[Federal Register Volume 79, Number 42 (Tuesday, March 4, 2014)]
[Proposed Rules]
[Pages 12302-12351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-04407]
[[Page 12301]]
Vol. 79
Tuesday,
No. 42
March 4, 2014
Part III
Department of Energy
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10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for
Commercial Clothes Washers; Proposed Rule
Federal Register / Vol. 79, No. 42 / Tuesday, March 4, 2014 /
Proposed Rules
[[Page 12302]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket No. EERE-2012-STD-0020]
RIN 1904-AC77
Energy Conservation Program: Energy Conservation Standards for
Commercial Clothes Washers
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking (NOPR) and public meeting.
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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as
amended, prescribes energy conservation standards for various consumer
products and certain commercial and industrial equipment, including
commercial clothes washers. EPCA also requires the U.S. Department of
Energy (DOE) to determine whether amended standards would be
technologically feasible and economically justified, and would save a
significant amount of energy. In this notice, DOE proposes to amend the
energy conservation standards for commercial clothes washers. The
notice also announces a public meeting to receive comment on these
proposed standards and associated analyses and results.
DATES: DOE will hold a public meeting on Monday, April 21, 2014 from 9
a.m. to 4 p.m., in Washington, DC. The meeting will also be broadcast
as a webinar. See section VII Public Participation for webinar
registration information, participant instructions, and information
about the capabilities available to webinar participants.
DOE will accept comments, data, and information regarding this
notice of proposed rulemaking (NOPR) before and after the public
meeting, but no later than May 5, 2014. See section VII Public
Participation for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 8E-086, 1000 Independence Avenue SW.,
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at
(202) 586-2945. Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures. Any
foreign national wishing to participate in the meeting should advise
DOE as soon as possible by contacting Ms. Edwards to initiate the
necessary procedures. Please also note that those wishing to bring
laptops into the Forrestal Building will be required to obtain a
property pass. Visitors should avoid bringing laptops, or allow an
extra 45 minutes. Persons can attend the public meeting via webinar.
For more information, refer to the Public Participation section near
the end of this notice.
Any comments submitted must identify the NOPR for Energy
Conservation Standards for commercial clothes washers, and provide
docket number EERE-2012-STD-0020 and/or regulatory information number
(RIN) number 1904-AC77. Comments may be submitted using any of the
following methods:
1. Federal eRulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: [email protected]. Include the
docket number and/or RIN in the subject line of the message.
3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building
Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW.,
Washington, DC 20585-0121. If possible, please submit all items on a
CD. It is not necessary to include printed copies.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies 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.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in this
proposed rule may be submitted to Office of Energy Efficiency and
Renewable Energy through the methods listed above and by email to
[email protected].
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section VII of this document
(Public Participation).
Docket: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at regulations.gov. The
docket for this rulemaking can be accessed by searching for the docket
at http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0020
and/or Docket No. EERE-2012-BT-STD-0020 at the regulations.gov Web
site. All documents in the docket are listed in the regulations.gov
index. However, some documents listed in the index, such as those
containing information that is exempt from public disclosure, may not
be publicly available. The regulations.gov Web page contains simple
instructions on how to access all documents, including public comments,
in the docket.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
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 Office, EE-5B,
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone:
(202)-586-2192. Email: [email protected].
Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General
Counsel, Mailstop GC-71, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 586-7796. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Commercial Clothes
Washers
III. General Discussion
A. General Rulemaking Issues
B. Product Classes and Scope of Coverage
1. Product Classes
C. Test Procedures
1. Appendix J2
2. Energy Metric
3. Water Metric
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price
c. Energy Savings
d. Lessening of Utility of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Market Assessment
[[Page 12303]]
2. Technology Assessment
B. Screening Analysis
C. Engineering Analysis
1. General Approach
2. Appendix J2 Efficiency Level Translations
3. Baseline Efficiency Levels
4. Front-Loading Higher Efficiency Levels
5. Top-Loading Higher Efficiency Levels
6. Impacts on Cleaning Performance
D. Markups Analysis
E. Energy and Water Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Costs
2. Installation Costs
3. Unit Energy Consumption
4. Energy and Water Prices
5. Repair and Maintenance Costs
6. Lifetime
7. Discount Rate
8. Base Case Efficiency Distribution
9. Compliance Date
10. Payback Period Inputs
11. Rebuttable-Presumption Payback Period
G. Shipments Analysis
1. Shipments by Market Segment
H. National Impact Analysis
1. Efficiency Trends
2. National Energy and Water Savings
3. Net Present Value of Customer Benefit
a. Total Annual Installed Cost
b. Total Annual Operating Cost Savings
I. Customer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
a. Government Regulatory Impact Model Key Inputs
b. Government Regulatory Impact Model Scenarios
3. Discussion of Comments
4. Manufacturer Interviews
a. Impacts to Cleaning Performance
b. Consumer Behavior
c. Disproportionate Impacts
d. Market Model Challenges
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
2. Valuation of Other Emissions Reductions
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Customers
a. Life-Cycle Cost and Payback Period
b. Customer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Impacts on Direct Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Customer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Summary of National Economic Impacts
8. Other Factors
C. Proposed Standards
1. Benefits and Burdens of Trial Standard Levels Considered for
Front-Loading and Top-Loading Commercial Clothes Washers
2. Summary of Benefits and Costs (Annualized) of the Proposed
Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Prepared General Statements For
Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
Title III of the Energy Policy and Conservation Act of 1975 (42
U.S.C. 6291, et seq; ``EPCA''), Public Law 94-163, sets forth a variety
of provisions designed to improve energy efficiency. (All references to
EPCA refer to the statute as amended through the American Energy
Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210
(Dec. 18, 2012)). Part C of title III, which for editorial reasons was
re-designated as Part A-1 upon incorporation into the U.S. Code (42
U.S.C. 6311-6317, as codified), establishes the ``Energy Conservation
Program for Certain Industrial Equipment.'' These include commercial
clothes washers (CCW), the subject of today's notice. (42 U.S.C.
6311(1)(H)).
Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that is technologically feasible and economically justified.
(42 U.S.C. 6295(o)(2)(A) and 6316(a)). Furthermore, the new or amended
standard must result in a significant conservation of energy. (42
U.S.C. 6295(o)(3)(B) and 6316(a)). In accordance with these and other
statutory provisions discussed in this notice, DOE proposes amended
energy conservation standards for commercial clothes washers. The
proposed standards, which are expressed for each product class in terms
of a minimum modified energy factor (MEFJ2) \1\ and a
maximum integrated water factor (IWF), are shown in Table I.1. These
proposed standards, if adopted, would apply to all products listed in
Table I.1 and manufactured in, or imported into, the United States on
or after the date three years after the publication of the final rule
for this rulemaking.
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\1\ DOE proposes to use the ``MEFJ2'' metric to
distinguish these new standards from the MEF metric on which the
current energy conservation standards are based. MEF is calculated
according to the test procedures at 10 CFR part 430, subpart B,
appendix J1; whereas MEFJ2 is defined in 10 CFR
431.154(b)(1) and is equivalent to the MEF calculation in 10 CFR
part 430, subpart B, appendix J2. See Section III.C for a comparison
of the current standards, measured using appendix J1, with these
proposed standards measured using the same appendix. The proposed
standards comply with 42 U.S.C. 6295(o)(1).
Table I.1--Proposed Energy Conservation Standards for Commercial Clothes
Washers
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Minimum Maximum
Product class MEFJ2* IWF[dagger]
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Top-Loading...................................... 1.35 8.8
Front-Loading.................................... 2.00 4.1
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* MEFJ2 (appendix J2 modified energy factor) is calculated as the
clothes container capacity in cubic feet divided by the sum, expressed
in kilowatt-hours (kWh), of: (1) the total weighted per-cycle hot
water energy consumption; (2) the total weighted per-cycle machine
electrical energy consumption; and (3) the per-cycle energy
consumption for removing moisture from a test load.
[dagger] IWF (integrated water factor) is calculated as the sum,
expressed in gallons per cycle, of the total weighted per-cycle water
consumption for all wash cycles divided by the clothes container
capacity in cubic feet.
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of commercial clothes washers, as
measured by the average life-cycle cost (LCC) savings and the median
payback period. The average LCC savings are positive for all product
classes for which consumers are impacted by the proposed standards. The
PBPs reflect the very small incremental cost necessary to achieve the
proposed standards.
[[Page 12304]]
Table I.2--Impacts of Proposed Standards on Consumers of Commercial
Clothes Washers: Multi-Family Application
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Median
Average LCC payback
Product class savings period
(2012$) (years)
------------------------------------------------------------------------
Front-Loading................................. $285 0.02
Top-Loading................................... $259 0.00
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Table I.3--Impacts of Proposed Standards on Consumers of Commercial
Clothes Washers: Laundromat Application
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Median
Average LCC payback
Product class savings period
(2012$) (years)
------------------------------------------------------------------------
Front-Loading................................. $235 0.01
Top-Loading................................... $145 0.00
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B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2014 to 2047). Using a real discount rate of 8.6
percent, DOE estimates that the industry net present value (INPV) for
manufacturers of commercial clothes washers is $124.2 million in 2012$.
Under the proposed standards, DOE expects that manufacturers may lose
up to 4.9 percent of their INPV, which is approximately $6.0 million in
2012$. Additionally, based on DOE's interviews with the manufacturers
of commercial clothes washers, DOE does not expect any plant closings
or significant loss of employment as a result of today's standards.
C. National Benefits \2\
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\2\ All monetary values in this section are expressed in 2012
dollars and are discounted to 2013.
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DOE's analyses indicate that the proposed standards would save a
significant amount of energy. The lifetime savings for front-loading
and top-loading commercial clothes washers purchased in the 30-year
period that begins in the year of compliance with amended standards
(2018-2047) amount to 0.11 quads. This is equivalent to 0.6% percent of
total U.S. commercial energy use in 2012.
The cumulative net present value (NPV) of total consumer costs and
savings of the proposed standards for front-loading and top-loading
commercial clothes washers ranges from $405 million (at a 7-percent
discount rate) to $938 million (at a 3-percent discount rate). This NPV
expresses the estimated total value of future operating-cost savings
minus the estimated increased product costs for products purchased in
2018-2047.
In addition, the proposed standards would have significant
environmental benefits. The energy savings would result in cumulative
emission reductions of 5.9 million metric tons (Mt)\3\ of carbon
dioxide (CO2), 50.1 thousand tons of methane, 4.4 thousand
tons of sulfur dioxide (SO2), 9.1 thousand tons of nitrogen
oxides (NOX) and 0.01 tons of mercury (Hg).\4\
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\3\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are presented in short tons.
\4\ DOE calculated emissions reductions relative to the Annual
Energy Outlook (AEO) 2013 Reference case, which generally represents
current legislation and environmental regulations for which
implementing regulations were available as of December 31, 2012.
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The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC) developed by an interagency process.
The derivation of the SCC values is discussed in section IV.M. Using
discount rates appropriate for each set of SCC values, DOE estimates
the present monetary value of the CO2 emissions reduction is
between $0.04 billion and $0.56 billion. DOE also estimates the present
monetary value of the NOX emissions reduction, is $4.9
million at a 7-percent discount rate and $11.4 million at a 3-percent
discount rate.\5\
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\5\ DOE is currently investigating valuation of avoided Hg and
SO2 emissions.
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Table I.4 summarizes the national economic costs and benefits
expected to result from the proposed standards for commercial clothes
washers.
Table I.4--Summary of National Economic Benefits and Costs of Proposed
Energy Conservation Standards for Front-Loading and Top-Loading CCW *
------------------------------------------------------------------------
Present value Discount rate
Category billion 2012$ (percent)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Operating Cost Savings............ 0.405 7
0.938 3
CO2 Reduction Monetized Value 0.04 5
($11.8/t case) **................
CO2 Reduction Monetized Value 0.18 3
($39.7/t case) **................
CO2 Reduction Monetized Value 0.29 2.5
($61.2/t case) **................
CO2 Reduction Monetized Value 0.56 3
($117/t case) **.................
NOX Reduction Monetized Value (at 0.0049 7
$2,639/ton) **...................
0.0114 3
Total benefits [dagger]....... 0.59 7
1.13 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Incremental Installed Costs....... 0.0 7
0.0 3
------------------------------------------------------------------------
Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction 0.59 7
Monetized Value[dagger]..........
1.13 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with front-
loading and top-loading CCW units shipped in 2018-2047. These results
include benefits to consumers which accrue after 2047 from the
products purchased in 2018-2047. The results account for the
incremental variable and fixed costs incurred by manufacturers due to
the standard, some of which may be incurred in preparation for the
rule.
[[Page 12305]]
** The CO2 values represent global monetized values of the SCC, in
2012$, in 2018 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated
using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
represents the 95th percentile of the SCC distribution calculated
using a 3% discount rate. The SCC time series used by DOE incorporate
an escalation factor. The value for NOX is the average of the low and
high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
the series corresponding to average SCC with 3-percent discount rate.
The benefits and costs of today's proposed standards, for products
sold in 2018-2047, can also be expressed in terms of annualized values.
The annualized monetary values are the sum of (1) the annualized
national economic value of the benefits from consumer operation of
products that meet the proposed standards (consisting primarily of
operating cost savings from using less energy, minus increases in
equipment purchase and installation costs, which is another way of
representing consumer NPV), and (2) the annualized monetary value of
the benefits of emission reductions, including CO2 emission
reductions.\6\
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\6\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE
calculated a present value in 2013, the year used for discounting
the NPV of total consumer costs and savings, for the time-series of
costs and benefits using discount rates of three and seven percent
for all costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates, as
shown in Table I.4. From the present value, DOE then calculated the
fixed annual payment over a 30-year period (2018 through 2047) that
yields the same present value. The fixed annual payment is the
annualized value. Although DOE calculated annualized values, this
does not imply that the time-series of cost and benefits from which
the annualized values were determined is a steady stream of
payments.
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Although combining the values of operating savings and
CO2 emission reductions provides a useful perspective, two
issues should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for analysis. The national operating
cost savings is measured for the lifetime of commercial clothes washers
shipped in 2018-2047. The SCC values, on the other hand, reflect the
present value of some future climate-related impacts resulting from the
emission of one ton of carbon dioxide in each year. These impacts
continue well beyond 2100.
Estimates of annualized benefits and costs of the proposed
standards are shown in Table I.5. The results under the primary
estimate are as follows. Using a 7-percent discount rate for benefits
and costs other than CO2 reduction, for which DOE used a 3-
percent discount rate along with the average SCC series that uses a 3-
percent discount rate, the cost of the standards proposed in today's
rule is $0.02 million per year in increased equipment costs, while the
benefits are $31 million per year in reduced equipment operating costs,
$9 million in CO2 reductions, and $0.37 million in reduced
NOX emissions. In this case, the net benefit amounts to $40
million per year. Using a 3-percent discount rate for all benefits and
costs and the average SCC series, the cost of the standards proposed in
today's rule is $0.02 million per year in increased equipment costs,
while the benefits are $46 million per year in reduced operating costs,
$9 million in CO2 reductions, and $0.57 million in reduced
NOX emissions. In this case, the net benefit amounts to $56
million per year.
Table I.5--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Commercial Clothes
Washers
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Primary estimate Low net benefits High net benefits
Discount rate * estimate * estimate *
----------------------------------------------------------------------------------------------------------------
million 2012$/year
----------------------------------------------------------------------------------------------------------------
Benefits
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Operating Cost Savings.......... 7%................ 31................ 27................ 38.
3%................ 46................ 40................ 60.
CO2 Reduction Monetized Value 5%................ 2................. 2................. 3.
($11.8/t case)*.
CO2 Reduction Monetized Value 3%................ 9................. 8................. 11.
($39.7/t case)*.
CO2 Reduction Monetized Value 2.5%.............. 13................ 12................ 17.
($61.2/t case) *.
CO2 Reduction Monetized Value 3%................ 28................ 25................ 34.
($117/t case) *.
NOX Reduction Monetized Value 7%................ 0.37.............. 0.33.............. 0.45.
(at $2,639/ton) **.
3%................ 0.57.............. 0.51.............. 0.70.
Total Benefits [dagger]......... 7% plus CO2 range. 33 to 58.......... 29 to 52.......... 42 to 73.
7%................ 40................ 35................ 50.
3% plus CO2 range. 49 to 75.......... 43 to 66.......... 64 to 95.
3%................ 56................ 49................ 72.
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Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs....... 7%................ 0.02.............. 0.02.............. 0.02
3%................ 0.02.............. 0.03.............. 0.02
----------------------------------------------------------------------------------------------------------------
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total[dagger]................... 7% plus CO2 range. 33 to 58.......... 29 to 52.......... 42 to 73.
7%................ 40................ 35................ 50.
3% plus CO2 range. 49 to 75.......... 43 to 66.......... 64 to 95.
[[Page 12306]]
3%................ 56................ 49................ 72.
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* This table presents the annualized costs and benefits associated with commercial clothes washer equipment
shipped in 2018-2047. These results include benefits to consumers which accrue after 2047 from the products
purchased in 2018-2047. The results account for the incremental variable and fixed costs incurred by
manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low
Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference case,
Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a flat rate for
projected product price trends in the Primary Estimate, a low decline rate for projected product price trends
in the Low Benefits Estimate, and a high decline rate for projected product price trends in the High Benefits
Estimate. The methods used to derive projected price trends are explained in section IV.
** The CO2 values represent global monetized values of the SCC, in 2012$, in 2015 under several scenarios of the
updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and
2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The
value for NOX is the average of the low and high values used in DOE's analysis.
[dagger] Total Ben efits for both the 3-percent and 7-percent cases are derived using the series corresponding
to average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2
range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
are added to the full range of CO2 values.
DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. DOE further notes that products
achieving these standard levels are already commercially available for
the product classes covered by today's proposal. Based on the analyses
described above, DOE has tentatively concluded that the benefits of the
proposed standards to the nation (energy savings, positive NPV of
consumer benefits, consumer LCC savings, and emission reductions) would
outweigh the burdens (loss of INPV for manufacturers and LCC increases
for some consumers).
DOE also considered higher energy efficiency levels as a trial
standard level, and is still considering them in this rulemaking.
However, DOE has tentatively concluded that the potential burdens of
the higher energy efficiency levels would outweigh the projected
benefits. Based on consideration of the public comments DOE receives in
response to this notice and related information collected and analyzed
during the course of this rulemaking effort, DOE may adopt energy
efficiency levels presented in this notice that are either higher or
lower than the proposed standards, or some combination of level(s) that
incorporate the proposed standards in part.
II. Introduction
The following section discusses the statutory authority underlying
today's proposal, as well as some of the relevant historical background
related to the establishment of standards for commercial clothes
washers.
A. Authority
As noted in section I, Title III of EPCA establishes the ``Energy
Conservation Program for Certain Industrial Equipment.'' This equipment
includes commercial clothes washers, the subject of this rulemaking.
(42 U.S.C. 6311(1)(H)).
EPCA established energy conservation standards for commercial
clothes washers and directed DOE to conduct two rulemakings to
determine whether the established standards should be amended. (42
U.S.C. 6313(e)) DOE published its first final rule amending commercial
clothes washer standards on January 8, 2010 (``January 2010 final
rule''), which apply to commercial clothes washers manufactured on or
after January 8, 2013. The second final rule determining whether
standards should be amended must be published by January 1, 2015. Any
amended standards would apply to commercial clothes washers
manufactured three years after the date on which the final amended
standard is published. (42 U.S.C. 6313(e)(2)(B)) This current
rulemaking will satisfy the requirement to publish the second final
rule by January 1, 2015.
Pursuant to EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2) labeling;
(3) the establishment of Federal energy conservation standards; and (4)
certification and enforcement procedures. Subject to certain criteria
and conditions, DOE is required to develop test procedures to measure
the energy efficiency, energy use, or estimated annual operating cost
of each covered product. (42 U.S.C. 6314(a)(2)) Manufacturers of
covered products must use the prescribed DOE test procedure as the
basis for certifying to DOE that their products comply with the
applicable energy conservation standards adopted under EPCA and when
making representations to the public regarding the energy use or
efficiency of those products. (42 U.S.C. 6314(d)) Similarly, DOE must
use these test procedures to determine whether the products comply with
standards adopted pursuant to EPCA.
The DOE test procedures for commercial clothes washers is codified
at title 10 of the Code of Federal Regulations (CFR) part 430, subpart
B, appendix J1 (hereafter, ``appendix J1''). On March 7, 2012, DOE
published a final rule amending its test procedures for clothes washers
(``March 2012 final rule''). (77 FR 13888) The March 2012 final rule
included minor amendments to appendix J1 and also established a new
test procedure at appendix J2 (hereafter, ``appendix J2''). Beginning
March 7, 2015, manufacturers of commercial clothes washers may use
either appendix J1 or appendix J2 to demonstrate compliance with the
current standards established by the January 2010 final rule.
Manufacturers using appendix J2 would be required to use conversion
equations to translate the measured efficiency metrics into equivalent
appendix J1 values, as proposed in a separate commercial clothes washer
test procedure NOPR published February 11, 2014. (79 FR 8112) \7\ The
use of appendix J2 would be required to demonstrate compliance with any
amended energy conservation standards established as a result of this
rulemaking, and the conversion
[[Page 12307]]
equations would no longer be used at that time.
---------------------------------------------------------------------------
\7\ Additional details regarding the commercial clothes washer
test procedure NOPR are available at DOE's rulemaking Web page:
http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=86. All rulemaking documents are also
available at www.regulations.gov, under Docket EERE-2013-
BT-TP-0002.
---------------------------------------------------------------------------
DOE must follow specific statutory criteria for prescribing amended
standards for covered products. As indicated above, any amended
standard for a covered product must be designed to achieve the maximum
improvement in energy efficiency that is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a))
Furthermore, DOE may not adopt any standard that would not result in
the significant conservation of energy. (42 U.S.C. 6295(o)(3) and
6316(a)) Moreover, DOE may not prescribe a standard: (1) for certain
products, including commercial clothes washers, if no test procedure
has been established for the product, or (2) if DOE determines by rule
that the proposed standard is not technologically feasible or
economically justified. (42 U.S.C. 6295(o)(3)(A)-(B) and 6316(a)) In
deciding whether a proposed standard is economically justified, DOE
must determine whether the benefits of the standard exceed its burdens.
(42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) DOE must make this
determination after receiving comments on the proposed standard, and by
considering, to the greatest extent practicable, the following seven
factors:
1. The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the imposition of the
standard;
3. The total projected amount of energy, or as applicable, water,
savings likely to result directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the covered
products likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
6. The need for national energy and water conservation; and
7. Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 6316(a))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard that either increases the maximum allowable energy
use or decreases the minimum required energy efficiency of a covered
product. (42 U.S.C. 6295(o)(1) and 6316(a)) Also, the Secretary may not
prescribe an amended or new standard if interested persons have
established by a preponderance of the evidence that the standard is
likely to result in the unavailability in the United States of any
covered product type (or class) of performance characteristics
(including reliability), features, sizes, capacities, and volumes that
are substantially the same as those generally available in the United
States. (42 U.S.C. 6295(o)(4) and 6316(a))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and
6316(a)). DOE conducts the analysis required by 6295(o) to determine
economic justification and confirm the results of the rebuttable
presumption analysis.
Additionally, EPCA specifies requirements when promulgating a
standard for a type or class of covered product that has two or more
subcategories. DOE must specify a different standard level than that
which applies generally to such type or class of products for any group
of covered products that have the same function or intended use if DOE
determines that products within such group (A) consume a different kind
of energy from that consumed by other covered products within such type
(or class); or (B) have a capacity or other performance-related feature
which other products within such type (or class) do not have and such
feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1) and
6316(a)). In determining whether a performance-related feature
justifies a different standard for a group of products, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE deems appropriate. Any rule prescribing such a
standard must include an explanation of the basis on which such higher
or lower level was established. (42 U.S.C. 6295(q)(2) and 6316(a)).
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c) and 6316(a)) DOE may, however,
grant waivers of Federal preemption for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under 42 U.S.C. 6297(d) and 6316(a)).
B. Background
1. Current Standards
In a final rule published on January 8, 2010 (``January 2010 final
rule''), DOE prescribed the current energy conservation standards for
commercial clothes washers manufactured on or after January 8, 2013.
The current standards are set forth in Table II.1.
Table II.1--Current Federal Energy Efficiency Standards for Commercial
Clothes Washers
------------------------------------------------------------------------
Maximum
Minimum WF
MEF* [dagger]
Product class cu.ft/ gal/
kWh/ cu.ft./
cycle cycle
------------------------------------------------------------------------
Top-Loading......................................... 1.60 8.5
Front-Loading....................................... 2.00 5.5
------------------------------------------------------------------------
*MEF (appendix J1 modified energy factor) is calculated as the clothes
container capacity in cubic feet divided by the sum, expressed in
kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot water
energy consumption; (2) the total weighted per-cycle machine
electrical energy consumption; and (3) the per-cycle energy
consumption for removing moisture from a test load.
[dagger] WF (water factor) is calculated as the weighted per-cycle water
consumption for the cold wash/cold rinse cycle, expressed in gallons
per cycle, divided by the clothes container capacity in cubic feet.
2. History of Standards Rulemaking for Commercial Clothes Washers
As described in Section II.A, EPCA established energy conservation
standards for commercial clothes washers and directed DOE to conduct
two rulemakings to determine whether the established standards should
be amended. (42 U.S.C. 6313(e)) DOE published its first final rule
amending commercial clothes washer standards on January 8, 2010
(``January 2010 final rule'').
This current rulemaking will satisfy the requirement to publish the
second final rule determining whether the standards should be amended
by January 1, 2015. DOE published a notice of public meeting and
availability of the framework document for this rulemaking, available
at http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0020-
0001 (``August 2012 notice''). DOE also requested public comment on the
document. 77 FR 48108 (August 13, 2012). The framework document is
[[Page 12308]]
available at http://www.regulations.gov/#!documentDetail;D=EERE-2012-
BT-STD-0020-0002. The framework document described the procedural and
analytical approaches that DOE anticipated using to evaluate energy
conservation standards for commercial clothes washers and identified
various issues to resolve during the rulemaking.
On September 24, 2012, DOE held the framework document public
meeting and discussed the issues detailed in the framework document.
DOE also described the analyses that it planned to conduct during the
rulemaking. Through the public meeting, DOE sought feedback from
interested parties on these subjects and provided information regarding
the rulemaking process that DOE would follow. Interested parties
discussed the following major issues at the public meeting: Rulemaking
schedule; test procedure revisions; product classes; technology
options; efficiency levels; and approaches for each of the analyses
performed by DOE as part of the rulemaking process. DOE considered the
comments received since publication of the August 2012 notice,
including those received at the September 2012 framework public
meeting, in developing today's proposed standards for commercial
clothes washers.
Following the framework meeting, DOE gathered additional
information, held discussions with manufacturers, performed product
testing and teardowns, and performed the various analyses described in
the framework document, including the engineering, life-cycle cost,
payback period, manufacturer impact, and national impact analyses. The
results of these analyses are presented in this NOPR.
III. General Discussion
A. General Rulemaking Issues
In the framework document and framework public meeting, DOE
discussed using the analyses performed during the previous commercial
clothes washer rulemaking in the development of the proposed rule.
The Association of Home Appliances Manufacturers (AHAM) commented
that the publishing of the framework document on August 13, 2012 was
premature given that the amended standards from the January 2010 final
rule would not become mandatory until January 8, 2013. AHAM stated that
neither DOE nor stakeholders know what the market will look like once
compliance with the new standards is required. AHAM further commented
that DOE should issue an advance notice of proposed rulemaking (ANOPR)
to seek comments after the new standards effective date of January 8,
2013. AHAM believes doing so would allow stakeholders to meaningfully
comment on DOE's proposed analysis prior to the notice of proposed
rulemaking. AHAM does not feel it is appropriate for DOE to streamline
the rulemaking process by not publishing an ANOPR in this case. (AHAM,
No. 6 at pp. 1-3; Whirlpool, No. 7 at p. 1) 8 9 Alliance
Laundry Systems (ALS) commented that it understands the EPCA statutory
requirements for the timeframe that DOE must follow for this
rulemaking, but that this rulemaking is premature in asking for
information regarding the market assessment before the January 8, 2013
standards take effect. (ALS, No. 16 at p. 2; ALS, Public Meeting
Transcript, No. 12 at p. 41) The National Resources Defense Council and
Appliance Standards Awareness Project (NRDC and ASAP) commented that
DOE should specify the portions of the 2010 rulemaking analysis that
will be reused in the current rulemaking, and to what extent data and
methodology will be updated. (NRDC and ASAP, No. 11 at p. 2)
---------------------------------------------------------------------------
\8\ A notation in this form provides a reference for information
that is in the docket for DOE's rulemaking to develop energy
conservation standards for commercial clothes washers (Docket No.
EERE-2012-BT-STD-0020), which is maintained at www.regulations.gov.
This notation indicates that AHAM's statement preceding the
reference can be found in document number 6 in the docket, and
appears at pages 1-3 of that document.
\9\ Whirlpool Corporation submitted a written comment stating
that it worked closely with AHAM in the development of AHAM's
submitted comments, and that Whirlpool supports and echoes the
positions taken by AHAM. Throughout this NOPR, reference to AHAM's
written comments (document number 6 in the docket) should be
considered reflective of Whirlpool's position as well.
---------------------------------------------------------------------------
DOE conducted the market and technology assessment, engineering
analysis, and manufacturer impact analysis for today's proposal
subsequent to the January 8, 2013 effective date of the current
commercial clothes washer standards. The information DOE has gathered
through product testing, teardowns, and confidential manufacturer
interviews since the framework meeting accurately reflect the state of
the commercial clothes washer market following the January 2013 product
transitions.
B. Product Classes and Scope of Coverage
1. Product Classes
EPCA defines a ``commercial clothes washer'' as a soft-mount front-
loading or soft-mount top-loading clothes washer that:
(A) Has a clothes container compartment that:
(i) for horizontal-axis clothes washers, is not more than 3.5 cubic
feet; and
(ii) for vertical-axis clothes washers, is not more than 4.0 cubic
feet; and
(B) is designed for use in:
(i) applications in which the occupants of more than one household
will be using the clothes washer, such as multi-family housing common
areas and coin laundries; or
(ii) other commercial applications.
(42 U.S.C. 6311(21))
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that
justifies a different standard. In making a determination whether a
performance-related feature justifies a different standard, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE determines are appropriate. (42 U.S.C. 6295(q) and
6316(a)).
Existing energy conservation standards divide commercial clothes
washers into two product classes based on the axis of loading: Top-
loading and front-loading. For the reasons explained below, DOE
maintained these product class distinctions in the framework document
and today's proposal.
AHAM commented that it supports DOE's proposal to retain the two
product classes based on the location of access. AHAM agrees that the
longer cycle times of front-loading commercial clothes washers versus
cycle times for top-loading commercial clothes washers significantly
impact consumer utility. (AHAM, No. 6 at p. 4; AHAM, Public Meeting
Transcript, No. 12 at p. 46) ALS commented that it also supports
continuing with two separate product classes, top-loading and front-
loading. (ALS, No. 16 at p. 2)
Pacific Gas and Electric Company, Southern California Gas Company,
and San Diego Gas and Electric Company (collectively, the ``California
Utilities'') commented that DOE should establish one standard that
applies to both top-loading and front-loading commercial clothes
washers. The California Utilities believe that the method of loading no
longer provides unique utility, and thus should not continue to be
treated as a unique ``feature'' warranting separate product classes.
Specifically, the California Utilities stated that front-loading
clothes washers are now available with cycle times equivalent to top-
loading clothes washers, and provided a table listing example cycle
times for a selection of top-loading and
[[Page 12309]]
front-loading residential clothes washer models. In addition, the
California Utilities believe that even with a single standard, top-
loading commercial clothes washers would still be able to meet such a
standard using technologically feasible design considerations. The
submitted comment includes a table comparing the top-loading efficiency
levels considered by DOE during the most recent energy conservation
standards rulemaking for residential clothes washers to the front-
loading efficiency levels proposed for consideration in this
rulemaking. Furthermore, the California Utilities believe that the
technologies, design, and operating characteristics of the residential
clothes washer market are transferrable to the commercial clothes
washer market. They believe that the split incentive between the
purchaser of the equipment (e.g., route operator) and those paying the
utility bill (e.g., coin-operated laundry owner) creates a split
incentive that has created a barrier for motivating the manufacture and
sale of higher-efficiency top-loaders, and that a single standard would
correct this market inefficiency. (California Utilities, No. 8 at pp.
2-3)
NEEA commented that DOE should reconsider defining a single product
class for commercial clothes washers. NEEA stated that in the current
market, cycle times are similar for both top-loading and front-loading
clothes washers, and as a result, cycle time is no longer a unique
utility associated with one method of loading. NEEA also stated that
technology to improve the efficiency of top-loading clothes washers has
advanced. (NEEA, No. 10 p. 1)
NRDC and ASAP commented that DOE should reconsider the division of
commercial clothes washers into separate product classes for top-
loading and front-loading machines. NRDC stated that the prior
determination of cycle times was based largely on a Consumer Reports
article on residential clothes washers that contrasted cycle times of
50 to 115 minutes for front-loading clothes washers to 30-85 minutes
for top-loading clothes washers. NRDC and ASAP stated that commercial
clothes washer manufacturers now offer cycle times on front-loading
machines comparable to cycle times on top-loading machines, and
provided examples from multiple commercial clothes washer
manufacturers. NRDC and ASAP believe that the similarity in cycle times
obviates the need for separate product classes. (NRDC and ASAP, No. 11
at pp. 2-3; NRDC, Public Meeting Transcript, No. 12 at pp. 44-46).
In response to these comments, DOE notes that in prior rulemakings
for residential clothes washers, DOE has concluded that the axis of
loading represents a distinct consumer utility-related feature, and,
consequently, established separate product classes for top-loading and
front-loading residential clothes washers. 56 FR 22263 (May 14, 1991)
and 77 FR 32319 (May 31, 2012). DOE has concluded that the same
justification applies to commercial clothes washers.
As noted by commenters, DOE also determined during the previous
energy conservation standards rulemaking for commercial clothes washers
that the longer cycle times of front-loading commercial clothes washers
versus top-loading clothes washers was likely to significantly impact
consumer utility and thereby constituted a performance-related utility
under the meaning of 42 U.S.C. 6295(q), which warranted separate
product classes. 75 FR 1122, 1130-34. As part of the engineering
analysis conducted for the current rulemaking, DOE measured total cycle
times on a representative sample of top-loading and front-loading
commercial clothes washers during appendix J2 testing, as described
fully in chapter 5 of the TSD. Top-loading cycle times for the maximum
load size ranged from 29-31 minutes, with an average of 30 minutes.\10\
Front-loading cycle times for the maximum load size ranged from 30-37
minutes, with an average of 34 minutes. The longer average cycle time
of front-loading machines results in fewer possible ``turns'' per day
compared to top-loading machines, which is more significant in a
laundromat or multi-family laundry setting for consumers waiting on the
machine to finish its cycle, as well as laundromat owners and multi-
family laundry route operators looking to maximize daily laundry
throughput. Therefore, although the magnitude of the difference in
cycle times for CCWs is smaller than for residential clothes washers,
DOE has determined that the longer average cycle time of front-loading
machines warrants consideration of separate product classes.
---------------------------------------------------------------------------
\10\ This excludes one outlier top-loading model with a cycle
time of 50 minutes.
---------------------------------------------------------------------------
In addition, DOE research indicates that the technologies, designs,
and operating characteristics of the maximum efficiency top-loading
residential clothes washers are not transferrable to commercial clothes
washers. The standard level proposed for front-loading commercial
clothes washers in this NOPR corresponds closely to the max-tech top-
loading level considered by DOE during the residential clothes washer
rulemaking. Achieving that level of efficiency in a top-loading machine
requires design features such as extra-large capacity, a non-agitator
``impeller'' wash plate, spin speed greater than 1,000 rpm, and water
recirculation. With regards to capacity, DOE notes that a larger
clothes container capacity is considered a detriment to commercial
clothes washer buyers because a larger capacity tub may result in fewer
wash cycles performed by the end-user customer. In competitive markets,
coin-operated laundries may not be able to sustain higher vend fares to
compensate for the lower number of ``turns'' per day. In addition,
based on discussions with manufacturers, larger tub capacities
encourage the over-loading of machines by end-user customers. Regarding
the use of non-agitator impeller wash plates, DOE research indicates
that this feature also encourages machine overloading in a coin laundry
environment, and that this technology is more susceptible to producing
poorer wash performance when overloaded compared to a traditional
agitator design. Spin speeds greater than 1,000 rpm and water
recirculation are also not features that currently exist in the
commercial clothes washer market, and DOE research indicates that these
features are unlikely to be suitable for commercial clothes washers
because of concerns regarding potential impacts on machine reliability
as a result of machine overloading or other extreme usage scenarios
experienced in a coin-operated laundry environment. Chapter 3 and 4 of
the TSD provide a detailed discussion of design options considered for
this rulemaking.
For these reasons, DOE concludes that separate product classes are
justified for top-loading and front-loading commercial clothes washers
based on the criteria established in EPCA. (42 U.S.C. 6295(o)(4) and
(q)(1), 6316(a)). Today's proposal thus maintains separate standards
for top-loading and front-loading product classes.
C. Test Procedures
1. Appendix J2
The amended standards proposed in this rulemaking are based on
energy and water metrics as measured using appendix J2 of 10 CFR part
430. DOE published a test procedure NOPR on February 11, 2014
(``February 2014 TP NOPR'') proposing to amend its test procedures for
commercial clothes washers to add equations for translating MEF and
water factor (WF) values as
[[Page 12310]]
measured using appendix J2 into their equivalent values as measured
using appendix J1. 79 FR 8112. These translation equations would be
codified at 10 CFR 429.46 and would be used when using the appendix J2
test procedure to demonstrate compliance with the current commercial
clothes washer standards established by the January 2010 final rule,
which were based on MEF and WF as measured using Appendix J1. These
crosswalk equations would not be used to demonstrate compliance with
the proposed amended standards in today's NOPR because the proposed
amended standard levels are based metrics as measured using the
appendix J2 test procedure.
Table III.1 shows the equivalent appendix J1 and appendix J2 values
for the current energy conservation standards for commercial clothes as
set forth at 10 CFR 431.156, and the proposed amended energy
conservation standards. As required by section 6295(o) of EPCA, the
proposed standards do not increase the maximum allowable energy or
water use, or decrease the minimum required energy efficiency, of
commercial clothes washers.
Table III.1--Current and Proposed Energy Conservation Standards for Commercial Clothes Washers, Equivalent Appendix J1 and J2 Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum energy standards Maximum water standards
---------------------------------------------------------------------------------------
Appendix J1 Appendix J2 Appendix J1 Appendix J2
Product class ---------------------------------------------------------------------------------------
Current Proposed Current Proposed
Current Proposed Current Proposed WF WF IWF IWF
MEF * MEF * MEF J2* MEF J2* [dagger] [dagger] [Dagger] [Dagger]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Loading..................................................... 1.60 1.70 1.15 1.35 8.5 8.4 8.9 8.8
Front-Loading................................................... 2.00 2.40 1.65 2.00 5.5 4.0 5.2 4.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* MEF (appendix J1 modified energy factor) and MEFJ2 (appendix J2 modified energy factor) are calculated as the clothes container capacity in cubic feet
divided by the sum, expressed in kilowatt-hours (kWh), of: (1) the total weighted per-cycle hot water energy consumption; (2) the total weighted per-
cycle machine electrical energy consumption; and (3) the per-cycle energy consumption for removing moisture from a test load.
[dagger] WF (water factor) is calculated as the weighted per-cycle water consumption for the cold wash/cold rinse cycle, expressed in gallons per cycle,
divided by the clothes container capacity in cubic feet.
[Dagger] IWF (integrated water factor) is calculated as the weighted per-cycle water consumption for all wash cycles, expressed in gallons per cycle,
divided by the clothes container capacity in cubic feet.
During the framework meeting and through subsequent written
comments, interested parties submitted comments regarding these
crosswalk equations and other issues including:
Dryer energy calculations
Water heating calculations
Load size usage factors
Temperature usage factors
DOE has addressed these comments related to the test procedure in the
February 2014 TP NOPR. (79 FR 8112)
2. Energy Metric
The amended energy efficiency standards proposed in this rulemaking
are based on the MEFJ2 metric. In the framework document,
DOE stated it would consider establishing amended energy efficiency
standards for commercial clothes washers on the IMEF metric, which
would incorporate standby and off mode power.
AHAM and ALS commented that they do not oppose new standards for
commercial clothes washers based on IMEF; however, DOE should not use
the same analysis it used for standby and off mode for residential
clothes washers. AHAM and ALS stated that residential and commercial
clothes washers have different use patterns, and encouraged DOE to
conduct studies on consumer usage to determine the appropriate usage
patterns for commercial clothes washers, such as time spent in active
mode versus standby mode. AHAM and ALS added that commercial clothes
washers are used on a more continuous basis than residential clothes
washers, and thus, spend more time in active mode and less time in
standby mode compared to residential clothes washers. In addition, AHAM
stated that the displays on commercial clothes washers must remain
activated longer than residential clothes washer displays so that users
know that the commercial machine is available for use. Finally, AHAM
suggested that the definition of standby mode should be different for
commercial clothes washers than for residential clothes washers. (AHAM,
No. 6, at p. 3; AHAM, Public Meeting Transcript, No. 12 at pp. 29-30;
ALS, No. 16 at p. 1)
The California Utilities support DOE's proposal to develop new
standards that take into account standby and off-mode power, stating
that they believe such standards would more accurately reflect the
total energy consumed by commercial clothes washers. (California
Utilities, No. 8 at p. 2) NRDC and ASAP also support establishing new
efficiency standards based on the IMEF metric to capture standby and
off-mode power. (NRDC and ASAP, No. 11 at p. 2)
As part of its market assessment and engineering analysis for this
rulemaking, DOE evaluated the standby and off mode power
characteristics of a representative sample of commercial clothes washer
spanning a wide range of display types, payment systems, and
communication features. Although interested parties generally supported
establishing new energy standards based on the IMEF metric, DOE is not
proposing amended standards for commercial clothes washers based on an
integrated energy metric in today's rule.
3. Water Metric
The amended water efficiency standards proposed in this rulemaking
are based on the IWF metric contained in appendix J2. In the framework
document, DOE stated it would consider establishing amended water
efficiency standards for commercial clothes washers based on the IWF
metric, which incorporates water consumption from all the temperature
cycles included as part of the energy test cycle in appendix J2. DOE
believes that the IWF metric provides a more representative measure of
water consumption than the WF metric.
AHAM and ALS stated that they do not oppose DOE's proposal to
establish amended water standards based on the IWF metric. ALS added
that they already record all the water used by a commercial clothes
washer during their DOE tests. (AHAM, No. 6 at p. 3; ALS, No. 16 at p.
1)
The Northwest Energy Efficiency Alliance (NEEA) and NRDC and ASAP
support establishing new water efficiency standards based on the IWF
metric to capture water consumption from all temperature cycles to
reflect typical usage patterns by consumers.
[[Page 12311]]
(NEEA, No. 10 at p. 2; NRDC and ASAP, No. 11 at p. 2)
DOE received no comments objecting to the use of the IWF metric.
Therefore, for the reasons stated above, the amended water efficiency
standards proposed in this rulemaking are based on the IWF metric.
D. Technological Feasibility
1. General
In each standards rulemaking, DOE conducts a screening analysis
based on information gathered on all current technology options and
prototype designs that could improve the efficiency of the products or
equipment that are the subject of the rulemaking. As the first step in
such an analysis, DOE develops a list of technology options for
consideration in consultation with manufacturers, design engineers, and
other interested parties. DOE then determines which of those means for
improving efficiency are technologically feasible. DOE considers
technologies incorporated in commercially available products or in
working prototypes to be technologically feasible. 10 CFR 430, subpart
C, appendix A, section 4(a)(4)(i). For further details on the
technology options DOE considered for this rulemaking, see chapter 3 of
the NOPR TSD.
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, or service; (2) adverse impacts
on product utility or availability; and (3) adverse impacts on health
or safety. Section IV of this notice summarizes the results of DOE's
screening analysis, particularly the designs DOE considered, those it
screened out, and those that are the basis for the TSLs in this
rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the NOPR TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for
commercial clothes washers using the design parameters for the most
efficient products available on the market. The max-tech levels that
DOE determined for this rulemaking are described in section IV.C.4 and
IV.C.5 of this proposed rule. For further details on the engineering
analysis for this rulemaking, see chapter 5 of the NOPR TSD.
E. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the products that
are the subject of this rulemaking purchased in the 30-year period that
begins in the year of compliance with amended standards (2018-2047).
The savings are measured over the entire lifetime of products purchased
in the 30-year period.\11\ DOE quantified the energy savings
attributable to each TSL as the difference in energy consumption
between each standards case and the base case. The base case represents
a projection of energy consumption in the absence of amended efficiency
standards, and considers market forces and policies that affect demand
for more efficient products.
---------------------------------------------------------------------------
\11\ In previous rulemakings, DOE presented energy savings
results for only the 30-year period that begins in the year of
compliance. In the calculation of economic impacts, however, DOE
considered operating cost savings measured over the entire lifetime
of products purchased in the 30-year period. DOE has modified its
presentation of national energy savings consistent with the approach
used for its national economic analysis.
---------------------------------------------------------------------------
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from amended standards for the products that
are the subject of this rulemaking. The NIA spreadsheet model
(described in section IV of this notice) calculates energy savings in
site energy, which is the energy directly consumed by products at the
locations where they are used. For electricity, DOE reports national
energy savings in terms of the savings in the energy that is used to
generate and transmit the site electricity. To calculate this quantity,
DOE derives annual conversion factors from the model used to prepare
the Energy Information Administration's (EIA) Annual Energy Outlook
(AEO).
DOE also estimates full-fuel-cycle energy savings in its energy
conservation standards rulemakings. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (August 17, 2012). The full-fuel-cycle (FFC)
metric includes the energy consumed in extracting, processing, and
transporting primary fuels (i.e., coal, natural gas, petroleum fuels),
and thus presents a more complete picture of the impacts of energy
efficiency standards. DOE's approach is based on calculation of an FFC
multiplier for each of the energy types used by covered products. For
more information on FFC energy savings, see section IV.H.2.
2. Significance of Savings
As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting
a standard for a covered product unless such standard would result in
``significant'' energy savings. Although the term ``significant'' is
not defined in the Act, the U.S. Court of Appeals, in Natural Resources
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985),
indicated that Congress intended ``significant'' energy savings in this
context to be savings that were not ``genuinely trivial.'' The energy
savings for all of the TSLs considered in this rulemaking (presented in
section V.C) are nontrivial, and, therefore, DOE considers them
``significant'' within the meaning of section 325 of EPCA.
F. Economic Justification
1. Specific Criteria
EPCA provides seven factors to be evaluated in determining whether
a potential energy conservation standard is economically justified. (42
U.S.C. 6295(o)(2)(B)(i) and 6316(a)) The following sections discuss how
DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of an amended energy conservation
standard on manufacturers, DOE first uses an annual cash-flow approach
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include industry net present
value (INPV), which values the industry on the basis of expected future
cash flows; cash flows by year; changes in revenue and income; and
other measures of impact, as appropriate. Second, DOE analyzes and
reports the impacts on different types of manufacturers, including
impacts on small manufacturers. Third, DOE considers the impact of
standards on domestic manufacturer employment and manufacturing
capacity, as well as the potential for standards to result in plant
closures and loss of capital investment. Finally, DOE takes into
account cumulative impacts of various DOE
[[Page 12312]]
regulations and other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and payback period (PBP) associated with new or amended
standards. These measures are discussed further in the following
section. For consumers in the aggregate, DOE also calculates the
national net present value of the economic impacts applicable to a
particular rulemaking. DOE also evaluates the LCC impacts of potential
standards on identifiable subgroups of consumers that may be affected
disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product compared
to any increase in the price of the covered product that are likely to
result from the imposition of the standard. (42 U.S.C.
6295(o)(2)(B)(i)(II) and 6316(a)) DOE conducts this comparison in its
LCC and PBP analysis. The LCC is the sum of the purchase price of a
product (including its installation) and the operating expense
(including energy, maintenance, and repair expenditures) discounted
over the lifetime of the product. To account for uncertainty and
variability in specific inputs, such as product lifetime and discount
rate, DOE uses a distribution of values, with probabilities attached to
each value. For its analysis, DOE assumes that consumers will purchase
the covered products in the first year of compliance with amended
standards.
The LCC savings and the PBP for the considered efficiency levels
are calculated relative to a base case that reflects projected market
trends in the absence of amended standards. DOE identifies the
percentage of consumers estimated to receive LCC savings or experience
an LCC increase, in addition to the average LCC savings associated with
a particular standard level.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and
6316(a)) As discussed in section IV, DOE uses the NIA spreadsheet to
project national energy savings.
d. Lessening of Utility of Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE evaluates
standards that would not lessen the utility of the considered products.
(42 U.S.C. 6295(o)(2)(B)(i)(IV) and 6316(a)) The standards proposed in
today's notice will not reduce the utility of the products under
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, which is
likely to result from the imposition of a standard. (42 U.S.C.
6295(o)(2)(B)(i)(V) It also directs the Attorney General to determine
the impact, if any, of any lessening of competition likely to result
from a proposed standard and to transmit such determination to the
Secretary within 60 days of the publication of a proposed rule,
together with an analysis of the nature and extent of the impact. (42
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of today's proposed
rule to the Attorney General with a request that the Department of
Justice (DOJ) provide its determination on this issue. DOE will address
the Attorney General's determination in the final rule.
f. Need for National Energy Conservation
The energy savings from the proposed standards are likely to
provide improvements to the security and reliability of the nation's
energy system. Reductions in the demand for electricity also may result
in reduced costs for maintaining the reliability of the nation's
electricity system. DOE conducts a utility impact analysis to estimate
how standards may affect the nation's needed power generation capacity.
The proposed standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with energy production. DOE reports the
emissions impacts from today's standards, and from each TSL it
considered, in section V of this notice. DOE also reports estimates of
the economic value of emissions reductions resulting from the
considered TSLs.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
DOE did not consider any other factors for today's NOPR.
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a), EPCA
creates a rebuttable presumption that an energy conservation standard
is economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effects that proposed
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV of this NOPR.
IV. Methodology and Discussion of Related Comments
DOE used four analytical tools to estimate the impact of today's
proposed standards. The first tool is a spreadsheet that calculates
LCCs and PBPs of potential new energy conservation standards. The
second tool includes a model that provides shipments forecasts, and a
framework in a spreadsheet that calculates national energy savings and
net present value resulting from potential amended energy conservation
standards. DOE uses the third spreadsheet tool, the Government
Regulatory Impact Model (GRIM), to assess manufacturer impacts.
Additionally, DOE estimated the impacts of energy conservation
standards for CCW on utilities and the environment. DOE used a version
of EIA's National Energy Modeling System (NEMS) for the utility and
environmental analyses. The NEMS model simulates the energy sector of
the U.S. economy. EIA uses NEMS to prepare its Annual Energy Outlook
(AEO), a widely known energy forecast for the United States. The
version of
[[Page 12313]]
NEMS used for appliance standards analysis is called NEMS-BT \12\ and
is based on the AEO version with minor modifications.\13\ The NEMS-BT
model accounts for the interactions between the various energy supply
and demand sectors and the economy as a whole.
---------------------------------------------------------------------------
\12\ BT stands for DOE's Building Technologies Program.
\13\ The EIA allows the use of the name ``NEMS'' to describe
only an AEO version of the model without any modification to code or
data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the
model as used here. For more information on NEMS, refer to The
National Energy Modeling System: An Overview, DOE/EIA-0581 (98)
(Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
---------------------------------------------------------------------------
A. Market and Technology Assessment
1. Market Assessment
In the framework document, DOE requested information that would
contribute to the market assessment for the commercial clothes washers
covered in this rulemaking (e.g., current product features and
efficiencies, product feature and efficiency trends, and historical
product shipments and prices).
AHAM provided commercial clothes washer shipment data and shipment-
weighted average efficiency data for 2010 and 2011, disaggregated by
product class. AHAM also provided market share efficiency data for 2010
and 2011, disaggregated by product class. (AHAM, No. 13 at pp. 2-4)
AHAM commented that the timing of its data submittal was too early to
be able to provide shipment data for products complying with the new
standards that became effective January 8, 2013. (AHAM, No. 8 at pp. 3-
4).
DOE requests information on historical product shipments and market
share efficiency data, disaggregated by product class, for 2012 and
2013 as those data become available.
NRDC and ASAP commented that DOE should confirm the split between
the coin laundry and multi-family housing sectors of the market, noting
that the different operating characteristics of these sub-sectors have
significant influence on the life-cycle costs and payback period
analysis. (NRDC and ASAP, No. 11 at p. 2)
DOE has incorporated the shipments data from AHAM throughout the
NOPR analysis. DOE confirmed through discussions with manufacturers
that the split between coin laundry and multi-family housing used for
the last rulemaking (15 percent and 85 percent, respectively) remains
valid for this rulemaking. The NOPR analysis reflects this breakdown.
2. Technology Assessment
In the framework document, DOE presented a table of design options
it believes represent the most viable options for commercial clothes
washers to achieve higher efficiencies. DOE requested comment on
whether any of the technologies should be removed from consideration,
or whether any other technologies not listed in the table should be
considered as technology options.
ALS recommended that DOE remove ``ozonated laundering'' from
consideration, because testing ALS has performed on ozone laundering
indicates it does not replace the need for heated water and detergent
to clean clothes. Therefore, ALS believes ozonated laundry does not
improve energy efficiency. (ALS, No. 16 at p. 2) As described in
greater detail in Chapter 3 and chapter 4 of the TSD, DOE retained
ozonated laundering as a design option because it may improve energy
efficiency, but eliminated it from consideration as a result of the
screening analysis.
The California Utilities recommended that DOE consider all of the
design options evaluated in the most recent residential clothes washer
standards rulemaking. The commenters believe that all such design
options are likely to be applicable and transferrable to commercial
clothes washers. (California Utilities, No. 8 at p. 4) As described in
the framework document, DOE eliminated from consideration those design
options from the prior commercial clothes washer and residential
clothes washer rulemakings that DOE has determined would provide
negligible, if any, energy savings. DOE also eliminated technologies
that it determined were not relevant to the commercial clothes washer
market. Chapter 3 and chapter 4 of the TSD provide detailed information
regarding DOE's analysis of each design option.
NRDC and ASAP suggested that DOE add temperature-differentiated
pricing controls to the list of technology options that manufacturers
can use to reduce energy consumption in machine operation. The
commenters noted that this feature is already being offered by
Whirlpool and Alliance Laundry Systems. NRDC and ASAP stated that
temperature-differentiated pricing offers launderers the incentive to
opt for lower temperature settings than they might otherwise select
under undifferentiated pricing. Such controls would allow a machine's
owner to pass through a share of the resulting hot water energy savings
to the end user, thus incentivizing energy savings. NRDC and ASAP
suggested that the test procedure for commercial clothes washers could
allow credit for inclusion of such a feature without altering the
mechanics of the test procedure itself. (NRDC, Public Meeting
Transcript, No. 12 at p. 47-48; NRDC and ASAP, No. 11 at p. 3)
Temperature-differentiated pricing offers the potential to
incentive energy savings by providing favorable vend pricing for lower-
temperature settings. DOE's market analysis confirmed the availability
of this feature on multiple clothes washer models from multiple
manufacturers. DOE has therefore added temperature-differentiated
pricing controls to the list of technology options for consideration.
DOE does not have any information, however, regarding the degree to
which this feature changes the temperature selection frequencies of end
users. Therefore, as described in further detail in Chapter 5 of the
TSD, DOE was not able to consider this technology for further
evaluation in its engineering analysis.
B. Screening Analysis
Following the development of the initial list of design options,
DOE conducts a screening analysis of each design option based on the
following factors: (1) Technological feasibility; (2) practicability to
manufacture, install and service; (3) adverse impacts on product
utility or product availability; and (4) adverse impacts on health or
safety. (10 CFR part 430, subpart C, appendix A, section 4(a)(3) and
(4).)
DOE did not receive any comments objecting to the proposed design
options based on these screening criteria. DOE did, however, receive
general comments regarding the impacts of higher efficiency levels on
product utility, which DOE addressed as part of its engineering
analysis.
C. Engineering Analysis
1. General Approach
The purpose of the engineering analysis is to characterize the
relationship between the incremental manufacturing cost and efficiency
improvements of commercial clothes washers. DOE used this cost-
efficiency relationship as input to the PBP, LCC, and NES analyses. As
proposed in the framework document, DOE conducted the engineering
analysis for this rulemaking using the efficiency-level approach
supplemented with a design-option approach. Using the efficiency-level
approach, DOE examined the aggregated incremental increases in
manufacturer selling price at each of the
[[Page 12314]]
efficiency levels analyzed. DOE also conducted a reverse-engineering
analysis, including testing and teardowns of models at each efficiency
level, to identify the incremental cost and efficiency improvement
associated with each design option or design option combination,
supplementing the efficiency-level approach with a design-option
approach as needed. Chapter 5 of the TSD contains a detailed discussion
of the engineering analysis methodology.
ALS commented that it supports DOE's proposal to use an efficiency
level approach supplemented by a design option approach as needed.
(ALS, No. 16 at p. 4)
AHAM commented that it believes DOE erroneously stated in the
framework document that it would measure the energy and water
consumption of representative units at each efficiency level under
consideration using DOE's test procedure at appendix J1. (AHAM, No. 6
at p. 6; AHAM, Public Meeting Transcript, No. 12 at p. 52) DOE intended
to reference both appendix J1 and appendix J2 in this instance. DOE
performed energy and water consumption testing using both test
procedures, which enabled DOE to translate the appendix J1-based
efficiency levels into equivalent levels based on appendix J2. DOE used
the appendix J2 energy and water consumption data for its engineering
analysis and all ``downstream'' analyses, including the LCC, PBP, and
NES.
2. Appendix J2 Efficiency Level Translations
In the framework document, DOE proposed baseline and higher
efficiency levels based on the current metrics MEF and WF, which are
determined according to the appendix J1 test procedure. As discussed in
prior sections, DOE has proposed amended standards for commercial
clothes washers in terms of MEFJ2 and IWF as measured using
appendix J2. DOE performed testing on a representative sample of
commercial clothes washer models to determine, for each baseline and
higher efficiency level considered in the analysis, the equivalent
appendix J2 efficiency levels corresponding to each appendix J1
efficiency level. Chapter 5 of the TSD describes the methodology DOE
used to perform the translations between appendix J1 MEF/WF values and
appendix J2 MEF/IWF values.
3. Baseline Efficiency Levels
DOE proposed in the framework document to use the amended energy
conservation standards effective January 8, 2013 to characterize the
baseline models for both the top-loading and front-loading product
classes.
ALS commented that it supports using the 2013 minimum efficiency
levels as the baseline levels for this rulemaking. (ALS, No. 16 at p.
2) DOE did not receive any comments objecting to the proposed baseline
efficiency levels. Therefore, as proposed, DOE used the January 8, 2013
amended energy conservation standards as the baseline efficiency levels
for this rulemaking.
4. Front-Loading Higher Efficiency Levels
In the framework document, DOE proposed analyzing the higher
efficiency levels shown in Table IV.1 for the front-loading product
class. The efficiency levels presented in the framework document were
based on MEF and WF as measured using appendix J1. Table IV.1 also
provides the equivalent levels based on MEFJ2 and IWF as
measured using appendix J2 test procedure. DOE invited comment on the
appropriateness of these front-loading efficiency levels.
Table IV.1--Front-Loading Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Appendix J1 metrics Appendix J2 metrics
Level Efficiency level ---------------------------------------------------------------
source MEF WF MEFJ2 IWF
----------------------------------------------------------------------------------------------------------------
Baseline...................... DOE Standard.... 2.00 5.5 1.65 5.2
1............................. CEE Tier 2...... 2.20 4.5 1.80 4.5
2............................. CEE Tier 3...... 2.40 4.0 2.00 4.1
3............................. Maximum 2.60 3.7 2.20 3.9
Available.
----------------------------------------------------------------------------------------------------------------
AHAM commented that rinsing performance could become a concern at
some of the levels DOE has proposed, noting that every manufacturer
would have its own opinion at which level, if any, this would occur.
AHAM stated that measuring the impact of the proposed levels on
cleaning and rinsing performance may be difficult because currently no
test procedures are available to link cleaning and rinsing performance
with the energy performance measured in DOE's test procedure. (AHAM,
No. 6 at pp. 4-5)
ALS commented that it strongly opposes any consideration of higher
efficiency levels for front-loading commercial clothes washers. ALS
stated that its tests on competitive front-loading products with more
stringent efficiency levels have shown that with large load sizes, the
clothing in the center of the load does not get wetted by water during
the wash portion of the cycle. ALS believes it would not be appropriate
for DOE to propose stricter standards that would create this kind of
result in a front-loading commercial clothes washer. (ALS, No. 16 at p.
3)
The California Utilities suggested that DOE include two additional
front-loading efficiency levels corresponding to the top two efficiency
levels considered during the most recent residential clothes washer
rulemaking: 2.60 MEF/3.8 WF and 2.89 MEF/3.7 WF, as measured using
appendix J1.
NRDC commented that while DOE proposed the ``maximum available''
efficiency level in the framework document, DOE did not indicate the
maximum efficiency level that is technologically feasible (i.e., the
``max tech'' level). (NRDC, Public Meeting Transcript, No. 12 at p. 55)
DOE notes that it developed its list of front-loading efficiency
levels based on a review of commercial clothes washer products
currently on the market. DOE confirmed through its market assessment
that products are available for purchase at each of the identified
efficiency levels. DOE performed appendix J1 and appendix J2 testing on
a representative sample of commercial clothes washer models at each
proposed efficiency level. To investigate concerns regarding potential
impacts on cleaning performance, rinsing performance, and solid
particle removal, DOE performed additional testing on each model using
AHAM's HLW-1-2010 test method: Performance Evaluation Procedures for
Household Clothes Washers (hereafter, ``AHAM HLW-1-2010'').
Specifically,
[[Page 12315]]
DOE performed the soil/stain removal, rinsing effectiveness, and sand
removal tests provided in HLW-1-2010. DOE's testing indicated that
front-loading commercial clothes washers are available on the market at
the proposed amended standard level that provide equivalent washing,
rinsing, and solid particle removal as current baseline units. Chapter
5 of the TSD describes these test results in greater detail.
Regarding the higher efficiency levels considered in the
residential clothes washer rulemaking, DOE notes that the 2.60 MEF/3.8
WF efficiency level suggested by the commenter corresponds closely with
the maximum level proposed by DOE, 2.60 MEF/3.7 WF. DOE does not
believe that the more stringent level of 2.89 MEF/3.7 WF would be
appropriate for consideration in this commercial clothes washer
rulemaking. First, no commercial clothes washer models are currently
available on the market at that efficiency level. Second, some of the
design options that would be required to achieve that efficiency level
could negatively wash basket size and cycle time. Most notably,
achieving the highest efficiency levels in the front-loading
residential clothes washer market requires large-capacity wash baskets
greater than 3.9 cubic feet and cycle times of 50 minutes or longer.
DOE notes that EPCA's product coverage definition of a front-loading
commercial clothes washer specifies a maximum capacity of 3.5 cubic
feet, so machines with the larger capacity wash baskets would not be
considered covered equipment subject to DOE's energy conservation
standards. (42 U.S.C. 6311(21)) In addition, as noted previously, a
larger clothes container capacity is considered a detriment to
commercial clothes washer owners because a larger capacity wash tub may
result in fewer wash cycles performed by the end-user customer. In
competitive markets, coin-operated laundries may not be able to sustain
higher vend fares to compensate for the lower number of turns per day.
Furthermore, cycle times of 50 minutes would constitute a substantial
increase over the current 34 minute average cycle time as measured by
DOE. Longer cycle times decrease the number of possible turns per day
on a given clothes washer, which is more significant in a laundromat or
multi-family laundry setting for consumers waiting on the machine to
finish its cycle, as well as laundromat owners and multi-family laundry
route operators looking to maximize daily laundry throughput.
Based on the results of its market and technology assessment and
engineering analysis, DOE has tentatively determined that the maximum
available efficiency level identified in the framework document
represents the maximum efficiency level that is technologically
feasible for front-loading commercial clothes washers.
5. Top-Loading Higher Efficiency Levels
In the framework document, DOE stated that it was unaware at the
time of any top-loading commercial clothes washers that exceeded the
January 8, 2013 baseline efficiency level of 1.60 MEF/8.5 WF.
Therefore, DOE did not specify any higher efficiency levels for top-
loading commercial clothes washers in the framework document. DOE also
stated, however, that should manufacturers develop models above the
baseline efficiency level, or should working prototypes above the
baseline efficiency level become available, DOE would consider
incorporating additional efficiency levels in its analysis.
Since the publishing of the framework document, DOE has become
aware of multiple top-loading clothes washers on the market, from
multiple manufacturers, at higher efficiency levels than the baseline
level represented by the January 8, 2013 amended standards.
Accordingly, DOE analyzed the higher efficiency levels shown in Table
IV.2 for the top-loading product class. Table IV.2 shows the efficiency
levels in terms of MEF and WF as measured using appendix J1, as well as
MEFJ2 and IWF as measured using appendix J2.
Table IV.2--Top-Loading Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Appendix J1 metrics Appendix J2 metrics
Level Efficiency level ---------------------------------------------------------------
source MEF WF MEFJ2 IWF
----------------------------------------------------------------------------------------------------------------
Baseline...................... DOE Standard.... 1.60 8.5 1.15 8.9
1............................. Gap Fill........ 1.70 8.4 1.35 8.8
3............................. Maximum 1.85 6.9 1.55 6.9
Available.
----------------------------------------------------------------------------------------------------------------
AHAM commented that more efficient standard levels for top-loading
commercial clothes washers are not justified, believing that standards
more stringent than the current level could create performance
concerns. AHAM stated that as hot water and water levels are reduced,
cleaning and rinse performance will suffer and may no longer meet
consumer expectations at standard levels beyond the January 2013
levels. AHAM also expressed concern that amended standards could
require changes in the spin speed, heavier lids, and door locks, and
that such changes could negatively impact consumer and end-user
utility. AHAM noted, for example, that consumers may find it more
difficult to use a clothes washer with a heavier lid or may not be able
to add clothing mid-cycle due to door locking. (AHAM, No. 6 at pp. 4-5)
ALS opposes any consideration of higher efficiency levels for top-
loading commercial clothes washers. At the time of its comment
submittal, ALS was not aware of any top-loading products that exceed
the January 2013 standard level. ALS stated that not enough time has
elapsed to evaluate consumer response or acceptability resulting from
deploying new top-loading models at the January 2013 standard level.
Accordingly, ALS believes the appropriate max-tech level for top-
loading commercial clothes washers is the 2013 DOE minimum standard.
ALS stated that it had opposed DOE's decision during the prior
rulemaking to establish the amended standard level at the max-tech
level, and that it had commented that removing hot water from the wash
cycle to achieve the proposed max-tech level would reduce cleaning
performance and negatively impact utility. ALS further commented that
``hot'' water is commonly recognized as 120 degrees Fahrenheit and
above; yet, according to ALS, the max-tech model from the prior
rulemaking provides 112 degrees wash water, which is commonly
recognized as ``warm''. ALS believes that further increasing the top-
loading standard level would further decrease consumer utility. (ALS,
No. 16 at pp. 3-4)
The California Utilities suggested that DOE analyze higher
efficiency levels for top-loading commercial clothes washers
corresponding to the higher efficiency
[[Page 12316]]
levels that DOE had analyzed during the most recent residential clothes
washer rulemaking. The California Utilities recommended levels ranging
from 1.72MEF/8.0WF to 2.47MEF/3.6WF at the max-tech level, as measured
using appendix J1. (California Utilities, No. 8 at p. 4)
NEEA commented that top-loading clothes washer technology has
advanced, but that it is not clear that the marketplace has
incorporated the newest technologies. NEEA recommended that DOE review
the max-tech level for top-loading commercial clothes washers. (NEEA,
No. 10 at p. 2)
NRDC and ASAP commented that the absence of products on the market
at a particular efficiency level above the baseline level does not
necessarily mean that efficiency levels above the baseline are not
technologically feasible. NRDC and ASAP added that should DOE retain
separate product classes for top-loading and front-loading commercial
clothes washers, DOE must identify a max-tech level for the top-loading
product class, noting that technology options may exist for improving
efficiency that have not yet been incorporated into current products.
(NRDC and ASAP, No. 11 at p. 4)
DOE developed its list of top-loading efficiency levels based on a
review of commercial clothes washer products currently on the market.
DOE gathered information through product testing and teardowns since
the framework meeting that reflect the state of the commercial clothes
washer market following the January 2013 product transitions.
DOE confirmed through its market assessment that products are
available for purchase at each of the identified efficiency levels. DOE
performed appendix J1 and appendix J2 testing on a representative
sample of top-loading commercial clothes washer models at each proposed
efficiency level. To investigate concerns regarding potential impacts
on cleaning performance, rinsing performance, and solid particle
removal, DOE performed additional testing on each model using AHAM's
HLW-1-2010 test method. DOE testing indicated that top-loading
commercial clothes washers are available on the market at the proposed
amended standard level that provide equivalent washing performance,
rinsing performance, and solid particle removal as current baseline
units. Chapter 5 of the TSD describes these test results in greater
detail. Regarding potential consumer utility impacts associated with
door locks, DOE's market analysis indicates that top-loading models
without door locks are currently available on the market at the
proposed amended standard level.
Regarding the higher efficiency levels considered in the
residential clothes washer rulemaking, DOE does not believe that the
more stringent levels above the identified maximum available level
would be appropriate for consideration in this commercial clothes
washer rulemaking, for many of the same reasons described previously
for the front-loading efficiency levels. First, no commercial clothes
washer models are currently available on the market above 1.85MEF/
6.9WF, as measured using appendix J1. Second, some of the design
options that would be required to achieve those higher efficiency
levels could be perceived by the machine owners and/or end users as
negatively impacting wash basket size. Most notably, achieving the
highest efficiency levels in the residential clothes washer market
requires implementing large-capacity wash baskets greater than 4.3
cubic feet. DOE notes that EPCA's product coverage definition of a top-
loading commercial clothes washer specifies a maximum capacity of 4.0
cubic feet, so units with the larger-capacity wash baskets would not be
covered equipment subject to DOE's energy conservation standards. (42
U.S.C. 6311(21)) In addition, as noted previously, a larger clothes
container capacity is considered a detriment to commercial clothes
washer owners because a larger-capacity tub may result in fewer wash
cycles performed by the end-user customer. Furthermore, the max-tech
residential clothes washers lack an agitator and instead use a circular
wash plate that requires different loading instructions than clothes
washers with traditional agitators. Manufacturers typically instruct
users not to load garments directly over the center of the wash plate,
so that the center of the wash plate remains visible when loaded. It is
unlikely that such specialized loading instructions would be
implementable in a commercial laundry environment such that the wash
performance of the unit would be maintained.
Based on the results of its market and technology assessment and
engineering analysis, DOE has determined that the maximum available
efficiency level identified in Table IV.2 represents the maximum
efficiency level that is technologically feasible for top-loading
commercial clothes washers.
6. Impacts on Cleaning Performance
As mentioned in the discussion of front-loading and top-loading
higher efficiency levels, DOE conducted performance testing to
quantitatively evaluate potential impacts on cleaning performance,
rinsing performance, and solid particle removal as a result of higher
standard levels. As described in greater detail in Chapter 5 of the
TSD, DOE tested a representative sample of commercial clothes washers
at each efficiency level using AHAM's HLW-1-2010 test procedure. For
each clothes washer, DOE tested the maximum load size specified in
appendix J2, rounded to the nearest pound, using the warm wash/cold
rinse cycle. Manufacturers indicated that the maximum load size is
particularly relevant to commercial clothes washer owners and operators
because end-users often overload the machines in order to limit their
total laundry cost. DOE notes that the warm wash/cold rinse temperature
selection has the highest usage factor in appendix J2. The test results
indicate that units meeting the proposed new standard levels are
capable of providing washing performance, rinsing performance, and
solid particle removal results equivalent to current baseline products.
ALS commented that no industry test method currently exists for
measuring the cleaning performance of commercial clothes washers, nor
has the industry agreed upon an acceptable range of performance
characteristics. ALS acknowledged AHAM's HLW-1 Performance Evaluation
Procedures for Household Clothes Washers, but stated that it may not be
fully appropriate for measuring the performance of commercial clothes
washers. (ALS, No. 16 at p. 4)
DOE consulted with a number of manufacturers who indicated that
AHAM HLW-1-2010 would be the most appropriate test method to determine
relative cleaning performance across different commercial clothes
washer models. DOE recognizes that AHAM HLW-1-2010 is typically used to
measure the performance of residential clothes washers, but given the
similarities in physical construction, DOE believes the test procedure
is appropriate for commercial clothes washers. DOE also acknowledges
that the commercial clothes washer industry has not agreed upon
acceptable ranges of performance characteristics; therefore, DOE's test
results should be used for relative comparison purposes only.
D. Markups Analysis
The markups analysis develops appropriate markups in the
distribution chain to convert the estimates of manufacturer selling
price derived in the engineering analysis to customer prices.
(``Customer'' refers to purchasers of the equipment being regulated.)
DOE
[[Page 12317]]
calculates overall baseline and incremental markups based on the
equipment markups at each step in the distribution chain. The
incremental markup relates the change in the manufacturer sales price
of higher efficiency models (the incremental cost increase) to the
change in the customer price.
For the three key CCW market segments--laundromats, private multi-
family housing, and large institutions--data indicate that an
overwhelming majority of commercial clothes washers are sold through
either distributors or route operators. For today's NOPR, DOE used two
distribution channels used in the 2010 Final Rule--manufacturer to
distributor to owner/lessee, and manufacturer to route operator to
owner/lessee. For purposes of developing the markups for commercial
clothes washers, DOE estimated that the markups and the resulting
consumer equipment prices determined for the distribution channel
involving distributors would be representative of the prices paid by
customers acquiring their equipment from route operators.
DOE based the distributor markups for commercial clothes washers on
financial data for the sector Machinery, Equipment and Supplies
Merchant Wholesalers from the 2007 U.S. Census Business Expenses Survey
(BES), which is the most recent available survey.\14\ This sector
includes the subsector Laundry Machinery, Equipment, and Supplies,
Commercial, Merchant Wholesalers, which specifically sells commercial
clothes washers. DOE calculated overall baseline and incremental
markups based on the equipment markups at the intermediate step in the
distribution chain. The incremental markup relates the change in the
manufacturer sales price of higher efficiency models (the incremental
cost increase) to the change in the customer price. Chapter 6 of the
NOPR TSD provides further detail on the estimation of markups.
---------------------------------------------------------------------------
\14\ U.S. Census Bureau, Economic Census, Business Expenses
Survey, Wholesale Trade, Machinery, Equipment and Supplies Merchant
Wholesalers, 2007. (Last accessed February, 2013.)
---------------------------------------------------------------------------
E. Energy and Water Use Analysis
The energy and water use analysis provides estimates of the annual
energy and water consumption of commercial clothes washer units at the
considered efficiency levels. DOE uses these values in the LCC and PBP
analyses and in the NIA. DOE developed energy and water consumption
estimates for all equipment classes analyzed in the engineering
analysis. The analysis seeks to capture the range of CCW use in the
field.
The framework document outlined DOE's intention to base the energy
and water use analysis on the energy and water use per cycle and the
number of cycles per year.
The test procedure uses a single value for number of cycles, which
is based on residential use. For the energy and water use analysis, DOE
established an appropriate range of usage specific to CCW in the field.
Because the predominant applications of CCWs are in multi-family
buildings and laundromats, DOE focused on these two building
applications to determine appropriate values for number of CCW cycles
per year.
NRDC and ASAP commented that DOE should include all major product
categories in its analysis for this rulemaking. The commenters noted
that ``other commercial applications'' in the statutory definition of
commercial clothes washers include washers used for on-premise laundry.
Further, the commenters stated that the on-premise laundry category
(such as in the hospitality industry) was largely ignored in the
technical analysis for the January 2010 final rule. The commenters
added that while the total unit count may be smaller than coin
laundries and multi-housing laundry, this subgroup may have distinctive
usage factors that will influence total energy and water use for
covered commercial clothes washers. (NRDC and ASAP, No. 11 at p. 1)
DOE acknowledges that the ``other commercial applications''
category in the statutory definition would include applications other
than coin-operated laundry and multi-family housing laundry. However,
DOE is not aware of any data indicating the prevalence of covered
products in other applications such on-premise laundries or the
hospitality industry. Furthermore, DOE is not aware of any data
indicating how the usage patterns of such products would compare to the
usage patterns of coin-operated and multi-housing laundries. Therefore,
DOE has no information on which to base a separate analysis for on-
premise laundry usage. Further, discussions with manufacturers have
supported DOE's understanding that applications other than coin-
operated laundries and multi-family housing laundries constitute a
small minority of installations of covered commercial clothes washers.
For these reasons, DOE's analysis for this NOPR focuses on the coin-
operated laundry and multi-housing laundry applications, which
represent the large majority of commercial clothes washer usage.
ALS suggested that DOE seek stakeholder input on new sources for
data that can assist in characterizing the cycles per year for CCWs.
(ALS, No. 97 at p. 5) DOE included all available studies on CCW usage
to establish representative usage. DOE welcomes information on data
sources other than those mentioned in today's NOPR.
For the NOPR analysis, DOE relied on several research studies to
arrive at a range of annual use cycles. The average values are 1,074
and 1,483 for multi-family and laundromat applications, respectively.
The data sources that informed these usage numbers include Multi-
Housing Laundry Association (MLA) and the Coin Laundry Association
(CLA), Southern California Edison, and San Diego Gas and Electric, as
well as research sponsored by the MLA and the CLA. Chapter 7 of the
NOPR TSD describes these sources in detail.\15\
---------------------------------------------------------------------------
\15\ DOE did not rely on the Commercial Building Energy
Consumption Survey (CBECS) conducted by DOE's Energy Information
Administration (EIA) because energy and water consumption is not
specified for buildings identified with laundry facilities in the
CBECS dataset.
---------------------------------------------------------------------------
To calculate the energy and water use per cycle, DOE used the new
Appendix J2 test procedure, as described in the paragraphs that follow.
(77 FR 13888, Mar. 7, 2012). Based on the known MEFJ2, IWF,
and remaining moisture content (RMC) of the washer, the test procedure
provides algorithms to derive energy and water use per cycle. The
energy use analysis for today's NOPR consists of three related parts--
the machine energy use, the dryer energy use and the water heating
energy use.
DOE determined the per-cycle machine energy use from the tests
results of the considered models, performed using the current DOE test
procedure (77 FR 13888, Mar. 7, 2012).
DOE determined the per-cycle clothes drying energy use by using
remaining moisture content (RMC) values contained in the cost/
efficiency data set developed in the engineering analysis. The energy
required to remove moisture from clothes, i.e., the dryer energy, is a
significant component of total clothes washer energy consumption. The
equation used to determine this energy component is as described in the
current DOE test procedure.
DOE determined the per-cycle water-heating energy use by first
determining the total per-cycle energy use (the clothes container
volume divided by the MEFJ2) and then subtracting from it
the per-cycle clothes-drying and machine energy.
Southern Company noted the importance of water heating energy and
[[Page 12318]]
dryer energy in the consideration of CCW energy use, and raised
concerns about the validity of the parameters specified in the test
procedure. Regarding water heating energy, Southern Company stated that
the assumed efficiency in the 2010 final rule DOE of 100% for electric
water heaters and 75% for gas water heaters was reasonable, but the
values should be updated as the weighted average efficiency of
installed water heaters changes over time. (Southern, No. 9 at p. 1)
DOE research indicates that the efficiency of the stock of commercial
water heaters is changing very slowly, so for today's NOPR it used the
same efficiencies as in the 2010 final rule.
Regarding dryer energy, Southern Company stated that energy use for
drying clothes is highly dependent on consumer behavior, and noted that
commercial dryers are usually equipped with a timer and do not have
moisture sensors. Southern also questioned the value used for variable
DEF, the nominal energy required for a clothes dryer to remove moisture
from clothes. It stated that the currently used DEF of 0.5 kWh per
pound appears to assume perfect operation and efficiency of drying.
They recommend DOE consider adjustments to the assumed benefits of
reduced clothing moisture for dryer operation. (Southern, No. 9 at p.
2)
DOE's current approach for quantifying reduction in dryer energy
use from an increase in CCW efficiency is based on the existing test
procedure for residential clothes washers. DOE acknowledges that
operating conditions for commercial dryers may differ from the
conditions of residential dryers, but DOE did not find any data to
support changing the dryer energy use calculation. However, in response
to comments received, DOE considered a sensitivity in the LCC and PBP
analysis in which the reduction in dryer energy use is half of what is
assumed in the test procedure.
Southern Company also stated that it is aware of a small soon-to-
be-completed study conducted by the Electric Power Research Institute
that found no measurable savings for high efficiency equipment for
direct energy use by residential washers and dryers. (Southern, No. 9
at p. 2) DOE attempted to obtain the study on observed energy savings
from washers in the field, but EPRI indicated that the study was
available only to EPRI members. Thus, DOE was not able to evaluate the
findings. In addition, DOE has concerns regarding both the sample size
and the applicability of a study of residential equipment to the
commercial equipment that is the subject of this analysis.
F. Life-Cycle Cost and Payback Period Analysis
The purpose of the LCC and PBP analysis is to analyze the effects
of potential amended energy conservation standards on customers of
commercial clothes washers by determining how a potential amended
standard affects their operating expenses (usually decreased) and their
total installed costs (usually increased).
The LCC is the total customer expense over the life of the
equipment, consisting of equipment and installation costs plus
operating costs over the lifetime of the equipment (expenses for energy
use, maintenance, and repair). DOE discounts future operating costs to
the time of purchase using customer discount rates. The PBP is the
estimated amount of time (in years) it takes customers to recover the
increased total installed cost (including equipment and installation
costs) of a more efficient type of equipment through lower operating
costs. DOE calculates the PBP by dividing the change in total installed
cost (normally higher) due to a standard by the change in annual
operating cost (normally lower) that results from the standard.
For any given efficiency level, DOE measures the PBP and the change
in LCC relative to an estimate of the base-case efficiency
distribution. The base-case estimate reflects the market in the absence
of amended energy conservation standards, including the market for
equipment that exceeds the current energy conservation standards.
DOE typically develops a consumer sample for determining PBPs and
LCC impacts. Because EIA's Commercial Building Energy Consumption
Survey (CBECS) does not provide the necessary data to develop one for
CCWs, DOE established the variability and uncertainty in energy and
water use by defining the uncertainty and variability in the use
(cycles per day) of the equipment. The variability in energy and water
pricing was characterized by regional differences in energy and water
prices.
DOE expresses the LCC and PBP results as the number of units
experiencing economic impacts of different magnitudes. DOE models both
the uncertainty and the variability in the inputs to the LCC and PBP
analysis using Monte Carlo simulation and probability
distributions.\16\ As a result, the LCC and PBP results are displayed
as distributions of impacts compared to the base case conditions.
---------------------------------------------------------------------------
\16\ The Monte Carlo process statistically captures input
variability and distribution without testing all possible input
combinations. Therefore, while some atypical situations may not be
captured in the analysis, DOE believes the analysis captures an
adequate range of situations in which small, large, and very large
air-cooled commercial package air conditioning and heating equipment
operate.
---------------------------------------------------------------------------
DOE conducted LCC and PBP analysis separately for two applications
in each of the equipment classes: Laundromats and multi-family
buildings. These applications have different usage characteristics.
Inputs to the LCC and PBP analysis are categorized as: (1) Inputs
for establishing the total installed cost and (2) inputs for
calculating the operating expense. The following sections contain brief
discussions of comments on the inputs and key assumptions of DOE's LCC
and PBP analysis and explain how DOE took these comments into
consideration.
1. Equipment Costs
To calculate the equipment prices faced by CCW purchasers, DOE
multiplied the manufacturing costs developed from the engineering
analysis by the supply chain markups it developed (along with sales
taxes).
For projecting future CCW prices, AHAM stated that DOE should not
rely on experience curves for the same reasons that it expressed in
comments for the microwave oven rulemaking. (AHAM, No. 19 at p. 5) To
develop an equipment price trend for the NOPR, DOE examined the
commercial laundry and dry-cleaning machinery PPI for the period 1993-
2012. This index, adjusted for inflation, shows a rising trend.
However, the inflation adjusted trend for household laundry equipment
(which more closely matches CCW units because the considered products
in this rulemaking are mostly residential-style units and exclude the
larger commercial laundry equipment) shows a long-term declining
trend.\17\ Given the uncertainty, DOE decided to use a constant price
for the default case for CCW units. For the NIA, DOE also analyzed the
sensitivity of results to alternative price forecasts. (See section
IV.X)
---------------------------------------------------------------------------
\17\ 2012-04 Direct Final Rule Technical Support Document--
Appendix 8-E. Estimation of Equipment Price Trends for Residential
Clothes Washers. http://www.regulations.gov/#!documentDetail;D=EERE-
2008-BT-STD-0019-0047.
---------------------------------------------------------------------------
In the previous CCW rulemaking, DOE based the LCC analysis on the
assumption that any increase in the cost of a more efficient unit that
is leased gets passed on to the building owners through the contracting
arrangements between route operators and building
[[Page 12319]]
owners. NRDC recommended that DOE seek information on contracting
arrangements between route operators and building owners. (NRDC, No. 12
at p. 81) DOE was unable to obtain information about contracting
arrangements between route operators and building owners. The
assumption that any increase in the cost of a more efficient unit that
is leased gets passed on is consistent with what one would expect in a
competitive business environment. To the extent that costs are not
passed on, the LCC savings for building owners from higher-efficiency
CCWs would be larger than indicated in today's NOPR.
2. Installation Costs
Installation costs include labor, overhead, and any miscellaneous
materials and parts. For today's NOPR, DOE used data from the RS Means
Mechanical Cost Data, 2013 on labor requirements to estimate
installation costs for CCWs. DOE estimates that installation costs do
not increase with equipment efficiency.
3. Unit Energy Consumption
The calculation of annual per-unit energy consumption at each
considered efficiency level is described above in section IV.E.
4. Energy and Water Prices
DOE used commercial sector energy and water prices for both multi-
family and laundromat applications. DOE assumes that common area
laundry facilities are mainly found in large multi-family buildings
that receive commercial energy and water rates.
a. Energy Prices
DOE derived average electricity and natural gas prices for 27
geographic areas. DOE estimated commercial electricity prices for each
of the 27 states and group of states based on 2012 data from EIA Form
861, Annual Electric Power Industry Report.\18\ DOE first estimated an
average commercial price for each utility, and then calculated an
average price for each area by weighting each utility with customers in
an area by the number of commercial customers served in that area.
---------------------------------------------------------------------------
\18\ http://www.eia.gov/electricity/data/eia861/.
---------------------------------------------------------------------------
DOE estimated average commercial natural gas prices in each of the
27 geographic areas based on 2012 data from the EIA publication Natural
Gas Monthly.\19\ DOE calculated an average natural gas price for each
area by first calculating the average prices for each state, and then
calculating a regional price by weighting each state in a region by its
population.
---------------------------------------------------------------------------
\19\ http://www.eia.gov/naturalgas/monthly/.
---------------------------------------------------------------------------
To estimate the trends in electricity and natural gas prices, DOE
used the price forecasts in AEO 2013. To arrive at prices in future
years, DOE multiplied the average prices described above by the
forecast of annual average changes in national-average commercial
electricity and natural gas prices. Because the AEO forecasts prices
only to 2040, DOE used the average rate of change during 2025-2040 to
estimate the price trends beyond 2040.
The spreadsheet tools used to conduct the LCC and PBP analysis
allow users to select either the AEO's high-growth case or low-growth
case price forecasts to estimate the sensitivity of the LCC and PBP to
different energy price forecasts.
b. Water and Wastewater Prices
DOE obtained commercial water and wastewater price data from the
Water and Wastewater Rate Survey conducted by Raftelis Financial
Consultants (RFC) and the American Water Works Association (AWWA).\20\
NRDC and ASAP suggested that DOE use the most recent AWWA/Raftelis
survey for calculating water and wastewater prices. (NRDC, No. 11 at p.
4) DOE obtained the water and wastewater price data from the 2012 Water
and Wastewater Rate Survey, the most recent survey conducted by RFC and
AWWA. The survey covers approximately 290 water utilities and 214
wastewater utilities from 44 states and the District of Columbia, with
water and wastewater utilities analyzed separately. The samples that
DOE obtained of the water and waste water utilities are not large
enough to calculate regional prices for all 27 states and group of
states. Hence, DOE calculated average values at the Census region level
(Northeast, South, Midwest, and West) by weighting each state in a
region by its population.
---------------------------------------------------------------------------
\20\ Raftelis Financial Consultants, Inc. 2012 RFC/AWWA Water
and Wastewater Rate Survey. 2013. Charlotte, NC, Kansas City, MO,
and Pasadena, CA. www.raftelis.com/ratessurvey.html.
---------------------------------------------------------------------------
To estimate the future trend for water and wastewater prices, DOE
used data on the historic trend in the national water price index (U.S.
city average) provided by the Bureau of Labor Statistics (BLS),
adjusted for inflation. Generally, DOE extrapolated a future trend
based on the linear growth from 1970 to 2012. However, using the linear
fit would have resulted in a price decline in the near-term, which does
not seem plausible because historically, water prices have not declined
in the country. Therefore, rather than use the extrapolated trend to
forecast the near-term trend after 2012, DOE pinned the annual price to
the value in 2012 until 2020. Beyond 2020, DOE used the extrapolated
trend to forecast prices out to 2047.
5. Repair and Maintenance Costs
Repair costs are associated with repairing or replacing components
that have failed in the appliance; maintenance costs are associated
with maintaining the operation of the equipment. For the January 2010
Final Rule, DOE included increased repair costs for higher efficiency
CCWs based on an algorithm developed by DOE for central air
conditioners and heat. This algorithm calculates annualized repair and
maintenance costs by dividing half of the equipment retail price over
the equipment lifetime. DOE requested industry input to estimate
changes in repair and maintenance costs with an increase in efficiency
of CCW units. AHAM stated that higher efficiency levels could impact
the maintenance and repair costs for CCW units. (AHAM, No. 6 at p. 5)
Since DOE did not receive any new inputs from manufacturers or national
route operators specific to repair and maintenance costs, it continued
with the approach used in the January 2010 Final Rule for today's NOPR.
This approach does show rising maintenance and repair costs as
efficiency increases.
6. Lifetime
Equipment lifetime is the age at which the equipment is retired
from service. For the 2010 Final Rule, DOE used a variety of sources to
establish low, average, and high estimates for equipment lifetime in
years. DOE characterized CCW lifetime with a Weibull probability
distribution. ALS suggested that DOE should expand its sources
(including route operators) for determining the average lifetime of CCW
units for multi-family and laundry applications. (ALS, No. 12 at p. 2)
DOE utilized the contact list submitted during the 2010 Final Rule to
reach out to national route operators to seek information on various
inputs to the analysis, including lifetime of the units, but was unable
to obtain information from them. For this NOPR, DOE updated its data
sources (as described in chapter 8 of the NOPR TSD), and found the same
average CCW lifetimes (11.3 years for multi-family building
applications and 7.1 years for laundromat applications) as used in the
2010 Final Rule. DOE used the same lifetime for each equipment class.
[[Page 12320]]
7. Discount Rate
The discount rate is the rate at which future expenditures are
discounted to estimate their present value. The cost of capital is
commonly used to estimate the present value of cash flows to be derived
from a typical company project or investment. Most companies use both
debt and equity capital to fund investments, so the cost of capital is
the weighted-average cost to the firm of equity and debt financing. DOE
uses the capital asset pricing model (CAPM) to calculate the equity
capital component, and financial data sources to calculate the cost of
debt financing.
For the 2010 Final Rule, DOE estimated the weighted-average cost of
capital of publicly traded firms in the key sectors that purchase CCWs
(i.e., personal services, educational services, hotels, and R.E.I.T--
building and apartment complex owners). For the current rulemaking, DOE
updated its data sources for calculating this cost. More details
regarding DOE's estimates of customer discount rates are provided in
chapter 8 of the NOPR TSD.
8. Base Case Efficiency Distribution
For the LCC and PBP analysis, DOE analyzes higher efficiency levels
relative to a baseline efficiency level. Some consumers, however, may
already purchase equipment with efficiencies greater than the baseline
equipment levels. To accurately estimate the percentage of consumers
that would be affected by a particular standard level, DOE estimates
the distribution of equipment efficiencies that consumers are expected
to purchase under the base case (i.e., the case without amended energy
efficiency standards). DOE refers to this distribution of equipment
energy efficiencies as a base-case efficiency distribution.
For today's NOPR, DOE utilized the shipment weighted efficiency
distributions for 2010-2011 submitted by AHAM to establish the base-
case efficiency distributions. Because the data are not sufficient to
capture any definite trend in efficiency, DOE used the 2011
distribution to represent the market in the compliance year (2018).
NRDC and ASAP stated that Energy Star unit shipment data should be used
in considering efficiency trends. (NRDC, No. 11 at p. 4) DOE found that
the Energy Star shipments data matched closely with the data submitted
by AHAM. Table IV.3 presents the market shares of the efficiency levels
in the base case for CCWs. See chapter 8 of the TSD for further details
on the development of CCW base-case market shares.
Table IV.3--Commercial Clothes Washers: Base Case Efficiency Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-loading Front-loading
----------------------------------------------------------------------------------------------------------------------
Standard level Market share Market share
MEFJ2 IWF (percent) Standard level MEFJ2 IWF (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline......................... 1.15 8.9 99.5 Baseline............ 1.65 5.2 28
1................................ 1.35 8.8 0.3 1................... 1.80 4.5 34
2................................ 1.55 6.9 0.3 2................... 2.00 4.1 38
.............. .............. ............... 3................... 2.20 3.9 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
9. Compliance Date
DOE calculated the LCC and PBP for all customers as if each were to
purchase new equipment in the year that compliance with amended
standards is required. EPCA, as amended, directs DOE to publish a final
rule amending the standard for the products covered by today's NOPR by
January 1, 2015. Any amended standards would apply to commercial
clothes washers manufactured three years after the date on which the
final amended standard is published. (42 U.S.C. 6313(e)(2)(B))
Therefore, for purposes of its analysis, DOE used 2018 as the first
year of compliance with amended standards.
10. Payback Period Inputs
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more efficient equipment,
compared to baseline equipment, through energy cost savings. Payback
periods are expressed in years. Payback periods that exceed the life of
the product mean that the increased total installed cost is not
recovered in reduced operating expenses.
The inputs to the PBP calculation are the total installed cost of
the product to the customer for each efficiency level and the average
annual operating expenditures for each efficiency level. The PBP
calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
11. Rebuttable-Presumption Payback Period
EPCA establishes a rebuttable presumption that a standard is
economically justified if the Secretary finds that the additional cost
to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy (and, as applicable, water) savings during the first year
that the consumer will receive as a result of the standard, as
calculated under the test procedure in place for that standard. For
each considered efficiency level, DOE determines the value of the first
year's energy savings by calculating the quantity of those savings in
accordance with the applicable DOE test procedure, and multiplying that
amount by the average energy price forecast for the year in which
compliance with the amended standards would be required.
G. Shipments Analysis
DOE uses projections of product shipments to calculate the national
impacts of standards on energy use, NPV, and future manufacturer cash
flows. DOE develops shipment projections based on historical data and
an analysis of key market drivers for each product. Historical
shipments data are used to build up an equipment stock and also to
calibrate the shipments model.
In projecting CCW shipments, DOE accounted for three market
segments: (1) New construction; (2) existing buildings (i.e., replacing
failed equipment); and (3) retired units not replaced. DOE used the
non-replacement market segment to calibrate the shipments model to
historical shipments data.
Based on historical CCW price and shipments data, DOE determined
that the considered standards would be unlikely to affect CCW
shipments.
Table IV.4 summarizes the approach and data DOE used to derive the
inputs to the shipments analysis for today's NOPR. DOE projected CCW
shipments (for both equipment classes) for the new construction and
replacement markets,
[[Page 12321]]
and also accounted for non-replacement of retired units. DOE then
allocated shipments to each of the two equipment classes based on the
current market share of each class. Based on data submitted by AHAM,
DOE estimated that top-loading washers comprise 64 percent of the
market while front-loading washers comprise 36 percent. DOE implemented
change in the market share for the projection period based on the
historical trend that shows a gradual market shift towards front-
loading units, with the market stabilizing at 52 percent and 48 percent
for top-loading and front-loading by 2047.
Table IV.4--Approach and Data Used To Derive the Inputs to the Shipments
Analysis
------------------------------------------------------------------------
Inputs Approach
------------------------------------------------------------------------
Number of Equipment Classes.. Two: top-loading washers and front-
loading washers. Shipments forecasts
established for all CCWs and then
disaggregated into the two equipment
classes based on the market share of top-
and front-loading washers.
New Construction Shipments... Determined by multiplying multi-housing
forecasts by forecasted saturation of
CCWs for new multi-housing. Multi-
housing forecasts with AEO 2013.
Verified frozen saturations with data
from the U.S. Census Bureau's American
Housing Survey (AHS) for 1997-2011.
Replacements................. Determined by tracking total equipment
stock by vintage and establishing the
failure of the stock using retirement
functions from the LCC and PBP analysis.
Retirement functions revised to be based
on Weibull lifetime distributions.
Retired Units not Replaced Used to calibrate shipments model to
(i.e., non-replacements). historical shipments data. Froze the
percentage of non-replacements at 31.6
percent for the period 2012-2047 to
account for the increased saturation
rate of in-unit washers in the multi-
family stock between 2000 and 2011
timeframe shown by the AHS.
Historical Shipments......... Data sources include AHAM data submittal,
Appliance Magazine, and U.S. Bureau of
Economic Analysis' quantity index data
for commercial laundry. Relative market
shares of the two equipment
applications, common-area laundry
facilities in multi-family housing and
laundromats, estimated to be 85 and 15
percent, respectively.
------------------------------------------------------------------------
DOE implemented a cross-price elasticity to capture the response to
a change in price of one equipment class on the demand of the other
equipment class. Due to insufficient data on CCW units, DOE was not
able to estimate cross-price impacts on the market share of top-loading
and front-loading commercial clothes washers and instead relied on its
analysis performed for the 2012 residential clothes washers
rulemaking.\21\ The regression results suggest that a 10% increase in
the price of front-loading washers would lead to a 10.7% decrease in
top-loading washers' market share, holding other variables constant and
measured as changes from the reference case using average values for
each variable. In this case, the front-loading cross-price impact
(percent change in top-loading market share over percent change in
front-loading price) is 1.07. The results indicate that a 20% price
increase for top-loading washers would yield a 21.49 percent increase
in front-loading market share. Thus, in this example, the top-loading
washer cross-price impact is also 1.07. For further details on this
estimation, please refer to chapter 9 of the NOPR TSD.
---------------------------------------------------------------------------
\21\ See chapter 9 in Direct Final Rule Technical Support
Document. http://www.regulations.gov/#!documentDetail;D=EERE-2008-
BT-STD-0019-0047.
---------------------------------------------------------------------------
1. Shipments by Market Segment
For the new construction market, DOE assumed shipments are driven
solely by multi-family construction starts. Implicit in this assumption
is the fact that a certain percentage of multi-family residents will
need to wash their laundry in either a common-area laundry facility
(within the multi-family building) or a laundromat.
For existing buildings replacing broken equipment, the shipments
model uses a stock accounting framework. Given the equipment entering
the stock in each year and a retirement function based on the lifetime
distribution developed in the LCC analysis, the model predicts how many
units reach the end of their lifetime in each year. DOE typically
refers to new shipments intended to replace retired units as
``replacement'' shipments. Such shipments are usually the largest part
of total shipments.
Historical data show a rise in shipments in the 2nd half of the
1990s followed by a significant drop in 1999-2002, and a slower decline
since then. DOE believes that a large part of the decline was due to
growth of in-unit washers in multi-family housing (possibly due to
conversions of rental property to condominiums), leading to non-
replacement of failed commercial clothes washers in common-area laundry
facilities.\22\ To account for the decline and to reconcile the
historical shipments with the accounting model, DOE assumed that every
retired unit is not replaced. Starting in 1999 and extending to 2011,
DOE estimated the share of retired units that were not replaced (as
discussed in chapter 9 of the NOPR TSD).
---------------------------------------------------------------------------
\22\ Data from the American Housing Survey as well as RECS
indicate that there has been growth of in-unit washer saturation in
the multi-family housing stock over the last 10-15 years. See
chapter 9 of the NOPR TSD for further discussion.
---------------------------------------------------------------------------
H. National Impact Analysis
The NIA assesses the national energy savings (NES) and the national
NPV of total customer costs and savings that would be expected to
result from amended standards at specific efficiency levels.
DOE used an MS Excel spreadsheet model to calculate the energy
savings and the national customer costs and savings from each TSL.\23\
The NIA calculations are based on the annual energy consumption and
total installed cost data from the energy use analysis and the LCC
analysis. DOE projected the lifetime energy savings, energy cost
savings, equipment costs, and NPV of customer benefits for each
equipment class for equipment sold from 2018 through 2047.
---------------------------------------------------------------------------
\23\ DOE's use of MS Excel as the basis for the spreadsheet
models provides interested parties with access to the models within
a familiar context. In addition, the TSD and other documentation
that DOE provides during the rulemaking help explain the models and
how to use them, and interested parties can review DOE's analyses by
changing various input quantities within the spreadsheet.
---------------------------------------------------------------------------
DOE evaluated the impacts of potential amended standards for front-
loading and top-loading CCW by comparing base-case projections with
standards-case projections. The base-case projections characterize
energy use and customer costs for each equipment
[[Page 12322]]
class in the absence of amended energy conservation standards.
Table IV.5 briefly describes the key inputs for the NIA. The
sections following provide further details, as does chapter 10 of the
NOPR TSD.
Table IV.5--Inputs for the National Impact Analysis
------------------------------------------------------------------------
Input Description
------------------------------------------------------------------------
Shipments.............................. Annual shipments from shipments
model.
Compliance date........................ January 1, 2018.
Base case efficiency................... Based on the current market
distribution of efficiencies,
with the option of a frozen,
1%, and 2% growth in
efficiency.
Standards case efficiency.............. Based on a ``Roll up'' scenario
to establish a 2018 shipment
weighted efficiency.
Annual energy and water consumption per Calculated for each efficiency
unit. level and equipment class
based on inputs from the
energy and water use analysis.
Total installed cost per unit.......... Calculated equipment prices by
efficiency level using
manufacturer selling prices
and weighted-average overall
markup values. Installation
costs vary in direct
proportion to the weight of
the equipment.
Electricity and water expense per unit. Annual energy use for each
equipment class is multiplied
by the corresponding average
energy and water and
wastewater price.
Escalation of electricity and water AEO 2013 forecasts (to 2040)
prices. and extrapolation beyond 2040
for electricity and gas
prices. BLS's historical
Consumer Price Index for water
for projecting the prices
beyond 2020.
Electricity site-to-primary energy A time series conversion
conversion. factor; includes electric
generation, transmission, and
distribution losses.
Discount rates......................... 3% and 7% real.
Present year........................... 2013.
------------------------------------------------------------------------
1. Efficiency Trends
A key component of DOE's estimates of NES and NPV is the equipment
energy and water efficiencies forecasted over time for the base case
and for each of the standards cases. For the base case, DOE considered
the lack of change in the historical trends and assumed that efficiency
would remain constant at the 2018 levels derived in the LCC and PBP
analysis. DOE provides a 1% and 2% efficiency growth rates as options
for sensitivities.
To estimate the impact that standards would have in the year
compliance becomes required, DOE used a ``roll-up'' scenario, which
assumes that equipment efficiencies in the base case that do not meet
the standard level under consideration would ``roll up'' to meet the
new standard level and equipment shipments at efficiencies above the
standard level under consideration are not affected. In each standards
case, the efficiency distributions remain constant at the 2018 levels
for the remainder of the shipments forecast period.
2. National Energy and Water Savings
For each year in the forecast period, DOE calculates the national
energy and water savings for each standard level by multiplying the
shipments of front-loading and top-loading by the per-unit annual
energy and water savings. Cumulative energy and water savings are the
sum of the annual energy and water savings over the lifetime of all
equipment shipped during 2018-2047.
The annual energy consumption per unit depends directly on
equipment efficiency. DOE used the shipment-weighted energy and water
efficiencies associated with the base case and each standards case, in
combination with the annual energy and water use data, to estimate the
shipment-weighted average annual per-unit energy and water consumption
under the base case and standards cases. The national energy
consumption is the product of the annual energy consumption per unit
and the number of units of each vintage, which depends on shipments.
DOE calculates the total annual site energy savings for a given
standards case by subtracting total energy use in the standards case
from total energy use in the base case. Note that shipments are the
same in the standards cases as in the base case.
DOE converted the site electricity consumption and savings to
primary energy (power sector energy consumption) using annual
conversion factors derived from the AEO 2013 version of the NEMS.
Cumulative primary energy and water savings are the sum of the national
energy and water savings for each year in which equipment shipped
during 2018-2047 continue to operate.
DOE has historically presented national energy savings 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). While DOE stated in that notice that it intended to use the
Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation
(GREET) model to conduct the analysis, it also said it would review
alternative methods, including the use of EIA's National Energy
Modeling System (NEMS). After evaluating both models and 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 a more appropriate tool for this specific
use. 77 FR 49701 (August 17, 2012). Therefore, DOE is using NEMS to
conduct FFC analyses. The approach used for today's NOPR, and the FFC
multipliers that were applied, are described in appendix 10-A of the
NOPR TSD.
3. Net Present Value of Customer Benefit
The inputs for determining the NPV of the total costs and benefits
experienced by customers of the considered equipment are: (1) Total
annual installed cost; (2) total annual savings in operating costs; and
(3) a discount factor. DOE calculates the lifetime net savings for
equipment shipped each year as the difference between the base case and
each standards case in total savings in lifetime operating costs and
total
[[Page 12323]]
increases in installed costs. DOE calculates lifetime operating cost
savings over the life of each front-loading and top-loading CCW unit
shipped during the forecast period.
a. Total Annual Installed Cost
The total installed cost includes both the equipment price and the
installation cost. For each equipment class, DOE calculated equipment
prices by efficiency level using manufacturer selling prices and
weighted-average overall markup values (weights based on shares of the
distribution channels used). Because DOE calculated the total installed
cost as a function of equipment efficiency, it was able to determine
annual total installed costs based on the annual shipment-weighted
efficiency levels determined in the shipments model.
As noted in section IV.F.1, DOE assumed no change in front-loading
and top-loading CCW equipment prices over the analysis period. However,
DOE conducted sensitivity analyses using alternative price trends: one
in which prices decline after 2013, and one in which prices rise. These
price trends, and the NPV results from the associated sensitivity
cases, are described in appendix 10-B of the NOPR TSD.
b. Total Annual Operating Cost Savings
The per-unit energy and water savings were derived as described in
section IV.H.2. To calculate future electricity and natural gas prices,
DOE applied the projected trend in national-average commercial
electricity and natural gas price from the AEO 2013 Reference case,
which extends to 2040, to the prices derived in the LCC and PBP
analysis. DOE used the trend from 2025 to 2040 to extrapolate beyond
2040. To calculate future water prices, DOE applied the historical
price trend based on the consumer price index of water, published by
the Bureau of Labor Statistics.
In addition, DOE analyzed scenarios that used the energy price
projections in the AEO 2013 Low Economic Growth and High Economic
Growth cases. These cases have higher and lower energy price trends
compared to the Reference case. These price trends, and the NPV results
from the associated cases, are described in appendix 10-C of the NOPR
TSD.
DOE estimated that annual maintenance costs (including minor
repairs) do not vary with efficiency within each equipment class, so
they do not figure into the annual operating cost savings for a given
standards case. In addition, as noted previously, DOE developed
annualized repair costs using the approach described in Section IV.F.5.
In calculating the NPV, DOE multiplies the net dollar savings in
future years by a discount factor to determine their present value. DOE
estimates the NPV using both a 3-percent and a 7-percent real discount
rate, in accordance with guidance provided by the Office of Management
and Budget (OMB) to Federal agencies on the development of regulatory
analysis.\24\ The discount rates for the determination of NPV are in
contrast to the discount rates used in the LCC analysis, which are
designed to reflect a consumer's perspective. The 7-percent real value
is an estimate of the average before-tax rate of return to private
capital in the U.S. economy. The 3-percent real value represents the
``social rate of time preference,'' which is the rate at which society
discounts future consumption flows to their present value.
---------------------------------------------------------------------------
\24\ OMB Circular A-4, section E (Sept. 17, 2003). Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------
I. Customer Subgroup Analysis
In analyzing the potential impacts of new or amended standards, DOE
evaluates impacts on identifiable groups (i.e., subgroups) of customers
that may be disproportionately affected by a national standard. For the
NOPR, DOE evaluated impacts on a small business subgroup using the LCC
spreadsheet model. The customer subgroup analysis is discussed in
detail in chapter 11 of the NOPR TSD.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the impacts of amended energy
conservation standards on manufacturers of commercial clothes washers.
The MIA has both quantitative and qualitative aspects and includes
analyses of forecasted industry cash flows, the INPV, investments in
research and development (R&D) and manufacturing capital, and domestic
manufacturing employment. Additionally, the MIA seeks to determine how
amended energy conservation standards might affect manufacturing
capacity, and competition, as well as how standards contribute to
overall regulatory burden. Finally, the MIA serves to identify any
disproportionate impacts on manufacturer subgroups.
The quantitative part of the MIA relies primarily on the Government
Regulatory Impact Model (GRIM), an industry cash flow model with inputs
specific to this rulemaking. The key GRIM inputs include data on the
industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry weighted average cost of capital,
and the impact to domestic manufacturing employment. The model
estimates the impacts of amended energy conservation standards on a
given industry by comparing changes in INPV and domestic manufacturing
employment between a base case and the various TSLs in the standards
case. To capture the uncertainty relating to manufacturer pricing
strategy following amended standards, the GRIM estimates a range of
possible impacts under different markup scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as manufacturing capacity, competition within the industry, the
cumulative impact of other regulations, and impacts on manufacturer
subgroups. The complete MIA is outlined in chapter 12 of the NOPR TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the commercial clothes washer
manufacturing industry. DOE used public sources of information to
derive preliminary financial inputs for the GRIM (e.g., revenues;
materials, labor, overhead, and depreciation expenses; selling,
general, and administrative expenses (SG&A); and R&D expenses). Sources
of data used in this initial characterization of the commercial clothes
washer manufacturing industry included company filings of form 10-K
from the Securities and Exchange Commission (SEC), corporate annual
reports, the U.S. Census Bureau's Economic Census, and reports from Dun
& Bradstreet.
In Phase 2 of the MIA, DOE prepared an industry cash flow analysis
to quantify the impacts of new and amended energy conservation
standards. The GRIM uses several factors to determine a series of
annual cash flows starting with the announcement of the standard and
extending over a 30-year period following the effective date of the
standard. These factors include annual expected revenues, costs of
sales, SG&A and R&D expenses, taxes, and capital expenditures. In
general, energy conservation standards can affect
[[Page 12324]]
manufacturer cash flow in three distinct ways: (1) Create a need for
increased investment; (2) raise production costs per unit; and (3)
alter revenue due to higher per-unit prices and changes in sales
volumes.
In Phase 3 of the MIA, DOE interviewed representative
manufacturers. During these interviews, DOE discussed engineering,
manufacturing, procurement, and financial topics to validate
assumptions used in the GRIM and to identify key issues or concerns.
See section IV.J.4 for a description of the key issues raised by
manufacturers during the interviews. As part of Phase 3, DOE also
evaluated subgroups of manufacturers that may be disproportionately
impacted by amended standards or that may not be accurately represented
by the average cost assumptions used to develop the industry cash flow
analysis. In addition to small business manufacturers, such
manufacturer subgroups may include low volume manufacturers (LVMs),
niche players, and/or manufacturers exhibiting a cost structure that
largely differs from the industry average. DOE identified two subgroups
for which average cost assumptions may not hold: small businesses and
LVMs.
Based on the size standards published by the SBA and available at
http://www.sba.gov/content/table-small-business-size-standards, to be
categorized as a small business manufacturer of commercial clothes
washers under North American Industry Classification System (NAICS)
333318, ``Other commercial and service industry machinery
manufacturing,'' a commercial laundry equipment manufacturer and its
affiliates may employ a maximum of 1000 employees. The 1000-employee
threshold includes all employees in a business's parent company and any
other subsidiaries. Using this classification in conjunction with a
search of industry databases and the SBA member directory, DOE did not
identify any manufacturers of commercial clothes washers that qualify
as small businesses.
Unlike small business manufacturers, there is no employment limit
associated with LVMs. Instead, LVMs are characterized by their low
overall production volumes relative to their competitors, often
associated with specialization within a singular industry. In the
industry characterization from Phase 1, DOE identified two
manufacturers that represent over 90 percent of commercial clothes
washer shipments.\25\ DOE categorized one of these manufacturers as a
LVM because of the concentration of its business in commercial clothes
washers relative to its competitors. In 2012, the LVM derived 98
percent of its revenues from the sale of laundry equipment and service
parts, while, for its main competitor, this percentage was 30 percent.
Within the washer segment, DOE estimates that the LVM derived 88
percent of its washer equipment revenues from the sale of commercial
clothes washers covered by this rulemaking. Because the commercial
clothes washer industry itself is characterized by low total shipments,
with less than 200,000 units sold annually in the U.S., the
concentration of this manufacturer's business in this industry
qualifies them as an LVM. Where the LVM operates at a much smaller
scale and does not manufacture products across a broad range of
industries, this rulemaking could have disproportionate impacts on the
LVM compared to its large, diversified competitors. Accordingly, DOE
performed an in-depth analysis of the issues relating to the commercial
clothes washer LVM. The manufacturer subgroup analysis is discussed in
greater detail in Chapter 12 of the NOPR TSD and in section V.B.2.d of
this notice.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in industry cash flows
resulting from amended energy conservation standards. The GRIM uses
manufacturer costs, markups, shipments, and industry financial
information to arrive at a series of base-case annual cash flows absent
new or amended standards, beginning with the present year, 2013, and
continuing through 2047. The GRIM then models changes in costs,
investments, shipments, and manufacturer margins that may result from
new or amended energy conservation standards and compares these results
against those in the base-case forecast of annual cash flows. The
primary quantitative output of the GRIM is the INPV, which DOE
calculates by summing the stream of annual discounted cash flows over
the full analysis period. For manufacturers of commercial clothes
washers, DOE used a real discount rate of 8.6 percent, the weighted
average cost of capital derived from industry financials and modified
based on feedback received during confidential interviews with
manufacturers.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the base case and the various
TSLs. The difference in INPV between the base case and a standards case
represents the financial impact of the amended standard on
manufacturers at that particular TSL. As discussed previously, DOE
collected the necessary information to develop key GRIM inputs from a
number of sources, including publicly available data and interviews
with manufacturers (described in the next section). The GRIM results
are shown in section V.B.2.a. Additional details about the GRIM can be
found in chapter 12 of the NOPR TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
Manufacturing a higher efficiency product is typically more
expensive than manufacturing a baseline product due to the use of more
complex and typically more costly components. The changes in the MPCs
of the analyzed products can affect the revenues, gross margins, and
cash flow of the industry, making product cost data key GRIM inputs for
DOE's analysis. For each efficiency level of each equipment class, DOE
used the MPCs developed in the engineering analysis, as described in
section IV.A.2 and further detailed in chapter 5 of the NOPR TSD.
Additionally, DOE used information from its teardown analysis,
described in section IV.C to disaggregate the MPCs into material and
labor costs. These cost breakdowns and equipment markups were validated
with manufacturers during manufacturer interviews.
Base-Case Shipments Forecast
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of shipments by efficiency
level. Changes in sales volumes and efficiency mix over time can
significantly affect manufacturer finances. For this analysis, the GRIM
uses the NIA's annual shipment forecasts derived from the shipments
analysis from 2013, the base year, to 2047, the end of the analysis
period. See chapter 9 of the NOPR TSD for additional details.
Standards-Case Shipments Forecast
For each standards case, the GRIM assumes that shipments of
products below the projected minimum standard levels would roll up to
the standard efficiency levels in response to an increase in energy
conservation standards. The GRIM also assumes that demand for high-
efficiency equipment is a function of price, and is independent of the
standard level. Additionally, the standards case shipments forecast
includes a partial shift of shipments from one equipment class to
another depending on the standard level, reflecting positive cross-
[[Page 12325]]
price elasticity of demand, as one equipment class becomes relatively
more expensive than the other to produce and for consumers to purchase.
A decrease in shipments offsets the relative increase in costs to
produce at a given TSL for a given equipment class. See Chapter 9 of
the NOPR TSD for additional details.
Product and Capital Conversion Costs
Amended energy conservation standards may cause manufacturers to
incur one-time conversion costs to bring their production facilities
and product designs into compliance with the new standards. For the
purpose of the MIA, DOE classified these one-time conversion costs into
two major groups: (1) Product conversion and (2) capital conversion
costs. Product conversion costs are investments in research,
development, testing, and marketing, focused on making product designs
comply with the new energy conservation standard. Capital conversion
expenditures are investments in property, plant, and equipment to adapt
or change existing production facilities so that new product designs
can be fabricated and assembled.
Stranded Assets
If new or amended energy conservation standards require investment
in new manufacturing capital, there also exists the possibility that
they will render existing manufacturing capital obsolete. If this
obsolete manufacturing capital is not fully depreciated at the time new
or amended standards go into effect, this would result in the stranding
of these assets, and would necessitate the expensing of the residual
un-depreciated value.
DOE used multiple sources of data to evaluate the level of product
and capital conversion costs and stranded assets manufacturers would
likely face to comply with amended energy conservation standards. DOE
used manufacturer interviews to gather data on the level of investment
anticipated at each proposed efficiency level and validated these
assumptions using estimates of capital requirements derived from the
product teardown analysis and engineering model described in section
IV.C. These estimates were then aggregated and scaled to derive total
industry estimates of product and capital conversion costs and to
protect confidential information.
In general, DOE assumes that all conversion-related investments
occur between the year the final rule is published and the year by
which manufacturers must comply with the new or amended standards. The
investment figures used in the GRIM can be found in section V.B.2 of
this notice. For additional information on the estimated product
conversion and capital conversion costs, see chapter 12 of the NOPR
TSD.
b. Government Regulatory Impact Model Scenarios
Markup Scenarios
As discussed in section IV.D, MSPs include direct manufacturing
production costs (i.e., labor, material, overhead, and depreciation
estimated in DOE's MPCs) and all non-production costs (i.e., SG&A, R&D,
and interest), along with profit. To calculate the MSPs in the GRIM,
DOE applied manufacturer markups to the MPCs estimated in the
engineering analysis. Modifying these markups in the standards case
yields different sets of impacts on manufacturers. For the MIA, DOE
modeled two standards-case markup scenarios to represent the
uncertainty regarding the potential impacts on prices and profitability
for manufacturers following the implementation of amended energy
conservation standards: (1) A preservation of gross margin \26\
(percentage) scenario; and (2) a preservation of operating profits (in
absolute dollars) scenario. These scenarios lead to different markups
values that, when applied to the MPCs, result in varying revenue and
cash flow impacts.
---------------------------------------------------------------------------
\26\ ``Gross margin'' is defined as revenues minus cost of goods
sold. On a unit basis, gross margin is selling price minus
manufacturer production cost. In the GRIMs, markups determine the
gross margin because various markups are applied to the manufacturer
production costs to reach manufacturer selling price.
---------------------------------------------------------------------------
Under the preservation of gross margin percentage scenario, DOE
applied a single, uniform ``gross margin percentage'' markup across all
efficiency levels. As production costs increase with efficiency, this
scenario implies that the absolute dollar markup will increase as well.
Based on publicly available financial information for manufacturers of
commercial clothes washers and comments from manufacturer interviews,
DOE assumed the industry average markup on production costs to be
1.285. Because this markup scenario assumes that manufacturers would be
able to maintain their gross margin percentage as production costs
increase in response to an amended energy conservation standard, it
represents a lower bound of industry impacts (higher industry
profitability) under an amended energy conservation standard.
In the preservation of operating profits (in absolute dollars)
scenario, manufacturer markups are calibrated so that operating profits
(in absolute dollars) in the year after the compliance date of the
amended energy conservation standard is the same as in the base case.
Under this scenario, as the cost of production goes up, manufacturers
are generally required to reduce the markups on their minimally
compliant products to maintain a cost competitive offering. The
implicit assumption behind this scenario is that the industry can only
maintain operating profits after compliance with the amended standard
is required. Therefore, gross margin (as a percentage) shrinks in the
standards cases. This markup scenario represents an upper bound of
industry impacts (lower profitability) under an amended energy
conservation standard.
3. Discussion of Comments
At the Framework public meeting, AHAM commented that DOE should
interview the customers of commercial clothes washer manufacturers, as
customers will have valuable information on issues including the impact
of higher efficiency standards on end user utility and whether
standards will increase maintenance and repair costs (AHAM, No. 13 at
pp. 5). Because commercial clothes washer customers have direct access
to the end user, these customers may have information concerning
consumer usage patterns and utility, as well as maintenance and repair
costs. DOE attempted to contact, but did not receive any affirmative
responses, from national route operators and trade groups representing
multi-housing laundry providers and coin laundry owners, all of whom
purchase CCWs. DOE will continue to solicit feedback from route
operators prior to publishing the final rule.
4. Manufacturer Interviews
To inform the MIA, DOE interviewed manufacturers with an estimated
combined market share of 95 percent. The information gathered during
these interviews enabled DOE to tailor the GRIM to reflect the unique
financial characteristics of the commercial clothes washer industry.
These interviews provided information that DOE used to evaluate the
impacts of amended energy conservation standards on manufacturer cash
flows, manufacturing capacities, and employment levels.
During the interviews, DOE asked manufacturers to describe their
major
[[Page 12326]]
concerns about this rulemaking. The following sections describe the
most significant issues identified by manufacturers. DOE also includes
additional concerns in chapter 12 of the NOPR TSD.
a. Impacts to Cleaning Performance
All of the manufacturers interviewed expressed concerns that future
energy conservation standards would have an adverse impact on cleaning
performance and reliability. One manufacturer asserted that products
currently considered to be at the max-tech efficiency level are not
truly commercial products. Another manufacturer noted that reaching the
max-tech level would require higher spin speeds, which could decrease
the reliability of the product. Two manufacturers expressed concerns
that the max-tech level for top loaders pushes the boundary of
acceptable water level in terms of both cleaning performance and market
acceptance. The lower water level of max-tech products would
necessitate lighter loads in order to maintain cleaning performance. A
lighter load size requirement would contradict consumer tendencies to
overload machines. As discussed in section IV.C.6, and further in
chapter 5 of the TSD, DOE has determined that the proposed standards
would not negatively impact the cleaning performance of commercial
clothes washers.
b. Consumer Behavior
All manufacturers noted that energy efficiency efforts are
inherently less effective in the commercial clothes washer market than
in markets for residential appliances, including residential clothes
washers. They attributed this to the usage patterns of commercial
clothes washer end users, reflecting the fact that end users: (1) Do
not own the machines, and (2) pay by the load to use machines. Such
usage patterns include tendencies to put too much detergent into
machines (leading to ``suds lock'', a condition where the clothes
washer is unable to achieve full spin speed due to the friction caused
by detergent suds in gap between the inner wash basket and outer wash
tub), overfilling machines with oversized loads, choosing to use hot
water when it is unnecessary to do so, and washing clothes twice to
counteract the effect of having used too much detergent.
Platform changes and reduced water levels of higher efficiency
products exacerbate these issues. One manufacturer noted that there is
a steep learning curve for end users relating to adaptation to low-
water machines. For instance, end users should be using high efficiency
detergents in recommended quantities, yet are unlikely to do so.
Concerns that machines are not functioning properly leads to increased
service calls. Another manufacturer noted that end user dissatisfaction
with high efficiency products may drive the need for selectable cycle
modifiers, which would allow end users to choose less efficient
settings to reach an acceptable level of cleaning performance to
resolve the performance issues caused by incorrect use of the machines.
Selectable modifiers would undermine the energy savings otherwise
achievable with higher efficiency machines.
As discussed in section IV.C.6, and further in chapter 5 of the
TSD, DOE has determined that the proposed standards would not
negatively impact the cleaning performance of commercial clothes
washers. Furthermore, DOE has determined that the proposed standards
would not require significant design (platform) changes to either top-
loading or front-loading CCWs, and thus would not require changes in
user operation compared to current baseline products. Therefore, the
consumer behaviors noted by commenters would not be exacerbated by the
proposed amended standards. In addition, DOE notes that since viable
products are readily available at the proposed standard levels, the use
of optional selectable cycle modifiers will not be necessary to achieve
acceptable levels of cleaning performance.
c. Disproportionate Impacts
Several manufacturers expressed concerns relating to competitive
impacts caused by future energy conservation standards. One
manufacturer specifically noted that a genuine and comprehensive
approach to redesigning products to meet DOE standards will result in a
competitive disadvantage relative to other manufacturers. As this
company's revenue is so closely tied to commercial clothes washers,
they predict that any increase in standards will impact their business
disproportionately. For a detailed discussion of the manufacturer
subgroup analysis, see chapter 12 of the NOPR TSD.
d. Market Model Challenges
The majority of the manufacturers interviewed emphasized that the
profit structure of the commercial clothes washer market fundamentally
opposes increased levels of product efficiency, and that an amended
conservation standard would negatively impact the profits of
manufacturers' customers, in addition to their own.
Commercial clothes washer manufacturers sell their products to
either route-operators, distributors, or both. Route-operators lease
the machines to multi-family housing unit owners under 5- to 15-year
contract agreements, and typically provide a 1-2 day service guarantee
on their machines. Distributors sell commercial clothes washers to
owners of laundromats.
The profits of both route-operators and laundromat owners are
driven by throughput, which is maximized by small capacity machines
with short cycle times (less than 35 minutes). In addition to
maximizing throughput, one manufacturer noted that consistency of cycle
times (at approximately 32 minutes) is necessary for ensuring the
correct number of washers and dryers in a given premise or laundromat.
Thus, commercial clothes washer manufacturers are constrained by
capacity and cycle time limits in any efforts to further increase the
efficiency of their machines. Also, due to the length of route-
operators lease contracts with their customers, if energy efficiency
improvements necessitate an increase in manufacturing selling price,
any required replacement of units before lease contracts are expired
will likely squeeze route-operators' profits, as they will not be able
to pass-through increased unit costs to lessees. One manufacturer noted
that in instances where route-operators and laundromat owners are able
to pass-through the costs of energy efficiency improvements, this will
negatively impact end users who are often the least able to bear
increased costs, as users of commercial laundry machines tend to be
from lower income consumer subgroups.
Finally, several manufacturers asserted that higher efficiency
machines require more complex designs and hence more time and money to
repair. Additionally, efficiency changes, such as reduced water levels,
are likely to be ill-received by end users and will lead to increases
in service calls and failures. Both outcomes will again potentially cut
into route-operator and laundromat owner profits.
As discussed in section IV.C and chapter 5 of the TSD, DOE has
determined that the proposed standard levels would not require any
major changes in the design complexity of CCWs. Wash basket size and
cycle time under the proposed standards will remain within the
acceptable ranges described by manufacturers. Section IV.F.5. describes
DOE's approach for considering changes in repair and
[[Page 12327]]
maintenance costs as a result of amended standards.
K. Emissions Analysis
In the emissions analysis, DOE estimated the reduction in power
sector emissions of carbon dioxide (CO2), nitrogen oxides
(NOX), sulfur dioxide (SO2), and mercury (Hg)
from potential energy conservation standards for commercial clothes
washers. In addition, DOE estimates emissions impacts in production
activities (extracting, processing, and transporting fuels) that
provide the energy inputs to power plants. These are referred to as
``upstream'' emissions. Together, these emissions account for the full-
fuel-cycle (FFC). In accordance with DOE's FFC Statement of Policy (76
FR 51282 (Aug. 18, 2011)),\27\ the FFC analysis includes impacts on
emissions of methane (CH4) and nitrous oxide
(N2O), both of which are recognized as greenhouse gases.
---------------------------------------------------------------------------
\27\ DOE's FFC was amended in 2012 for reasons unrelated to the
inclusion of CH4 and N2O. 77 FR 49701 (Aug.
17, 2012).
---------------------------------------------------------------------------
DOE primarily conducted the emissions analysis using emissions
factors for CO2 and most of the other gases derived from
data in the Energy Information Agency's (EIA's) Annual Energy Outlook
2013 (AEO 2013). Combustion emissions of CH4 and
N2O were estimated using emissions intensity factors
published by the Environmental Protection Agency (EPA), GHG Emissions
Factors Hub.\28\ Site emissions of CO2 and NOX
(from gas water heaters) were estimated using emissions intensity
factors from an EPA publication.\29\ DOE developed separate emissions
factors for power sector emissions and upstream emissions. The method
that DOE used to derive emissions factors is described in chapter 13 of
the NOPR TSD.
---------------------------------------------------------------------------
\28\ http://www.epa.gov/climateleadership/guidance/ghg-emissions.html.
\29\ U.S. Environmental Protection Agency, Compilation of Air
Pollutant Emission Factors, AP-42, Fifth Edition, Volume I:
Stationary Point and Area Sources. 1998. http://www.epa.gov/ttn/chief/ap42/index.html.
---------------------------------------------------------------------------
For CH4 and N2O, DOE calculated emissions
reduction in tons and also in terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted to CO2eq
by multiplying the physical units by the gas' global warming potential
(GWP) over a 100-year time horizon. Based on the Fourth Assessment
Report of the Intergovernmental Panel on Climate Change,\30\ DOE used
GWP values of 25 for CH4 and 298 for N2O.
---------------------------------------------------------------------------
\30\ Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R.
Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J.
Nganga, R. Prinn,G. Raga, M. Schulz and R. Van Dorland. 2007:
Changes in Atmospheric Constituents and in Radiative Forcing. In
Climate Change 2007: The Physical Science Basis. Contribution of
Working Group I to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change. S. Solomon, D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller,
Editors. 2007. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA. p. 212.
---------------------------------------------------------------------------
EIA prepares the Annual Energy Outlook using the National Energy
Modeling System (NEMS). Each annual version of NEMS incorporates the
projected impacts of existing air quality regulations on emissions. AEO
2013 generally represents current legislation and environmental
regulations, including recent government actions, for which
implementing regulations were available as of December 31, 2012.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous states and the
District of Columbia (DC). SO2 emissions from 28 eastern
states and D.C. were also limited under the Clean Air Interstate Rule
(CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based
trading program that operates along with the Title IV program. CAIR was
remanded to the U.S. Environmental Protection Agency (EPA) by the U.S.
Court of Appeals for the District of Columbia Circuit but it remained
in effect. See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008);
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2011
EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule
(CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C.
Circuit issued a decision to vacate CSAPR. See EME Homer City
Generation, LP v. EPA, No. 11-1302, 2012 WL 3570721 at *24 (D.C. Cir.
Aug. 21, 2012). The court ordered EPA to continue administering CAIR.
The AEO 2013 emissions factors used for today's NOPR assumes that CAIR
remains a binding regulation through 2040.
The attainment of emissions caps is typically flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the adoption of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by any regulated EGU.
In past rulemakings, DOE recognized that there was uncertainty about
the effects of efficiency standards on SO2 emissions covered
by the existing cap-and-trade system, but it concluded that negligible
reductions in power sector SO2 emissions would occur as a
result of standards.
Beginning in 2015, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants,
which were announced by EPA on December 21, 2011. 77 FR 9304 (Feb. 16,
2012). In the final MATS rule, EPA established a standard for hydrogen
chloride as a surrogate for acid gas hazardous air pollutants (HAP),
and also established a standard for SO2 (a non-HAP acid gas)
as an alternative equivalent surrogate standard for acid gas HAP. The
same controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions will be reduced as a result of the control
technologies installed on coal-fired power plants to comply with the
MATS requirements for acid gas. AEO 2013 assumes that, in order to
continue operating, coal plants must have either flue gas
desulfurization or dry sorbent injection systems installed by 2015.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO2 emissions. Under the MATS, NEMS shows a reduction
in SO2 emissions when electricity demand decreases (e.g., as
a result of energy efficiency standards). Emissions will be far below
the cap established by CAIR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by any regulated EGU. Therefore,
DOE believes that efficiency standards will reduce SO2
emissions in 2015 and beyond.
CAIR established a cap on NOX emissions in 28 eastern
states and the District of Columbia. Energy conservation standards are
expected to have little effect on NOX emissions in those
states covered by CAIR because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions. However,
standards would be expected to reduce NOX emissions in the
states not affected by the caps, so DOE estimated NOX
emissions reductions from the standards considered in today's NOPR for
these states.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would likely reduce Hg emissions. DOE estimated mercury
emissions reduction using emissions factors based on AEO 2013, which
incorporates the MATS.
[[Page 12328]]
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this proposed rule, DOE considered
the estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the TSLs considered. To make this calculation similar to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of equipment shipped in
the forecast period for each TSL. This section summarizes the basis for
the monetary values used for each of these emissions and presents the
values considered in this rulemaking.
For today's NOPR, DOE is relying on a set of values for the social
cost of carbon (SCC) that was developed by an interagency process. A
summary of the basis for these values is provided below, and a more
detailed description of the methodologies used is provided as an
appendix to chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) changes in net agricultural
productivity, human health, property damages from increased flood risk,
and the value of ecosystem services. Estimates of the SCC are provided
in dollars per metric ton of carbon dioxide. A domestic SCC value is
meant to reflect the value of damages in the United States resulting
from a unit change in carbon dioxide emissions, while a global SCC
value is meant to reflect the value of damages worldwide.
Under section 1(b)(6) of Executive Order 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to
the extent permitted by law, assess both the costs and the benefits of
the intended regulation and, recognizing that some costs and benefits
are difficult to quantify, propose or adopt a regulation only upon a
reasoned determination that the benefits of the intended regulation
justify its costs. The purpose of the SCC estimates presented here is
to allow agencies to incorporate the monetized social benefits of
reducing CO2 emissions into cost-benefit analyses of
regulatory actions that have small, or ``marginal,'' impacts on
cumulative global emissions. The estimates are presented with an
acknowledgement of the many uncertainties involved and with a clear
understanding that they should be updated over time to reflect
increasing knowledge of the science and economics of climate impacts.
As part of the interagency process that developed the SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of
carbon dioxide emissions, the analyst faces a number of serious
challenges. A recent report from the National Research Council points
out that any assessment will suffer from uncertainty, speculation, and
lack of information about: (1) Future emissions of greenhouse gases;
(2) the effects of past and future emissions on the climate system; (3)
the impact of changes in climate on the physical and biological
environment; and (4) the translation of these environmental impacts
into economic damages. As a result, any effort to quantify and monetize
the harms associated with climate change will raise serious questions
of science, economics, and ethics and should be viewed as provisional.
Despite the serious limits of both quantification and monetization,
SCC estimates can be useful in estimating the social benefits of
reducing carbon dioxide emissions. Most Federal regulatory actions can
be expected to have marginal impacts on global emissions. For such
policies, the agency can estimate the benefits from reduced emissions
in any future year by multiplying the change in emissions in that year
by the SCC value appropriate for that year. The net present value of
the benefits can then be calculated by multiplying the future benefits
by an appropriate discount factor and summing across all affected
years. This approach assumes that the marginal damages from increased
emissions are constant for small departures from the baseline emissions
path, an approximation that is reasonable for policies that have
effects on emissions that are small relative to cumulative global
carbon dioxide emissions. For policies that have a large (non-marginal)
impact on global cumulative emissions, there is a separate question of
whether the SCC is an appropriate tool for calculating the benefits of
reduced emissions. This concern is not applicable to this rulemaking,
however.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and consider public comments
as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
Economic analyses for Federal regulations have used a wide range of
values to estimate the benefits associated with reducing carbon dioxide
emissions. In the final model year 2011 CAFE rule, the U.S. Department
of Transportation (DOT) used both a ``domestic'' SCC value of $2 per
metric ton of CO2 and a ``global'' SCC value of $33 per
metric ton of CO2 for 2007 emission reductions (in 2007$),
increasing both values at 2.4 percent per year. DOT also included a
sensitivity analysis at $80 per metric ton of CO2.\31\ A
2008 regulation proposed by DOT assumed a domestic SCC value of $7 per
metric ton of CO2 (in 2006$) for 2011 emission reductions
(with a range of $0-$14 for sensitivity analysis), also increasing at
2.4 percent per year.\32\ A regulation for packaged terminal air
conditioners and packaged terminal heat pumps finalized by DOE in
October of 2008 used a domestic SCC range of $0 to $20 per metric ton
CO2 for 2007 emission reductions (in 2007$). 73 FR 58772,
58814 (Oct. 7, 2008). In addition, EPA's 2008 Advance Notice of
Proposed Rulemaking on Regulating Greenhouse Gas Emissions Under the
Clean Air Act identified what it described as ``very preliminary'' SCC
estimates subject to revision. 73 FR 44354 (July 30, 2008). EPA's
global mean values were $68 and $40 per metric ton CO2 for
discount rates of approximately 2 percent and 3
[[Page 12329]]
percent, respectively (in 2006$ for 2007 emissions).
---------------------------------------------------------------------------
\31\ See Average Fuel Economy Standards Passenger Cars and Light
Trucks Model Year 2011, 74 FR 14196 (March 30, 2009) (Final Rule);
Final Environmental Impact Statement Corporate Average Fuel Economy
Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at
3-90 (Oct. 2008) (Available at: http://www.nhtsa.gov/fuel-economy)
(Last accessed December 2012).
\32\ See Average Fuel Economy Standards, Passenger Cars and
Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 2008)
(Proposed Rule); Draft Environmental Impact Statement Corporate
Average Fuel Economy Standards, Passenger Cars and Light Trucks,
Model Years 2011-2015 at 3-58 (June 2008) (Available at: http://www.nhtsa.gov/fuel-economy) (Last accessed December 2012).
---------------------------------------------------------------------------
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across agencies, the Administration sought to
develop a transparent and defensible method, specifically designed for
the rulemaking process, to quantify avoided climate change damages from
reduced CO2 emissions. The interagency group did not
undertake any original analysis. Instead, it combined SCC estimates
from the existing literature to use as interim values until a more
comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: global SCC estimates for 2007 (in 2006$) of $55, $33,
$19, $10, and $5 per metric ton of CO2. These interim values
represented the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules.
c. Current Approach and Key Assumptions
Since the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: the FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change. Each model
was given equal weight in the SCC values that were developed.
Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
In 2010, the interagency group selected four sets of SCC values for
use in regulatory analyses.\33\ Three sets of values are based on the
average SCC from three integrated assessment models, at discount rates
of 2.5 percent, 3 percent, and 5 percent. The fourth set, which
represents the 95th-percentile SCC estimate across all three models at
a 3-percent discount rate, is included to represent higher-than-
expected impacts from climate change further out in the tails of the
SCC distribution. The values grow in real terms over time.
Additionally, the interagency group determined that a range of values
from 7 percent to 23 percent should be used to adjust the global SCC to
calculate domestic effects, although preference is given to
consideration of the global benefits of reducing CO2
emissions. Table IV.6 presents the values in the 2010 interagency group
report, which is reproduced in appendix 14-A of the NOPR TSD.
---------------------------------------------------------------------------
\33\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government, February 2010. http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.
Table IV.6--Annual SCC Values From 2010 Interagency Report, 2010-2050
[In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------
5 3 2.5 3
Year ---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 4.7 21.4 35.1 64.9
2015............................................ 5.7 23.8 38.4 72.8
2020............................................ 6.8 26.3 41.7 80.7
2025............................................ 8.2 29.6 45.9 90.4
2030............................................ 9.7 32.8 50.0 100.0
2035............................................ 11.2 36.0 54.2 109.7
2040............................................ 12.7 39.2 58.4 119.3
2045............................................ 14.2 42.1 61.7 127.8
2050............................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------
The SCC values used for today's notice were generated using the
most recent versions of the three integrated assessment models that
have been published in the peer-reviewed literature.\34\ Table IV.7
shows the updated sets of SCC estimates from the 2013 interagency
update in five-year increments from 2010 to 2050. Appendix 14-B of the
NOPR TSD provides the full set of values. The central value that
emerges is the average SCC across models at 3-percent discount rate.
However, for purposes of capturing the uncertainties involved in
regulatory impact analysis, the interagency group emphasizes the
importance of including all four sets of SCC values.
---------------------------------------------------------------------------
\34\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government.
May 2013; revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
[[Page 12330]]
Table IV.7--Annual SCC Values from 2013 Interagency Update, 2010-2050
[In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------
5 3 2.5 3
Year ---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 11 32 51 89
2015............................................ 11 37 57 109
2020............................................ 12 43 64 128
2025............................................ 14 47 69 143
2030............................................ 16 52 75 159
2035............................................ 19 56 80 175
2040............................................ 21 61 86 191
2045............................................ 24 66 92 206
2050............................................ 26 71 97 220
----------------------------------------------------------------------------------------------------------------
NRDC and ASAP indicated that DOE's current approach to monetizing
carbon underestimates the benefits. (NRDC and ASAP, No. 11 at p.5) The
range of SCC estimates used by DOE has been closely reviewed by the
interagency group and was updated in 2013. The range includes a set of
values that represents the 95th-percentile SCC estimate across all
three models at a 3-percent discount rate, which was included to
represent higher-than-expected impacts from climate change further out
in the tails of the SCC distribution. DOE acknowledges that the
estimates will continue to evolve over time as the science and economic
understanding of climate change and its impact on society improves.
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable since they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned above points out that there is tension between
the goal of producing quantified estimates of the economic damages from
an incremental ton of carbon and the limits of existing efforts to
model these effects. There are a number of concerns and problems that
should be addressed by the research community, including research
programs housed in many of the Federal agencies participating in the
interagency process to estimate the SCC. The interagency group intends
to periodically review and reconsider those estimates to reflect
increasing knowledge of the science and economics of climate impacts,
as well as improvements in modeling.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions resulting from today's rule, DOE
used the values from the 2013 interagency report, adjusted to 2012$
using the Gross Domestic Product price deflator. For each of the four
SCC cases specified, the values used for emissions in 2015 were $11.8,
$39.7, $61.2, and $117 per metric ton avoided (values expressed in
2012$). DOE derived values after 2050 using the relevant growth rates
for the 2040-2050 period in the interagency update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the four cases using the specific
discount rate that had been used to obtain the SCC values in each case.
2. Valuation of Other Emissions Reductions
As noted above, DOE has taken into account how new or amended
energy conservation standards would reduce NOX emissions in
those 22 states not affected by the CAIR. DOE estimated the monetized
value of NOX emissions reductions resulting from each of the
TSLs considered for today's NOPR based on estimates found in the
relevant scientific literature. Estimates of monetary value for
reducing NOX from stationary sources range from $468 to
$4,809 per ton in 2012$.\35\ DOE calculated monetary benefits using a
medium value for NOX emissions of $2,639 per short ton (in
2012$), and real discount rates of 3-percent and 7-percent.
---------------------------------------------------------------------------
\35\ U.S. Office of Management and Budget, Office of Information
and Regulatory Affairs, 2006 Report to Congress on the Costs and
Benefits of Federal Regulations and Unfunded Mandates on State,
Local, and Tribal Entities, Washington, DC.
---------------------------------------------------------------------------
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. It has not included monetization in the current analysis.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the power
generation industry that would result from the adoption of new or
amended energy conservation standards. In the utility impact analysis,
DOE analyzes the changes in installed electricity capacity and
generation that would result for each trial standard level. The utility
impact analysis uses a variant of NEMS,\36\ which is a public domain,
multi-sectored, partial equilibrium model of the U.S. energy sector.
DOE uses a variant of this model, referred to as NEMS-BT,\37\ to
account for selected utility impacts of new or amended energy
conservation standards. DOE's analysis consists of a comparison between
model results for the most recent AEO Reference Case and for cases in
which energy use is decremented to reflect the impact of potential
standards. The energy savings inputs associated with each TSL come from
the NIA. Chapter 15 of the NOPR TSD describes the utility impact
analysis in further detail.
---------------------------------------------------------------------------
\36\ For more information on NEMS, refer to the U.S. Department
of Energy, Energy Information Administration documentation. A useful
summary is National Energy Modeling System: An Overview 2003, DOE/
EIA-0581(2003) (March, 2003).
\37\ DOE/EIA approves use of the name NEMS to describe only an
official version of the model without any modification to code or
data. Because this analysis entails some minor code modifications
and the model is run under various policy scenarios that are
variations on DOE/EIA assumptions, DOE refers to it by the name
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under
whose aegis this work has been performed).
---------------------------------------------------------------------------
N. Employment Impact Analysis
Employment impacts from new or amended energy conservation
standards include direct and indirect impacts. Direct employment
impacts are any changes in the number of employees of
[[Page 12331]]
manufacturers of the equipment subject to standards; the MIA addresses
those impacts. Indirect employment impacts are changes in national
employment that occur due to the shift in expenditures and capital
investment caused by the purchase and operation of more efficient
equipment. Indirect employment impacts from standards consist of the
jobs created or eliminated in the national economy, other than in the
manufacturing sector being regulated, due to: (1) Reduced spending by
end users on energy; (2) reduced spending on new energy supply by the
utility industry; (3) increased consumer spending on the purchase of
new equipment; and (4) the effects of those three factors throughout
the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (BLS). BLS regularly publishes its estimates of the
number of jobs per million dollars of economic activity in different
sectors of the economy, as well as the jobs created elsewhere in the
economy by this same economic activity. Data from BLS indicate that
expenditures in the utility sector generally create fewer jobs (both
directly and indirectly) than expenditures in other sectors of the
economy. There are many reasons for these differences, including wage
differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based
on the BLS data alone, DOE believes net national employment may
increase because of shifts in economic activity resulting from amended
standards.
For the standard levels considered in the NOPR, DOE estimated
indirect national employment impacts using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies, Version 3.1.1
(ImSET). ImSET is a special-purpose version of the ``U.S. Benchmark
National Input-Output'' (I-O) model, which was designed to estimate the
national employment and income effects of energy-saving technologies.
The ImSET software includes a computer-based I-O model having
structural coefficients that characterize economic flows among the 187
sectors. ImSET's national economic I-O structure is based on a 2002
U.S. benchmark table, specially aggregated to the 187 sectors most
relevant to industrial, commercial, and residential building energy
use. DOE notes that ImSET is not a general equilibrium forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run. For the NOPR, DOE used ImSET only to
estimate short-term employment impacts.
For more details on the employment impact analysis, see chapter 16
of the NOPR TSD.
V. Analytical Results
A. Trial Standard Levels
At the NOPR stage, DOE develops Trial Standard Levels (TSLs) for
consideration. TSLs are formed by grouping different efficiency levels,
which are potential standard levels for each equipment class. Table V.1
presents the TSLs analyzed and the corresponding efficiency level for
each CCW equipment class. TSL 3 is comprised of the max-tech efficiency
levels. TSL 2 is comprised of efficiency level 2 for front-loading CCWs
and efficiency level 1 for top-loading CCWs. TSL 1 is comprised of
efficiency level 1 for each equipment class.
Table V.1--Summary of TSLs for Front-Loading and Top-Loading Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
Equipment class TSL 1 TSL 2 TSL 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level *
-----------------------------------------------
Front Loading CCW Units......................................... 1 2 3
Top Loading CCW Units........................................... 1 1 2
----------------------------------------------------------------------------------------------------------------
* For the MEFJ2 and IWF that correspond to efficiency levels 1 through 3, see Table IV.3.
B. Economic Justification and Energy Savings
As discussed in section II.A, EPCA provides seven factors to be
evaluated in determining whether a more stringent standard for front-
loading and top-loading commercial clothes washers is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)) The following sections discuss
how DOE addresses each of those factors in this rulemaking.
1. Economic Impacts on Individual Customers
DOE analyzed the economic impacts on front-loading and top-loading
commercial clothes washers customers by looking at the effects
potential standards would have on the LCC and PBP. DOE also examined
the impacts of potential standards on customer subgroups. These
analyses are discussed below.
a. Life-Cycle Cost and Payback Period
To evaluate the net economic impact of standards on front-loading
and top-loading CCW customers, DOE conducted LCC and PBP analyses for
each TSL. Section IV.F of this notice discusses the inputs DOE used for
calculating the LCC and PBP.
For each representative unit, the key outputs of the LCC analysis
are a mean LCC savings and a median PBP relative to the base case, as
well as the fraction of customers for which the LCC will decrease (net
benefit), increase (net cost), or exhibit no change (no impact)
relative to the base case. No impacts occur when the base-case
efficiency equals or exceeds the efficiency at a given TSL. Table V.2
through Table V.5 show the key results for each representative unit.
[[Page 12332]]
Table V.2--Summary Life-Cycle Cost and Payback Period Results for Front-Loading, Multi-Family Application
Commercial Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................ 1 2 3
MEFJ2/IWF....................................................... 1.80/4.50 2.00/4.10 2.20/3.90
Total Installed Cost ($)........................................ 1853.19 1853.69 1884.93
Mean LCC Savings ($)............................................ 229 285 8
Customers with LCC Increase (Cost) (%) *........................ 0 0 46
Customers with LCC Decrease (Benefit) (%) *..................... 27 61 53
Customers with No Change in LCC (%) *........................... 73 39 0
Median PBP (Years).............................................. 0.0 0.0 3.8
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
Table V.3--Summary Life-Cycle Cost and Payback Period Results for Front-Loading, Laundromat Application
Commercial Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................ 1 2 3
MEFJ2/IWF....................................................... 1.80/4.50 2.00/4.10 2.20/3.90
Total Installed Cost ($)........................................ 1853.19 1853.69 1884.93
Mean LCC Savings ($) [dagger]................................... 198 235 (19)
Customers with LCC Increase (Cost) (%) *........................ 0 0 72
Customers with LCC Decrease (Benefit) (%) *..................... 27 61 28
Customers with No Change in LCC (%) *........................... 73 39 0
Median PBP (Years).............................................. 0.0 0.0 8.0
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
[dagger] Values in parentheses are negative values.
Table V.4--Summary Life-Cycle Cost and Payback Period Results for Top-Loading, Multi-Family Application
Commercial Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................ 1 1 2
MEFJ2/IWF....................................................... 1.35/8.80 1.35/8.80 1.55/6.90
Total Installed Cost ($)........................................ 1251.06 1251.06 1313.40
Mean LCC Savings ($)............................................ 259 259 813
Customers with LCC Increase (Cost) (%) *........................ 0 0 0
Customers with LCC Decrease (Benefit) (%) *..................... 99 99 100
Customers with No Change in LCC (%) *........................... 1 1 0
Median PBP (Years).............................................. 0.0 0.0 0.6
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
Table V.5--Summary Life-Cycle Cost and Payback Period Results for Top-Loading, Laundromat Application Commercial
Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................ 1 1 2
MEFJ2/IWF....................................................... 1.35/8.80 1.35/8.80 1.55/6.90
Total Installed Cost ($)........................................ 1251.06 1251.06 1313.40
Mean LCC Savings ($)............................................ 145 145 654
Customers with LCC Increase (Cost) (%) *........................ 0 0 0
Customers with LCC Decrease (Benefit) (%) *..................... 99 99 100
Customers with No Change in LCC (%) *........................... 1 1 0
Median PBP (Years).............................................. 0.0 0.0 0.6
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
b. Customer Subgroup Analysis
In the customer subgroup analysis, DOE estimated the impacts of the
considered TSLs on small business customers. The LCC savings and
payback periods for small business customers are similar to the impacts
for all customers. Chapter 11 of the NOPR TSD presents detailed results
of the customer subgroup analysis.
c. Rebuttable Presumption Payback
As discussed in section III.E.2, EPCA establishes a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for equipment that meets the
standard is less than three times the value of the first-year energy
savings resulting from the standard. DOE calculated a rebuttable-
presumption PBP for each TSL.
DOE based the calculations on average usage profiles. As a result,
DOE
[[Page 12333]]
calculated a single rebuttable-presumption payback value, and not a
distribution of PBPs, for each TSL. Table V.6 and Table V.7 show the
rebuttable-presumption PBPs for the considered TSLs. In addition to the
rebuttable presumption analysis, however, DOE routinely conducts an
economic analysis that considers the full range of impacts to the
customer, manufacturer, nation, and environment, as required by EPCA.
The results of that analysis serve as the basis for DOE to evaluate the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any three-year PBP analysis).
Section V.C addresses how DOE considered the range of impacts to select
today's proposed standards.
Table V.6--Rebuttable-Presumption Payback Periods (Years) for Front-Loading and Top-Loading Commercial Clothes
Washer Units: Multi-Family Application
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................ FL: EL1 FL: EL2 FL: EL3
TL:EL1 TL:EL1 TL:EL2
Front Loading CCW Units......................................... 0.00 0.04 8.77
Top Loading CCW Units........................................... 0.0 0.0 2.3
----------------------------------------------------------------------------------------------------------------
Table V.7--Rebuttable-Presumption Payback Periods (Years) for Front-Loading and Top-Loading Commercial Clothes
Washer Units: Laundromat Application
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................ FL: EL1 FL: EL2 FL: EL3
TL:EL1 TL:EL1 TL:EL2
Front Loading CCW Units......................................... 0.00 0.05 11.19
Top Loading CCW Units........................................... 0.00 0.00 2.73
----------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of new energy
conservation standards on commercial clothes washer manufacturers. The
following section describes the expected impacts on manufacturers at
each TSL. Chapter 12 of the NOPR TSD explains the analysis in further
detail.
a. Industry Cash-Flow Analysis Results
The following tables depict the financial impacts (represented by
changes in INPV) of amended energy conservation standards on
manufacturers of commercial clothes washers as well as the conversion
costs that DOE estimates manufacturers would incur for each equipment
class at each TSL. To evaluate the range of cash flow impacts on the
commercial clothes washer manufacturing industry, DOE used two
different markup assumptions to model scenarios that correspond to the
range of anticipated market responses to amended energy conservation
standards.
To assess the lower (less severe) end of the range of potential
impacts, DOE modeled a preservation of gross margin percentage markup
scenario, in which a uniform ``gross margin percentage'' markup is
applied across all efficiency levels. In this scenario, DOE assumed
that a manufacturer's absolute dollar markup would increase as
production costs increase in the amended energy conservation standards
case. Manufacturers have indicated that it is optimistic to assume that
they would be able to maintain the same gross margin percentage markup
as their production costs increase in response to a new or amended
energy conservation standard, particularly at higher TSLs.
To assess the higher (more severe) end of the range of potential
impacts, DOE modeled the preservation of operating profit (in absolute
dollars) markup scenario, which assumes that manufacturers would not be
able to preserve the same overall gross margin, but instead cut their
markup for marginally compliant products to maintain a cost competitive
product offering and keep the same overall level of operating profit as
in the base case. The two tables below show the range of potential INPV
impacts for manufacturers of commercial clothes washers. The first
table reflects the lower bound of impacts (higher profitability) and
the second represents the upper bound of impacts (lower profitability).
Each scenario results in a unique set of cash flows and
corresponding industry values at each TSL. In the following discussion,
the INPV results refer to the sum of discounted cash flows through
2047, the difference in INPV between the base case and each standards
case, and the total industry conversion costs required for each
standards case.
Table V.8--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario
----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
INPV.......................... 2012$ Millions.. $124.2 118.3 118.2 33.0
Change in INPV................ 2012$ Millions.. .............. (5.9) (6.0) (91.2)
(%)............. .............. (4.7) (4.9) (73.4)
Product Conversion Costs...... 2012$ Millions.. .............. 9.9 10.2 62.4
Capital Conversion Costs...... 2012$ Millions.. .............. .............. .............. 63.1
---------------------------------------------------------------------------------
[[Page 12334]]
Total Conversion Costs.... 2012$ Millions.. .............. 9.9 10.2 126.6
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
Table V.9--Manufacturer Impact Analysis Under the Preservation of Operating Profit in Absolute Dollars Markup
Scenario
----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
INPV.......................... 2012$ Millions.. $124.2 118.3 118.2 28.8
Change in INPV................ 2012$ Millions.. .............. (5.9) (6.0) (95.4)
(%)............. .............. (4.7) (4.9) (76.8)
Product Conversion Costs...... 2012$ Millions.. .............. 9.9 10.2 62.4
Capital Conversion Costs...... 2012$ Millions.. .............. .............. .............. 63.1
---------------------------------------------------------------------------------
Total Conversion Costs.... 2012$ Millions.. .............. 9.9 10.2 126.6
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
Beyond impacts on INPV, DOE includes a comparison of free cash flow
between the base case and the standards case at each TSL in the year
before amended standards take effect to provide perspective on the
short-run cash flow impacts in the discussion of the results below.
At TSL 1, DOE estimates the impact on INPV for manufacturers of
commercial clothes washers to be $5.9 million, or a change in INPV of -
4.7 percent under either markup scenario. At this TSL, industry free
cash flow is estimated to decrease by approximately 30.2 percent to
$6.3 million, compared to the base-case value of $9.1 million in the
year before the compliance date (2017).
TSL 1 represents an improvement in MEFJ2 (as determined
using appendix J2) from the baseline level of 1.65 to 1.80 (ft\3\/kWh/
cycle) for front-loading equipment and an improvement in
MEFJ2 from the baseline level of 1.15 to 1.35 (ft\3\/kWh/
cycle) for top-loading equipment. The identical results for the two
markup scenarios at TSL 1 occur because for both equipment classes, the
baseline MPCs and the MPCs at TSL 1 are the same. For front-loading
equipment, this is because the 1.8 MEFJ2 (as determined
using appendix J2) products (on which the EL 1 standard is based) are
the lowest efficiency front-loading equipment available on the market.
As such, TSL 1 would have no impact on the front-loading market.
Similarly, the design options associated with EL 1 for top-loading
equipment relate to control changes and different cycle options, rather
than material changes to the equipment itself. While there are product
conversion costs associated with the research and development needed to
make these changes, there are no changes in the per unit production
costs. Given these conditions, the impacts on INPV at TSL 1 can be
attributed solely to the $9.9 million in product conversion costs for
top-loading equipment.
At TSL 2, DOE estimates the impact on INPV for manufacturers of
commercial clothes washers to be $6.0 million, or a change in INPV of -
4.9 percent under either markup scenario. At this TSL, industry free
cash flow is estimated to decrease by approximately 31.2 percent to
$6.2 million, compared to the base-case value of $9.1 million in the
year before the compliance date (2017).
TSL 2 represents an improvement in MEFJ2 from the
baseline level of 1.65 to 2.00 (ft\3\/kWh/cycle) for front-loading
equipment and an improvement in MEFJ2 from the baseline
level of 1.15 to 1.35 (ft\3\/kWh/cycle) for top-loading equipment. Much
like TSL 1, the identical results for the two markup scenarios at TSL 2
occur because the baseline MPCs and the MPCs at TSL 2 are very close
for front-loading equipment, and the same for top-loading equipment.
For front-loading equipment, this is because the 2.0 MEFJ2
EL (as determined using appendix J2) requires only minor changes to
baseline equipment needed to enable slightly faster spin speeds. The
standard level for top-loading equipment at TSL 2 is the same at TSL 1,
and again relates to control changes and different cycle options,
rather than material changes to the equipment. Because there are no
substantive changes to MPCs for either equipment class, much as in TSL
1, nearly all of the impacts on INPV at TSL 2 can be attributed to the
$10.2 million in product conversion costs.
At TSL 3, DOE estimates impacts on INPV for manufacturers of
commercial clothes washers to range from -$91.2 million to -$95.4
million, or a change in INPV of -73.4 percent to -76.8 percent. At this
TSL, industry free cash flow is estimated to decrease by over 500
percent to -$36.8 million, compared to the base-case value of $9.1
million in the year before the compliance date (2017).
TSL 3 represents an improvement in MEFJ2 from the
baseline level of 1.65 to 2.20 (ft\3\/kWh/cycle) for equipment class 1
and an improvement in MEFJ2 from the baseline level of 1.15
to 1.55 (ft\3\/kWh/cycle) for equipment class 2. Unlike TSL 1 and TSL
2, the efficiency levels specified at TSL 3 would require substantial
redesigns of products in both equipment classes. The design options
proposed at these efficiency levels include switching to direct-drive
motors, hung suspension, non-traditional agitation, and increasing the
tub capacity--all of which require major platform overhauls and
significant changes to manufacturing capital. These design options do
not contribute to substantially different MPCs, but the conversion
costs associated with product development and testing, as well as the
investments in manufacturing capital including
[[Page 12335]]
retooling of tubs and agitators significantly impact the INPV.
b. Impacts on Direct Employment
DOE used the GRIM to estimate the domestic labor expenditures and
number of domestic production workers in the base case and at each TSL
from 2013 to 2047. DOE used statistical data from the most recent U.S
Census Bureau's ``Annual Survey of Manufactures,'' the results of the
engineering analysis, and interviews with manufacturers to determine
the inputs necessary to calculate industry-wide labor expenditures and
domestic employment levels. Labor expenditures for the manufacture of a
product are a function of the labor intensity of the product, the sales
volume, and an assumption that wages in real terms remain constant.
DOE notes that the MIA's analysis detailing impacts on employment
focuses specifically on the production workers manufacturing the
covered products in question, rather than a manufacturer's broader
operations. Thus, the estimated number of impacted employees in the MIA
is separate from the total number of employees used to determine
whether a manufacturer is a small business for purposes of analysis
under the Regulatory Flexibility Act.
The estimates of production workers in this section cover only
those up to and including the line-supervisor level directly involved
in fabricating and assembling a product within the original equipment
manufacturer (OEM) facility. In addition, workers that perform services
closely associated with production operations are included. Employees
above the working-supervisor level are excluded from the count of
production workers. Thus, the labor associated with non-production
functions (e.g., factory supervision, advertisement, sales) is
explicitly not covered.\38\ In addition, DOE's estimates account for
production workers that manufacture only the specific products covered
by this rulemaking. For example, a worker on a clothes dryer production
line would not be included in the estimate of the number of commercial
clothes washer production workers. Finally, this analysis also does not
factor in the dependence by some manufacturers on production volume to
make their operations viable. For example, should a major line of
business cease or move, a production facility may no longer have the
manufacturing scale to obtain volume discounts on its purchases nor be
able to justify maintaining major capital equipment. Thus, the impact
on a manufacturing facility due to a line closure may affect more
employees than just the production workers, but as stated previously,
this analysis focuses on the production workers impacted directly. The
aforementioned scenarios, however, are considered relative to
employment impacts specific to the LVM at the end of this section.
---------------------------------------------------------------------------
\38\ The 2010 ASM provides the following definition: ``The
`production workers' number includes workers (up through the line-
supervisor level) engaged in fabricating, processing, assembling,
inspecting, receiving, storing, handling, packing, warehousing,
shipping (but not delivering), maintenance, repair, janitorial and
guard services, product development, auxiliary production for
plant's own use (e.g., power plant), recordkeeping, and other
services closely associated with these production operations at the
establishment covered by the report. Employees above the working-
supervisor level are excluded from this item.''
---------------------------------------------------------------------------
In the GRIM, DOE used the labor content of each product and the
manufacturing production costs from the engineering analysis to
estimate the annual labor expenditures in the commercial clothes washer
manufacturing industry. DOE used information gained through interviews
with manufacturers to estimate the portion of the total labor
expenditures that is attributable to domestic labor.
The employment impacts shown in Table V.10 represent the potential
production employment that could result following amended energy
conservation standards. These are independent of the employment impacts
from the broader U.S. economy, which are documented in chapter 16 of
the NOPR TSD.
DOE estimates that in the absence of amended energy conservation
standards, there would be 334 domestic production workers involved in
manufacturing commercial clothes washers in 2018. Table V.10 shows the
range of the impacts of potential amended energy conservation standards
on U.S. production workers in the commercial clothes washer
manufacturing industry. The upper end of the results in this table
estimates the total potential increase in the number of production
workers after amended energy conservation standards. To calculate the
total potential increase, DOE assumed that manufacturers continue to
produce the same scope of covered products in domestic production
facilities and domestic production is not shifted to lower-labor-cost
countries. Because there is a risk of manufacturers evaluating sourcing
decisions in response to amended energy conservation standards, the
lower end of the range of employment results in Table V.10 includes the
estimated total number of U.S. production workers in the industry who
could lose their jobs if all existing production were moved outside of
the United States.
Table V.10--Change in Total Number of Domestic Production Employees in 2018 in the CCW Industry
----------------------------------------------------------------------------------------------------------------
Base case TSL 1 TSL 2 TSL 3
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 334 334 334 364
2018...........................................
Potential Changes in Domestic Production Workers .............. 0-(334) 0-(334) 30-(364)
in 2018*.......................................
----------------------------------------------------------------------------------------------------------------
Because production employment expenditures are assumed to be a
fixed percentage of Cost of Goods Sold (COGS) and the MPCs typically
increase with more efficient products, labor tracks the increased
prices in the GRIM. As efficiency of washers increases, so does the
complexity of the machines, generally requiring more labor to produce.
As previously discussed, for TSL 1, there is no change in MPCs from the
base case, and, for TSL 2, there is a small increase in MPCs for front-
loaders that would be offset by a shift in shipments from front-loaders
to top-loaders. As a result, DOE expects that there would be no
employment impacts among domestic commercial clothes washer
manufacturers for TSL 1 and TSL 2. For TSL 3, the GRIM predicts an
increase in domestic employment following amended standards based on
the increase in complexity and relative price of the equipment.
Using the U.S. Census Bureau's 2010 Annual Survey of Manufactures
\39\ and interviews with manufacturers, DOE estimates that
approximately 83 percent of commercial clothes washers are currently
produced domestically. In the
[[Page 12336]]
commercial clothes washer industry, 100 percent of top-loaders are
manufactured domestically, while a much larger share of front-loaders
are produced abroad. As illustrated in Table V.10, the actual impacts
on domestic employment after standards would be different than
estimated if any U.S. manufacturer decided to shift remaining U.S.
production to lower-cost countries. The proposed standard could result
in losing all 334 production workers if all U.S. manufacturers source
standards-compliant washers or shift U.S. production abroad. However,
feedback from manufacturers during NOPR interviews supports the notion
that top-loading commercial clothes washers will continue to be
produced domestically following amended energy conservation standards,
unless the max-tech level is chosen.
---------------------------------------------------------------------------
\39\ The 2010 Annual Survey of Manufacturers is available at:
http://www.census.gov/mcd/asmhome.html.
---------------------------------------------------------------------------
c. Impacts on Manufacturing Capacity
According to the majority of commercial clothes washer
manufacturers, new energy conservation standards could potentially
impact manufacturers' production capacity depending on the efficiency
level required. For TSL 1 and TSL 2, the most significant conversion
costs are the research and development, testing, and certification of
products with more-efficient components, which does not affect
production line capacity. Available information indicates that
manufacturers will be able to maintain manufacturing capacity levels
and continue to meet market demand under new energy conservation
standards as long as manufacturers continue to offer top-loading and
front-loading washers.
However, a very high efficiency standard for top-loading clothes
washers could cause certain manufacturers to abandon further domestic
production of top-loading clothes washers after the effective date, and
choose instead to relocate manufacturing abroad or to source from a
foreign manufacturer, which could lead to a permanently lower
production capacity within the commercial clothes washer industry.
d. Impacts on Subgroups of Manufacturers
Using average cost assumptions to develop an industry cash flow
estimate is not adequate for assessing differential impacts among
subgroups of manufacturers. Small manufacturers, niche players, or
manufacturers exhibiting a cost structure that differs significantly
from the industry average could be affected differently. DOE used the
results of the industry characterization to group manufacturers
exhibiting similar characteristics.
As outlined earlier, one LVM of commercial clothes washers would be
disproportionately affected by any energy efficiency regulation in the
commercial clothes washer industry. This business is focused on one
specific market segment and is at least ten times smaller than its
diversified competitors. Due to this combination of market
concentration and size, this LVM is at risk of material harm to its
business, depending on the TSL chosen.
The commercial clothes washer LVM indicated that it could not
manufacture top-loading or front-loading washers at the proposed max-
tech level (MEFJ2 of 1.55 and 2.20, respectively, as
determined using appendix J2) with its existing manufacturing capital
and platform constraints. If DOE were to set the standard at the max-
tech level, the LVM believes that a ``green field'' design for front-
loaders would likely be required. For top-loaders, the LVM asserts that
it does not have the technology to reach the max-tech level, and it
would be forced to develop an entirely new business model, possibly
ceasing commercial clothes washer production altogether, sourcing from
abroad, shifting production abroad, or some combination thereof, which
could cause employment impacts in the commercial clothes washer
industry. If the LVM no longer offers top-loading washers, it would
likely cease commercial clothes washer production altogether, resulting
in significant impacts to the industry. Currently, the LVM's top-
loading washers account for more than half of the company's commercial
clothes washer revenues and three-quarters of its commercial clothes
washer shipments. To shift all top-loading commercial clothes washers
to front-loading washers at current production volumes would require
substantial investments that the company may not be able to justify. In
addition, the LVM derives an estimated 88 percent of its clothes washer
revenue from commercial clothes washers, so its sales in the
residential clothes washer market would be too low to justify
continuing any top-loading clothes washer manufacturing. Further detail
and separate analysis of impacts on the LVM are found in chapter 12 of
the NOPR TSD.
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden is the cumulative
impact of multiple DOE standards and the regulatory actions of other
Federal agencies and states that affect the manufacturers of a covered
product or equipment. While any one regulation may not impose a
significant burden on manufacturers, the combined effects of several
existing or impending regulations may have serious consequences for
some manufacturers, groups of manufacturers, or an entire industry.
Companies that produce a wider range of regulated products may be
faced with more capital and product development expenditures than their
competitors. This can prompt those companies to exit the market or
reduce their product offerings, potentially reducing competition.
Smaller companies can be especially affected, since they have lower
sales volumes over which to amortize the costs of compliance with new
regulations.
In addition to DOE's energy conservation regulations for commercial
clothes washers, several other existing regulations apply to these
products and other equipment produced by the same manufacturers. The
most significant of these additional regulations include several
additional existing or proposed Federal and State energy conservation
and environmental standards, consumer product safety standards, the
Green Chemistry law in California, and standards impacting commercial
clothes washer suppliers such as the Conflict Minerals directive
contained within the Dodd-Frank Act of 2010.
Most manufacturers interviewed also sell products to other
countries with energy conservation and standby standards. Manufacturers
may incur a substantial cost to the extent that there are overlapping
testing and certification requirements in other markets besides the
United States. Because DOE has authority to set standards on products
sold in the United States, DOE accounts only for domestic compliance
costs in its analysis of cumulative regulatory burdens impacting
commercial clothes washer manufacturers. For more details, see chapter
12 of the NOPR TSD.
3. National Impact Analysis
Projections of shipments are an important part of the NIA. As
discussed in section IV.G, The market shares of the equipment classes
are somewhat sensitive to the installed cost of new equipment. DOE
applied a cross-price elasticity to estimate how the market would shift
between front-loading and top-loading units in response to a change in
price of the unit.
Table V.11presents the estimated cumulative shipments in 2018-2047
in the base case and under each TSL. Because DOE found CCW units to be
relatively price inelastic, DOE estimated that the potential standards
would not affect total shipments.
[[Page 12337]]
Table V.11--Projected Cumulative Shipments of Front- and Top-Loading Commercial Clothes Washer Units in 2018-
2047
[Million units]
----------------------------------------------------------------------------------------------------------------
TSL3 Max Tech
Base case TSL1 FL: EL1 TSL2 FL: EL2 FL: EL3
TL:EL1 TL:EL1 TL:EL2
----------------------------------------------------------------------------------------------------------------
Front Loading................................... 2.813 2.813 2.812 2.900
Top Loading..................................... 3.465 3.465 3.466 3.379
---------------------------------------------------------------
Total........................................... 6.278 6.278 6.278 6.278
----------------------------------------------------------------------------------------------------------------
a. Significance of Energy Savings
For each TSL, DOE projected energy savings for front-loading and
top-loading commercial clothes washer unit purchased in the 30-year
period that begins in the year of anticipated compliance with amended
standards (2018-2047). The savings are measured over the entire
lifetime of equipment purchased in the 30-year period. DOE quantified
the energy savings attributable to each TSL as the difference in energy
consumption between each standards case and the base case. Table V.12
presents the estimated primary energy savings for each considered TSL,
and Table V.13 presents the estimated FFC energy savings for each TSL.
The approach for estimating national energy savings is further
described in section IV.H.
Table V.12--Cumulative Primary Energy Savings for Front-Loading and Top-Loading Commercial Clothes Washers Trial
Standard Levels for Units Sold in 2018-2047
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
quads
-----------------------------------------------
Front Loading CCW Units......................................... 0.007 0.023 0.005
Top Loading CCW Units........................................... 0.086 0.085 0.163
-----------------------------------------------
Total All Classes........................................... 0.092 0.109 0.168
----------------------------------------------------------------------------------------------------------------
Table V.13--Cumulative Full-Fuel-Cycle Energy Savings for Front-Loading and Top-Loading Commercial Clothes
Washers Trial Standard Levels for Units Sold in 2018-2047
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
quads
-----------------------------------------------
Front Loading CCW Units......................................... 0.007 0.025 0.005
Top Loading CCW Units........................................... 0.090 0.090 0.170
-----------------------------------------------
Total All Classes........................................... 0.097 0.114 0.175
----------------------------------------------------------------------------------------------------------------
For this rulemaking, DOE undertook a sensitivity analysis using
nine instead of 30 years of equipment shipments. The choice of a nine-
year period is a proxy for the timeline in EPCA for the review of
certain energy conservation standards and potential revision of and
compliance with such revised standards.\40\ This timeframe may not be
statistically relevant with regard to the equipment lifetime, equipment
manufacturing cycles or other factors specific to front-loading and
top-loading commercial clothes washer equipment. Thus, this information
is presented for informational purposes only and is not indicative of
any change in DOE's analytical methodology. The NES results based on a
9-year analytical period are presented in Table V.14. The impacts are
counted over the lifetime of commercial clothes washers purchased in
2018-2026.
---------------------------------------------------------------------------
\40\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. While adding
a 6-year review to the 3-year compliance period adds up to 9 years,
DOE notes that it may undertake reviews at any time within the 6
year period and that the 3-year compliance date may yield to the 6-
year backstop. A 9-year analysis period may not be appropriate given
the variability that occurs in the timing of standards reviews and
the fact that for some consumer products, the compliance period is 5
years rather than 3 years.
[[Page 12338]]
Table V.14--Cumulative Primary Energy Savings for Front-Loading and Top-Loading Commercial Clothes Washers Trial
Standard Levels for Units Sold in 2018-2026
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class -----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
quads
-----------------------------------------------
Front Loading CCW Units......................................... 0.002 0.006 0.001
Top Loading CCW Units........................................... 0.024 0.024 0.046
-----------------------------------------------
Total All Classes........................................... 0.026 0.030 0.047
----------------------------------------------------------------------------------------------------------------
b. Net Present Value of Customer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
customers that would result from the TSLs considered for CCWs. In
accordance with OMB's guidelines on regulatory analysis,\41\ DOE
calculated the NPV using both a 7-percent and a 3-percent real discount
rate. The 7-percent rate is an estimate of the average before-tax rate
of return on private capital in the U.S. economy, and reflects the
returns on real estate and small business capital as well as corporate
capital. This discount rate approximates the opportunity cost of
capital in the private sector. The 3-percent rate reflects the
potential effects of standards on private consumption (e.g., through
higher prices for equipment and reduced purchases of energy). This rate
represents the rate at which society discounts future consumption flows
to their present value. It can be approximated by the real rate of
return on long-term government debt (i.e., yield on United States
Treasury notes), which has averaged about 3 percent for the past 30
years.
---------------------------------------------------------------------------
\41\ OMB Circular A-4, section E (Sept. 17, 2003). Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------
Table V.15 shows the customer NPV results for each TSL considered
for CCWs. In each case, the impacts cover the lifetime of equipment
purchased in 2018-2047.
Table V.15--Net Present Value of Customer Benefits for Front-Loading and Top-Loading Commercial Clothes Washers
Trial Standard Levels for Units Sold in 2018-2047
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class Discount rate -----------------------------------------------
% 1 2 3
----------------------------------------------------------------------------------------------------------------
.............. billion 2012$
-----------------------------------------------
Front Loading CCW Units......................... 3 0.120 0.344 -0.132
Top Loading CCW Units........................... .............. 0.596 0.594 2.131
-----------------------------------------------
Total All Classes............................... .............. 0.716 0.938 1.999
Front Loading CCW Units......................... 7 0.051 0.145 -0.060
Top Loading CCW Units........................... .............. 0.261 0.260 0.910
-----------------------------------------------
Total All Classes........................... .............. 0.311 0.405 0.850
----------------------------------------------------------------------------------------------------------------
The NPV results based on the nine-year analytical period discussed
in section V.B.3.a are presented in Table V.16. The impacts are counted
over the lifetime of equipment purchased in 2018-2026. As mentioned
previously, this information is presented for informational purposes
only and is not indicative of any change in DOE's analytical
methodology or decision criteria.
Table V.16--Net Present Value of Customer Benefits for Front-Loading and Top-Loading Commercial Clothes Washers
Trial Standard Levels for Units Sold in 2018-2026 [dagger]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class Discount rate -----------------------------------------------
% 1 2 3
----------------------------------------------------------------------------------------------------------------
.............. billion 2012$
-----------------------------------------------
Front Loading CCW Units......................... 3 0.04 0.11 (0.04)
Top Loading CCW Units........................... .............. 0.21 0.21 0.71
-----------------------------------------------
Total All Classes............................... .............. 0.24 0.31 0.67
Front Loading CCW Units......................... 7 0.02 0.06 (0.03)
Top Loading CCW Units........................... .............. 0.13 0.12 0.42
-----------------------------------------------
[[Page 12339]]
Total All Classes........................... .............. 0.15 0.19 0.40
----------------------------------------------------------------------------------------------------------------
[dagger] Values in parentheses are negative values.
c. Indirect Impacts on Employment
DOE expects energy conservation standards for front-loading and
top-loading commercial clothes washers to reduce energy costs for
equipment owners, and the resulting net savings to be redirected to
other forms of economic activity. Those shifts in spending and economic
activity could affect the demand for labor. As described in section
IV.N, DOE used an input/output model of the U.S. economy to estimate
indirect employment impacts of the TSLs that DOE considered in this
rulemaking. DOE understands that there are uncertainties involved in
projecting employment impacts, especially changes in the later years of
the analysis. Therefore, DOE generated results for near-term time
frames, where these uncertainties are reduced.
The results suggest that the proposed standards are likely to have
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the NOPR TSD presents detailed results.
4. Impact on Utility
As discussed in section IV.C, DOE has determined that the standards
it is proposing today will not lessen the utility of front-loading and
top-loading commercial clothes washers.
5. Impact of Any Lessening of Competition
DOE considers any lessening of competition likely to result from
amended standards. The Attorney General determines the impact, if any,
of any lessening of competition likely to result from a proposed
standard, and transmits such determination to the Secretary, together
with an analysis of the nature and extent of such impact.
To assist the Attorney General in making such determination, DOE
will provide DOJ with copies of this NOPR and the TSD for review. DOE
will consider DOJ's comments on the proposed rule in preparing the
final rule, and DOE will publish and respond to DOJ's comments in that
document.
6. Need of the Nation to Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the nation's energy security, strengthens the economy, and reduces the
environmental impacts or costs of energy production. Reduced
electricity demand due to energy conservation standards is also likely
to reduce the cost of maintaining the reliability of the electricity
system, particularly during peak-load periods. As a measure of this
reduced demand, chapter 15 in the NOPR TSD presents the estimated
reduction in generating capacity for the TSLs that DOE considered in
this rulemaking.
Energy savings from standards for front-loading and top-loading
commercial clothes washers could also produce environmental benefits in
the form of reduced emissions of air pollutants and greenhouse gases.
Table V.17 provides DOE's estimate of cumulative emissions reductions
projected to result from the TSLs considered in this rulemaking. DOE
reports annual emissions reductions for each TSL in chapter 13 of the
NOPR TSD.
Table V.17--Cumulative Emissions Reduction Estimated for Front-Loading and Top-Loading Commercial Clothes
Washers Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------
1 2 3
----------------------------------------------------------------------------------------------------------------
Power Sector and Site Emissions *
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 4.5 5.4 8.2
SO2 (thousand tons)............................................. 4.0 4.3 8.6
NOX (thousand tons)............................................. 1.2 1.7 1.2
Hg (tons)....................................................... 0.00 0.01 0.01
N2O (thousand tons)............................................. 0.07 0.07 0.14
CH4 (thousand tons)............................................. 0.40 0.44 0.83
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 0.4 0.5 0.7
SO2 (thousand tons)............................................. 0.04 0.04 0.08
NOX (thousand tons)............................................. 6.0 7.4 10.0
Hg (tons)....................................................... 0.00 0.00 0.00
N2O (thousand tons)............................................. 0.002 0.002 0.004
CH4 (thousand tons)............................................. 40.4 49.7 65.3
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 5.0 5.9 8.8
SO2 (thousand tons)............................................. 4.0 4.4 8.7
[[Page 12340]]
NOX (thousand tons)............................................. 7.3 9.1 11.1
Hg (tons)....................................................... 0.00 0.01 0.01
N2O (thousand tons)............................................. 0.07 0.08 0.15
N2O (thousand tons CO2eq) **.................................... 20.4 22.6 43.2
CH4 (thousand tons)............................................. 40.8 50.1 66.2
CH4 (thousand tons CO2eq) **.................................... 1019.1 1253.4 1654.1
----------------------------------------------------------------------------------------------------------------
* Includes site emissions from gas water heaters.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX that DOE estimated for each of the TSLs considered.
As discussed in section IV.L, DOE used the most recent values for the
SCC developed by an interagency process. The four sets of SCC values
resulting from that process (expressed in 2012$) are represented by
$11.8/metric ton (the average value from a distribution that uses a 5-
percent discount rate), $39.7/metric ton (the average value from a
distribution that uses a 3-percent discount rate), $61.2/metric ton
(the average value from a distribution that uses a 2.5-percent discount
rate), and $117/metric ton (the 95th-percentile value from a
distribution that uses a 3-percent discount rate). These values
correspond to the value of emission reductions in 2015; the values for
later years are higher due to increasing damages as the projected
magnitude of climate change increases.
Table V.18 presents the global value of CO2 emissions
reductions at each TSL. For each of the four cases, DOE calculated a
present value of the stream of annual values using the same discount
rate as was used in the studies upon which the dollar-per-ton values
are based. DOE calculated domestic values as a range from 7 percent to
23 percent of the global values, and these results are presented in
chapter 14 of the NOPR TSD.
Table V.18--Estimates of Present Value of CO2 Emissions Reduction Under
Front-Loading and Top-Loading Commercial Clothes Washers Trial Standard
Levels
------------------------------------------------------------------------
SCC Case *
---------------------------------------------------------------
TSL 5% discount 3% discount 2.5% discount 3% discount
rate, average rate, average rate, average rate, 95th
* * * percentile *
------------------------------------------------------------------------
Million 2012$
------------------------------------------------------------------------
Power Sector and Site Emissions
------------------------------------------------------------------------
1....... 30.06 139.38 221.96 430.59
2....... 35.45 164.70 262.39 508.93
3....... 54.38 251.50 400.32 776.76
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1....... 2.652 12.450 19.876 38.514
2....... 3.219 15.136 24.170 46.828
3....... 4.434 20.818 33.234 64.399
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1....... 32.71 151.83 241.83 469.10
2....... 38.67 179.84 286.56 555.76
3....... 58.81 272.31 433.55 841.16
------------------------------------------------------------------------
* For each of the four cases, the corresponding global SCC value for
emissions in 2015 is $11.8, $39.7, $61.2, and $117 per metric ton
(2012$).
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other greenhouse gas (GHG) emissions
to changes in the future global climate and the potential resulting
damages to the world economy continues to evolve rapidly. Thus, any
value placed on reducing CO2 emissions in this rulemaking is
subject to change. DOE, together with other Federal agencies, will
continue to review various methodologies for estimating the monetary
value of reductions in CO2 and other GHG emissions. This
ongoing review will consider the comments on this subject that are part
of the public record for this and other rulemakings, as well as other
methodological assumptions and issues. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this proposed rule the
most recent values and analyses resulting from the interagency process.
DOE also estimated the cumulative monetary value of the economic
benefits associated with NOX emissions reductions
anticipated to result from
[[Page 12341]]
amended standards for Front-loading and Top-loading CCWs. The dollar-
per-ton values that DOE used are discussed in section IV.L. Table V.19
presents the cumulative present values for each TSL calculated using
seven-percent and three-percent discount rates.
Table V.19--Estimates of Present Value of NOX Emissions Reduction Under
Front-Loading and Top-Loading Commercial Clothes Washers Trial Standard
Levels
------------------------------------------------------------------------
TSL 3% discount rate 7% discount rate
------------------------------------------------------------------------
Million 2012$
------------------------------------------------------------------------
Power Sector and Site Emissions
------------------------------------------------------------------------
1................................. 1.18 0.26
2................................. 1.77 0.50
3................................. 0.63 -0.30
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1................................. 7.93 3.60
2................................. 9.66 4.36
3................................. 13.07 5.93
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1................................. 9.10 3.85
2................................. 11.43 4.86
3................................. 13.71 5.63
------------------------------------------------------------------------
7. Summary of National Economic Impacts
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the customer
savings calculated for each TSL considered in this rulemaking. Table
V.20 presents the NPV values that result from adding the estimates of
the potential economic benefits resulting from reduced CO2
and NOX emissions in each of four valuation scenarios to the
NPV of customer savings calculated for each TSL considered in this
rulemaking, at both a seven-percent and three-percent discount rate.
The CO2 values used in the columns of each table correspond
to the four sets of SCC values discussed above.
Table V.20--Net Present Value of Customer Savings Combined With Present
Value of Monetized Benefits From CO[ihel2] and NOX Emissions Reductions
------------------------------------------------------------------------
Customer NPV at 3% discount rate added with:
---------------------------------------------------------------
TSL SCC Case $11.8/ SCC Case $39.7/ SCC Case $61.2/ SCC Case $117/
metric ton metric ton metric ton metric ton
CO[ihel2]* CO[ihel2]* CO[ihel2]* CO[ihel2]*
------------------------------------------------------------------------
Billion 2012$
------------------------------------------------------------------------
1....... 0.8 0.9 1.0 1.2
2....... 1.0 1.1 1.2 1.5
3....... 2.1 2.3 2.4 2.9
------------------------------------------------------------------------
------------------------------------------------------------------------
Customer NPV at 7% Discount Rate added with:
---------------------------------------------------------------
TSL SCC Case $11.8/ SCC Case $39.7/ SCC Case $61.2/ SCC Case $117/
metric ton metric ton metric ton metric ton
CO[ihel2]* CO[ihel2]* CO[ihel2]* CO[ihel2]*
------------------------------------------------------------------------
Billion 2012$
------------------------------------------------------------------------
1....... 0.3 0.5 0.6 0.8
2....... 0.4 0.6 0.7 1.0
3....... 0.9 1.1 1.3 1.7
------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2012$. For NOX
emissions, each case uses the medium value, which corresponds to
$2,639 per ton.
Although adding the value of customer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating cost savings are domestic
U.S. customer monetary savings that occur as a result of market
transactions, while the value of CO2 reductions is based on
a global value. Second, the assessments of operating cost savings and
the SCC are performed with different methods that use different time
frames for analysis. The national operating cost savings is measured
for the lifetime of equipment shipped in 2018-2047. The SCC values, on
the other hand, reflect the present value of future climate-related
impacts resulting from the emission of one metric ton of CO2
in each year. These impacts continue well beyond 2100.
[[Page 12342]]
8. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) No
other factors were considered in this analysis.
C. Proposed Standards
When considering proposed standards, the new or amended energy
conservation standard that DOE adopts for any type (or class) of
covered equipment shall be designed to achieve the maximum improvement
in energy efficiency that the Secretary of Energy determines is
technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A) and 6316(a)) In determining whether a standard is
economically justified, the Secretary must determine whether the
benefits of the standard exceed its burdens to the greatest extent
practicable, considering the seven statutory factors discussed
previously. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) The new or amended
standard must also ``result in significant conservation of energy.''
(42 U.S.C. 6295(o)(3)(B) and 6316(a))
For today's NOPR, DOE considered the impacts of standards at each
TSL, beginning with the maximum technologically feasible level, to
determine whether that level was economically justified. Where the max-
tech level was not justified, DOE then considered the next most
efficient level and undertook the same evaluation until it reached the
highest efficiency level that is technologically feasible, economically
justified and saves a significant amount of energy.
To aid the reader in understanding the benefits and/or burdens of
each TSL, tables in this section summarize the quantitative analytical
results for each TSL, based on the assumptions and methodology
discussed herein. The efficiency levels contained in each TSL are
described in section V.A. In addition to the quantitative results
presented in the tables, DOE also considers other burdens and benefits
that affect economic justification. These include the impacts on
identifiable subgroups of customers who may be disproportionately
affected by a national standard (see section V.B.1.b), and impacts on
employment. DOE discusses the impacts on employment in front-loading
and top-loading commercial clothes washer equipment manufacturing in
section V.B.2, and discusses the indirect employment impacts in section
V.B.3.c.
1. Benefits and Burdens of Trial Standard Levels Considered for Front-
Loading and Top-Loading Commercial Clothes Washers
Table V.21 and Table V.22 summarize the quantitative impacts
estimated for each TSL for front-loading and top-loading commercial
clothes washers.
Table V.21--Summary of Analytical Results for Front-Loading and Top-Loading Commercial Clothes Washers: National
Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3
----------------------------------------------------------------------------------------------------------------
National FFC Energy Savings quads
----------------------------------------------------------------------------------------------------------------
0.097 0.114 0.175
----------------------------------------------------------------------------------------------------------------
NPV of Customer Benefits 2012$ billion
----------------------------------------------------------------------------------------------------------------
3% discount rate....................................... 0.72 0.94 2.00
----------------------------------------------------------------------------------------------------------------
7% discount rate....................................... 0.31 0.40 0.85
----------------------------------------------------------------------------------------------------------------
Cumulative Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO[ihel2] million metric tons.......................... 4.94 5.87 8.84
NOX thousand tons...................................... 7.26 9.10 11.14
Hg tons................................................ 0.00 0.01 0.01
N[ihel2]O thousand tons................................ 0.07 0.08 0.15
N[ihel2]O thousand tons CO[ihel2]eq*................... 20.37 22.57 43.25
CH4 thousand tons...................................... 40.77 50.14 66.16
CH4 thousand tons CO[ihel2]eq*......................... 1,019 1,253 1,654
SO[ihel2] thousand tons................................ 3.99 4.36 8.69
----------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO[ihel2] 2012$ million **............................. 32.7 to 469.1 38.7 to 555.8 58.8 to 841.2
NOX--3% discount rate 2012$ million.................... 9.1 11.43 13.71
NOX--7% discount rate 2012$ million.................... 3.85 4.86 5.63
----------------------------------------------------------------------------------------------------------------
* CO[ihel2]eq is the quantity of CO[ihel2] that would have the same global warming potential (GWP).
** Range of the economic value of CO[ihel2] reductions is based on estimates of the global benefit of reduced
CO[ihel2] emissions.
Table V.22--Summary of Analytical Results for Front-Loading and Top-Loading Commercial Clothes Washers:
Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts...................................
Change in Industry NPV (2012$ million) [dagger]........ (5.9) (6.0) (91.2) to (95.4)
Change in Industry NPV (%) [dagger].................... (4.7) (4.90) (73.4) to (76.8)
----------------------------------------------------------------------------------------------------------------
Customer Mean LCC Savings 2012$
----------------------------------------------------------------------------------------------------------------
Front-Loading, Multi-family............................ 229 285 8
[[Page 12343]]
Front-Loading, Laundromat [dagger]..................... 198 235 (19)
Top-Loading, Multi-family.............................. 259 259 813
Top-Loading, Laundromat................................ 145 145 654
Weighted Average *..................................... 235 257 464
----------------------------------------------------------------------------------------------------------------
Customer Median PBP years
----------------------------------------------------------------------------------------------------------------
Front-Loading, Multi-family............................ 0.0 0.0 3.8
Front-Loading, Laundromat.............................. 0.0 0.0 8.0
Top-Loading, Multi-family.............................. 0.0 0.0 0.6
Top-Loading, Laundromat................................ 0.0 0.0 0.6
Weighted Average *..................................... 0.0 0.0 2.2
----------------------------------------------------------------------------------------------------------------
Front-Loading, Multi-Family
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %.............................. 0 0 46
Customers with Net Benefit %........................... 27 61 53
Customers with No Impact %............................. 73 39 0
----------------------------------------------------------------------------------------------------------------
Front-Loading, Laundromat
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %.............................. 0 0 72
Customers with Net Benefit %........................... 27 61 28
Customers with No Impact %............................. 73 39 0
----------------------------------------------------------------------------------------------------------------
Top-Loading, Multi-Family
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %.............................. 0 0 0
Customers with Net Benefit %........................... 99 99 100
Customers with No Impact %............................. 1 1 0
----------------------------------------------------------------------------------------------------------------
Top-Loading, Laundromat
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %.............................. 0 0 0
Customers with Net Benefit %........................... 99 99 100
Customers with No Impact %............................. 1 1 0
----------------------------------------------------------------------------------------------------------------
* Weighted by shares of each equipment class in total projected shipments in 2018.
[dagger] Values in parentheses are negative values.
First, DOE considered TSL 3, the most efficient level (max tech),
which would save an estimated total of 0.17 quads of energy, an amount
DOE considers significant. TSL 3 has an estimated NPV of customer
benefit of $0.85 billion using a 7 percent discount rate, and $1.99
billion using a 3 percent discount rate.
The cumulative emissions reductions at TSL 3 are 8.8 million metric
tons of CO2, 11.1 thousand tons of NOX, 8.7
thousand tons of SO2, and 0.01 tons of Hg. The estimated
monetary value of the CO2 emissions reductions at TSL 3
ranges from $59 million to $841 million.
At TSL 3, the average LCC savings is $8 and -$19 for multi-family
and laundromat applications for front-loading CCW units, and $813 and
$654 for multi-family and laundromat applications for top-loading CCW
units. The median PBP is 4 and 8 years for multi-family and laundromat
applications for front-loading CCW units, and 0.6 years for both
applications for top-loading CCW units. The share of customers
experiencing a net LCC benefit is 53 percent and 28 percent for multi-
family and laundromat applications for front-loading CCW units, and
99.8 percent for both applications for top-loading CCW units.
At TSL 3, the projected change in INPV ranges from a decrease of
$91.2 million to a decrease of $95.4 million, equivalent to 73.4
percent and 76.8 percent, respectively. Products that meet the
efficiency standards specified by this TSL are forecast to represent
only 12 percent of shipments in the year leading up to amended
standards. As such, manufacturers would have to redesign nearly all
products by the 2018 compliance date to meet demand. Redesigning all
units to meet the current max-tech efficiency levels would require
considerable capital and equipment conversion expenditures. At TSL 3,
the capital conversion costs total $63.1 million, 13.1 times the
industry annual capital expenditure in the year leading up to amended
standards. DOE estimates that complete platform redesigns would cost
the industry $62.4 million in equipment conversion costs. These
conversion costs largely relate to the research programs required to
develop new products that meet the efficiency standards set forth by
TSL 3. These costs are equivalent to 14.3 times the industry annual
budget for research and development. Total capital and equipment
conversion costs associated with the changes in products and
manufacturing facilities required at TSL 3 would require significant
use of manufacturers' financial reserves (manufacturer capital pools),
impacting other areas of business that compete for these resources, and
significantly reducing INPV. In addition, manufacturers could face a
substantial impact on profitability at TSL 3. Because manufacturers are
more likely to reduce their margins to maintain a price-competitive
product at higher TSLs, DOE expects that TSL 3 would yield impacts
closer to the high end of the range of INPV impacts. If the high end of
the range of impacts is reached,
[[Page 12344]]
as DOE expects, TSL 3 could result in a net loss of 76.8 percent in
INPV to commercial clothes washer manufacturers. As a result, at TSL 3,
DOE expects that some companies would be forced to exit the commercial
clothes washer market or shift production abroad, both which would
negatively impact domestic manufacturing capacity and employment.
In view of the foregoing, DOE concludes that, at TSL 3 for front-
loading and top-loading CCW equipment, the benefits of energy savings,
positive NPV of total customer benefits, customer LCC savings for three
of the four applications, emission reductions and the estimated
monetary value of the emissions reductions would be outweighed by the
negative customer impacts for front-loadings CCWs in laundromats, the
large reduction in industry value at TSL 3, as well as the potential
for loss of domestic manufacturing. Consequently, DOE has concluded
that TSL 3 is not economically justified.
Next, DOE considered TSL 2, which would save an estimated total of
0.11 quads of energy, an amount DOE considers significant. TSL 2 has an
estimated NPV of customer benefit of $0.40 billion using a 7 percent
discount rate, and $0.94 billion using a 3 percent discount rate.
The cumulative emissions reductions at TSL 2 are 5.9 million metric
tons of CO2, 9.1 thousand tons of NOX, 4.4
thousand tons of SO2, and 0.01 tons of Hg. The estimated
monetary value of the CO2 emissions reductions at TSL 2
ranges from $39 million to $556 million.
At TSL 2, the average LCC savings is $285 and $235 for front-
loading CCW units for multi-family application, and laundromat
application, respectively. For top-loading CCW units, the average LCC
savings are $259 and $145 for multi-family and laundromat applications.
The median PBP is 0.02 and 0.01 years for multi-family and laundromat
applications for front-loading CCW units, zero years for top-loading
CCW units. The share of customers experiencing a net LCC benefit is 61
percent for front-loading CCW units, and 99 percent for top-loading CCW
units.
At TSL 2, the projected change in INPV is a decrease of $6.0
million, or a decrease of 4.9 percent. Although products that meet the
efficiency standards specified by this TSL are forecast to represent
only 15 percent of shipments in the year leading up to amended
standards, DOE's testing and reverse-engineering analyses indicate that
manufacturers can achieve TSL 2 at little or no additional capital cost
compared to models at the current baseline levels. Through its
analyses, DOE observed that manufacturers generally employ control
strategies to achieve the TSL 2 efficiency levels (e.g., changes in
water levels, water temperatures, and cycle settings available to the
end user). Accordingly, this level corresponds more to incremental
equipment conversions rather than platform redesigns. Thus, DOE
estimates that compliance with TSL 2 would not require any up front
capital investments, while the industry budget for capital expenditure
in the year leading up to amended standards is $4.8 million. TSL 2 will
require an estimated $10.2 million in equipment conversion costs
primarily relating to the research and development programs needed to
improve upon existing platforms to meet the specified efficiency
levels. This represents 2.3 times the industry budget for research and
development in the year leading up to amended standards. The
substantial reduction in conversion costs corresponding to compliance
with TSL 2 greatly mitigates the operational risk and impact on INPV.
After considering the analysis and weighing the benefits and the
burdens, DOE has tentatively concluded that at TSL 2 for front-loading
and top-loading commercial clothes washer equipment, the benefits of
energy savings, positive NPV of customer benefit, positive impacts on
consumers (as indicated by positive average LCC savings, favorable
PBPs, and the large percentage of customers who would experience LCC
benefits), emission reductions, and the estimated monetary value of the
emissions reductions would outweigh the potential reductions in INPV
for manufacturers. The Secretary of Energy has concluded that TSL 2
would save a significant amount of energy and is technologically
feasible and economically justified.
Based on the above considerations, DOE today proposes to adopt the
energy conservation standards for front-loading and top-loading
commercial clothes washers at TSL 2.
Table V.23 presents the proposed energy conservation standards for
commercial clothes washer equipment.
Table V.23--Proposed Energy Conservation Standards for Commercial
Clothes Washers
------------------------------------------------------------------------
Maximum
Product class Minimum IWF
MEFJ2* [dagger]
------------------------------------------------------------------------
Top-Loading....................................... 1.35 8.8
Front-Loading..................................... 2.00 4.1
------------------------------------------------------------------------
* MEFJ2 (appendix J2 modified energy factor) is calculated as the
clothes container capacity in cubic feet divided by the sum, expressed
in kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot
water energy consumption; (2) the total weighted per-cycle machine
electrical energy consumption; and (3) the per-cycle energy
consumption for removing moisture from a test load.
[dagger] IWF (integrated water factor) is calculated as the sum,
expressed in gallons per cycle, of the total weighted per-cycle water
consumption for all wash cycles divided by the clothes container
capacity in cubic feet.
2. Summary of Benefits and Costs (Annualized) of the Proposed Standards
The benefits and costs of today's proposed standards, for equipment
sold in 2018-2047, can also be expressed in terms of annualized values.
The annualized monetary values are the sum of (1) the annualized
national economic value of the benefits from consumer operation of
equipment that meet the proposed standards (consisting primarily of
operating cost savings from using less energy, minus increases in
equipment purchase and installation costs, which is another way of
representing consumer NPV), and (2) the annualized monetary value of
the benefits of emission reductions, including CO2 emission
reductions.\42\
---------------------------------------------------------------------------
\42\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2013, the year used for discounting
the NPV of total customer costs and savings, for the time-series of
costs and benefits using discount rates of three and seven percent
for all costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates. From
the present value, DOE then calculated the fixed annual payment over
a 30-year period (2019 through 2048) that yields the same present
value. The fixed annual payment is the annualized value. Although
DOE calculated annualized values, this does not imply that the time-
series of cost and benefits from which the annualized values were
determined is a steady stream of payments.
---------------------------------------------------------------------------
Although combining the values of operating savings and
CO2 emission reductions provides a useful perspective, two
issues should be considered. First, the national operating savings are
domestic U.S. customer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for
[[Page 12345]]
analysis. The national operating cost savings is measured for the
lifetime of front-loading and top-loading commercial clothes washers
shipped in 2018-2047. The SCC values, on the other hand, reflect the
present value of some future climate-related impacts resulting from the
emission of one ton of carbon dioxide in each year. These impacts
continue well beyond 2100.
Estimates of annualized benefits and costs of the proposed
standards for front-loading and top-loading commercial clothes washers
are shown in Table V.24. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction, for which DOE used a 3-percent discount
rate along with the average SCC series that uses a 3-percent discount
rate, the cost of the standards proposed in today's rule is $0.02
million per year in increased equipment costs; while the estimated
benefits are $31 million per year in reduced equipment operating costs,
$9 million in CO2 reductions, and $0.37 million in reduced
NOX emissions. In this case, the net benefit would amount to
$40 million per year. Using a 3-percent discount rate for all benefits
and costs and the average SCC series, the estimated cost of the
standards proposed in today's rule is $0.02 million per year in
increased equipment costs; while the estimated benefits are $46 million
per year in reduced operating costs, $9 million in CO2
reductions, and $0.57 million in reduced NOX emissions. In
this case, the net benefit would amount to approximately $56 million
per year.
Table V.24--Annualized Benefits and Costs of Proposed Standards for Front-Loading and Top-Loading Commercial
Clothes Washers (TSL 2)
----------------------------------------------------------------------------------------------------------------
Low net benefits High net benefits
Discount rate Primary estimate* estimate* estimate*
----------------------------------------------------------------------------------------------------------------
million 2012$/year
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings.......... 7%................ 31................ 27................ 38.
3%................ 46................ 40................ 60.
CO[ihel2] Reduction Monetized 5%................ 2................. 2................. 3.
Value ($11.8/t case) *.
CO[ihel2] Reduction Monetized 3%................ 9................. 8................. 11.
Value ($39.7/t case) *.
CO[ihel2] Reduction Monetized 2.5%.............. 13................ 12................ 17.
Value ($61.2/t case) *.
CO[ihel2] Reduction Monetized 3%................ 28................ 25................ 34.
Value ($117/t case) *.
NOX Reduction Monetized Value 7%................ 0.37.............. 0.33.............. 0.45.
(at $2,639/ton) **.
3%................ 0.57.............. 0.51.............. 0.70.
Total Benefits[dagger].......... 7% plus CO[ihel2] 33 to 58.......... 29 to 52.......... 42 to 73.
range.
7%................ 40................ 35................ 50.
3% plus CO[ihel2] 49 to 75.......... 43 to 66.......... 64 to 95.
range.
3%................ 56................ 49................ 72.
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs....... 7%................ 0.02.............. 0.02.............. 0.02.
3%................ 0.02.............. 0.03.............. 0.02.
----------------------------------------------------------------------------------------------------------------
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total[dagger]................... 7% plus CO[ihel2] 33 to 58.......... 29 to 52.......... 42 to 73.
range.
7%................ 40................ 35................ 50.
3% plus CO[ihel2] 49 to 75.......... 43 to 66.......... 64 to 95.
range.
3%................ 56................ 49................ 72.
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with front-loading and top-loading CCW units
shipped in 2018-2047. These results include benefits to customers which accrue after 2047 from the products
purchased in 2018-2047. The results account for the incremental variable and fixed costs incurred by
manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low
Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference case,
Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs
reflect no change for projected product price trends in the Primary Estimate, an increasing trend for
projected product prices in the Low Benefits Estimate, and a decreasing trend for projected product prices in
the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values
are based on the average SCC from the three integrated assessment models, at discount rates of 2.5, 3, and 5
percent. The fourth set, which represents the 95th percentile SCC estimate across all three models at a 3-
percent discount rate, is included to represent higher-than-expected impacts from temperature change further
out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time
series incorporate an escalation factor. The value for NOX is the average of the low and high values used in
DOE's analysis.
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
to the full range of CO2 values.
[[Page 12346]]
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The problems that today's standards address are as follows:
(1) There is a lack of consumer information and/or information
processing capability about energy efficiency opportunities in the
commercial appliance market.
(2) There is asymmetric information (one party to a transaction has
more and better information than the other) and/or high transactions
costs (costs of gathering information and effecting exchanges of goods
and services).
(3) There are external benefits resulting from improved energy
efficiency of commercial clothes washers that are not captured by the
users of such equipment. These benefits include externalities related
to environmental protection and energy security that are not reflected
in energy prices, such as reduced emissions of greenhouse gases.
In addition, DOE has determined that today's regulatory action is a
``significant regulatory action'' under Executive Order 12866. DOE
presented for review to the Office of Information and Regulatory
Affairs (OIRA) in the OMB the draft rule and other documents prepared
for this rulemaking, including a regulatory impact analysis (RIA), and
has included these documents in the rulemaking record. The assessments
prepared pursuant to Executive Order 12866 can be found in the
technical support document for this rulemaking.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563
is supplemental to and explicitly reaffirms the principles, structures,
and definitions governing regulatory review established in Executive
Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing
that some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative
regulations; (3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent
feasible, specify performance objectives, rather than specifying the
behavior or manner of compliance that regulated entities must adopt;
and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, the Office of Information and Regulatory Affairs has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
DOE believes that today's NOPR is consistent with these principles,
including the requirement that, to the extent permitted by law,
benefits justify costs and that net benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA'', 5 U.S.C. 601 et seq.)
requires preparation of an initial regulatory flexibility analysis
(IRFA) for any rule that by law must be proposed for public comment,
unless the agency certifies that the rule, if promulgated, will not
have a significant economic impact on a substantial number of small
entities. As required by Executive Order 13272, ``Proper Consideration
of Small Entities in Agency Rulemaking,'' 67 FR 53461 (August 16,
2002), DOE published procedures and policies on February 19, 2003, to
ensure that the potential impacts of its rules on small entities are
properly considered during the rulemaking process. 68 FR 7990. DOE has
made its procedures and policies available on the Office of the General
Counsel's Web site (http://energy.gov/gc/office-general-counsel).
DOE reviewed today's NOPR pursuant to the RFA and the policies and
procedures discussed above. DOE certifies that the standards
established in today's NOPR, published elsewhere in today's Federal
Register, will not have a significant impact on a substantial number of
small entities. The factual basis for this certification is set forth
below. DOE will consider any comments on the certification or economic
impacts of the rule in determining whether to proceed with the NOPR.
For manufacturers of commercial clothes washers, the Small Business
Administration (SBA) has set a size threshold, which defines those
entities classified as ``small businesses'' for the purposes of the
statute. DOE used the SBA's small business size standards to determine
whether any small entities would be subject to the requirements of the
rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533,
53544 (Sept. 5, 2000) and codified at 13 CFR part 121.The size
standards are listed by North American Industry Classification System
(NAICS) code and industry description and are available at:
www.sba.gov/sites/default/files/SizeStandards_Table.pdf. Commercial
clothes washer manufacturing is classified under NAICS 333318, ``Other
commercial and service industry machinery manufacturing.'' The SBA sets
a threshold of 1,000 employees or less for an entity to be considered
as a small business for this category.
To estimate the number of small businesses which could be impacted
by the amended energy conservation standards, DOE conducted a market
survey using available public information to identify potential small
manufacturers. DOE's research included the AHAM membership directory,
product databases (CEE, CEC, and ENERGY STAR databases) and individual
company Web sites to find potential small business manufacturers. DOE
also asked interested parties and industry representatives if they were
aware of any other small business manufacturers during manufacturer
interviews and at previous DOE public meetings. DOE reviewed all
publicly available data and contacted various companies, as necessary,
to determine whether they met the SBA's definition of a small business
manufacturer of covered commercial clothes washers. DOE screened out
companies that did not offer products covered by this rulemaking, did
not meet the definition of a ``small business,'' or are foreign owned
and operated.
All top-loading commercial clothes washers and approximately 40
percent of front-loading commercial clothes washers are currently
manufactured in the United States, accounting for 78 percent of overall
domestic commercial clothes washer shipments. Three U.S.-
[[Page 12347]]
based companies are responsible for this 78 percent domestic production
and over 95 percent of commercial clothes washer industry market share.
Although one of these manufacturers has been identified and analyzed
separately as a LVM, none of these manufacturers meet the definition of
a small business manufacturer, as they all have more than 1,000
employees. The small portion of the remaining commercial clothes washer
market (approximately 5,800 shipments) is supplied by a combination of
3 international companies, all of which have small market shares. These
companies are all foreign owned and operated, and exceed the SBA's
employment threshold for consideration as a small business under the
appropriate NAICS code. Therefore, DOE did not identify any small
business manufacturers of commercial clothes washers.
Based on the discussion above, DOE certifies that the standards for
commercial clothes washers set forth in today's rule would not have a
significant economic impact on a substantial number of small entities.
Accordingly, DOE has not prepared a regulatory flexibility analysis for
this rulemaking. DOE will transmit the certification and supporting
statement of factual basis to the Chief Counsel for Advocacy of the SBA
for review under 5 U.S.C. 605(b).
C. Review Under the Paperwork Reduction Act
Manufacturers of commercial clothes washers must certify to DOE
that their products comply with any applicable energy conservation
standards. In certifying compliance, manufacturers must test their
products according to the DOE test procedures for commercial clothes
washers, including any amendments adopted for those test procedures.
DOE has established regulations for the certification and recordkeeping
requirements for all covered consumer products and commercial
equipment, including commercial clothes washers. 76 FR 12422 (March 7,
2011). The collection-of-information requirement for the certification
and recordkeeping is subject to review and approval by OMB under the
Paperwork Reduction Act (PRA). This requirement has been approved by
OMB under OMB control number 1910-1400. Public reporting burden for the
certification is estimated to average 20 hours per response, including
the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the proposed rule fits within the category of
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets
the requirements for application of a CX. See 10 CFR Part 1021, App. B,
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The proposed rule fits
within the category of actions because it is a rulemaking that
establishes energy conservation standards for consumer products or
industrial equipment, and for which none of the exceptions identified
in CX B5.1(b) apply. Therefore, DOE has made a CX determination for
this rulemaking, and DOE does not need to prepare an Environmental
Assessment or Environmental Impact Statement for this proposed rule.
DOE's CX determination for this proposed rule is available at http://cxnepa.energy.gov/.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have Federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the states and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by state and local officials in the
development of regulatory policies that have Federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. EPCA governs and
prescribes Federal preemption of state regulations as to energy
conservation for the products that are the subject of today's proposed
rule. States can petition DOE for exemption from such preemption to the
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) No
further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' imposes on Federal agencies the general duty
to adhere to the following requirements: (1) Eliminate drafting errors
and ambiguity; (2) write regulations to minimize litigation; and (3)
provide a clear legal standard for affected conduct rather than a
general standard and promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Section 3(b) of Executive Order 12988 specifically
requires that Executive agencies make every reasonable effort to ensure
that the regulation: (1) Clearly specifies the preemptive effect, if
any; (2) clearly specifies any effect on existing Federal law or
regulation; (3) provides a clear legal standard for affected conduct
while promoting simplification and burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately defines key terms; and (6)
addresses other important issues affecting clarity and general
draftsmanship under any guidelines issued by the Attorney General.
Section 3(c) of Executive Order 12988 requires Executive agencies to
review regulations in light of applicable standards in section 3(a) and
section 3(b) to determine whether they are met or it is unreasonable to
meet one or more of them. DOE has completed the required review and
determined that, to the extent permitted by law, this proposed rule
meets the relevant standards of Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on state, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a proposed regulatory action likely to result in a rule that may
cause the expenditure by state, local, and tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of state, local, and tribal
[[Page 12348]]
governments on a proposed ``significant intergovernmental mandate,''
and requires an agency plan for giving notice and opportunity for
timely input to potentially affected small governments before
establishing any requirements that might significantly or uniquely
affect small governments. On March 18, 1997, DOE published a statement
of policy on its process for intergovernmental consultation under UMRA.
62 FR 12820. DOE's policy statement is also available at http://energy.gov/gc/office-general-counsel.
DOE examined today's proposed rule according to UMRA and its
statement of policy. Today's proposed rule does not contain a Federal
intergovernmental mandate, and DOE expects it will not require
expenditures of $100 million or more by the private sector. Such
expenditures may include: (1) Investment in research and development
and in capital expenditures by commercial clothes washer manufacturers
in the years between the final rule and the compliance date for the new
standards, and (2) incremental additional expenditures by consumers to
purchase higher-efficiency commercial clothes washers, starting at the
compliance date for the applicable standard. Therefore, the analytical
requirements of UMRA do not apply.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
DOE has determined, under Executive Order 12630, ``Governmental
Actions and Interference with Constitutionally Protected Property
Rights'' 53 FR 8859 (Mar. 18, 1988), that this regulation would not
result in any takings that might require compensation under the Fifth
Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
guidelines established by each agency pursuant to general guidelines
issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22,
2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7,
2002). DOE has reviewed today's NOPR under the OMB and DOE guidelines
and has concluded that it is consistent with applicable policies in
those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgates or is expected to lead to promulgation of
a final rule, and that: (1) is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use.
DOE has tentatively concluded that today's regulatory action, which
sets forth energy conservation standards for commercial clothes
washers, is not a significant energy action because the proposed
standards are not likely to have a significant adverse effect on the
supply, distribution, or use of energy, nor has it been designated as
such by the Administrator at OIRA. Accordingly, DOE has not prepared a
Statement of Energy Effects on the proposed rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as scientific information the
agency reasonably can determine will have, or does have, a clear and
substantial impact on important public policies or private sector
decisions. 70 FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following Web site:
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
VII. Public Participation
A. Attendance at the Public Meeting
The time, date, and location of the public meeting are listed in
the DATES and ADDRESSES sections at the beginning of this notice. If
you plan to attend the public meeting, please notify Ms. Brenda Edwards
at (202) 586-2945 or [email protected]. As explained in the
ADDRESSES section, foreign nationals visiting DOE Headquarters are
subject to advance security screening procedures.
In addition, you can attend the public meeting via webinar. Webinar
registration information, participant instructions, and information
about the capabilities available to webinar participants will be
published on DOE's rulemaking Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/56. Participants
are responsible for ensuring their systems are compatible with the
webinar software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has plans to present a prepared general statement
may request that copies of his or her
[[Page 12349]]
statement be made available at the public meeting. Such persons may
submit requests, along with an advance electronic copy of their
statement in PDF (preferred), Microsoft Word or Excel, WordPerfect, or
text (ASCII) file format, to the appropriate address shown in the
ADDRESSES section at the beginning of this notice. The request and
advance copy of statements must be received at least one week before
the public meeting and may be emailed, hand-delivered, or sent by mail.
DOE prefers to receive requests and advance copies via email. Please
include a telephone number to enable DOE staff to make follow-up
contact, if needed.
C. Conduct of the Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with section 336 of EPCA (42 U.S.C.
6306). A court reporter will be present to record the proceedings and
prepare a transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the public meeting. After the public meeting, interested parties may
submit further comments on the proceedings as well as on any aspect of
the rulemaking until the end of the comment period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this rulemaking. Each participant will be allowed
to make a general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will allow, as time
permits, other participants to comment briefly on any general
statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this rulemaking. The official conducting the public
meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be included in the docket,
which can be viewed as described in the Docket section at the beginning
of this notice. In addition, any person may buy a copy of the
transcript from the transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed rule before or after the public meeting, but no later than the
date provided in the DATES section at the beginning of this proposed
rule. Interested parties may submit comments, data, and other
information using any of the methods described in the ADDRESSES section
at the beginning of this notice.
Submitting comments via regulations.gov. The regulations.gov Web
page will require you to provide your name and contact information.
Your contact information will be viewable to DOE Building Technologies
staff only. Your contact information will not be publicly viewable
except for your first and last names, organization name (if any), and
submitter representative name (if any). If your comment is not
processed properly because of technical difficulties, DOE will use this
information to contact you. If DOE cannot read your comment due to
technical difficulties and cannot contact you for clarification, DOE
may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment 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 regulations.gov information for which disclosure
is restricted by statute, such as trade secrets and commercial or
financial information (hereinafter referred to as Confidential Business
Information (CBI)). Comments submitted through regulations.gov cannot
be claimed as CBI. Comments received through the Web site will waive
any CBI claims for the information submitted. For information on
submitting CBI, see the Confidential Business Information section
below.
DOE processes submissions made through regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or mail.
Comments and documents submitted via email, hand delivery, or mail also
will be posted to regulations.gov. If you do not want your personal
contact information to be publicly viewable, do not include it in your
comment or any accompanying documents. Instead, provide your contact
information 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. 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. According to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email, postal mail, or hand delivery/courier two well-marked copies:
one copy of the document marked confidential including all the
information believed to be confidential, and one copy of the document
marked non-confidential with the information believed to be
confidential deleted. Submit these documents via email or on a CD, if
feasible. DOE will make its own determination about the confidential
[[Page 12350]]
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).
E. Issues on Which DOE Seeks Comment
Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
1. Information on historical product shipments and market share
efficiency data, disaggregated by product class, for 2012 and 2013 as
those data become available.
2. Comments, information and data on characterizing the CCW usage
for establishing energy consumption of CCW. Specifically, whether there
are any data on on-premise laundry usage that could improve the usage
characterization.
3. Comments, information and data on the equipment lifetimes
developed for multi-family and laundromat applications for both front-
loading and top-loading CCW. DOE defines lifetime as the age at which
CCW equipment is retired from service. DOE welcomes further input on
the multi-family, commercial clothes washer lifetimes of 11.25 years on
average, a 15.5 year maximum, and a 7.0 year minimum. DOE also welcomes
further input on the laundromat average lifetime assumption of 7.125
years on average, a 9.3 year maximum, and a 5.0 year minimum. In the
technical support document, these equipment lifetime assumptions
applied to the LCC and PBP are discussed further in Chapter 8.2.3 and
the Weibull distributions used for the lifetimes are discussed in
Appendix 8C.
4. Comments, information and data on the base case efficiency
distributions of CCW. Given that market share efficiency data for 2010-
2011 were used to develop estimated base case efficiency distributions
in the compliance year (2018), DOE seeks more historical market share
efficiency data which would be useful for projecting the base case and
standards case efficiency distributions for the analysis period.
5. Comments, information, and data on the repair and maintenance
costs for front-loading and top-loading CCW equipment classes. Whether
repair costs for CCW equipment would increase at the efficiency levels
indicated in today's proposed rule due to any changes in the design and
materials and components used in order to comply with the new
efficiency standards.
6. Impacts that the energy and water conservation standards may
have on any lessening of the utility or performance of the covered
products. These impacts may include increased cycle times to wash
clothes, ability to achieve good wash performance (e.g., cleaning and
rinsing), increased longevity of clothing, improved ergonomics of
washer use, increased noise, and other potential impacts.
7. The reasonableness of the values that DOE used to characterize
the rebound effect with the more efficient CCW equipment.
8. Whether there would be any anticipated changes in the
consumption of complementary goods (e.g., laundry detergent, stain
removers, fabric softeners) that may result from the proposed
standards.
9. On the assumptions applied in the engineering analysis in
Chapter 5 of the technical support document, for top-loading and front-
loading product classes for the baseline efficiency levels and
technology cost assessment. For the top-loading product class, DOE used
the baseline level on the 1.60 MEF and the 8.5 WF requirements
specified by current Federal energy conservation standards, which
became effective for commercial clothes washers manufactured on or
after January 8, 2013. For the front-loading product class, DOE
established the baseline level based on the 2.00 MEF and 5.5 WF
requirements specified by current Federal energy conservation
standards.
10. To estimate the impact on shipments of the price increase for
the considered efficiency levels, DOE used a cross price elasticity
approach to measure the change in the market share of top-loaders
caused by a change in the price of front loaders. At the efficiency
levels proposed in this rule, front-loader CCW equipment would increase
their market share by 48 percent from the current 40 percent in the
analysis period. DOE welcomes stakeholder input and estimates on the
effect of amended standards on future CCW equipment shipments. DOE also
welcomes input and data on the cross elasticity estimates used in the
analysis.
11. DOE requests comment on whether there are features or
attributes of the more energy-efficient CCW equipment that
manufacturers would produce to meet the standards in this proposed rule
that might affect how they would be used by consumers. DOE requests
comment specifically on how any such effects on CCW product features or
attributes should be weighed in the choice of standards for the CCW
final rule.
12. For this rulemaking, DOE analyzed the effects of this proposal
assuming that the CCW equipment would be available to purchase for 30
years, and it undertook a sensitivity analysis using 9 years rather
than 30 years of product shipments. The choice of a 30-year period of
shipments is consistent with the DOE analysis for other products and
commercial equipment. The choice of a 9-year period is a proxy for the
timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards. We are seeking input, information and data on whether there
are ways to refine the analytic timeline further.
13. DOE solicits comment on the application of the new SCC values
used to determine the social benefits of CO2 emissions reductions over
the rulemaking analysis period. The rulemaking analysis period covers
from 2018 to 2047 plus an additional 50 years to account for the
lifetime operation of the equipment purchased in that period. In
particular, the agency solicits comment on its derivation of SCC values
after 2050, where the agency applied the average annual growth rate of
the SCC estimates in 2040-2050 associated with each of the four sets of
values.
14. The agency also seeks input on the cumulative regulatory burden
that may be imposed on industry either from recently implemented
rulemakings for these products or other rulemakings that affect the
same industry.
15. Whether DOE should incorporate the cost of risers or storage
drawers (also referred to as pedestals) into the baseline installation
costs for front-loading machines.
[[Page 12351]]
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's
proposed rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Energy conservation,
Household appliances, and Small businesses.
Issued in Washington, DC, on February 21, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, DOE proposes to amend
part 431 of chapter II, subchapter D, of title 10 of the Code of
Federal Regulations, to read as set forth below:
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
1. The authority citation for Part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 431.156 to Subpart I is amended by revising paragraph (b)
and adding paragraph (c) as follows:
Sec. 431.156 Energy and water conservation standards and their
effective dates.
* * * * *
(b) Each commercial clothes washer manufactured on or after January
8, 2013, and before January 1, 2015, shall have a modified energy
factor no less than and a water factor no greater than:
------------------------------------------------------------------------
Modified
energy Water
factor factor
Equipment class (MEF), (WF),
cu. ft./ gal./cu.
kWh/ ft./
cycle cycle
------------------------------------------------------------------------
Top-Loading......................................... 1.60 8.5
Front-Loading....................................... 2.00 5.5
------------------------------------------------------------------------
(c) Each commercial clothes washer manufactured on or after January
1, 2015 shall have a modified energy factor no less than and an
integrated water factor no greater than:
------------------------------------------------------------------------
Modified
energy Integrated
factor water
Equipment class (MEFJ2), factor
cu. ft./ (IWF),
kWh/ gal./cu.
cycle ft./cycle
------------------------------------------------------------------------
Top-Loading....................................... 1.35 8.8
Front-Loading..................................... 2.00 4.1
------------------------------------------------------------------------
[FR Doc. 2014-04407 Filed 3-3-14; 8:45 am]
BILLING CODE 6450-01-P