[Federal Register Volume 78, Number 45 (Thursday, March 7, 2013)]
[Proposed Rules]
[Pages 14717-14719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-05344]

Proposed Rules
                                                Federal Register

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.


Federal Register / Vol. 78, No. 45 / Thursday, March 7, 2013 / 
Proposed Rules

[[Page 14717]]


10 CFR Part 430

[Docket No. EERE-2010-BT-NOA-0067]
RIN 1904-AC52

Energy Conservation Standards for Set-Top Boxes: Availability of 
Initial Analysis

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 

ACTION: Notice of data availability (NODA).


SUMMARY: The U.S. Department of Energy (DOE) has completed an initial 
analysis that estimates the potential economic impacts and energy 
savings that could result from promulgating a regulatory energy 
conservation standard for set-top boxes. At this time, DOE is not 
proposing any energy conservation standard for set-top boxes. However, 
it is publishing this initial analysis so stakeholders can review the 
analysis's output and the underlining assumptions and calculations that 
might ultimately support a proposed standard. DOE encourages 
stakeholders to provide any additional data or information that may 
improve the analysis. The analysis is now publically available at: 

ADDRESSES: The docket, EERE-20111-BT-NOA-0067, is available for review 
at www.regulations.gov, including Federal Register notices, comments, 
and other supporting documents/materials. All documents in the docket 
are listed in the www.regulations.gov index. However, not all documents 
listed in the index may be publicly available, such as information that 
is exempt from public disclosure.
    A link to the docket web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-NOA-0067. The 
regulations.gov web page contains instructions on how to access all 
documents in the docket, including public comments.
    For further information on how to review the docket, contact Ms. 
Brenda Edwards at (202) 586-2945 or by email: 

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Dommu, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies, EE-2J, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 586-9870. Email: set-top@ee.doe.gov.
    Ms. Celia Sher, U.S. Department of Energy, Office of the General 
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 287-6122. Email: Celia.Sher@hq.doe.gov.


Table of Contents

I. History of Energy Conservation Standards Rulemaking for Set-Top 
II. Current Status
III. Summary of the Analyses Performed by DOE
    A. Engineering Analysis
    B. Manufacturer Impact Analysis
    C. Life-Cycle Cost and Payback Period Analyses
    D. National Impact Analysis

I. History of Energy Conservation Standards Rulemaking for Set-Top 

    Under the authority established in Title III, Part B \1\ of the 
Energy Policy and Conservation Act of 1975, as amended, (EPCA or the 
Act),\2\ Public Law 94-163 (42 U.S.C. 6291-6309, as codified), DOE 
published a notice of proposed determination that tentatively 
determined that set-top boxes and network equipment qualify as a 
covered product because classifying products of such type as a covered 
product is necessary or appropriate to carry out the purposes of EPCA, 
and the average U.S. household energy use for set-top boxes and network 
equipment is likely to exceed 100 kilowatt-hours (kWh) per year. 76 FR 
34914 (June 15, 2011).

    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the American Energy Manufacturing Technical 
Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012).

    DOE then prepared a document titled ``Rulemaking Overview and 
Preliminary Market and Technical Assessment: Energy Efficiency Program 
for Consumer Products: Set-Top Boxes and Network Equipment'' 
(Rulemaking Overview), which describes an initial market and technical 
analysis as well as the procedural and analytical approaches DOE 
anticipates using to evaluate potential energy conservation standards 
for set-top boxes.\3\

    \3\ This document is available at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-NOA-0067.

    DOE also published a Request for Information (RFI) on December 16, 
2011, requesting feedback from interested parties on several topics 
related to test procedures and potential energy conservation standards 
for set-top boxes. 76 FR 78174.
    DOE held a public meeting on January 26, 2012, at which it 
described the various analyses DOE would conduct as part of the 
rulemaking, such as the engineering analysis, the manufacturer impact 
analysis (MIA), the life-cycle cost (LCC) and payback period (PBP) 
analyses, and the national impact analysis (NIA). DOE also discussed 
questions raised in the RFI and solicited feedback from stakeholders. 
Representatives for manufacturers, trade associations, environmental 
and energy efficiency advocates, and other interested parties attended 
the meeting.\4\ Comments received since publication of the Rulemaking 
Overview and RFI have helped DOE identify and resolve issues related to 
the initial analyses.

    \4\ Supporting documents from this public meeting, including 
presentation slides and meeting transcript, are available at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-NOA-0067.

    In May 2012, DOE received a request from set-top box manufacturers, 
video programming distributors, and energy efficiency advocates to 
suspend its rulemaking activities to allow these stakeholders time to 
negotiate a non-regulatory agreement to improve the efficiency of set-
top boxes in lieu of a federal regulatory standard.\5\ These 
stakeholders cited several reasons why a non-regulatory agreement is 
preferable to a federal standard, including the ability to have an 
agreement come into effect sooner, the additional savings born of 
updating set-top boxes already in the field via software downloads, and

[[Page 14718]]

the flexibility this industry requires given the rapid cycles of 
innovation and the complexity of networks. Following this meeting, DOE 
suspended the issuance of a proposed rule for an energy conservation 
standard or test procedure until after October 1, 2012 to allow 
industry representatives and energy efficiency advocates time to 
negotiate a non-regulatory agreement to improve the energy efficiency 
of set-top boxes.

    \5\ Ex Parte communication between DOE and stakeholders 
available at: http://www.regulations.gov/#!documentDetail;D=EERE-

    During this time, DOE continued testing and evaluating the energy 
efficiency of set-top boxes in support of developing a DOE test 
procedure. Though DOE suspended the issuance of any new proposal, DOE 
continued developing an analysis in preparation for a regulatory 
standard in the event a non-regulatory agreement could not be reached 
or to cover any class of set-top boxes not covered by a non-regulatory 
    Despite the participants' best efforts to negotiate a non-
regulatory agreement, these talks ultimately did not produce an 
agreement that was supported by all parties, and the negotiations were 
terminated.\6\ Following the negotiations with energy efficiency 
advocacy groups, industry representatives signed and announced an 
agreement amongst themselves to improve the efficiency of set-top 
boxes. The five-year industry agreement, signed on December 6, 2012 
between 15 video programming distributors and set-top box 
manufacturers, went into effect on January 1, 2013.\7\ DOE has since 
moved forward with the regulatory process. On January 23, 2013, DOE 
published a notice of proposed rulemaking (NOPR) for a set-top box test 
procedure. 78 FR 5075.

    \6\ See Joint Letter to Secretary Chu, signed November 1, 2012, 
available at: http://www.regulations.gov/#!documentDetail;D=EERE-
    \7\ Full text of the industry voluntary agreement is available 
at: http://www.ce.org/CorporateSite/media/ce_news/FINAL-PUBLIC-VOLUNTARY-AGREEMENT-%2812-6-2012%29.pdf.

II. Current Status

    The analysis tools described in this NODA were developed to support 
a potential energy conservation standard for set-top boxes. DOE's 
primary goal is to improve the efficiency of consumer products, which 
result in significant national energy savings, consumer utility bill 
savings, and greenhouse gas emission reductions. DOE recognizes that 
there are multiple paths forward to reach this goal. At this time, DOE 
intends to move forward with its traditional regulatory rulemaking 
activities to develop an energy conservation standard for set-top 
boxes. The initial analysis presented in today's notice is a step in 
this process. However, as part of the regulatory impact analysis 
performed for a NOPR proposing an energy conservation standard, DOE 
will consider any non-regulatory agreement reached between all 
stakeholders as an alternative to a regulatory standard.
    At this time, DOE is not proposing any energy conservation 
standards for set-top boxes, and is therefore not requesting comments 
on any proposal at this time. If DOE issues a NOPR proposing new energy 
conservation standards, stakeholders will have an opportunity to 
provide statements on the record at a public meeting and to also submit 
written comments. DOE may revise the analysis presented in today's NODA 
based on any new or updated information or data it obtains between now 
and the publication of any future NOPR proposing energy conservation 
standards for set-top boxes. DOE encourages stakeholders to provide any 
additional data or information that may improve the analysis.

III. Summary of the Analyses Performed by DOE

    DOE conducted initial analyses of set-top boxes in the following 
areas: (1) Engineering; (2) manufacturer impacts; (3) life-cycle cost 
and payback period; and (4) national impacts. The tools used in 
preparing these analyses (engineering, life-cycle cost, national 
impacts, and manufacturer impacts spreadsheets) and their respective 
results are available at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/33 \8\. Each individual 
spreadsheet includes an introduction describing the various inputs and 
outputs to the analysis, as well as operation instructions. A brief 
description of each of these 4 analysis tools is provided below. If DOE 
proposes an energy conservation standard for set-top boxes, then DOE 
will also publish a Technical Support Document (TSD), which will 
contain a detailed written account of the analyses performed.

    \8\ These spreadsheets are also available on the rulemaking 
docket at http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-

A. Engineering Analysis

    The engineering analysis establishes the relationship between the 
cost and efficiency levels of set-top boxes. This relationship serves 
as the basis for cost-benefit calculations performed in the other three 
analysis tools for individual consumers, manufacturers, and the Nation.
    As a first step in the engineering analysis, DOE established 17 
potential set-top box groupings based on a characterization of the 
relevant set-top box markets. For each of these groupings, DOE 
identified existing technology options, including prototype designs 
that could improve the energy efficiency of set-top boxes. DOE then 
reviewed each technology option to decide whether it is technologically 
feasible; is practicable to manufacture, install, and service; would 
adversely affect product utility or product availability; or would have 
adverse impacts on health and safety. The engineering analysis 
identifies representative baseline products, which is the starting 
point for analyzing technologies that provide energy efficiency 
improvements. ``Baseline product'' refers to a model or models having 
features and technologies typically found in minimally-efficient 
products currently available on the market. DOE modeled the power 
consumption of baseline products in on and sleep modes of operation by 
system level components (e.g., tuners, hard disk, processor, power 
supply, etc.). DOE then identified design options to improve the 
efficiency of STBs and considered these options in the analysis as 
candidate standard levels (CSLs). DOE estimated the manufacturer 
production costs for the baseline and each of the three CSLs. The 
manufacturer production costs were derived from product teardowns, 
using more efficient components and modeling efficiency savings from 
power scaling when components are not in use. The main outputs of the 
engineering analysis are the manufacturer production costs (including 
material, labor, and overhead) and power consumption in each mode of 
operation at the baseline and each of 3 CSLs for all 17 possible 
groupings of set-top boxes.

B. Manufacturer Impact Analysis

    For the MIA, DOE used the Government Regulatory Impact Model (GRIM) 
to assess the economic impact of potential standards on set-top box 
manufacturers and multichannel video programming distributors. DOE 
developed key industry average financial parameters for the GRIM using 
publicly available data from corporate annual reports along with 
information received through confidential interviews with manufacturers 
and industry representatives. Additionally, DOE used this and other 
publicly available information to estimate and

[[Page 14719]]

account for the aggregate industry investment in research and 
development required to produce compliant products at each efficiency 
    The GRIM uses this information in conjunction with inputs from 
other analyses including manufacturer production costs from the 
engineering analysis, and shipments and price trends from the NIA to 
model industry annual cash flows from the base year through the end of 
the analysis period. The primary quantitative output of this model is 
the industry net present value (INPV), which DOE calculates as the sum 
of industry cash flows, discounted to the present day using industry 
specific weighted average costs of capital.
    Standards can affect INPV in several ways including increasing the 
cost of production and impacting manufacturer markups, as well as 
requiring upfront investments in manufacturing capital and product 
development. Under potential standards for set-top boxes, DOE expects 
that manufacturers and video programming distributors may lose a 
portion of the INPV, which is calculated as the difference between INPV 
in the base-case (absent new energy conservation standards) and in the 
standards-case (with new energy conservation standards in effect). DOE 
examines a range of possible impacts on industry by modeling scenarios 
with various standard levels and pricing strategies.
    In addition to INPV, the MIA also calculates the manufacturer 
markups, which are applied to the engineering cost estimates to arrive 
at the manufacturer selling price. For efficiency levels that require 
extensive software development, DOE calibrated the manufacturer markups 
to allow for the recovery of this upfront cost by amortizing the 
investment over the units shipped in the first three years of the 
analysis period. Due to the complexities of video programming 
distributor pricing models, DOE simplified its assumption regarding 
markups from the video programming distributor to the consumer by 
assuming that the incremental cost of a more efficient set-top box is 
directly passed on to the consumer. The resulting selling prices are 
then used in the LCC and PBP analyses, as well as in the NIA.

C. Life-Cycle Cost and Payback Period Analyses

    The LCC and PBP analyses determine the economic impact of potential 
standards on individual consumers. The LCC is the total cost of 
purchasing, installing and operating a set-top box over the course of 
its lifetime. The LCC analysis compares the LCC of a set-top box 
designed to meet possible energy conservation standards with the LCC of 
a set-top box likely to be installed in the absence of standards. DOE 
determines LCCs by considering: (1) Total installed cost to the 
consumer (which consists of manufacturer selling price, distribution 
chain markups, and sales taxes); (2) the range of annual energy 
consumption of set-top boxes that meet each of the efficiency levels 
considered as they are used in the field; (3) the operating cost of 
set-top boxes (e.g., energy cost); (4) set-top box lifetime; and (5) a 
discount rate that reflects the real consumer cost of capital and puts 
the LCC in present-value terms. The PBP represents the number of years 
needed to recover the increase in purchase price of higher-efficiency 
set-top boxes through savings in the operating cost. PBP is calculated 
by dividing the incremental increase in installed cost of the higher 
efficiency product, compared to the baseline product, by the annual 
savings in operating costs.
    For set-top boxes, DOE determined the range in annual energy 
consumption using outputs from the engineering analysis (power 
consumption at each efficiency level) and from a representative field-
metered sample of television usage (both live broadcast and DVR 
viewing). Total installed costs at each CSL are outputs from the MIA. 
Recognizing that several inputs to the determination of consumer LCC 
and PBP are either variable or uncertain (e.g., annual energy 
consumption, product lifetime, electricity price, discount rate), DOE 
conducts the LCC and PBP analysis by modeling both the uncertainty and 
variability in the inputs using Monte Carlo simulation and probability 
    The primary outputs of the LCC and PBP analyses are: (1) Average 
LCCs; (2) median PBPs; and (3) the percentage of households that 
experience a net benefit, have no impact, or have a net cost for each 
potential set-top box grouping and efficiency level. The average annual 
energy consumption derived in the LCC analysis is used as an input in 
the NIA.

D. National Impact Analysis

    The NIA estimates the national energy savings (NES) and the net 
present value (NPV) of total consumer costs and savings expected to 
result from potential new standards at each CSL. DOE calculated NES and 
NPV for each CSL as the difference between a base-case forecast 
(without new standards) and the standards-case forecast (with 
standards). Cumulative energy savings are the sum of the annual NES 
determined for the lifetime of set-top boxes shipped during the 
analysis period. Energy savings include the full-fuel cycle energy 
savings (i.e., the energy needed to extract, process, and deliver 
primary fuel sources such as coal and natural gas, and the conversion 
and distribution losses of generating electricity from those fuel 
sources). The NPV is the sum over time of the discounted net savings 
each year, which consists of the difference between total operating 
cost savings and increases in total installed costs. NPV results are 
reported for discount rates of 3%, 5%, and 7%.
    To calculate the NES and NPV, DOE projected future shipments and 
efficiency distributions (for each CSL) for each potential set-top box 
grouping. DOE recognizes the uncertainty in projecting shipments and 
efficiency distributions, and as a result the NIA includes several 
different scenarios for each. Other inputs to the NIA include the 
estimated set-top box lifetime used in the LCC analysis, manufacturer 
selling prices from the MIA, and average annual energy consumption from 
the LCC.
    The purpose of this NODA is to notify industry, manufacturers, 
consumer groups, efficiency advocates, government agencies, and other 
stakeholders of the publication of the initial analysis of potential 
energy conservation standards for set-top boxes. Stakeholders should 
contact DOE for any additional information pertaining to the analyses 
performed for this NODA.

    Issued in Washington, DC, on February 28, 2013.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and 
Renewable Energy.
[FR Doc. 2013-05344 Filed 3-6-13; 8:45 am]