[Federal Register Volume 81, Number 8 (Wednesday, January 13, 2016)]
[Proposed Rules]
[Pages 1688-1759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33062]
[[Page 1687]]
Vol. 81
Wednesday,
No. 8
January 13, 2016
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for Ceiling
Fans; Proposed Rule
Federal Register / Vol. 81 , No. 8 / Wednesday, January 13, 2016 /
Proposed Rules
[[Page 1688]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[Docket Number EERE-2012-BT-STD-0045]
RIN 1904-AD28
Energy Conservation Program: Energy Conservation Standards for
Ceiling Fans
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking (NOPR) and announcement of 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
ceiling fans. EPCA also requires the U.S. Department of Energy (DOE) to
periodically determine whether more-stringent, amended standards would
be technologically feasible and economically justified, and would save
a significant amount of energy. In this notice, DOE proposes amended
energy conservation standards for ceiling fans, and also announces a
public meeting to receive comment on these proposed standards and
associated analyses and results.
DATES: Comments: DOE will accept comments, data, and information
regarding this notice of proposed rulemaking (NOPR) before and after
the public meeting, but no later than March 14, 2016. See section VII,
``Public Participation,'' for details.
Comments regarding the likely competitive impact of the proposed
standard should be sent to the Department of Justice contact listed in
the ADDRESSES section before February 12, 2016.
Meeting: DOE will hold a public meeting on Wednesday, Feburary 3,
2016 from 9:00 a.m. to 4:00 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.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW.,
Washington, DC 20585.
Instructions: Any comments submitted must identify the NOPR on
Energy Conservation Standards for ceiling fans and provide docket
number EE-2012-BT-STD-0045 and/or regulatory information number (RIN)
1904-AD28. 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. Submit electronic
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and
avoid the use of special characters or any form of encryption.
3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy,
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue
SW., Washington, DC 20585-0121. If possible, please submit all items on
a compact disc (CD), in which case it is not necessary to include
printed copies.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible,
please submit all items on a CD, in which case it is not necessary to
include printed copies.
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].
EPCA requires the Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition. The U.S. Department of Justice Antitrust Division invites
input from market participants and other interested persons with views
on the likely competitive impact of the proposed standard. Interested
persons may contact the Division at [email protected]
before February 12, 2016. Please indicate in the ``Subject'' line of
your email the title and Docket Number of this rulemaking notice.
No telefacsimilies (faxes) will be accepted. 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 www.regulations.gov.
All documents in the docket are listed in the www.regulations.gov
index. However, some documents listed in the index may not be publicly
available, such as those containing information that is exempt from
public disclosure.
A link to the docket Web page can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/65. This Web page contains a link to the docket for this notice
on the www.regulations.gov site. The www.regulations.gov Web page
contains simple instructions on how to access all documents, including
public comments, in the docket. See section VII, ``Public
Participation,'' for further information on how to submit comments
through www.regulations.gov.
EPCA requires the Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition (42 U.S.C. 6295(o)(2)(B)(i)(V). The U.S. Department of
Justice Antitrust Division invites input from market participants and
other interested persons with views on the likely competitive impact of
the proposed standard. Interested persons may contact the Division at
[email protected] before February 12, 2016. Please
indicate in the ``Subject'' line of your email the title and Docket
Number of this rulemaking notice.
FOR FURTHER INFORMATION CONTACT: Lucy DeButts, 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) 287-1604. Email:
[email protected].
Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 586-7796. Email:
[email protected].
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].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
II. Introduction
A. Authority
B. Background
1. Current Standards
[[Page 1689]]
2. History of Standards Rulemaking for Ceiling Fans
III. General Discussion
A. Product Classes and Scope of Coverage
1. Scope of Coverage
2. Product Classes
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Product Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Baseline and Max-Tech Models
2. Manufacturing Cost Analysis
3. Installed Costs
D. Markups Analysis
E. Energy Use Analysis
1. Inputs for Standard, Hugger, and VSD Ceiling Fans
2. Inputs for Large-Diameter and High-Speed Small-Diameter
Ceiling Fans
3. Impact on Air Conditioning or Heating Equipment Use
F. Life-Cycle Cost and Payback Period Analysis
1. Purchase Price
2. Electricity Prices
3. Electricity Price Trends
4. Repair Costs
5. Product Lifetime
6. Discount Rates
7. Efficiency and Blade Span Distribution in the No-Standards
Case
8. Payback Period Analysis
G. Shipments Analysis
1. Shipments Demand Model
2. Stock-Accounting Model
3. Market-Share Projections
4. Price Trend
5. Impact of a Standard on Shipments
H. National Impact Analysis
1. National Energy Savings
2. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. GRIM Analysis and Key Inputs
3. Discussion of Comments
4. Manufacturer Interviews
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
2. Social Cost of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
2. Economic Impacts on Manufacturers
3. National Impact Analysis
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Ceiling Fan
Standards
2. Summary of Annualized Benefits and Costs 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
1. Description on Estimated Number of Small Entities Regulated
2. Description and Estimate of Compliance Requirements
3. Duplication, Overlap, and Conflict With Other Rules and
Regulations
4. Significant Alternatives to the Rule
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. Synopsis of the Proposed Rule
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291, et seq.),
established the Energy Conservation Program for Consumer Products Other
Than Automobiles.\2\ These products include ceiling fans, which are the
subject of this document. (42 U.S.C. 6295(ff))
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\2\ All references to EPCA in this document refer to the statute
as amended through the Energy Efficiency Improvement Act of 2015,
Public Law 114-11 (Apr. 30, 2015).
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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)) Furthermore, the new or amended standard must
result in a significant conservation of energy. (42 U.S.C.
6295(o)(3)(B)) EPCA also provides that not later than 6 years after
issuance of any final rule establishing or amending a standard, DOE
must publish either a notice of determination that standards for the
product do not need to be amended, or a notice of proposed rulemaking
including new proposed energy conservation standards. (42 U.S.C.
6295(m)(1))
In accordance with these and other statutory provisions discussed
in this document, DOE proposes amended energy conservation standards
for ceiling fans. The proposed standards, which are expressed for each
product class as the maximum allowable airflow efficiency in terms of
cubic feet per minute per watt (CFM/W), as a function of ceiling fan
diameter in inches, are shown in Table I-1. These proposed standards,
if adopted, would apply to all ceiling fans listed in Table I-1 and
manufactured in, or imported into, the United States on and after the
date 3 years after the publication of the final rule for this
rulemaking.
Table I-1--Proposed Energy Conservation Standards for Ceiling Fans
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Maximum airflow efficiency
Product class equation CFM/W *
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Very Small-Diameter (VSD)................ 3.17D-16.75
Hugger................................... 0.05D + 56.41
Standard................................. 0.30D + 60.61
High-Speed Small-Diameter (HSSD)......... 4.22D + 0.02
Large Diameter........................... 1.16D-24.38
------------------------------------------------------------------------
* D is the ceiling fan diameter, in inches.
A. Benefits and Costs to Consumers
Table I-2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of ceiling fans, as measured by the
average life-cycle cost (LCC) savings and the simple payback period
(PBP).\3\ The average LCC savings are positive for each product class,
and the PBP is less than the average lifetime of ceiling fans, which is
estimated to be 13.8 years for all product classes (see section IV.F).
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\3\ The average LCC savings are measured relative to the no-
standards case efficiency distribution, which depicts the market in
the compliance year in the absence of standards (see section
IV.F.7). The simple PBP, which is designed to compare specific
efficiency levels, is measured relative to the baseline model (see
section IV.F), which corresponds to the least efficient model
available to purchase.
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Table I-2--Impacts of Proposed Energy Conservation Standards on
Consumers of Ceiling Fans
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Average Simple
LCC payback
Product class savings period
(2014$) (years)
------------------------------------------------------------------------
Standard.......................................... 8.47 1.5
Hugger............................................ 5.59 1.6
Very Small-Diameter............................... 3.01 7.7
High-Speed Small-Diameter......................... 27.63 5.2
Large-Diameter.................................... 27.26 4.4
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DOE's analysis of the impacts of the proposed standards on
consumers is described in section IV.F of this notice.
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 (2015 to 2048). Using a real discount rate of 7.4
percent, DOE estimates that the INPV for manufacturers of CFs in the
no-standards case is $1,308.7 million in 2014$. Under the proposed
standards, DOE expects that manufacturers may lose up to 12.7 percent
of this INPV, which is approximately $166.3 million. Additionally,
based on DOE's interviews with the ceiling fan manufacturers, DOE does
not expect significant impacts on manufacturing capacity or loss of
employment for the industry as a whole to result from enacting the
proposed standards for ceiling fans.
DOE's analysis of the impacts of the amended standards on
manufacturers is described in section IV.J of this notice.
C. National Benefits and Costs \4\
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\4\ All monetary values in this section are expressed in 2014
dollars and, where appropriate, are discounted to 2015 unless
explicitly stated otherwise. Energy savings in this section refer to
the full-fuel-cycle savings (see section IV.H for discussion).
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DOE's analyses indicate that the proposed energy conservation
standards for ceiling fans would save a significant amount of energy.
Relative to the case where no energy efficiency performance standard is
set (the ``no-standards case''), the lifetime energy savings for
ceiling fans purchased in the 30-year period that begins in the
anticipated year of compliance with any amended standards (2019-2048)
amount to 0.758 quadrillion Btu (quads).\5\ This represents an energy
savings of 10.9 percent relative to the energy use of these products in
the case without amended standards (referred to as the ``no-standards
case'').
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\5\ A quad is equal to 10\15\ British thermal units (Btu).
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The cumulative net present value (NPV) of total consumer costs and
savings of the proposed standards for ceiling fans ranges from $0.813
billion (at a 7-percent discount rate) to $2.760 billion (at a 3-
percent discount rate). This NPV expresses the estimated total value of
future operating-cost savings minus the estimated increased product
costs for ceiling fans purchased in 2019-2048.
In addition, the proposed standards for ceiling fans would have
significant environmental benefits. DOE estimates that the proposed
standards would result in cumulative emission reductions of 45.7
million metric tons (Mt) \6\ of carbon dioxide (CO2), 24.5
thousand tons of sulfur dioxide (SO2), 84.2 thousand tons of
nitrogen oxides (NOX), 199.6 thousand tons of methane
(CH4), 0.51 thousand tons of nitrous oxide (N2O),
and 0.09 tons of mercury (Hg).\7\ The cumulative reduction in
CO2 emissions through 2030 amounts to 8.53 Mt, which is
equivalent to the emissions resulting from the annual electricity use
of almost 778,000 homes.\8\
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-
standards case, which reflects key assumptions in the Annual Energy
Outlook 2015 (AEO 2015) Reference case. AEO 2015 generally
represents current legislation and environmental regulations for
which implementing regulations were available as of October 31,
2014.
\8\ The conversion from cumulative CO2 emissions
reductions to electricity use emissions from homes is based on the
U.S. Environmental Protection Agency's Greenhouse Gas Equivalencies
Calculator: http://www.epa.gov/cleanenergy/energy-resources/calculator.html#results.
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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 a recent federal
interagency process.\9\ The derivation of the SCC values is discussed
in section IV.L. Using discount rates appropriate for each set of SCC
values (see Table I-3), DOE estimates the present monetary value of the
CO2 emissions reduction (not including CO2
equivalent emissions of other gases with global warming potential) is
between $0.3 billion and $4.4 billion, with a value of $1.4 billion
using the central SCC case represented by $40.0/t in 2015. DOE also
estimates the present monetary value of the NOX emissions
reduction to be $0.11 billion at a 7-percent discount rate and $0.27
billion at a 3-percent discount rate.\10\
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\9\ 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 July 2015) (Available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
\10\ DOE estimated the monetized value of NOx emissions
reductions using benefit per ton estimates from the Regulatory
Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for
Existing Power Plants and Emission Standards for Modified and
Reconstructed Power Plants,'' published in June 2014 by EPA's Office
of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.)
See section IV.L.2 for further discussion. Note that the agency is
presenting a national benefit-per-ton estimate for particulate
matter emitted from the Electricity Generating Unit sector based on
an estimate of premature mortality derived from the ACS study
(Krewski et al., 2009). If the benefit-per-ton estimates were based
on the Six Cities study (Lepuele et al., 2011), the values would be
nearly two-and-a-half times larger. Because of the sensitivity of
the benefit-per-ton estimate to the geographical considerations of
sources and receptors of emissions, DOE intends to investigate
refinements to the agency's current approach of one national
estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule. Note
that DOE is currently investigating valuation of avoided
SO2 and Hg emissions.
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Table I-3 summarizes the national economic benefits and costs
expected to result from the proposed standards for ceiling fans.
Table I-3--Summary of National Economic Benefits and Costs of Proposed
Energy Conservation Standards for Ceiling Fans (TSL 4) *
------------------------------------------------------------------------
Present value Discount rate
Category Billion 2014$ (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings...... 2.2 7
5.2 3
CO2 Reduction Monetized Value ($12.2/ 0.31 5
t case) **..........................
CO2 Reduction Monetized Value ($40.0/ 1.4 3
t case) **..........................
CO2 Reduction Monetized Value ($62.3/ 2.3 2.5
t case) **..........................
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CO2 Reduction Monetized Value ($117/t 4.4 3
case) **............................
NOX Reduction Monetized Value 0.11 7
[dagger]............................ 0.27 3
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Total Benefits[dagger][dagger]... 3.8 7
6.9 3
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Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs. 1.4 7%
2.4 3%
------------------------------------------------------------------------
Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction 2.3 7%
Monetized Value[dagger]............. 4.5 3%
------------------------------------------------------------------------
* This table presents the costs and benefits associated with ceiling
fans shipped in 2019-2048. These results include benefits to consumers
which accrue after 2048 from the products purchased in 2019-2048. The
results account for the incremental variable and fixed costs incurred
by manufacturers due to the standard, some of which may be incurred in
preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
2014$, 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 incorporate an
escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L.
DOE estimated the monetized value of NOX emissions reductions using
benefit per ton estimates from the Regulatory Impact Analysis titled,
``Proposed Carbon Pollution Guidelines for Existing Power Plants and
Emission Standards for Modified and Reconstructed Power Plants,''
published in June 2014 by EPA's Office of Air Quality Planning and
Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further
discussion. Note that the agency is presenting a national benefit-per-
ton estimate for particulate matter emitted from the Electric
Generating Unit sector based on an estimate of premature mortality
derived from the ACS study (Krewski et al., 2009). If the benefit-per-
ton estimates were based on the Six Cities study (Lepuele et al.,
2011), the values would be nearly two-and-a-half times larger. Because
of the sensitivity of the benefit-per-ton estimate to the geographical
considerations of sources and receptors of emissions, DOE intends to
investigate refinements to the agency's current approach of one
national estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
using the series corresponding to average SCC with 3-percent discount
rate ($40.0/t case).
The benefits and costs of the proposed standards, for ceiling fans
sold in 2019-2048, 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 new or amended standards (consisting primarily
of operating cost savings from using less energy, minus increases in
product purchase prices and installation costs, which is another way of
representing consumer NPV), and (2) the annualized monetary value of
the benefits of emission reductions, including NOX and
CO2 emission reductions.\11\
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\11\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2015, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2015. The calculation uses discount rates of 3 and 7
percent for all costs and benefits except for the value of
CO2 reductions, for which DOE used case-specific discount
rates, as shown in Table I-4. Using the present value, DOE then
calculated the fixed annual payment over a 30-year period, starting
in the compliance year, that yields the same present value.
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Although combining the values of operating savings and
CO2 emission reductions is relevant to DOE's determination,
two issues should be considered. First, the national operating savings
are domestic U.S. consumer monetary savings that occur as a result of
market transactions, whereas the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for analysis. The national operating
cost savings is measured for the lifetime of ceiling fans shipped in
2019-2048. Because CO2 emissions have a very long residence
time in the atmosphere,\12\ the SCC values after 2050 reflect future
climate-related impacts resulting from the emission of CO2
that continue beyond 2100.
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\12\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ (2005), ``Correction to
`Control of fossil-fuel particulate black carbon and organic matter,
possibly the most effective method of slowing global warming,''' J.
Geophys. Res. 110. pp. D14105.
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Estimates of annualized benefits and costs of the proposed
standards are shown in Table I-4. The results under the primary
estimate are as follows. Using a 7-percent discount rate for benefits
and costs other than CO2 reduction (for which DOE used a 3-
percent discount rate along with the average SCC series that has a
value of $40.0/t in 2015), the estimated annualized cost of the
standards proposed in this rule is $140 million per year in increased
equipment costs, while the estimated annualized benefits are $220
million in reduced equipment operating costs, $80 million in
CO2 reductions, and $10 million in reduced NOX
emissions. In this case, the annualized net benefit amounts to $170
million per year. Using a 3-percent discount rate for all benefits and
costs and the average SCC series that has a value of $40.0/t in 2015,
the estimated annualized cost of the proposed ceiling fans standards is
$136 million per year in increased equipment costs, while the estimated
annualized benefits are $290 million in reduced operating costs, $80
million in CO2 reductions, and $15 million in reduced
NOX emissions. In this case, the annualized net benefit
amounts to $248 million per year.
[[Page 1692]]
Table I-4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Ceiling Fans (TSL 4)
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(Million 2014$/year)
-----------------------------------------------------------------------------------
Discount rate (%) Low net benefits estimate High net benefits estimate
Primary estimate * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings... 7............................... 220....................... 195....................... 253.
3............................... 290....................... 255....................... 341.
CO2 Reduction Monetized Value 5............................... 23........................ 21........................ 26.
($12.2/t case)**.
CO2 Reduction Monetized Value 3............................... 80........................ 71........................ 90.
($40.0/t case)**.
CO2 Reduction Monetized Value 2.5............................. 117....................... 105....................... 132.
($62.3/t case)**.
CO2 Reduction Monetized Value 3............................... 243....................... 217....................... 274.
($117/t case)**.
NOX Reduction Monetized 7............................... 10........................ 9......................... 26.
Value[dagger]. 3............................... 15........................ 13........................ 37.
Total Benefits 7 plus CO2 range................ 254 to 473................ 225 to 421................ 305 to 553.
[dagger][dagger].
7............................... 310....................... 275....................... 369.
3 plus CO2 range................ 328 to 547................ 289 to 485................ 404 to 652.
3............................... 384....................... 340....................... 467.
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Costs
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Consumer Incremental Installed 7............................... 140....................... 177....................... 155.
Product Costs. 3............................... 136....................... 182....................... 152.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits
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Total [dagger]................ 7 plus CO2 range................ 114 to 333................ 47 to 243................. 150 to 398.
7............................... 170....................... 98........................ 214.
3 plus CO2 range................ 192 to 411................ 107 to 303................ 251 to 499.
3............................... 248....................... 157....................... 315.
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* This table presents the annualized costs and benefits associated with ceiling fans shipped in 2019-2048. These results include benefits to consumers
which accrue after 2048 from the products purchased in 2019-2048. 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 Estimate assumes the Reference case
electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the
electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend
for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the
same product price decrease for ceiling fans with DC motors as in the Primary Estimate.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 incorporate an escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L. DOE estimated the monetized value of NOx emissions reductions using benefit per
ton estimates from the Regulatory Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants,'' published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 I.A.2 for further discussion. For DOE's Primary Estimate and Low
Net Benefits Estimate, the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit
sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the
benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the
ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE
intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
rate ($40.0/t case). 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's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K and IV.L of this notice. 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 all product
classes covered by this 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 more- and less-stringent energy efficiency
levels as potential standards, and is still considering them in this
rulemaking. However, DOE has tentatively concluded that the potential
burdens of the more-stringent energy efficiency levels would outweigh
the projected benefits and that the proposed standard achieves the
maximum improvement in energy efficiency that is technologically
feasible and economically justified. 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 briefly discusses the statutory authority
underlying this proposed rule, as well
[[Page 1693]]
as some of the relevant historical background related to the
establishment of standards for ceiling fans.
A. Authority
Title III, Part B of the Energy Policy and Conservation Act of 1975
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291, et seq.)
established the Energy Conservation Program for Consumer Products Other
Than Automobiles, a program covering most major household appliances
(collectively referred to as ``covered products''), which includes the
ceiling fans that are the subject of this rulemaking. (42 U.S.C.
6295(ff)) EPCA, as amended, prescribed energy conservation standards
for these products and authorized DOE to consider energy efficiency or
energy use standards for the electricity used by ceiling fans to
circulate air in a room. Id.
Under 42 U.S.C. 6295(m), DOE must periodically review its already
established energy conservation standards for a covered product. Under
this requirement, the next review that DOE would need to conduct must
occur no later than 6 years from the issuance of any final rule
establishing or amending a standard for a covered product.
Pursuant to EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2) labeling;
(3) the establishment of Federal energy conservation standards; and (4)
certification and enforcement procedures. The Federal Trade Commission
(FTC) is primarily responsible for labeling, and DOE implements the
remainder of the program. Subject to certain criteria and conditions,
DOE is required to develop test procedures to measure the energy
efficiency, energy use, or estimated annual operating cost of each
covered product. (42 U.S.C. 6293, 6295(o)(3)(A)) Manufacturers of
covered products must use the prescribed DOE test procedure as the
basis for certifying to DOE that their products comply with the
applicable energy conservation standards adopted under EPCA and when
making representations to the public regarding the energy use or
efficiency of those products. (42 U.S.C. 6293(c) and 6295(s))
Similarly, DOE must use these test procedures to determine whether the
products comply with standards adopted pursuant to EPCA. (42 U.S.C.
6295(s)) The DOE test procedures for ceiling fans appear at title 10 of
the Code of Federal Regulations (CFR) part 430, subpart B, appendix U.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including ceiling fans. Any new
or 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
(3)(B)) Furthermore, DOE may not adopt any standard that would not
result in the significant conservation of energy. (42 U.S.C.
6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain
products, including ceiling fans, if no test procedure has been
established for the product, or (2) if DOE determines by rule that the
standard is not technologically feasible or economically justified. (42
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is
economically justified, DOE must determine whether the benefits of the
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make
this determination after receiving comments on the proposed standard,
and by considering, to the greatest extent practicable, the following
seven statutory 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 standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from 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
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))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in 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))
Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when
promulgating an energy conservation standard for a covered product that
has two or more subcategories. DOE must specify a different standard
level for a type or class of product that has the same function or
intended use, if DOE determines that products within such group: (A)
Consume a different kind of energy from that consumed by other covered
products within such type (or class); or (B) have a capacity or other
performance-related feature which other products within such type (or
class) do not have and such feature justifies a higher or lower
standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products,
DOE must consider such factors as the utility to the consumer of the
feature and other factors DOE deems appropriate. Id. Any rule
prescribing such a standard must include an explanation of the basis on
which such higher or lower level was established. (42 U.S.C.
6295(q)(2))
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE 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)).
Pursuant to the amendments contained in the Energy Independence and
Security Act of 2007 (EISA 2007), Public Law 110-140, any final rule
for new or amended energy conservation standards promulgated after July
1, 2010, is required to address standby mode and off mode energy use.
(42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a
covered product after that date, it must, if
[[Page 1694]]
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B)) In this rulemaking, DOE proposes to incorporate
such energy use into any amended energy conservation standards it
adopts in the final rule.
B. Background
1. Current Standards
The Energy Policy and Conservation Act of 1975 (EPCA) defined and
established design standards for ceiling fans. EPCA defined a ``ceiling
fan'' as ``a nonportable device that is suspended from a ceiling for
circulating air via the rotation of fan blades.'' (42 U.S.C. 6291(49))
In a final rule technical amendment published in the Federal Register
(FR) on October 18, 2005, DOE codified the statutorily-prescribed
design standards for ceiling fans. 70 FR 60407, 60413. These standards
are set forth in DOE's regulations at 10 CFR 430.32(s), and require all
ceiling fans manufactured on or after January 1, 2007, to have the
following features:
(i) Fan speed controls separate from any lighting controls;
(ii) adjustable speed controls (either more than one speed or
variable speed); and
(iii) the capability for reverse action (other than fans sold for
industrial or outdoor application or where safety would be an issue)).
(42 U.S.C. 6295(ff)(1)(A) and (6))
2. History of Standards Rulemaking for Ceiling Fans
EPCA established energy conservation standards for ceiling fans as
described in Section II.B.1 and authorized DOE to consider, subject to
the requirements of 42 U.S.C. 6295(o) and (p), establishing energy
efficiency or energy use standards for the electricity used by ceiling
fans to circulate air in a room. (42 U.S.C. 6295(ff))
As noted in section II.B.1, DOE codified the statutorily-prescribed
design standards for ceiling fans in the CFR at 10 CFR 430.32(s). 70 FR
60407, 60413 (Oct. 18, 2005). DOE also adopted test procedures for
ceiling fans at 10 CFR part 430, subpart B, appendix U. 71 FR 71340,
71366-67 (Dec. 8, 2006).
On March 15, 2013, DOE published a notice announcing the
availability of the framework document, ``Energy Conservation Standards
Rulemaking Framework Document for Ceiling Fans and Ceiling Fan Light
Kits,'' and a public meeting to discuss the proposed analytical
framework for the energy conservation standards rulemaking. 76 FR
56678. DOE also posted the framework document on its Web site, in which
it described the procedural and analytical approaches it anticipated
using to evaluate amended energy conservation standards for ceiling
fans and ceiling fan light kits.
DOE held the public meeting for the framework document on March 22,
2013,\13\ to present the framework document, describe the analyses DOE
planned to conduct during the rulemaking, seek comments from interested
parties on these subjects, and inform them about and facilitate their
involvement in the rulemaking. At the public meeting, and during the
comment period, DOE received many comments that both addressed issues
raised in the framework document and identified additional issues
relevant to this rulemaking.
---------------------------------------------------------------------------
\13\ The framework document and public meeting information are
available at regulations.gov under docket number EERE-2012-BT-STD-
0045-0001.
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DOE published the preliminary analysis for the ceiling fan energy
conservation standards rulemaking on September 29, 2014. 79 FR 58290.
DOE posted the preliminary analysis, as well as the complete
preliminary technical support document (TSD), on its Web site.\14\ The
preliminary TSD includes the results of the following DOE preliminary
analyses: (1) Market and technology assessment; (2) screening analysis;
(3) engineering analysis; (4) markups analysis; (5) energy use
analysis; (6) LCC and PBP analyses; (7) shipments analysis; (8)
national impact analysis (NIA); and (9) preliminary manufacturer impact
analysis (MIA).
---------------------------------------------------------------------------
\14\ The preliminary analysis, preliminary TSD, and preliminary
analysis public meeting information are available at regulations.gov
under docket number EERE-2012-BT-STD-0045-0066
---------------------------------------------------------------------------
DOE held a public meeting on November 19, 2014, to present the
preliminary analysis, which included presenting preliminary results for
the engineering and downstream economic analyses, seek comments from
interested parties on these subjects, and facilitate interested
parties' involvement in the rulemaking. At the public meeting, and
during the comment period, DOE received comments that addressed issues
raised in the preliminary analysis and identified additional issues
relevant to this rulemaking.
III. General Discussion
DOE developed this proposal after considering comments, data, and
information from interested parties that represent a variety of
interests. The following discussion addresses issues raised by these
commenters.
A. Product Classes and Scope of Coverage
1. Scope of Coverage
EPCA defines a ``ceiling fan'' as ``a nonportable device that is
suspended from a ceiling for circulating air via the rotation of fan
blades.'' (42 U.S.C. 6291(49))
In the ceiling fan light kit test procedure final rule published on
December 24, 2015. 80 FR 80209, DOE reinterpreted the statutory
definition of a ceiling fan to include hugger fans, which are fans that
are mounted close to the ceiling, and are safe to use in environments
with low ceilings, and also clarify that ceiling fans that produce
large volume of airflow also meet the definition. DOE research
indicates that all ceiling fans currently on the market, including
hugger ceiling fans and ceiling fans that produce a large volume of
airflow, appear to meet the EPCA design standards.
The changes in interpretation of the ceiling fan definition
discussed above result in the applicability of the design standards set
forth in EPCA at 42 U.S.C. 6295(ff)(1) to these fan types 30 days after
the publication of the ceiling fan light kit final rule test procedure.
DOE is also proposing efficiency standards for these fan types in this
ceiling fan NOPR.
During the preliminary analysis public meeting, Southern Company
expressed concern over including larger ceiling fans, generally used in
commercial and industrial settings under 10 CFR 430. Southern Company
suggested that it would be more appropriate for larger ceiling fans to
be considered as an ASHRAE product, and not subject to standards
established in this rulemaking. (Southern Company, Public Meeting
Transcript, No. 83 at p. 188) \15\ DOE interprets Southern Company's
comments to recommend that DOE exclude larger ceiling fans from this
rulemaking and allow ASHRAE to include efficiency requirements for
these products in ASHRAE 90.1 standard.
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\15\ A notation in this form provides a reference for
information that is in the docket of DOE's rulemaking to develop
energy conservation standards for ceiling fans (Docket No. EERE-
2012-BT-STD-0045), which is maintained at www.regulations.gov. This
notation indicates that the statement preceding the reference is
document number 83 in the docket for the ceiling fan energy
conservation standards rulemaking, and appears at page 188 of that
document.
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Pursuant to EPCA, ceiling fans are defined as a nonportable device
that is
[[Page 1695]]
suspended from a ceiling for circulating air via the rotation of fan
blades. (42 U.S.C. 6291(49)) EPCA also defines a ``consumer product'',
which includes ceiling fans, as any article of a type that consumes
energy and, ``to any significant extent, is ``distributed in commerce
for personal use or consumption by individuals.'' Because ceiling fans
are considered a consumer product under this definition, and because
the definition of ceiling fan does not have a threshold for size, DOE's
authority to consider energy conservation standards for ceiling fans
includes the larger ceiling fans generally used in commercial and
industrial settings referred to by Southern Company. In a separate
rulemaking proceeding, DOE is currently negotiating energy conservation
standards for commercial and industrial fans and blowers.\16\ DOE
encourages Southern Company and other interested parties to comment on
any proposed standards for this equipment as well, to ensure that DOE's
standards for ceiling fans and for commercial and industrial fans and
blowers do not overlap.
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\16\ All information for this rulemaking is available at
regulations.gov, under docket number EERE-2013-BT-STD-0006 (http://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0006).
---------------------------------------------------------------------------
2. Product Classes
When 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 justify differing
standards. In making a determination whether a performance-related
feature justifies a different standard, DOE must consider such factors
as the utility of the feature to the consumer and other factors DOE
determines are appropriate. (42 U.S.C. 6295(q))
Currently there are no product classes for ceiling fans, because
the previous final rule for ceiling fans published on October 18, 2005
set design standards, but did not establish product classes. 70 FR
60407. In this NOPR, DOE is proposing six product classes, which
include highly-decorative, very small-diameter, hugger, standard, high-
speed small-diameter and large-diameter product classes. For further
details on product classes, see section IV.A.1 of this notice.
B. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product. Similarly,
DOE must use these test procedures to determine compliance with its
energy conservation standards. (42 U.S.C. 6295(s)) As noted, the test
procedures for ceiling fans are provided in appendix U. DOE published a
NOPR to amend these test procedures on October 17, 2014. 79 FR 62521,
and published a supplemental NOPR (SNOPR) to provide further amendments
to the published NOPR on June 3, 2015. 80 FR 31487.
Currently no energy efficiency performance standards exist for
ceiling fans. DOE proposes to set energy efficiency performance
standards in terms of an airflow efficiency equation as proposed in the
test procedure NOPR and subsequent SNOPR. 79 FR 62521 (Oct. 17, 2014);
80 FR 31487 (June 3, 2015). The metric used to evaluate performance in
this NOPR calculates ceiling fan efficiency as the average of airflows
and power consumption at different speeds weighted by hours of
operation in each speed, including standby power.
In the test procedure SNOPR, DOE proposed to test all ceiling fans
with blade spans less than or equal to 7 feet according to a modified
version of the ENERGY STAR[supreg] ``Testing Facility Guidance Manual:
Building a Testing Facility and Performing the Solid State Test Method
for ENERGY STAR Qualified Ceiling Fans,'' version 1.1 test procedure,
for any representations with respect to energy use or efficiency of
these ceiling fans. DOE also proposed to test all ceiling fans with
blade spans less than or equal to 7 feet mounted to the real ceiling.
Additionally, DOE proposed to test all ceiling fans with blade spans
less than or equal to 7 feet at high and low speeds, with the exception
that high-volume small-diameter ceiling fans, which would only be
tested at high speed. 80 FR 31489-31490.
In the test procedure NOPR, DOE proposed to test all high-volume
ceiling fans according to a modified version of the test procedure in
American National Standards Institute/Air Movement and Control
Association International, Inc. (ANSI/AMCA) Standard 230-12,
``Laboratory Methods of Testing Air Circulating Fans for Rating and
Certification'' (AMCA 230 \17\). DOE also proposed that these ceiling
fans be tested only at high speed. 79 FR 62532. However, in the test
procedure SNOPR, DOE modified the proposed test methods for high-volume
ceiling fans. Specifically, instead of testing at only high speed, DOE
proposed to test all ceiling fans with blade spans greater than 7 feet
at five speeds spaced equally over the range of available speeds: 20%,
40%, 60%, 80%, and 100%. 80 FR 31490.
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\17\ Air Movement and Control Association International, Inc.
ANSI/AMCA Standard 230-12: Laboratory Methods of Testing Air
Circulating Fans for Rating and Certification. 2010. Arlington
Heights, IL. (Last accessed February 24, 2014) https://www.amca.org/store/item.aspx?ItemId=37.
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Additionally, in the test procedure NOPR, DOE also proposed to
reinterpret the statutory definition of a ceiling fan to include hugger
ceiling fans. DOE also proposed to clarify that multi-mount ceiling
fans meet the statutory definition of a ceiling fan. During the public
meeting, several manufacturers commented on how the requirements
proposed in the ceiling fan test procedure NOPR would affect how they
represent the performance of their ceiling fans in the market. DOE also
received comments regarding the test procedure and metric in response
to the Preliminary Analysis technical support document. DOE will
respond to all comments on the proposed test procedure, ceiling fan
representations and the proposed metric in the concurrent test
procedure rulemaking.
C. Technological Feasibility
1. General
In each energy conservation 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 technology options for improving efficiency
are technologically feasible. DOE considers technologies incorporated
in commercially available products or in working prototypes to be
technologically feasible. (10 CFR part 430, subpart C, appendix A,
section 4(a)(4)(i))
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; and (3) adverse impacts on
health or safety. (10 CFR part 430, subpart C, appendix A, section
4(a)(4)(ii)-(iv)) Additionally, it is DOE
[[Page 1696]]
policy not to include in its analysis any proprietary technology that
is a unique pathway to achieving a certain efficiency level. Section
IV.B of this notice discusses the results of the screening analysis for
ceiling fans, particularly the designs DOE considered, those it
eliminated (screened out), and those that are the basis for the
standards considered in this rulemaking. For further details on the
screening analysis for this rulemaking, see section IV.B of this notice
and 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 ceiling
fans, using the design parameters for the most efficient products
available on the market or in working prototypes. The max-tech levels
that DOE determined for this rulemaking are described in section IV.C.1
of this proposed rule and in chapter 5 of the NOPR TSD.
D. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the ceiling fans
that are the subject of this rulemaking purchased in the 30-year period
that begins in the year of compliance with any amended standards (2019-
2048).\18\ The savings are measured over the entire lifetime of ceiling
fans purchased in this 30-year period. DOE quantified the energy
savings attributable to each TSL as the difference in energy
consumption between each standards case and the no-standards case. The
no-standards case represents a projection of energy consumption in the
absence of amended energy conservation standards, and it considers
market forces and policies that may affect future demand for more-
efficient products.
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\18\ DOE also presents a sensitivity analysis that considers
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from potential amended standards for ceiling
fans. The NIA spreadsheet model (described in section IV.H of this
notice) calculates energy savings in site energy, which is the energy
directly consumed by products at the locations where they are used. For
electricity, DOE calculates national energy savings on an annual basis
in terms of primary energy savings, which is the savings in the energy
that is used to generate and transmit the site electricity. To
calculate primary energy savings from site electricity savings, DOE
derives annual conversion factors from data provided in the Energy
Information Administration's (EIA) most recent Annual Energy Outlook
(AEO).
In addition to primary energy savings, DOE also calculates full-
fuel-cycle (FFC) energy savings. As discussed in DOE's statement of
policy, the 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 conservation standards. 76 FR 51282 (August 18,
2011), as amended at 77 FR 49701 (August 17, 2012). DOE's approach is
based on the calculation of an FFC multiplier for each of the energy
types used by covered products or equipment. For ceiling fans, the
primary fuel is electricity. For more information on FFC multipliers,
see section IV.H.1.
2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in ``significant'' energy
savings. (42 U.S.C. 6295(o)(3)(B)) Although the term ``significant'' is
not defined in the Act, the U.S. Court of Appeals for the District of
Columbia Circuit, in Natural Resources Defense Council v. Herrington,
768 F.2d 1355, 1373 (D.C. Cir. 1985), opined that Congress intended
``significant'' energy savings in the context of EPCA to be savings
that were not ``genuinely trivial.'' The energy savings for all of the
TSLs considered in this rulemaking, including the proposed standards
(presented in section IV.H.1), are nontrivial, and, therefore, DOE
considers them ``significant'' within the meaning of section 325 of
EPCA.
E. Economic Justification
1. Specific Criteria
EPCA provides seven factors to be evaluated in determining whether
a potential energy conservation standard is economically justified. (42
U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) 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 a potential amended standard on
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as
discussed in section IV.J. 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: (1) INPV, which
values the industry on the basis of expected future cash flows; (2)
cash flows by year; (3) changes in revenue and income; and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and 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 consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analyses.
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
[[Page 1697]]
the lifetime of the product. The LCC analysis requires a variety of
inputs, such as product prices, product energy consumption, energy
prices, maintenance and repair costs, product lifetime, and consumer
discount rates. 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.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of a more efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analyses, DOE assumes that consumers will
purchase the covered products in the first year of compliance with
amended standards. The LCC savings for the considered efficiency levels
are calculated relative to a no-standards case that reflects projected
market trends in the absence of amended standards. DOE's LCC and PBP
analyses are discussed in further detail in section IV.F.
Southern Company encouraged DOE to pursue an efficiency standard
that keeps incremental fan price increases minimal while also having a
small payback period. (Southern Company, Public Meeting Transcript, No.
83 at p. 271) In assessing a proposed energy conservation standard, DOE
considers not only PBP, but also the other factors discussed in section
III.E. Section V.B.1 contains the calculated PBPs for the proposed
standard levels.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section III.D.1, DOE uses the NIA spreadsheet models to
project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards proposed in this notice would not
reduce the utility or performance of the products under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General that is
likely to result from a proposed 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 this proposed
rule to the Attorney General with a request that the Department of
Justice (DOJ) provide its determination on this issue. DOE will publish
and respond to the Attorney General's determination in the final rule.
f. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) 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, as discussed in section IV.M.
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 and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K; the emissions
impacts are reported in section V.C.2 of this notice. DOE also
estimates the economic value of emissions reductions resulting from the
considered TSLs, as discussed in section IV.L.
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))
To the extent interested parties submit any relevant information
regarding economic justification that does not fit into the other
categories described above, DOE could consider such information under
``other factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the 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.F of this proposed rule.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to ceiling fans. Separate subsections address
each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards proposed in this document. The first tool is a spreadsheet
that calculates the LCC and PBP of potential amended or new energy
conservation standards. The national impacts analysis uses a second
spreadsheet set that provides shipments forecasts and calculates
national energy savings and net present value resulting from potential
energy conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (GRIM), to assess manufacturer
impacts of potential
[[Page 1698]]
standards. These three spreadsheet tools are available on the DOE Web
site for this rulemaking: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/66. Additionally, DOE used
output from the latest version of EIA's AEO, a widely known energy
forecast for the United States, for the emissions and utility impact
analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly available
information. (See chapter 3 of the NOPR TSD for further discussion of
the market and technology assessment.) DOE received comments regarding
product classes, and the technology options DOE identified that can
improve the efficiency of ceiling fans.
1. Product Classes
DOE divides covered products into classes by: (a) The type of
energy used; (b) the capacity of the product; or (c) other performance-
related features that justify different standard levels, considering
the consumer utility of the feature and other relevant factors. (42
U.S.C. 6295(q))
In the ceiling fan test procedure NOPR, DOE proposed test methods
for two major categories of ceiling fans; low-volume ceiling fans and
high-volume ceiling fans. 79 FR 62521. DOE defined a low-volume ceiling
as a ceiling fan that: (1) Is less than or equal to 7 feet in diameter,
and has a blade thickness greater than or equal to 3.2 mm at the edge
and a maximum tip speed less than or equal to the limit in the
Underwriters Laboratory (UL) Standard 507-1999, ``UL Standard for
Safety for Electric Fans;''; or (2) has a maximum airflow volume less
than or equal to 5,000 CFM. DOE defined a high-volume ceiling as a
ceiling fan that: (1) is greater than 7 feet in diameter, or has a
blade thickness of less than 3.2 mm at the edge or a maximum tip speed
that exceeds the threshold in the UL 507 table; and (2) has a maximum
airflow volume greater than 5,000 CFM. 79 FR 62526. In the test
procedure NOPR, DOE also proposed definitions for hugger and standard
fans. DOE proposed that a hugger ceiling fan is a ceiling fan where the
lowest point on the fan blades is no more than 10 inches from the
ceiling based on the distance between the lowest point of the fan blade
and the ceiling. DOE proposed that a standard ceiling fan is a ceiling
fan where the lowest point on the fan blades is more than ten inches
from the ceiling. 79 FR 62526.
In the preliminary analysis, DOE further differentiated low-volume
and high-volume ceiling fans into five ceiling fan product classes
based on capacity and performance-related features that affect consumer
utility. The product classes considered in the preliminary analysis
were: Hugger, standard, highly-decorative, high-volume small-diameter,
and high-volume large-diameter.\19\ Table IV-1 provides the product
class definitions considered in the preliminary analysis.
---------------------------------------------------------------------------
\19\ The preliminary analysis TSD is available at
regulations.gov under docket number EERE-2012-BT-STD-0045.
Table IV-1--Preliminary Analysis Product Classes
------------------------------------------------------------------------
Product class Definition
------------------------------------------------------------------------
Low-volume...................... Hugger............ Lowest point on
fan blades is
<=10 inches from
the ceiling.
Standard.......... Lowest point on
fan blades >10
inches from the
ceiling.
Highly- decorative Rotational speed
<=90 RPM and
airflow <=2,000
CFM at high
speed.
High-volume..................... Small-diameter High-volume
(HVSD). ceiling fan with
diameter <=7
feet.
Large-diameter High-volume
(HVLD). ceiling fan with
diameter >7 feet.
------------------------------------------------------------------------
DOE received several comments regarding the ceiling fan categories
proposed, and the product classes being considered.
Stakeholders provided a variety of recommendations on how to define
``low-volume'' and ``high-volume'' ceiling fans. MacroAir suggested
that CFM be the only distinguishing factor between low-volume (max
airflow is less than or equal to 5000 CFM) and high-volume (max airflow
is greater than 5000 CFM) ceiling fans, and to exclude blade thickness
as it may impede innovation. (MacroAir, No. 89 at p. 12) Minka Group
suggested that the cutoff airflow for low-volume ceiling fans be
increased to 10,000 CFM. (Minka, Public Meeting Transcript, No. 83 at
p. 58)
Alternatively, manufacturers recommended differentiating fans based
on blade diameter instead of air volume. BAS recommended that all fans
less than or equal to 7 feet be considered small-diameter fans, and all
fans greater than 7 feet be considered large-diameter fans. (BAS, No.
88 at p. 2) The American Lighting Association (ALA) echoed BAS's
recommendation. ALA added that the ``low-volume'' and ``high-volume''
terms can be confusing and misleading and imply that the ``low-volume''
product classes are somehow less effective from a consumer utility
perspective than the ``high-volume'' product classes. (ALA, No. 91 at
p. 8)
In the test procedure NOPR, DOE proposed separate test methods for
low-volume and high-volume ceiling fans because some large-diameter
ceiling fans (i.e., those ceiling fans with blade spans greater than 7
feet) are too large to be tested in current low-volume ceiling fan test
facilities. Additionally, testing with a single load cell is more
practical for large-diameter ceiling fans than testing with numerous
air velocity sensors as is typically done for small-diameter ceiling
fans. In the test procedure NOPR, DOE proposed to test high-volume
small-diameter ceiling fans according to the same procedure as large-
diameter ceiling fans (i.e., using a load cell), even though they are
less than 7 feet in diameter.
In response to the test procedure NOPR, several stakeholders
disagreed with DOE's proposal to test high-volume small-diameter
ceiling fans differently than low-volume ceiling fans. BAS stated that
there may be instances in which a small-diameter ceiling fan has a
large enough measured airflow under the test procedure NOPR low-volume
test procedure to qualify it as a high-volume ceiling fan, but when
tested according to the high-volume test procedure proposed in the
NOPR, the measured airflow would be too low for the fan to qualify as a
high-volume fan. (BAS, Public Meeting Transcript, No. 83 at pp. 63-64)
According to ALA, manufacturers are already accustomed to testing all
ceiling fans with blade spans less than or equal to 7 feet, including
high-volume small-diameter fans, according to the current ENERGY STAR
test procedure, regardless of airflow volume. (Docket No. EERE-2013-BT-
TP-0050, ALA, No. 8 at pp. 7-8)
On June 3, 2015, DOE published a test procedure SNOPR that modified
some of the proposals from the test procedure NOPR. 80 FR 31487. In the
test procedure SNOPR, DOE proposes that all ceiling fans 7 feet or less
in diameter be tested using version 1.1 of the ENERGY STAR test
procedure, while all ceiling fans greater than 7 feet be tested using a
version of the AMCA 230 test procedure. DOE proposed this change to
[[Page 1699]]
harmonize the DOE test procedure with accepted industry testing
practices. Consequently, definitions for ``low-volume'' and ``high-
volume'' ceiling fans are no longer needed, because the test methods
proposed are based only on ceiling fan diameter. For this NOPR, DOE
accordingly did not adopt the airflow cutoff threshold recommendations
from Macro Air and Minka Group because DOE is no longer proposing an
airflow volume approach to determine ceiling fan categories.
DOE proposes to define a ``small-diameter ceiling fan'' as ``a
ceiling fan that is less than or equal to 7 feet in diameter'', and a
``large-diameter ceiling fan'' as ``a ceiling fan that is greater than
7 feet in diameter.'' DOE is no longer proposing definitions to
differentiate product classes as ``low-volume'' and ``high-volume''
ceiling fans.
DOE also received multiple stakeholder comments regarding the
product classes considered in the preliminary analysis. In the
preliminary analysis, DOE presented product classes that follow the
Underwriters Laboratory (UL) ceiling fan safety standards (UL Standard
507-1999, ``UL Standard for Safety for Electric Fans'' (UL 507)) to
differentiate between classes. The UL 507 standard uses both blade
thickness and tip speed to differentiate fans (See Table IV-3).
BAS commented that the classification of ceiling fans based on
blade thickness limits innovation, and therefore recommended a tip
speed of 680 feet per minute (fpm) paired with a diameter and distance
from blades to ceiling to determine fan classification. (BAS, No. 88 at
p. 4) BAS recommended 680 fpm assuming a 52-inch standard fan and a 50
rpm maximum speed. (BAS, No. 88, p. 12) BAS's recommended fan
classification, however, defined only the standard, hugger, highly-
decorative and large-diameter product classes, and eliminated the HVSD
product class. (BAS, No. 88 at p. 4) MacroAir commented that blade
thickness is not applicable to define low-volume and high-volume
ceiling fans, because it confuses the definition and may impede
innovation. (Docket No. EERE-2013-BT-TP-0050, MacroAir, No. 6 at p. 6)
ALA, on the other hand, provided comments on product classes that
included both blade thickness and tip speed. (ALA, No. 96, p. 8)
Neither BAS nor MacroAir provided specific examples on how
incorporating blade thickness in the product class definitions would
limit innovation. Additionally, BAS's recommendation on using 680 fpm
tip speed to differentiate product classes eliminated the HVSD product
class. Instead, HVSD ceiling fans were included as part of the standard
or hugger ceiling fan class. However, DOE finds that HVSD ceiling fans
provide different utility to the consumer than standard or hugger
ceiling fans, and therefore warrant a separate product class. HVSD
ceiling fans generally operate at much higher speeds (in terms of RPM)
than standard or hugger ceiling fans. In addition, DOE observes that
HVSD fans are generally applied in commercial buildings whereas
standard fans are installed in residential buildings. Further
discussion on the HVSD ceiling fan product class is in section
IV.A.1.d.
Based on BAS and MacroAir's comments, DOE considered whether the
product class structure presented in the preliminary analysis could be
simplified by removing blade thickness criteria. DOE investigated
differentiating standard and hugger ceiling fans from HVSD ceiling fans
using tip speed, but was unable to determine an appropriate tip speed
threshold. In general, DOE had limited tip speed specifications for
ceiling fans on the market. However, DOE looked at a database of 1400
ceiling fans, applied three different tip speed thresholds (680, 1200
and 2400 fpm), and calculated the percent of misclassifications of
standard and hugger ceiling fans as HVSD ceiling fans. DOE found that
between 40 and 100 percent of models were misclassified at these tip
speed thresholds. (The lower the tip speed thresholds, the higher the
rate of misclassification.) Therefore, DOE proposes to continue to use
blade thickness to determine ceiling fan product classes.
DOE prefers to harmonize with existing industry standards and
practices to the extent possible. Using the blade thickness limits from
the UL 507 standard in the product class definition allows for DOE to
harmonize with existing safety standards. All manufacturers will have
to comply with the existing UL 507 standard for applications in which
the distance between the fan blades and the floor is 10 feet or less,
regardless of whether DOE's use of blade thickness in its product class
definition. Consequently, including blade thickness in the product
class definitions does not introduce new constraints for these
applications.\20\ However, for ceiling fans in applications in which
the distance between the fan blades and the floor is greater than 10
feet, DOE's product class structure allows for manufacturers to
consider blade thickness and maximum tip speeds outside the range of
the UL 507 standard. Additionally, for high-volume large-diameter
(HVLD) ceiling fans, DOE does not include any blade thickness or
maximum tip speed requirements.
---------------------------------------------------------------------------
\20\ Underwriters Laboratories Inc. UL Standard for Safety for
Electric Fans, UL 507. 1999. Northbrook, IL. (Last accessed February
24, 2014) http://www.comm-2000.com/ProductDetail.aspx?UniqueKey=8782.
---------------------------------------------------------------------------
In the preliminary analysis, the product class structure also
incorporated a 5,000 CFM maximum airflow volume cutoff to differentiate
between HVSD ceiling fans and low-volume ceiling fans, as described
previously in this section. DOE found in the preliminary analysis that,
without the CFM cutoff, low-volume ceiling fans were inadvertently
being placed in the HVSD product class because some low-volume ceiling
fans operate at high RPMs and high airflows. For this NOPR, however,
DOE is proposing to analyze a separate product class for very small-
diameter (VSD) ceiling fans. (See section IV.A.1.c for further
discussion on the VSD product class.) VSD ceiling fans are fans with
one or more heads, each of which has a blade span of 18 inches or less
and operate at high RPMs (generating high volumes of airflow). VSD
ceiling fans provide consumers targeted airflow that can be directed,
unlike the airflow of a traditional ceiling fan. Also VSD fans can be
mounted in small, awkward spaces where traditional fans will not fit.
The low-volume ceiling fans that DOE had identified as being
inadvertently placed in the HVSD product class in the preliminary
analysis were VSD fans. As part of analyzing VSD fans as a separate
product class, DOE is proposing a definition for VSD fans that will
avoid misclassifying them as HVSD fans based on diameter (18 inches or
less). Consequently, the 5,000 CFM cutoff is no longer necessary. DOE
proposes to eliminate the 5,000 CFM cutoff from the product class
definitions.
Table IV-2 provides the new product classes that DOE is proposing
for all ceiling fans. DOE also proposes new product class names based
on updates to the ceiling fan categories and product class definitions.
Specifically, DOE is updating product class names based on the
elimination of the concept of ``low-volume'' or ``high-volume'' ceiling
fans. Therefore, the naming convention for HVSD ceiling fans is changed
to high-speed small-diameter (HSSD) ceiling fans, and HVLD ceiling fans
to large-diameter ceiling fans. In addition, all airflow criteria are
as measured by the test procedure as proposed in the test procedure
NOPR and modified by the test procedure SNOPR. 80 FR 31487 (June 3,
2015). DOE requests comment
[[Page 1700]]
on the product class structure proposed. See issue 1 in section VII.E.
Table IV-2--Proposed Ceiling Fan Product Classes
----------------------------------------------------------------------------------------------------------------
Product classes Product class definitions
----------------------------------------------------------------------------------------------------------------
Small-Diameter (7 feet or less)......... Highly-decorative.......... A ceiling fan with a maximum rotational
speed of 90 RPM and less than 1,840 CFM
airflow at high speed.
Belt-driven................ A ceiling fan with a series of one or
more fan heads, each driven by a belt
connected to one or more motors.
Very Small-Diameter (VSD).. A ceiling fan that is not a highly-
decorative ceiling fan or belt-driven
ceiling fan; and has one or more fan
heads, each of which has a blade span of
18 inches or less.
Hugger..................... A ceiling fan that is not a very small-
diameter ceiling fan, highly-decorative
ceiling fan or belt-driven ceiling fan;
and where the lowest point on fan blades
is <=10 inches from the ceiling; and has
a blade thickness of >=3.2 mm at the
edge and a maximum tip speed <= the
applicable limit in Table IV-3.
Standard................... A ceiling fan that is not a very small-
diameter ceiling fan, highly-decorative
ceiling fan or belt-driven ceiling fan;
and where the lowest point on fan blades
is >10 inches from the ceiling; and has
a blade thickness of >=3.2 mm at the
edge and a maximum tip speed <= the
applicable limit in Table IV-3.
High-speed small-diameter A ceiling fan that is not a very small-
(HSSD). diameter ceiling fan, highly-decorative
ceiling fan or belt-driven ceiling fan;
and has a blade thickness of <3.2 mm at
the edge or a maximum tip speed > the
applicable limit in Table IV-3.
Large-Diameter.......................... Large-diameter............. A ceiling fan that is greater than 7 feet
in diameter.
----------------------------------------------------------------------------------------------------------------
Table IV-3--UL 507 Blade Thickness and Maximum Tip Speed Limits
----------------------------------------------------------------------------------------------------------------
Thickness (t) of edges of blades Maximum speed at tip of blades
----------------------------------------------------------------------------------
Airflow direction * (feet per
Mm (inch) m/s minute)
----------------------------------------------------------------------------------------------------------------
Downward-Only................ 4.8 > t >= 3.2........ (3/16 > t >= 1/8).... 16.3 (3200)
Downward-Only................ t >= 4.8.............. (t >= 3/16).......... 20.3 (4000)
Reversible................... 4.8 > t >= 3.2........ (3/16 > t >= 1/8).... 12.2 (2400)
Reversible................... t >= 4.8.............. (t >= 3/16).......... 16.3 (3200)
----------------------------------------------------------------------------------------------------------------
* The ``downward-only'' and ``reversible'' airflow directions are mutually exclusive; therefore, a ceiling fan
that can only produce airflow in the downward direction need only meet the ``downward-only'' blade edge
thickness and tip speed requirements and a ceiling fan that can produce airflow in the downward and upward
directions need only meet the ``reversible'' requirements.
The following sections provide further details on each product
class proposed, and the methodology DOE is using to determine these
product classes.
a. Highly-Decorative Ceiling Fans
In the preliminary analysis, DOE defined highly-decorative ceiling
fans as ceiling fans with a rotational speed of 90 RPM or less, and an
airflow of 2,000 CFM or less at high speed, as tested using the current
DOE test procedure, because the primary utility of highly-decorative
ceiling fans is not airflow.\21\ Consequently, highly-decorative
ceiling fans typically produce less airflow.
---------------------------------------------------------------------------
\21\ The preliminary analysis TSD is available at
regulations.gov under docket number EERE-2012-BT-STD-0045.
---------------------------------------------------------------------------
BAS stated that using a combination of CFM and RPM to define
highly-decorative ceiling fans is better than simply using RPM. BAS
also commented that it would be hard to measure CFM for some of these
highly-decorative ceiling fans using the ENERGY STAR test procedure.
BAS recommended using tip speed as the defining characteristic for
highly-decorative ceiling fans, and stated that assuming a 52-inch fan
and a 50 rpm speed, a maximum tip speed of less than or equal to 680
fpm would be appropriate. (BAS, No. 79 at p. 33)
On the other hand, Matthews Fan Company suggested that CFM,
possibly as a function of fan diameter, be used to define highly-
decorative ceiling fans because some of their smaller fans run at
higher than 90 RPM speeds and would not fall under the proposed
definition. (Matthews, Public Meeting Transcript, No. 83 at p. 176)
Matthews Fan Company stated that if the RPM was used to define these
fans, that a 1,100 RPM minimum cutoff would be appropriate because
their small-diameter fans include high-speed blower motors. Matthews
added that these fans are designed to provide directional airflow into
a space directly underneath or across the room. (Matthews, Public
Meeting Transcript No. 83 at p. 177)
ALA recommended that within the small diameter fans, the highly-
decorative product class is (i) maximum rotational speed of 90 RPM and
less than 2,000 CFM airflow at high speed; or (ii) belt-driven fans.
(ALA, No. 91 at p. 8)
DOE first considered using only a maximum tip speed to define
highly-decorative ceiling fans. DOE investigated which ceiling fans on
the market would be categorized as highly-decorative using a tip speed
of 680 fpm, as suggested by BAS. BAS did not provide any supporting
information as to why the suggested maximum speed is appropriate for
the assumed diameter. In general, relatively few decorative ceiling
fans advertise rpm or tip speed in their specifications. In addition,
DOE found that relatively few ceiling fans advertise that they operate
entirely below the 680 fpm threshold recommended by BAS. Therefore, DOE
could not endorse BAS's tip speed recommendation. DOE also looked into
tip speeds slightly higher than 680 fpm that could potentially be used
to define the highly-decorative product class. DOE looked at a database
of 1,400 ceiling fans, and the next tip speed closest to 680 fpm was
803 fpm.
[[Page 1701]]
However, this ceiling fan was advertised as a ``traditional'' standard
ceiling fan, not a highly-decorative ceiling fan. Hence, DOE concluded
that any tip speed that is 803 fpm and above could not be used to
define highly-decorative ceiling fans, as this would inadvertently
place traditional ceiling fans into the highly-decorative ceiling fan
product class. Thus, DOE could not definitively identify a tip speed
that could be used to define highly-decorative ceiling fans. Therefore,
DOE does not propose to define highly-decorative ceiling fans using
only tip speed, to avoid misclassifying fans based on limited tip speed
data.
DOE also considered using only a maximum CFM cutoff for the highly-
decorative ceiling fans, per Matthews Fan Company's comments. DOE
analyzed published CFM results of ceiling fans sold in the market, and
observed which ceiling fans would be classified as highly-decorative
using only a maximum CFM cutoff. DOE observed that some fans advertised
and designed primarily to provide directed airflow in a small space--
characteristics of VSD fans for which DOE proposes to set standards--
were misclassified as highly-decorative ceiling fans. Further
discussion on VSD ceiling fans is provided in IV.A.1.c.
DOE also considered using only the 1,100 RPM cutoff for the highly-
decorative ceiling fans suggested by Matthews Fan Company. DOE
performed market research on ceiling fans specifications and identified
only three ceiling fans that had RPMs greater than the 1,100 RPM
suggested by Matthews Fan Company. DOE confirmed, however, that these
ceiling fans would be classified as VSD ceiling fans, because they are
advertised for use when air circulation needs to be directed, or if
space is tight. In addition, Matthews Fan Company stated in its
comments that these high RPM ceiling fan are designed to provide
directional airflow into a space directly underneath. (Matthews, Public
Meeting Transcript No. 83 at p. 177) Therefore, DOE does not propose to
define highly-decorative ceiling fans using only RPM, to avoid
misclassifying fans based on limited data.
After finding that using only tip speed, RPM, or airflow to define
highly-decorative ceiling fans may result in misclassifications, DOE
proposes to use a definition based on both a CFM and RPM cutoff,
similar to what was analyzed and considered in the preliminary
analysis. DOE expects that this approach will minimize
misclassifications. DOE is proposing this definition based on both CFM
and RPM because relatively low maximum RPM may indicate that a ceiling
fan was not designed primarily to provide airflow, as would relatively
low maximum airflow. However, criteria for a low maximum RPM by itself
might misclassify some larger ceiling fans that operate at relatively
low RPM, but provide high volumes of airflow, as highly decorative
ceiling fans. Conversely, criteria for low maximum CFM by itself might
incorrectly misclassify some VSD ceiling fans as highly decorative
category. ALA supports an RPM and CFM cutoff for highly decorative
ceiling fans. (ALA, No. 91 at p. 8) DOE requests comment on the
approach to use both fan speed and an airflow threshold to delineate
highly-decorative ceiling fans. See issue 2 in section VII.E.
In the preliminary analysis, DOE used a 2,000 CFM (as tested per
the current DOE test procedure) cutoff for highly-decorative fans. For
this document, DOE is updating the CFM cutoff value from 2,000 CFM to
1,840 CFM because the test procedure SNOPR updates the method of test
to mounting ceiling fans directly to the real ceiling, which yields a
different airflow measurement. DOE determined the percentage reduction
in CFM from the current DOE test procedure to mounting directly to the
ceiling by performing tests on ceiling fans in both configurations and
calculating a scaling factor. Applying this scaling factor, DOE
proposes that a highly-decorative ceiling fan is a ceiling fan with a
maximum rotational speed of 90 RPM and less than 1,840 CFM airflow at
high speed.
b. Belt-Driven Ceiling Fans
DOE did not include a separate product class for belt-driven
ceiling fans in the preliminary analysis. According to ALA, a belt-
driven ceiling fan is a series of one or more fan heads suspended from
the ceiling, each driven by a belt connected to one or more motors that
are independently suspended from the ceiling. (ALA, No. 91 at p. 11)
ALA suggested including belt-driven fans within the highly-
decorative product class. (ALA, No. 91 at p. 11) ALA also commented
that belt-driven ceiling fans are purchased by consumers principally
for their aesthetic qualities. Typically, a belt-driven fan will use
one or two motors to power multiple fan heads--up to seven or eight--
that rotate at low speed. The fan heads may rotate at very slow speeds,
with maximum speeds under 90 rpm, if there are many fan heads attached
to the same motor. (ALA, No. 91 at p. 11)
DOE's research on belt-driven ceiling fans indicates that the
market share is less than 1 percent. DOE has observed that these fans
are used in bars and restaurants that have decorative ceilings with
limited electrical boxes on the ceiling to mount multiple conventional
ceiling fans. Belt-driven ceiling fans use one or two motors to power
multiple fan heads, eliminating the need for many electrical boxes.
Additionally, belt-driven ceiling fans are highly customizable, in that
consumers can decide number of fan heads and the kind of fan belts to
use in their belt-driven ceiling fans, for example.
ALA suggested including belt-driven ceiling fans within the highly-
decorative ceiling fan product class. (ALA, No. 91 at p. 11) EPCA
requires that if DOE sets energy efficiency standards for ceiling fans,
it must consider ``establishing separate exempted product classes for
highly decorative fans for which air movement performance is a
secondary design feature.'' (42 U.S.C. 6295(ff)(6)(B)(ii)) Because
belt-driven ceiling fans can have up to seven to eight fan heads, DOE
has determined that the total airflow that these ceiling fan heads will
provide indicates that air movement performance is not a secondary
design feature for these fans.
Instead, DOE proposes to separate belt-driven ceiling fans into
their own product class because they provide a distinct utility for
consumers. DOE proposes to define belt-driven ceiling fans as a ceiling
fan with a series of one or more fan heads, each driven by a belt
connected to one or more motors.
In the NOPR, DOE agrees with manufacturers' that the market share
for belt-driven ceiling fans is small. Due to the limited number of
basic models for belt-driven ceiling fans, DOE did not have data to
directly analyze and establish standards for this additional product
classes. As a result, DOE does not propose standards for belt-driven
ceiling fans in this rulemaking.
c. Very Small-Diameter Ceiling Fans
In the preliminary analysis, DOE did not have a separate product
class for ceiling fans less than or equal to 18 inches in diameter. DOE
received comments on the preliminary analysis that these ``very small-
diameter fans'' require special consideration.
ALA expressed concerns with DOE's proposed treatment of ceiling
fans with very small diameters. ALA defines a ``very small-diameter
ceiling fan'' as a ceiling fan with one or more fan heads, each of
which has a blade span of 18 inches or less. ALA estimated that very
small-diameter fan sales represent between 0.3 and 0.5 percent of the
U.S.
[[Page 1702]]
ceiling fan market. ALA added that these fans would be
disproportionately penalized under DOE's candidate standard levels for
low-volume standard and hugger ceiling fans, which do not appear to
have been based on testing of any ceiling fan smaller than 44 inches in
diameter. According to ALA, very small-diameter fans would be
disadvantaged because very small diameter ceiling fans use high-
velocity AC motors to operate at high speeds, and there is no DC motor
on the market, or currently in development, that would provide an
acceptable substitute for this functionality. (ALA, No. 91 at p. 9) ALA
requests that DOE consider very small-diameter ceiling fans to be
outside the scope of this rulemaking or otherwise exempt them from
energy efficiency standards. (ALA, No. 91 at p. 9) ALA commented that
if DOE does not determine that very small-diameter ceiling fans are
outside the scope of the rulemaking or otherwise exempt them from
standards, DOE should establish a separate product class for very
small-diameter ceiling fans because of the unique utility that they
provide to consumers. (ALA, No. 91 at p. 9) ALA commented that very
small-diameter fans could also be multi-head or orbital fans that also
provide consumers a distinct utility from traditional ceiling fans.
(ALA, No. 91 at p. 10) These ceiling fans provide consumers targeted
airflow that can be directed, unlike the airflow of a traditional
ceiling fan. Also VSD fans can be mounted in small, awkward spaces
where traditional fans will not fit. (ALA, No. 91 at p. 10) Therefore,
ALA proposed to define very small-diameter fans as ``a ceiling fan with
one or more fan heads, each of which has a blade span of 18 inches or
less.'' (ALA, No. 8 at p. 6)
In response to the comments received on very small-diameter ceiling
fans, DOE conducted testing of ceiling fans with blade spans of 18
inches or less to obtain data on their performance. DOE determined from
testing that very small-diameter ceiling fans have much lower airflow
capacity and airflow efficiency than standard and hugger fans. Further
discussion on airflow capacity and efficiency results for VSD ceiling
fans are in chapter 5 of the NOPR TSD. Additionally, very small-
diameter fans provide a different utility to consumers, in that these
fans can be mounted in small places where traditional ceiling fans will
not fit. DOE concluded that for these reasons, a separate product class
for very small-diameter ceiling fans is warranted.
Therefore, DOE proposes to adopt the very small-diameter fan
definition suggested by ALA. DOE proposes that very small-diameter
ceiling fans be defined as a ceiling fan that is not a highly-
decorative ceiling fan or belt-driven ceiling fan; and has one or more
fan heads, each of which has a blade span of 18 inches or less.
d. Standard and Hugger Ceiling Fans
In the test procedure NOPR, DOE proposed standard and hugger
ceiling fan definitions based on the distance between the lowest point
of the fan blades and the ceiling. For standard ceiling fans, DOE
proposed that the lowest point of the fan blades is more than 10 inches
from the ceiling. For hugger ceiling fans, DOE proposed that the lowest
point of the fan blades is no more than 10 inches from the ceiling. 79
FR 62526 (October 17, 2014). With the current proposal to classify fans
as ``small-diameter'' and ``large-diameter'', instead of ``low-volume''
and ``high-volume'', DOE proposes to update the standard and hugger
ceiling fan definitions to differentiate them from other small-diameter
product classes, such as VSDs.
Several manufacturers commented on the proposed definition of
hugger ceiling fans in the test procedure NOPR, and on how they
characterize their own hugger ceiling fans. Emerson stated that its
hugger ceiling fans are designed to be mounted 11 to 12-inches from the
ceiling, instead of 9 to 10 inches to avoid turbulent air, which causes
the fan to vibrate, wobble, and make noise. (Emerson, Public Meeting
Transcript, No. 83 at p. 73) The Minka Group stated that it classifies
hugger ceiling fans as fans that are mounted directly to the ceiling
without a downrod. Minka Group added that they measure the distance
between the top of the blade instead of the bottom. Minka Group also
stated that there was no advantage to including tri-mount fans to this
category. (Minka, Public Meeting Transcript, No. 83 at p. 74) DOE
understands tri-mount to mean a fan that can be mounted flush to the
ceiling, with a standard downrod, or on a slope. Hunter Fan stated that
it calls a fan a hugger ceiling fan when it's directly bolted to the
ceiling. (Hunter, Public Meeting Transcript, No. 83 at p. 93) BAS
mentioned that defining hugger ceiling fans as just mounted to the
ceiling without a downrod would be problematic because, with the
exception of their multi-mount ceiling fans, all of its fans are
mounted to the ceiling without a downrod but still have 16 inches
between the blades and ceiling. (BAS, Public Meeting Transcript, No. 83
at p. 94)
DOE recognizes that the ceiling fan industry does not have a
standardized definition for hugger ceiling fans. While some ceiling fan
manufacturers define hugger ceiling fans based on how they are mounted
to the ceiling, others find this definition problematic. For the
purposes of promulgating standards, DOE definitions, to the extent
possible, are based on product specifications to provide verifiable
methods of determining product class. Consequently, DOE proposes to
base the hugger ceiling fan product class definition on the distance
between the lowest point of ceiling fan blade and the ceiling, as
specified by the manufacturer in the product literature shipped with
the product. DOE proposes that the lowest point of the fan blades is no
more than 10 inches from the ceiling for hugger fans.
While BAS stated that the 10-inch height is appropriate for the
hugger definition, they also stated that CFM numbers would not drop
dramatically when using the 10-inch specification, so the hugger
classification has the potential to be eliminated entirely. (BAS,
Public Meeting Transcript, No. 83 at p. 82)
DOE tested a multi-mount fan in both standard and hugger
configurations based on the test methods presented in the test
procedure NOPR, which assumes testing ceiling fans to a false ceiling,
to evaluate relative performance. DOE observed a 16 percent decrease in
CFM for a hugger configuration compared to a standard configuration.
DOE did not observe any change in power consumption. DOE assumes, based
on ceiling fan testing in multiple configurations that the relative
performance between standard and hugger configurations would be the
same even under the test procedure SNOPR, which assumes testing ceiling
fans mounted directly to ceiling. Additionally, as described in the
preliminary analysis, DOE determined that hugger fans offer a different
functionality to the consumer because hugger fans can be safely used in
rooms with lower ceilings. DOE concludes that these reasons warrant a
separate product class for hugger ceiling fans.
DOE also received comments regarding the hugger definition in
response to the test procedure NOPR. (DOE used the same definition for
hugger fans in the preliminary analysis and in the test procedure
NOPR.) ALA requested that DOE use the term ``close to ceiling'' instead
of ``hugger.'' ALA mentioned that ``hugger'' ceiling fan can cause
confusion with its commonly understood meaning in the industry. ALA
proposed to define close to ceiling fans as: Not VSD or highly-
decorative; and the lowest point on the fan blades
[[Page 1703]]
is less than or equal to 10 inches from the ceiling; and has a blade
thickness of greater than or equal to 3.2 millimeters at the edge, and
having a maximum tip speed less than or equal to the applicable limit
in the UL 507 table. (ALA, No. 96 at p. 8) BAS recommended that within
the small-diameter fans (7 feet or less), hugger fans are those that
have a tip speed greater than 680 fpm and have a blade to ceiling
distance less than or equal to 10 inches. (BAS, No. 88 at p. 2)
DOE received no adverse comments from interested parties on its
proposal to include in the definition of a hugger ceiling fan a
distance of less than or equal to 10 inches from the lowest point of
the fan blade to the ceiling. Thus, DOE proposes to include this
criterion for the hugger fan product class in this NOPR.
DOE expects that keeping the name ``hugger'' is less costly and
disruptive for manufacturers than changing to ``close to ceiling'' per
ALA's suggestion. The majority of ceiling fans for which the lowest
point of the fan blade is less than or equal to 10 inches from the
ceiling are already referred to as ``hugger'' ceiling fans by
manufacturers and no change in marketing material would likely be
required. For fans where the blade is less than or equal to 10 inches
from the ceiling and mounted on a downrod, some manufacturers would
need to make changes to marketing material that to meet the proposed
definition where the products are not already referred to as hugger
ceiling fans by the industry. Based on online research on ceiling fans
sold in the market, DOE estimates that these fans are in the minority.
DOE proposes to continue to use the term ``hugger'' to remain
consistent with the majority of the market.
After considering the elements of the hugger definition discussed
above, DOE proposes that a hugger ceiling fan is a ceiling fan that is
not a very small-diameter ceiling fan, highly-decorative ceiling fan or
belt-driven ceiling fan; and where the lowest point on fan blades is
<=10 inches from the ceiling; and has a blade thickness of >=3.2 mm at
the edge and a maximum tip speed <= the applicable limit in Table IV-3.
DOE also received comments on the standard ceiling fan definition
proposed in the test procedure NOPR. ALA suggested defining small-
diameter standard ceiling fans as: Not VSD or highly decorative; and
lowest point on fan blades is greater than 10 inches from the ceiling;
and has a blade thickness of greater than or equal to 3.2 millimeters
at the edge and a maximum tip speed less than or equal to the
applicable limit in the UL 507 table. (ALA, No. 96 at p. 8) BAS
recommended that within the small-diameter fans (7 feet or less), the
standard fans are those that have a tip speed greater than 680 fpm, and
have a blade to ceiling distance greater than 10 inches. (BAS, No. 88
at p. 2)
DOE received no adverse comments from interested parties on its
proposal to include the distance from the lowest point of the fan blade
to the ceiling to be greater than 10 inches in the definition of
standard ceiling fans. DOE continues to include this distance in the
standard ceiling fan proposal in this document. Additionally, as
discussed previously, DOE proposes to adopt the UL 507 standard blade
thickness and maximum tip speed limits when defining product classes,
so as to not misclassify ceiling fans. Therefore, DOE proposes to use
the same definition for standard ceiling fans as was used in the
preliminary analysis and presented in the previous paragraph.
e. High-Speed Small-Diameter Ceiling Fans
In the preliminary analysis, DOE analyzed the HVSD product class,
which included ceiling fans with a blade span less than or equal to 7
feet and an airflow greater than or equal to 5,000 CFM. As discussed in
section IV.A.1, DOE proposes to classify fans as ``small-diameter'' and
``large-diameter'', instead of ``low-volume'' and ``high-volume'' for
this NOPR. Consequently, DOE proposes to rename the HVSD ceiling fans
product class analyzed in the preliminary analysis to high-speed small-
diameter (HSSD), ceiling fans for this document. DOE also proposes to
exclude the 5000 CFM cutoff from the HVSD definition in the HSSD
ceiling fan definition. DOE proposes to define HSSD ceiling fans as
fans that are not VSD or highly-decorative; and have a blade thickness
of less than 3.2 millimeters at the edge or a maximum tip speed greater
than the applicable limit in Table IV-3.
DOE received several comments on the HVSD definition presented in
the preliminary analysis. BAS's suggested product class structure no
longer included HVSD ceiling fans, and instead incorporates HVSD
ceiling fans into standard or hugger ceiling fans. (BAS, No. 88, p. 4)
ALA proposed defining industrial fans (formerly HVSD) as fans that are
not VSD or highly decorative; and have a blade thickness of less than
3.2 millimeters at the edge or a maximum tip speed greater than the
applicable limit in the UL 507 table. (ALA, No. 96 at p. 8)
DOE finds that HSSD ceiling fans provide different utility to the
consumer than standard or hugger ceiling fans. HSSD ceiling fans
generally operate at much higher speeds (in terms of RPM) than standard
or hugger ceiling fans, and are installed in commercial applications.
HSSD ceiling fans are available in a blade span range similar to
standard and hugger ceiling fans, but an HSSD fan typically provides
more airflow at a given blade span because it runs at much higher RPMs.
DOE observes that HSSD fans are generally applied in commercial
buildings whereas standard fans are installed in residential buildings.
These factors indicate that HSSD ceiling fans provide a different
utility to consumers compared to standard fans that warrants a separate
product class for these ceiling fans. DOE proposes to define HSSD
ceiling fans as suggested by ALA as a ceiling fan that is not a very
small-diameter ceiling fan, highly-decorative ceiling fan or belt-
driven ceiling fan; and has a blade thickness of less than 3.2 mm at
the edge or a maximum tip speed greater than the applicable limit in
Table IV-3.
f. Large-Diameter Ceiling Fans
In the preliminary analysis, DOE defined HVLD ceiling fans as fans
that have a blade span greater than 7 feet. DOE proposes to rename HVLD
ceiling fans as large-diameter ceiling fans for this document to be
consistent with the proposal to establish product classes for ceiling
fans primarily by diameter and not airflow. All fans categorized as
HVLD in the preliminary analysis will be categorized as large-diameter
in this document.
DOE received no comments on the HVLD definition described in the
preliminary analysis. DOE proposes to use the HVLD definition from the
preliminary analysis to define large-diameter ceiling fans for this
NOPR. Therefore, DOE proposes to define large-diameter ceiling fans as
a ceiling fan that is greater than 7 feet in diameter.
2. Technology Options
In the preliminary analysis market and technology assessment, DOE
identified and assessed several technology options that were expected
to improve the efficiency of ceiling fans, as measured by the DOE test
procedure. These technologies fall into three main categories: (1) More
efficient motors, which included direct-drive single phase induction
motors, geared motors, brushless direct current (DC) motors, and three-
phase induction motors; (2) more efficient blades, which included fewer
fan blades, twisted blades, airfoil blades, beveled blades, curved
blades, blade attachments and blade material;
[[Page 1704]]
and (3) ceiling fan controls, which include occupancy sensors. DOE then
evaluated these technology options in the screening analysis to
determine which would be screened out, and which would be retained and
incorporated as design options in the engineering analysis.
In the preliminary analysis, DOE also requested comments on
technology options that it had not identified that could be
incorporated into the analysis. This section provides a discussion of
newly considered technology options, and a list of the technology
options DOE then analyzed in the screening analysis. DOE considered
capacitor start induction run (CSIR) motors, capacitor start capacitor
run (CSCR) motors, startup energy, wind and temperature sensors, fan
optimization and gearless direct current (DC) motors as new technology
options in this section. The new technology options were provided in
response to DOE's request for comments to the preliminary analysis, and
DOE also conducted additional research of new technologies.
a. CSIR and CSCR Motors
In the preliminary analysis, DOE specifically requested comment on
whether there are other single-phase alternating current motor options,
like CSIR and CSCR motors, which can be incorporated into ceiling fans
and increase ceiling fan efficiency. ALA commented that CSIR and CSCR
motors have been researched for ceiling fan applications and were found
to be problematic. These motors create audible noise, high blade tip
speeds and excessive motor temperatures when enclosed within ceiling
fan housings. (ALA, No. 91 at p. 16) DOE also did not find any CSIR or
CSCR motors that are incorporated in commercial products or working
prototypes. DOE did not include CSCR and CSIR motors as technology
options for these reasons.
b. Startup Energy
In its written comments, MacroAir suggested that DOE consider
designs that reduce startup energy. MacroAir suggested DOE study
various fans comparing their moment of inertia with startup power.
(MacroAir, No. 89 at p. 7)
DOE recognizes that certain fan designs that reduce ceiling fan
startup energy may have energy savings potential. However, MacroAir did
not provide data on the magnitude of the savings potential. In
addition, DOE is not aware of any industry test methods for measuring
fan startup energy. Furthermore, the industry test procedure for small-
diameter and larger-diameter ceiling fans requires that the airflow or
thrust (for small-diameter or large-diameter ceiling fans,
respectively) be measured only after the ceiling fan reaches steady
state. Therefore, startup power, or reduction of startup power, is not
reflected in the proposed metric. DOE did not include designs that
reduce ceiling fan startup energy in the engineering analysis for this
reason.
c. Wind and Temperature Sensors
Wind and temperature sensors detect temperature changes in the
surrounding space, or potential wind speed reductions below certain
thresholds. Ceiling fans could potentially adjust fan speed based on
the wind and temperature in the space the ceiling fan is located when
coupled with these sensors. This type of modulation could enable the
ceiling fan to better match demand and reduce energy consumption. DOE
received several comments on this potential technology option.
BAS commented that it is the only manufacturer of a ceiling fan
with a temperature sensor. (BAS, Public Meeting Transcript, No. 83 at
p. 194) MacroAir stated that implementing wind and temperature sensors
in ceiling fans could lead to energy savings and suggested that DOE
investigate this technology further. (MacroAir, No. 89 at p. 12)
However, ALA stated that it is not aware of any ceiling fans or working
prototypes that include integrated wind or temperature sensors, or data
that would indicate that these products could lead to energy savings in
real world applications. (ALA, No. 91 at p. 15)
DOE investigated the applications of wind and temperature sensors
in ceiling fans. To DOE's knowledge, only one manufacturer incorporates
temperature sensors in its ceiling fans. Qualitative data on how wind
and temperature sensors reduce energy consumption of a ceiling fan is
not available because this technology is new. Therefore, DOE is unable
to fully evaluate whether these sensors reduce energy consumption in
ceiling fan applications at this time. Consequently, DOE did not
consider wind and temperature sensors as technology options for this
rulemaking. DOE requests data on how wind and temperature sensors could
reduce energy consumption in a ceiling fan. See issue 3 in section
VII.E.
d. Fans With Fewer Blades and Fan Optimization
In the preliminary analysis, DOE observed that large-diameter fans
with fewer blades are generally more efficient because they are subject
to less air resistance, so DOE evaluated fewer blades as a design
option. DOE requested comment in the preliminary analysis on how
manufacturers choose the number of blades to use for large-diameter
fans and how it affects efficiency.
BAS commented that isolating the number of blades as a design
option ignores many factors and that fewer fan blades by itself does
not affect efficiency. BAS suggested that a combination of factors such
as cord width, angle of attack, and blade attachments, paired with
number of blades, are considered by manufacturers in a more holistic
approach when optimizing fan designs for efficiency. (BAS, No. 79 at p.
38; BAS, Public Meeting Transcript, No. 83 at p. 211) Additionally
MacroAir stated that reducing the number of fan blades from eight to
six is limiting to the market and may impede future innovations.
(MacroAir, No. 89 at p. 7)
After further investigation, DOE agrees with BAS and MacroAir and
proposes to replace reducing the number of fan blades for large-
diameter ceiling fans as a design option with a fan optimization design
option. Fan optimization represents the increase in the efficiency of a
fan by adjusting or optimizing the design features that already exist
in the fan. These adjustments could include changing blade pitch, fine-
tuning motor RPM, and changing internal motor characteristics like the
diameter of the wire, number of windings, skew angle, stack height and
capacitors. DOE observed that ceiling fans with the same blade span,
blade material, number of blades, type of motor and size of motor have
a range of performances, indicating that some ceiling fans are
optimized, whereas others are not. Fan optimization provides
manufacturers more flexibility in making design changes to improve
ceiling fan efficiency. DOE included fan optimization as a design
option for standard and hugger fans in the preliminary analysis. DOE is
now considering the fan optimization technology option for all ceiling
fan product classes.
e. Gearless DC Motors
MacroAir commented that direct drive by itself should be uncoupled
from any motor type and included as a design feature, because any
transfer of energy is a loss in efficiency. MacroAir stated that
gearbox losses are between 5 percent and 35 percent. (MacroAir, No. 89
at p. 5) MacroAir specifically suggested incorporating a gearless DC
motor technology option in the analysis,
[[Page 1705]]
which it considers max-tech. (MacroAir, No. 89 at p. 5)
DOE researched gearless ceiling fan designs in response to
MacroAir's comment. DOE found several large-diameter ceiling fans on
the market that use gearless DC motor designs. This indicates that the
gearless DC motor technology option is technologically feasible in
ceiling fans. Gearboxes have losses that may reduce overall ceiling fan
efficiency, as MacroAir commented. Eliminating the gearbox and
associated losses could, in turn, improve overall ceiling fan
efficiency. DOE included gearless motors as a technology option for
consideration in the screening analysis for these reasons. Further
details on this technology option can be found in section IV.B.
DOE is no longer considering the following technology options from
the preliminary analysis for this NOPR: Three-phase induction motors,
twisted blades, beveled blades, and alternate blade material. DOE
screened out these technology options in the preliminary analysis based
on the four screening criteria, outlined in section IV.B. Additionally,
DOE received no comments from interested parties about including these
technology options for the NOPR. Therefore, DOE continues to screen out
the above technology options.
For this NOPR, DOE proposes to analyze the technology options
listed in Table IV-4. The technology options for this NOPR include a
subset of the technology options from the preliminary analysis, in
addition to new technology options based on interested party feedback
and additional DOE research. The screening analysis provides further
discussion on which of these technology options DOE retained as design
options for the engineering analysis.
Table IV-4 Technology Options and Descriptions
------------------------------------------------------------------------
Technology option Description
------------------------------------------------------------------------
Fan optimization.......................... This represents increasing
the efficiency of a fan by
adjusting existing design
features. These adjustments
could include changing
blade pitch, fine-tuning
motor RPM, and changing
internal motor
characteristics such as the
diameter of the wire,
number of windings, skew
angle, stack height, and
capacitors.
More efficient motors:
Larger direct drive motors.............. This represents increasing
the efficiency of a fan by
increasing the size of (or
the quality of steel used
in) the stator and rotor
stack, improving the
lamination design,
increasing the cross
section of copper wiring,
or operating the fan at
reduced speed through
capacitor speed control.
Brushless DC motor...................... DC motors are permanent
magnet synchronous AC
motors driven by a
converter plus inverter
combination control system.
In this configuration, the
motor displays
characteristics of direct
current motors; thus, they
are called brushless direct
current motors. Because
there is no electrical
current flowing in the
rotor of a DC motor, there
are no rotor energy losses,
thereby resulting in
greater efficiency than
standard AC motors.
Geared DC motor......................... DC motor fans with geared
motors have fan blades
attached to the motor via a
geared mechanism, which
allows the fan blades to
rotate at a different speed
from the motor.
Gearless DC motor....................... Fans with a DC motor that
drive the fan blades
directly without the use of
a geared mechanism.
More efficient blades
Curved blades........................... Curved blades are blades for
which the centerline of the
blade cross section is
cambered. Curved blades
generally have uniform
thickness and no
significant internal
volume.
Airfoil blades.......................... Airfoil blades use curved
surfaces to improve
aerodynamics, but the
thickness is not uniform
and the top and bottom
surfaces do not follow the
same path from leading edge
to trailing edge.
Blade attachments....................... Blade attachments refer to
upswept blade tips or other
components that can be
fastened to a fan blade to
potentially increase
airflow or reduce drag.
Ceiling fan controls
Occupancy sensors....................... Occupancy sensors use
technologies that detect
the presence of people
through movement, body
heat, or other means.
Ceiling fans used with an
occupancy sensor could
power down if they sense
that a room is unoccupied.
------------------------------------------------------------------------
B. Screening Analysis
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
1. Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
2. Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
3. Impacts on product utility or product availability. If it is
determined that a technology would have significant adverse impact on
the utility of the product to significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
[[Page 1706]]
generally available in the United States at the time, it will not be
considered further.
4. Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further. (10 CFR part 430, subpart C,
appendix A, 4(a)(4) and 5(b))
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the above four criteria, it
will be excluded from further consideration in the engineering
analysis. The reasons for excluding technology options for this NOPR
are discussed below.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be screened out based on
the screening criteria. DOE requests comment on the screened out and
remaining technology options for each product class. See issue 4 in
section VII.E.
1. Screened-Out Technologies
a. Standard and Hugger Ceiling Fans
In the preliminary analysis, DOE screened out the following
technologies for standard and hugger fans: Occupancy sensors, geared
motors, three-phase induction motors; and blade design elements
including twisted blades, airfoil blades and beveled blades, fans with
fewer blades, blade attachments, and alternative blade materials. In
line with the technologies DOE screened out, Hunter Fan stated in
comments on the preliminary analysis that the aesthetic appeal of
ceiling fans must be considered because it can affect consumer utility.
(Hunter, Public Meeting Transcript, No. 83 at p. 197)
In the preliminary analysis, DOE screened out the occupancy sensors
technology option because DOE did not have enough information to
determine whether occupancy sensors are technologically feasible for
use in all ceiling fans. DOE requested comments on sensors as a
technology option. See issue 5 in section VII.E.
In response to DOE's request for comment on sensors, ALA, Hunter,
Westinghouse, and Lutron on behalf of Westinghouse commented to support
DOE's decision to screen out occupancy sensors from the analysis.
(Hunter, Public Meeting Transcript, No. 83 at p. 193) ALA and
Westinghouse stated that occupancy sensors would be problematic for
ceiling fans installed in bedrooms. Many consumers operate the ceiling
fan continuously while sleeping, but the occupancy sensor would not
detect the movement necessary to continuously operate through the
night. (ALA, No. 91 at p. 16; Westinghouse, Public Meeting Transcript,
No. 83 at p. 206) BAS, however, stated that a schedule can be included
in the occupancy sensor to get around the issue of the ceiling fan
turning off in the bedroom. (BAS, Public Meeting Transcript, No. 83 at
p. 206)
Westinghouse also commented that occupancy sensors can be difficult
to manage in a residential space. It stated that to include an
occupancy sensor to the ceiling fan, the room might have to have one as
well to meet local building codes. (Westinghouse, Public Meeting
Transcript, No. 83 at p. 195)
Occupancy sensors have the potential to save energy by reducing the
number of ceiling fan operating hours. DOE did not find or receive
enough data to evaluate any potential tradeoff between consumer utility
and the energy savings of reduced operating hours. DOE also researched
the option of introducing occupancy sensor schedulers in ceiling fans.
DOE did not find data to show that occupancy sensor schedulers can be
installed reliably in all ceiling fans. At this time, DOE proposes to
continue to screen out occupancy sensors because DOE cannot
satisfactorily evaluate the energy savings potential, technological
feasibility and impact on consumer utility of implementing sensors or
schedule controls. DOE requests comment and data to evaluate these
factors. See issue 5 in section VII.E.
DOE did not receive comments on the decision to screen out three-
phase induction motors or blade design elements including twisted
blades, airfoil blades and beveled blades, fans with fewer blades,
blade attachments, and alternative blade materials for standard and
hugger ceiling fans. DOE continues to screen out these technology
options for this NOPR.
b. Very Small-Diameter Ceiling Fans
As discussed in section IV.A.1, DOE proposes to analyze a new
product class for ceiling fans with blade spans of 18 inches or less.
DOE proposes to screen out the same technologies for very small-
diameter fans as for standard and hugger fans as described in section
IV.B.1.a. DOE did not receive any feedback on the decision to screen
out these technologies.
VSD ceiling fans are used in residential applications, similar to
standard and hugger ceiling fans. Thus, as discussed for standard and
hugger ceiling fans, DOE proposes to screen out blade technology
options that could affect appearance of VSD ceiling fans.
During manufacturer interviews, DOE asked whether the same design
options considered in the preliminary analysis for the standard and
hugger fans could be considered for VSD ceiling fans. These design
options included fan optimization, larger direct drive motor, and DC
motors. DOE has not received any objections from manufacturers
regarding its consideration of these design options for VSD ceiling
fans. One manufacturer pointed out that there are no VSD ceiling fans
with DC motors currently available in the market, but speculated that
DC motors in VSD ceiling fans could be technologically feasible because
they are used in more traditional ceiling fans (standard and hugger
ceiling fans). The manufacturer also acknowledged that there is limited
data on efficiency improvements of these design options specifically
for VSD ceiling fans. Further discussion on how these design options
were incorporated is provided in chapter 5 of the NOPR TSD.
DOE requests comment on the technologies that it screened out for
VSD ceiling fans. See issue 4 in section VII.E.
c. High-Speed Small-Diameter Ceiling Fans
In the preliminary analysis, DOE screened out the following eight
technologies for HVSD ceiling fans: More efficient direct-drive single-
phase induction motors, geared motors, three-phase induction motors,
fans with fewer blades, twisted blades, blade attachments, alternative
blade materials, and occupancy sensors. In line with the technologies
that DOE screened out, BAS commented that that they do not use geared
motors with variable frequency drives in acoustically sensitive places.
(BAS, Public Meeting Transcript, No. 83 at p. 214)
DOE received no comments objecting to screening out these
technology options in the preliminary analysis. DOE does not expect
that these technology options or the applicability of the screening
criteria to them will be affected by the proposed change in name and
definition of the HVSD product class to the HSSD product class analyzed
in this document. Therefore DOE proposes to continue to screen out
these technology options for HSSD fans in this NOPR.
d. Large-Diameter Ceiling Fans
In the preliminary analysis, DOE screened out the following
technologies for large-diameter fans: More efficient direct-drive
single-phase induction
[[Page 1707]]
motors, twisted blades, blade attachments, alternative blade materials
and occupancy sensors.
In the preliminary analysis, DOE described blade attachments as an
attachable clip that can be added to a fan blade to increase airflow or
reduce drag. DOE asked for comment in the preliminary analysis about
blade configurations and blade designs as technology options to improve
ceiling fan efficiency.
BAS commented that more than half of the large-diameter
manufacturers use some form of blade attachment and that winglets are
the most common type of blade attachment. BAS stated that a properly
designed winglet can increase the efficiency of a ceiling fan and
provided articles to show that blade attachment are used to increase
fuel efficiency in aircrafts. (BAS, No. 79 at p. 17) MacroAir stated
that it does not use blade attachments and does not consider blade
attachments to provide performance or efficiency gains. (MacroAir, No.
89 at p. 13)
There is disagreement in the industry whether blade attachments
improve fan efficiency. Because DOE has not received sufficient
information to conclude that blade attachments increase the efficiency
of large-diameter fans, DOE continues to screen out blade attachments.
DOE did not receive comment on the decision to screen out more
efficient direct-drive single-phase induction motors, twisted blades,
alternative blade materials, and occupancy sensors for large-diameter
fans. DOE continues to screen out these technology options for large-
diameter fans for this NOPR.
2. Remaining Technologies
DOE tentatively concludes that the technology options not screened
out meet all four screening criteria to be examined further as design
options in DOE's NOPR analysis. DOE determined that these technology
options are technologically feasible because they are being used in
commercially available products or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service and do
not result in adverse impacts on consumer utility, product
availability, health, or safety). In summary, DOE did not screen out
the following technology options:
a. Fan Optimization
In the preliminary analysis, DOE screened in fan optimization for
standard and hugger ceiling fans. DOE observed that ceiling fans with
the same blade span, blade material, number of blades, type of motor
and size of motor have a range of performances indicating that some
ceiling fans are optimized, whereas others are not. DOE research since
the preliminary analysis indicated that ceiling fans in all product
classes can be optimized.
Matthews Fan stated that increasing the angle of the blade causes
heat rise on the motor and the fan might not continue to meet the UL
safety requirements and therefore adjusting the blade pitch is not
possible. (Matthews, Public Meeting Transcript, No. 83 at p. 227)
Increasing the blade pitch can increase the heat rise on the motor
and that blade pitch optimizing needs to be done within the UL safety
requirements. The fan optimization design option, as proposed, includes
other adjustments that manufacturers can make to improve efficiency.
Consequently, manufacturers do not have to adjust blade pitch, but have
the flexibility to determine which adjustments to existing designs are
cost-effective and comply with UL safety requirements. DOE continues to
consider fan optimization as a viable technology option for improving
fan efficiency that meets DOE's screening criteria. Consequently, DOE
considered fan optimization in its analysis for all product classes.
b. Larger Direct-Drive Motor
DOE screened in larger-direct drive motors as a technology option
in the preliminary analysis. In response, ALA commented that DOE has
not accounted for the difficulties associated with motor redesign that
is required for larger AC motors. ALA stated that a significant
constraint on ceiling fans is the maximum internal temperature
permitted by UL 507. According to ALA, using a larger AC motor could
create higher internal temperature and lead to failure in UL testing.
(ALA, No. 91 at p. 5)
DOE recognizes ALA's concerns but proposes to continue to screen in
larger direct-drive motors for analysis in this NOPR. DOE identified
several commercially-available ceiling fan model series that use larger
direct-drive single-phase induction motors and still adhere to existing
safety standards. For example, the 52-inch Monte Carlo Homeowner Max
uses a 153 x 15 mm motor \22\ and the 52-inch Monte Carlo Designer Max
uses a 188 x 15 mm motor.\23\ DOE conducted testing to evaluate the
impact on performance of using larger direct-drive motors. DOE's
internal test data shows that the efficiency of low-volume ceiling fans
can be improved through the use of a larger AC direct-drive motor.
Discussions with manufacturers confirmed that ceiling fan efficiency
can be improved by increasing the size of the motor, but that the
improvement may be small and increases production cost. Based on these
findings, DOE continues to consider larger direct-drive motors as a
viable technology option for improving fan efficiency that meets DOE's
screening criteria. Consequently, DOE considered larger direct-drive
motors in its analysis for standard and hugger fans. DOE accounts for
costs associated with implementing a larger-direct drive motor in the
engineering and MIA analyses. DOE also screened in larger direct-drive
motors for very small-diameter ceiling fans based on information
received during manufacturer interviews and requests comments on the
inclusion of this design option for VSD ceiling fans. See issue 4 in
section VII.E.
---------------------------------------------------------------------------
\22\ Monte Carlo. 52'' Homeowner Max, http://www.montecarlofans.com/38090/52-Homeowner-Max-5HM52BPN.html.
\23\ Monte Carlo. 52'' Designer Max, http://www.montecarlofans.com/37831/52-Designer-Max_5DM52RZW.html.
---------------------------------------------------------------------------
c. DC Motor
Brushless DC Motors in Standard, Hugger, and HSSD Product Classes
In the preliminary analysis, DOE screened in brushless DC motors
for standard, hugger and HVSD ceiling fans. These ceiling fans
typically use AC induction motors. In AC induction motors, current
flowing through copper wire windings in the stator induce a current in
the motor rotor to create a magnetic field. There are energy losses
associated with this process. In DC motors, the rotor is a permanent
magnet that generates a magnetic field without the need for induced
current. Therefore, the energy losses associated with inducing current
in the rotor in an AC motor are not present in DC motors. Consequently,
DC motors are typically more efficient than AC induction motors.
Another advantage of DC motors is that they tend to be smaller and make
less noise than AC induction motors. However, DC motors require
additional controls to enable them to function on power sources typical
in a home. Implementing DC motor technology in ceiling fans may
increase manufacturing and product retail cost. These cost impacts are
analyzed in the engineering and downstream analyses. DOE requested
comment on the motor
[[Page 1708]]
technology options in the preliminary analysis.
ALA commented that brushless DC motors should be screened out of
DOE's analysis, because they have only been available in the market for
a short time, and therefore not enough data exists to fully evaluate
the long-term reliability of ceiling fans with DC motors. (ALA, No. 91
at p. 16) However, the California Investor Owned Utilities (CA IOUs)
supported the inclusion of DC motors as a technology option and urged
DOE to incorporate only the assumptions regarding manufacturing,
warranty, maintenance, and repair costs based on recent and accurate
data or research from manufacturers rather than more informal
assumptions. CA IOUs recommended that DOE conduct research regarding DC
motors through direct outreach with manufacturers. (CA IOUs, No. 91 at
p. 2) BAS commented that the latest generation of DC motor controllers
don't require a power converter and can drive the motor directly from
line voltage inverter. This eliminates one power conversion stage,
reducing cost, and improving efficiency and reliability. According to
BAS, DC motors are manufactured using similar techniques as AC motors
and share many critical components. Therefore the reliability and the
control system is not different for a DC motor compared to an AC motor.
(BAS, No. 79 at p. 29) Similarly, the Appliance Standards Awareness
Project (ASAP) noted that it is not aware that DC motors are less
reliable than AC motors. (ASAP, et al., No. 92 at p. 2) In their
submitted comments, ASAP stated several instances of manufacturers
indicating that there should not be any concerns related to reliability
of DC motors, including manufacturer responses to the preliminary TSD,
and comments during the preliminary analysis public meeting. (ASAP, et
al., No. 92 at pp. 2-3)
ALA commented that quiet fan speed controls and variable speed
controls are not compatible with brushless DC motors. ALA stated that
requiring DC motors in small-diameter ceiling fans would lead to the
elimination of existing wall-mounted controls for AC motor fans and
associated light kits. (ALA, No. 91 at p. 7)
In consideration of the above comments, DOE investigated DC motor
impacts on consumer utility and product availability. Through market
research, DOE found that most manufacturers offer ceiling fans with DC
motors. DOE is also aware of ceiling fans that use DC motors and have
wall mounted controls such as the BAS Haiku models that come with
optional wall controls.\24\ However, DC motors are a relatively new
technology and that reliability issues may become apparent as ceiling
fans using these motors in the field mature. However, their
availability in the market indicates to DOE that manufacturers have
deemed DC motors technologically feasible, practicable to manufacture,
install, and service and have acceptable impacts on utility (including
reliability and product availability). Consequently, DOE screened in DC
motors for this NOPR. DOE accounted for differences in reliability
between DC and AC motors in downstream analyses in section IV.F.4.
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\24\ Big Ass Solutions. Haiku, http://www.bigassfans.com/for-home/haiku/.
---------------------------------------------------------------------------
Brushless DC Motors in Very Small-Diameter Ceiling Fans
For this NOPR, DOE analyzed a new product for very small-diameter
ceiling fans that have blade spans of 18 inches or less. Currently
there is no very small-diameter ceiling fan on the market that uses a
DC motor; however conversations with one VSD manufacturer indicated
that DC motors are technologically feasible in very small-diameter
ceiling fans. Therefore DOE screens in the DC motor technology option
for very small-diameter ceiling fans. DOE requests comment on including
DC motors as a technology option. See issue 4 in section VII.E.
Geared and Gearless DC Motors for Large-Diameter Ceiling Fans
In the preliminary analysis, DOE screened in brushless DC motors
for large-diameter fans. DOE requested comment on whether brushless DC
motors meet the screening criteria for large-diameter ceiling fans.
In response to the preliminary analysis, MacroAir requested that
DOE include gearless DC motors as a new technology option (see section
IV.A.2). It stated that gearbox losses are between 5 and 35 percent.
(MacroAir, No. 89 at p. 5)
DOE found two manufacturers with large-diameter ceiling fans using
a gearless DC motor, including MacroAir's newly released AirVolution-D
model. (MacroAir, No. 89 at p. 10) Market availability of fans using
gearless DC motors indicates to DOE that this technology option is
technologically feasible and meets the other three screening criteria.
Thus, DOE screened in gearless DC motors for large-diameter ceiling
fans for consideration in the engineering analysis.
DOE did not receive any comments objecting to the consideration of
brushless DC motors as a design option analyzed in the preliminary
analysis for large-diameter ceiling fans. Thus, DOE screened in this
technology option for consideration in the engineering analysis for
this NOPR. Note, DOE refers to this design option as a geared DC motor
to make a clear distinction between fans with a gearbox and fans
without a gearbox.
d. Curved Blades and Airfoil Blades
In the preliminary analysis, DOE screened in curved and airfoil
blade technology options for high-speed small-diameter and large-
diameter ceiling fans. DOE requested comment about the blade technology
options, but did not receive any comments opposing the inclusion of
curved and airfoil blades in the analyses for these fan product
classes. Therefore, DOE continues to screen in curved and airfoil
blades for HSSD and large-diameter ceiling fans in this NOPR.
C. Engineering Analysis
In the engineering analysis, DOE established the relationship
between the manufacturer production cost (MPC) and improved ceiling fan
efficiency. This relationship serves as the basis for cost-benefit
calculations for individual consumers, manufacturers, and the Nation.
DOE typically structures the engineering analysis using one of three
approaches: (1) Design option; (2) efficiency level; or (3) reverse
engineering (or cost assessment). The design-option approach involves
adding the estimated cost and associated efficiency of various
efficiency-improving design changes to the baseline product to model
different levels of efficiency. The efficiency-level approach uses
estimates of costs and efficiencies of products available on the market
at distinct efficiency levels to develop the cost-efficiency
relationship. The reverse-engineering approach involves testing
products for efficiency and determining cost from a detailed bill of
materials (BOM) derived from reverse engineering representative
products. The efficiency ranges from that of the least-efficient
ceiling fans sold today (i.e., the baseline) to the maximum
technologically feasible efficiency level. At each efficiency level
examined, DOE determines the MPC; this relationship is referred to as a
cost-efficiency curve.
For this analysis, DOE structured its engineering analysis for
ceiling fans using a combination of the design-option approach and the
reverse-engineering approach. The analysis is performed in terms of
incremental increases in efficiency due to the implementation of
selected design
[[Page 1709]]
options, while the estimated MPCs for each successive design option are
based on product teardowns and a bottom-up manufacturing cost
assessment. Using this hybrid approach, DOE developed the relationship
between MPC and ceiling fan efficiency. DOE welcomed comments on an
alternative approach in the preliminary analysis.
DOE used the design option approach in the engineering analysis and
selected representative sizes for each product class to account for
differences in ceiling fan utility and efficiency based on blade
diameter. DOE selected representative sizes based on the available
range of sizes in each product class and based on the number of sales
per size. For each representative size in each proposed product class,
DOE identified a baseline efficiency as a reference point from which to
measure changes resulting from each design option. Efficiency is
represented in terms of the metric proposed in the test procedure NOPR
(i.e., aggregate airflow efficiency). The baseline represents the most
common, least efficient ceiling fan in the market for each product
class and representative size. DOE then developed separate cost-
efficiency relationships for each product class analyzed. The following
is a summary of the method DOE used to determine the cost-efficiency
relationship for ceiling fans:
Perform airflow efficiency tests on a representative
sample of ceiling fans in each product class.
Develop a detailed BOM for the tested ceiling fans through
product teardowns, and construct a ceiling fan cost model.
Use a combination of test data, data from spec sheets, the
cost model, and feedback from manufacturers to calculate the
incremental increase in efficiency and cost increase of adding specific
design options to a baseline model.
In the 2014 test procedure NOPR, DOE proposed to test standard
ceiling fans mounted to an artificial ceiling. ALA commented that the
candidate standard levels in the preliminary analysis were based on
airflow measurements made without an artificial ceiling. ALA
recommended that DOE adjust the analysis to adhere to the final test
procedure. (ALA, No. 91 at p. 2)
Since the preliminary analysis, DOE published a test procedure
SNOPR on June 3, 2015, in which DOE proposes to test all ceiling fans
mounted directly to the ceiling. DOE used test data for standard
ceiling fans mounted directly to the ceiling to update the engineering
analysis for this NOPR.
In response to the approach taken by DOE, MacroAir stated it
doesn't understand why a design approach was used for the efficiency
levels and a performance approach was taken in the candidate standard
levels (CSL). MacroAir suggested a consistent approach should be
maintained throughout the analysis process. (MacroAir, No. 89 at p. 13)
Typically, DOE structures an energy conservation standard in terms
of a performance requirement, i.e., a maximum level of energy
consumption or a minimum level of energy efficiency, often as a
function of some form of capacity or size. For this rulemaking, DOE is
structuring the standard using a minimum level of airflow efficiency
(CFM/W) as a function of diameter. The various levels of efficiency
being considered for the standard, or candidate standard levels, were
developed using efficiency levels described in the engineering
analysis. See chapter five of the NOPR TSD. In the engineering
analysis, DOE developed efficiency levels using design-options, which
are technologies that exist in the market that have passed the
screening criteria. See chapter four of the NOPR TSD. The efficiency
levels examined represent a certain path, or combination of design
options, that demonstrate how various levels of efficiency can be
achieved. While this analysis is meant to show one way of achieving
certain levels of efficiency, the actual structure of the standards (in
the form of equations defining a minimum level of air flow efficiency
(CFM/W) as a function of diameter) allows any design path to be used.
Also, establishing standards in this manner, as opposed to requiring
specific design requirements be used (e.g., a standard specifying one
type of motor), allows manufacturers freedom in meeting a standard and
avoids limiting innovation. Manufacturers may choose to use any
technologies and designs they desire to achieve the specified CFM/W
standard.
In written comments, ASAP noted that DOE evaluated efficiency
levels that are structured as a function of ceiling fan diameter. ASAP
expressed concern that standards as a function of diameter may not be
directly related to the performance of the fan. (ASAP, et al., No. 92
at p. 3)
In response to ASAP's comment, DOE examined how fan efficiency
behaves as a function of both fan diameter and airflow to evaluate
whether standards as a function of one or the other are more
appropriate. DOE collected data for airflow, blade diameter and airflow
efficiency for all the ceilings fans found on Web sites of ten
retailers, including, among others, Home Depot, Lowe's, Walmart and
Menards. DOE then plotted ceiling fan efficiency as a function of both
diameter and airflow and compared the correlation coefficient, or R\2\
value, for each relationship. DOE found that both airflow and fan
diameter have similar correlation coefficients as a function of airflow
efficiency and neither is statistically better than the other. Because
of this, DOE next examined which characteristic could be considered a
better indicator, or proxy, for utility.
DOE sets standards that are technologically feasible and
economically justified without diminishing utility to consumers.
Neither airflow nor diameter is a perfect proxy for utility, because
consumers make purchasing decisions based on both. However, DOE
believes that blade diameter is a better proxy for utility than
airflow. The size of a fan determines the cooling area, impacts room
aesthetics, and determines if a fan physically fits into a room.
Literature published by manufacturers clearly indicates that blade span
is an important criteria for consumer fan selection. Manufacturers
include sizing guides in published product literature to instruct
consumers on how to properly size a fan for a given room size. These
fan sizing guides specify the affected square footage of a room based
on fan blade diameter. DOE did not find such guides for other ceiling
fan characteristics such as airflow. Furthermore, DOE believes that
standards as a function of airflow instead of fan diameter could result
in substitution issues. For example, two ceiling fans of different
sizes but similar airflow might not fit into the same space, will not
have airflow produced over the same area, and have different room
aesthetics. However, DOE believes that standards as a function of
diameter would not result in substitution issues, because the
substitute fan would fit into the same space, produce airflow over the
same area and the room aesthetics would not be affected. This indicates
to DOE that ceiling fan blade diameter is a primary characteristic
considered by consumers when selecting a fan and a better proxy for
consumer utility than airflow. Consequently, DOE proposes standards as
a function of fan diameter to ensure that fans at a given diameter
(and, by proxy, fans that provide a similar utility to the consumer)
are subject to the same standard.
ASAP also stated that two fans of the same diameter could provide
different airflows. ASAP stated that
[[Page 1710]]
manufacturers could simply meet the standard by reducing the speed of
the fan, which would reduce airflow and fan utility. (ASAP, et al., No.
92 at p. 3)
Ceiling fans of the same size can produce different airflows, and
slowing down a fan can significantly reduce energy consumption. While
manufacturers may opt to do so to meet the levels proposed, DOE did not
include slowing down the fan as a design option; manufacturers can meet
the levels proposed without reducing speed. Also, DOE expects that
manufacturers will not reduce airflow to levels that are unacceptable
when other cost-justified pathways to compliance are available. DOE
requests comment on what an acceptable reduction of fan speed is such
that it does not affect consumer utility. See issue 6 in section VII.E.
1. Baseline and Max-Tech Models
To analyze technology options for energy efficiency improvements,
DOE defined a baseline and a max-tech model for each ceiling fan
product class. Typically, the baseline model is a model that just meets
current energy conservation standards, whereas a max-tech model is the
highest efficiency model in the market. DOE set the baseline and max-
tech efficiencies for each product class based on test data and
certified airflow efficiency data from manufacturer Web sites and
brochures. Further details can be found in chapter 5 of the TSD.
a. Standard and Hugger Ceiling Fans
In the preliminary analysis, DOE combined the cost efficiency
curves of flat-blade fans and unconventional-blade fans in the standard
and hugger product classes to create an aggregate curve for all
standard ceiling fans and all hugger ceiling fans. DOE used the maximum
efficiency of the unconventional-blade fans as the max-tech for the
aggregate curve to ensure that even at max-tech, all types of ceiling
fans, including designs with unconventional-blades, can achieve this
level of efficiency.
In response to this approach, the CA IOUs expressed concern that
the max-tech efficiency for the combined conventional and
unconventional class is significantly lower than the conventional blade
fan class. Therefore, the CA IOUs commented, DOE should consider
conventional blade fan model efficiency for the max-tech level instead
of the unconventional blade fan model. (CA IOUs, No. 91 at p. 1)
DOE appreciates the comment from the CA IOUs to use the max-tech
level of the flat-blade fan for the aggregate curve instead of the max-
tech level of the unconventional-blade fan. However, doing so could
result in a standard that cannot be met by unconventional blade fans,
eliminating them from the market. DOE considers the elimination of
unconventional blade fans from the market a loss of consumer utility
and a reduction in product availability because, while these fans are
functionally indistinguishable from flat-blade ceiling fans, a majority
of consumers purchase unconventional-blade fans because of their
aesthetic appeal. Overly stringent ceiling fan standards could force
manufacturers to reduce the aesthetic quality of some ceiling fans to
comply with energy conservation standards, therefore reducing consumer
utility. Thus, DOE continued to use the max-tech efficiency level of
the unconventional-blade fans as the max-tech efficiency level for the
aggregate curve in this NOPR.
b. Very Small-Diameter Ceiling Fans
After the preliminary analysis DOE decided to introduce a separate
product class for very small-diameter ceiling fans based on feedback
from interested parties (see section IV.A.1.c for more details on the
very small-diameter product class). DOE used publicly available market
data and test data to identify the baseline very small-diameter ceiling
fans for all representative sizes.
c. High-Speed Small-Diameter Ceiling Fans
In the preliminary analysis, DOE chose a baseline airflow
efficiency of 211 cfm/W for the 56-inch HSSD ceiling fans. DOE selected
this efficiency based on information listed in manufacturer
specification sheets because DOE did not have any test results for this
product class.
During the preliminary analysis public meeting, Westinghouse and
ALA commented that 211 cfm/W is too high for the baseline efficiency
for 56 inch high-speed small-diameter fans. Westinghouse stated that
the baseline 56-inch high-speed small-diameter airflow efficiency
should be 95 cfm/W. (Westinghouse, Public Meeting Transcript, Public
Meeting Transcript, No. 83 at p. 250) ALA provided published data to
support its statement showing baseline fans with airflow efficiencies
ranging between 90 and 115 cfm/W, and airflow ranging from 6,118 to
9,154 cfm. Additionally, ALA stated that it is aware that HSSD fan
manufacturers list extremely high cfm levels on their manufacturer
specification sheets. These models will have cfm levels similar to the
baseline models recommended by ALA when tested according to the DOE
test procedure. (ALA, No. 91 at p. 4)
Since the preliminary analysis, DOE tested baseline 56-inch HSSD
ceiling fans. Those tests confirmed comments received from interested
parties that the value used in the preliminary analysis is too high.
DOE reduced the baseline airflow efficiency for a 56 inch HSSD ceiling
fan from 211 cfm/W to 91 cfm/W, which corresponded to the lowest
efficiency of the HSSD ceiling fans tested.
d. Large-Diameter Ceiling Fans
In the preliminary analysis DOE described the baseline for the
large-diameter ceiling fan product class as having curved blades, a
three-phase induction motor with a gearbox, and an exposed motor with
no housing. DOE described a max-tech large-diameter ceiling fan as a
ceiling fan with airfoil blades and a DC motor.
MacroAir commented on the baseline and max-tech levels for the
large-diameter ceiling fan product class. MacroAir stated that geared
motors are a typical component of baseline large-diameter fans.
MacroAir also suggested that the max-tech unit has a brushless DC motor
and a direct drive (without gears). (MacroAir, No. 89 at p. 5)
DOE agrees with MacroAir because DOE found that large-diameter
ceiling fans with a brushless DC motor have the highest efficiency.
Therefore, for its analysis, DOE assumes that the max-tech efficiency
level for large-diameter ceiling fans includes a gearless DC motor.
2. Manufacturing Cost Analysis
DOE estimated the manufacturing costs using a reverse-engineering
approach, which involves a bottom-up manufacturing cost assessment
based on a detailed BOM derived from teardowns of the product being
analyzed. The detailed BOM includes labor costs, depreciation costs,
utilities, maintenance, tax, and insurance costs, in addition to the
individual component costs. These manufacturing costs are developed to
be an industry average and do not take into account how efficiently a
particular manufacturing facility operates.
For the reverse-engineering approach, DOE purchased off-the-shelf
ceiling fans available on the market with a range of efficiencies and
dismantled them component by component to determine what technologies
and designs manufacturers use to increase airflow efficiency. DOE then
used independent costing methods, along with component-supplier data,
to estimate
[[Page 1711]]
the costs of the components. DOE derived detailed manufacturing cost
estimates based on its reverse engineering analysis, which include the
cost of the product components, labor, purchased parts and materials,
and investment. The testing and teardown results indicated that the
manufacturing costs among different units from different manufacturers
can vary based on the type of material, amount of material, and/or
process used.
a. Standard and Hugger Ceiling Fans
In the preliminary analysis, DOE developed a single, aggregated
cost-efficiency curve for unconventional-blade and flat-blade fans for
both standard and hugger product classes. The MPC for the max-tech
(efficiency level 4, or EL 4) reflected a shipment weighted average of:
(1) The full cost of an unconventional-blade fan with a DC motor, and
(2) the full cost of a flat-blade fan with an AC motor.
ALA commented that the preliminary analysis costs for the EL 4
design option for standard and hugger fans are much too low. (ALA, No.
91 at p. 6) ALA stated that the aggregate curve would effectively
require DC motors for all ceiling fans. For flat-blade fans, the
minimum efficiencies required to comply with DOE's EL 4 would require
either DC motor technology or some combination of a larger AC motor and
other technologies that DOE has already screened out from
consideration. Westinghouse stated that if a DC motor with flat blade
is required to achieve EL 4, then the costs should also mirror that.
(Westinghouse, Public Meeting Transcript, No. 83 at p. 245)
DOE acknowledges that to comply with the EL 4 efficiency for both
flat-blade fans and unconventional-blade fans, DC motors is the only
remaining screened-in design option. Therefore, DOE adjusted the costs
at EL 4 to represent a shipment weighted average of the full cost of an
unconventional-blade fan and flat-blade fan that both use a DC motor.
b. Very Small-Diameter and High-Speed Small-Diameter Ceiling Fans
DOE used the reverse engineering approach described in section
IV.C.2 to estimate the manufacturing costs of very small-diameter and
HSSD ceiling fans. DOE received some feedback on the high-speed small-
diameter manufacturing costs. DOE used this feedback together with the
results from the reverse engineering to estimate the manufacturing
costs for HSSD ceiling fans. DOE did not receive any feedback from
interested parties on the manufacturing costs of very small-diameter
ceiling fans. Therefore DOE relied on the manufacturing cost results
from the reverse engineering approach.
c. Large-Diameter Ceiling Fans
In the preliminary analysis, DOE found that large-diameter fans
have a wide variety of motor horsepower. For consistency, DOE assumed
that all the large-diameter fans analyzed use a 1-horsepower motor
because they are available in 8-, 12-, and 20-foot fans. DOE estimated
the cost of 1-horsepower motors by evaluating the average price of a 1-
horsepower motors available on the market. DOE requested comment on the
assumption to use a 1-horsepower motor for all representative sizes.
BAS stated that a 1-horsepower motor is not representative of the
entire large-diameter market. BAS suggested that 20-foot fans should
have a 2-horsepower motor, 12-foot fans should have a 1-horsepower
motor, and 8-foot fans should have a 0.5-horsepower motor. (BAS, No. 79
at p. 4) MacroAir agreed with BAS stating that the 1-horsepower motor
is a poor assumption for all large-diameter fans. MacroAir provided a
breakdown in the percentage of sales based on motor horsepower, which
shows 36 percent of their large-diameter fans are sold with a 1-
horsepower motor, 23 percent are sold with a 2-horsepower motor and 13
percent are sold with a 0.5-horsepower motor. All other motor sizes
that MacroAir sells have sales of 13 percent or less. (MacroAir, No. 89
at p. 10)
Based on the feedback from BAS and MacroAir, DOE assumed that 20-
foot fans use 2-horsepower motors, 12-foot fans use 1-horsepower
motors, and 8-foot fans use 0.5-horsepower motors. DOE tore down two
20-foot large-diameter ceiling fans to estimate the manufacturing costs
for the fans and their subassemblies, including the fan motors. DOE
adjusted its assumptions regarding motor costs based on input received
during manufacturer interviews and these teardowns.
Chapter 5 of the NOPR TSD discusses the baseline efficiencies for
each product class, the design options DOE considered, the methodology
used to develop manufacturing production costs, and the cost-efficiency
curves. The LCC and PBP analyses uses the cost-efficiency relationships
developed in the engineering analysis.
3. Installed Costs
During the preliminary analysis public meeting, DOE received
comments on the installed costs for standard ceiling fans. The
installed costs are a function of MPC, manufacturer markup and retail
markup. In the preliminary analysis, DOE presented baseline and EL 4
installed costs of $107 and $149, respectively, for standard fans.
During the public meeting, Westinghouse and Fanimation stated that
the installed cost for the baseline is too high and the installed costs
for EL 4 is too low. (Westinghouse, Public Meeting Transcript, No. 83
at p. 242; Fanimation, Public Meeting Transcript, No. 83 at p. 243)
In response to Westinghouse and Fanimation, DOE re-evaluated its
MPC estimates. As stated, MPC is one of the factors DOE used to
calculate installed costs. (See sections IV.D and IV.F for discussion
of the other factors). In the preliminary analysis, DOE calculated the
MPC as the product of factory costs and factory markup. This approach
was used to calculate MPC, because standard and hugger ceiling fans are
typically outsourced by U.S. manufacturers to factories in China. DOE
calculated baseline and max-tech (EL 4) MPCs for 52 inch standard
ceiling fans of $41.33 and $65.56, respectively, in the preliminary
analysis.\25\
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\25\ In the preliminary analysis, DOE presented MSPs instead of
MPCs. The MPCs were marked up to the MSP using the distribution
channel markups. The MSP for the baseline 52-inch ceiling fan was
$56.62 and for the MSP for the max-tech 52-inch ceiling fan was
$89.82.
---------------------------------------------------------------------------
DOE revisited all the assumptions in the cost model from the
preliminary analysis and updated all the inputs to the cost model to
reflect the costs in 2015$. Additionally, DOE increased the
manufacturing purchase volume to reflect manufacturers' comments. DOE
presented the updated factory costs to manufacturers during interviews,
who generally agreed with the updated costs.
During manufacturer interviews, DOE also received feedback that the
overhead burden, shipping costs and tariffs should be included in the
MPC. In this NOPR, DOE included these costs in the MPC to be more
representative of the manufacturer cost structure described by
manufacturers.
During the interviews, DOE attempted to gather more information
about the factors it used to derive the MPC. Manufacturers generally
agreed with the factory markup of 1.2 used in the preliminary analysis.
Manufacturers also agreed with the overhead burden of $2.50 per unit
and the shipping tariff of 4.7 percent. DOE increased the shipping
costs from China from $2.50 per unit to $3.60 per unit based on
feedback received during interviews.
After reevaluating its installed costs and considering manufacturer
feedback, DOE increased the baseline MPC from $41.33 to $54.93. DOE
increased the
[[Page 1712]]
costs for the 52-inch standard ceiling fan for EL 4 from $65.56 to
$90.93. More details about the factory costs and the MPC can be found
in chapter 5 of the NOPR TSD. DOE requests comments on the new baseline
MPC of $54.93 for 52-inch standard ceiling fans. See issue 7 in section
VII.E.
DOE did not receive any comments about the installed costs that
were presented in the preliminary analysis for all the other product
classes. However the installed costs for these product classes changed
with updates in manufacturing costs and the distribution channel.
D. Markups Analysis
DOE uses distribution channel markups and sales taxes (where
appropriate) to convert the manufacturer production cost estimates from
the engineering analysis to consumer prices, which are then used in the
LCC, PBP, and the manufacturer impact analyses. The markups are
multipliers that are applied to the purchase cost at each stage in the
distribution channel.
DOE characterized four distribution channels to describe how
standard, hugger and VSD ceiling fans pass from manufacturers to
consumers. These four distribution channels can be characterized as
follows:
Manufacturer [rarr] Home Improvement Center [rarr] Consumer
Manufacturer/Home Improvement Center (in-store label) [rarr] Consumer
Manufacturer [rarr] Wholesaler [rarr] Contractor [rarr] Consumer
Manufacturer [rarr] Showroom [rarr] Consumer
DOE developed separate markups for home improvement centers that
have their in-store label ceiling fans and for those that sell
independent-label ceiling fans. As indicated in the market assessment,
Hampton Bay and Harbor Breeze ceiling fans, which are two of the top
three ceiling fan brands in the market, are the in-store brands for
Home Depot and Lowe's, respectively. In this case, Home Depot and
Lowe's serve as both in-store brand manufacturer and home improvement
center that carry both store-brand and independent-brand ceiling fans.
For in-store label ceiling fans, DOE developed an overall markup that
encompasses the margins for manufacturing as well as selling the
product. For the independent-label ceiling fans sold through home
centers, separate markups were developed for the brand manufacturer and
for the home improvement centers which serve only as a retailer.
For large-diameter and HSSD ceiling fans, the two distribution
channels that DOE considered can be characterized as follows:
Manufacturer [rarr] Dealer [rarr] Customer
Manufacturer [rarr] In-house Dealer [rarr] Customer
The second distribution channel for large-diameter and HSSD ceiling
fans is a direct sale channel where the manufacturer sells the product
directly to a customer through its in-house dealer. DOE is assuming the
markup for in-house dealers is the same as the conventional dealer
markup; therefore, the overall markup for these two distribution
channels is the same.
To account for manufacturers' non-production costs and profit
margin, DOE applies the manufacturer markup to the full MPC derived in
the engineering analysis. The resulting manufacturing selling price
(MSP) is the price at which the manufacturer can recover all production
and non-production costs and earn a profit. To meet new or amended
energy conservation standards, manufacturers typically introduce design
changes to their product lines, which increases manufacturer production
costs. As production costs increase, manufacturers typically incur
additional overhead.
To calculate the manufacturer markups, DOE reviewed 10-K reports
\26\ submitted to the U.S. Securities and Exchange Commission (SEC) by
publicly-owned ceiling fan companies. The financial figures necessary
for calculating the manufacturer markup are net sales, costs of sales,
and gross profit. Few ceiling fan manufacturing companies are publicly
owned, and most of the publicly-owned ceiling fan manufacturing
companies are subsidiaries of more diversified parent companies, so the
financial information summarized may not be exclusively for the ceiling
fan portion of their business and can also include financial
information from other product sectors. DOE discussed the manufacturer
markup with manufacturers during interviews, and used product specific
feedback on market share, markups and cost structure from manufacturers
to adjust the manufacturer markup calculated through review of SEC 10-K
reports.
---------------------------------------------------------------------------
\26\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (various years between 2007 and 2013), available at http://sec.gov.
---------------------------------------------------------------------------
To develop markups for the market participants involved in the
distribution of ceiling fans, DOE utilized several sources, including:
(1) The SEC 10-K reports and U.S. Census Bureau's annual retail trade
survey for building material and supplier dealer industry \27\ (to
develop home improvement center markups); (2) the U.S. Census Bureau's
annual wholesale trade report for electrical and electronic appliance,
television, and radio set merchant wholesaler industry \28\ (to develop
wholesaler markups); (3) 2014 RSMeans Electrical Cost Data \29\ (to
develop contractor markups); and (4) the SEC 10-K reports (to develop
dealer markups).
---------------------------------------------------------------------------
\27\ U.S. Census Bureau. 2012 Annual Retail Trade Survey.
Building Material and Supplier Dealer. 2012 (Last Accessed April 22,
2015) http://www.census.gov/retail/arts/historic_releases.html.
\28\ U.S. Bureau of the Census. 2012 Annual Wholesale Trade
Report, NAICS 423620: Electrical and Electronic Appliance,
Television and Radio Set Merchant Wholesaler. 2012. Washington, DC.
(Last Accessed April 22, 2015) http://www.census.gov/wholesale/index.html.
\29\ RS Means Company Inc. Electrical Cost Data: 36th Annual
Edition. 2014. Kingston, MA.
---------------------------------------------------------------------------
To develop the markups when home centers serve as both brand
manufacturer and retailer, DOE relied upon input from an industry
expert.\30\
---------------------------------------------------------------------------
\30\ Mehta, V. Personal communication. Email to Colleen Kantner,
LBNL. November 24, 2013.
---------------------------------------------------------------------------
For each of the market participants, DOE developed baseline and
incremental markups based on the product markups at each step in the
distribution chain. The baseline markup relates the change in the MSP
of baseline models to the change in the consumer purchase price. The
incremental markup relates the change in the MSP of higher-efficiency
models (the incremental cost increase) to the change in the consumer
purchase price.
In addition to the markups, DOE derived state and local taxes from
data provided by the Sales Tax Clearinghouse.\31\ These data represent
weighted average taxes that include county and city rates. DOE derived
shipment-weighted average tax values for each region considered in the
analysis.
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\31\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along
with Combined Average City and County Rates (2014) available at
http://thestc.com/STrates.stm (last accessed May 27, 2014).
---------------------------------------------------------------------------
Chapter 6 of the NOPR TSD provides further detail on the estimation
of markups.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of ceiling fans at different efficiency levels in
representative U.S. homes and commercial buildings, and to assess the
energy savings potential of increased ceiling fan efficiency. To
develop annual energy use estimates, DOE multiplied ceiling fan input
power by the number of hours of use (HOU) per
[[Page 1713]]
year. The energy use analysis estimates the range of operating hours of
ceiling fans in the field (i.e., as they are actually used by
consumers). The energy use analysis provides the basis for other
analyses that DOE performed, particularly assessments of the energy
savings and the savings in consumer operating costs that could result
from adoption of amended standards.
1. Inputs for Standard, Hugger, and VSD Ceiling Fans
a. Sample of Purchasers
As in the preliminary analysis, DOE has included only residential
applications in the energy use analysis of standard, hugger, and VSD
ceiling fans. DOE used the Energy Information Administration (EIA) 2009
Residential Energy Consumption Survey (RECS) \32\ to choose a random
sample of households in which new ceiling fans could be installed. RECS
is a national sample survey of housing units that collects statistical
information on the consumption of, and expenditures for, energy in
housing units, along with data on energy-related characteristics of the
housing units and occupants. RECS collected data on 12,083 housing
units, and was constructed by EIA to be a national representation of
the household population in the United States.
---------------------------------------------------------------------------
\32\ U.S. Department of Energy-Energy Information
Administration. 2009 RECS Survey Data. (Last accessed October 10,
2014.) http://www.eia.gov/consumption/residential/data/2009/.
---------------------------------------------------------------------------
In creating the sample of RECS households, DOE used the subset of
RECS records that met the criterion that the household had at least one
ceiling fan. DOE chose a sample of 10,000 households from RECS to
estimate annual energy use for standard, hugger, and VSD ceiling fans.
Because RECS provides no means of determining the type of ceiling fan
in a given household, DOE used the same sample for the standard,
hugger, and VSD product classes.
b. Operating Hours
As in the preliminary analysis, DOE used data from a study \33\
that surveyed ceiling fan owners to estimate the operating hours for
each sampled RECS household. In that study, the authors asked a
nationally representative sample of more than 2,500 ceiling fan users
to report their ceiling fan operating hours for high, medium, and low
speeds. The LBNL study reported a distribution of operating hours, with
an average of 6.45 hours of operation per day. The operating hour for
each sample used is drawn from the distribution of operating hours
reported in the LBNL study, and further apportioned into operating
hours at different fan speeds.
---------------------------------------------------------------------------
\33\ Kantner, C. L. S., S. J. Young, S. M. Donovan, and K.
Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.--
Results of a Survey on Amazon Mechanical Turk. 2013. Lawrence
Berkeley National Laboratory: Berkeley, CA. Report No. LBNL-6332E.
http://www.escholarship.org/uc/item/3r67c1f9.
---------------------------------------------------------------------------
In the preliminary analysis, DOE used the results from the LBNL
study to estimate that consumers run their standard, hugger, and VSD
ceiling fans at high speed 41 percent of the time, at medium speed 37
percent of the time, and low speed 22 percent of the time. ALA
submitted the results of an AcuPOLL survey \34\ showing that consumers
most often operate their standard, hugger, and VSD ceiling fans on
medium speed, not high speed, and asked DOE to adjust its assumptions
regarding hours of use at low, medium, and high speeds in light of
these results. (ALA, No. 8 at p. 6) Hunter Fan Company also asked DOE
to review the standard, hugger, and VSD ceiling fan hours of use
assumptions in light of the AcuPOLL survey results, especially because
energy consumption at medium speed is typically less than the mid-point
in energy consumption between high and low speeds. (Hunter Fan Company,
Public Meeting Transcript, Public Meeting Transcript, No. 83 at pp. 15,
104)
---------------------------------------------------------------------------
\34\ AcuPOLL[supreg] Precision Research, Inc. Survey of Consumer
Ceiling Fan Usage and Operations. 2013.
---------------------------------------------------------------------------
In light of ALA's and Hunter's comments and the AcuPOLL survey
results, DOE compared the LBNL and AcuPOLL survey results and takes
both into account in determining the fraction of time spent at each fan
speed. In the NOPR analyses, DOE estimated that the fraction of time
that standard, hugger, and VSD ceiling fans were operated at each speed
was equal to the simple average of the fractions reported by the LBNL
and AcuPOLL surveys: 33 percent on high speed, 38 percent on medium
speed, and 29 percent on low speed. DOE then used these fractions were
used to apportion the total hours of use into hours of use at high,
medium and low speeds.
c. Power Consumption at Each Speed and Standby
DOE determined the power consumption at high, medium, and low speed
for each representative fan size in the engineering analysis. These
values are shown in chapter 5 of the NOPR TSD. DOE estimated that all
ceiling fans with DC motors expend standby power, and that 7 percent of
standard, hugger, and VSD ceiling fans with AC motors come with a
remote, and therefore consume power while in standby mode. DOE further
estimated 0.7 watts as the power consumption value for standby for all
representative fans belonging to the standard, hugger, and VSD product
classes, based on testing conducted in association with developing the
engineering analysis.
2. Inputs for Large-Diameter and High-Speed Small-Diameter Ceiling Fans
a. Sample of Purchasers
As in the preliminary analysis, DOE has included only commercial
and industrial applications in the energy use analysis of large-
diameter and HSSD ceiling fans. Although some large-diameter and HSSD
fans are used in residential applications, they represent a very small
portion of the total market for large-diameter and HSSD ceiling fans.
Similar to standard, hugger, and VSD ceiling fans, DOE developed a
sample of 10,000 fans to represent the range of large-diameter and HSSD
ceiling fan energy use. The sample captured variations in operating
hours.
b. Operating Hours
In the preliminary analysis, DOE used feedback from manufacturers
to estimate total hours of operation for large-diameter and HSSD
ceiling fans. Manufacturers suggested a range of possible hours of
operation, depending on industry and application, with 12 hours per day
as a representative value. To represent a range of possible operating
hours around this representative value, DOE drew 10,000 samples from a
uniform distribution between 6 hours per day and 18 hours per day when
calculating the energy use of large-diameter and HSSD fans. DOE also
used manufacturer feedback to determine the proportion of operating
time spent at each speed, estimating that, on average, large-diameter
and HSSD fans spend approximately 10 percent of the time at high or low
speed, and the rest of their time (approximately 80 percent) at a
medium speed.
BAS used DOE's preliminary analysis assumptions to conduct an
analysis of large-diameter ceiling fan operation by month for a
specific consumer in the sample of consumers used in DOE's LCC
analysis. (BAS, No. 88 at pp. 37-38) BAS ultimately concluded that DOE
must have assumed the consumer operated the fan in reverse during the
winter months; or else, the consumer would have experienced a draft by
operating the ceiling fan in the forward direction at medium speed.
(BAS, No. 88 at p. 38) BAS suggested that DOE assume a 7 percent
increase in energy consumption for all hours (if any) that
[[Page 1714]]
a large-diameter ceiling fan is assumed to be operating in reverse,
because an airfoil operating in reverse does not move as efficiently
through the air. BAS also recommended conducting the analysis assuming
a large-diameter ceiling fan operates slowly in the forward direction
during the winter (heating) months, which will prevent the consumer
from experiencing a draft and also reduce overall energy consumption
relative to operating the ceiling fan at medium speed in reverse. (BAS,
No. 88 at p. 39) The analysis proposed by BAS--which used DOE's
assumption of 12 hours per day in active mode and assumes the fan
operates very slowly in the forward direction during the heating
months--resulted in the following hours of use per day by speed
setting: 0.6 hours per day at max speed, three hours at 80 percent of
max speed, 1.2 hours at 60 percent of max speed, 7.2 hours at 25
percent of max speed, and 12 hours in standby mode. (BAS, No. 88 at pp.
45, 47) MacroAir also provided suggested hours of use for large-
diameter ceiling fans at different settings: three hours per day at max
speed, four hours at 80 percent of max speed, six hours at 60% percent
max speed four hours at 40 percent max speed, one hour at 20 percent
max speed, and six hours in standby mode. (MacroAir, No. 89 at pp. 9-
10)
To clarify, in the energy use analysis from the preliminary
analysis, DOE did not consider any direction of rotation other that the
forward direction. The analysis assumed that once a large-diameter
ceiling fan's hours of use were sampled from the distribution, that
ceiling fan operated in the forward direction over three speeds every
day for that many hours. DOE assumed that 80 percent of that time the
fan operated at medium speed (intermediate RPM), 10 percent of the time
at low speed (at or near minimum RPM) and 10 percent at high speed (at
or near maximum RPM).
DOE appreciates BAS' comment regarding the induced draft from
operating a large-diameter ceiling fan at medium speed during the
winter (heating) months. For the NOPR analyses, DOE continued to assume
that large-diameter ceiling fans only operated in the forward
direction.\35\ However, DOE assumed different hours of use by setting
than in the preliminary analysis. DOE calculated the hours of use at
each speed using a simple average of the values provided by BAS and
MacroAir, resulting in: 1.8 hours at max speed, 3.5 hours at 80 percent
speed, 3.6 hours at 60 percent speed, 2 hours at 40 percent speed, and
4.1 hours at 20 percent speed.\36\ Modeling large-diameter ceiling fan
operating hours based on fraction of time spent at each of five speeds
aligns with the ceiling fans test procedure SNOPR, which proposes to
test all large-diameter ceiling fans at max speed, 80 percent speed, 60
percent speed, 40 percent speed, and 20 percent speed. 80 FR 31487
(June 3, 2015).
---------------------------------------------------------------------------
\35\ DOE is not aware of any information on how frequently these
fans might be used in reverse, nor did it have any data to support a
different energy consumption when operating in reverse, compared to
the energy consumption in the forward direction, for an equivalent
speed.
\36\ In calculating the average, DOE assumed that the 7.2 hours
attributed by BAS to 25% speed correspond to the 20% speed setting.
In addition, BAS assumed large-diameter ceiling fans are operated 12
hours per day, whereas MacroAir assumed large-diameter ceiling fans
are operated 18 hours per day. The calculation of the average hours
of use at each setting therefore results in large-diameter ceiling
fans operating for 15 hours per day.
---------------------------------------------------------------------------
DOE did not receive any comments in response to the operating hours
distribution for HSSD fans in the preliminary analysis, and has
therefore maintained the same approach. This approach assumes a uniform
distribution for daily operating hours of between 6 and 18 hours per
day and that such fans spend approximately 10 percent of the time at
each of high and low speed, and approximately 80 percent of the time at
a medium speed. DOE requests data on operating hours for HSSD ceiling
fans. See issue 8 in section VII.E.
c. Power Consumption at Each Speed and Standby
For the large-diameter ceiling fan product class, the power
consumption for a given representative fan was determined by the
weighted average of power consumption at the five speeds discussed
previously, where each speed was weighted by the fraction of time spent
at that speed.
For the HSSD ceiling fan product class, as in the preliminary
analysis, DOE determined power consumption at high speed for each
representative fan in the engineering analysis. To estimate the power
consumption at medium speed, DOE multiplied the high-speed power by the
average ratio between high-speed power and medium-speed power in the
standard, hugger, and VSD fans engineering analysis. DOE used the same
approach for low-speed power, using the average ratio between high-
speed power and low-speed power from the standard, hugger, and VSD fans
engineering analysis.
In the preliminary analysis, DOE considered all HSSD fans at the
efficiency levels with a DC motor to have standby power, assuming a
remote control was included for all such fans. DOE estimated 0.7 watts
as the standby power value for all representative fans in the HSSD
product class. Because these fans also have standby power as a result
of a remote control receiver, this is the same value used for standard,
hugger and VSD fans, as discussed in section IV.E.1.c. DOE also
considered all large-diameter fans to have standby power, because
available information indicated that all large-diameter ceiling fans in
the market use a variable-frequency drive that consumes standby power.
BAS indicated that there are a number of large-diameter ceiling fans
without variable-frequency drives (VFDs) that have standby power
consumption. (BAS, Public Meeting Transcript, No. 83 at p. 285) DOE
appreciates this clarification and has not made the assumption in the
NOPR analyses that all large-diameter ceiling fans have VFDs, but
retains the assumption from the preliminary analysis that all large-
diameter ceiling fans have standby power. For HSSD and large-diameter
ceiling fans with standby power consumption, DOE calculated the number
of standby hours as the total annual hours not spent in active mode.
The standby power for large-diameter ceiling fans (with fan blades
exceeding 7 feet in diameter) was estimated to be 7 watts in the
engineering analysis (see chapter 5 of the NOPR TSD).
3. Impact on Air Conditioning or Heating Equipment Use
In response to comments on the framework document, DOE issued a
Request for Information (RFI) regarding the potential interaction
between ceiling fans and air conditioning usage. 78 FR 62494. While RFI
commenters were generally in agreement on the theoretical energy
savings potential from substituting ceiling fan usage for air
conditioning usage, no clear evidence was presented indicating that
ceiling fans are actually used in this manner. Therefore, DOE did not
account for any impact on air conditioning or heating equipment use in
response to an amended ceiling fan energy conservation standard in the
preliminary analysis.
In response, MacroAir commented that DOE should consider several
possible sources of savings in air conditioning use in its analyses,
including: savings from air conditioning usage being displaced by
ceiling fan use, savings from reduction in the required size of air
conditioning units, and savings related to consumers using their
ceiling fan rather than air conditioning
[[Page 1715]]
unit (as a result of increased future electricity prices combined with
changing consumer behavior to save money). (MacroAir, No. 89 at pp. 8-
9) BAS agreed, indicating that air conditioning units use more power
than ceiling fans for the same level of perceived cooling. (BAS, No. 88
at p. 42) ALA added that the LBNL study cited by DOE in the preliminary
analysis shows that approximately 25 percent of ceiling fan owners
reduce their air conditioning usage when using a ceiling fan;
therefore, ALA requested DOE conduct a sensitivity analysis to
understand how a ceiling fan price increase would affect air
conditioning usage. (ALA, No. 90 at p. 13) Other interested parties--
including Hunter Fan Company, Southern Company, Moshe Pardo, and Norman
Kennedy--cited the likelihood of increased air conditioning use from an
energy conservation standard for ceiling fans. (Hunter Fan Company,
Public Meeting Transcript, No. 83 at p. 256; Southern Company, Public
Meeting Transcript, No. 83 at pp. 263-264; Moshe Pardo, No. 85 at p. 1;
Norman Kennedy, No. 87 at p. 1)
DOE agrees that ceiling fans can be an inexpensive and effective
replacement for air conditioning use. The savings identified by
MacroAir are associated with ceiling fans in general. It seems unlikely
that consumers would substantially increase air conditioning use, or
forego purchasing a ceiling fan in lieu of an air conditioning unit,
due to a modest increase in the initial cost of a ceiling fan due to an
amended energy conservation standard. Because the interaction between
ceiling fan use and air conditioning use is unlikely to be different in
the case of amended standards than it would be in the no-standards
case, DOE did not account for such interaction for the NOPR analyses.
DOE requests specific information and any relevant data on how the
proposed standards could affect the operation of air conditioners. See
issue 9 in section VII.E.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducts LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards. The
effect of new or amended energy conservation standards on individual
consumers usually involves a reduction in operating cost and an
increase in purchase cost. DOE uses the following two metrics to
measure consumer impacts:
The LCC (life-cycle cost) is the total consumer expense of
an appliance or product over the life of that product, consisting of
total installed cost (manufacturer selling price, distribution chain
markups, sales tax, and installation costs) plus operating costs
(expenses for energy use, maintenance, and repair). To compute the
operating costs, DOE discounts future operating costs to the time of
purchase and sums them over the lifetime of the product.
The PBP (payback period) is the estimated amount of time
(in years) it takes consumers to recover the increased purchase cost
(including installation) of a more-efficient product through lower
operating costs. DOE calculates the PBP by dividing the change in
purchase cost at higher efficiency levels by the change in annual
operating cost for the year that amended or new standards are assumed
to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of ceiling fans in the absence of new
or amended energy conservation standards. In contrast, the PBP for a
given efficiency level is measured relative to the baseline product.
DOE calculated the LCC and PBP for each considered efficiency level
for a nationally representative consumer sample for each of the product
classes. DOE developed consumer samples that account for variation in
factors such as geographic location. Two types of consumer samples were
created: one for the standard, hugger and VSD group of fans and another
for the HSSD and large-diameter group. This was done to capture the
variability in energy consumption, discount rates and energy prices
associated with the different groups of ceiling fans.
For VSD, hugger, and standard ceiling fans, DOE created a sample in
a manner similar to that outlined in section IV.E.1. Due to a lack of
data on the location of HSSD and large- diameter fans, DOE assumed that
the geographic distribution of HSSD and large- diameter fan purchasers
is similar to that of standard, hugger, and VSD ceiling fan purchasers.
Therefore, DOE chose the location of HSSD and large-diameter fan
purchasers according to the geographic distribution of households in
RECS. For each consumer in the sample used for HSSD and large-diameter
fans, DOE determined the energy consumption of ceiling fans and the
appropriate electricity price for the location and sector.
The calculation of the total installed cost includes MPCs,
manufacturer markups, retailer and distributor markups, and sales
taxes. Installation costs were assumed not to vary by efficiency level,
and therefore were not considered in the analysis. DOE welcomes
comments on this assumption. See issue 10 in section VII.E.
Inputs to the calculation of operating expenses include annual
energy consumption, energy prices and price projections, repair and
maintenance costs, product lifetimes, and discount rates.
DOE created distributions of values for product lifetime, discount
rates, and sales taxes, with probabilities attached to each value, to
account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on
a Monte Carlo simulation to incorporate uncertainty and variability
into the analysis. The Monte Carlo simulations randomly sample input
values from the probability distributions and ceiling fan user samples.
The model calculated the LCC and PBP for products at each efficiency
level for a sample of 10,000 consumers per simulation run.
DOE calculated the LCC and PBP for all consumers as if each were to
purchase a new product in the expected year of compliance with amended
standards. For this NOPR, DOE estimated publication of a final rule in
the first half of 2016. For purposes of its analysis, DOE assumed a
compliance date three years after publication of any final amended
standard (i.e., 2019), consistent with the approach taken in the
concurrent ceiling fan light kits energy conservation standards
rulemaking.
Table IV-5 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
and its appendices of the NOPR TSD. DOE requests comments on the
methodology of the LCC and PBP analyses for ceiling fans. See issue 11
in section VII.E.
[[Page 1716]]
Table IV-5--Summary of Inputs and Methods for the LCC and PBP Analyses*
----------------------------------------------------------------------------------------------------------------
Inputs Source/Method
----------------------------------------------------------------------------------------------------------------
Purchase Price................................................... DOE estimated the purchase price of ceiling
fans (CF) by combining the different cost
components along the production, import,
distribution and retail chain.
DOE further used a price trend to project
prices of CF with DC motors to the
compliance year.
Sales Tax........................................................ Derived 2019 population-weighted-average tax
values for each reportable domain based on
Census population projections and sales tax
data from Sales Tax Clearinghouse.
Energy Use....................................................... Derived in the energy use analysis, and takes
into account variations in factors such as
operating hours. Variation in geographic
location is taken into account for certain
product classes.
Energy Prices.................................................... Electricity: Based on 2014 marginal
electricity price data from the Edison
Electric Institute.
Variability: Electricity prices vary by
season, U.S. region, and baseline
electricity consumption level.
Energy Price Trends.............................................. Based on AEO 2015 price forecasts.
Product Lifetime................................................. Derived a mean ceiling fan life time of 13.8
years from a best-fit model based on the
Weibull distribution.
Discount Rates................................................... Approach involves identifying all possible
debt or asset classes that might be used to
purchase the considered appliances, or might
be affected indirectly. Primary data source
was the Federal Reserve Board's Survey of
Consumer Finances.
Efficiency Distribution.......................................... Current efficiency distribution is based on
in-store and online model counts. Efficiency
distribution for the compliance year is
estimated by the market-share module of
shipments model. See chapter 9 of the NOPR
TSD for details.
Assumed Compliance Date.......................................... 2019.
----------------------------------------------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided in the sections following the table and
in chapter 8 of the NOPR TSD.
1. Purchase Price
DOE estimates the purchase price by combining manufacturing and
production cost, manufacturer markups, tariffs, import costs, retail
markups, and sales tax. Section IV.D provides the details of the
markups analysis.
DOE used a price trend to account for changes in the incremental DC
motor price that are expected to occur between the time for which DOE
has data for DC motor prices (2014) and the assumed compliance date of
the rulemaking (2019). DOE estimated a 6 percent price decline rate
associated with the electronics used to control DC motor fans based on
an analysis of the Producer Price Index (PPI) of semiconductor
components.\37\ This rate is only applied to the incremental cost
between a DC motor and an AC motor and not to the price of the entire
ceiling fan. For details on the price trend analysis, see section IV.G.
---------------------------------------------------------------------------
\37\ PCU334413334413
---------------------------------------------------------------------------
DOE applied sales tax, which varies by geographic location, to the
total product cost. DOE collected sales tax data from the Sales Tax
Clearinghouse \38\ and used population projections from the Census
bureau \39\ to develop population-weighted-average sales tax values for
each state in 2019.
---------------------------------------------------------------------------
\38\ https://thestc.com/STRates.stm. Last accessed April 27th
2015.
\39\ U.S. Census Bureau, Population Division, Interim State
Population Projections, 2005. Table A1: Interim Projections of the
Total Population for the United States and States: April 1, 2000 to
July 1, 2030.
---------------------------------------------------------------------------
Southern Company suggested DOE allow for some percentage of low-
income consumers to have zero installation cost, as they would install
the ceiling fan themselves. (Southern Company, Public Meeting
Transcript, No. 83 at p. 296) DOE notes that in the NOPR analyses, as
in the preliminary analysis, DOE assumed that installation costs are
the same regardless of efficiency level and do not affect the LCC or
PBP.
2. Electricity Prices
In the preliminary analysis, DOE used average retail electricity
prices to conduct its analyses. In response to this methodology, ALA
suggested DOE use marginal electricity prices, rather than average
electricity prices, for its LCC and PBP analyses in order to remove
fixed monthly charges and demand charges from the analysis. (ALA, No.
90 at p. 12) Because marginal electricity price captures more
accurately the small, incremental cost or savings associated with a
change in energy use relative to the consumer's bill in the reference
case, it may provide a better representation of consumer costs than
average electricity prices. Therefore, DOE used average electricity
prices to characterize the baseline efficiency level and marginal
electricity prices to characterize incremental energy costs associated
with the other efficiency levels considered. In the LCC analysis, the
marginal electricity prices vary by season, region, and baseline
household electricity consumption level. DOE estimated these prices
using data published with the Edison Electric Institute (EEI) Typical
Bills and Average Rates reports for summer and winter 2014.\40\ DOE
assigned seasonal marginal prices to each LCC sample based on the
location and the baseline monthly electricity consumption for an
average summer or winter month associated with that sample. DOE
approximated the electricity prices for the industrial sector using the
commercial sector prices. This approximation was made as the type of
industrial facility that uses ceiling fans typically occupies a regular
building, rather than a heavy industrial complex. For a detailed
discussion of the development of electricity prices, see appendix 8B of
the NOPR TSD.
---------------------------------------------------------------------------
\40\ Edison Electric Institute. Typical Bills and Average Rates
Report. Winter 2014 published April 2014, Summer 2014 published
October 2014. See http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------
3. Electricity Price Trends
To arrive at average and marginal electricity prices in future
years, DOE multiplied the average and marginal electricity prices in
the reference year (2014) by the forecast of annual residential or
commercial electricity price changes for each Census division from
EIA's AEO 2015, which has an end year of 2040.\41\ To estimate the
trends after 2040, DOE used the average rate of change during 2025-
2040.
---------------------------------------------------------------------------
\41\ U.S. Department of Energy-Energy Information
Administration, Annual Energy Outlook 2015 with Projections to 2040
(Available at: http://www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------
For each fan purchase sampled, DOE applied the projection for the
Census division in which the purchase was located. The AEO electricity
price trends do not distinguish between marginal and average prices, so
DOE used the AEO 2015 trends for the marginal prices. DOE reviewed the
EEI data for the years 2007 to 2014 and determined that there is no
systematic
[[Page 1717]]
difference in the trends for marginal vs. average electricity prices in
the data.
DOE used the electricity price trends associated with the AEO
Reference case scenarios for the nine Census divisions. The Reference
case is a business-as-usual estimate, given expected market,
demographic, and technological trends. DOE also included prices from
AEO high-growth and AEO low-growth scenarios in the analysis. The high-
and low-growth cases show the projected effects of alternative economic
growth assumptions on energy markets.
4. Repair Costs
In the preliminary analysis, DOE used information on repairs and
installation from manufacturer interviews to estimate the cost to
consumers of repairing a ceiling fan. DOE also assumed that 2.5 percent
and 9 percent of AC-motor and DC-motor ceiling fans incurred repair
costs, respectively. DOE based these assumptions on repair rate
estimates provided by a ceiling fan technical expert.\42\ Westinghouse
Lighting stated that low-price ceiling fans are more likely to be
replaced by consumers rather than repaired; therefore, Westinghouse
Lighting suggested DOE only include a replacement cost and not a repair
cost. (Westinghouse Lighting, Public Meeting Transcript, No. 83 at p.
299) While DOE understands Westinghouse's point that many consumers of
low-cost ceiling fans will not find it economically justified to repair
their ceiling fan, DOE does not have data to support revising the
assumptions used in the preliminary analysis, and DOE has continued to
use the same assumptions in the NOPR analyses.
---------------------------------------------------------------------------
\42\ Mehta, V. Personal communication. Email to Mohan
Ganeshalingam, LBNL. January 14, 2014.
---------------------------------------------------------------------------
ASAP requested DOE use the same repair costs and assumptions for
both AC and DC motors, because ASAP is unaware of any data supporting
an increased repair rate for DC motors, and because ASAP projects that
any reliability issues that manufacturers are currently experiencing
with DC motors will be eliminated by 2019 as more ceiling fans with DC
motors are sold and the technology matures. (ASAP, et al., No. 92 at
pp. 1-2) BAS agrees with ASAP, and the CA IOUs encouraged DOE to
research specific DC motor issues to determine the magnitude of
reliability issues and whether these issues are prevalent currently.
(BAS, No. 88 at p. 27; CA IOUs, No. 91 at pp. 2-3) On the other hand,
ALA commented that the intensity of use can be a limiting factor for
the lifetime of ceiling fans with DC motors, which is not the case for
fans with AC motors. (ALA, No. 90 at p. 14)
As mentioned previously, in the preliminary analysis, DOE assumed a
higher repair rate for ceiling fans with DC motors (9 percent) as
compared to ceiling fans with AC motors (2.5 percent). This assumption
was based on an estimate provided by a ceiling fan technical
expert.\42\ DOE appreciates the feedback provided on the prevalence of
repairs for ceiling fans with DC motors; however, DOE has looked into
the issue further and has found no suitable data with which to update
its assumption that the excess rate of failure for DC motors, above the
repair rate for AC motors, is 6.5 percent of purchases. While DOE is
unaware of any data illuminating the magnitude of the excess repair
rate for DC motors, because DC motors incorporate electronics that AC
motors do not have, the reliability of AC motors is likely to exceed DC
motors. DOE invites comment, input, and data that can improve the
estimate of repair costs, particularly repair costs associated with DC
motors. See issue 12 in section VII.E.
5. Product Lifetime
DOE estimated ceiling fan lifetimes by fitting a survival
probability function to data of historical shipments and the 2012 age
distributions of installed stock. Data on the age distribution for the
installed standard, hugger, and VSD ceiling fan stock in 2012 was
available from the LBNL study.\43\ By combining data from the LBNL
study with historic data on standard, hugger, and VSD ceiling fan
shipments from NPD, ENERGY STAR and Appliance Magazine (see chapter 3
for more information on historical shipments), DOE estimated the
percentage of appliances of a given age that are still in operation.
This survival function, which DOE assumed has the form of a cumulative
Weibull distribution,\44\ provides a mean of 13.8 years and a median of
13.0 years for ceiling fan lifetime and is the same distribution
employed in the preliminary analysis. DOE welcomes comment on these
estimates. See issue 13 in section VII.E.
---------------------------------------------------------------------------
\43\ Kantner, et al. (2013), op. cit.
\44\ Weibull distributions are commonly used to model appliance
lifetimes.
---------------------------------------------------------------------------
Shipment data were only available for standard, hugger, and VSD
ceiling fans, so DOE assumed the survival probability function of
large-diameter and HSSD ceiling fans is the same as that for standard,
hugger, and VSD ceiling fans. DOE requests comments and data on product
lifetimes of large-diameter and HSSD ceiling fans. See issue 14 in
section VII.E.
Hunter Fan Company agreed with DOE's assumed standard, hugger, and
VSD ceiling fan life of 13.8 years, and ALA agreed with DOE's lifetime
assumptions for all ceiling fan types. (Hunter Fan Company, Public
Meeting Transcript, No. 83 at p. 301; ALA, No. 90 at p. 14) MacroAir
reports that large-diameter ceiling fans typically have longer
lifetimes than standard, hugger, and VSD ceiling fans, but it cannot
provide data to support this as large-diameter fans have only been
manufactured and sold in the United States for about 13 years. MacroAir
did cite its warranties for two product lines--12 years (prorated) for
their AC motor line and 50,000 hours of operation for its DC motor
line--as evidence of lifetimes longer than the 13.8 years DOE assumed
in its analyses. (MacroAir, No. 89 at p. 11)
While the warranty information provided by MacroAir is informative,
it does not provide a representative basis for modifying DOE's
assumption on lifetime of large-diameter ceiling fans. Thus, DOE has
maintained an average lifetime of 13.8 years in the NOPR analyses for
all ceiling fan product classes.
6. Discount Rates
In calculating the LCC, DOE applies discount rates appropriate to
consumers to estimate the present value of future operating costs. To
identify appropriate discount rates for purchasers, DOE estimated the
percentage of HSSD and large-diameter fan purchasers in the commercial
and industrial sectors. For HSSD fans, DOE estimated the ratio in floor
space between likely building types where a fan would be installed in
commercial settings to that in industrial settings. Manufacturer
interviews informed DOE of the likely locations of CF installations.
Floor space estimates by building type were taken from the 2010 U.S.
Lighting Market Characterization,\45\ which extrapolates estimates for
commercial floor space from the 2003 Commercial Buildings Energy
Consumption Survey (CBECS) and industrial floor space from the 2006
Manufacturing Energy Consumption Survey (MECS) to 2010 values using
measured growth trends. The ratio suggests that 80 percent of HSSD
installations are in the commercial sector and 20 percent are in the
industrial sector. For large-diameter
[[Page 1718]]
fans, DOE used manufacturer feedback about common applications for
these fans. DOE estimated that 20 percent of large-diameter ceiling fan
installations are in the commercial sector and 80 percent are in the
industrial sector.
---------------------------------------------------------------------------
\45\ Navigant Consulting, Inc. Final Report: 2010 U.S. Lighting
Market Characterization. January 2012. (Last Accessed March 27,
2014.) http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2010-lmc-final-jan-2012.pdf.
---------------------------------------------------------------------------
For residential consumers, DOE estimated a distribution of discount
rates for ceiling fans based on consumer financing costs and
opportunity cost of funds related to appliance energy cost savings and
maintenance costs. First, DOE identified all relevant household debt or
asset classes to approximate a consumer's opportunity cost of funds
related to appliance energy cost savings. It estimated the average
percentage shares of the various types of debt and equity by household
income group using data from the Federal Reserve Board's Survey of
Consumer Finances \46\ (SCF) for 1995, 1998, 2001, 2004, 2007, and
2010. Using the SCF and other sources, DOE developed a distribution of
rates for each type of debt and asset by income group to represent the
rates that may apply in the year in which amended standards would take
effect. DOE assigned each sample household a specific discount rate
drawn from one of the distributions. The average rate across all types
of household debt and equity and income groups, weighted by the shares
of each type, is 4.4 percent. See chapter 8 of the NOPR TSD for further
details on the development of residential discount rates.
---------------------------------------------------------------------------
\46\ Board of Governors of the Federal Reserve System. Survey of
Consumer Finances. 1995, 1998, 2001, 2004, 2007, and 2010. (Last
accessed October 10, 2014.) http://www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------
To establish discount rates for commercial and industrial users,
DOE estimated the cost of capital for companies that purchase ceiling
fans. The weighted average 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 their cost of capital is the weighted average
of the cost to the firm of equity and debt financing, as estimated from
financial data for publicly traded firms in the sectors that purchase
ceiling fans. For this analysis, DOE used Damodaran online \47\ as the
source of information about company debt and equity financing. The
average rate across all types of companies, weighted by the shares of
each type, is 5.0 percent. See chapter 8 of the NOPR TSD for further
details on the development of commercial and industrial sector discount
rates.
---------------------------------------------------------------------------
\47\ Damodaran, A. Cost of Capital by Sector. January 2014.
(Last accessed September 25, 2014.) http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm
---------------------------------------------------------------------------
7. Efficiency and Blade Span Distribution in the No-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of product efficiencies in the no-
standards case (i.e., the case without new efficiency performance
standards).
For standard, hugger, and VSD ceiling fans, DOE developed the
current efficiency market share distributions by product class using
online data from Hansen Wholesale \48\ and data obtained from in-store
visits of major retailers. Ceiling fan models were binned according to
their efficiency to arrive at the current distributions. To estimate
the efficiency distributions in 2019, DOE applied a consumer-choice
model sensitive only to the first cost of options representative of
each efficiency level given by the engineering analysis. The consumer-
choice model is discussed in detail in section IV.G.1.
---------------------------------------------------------------------------
\48\ http://www.hansenwholesale.com/.
---------------------------------------------------------------------------
For HSSD and large-diameter ceiling fans, DOE developed the current
efficiency distributions using model counts available on HSSD and
large-diameter fan manufacturer Web sites. DOE assumed the current
distribution observed in 2015 would also be representative of the
efficiency distribution in 2019.
The estimated market shares for the no-standards case for all
ceiling fans are shown in Table IV-6. See chapter 8 of the NOPR TSD for
further information on the derivation of the efficiency distributions.
[GRAPHIC] [TIFF OMITTED] TP13JA16.000
Westinghouse Lighting suggested that EL 0 and EL 1 in the no-
standards case should have larger market shares compared to higher
efficiency levels due to the lower price point associated with these
levels. (Westinghouse Lighting, Public Meeting Transcript, No. 83 at
pp. 293-294, 310) As discussed in section IV.G.1, DOE investigated the
effect of prices on the efficiency distribution, and did not find a
basis to modify the distribution based on model counts.
DOE also developed size distributions within each product class to
determine the likelihood that a given purchaser would select each of
the representative fan sizes from the engineering analysis. In the
preliminary analysis, DOE assumed that the current market share for 56-
inch HSSD ceiling fans is 66.7 percent. Westinghouse Lighting and BAS
indicated that the current market share for 56-inch HSSD ceiling fans
is likely higher--potentially closer to 85 percent--than DOE assumed in
the preliminary analysis. (Westinghouse Lighting, Public Meeting
Transcript, No. 83 at p. 290; BAS, Public Meeting Transcript, No. 83 at
p. 290)
For the NOPR, DOE estimated the distribution of diameters for
standard, hugger, HSSD and large-diameter ceiling
[[Page 1719]]
fans using the distribution of models currently seen on the market. A
limited pool of available VSD fan models indicated a rough split of
market share between the two representative blade spans, so DOE assumed
that the VSD market was evenly split between the two blade spans. Table
IV-7 presents the blade span distribution of each of the product
classes. DOE's updated model count data show that 7.0 percent of HSSD
models are 36-inch and the other 93.0 percent of models are 48-inch or
larger (these were assigned to the 56-inch category). (For the NIA, DOE
assumed that blade size distribution remains constant over the years
considered in the analysis.)
Table IV-7--Blade Span Distribution
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Product class Standard
Hugger
VSD
HSSD
Large-Diameter
----------------------------------------------------------------------------------------------------------------
Blade Span inches........... 44 52 60 44 52 13 16 36 56 96 144 240
Market Share %.............. 21.1 72.5 6.5 46.2 53.8 50.0 50.0 7.0 93.0 23.0 27.0 49.0
----------------------------------------------------------------------------------------------------------------
8. Payback Period Analysis
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more-efficient products,
compared to baseline products, 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 for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. The
PBP calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
Westinghouse Lighting found the PBP estimated for standard ceiling
fans from DOE's preliminary analysis to be reasonable, but pointed out
that the underlying first cost assumptions need to be updated to obtain
a more accurate PBP. (Westinghouse Lighting, Public Meeting Transcript,
No. 83 at pp. 272-273) Discussion of updates to the first cost can be
found in section IV.F.7. Updated PBP results can be found in section
V.B.1.
EPCA, as amended, 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 first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings 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 potential amended energy conservation standards on energy
use, NPV, and future manufacturer cash flows. Historical shipments data
are used to build up an equipment stock, and to calibrate the shipments
model to project shipments over the course of the analysis period based
on the estimated future demand for ceiling fans. Details of the
shipments analysis are described in chapter 9 of the NOPR TSD.
The shipments model projects total shipments and market-share
efficiency distributions in each year of the 30-year analysis period
(2019-2048) for the no-standards case and each of the standards cases
calibrated using historical shipments. The shipments model consists of
three main components: (1) A shipments demand model that determines the
total demand for new ceiling fans in each year of the analysis period,
(2) a stock model that tracks the age distribution of the stock over
the analysis period, and (3) a model that determines the market shares
of purchased ceiling fans across efficiency levels. For standard,
hugger, and VSD ceiling fans, DOE used a consumer-choice model
sensitive to ceiling fan first cost to estimate market shares across
efficiency level. For HSSD and large-diameter ceiling fans, DOE used a
roll-up approach to estimate the efficiency distribution in each
standards case.
1. Shipments Demand Model
DOE used historical shipment data of hugger, standard, and VSD fans
from Appliance Magazine's Statistical Review from 1991 to 2006,\49\
data from ENERGY STAR annual reports from 2003 to 2013,\50\ and data
purchased from NPD Research group from 2007-2011.\51\ Figure 9.3.1 in
Chapter 9 of this NOPR TSD displays the historical time series used for
DOE's shipments analysis.
---------------------------------------------------------------------------
\49\ Appliance[supreg] Statistical Review, Annual Report,
Appliance Magazine (1991-2006).
\50\ United States Environmental Protection Agency, ENERGY
STAR[supreg] and Other Climate Protection Partnerships: Annual
Report (2003-2013).
\51\ NPD Group, 2007-2011.
---------------------------------------------------------------------------
As the data were not disaggregated by product class, DOE estimated
the relative split between standard, hugger, and VSD product classes.
In the preliminary analysis, DOE used model counts of ceiling fans
available in-store and online to estimate the market share split
between hugger and standard ceiling fans. DOE estimated that hugger
ceiling fans constitute 21 percent of the standard, hugger, and VSD
ceiling fan market, with standard (26 percent) and multi-mount (53
percent) ceiling fans making up the rest of the market. Furthermore,
DOE assumed 27 percent of multi-mount ceiling fans are installed in the
hugger configuration, with the remaining 73 percent installed in the
standard configuration.\52\ This resulted in market shares of 35
percent and 65 percent for hugger and standard fans, respectively.
---------------------------------------------------------------------------
\52\ AcuPOLL[supreg] Precision Research, Inc. Survey of Consumer
Ceiling Fan Usage and Operations. 2013.
---------------------------------------------------------------------------
Westinghouse Lighting and Hunter Fan Company indicated that the
distribution for standard, hugger, and VSD ceiling fans used in the
preliminary analysis should be more heavily weighted toward hugger
ceiling fans, because hugger fans are generally less expensive than
standard fans. (Westinghouse Lighting, Public Meeting Transcript, No.
83 at pp. 291-292; Hunter Fan Company, Public Meeting Transcript, No.
83 at p. 292)
For the NOPR analyses, DOE used updated online and in-store ceiling
fan data, and applied a price-weighting approach based on market share
data as a function of retail price for ceiling fans collected by the
NPD Group from 2007 to 2011. These data inform the price-weighting
scheme, which apportions more market share to ceiling fans with lower
first costs. Using the updated, price-weighted data, DOE calculated
48.7 percent and 51.3 percent current
[[Page 1720]]
market shares for hugger and standard ceiling fans, respectively. (This
calculation retained the 27 percent/73 percent installation split used
in the preliminary analysis for multi-mount fans.) Using these same
data, DOE found that price-weighting did not significantly affect the
relative market shares at each EL for hugger and standard ceiling fans.
Therefore, DOE did not take price into account in developing these
estimates. DOE welcomes comment, data, or information on its estimates
for the relative split between hugger, standard, and VSD product
classes. See issue 15 in section VII.E.
DOE was unable to obtain historical shipment data for HSSD and
large-diameter ceiling fans. DOE's estimate for HSSD historical
shipments is based on scaling historical shipments of standard, hugger,
and VSD ceiling fans using a scaling factor estimated from feedback
from manufacturer interviews. DOE's estimate for large-diameter fans is
based on matching a linear shipments trend to an estimate of 2013
installed stock assuming large-diameter fans were introduced to the
market in 2000. DOE requests data and information on current and
historical shipments for HSSD and large-diameter ceiling fans. See
issue 16 in section VII.E.
Shipments for standard, hugger, and VSD ceiling fans are calculated
for the residential sector. Shipments for HSSD and large-diameter fans
are calculated for the commercial and industrial sectors. As all of the
inputs used in the downstream analyses are the same for both sectors,
DOE does not distinguish between shipments to the commercial or
industrial sector. DOE requests comments on the assumed ceiling fan
usage by sector for all product classes. See issue 17 in section VII.E.
The ceiling fan shipments demand model considers four market
segments that affect the net demand for total shipments: replacements
for retired stock, additions due to new building construction,
additions due to expanding demand in existing buildings, and reductions
due to building demolitions, which erodes demand from replacements and
existing buildings.
2. Stock-Accounting Model
The stock accounting model tracks the age (vintage) distribution of
the installed ceiling fan stock. The age distribution of the stock
impacts both the national energy savings (NES) and NPV calculations,
because the operating costs for any year depend on the age distribution
of the stock. Older, less efficient units may have higher operating
costs, while newer, more efficient units have lower operating costs.
The stock accounting model is initialized using historical shipments
data and accounts for additions to the stock (i.e., shipments) and
retirements. The age distribution of the stock in 2012 is estimated
using results from the LBNL survey of ceiling fan owners.\53\ The stock
age distribution is updated for subsequent years using projected
shipments and retirements determined by the stock age distribution and
a product retirement function.
---------------------------------------------------------------------------
\53\ Kantner, et al. (2013), op. cit.
---------------------------------------------------------------------------
3. Market-Share Projections
The consumer-choice model used for standard, hugger, and VSD
ceiling fans estimates the market shares of purchases in each year in
the analysis period for each efficiency level presented in the
engineering analysis. DOE assumed that each of these product classes
provides a specific utility and consumers do not choose between options
in different product classes. The consumer-choice module selects which
ceiling fans are purchased within a product class in any given year
based on consumer sensitivity to first cost, as well as on the ceiling
fan options available, which were determined in the engineering
analysis. Deviations from purely cost-driven behavior are accounted for
using factors found by calibrating the model to observed historical
data. DOE requests comments on its approach for estimating the market
share distribution by efficiency level using a consumer-choice model
sensitive to first cost for standard, hugger, and VSD ceiling fans. See
issue 18 in section VII.E.
For HSSD and large-diameter ceiling fans, in the no-standards case
the efficiency distribution over the shipments analysis period is
assumed to remain fixed to the current distribution estimated for 2015.
In the standards cases, market shares for those levels that do not meet
the standard roll-up to the standard level, and shares above the
standard level are unchanged. As in the preliminary analysis, DOE
assumed no product class switching between the HSSD and large-diameter
product classes. DOE welcomes comments on its use of the roll-up
approach to estimate market-shares by efficiency levels for HSSD and
large-diameter ceiling fans. See issue 19 in section VII.E.
In the preliminary analysis, DOE assumed no product class switching
between standard and hugger ceiling fans. Hunter Fan Company suggested
that some fraction of consumers may switch among product classes;
however, Hunter did not expect the overall market share of standard and
hugger ceiling fans to change substantially. (Hunter Fan Company,
Public Meeting Transcript, No. 83 at pp. 318-320) Westinghouse Lighting
agreed with the possibility of product class switching, because first
cost is the main consumer choice point, not whether the fan is standard
or hugger. (Westinghouse Lighting, Public Meeting Transcript, No. 83 at
p. 320) ALA added that because the ceiling fan market is highly
dependent on aesthetics, consumers may choose to switch between product
classes. (ALA, No. 90 at p. 18)
Although DOE agrees that consumers are primarily sensitive to first
cost when purchasing a ceiling fan, the difference in retail price
between comparable efficiency levels in each product classes is
relatively small and unlikely to drive a significant fraction of the
market to switch product classes. There will be some fraction of
consumers that cannot switch product classes due to room-size
constraints. For example, only hugger fans can adequately fit in rooms
with low ceilings. Therefore, for the NOPR analysis, DOE assumed no
product class switching between standard and hugger ceiling fans. Thus,
the relative fraction of standard and hugger ceiling fans remains fixed
in the no-standards case shipments. In a standards case, the relative
fraction of hugger and standard fans could potentially change because
standards-case shipments for each product class are calculated based on
the change in price relative to the no-standards case shipments for
that product class using a relative price elasticity (see discussion
below).
4. Price Trend
The consumer-choice model uses ceiling fan prices, which change
over time in some cases. There is considerable evidence of learning-by-
doing lowering the cost of new technologies along with increases in
production of the new technology. The concept behind this empirical
phenomenon is that as the new technology is produced in greater
numbers, employees and firms will find ways to lower costs. Brushless
DC motors are a relatively new technology for use in ceiling fans, and
thus DOE expects comparable price declines. Given the absence of data
on shipments of DC motors, DOE models learning lowering costs, and thus
prices, with time. In the preliminary analysis, DOE adopted a price
decline rate of 6 percent applied to the incremental (not total) cost
associated with a brushless DC motor, based on information from a
technical expert for standard, hugger, and VSD ceiling fans.\42\ ASAP
[[Page 1721]]
supported DOE's use of a price trend for DC motor components, and
believes that the price of DC motors and their controls will decline
more quickly than the total price of ceiling fans. (ASAP, et al., No.
92 at p. 2) ALA also agrees with DOE's price trend approach, but ALA
states that this price decline will cease at some point during the
analysis period and requested that DOE identify the year at which the
price decline would cease to occur. (ALA, No. 90 at p. 18)
In the NOPR analyses, DOE continued to use the 6 percent price
decline rate assumption. DOE is not able to specify a year at which the
price decline would cease for DC motors; instead, DOE's approach
resulted in the cost of DC motors asymptotically approaching the cost
of AC motors. DOE requests input on the validity of its price trend
methodology as applied to the incremental cost of a DC motor. See issue
20 in section VII.E.
In the preliminary analysis, DOE's application of a price trend to
DC motor ceiling fans in its reference case was independent of the
composition of the magnet used in DC motors over the course of the
analysis period. This assumption is predicated on the magnets used in
DC motor ceiling fans being easily available to manufacturers and not
subject to price fluctuations based on limited supply, as in the case
of rare-earth materials. DOE requested comment from manufacturers on
the composition and price of magnets used in DC motor fans to assess
whether rare-earth materials are used to construct DC motor magnets.
BAS provided a table comparing the relative performance and
relative price of the three main types of magnets used in DC ceiling
fan motors (ferrite, bonded neodymium, and sintered neodymium) and also
provided a table of information showing that bonded neodymium and
sintered neodymium magnets are approximately 3.5 and 10 times more
expensive than ferrite magnets, respectively. (BAS, No. 88 at p. 26)
Hunter Fan Company stated that it mainly uses ferrite magnets in its DC
motor fans, MacroAir noted that they use sintered neodymium magnets in
its new DC motor ceiling fan, and BAS indicated that neodymium magnets
are not used in their residential fans. (Hunter Fan Company, Public
Meeting Transcript, No. 83 at p. 317; MacroAir, No. 89 at p. 10; BAS,
No. 88 at pp. 26-27) BAS indicated that the price of a ferrite magnet
manufactured to fit within the frame size of an existing AC motor may
only cost $1-$2 per motor, and also suggested that as more DC ceiling
fans enter the market, ferrite magnets will be used more commonly.
(BAS, No. 88 at pp. 26-27)
The price of the permanent magnet may fluctuate based on the
pricing of the raw material used to construct the magnet. As a
sensitivity scenario in the NOPR analysis, DOE also analyzed the case
in which the cost of a DC motor does not undergo price decline and
remains fixed at its 2014 price over the course of the analysis period.
5. Impact of a Standard on Shipments
To estimate the impacts of potential standards on shipments, in the
preliminary analysis, DOE used a relative price elasticity of demand of
-0.34, which is the value DOE has typically used for residential
appliances. Because it is relatively easy to replace the cooling
provided by ceiling fans with other means, ALA requested DOE use a
higher relative price elasticity of demand for ceiling fans in its
analyses. (ALA, No. 90 at pp. 12-13) Hunter Fan Company also expressed
concern that DOE's analysis did not show a significant drop in
shipments resulting from moving from a no-standards case to efficiency
level 1. (Hunter Fan Company, Public Meeting Transcript, No. 83 at p.
256)
In the absence of data necessary to estimate a price elasticity
specific to ceiling fans, DOE continued to use a relative price
elasticity of -0.34 in its NOPR analysis. In addition, DOE notes that a
standard at EL 1, EL 2, or EL 3 would affect a relatively small portion
of the ceiling fan market, as a majority of the hugger and standard
ceiling fan market is at EL 3 or above. The incremental cost associated
with EL 1, EL 2, and EL 3 compared to the baseline is relatively small
in relation to the total price of the ceiling fan. For example, the
installed cost of EL 1 and EL 2 is the same as that of the baseline for
hugger and standard ceiling fans. Thus, even if DOE were to use a
higher price elasticity, the shipments model would project only a
modest decrease in shipments relative to the no-standards case in the
event of an efficiency standard set at EL 1, EL 2, or EL 3. DOE
requests data to more accurately estimate a price elasticity of demand
specific to ceiling fans. Specifically, DOE requests concurrent data on
industry-wide shipments-weighted retail price and efficiency and
average household income. See issue 21 in section VII.E.
As was noted in the preliminary analysis, an increase in the price
of ceiling fan light kits due to a ceiling fan light kit standard will
also impact the shipments of ceiling fans sold with ceiling fan light
kits. The ceiling fan NOPR analysis includes the impact on ceiling fan
shipments from the ceiling fan light kit price change due to the
proposed ceiling fan light kit standard [CITATION to be added]. The
impact from a ceiling fan light kit standard to ceiling fan shipments
is applied to both the no ceiling fan standards case and the ceiling
fan standards case shipments.
H. National Impact Analysis
The NIA assesses the national energy savings (NES) and the net
present value (NPV) from a national perspective of total consumer costs
and savings that would be expected to result from new or amended
standards at specific efficiency levels. (``Consumer'' in this context
refers to consumers of the product being regulated.) DOE calculates the
NES and NPV based on projections of annual product shipments, along
with the annual energy consumption, total installed cost, and repair
costs. For the NOPR analysis, DOE projected the energy savings,
operating cost savings, product costs, and NPV of consumer benefits
over the lifetime of ceiling fans shipped from 2019 through 2048.
DOE evaluates the impacts of potential standards by comparing a no-
standards case projection with standards-case projections. The no-
standards case projection characterizes energy use and consumer costs
in the absence of amended energy conservation standards. The standards-
case projections characterize energy use and consumer cost for the
market distribution where ceiling fans that do not meet the TSL being
analyzed are excluded as options available to the consumer. As
described in section IV.G of this notice, DOE developed market share
distributions for ceiling fans at each EL in the no-standards case and
each of the standards cases in its shipments analysis.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV-8 summarizes the inputs and methods DOE used for the NIA
analysis for the NOPR. Discussion of these inputs and methods follows
the table. See chapter 10 of the NOPR TSD for further details.
[[Page 1722]]
Table IV-8--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments.......................... Annual shipments from shipments
model.
Assumed Compliance Date of Standard 2019.
No Standard-Case Forecasted Estimated by market-share module of
Efficacies. shipments model.
Standards-Case Forecasted Estimated by market-share module of
Efficacies. shipments model.
Annual Energy Consumption per Unit. Annual weighted-average values are
a function of energy use at each
EL.
Total Installed Cost per Unit...... Annual weighted-average values are
a function of cost at each EL.
Annual Energy Cost per Unit........ Annual weighted-average values as a
function of the annual energy
consumption per unit and energy
prices.
Repair and Maintenance Cost per DC motor fans have a 6.5% higher
Unit. failure rate compared to AC motor
fans.
Energy Prices...................... AEO 2015 forecasts (to 2040) and
extrapolation thereafter.
Energy Site-to-Primary Conversion.. A time-series conversion factor
based on AEO 2015.
Discount Rate...................... Three and seven percent.
Present Year....................... 2015.
------------------------------------------------------------------------
1. National Energy Savings
The NES analysis involves a comparison of national energy
consumption of the considered products in each potential standards case
(TSL) with consumption in the case with no new or amended energy
conservation standards. DOE calculated the national energy consumption
by multiplying the number of units (stock) of each product (by vintage
or age) by the unit energy consumption (also by vintage). DOE
calculated annual NES based on the difference in national energy
consumption for the no-standards case and for the case where a standard
is set at each TSL. Cumulative energy savings are the sum of the NES
for each year over the timeframe of the analysis.
DOE estimated energy consumption and savings based on site energy
and converted the electricity consumption and savings to primary energy
(i.e., the energy consumed by power plants to generate site
electricity) using annual conversion factors derived from AEO 2015.
In 2011, 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 Sciences,
DOE announced its intention to use full-fuel-cycle (FFC) measures of
energy use and greenhouse gas and other emissions in the national
impact analyses and emissions analyses included in future energy
conservation standards rulemakings. 76 FR 51281 (August 18, 2011).
After evaluating the approaches discussed in the August 18, 2011
notice, DOE published a statement of amended policy in which DOE
explained its determination that EIA's National Energy Modeling System
(NEMS) is the most appropriate tool for its FFC analysis and its
intention to use NEMS for that purpose. 77 FR 49701 (August 17, 2012).
NEMS is a public domain, multi-sector, partial equilibrium model of the
U.S. energy sector that EIA uses to prepare its Annual Energy
Outlook.\54\ The approach used for deriving FFC measures of energy use
and emissions is described in appendix 10B of the NOPR TSD.
---------------------------------------------------------------------------
\54\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb. 1998)
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------
The rebound effect accounts for increased usage of an appliance by
consumers after the implementation of a standard, reducing the energy
savings attributed to a standard. DOE generally accounts for the direct
rebound effect in its estimates of the national energy savings. In
principle, the rebound effect can reduce expected savings in energy
costs to consumers in the standards case. However, the take-back in
energy consumption associated with the rebound effect can also be
expected to provide benefits to consumers. These benefits from an
incremental increase in appliance usage are challenging to monetize,
but by definition must be similar to the costs. Therefore, DOE assumed
that if it were able to monetize the increased value to consumers of
the rebound effect, this value would be similar in value to the forgone
energy savings. Accordingly, the economic impacts on consumers with or
without the rebound effect are approximately the same, so DOE does not
adjust operating cost savings in the NIA based on rebound.
Nevertheless, DOE performed a sensitivity scenario assuming a rebound
of 3-percent to examine the implications of the rebound. This choice is
based on the judgment that in most cases, consumers do not often adjust
ceiling fans. The results of this sensitivity analysis can be found in
appendix 10C of this NOPR TSD.
2. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are: (1) Total annual installed cost; (2)
total annual savings in operating costs; and (3) a discount factor to
calculate the present value of costs and savings. DOE calculates net
savings each year as the difference between the no-standards case and
each standards case in terms of total savings in operating costs versus
total increases in installed costs. DOE calculates operating cost
savings over the lifetime of each product shipped during the forecast
period.
The operating cost savings are primarily energy cost savings, which
are calculated using the estimated energy savings in each year and the
projected price of electricity. To estimate electricity prices in
future years, DOE multiplied the average regional electricity prices by
the forecast of annual national-average residential or commercial
electricity price changes in the Reference case from AEO 2015, which
has an end year of 2040. To estimate price trends after 2040, DOE used
the average annual rate of change in prices from 2025 to 2040. As part
of the NIA, DOE also analyzed scenarios that used inputs from the AEO
2015 low economic growth and high economic growth cases.
DOE estimated the range of potential impacts of amended standards
by considering three sensitivity scenarios: A high-benefit scenario, a
low-benefit scenario, and a scenario that includes a 3-percent rebound
effect. In the high benefits scenario, DOE used the AEO 2015 high
economic growth case estimates for new housing starts and electricity
prices along with its reference price trend for DC motor fans.
[[Page 1723]]
As discussed in section IV.G, price trend is only applied to the price
premium between a DC motor and a direct drive AC motor. In the low
benefits scenario, DOE used the low economic growth AEO 2015 estimates
for housing starts and electricity prices, along with no price trend.
In the 3-percent rebound scenario, DOE assumed that there would be
increased ceiling fan usage due to the decreased operating cost savings
associated with a standard. The NIA results based on these alternative
scenarios are presented in appendix 10C of the NOPR TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
NOPR, DOE estimated the NPV of consumer benefits using both a 3-percent
and a 7-percent real discount rate. DOE uses these discount rates in
accordance with guidance provided by the Office of Management and
Budget (OMB) to federal agencies on the development of regulatory
analysis.\55\ 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.
---------------------------------------------------------------------------
\55\ United States Office of Management and Budget. ``Circular
A-4: Regulatory Analysis,'' (Sept. 17, 2003), section E (Available
at: www.whitehouse.gov/omb/memoranda/m03-21.html).
---------------------------------------------------------------------------
DOE requests comments on the overall methodology used to develop
shipment forecasts and estimate NES and the NPV of those savings. See
issue 22 in section VII.E.
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on
consumers, DOE evaluates the impact on identifiable subgroups of
consumers that may be disproportionately affected by a new or amended
national standard. DOE evaluates impacts on particular subgroups of
consumers by analyzing the LCC impacts and PBP for those particular
consumers at alternative standard levels.
ALA requested DOE consider the impact of energy conservation
standards on low-income consumers. (ALA, No. 90 at p. 18) For this
NOPR, DOE analyzed the impacts of the considered standard levels on
low-income households and small businesses that purchase ceiling fans.
DOE calculated the LCC and PBP results for standard, hugger, and
VSD fans based on a sample of low-income households or consumers who
were identified in the RECS 2009 survey as being at or below the
``poverty line.'' The poverty line varies with household size, head of
household age, and family income.
In the case of the HSSD and large-diameter fans, DOE conducted a
subgroup analysis based on small businesses that purchase ceiling fans
by applying the small company discount rate distributions for each
sector in the LCC and PBP calculation, instead of the discount rate
associated with the entire industry.
Chapter 11 of the NOPR TSD describes the consumer subgroup
analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE conducted an MIA for ceiling fans to estimate the financial
impact of proposed standards on manufacturers of ceiling fans. The MIA
has both quantitative and qualitative aspects. The quantitative part of
the MIA relies on the GRIM, an industry cash-flow model customized for
the ceiling fans covered in this rulemaking. The key GRIM inputs are
data on the industry cost structure, manufacturer production costs
(MPCs), shipments, and assumptions about manufacturer markups, and
conversion costs. The key MIA output is INPV. DOE used the GRIM to
calculate cash flows using standard accounting principles and to
compare changes in INPV between a no-standards case and various TSLs
(the standards cases). The difference in INPV between the no-standards
case and standards cases represents the financial impact of amended
energy conservation standards on ceiling fan manufacturers. Different
sets of assumptions (scenarios) produce different INPV results. The
qualitative part of the MIA addresses factors such as manufacturing
capacity; characteristics of, and impacts on, any particular subgroup
of manufacturers; and impacts on competition.
DOE conducted the MIA for this rulemaking in three phases. In the
first phase, DOE prepared an industry characterization based on the
market and technology assessment, preliminary manufacturer interviews,
and publicly available information. In the second phase, DOE estimated
industry cash flows in the GRIM using industry financial parameters
derived in the first phase and the shipment scenarios used in the NIA.
In the third phase, DOE conducted interviews with a variety of ceiling
fan manufacturers that account for more than 30 percent of domestic
ceiling fan sales covered by this rulemaking. During these interviews,
DOE discussed engineering, manufacturing, procurement, and financial
topics specific to each company, and obtained each manufacturer's view
of the ceiling fan industry as a whole. The interviews provided
information that DOE used to evaluate the impacts of amended standards
on manufacturers' cash flows, manufacturing capacities, and direct
domestic manufacturing employment levels. See section V.B.2.b of this
NOPR for the discussion on the estimated changes in the number of
domestic employees involved in manufacturing ceiling fans covered by
standards. See section IV.J.3 of this NOPR for a description of the key
issues that manufacturers raised during the interviews.
During the third phase, DOE used the results of the industry
characterization analysis in the first phase and feedback from
manufacturer interviews to group manufacturers that exhibit similar
production and cost structure characteristics. DOE identified one
manufacturer subgroup for a separate impact analysis--small businesses.
DOE determined that ceiling fan manufacturing falls under the North
American Industry Classification System (NAICS) code 335210, small
electrical appliance manufacturing. The U.S. Small Business
Administration (SBA) defines a small business as having less than 750
total employees for manufacturing operating under this NAICS code. This
threshold includes all employees in a business' parent company and any
other subsidiaries. Based on this classification, DOE identified up to
37 ceiling fan manufacturers that could potentially qualify as small
businesses. ALA commented that many of the manufacturers in the ceiling
fan industry are small businesses. (ALA, No. 91, Public Meeting
Transcript, pp. 18) DOE agrees that small ceiling fan manufacturers
hold a significant share of the ceiling fan market. DOE analyzed the
impact on the small business subgroup in the complete MIA, which is
presented in chapter 12 of this NOPR TSD, and in the Regulatory
Flexibility analysis required by the Regulatory Flexibility Act, 5
U.S.C. 601, et. seq., presented in section VI.B of this NOPR.
2. GRIM Analysis and Key Inputs
DOE uses the GRIM to quantify the changes in cash flows over time
due to
[[Page 1724]]
amended energy conservation standards. These changes in cash flows
result in either a higher or lower INPV for the standards case compared
to the no-standards case. The GRIM analysis uses a standard annual
cash-flow analysis that incorporates MPCs, manufacturer markups,
shipments, and industry financial information as inputs. It then models
changes in MPCs, investments, and manufacturer margins that may result
from analyzed amended energy conservation standards. The GRIM uses
these inputs to calculate a series of annual cash flows beginning with
the base year of the analysis, 2015, and continuing to 2048. DOE
computes INPV by summing the stream of annual discounted cash flows
during the analysis period. DOE used a real discount rate of 7.4
percent for ceiling fan manufacturers. Initial discount rate estimates
were derived from industry corporate annual reports to the Securities
and Exchange Commission (SEC 10-Ks). DOE initially derived a real
discount rate of 5.9 percent from publicly available SEC 10-Ks of
ceiling fan manufacturers. During manufacturer interviews, DOE asked
ceiling fan manufacturers to provide feedback on this discount rate.
Based on manufacturer feedback that the 5.9 percent discount was too
low for the ceiling fan industry, DOE revised the real discount rate to
be 7.4 percent for this analysis. Many of the GRIM inputs come from the
engineering analysis, the NIA, manufacturer interviews, and other
research conducted during the MIA. The major GRIM inputs are described
in detail in the following sections.
a. Capital and Product Conversion Costs
DOE expects amended ceiling fan energy conservation standards to
cause manufacturers to incur conversion costs by bringing their tooling
and product designs into compliance with amended standards. For the
MIA, DOE classified these conversion costs into two major groups: (1)
Capital conversion costs and (2) product conversion costs. Capital
conversion costs are investments in property, plant, and equipment
necessary to adapt or change existing tooling equipment so new product
designs can be fabricated and assembled. Product conversion costs are
investments in research, development, testing, marketing,
certification, and other non-capitalized costs necessary to make
product designs comply with amended standards.
Using feedback from manufacturer interviews, DOE conducted a
bottom-up analysis to calculate the capital and product conversion
costs for ceiling fan manufacturers for each product class at each EL.
To conduct this bottom-up analysis, DOE used manufacturer input from
manufacturer interviews regarding the types and dollar amounts of
discrete capital and product expenditures that would be necessary to
convert specific production lines for ceiling fans at each EL. Ceiling
fan manufacturers identified tooling costs as the primary capital cost
that would be necessary to meet higher efficiency levels for ceiling
fans. Tooling costs are necessary to produce ceiling fans with
optimized designs that accommodate more efficient fan motors and fan
blades to meet proposed efficiency levels. The two main types of
product conversion costs for ceiling fans that manufacturers shared
with DOE during manufacturer interviews were the engineering hours
necessary to redesign ceiling fans to meet higher efficiency standards
and the testing and certification costs necessary to comply with higher
efficiency standards.
ALA commented that achieving greater efficiency through the use of
a larger AC motor will impose significant ceiling fan redesign and
regulatory approval costs. ALA stated that modifying an existing model
to use a larger AC motor will require redesign of ceiling fan motor
housings, blade arm tooling, and potentially switchcups and flange
skirts to aesthetically accommodate the larger motor and maintain
proper spacing to accommodate motor cooling. ALA estimates that tooling
costs for this modification is $20,000 per modified model and that each
modified model will need a complete safety investigation, at an
additional estimated cost of $6,000 per model. (ALA, No. 91 at p. 5)
Additionally, ALA commented that a standard requiring larger direct
drive motors could cause manufacturers to pass on significant
conversion costs associated with product design, engineering,
retooling, and regulatory approval to customers. (ALA, No. 91 at p. 5-
6)
DOE agrees that certain efficiency levels requiring model redesigns
that include replacing the motor powering a ceiling fan and modifying
motor housing and rotors will most likely cause manufacturers to incur
capital conversion costs for retooling and product conversion costs for
redesigning models. DOE used these comments from ALA and other comments
from manufacturer interviews to make average value estimates (i.e.,
average number of hours or average dollar amounts) based on the range
of responses given by manufacturers for each capital and product
conversion cost at each EL. See chapter 12 of the NOPR TSD for a
complete description of DOE's assumptions for the capital and product
conversion costs. Additionally, DOE analyzed how conversion costs and
increased MPCs will impact the ceiling fan industry as well as how
manufacturers will pass along conversion costs and increased production
costs to consumers in section V.B.2.a of this NOPR.
b. Manufacturer Production Costs
Manufacturing a higher-efficiency product is typically more
expensive than manufacturing a baseline product due to the use of more
complex components, which are typically more costly than baseline
components. The increases in the MPCs of the analyzed products can
affect the revenues, gross margins, and cash flow of the industry,
making these product costs key inputs for the GRIM and the MIA.
In the MIA, DOE used the MPCs calculated in the engineering
analysis, as described in section IV.C and further detailed in chapter
5 of this NOPR TSD. To calculate the MPCs for ceiling fans, DOE
purchased ceiling fans for specific product classes and efficiency
levels and performed testing on these units to calculate the
efficiencies of those units. DOE then conducted teardowns of these
units to cost each ceiling fan model. This allowed DOE to estimate the
incremental material, labor, depreciation, and overhead costs for
products at each efficiency level within a product class. DOE used
modeled data to represent some efficiency levels within a product class
when it was unable to purchase ceiling fans at those efficiency levels.
Manufacturers provided feedback on these performance and cost
breakdowns during manufacturer interviews.
c. Shipment Scenarios
INPV, which is the key GRIM output, depends on industry revenue,
which depends on the quantity and prices of ceiling fans shipped in
each year of the analysis period. Industry revenue calculations require
forecasts of: (1) total annual shipment volume of ceiling fans; (2) the
distribution of shipments across the product class (because prices vary
by product class); and, (3) the distribution of shipments across ELs
(because prices vary with ceiling fan efficiency).
DOE modeled the no-standards case ceiling fan shipments and the
growth of ceiling fan shipments using replacement shipments of failed
ceiling fan units, new construction starts as projected by AEO 2015,
and the number of additions to existing buildings due to expanding
demand throughout the analysis period
[[Page 1725]]
taking into account demolitions in the housing stock.
For the standards cases, DOE used a ``roll-up'' approach to
estimate shipments for HSSD and large-diameter ceiling fans and a
consumer-choice model to estimate shipments for standard, hugger, and
VSD ceiling fans. DOE used two different approaches to model shipments
based on the availability of data to calibrate the market share model.
See section IV.G.3 for further detail.
For HSSD and large-diameter ceiling fans, a roll-up approach was
used, in which consumers who would have purchased ceiling fans that
fail to meet the new standards in the no-standards case purchase the
least efficient, compliant ceiling fans in the standards cases.
Consumers that would have purchased compliant ceiling fans in the no-
standards case continue to purchase the exact same ceiling fans in the
standards cases. For standard, hugger, and VSD ceiling fan, a consumer-
choice model was used to project consumer purchases based on consumer
sensitivity to first cost.
For all ceiling fans, DOE also included price elasticity in the
shipments analysis for all standards cases. When price elasticity is
included in the shipment analysis, the total number of ceiling fans
declines as the price of a ceiling fan increases due to standards. For
a complete description of the shipments, see the shipments analysis
discussion in section IV.G of this NOPR.
d. Markup Scenarios
As discussed in the previous manufacturer production costs section,
the MPCs for ceiling fans are the manufacturers' costs for those units.
These costs include materials, labor, depreciation, and overhead, which
are collectively referred to as the cost of goods sold (COGS). The MSP
is the price received by ceiling fan manufacturers from the first sale,
typically to a distributor, regardless of the downstream distribution
channel through which the ceiling fans are ultimately sold. The MSP is
not the cost the end user pays for ceiling fans, because there are
typically multiple sales along the distribution chain and various
markups applied to each sale. The MSP equals the MPC multiplied by the
manufacturer markup. The manufacturer markup covers all the ceiling fan
manufacturer's non-production costs (i.e., selling, general and
administrative expenses [SG&A], research and development [R&D],
interest) as well as profit. Total industry revenue for ceiling fan
manufacturers equals the MSPs at each EL multiplied by the number of
shipments at that EL.
Modifying these manufacturer markups in the standards cases yields
a different set of impacts on ceiling fan manufacturers than in the no-
standards case. For the MIA, DOE modeled three standards case markup
scenarios for ceiling fans to represent the uncertainty regarding the
potential impacts on prices and profitability for ceiling fan
manufacturers following the implementation of analyzed amended energy
conservation standards. The three scenarios are: (1) A preservation of
gross margin, or flat, markup scenario; (2) a preservation of operating
profit markup scenario; and (3) a two-tiered markup scenario. Each
scenario leads to different manufacturer markup values, which, when
applied to the inputted MPCs, result in varying revenue and cash-flow
impacts on ceiling fan manufacturers.
The preservation of gross margin markup scenario assumes that the
COGS for each product is marked up by a preservation of gross margin
percentage to cover SG&A expenses, R&D expenses, interest expenses, and
profit. This allows manufacturers to preserve the same gross margin
percentage in the standards cases as in the no-standards case. This
markup scenario represents the upper bound of the ceiling fan
industry's profitability in the standards cases because ceiling fan
manufacturers are able to fully pass additional costs due to standards
to their consumers.
To estimate the industry average gross margin percentage for
ceiling fans for the preservation of gross margin markup scenario, DOE
examined the SEC 10-Ks of publicly traded ceiling fan manufacturers.
DOE then asked manufacturers to verify the industry average gross
margin percentage derived from SEC 10-Ks. For this NOPR analysis, DOE
used 1.37 as the manufacturer markup for all ceiling fans in the
preservation of gross margin markup scenario.
The preservation of operating profit markup scenario assumes that
manufacturers are able to maintain only the no-standards case total
operating profit in absolute dollars in the standards cases, despite
higher product costs and investment. The no-standards case total
operating profit is derived from marking up the COGS for each product
by the preservation of gross margin markup. In the standards cases for
the preservation of operating profit markup scenario, DOE adjusted the
ceiling fan manufacturer markups in the GRIM at each TSL to yield
approximately the same earnings before interest and taxes in the
standards cases in the year after the compliance date of the amended
ceiling fan standards as in the no-standards case. Under this scenario,
while manufacturers are not able to yield additional operating profit
from higher production costs and the investments that are required to
comply with amended ceiling fan energy conservation standards, they are
able to maintain the same operating profit in the standards case that
was earned in the no-standards case.
DOE also modeled a two-tiered markup scenario, which reflects the
industry's high- and low-efficiency product pricing structure. DOE
implemented the two-tiered markup scenario because multiple
manufacturers stated in interviews that they offer multiple tiers of
product lines that are differentiated, in part, by efficiency level.
The higher efficiency tiers typically earn premiums (for the
manufacturer) over the baseline efficiency tier. Several manufacturers
suggested that amended standards would lead to a reduction in premium
markups and reduce the profitability of higher efficiency products.
During the MIA interviews, manufacturers provided information on the
range of typical ELs in those tiers and the change in profitability at
each level. DOE used this information to estimate markups for ceiling
fans under a two-tiered pricing strategy in the no-standards case. In
the standards cases, DOE modeled the situation in which standards
result in less product differentiation, compression of the markup
tiers, and an overall reduction in profitability.
3. Discussion of Comments
Interested parties commented on the assumptions and results of the
preliminary analysis. These topics covered MIA issues regarding the
number of small businesses and the capital and product conversion costs
associated with potential standards. These two comments were previously
discussed in sections IV.J.1 and IV.J.2 respectively. No further
comments on the preliminary analysis were submitted regarding the MIA.
4. Manufacturer Interviews
DOE conducted additional interviews with manufacturers following
the preliminary analysis as part of the NOPR analysis. In these
interviews, DOE asked manufacturers to describe their major concerns
with this ceiling fan rulemaking. Manufacturers identified four major
areas of concern: (1) Shift to air conditioning; (2) testing burden;
and (3) utility of DC motors for residential consumers.
[[Page 1726]]
a. Shift to Air Conditioning
Several manufacturers stated that ceiling fan energy conservation
standards could cause consumers to forgo the purchase of a ceiling fan
in lieu of an air conditioner due to the anticipated price increase, or
could cause ceiling fan owners to run their air conditioners more
frequently instead of using their ceiling fan. Manufacturers assert
that if consumers instead use their air conditioner to cool their
homes, this could result in more energy use, as ceiling fans tend to be
more efficient at cooling rooms than air conditioners.
Manufacturers also stated that overly stringent ceiling fan
standards could force manufacturers to reduce the aesthetic quality of
some ceiling fans to comply with energy conservation standards. This
could cause consumers to forgo the purchase of these ceiling fans
because the aesthetic appearance of ceiling fans is an important factor
when consumers purchase ceiling fans. Manufacturers claim this
reduction in aesthetic quality could again result in more energy use,
because consumers who do not purchase ceiling fans would need to use
air conditioners to cool their homes. DOE addresses this issue in
section IV.E.3 of this NOPR.
b. Testing Burden
Manufacturers are concerned about the additional testing burden
associated with complying with energy conservation standards. Most
manufacturers use third-party testing facilities for testing and
reporting purposes, which can be expensive. Manufacturers stated that
ceiling fan standards would significantly increase the amount that they
already invest in testing each year. DOE includes the additional
testing and certification costs that manufacturers must make due to
standards as part of the MIA. DOE calculates the total industry
conversion costs for manufacturers, which includes the additional
testing and certification costs of complying with any potential
standards. These conversion costs impact the INPVs at each TSL
displayed in section V.B.2.a of this NOPR notice.
c. Utility of DC Motors for Residential Consumers
Manufacturers stated that energy conservation standards that
required the use of DC motors in residential ceiling fans would limit
the overall utility of the fan, as well as increase maintenance costs.
Manufacturers claim that DC motors require significantly more
maintenance and have a higher warranty factor compared to ceiling fans
with AC motors. Additionally, ceiling fans with DC motors require the
use of a handheld remote, which manufacturers claim is not preferred by
many residential consumers. Therefore, manufacturers stated any ceiling
fan standard that required the use of a DC motor would significantly
reduce the overall utility of ceiling fans to residential consumers.
DOE conducted a screening analysis as part of this NOPR analysis
and concluded that DC motors should be considered as a viable
technology for all product classes of covered ceiling fans for the
engineering analysis. See section IV.B of this NOPR for a detailed
discussion of the screening analysis. Also, DOE did include the
additional repair costs of ceiling fans using DC motors as part of the
LCC analysis. See section IV.F.4 for a complete description of the
repair cost assumptions of DC motors.
For the HSSD and large-diameter product classes, which are expected
to represent 3 percent of all covered ceiling fan shipments in 2019,
DOE is proposing standards that manufacturers indicated they would most
likely meet using a DC motor. Use of DC motors will not significantly
impact consumer utility for HSSD and large-diameter ceiling fans
because HSSD and large-diameter ceiling fans are used in commercial and
industrial applications as opposed to residential applications. Most
manufacturers indicated that commercial and industrial consumers do not
dislike using a handheld remote that is required when operating a
ceiling fan with a DC motor, and in some applications it is preferable.
Also, these commercial and industrial consumers tend to be better
equipped to respond to the increased maintenance costs associated with
owning and operating ceiling fans with DC motors due to these consumers
repairing products and equipment they own more frequently compared to
residential consumers.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions to emissions of all species
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion. The associated emissions are referred
to as upstream emissions.
The analysis of power sector emissions uses marginal emissions
factors that were derived from data in AEO 2015, as described in
section IV.M. The methodology is described in chapter 13 and chapter 15
of the NOPR TSD.
Combustion emissions of CH4 and N2O are
estimated using emissions intensity factors published by the EPA, GHG
Emissions Factors Hub.\56\ The FFC upstream emissions are estimated
based on the methodology described in chapter 15 of the NOPR TSD. The
upstream emissions include both emissions from fuel combustion during
extraction, processing, and transportation of fuel, and ``fugitive''
emissions (direct leakage to the atmosphere) of CH4 and
CO2.
---------------------------------------------------------------------------
\56\ Available at: http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. Total emissions
reductions are estimated using the energy savings calculated in the
national impact analysis.
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 each ton of gas by the gas' global warming potential
(GWP) over a 100-year time horizon. Based on the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change,\57\ DOE used
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------
\57\ IPCC, 2013: Climate Change 2013: The Physical Science
Basis. Contribution of Working Group I to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Stocker,
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A.
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA.
Chapter 8.
---------------------------------------------------------------------------
The AEO incorporates the projected impacts of existing air quality
regulations on emissions. AEO 2015 generally represents current
legislation and environmental regulations, including recent government
actions, for which implementing regulations were available as of
October 31, 2014. DOE's estimation of impacts accounts for the presence
of the emissions control programs discussed in the following
paragraphs.
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
[[Page 1727]]
Columbia (DC). (42 U.S.C. 7651 et seq.) SO2 emissions from
28 eastern States and DC were also limited under the Clean Air
Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR created an
allowance-based trading program that operates along with the Title IV
program. In 2008, CAIR was remanded to EPA by the U.S. Court of Appeals
for the District of Columbia Circuit, but it remained in effect.\58\ In
2011, EPA issued a replacement for CAIR, the Cross-State Air Pollution
Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the DC
Circuit issued a decision to vacate CSAPR,\59\ and the court ordered
EPA to continue administering CAIR. On April 29, 2014, the U.S. Supreme
Court reversed the judgment of the DC Circuit and remanded the case for
further proceedings consistent with the Supreme Court's opinion.\60\ On
October 23, 2014, the DC Circuit lifted the stay of CSAPR.\61\ Pursuant
to this action, CSAPR went into effect (and CAIR ceased to be in
effect) as of January 1, 2015.
---------------------------------------------------------------------------
\58\ 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).
\59\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696,
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
\60\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610
(U.S. 2014). The Supreme Court held in part that EPA's methodology
for quantifying emissions that must be eliminated in certain States
due to their impacts in other downwind States was based on a
permissible, workable, and equitable interpretation of the Clean Air
Act provision that provides statutory authority for CSAPR.
\61\ See Georgia v. EPA, Order (D.C. Cir. filed October 23,
2014) (No. 11-1302),
---------------------------------------------------------------------------
EIA was not able to incorporate CSAPR into AEO 2015, so it assumes
implementation of CAIR. Although DOE's analysis used emissions factors
that assume that CAIR, not CSAPR, is the regulation in force. However,
the difference between CAIR and CSAPR is not relevant for the purpose
of DOE's analysis of emissions impacts from energy conservation
standards.
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 energy conservation 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 2016, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants.
77 FR 9304 (Feb. 16, 2012). In the 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
2015 assumes that, in order to continue operating, coal plants must
have either flue gas desulfurization or dry sorbent injection systems
installed by 2016. Both technologies, which are used to reduce acid gas
emissions, also reduce SO2 emissions. Under the MATS,
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, energy conservation standards will generally reduce
SO2 emissions in 2016 and beyond.\62\
---------------------------------------------------------------------------
\62\ DOE notes that the Supreme Court recently determined that
EPA erred by not considering costs in the finding that regulation of
hazardous air pollutants from coal- and oil-fired electric utility
steam generating units is appropriate. See Michigan v. EPA (Case No.
14-46, 2015). The Supreme Court did not vacate the MATS rule and DOE
has tentatively determined that the Court's decision on the MATS
rule does not change the assumptions regarding the impact of energy
efficiency standards on SO2 emissions (see chapter 13 for
further discussion). Further, the Court's does not change the impact
of the energy efficiency standards on mercury emissions. DOE will
continue to monitor developments related to this case and respond to
them as appropriate.
---------------------------------------------------------------------------
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia.\63\ 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 this NOPR for
these States.
---------------------------------------------------------------------------
\63\ CSAPR also applies to NOX and it would supersede
the regulation of NOX under CAIR. As stated previously,
the current analysis assumes that CAIR, not CSAPR, is the regulation
in force. The difference between CAIR and CSAPR with regard to DOE's
analysis of NOX emissions is slight.
---------------------------------------------------------------------------
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 2015, which
incorporates the MATS.
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. In order to make this calculation analogous to
the calculation of the NPV of consumer benefit, DOE considered the
reduced emissions expected to result over the lifetime of products
shipped in the forecast period for each TSL. This section summarizes
the basis for the monetary values used for each of these emissions and
presents the values considered in this NOPR.
For this NOPR, DOE relied on a set of values for the social cost of
carbon (SCC) that was developed by a Federal interagency process. The
basis for these values is summarized in the next section, 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 CO2. A domestic SCC value is
meant to reflect the value of damages in the United States resulting
from a unit change in CO2 emissions, while a global SCC
value is meant to reflect the value of damages worldwide.
Under section 1(b) 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
[[Page 1728]]
presented here is to allow agencies to incorporate the monetized social
benefits of reducing CO2 emissions into cost-benefit
analyses of regulatory actions. 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 these 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
CO2 emissions, the analyst faces a number of challenges. A
report from the National Research Council \64\ points out that any
assessment will suffer from uncertainty, speculation, and lack of
information about: (1) Future emissions of GHGs; (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 questions of science, economics, and
ethics and should be viewed as provisional.
---------------------------------------------------------------------------
\64\ National Research Council, Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use, National Academies Press:
Washington, DC (2009).
---------------------------------------------------------------------------
Despite the limits of both quantification and monetization, SCC
estimates can be useful in estimating the social benefits of reducing
CO2 emissions. The agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC values
appropriate for that year. The NPV of the benefits can then be
calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years.
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. Development of Social Cost of Carbon Values
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 Federal 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
After the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specially, 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 (IPCC).
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. 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, was 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,\65\ although preference is given to consideration of the
global benefits of reducing CO2 emissions. Table IV-9
presents the values in the 2010 interagency group report,\66\ which is
reproduced in appendix 14A of the NOPR TSD.
---------------------------------------------------------------------------
\65\ It is recognized that this calculation for domestic values
is approximate, provisional, and highly speculative. There is no a
priori reason why domestic benefits should be a constant fraction of
net global damages over time.
\66\ 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) (Available at:
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).
[[Page 1729]]
Table IV-9--Annual SCC Values From 2010 Interagency Report, 2010-2050
[2007$ 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 this notice were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature, as described in the
2013 update from the interagency working group (revised July 2015).\67\
---------------------------------------------------------------------------
\67\ 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 July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
---------------------------------------------------------------------------
Table IV-10 shows the updated sets of SCC estimates from the latest
interagency update in 5-year increments from 2010 to 2050. The full set
of annual SCC values between 2010 and 2050 is reported in appendix 14B
of the NOPR TSD. The central value that emerges is the average SCC
across models at the 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.
Table IV-10--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
-----------------------------------------------------------------------
Year 5% 3% 2.5% 3%
-----------------------------------------------------------------------
Average Average Average 95th percentile
----------------------------------------------------------------------------------------------------------------
2010.................................... 10 31 50 86
2015.................................... 11 36 56 105
2020.................................... 12 42 62 123
2025.................................... 14 46 68 138
2030.................................... 16 50 73 152
2035.................................... 18 55 78 168
2040.................................... 21 60 84 183
2045.................................... 23 64 89 197
2050.................................... 26 69 95 212
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable because 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 previously 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 analytical
challenges that are being 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, DOE used the values from the
2013 interagency report (revised July 2015), adjusted to 2014$ using
the implicit price deflator for gross domestic product (GDP) from the
Bureau of Economic Analysis. For each of the four sets of SCC cases
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3,
and $117 per metric ton avoided (values expressed in 2014$). 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. Social Cost of Other Air Pollutants
As noted previously, DOE has estimated how the considered energy
[[Page 1730]]
conservation standards would reduce site NOX emissions
nationwide and decrease power sector NOX emissions in those
22 States not affected by the CAIR.
DOE estimated the monetized value of NOX emissions
reductions using benefit per ton estimates from the Regulatory Impact
Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing
Power Plants and Emission Standards for Modified and Reconstructed
Power Plants,'' published in June 2014 by EPA's Office of Air Quality
Planning and Standards. The report includes high and low values for
NOX (as PM2.5) for 2020, 2025, and 2030
discounted at 3 percent and 7 percent,\68\ which are presented in
chapter 14 of the NOPR TSD. DOE assigned values for 2021-2024 and 2026-
2029 using, respectively, the values for 2020 and 2025. DOE assigned
values after 2030 using the value for 2030.
---------------------------------------------------------------------------
\68\ For the monetized NOX benefits associated with
PM2.5, the related benefits (derived from benefit-per-ton
values) are based on an estimate of premature mortality derived from
the ACS study (Krewski et al., 2009), which is the lower of the two
EPA central tendencies. Using the lower value is more conservative
when making the policy decision concerning whether a particular
standard level is economically justified so using the higher value
would also be justified. If the benefit-per-ton estimates were based
on the Six Cities study (Lepuele et al., 2012), the values would be
nearly two-and-a-half times larger. (See chapter 14 of the NOPR TSD
for further description of the studies mentioned above.)
---------------------------------------------------------------------------
DOE multiplied the emissions reduction (tons) in each year by the
associated $/ton values, and then discounted each series using discount
rates of 3 percent and 7 percent as appropriate. DOE will continue for
evaluate the monetization of avoided NOx emissions and will make any
appropriate updates of the current analysis for the final rulemaking.
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. DOE has not included monetization of those emissions in
the current analysis.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the
electric power industry that would result from the adoption of new or
amended energy conservation standards. The utility impact analysis
estimates the changes in installed electrical capacity and generation
that would result for each TSL. The analysis is based on published
output from NEMS associated with AEO 2015. NEMS produces the AEO
Reference case, as well as a number of side cases that estimate the
economy-wide impacts of changes to energy supply and demand. DOE uses
published side cases to estimate the marginal impacts of reduced energy
demand on the utility sector. These marginal factors are estimated
based on the changes to electricity sector generation, installed
capacity, fuel consumption and emissions in the AEO Reference case and
various side cases. Details of the methodology are provided in the
appendices to Chapters 13 and 15 of the NOPR TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of new or amended
energy conservation standards
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed standard. Employment impacts from new or
amended energy conservation standards include both direct and indirect
impacts. Direct employment impacts are any changes in the number of
employees of manufacturers of the products subject to standards, their
suppliers, and related service firms. 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 appliances. Indirect
employment impacts from standards consist of the net jobs created or
eliminated in the national economy, other than in the manufacturing
sector being regulated, caused by: (1) Reduced spending by end users on
energy; (2) reduced spending on new energy supply by the utility
industry; (3) increased consumer spending on new products to which the
new standards apply; 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).\69\ 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.\70\ 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, net national employment may increase due to
shifts in economic activity resulting from energy conservation
standards.
---------------------------------------------------------------------------
\69\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by email to [email protected].
\70\ See Bureau of Economic Analysis, Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this NOPR using an input/output model of the U.S.
economy called Impact of Sector Energy Technologies version 3.1.1
(ImSET).\71\ 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 187
sectors most relevant to industrial, commercial, and residential
building energy use.
---------------------------------------------------------------------------
\71\ J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1:
Impact of Sector Energy Technologies, PNNL-18412, Pacific Northwest
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------
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 this rule. Therefore, DOE generated results for near-term
timeframes, where these uncertainties are reduced. For more details on
the employment impact
[[Page 1731]]
analysis, see chapter 16 of the NOPR TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for
ceiling fans. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for ceiling fans, and the standards levels that DOE is
proposing to adopt in this NOPR. Additional details regarding DOE's
analyses are contained in the NOPR TSD supporting this notice.
A. Trial Standard Levels
DOE analyzed the benefits and burdens of six TSLs for ceiling fans.
These TSLs were developed by combining specific efficiency levels for
each of the product classes analyzed by DOE. DOE presents the results
for the TSLs in this document, while the results for all efficiency
levels that DOE analyzed are in the NOPR TSD.
Table V-1 presents the TSLs and the corresponding efficiency levels
for ceiling fans. TSL 6 represents the maximum technologically feasible
(max-tech) energy efficiency for all product classes. TSL 5 corresponds
to the maximum NPV (at a 7 percent discount rate). TSL 4 corresponds to
the highest efficiency level for which the LCC savings and NPV are both
positive. TSL 3 corresponds to the highest efficiency level that can be
met with a standard (AC) motor for all product classes. TSL 2
corresponds to the fan-optimization design-option efficiency level. TSL
1 corresponds to the first non-baseline efficiency level (i.e., EL 1).
Table V-1--Trial Standard Levels for Ceiling fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSD Hugger Standard HSSD Large-diameter
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1........................... EL 1.................. EL 1.................. EL 1.................. EL 1.................. EL 1
TSL 2........................... EL 1.................. EL 2.................. EL 2.................. EL 1.................. EL 1
TSL 3........................... EL 2.................. EL 3.................. EL 3.................. EL 3.................. EL 2
TSL 4........................... EL 2.................. EL 3.................. EL 3.................. EL 4.................. EL 3
TSL 5........................... EL 3.................. EL 3.................. EL 4.................. EL 4.................. EL 3
TSL 6........................... EL 3.................. EL 4.................. EL 4.................. EL 4.................. EL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on ceiling fan consumers by
looking at the effects potential amended standards at each TSL would
have on the LCC and PBP. DOE also examined the impacts of potential
standards on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) Purchase price increases, and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., product price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD
provides detailed information on the LCC and PBP analyses.
Table V-2 and Table V-3 show the LCC and PBP results for the
efficiency levels considered for all the ceiling fan product classes.
In the first of each pair of tables for each product class, the simple
payback is measured relative to the baseline product. In the second
table, the LCC savings are measured relative to the no-standards
efficiency distribution in the compliance year (see section IV.F.7 of
this notice).
Table V-2--Average LCC and PBP Results by Efficiency Level for Standard Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple Average
EL First year's Lifetime payback lifetime
Installed cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 113.36 19.95 184.36 297.71 .............. 13.8
1....................................................... 113.36 14.98 138.97 252.33 .............. 13.8
2....................................................... 113.36 13.32 123.84 237.20 .............. 13.8
3....................................................... 125.41 11.94 111.28 236.69 1.5 13.8
4....................................................... 158.30 8.74 82.25 240.55 4.0 13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V-3--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for Standard Fans
----------------------------------------------------------------------------------------------------------------
Life-Cycle cost savings
---------------------------------------------------------------
EL % of Consumers Average savings Average savings
that experience (all consumers) (affected consumers)*
net cost (2014$) (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. ................. ................. ........................
1............................................... 0.00% 1.59 48.62
2............................................... 0.00% 2.81 36.38
[[Page 1732]]
3............................................... 20.22% 3.03 8.47
4............................................... 61.77% -0.40 -0.44
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).
Table V-4--Average LCC and PBP Results by Efficiency Level for Hugger Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple Average
EL First year's Lifetime payback lifetime
Installed cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 101.24 17.34 160.38 261.62 .............. 13.8
1....................................................... 101.24 13.02 121.05 222.29 .............. 13.8
2....................................................... 101.24 11.58 107.93 209.18 .............. 13.8
3....................................................... 111.90 10.48 97.99 209.89 1.6 13.8
4....................................................... 140.97 8.09 76.43 217.40 4.3 13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V-5--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for Hugger Fans
----------------------------------------------------------------------------------------------------------------
Life-Cycle cost savings
---------------------------------------------------------------
EL % of Consumers Average savings Average savings
that experience (all consumers) (affected consumers)*
net cost (2014$) (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. ................. ................. ........................
1............................................... 0.00 1.25 41.66
2............................................... 0.00 2.20 30.20
3............................................... 21.89 1.99 5.59
4............................................... 66.01 -4.80 -5.27
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).
Table V-6--Average LCC and PBP Results by Efficiency Level for VSD Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple Average
EL Installed First year's Lifetime payback lifetime
cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 283.94 16.84 155.54 439.48 .............. 13.8
1....................................................... 283.94 14.98 138.64 422.57 .............. 13.8
2....................................................... 306.04 13.97 129.48 435.52 7.7 13.8
3....................................................... 366.47 8.46 79.59 446.06 9.8 13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V-7--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for VSD Fans
----------------------------------------------------------------------------------------------------------------
Life-Cycle cost savings
---------------------------------------------------------------
EL % of Consumers Average savings Average savings
that experience (all consumers) (affected consumers)*
net cost (2014$) (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. ................. ................. ........................
1............................................... 0.00 0.66 16.47
2............................................... 2.39 0.12 3.01
[[Page 1733]]
3............................................... 70.86 -10.42 -10.42
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).
Table V-8--Average LCC and PBP Results by Efficiency Level for HSSD Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple Average
EL First year's Lifetime payback lifetime
Installed cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 145.00 22.83 193.80 338.80 .............. 13.8
1....................................................... 145.00 20.29 172.50 317.50 .............. 13.8
2....................................................... 168.37 18.97 161.35 329.72 6.0 13.8
3....................................................... 177.01 18.83 166.65 343.66 8.0 13.8
4....................................................... 217.50 8.95 83.67 301.16 5.2 13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V-9--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for HSSD Fans
----------------------------------------------------------------------------------------------------------------
Life-Cycle cost savings
---------------------------------------------------------------
EL % of Consumers Average savings Average savings
that experience (all consumers) (affected consumers)*
net cost (2014$) (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. ................. ................. ........................
1............................................... 0.00 10.03 21.56
2............................................... 59.71 -1.18 -1.29
3............................................... 71.46 -14.03 -15.26
4............................................... 32.77 25.95 27.63
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).
Table V-10--Average LCC and PBP Results by Efficiency Level for Large-Diameter Fans
----------------------------------------------------------------------------------------------------------------
Average costs (2014$)
----------------------------------------------------
First Simple Average
EL Installed year's Lifetime payback lifetime
cost operating operating LCC (years) (years)
cost cost
----------------------------------------------------------------------------------------------------------------
0................................. 4080.64 246.45 2102.94 6183.58 ........... 13.8
1................................. 4080.64 219.48 1875.26 5955.91 ........... 13.8
2................................. 4206.91 199.87 1709.68 5916.59 2.7 13.8
3................................. 4420.85 168.25 1486.83 5907.68 4.4 13.8
4................................. 4577.89 160.35 1420.10 5997.99 5.8 13.8
----------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency
level. The PBP is measured relative to the baseline product.
Table V-11--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for Large-Diameter
Fans
----------------------------------------------------------------------------------------------------------------
Life-Cycle cost savings
-----------------------------------------------------------------
EL Average savings
% of Consumers that Average savings (all (affected
experience net cost consumers) (2014$) consumers)* (2014$)
----------------------------------------------------------------------------------------------------------------
--............................................ .................... .................... ....................
1............................................. 0.00 10.41 235.01
2............................................. 1.52 14.15 159.69
[[Page 1734]]
3............................................. 34.92 22.75 27.26
4............................................. 49.05 -52.65 -63.10
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered ELs on low-income households and small businesses. Table V-
12 to Table V-15 compare the average LCC savings for each EL and the
simple PBP at each efficiency level for the two consumer subgroups to
the average LCC savings and the simple PBP for the entire sample for
all the product classes. In most cases, the average LCC savings and the
simple PBP for low-income households and small businesses that purchase
ceiling fans are not substantially different from the average LCC
savings and simple PBP for all households and all buildings,
respectively. Chapter 11 of the NOPR TSD presents the complete set of
results and discussion for LCC and PBP for the subgroups.
Table V-12--Comparison of LCC Savings and PBP for Low-Income Households and All Households for Standard Fans
----------------------------------------------------------------------------------------------------------------
Average LCC savings Simple payback period
(2014$) (years)
EL ---------------------------------------------------
All Low-income All Low-income
----------------------------------------------------------------------------------------------------------------
--.......................................................... ........... ........... ...........
1........................................................... 48.62 50.03 0.0 0.0
2........................................................... 36.38 37.26 0.0 0.0
3........................................................... 8.47 8.81 1.5 1.5
4........................................................... -0.44 -1.30 4.0 4.1
----------------------------------------------------------------------------------------------------------------
Table V-13--Comparison of LCC Savings and PBP for Low-Income Households and All Households for Hugger Fans
----------------------------------------------------------------------------------------------------------------
Average LCC savings Simple payback period
(2014$) (years)
EL ---------------------------------------------------
All Low-income All Low-income
----------------------------------------------------------------------------------------------------------------
--.......................................................... ........... ........... ........... ...........
1........................................................... 41.66 46.99 0.0 0.0
2........................................................... 30.20 31.44 0.0 0.0
3........................................................... 5.59 4.98 1.6 1.6
4........................................................... -5.27 -6.60 4.3 4.4
----------------------------------------------------------------------------------------------------------------
Table V-14--Comparison of LCC Savings and PBP for Low-Income Households and All Households for VSD Fans
----------------------------------------------------------------------------------------------------------------
Average LCC savings Simple payback period
(2014$) (years)
EL ---------------------------------------------------
All Low-income All Low-income
----------------------------------------------------------------------------------------------------------------
--.......................................................... ........... ........... ........... ...........
1........................................................... 16.47 15.97 0.0 0.0
2........................................................... 3.01 1.55 7.7 7.2
3........................................................... -10.42 -8.15 9.8 9.3
----------------------------------------------------------------------------------------------------------------
[[Page 1735]]
Table V-15--Comparison of LCC Savings and PBP for Small Businesses and All Buildings for HSSD Fans
----------------------------------------------------------------------------------------------------------------
Average LCC savings Simple payback period
(2014$) (years)
EL ---------------------------------------------------
Small Small
All businesses All businesses
----------------------------------------------------------------------------------------------------------------
--.......................................................... ........... ........... ........... ...........
1........................................................... 21.56 19.22 0.0 0.0
2........................................................... -1.29 -3.85 6.0 6.0
3........................................................... -15.26 -17.07 8.0 7.9
4........................................................... 27.63 17.25 5.2 5.2
----------------------------------------------------------------------------------------------------------------
Table V-16--Comparison of LCC Savings and PBP for Small Businesses and All Buildings for Large-Diameter Fans
----------------------------------------------------------------------------------------------------------------
Average LCC savings Simple payback period
(2014$) (years)
EL ---------------------------------------------------
Small Small
All businesses All businesses
----------------------------------------------------------------------------------------------------------------
--.......................................................... ........... ........... ........... ...........
1........................................................... 235.01 194.80 0.0 0.0
2........................................................... 159.69 112.87 2.7 2.7
3........................................................... 27.26 -7.88 4.4 4.3
4........................................................... -63.10 -107.69 5.8 5.7
----------------------------------------------------------------------------------------------------------------
c. Rebuttable Presumption Payback
As discussed in section IV.F.8, EPCA establishes a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for a product that meets the
standard is less than three times the value of the first-year energy
savings resulting from the standard. The criterion is equivalent to
having a simple payback period of less than 3 years. In calculating a
rebuttable presumption payback period for each of the considered ELs,
DOE based the energy use calculation on the DOE test procedures for
ceiling fans, as required by EPCA. Table V-17 shows the results of this
analysis for the considered ELs.
Table V-17--Rebuttable Presumption Payback Period Results
----------------------------------------------------------------------------------------------------------------
Large-
EL Standard Hugger VSD HSSD diameter
----------------------------------------------------------------------------------------------------------------
--............................................. ........... ........... ........... ........... ...........
1.............................................. 0.0 0.0 0.0 0.0 0.0
2.............................................. 0.0 0.0 9.2 3.2 3.3
3.............................................. 1.5 1.5 11.8 3.9 5.4
4.............................................. 3.8 3.9 ........... 2.8 7.1
----------------------------------------------------------------------------------------------------------------
While DOE examined the rebuttable-presumption criterion, it
considered whether the standard levels considered for this rule are
economically justified through a more detailed analysis of the economic
impacts of those levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that
considers the full range of impacts to the consumer, manufacturer,
Nation, and environment. The results of that analysis serve as the
basis for DOE to definitively evaluate the economic justification for a
potential standard level, thereby supporting or rebutting the results
of any preliminary determination of economic justification.
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
Table V-18 through Table V-20 present the financial impacts
(represented by changes in INPV) of analyzed standards on ceiling fan
manufacturers as well as the conversion costs that DOE estimates
ceiling fan manufacturers would incur at each TSL. To evaluate the
range of cash-flow impacts on the ceiling fan industry, DOE modeled
three markup scenarios that correspond to the range of anticipated
market responses to amended standards. 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
difference in industry value between the no-standards case and the
standards cases that result from the sum of discounted cash flows from
the base year (2015) through the end of the analysis period (2048). The
results also discuss the difference in cash flows between the no-
standards case and the standards cases in the year before the
compliance date for analyzed standards. This difference in cash flow
represents the size of the required conversion costs relative to the
cash flow generated by the ceiling fan industry in the absence of
amended energy conservation standards.
To assess the upper (less severe) end of the range of potential
impacts on ceiling fan manufacturers, DOE modeled a preservation of
gross margin, or flat, markup scenario. This scenario assumes that in
the standards cases, manufacturers would be able to pass along all the
higher production costs required for more efficient products to their
consumers. Specifically, the industry would be able to maintain its
average no-standards case gross margin (as a percentage of revenue)
despite the
[[Page 1736]]
higher product costs in the standards cases. In general, the larger the
product price increases, the less likely manufacturers are to achieve
the cash flow from operations calculated in this scenario because it is
less likely that manufacturers would be able to fully mark up these
larger cost increases.
To assess the lower (more severe) end of the range of potential
impacts on ceiling fan manufacturers, DOE modeled two additional markup
scenarios; a preservation of operating profit markup and a two-tiered
markup. In the preservation of operating profit markup scenario
manufacturers are not able to yield additional operating profit from
higher production costs and the investments that are required to comply
with amended ceiling fan energy conservation standards, but instead are
only able to maintain the same operating profit in the standards cases
that was earned in the no-standards case. This scenario represents a
potential lower end of the range of impacts on manufacturers because
manufacturers are only able to maintain the operating profit that they
would have earned in the no-standards case despite higher production
costs and investments. Manufacturers must therefore, reduce margins as
a result of this markup scenario which reduces profitability.
Another manufacturer markup scenario DOE analyzed was the two-
tiered markup scenario. In this markup scenario manufacturers have two
tiers of manufacturer markups for their products, one for ceiling fans
with small motors and one for ceiling fans with larger AC or DC motors.
As the stringency of analyzed standards increases, the higher premium
markup applied to more efficient products erodes, and all products sold
adopt the lower baseline markup. This scenario represents a potential
lower end of the range of impacts on manufacturers because
manufacturers reduce profit margins on high efficiency products as
these products become the baseline, higher volume products. Therefore,
manufacturers' profits are also reduced as a result of this markup
scenario.
Table V-18--Manufacturer Impact Analysis for Ceiling Fans--Preservation of Gross Margin Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels
Units No-standards -----------------------------------------------------------------------------
case 1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................. 2014$ millions....... 1,308.7 1,307.9 1,306.8 1,296.2 1,293.2 1,253.3 1,229.8
Change in INPV.................... 2014$ millions....... ............... (0.8) (1.9) (12.4) (15.5) (55.4) (78.9)
(%).................. ............... (0.1) (0.1) (1.0) (1.2) (4.2) (6.0)
Product Conversion Costs.......... 2014$ millions....... ............... 0.0 0.1 0.8 1.1 2.0 2.4
Capital Conversion Costs.......... 2014$ millions....... ............... 0.1 0.2 2.6 3.4 7.3 8.6
Total Conversion Costs............ 2014$ millions....... ............... 0.2 0.3 3.4 4.5 9.4 11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V-19--Manufacturer Impact Analysis for Ceiling Fans--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels
Units No-standards -----------------------------------------------------------------------------
case 1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................. 2014$ millions....... 1,308.7 1,305.2 1,299.6 1,244.9 1,231.6 1,059.1 925.2
Change in INPV.................... 2014$ millions....... ............... (3.5) (9.1) (63.8) (77.1) (249.5) (383.4)
(%).................. ............... (0.3) (0.7) (4.9) (5.9) (19.1) (29.3)
Product Conversion Costs.......... 2014$ millions....... ............... 0.0 0.1 0.8 1.1 2.0 2.4
Capital Conversion Costs.......... 2014$ millions....... ............... 0.1 0.2 2.6 3.4 7.3 8.6
Total Conversion Costs............ 2014$ millions....... ............... 0.2 0.3 3.4 4.5 9.4 11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V-20--Manufacturer Impact Analysis for Ceiling Fans--Two-Tiered Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels
Units No-standards -----------------------------------------------------------------------------
case 1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................. 2014$ millions....... 1,308.7 1,311.2 1,315.3 1,147.6 1,142.4 1,091.2 1,058.5
Change in INPV.................... 2014$ millions....... ............... 2.5 6.6 (161.1) (166.3) (217.4) (250.2)
(%).................. ............... 0.2 0.5 (12.3) (12.7) (16.6) (19.1)
Product Conversion Costs.......... 2014$ million)....... ............... 0.0 0.1 0.8 1.1 2.0 2.4
Capital Conversion Costs.......... 2014$ millions....... ............... 0.1 0.2 2.6 3.4 7.3 8.6
Total Conversion Costs............ 2014$ millions....... ............... 0.2 0.3 3.4 4.5 9.4 11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 1737]]
TSL 1 sets the efficiency level at EL 1 for all ceiling fans. At
TSL 1, DOE estimates impacts on INPV range from -$3.5 million to $2.5
million, or a change in INPV of -0.3 percent to 0.2 percent. At TSL 1,
industry free cash flow (operating cash flow minus capital
expenditures) is expected to decrease by approximately 0.1 percent to
$79.7 million, compared to the no-standards case value of $79.0 million
in 2018, the year leading up to the proposed standards.
Percentage impacts on INPV are slightly negative to slightly
positive at TSL 1. DOE estimates that 97 percent of standard and hugger
ceiling fan shipments, 96 percent of VSD ceiling fan shipments, 54
percent of HSSD ceiling fan shipments, and 96 percent of large-diameter
fan ceiling fan shipments would meet or exceed the efficiency levels
required at TSL 1.
DOE expects conversion costs to be small compared to the no-
standards case industry value because most of the ceiling fan
shipments, on a total volume basis, already meet or exceed the
efficiency levels analyzed at TSL 1. DOE expects ceiling fan
manufacturers to incur approximately $43 thousand in product conversion
costs for ceiling fan redesign and testing. DOE estimates manufacturers
will incur minimal capital conversion costs associated with TSL 1, as
most efficiency gains will be achieved by the optimization of existing
ceiling fan designs, not through any major equipment upgrades or
capital investments. DOE expects approximately $114 thousand in capital
conversion costs for manufacturers, primarily to invest in tooling
necessary to produce optimized ceiling fans in models that do not meet
the required efficiency levels.
At TSL 1, the shipment-weighted average MPC increases by
approximately 0.3 percent for all ceiling fans relative to the no-
standards case MPC in 2019, the expected year of compliance. In the
preservation of gross margin markup scenario, manufacturers are able to
fully pass on this slight cost increase to consumers. However, this
slight increase in MPC is outweighed by the approximately $0.2 million
in conversion costs that manufacturers would incur, which causes a
slightly negative change in INPV at TSL 1 under the preservation of
gross margin markup scenario.
Under the preservation of operating profit markup scenario,
manufacturers earn the same operating profit as would be earned in the
no-standards case, but manufacturers do not earn additional profit from
their investments. In this scenario, the 0.3 percent MPC increase
results in a very slight reduction in manufacturer markup after the
compliance year, from 1.37 in the no-standards case to 1.369 at TSL1.
This slight reduction in manufacturer markup and $0.2 million in
conversion costs incurred by manufacturers cause a slightly negative
change in INPV at TSL 1 under the preservation of operating profit
markup scenario.
Under the two-tiered markup scenario, where manufacturers earn
different markups for more efficient products, the average manufacturer
markup across the entire analysis period slightly increases from 1.370
in the no-standards case to 1.371 at TSL 1. This increase in
manufacturer markup combined with the slight increase in MPC outweighs
the $0.2 million in conversion costs that manufacturers incur, causing
a slightly positive change in INPV at TSL 1 under the two-tiered markup
scenario.
TSL 2 sets the efficiency level at EL 1 for VSD, HSSD, and large-
diameter ceiling fans and EL 2 for standard and hugger ceiling fans. At
TSL 2, DOE estimates impacts on INPV range from -$9.1 million to $6.6
million, or a change in INPV of -0.7 percent to 0.5 percent. At this
TSL, industry free cash flow is estimated to decrease by approximately
0.1 percent to $79.6 million, compared to the no-standards case value
of $79.0 million in 2018.
Percentage impacts on INPV range from slightly negative to slightly
positive at TSL 2. DOE projects that in 2019, 92 percent of standard
and hugger ceiling fan shipments, 96 percent of VSD ceiling fan
shipments, 54 percent of HSSD ceiling fan shipments, and 96 percent of
large-diameter fan shipments would meet or exceed the efficiency levels
required at TSL 2.
DOE expects conversion costs to be small compared to the industry
value because most of the ceiling fan shipments, on a total volume
basis, already meet or exceed the efficiency levels analyzed at TSL 2.
DOE expects that product conversion costs will rise from approximately
$43 thousand at TSL 1 to approximately $77 thousand at TSL 2 for
ceiling fan redesign and testing. Capital conversion costs will
increase from $0.1 million at TSL 1 to $0.2 million at TSL 2. Increased
capital conversion costs at TSL 2 are driven by investments in tooling
needed to further optimize ceiling fans above aggregated market minimum
efficiencies for standard and hugger ceiling fan product classes to
meet efficiency levels required at TSL 2.
At TSL 2, the shipment-weighted average MPC increases by
approximately 0.8 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup
scenario, manufacturers are not able to recover their $0.3 million in
conversion costs through the slight increase in MPC over the course of
the analysis period causing a slightly negative change in INPV at TSL 2
under the preservation of gross margin markup scenario.
Under the preservation of operating profit markup, the 0.8 percent
MPC increase for all ceiling fans results in a very slight reduction in
manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.369 at TSL 2. This slight reduction in manufacturer
markup and $0.3 million in conversion costs incurred by manufacturers
cause a slightly negative change in INPV at TSL 2 under the
preservation of operating profit scenario.
Under the two-tiered markup scenario, the average manufacturer
markup across the entire analysis period slightly increases from 1.37
in the no-standards case to 1.371 at TSL 2. This increase in
manufacturer markup combined with the slight increase in MPC outweighs
the $0.3 million in conversion costs that manufacturers incur, causing
a slightly positive change in INPV at TSL 2 under the two-tiered markup
scenario.
TSL 3 sets the efficiency level at EL 2 for VSD and large-diameter
ceiling fans and EL 3 for standard, hugger, and HSSD ceiling fans. At
TSL 3, DOE estimates impacts on INPV range from -$161.1 million to -
$12.4 million, or decreases in INPV of -12.3 percent to -1.0 percent.
At this level, industry free cash flow is estimated to decrease by
approximately 1.8 percent to $78.3 million, compared to the no-
standards case value of $79.0 million in 2018.
Percentage impacts on INPV range from moderately negative to
slightly negative at TSL 3. DOE projects that in 2019, 64 percent of
standard and hugger ceiling fan shipments, 96 percent of VSD ceiling
fan shipments, 9 percent of HSSD ceiling fan shipments, and 91 percent
of large-diameter fan shipments would meet or exceed the efficiency
levels analyzed at TSL 3.
DOE expects that manufacturers will incur increased total
conversion costs of $3.4 million at TSL 3. DOE expects that product
conversion costs will rise from $0.1 million at TSL 2 to $0.8 million
at TSL 3 for ceiling fan redesign and testing. Capital conversion costs
will increase from $0.2 million at TSL 2 to $2.6 million at TSL 3.
Increased capital conversion costs at TSL 3 are driven by investments
in tooling needed to produce ceiling fans with larger direct
[[Page 1738]]
drive motors in the standard, hugger, and VSD ceiling fan product
classes as well as accommodating air foil blades in the HSSD and large-
diameter fan product classes.
At TSL 3, the shipment-weighted average MPC increases by
approximately 5.8 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup
scenario, manufacturers are not able to recover their $3.4 million in
conversion costs through the increase in MPC over the course of the
analysis period causing a slightly negative change in INPV at TSL 3
under the preservation of gross margin markup scenario.
Under the preservation of operating profit markup, the 5.8 percent
MPC increase for all ceiling fans results in a reduction in
manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.362 at TSL 3. This reduction in manufacturer markup
and $3.4 million in conversion costs incurred by manufacturers cause a
slightly negative change in INPV at TSL 3 under the preservation of
operating profit scenario.
Under the two-tiered markup scenario, the average manufacturer
markup across the entire analysis period decreases from 1.30 in the no-
standards case to 1.354 at TSL 3. This decrease in manufacturer markup
and the $3.4 million in conversion costs incurred by manufacturers
outweighs the increase in MPC, causing a moderately negative change in
INPV at TSL 3 under the two-tiered markup scenario.
TSL 4 sets the efficiency level at EL 2 for VSD ceiling fans, EL 3
for standard, hugger, and large-diameter ceiling fans, and EL 4 for
HSSD ceiling fans. At TSL 4, DOE estimates impacts on INPV range from -
$166.3 million to -$15.5 million, or decreases in INPV of -12.7 percent
to -1.2 percent. At this level, industry free cash flow is estimated to
decrease by approximately 2.3 percent to $77.9 million, compared to the
no-standards case value of $79.0 million in 2018.
Percentage impacts on INPV range from moderately negative to
slightly negative at TSL 4. DOE projects that in 2019, 64 percent of
standard and hugger ceiling fan shipments, 96 percent of VSD ceiling
fan shipments, 6 percent of HSSD shipments, and 17 percent of large-
diameter ceiling fan shipments would meet or exceed efficiency levels
analyzed at TSL 4.
TSL 4 is the first TSL that requires DC motors be used to meet
required efficiency levels in the large-diameter fan and HSSD ceiling
fan product classes. DOE expects total conversion costs to increase
from $3.4 million at TSL 3 to $4.5 million at TSL 4. DOE estimates
manufacturers will incur product conversion costs of $1.1 million to
redesign and test ceiling fans that do not meet required efficiency
levels at TSL 4. DOE estimates that manufacturers will incur $3.4
million in capital conversion costs due to retooling costs associated
with accommodating larger direct drive motors in the standard, hugger
and VSD product classes and DC motors in the HSSD and large-diameter
fan product classes.
At TSL 4, the shipment-weighted average MPC increases by
approximately 7.0 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup
scenario, manufacturers are not able to recover their $4.5 million in
conversion costs through the increase in MPC over the course of the
analysis period causing a slightly negative change in INPV at TSL 4
under the preservation of gross margin markup scenario.
Under the preservation of operating profit markup, the 7.0 percent
MPC increase for all ceiling fans results in a reduction in
manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.360 at TSL 4. This reduction in manufacturer markup
and $4.5 million in conversion costs incurred by manufacturers causes a
slightly negative change in INPV at TSL 4 under the preservation of
operating profit scenario.
Under the two-tiered markup scenario, the average manufacturer
markup across the entire analysis period decreases from 1.370 in the
no-standards case to 1.351 at TSL 4. This decrease in manufacturer
markup and $4.5 million in conversion costs that manufacturers incur
outweigh the increase in MPC, causing a moderately negative change in
INPV at TSL 4 under the two-tiered markup scenario.
TSL 5 sets the efficiency level at EL 3 for hugger, VSD, and large-
diameter ceiling fans and EL 4 for standard and HSSD ceiling fans. At
TSL 5, DOE estimates impacts on INPV range from -$249.5 million to -
$55.4 million, or decreases in INPV of -19.1 percent to -4.2 percent.
At this level, industry free cash flow is estimated to decrease by
approximately 4.9 percent to $75.9 million, compared to the no-
standards case value of $79.0 million in 2018.
Percentage impacts on INPV range from significantly negative to
slightly negative at TSL 5. DOE projects that in 2019, 9 percent of
standard ceiling fan shipments, 64 percent of hugger ceiling fan
shipments, no VSD ceiling fan shipments, 6 percent of HSSD shipments,
and 17 percent of large-diameter fan shipments would meet or exceed the
efficiency levels analyzed at TSL 5.
DOE expects total conversion costs to increase from $4.5 million at
TSL 4 to $9.4 million at TSL 5. DOE estimates manufacturers will incur
product conversion costs of $2.0 million to redesign and test ceiling
fans that do not meet required efficiency levels at TSL 5. DOE
estimates that manufacturers will incur $7.3 million in capital
conversion costs due to retooling costs associated with accommodating
larger direct drive motors in the hugger ceiling fan product class and
DC motors in the standard, VSD, HSSD, and large-diameter fan product
classes.
At TSL 5, the shipment-weighted average MPC increases by
approximately 23.4 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup
scenario, manufacturers are not able to recover their $9.4 million in
conversion costs through the increase in MPC over the course of the
analysis period causing a slightly negative change in INPV at TSL 5
under the preservation of gross margin markup scenario.
Under the preservation of operating profit markup scenario, the
23.4 percent MPC increase for all ceiling fans results in a reduction
in manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.346 at TSL 5. This reduction in manufacturer markup
and $9.4 million in conversion costs incurred by manufacturers causes a
significantly negative change in INPV at TSL 5 under the preservation
of operating profit markup scenario.
Under the two-tiered markup scenario, the average manufacturer
markup across the entire analysis period decreases from 1.37 in the no-
standards case to 1.351 at TSL 5. This decrease in manufacturer markup
and $9.4 million in conversion costs that manufacturers incur outweigh
the increase in MPC, causing a moderately negative in INPV at TSL 5
under the two-tiered markup scenario.
TSL 6 represents max-tech for all ceiling fan product classes. This
TSL sets the efficiency level at EL 3 for VSD ceiling fans and EL 4 for
standard, hugger, HSSD, and large-diameter ceiling fans. At TSL 6, DOE
estimates impacts on INPV range from -$383.4 million to -$78.9 million,
or decreases in INPV of -29.3 percent to -6.0 percent. At this level,
industry free cash flow is estimated to decrease by approximately 5.7
percent to $75.2 million, compared to the no-standards case value of
$79.0 million in 2018.
[[Page 1739]]
Percentage impacts on INPV range from significantly negative to
slightly negative at TSL 6. DOE projects that in 2019, 9 percent of
standard and hugger ceiling fan shipments, no VSD ceiling fan
shipments, 6 percent of HSSD shipments, and 17 percent of large-
diameter fan shipments would meet the efficiency levels analyzed at TSL
6.
DOE expects total conversion costs to increase from $9.4 million at
TSL 5 to $11.0 million at TSL 6. DOE estimates manufacturers will incur
product conversion costs of $2.4 million to redesign and test the
majority of covered ceiling fans currently offered on the market. DOE
estimates that manufacturers will incur $8.6 million in capital
conversion costs due to retooling costs associated with accommodating
DC motors in all of the ceiling fan product classes.
At TSL 6, the shipment-weighted average MPC increases by
approximately 36.9 percent for all ceiling fans relative to the no-
standards case MPC in 2016. In the preservation of gross margin markup
scenario, manufacturers are not able to recover their $11.0 million in
conversion costs through the increase in MPC over the course of the
analysis period causing a slightly negative change in INPV at TSL 6
under the preservation of gross margin markup scenario.
Under the preservation of operating profit markup, the 36.9 percent
MPC increase for all ceiling fans results in a reduction in
manufacturer markup after the compliance years, from 1.37 in the no-
standards case to 1.336 at TSL 6. This reduction in manufacturer markup
and $11.0 million in conversion costs incurred by manufacturers causes
a significantly negative change in INPV at TSL 6 under the preservation
of operating profit markup scenario.
Under the two-tiered markup scenario, the average manufacturer
markup across the entire analysis period decreases from 1.37 in the no-
standards case to 1.351 at TSL 6. This decrease in manufacturer markup
and $11.0 million in conversion costs that manufacturers incur outweigh
the increase in MPC, causing a moderately negative change in INPV at
TSL 6 under the two-tiered markup scenario.
b. Impacts on Employment
DOE quantitatively assessed the impacts of potential amended energy
conservation standards on direct employment in the ceiling fan
industry. DOE used the GRIM to estimate the domestic labor expenditures
and number of domestic production workers in the no-standards case and
at each TSL from 2015 to 2048. DOE used statistical data from the U.S.
Census Bureau's 2011 Annual Survey of Manufacturers, 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 involved with the
manufacturer of the product are a function of the labor intensity of
the product, the sales volume, and an assumption that wages remain
fixed in real terms over time.
In the GRIM, DOE used the labor content of ceiling fans and the
MPCs to estimate the annual labor expenditures in the industry. DOE
used Census data and interviews with manufacturers to estimate the
portion of the total labor expenditures that is attributable to
domestic labor.
The production worker estimates in this section only cover workers
up to the line-supervisor level directly involved in fabricating and
assembling a product within a manufacturing facility. Workers
performing services that are closely associated with production
operations, such as material handing with a forklift, are also included
as production labor. DOE's estimates account for production workers who
manufacture only the specific products covered by this rulemaking.
The employment impacts shown in Table V-21 represent the potential
production employment that could result following amended energy
conservation standards. The upper bound of the results estimates the
maximum change in the number of production workers that could occur
after compliance with amended energy conservation standards when
assuming that manufacturers continue to produce the same scope of
covered products in the same production facilities. It also assumes
that domestic production does not shift to lower labor-cost countries.
Because there is a real risk of manufacturers evaluating sourcing
decisions in response to amended energy conservation standards, the
lower bound of the employment results includes the estimated total
number of U.S. production workers in the industry who could lose their
jobs if some or all existing production were moved outside of the
United States. While the results present a range of employment impacts
following 2019, the sections below also include qualitative discussions
of the likelihood of negative employment impacts at the various TSLs.
Finally, the employment impacts shown are independent of the employment
impacts from the broader U.S. economy, documented in chapter 17 of this
NOPR TSD.
DOE estimates that in the absence of amended energy conservation
standards, there would be approximately 39 domestic production workers
involved in manufacturing ceiling fans in 2019. The table below shows
the range of the impacts of potential amended energy conservation
standards on U.S. production workers in the ceiling fan industry.
Table V-21--Potential Changes in the Total Number of Domestic Ceiling Fan Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
No-standards -----------------------------------------------------------------------------
case 1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2019 39 39 39 38 38 36 34
(without changes in production locations)...............
Potential Changes in Domestic Production Workers in ............... 0-(39) 0-(39) (1)-(39) (1)-(39) (3)-(39) (5)-(39)
2019\*\.................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
At the upper end of the employment impact range, all TSLs show
either no change in domestic employment or slight negative impacts.
These slightly negative impacts are driven by the reduction in total
ceiling fan shipments at higher TSLs. DOE included price elasticity as
part of the shipments analysis, so as the average price of ceiling fans
increase due to amended standards, fewer ceiling fans would be sold.
Therefore, the amount of labor
[[Page 1740]]
associated with these fewer shipments also decreases. It is important
to note that while the average total MPC increases for more efficient
ceiling fans, the increase in MPC is almost entirely attributed to the
increase in the material costs used to produce more efficient fans. The
amount of labor associated with more efficient ceiling fans remains
constant even as the total MPC of a ceiling fan increases at higher
ELs.
At the lower end of the range, DOE models a situation where all
domestic employment associated with ceiling fan production moves abroad
as a result of energy conservation standards. In this situation, the
handful of manufacturers who currently purchase various ceiling fan
components from original equipment manufacturers abroad and assemble
ceiling fans domestically may instead purchase fully assembled ceiling
fans, and the handful of manufacturers who currently produce ceiling
fans domestically may move all ceiling fan production abroad. DOE does
not anticipate either of these situations to be probable, because the
majority of manufacturers that have domestic production produce large
diameter ceiling fans and the associated shipping costs of those large
diameter ceiling fans is significant. Therefore, manufacturers would
incur much higher shipping costs if production or assembly is moved
abroad. Based on manufacturer feedback, DOE does not expect a
significant impact on domestic employment at any TSL.
At TSL 4, the proposed TSL in today's NOPR, DOE concludes, based on
the shipment analysis, manufacturer interviews, and the potential range
of result of the direct employment analysis, that manufacturers could
face a slight negative impact on domestic employment due to a slight
reduction in overall ceiling fan shipments in 2019. However, DOE does
not have information upon which to conclude that any ceiling fan
manufacturers would shift their domestic ceiling fan production abroad
as a result of the proposed standards.
c. Impacts on Manufacturing Capacity
Ceiling fan manufacturers stated that they anticipate manufacturing
capacity constraints if all ceiling fans are required to use DC motors
to comply with the amended energy conservation standards. DOE learned
during interviews that manufacturers primarily source motors for
ceiling fans from either ceiling fan original equipment manufacturers
or directly from motor manufacturers and then insert them into their
ceiling fan models. During interviews, manufacturers stated that demand
for DC motors may outpace supply if DC motors are required for all
ceiling fans to comply with amended standards. Manufacturers expressed
concern during interviews that currently only a few ceiling fan
shipments incorporate DC motors, and there would be major sourcing
concerns if all ceiling fan were required to use DC motors.
While the proposed TSL 4 requires HSSD and large-diameter ceiling
fans to use DC motors to meet efficiency levels, this only accounts for
approximately 2.5 percent of all ceiling fans. Therefore, DOE does not
anticipate a manufacturer capacity constraint on the supply of DC
motors for this small portion of the overall ceiling fan market. DOE
expects that the motor manufacturers that supply ceiling fan
manufacturers with DC motors would be able to increase production of DC
motors in the estimated 3 years from the publication of the final rule
to the compliance date to meet demand for ceiling fans that require DC
motors due to amended standards. DOE does not anticipate any
significant impact on the manufacturing capacity at the proposed
amended energy conservation standards in this NOPR. See section V.C.1
for more details on the proposed standard. DOE seeks comment on any
potential impact on manufacturing capacity at the efficiency levels
proposed in this NOPR. See issue 23 in section VII.E.
d. Impacts on Subgroups of Manufacturers
Using average cost assumptions to develop an industry cash-flow
estimate may not be adequate for assessing differential impacts among
manufacturer subgroups. Small manufacturers, niche product
manufacturers, and manufacturers exhibiting cost structures
substantially different from the industry average could be affected
disproportionately. DOE identified only one manufacturer subgroup that
would require a separate analysis in the MIA; small businesses. DOE
analyzes the impacts on small businesses in a separate analysis in
section VI.B of this NOPR. DOE did not identify any other adversely
impacted manufacturer subgroups for ceiling fans for this rulemaking
based on the results of the industry characterization. DOE seeks
comment on any other potential manufacturer subgroups that could be
disproportionally affected by amended energy conservation standards for
ceiling fans. See issue 24 in section VII.E.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of recent or impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. Multiple
regulations affecting the same manufacturer can strain profits and lead
companies to abandon product lines or markets with lower expected
future returns than competing products. For these reasons, DOE conducts
a cumulative regulatory burden analysis as part of its rulemakings for
ceiling fans.
DOE identified a number of requirements, in addition to amended
energy conservation standards for ceiling fans, that ceiling fan
manufacturers will face for products they manufacture approximately 3
years prior to and 3 years after the estimated compliance date of these
amended standards. The following section addresses key related concerns
that manufacturers raised during interviews regarding cumulative
regulatory burden.
Manufacturers raised concerns about existing regulations and
certifications separate from DOE's energy conservation standards that
ceiling fan manufacturers must meet. These include California Title 20,
which has the same energy conservation standards to DOE's existing
ceiling fan standards, but requires an additional certification, and
California Air Resources Board Standards limiting the amount of
formaldehyde in composite wood used to make fan blades, among others.
DOE discusses these and other requirements in chapter 12 of the
NOPR TSD, which lists the estimated compliance costs of those
requirements when available. In considering the cumulative regulatory
burden, DOE evaluates the timing of regulations that affect the same
product because the coincident requirements could strain financial
resources in the same profit center and consequently affect capacity.
DOE identified the upcoming ceiling fan light kit standards rulemaking
as a potential source of additional cumulative regulatory burden on
ceiling fan manufacturers.
DOE has initiated a rulemaking to evaluate the energy conservation
standards of ceiling fan light kits by publishing a notice of
availability for a framework document (78 FR 16443; Mar. 15, 2013) and
preliminary analysis TSD (79 FR 64712; Oct. 31, 2014), (ceiling fan
light kit standards rulemaking). The ceiling fan light kit standards
rulemaking affects the majority of ceiling fan manufacturers and has a
similar projected compliance
[[Page 1741]]
as the ceiling fan rulemaking. Due to these similar projected
compliance dates, manufacturers could potentially be required to make
investments to bring ceiling fan light kits and ceiling fans into
compliance during the same time period. Additionally, redesigned
ceiling fan light kits could also require adjustments to ceiling fan
redesigns separate from those potentially required by the ceiling fan
rule.
In addition to the proposed amended energy conservation standards
on ceiling fans, several other existing and pending federal regulations
may apply to other products produced by ceiling fan manufacturers. DOE
acknowledges that each regulation can affect a manufacturer's financial
operations. Multiple regulations affecting the same manufacturer can
quickly strain manufacturers' profit and possibly cause them to exit
particular markets. Table V-22 lists the other DOE energy conservation
standards that could also affect ceiling fan manufacturers in the 3
years leading up to and after the estimated compliance date of amended
energy conservation standards for these products.
Table V-22--Other DOE Regulations Potentially Affecting Ceiling Fan
Manufacturers
------------------------------------------------------------------------
Estimated industry
Regulation Approximate total conversion
compliance date expenses
------------------------------------------------------------------------
Electric Motors................. 2016 $84.6 million
(2013$).\a\
Ceiling Fan Light Kits.......... * 2019 N/A.[dagger]
Commercial and Industrial Fans.. * 2019 N/A.[dagger]
------------------------------------------------------------------------
* The dates listed are an approximation. The exact dates are pending
final DOE action.
[dagger] For energy conservation standards for rulemakings awaiting DOE
final action, DOE does not have a finalized estimated total industry
conversion cost.
\a\ Estimated industry conversion expenses were published in the TSD for
the May 2014 electric motors final rule. 79 FR 30933 The TSD for 2014
electric motors final rule can be found at http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/42.
DOE did not receive any data on other regulatory costs that affect
the industry modeled in the cash-flow analysis. To the extent DOE
receives specific costs associated with other regulations affecting the
ceiling fan profit centers modeled in the GRIM, DOE will incorporate
that information, as appropriate, into its cash-flow analysis. DOE
seeks comment on the compliance costs of any other regulations on
products that ceiling fan manufacturers also manufacture, especially if
compliance with those regulations is required 3 years before or after
the estimated compliance date of this proposed standard. See issue 25
in section VII.E.
3. National Impact Analysis
a. Significance of Energy Savings
To estimate the energy savings attributable to potential standards
for ceiling fans, DOE compared the energy consumption of those products
under the no-standards case to their anticipated energy consumption
under each TSL. The savings are measured over the entire lifetime of
products purchased in the 30-year period that begins in the year of
anticipated compliance with amended standards (2019-2048). Table V-23
presents DOE's projections of the national energy savings for each TSL
considered for ceiling fans. The savings were calculated using the
approach described in section IV.H of this notice.
Table V-23--Cumulative National Energy Savings for Ceiling Fans Shipped 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level (Quads)
-----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy.......................................... 0.132 0.201 0.531 0.725 1.303 1.724
FFC energy.............................................. 0.137 0.210 0.555 0.758 1.362 1.802
--------------------------------------------------------------------------------------------------------------------------------------------------------
OMB Circular A-4 \72\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9, rather than 30, years of
product shipments. The choice of a 9-year period is a proxy for the
timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards.\73\ The review timeframe established in EPCA is generally
not synchronized with the product lifetime, product manufacturing
cycles, or other factors specific to ceiling fans. Thus, such results
are presented for informational purposes only and are not indicative of
any change in DOE's analytical methodology. The NES sensitivity
analysis results based on a 9-year analytical period are presented in
Table V-24. The impacts are counted over the lifetime of ceiling fans
purchased in 2019-2027.
---------------------------------------------------------------------------
\72\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
\73\ Section 325(m) of 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 1742]]
Table V-24--Cumulative National Energy Savings for Ceiling Fans; Nine Years of Shipments
[2019-2027]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level (Quads)
-----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy.......................................... 0.041 0.061 0.152 0.203 0.401 0.544
FFC energy.............................................. 0.042 0.064 0.159 0.212 0.419 0.569
--------------------------------------------------------------------------------------------------------------------------------------------------------
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for ceiling fans.
In accordance with OMB's guidelines on regulatory analysis,\74\ DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate.
---------------------------------------------------------------------------
\74\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis,'' section E, (Sept. 17, 2003) (Available
at:http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------
Table V-25 shows the consumer NPV results with impacts counted over
the lifetime of products purchased in 2019-2048.
Table V-25--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans Shipped in 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level (Billion 2014$)
Discount rate -----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent............................................... 0.952 1.333 1.944 2.760 4.466 5.251
7 percent............................................... 0.400 0.539 0.522 0.813 1.094 1.051
--------------------------------------------------------------------------------------------------------------------------------------------------------
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V-26. The impacts are counted over the
lifetime of products purchased in 2019-2027. As mentioned previously,
such results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology or decision
criteria.
Table V-26--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans; Nine Years of Shipments
[2019-2027]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level (Billion 2014$)
Discount rate -----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent............................................... 0.360 0.491 0.561 0.773 0.947 0.834
7 percent............................................... 0.203 0.268 0.180 0.280 0.138 -0.126
--------------------------------------------------------------------------------------------------------------------------------------------------------
The above results reflect the use of a default trend to estimate
the change in price for ceiling fans over the analysis period (see
section IV.G of this document). DOE also conducted a sensitivity
analysis that considered one scenario with no price decline. The
results of these alternative cases are presented in appendix 10C of the
NOPR TSD.
c. Indirect Impacts on Employment
DOE expects energy conservation standards for ceiling fans to
reduce energy bills for consumers of those products, with the resulting
net savings being redirected to other forms of economic activity. These
expected shifts in spending and economic activity could affect the
demand for labor. As described in section IV.N of this document, 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.
There are uncertainties involved in projecting employment impacts,
especially changes in the later years of the analysis. Therefore, DOE
generated results for near-term timeframes (2019-2024), where these
uncertainties are reduced.
The results suggest that the proposed standards are likely to have
a 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
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
DOE has tentatively concluded that the standards proposed in this
NOPR would not reduce the utility or performance of the ceiling fans
under consideration in this rulemaking. During manufacturer interviews,
manufacturers stated that energy conservation standards that require
the use of DC motors in ceiling fans would limit the overall utility of
ceiling fans for residential consumers, as well as increase maintenance
costs. DOE is proposing standards that manufacturers indicated they
would likely meet using a DC motor for the HSSD and large-diameter
ceiling fan product classes, which represent less than three percent of
expected covered ceiling fan shipments in 2019. Additionally, the
[[Page 1743]]
use of DC motors will not significantly impact consumer utility for
HSSD and large-diameter ceiling fans because the consumers using these
products have significantly different needs for their ceiling fans than
the needs of consumers using residential ceiling fans that were
referenced by manufacturers during interviews.
5. Impact of Any Lessening of Competition
DOE has considered any lessening of competition that is likely to
result from the proposed 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 in writing 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
has provided DOJ with copies of this NOPR and the accompanying TSD for
review. DOE will consider DOJ's comments on the proposed rule in
determining whether to proceed to a final rule. DOE will publish and
respond to DOJ's comments in that document. DOE invites comment from
the public regarding the competitive impacts that are likely to result
from this proposed rule. See issue 26 in section VII.E. In addition,
stakeholders may also provide comments separately to DOJ regarding
these potential impacts. See ADDRESSES section for information to send
comments to DOJ.
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 (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 of the NOPR TSD presents the estimated impact on
generating capacity, relative to the no-standards case, for the TSLs
that DOE considered in this rulemaking.
Energy savings from amended standards for ceiling fans are expected
to yield environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases. Table V-27 provides DOE's estimate of
cumulative emissions reductions expected to result from the TSLs
considered in this rulemaking. The table includes both power sector
emissions and upstream emissions. The emissions were calculated using
the multipliers discussed in section IV.K. DOE reports annual emissions
reductions for each TSL in chapter 13 of the NOPR TSD.
Table V-27--Cumulative Emissions Reduction for Ceiling Fans Shipped 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 7.87 11.99 31.67 43.20 77.91 103.19
SO2 (thousand tons)..................................... 4.40 6.71 17.67 24.04 43.61 57.85
NOX (thousand tons)..................................... 8.84 13.48 35.64 48.66 87.62 116.00
Hg (tons)............................................... 0.02 0.02 0.07 0.09 0.16 0.22
CH4 (thousand tons)..................................... 0.63 0.97 2.55 3.47 6.29 8.34
N2O (thousand tons)..................................... 0.09 0.14 0.36 0.49 0.89 1.18
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 0.45 0.68 1.81 2.48 4.45 5.88
SO2 (thousand tons)..................................... 0.08 0.13 0.34 0.46 0.82 1.09
NOX (thousand tons)..................................... 6.43 9.81 25.99 35.51 63.72 84.28
Hg (tons)............................................... 0.00 0.00 0.00 0.00 0.00 0.00
CH4 (thousand tons)..................................... 35.52 54.17 143.56 196.12 351.90 465.40
N2O (thousand tons)..................................... 0.00 0.01 0.02 0.02 0.04 0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 8.31 12.67 33.48 45.68 82.36 109.08
SO2 (thousand tons)..................................... 4.49 6.84 18.01 24.50 44.43 58.94
NOX (thousand tons)..................................... 15.28 23.29 61.63 84.17 151.34 200.27
Hg (tons)............................................... 0.02 0.03 0.07 0.09 0.16 0.22
CH4 (thousand tons)..................................... 36.15 55.14 146.11 199.59 358.18 473.74
CH4 (thousand tons CO2eq) *............................. 1012.20 1543.84 4091.09 5588.54 10029.17 13264.68
N2O (thousand tons)..................................... 0.09 0.14 0.38 0.51 0.93 1.23
N2O (thousand tons CO2eq) *............................. 24.83 37.83 99.71 135.69 245.85 326.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential.
As part of the analysis for this proposed rule, DOE estimated
monetary benefits likely to result from the reduced emissions of
CO2 and NOX that DOE estimated for each of the
considered TSLs for ceiling fans. As discussed in section IV.L of this
notice, for CO2, DOE used the most recent values for the SCC
developed by an interagency process. The four sets of SCC values for
CO2 emissions reductions in 2015 resulting from that process
(expressed in 2014$) are represented by $12.2/metric ton (the average
value from a distribution that uses a 5-percent discount rate), $40.0/
metric ton (the average value from a distribution that uses a 3-percent
discount rate), $62.3/metric ton (the average value from a distribution
that uses a 2.5-percent discount rate), and $117/metric ton (the 95th-
percentile value from a distribution that uses a 3-percent discount
rate). The values for later years are higher due to increasing damages
(public health, economic and
[[Page 1744]]
environmental) as the projected magnitude of climate change increases.
Table V-28 presents the global value of CO2 emissions
reductions at each TSL. For each of the four cases, DOE calculated a
present value of the stream of annual values using the same discount
rate as was used in the studies upon which the dollar-per-ton values
are based. DOE calculated domestic values as a range from 7 percent to
23 percent of the global values; these results are presented in chapter
14 of the NOPR TSD.
Table V-28--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2019-2048
(Million 2014$)
----------------------------------------------------------------------------------------------------------------
SCC Case *
-------------------------------------------------------------------
TSL 3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1........................................... 53.88 247.99 394.24 755.34
2........................................... 81.92 377.43 600.14 1149.69
3........................................... 214.57 992.25 1579.02 3023.52
4........................................... 291.62 1350.73 2150.25 4116.32
5........................................... 533.47 2455.82 3904.26 7480.15
6........................................... 709.41 3260.18 5181.11 9928.66
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1........................................... 3.02 14.01 22.30 42.70
2........................................... 4.59 21.33 33.98 65.04
3........................................... 12.07 56.27 89.70 171.61
4........................................... 16.43 76.71 122.32 233.96
5........................................... 29.89 138.74 220.94 422.94
6........................................... 39.69 183.90 292.76 560.54
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1........................................... 56.90 262.00 416.54 798.03
2........................................... 86.52 398.76 634.12 1214.73
3........................................... 226.64 1048.53 1668.72 3195.13
4........................................... 308.06 1427.44 2272.57 4350.28
5........................................... 563.36 2594.56 4125.20 7903.09
6........................................... 749.10 3444.09 5473.88 10489.20
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
world economy continues to evolve rapidly. Thus, any value placed on
reduced 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 review
process.
DOE also estimated the cumulative monetary value of the economic
benefits associated with NOX emissions reductions
anticipated to result from the considered TSLs for ceiling fans. The
dollar-per-ton values that DOE used are discussed in section IV.L of
this document. Table V-29 presents the cumulative present value ranges
for NOX emissions for each TSL calculated using 7-percent
and 3-percent discount rates. This table presents values that use the
low dollar-per-ton values. Results that reflect the range of
NOX dollar-per-ton values are presented in Table V-31.
Table V-29--Estimates of Present Value of NOX Emissions Reduction for
Ceiling Fans Shipped 2019-2048
(Million 2014$)
------------------------------------------------------------------------
3% 7%
TSL discount discount
rate rate
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1................................................. 28.60 11.67
2................................................. 43.48 17.67
3................................................. 113.87 45.66
4................................................. 154.82 61.76
5................................................. 283.19 115.39
6................................................. 376.58 154.36
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1................................................. 20.48 8.15
2................................................. 31.15 12.36
3................................................. 81.80 32.02
4................................................. 111.29 43.34
5................................................. 202.78 80.64
6................................................. 269.34 107.74
------------------------------------------------------------------------
[[Page 1745]]
Total FFC Emissions
------------------------------------------------------------------------
1................................................. 49.08 19.82
2................................................. 74.63 30.02
3................................................. 195.67 77.68
4................................................. 266.11 105.10
5................................................. 485.97 196.04
6................................................. 645.92 262.11
------------------------------------------------------------------------
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
8. Summary of National Economic Impacts
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table V-
30 presents the NPV values that result from adding the estimates of the
potential economic benefits resulting from reduced CO2 and
NOX emissions in each of four valuation scenarios to the NPV
of consumer savings calculated for each TSL for ceiling fans considered
in this rulemaking, at both a 7-percent and 3-percent discount rate.
The CO2 values used in the columns of each table correspond
to the four sets of SCC values discussed above.
Table V-30--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% discount rate added with: (Billion 2014$)
---------------------------------------------------------------------------------------
TSL SCC case $12.2/ SCC case $40.0/ SCC case $62.3/ SCC case $117/metric
metric ton and 3% metric ton and 3% metric ton and 3% ton and 3% low NOX
low NOX values low NOX values low NOX values values
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................... 1.1 1.3 1.4 1.8
2............................................................... 1.5 1.8 2.0 2.6
3............................................................... 2.4 3.2 3.8 5.3
4............................................................... 3.3 4.5 5.3 7.4
5............................................................... 5.5 7.5 9.1 12.9
6............................................................... 6.6 9.3 11.4 16.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with: (Billion 2014$)
---------------------------------------------------------------------------------------
TSL SCC case $12.2/ SCC case $40.0/ SCC case $62.3/ SCC case $117/metric
metric ton and 7% metric ton and % 7% metric ton and 7% ton and 7% low NOX
low NOX values low NOX values low NOX values values
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................... 0.5 0.7 0.8 1.2
2............................................................... 0.7 1.0 1.2 1.8
3............................................................... 0.8 1.6 2.3 3.8
4............................................................... 1.2 2.3 3.2 5.3
5............................................................... 1.9 3.9 5.4 9.2
6............................................................... 2.1 4.8 6.8 11.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Although adding the value of consumer savings to the values of
emission reductions informs DOE's evaluation, two issues should be
considered. First, the national operating cost savings are domestic
U.S. 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 products shipped from 2019 to 2048. Because CO2
emissions have a very long residence time in the atmosphere,\75\ the
SCC values in future years reflect future climate-related impacts
resulting from the emission of CO2 that continue beyond
2100.
---------------------------------------------------------------------------
\75\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of
fossil-fuel particulate black carbon and organic matter, possibly
the most effective method of slowing global warming,' '' J. Geophys.
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------
C. Conclusion
When considering proposed standards, the new or amended energy
conservation standards that DOE adopts for any type (or class) of
covered product must be designed to achieve the maximum improvement in
energy efficiency that the Secretary determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In
determining whether a standard is economically justified, the Secretary
must determine whether the benefits of the standard exceed its burdens
by, to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
For this NOPR, DOE considered the impacts of amended standards for
ceiling fans at each TSL, beginning with the maximum technologically
feasible level, to determine whether that level was economically
justified. Where the max-tech level was not justified, DOE then
considered the next most efficient level and undertook the same
evaluation until it reached the highest efficiency level that is both
technologically feasible and economically justified and saves a
significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of
each TSL, tables in this section present a summary of the results of
DOE's quantitative
[[Page 1746]]
analysis for each TSL. 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 consumers who may be disproportionately
affected by a national standard and impacts on employment.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. There is evidence that consumers
undervalue future energy savings as a result of: (1) A lack of
information; (2) a lack of sufficient salience of the long-term or
aggregate benefits; (3) a lack of sufficient savings to warrant
delaying or altering purchases; (4) excessive focus on the short term,
in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments; (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs; and (6) a divergence in incentives (for example, between
renters and owners, or builders and purchasers). Having less than
perfect foresight and a high degree of uncertainty about the future,
consumers may trade off these types of investments at a higher than
expected rate between current consumption and uncertain future energy
cost savings.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forego the
purchase of a product in the standards case, this decreases sales for
product manufacturers, and the impact on manufacturers attributed to
lost revenue is included in the MIA. Second, DOE accounts for energy
savings attributable only to products actually used by consumers in the
standards case; if a regulatory option decreases the number of products
purchased by consumers, this decreases the potential energy savings
from an energy conservation standard. DOE provides estimates of
shipments and changes in the volume of product purchases in chapter 9
of the NOPR TSD. However, DOE's current analysis does not explicitly
control for heterogeneity in consumer preferences, preferences across
subcategories of products or specific features, or consumer price
sensitivity variation according to household income.\76\
---------------------------------------------------------------------------
\76\ P.C. Reiss and M.W. White, Household Electricity Demand,
Revisited, Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance energy conservation
standards, and potential enhancements to the methodology by which these
impacts are defined and estimated in the regulatory process.\77\ DOE
welcomes comments on how to more fully assess the potential impact of
energy conservation standards on consumer choice and how to quantify
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------
\77\ Alan Sanstad, Notes on the Economics of Household Energy
Consumption and Technology Choice. Lawrence Berkeley National
Laboratory (2010) (Available online at: www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf).
---------------------------------------------------------------------------
1. Benefits and Burdens of TSLs Considered for Ceiling Fan Standards
Table V-31 and Table V-32 summarize the quantitative impacts
estimated for each TSL for ceiling fans. The national impacts are
measured over the lifetime of ceiling fans purchased in the 30-year
period that begins in the anticipated year of compliance with amended
standards (2019-2048). The energy savings, emissions reductions, and
value of emissions reductions refer to full-fuel-cycle results. The
efficiency levels contained in each TSL are described in section V.A of
this notice.
Table V-31--Summary of Analytical Results for Ceiling Fans TSLs: National Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
quads........................... 0.137.................... 0.210.................... 0.555.................... 0.758.................... 1.362................... 1.802
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NPV of Consumer Costs and Benefits (2014$ billion)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate................ 0.952.................... 1.333.................... 1.944.................... 2.760.................... 4.466................... 5.251
7% discount rate................ 0.400.................... 0.539.................... 0.522.................... 0.813.................... 1.094................... 1.051
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction ( Total FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 million metric tons......... 8.31..................... 12.67.................... 33.48.................... 45.68.................... 82.36................... 109.08
SO2 thousand tons............... 4.49..................... 6.84..................... 18.01.................... 24.50.................... 44.43................... 58.94
NOX thousand tons............... 15.28.................... 23.29.................... 61.63.................... 84.17.................... 151.34.................. 200.27
Hg tons......................... 0.02..................... 0.03..................... 0.07..................... 0.09..................... 0.16.................... 0.22
CH4 thousand tons............... 36.15.................... 55.14.................... 146.11................... 199.59................... 358.18.................. 473.74
CH4 thousand tons CO2eq *....... 1012.20.................. 1543.84.................. 4091.09.................. 5588.54.................. 10029.17................ 13264.68
N2O thousand tons............... 0.09..................... 0.14..................... 0.38..................... 0.51..................... 0.93.................... 1.23
N2O thousand tons CO2eq *....... 24.83.................... 37.83.................... 99.71.................... 135.69................... 245.85.................. 326.06
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (Total FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 2014$ billion **............ 0.057 to 0.798........... 0.087 to 1.215........... 0.227 to 3.195........... 0.308 to 4.350........... 0.563 to 7.903.......... 0.749 to 10.489
[[Page 1747]]
NOX--3% discount rate 2014$ 49.1 to 108.9............ 74.6 to 165.6............ 195.7 to 433.9........... 266.1 to 590.0........... 486.0 to 1078.7......... 645.9 to 1434.2
million.
NOX--7% discount rate 2014$ 19.8 to 44.2............. 30.0 to 67.0............. 77.7 to 173.4............ 105.1 to 234.6........... 196.0 to 437.5.......... 262.1 to 584.9
million.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
Table V-32--Summary of Analytical Results for Ceiling Fans TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * TSL 5 * TSL 6 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ million) (No-Standards 1,305-1,311 1,300-1,315 1,148-1,296 1,142-1,293 1,059-1,253 925-1,230
Case INPV = 1,309).........................
Industry NPV................................ (3.5)-2.5 (9.1)-6.6 (161.1)-(12.4) (166.3)-(15.5) (249.5)-(55.4) (383.4)-(78.9)
$2014 million change........................
Industry NPV................................ (0.3)-0.2 (0.7)-0.5 (12.3)-(1.0) (12.7)-(1.2) (19.1)-(4.2) (29.3)-(6.0)
% change....................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings 2014$:
Standard................................ 48.62 36.38 8.47 8.47 (0.44) (0.44)
Hugger.................................. 41.66 30.20 5.59 5.59 5.59 (5.27)
VSD..................................... 16.47 16.47 3.01 3.01 (10.42) (10.42)
HSSD.................................... 21.56 21.56 (15.26) 27.63 27.63 27.63
Large-Diameter.......................... 235.01 235.01 159.69 27.26 27.26 (63.10)
Consumer Simple PBP **years:
Standard................................ - - 1.5 1.5 4.0 4.0
Hugger.................................. - - 1.6 1.6 1.6 4.3
VSD..................................... - - 7.7 7.7 9.8 9.8
HSSD.................................... - - 8.0 5.2 5.2 5.2
Large-Diameter.......................... - - 2.7 4.4 4.4 5.8
% of Consumers that Experience Net Cost:
Standard................................ 0.00 0.00 20 20 62 62
Hugger.................................. 0.00 0.00 22 22 22 66
VSD..................................... 0.00 0.00 2 2 71 71
HSSD.................................... 0.00 0.00 71 33 33 33
Large-Diameter.......................... 0.00 0.00 2 35 35 49
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values.
** Simple PBP results are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline
product.
DOE first considered TSL 6, which represents the max-tech
efficiency levels. TSL 6 would save 1.802 quads of energy, an amount
DOE considers significant. Under TSL 6, the NPV of consumer benefit
would be $1.051 billion using a discount rate of 7 percent, and $5.251
billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 6 are 109.08 Mt of
CO2, 58.94 thousand tons of SO2, 200.27 thousand
tons of NOX, 0.22 ton of Hg, 473.74 thousand tons of
CH4, and 1.23 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reduction at TSL 6
ranges from $0.749 billion to $10.489 billion.
At TSL 6, the average LCC impact is a savings of ($10.42) for VSD
ceiling fans, ($5.27) for hugger ceiling fans, ($0.44) for standard
ceiling fans, $27.63 for HSSD ceiling fans, and ($63.10) for large-
diameter ceiling fans. The simple payback period is 9.8 years for VSD
ceiling fans, 4.3 years for hugger ceiling fans, 4.0 years for standard
ceiling fans, 5.2 years for HSSD ceiling fans, and 5.8 years for large-
diameter ceiling fans. The fraction of consumers experiencing a net LCC
cost is 71 percent for VSD ceiling fans, 66 percent for hugger ceiling
fans, 62 percent for standard ceiling fans, 33 percent for HSSD ceiling
fans, and 49 percent for large-diameter ceiling fans.
At TSL 6, the projected change in INPV ranges from a decrease of
$383.4 million to a decrease of $78.9 million, which represent
decreases of 29.3 percent and 6.0 percent, respectively.
At TSL 6, the corresponding efficiency levels for all product
classes are the max-tech efficiency levels. Specifically for the VSD,
hugger, standard and large-diameter ceiling fan product classes, the
average LCC savings in 2014$ for all consumers, and affected consumers
relative to no standards case is negative. Additionally, the percentage
of consumers that experience net cost for the VSD, hugger and standard
ceiling fan product classes at max-tech efficiencies are greater than
60 percent.
[[Page 1748]]
The Secretary tentatively concludes that at TSL 6, the benefits of
energy savings, positive NPV of consumer benefits, emission reductions,
and the estimated monetary value of the emissions reductions would be
outweighed by the negative average LCC savings for the VSD, hugger,
standard, and large-diameter ceiling fan product classes and the
potential reduction in manufacturer industry value. Consequently, the
Secretary has tentatively concluded that TSL 6 is not economically
justified.
DOE then considered TSL 5, which corresponds to the maximum NPV at
a 7 percent discount rate, which would save 1.362 quads of energy, an
amount DOE considers significant. Under TSL 5, the NPV of consumer
benefit would be $1.094 billion using a discount rate of 7 percent, and
$4.466 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 82.36 Mt of
CO2, 44.43 thousand tons of SO2, 151.34 thousand
tons of NOX, 0.16 ton of Hg, 358.18 thousand tons of
CH4, and 0.93 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reduction at TSL 5
ranges from $0.563 billion to $7.903 billion.
At TSL 5, the average LCC impact is a savings of ($10.42) for VSD
ceiling fans, $5.59 for hugger ceiling fans, ($0.44) for standard
ceiling fans, $27.63 for HSSD ceiling fans, and $27.26 for large-
diameter ceiling fans. The simple payback period is 9.8 years for VSD
ceiling fans, 1.6 years for hugger ceiling fans, 4.0 years for standard
ceiling fans, 5.2 years for HSSD ceiling fans, and 4.4 years for large-
diameter ceiling fans. The fraction of consumers experiencing a net LCC
cost is 71 percent for VSD ceiling fans, 22 percent for hugger ceiling
fans, 62 percent for standard ceiling fans, 33 percent for HSSD ceiling
fans, and 35 percent for large-diameter ceiling fans.
At TSL 5, the projected change in INPV ranges from a decrease of
$249.5 million to a decrease of $55.4 million, which represent
decreases of 19.1 percent and 4.2 percent, respectively.
For TSL 5, the efficiency levels for each product class correspond
to the following: max-tech efficiency levels for the VSD, standard and
HSSD ceiling fan product classes, and EL 3 for hugger and large-
diameter ceiling fan product classes. Therefore, for the VSD and
standard ceiling fan product classes, the average LCC savings in 2014$
for all consumers and affected consumers relative to no standards case
is negative. Additionally, the percentage of consumers that experience
net cost for these product classes at max-tech efficiencies are greater
than 60 percent. The Secretary tentatively concludes that at TSL 5 for
ceiling fans, the benefits of energy savings, positive NPV of consumer
benefits, emission reductions, and the estimated monetary value of the
emissions reductions would be outweighed by the negative average LCC
savings for the VSD and standard ceiling fan product classes and the
potential reduction in manufacturer industry value. Consequently, the
Secretary has tentatively concluded that TSL 5 is not economically
justified.
DOE then considered TSL 4, which corresponds to the highest
efficiency level for which the LCC and NPV are both positive, which
would save 0.758 quads of energy, an amount DOE considers significant.
Under TSL 4, the NPV of consumer benefit would be $0.813 billion using
a discount rate of 7 percent, and $2.760 billion using a discount rate
of 3 percent.
The cumulative emissions reductions at TSL 4 are 45.68 Mt of
CO2, 24.50 thousand tons of SO2, 84.17 thousand
tons of NOX, 0.09 ton of Hg, 199.59 thousand tons of
CH4, and 0.51 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reduction at TSL 4
ranges from $0.308 billion to $4.350 billion.
At TSL 4, the average LCC impact is a savings of $3.01 for VSD
ceiling fans, $5.59 for hugger ceiling fans, $8.47 for standard ceiling
fans, $27.63 for HSSD ceiling fans, and $27.26 for large-diameter
ceiling fans. The simple payback period is 7.7 years for VSD ceiling
fans, 1.6 years for hugger ceiling fans, 1.5 years for standard ceiling
fans, 5.2 years for HSSD ceiling fans, and 4.4 years for large-diameter
ceiling fans. The fraction of consumers experiencing a net LCC cost is
2 percent for VSD ceiling fans, 22 percent for hugger ceiling fans, 20
percent for standard ceiling fans, 33 percent for HSSD ceiling fans,
and 35 percent for large-diameter ceiling fans.
At TSL 4, the projected change in INPV ranges from a decrease of
$166.3 million to a decrease of $15.5 million, which represent
decreases of 12.7 percent and 1.2 percent, respectively.
For TSL 4, the efficiency levels for each product class correspond
to the following: max-tech for HSSD ceiling fan product class, EL 3 for
the hugger, standard and large-diameter ceiling fan product classes,
and EL 2 for the very-small diameter ceiling fan product class. At TSL
4, the average LCC savings in 2014$ are positive for all product
classes. Also, the fraction of consumers that experience net savings at
TSL 4 is much greater than the fraction of consumers that experience a
net cost.
After considering the analysis and weighing the benefits and
burdens, the Secretary has tentatively concluded that at TSL 4, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, the estimated monetary value of the emissions reductions,
and positive average LCC savings would outweigh the negative impacts on
some consumers and on manufacturers, including the conversion costs
that could result in a reduction in INPV for manufacturers.
Accordingly, the Secretary has tentatively concluded that TSL 4 would
offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy.
Therefore, based on the above considerations, DOE proposes to adopt
the energy conservation standards for ceiling fans at TSL 4. The
proposed amended energy conservation standards for ceiling fans, which
are expressed as maximum CFM/W, are shown in Table V-33.
Table V-33--Proposed Amended Energy Conservation Standards for Ceiling
Fans
------------------------------------------------------------------------
Maximum
airflow
Product class efficiency
equation (CFM/
W) *
------------------------------------------------------------------------
Very Small-Diameter (VSD)............................... 3.17D-16.75
Hugger.................................................. 0.05D+56.41
Standard................................................ 0.30D+60.61
High-Speed Small-Diameter (HSSD)........................ 4.22D+0.02
Large Diameter.......................................... 1.16D-24.38
------------------------------------------------------------------------
* D is the ceiling fan diameter, in inches.
2. Summary of Annualized Benefits and Costs of the Proposed Standards
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The annualized monetary values
are the sum of: (1) the annualized national economic value (expressed
in 2014$) of the benefits from operating products that meet the
proposed standards (consisting primarily of operating cost savings from
using less energy, minus increases in product purchase costs, which is
another way of representing consumer NPV), and (2) the annualized
monetary value of the benefits of CO2 and NOX
emission reductions.\78\
---------------------------------------------------------------------------
\78\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2014, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(2020, 2030, etc.), and then discounted the present value from each
year to 2015. The calculation uses discount rates of 3 and 7 percent
for all costs and benefits except for the value of CO2
reductions, for which DOE used case-specific discount rates. Using
the present value, DOE then calculated the fixed annual payment over
a 30-year period, starting in the compliance year that yields the
same present value.
---------------------------------------------------------------------------
[[Page 1749]]
Table V-34 shows the annualized values for ceiling fans under TSL
4, expressed in 2014$. 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 has a value of $40.0/t in 2015),
the estimated cost of the standards proposed in this rule is $140
million per year in increased equipment costs, while the estimated
annual benefits are $220 million in reduced equipment operating costs,
$80 million in CO2 reductions, and $10 million in reduced
NOX emissions. In this case, the net benefit amounts to $170
million per year.
Using a 3-percent discount rate for all benefits and costs and the
average SCC series that has a value of $40.0/t in 2015, the estimated
cost of the proposed ceiling fans standards is $136 million per year in
increased equipment costs, while the estimated annual benefits are $290
million in reduced operating costs, $80 million in CO2
reductions, and $15 million in reduced NOX emissions. In
this case, the net benefit amounts to $248 million per year.
Table V-34--Annualized Benefits and Costs of Proposed Standards (TSL 4) for Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Million 2014$/year
-----------------------------------------------------------------------------------
Discount rate Low net benefits estimate High net benefits estimate
Primary estimate * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings... 7%.............................. 220....................... 195....................... 253.
3%.............................. 290....................... 255....................... 341.
CO2 Reduction Value ($12.2/t) **.. 5%.............................. 23........................ 21........................ 26.
CO2 Reduction Value ($40.0/t) **.. 3%.............................. 80........................ 71........................ 90.
CO2 Reduction Value ($62.3/t) **.. 2.5%............................ 117....................... 105....................... 132.
CO2 Reduction Value ($117/t) **... 3%.............................. 243....................... 217....................... 274.
NOX Reduction Value [dagger]...... 7%.............................. 10........................ 9......................... 26.
3%.............................. 15........................ 13........................ 37.
---------------------------------------------------------------------------------------------------------------------
Total Benefits 7% plus CO2 range............... 254 to 473................ 225 to 421................ 305 to 553.
[dagger][dagger].
7%.............................. 310....................... 275....................... 369.
3% plus CO2 range............... 328 to 547................ 289 to 485................ 404 to 652.
3%.............................. 384....................... 340....................... 467.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs 7%.............................. 140....................... 177....................... 155.
3%.............................. 136....................... 182....................... 152.
---------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]........ 7% plus CO2 range............... 114 to 333................ 47 to 243................. 150 to 398.
7%.............................. 170....................... 98........................ 214.
3% plus CO2 range............... 192 to 411................ 107 to 303................ 251 to 499.
3%.............................. 248....................... 157....................... 315.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with ceiling fans shipped in 2019-2048. These results include benefits to consumers
which accrue after 2048 from the products purchased in 2019-2048. 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 Estimate assumes the Reference case
electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the
electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend
for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the
same product price decrease for ceiling fans with DC motors as in the Primary Estimate.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 incorporate an escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L. DOE estimated the monetized value of NOx emissions reductions using benefit per
ton estimates from the Regulatory Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants,'' published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 I.A.2for further discussion. For DOE's Primary Estimate and Low
Net Benefits Estimate, the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit
sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the
benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the
ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE
intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
rate ($40.0/t case). 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 1750]]
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 the proposed standards set forth in this NOPR are
intended to address are as follows:
(1) Insufficient information and the high costs of gathering and
analyzing relevant information leads some consumers to miss
opportunities to make cost-effective investments in energy efficiency.
(2) In some cases, the benefits of more-efficient equipment are not
realized due to misaligned incentives between purchasers and users. An
example of such a case is when the equipment purchase decision is made
by a building contractor or building owner who does not pay the energy
costs.
(3) There are external benefits resulting from improved energy
efficiency of appliances and equipment that are not captured by the
users of such products. These benefits include externalities related to
public health, environmental protection, and national energy security
that are not reflected in energy prices, such as reduced emissions of
air pollutants and greenhouse gases that impact human health and global
warming. DOE attempts to quantify some of the external benefits through
use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory
Affairs (OIRA) in the OMB has determined that the proposed regulatory
action is a significant regulatory action under section (3)(f) of
Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of
the Order, DOE has provided to OIRA: (i) The text of the draft
regulatory action, together with a reasonably detailed description of
the need for the regulatory action and an explanation of how the
regulatory action will meet that need; and (ii) An assessment of the
potential costs and benefits of the regulatory action, including an
explanation of the manner in which the regulatory action is consistent
with a statutory mandate. DOE has included these documents in the
rulemaking record.
In addition, the Administrator of OIRA has determined that the
proposed regulatory action is an ``economically'' significant
regulatory action under section (3)(f)(1) of Executive Order 12866.
Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has
provided to OIRA an assessment, including the underlying analysis, of
benefits and costs anticipated from the regulatory action, together
with, to the extent feasible, a quantification of those costs; and an
assessment, including the underlying analysis, of costs and benefits of
potentially effective and reasonably feasible alternatives to the
planned regulation, and an explanation why the planned regulatory
action is preferable to the identified potential alternatives. These
assessments 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).
Executive Order 13563 is supplemental to and explicitly reaffirms the
principles, structures, and definitions governing regulatory review
established in Executive Order 12866. To the extent permitted by law,
agencies are required by Executive Order 13563 to: (1) Propose or adopt
a regulation only upon a reasoned determination that its benefits
justify its costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor regulations to impose the least
burden on society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent practicable,
the costs of cumulative regulations; (3) select, in choosing among
alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity);
(4) to the extent feasible, specify performance objectives, rather than
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, OIRA has emphasized that such techniques may include
identifying changing future compliance costs that might result from
technological innovation or anticipated behavioral changes. For the
reasons stated in the preamble, DOE believes that this 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
1. Description on Estimated Number of Small Entities Regulated
For manufacturers of ceiling fans, the 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. See 13 CFR part 121. The
size standards are listed by North American Industry Classification
System (NAICS) code and industry description available at: https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Ceiling
fan manufacturing is classified under NAICS code 335210, ``Small
Electrical Appliance Manufacturing.'' The SBA sets a threshold of 750
employees or less for an entity to be considered as a small business
for this category.
To estimate the number of companies that could be small businesses
that sell ceiling fans covered by this rulemaking, DOE conducted a
market survey using publicly available information. DOE first attempted
to identify all potential ceiling fan manufacturers by researching
industry trade associations (e.g., ALA \79\), information from previous
rulemakings, individual company Web sites, and SBA's database. DOE then
attempted to gather information on the location and number of employees
to see if these companies met SBA's definition of a small business for
each potential ceiling fan manufacturer by reaching out directly to
those potential small businesses and using market research tools (e.g.,
www.hoovers.com, www.manta.com, glassdoor.com, www.linkedin.com, etc.).
DOE also asked interested parties and industry representatives if they
were aware of any small businesses during manufacturer interviews and
DOE public meetings. DOE used information from these sources to create
a list of companies that potentially manufacture or sell ceiling fans
and would be affected by this rulemaking. DOE
[[Page 1751]]
screened out companies that do not offer products covered by this
rulemaking, do not meet the definition of a ``small business,'' or are
completely foreign owned and operated.
---------------------------------------------------------------------------
\79\ ALA. Membership Directory and Buyer's Guide 2015. Last
Accessed June 9, 2015. http://www.lightrays-digital.com/lightrays/2015_membership_directory#pg1.
---------------------------------------------------------------------------
For ceiling fans, DOE initially identified 82 potential companies
that sell ceiling fans in the United States. After reviewing publicly
available information on these potential ceiling fan manufacturers, DOE
determined that 45 were either large businesses or businesses that were
completely foreign owned and operated. DOE determined that the
remaining 37 companies were small businesses that either manufacture or
sell covered ceiling fans in the United States. Based on manufacturer
interviews, DOE estimates that these small businesses account for
approximately 25 percent of the ceiling fan market.
DOE seeks comments, information, and data on the small businesses
in the industry, including their numbers and their role in the ceiling
fan market. DOE also requests data on the market share of small
businesses in the ceiling fan market. See issue 27 in section VII.E.
2. Description and Estimate of Compliance Requirements
At TSL 4, DOE estimates that small ceiling fan businesses selling
standard and hugger ceiling fans could be disproportionally impacted by
the proposed energy conservation standards compared to large ceiling
fan businesses. However, since DOE estimates that more than 90 percent
of VSD, HSSD, and large-diameter ceiling fans are manufactured by small
businesses, DOE projects the impacts on small businesses that only
produce VSD, HSSD, and large-diameter fan product classes to be
represented by the overall industry impacts for those particular
product classes. DOE displays the overall industry impacts for VSD,
HSSD, and large-diameter fan product classes individually at the
proposed TSL in Table VI-1, Table VI-2, and Table VI-3.
Table VI-1--Manufacturer Impact Analysis for Very Small-Diameter Ceiling Fans at the Proposed Trial Standard
Level (TSL 4)
----------------------------------------------------------------------------------------------------------------
Proposed trial standard level (TSL 4)
-----------------------------------------------
Units No-standards Preservation Preservation
case of gross of operating Two-tiered
margin profit
----------------------------------------------------------------------------------------------------------------
INPV.......................... 2014$ thousands. 8,898 8,889 8,855 7,020
Change in INPV................ 2014$ thousands. .............. (9) (43) (1,878)
%............... .............. (0.1) (0.5) (21.1)
Product Conversion Costs...... 2014$ thousands. .............. 3 3 3
Capital Conversion Costs...... 2014$ thousands. .............. 9 9 9
Total Conversion Costs........ 2014$ thousands. .............. 12 12 12
----------------------------------------------------------------------------------------------------------------
For the VSD ceiling fan product class, at TSL 4 DOE estimates
impacts on INPV range from -$1,878 thousand to -$9 thousand, or
decreases in INPV of -21.1 percent to -0.1 percent. DOE projects that
in 2019, 96 percent of VSD ceiling fan shipments will meet or exceed
efficiency levels analyzed at TSL 4.
Table VI-2--Manufacturer Impact Analysis for High-Speed Small-Diameter Ceiling Fans at the Proposed Trial
Standard Level (TSL 4)
----------------------------------------------------------------------------------------------------------------
Proposed trial standard level (TSL 4)
-----------------------------------------------
Units No-standards Preservation Preservation
case of gross of operating Two-tiered
margin profit
----------------------------------------------------------------------------------------------------------------
INPV.......................... 2014$ thousands. 29,350 28,030 13,088 27,278
Change in INPV................ 2014$ thousands. .............. (1,323) (16,265) (2,072)
%............... .............. (4.5) (55.4) (7.1)
Product Conversion Costs...... 2014$ thousands. .............. 94 94 94
Capital Conversion Costs...... 2014$ thousands. .............. 293 293 293
Total Conversion Costs........ 2014$ thousands. .............. 388 388 388
----------------------------------------------------------------------------------------------------------------
For the HSSD ceiling fan product class, at TSL 4 DOE estimates
impacts on INPV range from -$16,265 thousand to -$1,323 thousand, or
decreases in INPV of -55.4 percent to -4.5 percent. TSL 4 represents
max-tech for the HSSD ceiling fan product class, and DOE projects that
in 2019, 6 percent of HSSD ceiling fan shipments will meet or exceed
efficiency levels analyzed at TSL 4.
Table VI-3--Manufacturer Impact Analysis for Large-Diameter Ceiling Fans at the Proposed Trial Standard Level
(TSL 4)
----------------------------------------------------------------------------------------------------------------
Proposed trial standard level (TSL 4)
-----------------------------------------------
Units No-standards Preservation Preservation
case of gross of operating Two-tiered
margin profit
----------------------------------------------------------------------------------------------------------------
INPV.......................... 2014$ thousands. 37,840 36,415 33,923 34,870
[[Page 1752]]
Change in INPV................ 2014$ thousands. .............. (1,425) (3,917) (2,970)
%............... .............. (3.8) (10.4) (7.8)
Product Conversion Costs...... 2014$ thousands. .............. 174 174 174
Capital Conversion Costs...... 2014$ thousands. .............. 638 638 638
Total Conversion Costs........ 2014$ thousands. .............. 812 812 812
----------------------------------------------------------------------------------------------------------------
For the large-diameter ceiling fans product class, at TSL 4, DOE
estimates impacts on INPV range from -$3,917 thousand to -$1,425
thousand, or decreases in INPV of -10.4 percent to -3.8 percent. DOE
projects that in 2019, 17 percent of large-diameter ceiling fan
shipments will meet or exceed efficiency levels analyzed at TSL 4.
Because small businesses represent the majority of the VSD, HSSD
and large-diameter ceiling fan markets, these estimated industry
impacts represent the estimated impacts on small businesses selling
VSD, HSSD, and large-diameter ceiling fan product classes.
As a result of this rulemaking, small businesses will incur product
conversion costs because products that no longer meet the proposed
efficiency levels of amended energy conservation standards will most
likely need to be redesigned, tested, and certified. Manufacturers will
also incur capital conversion costs due to retooling costs associated
with producing more efficient ceiling fans required by the proposed
standards. Table VI-4 presents total conversion costs for both large
and small manufacturers. At TSL 4, approximately fifty percent of total
industry conversion costs are incurred by small manufacturers.
Table VI-4--Total Conversion Costs by Manufacturer Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
Units TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Conversion Costs for Small 2014$ (thousands)............ 99 140 1,209 2,273 4,072 4,610
Manufacturers.
Total Conversion Costs for Large 2014$ (thousands)............ 57 144 2,221 2,221 5,284 6,411
Manufacturers.
Total Industry Conversion Costs............ 2014$ (thousands)............ 156 284 3,430 4,494 9,356 11,022
--------------------------------------------------------------------------------------------------------------------------------------------------------
Because small businesses have significantly less revenue, annual
R&D budgets, and annual capital expenditure budgets than large
manufacturers, the conversion costs necessary to comply with proposed
standards represent the majority of a typical small business' annual
R&D budget, almost one and a half times a typical small business'
annual capital expenditure budget, and a sizeable portion of a typical
small business' annual revenue. Table VI-5 demonstrates the impacts
that conversion costs as a result of the proposed standards could have
on typical small and large ceiling fan business's annual R&D budgets,
annual capital expenditure budgets, and annual revenues.
Table VI-5--Estimated Testing and Certification Costs as a Percentage of Annual R&D Expense and Revenue for
Ceiling Fan Manufacturers
----------------------------------------------------------------------------------------------------------------
Product conversion Capital conversion
cost as a cost as a percentage Total conversion
percentage of of annual capital cost as a percentage
annual R&D expense expenditure of annual revenue
----------------------------------------------------------------------------------------------------------------
Typical Small Manufacturer.................... 80 147 7
Typical Large Manufacturer.................... 12 23 1
----------------------------------------------------------------------------------------------------------------
At TSL 4, an average of 36 percent of standard and hugger ceiling
fans would need to be redesigned to meet the efficiency levels required
at the proposed TSL. For a typical small business that sells standard
and hugger ceiling fans, the cost of redesigning and testing these
models would account for 80 percent of a typical small business' annual
R&D budget, compared to 12 percent of a typical large business' annual
R&D budget.
Capital conversion costs are driven primarily by the retooling
costs associated with producing redesigned models that meet efficiency
levels required by the proposed standards and would account for 147
percent of a typical small business' annual capital expenditure budget,
compared to 23 percent of a typical large business' annual capital
expenditure budget.
Additionally, total conversion costs at the proposed standards
represents 7 percent of an average small ceiling fan business' revenue,
compared to 1 percent of an average large ceiling fan business'
revenue. Small ceiling businesses that sell standard and hugger ceiling
fans must recover costs that
[[Page 1753]]
account for a larger percentage of their total revenue with a smaller
amount of sales than large ceiling fan businesses.
Due to the difficulty of cost recovery, DOE concludes that small
businesses selling standard and hugger ceiling fan product classes
could be disproportionately impacted by the proposed amended ceiling
fan energy conservation standard compared to large businesses.
DOE seeks comment on the potential impacts of the amended standards
on ceiling fan small businesses. See issue 28 in section VII.E.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
DOE is not aware of any rules or regulations that duplicate,
overlap, or conflict with the proposed amended standard. DOE seeks
comment on any rules or regulations that could potentially duplicate,
overlap, or conflict with the proposed amended standard. See issue 29
in section VII.E.
4. Significant Alternatives to the Rule
The discussion in the previous section analyzes impacts on small
businesses that would result from DOE's proposed rule, TSL 4. In
reviewing alternatives to the proposed rule, DOE examined energy
conservation standards set at lower efficiency levels. While TSL 1, TSL
2, and TSL 3 would reduce the impacts on small business manufacturers,
it would come at the expense of a significant reduction in energy
savings and NPV benefits to consumers. TSL 1 achieves 82 percent lower
energy savings and 51 percent less NPV benefits to consumers compared
to the energy savings and NPV benefits at TSL 4. TSL 2 achieves 72
percent lower energy savings and 34 percent less NPV benefits to
consumers compared to the energy savings and NPV benefits at TSL 4. TSL
3 achieves 27 percent lower energy savings and 36 percent less NPV
benefits to consumers compared to the energy savings and NPV benefits
at TSL 4.
Establishing standards at TSL 4 balances the benefits of the energy
savings and the NPV benefits to consumers created at TSL 4 with the
potential burdens placed on ceiling fan manufacturers, including small
business manufacturers. Accordingly, DOE is declining to adopt one of
the other TSLs considered in the analysis, or the other policy
alternatives detailed as part of the regulatory impacts analysis
included in chapter 17 of this NOPR TSD.
Additional compliance flexibilities may be available through other
means. For example, individual manufacturers may petition for a waiver
of the applicable test procedure (see 10 CFR 430.27). Further, EPCA
provides that a manufacturer whose annual gross revenue from all of its
operations does not exceed $8 million may apply for an exemption from
all or part of an energy conservation standard for a period not longer
than 24 months after the effective date of a final rule establishing
the standard. Additionally, Section 504 of the Department of Energy
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary
to adjust a rule issued under EPCA in order to prevent ``special
hardship, inequity, or unfair distribution of burdens'' that may be
imposed on that manufacturer as a result of such rule. Manufacturers
should refer to 10 CFR part 430, subpart E, and part 1003 for
additional details.
C. Review Under the Paperwork Reduction Act
Manufacturers of ceiling fans 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 ceiling fans, 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 ceiling fans. See
generally 10 CFR part 429. 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 30 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 (August 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. DOE has examined this
proposed rule and has tentatively determined that it would not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. EPCA
governs and prescribes Federal preemption of State regulations as to
energy conservation for the products that are the subject of this
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) Therefore, 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
[[Page 1754]]
following requirements: (1) eliminate drafting errors and ambiguity;
(2) write regulations to minimize litigation; (3) provide a clear legal
standard for affected conduct rather than a general standard; and (4)
promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996).
Regarding the review required by section 3(a), section 3(b) of
Executive Order 12988 specifically requires that Executive agencies
make every reasonable effort to ensure that the regulation: (1) Clearly
specifies the preemptive effect, if any; (2) clearly specifies any
effect on existing Federal law or regulation; (3) provides a clear
legal standard for affected conduct while promoting simplification and
burden reduction; (4) specifies the retroactive effect, if any; (5)
adequately defines key terms; and (6) addresses other important issues
affecting clarity and general draftsmanship under any guidelines issued
by the Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, this proposed rule meets the relevant standards of
Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a proposed regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a proposed ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. 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/sites/prod/files/gcprod/documents/umra_97.pdf.
Although this proposed rule does not contain a Federal
intergovernmental mandate, it may require expenditures of $100 million
or more by the private sector. Specifically, the proposed rule would
likely result in a final rule that could require expenditures of $100
million or more. Such expenditures may include: (1) Investment in
research and development and in capital expenditures by ceiling fan
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 ceiling fans, starting at
the compliance date for the applicable standard..
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the proposed rule. (2 U.S.C. 1532(c)) The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of the NOPR and the ``Regulatory
Impact Analysis'' section of the NOPR TSD for this proposed rule
respond to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the proposed rule unless DOE publishes
an explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(d),
(f), and (o), 6313(e), and 6316(a), this proposed rule would establish
amended energy conservation standards for ceiling fans that are
designed to achieve the maximum improvement in energy efficiency that
DOE has determined to be both technologically feasible and economically
justified. A full discussion of the alternatives considered by DOE is
presented in the ``Regulatory Impact Analysis'' section of the NOPR TSD
for this proposed rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights,'' 53 FR
8859 (March 15, 1988), DOE has determined that this proposed rule 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 information
quality 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 this 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
[[Page 1755]]
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 this regulatory action, which
proposes amended energy conservation standards for ceiling fans, 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 this 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.'' Id. at 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].
Please note that foreign nationals visiting DOE Headquarters are
subject to advance security screening procedures which require advance
notice prior to attendance at the public meeting. If a foreign national
wishes to participate in the public meeting, please inform DOE of this
fact as soon as possible by contacting Ms. Regina Washington at (202)
586-1214 or by email ([email protected]) so that the
necessary procedures can be completed.
DOE requires visitors to have laptops and other devices, such as
tablets, checked upon entry into the Forrestal Building. Any person
wishing to bring these devices into the building will be required to
obtain a property pass. Visitors should avoid bringing these devices,
or allow an extra 45 minutes to check in. Please report to the
visitor's desk to have devices checked before proceeding through
security.
Due to the REAL ID Act implemented by the Department of Homeland
Security (DHS), there have been recent changes regarding identification
(ID) requirements for individuals wishing to enter Federal buildings
from specific States and U.S. territories. As a result, driver's
licenses from several States or territory will not be accepted for
building entry, and instead, one of the alternate forms of ID listed
below will be required. DHS has determined that regular driver's
licenses (and ID cards) from the following jurisdictions are not
acceptable for entry into DOE facilities: Alaska, American Samoa,
Arizona, Louisiana, Maine, Massachusetts, Minnesota, New York,
Oklahoma, and Washington. Acceptable alternate forms of Photo-ID
include: U.S. Passport or Passport Card; an Enhanced Driver's License
or Enhanced ID-Card issued by the States of Minnesota, New York, or
Washington (Enhanced licenses issued by these States are clearly marked
Enhanced or Enhanced Driver's License); a military ID or other Federal
government-issued Photo-ID card.
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 Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=65. Participants are
responsible for ensuring their systems are compatible with the webinar
software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has plans to present a prepared general statement
may request that copies of his or her statement be made available at
the public meeting. Such persons may submit requests, along with an
advance electronic copy of their statement in PDF (preferred),
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to
the appropriate address shown in the ADDRESSES section at the beginning
of this notice. The request and advance copy of statements must be
received at least one week before the public meeting and may be
emailed, hand-delivered, or sent by mail. DOE prefers to receive
requests and advance copies via email. Please include a telephone
number to enable DOE staff to make 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. There shall not be discussion of proprietary
information, costs or prices, market share, or other commercial matters
regulated by U.S. anti-trust laws. 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.
[[Page 1756]]
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 and will be accessible on the DOE Web site. 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 www.regulations.gov. The
www.regulations.gov Web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (CBI)). Comments submitted through
www.regulations.gov cannot be claimed as CBI. Comments received through
the Web site will waive any CBI claims for the information submitted.
For information on submitting CBI, see the Confidential Business
Information section below.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or mail.
Comments and documents submitted via email, hand delivery/courier, or
mail also will be posted to www.regulations.gov. If you do not want
your personal contact information to be publicly viewable, do not
include it in your comment or any accompanying documents. Instead,
provide your contact information in a cover letter. Include your first
and last names, email address, telephone number, and optional mailing
address. The cover letter will not be publicly viewable as long as it
does not include any comments
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via mail or hand
delivery/courier, please provide all items on a CD, if feasible, in
which case it is not necessary to submit printed copies. No
telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit 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
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 that 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. DOE requests comment on the proposed product class structure
based on blade diameter, distance from the ceiling and the UL 507
table. See section IV.A.1.
2. DOE seeks comment on the definition of highly-decorative ceiling
fans based on both an RPM and a CFM threshold. See section IV.A.1.a.
3. DOE requests comment on the applications of wind and temperature
sensors, and if they reduce or increase the energy consumption of a
ceiling fan considering both active and standby of
[[Page 1757]]
fan operation. If so, DOE seeks specific data on how wind and
temperature sensors reduce or increase energy consumption of a ceiling
fan. See section IV.A.2.c.
4. DOE requests comment on the technologies that were assumed to be
available and able to allow each product class to meet the specified
energy efficiency level, including fan optimization, larger direct-
drive motor and DC motors for the very small-diameter product class.
See section IV.B.
5. DOE requests comment and data about the performance of occupancy
sensors and occupancy sensor schedulers and whether they would reduce
or increase the energy consumption of a ceiling fan considering both
active and standby/off modes of fan operation. See section IV.B.1.a.
6. One method to improve ceiling fan efficiency is to reduce the
fan speed. Some reduction in fan speed may not impact consumer utility.
DOE requests comment on what an acceptable reduction of fan speed may
be such that it does not affect consumer utility for each of the
proposed product classes. See section IV.C.
7. DOE requests comment about the proposed factory costs at each
efficiency level for each product class. Specifically DOE seeks comment
on the 52-inch standard ceiling fan baseline factory costs of $38.85
and a baseline MPC of $54.93. See section IV.C.3.
8. DOE requests any data on operating hours for each product class
and inparticular the HSSD ceiling fan product class. See section
IV.E.2.b.
9. DOE requests any relevant data on how the proposed ceiling fan
standards could have on the operation of air conditioners, whether and
to what level there may be a substitution effect that would cause a
reduction in the purchase of residential and/or commercial air
conditioning systems in lieu of ceiling fans. In addition, DOE requests
any relevant data regarding whether the proposed standards would impact
the usage rate of residential and/or commercial air conditioning
systems. See section IV.E.3.
10. Installation costs were assumed not to vary by efficiency level
for all product classes, and therefore were not considered in the
analysis. DOE requests comments on this assumption. See section IV.F.
11. DOE requests comments on the methodology of the LCC and PBP
analysis for ceiling fans. See section IV.F.
12. DOE has assumed that the excess rate of failure for DC motors,
above the repair rate for AC motors, is 6.5 percent of purchases. DOE
also assumed a repair cost of $150 for all product classes other than
the large-diameter product class, and a repair cost of $1000 for large-
diameter fans. DOE requests comment, input, and data that can improve
the estimate of repair costs, particularly repairs costs associated
with DC motors. See section IV.F.4.
13. DOE requests comment on the survival function used in this
rulemaking, which DOE assumed has the form of a cumulative Weibull
distribution, and provides a mean of 13.8 years and a median of 13.0
years for appliance lifetime. This is the same distribution employed in
the preliminary analysis. DOE welcomes comment on these estimates. See
section IV.F.5.
14. Shipment data were only available for standard, hugger, and VSD
ceiling fans, so DOE assumed the survival probability function of
large-diameter and HSSD ceiling fans is the same as that for standard,
hugger, and VSD ceiling fans. DOE requests comments and data on product
lifetimes of large-diameter and HSSD ceiling fans. See section IV.F.5.
15. Using updated, price-weighted data, DOE calculated 48.7 percent
and 51.3 percent as the current market share split for hugger and
standard ceiling fans, respectively. (This calculation retained the 27
percent/73 percent installation split used in the preliminary analysis
for multi-mount fans.) DOE requests comment, data, or information on
its estimates for the relative split between hugger, standard, and VSD
product classes. See section IV.G.1.
16. DOE requests data and information on current and historical
shipments for HSSD and large-diameter ceiling fans. See section IV.G.1.
17. DOE requests comments on the assumed ceiling fan usage by
sector for all product classes. See section IV.G.1.
18. DOE requests comments on its approach for estimating the market
share distribution by efficiency level using a consumer-choice model
sensitive to first cost for standard, hugger, and VSD ceiling fans. See
section IV.G.3.
19. DOE requests comments on its use of the roll-up approach to
estimate market-shares by efficiency levels for HSSD and large-diameter
ceiling fans. See section IV.G.3.
20. DOE assumed that the cost of DC motor ceiling fans would
decrease over the course of the shipments analysis due to a price trend
applied to the electronics controller used in DC motor fans. DOE
estimated the cost of the electronics controller as the incremental
price difference between a DC motor and a comparable AC motor. DOE
applied a 6% price decline rate to the incremental cost associated with
the electronic controller. DOE's methodology leads to an average annual
decrease of 0.5% in the total price of a DC motor ceiling fan. DOE
requests input on the validity of its price trend methodology as
applied to the incremental cost of a DC motor. See section IV.G.4.
21. DOE requests data and information to more accurately estimate a
price elasticity of demand specific to ceiling fans. Specifically, DOE
requests concurrent data on industry-wide shipments-weighted retail
price and efficiency and average household income. See section IV.G.5.
22. DOE requests comments on the overall methodology used to
develop shipment forecasts and estimate NES and the NPV of those
savings. See section IV.H.2.
23. DOE seeks comment on any potential impact on manufacturing
capacity at the efficiency levels proposed in this NOPR. See section
V.B.2.c.
24. DOE seeks comment on any other potential manufacturer subgroups
that could be disproportionally affected by amended energy conservation
standards for ceiling fans. See section V.B.2.d.
25. DOE seeks comment on the cumulative regulatory burden due to
compliance costs of any other regulations, such as the ceiling fan
light kit proposed rule, on products that ceiling fan manufacturers
also manufacture, especially if compliance with those regulations is
required 3 years before or after the estimated compliance date of this
proposed standard. See section V.B.2.e.
26. DOE invites comment from the public regarding the competitive
impacts that are likely to result from this proposed rule. See section
V.B.5.
27. DOE seeks comments, information, and data on the small
businesses in the industry, including their numbers and their role in
the ceiling fan market. DOE also requests data on the market share of
small businesses in the ceiling fan market. See section VI.B.1.
28. DOE seeks comment on the potential impacts of the amended
standards on ceiling fan small businesses. See section VI.B.2.
29. DOE seeks comment on any rules or regulations that could
potentially duplicate, overlap, or conflict with the proposed amended
standard. See section VI.B.3.
[[Page 1758]]
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this notice of
proposed rulemaking.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovernmental relations, Small
businesses.
Issued in Washington, DC, on December 23, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, DOE proposes to amend
part 430 of chapter II, subchapter D, of title 10 of the Code of
Federal Regulations, as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for Part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Section 430.2 is amended by adding the definitions for ``belt-driven
ceiling fan,'' ``highly-decorative ceiling fan,'' ``high-speed small-
diameter ceiling fan,'' ``hugger ceiling fan,'' ``large-diameter
ceiling fan,'' ``small-diameter ceiling fan,'' ``standard ceiling
fan,'' and ``very small-diameter ceiling fan'' in alphabetical order to
read as follows:
Sec. 430.2 Definitions.
* * * * *
Belt-driven ceiling fan means a ceiling fan with a series of one or
more fan heads, each driven by a belt connected to one or more motors.
* * * * *
Highly-decorative ceiling fan means a ceiling fan with a maximum
rotational speed of 90 RPM and less than 1,840 CFM airflow at high
speed.
* * * * *
High-speed small-diameter ceiling fan means a ceiling fan that is
not a very small-diameter ceiling fan, highly-decorative ceiling fan or
belt-driven ceiling fan; and has a blade thickness of < 3.2 mm at the
edge or a maximum tip speed > the applicable limit in the table in this
definition.
Small-Diameter Ceiling Fans, Less Than or Equal to 7 Feet in Diameter
----------------------------------------------------------------------------------------------------------------
Thickness (t) of Edges of Blades Maximum Speed at Tip of Blades
Airflow Direction ---------------------------------------------------------------------------
mm inch m/s feet per minute
----------------------------------------------------------------------------------------------------------------
Downward-only....................... 4.8 > t >= 3.2 3/16 > t >= 1/8 16.3 3,200
Downward-only....................... t >= 4.8 t >= 3/16 20.3 4,000
Reversible.......................... 4.8 > t >= 3.2 3/16 > t >= 1/8 12.2 2,400
Reversible.......................... t >= 4.8 t >= 3/16 16.3 3,200
----------------------------------------------------------------------------------------------------------------
* * * * *
Hugger ceiling fan means a ceiling fan that is not a ceiling fan
that is not a very small-diameter ceiling fan, highly-decorative
ceiling fan or belt-driven ceiling fan; and where the lowest point on
fan blades is <= 10 inches from the ceiling; and has a blade thickness
of >= 3.2 mm at the edge and a maximum tip speed <= the applicable
limit in the table in this definition.
Small-Diameter Ceiling Fans, Less Than or Equal to 7 Feet in Diameter
----------------------------------------------------------------------------------------------------------------
Thickness (t) of Edges of Blades Maximum Speed at Tip of Blades
Airflow Direction ---------------------------------------------------------------------------
mm inch m/s feet per minute
----------------------------------------------------------------------------------------------------------------
Downward-only....................... 4.8 > t >= 3.2 3/16 > t >= 1/8 16.3 3,200
Downward-only....................... t >= 4.8 t >= 3/16 20.3 4,000
Reversible.......................... 4.8 > t >= 3.2 3/16 > t >= 1/8 12.2 2,400
Reversible.......................... t >= 4.8 t >= 3/16 16.3 3,200
----------------------------------------------------------------------------------------------------------------
* * * * *
Large-diameter ceiling fan means a ceiling fan that is greater than
7 feet in diameter.
* * * * *
Small-diameter ceiling fan means a ceiling fan that is less than or
equal to 7 feet in diameter.
* * * * *
Standard ceiling fan means a ceiling fan is not a ceiling fan that
is not a very small-diameter ceiling fan, highly-decorative ceiling fan
or belt-driven ceiling fan; and where the lowest point on fan blades is
> 10 inches from the ceiling; and has a blade thickness of >= 3.2 mm at
the edge and a maximum tip speed <= the applicable limit in the table
in this definition.
Small-Diameter Ceiling Fans, Less Than or Equal to 7 Feet in Diameter
----------------------------------------------------------------------------------------------------------------
Thickness (t) of Edges of Blades Maximum Speed at Tip of Blades
Airflow Direction ---------------------------------------------------------------------------
mm inch m/s feet per minute
----------------------------------------------------------------------------------------------------------------
Downward-only....................... 4.8 > t >= 3.2 3/16 > t >= 1/8 16.3 3,200
Downward-only....................... t >= 4.8 t >= 3/16 20.3 4,000
Reversible.......................... 4.8 > t >= 3.2 3/16 > t >= 1/8 12.2 2,400
Reversible.......................... t >= 4.8 t >= 3/16 16.3 3,200
----------------------------------------------------------------------------------------------------------------
[[Page 1759]]
* * * * *
Very small-diameter ceiling fan means a ceiling fan that is not a
highly-decorative ceiling fan or belt-driven ceiling fan; and has one
or more fan heads, each of which has a blade span of 18 inches or less.
* * * * *
0
3. Section 430.32 is amended by:
0
a. Redesignating paragraphs (s)(2), (s)(3), (s)(4) and (s)(5) as
(s)(3), (s)(4), (s)(5) and (s)(6).
0
b. Adding a new paragraph (s)(2).
The addition to read as follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(s) * * *
(1) * * *
(2) Ceiling fans manufactured on or after [DATE 3 YEARS AFTER DATE
OF FINAL RULE PUBLICATION IN THE Federal Register] shall meet the
requirements shown in the table:
------------------------------------------------------------------------
Airflow
Efficiency
Product Class Equation (CFM/W)
*
------------------------------------------------------------------------
Very small-diameter (VSD)............................ 3.17D - 16.75
Hugger............................................... 0.05D + 56.41
Standard............................................. 0.30D + 60.61
High-speed small-diameter (HSSD)..................... 4.22D + 0.02
Large-diameter....................................... 1.16D - 24.38
------------------------------------------------------------------------
* D is the ceiling fan diameter, in inches.
* * * * *
[FR Doc. 2015-33062 Filed 1-12-16; 8:45 am]
BILLING CODE 6450-01-P