and the gas boiler market.
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\11\ RS Means Company Inc., RS Means Facilities Maintenance &
Repair Cost Data (2013).
\12\ Decision Analysts, 2008 American Home Comfort Study: Online
Database Tool (2009) (Available at: <http://www.decisionanalyst.com/Syndicated/HomeComfort.dai>).
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Product lifetime is the age at which an appliance is retired from
service. DOE conducted an analysis of boiler lifetimes using a
combination of shipments data, the boiler stock, and RECS data on the
age of the boilers in the homes. The data allowed DOE to develop a
survival function, which provides an average and a median appliance
lifetime. In addition, DOE reviewed a number of sources to validate the
derived boiler lifetime, including research studies (from the U.S. and
Europe) and field data reports.
DOE used discount rates to determine the present value of lifetime
operating expenses. The discount rate used in the LCC analysis
represents the rate from an individual consumer's perspective. Much of
the data used for determining consumer discount rates comes from the
Federal Reserve Board's triennial Survey of Consumer Finances.\13\
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\13\ Available at www.federalreserve.gov/econresdata/scf/scfindex.htm.
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3. Base-Case Distributions by Efficiency Levels
To estimate the share of consumers affected by a potential standard
at a particular efficiency level, DOE's LCC and PBP analysis considers
the projected distribution (i.e., market shares) of product
efficiencies that consumers will purchase in the first compliance year
under the base case (the case without amended energy conservation
standards).
DOE accounted for the increasing market share of condensing
residential gas boilers in its base-case projection. DOE's projection
used available data on recent market trends in boiler efficiency and
takes into account the potential impacts of the ENERGY STAR program and
other policies that may affect the demand for more-efficient boilers.
DOE estimated the market shares of the efficiency levels in each
product class in 2020 using data on the share of models in each product
class that are of different designs, based on the AHRI certification
directory.\14\
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\14\ Air Conditioning Heating and Refrigeration Institute,
Consumer's Directory of Certified Efficiency Ratings for Heating and
Water Heating Equipment (AHRI Directory September 2013) (Available
at: http://www.ahridirectory.org/ahridirectory/pages/home.aspx)
(Last accessed September, 2013).
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G. Shipments Analysis
DOE used forecasts of product shipments to calculate the national
impacts of potential amended energy
[[Page 8127]]
conservation standards on energy use, NPV, and future manufacturer cash
flows. A discussion of the shipments forecast methodology and the
sources used is available at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0047 (see chapter 9 of the supporting
documentation). DOE estimated boiler shipments by projecting shipments
in three market segments: (1) Replacements; (2) new housing; and (3)
new owners in buildings that did not previously have a boiler. DOE also
considered whether standards that require more-efficient boilers would
have an impact on boiler shipments.
To project boiler replacement shipments, DOE developed retirement
functions for boilers from the lifetime estimates and applied them to
the existing products in the housing stock. The existing stock of
products is tracked by vintage and developed from historical shipments
data.15 16
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\15\ U.S. Appliance Industry Statistical Review, Appliance
Magazine, various years.
\16\ Air-Conditioning, Heating, and Refrigeration Institute
(AHRI), Confidential Shipment data for 2003-2012.
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To project shipments to the new housing market, DOE utilized a
forecast of new housing construction and historic saturation rates of
boiler product types in new housing. DOE used AEO 2013 for forecasts of
new housing. Boiler saturation rates in new housing are provided by the
U.S. Census Bureau's Characteristics of New Housing.\17\
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\17\ Available at: http://www.census.gov/const/www/charindex.html.
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To estimate future shipments to new owners, DOE determined that a
fraction of residential boiler shipments are to new owners with no
previous boiler based on a proprietary consumer survey.\18\ DOE also
accounted for potential switching between different boiler product
classes (steam to hot water and oil to gas).
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\18\ Decision Analysts, 2008 American Home Comfort Study: Online
Database Tool (2009) (Available at: <http://www.decisionanalyst.com/Syndicated/HomeComfort.dai>).
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To estimate the impact of the projected price increase for the
considered efficiency levels, DOE used a relative price elasticity
approach. This approach gives some weight to the operating cost savings
from higher-efficiency products. The impact of higher boiler prices (at
higher efficiency levels) is expressed as a percentage drop in market
share for each year during the analysis period.
Additional details regarding the shipments analysis can be found in
worksheet ``NODA Results'' of the NIA Spreadsheet.
H. National Impact Analysis
The NIA assesses the national energy savings (NES) and the net
present value (NPV) from a national perspective of total consumer costs
and savings expected to result from new or amended energy conservation
standards at specific efficiency levels. DOE determined the NPV and NES
for the efficiency levels considered for the boiler product classes
analyzed. To make the analysis more accessible and transparent to all
interested parties, DOE prepared a computer spreadsheet that uses
typical values (as opposed to probability distributions) as inputs.
Analyzing impacts of potential energy conservation standards for
residential boilers requires comparing projections of U.S. energy
consumption with amended energy conservation standards against
projections of energy consumption without amended standards. The
forecasts include projections of annual appliance shipments, the annual
energy consumption of new appliances, and the purchase price of new
appliances.
A key component of DOE's NIA is the energy efficiencies forecasted
over time for the base case (without new standards) and each of the
standards cases. DOE developed a distribution of efficiencies in the
base case for 2020 (the year of anticipated compliance with an amended
standard) for each residential boiler product class. Details can be
found in worksheet ``NODA Results'' of the NIA spreadsheet. In each
standards case, a ``roll-up'' scenario approach was applied to
establish the efficiency distribution for 2020. Under the ``roll-up''
scenario, DOE assumed that product efficiencies in the base case that
do not meet the standard level under consideration would ``roll-up'' to
meet the new standard level, and product efficiencies above the
standard level under consideration would not be affected.
Regarding the efficiency trend in the years after compliance, for
the base case, DOE estimated that the overall market share of
condensing gas-fired and oil-fired hot water boilers would grow. DOE
assumed a similar trend for the standards cases. Details on these
efficiency trends are in worksheet ``NODA Results'' of the NIA
spreadsheet.
The inputs for determining the national energy savings for each
product analyzed are: (1) Annual energy consumption per unit; (2)
shipments; (3) product stock; (4) national energy consumption; and (5)
site-to-source conversion factors. DOE calculated the annual national
energy consumption by multiplying the number of units (stock) of each
product (by vintage or age) by the unit energy consumption (also by
vintage). DOE calculated annual NES based on the difference in national
energy consumption under the base case (without new or amended
efficiency standards) and under each higher efficiency standard. DOE
estimated energy consumption and savings based on site energy and
converted the electricity consumption and savings to source (primary)
energy using annual conversion factors derived from the most recent
version of NEMS. Cumulative energy savings are the sum of annual NES
over the timeframe of the analysis.
DOE has historically presented NES in terms of primary energy
savings. In response to the recommendations of a committee on ``Point-
of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency
Standards'' appointed by the National Academy of Science, DOE announced
its intention to use full-fuel-cycle (FFC) measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (August 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in the Federal Register in which DOE
explained its determination that NEMS is the most appropriate tool for
its FFC analysis and its intention to use NEMS for that purpose. 77 FR
49701 (August 17, 2012). For this analysis, DOE calculated FFC energy
savings using a NEMS-based methodology.
The inputs for determining NPV are: (1) Total annual installed
cost; (2) total annual savings in operating costs; (3) a discount
factor to calculate the present value of costs and savings; (4) present
value of costs; and (5) present value of savings. DOE determined the
net savings for each year as the difference between the base case and
each standards case in terms of the total savings in operating costs
and total increases in installed costs. DOE calculated NPV as the
difference between the present value of operating cost savings and the
present value of total installed costs over the lifetime of products
shipped in the forecast period. DOE estimates 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. (OMB Circular A-4
[[Page 8128]]
(Sept. 17, 2003), section E, ``Identifying and Measuring Benefits and
Costs'')
DOE used EIA's Annual Energy Outlook (AEO 2013) as the source of
projections for future energy prices.
I. Preliminary Manufacturer Impact Analysis
In the NOPR phase, DOE will perform a manufacturer impact analysis
(MIA) to estimate the financial impact of potential amended energy
conservation standards on residential boiler manufacturers, as well as
to calculate the impact of such standards on employment and
manufacturing capacity.
DOE recognizes that while any one regulation may not impose a
significant burden on manufacturers, the combined effects of several
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. As a preliminary step to conducting the
MIA, as part of this NODA analysis, DOE assessed the cumulative
regulatory burden by identifying and characterizing other significant
product-specific regulations that could affect residential boiler
manufacturers. DOE identified the following regulations relevant to
residential boiler manufactures including: DOE energy efficiency
standards, ENERGY STAR, and local (State and regional) NOX
requirements.
IV. Public Participation
DOE is interested in receiving comments on all aspects of the data
and analysis presented in the NODA and supporting documentation that
can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-
BT-STD-0047.
A. Submission of Comments
DOE will accept comments, data, and information regarding this
notice no later than the date provided in the DATES section at the
beginning of this notice. Interested parties may submit comments, data,
and other information using any of the methods described in the
ADDRESSES section at the beginning of this notice.
Submitting comments via www.regulations.gov. The
www.regulations.gov Web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (CBI)). Comments submitted through
www.regulations.gov cannot be claimed as CBI. Comments received through
the Web site will waive any CBI claims for the information submitted.
For information on submitting CBI, see the Confidential Business
Information section below.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or mail.
Comments and documents submitted via email, hand delivery, or mail also
will be posted to www.regulations.gov. If you do not want your personal
contact information to be publicly viewable, do not include it in your
comment or any accompanying documents. Instead, provide your contact
information in a cover letter. Include your first and last names, email
address, telephone number, and optional mailing address. The cover
letter will not be publicly viewable as long as it does not include any
comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via mail or hand
delivery/courier, please provide all items on a CD, if feasible, in
which case it is not necessary to submit printed copies. No facsimiles
(faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit two
well-marked copies: One copy of the document marked ``confidential''
including all the information believed to be confidential, and one copy
of the document marked ``non-confidential'' with the information
believed to be confidential deleted. DOE will make its own
determination about the confidential status of the information and
treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by or available from other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person which would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
[[Page 8129]]
Issued in Washington, DC, on January 31, 2014.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and
Renewable Energy.
[FR Doc. 2014-02823 Filed 2-10-14; 8:45 am]
BILLING CODE 6450-01-P