Appliance Process Improvement Meeting February 13, 1996 The Aerospace Center, 901 D St., 9th Floor

Washington, DC Sponsored by the Department of Energy, Office of Energy Efficiency and

Renewable Energy, Washington, D.C.
9:00 am -9:15 am Introductions, overview, agenda review - Doug Brookman 9:15 am -9:45 am Selection of trial standards levels - Description of past experience - Open discussion on alternatives/concerns/key issues 9:45 am -10:30 am Selection of the proposed standards levels - Examination of a sample briefing package- Open discussion on possible improvements to decisionmaking 10:30 am -10:45 am Break 10:45 am - 11:30 am Review of a "major themes" outline summarizing findings of stakeholder consultations - Stakeholder group meetings - Stakeholder interviews 11:30 a.m. - 1:30 p.m. Review of a draft outline of DOE's proposed process improvement and research agenda (working lunch) 1:30 p.m. - 2:00 p.m Market conditioning and mandatory programs - Is there a way to describe the conditions under which market conditioning initiatives would be successful?- How to determine where on the continuum (MandatoryMarket conditioning) efforts should be targeted - What should be the parameters of a workshop on this subject? 2:00 p.m. - 2:30 p. m. Prioritization of rules - Past Practices - Status of regulatory agenda development 2:30 p.m. - 3:00 p.m. Break

2/12/96 Appliance Process Improvement Meeting

. February 13, 1996 The Aerospace Center, 901 D St., 9th Floor Washington, DC Sponsored by the Department of Energy, Office of Energy Efficiency and Renewable Energy, Washington, D.C.

9:00 am -9:15 am

9: 15 am -9:45 am

9:45 am -to:30 am

10:30 am -10:45 am 10:45 am - 11:30 am

11:30 a.m. - 1:30 p.m.

1:30 p.m. - 2:00 p.m

. 2:00 p.m. - 2:30 p.m.

2:30 p.m. - 3:00 p.m. Introductions, overview, agenda review

- Doug Brookman Selection oftrial standards levels

- Description ofpast experience

- Open discussion on altematives/concems/key issues Selection ofthe proposed standards levels

- Examination ofa sample briefing package

- Open discussion on possible improvements to decisionmaking Break Review ofa "major themes" outline summarizing findings ofstakeholder consultations

- Stakeholder group meetings

- Stakeholder interviews Review ofa draft outline of DOE's proposed process improvement and research agenda (working lunch) Market conditioning and mandatory programs

- Is there a way to describe the conditions under which

market conditioning initiatives would be successful?

- How to determine where on the continuum (MandatoryMarket conditioning) efforts should be targeted

- What should be the parameters ofa workshop on this subject? Prioritization ofrules.

- Past Practices

- Status ofregulatory agenda development Break

2/12/963:00 p.m. - 3:45 p.m. Preparation for March workshops - Proposed agenda review/revision - Meeting format, participants - Materials required - Date for review of workshop materials

3:45 p.m. - 4: 00 p.m. Next Steps

2/12/96 3:00 p.m. - 3:45 p.m.

3:45 p.m. - 4: 00 p.m. Preparation for March workshops

- Proposed agenda review/revision

- Meeting format, participants

- Materials reguired

- Date for review ofworkshop materials

Next Steps

2/12/96

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## -Discussion Draft, February 13,1996 OUTLINE OF PROCESS IMPROVEMENT PLAN for Appliance Efficiency Standards Program PROPOSED STANDARDS DEVELOPMENT PROCESS (see flow chart): Priority-Setting • Draft Analytical and Rulemaking Agenda . At least annually, probably in late summer. DOE will develop, in consultation with stakeholders, its planned analytical and rulemaking agenda for the coming fiscal year, and its preliminary agenda for the following fiscal year. • Stakeholder Consultations and Review of Draft Agenda . An annual workshop is to review the agenda is likely, probably in September.

• Publication of Agenda. Phase I Analysis and Determinations • Draft Phase I Analysis and Findings , including engineering analysis, impacts on product utility, technological feasibility, manufacturer practicability, and significance of possible energy savings, with initial consumer life cycle cost and net national benefits estimates. (DOE would propose any required test procedure amendments prior to completing this analysis.)

• Expert and Stakeholder Consultations on Inputs and Outputs of Phase I Analysis. • Issuance of Advance Notice of Proposed Rulemaking or Termination of Standards Development Process (if standards are not warranted). The Advance Notice would provide Phase I analysis results, identify the product categories and standard levels to be analyzed in more detail, and would identify those standard levels eliminated from further consideration. Stakeholder Negotiations, Phase 11 Analysis, and Proposed Standards

• Public Comments on ANOPR, including, if feasible, Stakeholder Negotiations. • Phase II Analysis and Formal Stakeholder and Public Comments , followed by revisions to Phase II analysis, and final stakeholder review (DOE would issue final amended test procedures, if required, before the completion of this analysis).

• Issue Proposed Rule with Updated Standards. Final Comments

. Analysis Revisions and Rule

• Public (and Stakeholder) Comment on Proposed Rule.

• Final revisions to DOE's analysis.

• Issuance of Final Standards. Discussion Draft, February 13, 1996 OUTLINE OF PROCESS IMPROVEMENT PLAN for Appliance Efficiency StandardsProgram PROPOSED STANDARDS DEVELOPMENTPROCESS (seeflow chart):

. . Priority.Setting • Draft Analytical and Rulemaking Agenda. At least annually. probably in late summer.. DOE will develop. in consultation with stakeholders. its planned analytical and rulemaking agenda for the coming tiscal year. and its preliminary agendafor the following fiscal year.

• Stakeholder Consultations and Review ofDraftAgenda. An annual workshop is to review the agenda is likely. probably in September.

• Publication ofAgenda. Phase I Analysis and Determinations • Draft Phase I Analysis and Findings, including engineering analysis. impacts on product utility. technological feasibility. manufacturer practicability. and significance ofpossible energy savings. with initial consumer life cycle cost and net national benefits estimates. (DOE wouldpropose any required testprocedure amendmentsprior to completing this anal.).'sis.)

• Expert and Stakeholder Consultations on Inputs and Outputs ofPhase I Analysis.

• Issuance ofAdvance Notice ofProposed Rulemaking or Termination of Standards Development Process (if standards are not wa"anted). The Advance Notice would provide Phase I analysis results. identify the product categories and standard levels to be analyzed in more detail. and would identify those standard levels eliminated from further consideration. Stakeholder Negotiations, Phase II Analysis, and Proposed Standards • Public Comments on ANOPR, including, iffeasible, Stakeholder Negotiations.

• Phase II Analysis and Formal Stakeholderand Public Comments, followed by revisions to Phase II analysis, and tinal stakeholder review (DOE would issuefinal amended test. procedl!res, ifrequired. before the completion of this analysis).

.
• Issue Proposed Rule with Updated Standards. Final Comments, Analysis Reyisions and Rule • Public (and Stakeholder)Comment on Proposed Rule.

• Final revisions to DOE's analysis.

• Issuance ofFinal Standards.Discussion Draft, February 13, 1996

DOE DECISION CRITERIA TO BE MODIFIED OR ADDED The draft process improvement plan to be distributed at the March workshop will address how DOE intends to modify or expand its consideration of each of the following factors in its future decisionmaking: Significant energy savings Manufacturing practicability Impacts on manufacturers Impacts on consumers Uncertainty of Quantitative Analyses Participation in Voluntary Programs Joint Recommendations by Stakeholders -- among others RESOLUTION OF KEY ISSUES The draft process improvement plan will address many key issues identified by stakeholders, including: Reducing or Eliminating the Recurring Threat ofNew Standards : DOE's regulatory agenda will indicate for which product categories DOE intends to initiate the standards review and development process. given available budget resources, and the basis for DOE's priority-setting. For those product categories identified for review, the Phase I analysis, which precedes an ANOPR, will be designed to narrow the range of technologies or standard levels to be considered, and to provide the basis for DOE to terminate its review if updated standards are not warranted. Early Elimination of Maximum Technologically Feasible Standard Level: DOE will no longer perform an indepth (Phase II) analysis of the "maximum technologically feasible" standard level unless that level would also be practicable to manufacture (and service), would not affect the utility of the product and would likely produce net benefits to consumers and the nation. Improved Analytical Methods: DOE will initiate a cooperative effort with key stakeholders and qualified contractors to develop improved methods of analyzing the likely impacts of standards on manufacturers, and possibly other key analysis methods. Accessing Technical Expertise and Industry Knowledge : By consulting stakeholders and industry experts at the start of the analytical process, DOE hopes to ensure that its chosen contractors are knowledgeable and skilled. and that they have ready access to expert peer review. Discussion Draft. February 13. 1996 DOE DECISION CRITERIA TO BE MODIFIED ORADDED The draft process improvement plan to be distributed at the March workshop will address how DOE intends to modify orexpand**it~** consideration of each ofthe following factors in its future decisionmaking: Significant energy savings Manufacturing practicability Impacts on manufacturers Impacts on consumers Uncertainty ofQuantitative Analyses Participation in Voluntary Programs Joint Recommendations by Stakeholders

-- among others RESOLUTION OF KEY ISSUES The draft process improvement plan will address many key issues identified by stakeholders. including: Reducing orEliminating the Recurring Threat ofNew Standards: DOE's regulatory agenda will indicate for which product cate,gories DOE intends to initiate the standards review and. development process. given**availabl~** budget resources. and the basis for DOE's priority-setting. For those product categories identified for review. the Phase I analysis. which precedes an ANOPR, will be designed to narrow the range oftechnologies or standard levels to be considered. and to provide the basis for DOE to terminate its review ifupdated standards are not warranted. Early Elimination ofMaximum Technologically Feasible Standard Level: DOE will no . longer perform an indepth (Phase II) analysis ofthe "maximum technologically feasible" standard level unless that level would also be practicable to manufacture (and service);would not affect the utility ofthe product and would likely produce net benefits to consumers and the nation. Improved Analytical Methods: DOE will initiate a cooperative effort with key stakeholders and qualified contractors to develop improved methods ofanalyzing the likely impacts of standards on manufacturers. and possibly other key analysis methods

.. Accessing Technical Expertise and Industry Knowledge: By consulting stakeholders and industry experts at the start ofthe analytical process, DOE hopes to ensure that its chosen contractors are knowledgeable and skilled. and that they have 'ready access to expert peer review.

## Discussion Draft, February 13, 1996 PROPOSED APPLIANCE EFFICIENCY STANDARDS



## DEVELOPMENT PROCESS

• Stakeholder Review 

# " Annual' 

### Priority-Setting

.Go/No.Go Decision· 

## Discussion Draft, February 13, 1996 PROPOSED APPLIANCE EFFICIENCY STANDARDS DEVELOPMENT PROCESS

Stakeholderl Expert Review Public and Stakeholder Comment Stakeholder Review

..... Phase 

### I.

... ANOPR or .



# ... .--

# .. .

.Analysis II' Termination __ .. _ Proposed Phase II Analysis

... Standards

Proposed orFinal Test Procedures, 

### ifneeded Go/No Go Decision·

Final Test Procedures Public Comment



### Revised Analysis 

### alid Final StandardsCriteria for consideration in determining appropriate balance between voluntary programs and. mandatory efficiency standards for a specific appliance or equipment category, with identified opportunities for improving energy efficiency. Voluntary Programs Major Change Highly Variable Strong market Strong Highly variable Others TBD to Consumer LCC forces (few commitment by impacts of Manufacturing (because of barriers) manufacturers standards on Process regional or other and retailers to manufacturers and

use differences, voluntary likely antiinstallation costs, efforts competitive effects 

### etc.j


# I

Relatively uniform Weak impacts on Mandatory No change to Relatively Weak market commitment by manufacturers and manufacturing uniform forces (many manufacturers few impacts on process consumer LCC barriers) and retailers competition 

### Criteria for consideration in determining appropriate balance between voluntary programs 

### apd. mandatory efficiency standards for a specific appliance or equipment category, with identified opportunities for improving energy efficiency.



### Voluntary Programs Major Change Highly Variable Strong market Strong Highly variable Others TBD to ConsumerLCC forces (few commitment by impacts of Manufacturing (because of barriers) manufacturers standardson Process regional orother and retailers 

### to manufacturers and use differences, voluntary likely antiinstallation costs, efforts**c9mp~titive** 

### effects

. etc.) 

# i i i i i i 

# i

I


# . 

# 1 °1 1 1 1 1 1

.

,

I 

### Relatively uniform Weak impacts on Mandatory No change to Relatively Weak market commitment by manufacturers and manufacturing uniform forces (many manufacturers few impacts on process consumerLCC barriers) and retailers competition

### Department of Energy Washington, DC 20585

PUBLIC WORKSHOP ON THE IMPROVEMENT OF THE APPLIANCE STANDARDS RULEMAKING PROCESS
The Department of Energy (DOE). Office of Energy Efficiency and Renewable Energy, has initiated a comprehensive process improvement effort to examine. through a series of stakeholder meetings and interviews, issues surrounding the appliance standards program. The initial findings from these meetings and interviews will be the basis for discussion of possible initiatives that the Department will undertake to improve the appliance standards rulemaking process. The workshop will be held on March 19 and March 20. 1996 at the Embassy Suites Hotel in Arlington. Virginia. Discussion topics will include issues surrounding the planning and prioritization process. data and analysis collection and decision making criteria. The workshop also will provide an opportunity to comment on DOE's proposed. 1997 Regulatory Agenda. The workshop will be professionally facilitated to encourage discussion and comment on these topics. A briefing document will be sent to all participants that notify the Department in advance that they will attend and there will be an opportunity to submit written comments after the workshop. TIME: March 19. 1996 - 9:00 a.m. - 4:30 p.m.

March 20. 1996 - 9:00 a.m. - 1:00 p.m. PLACE: Embassy Suites Hotel (Crystal City)

1300 Jefferson Davis Highway Arlington, VA 22202 (703) 979-9799 (The Crystal City metro station is located on the Yellow line one stop north of National Airport.) CONTACT: Mr. Bryan Berringer

U.S. Department of Energy Office of Energy Efficiency and Renewable Energy, EE-431 1000 Independence Avenue. SW Washington. DC 20585 (202)586-0371 (202)586-4617 (Fax)



# 5?7: Christine A. Ervin Assistant Secretary Energy Efficiency and Renewable Energy
Punted with soy ink on recycled paper 

### Department of Energy Washington, DC 20585
PUBLIC WORKSHOP ON THE IMPROVEMENT OF THE APPLIANCE STANDARDS RULEMAKING PROCESS

The Depanment of Energy (DOE), Office of Energy Efficiency and Renewable Energy, has initiated a comprehensive process improvement etlon to examine, through a series of stakeholder meetings and interviews, issues surrounding the appliance standards program. The initial findings from these meetings and interviews will be the basis for discussion of possible initiatives that the Department will undeI1ake to improve the appliance standards rulemaking process. The workshop will be held on March 19 and March 20, 1996 at the Embassy Suites Hotel in ArUngton, Virginia. Discussion topics will inClude issues surrounding the planning and prioritization process. data and analysis collection and decision making criteria. The workshop also will provide an 0ppoI1unity to comment on DOE's proposed. 1997 Regulatory Agenda. The workshop will be professionally facilitated to encourage discussion and comment on these topics. A briefing document will be sent to all panicipants that notify the Department in advance that they will attend and there will be an opportunity to submit written comments after the workshop. TIME:

PLACE: March 19. 1996

- 9:00 a.m. - 4:30 p.m. March 20. 1996

- 9:00 a.m. - 1:00 p.m. Embassy Suites Hotel (Crystal City) 1300 Jefferson Davis Highway Arlington. V A 22202 (703) 979-9799 (The Crystal City metro station is located on the Yellow line one stop north of National Airport.) CONTACT: Mr. Bryan Berringer U.S. Department of Energy Office of Energy Efficiency and Renewable Energy, EE-431 1000 Independence Avenue. SW Washington. DC 20585 (202)586-0371 (202)586-4617 (Fax) 

# G£ST7aLQ·

Chnstine A. Ervin

# ~ Assistant Secretary Energy Efficiency and Renewable Energy 

# *

Pnnted With soy ink on recycled paper

# Rulemaking Priorities with Potential Energy Savings

RULEMAKING PRIORITY NOPR DATE FINAL

RULE DATE' PROBABILITY

OF MEETING SCHEDULE POSSIBLE ENERGM

SAVINGS (QUADS) Refrigerator 1 May 95 Dec 95 Medium 1.1 Six Products 2 Mar 94 Sep 95 Medium 12.8 2 Ballasts 3 Sep 95 June 96 Medium 17 z Electric Water Heaters 4 Feb 96 Dec 96 Low 0.1 - 30.8 2 Central AC /Heat Pump 5 Jan 96 Oct 96 Low 11.4 Furnaces and Boilers 6 Jun 96 April 97 High 2.0 - 10.0 Laundry 7 Jul 96 Mar 97 High 10.4 Dishwashers 7 Jul 96 Mar 91 High 0.5 Televisions 8 TBD TBD 3.1 1 Regulatory Coordination Steering Committee approved dates. 2 Estimate from NOPR. 3 Estimate based on most recent analysis.



## May .3, 1995 

# Rulemaking Priorities with Potential Energy Savings

RULEMAKING NOPR RNAL PRIORITY DATE RULE DATE! Re.fri gerator 1
.May 95 Dec 95 Sh Products 2 Mar 94 Sep 95

Ballasts 3 Sep 95 June 96 Electric Water Heaters 4 Feb 96 Dec 96

CentraI AC/Heat Pump 5 Jan 96 Oct 96 Furnaces and Boilers 6 Jun 96 April 97 laundry 7 Jul 96
. Mar 97 Dishwashers 7 Jul 96 Mar 97 Televisions 8 T8D T80 1 Regulatory Coordinatfon Steering COIlI1IHtee approved dates. 2 Estfmte frOil NOPR. 3 EstflJlate based on most recent analysis.



## May.3, 1995 PROBABIUTY POSSIBLE ENERG'! OF MEETING SAVINGS (QUAt'S)

SCHEDULE Medium 7.1 MedilU11 12.8 2 MediU111 17 z

low 0.1

- 30.8 Z low 11.4 ) High 2.0

- 10.0 High 10.4 High 0.5 3.1

# Appliance Standards Office of Building Technologies Office of Codes and Standards

Briefing on the Analysis in Support of a Proposed Rule for Room Air Conditioners , Water Heaters, Mobile Home Furnaces, Direct Heating Equipment, Pool Heaters , Kitchen Ranges and Ovens, Fluorescent Lamp Ballasts, Television Sets, and Clothes Washers February 3,1992 \ 

### . 

# Appliance Standards O'ffice of Building Technologies

Office of Codes and Standards

Briefing o'n the Analysis in Support of a Proposed Rule for Room Air Conditioners, Water Heaters, Mobile Home Furnaces, Direct Heating Equipment, Pool Heaters, Kitchen Ranges and Ovens, Fluorescent Lamp Ballasts, Television Sets, and Clothes Washers February 

## 3, 1992

# Rulemaking Considerations

The National Appliance Energy Conservation Act, as amended , established energy conservation standards for 12 products, including: 

## Room Air Conditioners Pool Heaters Water Heaters Kitchen Ranges and Ovens Mobile Home Furnaces Fluorescent Lamp Ballasts Direct Heating Equipment Clothes Washers The Act directs DOE to undertake two rounds
-of review to determine whether the stringency of the standards should be increased

. In addition, DOE was directed to consider establishing standards on television sets. The current issue is whether to go forward with a proposed rule that increases the stringency of existing standards for the eight products and that sets initial standards for television sets and , if so, to what level. The proposed rule will then be published for public comment , and upon review of these comments , a final rule will be published

. If the standards are made more stringent or standards are set on additional products, the levels would become effective three years after publication in the Federal Register. 

## The National AppUance Energy Conservation Act, as amended, established ,energy conservation standards for 12 products, including: Room Air Conditioners Water Heaters Mobile Home Furnaces Direct Heating Equipment Pool Heaters Kitchen Ranges and Ovens Fluorescent Lamp Ballasts Clothes Washers The Act directs DOE to undertake two rounds-of review to determine whether the stringency of the standards should be increased. In addition, DOE was**~irected** 

## to consider establishing standards on television sets. The current issue is whether to go forward with a proposed rule that' increases the stringency of existing standards for the eight products and 'that sets initial standards for television sets and, if so, to what level.

The proposed rule will then be published for public comment, and upon review of these comments, a final rule will be published. If the standards are made more stringent or standards are set on additional products, the levels would become effective three years after publication in the Federal Register.



## 2

# EPCA Requirements

Standards shall be designed to: ♦ Achieve the maximum improvement in energy efficiency (Sec 325 (I)(2)(A)) ♦ Be technologically feasible (Sec 325 (l)(2)(A))
♦ Be economically justified - • Seven legislated economic factors are to be considered (Sec (I)(2)(B)) • There is a rebuttable presumption that a standard is economically justified if payback is less than three years (Sec 325 ( I)(2)(B)) 

## ♦ Provide significant conservation of energy (Sec 325 (1)(3)(B)) -- de minimus test based on EPCA and court decision 

# Standards shall be designed tf):
• Achieve the maximum improvement in energy efficiency (Sec 325 (1)(2)(A»
• Be technologically feasible (Sec 325 (1)(2)(A»
• Be economically justified
- • Seven legislated economic factors are to be considered (Sec (1)(2)(8» • There is a rebuttable presumption that a standard is

. economically justified if payback is less than three years (Sec 325 (1)(2)(8»
• Provide significant conservation of energy (Sec 325 (1)(3)(8»
- de minimus test based on EPCA and court decision

3

# Economic Factors

♦ Economic Impact of Standards on: • Manufacturers 

# • Consumers ♦ Life-Cycle
-Cost (LCC) Impacts
♦ Total Projected Energy Savings 

# ♦ Lessening of Utility or Performance Impact on any Lessening of Competition ♦ Nation's Need to Conserve Energy
♦ Other Relevant Factors (Including Environmental I mpacts) 

# • Economic Impact of Standards on: • Manufacturers • Consumers
•**~ife-Cycle-Cost** 

# (LCC) Impacts
• Total Pro'jected Energy Savings
• Lessening of Utility or Performance
• Impact on any Lessening of Competition
• Nation's Need to Conserve Energy
• Other Relevant Factors (Including Environmental Impacts)

4

# Rebuttable Presumption

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, there shall be a rebuttable presumption th at such a standard level is economically justified. A determination by the Secretary that such criterion is not met shall be taken into consideration in the Secretary's determination of whether a standard is economically justified. 

# If the Secretary finds that the adEJitionalcost to the

.consumer of purchasing a product complying with an

'energy conservation standard level will be less**t,h~n** 

# 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 proc·edure, there shall be a rebuttable presumption that such a standard level is economically justified.
A determination by the Secretary that such criterion is not met shall be taken into consideration in the Secretary's determination of whether a standard is

. economically justified.

5

# Analytical Approach

♦ Identified up to 16 classes of each product for a total of 56 classes (based on fuel type, unit capacity, and/or design features) ♦ Identified the features of the baseline equipment for each class of product (based on the least energy efficient unit on the market today) ♦ Identified a series of modifications that improve the efficiency of the baseline unit up to the maximum that is technologically feasible 

## ♦ Calculated the cost , reduction in energy use, and impact on life-cycle costs of each of these modifications Selected trial standard levels for each product and class: • maximum efficiency level (max-tech) • minimum life-cycle-cost point • up to six additional levels 

## ♦ Performed economic analysis of the trial standard levels • Identified up to 

## 16 classes of each product for a tota.1 of 

## 56 classes (based on fuel type, unit capacity, and/or desig'n features)
• Identified the features of the baseline equipment for each class of product (based on the least energy efficient unit on the market today)
• Identified a series of modifications that improve the efficiency of the baseline unit up to the maximum that is technologically feasible
• Calculated the cost, reduction in energy use, and impact on life-cycle costs of each of these modifications
• Selected trial standard levels for each product and class: • maximum efficiency level (max-tech) • minimum life-cycle-cost point • up to six additional levels
• Performed economic analysis ofthe trial standard levels

6

# Products under Consideration

Room Air Conditioners

Water Heaters

Mobile Home Furnaces

Direct Heating Equipment 

# LI Pool Heaters

Kitchen Ranges and Ovens

Fluorescent Lamp Ballasts.

Television Sets

Clothes'Washers Room 

### Air Conditioners

Water Heaters

Mobile Home Furnaces
.

Direct Heating Equipment**~'** 

# -- 08 Pool Heaters

Kitchen Ranges and Ovens

Fluorescent lamp Ballasts

Television Sets

Clothes Washers



## 7

# 1990 U

.S

. Primary Energy Consumption by Product

Room Air Conditioners (1.4 quads)

Clothes Washers (1.0 quads)
Television Sets (0.2 quads)

Fluorescent Lamp Ballasts (2.3 quads) Kitchen Ranges and Ovens (1.4 quads) Mobile Home Furnaces (0.2 quads) Direct Heating Equipment (1.1 quads) 

### Pool Heaters (less than 0.1 quads)

Total energy consumed in 1990 by these nine products : 11.4 quads Total energy consumed in 1990 by the buildings sector: 29.2 quads 

# 1990 U.S. Pri,mary 

# Energy Consumption 

# by Product

Room Air Conditioners (1.4 quads)

Clothes Washers (1.0 quads)

Television Sets (0.2 quad$)-••

## ----~!I Water Heaters (3.8 quads)

Mobile Jiome Furnaces (0.2 quads.)
Fluorescent Lamp Ballasts (2.3 quads) Direct Heating Equipment (1.1 quads)

Kitchen Ranges and Ovens (1.4 quads) Pool Heaters (less than 0.1 quadS)

Total energy consumed 

### hi 1990 by these nine products: 11.4 quads Total energy consumed in 1990 by the buildings sector: 29.2 quads



## 8

# Potential U.S. Energy Savings

Estimated Energy Saved by Product from 1996 to 2030

Room Air Conditioners

Water Heaters
Mobile Home Furnaces Direct Heating Equipment1

Pool Heaters 

### Kitchen Ranges and Ovens Fluorescent Lamp Ballasts*



### Television Sets Clothes Washers n Max-Tech n Minimum LCC q Lowest Standard

-+---T- ► t 1 ► 1 1 1 1 1 L l 1 J 1 1 ^ (_ _._ ._ 

### 0 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Quads *Estimated energy savings is from 1990 to 2025. 

# Potential U.S. Energy Savings Estimated Energy Saved by Product from 1996 

# to 2030

Room Air Conditioners
Water Heaters
Mobile Home Furnaces
Direct Heating Equip
Pool Heaters
Kitchen Ranges and Ovens
Fluorescent lamp Ballasts·
Television Sets
Clothes Washers 54.Squads 

# • 34.9 quads

• Max-TeCh
• Minimum LCC 

# o lowest Standard



### -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 

### Quads *Estimated energy savings is from 1990 to 2025. 

## 9

# Outline for Briefing by Product Type

♦ Design options of standard levels ♦ Recommendation for standard level ♦ Projected energy savings for each standard level Impact on consumers (product energy use, costs , and paybacks by class) ♦ Impact on manufacturers (return
-on-equity and projected product shipments) ♦ Other relevant factors (net present values , environmental impacts, and benefit/cost ratios)

10 

## • Design options of standard levels
• Recommendation for standard level
• Projected energy savings for each standard level
• Impact on consumers (product energy use, costs, and paybacks by class)
• Impact on manufacturers (return-on-equity and projected

. product shipments)

. • Other relevant factors (net present values, environmental impacts, and· benefit/cost ratios)

10

# Room Air Conditioners ♦ Less than 6000 kBtuh with louvers 

# Room Air Conditioners 

# + Less than 6000 kBtuh with 

# louvers.

11

# i ^-_-------- ' Standards/Design Options

Standard Design Options 

### Level Less than 6 kBtuh with Louvers
Baseline I Baseline + enhanced fins + PSC fan motor
2 Baseline + enhanced fins + PSC fan motor 

### 3 Level 2 + grooved tubes + subcooler 4 Level 3 + 11.0 EER compressor
5 

### Level 4 + 11.5 EER compressor 6 Level 5 + increased coil areas 7 Level 6 + variable
-speed compressor + brushless DC fan motor



### 12 

# Standards/Design Options

Standard Design Options level 

### Less than 6 kBtuh with Louvers Baseline
1 Baseline + enhanced fins + PSC fan motor 2 Baseline + enhanced fins + PSC fan motor
3 level 2 + grooved tubes + subcooler

. 4 level 3 + 11.0 EEA compressor 5 

### level 4 

### + 11.5 EER compressor
6 level 5 + increased coil areas
7 level 6 + variable-speed compressor + brushless DC fan motor



## 12

# Recommendation

Rejected Standard Levels Max Tech through Level 7: Payback exceeds life of product, negative short run ROE. 

## Level 6: Paybacks range up to 60% (9+ years) of product life, approximately 40% reduction in short
-run ROE, some classes with variable-speed compressors for which there is no test procedure. . 

# Recommended Standard Level Level 5: Paybacks less than half of product life , is or is close to the minimum LCC point, insignificant changes in ROE (highest long-run ROE ), slightly higher sales (highest), EERs (9.3 - 11

. 1, averaging about 10

.5) roughly comparable to central A/C, positive NPV of $9.1 billion, environmental value ranging from $3.9 to $105

.2 billion , energy savings of 2.2 quads.



### 13 

# Recommendation 

# I

Rejected Standard Levels Max Tech through Level 7: Payback exceeds life of product, negative short run ROE. 

## Level 6: Paybacks range up to 60% (9+ years) of product life, approximately 40% reduction in short-run ROE, some classes with variable-speed compressors for which,there is no test procedure.·. 

# [Recommended Standard 

# Leve( I'

Level 5: Paybacks less than half of product life, is or is close to the minimum LCC pOint, insignificant changes in ROE (highest long-run ROE), slightly higher sales (highest), EERs (9.3 -11.1, averaging about 10.5) roughly comparable to central AIC, 

### positive NPV of $9.1 billion, environmental value ranging from $3.9 to $105.2 billion, energy savings of 2.2 quads.



### 13

# Projected Energy Savings (1996
-2030)

Electricity Standard - Percent of Level Quads Baseline

0.28 1.2% 2 0.62 2.7 

# 3 1.24 5.4 4 1.42 6.2 

# 5 2.22 

# 9.7 0 3.06 13.4

5.22 22.9

14 

# Projected Energy Savi.ngs (1996-2030)

Electricity Standard Percent of Level Quads Baseline 

# 1 0.28 ·1.2% 2 0.62 2.7 

# 3 1.24 5.4 4 ·1.42 6.2 

# 5 2.22 

# 9.7 6 

# . 3.06 13.4 7 

# 5.22 22.9

14

# ------- Impact on Consumers

Price ($)

8 4 Life-Cycle
-Cost ($)

10 11 12 13 14 , 08 Energy Efficiency Ratio (EER) 10 11 12 13 14 Energy Efficiency Ratio (ERR)
Standard Level Energy Use

(kWh/Yr) Price

(1990 $s) Life-Cycle-Cost

(1990 $s) Payback

(Years) Baseline 532 $288 $716 N/A 1 470 293 671 1.0 2 470 293 671 1.0 3 422 302 641 1.7 4 415 303 637 1.8* 5 397 320 640 3.5 6 382 34 3 650 5.3 7 338 508 780 16.1 Maximum level that meets rebuttable presumption test of economic justification. Average lifetime is 15 years. 

# 11111 Impact on Consumers

Price ($) Ufe·Cycle-Cost ($) 1000 1000

800 800 7 0 3 5 600 600 4 6 7 400 400 0 1,2 3 4 6 200 200

0 

# . . 08

8 9 10 11 12 13 14 9 10 11 12 13 14 Energy Efficiency Ratio (EER) Energy Efficiency Ratio (ERR)
Standard Enefgy Use Price life-Cycle-Cost Payback level (kWh/Vr) (1990 $s) (1990 $s) (Years) Baseline 532 $288 $116 

### N/A 1 470 293 671 1.0 2 410 293 611 1.0 3 422 302 641 1.1 4 415 303 637 1.0- 5 

### 397 320 640 

### 3.5 6 382**3~3** 650 5.3 7 338 508 780 16.1 • Maximum level that meets rebuttable presumption test of economic justification. Average lifetime is 15 years. ' 

## 15

# Impact on Manufacturers

Standard Return on

Equity (%) Return on

Equity (%) 

## Total

Shipments* Level Lon -Run 

## Short-Run (millions) 

## Baseline 8.6% 

## 8.6% 171.0 1 

## 8.5 8.5 171.3 2 

## 8.5 8.5 171.5 3 8.5 8.4 171.9 4 8.5 8.4 172.0 

## 5 8.6 8.4 172.0 6 7.9 5.2 171.5

7.1 -4.3 166.7

* From 1996 through 2030. 

# 11.11 Impact on Manufacturers

Return on Return on Total

. Standard Equity (0/0) Equity (%) Shipments· Level Long-Run Short-Run (millions)

. Baseline 8.60/0 8.6% 171.0 1 8.5
- 

## 8.5 171.3

! 

## 2 8.5 8.5 171.5 

## 3 8.5 8.4 171.9 4 8.5 8.4 172.0 

## 5 

# 8.6 8.4 172.0 6 7.9 5.2 171.5 7 7.1 -4.3 166.7 * From 1996 through 2030.



## 16

# Other Relevant Factors (1996
-2030)

Net Present Value* Value of Emission Reductions** (billions) Benefit/Cost Ratio*** Standard (billions) Low Hig h Low High 1 $13 $0. 5 $13.9 18.6 126.6 2 3.2 1.1 30.5 7.6 51.7 3 

### 6.6 2.3 60
. 9 7.0 46.8 

### 4 7.1 2. 6 69.3 6.0 40.1 5 9.1 3.9 105.2 3.7 

### 24.3 6 9.1 5.2 139.3 2.5 16.2 7 -4.9 7.8 208.6 1.1 7.1 * Excluding value of emission reductions. COs, S02 , and N02 ••' Including value of emission reductions. 

# Other Relevant Factors (1996-2030)

Net Present Value of Emission Reductions" Value* Standard (billions) 

### level Low 

### 1 $1.1 

### $0.5 2 

### 3.2 1.1 3 6.5 2.3 4 7.1 2.6 

### 5 

## 9.1 3.9 6 9.1 5.2 7 

### -4.9 7.8
* Excluding value 01 emission reductions.

.. C02 t 502, and N02

... Including value 01 emission reductions. (billions) 

# . High 

### $13.9

30.5 60.9 69.3 

### 105.2 139.3 208.6 - Benefit/Cost Ratio"*

Low High 

### 18.6 126.6

7.6 51.7 7.0 46.8 6.0 40.1 

## 3.7 24.3 2.5 16.2 1.1 7.1



## 17

# ama

January 22, 1996 1901 North Moore Street • P.O. Box 9245 • Arlington, Virginia 22209 •703/525-9565

Ms. Deborah E. Miller Office of the Assistant Secretary for Energy Efficiency and Renewable,Energy EE1-6C016 U. S. Department of Energy Forrestal Building 1.000 Independence Avenue, S.W. Washington, D.C. 20585

Dear Deborah: Re: Historical Background of NAECA

The Gas Appliance Manufacturers Association (GAMA) is pleased to be a participant in DOE's process improvement effort. Based on what we have seen so far, we are optimistic that this effort will produce significant results. Enclosed is a copy of the NAECA historical background information that Chuck Samuels referred to during our most recent meeting. On the same subject, also enclosed is a copy of a speech GAMA's President, Reuben Autery, delivered last year to GAMA's counterpart in Australia. I look forward to meeting with you again on February 13. Very truly yours,

Joseoh_.Y. Mattingly Director of Government Affairs and General Counsel JMM/cb Enclosures cc: Michael Rivest, Arthur D. Little, Inc.

An Association of Manufacturers of Appliances and Equipment for Utilization, Distribution and Control of Gas 

# Gama 1901 North Moore Street. 

### P.o. Box 9245 •Arlington, Virginia 22209 .703/525-9565

January 22, 1996

Ms. Deborah E. Miller Office of the Assistant Secretary for Energy Efficiency and Renewable ,Energy EEl-6C016 U. S. Department of Energy Forrestal Building 1000 Independence Avenue, S.W. Washington, D.C. 20585
Re: Historical Background of NAECA Dear Deborah: The Gas Appliance Manufacturers Association (GAMA) is be a participant in DOE's process improvement effort. what we have seen so far, we are optimistic that this will produce significant results. pleased to Based on effort
Enclosed is a copy of the NAECA historical background information that Chuck Samuels referred to during our most recent meeting. On the same subject, also enclosed is a copy of a speech GAMA's President, Reuben Autery, delivered last year to GAMA's counterpart in Australia. I look forward to meeting with you again on February 13.

# ::~~~:~~~:~lY Director of Government Affairs and General Counsel JMM/cb Enclosures

cc: Michael Rivest, Arthur D. Little, Inc.

An Association of Manufacturers of Appliances and Equipment for Utilization, Distribution and Control of GasPrior to its amendment by NAECA in 1987, the Energy Policy and

Conservation Act of 1975 ( EPCA ), as previously amended in 1978, directed the U. S. Department of Energy (DOE) to prescribe minimum efficiency standards for specified household appliances . The statute further stated that, not later than 5 years after prescribing an appliance efficiency standard, DOE must "conduct a reevaluation in order to determine whether such standard should be amended in any manner." The statute made no provision for any further DOE reevaluation of the federal standard for a particular covered product after the initial reevaluation. Both the initial standard and any amended standard were to require the maximum improvement in the energy efficiency of the appliance that was technically feasible and economically justified. Economic justification criteria were prescribed by the statute. The statute also provided for federal preemption of state and local appliance efficiency standards, but allowed states to obtain a waiver of federal preemption if the state was able to establish "a significant state or local interest" to justify such waiver. The Reagan Administration DOE declined to prescribe substantive federal appliance efficiency standards, but instead published "no standard" standards. Several states petitioned DOE for a waiver of federal preemption. DOE-was preparing to be very liberal in granting preemption waivers to the states when the Natural Resources Defense Council (NRDC), the State of California and several other states sued DOE for its failure to prescribe substantive federal appliance efficiency standards. NRDC and its fellow petitioners won the lawsuit. In a 154-page opinion, the U. S. Court of Appeals in Washington, D.C. harshly criticized DOE and laid out a framework for DOE establishment of very stringent federal appliance efficiency standards. Faced with the probability of stringent federal standards and DOE's inclination to freely grant states exemptions from federal preemption, appliance manufacturer associations (GAMA, AHAM and ARI) decided to try to negotiate reasonable legislated standards with NRDC that would also provide for stronger federal preemption. The background and history of this effort is succinctly described in the attached September 5, 1986, memorandum prepared by the staff of the House Subcommittee on Energy Conservation and Power (Attachment A). NAECA was introduced in 1986 as the product of the negotiations between NRDC and the appliance trade associations. The initial federal standards were to be legislated standards rather than standards developed through DOE rulemaking, and federal preemption would be strengthened. An effort was made not to change EPCA where /Continued . Prior to its amendment by NAECA in 1987, the Energy Policy and C.onservation Act of 1975 (EPCA), as previously amended in 1978, directed the U.· S. Department of Energy (DOE) to prescribe minimum efficiency standards for specified household appliances. The statute further stated that, not later than 5 years after prescribing an appliance efficiency standard, DOE must "conduct a reevaluation in order to determine**w~ether** such standard should be amended in any manner." The statute made no provision for any further DOE reevaluation of the federal standard for a particular covered product after the initial reevaluation. Both the initial standard and any amended standard were to require the maximum improvement in the energy efficiency of the appliance that was technically feasible and economically justified. Economic justification criteria were**~rescribed** by the statute. The statute also provided for federal preemption of state and local appliance efficiency standards, but allowed states to obtain a waiver of federal preemption if the state was able to establish "a significant state or local interest" to justify such waiver. The Reagan Administration DOE declined to prescribe stibstantive federal appliance efficiency standards, but instead published "no standard" standards. Several sta-tes petitioned DOE for a waiver of federal preemption. DOE' was preparing to be very liberal in granting preemption waivers to the states when the Natural Resources Defense Council (NRDC), the State of California and several other states sued DOE for its failure to prescribe substantive federal appliance efficiency standards. NRDC and its fellow petitioners won the lawsuit. In a 154-page opinion, the U. S. Court of Appeals in washington, D.C. harshly criticized DOE and laid out a framework for DOE establishment of very stringent federal appliance efficiency standards. Faced with the probability of stringent federal standards and DOE's inclination to freely grant states exemptions from federal preemption, appliance manufacturer associations (GAMA, AHAM and ARI) decided to try to negotiate reasonable legislated standards with NRDC that would also provide for stronger**fed~ral** preemption. The background**~nd** history of this effort is succinctly described in the attached September 5, 1986, memorandum prepared by the staff of the House Subcommittee on Energy Conservation and Power (Attachment A). NAECA was introduced in 1986 as the product of the negotiations between NRDC and the appliance trade associations. The initial federal

standards were to be legislated standards rather than standards developed through DOE rulemaking, and federal preemption would be strengthened. An effort was made not to change EPCA where /Continued

. . .change could be avoided (e.g. product labeling provisions) in

order to minimize controversy about the bill. The attached House Subcommittee memorandum describes the 1986 bill. President Reagan pocket-vetoed the 1986 bill. NAECA was re-introduced very early in 1987, passed Congress with little opposition, and was signed into law by President Reagan in March 1987. A "fig leaf" change was made to the 1986 bill to provide President Reagan a rationale for signing the 1987 bill after having vetoed the virtually identical 1986 bill. The change had to do with the schedule for mandatory DOE reevaluation of standards. The 1986 version of NAECA established schedules for mandatory DOE review of the standards for each covered product and for the-effective dates of any amended standards. For most of the covered products, there were to be two scheduled standards review cycles followed by further mandatory periodic DOE review of the standards indefinitely into the future. For example , the initial NAECA water heater'standards were to take effect January 1, 1990. DOE was to publish a final rule amending these standards (if appropriate) by January 1, 1992, and the amended standards (if any) were to take effect January 1, 1995. Then DOE was to publish a final rule further amending the water heater standards (if appropriate) by January 1, 2000, and the amended standards (if any) were to take effect January 1, 2005. Thereafter, DOE was to reevaluate the adequacy of the water heater standards every five years with.no_sunset. The lack of any sunset on mandatory DOE review of NAECA appliance standards was the professed reason for President Reagan's veto of the legislation. To satisfy the Administration, the 1987 version of NAECA sunsetted mandatory review of appliance standards after the second review cycle (see attached (Attachment B) February 20, 1987, "Coalition Update"). Thus, the statute does not now providefor any further mandatory DOE review of the NAECA water heater standards after January 1, 2000. After that date, a party may petition DOE for further strengthening of the water heater standard, but DOE action on the petition is discretionary. -2- change could be avoided (e.g. product labeling provisions) in order to minimize controversy about the bill. The attached House Subcommittee memorandum describes the 1986 bill. President Reagan pocket-vetoed the 1986 bill. NAECA was re-introduced very early**~n** 1987, passed Congress with little opposition, and was signed into law by President**Reaga~** in March .1987. A "fig leaf" change was made to the 1986 bill to provide President Reagan a rationale for signing the 1987 bill after having vetoed the virtually identical 1986 bill. The change had to do with the schedule for mandatory DOE reevaluation of standards. The 1986 version of NAECA established schedules for mandatory DOE review of the standards for each covered product and for**the~effective** dates of any amended standards. For most of the covered products, there were to be two scheduled standards review cycles followed by further mandatory periodic DOE review of the standards indefinitely into the future. For example, the initial NAECA water heater ·standards were to take effect January 1, 1990. DOE was to publish a final rule amending these standards (if appropriate) by January 1, 1992, and the amended standards (if any) were to take effect January 1, 1995. Then DOE was to publish a tinal rule further amendlng

. the water heater standards (if appropriate) by January 1, 2000,

and the amended standards (if any) were to take effect January 1, 2005. Thereafter, DOE was to reevaluate the adequacy of the water heater standards every five years with no sunset. The lack of any sunset on mandatory DOE revie\..., of NAECA appliance standards was the professed reason for President Reagan's veto of the legislation. To satisfy the Administration, the 1987 version of NAECA sunsetted mandatory review of appliance standards after the second review cycle (see attached (Attachment B) February 20, 1987, "Coalition Update"). Thus, the statute does not now provide for any further mandatory DOE review of the NAECA water heater standards after January I, 2000. After that date, a party may petition DOE for further strengthening of the water heater standard, but DOE action on the petition is discretionary.♦ E7t+AaO J IARXfv

. tAASSACHUSETTS. C., AINi*•. CARLOS J. ?AOCRNEAO CAUFQRNIA _A^1r .T "k.i MICHAEL C. OXLfY OMIO -, U. :.r -t:cnS 4OWAa0 ... NIELSCM .TAA ;0 :1-t.gam :;rteAUA VICi'AEL a UPAXIS. FLO'10A

'At :'4 ORES : ECXERT yFAI.ORR ' •nom.. -_

c: ; "DPUAN F tENT. NEW YOAR ILX GFflCIOI . SXI •IINN.SC'1

I^yw--NCE A. SIDUAN :NIEF CC.4NSEL ..NO STAFF OIREQCR Attachment A 

### U.S. HOUSE OF REPRESENTATIVES SUBCOMMITTEE ON ENE

## RGY CONSERVATION

AND POWER OF THE COMMITTED ON ENERGY AND COMMERCE WASHINGTON, DC 20515 

### September 5, 1986 .., PwOnly;tA1.6-le7a

ME:'.CFJ NDGM TC: Me=bers, Subcommittee on Energy Conservation & Power FRCM: Subcommittee Staff ST.7'-- .T Hear..ng and Markup: H.R. 5.65, "National Appliance Energy Conservation Act of 1986."

-------------------------------------------------------------- The Subcommittee will hold a lecisletive hearing on H.R. 5465 ; the National Appliance Energy Conservation Act of 1986, on Wednesday, September 10, 1986 at 9:30 a.m . in Room 2322 Rayburn. A witness list is attached. At 2 p.m. on the same date and in the same room, the Subcommittee will mark up H.R. 5465. This memorandum describes the key provisions of the bill. ackcround Residential buildings account for 16.5 Quads of energy cons=..-t_on in the United States, or 23% of the national total. Cf that f icure, approximately 80% is attributable to major home apci_ancss, including central systems (centrai air conditioning and heating, hot water heaters, etc.) and individual units (ref iaerators, freeezers, washers and dryers, rocm air con itioners, etc..) . The central tenet of this or any apcliance standards bill is simple: the more efficient the appl_ar:cs, theless energy is consumedAc :.ra ce e. ciency standards are desicn L cu

### ir ements or mirinun efficiency requirements for app ii ancss . unlike energy of _cienc•

_ rating ;, which are 

### i nformational ors:,. , 

### appliance eT_ _ci enc_ standards establish actual baseline, y^..__mum requir ements for each covered product . The resul 

### t is that the least energy efficient products are el^minate6, r esulti ng in grea ter average e_ _ic ien cy , decr eas ed ever _v CCT13 Ct: on C_^ ratetaye_c, and decreased demand requirement--:- or. utilities . ., !::!\,

..ao .. 'AAJlUY. !.c.4SUCHUSiTi"s, CriAllli;;A'.

..**(~ ·;,t':'~""·IC:':'.:'4**  c.:.IIl0S

... lIoo""U.O c.u.JFOI'INIA**!~"".,~.r** --:l

... ; \I,CHA'" C. £1XUY**~**..'o**~'L~:";":.i. -::t~\S**  "OWAAO

.....**~I(LSCH** .",,:... ';0 ::.**.:,.~** ..;: ..... :.wa.8.&tr.I.. VICiot

..Ei.. IlllJP..A-"S. FlO"OA**"O;~"** ... nc:'I**~It£;j ~**  EeXERT '<(',." "01l1C ':'

....,\.

..._ ·:,.c:."; ·'"PUAH.**j.E~T"l'Crw** "OA. ;.:: ::·,.or _ /"tu) 10**CF~ICjO)** .

, :,":::SII ·JIN

... ·SC

.."" ': : .....**~t~** :.lICI'U(ul./Oit ::F:·'=::l I,...lwaca.,cr't 'SI:'J"''''' :;I1IH C:;'''5£

......0 STU'**OII\~CJl ME!!OFJ~lDul!**  " 

### Attacmnent A 

### U.S. HOUSE OF REPRESENTATIVES SUSCOMMITTEEON ENERGY CONSERVATION AND POWER OF THE

_C;OMMITTEE ON ENERGY AND COMMERC:= WASHINGTON, DC 20515**Septe~ber** 

### 5, 1986 • .•••**1"I4O~~%l":"U24** 

## "

."

..-: .**!,~.~~-** 

## ':

...



# ., # ,t •• :'• •_-_• ..-r- •• ""



### T,-..·

....... 

### VeT-he?"c:!**1~** ......,;**~** ..._, 

### Subcommittee on Energy**Conser;at~on** 

### & 

### power**FP.C~:** 

### Subcommittee Staff**Eear~ng** 

### and Markup: 

### H.R.**5~65,** 

### WNational Appliance**Ener~~** 

### Consertation Act of 1986. w



# ------------------------------------------------------------------- T!1e Subcommittee will hold a legislative hearing on 

### H.R. 5465; 

### t!1e National Appliance Energy Conservation Act of 1986, on**Wed~esday,** 

### September 10, 1986 

### at 9:30 

### a.m. in Room 2322 

### Rayburn. A**wit~es3** 

### list is attached. At 2 p.m. on the same date and 

### in the**s~e roo~,**  

### the Subcommittee will mark up 

### H.R. 5465. 

### This

. me.;"::lOra-"1CU:1l describes the key provisions of the bill.

Backe-round**Resident~al buildi~gs**  

### account for**16.~** 

### Quads of energy**consu=~~~on** 

### in the united**St~tes,** 

### or 23% 

### of the**nat~onal** 

### total. Of**tba~ fig~re,**  

### aFproxiDately 80% 

### is attributable to major heme**-~-l;-~r~~ ;nr7r'c."~na** **CQ~t-al sv~tQ~e** **(cQ~t~al -;~** **c~nc-;~~on;nc c::.t"'~** **_~.** ___ .... - ........ _ .......... _ ... _ ..................;. •• - c ___ .... '--

..- _**-~c- hQ-~~~c** **ho~ w-t:'o~** **he~te?"s e~c)**  

### anc" l'nc-l"Tia-u- i**u~;te** c.J.. • _.::. ___ ... _ , 4.. Q**~** _ _ _,"

... y _ .c._ ••• w**(ref=~aerators,** 

### f=eezars, washers and drvers, roc= air condit£oners, etc.'. The central tenet of**~~is** 

### or any 

### appliance**st~nd~rds** 

### bill is simple: tbe more ef=icient**t~ea;:lianc~, ~e**  

### leSE E.!:ergy is. consumed.**;"_~pliance** 

### ef::icienc.! standards are**d~.sign r~:.:i=E!!len!:s**  

### or**mini=~=** 

### e£=iciency**reguir~ents** 

### for**app~~anc~.s. unl~ke** **ene~~J ef=~c~enc7**  

### ratinss,**whic~** 

### are**inior:lat~onal o~~y,**  

### appliance e .,:=**~** c'; e"'"**~**•• s·

### -nc-- rc"s eC'''' -bl ; 

### en' ac"ual baC'e 1 i

....

### e .... i

...**~** ..., ....."

. ___ .. •
..**~.:** \-Q..i a _ ... .w. ... _ • _ _ __"'

.. i

......_ ......_ ......**~** 

### requi=ements for**eac~** 

### covered produc:. The result is**t~at t~e**  

### le=st energy efficient produc:s are**elimin~t2d, re.sult~ng**  

### in gre=!:er average**ef~iciency,** 

### decre=sed energy**c~nsu=~~~on** by**r~t~~2yers,** 

### and decreased demand**rE~uire!!lent~** 

### or.**u~~:it~es.**

# 2 'QderaAnn 'ance Standards Lecis , latzon of the 970's Appliance efficiency has been a subject of national interest since at least the initial 'energy price jolts of the early 1970's. In 1975, Congress passed the Energy Policy and Conservation Act (EPr=.) , which requi red the U. S

. Department of E ercy ( DOE) to mandate energy labeling of appliances and to prescribe voluntary,

r_;-wide appliance efficiency improvemento. In addition, EC_A authorized, but did not require , DOE to set mandator? efficienc- standards if the lebel i nc and voluntary antroaces proved ineffective. - -- s in 1978, Congress enacted the National EnerTy Conservation Policy Act (NECPA) , 42 Q.S.C. 6291 eat see) NEC2A, among other thincs, a....ended EPCA to require DOE to promulgate expeditiously mandatory Federal efficiency standards for 13-covered ' 3 covered products (refrigerators , freezers , water heaters , room air conditioners, central air conditioners, furnaces , dishwe_her: , clothes washers, clothes dryers, home heating equipment, kitchen ranges/ovens, television sets , and humidifiers/dehumidifiers ). The Carter Administration DOE proceeded with the rulemmaking and, in 1960, issued proposed standards for 8 of the 13 covered appliances. The "No-Standard* Standard One of the Reagan Administration DOE's first official acts was to scrap the proposed appliance standard rules,,and to embark upon a new rulemaking procedure. Between 1982 and 19831, DOE issued proposed and then final ' no-standard" standards for most of the covered appliances. These standards constituted DOE's determination that, applying the statutory criteria of "technological feasibility" and "economic justification," the most appropriate Federal appliance standards were no standards at all.

The "no-standard" standards resulted ii ediately in litigation. The Natural Resources Defense Council, joined by Congressman Richard Ott_neer and the States of California, 

### H nnesota and New York, sued DOE to overturn t

### h e s tr. .. -nd- .r as r '- ^..

_ G a wholesale misapplication of the Congressional directive to promulgate Federal standards. On July 16 , 1985, a unanimous pane? of the D. C. Circuit Court of Appeals issued a 154-pace derision striking down the "no-standard" standards as "unsupported by substantial evidence and . . contrary to lawn for a host of reasons, and directing the Department to initiate a new rulemmaking Procedure in accordance with the statutory intent. NPDC v. ?err ncton, 768 F.2d 1335 (D.C. Cir. 1985). T h-, r ._emaking sz_1l in progress. ct_ -i }•_ at the State Level %tir.' le Congress was enact ing the f'-rst Federal atpl_arce standards legislation in the 1970 ' s, some states began enactiz

ewr. appliance standards legislation. First California, later New York, Wisconsin, Minnesota and Orecon, passed a d 

### 2**r~deral- Acolianc~** **~tandarq~** 

### teaislation of**t~e l~iOts**  

### Appliance efficiency has been a**subjec~** 

### of**nat~onal** 

### interest**sin!:~** 

### a'C. least the initialenOergy price jolts 

# of t.'1e 

### early 1910's. In 19i5, 

### Congress passed the Energy 

### Policy and Conservation Act (EP-:';)' 

### which requi**r~d** 

### the 

## u. S. Depart.:nent of Energy CDOE> to**~enca'C.s ener~J**  

### labellng of appliances and to**prescr~be** 

### voluntary,**i::,G~.str-7-",ide** 

### a'C'Cliance ef::icienc·., imorovl;:!:len'C.::. In 

### aceitoien,**EC::~; au~~cr.ized~-**  

### but did not requlre, - DOE to set mandator·, e£=:c:'enc:l standards if the lebelina and voluntary**ac'Cro~bes**

... -,z: .• -- - -- t 

### prcvea**lne~.eC~lve.** 

### In 1978, 

### Concress enacted the National Energy Conser7ation Policy**Ac~** 

### (NEC?A), 

### 42 U.S.C. 6291 

### et**~L** 

### NEC?A, among otber tl:':'ngs., a:.:ended EPCA 

### to require DOE to promulgate expeditiously manda'C.ory Federal efficiency standards for 12 

### covered proc.uc:s (ref:igerators,freezers, water heaters, roem ai: conditionersi central air conditioners, furnaces,**dishwi:~~her::t** 

### clothes**wast,~rs,** 

### clothes dryers, home heating equipment, k;j. 

### tchen ranges/ovens, television sets. and humidifiers/dehumidifiers). The Carter Ad::linistration DOE proceeded witb the rule.'!!aki'hg and, in 1980, 

### issued proposed standards for 8 

### of the 13 

### covered appliances. The**·No-Stand~rd~** 

### Standard One of the**R~agan'Administration DO~'s**  

### first official acts was 

### to scrap the proposed appliance standard rules, ,and to embark upon a new rulemaking procedure. Between 1982 

### and 1983, 

### DOE issued proposed and then final ,-no-standard- standards for most of the covered appliances. These standards const:'touted .DOE' S**determinat~on** 

### that. applying the statutory criteria of -technological**feasibility~** 

### and -economic justification,- the most appropriate Federal appliance standards were no 

### standards at all. The**~no-standard·** 

### standards resulted**i~eciatelv** 

### in**lit~gation.** 

### The Natural ReEources Defense Council, Joined by 

### ConcrEssman Richard Ott:'naer and the States of**C~liforniar ~~~;'eso'C.~**  

### and New York, sued DOE to**overtur~ t~e** **st~r.dards** 

### as a wholesale**misap~lication** 

### of**~~e** 

### Concressional**di=Ec~:'ve** 

### to prsmulga

### 'C.:= Federal st::.ndards. On July 16, 1985, a**unani1:lou~** 

### pc:nel 

# of the D.C. Circuit Court of Appaals issued a**15~-Fage** 

### dec:'sicn**s~=~kinc** 

### down tbe**·no-s~andard·** 

### standards as**wun5u~~or~ed** 

### bv**suts~~nt:'al** 

### evidenca and ••• cont=arv to lawn f8r-a,host 

# of reasons, a.r:d di**rec~ing** 

### t!lE Depar-=:::ent to i:1i

### t:'a1:::: a 

### ne';l rulE:l2.}::'!'lg proc2cure in ac=ordanca with**~~e** 

### statutory**in~e~~.** NPr.C 

### v.**R~"'==-nct::r:.,** 768 F.2d 1355 

### (D.C. Cir. 1985).**T::.:~:c r::'::'e~ak':'ng**  lZ**s~~ll** 

### in progress.**~ilii'::'** 

### e Cong:: ess was enact:'ng t!1e first FeGer**~l** 

### a!;;? 1i 

### anC2**s~~nc~rds** 

### leaislat:'on in t!1e 1970's, some**st~tes ~e~3n** **en~c~~nc** 

### t--:eir c"Jn**a~nliance st~.r.dards**  

### leaislation. First**C~l':for:lic"** 

### .ind later**~ew Y~~k,** **~isconsin, Minne~ota**  

### and Oregon, passed

### 3 legislation or promulgated regulations establishing standards for appliances covered under Federal law. Although NEC,=.k provides that Federal appliance standards preempt state standards , the law also allows DOE to grant waivers to states able to demonstrate a "significant State or local interest ' justifying the state's standards in lieu of the Federal standard. At the same time that DOE promulgated the Rnc

- standard" standards , it began a practice of granting wailer patitions filed by the states

. As a result , the major activity in appliance standards over the past decade has been at the state level. At present, more than a half

- dozen states have appliance standards legislation of one kind or another on the books , and another ten state s are moving in that direction. Industry and the vironmentalists Negotiate In December 1985 , DOE and the Solicitor General ' s office decided not to appeal th e Court's decision in ZC v. Herrington. Appliance manufacturers,, accordingly , were confronted with the absence of Federal appliance standards for t

.he''immediate future, and a growing plethora of differing state regulations, complicating industry ' s long-term planning .- Environmental groups, for their part , were put to the task of fighting a series of legislative battles at the state level , Vith litigation ensuing in some cases . In early 1986 , th.e major appliance manufacturer associations and the Natural Resources Defense Council began a negotiation to resolve their long

- standing differences in the area of appliance standards

.. That negotiation continued for close to six months and resulted in a comprehensive agreement which is the foundati on of H

. R. 5465.
E.R5. 165 There are two central tenets to the National Appliance Energy Conservation Act of 1986, E.R. 5465. First, the bill legislates e°Z'r^ss energy conservation standards for eleven ccnsi er products; DOE is responsible for amending the standards in te future. Second, the bill preempts state law under most circumstances. (a) Tie _Ztandards The bill sets exress energy conservation standards for eleven. covered products: (1) refrigerators and freezers; (2) room a;.r conditioners; (3) central air conditioners and heat pumps; (4) water heaters; (5) furnaces; (6) dishwashers; (7) clothes washers; (8) clothes dryers; (9) direct heating equipment; (1,11) kitchen ranges and ovens; and (11) pool heaters. The standard for a covered product is expressed as either a design rec, r:meat or a Performance standard prescribing a minimum enercv e-= _c. enc y level or a marinum quantity of enera use. These standards take effect in 1985, 1990 or 1992, demendina upon t e product, and remain in affect fo;- anywhere from 3 to 1.0 years, again deTenc_. _ upon t; -e_ ......**~**.•**~** -pi.·•• :..**~** •

. :-, ,--

### ......... '" 

### 3 

### legislation or promulgated regulations establishing**standa~~s** 

### for**apclianc~s** 

### covered under Federal 

### law.**Alt~ouah** 

### NEC?A provloes tSat Federal 

### appliance standards preempt state standards, tbe 

### law also 

### allows DOE to grant waivers to states able to demonstrate a ·significant State or 

### local interest- justifying**t~e** 

### state's**s~andarcs** 

### in lieu of the Federal standard. " " At 

### tbe" SaI:le time cat DOE promulgated**t~e** 

### ,,':lc-standard"

. st3r.carcis, it began 

### a**prac~ice** 

### of granting wai7er patiti-Qns**f~led** by 

### the states. As 

### a result, the major activity in appliance standards over the past decade has been at the state level. At**pr~sent,** 

### more than a half-dozen states have at:'Oliance standards legislat!on of one kind or another on the**boo~~,** 

### and anotber ten st3tes are moving in that direction. " - Incustr7 and the**~virQnmentalist3** 

### Neaotiate In December 1.985, 

### DOE and the Solicitor General'::; Office decided not to appeal the Court's decision in**NF~C** 

### v. gerrinctcn. AFplianc:= ltanufacturers, accordingly, were confronted with the absence ,of Federal appliance standards for the" 

### immediate future, and a growing plethora of differing state regulations, complicating industry's long-term planning. ' Environmental groups, for their part, were put to the task of fighting a series of legislative battles at the state 

### level, with litigation ensuing in some cases. In early 1.986, 

### the major appliance manufacturer

. associations and the N-atural Resources Defense Council began a neootiation to resolve their lonc-standina differences in the area 

# - - .- 

### of aPOliance standards. That rie'aotiation continued for close to six months and resulted in a**compr~hensive agre~ent**  

### which is the foundation of H.R. 5465. E.R-'L., 5.:i65 

### There are two central tenets to the National AFpliance**E~er~~** 

### Conser7ation Act of 1986,**H~R.** 

### 54E3. 

### First,**~e** 

### bill legislates er.:r"ess enercv conservation standards for**e.!.e~!e!l** 

### c::nst:=er**prod~c~3;** 

### DOE-is resFonsible for amending**t~e** 

### standards in**t~e f~ture.**  

### Second, the 

### bill preempts**s~ate** 

### law under**mos~ circ~!Jstances.** 



### The 

### bill sets express**ener~1** 

### conservation**s~~r.d~rds** 

### for**e.!.e~en** 

### covered**produc~3:** (1) 

### refrigaratcrs and f:eezer$; (2) 

### room air**conci::ioners~** (3)**cen~ral** 

### air 

### conditioners and he::.t pumps: (4) 

### water heaters; (5)**furnaces~** (6) 

### dishwashers; (7)**clo~~es washe~si**  (8)**clot~es** 

### dryers; (9)**d!.rec~** 

### heating**esuiper:~;'** (:0)
- 

### kitchen ranges and 

### ovens; and (11) 

### pool heater::;;. T!1e**st:3r:c~=d** 

### fora covered oroduet is 

### exrressed as**ei~,e~** 

### a**desic~ r~=~:=2~ent**  

### or a

_ _ _ 4**F2r=or~~r.c~ st~ncard**  

### presc=ibing a mininum 

### er.e=sy**e==~c:er.e7** 

### level or a ::na=i::um cruantit·, of**ener~.;** 

### u.se. These St:2r:03=:::S t.::;.ke e£fet;:"!: l ·.., 'T 08 Q 1000 

### -or 100-2**a·e~enQ** 

### ..r-no u-on t;"Q 

### proc'"c-**-,...~** 

### r,::,,,,,,,,,';n i-:-.
... __ "-' " _ _ _ _ _, =' .4

_**~** ..... _ _ _, ...::............ _ ••,........... ...**~£fec=** 

### f=r**anywh~re** 

### f:om 3 

### to 10**years~** 

### again**de~e~:::~~g** 

### uFon**t~€**

### .4 product
. The Federal standards are as strong as or stronger than arv ene rgy conservation standards currently in effect in any, state. DOE is directed to promulgate follow-on stan dards for each product, to take effect upon expiration of the express statutory standards. These
. f ollow-on standards may not be lower than the 

### e tress standards set forth in H.R. 5465. (b) P reemution As a general rule, the Federal ' appliance standards opreempt all state standards

. Special consideration is given to states with appliance standards currently on the books

. In addition, states may petition DOE for a waiver of the Federal standards. State regulations prescribed or enacted before January 8, 1987 which are applicable to products before January 3, 1988 are 'g:: z.-ndf athered ' under H. R. 5465. No other state regulations may bezc,me applicable. 'srandfathered ' regulations remain effective until the applicable Federal standards become effective , but they may not be revised upward during that period

. At the effective date of each Federal standard , these ' grandfathered' state standards are superseded. States may file petitions with DOE seeking waiver of Federal preemption
. The State must establish by a preponderance of the evidence that its regulation is needed i.n order to meet 'unusual and compelling State or local interests ,' defined as conditions substantially different in nature or magnitude from those prevailing in the United States generally

. In addition, DOE may not grant a State's waiver application if interested persons establish by a preponderance of the evidence that the State r e gul ati on will signifi cantly burden marketing , manufacturing, distribution , sale or servicing of affected products on a national basis . Finally, DOE may not grant a State ' s waiver application if interested persons establish by, a preponderance of the evidence that the State regulation is likely to result in the, unavailability in 'the State of any covered product type or class of performance characteristics

. For instance , if the State rernulation would el irinate frost-free refrigerators in the state, DOE would be precluded from granting that aspe ct of the State' s waive= application. A State may apply for a waiver of Federal preemption at any t::re after en actment. State waiver applica tions take effect 

### three years of ter they are granted by DOE, and in general not before e:=-.ration of the express Federal energy conser-: ation standards in E.R. 5465

. The only circumstances under whin h

.a.St_te may inpiement a regulation for which -DOE has gr anted a waiver before that date is if the State can show, by a preponderance of the evidence , that , due to c-; circumstances not re :scrip ? Y forseeabl e, an "energy emergency condition' exists within the State which

the health, safety and we? far e of its residents because of the inability- of the State to provide adequate quantities of ene_ to its residents at less than prohi-it e cost2. 

# . ' .,

### .--.-

### ........... . 4 

### product. The Federal standards are as strong as or stronger tban ar.y er.ergy conser.vation standards currently in**ef=ec~ i~**  

### any, .**st~t~.** 

### DOE 

### is directed to promulgate follow-on stanaarcs for**eac~** 

### produc:, to take effect upon expiration of the**e~press** 

### statutory**st~nciards.** 

### These.follow-on standards may not be lower than the**e~r;ss** 

### standards set forth in B.R. 5465. 

### (b) P:ee!!lotion • As a 

### general 

### rule, the Fecerai' appliance standards :preempi: al: state standards. Soecial consideration is aiven to states**wit~** 

### appliance**standard~** 

### currently on the books: In addition,**st~t:es** 

### may petition DOE 

### for a waiver of the Federal standards. State regulations prescribed or enacted before January 8, 1987 

### which are applicable to products before January 3, 1988 are -g=2ndfathered- under B.R. 5463. No 

### other state regulations may l::e·';;:.Jme applic.able.**a'~randfat.b.~redw** 

### regulations remain effective until the applicable Federal**~~andards** 

### become effective, but they z:ay not: be revised upward during that period•.:-At the effective date of eacb Federal standard, these wgrandfathered w 

### state standards are superseded. States may file'petitions with DOE 

### seeking waiver of Federal preemption. The State must establish by' a preponderance of the evidence that its regulation is needed 

# in order to meet ·unusual and compelling State or local interests.· defined as conditions substantially different in nature or magnitude from those 

### prevailing in the united States. generally. 

## In addition. DOE 

### may not: gra.nt a State's waiver applis:ation if interested persons est:ablish by 

### a preponderance of the evidence ,that the state regulation will 

### Significantly burden marketing, manufacturing, distribution, 

### sale or servicing of affected products on 

### a national basis. Finally, DOE 

### may not grant a 

### State's waiver**applicatio~** 

### if**ir.~erested** 

### persons establish by 

### a preponderance of the evidence**t~at** 

### the State regulation is likely to result in**the~ u~~vailabili~I**  

### in 

### the State of 

### any covered**proc~c=** 

### type or class of**per~or~ance** 

### characteristics. For instance, if**t~e** 

### stat:e**re~~lat~on** 

### would eliwinate frost-free**refr~cer~tors** 

### in**t~e** 

### state, DOE 

### would be precluded from granting that aspec: of tbe State's waiver applic3tion. A 

### State may apply for a waiver of Federal.**Dree..~ction** 

### at anv**t~~e af~~r** **enact~ent:.** 

### State waiver**applic~tior.s** 

### take**ef=ec~** 

### three years**af~er** 

### they are granted by DOE, 

### and in**gener~** 

### not before**e=-::~i=at:ion** 

### of the 

### express Federal energy conser:-at:ion star-dards in E. R. 5465. The 

### only 

### circumstances under**whic~a**

### .. S

### tate may**i=ple~ent** 

### a 

### regulation for which nOE 

### bas granted a waiver before t!1at date is 

### if the State can show, 'by a**prepor:c2ra....,:c~** 

### of t!1e**ev~dence, t~at,due**  

### to circumstances nct: reascnablv**for~eeable,** 

### an "enErgy**e~ergencJ** 

### condition- exist3**wit~in** 

### the**St~t2 whic~**  

### :"::1Fer:"ls the health, 

### safety and welfare of 

### its reside::-=.:s**!:eC::iu~e** 

### oi the**in3.bi~it'"I** 'of 

### the State 

### to proviDe acequat:e q;l2.nt':' 

### ::ie:::: of ene!':."?! to i 

### tsresidents at lesE than prohibi

## t.:. ':2**cost~.**pro=ected Energy ; avincs

According to the American Council for an Enercy -Efficient Economy., S.R. 5465 would provide consumers with a net savings of $28 billion, or nearly $300 per household , based on appliances sold through the year 2000 and assuming that DOE does not revise anv of the Federal standards upward during that time frame. Overall, the benefits throuch reduced operating costs art nearly three tines as gr eat as the increased first costs. of the covered products

. In addition , H. R. 5465 will lower residential energy consumption in the U.S. by 1 Quad or about 6 %. The energy savings expected over the lifetime of products sold through 2000 -- 17 Quads -- is equivalent to over two years of energy imports at America' s current import rate . Finally, the standards would lower peak el ectricity demand in 2000 by 22 , 000 Megawatt s -- equivalent to about 1

. 0% of the growth in peak power

. demand ring 1986-2000 as forecast by the utility industry.

11 

# . . , " .' 

## ....- ,,5 

## ..' ,,- :**.~** 

### .... 

# ...

## -

# ..... '

# .. 'Ii'· : ,-. • .' :" 

## ,--

# ........

# '.

According to the American Council for an Energy-Ef=icient Econcmy., B. R. 5465 would provide consumers wit!:l a net savings of**S~8** 

### billion, or nearly $300 per household, based on 

### appliance

# 7 sela tllr::lughthe year 2000 and assUI:1ing tllat DOE does net reVlse ar:.., of**t~e** 

### Federal standards u't:"'ailard durine ti"lat time frame. CVerall, the benefits through" reduced operating costs**ar~** 

### nearly three times as creat as the inc::-eased first costs of the covered


# .. procucts. In addition, H.R. 5465 will lower residential energy**ccnsu~p~ion** 

### in the 

# u.s. by 1 Quad or about 6%. The energy savings**expec~ed** 

### over the li£etime of products sold through 2000

-- 17 Quads

-- is equivalent to over two years of**ener~J i~por~s** **a~** 

### America's**c~r=ent** 

### import rate. Finally, the star-dards 

### would lower peak electricity demand in 2000 by 22,000 Megawat7.s

-- equivalent to about**~.O%** 

### of the growth in 

### peak power. dem.and 

## cD ring 1986-2000 as**foreca~t** 

### by the utility industry.·

.

"._.r _ av> 4. ► - . &ua A a63 L&LAlLk--- i_l d lt. l\..l L%-I VLLll L' L&1. %.a 3 February 20, 1987 FC^ 2 5 1 C4

COALITION UPDATE

P ASSES SE`NA.TE On F.bruar 17 the Senate o -is -.-d the •i
-- . nD7anceFner:'), C o nser '7 3C_OR Act a D G am : S 3:-^ ( ; ' ^ _ the f i v e abse nt S e n a t o r s a_. l e ' . . 2 _- Cos .U: ors Before the f inai vote on the le 1 at o " --En passed an amendment by unanimous consent altering the future DOE rulemaking schedule in the bill. This amendment was wor e"d out as a compromise between the Reagan Administration, on the one hand, and the Coalition and Congress, on the other. As a result of the amendment (and assuming it is adopted in the House), the Administration's senior advisors will be recommending that the President sign the NAECA. As introduced, the NAECA provided for scheduled future rule makings to readdress the'standards ad infini tum. The compromise amendment eliminates the requirements in the bill for mandatory future rulemakings after two reviews . After the second set of rulemakings , the Department of Energy is given discre tionary authority to readdress
. the standards
.. The amendment also permits a person to petition the Department for a review and rulemaking to determine if the standards need to be amended.
HOUSE ACTION: Markup in the House Energy and Power Subcommittee is scheduled for Tuesday, February 24, at 2:00 p .m. Congressman Joe Barton ( freshman Republican from Texas ) will be offering (at least) two amendments opposed by the Coalition. .One would gut the standard levels in the bill while the other would eliminate all future DOE rulemaking authority. Coalition members are urged to contact members of the Subcommittee to request that they oppose t::_ B.r_on amendments . Amendments will also be offered to conform t`:e :souse bill with the Senate bill. Subcommi__ee me _bers should be urged to support these amendments. cor_ ittee consideration of the bill is hoed for _n ,.hie a :,d Commerce Committee on Thursday, uSe action could come the first week in Marc'.:.

1 :^l ^ir11: n t1^tikv. iId ^Utrc • :L"T(^a, Viri,' ini.1 12 f:•?11::i' 1 1)) ^^^ ,ih54 February 

### 20, 198i 

## FE3 2 5**1ge~**

COALI:ION UPDATE

;:.::;'::':'":..ll _';'pn'i.':"ance Enel:'-;Y C,1nser-Tat'::on Act**(~;,:_;,,~_:.., ~,:**  a.**:-J~:'** ,:;;2.:'**~G~~ 0~** **39-~ (~~:~**  the eive absent Senators 0.1:**~e~~2 ~t~_**  c :::**~** ;:**~;** i. ::: 0 r.3 ; • Ee f 0 l:' e t!1 e r 1. n a i v 0 teonthe 1e ; i .: :. .J. t: :. 0 :"'" :.**~~** Sen.:;.:. ::: passed an amendcent by unanimous consent**alter~ng** the**f~cuLe ~OE**  l:'ule:.laking sc!1edule in the bill. This amendment: ;.;as ',,;od:/d out as a.**co~pr~~ise bet~een**  the Reagan Administration, on**t~e** one hane, and t!1e Coalition and Congress, on the other. As a result of**t~e amend~ent**  (and assuming it is adopted in the House), the**Ae~inist=ation's** senior advisors will be**recommendin~** that t!1e**?=esid~nt** sign the NAECA. As**~ntroduced,** the NAECA provided for**schedul~d** future rulemakings**t~** readdress**the~** standards ad infinitum. The compromise amendment el:minates the requirements in the bill for mandatory future rulemakings after**t~o** reviews. After the second set of rulemakings, the Department of Energy is given discretionary authority to readdress .the standards.. The amendment also permits a person to petition the Department for a review and rulemaking to determine if the standards need to be amended. HOUSE ACTION: Markup in the House**Energ~** and Power Subcommittee is scheduled for Tuesday, February 24, at 2:00 p.m.**Con~ressman** Joe Bar:on (freshman**Re~ublican** from Texas) will be offering (at least) two amendments opposed by the Coalition •. One would gut t!1e stancard levels in the bill while the other would eliminate all future DOE rulemaking authority •. Coalition members are urged to coct3C: members of the**S~bcommittee** to request that they oppose**t~~** 5dr:on amendments. Amendments will also be**offere~** to**con£or~ t~E**  50use bill with the Senate bill. Subcommi::ee**~e=bers** should be urged to support these amendments. Fu::**co~=it:ee** consideration of**t~e** bill is**hoce~ ~**  .. .L
:: ::.: !:' ; : T a :: d. Cu t:l :-:e !" c e C 6 L:.::' itte eon T h u r s day, F**~** S ::- . ...;. 3. r ..**:~** :::;.
:: ::.. ;:: G rae::: i 0 ceou l d come the f i l:' S t wee Kin Xarc :: •

# It is truly an honor and a privilege for me to have the opportunity to address the natural gas industry of this remarkable country. Today, I want to tell you about how the gas appliance industry in the United States has used federal law to promote our nation's energy conservation goals and maintain healthy markets for gas and gas appliances. First, in case you don't know, our association, the Gas Appliance Manufacturers Association - GAMA for short - represents the whole spectrum of household and commercial gas appliances and components. Our members manufacture and sell central heating equipment, room heaters, water heaters, commercial cooking equipment, gas controls, gas burners-and gas vents. We also represent suppliers of equipment and services used in the production, transmission and distribution of natural gas.



# It is truly an hon9r and a privilege for me to have the 0pp0rlunity to address the natural gas industry ofthis remarkable country. Today, I want to tell you about how the 6

# gas appliance industry in the United States has used federal law to promote our nation's energy conservation goals and maintain healthy markets for gas and gas appliances

.

.First, in case you dori't know, oUf

association, the Gas Appliance Manufacturers Association

- GAMA for short

- represents the whole spectrum of household and commercial gas appliances and components. Our members manufacture and sell central heating equipment, room heaters, water heaters, commercial cooking equipment, gas controls, gas burners-and gas

- vents. We also represent suppliers of equipment and services 

# lls-ed in the production, transmission and distribution of natural gas.

# The United States woke up to the need for energy conservation in the early ' 1970's with the formation of the OPEC oil cartel. Since that "oil crisis" 20 years ago, consumers in the U.S. have become much more interested in the cost of operation of their appliances, and the. market has responded with more efficient appliances. This natural market response to greater demand for more efficient appliances has been accelerated by federal law that GAMA helped to design and implement. GAMA's motive for doing so was to avoid disruption of the markets for natural gas and gas appliances. In the 1980's, political pressures for increased energy conservation had made regulation of appliance energy use inevitable. The Reagan Administration was inclined to leave regulation of appliance



# The United States woke up to the need for energy conservation in the early' 1970's with the formation ofthe OPEC oil cartel. Since that "oil crisis" 20 years ago, consumers· in the U.S. have become much more interested 'in the cost ofoperation oftheir appliances, and the. market has responded· with more efficient appliances. This natural market response to greater demand for more efficient appliances has been accelerated ,by federal law that GAMA helped to design and implement. GAMA's motive .for doing so was to avoid disruption ofthe markets for natural gas and gas appliances. ' In the 1980's, political pressures for increased energy conservation had made regulation of appliance energy use inevitable. The Reagan Administration was inclined to leave regulation of appliance
2 -

# energy consumption to the individual states. Many states in fact began the process of developing laws to regulate appliance energy use. This presented.the gas appliance industry with a nightmare scenario. The various states would build beauracracies to impose and enforce their own, inconsistent rules for appliances. Some of the states with the largest populations - California, New York, Massachusetts, Florida and others had already established such bureaucracies. Gas appliance manufacturers feared that the economics of production and distribution would be greatly complicated if numerous states had their own separate appliance requirements. The consumer as well as the manufacturer would lose with that scenario, as loss of efficiencies in production and distribution would result in higher prices. To avoid this nightmare, GAMA, on behalf of its members, reached a "negotiated



# energy consumption to the individual states
.

. Many states in fact began the process of developing laws to regulate appliance

. energy use. This presentedthe gas· appliance industry with a nightmare scenario. The various states would build beauracracies to impose and enforce their own, inconsjstent rules for**applia~ces.** 

# Some ofthe states with the largest populations

- California, New York, Massachusetts, Florida and others

- had already established such bureaucracies. Gas appliance manufacturers feared that the economics ofproduction and distribution would be greatly complicated ifnumerous states had their**~wn** 

# separate appliance requirements. The consumer as well as the' manufacturer would lose with that scenario, as loss ofefficiencies in production and distribution would result in higher prices. To avoid this nightmare,**GAMA~** 

# on behalf ofits members, reached a "negotiated


# 3

# settlement" with the energy conservation advocacy groups that had been urging the states to regulate appliances. The result of this negotiated settlement was the passage in 1987 of the National Appliance Energy Conservation Act, which we simply call NAECA. GAMA was instrumental in the drafting of NAECA. Faced with the inevitability of appliance energy conservation standards, we had four main objectives. First, we wanted to establish uniform national standards that individual states could not deviate from. . Second, we wanted the national standards to be set at reasonable levels. Third,. we wanted appliance manufacturers to be afforded adequate "lead time" to prepare to comply with the initial standards and any future revised standards. Fourth, we wanted to insure that standards would remain in place long enough for manufacturers to recoup their investment in complying



# settlement" with the energy conservation advocacy groups that had been urging the states to regulate appliances. The result of this negotiated- settlement was the passage in

1987 ofthe National Appliance Energy" Conservation Act, which we simply call NAECA. GAMA was instrumental in the drafting of

. NAECA. Faced with the inevitability of appliance**~nergy** 

# conservation standards, we had four main objectives. First, we wanted to establish uniform national standards that individual states could not deviate from. Second, we wanted the national standards to be set at reasonable levels. Third, we wanted appliance manufacturers to be afforded adequate "lead**ti~e"** 

# to prepare to comply with the initial standards and any future revised standards. Fourth, we wanted to insure that standards would remain in place long enough for manufacturers to recoup their investment in complying
4

# products before any more stringent standard is adopted. Happily, NAECA incorporated all four of these objectives. NAECA established minimum energy efficiency requirements for most major household appliances

. Not only gas appliances are regulated; competing electric and oil

-fired appliances are regulated as well. Great pains were in fact taken to insure that the legislation did not advantage any particular energy source. The improving market share natural gas. has enjoyed in recent years in U.S

. residential end-use markets shows that natural gas certainly has not been disadvantaged by NAECA. Let me now try to explain to you briefly how NAECA -works. The initial NAECA standards were negotiated by the competing interest groups and are specified in the law. Most of the standards for gas appliances are



# products before any more stringent standard is adopted. Happily, NAECA incorporated "all four ofthese objectives. NAECA established minimum energy " 

# efficiency requirements for most major household appliances. Not only gas appliances are regulated; competing electric and oil-fired appliances are regulated as welL Great pains were in fact taken to
.. insure that the legislation did not advantage any particular energy source. The improving market share natural gas. has enjoyed in recent years in U.S. residential end-use markets shows that natural gas certainly has not been dis·advantaged by NAECA. ' Let me now try.t9· explain to you briefly how NAECA ·works. The initial NAECA standards were negotiated by the competing interest groups and are specified in the law. Most ofthe standards for gas appliances are 

# 5

# performance standards that manufacturers are allowed to meet any way they can. In just a few .cases, the NAECA standard is prescriptive. For example, NAECA prohibits the use of a constant burning pilot on gas dryers and on kitchen ranges and ovens having an electrical supply cord. The U.S. Department of Energy, DOE for short, is charged with the overall management of the NAECA regulatory scheme. DOE was directed by the statute to. consider revisions to the standards periodically through the rulemaking process according to specified timetables. For example, the initial NAECA minimum standards for furnaces took effect in 1992. DOE was directed by NAECA to publish a final rule by 1994 amending the initial furnace standards, if appropriate. Any amended furnace standard would not take effect until 2002. DOE has started the rulemaking process to consider amending



# performance standards that**manuf~cturers** 

# are allowed to meet any way they can. In just a few.cases, the NAECA standard is prescriptive. For example, NAECA I 

# prohibits the use ofa constant burning pilot " on gas dryers and on kitchen ranges and ovens having an electrical'supply cord. The U.S. Department ofE.nergy, DOE for short, is charged with the overall management ofthe NAECA regulatory

.

. scheme. DOE was directe'd by the statute to consider revisions to the standards periodically through the rulemaking process according to specified timetables. For example, the initial NAECA minimum standards for furnaces took effect in 1992. DOE was directed by NAECA to publish a final rule by 1994 amending the initial fumacestandards, ifappropriate. Any amended furnace standard would not take effect until 2002. DOE has started the rulemaking process to consider amending
6

# the initial NAECA furnace standards,. but has not been able to adhere, to the schedule prescribed by NAECA. To give you another example, the initial NAECA standards for water heaters took effect in 1990. NAECA directed DOE to publish a final rule by 1992 amending the initial water heater standards, if appropriate. Any amended water heater standard would not take effect until 1995. DOE has published proposed new water heater standards, but, again, has not been able to adhere to the NAECA timetable. Please note that the NAECA timetables for furnaces and water heaters have built

-in lead times and sufficient time for manufacturers to recoup their investment in existing products, before they have to replace them with new products

. For example, furnace manufacturers were given a lead-time of 5 years from the 1987 passage of NAECA to



# the initial NAECA furnace standards,_ but has not been able to adhere to the schedule prescribed by NAECA.

I 

# To give you another example, the initial NAECA standards for water heaters took effect in 

# 1990. NAECA directed DOE to publish a final rv1e 

# by 1992 amending the initial water heater standards, if appropriate. Any amended water heater standard would

- not take effect until 1995. DOE has published proposed new water heater standards, but, again, has not been able to adhere to the NAECA timetable. Please note that the NAECA timetables for

, 

# furnaces and water heaters have built-in lead

. times and sufficient time for m'anufacturers to recoup their investment in existing productsbefore they**hav~_,to** 

# replace them with new products. For example, furnace manufacturers were given a lead-time of5 years from the 1987 passage ofNAECA to


# 7

# bring their entire product lines into compliance with the.1992 furnace standards. DOE is directed to publish any amended furnace standard by 1994, well in advance of its 2002 effective date. The 1992 furnace standards will be in effect for at least 10 years before any amended furnace standard takes effect. Although DOE has not been able to adhere to the NAECA timetable, DOE has agreed to maintain the lead times contemplated by the statute. Thus, instead of taking effect in 2002, any amended furnace standard might not take effect until 2004 or later, depending on how long it takes DOE to publish an amended standard. In amending NAECA standards, DOE does not 'have unlimited discretion. The statute forbids DOE to reduce the stringency of an existing standard, but it also requires DOE to justify any more stringent standard. Any



# bring their entire product lines**i~to** 

# compliance with the .1992 furnac;e standards. DOE is directed to publish any amended furnace standard by 1994, well in advance of its 2002 effective date. The 1992 furnace standards will be in effect for at least 10 years before any amended furnace standard takes effect. Although DOE has not been able to adhere to the NAECA timetable, DOE has agreed to

,maintain the lead times contemplated by the

statute. 'Thus, instead oftaking effect in 2002, any amended furnace standard might not take effect until 2004 or later, depending on how long it takes DOE to publish an amended standard. In amending NAECA standards, DOE does not have unlimited discretion. The statute forbids DOE to reduce the stringency of an

, existing standard, but it also requires DOE

tojustify any more stringent standard. Any
8

# new standard must be both technically feasible and economically sound. Economic justification criteria are spelled out in the law. DOE must consider the likely economic impact of a proposed new standard on both consumers and manufacturers. Of paramount importance_ is whether savings in operating costs will offset the higher price consumers may have to pay for a more efficient appliance. DOE must also consider any lessening of the overall performance or utility of the appliance that would, result from the proposed new standard. There is another very important duty DOE performs under NAECA besides deciding whether to amend the standards. Manufacturers need to know what they must do to establish compliance with standards. In other words, the manufacturer must know how to test its products to meet the r •


# new standard must be both technically feasible and economically sound. Economicjustification criteria are**spell~d** 

# . ..**~** 

# out In the law. DOE must ·consider the likely economic impact of a proposed new standard on both consumers and manufacturers. Ofparamount importance.is whether savings in operating costs will offset the higher price consumers may have to pay for a more efficient appliance. DOE must also consider any lessening ofthe overall performance or utility ofthe appliance that would result from the proposed new standard. There is another very important duty DOE performs under NAECA besides deciding whether to amend the standards. Manufacturers need to know what they must do to establish compliance with standards. In other words, the manufacturer must know how to test its products to meet the
9

# applicable efficiency standard. Through the rulemaking process, DOE has developed test procedures for measuring the. efficiency of most NAECA-covered. products. Any efficiency claim a manufacturer makes for a particular appliance model must be supported by testing using the applicable DOE test procedure. The gas appliance industry did not want to see the-government establish an elaborate program to verify manufacturers' efficiency claims and to enforce NAECA standards. We believed that the industry itself could do the job just as responsibly and more effectively. For many years now, GAMA has sponsored efficiency certification programs for residential space heating equipment and water heaters. Random selection and testing of products is conducted by an independent test house' under contract with GAMA. Twice a year, we publish 'a directory informing consumers



# 10 , " 

# applicable efficiency standard. Through the rulemaking'process, DOE has developed test procedures for measuring the.efficiency of most NAECA-covered'products. Any , • 

# efficiency claim a manufacturer makes for a particular appliance model must be supported by testing using the applicable DOE test procedure. The gas appliance industry did not want to see the'government establish an elaborate program to verify manufacturers' efficiency claims and to enforce NAECA standards. We believed that the industry itselfcould do thejobjust as responsibly and more effectively.**Fo~** 

# many years now, GAMA has sponsored efficiency certification programs for residential space heating equipment and water heaters. Random selection and testing ofproducts is conducted by an-independent test house' under contract with GAMA. Twice a year, we publish 'a directory informing consumers
10

# of the efficiency of virtually every furnace, boiler, water heater and gas space

- heater in the marketplace

. I am happy to say that, due to the excellent reputation of GAMA's efficiency verification programs , the federal government has relied on our programs instead of creating their own. NAECA has satisfied our goal to establish uniform national standards. The statute contains strong federal preemption provisions that prevent the states from creating their own additional requirements. An exemption from federal preemption is theoretically possible, but very difficult to obtain, and no exemptions have been granted. Occasionally, GAMA has had to remind a state government that a proposed regulation is preempted by NAECA, .generally with very little resistance. The states now recognize that DOE is the proper place to debate appliance efficiency issues.

11 

# ofthe efficiency ofvirtually every furnace, boiler, water he.ater and gas space heater in the marketplace. I am happy to say that, due

. to the excellent reputation ofGAMA's

. 4 

# ·efficiency verification programs, the federal government has relied on our programs instead ofcreating their own. NAECA has satisfied our goal to establish

- , 

# uniform national standards. The statute contains strong federal preemption provisions that prevent the 'states from creating their own additional requirements. An exemption from federal preemption is theoretically possible, but very difficult to obtain, and no e.xemptions have been granted. Occasionally, GAMA has had to remind a state government that a proposed regulation is preempted by NAECA,

.generally with very little**resistan~e.** 

# The

states now recognize that DOE is the proper place to debate appliance efficiency issues.

11

# The success of NAECA has led to the . . establishment of a similar regulatory scheme for commercial appliances under the Energy Policy Act of 1992. GAMA again played a key role in the drafting of the federal law. Preemptive national standards for commercial space heating .equipment and water heaters are now in effect under the new law. To conclude, I would like to share with you some statistical information showing the progress of gas appliance sales in the United States, including the effects of NAECA on appliance efficiency.



# 12 The success ofNAECA has led to the

.. establishment ofa similar regulatory scheme for commercial appliances under the Energy Policy Act of 1992. GAMA again played a key role in the drafting ofthe federal law. Preel1)ptive national standards for commercial space heating equipment and water heaters are now in effect under the new law. To conclude, I would like to share with you '. some statistical information showing the progress ofgas appliance sales inthe United States, including the effects ofNAECA on appliance efficiency.

12

### March 19

-20 Proposed Workshop Agenda - Draft 1--Major Topics Goals: Familiarize attendees with the Ad Hoc group's purpose, the process we used and the major themes, findings and recommendations of the group. • Provide DoE an opportunity to present its proposed regulatory process improvements, in response to the Committee's work. • Create an opportunity for all attendees to question and comment on both the Ad Hoc group's findings and recommendations and on DoE's proposed changes to its regulatory process. • Layout the elements and principal assumptions behind a proposed Regulatory Agenda and receive questions, comments and advice from attendees on how to prioritize.
Tuesday, March 19 1. Brief presentations on Major Themes/Findings of the Ad Hoc group followed byquestion and answer and discussion: • Blocks of major findings and themes- (?Planning, Input-Analysis, Decisionmaking?) -Panelists to brief on what this means, how it emerged and answer questions II. DoE presents Proposed Process Improvements Overview -Questions, answers and discussion III. Lingering Questions/Topics Discussion • Break into smaller groups to discuss and receive recommendations on specific subsets of the proposal. (?Create several informal "Topic Tables" to answer more specific questions?) Wednesday March 20, 1. DoE's Proposed Regulatory Agenda - - • Brief Presentation on Current Status of Rules and Test Procedures- Discussion • Tiered Presentation on what is proposed followed by Question, Answer and Discussion Goals: 

### March 19-20 Proposed Workshop Agenda 

### -Draft I--Major Topics

• Familiarize attendees with the Ad Hoc group's purpose, the process we used and the major themes, findings and recommendations ofthe group.

• Provide DoE an opportunity to present its proposed regulatory process improvements, in response to the Committee's work.

• Create an opportunity for all attendees to question and comment on both the Ad Hoc group's findings and recommendations and on DoE's proposed changesto its regulatory process.

• Layout the elements and principal assumptions behind a proposed Regulatory Agenda and receive questions, comments and advice from attendees on how to prioritize.
Tuesday, March 19 1. Briefpresentations on Major ThemeslFindings of the Ad Hoc group followed by question and answer and discussion: • Blocks ofmajor findings and themes-(?Planning, Input-Analysis, Decisionmaking?) -Panelists to briefon what this means, how it emerged and answer questions II. DoE presents Proposed Process Improvements Overview -Questions, answers and discussion III. Lingering Questions/Topics Discussion • Break into smaller groups to discuss and receive .recommendations on specific subsets of the proposal. (?Create several informal "Topic Tables" to answer more specific questions?) Wednesdav March 20, I. DoE's Proposed Regulatory Agenda • BriefPresentation on Current Status ofRules and Test Procedures- Discussion • Tiered Presentation on what is proposed followed by Question, Answer and Discussion