[Federal Register Volume 79, Number 28 (Tuesday, February 11, 2014)]
[Proposed Rules]
[Pages 8122-8129]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-02823]


-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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: ResBoilers2012STD0047@ee.doe.gov. 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: 
Brenda.Edwards@ee.doe.gov.

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 residential_furnaces_and_boilers@ee.doe.gov.
    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: Eric.Stas@hq.doe.gov.

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)).
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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/>).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \9\ S. Sorrell, J. D., and M. Sommerville, ``Empirical estimates 
of the direct rebound effect: A review,'' Energy Policy (2009) 37: 
pp. 1356-71.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \10\ DOE plans to use the Annual Energy Outlook 2014 when it 
becomes available.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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>).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \13\ Available at www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \17\ Available at: http://www.census.gov/const/www/charindex.html.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \18\ Decision Analysts, 2008 American Home Comfort Study: Online 
Database Tool (2009) (Available at: <http://www.decisionanalyst.com/Syndicated/HomeComfort.dai>).
---------------------------------------------------------------------------

    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