# TECHNICAL SUPPORT DOCUMENT:

ENERGY EFFICIENCY PROGRAM

FOR CONSUMER PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT:

CEILING FAN LIGHT KIT S

October 2014

U.S. Department of Energy Assistant Secretary

Office of Energy Efficiency and Renewable Energy Building Technologies Program Appliances and Commercial Equipment Standards Washington, DC 20585This Document was prepared for the Department of Energy by staff members of Navigant Consulting, Inc.

and Lawrence Berkeley National LaboratoryEXECUTIVE SUMMARY

TABLE OF CONTENTS

ES.1 OVERVIEW OF PRELIMIN ARY ANALYSIS ACTIVIT IES

................................ .......... 1

ES.2 KEY RESULTS OF THE A NALYSIS

................................ ................................ ............... 3

ES.2.1 Determination of Scope

................................ ................................ ........................... 3

ES.2.2 Product Class Redefinition

................................ ................................ ...................... 3

ES.2.3 Market Assessment

................................ ................................ ................................ .. 3

ES.2.4 Technology Assessment

................................ ................................ ........................... 5

ES.2.5 Screening Analysis

................................ ................................ ................................ ... 5

ES.2.6 Engineering Analysis

................................ ................................ ............................... 5

ES .2.7 Energy Use Analysis

................................ ................................ ................................ 6

ES.2.8 Product Price Determination

................................ ................................ .................... 7

ES.2.9 Life

- Cycle Cost and Payback Period Analysis

................................ ........................ 7

ES.2.10 Shipments Analysis

................................ ................................ ................................ 10

ES .2.11 National Impact Analysis

................................ ................................ ....................... 13

ES.2.11.1 National Energy Savings

................................ ................................ .............. 14

ES.2.11.2 Net Present Value of Consumer Benefits

................................ ..................... 16

ES.2.12 Preliminary Manufacturer Impact Analysis

................................ ........................... 18

ES.2.13 Other Analyses

................................ ................................ ................................ ....... 19

ES.3 ISSUES ON WHICH DOE SEEKS PUBLIC COMMENT

................................ .............. 19

ES.3.1 CFLKs Sold With and Without Ceiling Fans

................................ ........................ 19

ES.3.2 Shipments for CFLKs Used With High Volume Ceiling Fans

.............................. 19

ES.3.3 Lifetime

................................ ................................ ................................ .................. 19

ES.3.4 Dimming Functionality

................................ ................................ .......................... 20

ES.3.5 Lighting Controls

................................ ................................ ................................ ... 20

ES.3.6 Technology Options

................................ ................................ ............................... 20

ES.3.7 New Product Class Structure Considered in this Rulemaking

............................... 20

ES.3.8 CFLKs for High

- volume Fans

................................ ................................ ............... 20

ES.3.9 Market and Technology Assessment

................................ ................................ ..... 20

ES.3.10 Screening Analysis

................................ ................................ ................................ . 20

ES.3.11 Representative Product Classes

................................ ................................ ............. 21

ES.3.12 Baseline Lamps

................................ ................................ ................................ ...... 21

ES.3.13 Substitution Scenarios

................................ ................................ ............................ 21

ES.3.14 More Efficacious Substitutes

................................ ................................ ................. 21

ES.3.15 Lamp

- and

- Ballast Systems

................................ ................................ .................... 21

ES.3.16 Candidate Standard Levels

................................ ................................ .................... 22

ES.3.17 Ballast Replacements

................................ ................................ ............................. 22

ES.3.18 Inseparable SSLs

................................ ................................ ................................ .... 22

ES.3.19 Production of Externally

- Driven LED CFLKs

................................ ...................... 22

ES.3.20 Externally

- Driven LED Replacements

................................ ................................ .. 22

ES.3.21 Externally

- Driven LED Efficacies

................................ ................................ ......... 22

ES.3.22 Engi neering Analysis

................................ ................................ ............................. 23

ES.3.23 Energy Use Analysis of Externally

- Ballasted/Driven CFLKs

............................... 23

ES

- iES.3.24 CFLK and Lamp Price Percentages

................................ ................................ ....... 23

ES.3.25 Consumer Price Distribution Channel Weighting

................................ ................. 23

ES.3.26 Product Price Determination

................................ ................................ .................. 23

ES.3.27 Ballast Prices

................................ ................................ ................................ .......... 23

ES.3.28 Installation Costs

................................ ................................ ................................ .... 23

ES.3.29 Disposal Costs

................................ ................................ ................................ ........ 24

ES.3.3 0 Price Learning

................................ ................................ ................................ ........ 24

ES.3.31 LCC Analysis

................................ ................................ ................................ ......... 24

ES.3.32 Market Distribution of CFLKs by CSL

................................ ................................ . 24

ES.3.33 Residential and Commercial Sector Shipments

................................ ..................... 24

ES.3.34 LED Shipments

................................ ................................ ................................ ...... 25

ES.3.35 Shipments and NIA

................................ ................................ ................................ 25

ES.3.36 CFLK Usage in Residential and Commercial Sectors

................................ ........... 25

ES.3.37 Consumer Subgroups

................................ ................................ ............................. 25

ES.3.38 Regulatory Flexibility Act Analysis

................................ ................................ ...... 25

ES.3.39 Manufacturer Subgroup Analysis

................................ ................................ .......... 25

ES.3.40 Manufacturer Impact Analysis

................................ ................................ ............... 25

ES.3.41 Manufacturer Markup

................................ ................................ ............................ 26

ES.3.42 Utility Impacts of Power Factor Reductions

................................ .......................... 26

ES.3.43 Trial Standard Levels

................................ ................................ ............................. 26

ES.3.44 Emissions Analysis

................................ ................................ ................................ 26

ES .3.45 Monetization of Emissions Reductions Benefits

................................ ................... 26

ES.3.46 Utility Impact Analysis

................................ ................................ .......................... 26

ES.3.47 Employment Impact Analysis

................................ ................................ ................ 26

ES.3.48 Regulatory Impact Analysis (RIA)

................................ ................................ ........ 2 6

LIST OF TABLES

Table ES.2.1 CFLK Market Shares in 2012 by Existing Product Class and Socket Type

................................ ................................ ................................ ................... 4

Table ES.2.2 CFLK Market Shares in 2012 by Product Classes Under Consideration

.......... 5

Table ES.2.3 CFLK Market Share s in 2012 by Current Product Class and Efficacy

............. 5

Table ES.2.4 Candidate Standard Levels for CFLK Representative Product Classes

............ 6

Table ES.2.5 Average Annual Energy Use and Savings per Unit for Externally

Ballasted/Driven CFLKs

................................ ................................ .................... 7

Table ES.2.6 Average Annual Energy Use and Savings per Unit for All Other

CFLKs

................................ ................................ ................................ ................ 7

Table ES.2.7 Average LCC and PBP Results by Efficiency Level for Externally

Ballasted/Driven CFLKs

................................ ................................ .................... 8

Table ES.2.8 Average LCC Savings for Externally Ballasted/Driven CFLKs*

..................... 9

Table ES.2.9 Average LCC and PBP Results by Efficiency Level for All Other

CFLKs

................................ ................................ ................................ ................ 9

Table ES.2.10 Average LCC Savings for All Other CFLKs*

................................ ................. 10

ES

- iiTable ES.2.11 Cumulative CFLK Shipments from 2019

- 2048 (millions of units) from a CFLK Standard with an Assumed Ceiling Fan Standard and without

a Ceili ng Fan Standard

................................ ................................ ..................... 12

Table ES.2.12 Estimates of Cumulative Full

- Fuel Cycle Energy Savings (quads) for CFLKs With an Assumed Ceiling Fan Standard (Reference Case)

................ 15

Table ES.2.13 Estimates of Full

- Fuel Cycle Energy Savings (quads) for CFLKs with an Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

........ 16

Table ES.2.14 Cumulative Net Present Value of Consumer Benefits for CFLKs at 3% Discount Rate in Billion 2013$ With an Assumed Ceiling Fan Standard (Reference Case)

................................ ................................ ............... 17

Table ES.2.15 Cumulative Net Present Value of Consumer Benefits for CFLKs at 7% Discount Rate in Billion 2013$ With an Assumed Ceiling Fan Standard (Reference Case)

................................ ................................ ............... 17

Table ES.2.16 Net Present Value for CFLKs at 3% Discount With an Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

............................. 18

Table ES.2.17 Net Present Value for CFLKs at 7% Discount With an Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

............................. 18

LIST OF FIGURES

Figure ES 1.1 Flow Diagram of Analyses for the CFLK Rulemaking Process

........................ 2 Figure ES 2.1 Projected Total CFLK Shipments in the No CFLK Standard Case without a Ceiling Fan Standard and with an Assumed Ceiling Fan

Standard

................................ ................................ ................................ ........... 12 Figure ES 2.2 Projected Shipments of Externally

- Ballasted/Driven CFLKs in the No

Standard Case and at CSL1, With an Assumed Ce iling Fan Standard

............ 13 Figure ES 2.3 Projected Shipments of All Other CFLKs in the No

- Standard Case and at each CSL, With an Assume d Ceiling Fan Standard

................................ .... 13

ES

- iiiEXECUTIVE SUMMARY

ES.1 OVERVIEW OF PRELIMINARY ANALYSIS ACTIVITIES

Section 6295(o)(3)(B) of 42 U.S.C. requires the U.S. Department of Energy (DOE) to establish energy conservation standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. Pursuant to En ergy Policy and Conservation Act (EPCA), DOE has the discretion to issue amended energy conservatio n standards (ECS) for ceiling fan light kits (CFLKs). (42 U.S.C. 6291(1 ), 6295(ff) (5) (A) ) DOE is currently conducting an ECS rulemaking for CFLKs. This techn ical support document presents preliminary analyses in support of that rulemaking.

Figure ES 1

. 1 presents a summary of the analytical components of the standards

- setting process and illustrates how key results are generated. The focal point of the figure is the center column, labeled “An alyses.” The columns labeled “Key Inputs” and “Key Outputs” show how the analyses fit into the process and how they relate to each other. Key inputs are the types of data and other information that the analyses require. Some key information is obtained fro m public databases; DOE collects other inputs from interested parties or persons having special knowledge and expertise. Key outputs are analytical results that feed directly into the standards

setting process. The issues on which DOE seeks comment from in terested parties derive from the key results that are generated by the preliminary analys i s. Arrows connecting analyses show the types of information that feed from one analysis to another.

ES

- 1Figure ES 1

. 1 F low Diagram of Analyses for the CFLK Rulemaking Process

ES

- 2ES.2 KEY RESULTS OF THE ANALYSIS

ES.2.1 Determination of Scope

The Energy Policy and Conservation Act (EPCA) defines a “ceiling fan light kit” as “equipment designed to provide light from a ceiling fan that can be integral, such that the equipment is attached to the ceiling fan prior to the time of retail sale; or attachable, such that at the time of retail sale the equipment is not physically atta ched to the ceiling fan, but may be included inside the ceiling fan at the time of sale or sold separately for subsequent attachment to

the fan.” a (42 U.S.C. 6291(50)(A)

, (B)) The concurrent CFLK test procedure rulemaking is proposing to withdraw the curr ent guidance on accent lighting and to consider all lighting packaged with any CFLK to be subject to energy conservation requirements . Additionally, t he concurrent ceiling fans test procedure rulemaking is proposing to reinterpret the definition of a

ceili ng fan . Any equipment designed to provide light from products that are defined as ceiling fans will be included in the scope of the CFLK rulemaking.

ES.2.2 Product Class Redefinition

In the framework document for this rulemaking

, DOE indicated that it was consid ering combining or restructuring ceiling fan light kit product classes from the current three product classes (described in section ES.2.3 ), to one or two product classes. DOE currently divides CFLKs into three products classes, depending on the type of light socket: medium screw based (class 1)

, pin

- based fluorescent (class 2) , and all other CFLKs (class 3)

.

As described in chapters 2 and 3 of this TSD, DOE therefore examined the current product classes for consistency with DOE’s product class criteria, which are set out in 42 U.S.C. 6295(q). DOE concluded that the current product classes do not meet DOE’s criteria. Based on the criteria, DOE is considering redefining CFLKs into the following two products classes: (1) Externally

- Ballasted/Driven CFLKs and (2) A ll other CFLK s. This redefinition effectively combines product classes 1 and 3 into the All Other CFLKs product class, which would

constit ute over 99% of the CFLK market, and leaving CFLKs with pin

- based sockets for fluorescent lamps in its own product class. b The consumer impact, energy, and economic impact of product class redefinition is quantified in the life

- cycle cost analysis (section ES.2.9 ) and the national impact analysis (section ES.2.11 ).

ES.2.3 Market Assessment

In its market assessment, which is described in chapter 3 of this TSD, DOE identifies

domestic manufacturer s of CFLKs and associated trade group s, and describes market

characteristics. DOE found that t hree “ big box ” retailers dominate the CFLK market: Home

a Ceiling fan is defined as “ a nonportable device that is suspended from a ceiling for circulating air via the rotation of fan blades.” (42 U.S.C. 6291(49)) “Low

- volume” and “high

- volume” fans are defined in the concurrent ceiling

fans t est procedure rulemaking.

b The only exception to this statement involves CFLKs with solid

- state lighting in which the light source is separate from the driver. To DOE’s knowledge these products do not exist in the current market, but are included for

comp leteness. They would fall under product class 3 in the current product class structure, but would be grouped with pin

- based fluorescent (product class 2) products in the proposed Externally

- Ballasted/Driven CFLKs product

class.

ES

- 3Depot, Lowe ’ s, and Wal

- M art. DOE estimates that together these retailers constituted 79% of the total CFLK market in 2011, with Home De pot holding 36% of the market, Lowe’s 32%, and

Wal

- M art 11%. Home Depot and Wal

- M art both carry their own br ands, but also sell other companies’ products in their stores. The top three brands are produced by Hunter, Home Depot, and Lowe’s, which together constitute an estimated 43% of the market

.

DOE examined the current market distribution of C FL Ks by the cur rent product classes and the products classes under consideration. Table ES. 2

. 1 show s DOE ’ s estimate of the market

breakdown of CFLKs in 2012 by current product class and socket type

, based on in

- store shelf

surveys conducted at the Home Depot, Lowe’s, and Wal

- M art and on product offerings on the

Internet described in chapter 3 of this TSD

. P roduct class 3 constitutes an estimated 85% of the market, consisting primaril y of CFLKs with candelabra sockets . CFLK s with medium screw

base d sockets constitute the next largest product class , which in the survey year included only compact fluorescent lamps . Product class 2 is less than 1% of the market.

Table ES. 2

. 1 CFLK Market Shares in 2012 by Existing Product Class and Socket T ype

Product

class Shelf Surveys Online Weighted

Total

Market Share by

Product

Class Base Type Market Share by Base Type Market Share by

Product

Class Market Share by Base Type Product Class

1 15.1% Medium screw

base 15.1% 16.9% 16.9% 15.1%

2 <1% Pin

- based

fluorescent 0.0% <1% 0.5 % <1%

3 84.9% Candelabra (including mini

candelabra) 7 9.2 %

82.4% 6 8.8 %

84.8% GU24 4.6% 12.8%

Others ( e.g., G9, GU 10, integral LED) 1.2 % 0. 8 %

100% 100% 100% 100% 100%

Table ES. 2

. 2 shows the estimated 2012 market breakdown of CFLKs by the new product

classes under consideration in this rulemaking.

ES

- 4Table ES. 2

. 2 CFLK Market Shares in 2012 by Product Class es Under Consideration

Product Class Market Share

Externally

- Ballasted/Driven CFLKS 0.5%

All Other CFLKs 99.5%

Table ES. 2

. 3 shows the CFLK market share bre ak down by light current product class and efficacy level

.

Table ES. 2

. 3 CFLK Market Shares in 2012 by Current Product Class and Efficacy

Market Share Distribution within Product Classes Share of

Total Market Light Source Efficacy 1 2 3

>70 lm/W 0.0% 0.0% 0.4% 0.4%

≥ 45 and <70 lm/W 100 % 100 % 5.9 % 20 %



### ≥ 15 and <45 lm/W 0.0% 0.0% 0.0 % 0.0 %

<15 lm/W 0.0% 0.0% 94 % 80 %

TOTAL * 100% 100% 100% 100%

* Values in columns may not add to 100% because of rounding

ES.2.4 Technology Assessment

The technology assessment identifies technology options to improve CFLK efficiency

. To develop technology options

, DOE reviewed all technology information gathered during the

market assessment and consulted with technical experts. In its initial review

, DOE identified the following components as affecting the energy use of CFLKs: lamps, ballasts and drivers, and lighting controls. For technical reasons described in chapters 2 and 3 of this TSD, DOE is considering including only more efficacious lamps and light sources as technology options in this rulemaking.

ES.2.5 Screening Analysis

DOE developed technology options for enhancing efficacy of lamps used in CFLKs in the technology assessment. In consultation with interested parties, DOE reviewed the options to

assess whether the option s are technologically feasible

, are practicable to manufacture, install,

and service

, would adversely impact pr oduct utility or availability

, and would have adverse impacts on health and safety. See chapter 4 of this TSD for details.

ES.2.6 Engineering Analysis

In the engineering analysis, DOE chose certain product classes as representative of the

total CFLK market and concentrated its analytical effort on those classes. Generally, DOE

ES

- 5selected representative product classes based on the highest shipment volumes, although it also considered unique performance characteristics as appropriate. DOE then chose appropriat e baseline models and identified more efficacious replacements. A baseline model is typically the most common, least efficacious product sold in a CFLK in a given product class. DOE also

selected baselines t hat ensure that there would be no decrease in the minimum required efficiency of a covered product. See chapter 5 of this TSD for details. Candidate standard levels (CSLs) were developed using catalog data.

Table ES. 2

. 4 presents the CSLs identified in the engineering analysis.

Table ES. 2

. 4 Candidate Standard Levels for CFLK Representative Product Classes

Representative Product Class Candidate Standard Level Efficacy

lm/W Externally

- Ballasted/Driven CFLKs CSL 1 62/(1+9*((W+12)

- 1 ))

All Other CFLKs CSL 1 73/(1+5*((W+10)

- 1 ))

CSL 2 81/(1+5*((W+10)

- 1 ))

CSL 3 87/(1+5*((W+10)

- 1 ))

CSL 4 94/(1+5*((W+10)

- 1 ))

CSL 5 108/(1+5*((W+10)

- 1 )) W = lamp wattage

ES.2.7 Energy Use Analysis

The purpose of the energy use analysis is to determine the annual energy consumption of

CFLKs and to assess the energy savings potential of increased CFLK efficiency. The energy use analysis provides the basis for developing the energy savings used in the life

- cycle cost (LCC) analysis and subsequent analyses.

To determine the distribution of annual energy use of CFLKs as used by residential and

commercial consumers

, DOE combined information on the power consumption of the representative lamps, from chapter 5 of this TSD, with information on operating hours of those lamps types, from two separate surveys of residential and commercial lighting energy use

. Table

ES. 2

. 5 and Table ES. 2

. 6 show the average annual energy use of CFLKs in each of the product

classes at each candidate standard level that DOE conside red in this rulemaking and the annual energy savings with respect t o CSL 0, which is the baseline under consideration for redefined product classes . All values are in units of kilowatt

- hours per year and are rounded to two significant figures. Chapter 6 provides more details on the methods, data sources , and assumptions u sed for the energy use analysis.

ES

- 6Table ES. 2

. 5 Average Annual Energy Use and Savings per Unit for Externally

Ballasted/Driven CFLKs

CSL Residential Commercial

Energy Use

(kWh/yr) Savings (kWh/yr) Energy Use (kWh/yr) Savings (kWh/yr)

0 8. 6

- 66

-

1 7.7 0.9 5 9 7.2

Table ES. 2

. 6 Average Annual Energy Use and Savings per Unit for All Other CFLKs

CSL Residential Commercial

Energy Use (kWh/yr) Savings (kWh/yr) Energy Use (kWh/yr) Savings (kWh/yr)

0 19. 0

- 1 4 5

-

1 16

. 7 2.4 12 7 18

2 1 4. 6 4. 4 1 12 3 4

3 13. 6 5. 4 1 04 42

4 1 2. 6 6.5 9 6 49

5 1 1. 6 7.5 88 5 7

ES.2.8 Product Price Determination

For this rulemaking, because the CFLK efficiency is based on the efficacy of its lamps,

DOE estimated the consumer prices of the lamps packaged with CFLKs. DOE determined these

consumer prices directly, rather than develop manufacturer selling prices (MSPs ) from a bill of materials and manufacturer markup analysis. DOE selected this methodology because it is

difficult to reverse

- engineer lamps used in CFLKs, which are not easily disassembled.

In its review of publicly available prices, DOE observed a range of consumer prices paid for a CFLK, depending on the distribution channel through which it is purchased. In line with its observation of public pricing, DOE developed three sets of premiums from the distributor net prices, representing low (electrical/spe cialty), medium (home centers, including do

- it

- yourself stores), and high (lighting showrooms) CFLK prices. Based on manufacturer feedback, DOE then applied the percentage of the CFLK price attributable to the lamp components to obtain

consumer prices for the lamp sold with the CFLK. See chapter 7 of this TSD for details.

ES.2.9 Life

- Cycle Cost and Payback Period Analys i s

The impacts of energy conservation standards on consumers often include a change in operating expense (usually decreased electricity expenses) a nd a change in purchase price (usually increased). The life

- cycle cost (LCC) of a product is the cost it incurs over its lifetime, taking into account both purchase price and operating expenses. The payback period (PBP) represents the time it takes to reco ver the additional installed cost of the more efficient products through annual operating cost savings. DOE analyzed the net effect on consumers by calculating

ES

- 7the LCC and PBP using inputs from the engineering performance data, the product price

deter m inat ion , and the energy use analysis. Inputs to the LCC calculation include the installed cost to the consumer, operating expenses, lifetime of the product, and discount rates. Chapter 8 of this TSD provides a detailed description of the LCC and PBP analysis a nd the results.

Table ES. 2

. 7 and Table ES. 2

. 9 show the LCC and PBP results for all efficiency levels considered for both Externally

- Ballasted/Driven CFLKs and All Other CFLKs. In the first of each pair of tables, the simple payback is measured relative to the least efficient product currently availab le on the market . In the second table of each pair , the average LCC savings are measured relative to the projected distribution of CFLK efficacies in the absence of an amended

standard (hereafter referred to as the ‘no standard case’ ) in the compliance yea r

. In the tables, CSL 0 represents the baseline that DOE is considering for the redefined product classes. The positive average LCC saving s for commercial c and residential consumers at CSL 0 in Table

ES. 2

. 10 represent a positive consumer impact of the new product class structure being considered in this analysis for All Other CFLKs

. d

Table ES. 2

. 7 Average LCC and PBP Results by Efficiency Level for Externally

Ballasted/Driven CFLKs

CSL Average Costs

2013$ Simple
Payback

years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $8.6 $1.1 $10 $19

-- 13.8

1 $13 $1.0 $7.7 $20 33.7 13.8

Commercial Sector

0 $8.6 $7.7 $81 $90

-- 13.8

1 $13 $6.8 $76 $88 4.9 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficie ncy level.

The PBP is measured relative to the least efficient product currently available on the market

.

c Note that for All Other CFL Ks in the commercial sector, the calculated operating costs do not always decrease at higher CSLs. This is because the operating costs calculated over the lifetime of the CFLK include the operating costs of the lamps used as replacements for the regulated lamps packaged with the light kit. These lamp replacements can offset the lower energy costs of the packaged lamps at the higher CSLs. This effect is seen in the commercial sector more than in the residential sector because the packaged lamps are replaced much sooner and more often because of the much higher operating hours of lamps in the commercial sector. The magnitude of the effect is also sensitive to the lifetime of the packaged lamps.

d Product class redefinition is equivalent to setting a standard a t CSL 0. There are life

- cycle cost savings at CSL 0 for the All Other CFLKs because there are products currently in the market with efficiencies below that level.

ES

- 8Table ES. 2

. 8 Average LCC Savings for Externally Ballasted/Driven CFLKs *

Efficiency

Level Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings* *

Net Cost 2013$

Residential Sector

0 0% $0.0

1 37%

- $0.8

Commercial Sector

0 0% $0.0

1 26% $0.7

* R elative to the projected distribution of CFLK efficacies in the no standard case in the compliance year

. * * The calculation includes households with zero LCC savings (no impact).

Table ES. 2

. 9 Average LCC and PBP Results by Efficiency Level for All Other CFLKs

CSL Average Costs

2013$ Simple
Payback

Y ears Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $10.8 $2.4 $23.8 $34.6 0.5 13.8

1 $10.9 $2.1 $20.5 $31.4 0.5 13.8

2 $11.7 $1.9 $17.8 $29.5 0.6 13.8

3 $24.2 $1.7 $14.2 $38.4 1.8 13.8

4 $26.1 $1.6 $11.9 $38.0 2.0 13.8

5 $27.5 $1.5 $9.90 $37.4 2.1 13.8

Commercial Sector

0 $10.8 $16.9 $122 $133 0.1 13.8

1 $10.9 $14.8 $116 $127 0.1 13.8

2 $11.7 $13.0 $109 $120 0.1 13.8

3 $24.2 $12.1 $113 $138 0.3 13.8

4 $26.1 $11.2 $104 $130 0.3 13.8

5 $27.4 $10.3 $96.0 $123 0.3 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficie ncy level.

The PBP is measured relative to the least efficient product currently available on the market

.

ES

- 9Table ES. 2

. 10 Average LCC Savings for All Other CFLKs*

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $30.7

1 0% $32.5

2 3% $33.9

3 14% $27.3

4 14% $27.6

5 13% $28.1

Commercial Sector

0 0% $143

1 0% $147

2 3% $151

3 12% $139

4 9% $144

5 6% $149

*Relative to the projected distribution of CFLK efficacies under current CFLK standards.

** The calculation includes households with zero LCC savings (no impact).

ES.2.10 Shipments Analysis

Shipments projections are needed as inputs to calculate the net present value (NPV) of standards, and their impacts on national energy use and future manufacturer cash fl ows. Because a standard set on ceiling fans affects the projected shipments of CFLKs, DOE assumed a ceiling fan

standard for its reference case CFLK analysis. To determine the maximum potential impact of this assumption, DOE also conducted a sensitivity an alysis that assumes no ceiling fan standard.

The details of the modeling DOE used to estimate shipments in this rulemaking are described in chapter 9 of this TSD. Based on historical CFLK shipments data, DOE estimated

future CFLK shipments by developing a model to project shipments in three market segments: (1) replacements; (2) new construction; and (3) increased numbers of CFLKs in existing homes

. DOE developed a modified consumer

- choice model to assign market shares to efficacy levels

within product cla sses based on consumer sensitivity to first cost and operating cost

. In the case of CFLKs, the manufacturer is the purchaser of the lamp packaged with the CFLK. DOE assumed that the manufacturer is primarily sensitive to first cost when choosing lamps to

p ackage with a CFLK.

DOE assumed that the relevant lifetime in projecting replacements of CFLKs is the

lifetime of the ceiling fan to which it is attached. DOE developed a retirement function for ceiling fans and applied them to the existing stock in resi dential and commercial sectors . The

ES

- 10existing stock of products is tracked by vintage and developed from historical shipments data. To project CFLK shipments for new construction , DOE utilized the Annual Energy Outlook 201 4 projection for new construction a nd the historic installation rates of CFLKs associated with new

construction

.

DOE believes that, consistent with economic theory and its past practice, it is reasonable

to ex pect that standards that result in higher CFLK prices may have some dampening eff ect on sales. To estimate the impact of the price increase on shipments for the considered efficiency levels, DOE used a relative price elasticity approach. The impact of higher CFLK prices is expressed as a percentage drop in market share for each year of the 30

- year analysis period (2019

- 204 8 )

.

Based on DOE’s review of the CFLK market, essentially all CFLKs are designed for

low

- volume ceiling fans ; therefore

, CFLK shipments are closely coupled to the shipments of

these ceiling fans

. e A standard passed on ceiling fans that results in a higher price for ceiling fans is therefore expected to reduce ceiling fan shipments and, consequently, CFLK shipments. DOE

considered the impacts of both potential ceiling fan and CFLK standard s on CFLK shipments

. Figure ES 2

. 1 shows projected shipments of CFLKs for two scenarios: 1) where no CFLK

standard is in place but a ceiling fan standard is in place, and 2) where there are no CFLK or ceiling fan standards in place. The drop in CFLK shipments in the ceiling fan standards scenario is due to the price increase associated with a n assumed ceiling fan standard. Table ES. 2

. 11 presents the impacts on cumulative shipments over the course of the analysis period (2019

- 2048) under different CFLK and ceiling fan standard scenarios. A more in

- depth discussion of the impacts of potential ceiling fan standard s on shipments can be found in c hapter 9 of this TSD.

Figure ES 2

. 2 and Figure ES 2

. 3 show projected CFLK shipments in the absence of

standards and at each CSL for the reference case ( i.e., with an a ssum ed ceiling fan standard)

. For most of the analysis , the change in shipments between the no

- standard cas e and the candidate standards case is so small that it is indistinguishable on the figure. In that case, the higher

standard level is shown on the figure

. Even though the installed cost of CFLKs increases substantially from CSL 0 to CSL 5 in the compliance year of this rulemaking (2019) , the cost of achieving CSLs 3 through 5 declines rapidly because of price lea rning for LEDs, so the impact on CFLK shipments is s mall, but can be observed for All Other CFLKs in the year of compliance and shortly thereafter

.

e Low

- volume ceiling fans, which are defined in the concurrent ceiling fan standards rulemaki ng, constitute the majority of the ceiling fan market.

ES

- 11Figure ES 2

. 1 Projected Total CFLK Shipments in the No CFLK Standard Case without a Ceiling Fan Standard and with an Assumed Ceiling Fan Standard

Table ES. 2

. 11 Cumulative CFLK Shipments from 2019

- 2048 (millions of units) from a

CFLK Standard with a n Ass umed Ceiling Fan Standard and without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard

a ssumed No CF

Standard Percent Change

due to CF

Standard CF

Standard

Assumed No CF

Standard Percent Change

due to CF

Standard

No

CFLK

Standard 0.74 0.77

- 4% 644.6 664.1

- 3%

0 0.74 0.77

- 4% 644.1 663.4

- 3%

1 0.74 0.77

- 4% 644.1 663.4

- 3%

2 644.0 663.2

- 3%

3 643.1 661.7

- 3%

4 643.1 661.7

- 3%

5 643.1 661.7

- 3%

ES

- 12Figure ES 2

. 2 Projected Shipments of Externally

- Ballasted/Driven CFLKs in the No

Standard Case and at CSL1, With an Assumed Ceiling Fan Standard

Figure ES 2

. 3 Projected Shipments of All Other CFLKs in the No

- Standard Case and at each CSL, With an Assumed Ceiling Fan Standard

ES.2.11 National Impact Analysis

The national impact analysis (NIA) estimates the following national impacts from possible energy conservation standards for CFLKs : (1) national energy savings; (2) monetary

ES

- 13value of the energy savings due to amended standards; (3) increased total installed costs of the considered products due to amended standards; and (4) the NPV of the difference between the

valu e of energy savings and increased total in stalled costs. DOE prepared a spreadsheet model to estimate energy savings and national consumer economic costs and savings resulting from new

standards. In contrast to the LCC and PBP analysis, which uses probabil ity distributions for the inputs, the NIA uses average or typical values for inputs.

A key component of DOE’s estimates of n ational e nergy s avings ( NES ) and NPV is the trend in energy efficiency forecasted for the no

- standard case and at each CSL

. DOE de veloped a

consumer

- choice model to estimate the efficiency distribution in the no

- standard case based on consumer sensitivity to first cost and operating cost of available technology options. For its

determination of standards

- cas e efficiency distributions , DOE recalculated market shares for efficiency levels using only those efficiency levels that meet or exceed a standard in the year a

standard comes into effect and in subsequent years.

To evaluate the impact of the product class redefinition, described in section ES.2.2 and in chapter 3 of th is TSD, the NIA evaluates separately the NES and NPV of moving from no

standard to the proposed baseline of the redefined p roduct classes, and from the baseline to each

CSL for the “ All Other CFLK ” product class.

Chapter 10 provides additional details on this and other aspects of the NIA analysis.

ES.2.11.1 National Energy Savings

DOE calculated annual NES as the difference between national energ y consumption

w ithout amended efficiency standards and under each CSL. DOE estimated energy consumption and savings based on site energy. Cumulative energy savings are the sum of the annual NES over the period in which products shipped in 201 9

- 2048 remain in use

. Although amended standards can act to reduce shipments, DOE does not attribute a decrease in shipments between a no

standard case and the standards case s to energy savings. DOE uses the standards case shipments

to calculate annual ene rgy consumption in the no

- standard case

.

DOE accounts for the direct rebound effect in its NES estimates. Direct rebound is the concept that increased energy efficiency of equipment may indirectly induce increased usage by

the consumer , undercutting expec ted energy savings. DOE assumed a rebound rate of 0 % ( i.e.

, no change in usage for more efficient CFLKs) for its reference case based on feedback from

manufacturers . (ALA, No. 39, at p. 39 ) f As a sensitivity scenario presented in chapter 10 of this TSD, DO E considered a rebound rate of 15% i n the residential and commercial sector s based on rates used in the National Energy Modeling System.

As described in section ES.2.10

, a standard for ceiling fans could potentially affect CFLK shipments

. DOE’s reference scenario for CFLK shipments assumes a ceiling fan standard for

f A notation in this form provides a reference for information that is in the docket of DOE’s rulemaking to develop amended energy conservation standards for CFLKs (Docket No. EERE

– 2012

– BT

– STD

– 0045), w hich is maintained

at www.regulations.gov . This notation indicates that the statement preceding the reference is document number 39 in the docket for the CFLK energy conservation standards rulemaking, and appears at page 39 of that document.

ES

- 14low

- volume ceiling fans

. Table ES. 2

. 12 present s the site energy s avings for both product classes. For the All Other CFLKs product class, the results are broken into (1) energy savings associated

with mov ing f rom no standard to a standard at CSL0 ( “ Impact of M eeting CSL 0” ) , (2) energy savings associated with mov ing from CSL 0 to the listed CSL (“Impact of Going from CSL 0 to Listed CSL”) , and (3) the total energy savings (“Total”)

. The first result, associated with moving

from no standard to CSL 0

, reflects the impact of the product class redefinition that DOE is considering for CFLKs (see section ES.2.2 ). DOE notes tha t national site energy savings for All Other CFLKs for CSLs 3, 4, and 5, are essentially the same because the efficacies of 99% of the LEDs in the market are expected to exceed the efficacy of CSL 5 by 2019. The results for the Externally

- Ballasted/Driven CFLKs are not broken down in this way because there are no products on the market that are below the baseline (CSL 0) for that product class.

Table ES. 2

. 12 Estimates of Cumulative Full

- Fuel Cycle Energy Savings (quads) for CFLKs

With a n Assumed Ceiling Fan Standard (Reference Case )

CSL Externally

Ballasted/Driven

CFLKs All Other CFLKs

Total Impact of Meeting

CSL 0 Impact of Going From

CSL 0 to

Listed CSL Total

1 0.00005 0.286 0.000 0.286

2 0.286 0.045 0.330

3 0.284 0.110 0.394

4 0.284 0.110 0.394

5 0.284 0.110 0.394

Table ES. 2

. 13 presents results for full

- fuel cycle energy savings in quads for the reference shipments scenario (i.e., a n assumed ce iling fan standard ) and in the absence of a ceiling fan standard

. Results are presented for each CFLK product class and CSL.

ES

- 15Table ES. 2

. 13 Estimates of Full

- Fuel Cycle Energy Savings (quads) for CFLKs with a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven

CFLKs All Other CFLKs

CF Standard

Assumed No CF

Standard CF Standard

Assumed No CF

Standard

1 0.00005 0.00005 0.286 0.298

2 0.330 0.344

3 0.394 0.409

4 0.394 0.409

5 0.394 0.409

ES.2.11.2 Net Present Value of Consumer Benefits

DOE calculated net monetary savings in each year of the analysis period as the difference between total savings in operating costs and increases in total equipment costs in the no

- standard

case and amended standards cases. DOE calculated savings over the life of the products purchased in the forecast period. The NPV i s the difference between the present value of operating cost savings and the present value of increased total installed costs. I n accordance with guidance provided by the Office of Ma nagement and Budget (OMB) to Federal agencies on regulatory analysis, DOE used discount rates of 7 percent and 3 percent to discount future costs and savings to the present.

The NPV results for the reference scenario are shown in Ta ble ES. 2

. 14 and Table

ES. 2

. 15

. Table ES. 2

. 16 and Table ES. 2

. 17 show NPV results for CFLKs in the absence of a ceiling fan standard compared to NPV results assuming a ceiling fan standard.

ES

- 16Table ES. 2

. 14 Cumulative Net Present Value of Consumer Benefits for CFLKs at 3%

Discount Rate in B illion 2013$ W ith a n Assumed Ceiling Fan S tandard (Reference Case)

CSL Externally

Ballasted/Driven

CFLKs All Other CFLKs

Total Impact of Meeting

CSL 0 Impact of Moving

From CSL 0

to Listed

CSL Total

Millions 2013$ Billions 2013$

1

- 0.34 3.39 0.00 3.39

2 3.39 0.28 3.66

3 3.37 0.52 3.89

4 3.37 0.52 3.89

5 3.37 0.52 3.89

Table ES. 2

. 15 C umulative Net Present Value of Consumer Benefits for CFLKs at 7%

Discount Rate in B illion 2013$ W ith a n Assumed Ceiling Fan S tandard (Reference Case)

CSL Externally

Ballasted/Driven

CFLKs All Other CFLKs

Total Impact of Meeting

CSL 0 Impact of

Mov ing

From CSL 0

to Listed

CSL Total

Millions 2013$ Billions 2013$

1

- 0.37 2.22 0.00 2.22

2 2.22 0.13 2.35

3 2.21 0.04 2.25

4 2.21 0.04 2.25

5 2.21 0.04 2.25

ES

- 17Table ES. 2

. 16 Net Present Value for CFLKs at 3% Discount With a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven

CFLKs All Other CFLK s

CF Standard

Assumed No CF

Standard CF Standard

Assumed No CF

Standard

Millions 2013$ Billions 2013$

1

- 0.34

- 0.36 3.39 3.54

2 3.66 3.82

3 3.89 4.03

4 3.89 4.03

5 3.89 4.03

Table ES. 2

. 17 Net Present Value for CFLKs at 7% Discount With a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven

CFLKs All Other CFLKS

CF Standard

Assumed No CF

Standard CF Standard

Assumed No CF

Standard

Millions 2013$ Billions 2013$

1

- 0.37

- 0.39 2.22 2.32

2 2.35 2.46

3 2.25 2.34

4 2.25 2.34

5 2.25 2.34

ES.2.12 Preliminary Manufacturer Impact Analysis

The manufacturer impact analysis (MIA) assesses the potential impacts of energy conservation standards on manufacturers, including effects on expenditures for capital conversion, marketing costs, shipments, and research and development costs. Impacts to di rect employment are also addressed in the MIA. Potential impacts might lead to changes in manufacturing practices for CFLKs. DOE identified potential impacts through interviews with manufacturers and other interested parties.

During interviews for this p reliminary MIA, manufacturers identified two major areas of

concern: (1) duplicative regulation and (2) shift to air conditioning

. See chapter 12 of this TSD

for details.

ES

- 18ES.2.13 Other Analyses

The remaining chapters of th is preliminary TSD address the following analyses, which will be performed for any Noticed of Proposed Rulemaking ( NOPR ) issued for CFLKs :

• The consumer subgroup analysis evaluates the effects of energy conservation standards on various national customer subgroups ( c hapter 1 1 ) ;

• The emissions analysis examines the effects of energy conservation standards on various airborne emissions ( chapter 1 3 ) ;

• The monetization of emissions analysis quantifies the impacts of reduced emissions as a result of energy conservation stand ards ( chapter 1 4 ) ;

• The utility impact analysis examines impacts of energy conservation standards on the generation capacity of electric utilities ( chapter 1 5);

• The employment impact analysis examines the indirect effects of energy conservation

standards o n national employment ( chapter 1 6); and

• The regulatory impact analysis examines the national impacts of non

- regulatory alternatives to mandatory energy conservation standards ( chapter 1 7 ).

ES.3 ISSUES ON WHICH DOE SEEKS PUBLIC COMMENT

DOE is interested in receiving comment on all aspects of this preliminary analysis. DOE especially invites comment or data to improve DOE’s analyses , including information that will respond to the following questions and concerns raised in the development of this preliminary

TSD.

ES.3.1 CFLKs S old W ith and W ithout C eiling Fans

DOE estimated that 88% of low

- volume ceiling fan shipments are sold with CFLKs.

DOE also estimated that 89% of low

- volume ceiling fan stock sold within the past four years ha d

a CFLK. Based on these two estimates , DOE assumes that the majority of CFLKs are sold with ceiling fans and did not include CFLKs sold separately in its analysis. DOE requests comment on this assumption and available shipments data on CFLKs sold separately.

ES.3.2 Shipments fo r CFLKs U sed W ith High Volume Ceiling Fans

In evaluating overall U.S. shipments of CFLKs

, DOE assumed in its analysis that CFLKs are prima rily found on low

- volume ceiling fans . DOE requests any information regarding shipments of CFLKs intended for high

- volume ceiling fans

.

ES.3.3 Lifetime

For this preliminary analysis , DOE assumes that the lifetime of CFLKs is equal to the lifetime of the ceiling fan

. DOE invites comment, input, and data on the lifetime of CFLKs.

ES

- 19ES.3.4 Dimming Functionality

DOE is aware that not all compact fluorescent lamps ( CFLs ) and light emitting diodes ( LEDs ) have dimming performance comparable to traditional lamps , especially when operated

on standard t riode for a lternating c urrent (TRIAC) dimmers. DOE also notes that major l ighting manufacturers currently market dimmable CFLs and LEDs

, and that dimmers designed specifically to control these products are also currently on the market. DOE therefore seeks data on the dimming functionality of current generation CFL and LED lamps, and specifically on the performance of those lamps with dimmers designed for their control. DOE seeks data on

consumer satisfaction with the dimming functionality of these systems. DOE also seeks input from manufacturers as to whether they anticipate accommodating dimming functionality into the LED CFLK models they will offer for sale in the next five years, and if so, what fraction of LED CFLKs would include such functionality

.

ES.3.5 Lighting Controls

DOE requests comment on its proposal not to include lighting controls as a technology option in this rulemaking.

ES.3.6 Technology Options

DOE requests comment on lamps being considered as the technology option s for CFLKs and any additional options that should be included.

ES.3.7 New Product Class Structure Considered in this Rulemaking

As described in section ES.2.2

, DOE is considering a new product class structure that divides CFLKs into two product classes: Externally

- Ballasted /Driven CFLKs and A ll O ther

CFLKs. DOE invites comment on this structure

.

ES.3.8 CFLKs for H igh

- volume F ans

DOE seeks answ ers to the following questions related to CFLKs designed for high

volume fans :

• Do manufacturers anticipate that CFLKs designed for high

- volume fans will constitute a significant fraction of the CFLK market in the next 5 to 10 years?

• What range of lumen outputs are/would these products be designed to achieve?

• Would these CFLKs be likely to have any other unique characteristics that are not
common to the current market of CFLKs?

ES.3.9 Market and Technology Assessment

DOE invites comment on the overall methodology and results of the market and technology assessment for CFLKs

.

ES.3.10 Screening Analysis

DOE invites comment on the screening analysis.

ES

- 20ES.3.11 Rep resentative Product Classes

DOE identified the following product classes as representative for CFLKs:

• Externally

- Ballasted/Driven CFLKs

• All Other CFLKs

DOE requests comment on the representative product classes for CFLKs.

ES.3.12 Baseline Lamps

DOE selected the most common and least efficacious lamps packaged with CFLKs as baselines within each representative product class. DOE requests comment on the baseline units selected for both CFLK representative product classes.

ES.3.13 Substitution Scenarios

DOE considered more efficacious lamps under two different substitut ion scenarios: (1) a lamp replacement scenario and (2) a light kit fixture replacement scenario. In the lamp replacement scenario, DOE assumed that manufacturers would maintain the original fi xture design, including the number of sockets, and only replace the lamp. Thus, the base types of the more efficacious substitutes were selected to be the same as the baseline lamp base type. In the light kit fixture replacement scenario, DOE accounted for the possibility that manufacturers may change fixture designs. Thus, the base types of the more efficacious substitutes were not required to be the same as the baseline lamp and the number of sockets could be changed. DOE requests

comment on the likelihoo d of CFLK manufacturers selecting each substitution scenario and information on any alternative scenarios that manufacturers may choose.

ES.3.14 More Efficacious Substitutes

For the Externally

- Ballasted/Driven CFLKs product class, DOE chose more efficacious

substi tutes that maintained system lumen o utput within 10 percent of the baseline system lumen

output (for the lamp replacement scenario) or the baseline fixture system lumen output (for the light kit fixture replacement scenario). For the All Other CFLKs product class, DOE chose more

efficacious substitutes that maintained lumen o utput within 10 percent of the baseline lamp

l umen output (for the lamp replacement scenario) or the baseline fixture lumen output (for the light kit fixture replacement scenario). DOE identified replacement lamps with similar performance characteristics to the baseline, when pos sible

. DOE requests comment on the criteria used in selecting more efficacious substitute lamps, as well as the characteristics of the lamps selected. DOE particularly requests comment on the lifetimes of the baseline and substitute lamps.

ES.3.15 Lamp

- and

- Ballast Systems

DOE requests comment on the lamp

- and

- ballast systems selected for the Externally

Ballasted/Driven CFLKs product class. In particular, DOE requests comment on the selection of electronic ballasts for the lamp

- and

- ballast systems.

ES

- 21ES.3.16 Candidate Standard Levels

After identif ying more efficacious substitutes for each of the baseline lamps, DOE develop s CSL s based on the consideration of several factors

, including: (1) the design options associated with the specific lamps being studied; (2) the ability of l amps across wattages to comply with the standard level of a given product class; and (3) the max tech level. DOE requests comment on the CSLs under consideration, including the max tech level, for CFLKs. In particular, DOE requests comment on the equations used to define the efficacy requirements at

each CSL.

ES.3.17 Ballast Replacements

DOE requests comment on whether

, and what fraction of

, ballasts for pin

- based fluorescent lamps are designed to be replaceable by the consumer. DOE also requests comment on whether consumers generally replace the ballast in a CFLK with a consumer

- replaceable

ballast if it fails

, or if consumers replace the entire CFLK, assuming it is no longer operable

.

ES.3.18 Inseparable SSLs

DOE is considering requiring CFLKs with solid

- state lighting components that are inseparable from the CFLK to be tested with luminaire photometry. DOE requests comment on

whether and which of the solid state lighting (SSL) components in such products are designed to

be replaceable by the consumer. Specific ally, DOE requests information on which SSL components may be easily removable and replaceable by consumers

, and how such replacements would be performed.

ES.3.19 Production of Externally

- Driven LED CFLKs

Externally

- Ballasted/Driven CFLKs are CFLKs that use lamps in which the light source is designed to use consumer replaceable lamps that do not operate on mains power. Such lamps have a ballast or driver that is separate from the lamp. The ballast or driver may be either independently consumer separable, or it may be built into the CFLK and not intended for replacement by the consumer. DOE requests comment on whether manufacturers are currently producing or expecting in the future to produce CFLKs that use externally

- driven LED lamps

.

ES.3.20 Externally

- Driven LED Replaceme nts

DOE requests comment on the practicality of externally

- driven LEDs ( e.g., LED module

and

- driver systems) as replacements for externally

- ballasted fluorescent or CFL lamps in CFLKs. Specifically, DOE requests information on the fixture changes necessary for such a replacement.

ES.3.21 Externally

- Driven LED Efficacies

DOE requests information on the typical efficacy ranges for externally

- driven LEDs used

in CFLKs. DOE requests information on what these efficacy ranges represent ( i.e., luminaire efficacy of the fixture, LED module alone, or LED module

- and

- driver system).

ES

- 22ES.3.22 En gineering Analysis

DOE requests comment on the overall methodology and results of the CFLK engineering analyses.

ES.3.23 Energy Use Analysis of Externally

- Ballasted/Driven CF LKs

To improve its energy use estimates, DOE seeks comment on the typical total lumen

output s of pin

- based fluorescent CFLKs

.

ES.3.24 CFLK and Lamp Price Percentages

DOE requests comment on its determination that a basic CFLK packaged with a ceiling fan comprises 20 percent of the consumer price of a ceiling fan and light kit. DOE also requests comment on its determination that a CFL or LED packaged with a CFLK compris e s 15 percent

of the consumer price of the CFLK.

ES.3.25 Consumer Price Distribution Channel Weighting

DOE developed consumer prices for ceiling fans sold with light kits and CFLKs sold alone weighted by distribution channel. Using manufacturer feedback from inter views, DOE determined an aggregated percentage of shipments that go through each of the channels: electrical/specialty channel at 12 percent, home center channel at 80 percent, and lighting showroom channel at 8 percent. DOE requests comment on the values of the percentages of shipments that go through each of these distribution channels.

ES.3.26 Product Price Determination

DOE invites comment on its methodology and results for estimating consumer prices for lamps packaged with CFLKs.

ES.3.27 Ballast Prices

DOE requests comment on its assumption that the prices of the different electronic ballasts presented in the f ixture replacement scenario are equal to each other for the Externally

Ballasted/Driven CFLKs product class

.

ES.3.28 Installation Cost s

The installation cost for a CF LK represents all costs required to install the product, other

than the consumer product price and sales tax. The installation cost includes labor, overhead, and any miscellaneous materials and parts. For this preliminary analysis, DOE assumed that the

ins tallation cost for CFLKs are the same for all CSLs and product classes for both the residential

and commercial sectors . DOE assume d that the same is true for the installation of replacement lamps after the original lamps packaged with the CFLK fail. Theref ore, in the LCC analysis, DOE did not include installation costs for any CFLKs. DOE welcomes comment on its approach

of not includ ing installation costs in the LCC analysis.

ES

- 23ES.3.29 Disposal Costs

DOE includes the difference in disposal costs between the no

- stan dard and standards cases when calculating the cost impact of amended standards. DOE is assuming that the cost

difference at different CSL s results only from the difference in lamps or light sources used in the

CFLK

, and DOE has based its cost estimates on the cost of recycling the different type s of lamps and light sources considered in this rulemaking.

From market research, DOE determined that the average cost of disposing of a CFL is approximately $1 per lamp

. DO E did not find any data for LED bulb disposal costs, but assumed that their disposal costs would be the same as for CFLs. For the LCC analysis, DOE did not apply a disposal cost to the residential sector because consumers in th is sector generally do not

pa y to recycle CFLs or LEDs. However

, for the commercial sector, DOE assumed that 10% of consumers pay to recycle CFLs and LEDs at the end of their lifetime

. DOE requests comment and relevant data on the disposal cost assumptions for the different light sour ce technologies

used in CFLKs

.

ES.3.30 Price Learning

For this preliminary analysis, DOE assumed that only LEDs will continue to experience price learning, because of the relative maturity of the other lamp technologies, and their anticipated sharp decline as mar ket share shifts to LED. DOE requests comment on the assumption that only LEDs will continue to undergo significant cost reduction due to price learning.

ES.3.31 LCC Analysis

DOE requests comment on the methodology and results of the LCC analysis for CFLK s.

ES.3.32 Market Distribution of CFLKs by CSL

As described in chapters 3 and 8 of this TSD, DOE developed a market distribution of CFLKs by CSL for each product class for the no

- standard case in the expected compliance year (2019). For Externally

- Ballasted/Driven CFLKs , due to lack of market data, DOE assumed an equal market share at the baseline and CSL 1. For All Other CFLKs, DOE used data on (1) the

market distribution of CFLKs sold by mass retailers and by on

- line retailers, (2) the efficacies of the types of lamps included in those CFLKs from on

- line offerings of these lamps types

, and (3) projections of LED efficacy and market incursion. DOE requests comment on the overall methodology and assumptions, as well as relevant data, on the market distribution of CFLKs by CSL for each product class.

ES.3.33 Residential and Commercial Sector Shipments

DOE assumed that the distribution of CFLKs by light source technology in the

commercial sector is the same as the light source technology distribution in the residential sector.

DOE r equests comment and input regarding this assumption.

ES

- 24ES.3.34 LED Shipments

Although LED technology currently accounts for a small fraction of the ceiling fan light kit market, manufacturers indicate that LED penetration is expected to dominate the lighting

market in a relatively short time

. DOE estimated the market penetration of LEDs into the ceiling fan light kit market as a Bass diffusion curve

. DOE requests comment on this approach.

ES.3.35 Shipments and NIA

DOE requests comments on the overall methodology used to deve lop shipment forecasts and estimate national energy savings and the NPV of those savings.

ES.3.36 CFL K Usage in Residential and Commercial Sectors

DOE requests comments on its assumed breakdown of CFLK usage as 95% in the

residential sector and 5% commercial sector

.

ES.3.37 Consumer Subgroups

Some consumer subgroups might be adversely affected by potential energy conservation standards for CFLKs. DOE is considering the following consumer subgroups for analysis: low

income consumers, institutions of religious worship , and institutions serving low

- income consumers. DOE is considering defining low

- income consumers as residential consumers with incomes at or below the poverty line

, as defined by the U.S. Census Bureau. DOE welcomes

comment on its consumer subgroup analys is , including whether additional subgroups would be appropriate

.

ES.3.38 Regulatory Flexibility Act Analysis

DOE conducts a regulatory flexibility analysis that examines the impact of amended energy conservation standards on small entities and considers alternativ e ways of reducing negative impacts in the NOPR stage. DOE has conducted an initial regulatory flexibility analysis on the potential impacts to small businesses of the proposed test procedure amendments in

DOE’s concurrent CFLK TP NOPR. DOE invites interes ted parties to provide information for any small businesses that manufacture CFLKs that should be consulted before DOE publishes a

NOPR for this standards rulemaking

.

ES.3.39 Manufacturer Subgroup Analysis

DOE considers the impacts on certain manufacturer subgroup s that have different cost

structures from the industry averages used in the MIA or operate within different regulatory

frameworks than most CFLK manufacturers in the NOPR stage. DOE requests feedback on

manufacturer subgroups that DOE should analyze and/o r types of CFLK manufacturers for the subgroup analysis.

ES.3.40 Manufacturer Impact Analysis

DOE requests comment on its identification of key issues and requests data and information from interested parties to assist in evaluating the potential impact of amended energy conservation standards on CFLK manufacturers.

ES

- 25ES.3.41 Manufacturer Markup

DOE requests comment on the manufacturer markup value of 1.37 used in the preliminary analysis.

ES.3.42 Utility Impacts of Power Factor Reductions

DOE received a comment on the frame work document from California Investor

- Owned Utilities ( CA IOUs ) recommending that DOE consider the power factor of CFLKs because a reduction in power factor may result in a decrease in power quality and transmission efficiency of the electric grid. DOE ac knowledges that phase shifts introduced into the grid by loads may have such effects and recognizes that it is the net impact of many loads that ultimately determines the impact, which in turn depends on a dynamically changing load mix. DOE requests input on this issue.

ES.3.43 Trial Standard Levels

For the NOPR, DOE typically develop s trial standard levels (TSLs) based on the CSLs developed in the preliminary analysis . DOE is considering several criteria in developing the TSLs, including, but not limited to, minimum LCC, maximum NPV, and maximum technologically feasible efficiency. These TSLs may include combinations of CSLs and will consider the interaction between product classes. From the list of TSLs developed, DOE will select one as its proposed stan dard for the NOPR. DOE invites comment on the criteria it should

use as the basis for selection of TSLs.

ES.3.44 Emissions Analysis

DOE requests comment on its approach to conducting the emissions analysis for ceiling

fans.

ES.3.45 Monetization of Emissions Reductions B enefits

DOE invites input on the proposed approach for estimating monetary benefits associated

with emissions reductions.

ES.3.46 Utility Impact Analysis

DOE seeks comment on the planned approach to conduct the utility impact analysis.

ES.3.47 Employment Impact Analysis

DOE welcomes input on it proposed approach for assessing national employment impacts.

ES.3.48 Regulatory Impact Analysis (RIA)

In the NOPR stage of this rulemaking, DOE will prepare a regulatory impact analysis to address the potential for non

- regulatory approac hes to supplant or augment amended energy conservation standards to improve the efficiency of CFLKs on the market. DOE will attempt to

base its assessment of non

- regulatory initiatives on the actual impacts of any such initiatives to

ES

- 26date on these or other products, and will also consider other available information. DOE requests any available data or reports on existing or past non

- regulatory programs and their effectiveness, particularly as they relate to the product classes covered in this rulemaking.

ES

- 27CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUM ENT

................................ ................................ ................. 1

- 1

1.2 OVERVIEW OF APPLIANC E STANDARDS

................................ .............................. 1

- 1

1.3 OVERVIEW OF CEILING FAN LIGHT KIT STANDA RDS

................................ ...... 1

- 2

1.3.1 Current Standards

................................ ................................ ................................ . 1

- 2

1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

................... 1

- 2

1.5 STRUCTURE OF THE DOC UMENT

................................ ................................ ............ 1

- 5

LIST OF TABLES

Table 1.4.1 Analyses Under the Process Rule

................................ ................................ .. 1

- 4

1

- iCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT

This preliminary technical support document (preliminary TSD) is a standalone report that documents the technical analyses and results supporting the preliminary analysis for establishing energy conservation standards for ceiling fan light kits (CFLKs)

.

1.2 OVERVIEW OF APPLIANCE STANDARDS

Title III of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6291, et seq.;

“ EPCA” or, “the Act”) sets forth a variety of provisions designed to improve energy efficiency. (All references to EPCA refer to the stat ute as amended through the American Energy Manufacturing Technical Corrections Act (AEMTCA), Pub. L. 112

- 210 (Dec. 18, 2012).) Part B of title III, which for editorial reasons was redesignated as Part A upon incorporation into the U.S. Code (42 U.S.C. 6291

– 6309, as codified), establishes the “Energy Conservation Program

for Consumer Products Other Than Automobiles.” These include CFLKs

- the products that are the focus of this rulemaking.

Pursuant to EPCA, the U.S. Department of Energy (DOE) is required to design each

standard for these products to (1) achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified; and (2) result in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B) , 42 U.S.C. 6313(d)(4)) To determine whether a proposed standard is economically justified, DOE will, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens to the greatest extent practicable, c onsidering the following seven factors:

1. T he economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard;

2. T he savings in operating costs throughout the estimated average life of the covered product i n the type (or class) compared to any increase in the price of, or in the initial charges for maintenance expenses of, the covered products that are likely to result from the imposition of the standard;

3. T he total projected amount of energy savings likely to result directly from the imposition of the standard;

4. A ny lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;

5. T he impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

6. T he need for national energy conservation; and

1

- 17. O ther factors the Secretary considers relevant. (42 U.S.C. 6295(o)(2)(B)(i); 6313(d)(4))

EPCA also directs that DOE may not prescribe an amended or new standard if the standard is likely to result in the unavailability in the United States of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as thos e generally available in the United States at the time that the standard is prescribed. (42 U.S.C. 6295(o)(4) and 6313(d)(4)) For CFLKs

, DOE is applying those factors in a manner consistent with its other energy conservation standards rulemakings to

ascert ain the maximum improvement in energy efficiency that is technologically feasible and economically justified for these products

.

1.3 OVERVIEW OF CEILING FAN LIGHT KIT STANDARDS

1.3.1 Current Standards

Current energy conservation standards for CFLKs (42 U.S.C. 6295 (ff)) were established by the Energy Policy Act of 2005 ( EPA ct 2005 ) (Title I, Subtitle C, section 135(c)), which were later amended by EPCA. Specifically, EPAct 2005 established individual energy co nservation standards for three groups of CFLKs: ( 1) those having medium screw base sockets (hereafter “product class 1”) ; ( 2) those having pin

- based sockets for fluorescent lamps (hereafter “product class 2”) ; and ( 3) those having any socket not included i n product class 1 or 2 (hereafter “product class 3”). (42 U.S.C. 6295(ff)(2)

- (4)) In a technical amendment published on October 18, 2005, DOE codified the statute's requirements for product classes 1 and 2 . 70 FR 60413. EPA ct 2005 specified that the prescr ibed standard for product class 3 (which was prescribed a 190

- watt limit) would become effective only if DOE failed to issue a final rule on energy conservation standards

for those CFLKs by January 1, 2007. (42 U.S.C. 6295(ff)(4)(C)) Because DOE did not is sue a final rule on standards for CFLKs by that date, DOE published a technical amendment that codified the statute’s requirements for product class 3 CFLKs. 72 FR 1270. Another technical amendment on March 3, 2009 (74 FR 12058) added a provision that CFLK s with sockets for pin

based fluorescent lamps must be packaged with lamps to fill all sockets. (42 U.S.C. 6295(ff)(4)(C)) These standards for ceiling fan light kits are codified in 10 Code of Federal Regulations (CFR) part 430.32 (s)(2).

1.4 PROCESS FOR SETTI NG ENERGY CONSERVATION STANDARDS

DOE considers stakeholder participation a very important part of the standards

- setting process. DOE encourages the participation of all stakeholders during the comment period of each rulemaking stage. Beginning with the ru lemaking framework document for CFLKs (hereafter the “framework document”) and during subsequent comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.

After the pu blication of the f ramework d ocument, the energy conservation standards rulemaking process involves three additional, formal public notices, which DOE publishes in the Federal Register. The first of the rulemaking notices is a notice of public meeting ( NOPM )

, which is designed to publicly vet the models and tools used in the preliminary rulemaking and to

1

- 2facilitate public participation before the NOPR stage. The second notice is the NOPR, which presents a discussion of comments received in response to the NO PM and the preliminary analyses and analytical tools; analyses of the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these impacts of amended energy conservation standards; and the proposed energy conservation standards for each product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s weighting of these impacts; the amended energy conservat ion standards DOE is adopting for each product; and the effective dates of the amended energy conservation standards.

This preliminary analysis , which is part of DOE’s first review cycle for CFLK standards,

aims to determine whether the standards in effect for CFLK s (42 U.S.C 6295(ff)) should be

amended and presents candidate standards levels under consideration by DOE . It also addresses the requirement under 42 U.S.C. 6295(gg)(3) that DOE incorporate , if feasible

, standby mode

and off

- mode energy use in any amended (or new) standard adopted after July 1, 2010 pursuant to 42 U.S.C. 6295(o).

On March 15, 2013, DOE published in the Federal Register a Notice of Public Meeting and Availability of the f ramework d ocume nt to initiate the energy conservation standard rulemaking for CFLKs . 78 FR 16443. DOE requested feedback from interested parties in the Framework Document on many issues related to test methods for evaluating the airflow and electrical consumption perfo rmance of ceiling fans. This document is available at: http://www.regulations.gov/#!documentDetail;D=EERE

- 2012

- BT

- STD

- 0045

- 0001

DOE held the framework public meeting on March 22, 2013. DOE originally scheduled the framework comment period to close o n April 29, 2013. However, due to the large number and broad scope of questions and issues raised in the Framework Document (and during the public meeting), DOE subsequently published a notice in the Federal Register extending the

comme nt period until Jun e 14, 2013, to allow additional time for interested parties to submit comments. 78 FR 25626 (May 2, 2013). DOE is conducting a test procedure rulemaking for

CFLKs pursuant to 42 U.S.C. 6295(r). DOE published the CFLK test procedure NOPR on

October 2 7 , 2014

.

D uring the March 2013 public meeting, interested parties commented about numerous issues relating to each one of the analyses listed in Table 1.4

. 1 . Comments from interested parties submitted during the f ramework d ocument comment period elaborated on the issues raised during the public meeting. DOE attempted to address these issue s durin g its preliminary analysi s and summarized the comments and DOE’s responses in chapter 2 of the preliminary TSD.

1

- 3Table 1.4

. 1 Analyses Under the Process Rule
Preliminary Analyses NOPR Final Rule

Market and tec hnology assessment Revised preliminary analysis Revised analyses

Screening analysis Consumer subgroup analysis

Engineering analysis Manufacturer impact analysis

Energy use analysis Emissions analysis

Product price d etermination Monetization of emissions

reduction benefits

Life

- cycle cost and payback period analysis Utility impact analysis

Shipments analysis Employment impact analysis

National impact analysis Regulatory impact analysis

Preliminary manufacturer impact analysis

As part of the information gathering and sharing process, DOE organized and held

interviews with manufacturers of the products considered in this rulemaking as part of the engineering analysis. DOE selected companies that represented production of all type s of products, ranging from small to large manufacturers. DOE had four objectives for these interviews: (1) solicit manufacturer feedback on the draft inputs to the engineering analysis; (2) solicit feedback on topics related to the preliminary manufacture r impact analysis; (3) provide an opportunity, early in the rulemaking process, to express manufacturers’ concerns to DOE; and (4) foster cooperation between manufacturers and DOE.

DOE incorporated the information gathered during the engineering intervi ews with

manufacturers into its engineering analysis (c hapter 5) and the preliminary manufacture r impact analysis (MIA, c hapter 12). Following the publication of the preliminary analysis and the preliminary analysis public meeting, DOE intends to hold addi tional meetings with manufacturers as part of the consultative process for the MIA conducted during the NOPR phase.

DOE conducted the LCC and PBP analyses based on an approach that establishes an annual energy expense using regional average electric util ity costs for affected businesses and projected those electricity costs into the future using electricity price projections from the DOE Energy Information Agency (EIA).

DOE developed spreadsheets for the engineering, LCC, and PBP analyses for each product. For each product, DOE developed an LCC spreadsheet that calculates the LCC and PBP at various energy efficiency levels. DOE also developed a national impact analysis spreadsheet that calculates the national energy savings (NE S) and national net present values (NPVs) at various energy efficiency levels. This spreadsheet includes a model that forecasts the impacts of amended energy conservation standards at various levels on product shipments. All of these spreadsheets are avail able on the DOE website for CFLKs : ( http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/66 ).

1

- 41.5 STRUCTURE OF THE DOCUMENT

This pr eliminary TSD outlines the analytical approaches used in this rulemaking. The

TSD consists of 1 7 chapters as well as appendices.

• Chapter 1, Introduction : provides an overview of the appliance standards program and how it applies to the CFLK rulemaking, an d outlines the structure of the document.

• Chapter 2, Analytical Framework : describes the rulemaking process step by step, summarizes comments made by interested parties during the F ramework D ocument comment period, and provides DOE responses to those comments.

• Chapter 3, Market and Technology Assessment : characterizes the CFLK market and the technologies available for increasing product efficiency.

• Chapter 4, Screening Analysis : determines which technology options are viable for

consideration in the en gineering analysis.

• Chapter 5, Engineering Analysis : discusses the methods used for developing the relationship between increased manufacturer price and increased efficiency.

• Chapter 6, Energy Use Analysis : discusses the process used for generating energy use estimates of CFLKs for a variety of product classes and standard levels.

• Chapter 7, Product Price Determination: describes DOE’s methodology for establishing the end

- user prices for lamps packaged in CFLKs.

• Chapter 8, Life

- Cycle Cost and Payback Perio d Analysi s : discusses the economic

effects of standards on individual consumers and users of the products and compares the LCC and PBP of products with and without higher efficiency standards.

• Chapter 9, Shipments Analysis : discusses the methods used for f orecasting shipments with and without higher efficiency standards.

• Chapter 10, National Impact Analysis : discusses the methods used for forecasting national energy consumption and national economic impacts based on annual product shipments and estimates of future product efficiency distributions in the absence and presence of higher efficiency standards.

• Chapter 11, Consumer Subgroup Analysis : discusses the effects of standards on a subgroup of CFLK customers and compares the LCC and PBP of products with an d without higher efficiency standards.

• Chapter 12, Manufacturer Impact Analysis : discusses the effects of standards on the finances and profitability of product manufacturers.

• Chapter 13, Emissions Analysis : discusses the effects of standards on airborne

e missions of electric utilities.

• Chapter 14, Mone tization of Emissions Reduction Benefits: considers the estimated monetary benefits likely to result from reduced emissions of carbon dioxide and nitrogen oxides expected to result from the standards.

• Chapter 15, Utility Impact Analysis : discusses the effects of standards on the installed generation capacity of electric utilities.

• Chapter 16, Employment Impact Analysis : discusses the effects of standards on national employment.

• Chapter 17, Regulator y Impact Analysis : discusses the present regulatory actions as well as the impact of non

- regulatory alternatives to setting energy efficiency standards.

1

- 5• Appendix 8A

, User Instructions for Life

- Cycle Cost and Payback Period Analysis Spreadsheet : Provides bas ic instructions for operating the LCC and PBP workbook, as well as descriptions of each worksheet included in the workbook.

• Appendix 8B

, Uncertainty and Variability in LCC Analysis : Discusses uncertainty and variability analyses and presents results of tho se uncertainty and variability analyses performed in the LCC and PBP analyses.

• Appendix 8C

, Discount Rate Distributions : Provides the distribution of discount rates used in the LCC Analysis

• Appendix 9A

, Relative Price Elasticity of Demand for Appliances : P rovides a summary of DOE's study of the price elasticity of demand for consumer appliances.

• Appendix 10A

, User Instructions for Shipments and NIA Spreadsheets : Provides basic instructions for operating the NIA workbook, as well as descriptions of each

work sheet included.

• Appendix 10B, Full

- Fuel

- Cycle Multipliers : Summary of methods used to calculate

full

- fuel

- cycle energy savings expected from potential standards.

1

- 6CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION

................................ ................................ ................................ ........... 2

- 1

2.2 REGULATORY AUTHORITY AND HISTORY OF STAND ARDS

RULEMAKINGS FOR CFLK S

................................ ................................ ...................... 2

- 3

2.3 SCOPE

................................ ................................ ................................ ............................. 2

- 4

2.4 EFFICIENCY METRICS A ND PRODUCT CLASSES

................................ ................. 2

- 4

2.4.1 Efficiency Metric

................................ ................................ ................................ . 2

- 6

2.4.2 Product Classes

................................ ................................ ................................ .... 2

- 8

2.4.3 Test Procedure

................................ ................................ ................................ ... 2

- 11

2.4.4 Standby Mode and Off

- Mode Energy Consumption

................................ ......... 2

- 12

2.5 MARKET AND TECHNOLOG Y ASSESSMENT

................................ ...................... 2

- 12

2.5.1 Market Asse ssment

................................ ................................ ............................ 2

- 13

2.5.2 Technology Assessment

................................ ................................ ..................... 2

- 13

2.6 SCREENING ANALYSIS

................................ ................................ ............................ 2

- 14

2.7 ENGINEERING ANALYSIS

................................ ................................ ........................ 2

- 15

2.7.1 Approach

................................ ................................ ................................ ............ 2

- 16

2.7.2 Representative Product Classes

................................ ................................ ......... 2

- 18

2.7.3 Baseline Lamps

................................ ................................ ................................ .. 2

- 19

2.7.4 More Efficacious Substitutes

................................ ................................ ............. 2

- 20

2.7.5 Candidate Standard Levels

................................ ................................ ................ 2

- 22

2.7.6 Scaling to Other Product Classes

................................ ................................ ....... 2

- 26

2.8 ENERGY USE ANALYSIS

................................ ................................ .......................... 2

- 26

2.9 PRODUCT PRICE DETERM INATION

................................ ................................ ...... 2

- 27

2.10 LIFE

- CYCLE COST AND PAYBACK PERIOD A NALYSIS

................................ ... 2

- 29

2.11 SHIPMENTS ANALYSIS

................................ ................................ ............................. 2

- 30

2.12 NATIONAL IMPACT ANAL YSIS

................................ ................................ .............. 2

- 31

2.12.1 National Energy Savings Analysis

................................ ................................ ..... 2

- 32

2.12.2 Net Pr esent Value Analysis

................................ ................................ ............... 2

- 32

2.13 CONSUMER SUBGROUP AN ALYSIS

................................ ................................ ...... 2

- 33

2.14 MANUFACTURER IMPACT ANALYSIS

................................ ................................ .. 2

- 33

2.14.1 Sources of Information for the Manufacturer Impact Analysis

......................... 2

- 34

2.14.2 Industry Cash

- Flow Analysis

................................ ................................ ............. 2

- 34

2.14.3 Direct Employment Impact Analysis

................................ ................................ . 2

- 35

2.14.4 Manufacturer Subgroup Analysis

................................ ................................ ...... 2

- 35

2.14.5 Competitive Impacts Assessment

................................ ................................ ...... 2

- 36

2.14.6 Cumulati ve Regulatory Burden

................................ ................................ ......... 2

- 36

2.14.7 Preliminary Results for the Manufacturer Impact Analysis

.............................. 2

- 36

2.14.7.1 Duplicative Regulation.

................................ ................................ ............ 2

- 37

2.14.7.2 Potential Consumer Shift to Air Conditioning

................................ ......... 2

- 37

2.15 EMISSIONS ANALYSIS

................................ ................................ .............................. 2

- 37

2.16 MONETIZING OF CO 2 AND OTHER EMISSIONS

................................ .................. 2

- 39

2. 17 UTILITY IMPACT ANALY SIS

................................ ................................ ................... 2

- 40

2

- i2.18 EMPLOYMENT IMPACT AN ALYSIS

................................ ................................ ....... 2

- 40

2.19 REGULATORY IMPACT AN ALYSIS

................................ ................................ ........ 2

- 41

REFERENCES

................................ ................................ ................................ .......................... 2

- 42

LIST OF TABLES

Table 2.4.1 Current Product Classes, Energy Efficiency Requirements, and Efficiency Metrics for CFLKs

................................ ................................ ....... 2

- 6

Table 2.7.1 CFLK Representative Product Classes

................................ ........................ 2

- 19

Table 2.7.2 Externally

- Ballasted/Driven CFLKs Product Class Baseline Lamp

and

- Ballast System

................................ ................................ ....................... 2

- 20

Table 2.7. 3 All Other CFLKs Product Class Baseline Lamp

................................ ......... 2

- 20

Table 2.7.4 Externally

- Ballasted/Driven CFLKs Product Class Design Options: Lamp Replacement Scenario

................................ ................................ ....... 2

- 24

Table 2.7.5 Externally

- Ballasted/Driven CFLKs Product Class Design Options: Light Kit Fixt ure Replacement Scenario

................................ ..................... 2

- 24

Table 2.7.6 All Other CFLKs Product Class Design Options: Lamp Replacement

Scenario

................................ ................................ ................................ ........ 2

- 25

Table 2.7.7 All Other CFLKs Product Class Design Options: Light Kit Fixture Replacement Scenario

................................ ................................ .................. 2

- 25

Table 2.7.8 Summary of CSLs for CFLK Representative Product Classes

.................... 2

- 26

2

- iiCHAPTER 2. ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

The Energy Policy and Conservation Act (EPCA), as amended, require s that energy

conservation standards established by the U.S. Department of Energy (DOE) be technologically feasible and economically justified, and achieve the maximum possible improvement in energy efficiency. (42 U.S.C. 6295(o) (2)(A) and (3)) This chapter describes the general analytical framework that DOE uses in developing such standards, and in particular, standards for ceiling fan light kits ( CFLK s). The chapter includes a description of the methodology, analytical tools,

an d relationships among the various analyses that are part of this rulemaking. Chapter 2 also

summarizes the preliminary activities DOE has conducted and discusses the comments it

received in response to the framework document . Finally, chapter 2 provides cr oss

- references to the other chapters of th is preliminary technical support document (TSD) that address DOE ’ s analytical approach, inputs, and findings.

The analyses presented in this preliminary TSD include:

• a market and technology assessment to charact erize the relevant markets

, to identify technology options that improve efficiency

, and to develop product classes;

• a screening analysis in which each technology option is evaluated, to determine if it is technologically feasible

, is practicable to manufacture, install, and service

, would adversely impact product utility or product availability

, or would have adverse impacts on health and safety;

• an engineering analysis t hat examines representative lamp units used in CFLKs as

subs titutes for baseline products, and to select candidate standard levels (CSLs ) ;

• an energy

- use characterization that estimates annual energy

- use of CFLKs;

• a product price determination that develops consumer product prices for the representative lamp unit s identified in the engineering analysis;

• a life

- cycle cost ( LCC ) analysis that calculates, at the consumer level, the discounted savings in operating costs throughout the estimated life of the product , compared to any

increase in the installed costs lik ely to result directly from imposition of a standard;

• a payback period (PBP) analysis to estimate the amount of time it takes consumers to recover the higher purchase expense of more efficient products through lower operating

costs;

• a shipments analysis that estimates shipments of CFLKs during the period considered in the analysis;

2

- 1• a national impact analysis ( NIA ) that assesses the aggregate impacts at the national level of potential energy conservation standards as measured by the net present value (NPV) of total consumer economic impacts and national energy savings (NES); and

• a preliminary manufacturer impact analysis (MIA) that begins the evaluat ion of potential

effects on manufacturers of amended efficiency standard s

.

Before it publishes a notice of proposed rulemaking (NOPR), DOE may revise any of its analyses based on comments and new information received in response to this preliminary TSD

.

The analyses DOE will perform at the NOPR stage include:

• a consumer subgroup analysis that evaluates the economic effects on identifiable groups

of consumers of CFLKs , including various categories of p urchasers or owners who may experience disproportionate effects from a national energy conservation standard;

• an MIA that estimates the financial impact of standards on CFLK manufacturers and calculates impacts on competition, employment at the manufacturing plant, and manufacturing capacity;

• an emissions analysis to estimate the effects of amended energy conser vation standards on emissions of carbon dioxide (CO 2 ), sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (Hg);

• a monetization of the effects of reduced emissions from the new standard levels considered in this preliminary analysis ;

• a utility impa ct analysis that estimates the effects of new standards considered in this preliminary analysis on the installed capacity and the generating base of electric utilities;

• an employment impact analysis that estimates the impacts of standards on net jobs

eli minated or created in the general economy because of the increased installed price of

CFLKs and the reduced c onsu mer spending on energy; and

• a regulatory impact analysis (RIA) that presents major alternatives to the amended

standards considered in this pr eliminary analysis that may achieve comparable energy savings at a reasonable cost.

DOE developed this analytical framework and documented its findings in the Energy Conservation Standards Rulemaking Framework Document for Ceiling Fans and Ceiling Fan Light Kits

. 1 On March 15, 2013 D OE presented its analytical approach to interested parties during a public meeting (hereafter the “framework public meeting”).

In response to the publication of the framework document and the framework public meeting, DOE received comments from interested parties regarding DOE’s analytical approach. This chapter (chapter 2) of the preliminary TSD summarizes the key comments DOE received

2

- 2from interested parties and presents DOE’s responses to those comments. Also in this chapter,

DOE summarize s any significant changes made to any analytical approach since publi cation of

the framework document. Lastly, in the executive summary of th is preliminary TSD, DOE

identifie s issues on which DOE seeks public comment. DOE explain s each of those issues in the appropriate sections of this chapter

.

2.2 REGULATORY AUTHORITY AND HISTORY OF STANDARDS

RULEMAKINGS FOR CFLKS

Title III , Part B a of the Energy Policy and Conservation Act of 1975, as amended , Pub. L.

94

- 163 (42 United States Code (U.S.C.) 6291

- 6309, as codified )

, established the E nergy C onservat ion P rogram for Consumer Products Other Than Automobiles, a program that cover s

most major household appliances and certain industrial and commercial equipment. b This program authorized DOE to establish technologically feasible, economically justified ener gy conservation regulations that would likely produce substantial national energy savings. (42 U.S.C. 6295(o)(2)(B)(i)(I)

- (VII)) Amendments to Title III of EPCA have given DOE the authority to regulate the energy efficiency of several additional products a nd equipment, including ceiling fan light kits , which are the focus of this document . (42 U.S.C 6295(ff))

Current energy conservation standards for CFLKs (42 U.S.C. 6295(ff)) were established by the Energy Policy Act of 2005 ( EPA ct 2005 ) (Title I, Subtit le C, section 135(c)), which were later amended by EPCA. Specifically, EPAct 2005 established individual energy conservation standards for three groups of CFLKs: ( 1) those having medium screw base sockets (hereafter “product class 1”) ; ( 2) those having pin

- based sockets for fluorescent lamps (hereafter “product class 2”) ; and ( 3) any CFLKs other that those included in product class 1 or 2 (hereafter “product class 3”). (42 U.S.C. 6295(ff)( 2)

- (4)) In a technical amendment published on October 18, 2005, DOE codified the statute's requirements for product class es 1 and 2 . 70 FR 60413. EPA ct 2005

also specified that if DOE failed to issue a final rule on energy conservation standards for produc t class 3 CFLKs by January 1, 2007 , a 190

- watt limit would apply to those products . (42 U.S.C. 6295(ff)(4)(C)) Because DOE did not issue a final rule on standards for CFLKs by that date, DOE published a technical amendment that codified the statute’s requi rements for product

class 3 CFLKs on January 11, 2007 , which applied to product class 3 CFLKs manufactured on or after January 1, 2009 . 72 FR 1270. Another technical amendment final rule published on March 3, 2009 (74 FR 12058) added a provision that CFLKs with sockets for pin

- based fluorescent lamps must be packaged with lamps to fill all sockets. (42 U.S.C. 6295(ff)(4)(C) (ii) ) These standards for ceiling fan light kits are codified in 10 Code of Federal Regulations ( CFR ) part 430.32(s)(2).

This prelimin ary analysis , which is part of DOE’s first review cycle for CFLK standards,

aims to determine whether the standards currently in effect for CFLK s (42 U.S.C 6295(ff))

should be amended and presents candidate standards levels under consideration by DOE . It a lso

addresses the requirement under 42 U.S.C. 6295(gg)(3) that DOE incorporate , if feasible,

a For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

b All references to EPCA in this document refer to the statute as amended through the American Energy Manufacturing Technical Corrections Act (AEMTCA), Pub. L. 112

- 210 (Dec. 18, 2012).

2

- 3standby mode and off

- mode energy use in any amended (or new) standard adopted after July 1, 2010 pursuant to 42 U.S.C. 6295(o).

2.3 SCOPE

As defined in 42 U.S.C. 6291 (50) a ceiling fan light kit (CFLK) is “equipment designed to provide light from a ceiling fan” that can be either integral to the ceiling fan or attachable. Attachable CFLKs may be sold packaged with a ceiling fan or separately. Therefore, all lighting

eq uipment that is either built into, or designed to be attachable to, any product that is defined as a ceiling fan, is a CFLK

, and is covered by this rulemaking.

At this time, DOE is not considering developing a separate product class for CFLKs designed for high

- volume CFLKs since e ssentially all CFLKs on the market today are designed

for low

- volume ceiling fans. c Even if manufacturers begin producing such products in large number, DOE does not anticipate that they will have distinctive characteristics th at would require a separate product class from CFLKs designed for low

- volume ceiling fans. T herefore

, DOE is not including CFLKs designed for high volume fans in this preliminary analysis. DOE requests comment on the need for a separate product class for C FLKs designed for high

- volume ceiling

fans

. DOE seeks comment on whether manufacturers are likely to market CFLKs for high

volume ceiling fans in the future

.

2.4 EFFICIENCY METRICS AND PRODU CT CLASSES

C urrent DOE standards for CFLKs (42U. S.C. ( 6295(ff)), u se different energy efficiency metrics for different product classes. The current standards for CFLKs with medium screw

- based

sockets ( product class 1) and those with pin

- based sockets for fluorescent lamps ( product class 2) require that lamps packaged with the light kits must meet an efficacy standard

. d Lamps used in product class 1 must meet the ENERGY STAR Program Requirements for Compact Fluorescent Lamps (CFLs), version 3.0

, or hav e an equivalent minimum efficacy. e Lamps used in product class 2 must meet the combined lamp and ballast efficacy requirements set out in the ENERGY STAR Program Requirements for Residential Light Fixtures , version 4.0

. Because the ENERGY STAR Program Requ iremen ts for CFLs, version 3.0, covers only self

- ballasted lamps, the efficacy metric incorporates the energy consumption of the ballast that drives the lamp while operating in the CFLK in both cases . Therefore, the efficacy requirement can be characterize d in terms of the light output from the lamp, measured in lumens, divided by the line power input to the lamp system, measured in watts, where the lamp system includes any power circuitry needed to modify line power to the power conditions needed to operat e the lamp. F or all other CFLKs ( product class 3) , CFLKs are required to meet a maximum allowed operating wattage

.

c DOE knows of only one CFLK that is designed for high volume fan, a product made by Big Ass Fans.

d Efficacy is the measure of lamp efficiency, which is defined as the quo tient of the total luminous flux (lumens) emitted by the lamp divided by the total lamp power input (watts). Efficacy is therefore measured in units of lumens per watt (lm/W).

e ENERGY STAR is a joint program of the U.S. Environmental Protection Agency (E PA) and DOE that establishes a voluntary
rating, certification, and labeling program for highly energy efficient consumer products and commercial equipment. Informati on on the program is available at : www.energysta r.gov

.

2

- 4Specifically, product class 3 CFLKs shall not be capable of operating with lamps that total more

than 190 watts

. To date, DOE has interpreted th e product class 3 standard as a design standard that requires the incorporation of a wattage limiter.

In summary, product classes 1 and 2 require an efficacy metric while product class 3 requires a maximum wattage (see Table 2.4

. 1 )

.

2

- 5Table 2.4

. 1 Current Product Classes, Energy Efficiency Requirements , and Efficiency

Metrics for CFLKs

* CFLKs packaged with medium screw base CFLs must also meet additional specifications in ENERGY STAR Program Requirements for Compact Fluorescent Lamps

, version 3.0.

2.4.1 Efficiency Metric

In the framework document, DOE indicated that it is considering using luminous efficacy

as the e fficiency metric for all CFLKs, using lamp efficacy where possible, and using luminaire efficacy for cases not supported by existing lamp test procedures (i.e., for CFLKs with integrated

solid

- state lighting circuitry, such as those with inseparable LED lighting).

DOE received a number of comments regarding the metrics used for CFLK efficiency.

In a joint comment, the Appliance Standards Awareness Project (ASAP), National Consumer Law Center (NCLC), Natural Resources Defense Council (NRDC), and Northwest Energy Efficiency Alliance (NEEA) supported the proposal to use luminous efficacy as the efficiency metric for all CFLKs. They commented that using one metric would eliminate the loophole created by current standards, which allow s manufacturers to use intermediat e or candelabra base sockets in place of medium screw base sockets to avoid having to meet lm/W

standa rds. ( ASAP

- NCLC

- NEEA

- NRDC , No. 14 at p. 6) f

DOE notes that the choice of efficiency metric does not determine the standard level. Regardless of whether the efficiency standard for a product class is measured as a wattage limit or as efficacy, when DOE reviews standards it must consider whether a higher standard is justified under the criteria set out in 42 U.S.C. 6295(o). If a more stringent efficiency s tandard is

f A notation in this form provides a reference for information that is in the docket of DOE’s rulemaking to develop energy conservation standards for CFLKs (Docket No. EERE

– 2012

– BT

– STD

– 0045), which is maintained at www.regulations.gov . This notation indicates that the statement preceding the reference is document number 14 in the docket for the CFLK energy conservation standards rulemaking, and appears at page 6 of that document. Product Class Energy Efficiency Requirement * Energy Efficiency Metric

Product Class 1:

medium screw base (E26) Package with lamps to fill all sockets. The lamps must meet the ENERGY STAR Program Requirements for Compact Fluorescent Lamps , version 3.0, or with lamps having equivalent lm/W performance. Lamp efficacy (lm/W) for

self

- ballasted lamps.

Product Class 2: pin

- based fluorescent Package with lamps to fill all sockets. The lamps must meet the ENERGY STAR Program Requirements for Residential Light

Fixtures , version 4.0. Lamp

- and

- ballast system efficacy (lm/W)

Product Class 3:

all other CFLKs Shall not be capable of operating with lamps that total more than 190

watts. Wattage

2

- 6justified for a product class that uses maximum wattage as the metric, the amended standard would reduce the allowable wattage limit.

No stakeholders identified any problems inherent to using the l m/W m etric

, which is the metric generally use d to characterize the efficiency of lamps and fixtures. In contrast, many drawbacks were observed regarding the wattage limit, in particular its interpret ation as a design

standard. Hunter Fan Company (Hunter) , among other stakeholders, argued that wattage limiters are prone to failure, thereby significantly increasing the costs associated with product warrantees. (Hunter, No. 37 at p. 2; and multiple submittals, No. 48 at p. 1) A survey commissioned by the American Lighting Association ( ALA ) found that the added warranty cost to service the failures of wattage limiters averaged over $46 per claim. (ALA, No. 39 at p. 21) However, ALA argued the wattage limit metric would be desirable, if applied narrowly to products for which a wattage

limiter would not be n eeded, citing 3

- lamp candelabra CFLKs as an example. (ALA, No 59, at

p p . 26

- 27) As noted above, the metric does not determ ine the standard, so CFLKs of this design might not meet an amended standard for all possible lamps choices

.

DOE acknowledges the drawbacks of using wattage as an efficiency metric , b eyond the concerns raised by stakeholders , g iven that two products with the same power consumption (watts) can ha ve very different lumen outputs. Therefore, a wattage metric does not

communicate to consu mers how much light is delivered for a given amount of energy consumer

. DOE therefore plans to use lumens per watt as the efficiency metric for all CFLK products.

Two stakeholders commented on whether DOE, if it adopt s the efficacy metric, should base the standard on the efficacy of the lamps (lamp efficacy) or the efficacy of the fixture (luminaire efficacy). The California Investor Owned Utilities (CA IOUs) supported a fixture

based metric, which would “account for fixture losses” and “encourage fixture design that distributes light more effectively

. ” If DOE could not adopt this approach

, the CA IOUs supported DOE’s proposal to use lamp efficacy as the metric for all pro duct classes. (CA IOUs, No 12, at p. 2) ALA commented that using a luminaire efficacy metric “would be overly

burdensome and e xpensive

. ” As a result, ALA recommended using lamp efficacy as a metric for

CFLKs . However, A LA also proposed a design standard fo r CFLKs with candelabra (E12) and intermediate (E17) base types

, which would not be subject to a l amp efficacy metric. (ALA, No.

3 9, at p. 14)

DOE has considered using luminaire efficacy for all CFLKs. Luminaire efficacy accounts only for the light leavi ng the luminaire, as opposed to the light leaving the lamps themselves. Therefore, a luminaire with bare bulb will always have a higher luminaire efficacy than a luminaire that includes a shade or other optical elements widely used to modify light output b oth for aesthetic purposes and to prevent glare.

DOE believes that the l uminaire efficacy metric is more suitable for certain commercial, industrial, or roadway lighting products

, where aesthetics are not as large a factor as they are in

the home. Aest hetics provide a major consumer utility in home lighting. For example, consumers may select lumina i res with colored glass shades purely for aesthetic reasons. Because the light absorption would differ in each case, so would the measured luminaire efficacy. DOE believes

2

- 7that such purely aesthetic factors should not be reflected in residential lighting efficiency metrics if possible. Therefore DOE has opted to use lamp, not luminaire

, efficacy wherever possible.

DOE received an additional comment that rela tes indirectly to metrics. Progress Lighting (Progress) recommend ed that DOE remove the requirement from the standard that CFLKs be packaged with lamps to fill all sockets. ( Progress No 6, at p p . 5

- 6) DOE is forbidden by law (42 U.S.C. 6295(o)(1)) from amending standards in a way that would increase the allowable energy use, or decrease the minimum required efficiency. Removing the packaging requirement would essentially remove any lighting efficiency standard, which by definition weakens the standard,

a nd therefore appears inconsistent with the statute.

2.4.2 Product Classes

In the framework document for this rulemaking

, DOE indicated that it was considering combining or restructuring ceiling fan light kit product classes, from the current three, to one or

tw o product classes

. Accordingly, DOE first examined the existing product classes for consistency with DOE’s criteria for establishing product classes. DOE’s criteria for defining products classes are set out in 42 U.S.C. 6295(q). In summary, products may be put in different product classes (1) if they consume a different kind of energy, or (2) if they have different capacities or other performance related features that necessitate a different efficiency standard, or (3) if they have a distinct consumer utili ty, or other factors that the Secretary deems appropriate.

DOE notes that all CFLKs use the same kind of energy (electricity) and do not require

different product classes to account for capacity (light output). The three original product classes

were def ined in terms of socket type, which DOE does not see as providing any unique utility or other performance

- related feature that would necessitate a different efficiency standard. DOE did find a unique utility in CFLKs that use externally ballasted or driven lamps, in that they allow consumers to replace the lamp, and potentially the ballast or driver, separately if one fails independently of the other . Additionally, because externally

- ballasted lamps may have different

cost

- efficiency relationships from inte rnally ballasted lamps, they might require a different efficiency standard

.

Accordingly, DOE is considering redefining CFLKs into the following two products

classes:

1. CFLKs with externally ballasted or driven lamps ( hereafter “Externally

Ballasted/Driven CFLKs”), and

2. All other CFLKs ( hereafter “All Other CFLKs”)

With respect to products currently on the market, the new product class structure

combine s the current product classes 1 and 3 into All Other CFLKs , which together represent

more than 99% of the current market

. Externally

- Ballasted/Driven LED CFLKs would have constituted an exception to this, in that they would currently be in product class 3, and under the new product class structure being considered, they would join pin

- based fluorescent CFLKs in the Externally

- Ballasted/Driven CFLKs product class. However, to DOE’s knowledge there are

2

- 8no externally

- driven (LED) lamps on the market and DOE is unaware of any plans to introduce such lamps.

DOE is seeking feedback on the proposed product classes and on the following related

issues. DOE requests comment on whether the ballasts that manufacturers install in pin

- based fluorescent lamps have sockets that are de signed for consumer replacement. DOE also requests

comment on whether a consumer would replace a ballast upon failure or the entire unit

.

In chapter 5 of this TSD, DOE develops baselines for the new product classes being considered in this analysis, to ensure that there is no decrease in th e minimum required efficiency of a covered product , as required under 42 U.S.C. 6295(o)(1) . In chapter s 8 and 10 of this TSD

, DOE quantifies the impact of the new product class structure on consumer s and on the national

economy.

Several comments were rec eived regarding the proposed restructuring of CFLK product

classes.

The CA IOUs supported consolidating CFLK product classes into a single product class, and alternatively proposed two product classes: (1) for CFLKs with lamps enclosed by a casing

and ( 2) for CFLKs with exposed lamps and open casings

. (CA IOUs, No. 12, at p p . 2

- 3) DOE understands that different fixture optical treatments, such as diffusers, reduce light output from

the fi xture, and that these treatments provide utility to consumers ( e.g. , glare reduction) ; however

, DOE also notes that utilities achieved by optics can also be achieved by lamp selection

. For example, covered lamps diffuse light in a similar fashion to fixture diffusers. Similarly, reflector lamps direct light in a way that can also be achieved by fixture optics. DOE believes,

therefore

, that dividing CFLKs into product classes according to the fixture optics would be

unnecessa rily confusing and would not achieve a clear utility distinction. Therefore, DOE is not considering developing product classes on that basis.

Westinghouse Electric (Westinghouse) proposed two product classes becaus e defining only one product class would eliminate lamps less efficacious than CFLs. (Westinghouse, No. 9 at p. 105). The product class that currently incorporates the least efficacious lamps is product class 3. When DOE reviews energy efficiency standards in a rulemaking, it reviews the standards

for all product classes. Preserving product class 3 would not exempt that product class from a

ch ange in standard, regardless of whether the standard is expressed as a maximum allowed wattage or an efficacy level. Moreover, DOE does not have the authority to define product

classes for the purpose of retaining less efficacious products on the market.

Progress stated that “ forcefu lly promoting CFLs to consumers ” (as a result of combining CFLK product class es ) would compromise dimming utility for consumers

, because CFLs have poor dimming performance

. (Progress, No

. 6, at p. 7) Westinghouse also expressed concern that standards at the CFL level affect consumer utility due to the limitations of CFL dimming, which might drive consumers away from ceiling fans and CFLKs and back to using air conditioning (instead of ceiling fans ) and conventional lighting fixtures . (Westinghouse, No. 9 at p. 84) DOE

notes that , according to manufacturer interviews, manufacturers anticipate that CFLKs with LED lighting will constitute about two

- thirds of their U.S. CFLK sales by 2018

. Given the anticipated

2

- 92019 compliance date for this rulemaking, i f such a large fraction of the market has converted to

LED technology by that time , the perfor mance of LED lighting on dimmers may be more important than the performance of CFLs on dimmers.

Currently about 15 percent of CFLK owners use dimmers with their CFLKs. 2 DOE is

aware that not all high efficiency lamps offer dimming performance comparable to that of

tradi tional lamps operated on conventional triac dimmers. However, DOE also notes that major lighting manufacturers currently market dimmable CFLs and LEDs

, and that dimmers designed specifically to control th o se products are on the market. DOE seeks data on th e dimming functionality of current generation CFL and LED lamps, and specifically on the performance of those lamps with dimmers designed for their control. DOE also seeks data on consumer

satisfaction with the dimming functionality of such systems. DOE re quests input from

manufacturers regarding whether they anticipate incorporated dimming functionality in the LED CFLK models they will offer in the next 5 years and

, if so, what fraction of LED CFLKs would include such functionality

.

Some stakeholders were concerned that restructuring product classes might force

consumers to use CFLs that may perform inadequately in other ways or be aesthetically objectionable. Westinghouse noted that consumers comment on the length of lamp warm

- up

per iods, especially for CFLs, because they do not turn on at full brightness. (Westinghouse, No. 9 at p p . 145

- 146) Westinghouse also noted that some consumers prefer the shape of A

- line bul bs to spiral CFLs. ALA and Hunter commented that consumers care about correlated color temperature, color rendering index , and color performance. (Westinghouse, No. 9 at p p . 145

- 146 ; ALA, No. 9 at p. 146 ; Hunter, No. 9 at p p . 146

- 147)

DOE acknowledges that some CFLs have noticeable lag times before emitting at full bright ness. However, DOE believes that some CFLs have satisfactory performance . Moreover, DOE believes that LEDs are not associated with long warm

- up periods and, as previously indicated, manufacture r s expect two

- thirds of their CFLK product offerings will be LE D by the expected compliance date of this rulemaking

. If so

, CFL CFLKs would constitute at most one

third of the market. Approximately 40 percent of consumers currently use CFLs in the CFLKs

installed in their homes. 2 Given that the fraction of CFLK consumers currently choo sing to use CFLs in their CFLKs exceeds the fraction of CFLKs expected to be offered with CFLs in the future, it does not appear that CFLK consumers will be forced to use CFLs if they would prefer

not to do so. DOE further notes that both CFLs and LEDs are available in A

- line shapes. DOE

therefore concludes that this rulemaking is unlikely to adversely contribute to increases in CFL performance

- related issues

.

Progress commented that CFLKs that have GU

- 24 base types, which currently belong to product class 3, should be combined with product class 2 because t he American National Standards Institute (ANSI) standard for GU

- 24 sockets restricts their use to higher efficiency lamps types

. (Progress, No 6, at p.5) Th e outcome of this action would be to group products with similar efficacies into a single product class. This approach effectively prevents more efficient products from being considered as alternative to less efficient products in energy conservation

stand ards rulemakings. DOE does not have the authority to separate products into product classes on this basis. The criteria for prescribing product classes are set forth in 42 U.S.C. 6295(q).

2

- 10In addition, the ALA suggested that DOE should “ define and classif y the GU

- 24 base as

for 120 volt ‘ energy

- efficient products only ’ similar to actions of the California Energy

Commission

. ” (ALA, No 59, at p. 27) DOE finds that such action is beyond the scope of this rulemaking.

The ALA agreed that it makes sense to re structure CFLK product classes, but argued for a design standard rather than an efficacy

- based performance standard , which “would unnecessarily burden manufacturers with testing costs associated with certifying compliance

, while a design standard can take advantage of current lamp legislation and eliminate the need for 190W limiting devices

. ” Specifically, the ALA proposed combining product classes 1 and 2

, while also creating 2 additional product classes : one for CFLKs “with a maximum of 3

candelabra base sockets or a maximum of 4 intermediate base sockets

, ” and another for all other CFLKs. According to the ALA, the former product class would not require a wattage limiter, while the latter would. (ALA, No 59, at p p . 26

- 27) DOE notes that creating a product class for CFLKs with a maximum of 3 candelabra based sockets is equivalent to setting a 180 watt limit on class 3 products. DOE is not authorized to set a standard at an arbitrary level. DOE must evaluate potential standard levels based on the criteria set out in 42 U.S.C. 6295(o).

2.4.3 Test Procedure

The Energy Independence and Security Act of 2007 (EISA) requires DOE to review test procedures for all covered products at least once every 7 years. In this review

, DOE must either amend the test procedures or pu blish notice in the Federal Register of the determination not to

amend the test procedure. (42 U.S.C. 6293(b)(1)(A)) DOE originally published the test procedures for CFLKs with medium screw base sockets and with sockets for pin

- based fluorescent lamps on December 8, 2006. 71 FR 71340. No test procedure was established for CFLK product class 3, because it is regulated through a design standard. For those products with test procedure final rules that were published before the enactment of EISA 2007, DOE has determined that a review will be required 7 years from the enactment date of EISA 2007. Therefore, DOE must amend its CFLK test procedures, or issue a determination not to amend, by December 19, 2014. In compliance with EISA, DOE is c urrently engaged in its first seven

- year review of CFLK test procedures.

Under this review, DOE is proposing to amend the CFLK test procedures, making efficacy (lumens per watt) the efficiency metric for all covered CFLKs , including for product

class 3

. The proposal is to use active mode lamp testing as the basis of CFLK efficacy testing

, where existing test methods support the testing of consumer replaceable lamps

. As part of these

amendments

, DOE is proposing to update the r eferenced lamp test procedure s to the current DOE lamp test procedures, where available, and to the current test procedures of the Illuminating Engineering Society, where they are not. The amendments would also add test procedure s for CFLKs that use light emitting diodes (LEDs) as the ir light source; these types include CFLKs that use consumer replaceable LED lamps and those with inte grated circuitry ( light sources, drivers, or intermediate circuitry ) that is not consumer replaceable. In cases in which it is technically infeasible to m easure lamp efficacy ( e.g., for CFLKs with inseparable solid

- state lighting), DOE proposes to measure the efficacy of the light kit (luminaire) as a whole

.

2

- 112.4.4 Standby Mode and Off

- Mode Energy Consumption

For test procedures of covered products that do not fully account for standby mode and off mode energy consumption , and that have standards adopted after July 1, 2010 , EISA directs DOE to amend its test procedures to account for standby mode and off mode energy consumption

. g (42 U.S.C. 6295(gg)(3)) DOE is a ddressing th o se requirements in the concurrent test procedure rulemakings for ceiling fans and CFLKs. DOE’s approach is briefly summarized

here.

Based on its review of products currently on the market, DOE concludes that CFLKs do not consume power in off

- mode. Therefore DOE is not planning to consider off

- mode power consumption in this rulemaking.

DOE’s research indicates that standby power is relevant only to combined ceiling fan and light kit systems operated by remote cont rol

. h The remote control receiver, which is almost always installed in the ceiling fan housing and used to receive signals for both the ceiling fan and the CFLK, is the component that constitutes the st andby power consumption in the ceiling fan and light kit system. DOE therefore proposes to account for standby power in the ceiling fan test procedures. DOE further notes that it would be confusing to consumers to combine standby power into a single metric with active mode power for CFLKs because the active mode metric reflects the efficacy of lamps. If standby mode were included into a single metric for CFLKs with remote controls, the CFLK would have a different efficacy than its lamps

.

2.5 MARKET AND TECHNOLOGY ASSESSMENT

In the initial stages of an energy conservation standards rulemaking, DOE gathers

information to develop an overall picture of the market for the covered products , including the nature and market characteristics of the products and the industry structure. This activity consists

of b oth quantitative and qualitative analyses, based primarily on publicly available information. The subjects addressed in the market and technology assessment for the preliminary analysis include the major manufacturers, product classes, retail market trends , shipments of covered products, regulatory and non

- regulatory programs, and technologies that could be used to improve the efficiency of CFLKs. This information serves as a resource throughout the rulemaking.

DOE consulted a broad array of sources

, on b oth CFLKs and the lamps used in CFLKs, to gather information for its market and technolog y assessments

. Sources included surveys of

pr oducts offered for sale on the I nternet, i a survey of products offered in

- store by the three top

g Standby mode is defined as the condition in which an energy

- using product is connected to a main power source and offers one or more of the following user

- oriented or protective functions: facilitating the activation or deactivation of other functions (including active mode) by rem ote switch (including remote control), internal sensor, or timer; or providing continuous functions, including information or status displays (including clocks) or sensor

based functions. Off mode is defined as the condition in which an energy

- using produc t is c onnected to a main power source, but is not providing any stan dby or active mode function.

h About16 percent of ceiling fans sold in 2013 included a remote controls, according to manufacturer interviews.

i The on

- line survey included 16,349 samples f rom four on

- line retailers.

2

- 12distributors (Home Depot, Lowe ’ s, and Walmart), j a survey of CFLK consumers, 2 publicly accessible product databases, manufacturer inte rviews, and literature reviews. The latter include

reviews of manufacturer catalogs, trade journals, and reports by governmental and non

governmental organizations.

2.5.1 Market Assessment

The results of the market survey are detailed in chapter 3 of this TSD. In the framework

d ocument, DOE sought comment s on the market for ceiling fans and in particular on product features, market shares, and trends. ALA presented market shares b y distribution channel, estimating that 82 percent of ceiling fans are purchased from home centers and mass merch ants, 13 percent from lighting stores and the I nternet, and 5 percent from electr ical distributors. (ALA, No. 39 at p p

. 23

- 24) DOE acknowledges and appreciates the mar ket information provided by

ALA. DOE has found similar data on sales trends and market shares by distribution channel, which are presented in chapter 3 of this TSD.

2.5.2 Technology Assessment

The technology assessment identifie s technology options that improve CFLK efficiency

. This assessment provides the technical background and structure on which DOE bases its screening and engineering analyses. To develop a list of technology options

, DOE reviewed all technology information g athered during the market assessment

, and consulted with technical

experts. DOE began identifying technology options by considering components that affect CFLK energy use: (1) lamps, (2) ballasts and drivers, and (3) lighting controls. Technology options that affect standby power use were eliminated for reasons described in sectio n 2.4.4

.

Lamps are the components that have the greatest impact on CFLK active mode power consumption. Light source technology is the primary factor that affect s lamp efficacy. Within light source type, there are many factors that affect lamp efficacy, including the characteristic s of power conditioning devices ( ballasts and drivers ) used to obtain the necessary circuit conditions to operate the light source. An estimated 99 percent of CFLKs currently on the market (CFLKs in the current product classes 1 and 3 ) use lamps that operate on line power. Such lamps incorporate the ballast or driver, where necessary, into the lamp. In such cases, the efficacy impacts of these components are included in lamp testing.

For this rulemaking, DOE is proposing not to include ballasts or drivers that are external

to consumer replaceable lamps as technology option s for CFLKs . Currently

, CFLKs with pin

based fluorescent lamps (p rimarily circline lamps) are the only CFLKs on the market that use such lamps. These CFLKs are estimated to constitute less than 1 percent of the market and are expected to be rapidly displaced by CFLKs with inseparable solid

- state lighting. The CFLK test procedure NOPR proposes to rate the efficacy of such a CFLK as the efficacy of its lamp (or lamps) tested on its reference ballast. CFLK standards and test procedures thus would not be based on the performance of the ballasts that actually operate the lamp s in the CFLKs. In the preliminary energy use analysis, DOE adjusts the performance of the lamp operating on the

j The comprehensive shelf surveys were conducted in 15 stores in the last half of 2012: 6 Home Depot stores, 7 Lowes stores, and 2 Walmart stores. The stores were located in four states: Hawaii, California, New Mexico, and

Massa chusetts.

2

- 13reference ballast to reflect its expected energy use when operated on ballasts typically used in

CFLKs. DOE requests comment on its approach.

Manual and automated lighting controls can reduce CFLK energy use by turning lights

off or reducing the light output when not needed. Based on DOE’s research, other than on

- off switches, the only controls currently sold with or for CFLKs are manual controls (dimming or

multi

- level) that can be operated by remote control or at the wall switch. The controls for the

CFLK are combined with those of the ceiling fan into a single device, and are often sold separately from the ceiling fan and CFLK

.

DOE is proposing not to include lighting controls as a technology option in this rulemaking for two reasons : t he energy savings from controls cannot be measured using the methods specified in the CFLK test procedure ; and DOE lacks data on the energy savings

obta ined from controls on residential lighting

— the primary use of CFLKs.

In this rulemaking, DOE is therefore considering more efficacious light source s as the only technology option to increase CFLK efficacy . With respect to current designs in which light sources are typically incorporated into consumer replaceable lamps, the technology options are therefore lamps of different efficacies. The efficacies of lamps designed for socket types currently used in CFLKs range from less than 10 lm/W to close to 100 l m/W. As mentioned previously, products are now beginning to enter the market in which the lighting is integral to ( i.e., not consumer separable from) the CFLK. As discussed in section 2.4.1 , for these products DOE is proposing to use luminaire photometry to measure the efficiency of CFLKs with integrated solid

- state lighting (SSL) circuitry . I n that case , the light source is the technology option DOE is addressing in this rulemaking. DOE notes that luminaire optical design also

affects luminaire lumen output ; however

, DOE does not plan to consider luminaire design a s a

t echnology option because the standard s u nder consideration for other products in the proposed All Other CFLKs product class are based on lamp efficacy

, and DOE believes that products tested using luminaire photometry would not be eliminated if luminaire design were not incorporated as a technolo gy option

.

DOE requests comment on the technology options considered in this rulemaking.

2.6 SCREENING ANALYSIS

After DOE identifies the technologies that improve the efficacy of lamps in CFLKs, DOE conducts the screening analysis. The purpose of the scree ning analysis is to determine which options to consider further and which options to screen out. DOE consults with industry, technical experts, and other interested parties in developing a list of technology options. DOE then applies the following set of s creening criteria to determine which options are unsuitable for further consideration in the rulemaking (10 CFR Part 430, subpart C, appendix A at 4(a)(4) and 5(b)):

• Technological Feasibility : DOE will consider technologies incorporated in commercially

av ailable products or in working prototypes to be technologically feasible.

2

- 14• Practicability to Manufacture, Install, and Service: If mass production of a technology
and reliable installation and servicing of the technology could be achieved on the scale

neces sary to serve the relevant market at the time the standard comes into effect, then
DOE will consider that technology practicable to manufacture, install, and service.

• Adverse Impacts on Product Utility or Product Availability: If DOE determines a
technolog y to have significant adverse impact on the utility of the product to significant
subgroups of consumers, or to result in the unavailability of any covered product type
with performance characteristics (including reliability), features, sizes, capacities, and
volumes that are substantially the same as products generally available in the United
States at the time, it will not further consider this technology.

• Adverse Impacts on Health or Safety: If DOE determines that a technology will have
significant adver se impacts on health or safety, it will not further consider this
technology.

Those technology options not screened out by the above four criteria are called “design options” and are considered as possible methods of improving efficacy in the engineering analysis.

In the framework document, DOE presented the general methodology for the screening analysis. Hunter expressed support for technological advances that improve efficiency of the CFLK only as they are mass market

- ready, noting that there is a sel ection of LED products, but there is insufficient historical warranty and usage data for them. (Hunter, No. 37 at p. 2 ; Hunter, No. 37 at p. 4)

One of the criteria that DOE uses in the screening analysis is practicability to manufacture, install, and service, which requires that mass production and reliable installation and servicing of the technology is achievable on a scale that can appropriatel y serve the market. Because DOE considered technology options that are found in commercially available lamps in its analysis, DOE believes it has satisfied this criterion.

In this preliminary analysis, DOE did not screen out any of the technology options . For a list of technology options considered, see section 2.5.2 . For further details on the screening analysis, see chapter 4 of this TSD.

2.7 ENGINEERING ANALYSIS

In the engineering analysis, DOE selects representative product classes to analyze. It then

selects baseline lamp s in CFLKs within those representative product classes and identifies more efficacious substitutes for the baseline lamps. DOE uses these more efficacious lamps to develop

CSLs.

2

- 15DOE derive s CSLs in the engineering analysis and consumer prices in the product price

determination. DOE estimates the consumer price of lamps packaged with CFLKs directly

because reverse

- engineering a lamp is impractic al as the lamps are not easily disassembled. By combining the results of the engineering analysis and the product price determination, DOE

derive s typical inputs for use in the LCC and NIA. Section 2.9 discusses the product price determination (see c hapter 7 of this TSD for further detail).

For this rulemaking, DOE is proposing a new product class structure for CFLKs. See

section 2.4.2 for further details on product classes. Thus, in this engineering analysis, which is described in further detail below, DOE selected baseline and substitute lamps that were appropriate for th e new product class structure under consideration.

2.7.1 Approach

The following is a summary of the steps taken in the engineering analysis:

• Step 1: Select Representative Product Classes

• Step 2: Select Baseline CFLK Lamps

• Step 3: Identify More Efficacious Subst itutes

• Step 4: Develop CSLs

A more detailed discussion of the methodology DOE followed to perform the engineering analysis can be found in chapter 5 of this TSD. The following discussion summarizes the general steps of the engineering analysis:

Represe ntative product classes : DOE first reviews CFLKs covered under the scope of this rulemaking and the associated product classes. When a product has multiple product classes, DOE selects certain classes as “representative” and concentrates its analytical eff ort on these classes. DOE selects representative product classes primarily because of their high market

volumes and/or distinct characteristics. For those product classes that are not analyzed, DOE extrapolates the CSLs from representative product classes.

Baseline lamps : For each representative product class , DOE select s a baseline lamp packaged with a CFLK as a reference point against which to measure changes resulting from energy conservation standards. Typically, a baseline model is the most common, least efficacious lamp in a CFLK sold in a given product class. For this preliminary analysis, DOE uses perf ormance data presented in manufacturer catalogs to determine lamp efficacy. DOE also

consider s other lamp characteristics in choosing the most appropriate baseline for each product

class , such as wattage, lumen output, and lifetime

.

More e fficacious s ub stitutes : DOE selects higher efficacy lamps as replacements for each of the baseline models considered. When selecting higher efficacy lamps, DOE considers only design options that meet the criteria outlined in the screening analysis (see section 2.6 or chapter 4 of this TSD). For the Externally

- Ballasted/Driven CFLKs product class, DOE pairs each representative lamp unit with an appropriate ballast because they are fluorescent lamps , which are a component of a system, and their performance is related to the ballast on which they

operate.

2

- 16Candidate standard levels : After identifying the more efficacious substitutes for each baseline lamp, DOE develops CSLs. DOE ba ses its analysis on three factors: (1) the design options associated with the specific lamps studied; (2) the ability of lamps across wattages to comply with the standard level of a given product class ; k and (3) the maximum technologically feasible (“max tech”) CSL. DOE then scales the CSLs of representative product classes to those classes not directly analyzed.

DOE received several comments on the general approach to the engineering analysis presented in the framework document. Regarding the efficacy metric, ALA remarked that the industry believes that luminous efficacy of the light source is the appropriate effi ciency metric

for CFLKs. ALA commented that t here is a n increase in cost and complexity in testing the efficacy of luminaires as opposed to the efficacy of light sources

, and further noted that photometric testing of CFLKs would be overly burdensome while the required lamp efficacy information can be obtained from the lamp manufacturer. (ALA, No. 39 at p p . 14

- 15 ; ALA, No. 9 at p p . 78

- 79) In a Joint Comment, ASAP, NCLC, NRDC, and NEEA agreed with using luminous efficacy in lm/W as the efficiency metric for a ll CFLKs, especially to close the loophole in which manufacturers use E17 and E12 base sockets to avoid having to meet a lumens

per watt standard. (ASAP, NCLC, NRDC, NEEA, No. 14 at p. 6)

CA IOUs , on the other hand, recommended a fixture

- based approach

, stating that the true light output from a CFLK depends on the fixture design. CA IOUs stated that a fixture

- based metric would account for fixture losses and encourage design that distributes light more usefully and efficiently, such as an integrated LED r ather than a fixture with reflector lamps. If th is approach cannot be adopted , CA IOU s recommended one product class with a lumens per watt efficacy metric on the basis of a technology

- bl ind cost

- effectiveness analysis . If th is alternate approach cannot be adopted , CA IOUs recommended two product classes with a separate lumens per watt standard : lamps enclosed by a casing and exposed lamps. (CA IOUs, No. 12 at p. 2)

ALA , however, remarked that decorative and functional attributes of CFLKs would be easier to

separate if the total efficacy of the fixture were not being considered and that t he bulbs control

the efficienc y of the CFLK . (ALA, No. 39 at p. 36)

DOE determined that luminous effi cacy of the lamps packaged with CFLKs is the most appropriate measure of the CFLK’s efficiency. Light output is the primary utility of the CFLK and is delivered by the lamps with which it is packaged. Further, lamp efficacy provides a

standard metric to as sess all CFLKs and is a commonly used measure of efficiency in the lighting industry. Therefore, in this analysis, DOE is putting forth standards for consideration that are based on lamp efficacy and are technology neutral. Hence, DOE is also proposing tha t luminous efficacy measured by lamp photometry be used for CFLKs with lamps that are separable from the CFLK. Luminaire photometry is proposed only in the case that lamps and associated components, such as ballasts or drivers, are not designed to be remov ed from the CFLK or CF fixture by a consumer . For further discussion of the metric, see section 2.4.1 , and

for further discussion of the proposed test procedure, s ee section 2.4.3

.

k CSLs span multiple lamps of different wattages. In selecting CSLs, DOE consider s whether these multiple lamps

can meet the standard levels.

2

- 17ALA commented that many decorative fans are chosen, sold, and designed for appearance rather than lumen output, which may be irrelevant to consu mer choice. ALA stated that the CFLK efficiency metric is not used by consumers to evaluate decorative products and

should not be used to evaluate decorative light kits . (ALA, No. 9 at p p . 118

- 119)

In this preliminary analysis, DOE is not considering differentiating between light kits that are decorative versus those that are not. DOE has determined that the efficacy metric should be applicable to all CFLKs.

Progress commented that the lumens per watt metric canno t be used for medium base

sockets because a consumer can use a wide variety of light sources for that base type. (Progress, No. 6 at p. 6)

As discussed in section 2.4.2 , in this preliminary analysis, DOE restructured CFLK product classes such that they are no longer based on socket type. Further, DOE notes that the efficacy metric is calculated based on the efficacy of the individual lamps that come packaged with the light kit. Additionally, the engineering analysis uses various design options to select CSLs, thus accounting for the variety of lamp efficacies available to consumers.

DOE requests comment on the overall methodology and results of th e CFLK engineering analysis.

2.7.2 Representative Product Classes

In rulemakings, if a covered product ha s multiple product classes, DOE identifie s and

select s certain product classes as “representative” product classes regarding which DOE conducts further analy sis

. DOE cho o se s these representative product classes primarily because of their high market volumes and/or distinct characteristics.

DOE identified two product classes for CFLKs: Externally

- Ballasted/Driven CFLKs and

All Other CFLKs. See section 2.4.2 for further details on product classes. For CFLKs, DOE selected the representative product classes as shown (in gray) in Table 2.7

. 1 . The lamps in the Externally

- Ballasted/Driven CFLKs product class offer a unique utility in their ability to allow the consumer to replace the lamp or ballast. Additionally, the efficacies o f externally

ballasted /driven lamps do not include losses from the ballast. Thus, lamps in the Externally

Ballasted/Driven CFLKs product class have a different cost

- efficiency relationship than lamps in the All Other CFLKs product class. The All Other CFL Ks product class constitutes a major market share of CFLKs sold. DOE did not receive any comments regarding representative product classes. See chapter 5 of this TSD for additional details. DOE requests comment on the representative product classes for CFL Ks.

2

- 18Table 2.7

. 1 CFLK Representative Product Classes

Product Class

Externally

- Ballasted/Driven CFLKs

All Other CFLKs

2.7.3 Baseline Lamps

Once DOE identified representative product classes for analysis, it selected baseline lamps in CFLKs t o analyze in each class. Typically, a baseline lamp is the most common, least efficacious lamp packaged with a CFLK that meets existing energy conservation standards. Specific lamp characteristics are used to characterize the most common lamps packaged with CFLKs purchased by consumers today ( e.g. , wattage and light output)

. In the framework document, DOE presented the general methodology for identifying baseline lamps. DOE did not receive any comments regarding the method ology for selecting baseline lamps.

In the preliminary analysis, DOE selected lamps representative of the most common, least efficacious lamps packaged with CFLKs in these product classes that just meet existing

CFLK standards. The common features were determined based on characteristics such as wattage, lumen output, lifetime, bulb shape, color rendering index ( CRI ) , and correlated color temperature ( CCT ) . Based on its review of product catalogs, DOE determined that the baseline lamp in CFLKs for the Externally

- Ballasted/Driven CFLKs product class is a 22 watt ( W ) T9

c ircular fluorescent with an initial lamp lumen output of 950 lumens, and a lifetime of 12,000

hours (hr) . DOE determined that the baseline lamp in CFLKs for the All Other CFLKs produ ct class is a 14 W spiral CFL with an initial lamp lumen output of 730 lumens, and a lifetime of 10,000 h r

.

DOE determined that the CF LKs in the Externally

- Ballasted/Driven CFLKs product class

must meet the current st andards for CFLKs with pin

- base sock ets for fluorescent lamps. These

standards are based on the system efficacy of the lamp

- and

- ballast system packaged with the

CFLK

. Therefore, DOE paired the baseline lamp selected for the Externally

- Ballasted/Driven

CFLKs product class with a ballast that resulted in a system efficacy that just meets the existing system efficacy standard for CFLKs with pin

- base sockets. DOE determined that current standards for CFLKs with medium screw bases are applicable to the CFLKs in the All Other CFLKs product class. T herefore, DOE ensured the baseline lamp just meets the existing lamp efficacy standard for CFLKs with medium screw bases. See chapter 5 of this TSD for further

detail.

The characteristics of the baseline lamps that DOE is considering in this preliminary analysis are summarized in Table 2.7

. 2 and Table 2.7

. 3

. See chapter 5 of thi s TSD for additional baseline specifications. DOE requests comment on the baseline units selected for both CFLK representative product classes.

2

- 19Table 2.7

. 2 Externally

- Ballasted/Driven CFLKs Product Class Baseline Lamp

- and

Ballast System

Bulb Shape Base Type Lamp

Diameter Nominal Wattage Rated Wattage

l System Input

Power Lamp

Initial Light Output System

Initial Light Output Lamp

Rated Efficacy

m System Efficacy Lamp

Life tim

e

W W W l m lm l m/W lm/W h r Circular G10q T9 22 22.5 17.0 950 855 42.2 50.3 12,000

Table 2.7

. 3 All Other CFLKs Product Class Baseline Lamp

Bulb Shape Base Type Lamp Type Lamp Wattage Initial Light Output Efficacy Lamp

Lifetime

W l m lm/W h r Spiral E26 CFL 14 730 52.1 10,000

2.7.4 More Efficacious Substitutes

DOE select ed a series of more efficacious replacements for the baseline lamps considered within each representative product class. In the framework document, DOE presented the general methodology for identifying more efficacious substitutes. DOE received several comments regarding the selection of more efficacious substitutes.

Regarding lamp characteristics of more efficacious subs titutes, Westinghouse expressed

concern that standards at the CFL level affect consumer utility due to the limitations of CFL dimming , which m ight drive consumers away from ceiling fans and CFLKs and cause consumers

to revert back to HVAC and conventional light fixtures . (Westinghouse, No. 9 at p. 84) Westinghouse noted that consumers comment on lamp warm

- up periods, especially for CFLs

, noting that they do no t turn on at full brightness and have limited dimmability. (Westinghouse, No. 9 at p p . 145

- 146 )

DOE notes that the baseline lamp for the All Other CFLKs product class is a CFL , which may have limited dimmability . However, some of the more efficacious substitutes can be successfully dimmed. Further, for the Externally

- Ballasted/Driven CFLKs product cl ass, the more efficacious fixture replacement substitute option includes an externally

- ballasted CFL that

has a 4

- pin base, which is compatible with dimmable ballasts. See section 2.4.2 for further discussion on dimming.

Westinghouse further noted that b ulb appearance matters, with some consumers preferring the shape of A

- line bulbs to spiral CFLs , and ALA and Hunter commented that

consumers care about CCT, CRI, and color performance. (Westinghouse, No. 9 at p p . 145

- 146, ALA, No. 9 at p. 146, Hunter, No. 9 at p p . 146

- 147) In selecting more efficacious substitutes, DOE ensured that the characteristics of the baseline lamp were maintained, taking lumen output,

bulb shape, CCT, and CRI into consideration.

l ANSI rated wattage

m The rated efficacy is the initial lumen output published in manufacturer catalogs divided by the ANSI rated wattage. For lamp types that do not have a defined ANSI rated wattage, DOE utilized the lamp’s nominal wattage to calculate rated efficacy.

2

- 20Fanimation

, Inc. (Fanimation) noted that consumers depend on CFLKs for room lighting

and i f CFLK lighting is insufficient, consumers will place additional light fixtures in their rooms

. (Fanimation, No. 30 at p. 6) DOE selected more efficacious substitutes such that the lumen output of the baseline lamp was maintained within 10 percent. Th us, DOE is able to ensure that lamps meeting higher efficacy levels are able to maintain light output close to the baseline lamps

. Because the baseline lumen output is maintained for the more efficacious substitutes, consumers should not need to place additional light fixtures in their rooms since there is not a noticeable difference in light output.

W en Zhang commented that LED technology is advancing, and soon there will be LED replacements for small socket high wattage lamps that are currently constrained to halogens. (Zhang, No. 40 at p. 2) DOE considered all lamps that are currently available on the market as potential substi tutions.

In this preliminary analysis, for each representative product class, DOE considered more efficacious lamps under two different substitut ion scenarios: (1) a lamp replacement scenario and (2) a light kit fixture replacement scenario. In the lamp replacement scenario, DOE assumed that manufacturers would maintain the original fixture design, including the number of sockets, and only replace the lamp. Thus, the base types of the more efficacious substitutes were selected to

be the same as that of th e baseline lamp. In the light kit fixture replacement scenario, DOE accounted for the possibility that manufacturers may change fixture designs. Thus, the base types of the more efficacious substitutes were not required to be the same as that of the baseli ne lamp and the number of sockets could be changed. For example, for the All Other CFLKs product class, DOE selected a baseline lamp fixture with two medium base sockets and considered replacement fixtures with between one and four sockets and non

- medium b ase types. DOE requests comment on the likelihood of CFLK manufacturers selecting each substitution scenario and information on any alternative scenarios that manufacturers may choose.

In selecting more efficacious substitutes, DOE considered only techno logies that met all

four criteria in the screening analysis. DOE utilized a database of commercially available lamps and identified substitute lamps that resulted in energy savings

. n DOE also ensured that substitute lamps had performance characteristics si milar to the baseline, when possible. For the Externally

Ballasted/Driven CFLKs product class, t hese selections were made such that potential

substitutions maintained system lumen o utput within 10 percent of the baseline system lumen

output (for the lamp r eplacement scenario) and within 10 percent of the baseline fixture system lumen output (for the light kit fixture replacement scenario). For the All Other CFLKs product class, t hese selections were made such that potential substitutions maintained light o u tput within

10 percent of the baseline lamp l umen output (for the lamp replacement scenario) and within 10 percent of the baseline fixture lumen output (for the light kit fixture replacement scenario). See chapter 5 of this TSD for additional details. DOE requests comment on the criteria used in selecting more efficacious substitute lamps, as well as the characteristics of the lamps selected. DOE particularly requests comment on the lifetimes of the baseline and substitute lamps.

n DOE considers substitutions that both save energy and do not save energy in the NIA.

2

- 21To develop representative lamp

- and

- ballast system pairings for the Externally

Ballasted/Driven CFLKs product class, DOE used the most common fluorescent lamp ballasts on the market . Specifically, DOE chose to pair electronic ballasts with the representative lamp unit s selected in this rulemaking to represent the lamp

- and

- ballast combinations present in the market.

For these lamp

- and

- ballast systems, in the lamp replacement scenario, DOE selected a ballast that can operate both the T9 circular baseline lamp and highe r efficacy lamps, achieve energy savings, and maintain system lumen output within 10 percent of the baseline system lumen output. In the fixture replacement scenario, DOE allowed for a different ballast to be paired with the representative lamp unit than t he one paired with the baseline lamp. DOE paired its representative lamp unit with an electronic ballast that achieved energy savings and kept the system lumen output within 10 percent of the baseline system lumen output. DOE requests comment on the lamp

- a nd

- ballast systems selected for the Externally

- Ballasted/Driven CFLKs product class. In particular, DOE requests comment on the selection of electronic ballasts for the lamp

- and

- ballast systems. DOE also requests comment on whether ballasts for externally

ballasted fluorescent lamps or CFLs are replaceable by the consumer.

As noted previously, the existing standards for CFLKs in the Externally

- Ballasted/Driven

CFLKs product class is based on the system efficacy of the lamp

- and

- ballast system packaged

with the CFLK. Thus, DOE selected lamp

- and

- ballast pairings such that the system efficacy is greater than or equal to current standards. Therefore, the representative lamp unit at CSL 1 has a lamp efficacy of 48.4 lm/W and a system efficacy of 57.9 lm/W, which is greater than the existing system efficacy standard at 50 lm/W. However, because this analysis is considering a lamp efficacy metric for all CFLKs, the CSL is based on the lamp efficacy of the more efficacious substitute selected. See chapter 5 of this TSD for further detail.

2.7.5 Candidate Standard Levels

After identif ying more efficacious substitutes for each of the baseline lamps, DOE develop ed CSL s based on the consideration of several factors

, including: (1) the design options associated with the specif ic lamps being studied; (2) the ability of lamps across wattages to comply with the standard level of a given product class; o and (3) the max tech level. In the framework document, DOE presented the general methodology for selecting CSLs. DOE

received one comment related to CSLs.

Fanimation commented that requiring ENERGY STAR products “dilutes” the ENERGY

STAR program. (Fanimation, No. 9 at p. 85) When amending standards, DOE is directed to ensure that an adopted standard achieves the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Accordingly, in this rulemaking, DOE has conducted an engineering analysis based on all commercially available products, regardless of whether they meet E NERGY S TAR requirements, to identify the efficiency levels that are technologically feasible and assessed the economic impacts of each

level under consideration. The CSLs under consideration do not reference ENERGY STAR program requirements.

o CSLs span multiple lamps of different wattages. In selecting CSLs, DOE considered whether these multiple lamps

can meet the CS Ls.

2

- 22For t his preliminary analysis, DOE analyzed CSLs for each of the representative product classes. As mentioned, for each representative product class, DOE considered two scenarios: a lamp replacement scenario and a fixture replacement scenario. DOE selected CSLs that could be met by the more efficacious substitutes identified in the lamp replacement scenario. DOE also identified more efficacious fixture substitutes for the fixture replacement scenario that had efficacies equal to or greater than the efficacies of the corresponding CSL based on the lamp replacement scenario. DOE used commercially available lamps and their associated efficacies to determine the design options required to meet each CSL. For the Externally

- Ballasted/Driven

CFLKs product class, DOE use d the catalog lumens and the ANSI rated wattage of the lamp, or catalog wattage if the ANSI rated wattage was not available, to calculate efficacy. For the All Other CFLKs product class, DOE used the catalog lumens and the catalog wattage of the lamp to

ca lculate efficacy. See chapter 5 of this TSD for further detail.

The CSLs and characteristics of the representative lamp units for CFLKs are summarized in the tables below. Please note that for each representative product class, the lamp replacement scenario and fixture replacement scenario correspond to the same set of CSLs, which are based on the representative lamp units selected for the lamp replacement scenario, as noted above. The paragraphs following each table discuss the CSLs in more detail.

2

- 23Table 2.7

. 4 Externally

- Ballasted/Driven CFLKs Product Class Design Options: Lamp Replacement Scenario

Candidate

Standard

Level Lamp Type Lamp

Diameter Nominal Wattage Rated Wattage System Input

Power Lamp

Initial Light Output System

Initial Light Output Lamp

Rated Efficacy System Efficacy Lamp

Life

W W W Lm lm lm/W lm/W hr

Baseline Fluorescent T9 22 22.5 17.0 950 855 42.2 50.3 12,000

CSL 1 F luorescent T9 20 19 14.3 920 828 48.4 57.9 12,000

For the Externally

- Ballasted/Driven CFLKs representative product class, one CSL is being considered. For the lamp replacement scenario, t he baseline represents a circular lamp

- and

- ballast system with a system efficacy near the current standard level. CSL 1 represents a n improved efficacy lamp that is a reduced wattage lamp.

Table 2.7

. 5 Externally

- Ballasted/Driven CFLKs Product Class Design Options: Light Kit Fixt ure Replacement Scenario

Candidate

Standard

Level Lamp Type Lamp

Diameter Fixture

Sockets Lamp Wattage Fixture Wattage Fixture System Input

Power Lamp

Initial Light Output Fixture System

Initial Light Output Lamp

Rated Efficacy System Efficacy Lamp

Life

W W W lm lm lm/W lm/W hr

Baseline Fluorescent T9 1 22 22.5 17.0 950 855 42.2 50.3 12,000

CSL 1 CFL 1 13 13 16.0 900 900 69.2 56.3 17,000

For the fixture replacement scenario, t he baseline represents a circular lamp

- and

- ballast system with one socket and a system efficacy near the current standard level. CSL 1 can be achieved with a one socket fixture with an improved efficacy lamp

.

2

- 24Table 2.7

. 6 All Other CFLKs Product Class Design Options: Lamp Replacement

Scenario

Candidate Standard

Level Lamp Type Wattage Initial Light Output Efficacy Lamp Life

W lm lm/W hr

Baseline CFL 14 730 52.1 10,000

CSL 1 CFL 13 800 61.5 12,000

CSL 2 CFL 11 730 66.4 10,000

CSL 3 LED 10 700 70.0 50,000

CSL 4 LED 9 680 75.6 50,000

CSL 5 LED 8 680 85.0 50,000

For the lamp replacement scenario in the All Other CFLKs representative product class, five CSLs are being considered. The baseline represents a lamp with an efficacy near the current standard level. CSL 1 represents an improved efficacy lamp. CSL 2 repres ents a more improved efficacy lamp. CSL 3 represents an advanced efficacy lamp. CSL 4 represents a more advanced efficacy lamp. CSL 5 represents the maximum technologically feasible level.

Table 2.7

. 7 All O ther CFLKs Product Class Design Options: Light Kit Fixture Replacement Scenario

Candidate

Standard

Level Lamp Type Fixture

Sockets Lamp Wattage Fixture Wattage Lamp

Initial Light Output Fixture

Initial Light Output Efficacy Lamp

Life

W W lm lm lm/W hr

Baseline CFL 2 14 28 730 1,460 52.1 10,000

CSL 1 CFL 1 23 23 1,500 1,500 65.2 10,000

CSL 2 CFL 3 7 21 450 1,350 64.3 12,000

CSL 3 LED 4 5 20 340 1,360 68.0 50,000

CSL 4 LED 1 19 19 1,600 1,600 84.2 50,000

CSL 5 LED 3 6 18 500 1,500 83.3 50,000

For the fixture replacement scenario in the All Other CFLKs representative product class, the baseline represents a two

- socket fixture with lamps that have an efficacy near the current

standard level. CSL 1 can be achieved with a one

- socket fixture with an improved efficacy lamp.

CSL 2 can be achieved with a three

- socket fixture with more improved efficacy lamps. CSL 3

can be achieved with a four

- socket fixture with advanced efficacy lamps. CSL 4 can be achieved

with a one

- socket fixture with more advanced efficacy lamps. CSL 5 can be achieved with a

three

- socket fixture with lamps achieving the maximum technologically feasible level.

DOE developed equations based on the efficacies of lamps with similar characteristics across a range of wattages. Because t he equations account for variation in efficacy due to

wattage , they can account for market shifts to new lamp wattages. For each representative lamp unit in the lamp replacement scenario, DOE calculated the numerator of the equation. DOE then

2

- 25evaluated the equation against lamps with the same design options as the representative lamp unit for each CSL and made slight adjustments to capture the efficacy of lamps with those design options across a range of wattages. See chapter 5 of this TSD for further detai l. Table 2.7

. 8 summarizes the efficacy requirements at each CSL for CFLK lamps. DOE requests comment on the CSLs under consideration, including the max tech level, for CFLKs. In particular, DOE

requests com ment on the equations used to define the efficacy requirements at each CSL.

Table 2.7

. 8 Summary of CSLs for CFLK Representative Product Classes

Representative Product Class Candidate Standard

Level Efficacy

lm/W
Externally

- Ballasted/Driven CFLKs CSL 1 62/(1+9*((W+12)

- 1 ))

All Other CFLKs CSL 1 73/(1+5*((W+10)

- 1 ))

CSL 2 81/(1+5*((W+10)

- 1 ))

CSL 3 87/(1+5*((W+10)

- 1 ))

CSL 4 94/(1+5*((W+10)

- 1 ))

CSL 5 108/(1+5*((W+10)

- 1 )) W = lamp wattage

2.7.6 Scaling to Other Product Classes

DOE identified and selected certain product classes as representative and analyzed these product classes directly. DOE chose these representative product classes due to high market

volume and /or distinct characteristics

. In general, CSLs for product classes that were not analyzed (“non

- representative product classes”) are then determined by scaling from the CSLs of the representative product classes. However, DOE chose to analyze all product classes as representative. Thus, no scaling was required.

2.8 ENERGY USE ANALYSIS

The purpose of the energy use analysis is to estimate the annual energy us e of the baseline and higher efficacy lamps considered in this rulemaking

. DOE estimates the energy consumption of CFLKs based on the ir rated powe r ( in watts) and their annual operating hours. This analysis, which is meant to represent typical energy consumption in the fi eld, is an input to

both the LCC and PBP analyses (described in chapter 8 of this TSD) and the NIA (described in chapter 10 of thi s TSD)

.

In the framework document, DOE presented its proposed methodology for determining energy consumption of CFLKs

. T o estimate a distribution of operating hours for CFLKs in the residential and commercial sectors, DOE stated that it would consult various sources, including DOE’s Residential Lighting End

- Use Consumption Study (RLEUCS ) 3 and the 2010 U.S. Lighting Market Characterization (LMC)

, 4 the Energy Information Administration ( EIA ) ’s 200 9 Residential Energy Consumption Survey (RECS)

, 5 and the 2003 Commercial Buildings Ene rgy Consumption Survey (CBECS)

. 6 In this preliminary analys is, DOE is using operating hour usage

data from the RLEUCS because , unlike other sources, RLEUCS provides ceiling fixture operating hours by room type. Combining this with survey data for the rooms in which ceiling fans are located allows DOE to develop a robust estimate of CFLK operating hours

. As discussed

2

- 26in chapter 6 of this TSD, the weighted average CFLK usage was estimated to be 1.4 hours per day in the residential sector, and 10.6 ho urs per day in the commercial sector

.

2.9 PRODUCT PRICE DETERMINATION

Because the efficiency of a CFLK is based on the efficacy of the lamps it is packaged with, DOE developed a product price determination for the lamp component of the CFLK. Typically, DOE de velops manufacturer selling prices (MSPs) for covered products and applies markups to create consumer prices to use as inputs to the LCC analysis and NIA. Because lamps

are difficult to reverse

- engineer (i.e., not easily disassembled), DOE directly derived consumer prices for the lamps in this rulemaking. DOE estimates consumer prices for lamps by establishing premiums applied to CFLK manufacturer suggested prices. In the framework document, DOE summarized the general methodology for developing consumer pri ces. DOE received several comments on the price methodology presented in the framework document.

Westinghouse commented that changing the lamp type might add cost, especially if socket types must be changed. (Westinghouse, No. 9 at p. 118) As discussed i n section 2.7.4

, DOE included two substitution scenarios in the engineering analysis: (1) a lamp replacement scenario, in which a different lamp ty pe with the same base as the baseline lamp can be selected

and (2) a light kit fixture replacement scenario, in which the socket type as well as the number of fixture sockets may change. In the lamp replacement scenario, because only the lamp type changes, DOE estimated the consumer prices of the lamp. In the fixture replacement scenario, because the lamp type as well as the type and number of fixture sockets could change, DOE

estimated consumer prices for the lamp and also included the incremental cost due to changes to the socket configuration.

Progress commented that costs associated with decorative features and functional features will be able to be separated and that aesthetics are not directly related to performance. (Progress, No. 6 at p. 8) Progre ss also commented that the “bulb included” requirement provides a net cost increase to consumers because CFLK manufacturers are also consumers, so consumers of a

CFLK must pay a markup to the ceiling fan manufacturers that purchased the lamp on their

behal f . (Progress, No. 6 at p p . 5

- 6 ; Progress, No. 6 at p. 9)

As noted, DOE estimated consumer prices based on the lamp packaged with the CFLK, which constitutes the primary functional feature of the CFLK. In its assessment, DOE determined the price a consume r would pay for a lamp that is packaged with a CFLK rather than a lamp sold alone. To do so, DOE determined the consumer price of the CFLK and, based on information received in manufacturer interviews, applied the percentage of the CFLK consumer price attributable to the lamp.

DOE also received comments regarding the appropriate distribution channels for CFLKs. Hunter suggested grouping lighting showrooms and electrical distributors into one distribution

channel

, and defining home improvement retailer s as a second distribution channel. (Hunter, No. 9 at p p . 121

- 122) Aggregated feedback from manufacturer interviews indicated that there are three distinct channels: electrical distributors and specialty distributors, home centers including

2

- 27do

- it

- yourself (DIY) stores, and lighting showrooms. DOE included internet retailers under the electrical/specialty distribution channel.

ALA commented that individual company markups are confidential and referred DOE to the information gathered in the individual manu facturer interviews. (ALA, No. 39 at p. 38)

DOE based its product price determination on publicly available pricing data and aggregated information received in manufacturer interviews. In its review of publicly available prices, DOE observed a range of c onsumer prices for a lamp, depending on the distribution channel through which it is purchased. DOE started with a consistent set of aggregated

manufacturer

- suggested distributor net prices for ceiling fans sold with light kits and CFLKs sold alone. Using consumer prices for the ceiling fans sold with light kits and CFLKs sold alone determined for each distribution channel, DOE calculated the average premium applied to the distributor net prices. Using these premiums, DOE developed three different consumer prices as representative of a range of publicly available prices: low price, based on the electrical/specialty channel; medium price, based on the home center channel; and high price, based on the lighting

showroom channel.

DOE then developed consumer pr ices for ceiling fans sold with light kits and CFLKs sold

alone

, weighted by distribution channel. Using manufacturer feedback from interviews, DOE determined an aggregated percentage of shipments that go through each of the channels: electrical/specialty channel at 12 percent, home center channel at 80 percent, and lighting showroom channel at 8 percent. DOE requests comment on the values of the percentages of shipments that go through each of these distribution channels. DOE then applied these

percentages respectively to the low price determined for electrical/specialty channels, to the medium price determined for home center stores, and to the high price determined for lighting showrooms. Using the sum of these weighted prices, DOE obtained the consumer p rices for ceiling fans sold with light kits and CFLKs sold alone. Based on manufacturer feedback, DOE determined that a basic light kit fixture comprises 20 percent of the consumer price of a ceiling

fan sold with a light kit. DOE applied this percentage t o the consumer price of the ceiling fan sold with the light kit to obtain the consumer price for the CFLK. DOE welcomes comment on

this determination of the consumer price percentage of a light kit packaged with a ceiling fan

.

Based on manufacturer feed back, DOE determined that the cost of a CFL or LED in a CFLK comprised 15 percent of the CFLK consumer price. DOE applied this percentage to the

CFLK consumer price to obtain the consumer price of the lamp packaged with the CFLK. DOE

welcomes comment on th is determination of the consumer price percentage of a lamp packaged

with a CFLK.

Because DOE ensured that all baseline lamps were found in CFLKs in the engineering analysis, the baseline lamp consumer prices were developed as detailed above. However, i n some cases the representative lamp units at the CSLs under consideration were not sold in CFLKs or the CFLKs in which they were sold did not have available distributor net pricing information. In these cases, DOE developed a ratio relating the consumer p rice of the baseline lamp packaged with the CFLK to the lamp manufacturer suggested price (i.e., “blue

- book” value) of the representative lamp unit at the CSL. DOE then applied this ratio to the blue

- book value of the

2

- 28representative lamp unit to obtain its consumer price if it were packaged with a CFLK. Where

blue

- book prices were not available for representative lamp units, DOE extrapolated prices by using the blue

- book prices of equivalent lamps from an alternative manufacturer or by developing ratios bas ed on lamps characteristics such as technology, wattage, and efficacy.

As mentioned, DOE also included the incremental cost due to changes in socket configuration when applicable. Based on manufacturer feedback, DOE estimated the cost of

different socke t types to the manufacturer and then applied the appropriate manufacturer and distributor markups to obtain the consumer price of the socket. See chapter 7 of this TSD for

further detail.

Once DOE calculated consumer prices for lamps packaged with CFLK s, DOE added sales tax and, if appropriate, installation costs to derive the total, installed consumer cost. The

consumer prices derived for lamps packaged with CFLKs were used in the LCC analysis and NIA. See chapter 7 of this TSD for further details on t he product price determination. DOE invites comment on its methodology and results for estimating consumer prices for lamps packaged with CFLKs. DOE also requests comment on its assumption that the prices of the different electronic ballasts presented in t he fixture replacement scenario are equal to each other for the CFLKs with Externally

- Ballasted or Driven Lamps.

2.10 LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

The effects of amended energy conservation standards on consu mers usually include a change in operating cost (usually decreased electricity expenses) and a change in purchase price (usually increased). The LCC of a product is the cost it incurs over its lifetime, taking into account both purchase price and operating expenses. Th e PBP represents the time it takes for the

consumer to recover the additional installed cost of a more efficacious products through annual operating

- cost savings. In the framework document, DOE presented its approach to the LCC analysis. DOE analyzes the n et effect on c onsu mers by calculating the LCC and PBP using the engineering performance data, the product price determination, and the energy

- use analysis. Inputs to the LCC calculation include the installed cost to the consu mer, operating expenses, the

li fetime of the product , and a discount rate. Inputs to the PBP calculation include the installed

cost to the consu mer and annual operating costs.

Recognizing that several inputs to determining consumer LCC and PBP are either variable or uncertain, DOE uses Monte Carlo simulation and probability distributions to model both the uncertainty and variability in inputs. DOE uses Microsoft Excel combined with Crystal Ball (a commercially available program) to develop LCC and PBP spreadsheet models that incorpo rate both Monte Carlo simulation and probability distributions. Each Monte Carlo simulation consists of 10,000 LCC and PBP calculations. The model performs each calculation using input values that are either sampled from probability distributions and build ing samples or characterized with single point values.

DOE accounted for variability in CFLK operating hours by developing a sample of individual households (in the residential sector) and businesses (in the commercial sector) where CFLKs are installed, using RECS and CBECS

, respectively, as discussed in section 2.8

.

2

- 29DOE also accounted for variability in the CFLK lifetime s by assigning a lifetime

distribution that is tied to the ceiling fan lifetime p to which the CFLK is attached. To estimate the ceiling fan lifetime distribution, DOE combined the data on ceiling fan age provided by ALA with data from an additional study that surveyed c eiling fan owners 2

. If originally packaged lamps fail before the end of the CFLK lifetime, DOE assumed that consumers replace those lamps with lamp s of the same socket type. The selection of a lamp replacement is determined by

a consumer

- choice model that is sensitive to b oth first cost and replacement cost

. The model estimates the likelihood of a consumer choosing from a set of lamp replacement options that have the same base type and similar lumen output as the lamp being replaced. For additional

detail s regarding the con sumer

- choice model, see chapter 9 of this TSD.

To capture the uncertainty of electricity price trends during the forecast period, DOE used three separate projections from the Energy Information Administration’s (EIA) Annual Energy

Outlook 2013 ( AEO 2013 ) : reference, low economic growth, and high economic growth. The high and low growth cases show the projected effects of alternative economic growth assumptions on energy markets.

Progress (No 6, p. 10) stated that DO E should assess whether the CFLs pac kaged with

CFLKs are in fact being installed and used after CFLK purchase and should consider the implications for lamp disposal if they are not

. According to a survey of 3,240 CFLK owners,

about 40 percent use CFLs in their CFLKs. 2 That CFL usage rate is higher than the sh are of

CFLKs with CFLs sold in 2013 (34 percent , according to manufacturer interviews )

. DOE

therefore assumes that consumers generally use the CFLs packaged with CFLKs.

2.11 SHIPMENTS ANALYSIS

DOE uses projections of product shipments to calculate the national impacts of standards on energy use, NPV, and future manufacturer cash flows. Details of the shipments analysis are provided in chapter 9 of this TSD . T he approach is summarized here.

Future CFLK shipments are estimated by projecting historical CFLK shipments data throughout the analysis period. DOE modeled three market segments that account for all CFLK shipments: (1) replacements of reti red CFLKs; (2) installation in new construction; and (3) increased penetration of CFLKs into existing buildings. In practice, DOE ’ s model for CFLK shipments uses historical data for low

- volume ceiling fans and assumes that 88 percent of low

volume ceiling fans are shipped with CFLKs.

DOE adopted a co nsumer choice

- based model to estimate market shares of product

classes and CSLs based on economic incentives, similar to the approach taken in the preliminary analysis for the rulemaking on general service fluorescent lamps and incandescent reflector lamps . In the case of CFLKs, efficacy levels correspond to lamp efficacies and CFLK manufacturers purchase the lamps that are packaged with the CFLK s . DOE assumed that CFLK manufacturers are primarily sensitive to the first cost of lamps packaged with the CFLK.

p The lifetime of the ceiling fan , rather than that of the CFLK, is used because the fan, having moving parts, is likely

to h ave a shorter life, and the available data suggest that when fans cease to function, their light kit is also retired.

2

- 30The options availa ble to the consumer also depend on the CSL under consideration. In the absence of an amended standard ( “ the no

- standard case ” ) all CFLK options are available. In each standards case only those CFLK options at or above the CSL are allow ed. In this way, the consumer choice module assigns market shares to the two product classes and efficiency levels

based on historical obse rvations of consumer behavior. The model accounts for other observed deviations from purely price and cost

- driven beh avior using an acceptance factor. By using a

consumer

- choice

- based model in its shipments analysis and national impacts modeling, DOE ha s

account ed for voluntary conversions to more efficient technologies that result from economic

incentives.

DOE’s anal ysis of the current CFLK market estimates that less than 1 percent of products utilize LED technology. However, information from manufacturer interviews suggests rapid penetration of LED technology into the CFLK market within the next 5 years. To account f or this expected transition to LED technology, DOE modeled LED incursion into the CFLK market using results from the report titled Energy Savings Potential of Solid

- State Lighting in General Illumination Applications

. 7 DOE assumed that LED incursion would occur in both CFLK product classes.

DOE uses a price elasticity model to consider the effect that standards may have on shipments. The model estimates the reduction in shipments in response to a price increase

attributable to an amended standard for CFLKs. Because most CFLKs are sold packaged with a ceiling fan

, consumer price sensitivity is generally in response to the price of the combined package

. Therefore, an increase in the price of ceili ng fans as a result of a ceiling fan standard would also decrease shipments of the CFLKs. To address this, DOE assumed a ceiling fan standard for its reference case CFLK analysis to allow for analyzing the shipments impact for CFLKs . To

determine the maxim um potential impact of this assumption, DOE also conducted a sensitivity analysis that assumes no ceiling fan standard. As summarized in the executive summary and in the shipments analysis (chapter 9) of this TSD, DOE projects that a n assumed fa n standard would reduce CFLK shipments by about 3% compare d to CFLK standard conducted in the absence of a ceiling fan

standard

.

Because of the complexity of the consumer choice based shipments analysis, the shipments model was executed as a separate computer model written in the Python computer programming language. The inputs and outputs of the shipments model were then embedded in the NIA spreadsheet model for all cases and scenarios.

2.12 NATIONAL IMPACT ANALYSIS

The NIA assesses the NES and the NPV of total consume r costs and savings nationwide

that are expected to result from new or amended energy conservation standards

. Analyzing impacts of potential energy conservation standards for CFLKs requires comparing projections of

national energy consumption with new or amended energy conservation standards against projections of energy consumption without the standards. Candidate standards cases are specified by setting the hypothetical CSL for each product class.

2

- 31To explore a range of impacts from potential standards, this preliminary analysis explored one CSL for Externally

- Ballasted/Driven CFLKs and five CSLs for A ll O ther CFLKs

. In each case, efficiency levels that do not meet the standard are eliminated and the consumer

choice model assigns the market shares for th e remaining efficiency levels. In addition to conducting the analysis for CFLKs as a whole, DOE evaluated the NPV and NES by product

class

. DOE coded the NIA in a Microsoft Excel file available on the CFLK rulemaking webpage. q The file allows access to a r ange of scenario assumptions for conducting sensitivity

ana lyses on specific input values.

To evaluate the impact of the product class redefinition, described in section 2.4.2 and in chapter 3 of this TSD, the NIA evaluates separately the NES and NPV of going from no

- standard

to CSL 0 and from CSL 0 to each CSL for the All Other CFLKs product class

. For the

Externa lly

- Ballasted/Driven CFLKs there are no products with efficacies below CSL 0, so only results from CSL0 to CSL1 are presented.

2.12.1 National Energy Savings Analysis

The inputs for determining the national energy savings for each product class are: (1)

CFLK shi pments; (2) CFLK annual energy consumption per unit; (3) stocks of CFLKs in each year; and (4 ) site

- to

- primary energy and fu l l

- fu e lcycle (FFC) conversion factors. CFLK stocks

were calculated by the shipments model for each year of the analysis period from the prior year’s stock, minus retirements, plus new shipments, accounting f or CFLK lifetimes. DOE calculated

the national electricity consumption in each year by multiplying the number of units of each product class and CSL in the stock by its power consumption and operating hours. The electricity savings are estimated from the difference in national electricity consumption between the no

standard case and the candidate standards cases for CFLKs shipped during the 2019

- 2048 period.

2.12.2 Net Present Value Analysis

The inputs for determining NPV are (1) total annual installed cost, (2) total an nual savings in operating costs, and (3) a discount factor to calculate the pre sent value of costs an d savings . DOE calculated net savings each year as the difference between the no

- standard case

and each candidate standard accounting for total savings in operating costs and total increases in installed costs. DOE calculated savings over the lifetime of a ll products shipped during the 30

-
year an al ysis period. DOE calculated the NPV as the difference between the present value of operating

- cost savings and the present value of total installed costs. DOE used real discount rates

of 3 percent and 7 percent to discount future costs and savings to present values.

For the NPV analysis, DOE calculates increases in total installed costs as the difference

in total installed cost between the no

- standard case and standard case ( i.e. , once standards take effect). Beca use the more effic acious products bought in the standards case s usually will cost more than products bought in the no

- standard case , cost increases appear as negative values in

the NPV.

q http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/66

2

- 32DOE expresses savings in operating costs as decreases associated with the lower energy consumption of products bought in the standards case compared to the no

- standard case . Total savings in operating costs are the product of savings per unit and the numbe r of units of each vintage that survive in a given year.

DOE used AEO 201 4 as the source of projections for future energy prices.

DOE estimates the NPV of consumer benefits using both a 3

- percent and a 7

- percent real

discount rate. DOE uses th o se disco unt rates in accordance with guidance provided by the Office of Management and Budget (OMB) to Federal agencies on the development of regulatory analysis. (OMB Circular A

- 4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits

and Costs

. ”)

2.13 CONSUMER SUBGROUP ANALYSIS

The consumer subgroup analysis evaluates economic impacts on selected groups of

consu mers. At the NOPR stage of this rulemaking, DOE will conduct the consumer subgroup analysis and divide consu mers into subgroups that account for var iations in key inputs to the LCC analysis. A c onsu mer subgroup comprises a subset of the population that may be affected disproportionately by amended energy conservation standards ( e.g. , low income consumers,

seniors ). The purpose of a subgroup analysis i s to determine the extent of any such disproportionate effect. DOE will work with industry and other interested parties early in the rulemaking process to identify any subgroups for consideration.

In comparing potential effects on the different c onsu mer subgroups, DOE will evaluate variations in regional electricity prices, usage profiles, and installation costs that might affect

LCC and PBP for certain c onsu mer subgroups under potential energy conservation standards. For more detail on the approach to t he consumer subgroup analysis, see chapter 1 1 of this TSD.

2.14 MANUFACTURER IMPACT ANALYSIS

The purpose of the MIA is to identify the likely impacts of new and amended energy conservation standards on manufacturers. In conducting this analysis , DOE will seek input from manufacturers and other interested parties and consider financial impacts , as well as a wide range of quantitative and qualitative industry impacts that might occur after adoption of a standard. For example, a particular standard level could re quire changes to manufacturing practices of CFLKs

. DOE will identify and discuss these impacts in interviews with manufacturers and other interested parties during the NOPR stage of the analysis.

DOE conduct s the MIA in three phases, and further tailor s the analytical framework based on the comments it receives. In Phase I, DOE creates an industry profile to characterize the industry and identify important issues that require consideration. In Phase II, DOE prepares an industry cash flow model and conside rs what information it might gather in manufacturer

interview s . In Phase III, DOE interviews manufacturers and assesses the impacts of new and

amended standards both quantitatively and qualitatively. DOE assesses industry and subgroup

cash flow and industr y net present value (INPV) using the Government Regulatory Impact

2

- 33Model (GRIM). DOE then assesses impacts on competition, manufacturing capacity, employment, and regulatory burden based on manufacturer interview feedback and discussions.

DOE evaluat es an d report s preliminary MIA information in this preliminary analy sis phase. DOE gather s the information for the analysis during manufacturer interviews. S ee chapter

12 of th is TSD for more detail ed information on the MIA.

2.14.1 Sources of Information for the Manufacturer Impact Analysis

The MIA uses outputs from other upstream analyses, such as the engineering analysis, the NIA, and the shipments analysis. It also uses inputs based on publicly available information, such as Securities and Exchange Commission (SEC) 10

- K filings, and refines these inputs based on feedback during manufacturer interviews. These analyses provide important information for

the MIA , including the number of shipments and the manufacturer production costs for each product . DOE supplemen t s this information with company financial data and other information gathered and/or refined during interviews with manufacturers to estimate the industry financial parameters, such as the tax rate, the research and development (R&D) rate, the capital

exp enditure rate, the depreciation rate, and industry discount rate

.

DOE aggregates information across manufacturers to creat e a combined industry opinion

or estimate. The interview process plays a key role in the MIA. DOE conducts detailed

interviews with manufacturers to gain insight into the range of potential impacts of new and

amended standards. Typically, DOE solicits both quantitative and qualitative information during the interviews on the potential impacts of ELs on sales, direct employment, capital assets, and industry competitiveness.

2.14.2 Industry Cash

- Flow Analysis

The industry cash

- flow analysis relies primarily on the GRIM. DOE uses the GRIM to analyze the financial impacts of new and amended energy conservation standards on the

industr y

. The GRIM analysis uses several inputs to determine industry annual cash flows with

and without new and amended energy conservation standard s. These inputs include shipments, production costs, product markups, conversion costs fo r higher efficacy standards, and industry financial parameters

. DOE requests comment on the manufacturer ma rkup value of 1.37 used in the p reliminary a nalysis.

DOE then compares the industry annual cash flows resulting from two scenarios

– one where eff icacy standards are mandated and one where no new or amended energy conservation

standards are establish ed . The financial impact of new and amended energy conservation

standards is the difference between the two sets of discounted industry annual cash flow s. Other performance metrics, such as return on invested capital, are also available from the GRIM.

One factor that can affect manufacturers cash flows when complying with energy conservation standards are product conversion costs, or one

- time costs that manufacturers must

pay to bring their product designs into compliance with standards. These costs could include engineering hours required to conduct R&D to have products meet standards , in addition to testing and certification costs. Several manufacturer s stated that amended CFLK standards could

2

- 34add large testing and certification costs to manufacturers and that these costs could represent a significant burden on manufacturers. (ALA, No. 39 at p. 37 ; Westinghouse, No. 7 at p p .1

- 2 ; Westinghouse, No. 29 at p. 2 ; Modern Fan, No. 45 at p p . 1

- 2) Also, some manufacturers noted

that since the weak economy and housing market have been challenging for the ceiling fan industry , t he potential work for ceiling fan and CFLK manufacturers caused by amended

standards w ould be challenging to absorb due to an already reduc ed staff, including engineers

. (ALA, No. 3 at p. 1 ; ALA, No. 9 at p p . 15

- 16) DOE will examine all product conversion costs, including the number of engineer hours

, required to comp ly with any amended standards. DOE

will incorporate these conversion costs into the NOPR MIA

. See chapter 1 2 of th is TSD for more information on the industry cash

- flow analysis.

2.14.3 Direct Employment Impact Analysis

The impact of new and amended energy conserv ation standards on employment is an important consideration in the rulemaking process. Manufacturer interviews play a significant role in assessing how domestic employment patterns might be impacted by new and amended

energy conservation standards. DOE e xp lore s current employment trends in the CFLK industr y and solicit s feedback from manufacturers on changes in employment patterns that may result

from new and amended energy conservation standard s

. See chapter 12 of this TSD for more

information on the direc t employment impact analysis.

2.14.4 Manufacturer Subgroup Analysis

Average i ndustry impacts may not adequately show differential impacts among subgroups of manufacturers that have different cost structures or operate within different regulatory frameworks

. For example, small and niche manufacturers, or manufacturers whose cost structure differs significantly from the industry average, could experience a more negative impact. Ideally, DOE would consider the impact on every firm individually; however, because this usually is not possible, DOE typically uses the results of the industry characterization to group manufacturers exhibiting similar characteristics. One common subgroup identified is small

business manufacturers. ALA stated that DOE must comply with t he Regulatory Flexibility Act

so that small business manufacturers are not severely impacted by additional standards. (ALA, No. 39 at p. 37) DOE will analyze impacts on small business manufacturers consistent with the Regulatory Flexibility Act in the NOPR . (5 U.S.C. 601 et seq .)

During the interview process, DOE discuss es the potential subgroups and subgroup members it has identified for the analysis. DOE will encourage manufacturers to recommend subgroups or characteristics that are appropriate for the subgroup analysis. Hunter suggested that DOE consider the impacts on the lighting showroom channel. Hunter further stated that the entire retail channel, including small businesses and home center business es , could be significantly impacted by increases i n product costs since t he cost structure of ceiling fans may

be altered significantly due to standards . (Hunter, No. 9 at p. 142) DOE will examine whether the lighting showroom channel qualifies as a potential manufacturer subgroup in the NOPR analysis.

Se e chapter 1 2 of th is T SD for more detail on the manufacturer subgroup analysis.

2

- 352.14.5 Competitive Impacts Assessment

EPCA directs DOE to consider any lessening of competition likely to result from the imposition of standards. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It further directs the Attorney General

to determine

, in writing

, the impacts, if any, of any lessening of competition. (42 U.S.C. 6295(o)(2)(B)(ii))

The manufacturer interviews focus on gathering information that would help in assessing impacts on competit ion, such as asymmetrical cost increases to some manufacturers, increased proportion of fixed costs potentially escalating business risks, and potential barriers to market entry ( e.g. , proprietary technologies , limited access to resources, etc. ). DOE will provide the Attorney General with a copy of any NOPR for consideration in evaluati ng the impact of new or amended energy conservation standards on the lessening of competition. DOE will publish the Attorney General’s letter and address any related comments in any final rule.

2.14.6 Cumulative Regulatory Burden

Other regulations may apply to the CFLKs covered under this rulemaking, and to other products produced by CFLK manufacturers. DOE recognizes that multiple regulations could result in a significant cumulative regulatory burden on manufacturers

. DOE’s initial analysis of regulations affecting CFLKs is located in the market and technology assessment ( see chapter 3 of

th is TSD). Some manufacturers commented that there are already existing or ongoing reg ulations covering most lamps used in CFLKs , such as EISA 2007

, EPAct 2005 , and the ongoing DOE general service lamps rulemaking ( 79 FR 3742 , Jan. 23, 2014)

. The manufacturers noted that

, therefore, CFLK energy conservation standards would only result in re gulating products that, for the most part, have already met a lighting energy conservation standard and would require

manufacturers to conduct additional testing and certification for those products that might not result in significant energy reduction . (W estinghouse, No. 7 at p p . 1

- 2 ; Westinghouse, No. 9 at

p p . 79

- 80

, 139 ; Westinghouse, No. 29 at p. 2 ; Hunter, No. 37 at p. 3) DOE will examine the cumulative regulatory burden that amended CFLK standards will have on CFLK manufacturers as part of the NOPR an alysis. ALA recommended that DOE consider state requirements, such as those set by the California Energy Commission (CEC), and use them to reduce and/or eliminate multiple standards and reporting requirements. (ALA, No. 3 at p. 2) Also, Progress asked DOE to consider aligning CFLK standards with EISA 2007 and California Title 20, as alignment would reduce compliance overhead and improve product efficiency reporting. (Progress, No. 6 at

p p . 9

- 10) During the NOPR analysis , DOE will investigate the regulations manufacture rs mentioned in interviews and in their comments , and will further analyze and consider the impact of multiple, product

- specific regulatory actions on CFLK manufacturers.

2.14.7 Preliminary Results for the Manufacturer Impact Analysis

One important aspect of the preliminary MIA is the opportunity it creates for DOE to identify key manufacturer issues early in the evaluation of new and amended energy conservation standards. During preliminary interviews

, manufacturers identified two majo r areas of concern: (1) duplicative regulation and (2) a potential consumer shift to air conditioning.

2

- 362.14.7.1 Duplicative Regulation

.

Some manufacturers commented in confidential interviews that a separate regulation specifically for CFLKs was unnecessary, sinc e most lamps placed in CFLKs would be covered by other lighting energy conservation standards, such as the ongoing general service lamps rulemaking. These manufacturers claim that there would not be significant additional energy savings from separate CFLK standards.

2.14.7.2 Potential Consumer Shift to Air Conditioning

Manufacturers were also concerned about a potential technology shift in the CFLK

market as a result of amended energy conservation standards. Manufacturers stated in

confidential interviews that since using more efficacious lamps in CFLKs could significantly increase the price of the overall ceiling fan, consumers could potentially choose to purchase or use air conditioning more frequently to cool their rooms as opposed to ceiling fans. These

manufacturers claim this shift could result in more energy use, since ceiling fans tend to be more efficient at cooling rooms than air conditioners

. The technical support document for the concurrent ceiling fans rulemaking discusses the potential interact ions between ceiling fans and air conditioning in more detail.

2.15 EMISSIONS ANALYSIS

In the emissions analysis, DOE will estimate the reduction in power sector emissions of carbon dioxide (CO 2 ), nitrogen oxides (NO X ), sulfur dioxide ( SO 2 ), and mercury (Hg) from potential amended e nergy conservation standards for CFLKs . In addition, DOE will estimate emissions impacts in production activities (extracting, processing, and transporting fuels) that provide the energy inputs to power plants. Thes e are referred to as “upstream” emissions. Together, the emissions account for the FFC. In accordance with DOE’s FFC Statement of Policy (76 FR 5128 1

, Aug. 18, 2011), the FFC analysis includes effe cts of potential standards on emissions of methane and nitr ous oxide, both of which are recognized as greenhouse gases ( GHG s)

.

DOE will conduct the emissions analysis using emissions factors derived from data in the

latest version of EIA’s AEO

, supplemented by data from other sources. EIA prepares the AEO using the National Energy Modeling System ( NEMS )

. Each annual version of NEMS incorporates the projected effe cts of current air quality regulations on emissions. The text below

refers to AEO 2013, which generally represents current legislation and environmental regulations, including recent government actions, as of December 31, 2012.

SO 2 emissions from affected electric generating units (EGUs) are subject to nation al and regional emissions cap

- and

- trad e programs. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for affected EGUs in the 48 contiguous s tates and the District of Columbia (D.C.). SO 2 emissions from 28 eastern s tates and D.C. also were limited under the Clean Air

Interstate Rule (CAIR), which created an allowance

- based trading pro gram t o operate along with the Title IV program in those States and D.C. 70 FR 25162 (May 12, 2005). CAIR was remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit (D.C.

2

- 37Circuit), but it remained in effect. r On July 6, 2011

, EPA issued a replacement for CAIR, the

Cross

- State Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012,

the D.C. Circuit issued a decision to vacate CSAPR. s The court ordered EPA to continue administering CAIR. AEO 2013 assumes that C AIR remains a binding regulation through 2040.

The attainment of emissions caps typically is flexible among EGUs , being enforced through the use of emissions allowances and tradable permits. Under current EPA regulations, any excess SO 2 emissions allowan ces resulting from the lower electricity demand caused by the adoption of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about

the ef fects of effic ienc y standards on SO 2 emissions covered by the cap

- and

- trade system, but it concluded that reductions in power

- sector SO 2 emissions as a result of standards would be negligible.

Beginning in 2015, however, SO 2 emissions will decline as a r esult of the Mercury and Air Toxics Standards (MATS) for power plants . 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a standard for hydrogen chloride as a surrogate for acid gas hazardous air pollutants (HAP), and also established a standard for SO 2 (a non

- HAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and

non

- HAP acid gas; thus, SO 2 emissions will be reduced by the control technologies installed on

coal

- fired power plants to comply with the MATS requirements for acid gas. AEO 201 3 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection systems installed by 2015. Both technologies reduce SO 2 emissions as well as acid gas emissions. Under the MATS, the NEMS shows a reduction in SO 2 emissions when electricity demand decreases (e.g., as a result of energy efficiency standards). Emissions will be far below the cap that would be established by CAIR, so it is unlikely that excess SO 2 emissions allowances resulting from lower electricity demand would be needed or used to permit offsetting

increases in SO 2 emissions by any regulated EGU. DOE therefore believes that efficiency

standards will reduce SO 2 emissions in 2015 and beyond.

CAIR established a cap on NO X emissions in 28 eastern s tates and D.C. E nergy conservation standards are expected to have little effect on NO X e missions in those S tates covered by CAIR, because excess NO X emissions allowances resulting from lower electricity

demand could be used to permit offsetting increases in NO X emissions

. S tandards would be expected to reduce NO X emissions in the States not affected by the caps, however, so DOE

estimates NO X emissions reductions from potential standards in the States where emissions are not capped.

The MATS limit mercury emissions from power plants, but do not include emissions caps. Thus energy conservation standard s likely wou ld reduce Hg emissions. DOE will estimate mercury emissions reduction using emissions factors based on AEO 2013 , which incorporates the

MATS.

r See North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir . 2008) and North Carolina v. EPA , 531 F.3d 896 (D.C. Cir. 2008).

s See EME Homer City Generation, LP, v. EPA , 696 F.3d 7, 38 (D.C. Cir. 2012).

2

- 38Power plant smoke stacks may emit particulates that are known as direct particulate matter (PM) emissions. NEMS does not account for direct PM emissions from power plants. DOE is investigating other methods for estimat ing reduction s in PM emissions because of

standards. The great majority of ambient PM associated with power plants is in the form of secondary sulfates and nitrates, which are produced at a significant distance from power plants by complex atmospheric chemical reactions that often involve the gaseous emissio ns of power plants, primari ly SO 2 and NO X

. The monetary benefits that DOE estimates from reductions in

SO 2 and NO X emissions resulting from standards are in fact related primarily to the health

benefits of reduced ambient PM.

2.16 MONETIZING OF CO 2 AND OTHER EMISSIONS

DOE plans to consider the estimated monetary benefits likely to result from reduced

emissions of CO 2 and NO X that are expected to result from each of the energy conservation

standard levels considered.

T o estimate the monetary value of benefits resulting from reduced emissions of CO 2 , DOE plans to use the most current Social Cost of Carbon (SCC) values developed and/or agreed to by an interagency process. The SCC is intended to be a monetary measure of the incremental damage resulting from GHG e missions, including, but not limited to, net loss of agricultural productivity, human health effects, property damage from sea level rise, and changes in ecosystem services. Any effort to quantify and monetize the harms associated with climate change raise s serious questions of science, economics, and ethics. But with full regard for the limits of both quantification and monetization, the SCC can be used to estimate the social

benefits of reductions in GHG emissions.

In 2013 t he Interagency Working Group on Social Cost of Carbon released an update of its previous report. 8 The most recent estimates of the SCC in 2015, expressed in 2013$, are $12.0, $40.5, $62.4, and $119 per metric ton of CO 2 avoided. For emissions reductions that occur in later years, th o se values grow in real terms. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects, although DOE w ill give preference to consider ing the global benefits of reducing CO 2 emissions.

DOE multiplies the CO 2 emissions reduction estimated for each year by the SCC value for that year in each of the four cases. To calculate a present value of the stream of monetary values, DOE discounts the values in each of the four cases using the discount rates that had been

used to obtain the SCC values in that case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly regarding the contribution of CO 2 and other GHG to changes in the future global climate and the potential resulting damages to the world economy. Thus, the values are subject to change.

DOE also estimates the potential monetary benefit of reduced NO X emissions re sulting

from the considered standard levels. Estimates of monetary value for reducing NO X from stationary sources range from $476 to $4,893 per ton

, in 2013 $. 9 DOE calculates monetary

2

- 39benefits using a medium value for NO X emissions of $2,639 per short ton (in 2012$), and real discount rates of 3 percent and 7 percent, in accordance with OM B guidance. 10

DOE is evaluating an appropriate valuation for avoided SO 2 and Hg emissions. Whether

monetization of reduced SO 2 and Hg emissions will occur during this rulemaking is yet to be

determined.

2.17 UTILITY IMPACT ANALYSIS

To estimate the effe cts of potential ener gy conservation standards for CFLKs on the electric utility industry, DOE will use a variant of the EIA’s NEMS called NEMS

- BT. t NEMS is a larg e, multi

- sectorial, partial

- equilibrium model of the U.S. energy sector that EIA has developed over several years, primarily for the purpose of preparing the AEO . NEMS , which is available to the public

, produces a widely recognized forecast for the United States.

The utility impact analysis is a comparison between NEMS

- BT model results for the base case and standard cases. Outputs of the analysis usually parallel results that appear in the latest

AEO , with some additions. The utility impact analysis repo rts the changes in installed capacity and generation that result from each standard level by plant type. DOE will us e NEMS

- BT to model the anticipated energy savings f rom potential amended energy conservation standards

, generat ing forecasts that deviate fr om the AEO reference case.

DOE received a comment on the framework document from CA IOUs recommending that DOE consider the power factor of CFLKs because a reduction in power factor may

undermine power quality and transmission efficiency of the electric grid. (CA IOU, No. 12 at p. 5) Based on field studies, DOE has found no evidence of significant adverse utility

- scale effects resulting from CFLKs, which also reduce lamps ’ power factor. 11 DOE seeks input on how best to quantify potential impacts on primary energy consumption for the lamp types used in CFLKs.

2.18 EMPLOYMENT IMPACT ANALYSIS

The adoption of new or amended energy conservation standards can affe ct employment both directly and indirectly. Direct employment effe cts are changes in the number of employees at the plants that produce the covered products, along with affiliated distribution and service companies. DOE will evaluate direct employment impa cts in the MIA.

Indirect employment effe cts may result if expenditures shift between goods (the substitution effect) and income and overall expenditure levels change (the income effect)

because of standards. DOE defines indirect employment impacts as ne t jobs eliminated or created in the general economy as a result of increased spending driven by higher product prices and reduced spending on energy.

t EIA approves use of the name NEMS to describe only an official version of the model without any modification t o code or data. Because this analysis entails some minor code modifications

, and the model is run under policy scenarios that are variations on EIA assumptions, DOE refers to the model as NEMS

- BT. (“BT” refers to DOE’s Building Technologies Program, under whose aegis this work is performed.)

2

- 40I ndirect employment effe cts will be investigated in the employment impact analysis using

the Pacific No rthwest National Laboratory’s Impact of Sector Energy Technologies (ImSET)

model. 12 The ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis to estimate the employment and income effects of energy

- saving technologies in buildings, industry, and transportation. Compared with simple econo mic multiplier approaches, ImSET allows for more complete and automated analysis of the economic effe cts of energy conservation

investments.

2.19 REGULATORY IMPACT ANALYSIS

In the NOPR stage of this rulemaking, DOE will prepare a regulatory impact analysis that evaluates potential non

- regulatory policy alternatives, then compar es each alternative ’ s costs and benefits to those of the proposed standards. DOE recognizes that non

- regulatory policy alternatives can affect energy efficiency or reduce energy consumptio n substantially. DOE will

base its assessment on the documented effect s of any such initiatives to date, but also will consider information presented by interested parties regarding potential future effe cts of current

initiatives.

2

- 41REFERENCES

1. U.S. Department of Energy

– Office of Energy Efficiency and Renewable Energy Building Technologies Program. Rulemaking Framework Document for Ceiling Fans and Ceiling Fan Light Kits. March 8, 2013. Washington, D.C. (Last Accessed March 2 7, 2014.) http://www.regulations.gov/#!documentDetail;D=EERE

- 2012

- BT

- STD

- 0045

- 0001

2. Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.

— Results of a Survey on Amazon Mechanical Turk. Lawrence Berkeley National Laboratory, Berkeley, CA. July 2013. (Last Accessed March 27, 2014) http://www.esch olarship.org/uc/item/3r67c1f9

3. DNV KEMA Energy and Sustainability, Pacific Northwest Laboratory. Residential Lighting End

- Use Consumption Study: Estimation Framework and Baseline Estimates. Prepared for the Solid

- State Lighting Program, Building Technol ogies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy. December 2012. (Last Accessed March 27, 2014) http: //apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2012_residential

- lighting

study.pdf

4. Navigant Consulting, Inc. Final Report: 2010 U.S. Lighting Market Characterization. Prepared for the Solid

- State Lighting Program, Building Technologies Progra m, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy. January 2012. (Last Accessed March 27, 2014.) http://apps1.eere.energy. gov/buildings/publications/pdfs/ssl/2010

- lmc

- final

- jan

- 2012.pdf

.

5. U.S. Department of Energy

– Energy Information Administration. Residential Energy Consumption Survey: 2009 RECS Survey Data. 2009. (Last Accessed March 27, 2014.) http://www.eia.gov/consumption/residential/data/2009/

.

6. U.S. Department of Energy

– Energy Information Administration. Commercial Building Energy Consumption Survey: Micro

- level data: Fil e 1 General Building Information and Energy End Uses. Washington, D.C. 2003. (Last Accessed March 27, 2014) http://www.eia.gov/consumption/commercial/data/2003/ind ex.cfm?view=microdata

7. Navigant Consulting, Inc. Energy Savings Potential of Solid

- State Lighting in General Illumination Applications. Prepared for the Solid

- State Lighting Program, Building Technologies Program, Office of Energy Efficiency and Renewab le Energy, U.S. Department of Energy. January 2012. (Last Accessed March 27, 2014.) http://apps1.eere.energy.gov/buildings/publications/pdfs /ssl/ssl_energy

- savings

report_jan

- 2012.pdf

8. Interagency Working Group on Social Cost of Carbon. Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon , U.S. Government. May 2013;

2

- 42revised November 2013. (Last Accessed March 27, 2014.) http://www.whiteho use.gov/sites/default/files/omb/assets/inforeg/technical

- update

- social

cost

- of

- carbon

- for

- regulator

- impact

- analysis.pdf

9. U.S. Office of Management and Budget. 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities. 2006. Washington, D.C. (Last Accessed March 27, 2014.) http://www.whitehouse.gov/sites/default/file s/omb/assets/omb/inforeg/2006_cb/2006_cb _final_report.pdf

.

10. U.S. Office of Management and Budget. Circular No. A

- 4, Regulatory Analysis. Washington, DC. 2003. (Last Accessed March 27, 2014.) http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a

- 4.pdf

11. Page, E., and M. Ton. Power Factor: Policy Implications for the Scale

- up of CFL Programs. USAID ASIA. 2010. (Last Access ed March 27, 2014) http://standby.iea

4e.org/files/otherfiles/0000/0057/2010_USaid_PF_study_CFLs.pdf

12. Roop, J.M., M.J. Scott, and R.W. Schultz. ImSET: Imp act of Sector Energy Technologies. Pacific Northwest National Laboratory, Richland, WA. 2005. (Last Accessed March 27, 2014.) http://www.pnl.gov/main/publication s/external/technical_reports/PNNL

15273.pdf

2

- 43CHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CONTENTS

3.1 INTRODUCTION

................................ ................................ ................................ ........... 3

- 1

3.2 SCOPE OF COVERAGE

................................ ................................ ................................ 3

- 1

3.3 PRODUCT CLASS REDEFI NITION

................................ ................................ ............. 3

- 2

3.4 MARKET ASSESSMENT

................................ ................................ .............................. 3

- 3

3.4.1 Manufacturer Trade Group

................................ ................................ .................. 3

- 3

3.4.2 Manufacturers and Market Shares

................................ ................................ ....... 3

- 4

3.4.2.1 Manufacturers of Ceiling Fan Light Kits

................................ ................... 3

- 4

3.4.2.2 Distribution Channels

................................ ................................ ................. 3

- 5

3.4.2.3 Market Breakdown by Ceiling Fan Light Kit Characteristics

.................... 3

- 6

3.4.3 Historical Shipments

................................ ................................ .......................... 3

- 10

3.5 TECHNOLOGY ASSESSMEN T

................................ ................................ .................. 3

- 11

3.6 REGULATORY AND NON

- REGULATORY PROGRAMS

................................ ...... 3

- 13

3.6.1 Regulatory Programs

................................ ................................ ......................... 3

- 13

3.6.2 Non

- Regulatory Initiatives

................................ ................................ ................. 3

- 14

REFERENCES

................................ ................................ ................................ .......................... 3

- 15

LIST OF TABLES

Table 3.3.1 Current Ceiling Fan Light Kit Product Classes

................................ ............. 3

- 2

Table 3.4.1 Average Market Share of Major Ceiling Fan Brands

................................ .... 3

- 4

Table 3.4.2 Market Shares of Ceiling Fans Sold with CFLKs by Retailer in 2011

.......... 3

- 6

Table 3.4.3 Estimates of CFLK Market Shares in 2012 by Current Product Class and Socket Type

................................ ................................ ............................. 3

- 8

Table 3.4.4 CFLK Market Shares in 2012 by Current Product Class and Efficacy

........ 3

- 8

Table 3.4.5 Estimates of CFLK Market Shares in 2012 by Product Class under

Consideration

................................ ................................ ................................ . 3

- 9

Table 3.4.6 NPD Estimates of Historical Shipments of Ceiling Fans

............................ 3

- 10

Table 3.4.7 DOE Estimates of Historical Shipments of Ceiling Fans

............................ 3

- 11

Table 3.5.1 Socket Types used for Ceiling Fan Light Kits

................................ ............. 3

- 12

Table 3.6.1 Sales of ENERGY STAR CFLKs from 2004

- 2012 in Thousands

............ 3

- 15

LIST OF FIGURES

Figure 3.4.1 Percentage of Shelf Offerings by Socket and Lamp Wattage

Combinations for Product Class 1

................................ ................................ . 3

- 9 Figure 3.4.2 Percentage of Shelf Offerings by Socket and Lamp Wattage

Combinations for Product Class 3

................................ ............................... 3

- 10

3

- iCHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

3.1 INTRODUCTION

This chapter consists of four sections: scope of coverage, market assessment, technology assessment, and product classes. The scope of coverage describes the products covered under this rulemaking by the U.S. Department of Energy (DOE). The market assessment provides an overall picture of the market for the products concerned, including the na ture of the products, industry structure, and manufacturer market shares; regulatory and non

- regulatory efficiency improvement programs; market trends; and quantities of products sold. The technology assessment identifies the technologies considered in the screening analysis. The product classes

section discusses the class

- setting factors DOE considered for this rulemaking.

The information DOE gathers from the market and technology assessment s serve as resource material for use throughout the rulemaking. D OE considers both quantitative and qualitative information from publicly available sources and interested parties.

3.2 SCOPE OF COVERAGE

As defined in 42 U.S.C. 6291 (50) a “ceiling fan light kit” (CFLK) is “equipment designed to provide light from a ceiling fan” that can be either integral to the ceiling fan or attachable. Attachable CFLKs may be sold packaged with a ceiling fan or separately ; t herefore, all lighting equipment that is either built into or designed to be attachable to any product defined as a ceiling

fan

— regardless of whether the ceiling fan is subject to standards

— is a CFLK and is covered by this rulemaking. DOE notes that i n the concurrent test procedure rulemaking for ceiling fans, DOE is proposing to reinterpret the statutory definition of a ceiling fan to include hugger ceiling fans and also clarifying that both multi

- mount ceiling fans and ceiling fans capable of producing large volumes of airflow meet the statutory definition of a ceiling fan. 79 FR 62521

.

At this point in time, DOE is not considering developing a separate product class for CFLKs designed for high

- volume CFLKs since essentially all CFLKs on the market today are designed for low

- volume ceiling fans. a Even if manufacturers begin producing such products in large number, DOE does not anticipate that they will have distinctive characteristics that would require a separate product class from CFLKs designed for low

- volume ceiling fans. Therefore, DOE is not including CFLKs designed for high

- volume fans in this preliminary analys is. DOE requests comment on the need for a separate product class for CFLKs designed for high

- volume ceiling fans

. DOE seeks comment on whether manufacturers are likely to market CFLKs for high

- volume ceiling fans in the future.

The concurrent CFLK test p rocedure notice of proposed rulemaking (NOPR) issued on

October 2 7 , 2014 proposes to withdraw the current guidance on accent lighting and to consider all lighting packaged with any CFLK to be subject to energy conservation requirements

. That change would go into effect 30 days after publication of the test procedure final rule. This preliminary analysis is considering amendments to CFLK efficiency standards that would go into

a DOE knows of only one CFLK that is designed for a high

- volume fan, a product made by Big Ass Fans.

3

- 1force after that change. Therefore, under the standards amendments considered in this preliminary analysis, DOE would consider accent lighting as included in the scope of CFLK

standards.

3.3 PRODUCT CLASS REDEFINITION

The current product class structure for CFLKs was established by the Energy Policy Act of 2005 (EPACT 2005), which divides CFLKs into three products classes : ( product class 1) CFLKs

with medium screw base (E26) sockets , ( product class 2) CFLKs with pin

- based sockets for

fluorescen t lamps , and ( product clas s 3) any CFLKs other than those in product class es 1 and 2.

Product classes 1 and 2 require an efficacy metric while product class 3 requires a maximum wattage (see Table 3.3

. 1 ).

Table 3.3

. 1 Current Ceiling Fan Light Kit Product Classes

Product Class Energy Efficiency Requirement * Efficiency

Metric

Product Class 1:

Medium screw base (E26) Package with compact fluorescent lamps (CFLs) that meet the ENERGY STAR requirements for CFLs, version 3, or with lamps of at least equivalent efficacy

. Lamp efficacy (lm/W)

Product Class 2:

Pin

- based fluorescent Package with lamps that meet the ENERGY STAR requirements for R esidential L ight

F ixtures, version 4.0

. Lamp and ballast

system efficacy (lm/W)

Product Class 3:

All other CFLKs not
included in Product

Class 1 or Product Class

2 Shall not be capable of operating with lamps that

total more than 190 watts. CFLK w attage

* CFLKs packaged with medium screw base CFLs must also mee t additional specifications in ENERGY STAR Program Requirements for Compact Fluorescent Lamps , version 3.0

In the framework document for this rulemaking DOE indicated that it was considering combining or restructuring CFLK product classes, from the current three to one or two product

classes

. Accordingly, DOE first examined the existing product classes for consistency with DOE’s criteria for establishing product classes. DOE’s criteria for defining product classes are set o ut in 42 U.S.C. 6295 (q) . In summary, products may be put in different groups (1) if they consume a different kind of energy, (2) if they have different capacities or other performance

- related features that require

a different efficiency standard, or (3) if they have a distinct consumer utility, or other factors that the Secretary deems appropriate.

DOE notes that all CFLKs use the same kind of energy (electricity) and do not require

different product classes to account for capacity (lig ht output). The three original product classes were defined in terms of socket type, which DOE does not see as providing any unique utility or other performance

- related feature that would necessitate a different efficiency standard. DOE did find a unique u tility in CFLKs that use externally ballasted or driven lamps, in that they allow

3

- 2consumers to replace the lamp, and potentially the ballast or driver, separately if one fails independently of the other. Additionally, because externally

- ballasted lamps may have different

cost

- efficiency relationships from internally ballasted lamps, externally

- ballasted lamps may require a different efficiency standard

.

Accordingly, DOE is considering redefining CFLKs into the following two product

classes:

1. CFLKs with ext ernally

- ballasted or driven lamps (hereafter “Externally

Ballasted/Driven CFLKs”), and

2. All other CFLKs (hereafter “All Other CFLKs”)

With respect to products currently on the market, the new product class structure essentially combines the current produc t classes 1 and 3 into All Other CFLKs. Externally

- driven LED CFLKs would have constituted an exception to this, in that they would currently be in product class 3, and under the new product class structure being considered, they would join pin

based fluor escent CFLKs in the Externally

- Ballasted/Driven product class. However, to DOE’s knowledge there are no externally

- driven LED lamps on the market and DOE is unaware of any plans to introduce such lamps.

DOE is seeking feedback on the considered product classes and on the following related

issues : 1) whether the ballasts that manufacturers install in pin

- based fluorescent lamps have

sockets that are de signed for consumer replacement , and 2) whether, i f a ballast fails in a CFLK with a pin

- base fluorescent lamp

, consumers replace the ballast or assume that th e fixture itself is no longer operable.

In chapter 5 of this TSD, DOE develops baselines for the new product classes being considered in this analysis, to ensure that there is no decrease in the minimu m required efficiency of a covered product , as required under 42 U.S.C. 6295(o)(1). In chapters 8 and 10 of this TSD DOE quantifies the impact of the new product class structure on consumer s and on the national

economy.

3.4 MARKET ASSESSMENT

The following mark et assessment for CFLKs identifies the relevant manufacturer trade group and domestic manufacturers; discusses manufacturer market share, regulatory programs,

and non

- regulatory initiatives; and provides historical shipment data and product lifetime

estima tes

. b

3.4.1 Manufacturer Trade Group

DOE recognizes the importance of trade groups in disseminating information and promoting the interests of the industry that they support. DOE identified the American Lighting Association (ALA) as the primary group that supp ort s and has interest in CFLKs

. The ALA is a

b As defined by 42 U.S.C 6291 (10), t he term “manufacture” means to manufacture, produce, assemble

, or import.

3

- 3trade organization that represents lighting and ceiling fan manufacturers, designers, retail showrooms, and distributors working to promote the sale and proper use of quality residential lighting products. The ALA provides specific information regarding the selection, benefits, and proper use of CFLKs

. The ALA also advocates the interests of the industry regarding Federal and State legislative and regulatory issues.

3.4.2 Manufacturers and Market Shares

This section d escribes CFLK distribution channels, CFLK manufacturers and their market shares, as well as CFLK market shares based on product characteristics, such as wattage, efficiency

, and socket type.

3.4.2.1 Manufacturers of C eiling F an L ight K it s

The majority of CFLKs sold in the U nited States are brands that are owned by U.S. companies that contract foreign original equipment manufacturers to build the products overseas, primarily in Asia. CFLKs are almost always produced by the same manufacturers, and in the

same fact ories, as the ceiling fans to which they are designed to couple. The two largest U.S. retailers of ceiling fans and CFLKs have their own brands, which they sell along with other companies’ brands.

Table 3.4

. 1 reports the domestic market shares of the six top selling ceiling fan brands, according to data obtained from the NPD G roup for the years 2007

– 2011. Because most ceiling

fans are sold with CFLKs ( 88% , discusse d in detail in section 3.4.3 ), these data are taken to be approximately representative of the market share rankings of CFLKs as well. Hunter dominates the market, w ith its Hunter and Casablanca brands ranking first and fourth in the market. Together

, the top six brands constitute more than half of the market, with all other brands constituting less than 1% each.

Table 3.4

. 1 Average Market Share of Major Ceiling Fan Brands

Rank Brand Company Average Market Share (%)

1 Hunter Hunter 17

2 Hampton Bay Home Depot 14

3 Harbor Breeze Lowe’s 12

4 Casablanca Hunter 5

5 Westinghouse Westinghouse Lighting 4

6 Emerson Emerson Electric 2

TOTAL 54

3

- 43.4.2.2 Distribution Channels

CFLKs are p assed from man ufacturers to end users through retailers, electrical distributors, and lighting showrooms. The m ajority of CFLK s are purchased at retailers, which

include so

- called brick

- and

- mortar retailers and Internet sellers. Retailers sell most CFLKs packaged with ceiling fans ; h owever, all outlets have some options to purchase CFLKs separately from ceiling fans, with specialt y stores offering more opportunities to mix and match CFLKs with ceiling fans than other outlet types

.

B rick

- and

- mortar retailers have a physical retail building that consumers can visit to view products and make purchases. While mass market retailers dom inate the CFLK market, CFLKs

are also sold in many other brick

- and

- mortar establishments . Brick

- and

- mortar retailers include:

• Mass market retailers

— national chain stores such as home centers, discount stores, and hardware stores;

• Regional stores, which may have multiple outlets like the mass market retailers, but are limited to a single region;

• Specialty stores, which usually offer a broad range of products in a narrow product category and can be mass market, regional, or independ ent owners having a single retail outlet; and

• Club or warehouse stores, which require a membership fee for customers to gain access to the goods, where products are usually sold in bulk.

To a far lesser extent, CFLKs are also sold online

, packaged both in dividually and with the ceiling fans that they are designed for

. Online sellers can be brick

- and

- mortar retailers that also participate in online sales, sometimes called “clicks and bricks,” or dedicated online

retailers.

DOE looked at CFLK sales by retai l distribution channel. Because ceiling fan sales data

are more readily available and because nearly 90% of ceiling fans are sold with CFLKs, DOE

used national data from the NPD Group on ceiling fans that were sold with CFLKs as a proxy for

CFLK sales. The data from NPD Group includes data for consumers who purchased the ceiling fans from retailers and lighting showrooms. However, the data may not account for consumers who purchased a new home which had a new ceiling fan installed in it

. The results are

sum marized in Table 3.4

. 2

. c Table 3.4

. 2 demonstrates that t hree mass market ret ailers (Home Depot, Lowe’s, and Wal

- Mart) comprised approximately 80 % of the total retail market of ceiling

fans sold with CFLKs in the United States in 2011

.

c NPD does not collect point

- of

- sales data for ce iling fans and CFLKs

. Instead, it surveys a representative sample of consumers who recently purchased a ceiling fan. In describing their techniques, NPD stated that they reach out to “approximately 200,000 panelists each month (equivalent to 100,000 comple tes) and ask them about their appliance purchasing. Specifically, we ask them the appliance purchased, where purchased at, brand purchased

, and price paid

, as well as a number of other purchase drivers (the “why’s”) regarding their purchase s

. From there, w e project this information, using the Census population, to be representative of a total U.S. market size estimate. Additionally, we

use actual retail point

- of

- sale data to inform our consumer

- driven market size estimates.” 1

3

- 5Table 3.4

. 2 Market Shares of Ceiling Fans Sold with CFLKs by Retailer in 2011

Retailer Store

Market

Share % Online

Market

Share % Other †

Market

Share % Total

Market

Share* % Home Depot 37.7 1.2 0.1 38.9

Lowe's 31.9 0.7 0.0 32.5

Wal

- Mart 8.9 0.3 0.0 9.2

Menards 5.4 0.1 0.0 5.5 Lighting and Electrical Supply Store 1.6 0.2 0.1 1.9

Ace Hardware 1.6 0.2 0.0 1.8

Sears * 0.7 0.0 0.0 0.8 Target 0.7 0.1 0.0 0.8

Kmart 0.7 0.0 0.0 0.7

Costco Price Club 1.0 0.2 0.0 1.2

Others 4.4 1.5 0.7 6.6 Total share of top 3 retailers * 78.3 2.1 0.2 80.6

Total * 94.5 4.4 1.1 100
* May not sum due to rounding

† Other includes catalog and other purchases Source: NPD Group, 2011.

3.4.2.3 Market Breakdown by C eiling F an L ight K it Characteristics

To obtain a better understanding of the CFLK market, DOE examined the market distribution of CFLKs broken down in different ways: by current product class, socket type, and efficiency; by considered product class ; and by socket and lamp wattage combination s. The results are presented in this section.

As described in section 3.3

, DOE currently divides CFLKs into three products classes

based on the light socket type : ( product class 1) medium screw based, ( product class 2) pin

- based fluorescent, and ( product class 3) a ll other CFLKs.

To make estimates of CFLK market shares, DOE performed model counts of CFLKs (sold with a ceiling fan, or independently) using two data sources: in

- store shelf surveys and product offerings on the Internet. d Recognizing that model counts do not reflect th e fact that products typically sell in higher volumes at lower prices, DOE used a price

- weighting scheme based on an analysis presented in the concurrent ceiling fans energy conservation standard s rulemaking e and summarized here.

d Comprehensive shelf surveys were conducted in 15 stores in the last half of 2012: 6 Home Depot stores, 7 Lowes stores, and 2 Wal

- Mart stores. The stores were located in four states: Hawai i, California, New Mexico, and Massachusetts. The survey of Internet offerings included 16,349 samples from four on

- line retailers.

e The preliminary analysis technical support document for the ceiling fans energy conservation standards rulemaking

is avail able at http://www.regulations.gov/#!documentDetail;D=EERE

- 2012

- BT

- STD

- 0045

- 0065

.

3

- 6T he relationship between ceiling fan market share and retail price is described by the following equation:

MMMM ( pp ) = AA ee ββ FFFF ∗ pp Eq. 3

. 1

Where:

MMMM ( pp ) = Market share for a ceiling fan that costs p,

AA = Normalization factor,

pp = Retail price of a ceiling fan, and ββ FFFF = Consumer sensitivity to first cost , found to be equal to

- 0.028

.

Because CFLKs are sold primarily with ceiling fans, DOE uses the same equation to estimate CFLK market shares by product class. DOE al so accounted for the fact that different data sources represent channels with different sales volumes. f

As shown in Table 3.4

. 3 , product class 3 dominates the market largely with CFLKs with

candelabra sockets that use low

- efficacy lamps (15 lm/W), which constitute almost 80 % of the

entire market. CFLKs with medium scr ew base sockets constitute the next largest product class, which in the survey year included only compact fluorescent lamps. Product class 2 is insignificant at less than 1% of the market.

f Specifically, DOE weighted the shelf survey versus the online data based on the store and online market shares

shown in Table 3.4 .2 (94.5% for the shelf survey data versus 4.4% for the online data). In addition, the data from each retailer in the shelf survey was weighted by the retailer market share shown in Table 3.4 .2 as well as the percent of occurrences of each model across the same retailer. For example, if a CFLK was found on the shelves of 3 out of 6 surveyed Home Depot stores, it would be wei ghted by 94.5% (the store market share), by 37.7% (the Home Depot store market share), and by 50% (the percent of occurrences in all Home Depot stores). In this analysis DOE assumed that offerings at the largest retailers (Home Depot, Lowe’s, and Wal

- Mart) are representative of other

in

- store sales.

3

- 7Table 3.4

. 3 Estima tes of CFLK Market Shares in 2012 by Current Product Class and Socket Type

Product

class Shelf Surveys Online Weighted Total

Market Share by

Product

Class Base Type Market Share by Base Type Market Share by

Product

Class Market Share by Base Type Product Class

1 15.1% Medium screw

base 15.1% 16.9% 16.9% 15.1%

2 <1% Pin

- based

fluorescent 0.0% <1% 0.5 % <1%

3 84.9% Candelabra (including mini

candelabra) 7 9.2 %

82.4% 6 8.8 %

84.8% GU24 4.6% 12.8%

Others ( e.g., G9, GU 10, integral

solid

- state lighting ) 1.2 % 0. 8 %

100% 100% 100% 100% 100%

DOE also examined the 2012 market breakdown by product class efficacy based on the

shelf

- survey data, the results of which are shown in Table 3.4

. 4

. From this table and Table 3.4

. 3

, it is clear that the market was dominated by product class 3 CFLKs t hat use relatively low

efficacy lamps, g typically less than 15 lm/W. T he remainder of the marke t was dominated by

CFLKs with medium screw base sockets which, based on the current efficiency standard, were constrained to higher efficacy lamps, typically gr eater than 55 lm/W . As shown in Table 3.4

. 4 , a very small share of the product class 3 market (estimated to be less than 0.5 % ) was made up of CFLKs with integral solid

- state lighting, which are just entering the market ; this market segment is expected to grow rapidly.

Table 3.4

. 4 CFLK Market Shares in 2012 by Current Product Class and Efficacy

Market Share Distribution within Product Classes Share of

Total Market Light Source Efficacy 1 2 3

>70 lm/W 0.0% 0.0% 0.4% 0.4%

≥ 45 and <70 lm/W 100 % 100 % 5.9 % 20 %



### ≥ 15 and <45 lm/W 0.0% 0.0% 0.0 % 0.0 %

<15 lm/W 0.0% 0.0% 94 % 80 %

TOTAL * 100% 100% 100% 100%

* Values in columns may not add to 100% because of rounding

.

g The efficiency of lamps is measured in light output (lumens, lm) per unit of power input (watts, W).

3

- 8DOE also examined the 2012 market distribution broken down by the considered product

classes described in section 3.3 . The results are shown in Table 3.4

. 5

.

Table 3.4

. 5 Estimates of CFLK Market Shares in 2012 by Product Class u nder

Consideration

Product Class Market Share

Externally Ballasted/Driven CFLKs 0.5%

All Other CFLKs 99.5%

DOE used the shelf surveys conducted at Home Depot, Lowe’s

, and Wal

- Mart to examine socket and lamp wattage combinations that are typically found in product class 1 and product class 3 products. h Product class 2 is not presented because of its small market share and because almost all product class 2 products use a single circline lamp. As shown in Figure 3.4

. 1

and Figure 3.4

. 2 , DOE found a large diversity of combinations in the two product classes. In product class 1 most products have 1 to 4 lamps, with two 14 W lamps dominating. Product class 3 products also typically include 1 to 4 lamps, but with a broader range of wattages and a

diver sity of socket types. However, 2

- lamp and 3

- lamp candelabra sockets clearly dominate the

market.

Figure 3.4

. 1 Percentage of Shelf Offerings by Socket and Lamp Wattage Combinations

for Product Class 1

h This analysis is based directly on the observations of models found in shelf surveys and does not include re

weighting for market share, as was described in the market share analysis. 12% 6% 15% 8% 2% 2% 25% 11% 2% 2% 5% 12%

0% 5% 10% 15% 20% 25% 30% 4x14w

3x9w 3x14w 3x13w 3x10w 2x18w 2x14w 2x13w 1x23w 1x20w 1x14w 1x13w

3

- 9Figure 3.4

. 2 Percentage of Shelf Offerings by Socket and Lamp Wattage Combinations

for Product Class 3

3.4.3 Historical Shipments

DOE used data from the NPD Group and ENERGY STAR ® to estimate historical shipmen ts of CFLKs

. Table 3.4.6 shows estimates of total U.S. shipments of ceiling fans sold with and without CFLKs, along with shipments of ceiling fans for which it was not specified if the ceiling fan was sold with or without a CFLK. Because these data do not capture CFLKs sold

alone and t he ‘not specified’ responses could be with or without a CFLK, CFLK sales can only be approximated from these data.

Table 3.4

. 6 NPD Estimates of Historical Shipments of Ceiling Fans

Number of Units 2007 2008 2009 2010 2011

With CFLK 14,899,594 15,485,300 16,015,248 14,414,909 14,597,241

Without CFLK 2,176,229 2,226,826 2,106,832 2,184,390 2,035,746

Not Specified 3,970,371 3,080,311 3,561,611 2,830,707 2,140,867

Source: NPD Group (2007

- 2011).

Using the data in Table 3.4

. 6 and assuming that the ratio of ceiling fans sold with and

without CFLKs is the same for the customers who did and did not specify, DOE estimated the total shipments of ceiling fans sold with and without CFL Ks and the percentage of ceiling fan s sold with CFLKs in each year. The results are shown in Table 3.4

. 7 . While there is significant variability in the estimated annual sales, the percentage of ceiling fans sold with CFLKs

remain ed between 87% and 88% throughout the five

- year period. 3%

4% 11% 26% 20% 15%

3%

2% 3% 3% 3%

2% 3%

1% 3%

0% 5% 10% 15% 20% 25% 30% Other 4x60w 4x30w 3x60w 3x50w 3x30w 3x13w 2x60w 2x14w 2x13w 1x13w 1x100w

Cand

GU10

GU24

MiniCand

intLED

3

- 10Table 3.4

. 7 DOE Estimates of Historical Shipments of Ceiling Fans

Number of Units 2007 2008 2009 2010 2011

With CFLK 18 ,360,000 18,180,000 19,160,000 16,870.000 16,480,000

Without CFLK 2,680,000 2,610,000 2,520,000 2,560,000 2,290,000

Total 21,050,000 20,790,000 21,680,000 19,430,000 18,770,000

% with CFLK 87% 87% 88% 87% 88%

DOE acknowledges that the total values shown in Table 3.4

. 6 may set a lower bound on CFLK shipments

, because some occurrences of CFLKs sold alone may not be captured

. However, DOE believes that actual shipments are unlikely to greatly exceed this valu e. DOE

also believes that the NPD data on ceiling fans sold with CFLKs represent purchases made at the same time, not necessarily CFLKs that are packaged with ceiling fans at the time of purchase

. DOE believes that consumers are likely to want to purchase the CFLK at the same time as the ceiling fan to en sure that the products match well

, which suggests that the NPD data would account for this scenario. In addition, because CFLKs are likely to last longer than ceiling fans,

as CFLKs do no t have moving parts , CFLKs are unlikely to be replaced before the ceiling fan fails, at which time both products are likely to be retired. For these reasons DOE believes that CFLK sales are approximately 88% of ceiling fan sales. DOE notes that this value is consistent

with recent user surveys of ceiling fan owners that found that 89% of ceiling fans had CFLKs

installed

. 2

3.5 TECHNOLOGY ASSESSMENT

The technology assessment identifies technology options that improve CFLK efficiency. This assessment provides the technical background and structure on which DOE bases its screening and engineering analyses. The technology assessment begins with a descrip tion of the basic structure and operation of CFLKs and then develops a list of technology options considered in the screening analysis.

In preparation for the screening and engineering analyses, DOE prepared a brief description of the characteristics and operation of CFLKs. These descriptions provide a basis for understanding the technologies used to improve product efficiency. CFLKs by definition are designed to couple to ceiling fans, from which they draw their power. CFLKs are typically purchased at th e same time as the ceiling fans, and DOE assumes that they are also retired together. Therefore

, the CFLK is assumed to have the same lifetime as the associated ceiling fan. DOE has investigated the life expectancy of ceiling fans and provides details on t his assessment

in the TSD of the concurrent ceiling fans energy conservation standards rulemaking. Based on

that work

, DOE estimates a mean lifetime of 13.8 years.

According to the ALA, in mass market retail outlets, which constitute more than 80 % of

sal es, about 90 % of ceiling fan s come pre

- packaged with CFLKs. In lighting showrooms only

about 50 % of ceiling fans come pre

- pack aged with CFLKs, but about 95 % can accommodate them. By law, CFLKs come packaged with lamps to fill all sockets. (42 U.S.C. 6295 ( ff))

3

- 11The lamps used in CFLKs utilize many different socket types , as shown in Table 3.5

. 1

. While some socket types have restrictions on the types of lamps that can b e use in them based on the lamps ’ power consumption or efficiency, i the socket itself does not affect energy use.

Therefore

, DOE is not considering including socket type when defining technology options in this rulemaking.

Table 3.5

. 1 Socket Types used for Ceiling Fan Light Kits Socket Types

2GX13

E11 Mini Candelabra

E12 Candelabra

E26 Medium G10q

G9

GU10

GU24

Lamps are the components that have the greatest impact on CFLK active

- mode power consumption. Light source technology is the primary factor that affects lamp efficacy. Within light source type, there are many factors that affect lamp efficacy, including the characteristic s of

the power conditioning devices (ballasts and drivers) used to obtain the necessary circuit conditions to operate the light source. An estimated 99 % of CFLKs currently on the market (class 1 and class 3 CFLKs) use lamps that operate on mains power. Such lamps incorporate the ballast or driver, where necessary, into the lamp. In such cases, the efficacy impacts of these components are included in lamp testing.

For this rulemaking, DOE is considering not includ ing ballasts or drivers that are external

to consumer

- replaceable lamps as technology options for CFLK s. Currently

, CFLKs with pin

based fluorescent lamps (primarily circline lamps) are the only CFLKs on the market that use such lamps. These are estimated to constitute less than 1 % of the market and are expected to be rapidly displaced by CFLKs with insepa rable solid

- state lighting. The concurrent CFLK test procedure NOPR ( issued on October 2 7 , 2014 ) proposes to rate the efficacy of such a CFLK as the efficacy of its lamp (or lamps) tested on its reference ballast. CFLK efficiency standards and test procedures thus would not be based on the performance of the ballasts that actually operate the lamps in the CFLKs. In the preliminary energy use analysis, DOE adjusts the performance of the lamp operating on the reference ballast to ref lect its expected energy use when operated on ballasts typically used in CFLKs. DOE requests comments on its approach.

Manual and automated lighting controls can reduce CFLK energy use by turning lights off or down when light output is not needed. Based on DOE’s research, other than on

- off switches, the only controls currently sold with or for CFLKs are manual controls (di mming or

i For example, the American National Standards Institute requires that GU24 bases utilize high

- efficacy lamps (American National Standard for Electric Lamp Bases, ANSI_ANSLG C81 .61

- 2009).

3

- 12multi

- level) that can be operated by remote control or at the wall switch. The controls for the CFLK are combined with those of the ceiling fan into a single device. Ceiling fan

- CFLK controls often are sold separately from the ceiling fan

- CFLK.

D OE is considering not includ ing lighting controls as a technology option in this rulemaking. T he energy savings from controls cannot be measured by the methods specified in

the CFLK test procedure

. Generally

, remote controls are the only method of lighting control packaged with a CFLK and

, therefore

, these controls could potentially be regulated with the CFLK, but such controls are virtually always incorporated into the fan housing and control both the ceiling fan and the CFLK. As proposed in the ceiling fa n test procedure NOPR, DOE plans to incorporate the energy use of wireless receivers for remote controls into its ceiling fan test procedure. 79 FR 62521

.

In this rulemaking, DOE is therefore considering more efficacious light sources as the only technolo gy option to increase CFLK efficacy. With respect to current designs in which light sources are typically incorporated into consumer

- replaceable lamps, the technology options are therefore lamps of different efficacies. The efficacies of lamps designed for socket types currently used in CFLKs range from less than 10 lm/W to nearly 100 lm/W. As mentioned previously, products are now beginning to enter the market in which the lighting is integral to ( i.e., not consumer

- separable from) the CFLK. As described i n the concurrent CFLK test procedure rulemaking ( issued on October 2 7 , 2014 )

, DOE is proposing to use luminaire photometry to measure the efficiency of CFLKs with integrated solid

- state lighting (SSL) circuitry. In that case, the light source is the technology option DOE is addressing in this rulemaking. DOE notes that luminaire optical design also affects luminaire lumen output ; however

, DOE does not plan to consider luminaire design as a t echnology option because the

standard un der consideration for other products in the All Other CFLKs product class is based on lamp efficacy, and DOE believes that products tested using luminaire photometry would not be eliminated if luminaire design were not incorporated as a technology option.

3.6 REGULATORY AND NON

- REGULATORY PROGRAMS

3.6.1 Regulatory Programs

The National Appliance Energy Conservation Act of 1987, codified in 42 U.S.C. 6297(b), established a general rule that federal appliance standards preempt state standards,

unless the state rule w as prescribed or enacted before January 8, 1987, and for certain other exceptions. DOE knows of no state rule on CFLKs that was promulgated before 1987, and of no other exceptions that apply to CFLKs. While the states of Maryland, New York, and California all enacted standards after 1987, these rules are now preempted by the federal standard.

Since January 2010, Canada has required a 190 W wattage limiter on any CFLKs that have any sockets that are not pin

- based (CSA C22.2 No. 9). This includes CFLKs with integrated lights that have total electrical power greater than 10 W that also include at least one socket that is not pin

- based.

3

- 133.6.2 Non

- Regulatory Initiatives

DOE reviewed several national, regional, and local voluntary programs that promote the

use of ene rgy efficient lighting in the United States. ENERGY STAR operates the most significant voluntary program. It is a joint program of DOE and the U.S. Environmental Protection Agency (EPA) that is designed to protect the environment by promoting energy

effici ent products and practices. 3 To qualify, a product must usually exceed federal minimum standards by a specified amount, or

, if no federal standard exists, it must meet minimum efficiency levels set by the program and/or exhibit selected energy

- saving features. ENERGY STAR creates minimum energy efficiency specifications for various products, including CFLKs

.

The ENERGY STAR program requirements for CFLKs are specified in its Program Requirements for Luminaires, version 1.2 , which became effective December 21, 2012. 4 The current program requirements specify criteria for directional residential CFLKs under accent lights and for non

- directional reside ntial CFLKs under indoor ceiling/close

- to

- ceiling mount

luminaires. To qualify for the ENERGY STAR label, directional residential products must be evaluated with luminaire photometry and non

- directional residential products must be evaluated with source ph otometry requirements. j For directional residential CFLKs, the program specifies criteria for initial luminaire efficacy, initial luminaire minimum light output, and luminaire zonal lumen density requirement. For non

- directional residential CFLKs , the prog ram specifies criteria

f or initial source minimum light output.

Table 3.6

. 1 shows ENERGY STAR’s estimates of the sales of ENERGY STAR CFLKs

from 2004 to 2012. As ind icated in the table, ENERGY STAR CFLKs constitute a very small fraction of the total market. The reason for this is that CFLKs do not qualify for ENERGY STAR certification if they use sockets that can accommodate low

- efficacy lamps. Therefore the two

domin ant CFLK socket types

— candelabra and medium screw base

— are not applicable for

ENERGY STAR certification

.

j CFLKs that use screw base lampholders, like ANSI E26, E26d E12, E17, E39, E39d , without dedicated ballasts are not eligible to qualify for the ENERGY STAR label.

< http://www.energystar.gov/ia/partners/product_specs/program_reqs/Final_Luminaires_V1_2.pdf?3c71

- 128e >

3

- 14Table 3.6

. 1 Sales of ENERGY STAR CFLKs from 2004

- 2012 in Thousands

Year Sold W ith C eiling F ans Sold W ithout C eiling

F ans Total

2004 166 24.9 191

2005 368 130 499

2006 117 12.0 129

2007 132 21.1 153

2008 127 45.4 172

2009 219 61.0 280

2010 304 171 475

2011 581 67.0 648

2012 621 167 788

REFERENCES

1. Heffron, Aaron J. Personal Communication. The NPD Group, Inc., Email to Hung

- Chia Yang, LBNL. June 4, 2012.

2. Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.

— Results of a Survey on Amazon Mechanical Turk. July 2013. Lawrence Berkeley National Laboratory, Berkeley, CA. Report No. LBNL

- 6332E. (Last Accessed March 27, 2014) http://www.escholarship.org/uc/item/3r67c1f9

3. U.S. Environmental Protect ion Agency and U.S. Department of Energy. About ENERGY STAR. (Last Accessed http://www.energystar.gov/index.cfm?c=about.ab_index

4. ENERGY STAR Program Requirements for Luminaires, ver sion 1.2. (Last Accessed March 28, 2014.) http://www.energystar.gov/ia/partners/product_specs/program_reqs/Final_Luminaires_V 1_2.pdf

3

- 15CHAPTER 4. SCREENING ANALYSIS

TABLE OF CONTENTS

4.1 INTRODUCTION

................................ ................................ ................................ ........... 4

- 1

4.2 REMAINING T ECHNOLOGIES

................................ ................................ ................... 4

- 2

4.2.1 CFLKs with Externally

- Ballasted or Driven Lamps Design Options

................. 4

- 2

4.2.2 All Other CFLKs Design Options

................................ ................................ ........ 4

- 2

4

- iCHAPTER 4. SCREENING ANALYSIS

4.1 INTRODUCTION

This chapter discusses the U.S. Department of Energy’s (DOE) screening analysis of the technology options identified for lamps used in ceiling fan light kits ( CFLK s )

. As discussed in

c hapter 3 of this preliminary technical support document ( TSD )

, DOE consu lts with industry, technical experts, and other interested parties in developing a list of technology options for consideration. The purpose of the screening analysis is to evaluate th e list of options and

determine which to consider further and which to s creen out.

Section 325(o)(2) of the Energy Policy and Conservation Act ( EPCA ) provides that any new or revised standard must be designed to achieve the maximum improvement in energy efficiency that is determined to be technologically feasible and economica lly justified. (42 U.S.C. 6295(o)(2)) In view of the EPCA requirements for determining whether a standard is technologically feasible and economically justified, A ppendix A to S ubpart C of Title 10, Code of Federal Regulations (CFR) , Part 430, “Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” (the Process Rule) sets forth procedures to guide DOE in its consideration and promulgation of new

or revised ef ficiency standards. These procedures elaborate on the statutory criteria provided in 42 U.S.C. 6295(o) and, in part, eliminate problematic technologies early in the process of prescribing or amending an energy efficiency standard. In particular, sections 4 (b)(4) and 5(b) of the Process Rule provide guidance to DOE for determining which technology options are

unsuitable for further consideration:

1. Technological feasibility. DOE will consider technologies incorporated in commercial ly

available products or in working prototypes to be technologically feasible.

2. Practicability to manufacture, install, and service. If mass production of a technology and reliable installation and servicing of the technology could be achieved on the scale necessary to serve the relev ant market at the time the standard requires compliance , then DOE will consider that technology practicable to manufacture, install, and service.

3. Adverse i mpacts on product utility or product availability

. If DOE determines a technology would have signific ant adverse impact on the utility of the product to significant subgroups of consumers, or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes tha t are substantially the same as products generally available in the United States at the time, it will not further consider this technology.

4. Adverse impacts on health or safety

. If DOE determines that a technology will have significant adverse impacts on h ealth or safety, it will not further consider this technology.

4

- 1DOE did not screen out any technology options from further consideration

. Section 4.2

lists the technology options not screened out and considered as design options in this preliminary analys is

. The market and technology assessment ( see c hapter 3 of this preliminary technical support document [ TSD ] ) discusses in detail all technology options analyzed in this preliminary analysis

.

4.2 REMAINING TECHNOLOGIES

After considering screening out technologies in accordance with the policies set forth in 10 CFR Part 430, Subpart C, Appendix A, (4)(a)(4) and 5(b), DOE is considering the design options in the followi ng list as viable means for improving efficacy. T hese design options are being utilized in commercially available lamps and have demonstrated that they are technologically feasible, practicable to manufacture, install, and service, and do no t result in

adv erse impacts on product utilit y /availability or health and safety

. The market and technology

a ssessment ( see c hapter 3 of this TSD ) provides a detailed description of these design options.

4.2.1 CFLKs with Externally

- Ballasted or Driven Lamps Design Options

• More efficacious light sources

4.2.2 All Other CFLKs Design Options

• More efficacious light sources

DOE will consider the se options in the engineering analysis as a viable means for improving lamp efficacy

.

4

- 2CHAPTER 5. ENGINEERING ANALYSIS

TABLE OF CONTENTS

5.1 INTRODUCTION

................................ ................................ ................................ ........... 5

- 1

5.2 METHODOLOGY OVERVIEW

................................ ................................ .................... 5

- 1

5.3 ANALYSIS

................................ ................................ ................................ ...................... 5

- 2

5.3.1 Representative Product Classes

................................ ................................ ........... 5

- 2

5.3.2 CFLKs with Externally

- Ballasted or Driven Lamps Product Class

.................... 5

- 3

5.3.2.1 Existing Standards

................................ ................................ ...................... 5

- 3

5.3.2.2 Baseline Lamps

................................ ................................ .......................... 5

- 4

5.3.2.3 More Efficacious Substitutes

................................ ................................ ..... 5

- 7

5.3.2.4 Lamp

- and

- Ballast Systems

................................ ................................ ......... 5

- 8

5.3.2.5 Candidate Sta ndard Levels

................................ ................................ ....... 5

- 10

5.3.3 All Other CFLKs Representative Product Class

................................ ................ 5

- 13

5.3.3.1 Existing Standards

................................ ................................ .................... 5

- 13

5.3.3.2 Baseline Lamps

................................ ................................ ........................ 5

- 14

5.3.3.3 More Efficacious Substitutes

................................ ................................ ... 5

- 15

5.3.3.4 Candidate Standard Levels

................................ ................................ ....... 5

- 16

5.3.4 Scaling to Other Product Classes

................................ ................................ ....... 5

- 21

5.3.5 Summary of All Candidate Standard Levels for CFLKs

................................ ... 5

- 21

REFERENCES

................................ ................................ ................................ .......................... 5

- 22

LIST OF FIGURES

Figure 5.3.1 Candidate Standard Level for CFLKs with Externally

- Ballasted or Driven Lamps

................................ ................................ ............................... 5

- 11 Figure 5.3.2 Candidate Standard Levels for All Other CFLKs: Lamp Replacement

Scenario

................................ ................................ ................................ ........ 5

- 18 Figure 5.3.3 Candidate Standard Levels for All Other CFLKs: Fixture Replacement

Scenario

................................ ................................ ................................ ........ 5

- 19

LIST OF TABLES

Table 5.3.1 Product Classes for Ceiling Fan Light Kits

................................ ................... 5

- 3

Table 5.3.2 Pin

- Based Product Class E xisting Standard Efficacy Requirements

............. 5

- 3

Table 5.3.3 Externally

- Ballasted Product Class Current Standard Efficacy Requirements

................................ ................................ ................................ . 5

- 4

Table 5.3.4 CFLKs with Externally Ballasted or Driven Lamps Product Class Baseline Lamp

- and

- Ballast System: Lamp Replacement

.............................. 5

- 6

Table 5.3.5 High Frequency Reference Lamp Arc Powers

................................ .............. 5

- 8

Table 5.3.6 CFLKs with Externally

- Ballasted or Driven Lamps Product Class Design Options: Lamp Replacement Scenario

................................ ............ 5

- 12

5

- iTable 5.3.7 CFLKs with Externally

- Ballasted or Driven Lamps Product Class Design Options: Light Kit Fixture Replacement Scenario

.......................... 5

- 12

Table 5. 3.8 CSL 1 for CFLKs with Externally

- Ballasted or Driven Lamps

.................. 5

- 13

Table 5.3.9 Medium Screw Base Product Class Current Standard Effi cacy Requirements

................................ ................................ ............................... 5

- 13

Table 5.3.10 All Other CFLKs Product Class Current Standard Efficacy Requirements

................................ ................................ ............................... 5

- 14

Table 5.3.11 All Other Product Class Baseline Lamp: Lamp Replacement

..................... 5

- 15

Table 5.3.12 All Other CFLKs Product Class Design Options: Lamp Replacement

Scenario

................................ ................................ ................................ ........ 5

- 19

Table 5.3.13 All Other CFLKs Product Class Design Options: Light Kit Fixture Replacement Scenario

................................ ................................ .................. 5

- 20

Table 5.3.14 CSLs for All Other CFLKs Product Class

................................ ................... 5

- 20

Table 5.3.15 Summary of Candi date Standard Levels for CFLKs

................................ ... 5

- 21

5

- iiCHAPTER 5. ENGINEERING ANALYSIS

5.1 INTRODUCTION

The U.S. Department of Energy (DOE) performed engineering analyses for ceiling fan light kits (CFLKs). This chapter of the preliminary technical support document (TSD) provides the analyses DOE used to study representative lamp unit s and to select candidat e standard levels (CSLs). After selecting representative product classes, DOE then selects lamps packaged with CFLKs that represent the baseline efficacy, as well as more efficacious substitutes for those baseline lamps. DOE uses these more efficacious lam ps to develop CSLs. While DOE establishes CSLs based on lamp designs for the engineering analysis, for externally

- ballasted lamps packaged with CFLKs it also develops lamp

- and

- ballast systems for use in the life

- cycle cost (LCC) analysis and national impac t analysis (NIA) because externally

- ballasted lamps operate together with a ballast in practice.

In energy conservation rulemakings for other products, DOE often develops cost

efficiency relationships in the engineering analysis. However, for this CFLK rul emaking, DOE derives CSLs in the engineering analysis and consumer prices in the product price determination. By combining the results of the engineering analysis and the product price determination, DOE derives typical inputs for use in the LCC and NIA. S ee chapter 7 of this TSD for discussion of DOE’s methodology for determining product prices.

5.2 METHODOLOGY OVERVIEW

To the extent possible, DOE bases the engineering analysis on commercially available lamps that incorporate the design options identified in t he technology assessment and screening analysis (chapters 3 and 4 of this TSD). The engineering analysis for the CFLKs that DOE analyzes in this rulemaking follows a similar approach:

1. Select representative product classes: DOE first reviews CFLKs covered u nder the scope of the rulemaking and the associated product classes. When a product has multiple product classes, DOE selects certain classes as “representative” and concentrates its analytical effort on these classes. DOE selects representative product classes primarily because of their high market volumes and/or distinct characteristics. For those product classes that are not analyzed, DOE extrapolates the CSLs from representative product classes.

2. Select baseline lamps : For each representative product class, DOE selects a baseline lamp packaged with a CFLK as a reference point against which to measure changes resulting from energy conservation standards. Typically, a baseline model is the most common, least efficacious lamp in a CFLK sold in a given pro duct class. For this preliminary analysis, DOE uses performance data presented in lamp manufacturer catalogs to determine lamp efficacy. DOE also considers other lamp characteristics in choosing the most appropriate baseline for each product class, such as wattage, lumen output, and lifetime.

3. Identify more efficacious substitutes : DOE selects higher efficacy lamps as replacements for each of the baseline models considered. When selecting higher efficacy lamps, DOE

5

- 1considers only design options that meet th e criteria outlined in the screening analysis (see chapter 4 of this TSD). For the CFLKs with Externally

- Ballasted or Driven Lamps (“Externally

- Ballasted/Driven”) product class, DOE pairs each representative lamp unit with an appropriate ballast because th ey are fluorescent lamps, which are a component of a system, and their performance is related to the ballast on which they operate.

4. Determine Candidate Standard Levels

. After identifying more efficacious substitutes for each baseline lamp, DOE develops CS Ls. DOE bases its analysis on three factors: (1) the design options associated with the specific lamps studied; (2) the ability of lamps across wattages to comply with the standard level of a given product class; a and (3) the maximum technologically feasib le (“max tech”) CSL . DOE then scales the CSLs of representative product classes to those product classes not directly analyzed.

The sections that follow discuss how DOE applies this methodology to each CFLK product class to create the engineering analysis

.

5.3 ANALYSIS

5.3.1 Representative Product Classes

As discussed in the market and technology assessment (chapter 3 of this TSD), DOE is considering two separate CFLK product classes based on one class

- setting factor: the ballast configuration of the lamp packaged with the CFLK. The Externally

- Ballasted/Driven product

class includes products such as CFLKs packaged with fluorescent lamps or compact fluorescent lamps ( CFLs ) with external ballasts and CFLKs that use solid state lighting in which the driver is

external to the light source

. DOE considered the Externally

- Ballasted/Driven product class as representative because the CFLK s in this class offer a different utility in their ability to allow the consumer to replace the lamp or ballast /driver . Additionally, the e fficacies of externally

ballasted/driven lamps do not include losses from the ballast. Thus, lamps in the Externally

Ballasted/Driven product class have a different cost

- efficiency relationship than lamps in the All Other CFLKs product class. The All Other CFLKs product class includes all CFLKs that are not in the Externally

- Ballasted/Driven product class, including products such as CFLKs that are packaged with CFLs and LED lamps with integral ballasts and solid state lighting systems in

which the driver is integrated into the light source . DOE considered t he All Other CFLKs product class as representative because it constitutes a major market share of CFLKs sold.

Table 5.3

. 1 lists the two product classes and identifies the representative product classes (indicated by gray shading) that DOE is considering in this preliminary analysis.

a CSLs span multiple lamps of different wattages. In selecting CSLs, DOE considered whether these multiple lamps

can meet the standard levels.

5

- 2Table 5.3

. 1 Product Classes for Ceiling Fan Light Kits

Product Class

CFLKs with Externally

- Ballasted or Driven Lamps

All Other CFLKs

5.3.2 CFLKs with Externally

- Ballasted or Driven Lamps Product Class

5.3.2.1 Existing Standards

Current standards for CFLKs , codified at 10 CFR 430.32(s), are divided into three product classes: (1) Ceiling fan light kits with medium screw base sockets (hereafter referred to as the “Medium Screw Base product class”) ; (2) Ceiling fan light kits with pin

- based sockets for fluorescent lamps (hereafter referred to as the “Pin

- B ased product class”) ; and, (3) C eiling fan light kits with socket types other than those covered for the previous two product classes, including candelabra screw base sockets (hereafter referred to as the “Other Base Type product class”)

.

Current standards require lamps in the pin

- based product class to “meet the ENERGY STAR Program Requirements for Residential Light Fixtures version 4.0.” 10 CFR 430.32(s) The minimum efficacy requirements specified in the ENERGY STAR Program Requirements f or Residential Light Fixtures version 4.0 1 are summarized in Table 5.3

. 2

.

Table 5.3

. 2 Pin

- Based Product Class Existing Standard Efficacy Requirements

Lamp Power Lamp Length System Efficacy per Lamp Ballast Platform

W in lm/W

< 30 All 50

> 30 < 24 60

> 24 70

DOE determined that the produ c ts in the Externally

- Ballasted/Driven Lamps product

class are subjected to the same efficacy standards as the existing P in

- B ased product class. For products with wattages less than 30 W, DOE set the baseline efficacy at the existing system efficacy standard of 50 l m/W. The Energy Policy and Conservation Act (EPCA) contains what is

known as an “anti

- backsliding” provision, which prevents DOE from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. 42 U.S.C. 6295(o)(1) DOE is not considering length as a class setting factor in this analysis

. Therefore , f or products with wattages 30 W or

greater

, DOE set the baseline at the higher of the two current standards (s ystem efficacy of 70

lm/W )

. Additionally, f or the Externally

- Ballasted/Driven product class, DOE used the catalog

lumens and the American National Standards Institute ( ANSI ) rated wattage of the lamp, or

5

- 3catalog wattage if the ANSI rated wattage was not av ailable, to calculate efficacy. T he bas eline efficacy requirements are shown in Table 5.3

. 3

.

Table 5.3

. 3 Externally

- Ballasted Product Class Current Standard Efficacy Requirements

Lamp Power System Efficacy per Lamp Ballast Platform

W lm/W

< 30 50

> 30 70

The existing standards for CFLKs in the Externally

- Ballasted/Driven product class are based on the system efficacy of the lamp

- and

- ballast system packaged with the CFLK. Thus, DOE selected lamp

- and

- ballast pairings for the baseline and representative lamp units such that the system efficacy is greater than or equal to current standards. b H owever, because this analysis is considering a lamp efficacy metric for all CFLKs, the CSL for this product class is based on the lamp efficacy of the more efficacious substitute selected.

5.3.2.2 Baseline Lamps

DOE selects baseline lamps that are typically the most common, least efficacious lamps in a CFLK that meet existing energy conservation standards. Specific lamp characteristics are used to characterize the most common lamps packaged with CFLKs today ( e.g. , wattage and light output). To identify baseline l amps, DOE reviews product offerings in catalogs and manufacturer feedback obtained during interviews.

In th is preliminary analysis, DOE selected lamps representative of the most common, least efficacious lamps packaged with CFLKs in the Externally

- Ballaste d/Driven product class that just meet existing CFLK standards. DOE selected baseline lamps as reference points from which to measure changes resulting from potential energy conservation standards. To determine energy savings and changes in price, DOE compa red representative lamp units at each higher efficacy level with the baseline unit.

DOE considered a number of criteria , such as lamp type, wattage, lamp diameter, base

type, correlated color temperature ( CCT )

, and lifetime when selecting which commercially available lamp would serve as a baseline. Regarding lamp type, DOE considered e xternally

ballasted fluorescent lamps, externally

- ballasted CFLs, and externally

- driven LEDs in the analysis. DOE selected a circular fluoresce nt lamp based on a review of product offerings and manufacturer feedback indicating that a majority of externally

- ballasted lamps packaged with CFLKs are circular fluorescent lamps.

DOE determined that 22 watts ( W ) is the most common wattage and that T9 is the most common diameter for circular fluorescent lamps packaged with CFLKs. T9 circular fluorescent lamps are associated with the G10q base type. For the 22 W T9 circular fluorescent lamp, DOE

b In this analysis, DOE found that LED light source/driver systems did not meet the criteria to be selected as a baseline or representative lamp unit.

5

- 4identified a CCT of 4,100 K and a rated lifetime of 12,000 ho urs as the typical performance

characteristics among commercially available lamps.

As noted, t ypically, a baseline product is a unit that just meets the existing energy conservation standard for the product . The current standards are based on system effic acy. Thus,

DOE selected a baseline representative lamp unit and paired it with a ballast so that the system
efficac y just meet s standards (50 lm/W for the less than 30 W products in this product class , see section 5.3.2.1 for further details )

. To develop representative lamp

- and

- ballast system pairings for the Externally

- Ballasted/Driven product class, DOE used the most common fluorescent lamp

ballasts on the m arket. Specifically, DOE chose to pair electronic ballasts with the representative lamp units selected in this rulemaking to represent the lamp

- and

- ballast combinations present in

the market.

In summary, f or the Externally

- Ballasted/Driven product class, D OE identified a lamp

with a n initial lamp efficacy of 42.2 lm/W to be the most common, least efficacious circular fluorescent lamp available. When paired with an electronic ballast, the system efficacy of this lamp

- and

- ballast combination is 50.3 lm/W. See section 5.3.2.4 on lamp

- and

- ballast system

calculations.

Table 5.3

. 4 pro vides detailed information on the Externally

- Ballasted/Driven baseline representative lamp unit used in the engineering analysis and subsequent analyses.

5

- 5Table 5.3

. 4 CFLKs with Externally Ballasted or Driven Lamps Product Class Baseline Lamp

- and

- Ballast System: Lamp Replacement

Bulb Shape Base Type Lamp

Diameter Nominal Wattage ANSI

Rated Wattage System Input

Power Lamp

Initial Light Output System

Initial Light Output Lamp

Rated Efficacy * System Efficacy CRI c CCT Lamp

Lifetime

W W W lm lm lm/W lm/W K hr

T9

Circular G10q T9 22 22.5 17.0 950 855 42.2 50.3 80 4,100 12,000

* Lamp Rated efficacy is catalog initial lumen output divided by the ANSI rated wattage.

Baseline Fixture

As described in more detail in the discussion of the selection of more efficacious substitutes (section 5. 3.2.3 ) , DOE selected

baselines and more efficacious substitut es taking into consideration two different substitution scenarios: (1) a lamp replacement scenario and (2) a light kit fixture replacement scenario. In the lamp replacement scenario

, the more efficacious substitute must have the same base type as the bas e l ine lamp and no changes to the fixture are made. In the fixture replacement scenario, a more efficacious fixture is chosen, allowing for a more efficacious lamp substitute with a different base type than the baseline lamp and a ch ange in

number of sockets.

Both the lamp and fixture replacement scenario use the same baseline lamp. However, in the fixture replacement scenario

, DOE also identified a baseline fixture consisting of the most common number of sockets

, each containing the baseline lamp. Specifical ly, b ased on commercially available product information, DOE determined that the most common number of sockets in CFLKs that use externally

- ballasted or driven lamps is one.

c Color Rendering Index

5

- 65.3.2.3 More Efficacious Substitutes

After choosing a baseline lamp , DOE identifies commercially available lamps that can

serve as more efficacious substitutes. When identifying higher efficacy replacement lamps, DOE used lamp efficacy values determined using catalog lumens and the ANSI rated wattage of the lamp, or catal og wattage if the ANSI rated wattage was not a vailable

. DOE utilized a database of commercially available lamps and selected more efficacious replacement lamps that both save

energy d and maintain comparable light output to the baseline lamp

. Specifically, DOE ensured that potential substitutions maintained light output within 10 percent of the baseline system lumen output (for the lamp replacement scenario) and within 10 percent of the baseline fixture

system lumen output (for the light kit fixture replacem ent scenario)

. See section 5.3.2.4 for further details on the system power rating and system lumen output determination. Further, DOE

considered onl y technologies that met all four criteria in the screening analysis.

Regarding the lamp characteristics of the substitutes, DOE selected replacement lamp units with lifetimes greater than or equal to the lifetime of the baseline lamp. DOE also selected

rep lacement lamp units with a CRI and CCT that was comparable to that of the baseline representative lamp unit . DOE ensured that the length of the replacement lamp unit was less than or equal to the length of the baseline lamp so that the replacement lamp uni t c ould fit in the same light kit.

As mentioned previously , for each representative product class, DOE considered more efficacious lamps under two different substitution scenarios: (1) a lamp replacement scenario and (2) a light kit fixture replacement sc enario. In the lamp replacement scenario, DOE assumed that manufacturers would maintain the original fixture design, including the number of sockets, and only replace the lamp. Thus, the base types of the more efficacious substitutes were selected to

be th e same as the baseline lamp base type. Further, i n the lamp replacement scenario, DOE

selected reduced wattage replacement lamps that can operate on the installed ballast

.

In the light kit fixture replacement scenario, DOE accounted for the possibility that manufacturers may change fixture designs. Thus, the base types of the more efficacious substitutes were not required to be the same as the baseline lamp and the number of sockets could be changed. DOE determined that the most common number of sockets in CFLKs that use externally

- ballasted lamps is one; thus DOE selected a baseline fixture with one socket containing the baseline lamp. DOE considered more efficacious replacement fixtures with between one and four sockets, which are the common socket coun ts in CFLKs on the market. Varying the number of sockets allows for a wider variety of lamp types, wattages and lumen packages to be considered. DOE calculated the total lumen output and wattage of the fixture as the product of the lumen output of each lam p or wattage of each lamp, respectively, and the total number of lamps. More efficacious substitu t es were selected such that they have a both a lower fixture wattage and higher efficacy than the previous level and maintain fixture light output within 10 pe rcent of the baseline fixture.

d DOE allows for substitutions that both save energy and do not save energy in the NIA.

5

- 7DOE also allowed for a different ballast to be paired with the representative lamp unit than the one paired with the baseline lamp in the fixture replacement scenario. Changing the ballast allows for CFLs and other products with different base types to be considered, as replacement units are not restricted to being compatible with the baseline ballast. Because DOE did not consider a complete change in fixture type beyond changing the base type and the number of sockets, DOE d id not consider LED light source and driver systems as replacements.

5.3.2.4 Lamp

- and

- Ballast Systems

As described in more detail in the sections above

, because the representative lamp units

selected are externally

- ballasted lamps

, which operate on a ballast in pr actice, DOE analyzed lamp

- and

- ballast systems in the engineering analysis. DOE believes that pairing a lamp with a ballast more accurately captures real

- world energy use and light output.

When the replacement lamp was paired with a ballast, DOE only consid ered lamp

- and

ballast systems that save energy. DOE chose to pair electronic ballasts with the representative lamp units selected to represent the lamp

- and

- ballast combinations present in the market. DOE ensured that the lamp

- and

- ballast system efficacy was greater than current standards to prevent backsliding.

DOE determined system lumen output by multiplying the lamp initial lumen output by

the ballast factor (BF) of the ballast it was paired with a nd the number of lamps operated by the lamp

- and

- ballast system. DOE determined energy consumption by calculating the system input power of the lamp

- and

- ballast system. The system input power represents the energy consumption rate of both the lamp and balla st, and therefore is greater than the rated power of the lamp alone. In addition to the rated lamp power, the system power is also affected by the number of lamps operated per ballast, type of ballast used ( i.e. , electronic or magnetic), starting method, a nd the ballast factor of that ballast.

DOE calculated the system input power for each ballast it paired with the representative lamp units at each CSL. The system input power depends on both the total lamp arc power operated by the ballast and the ballast luminious efficiency, or BLE. DOE first calculated the total lamp arc power of the system by multiplying the catalog BF, the number of lamps operated by the ballast, and the high frequency reference lamp arc power. Because DOE only analyzed

electronic ball asts in this rulemaking, all lamp

- and

- ballast systems were high frequency. The high frequency reference lamp arc powers are shown in Table 5.3

. 5 . If a high frequency reference arc power was not available for a specific lamp type, DOE used the nominal wattage.

Table 5.3

. 5 High Frequency Reference Lamp Arc Powers

Lamp Type Nominal Wattage High Frequency Reference Lamp Arc Power

FC8T9 2 2 22.5

FC6T9 20 19

CFQ13W/G24q 13

-

5

- 8BLE is dependent on the ballast efficiency factor (BEF). DOE use d the BEF values specified in catalogs for the selected ballast model to calculate BLE. Using the calculated total lamp arc power and calculated BLE value of the lamp

- and

- ballast system , DOE then calculated the system input power, equivalent to ballast input power, using Eq. 5

. 1 . This process was repeated for each lamp

- and

- ballast system pairing.

BLE = Total Lamp Arc Power

Ballast Input Power ∗ 100 ∗ β

Eq. 5

. 1

Where:

β = 1.0 for high frequency ballasts

For the 20 W fluorescent replacement lamp unit identified in the lamp replacement scenario, the ballast that was paired with the baseline did not have published specifications for operating reduced wattage lamps

. Thus, DOE had to determine the expected BLE using the known power

- efficiency relationship of ballasts. In the 2011 Ballast Rule, DOE developed a power law equation to model the trend between total lamp arc power and average BLE. The power law equation followed the form:

BLE = A

1 + B ∗ power − C
Eq. 5

. 2

Where :

power = total lamp arc power

Similar to the full wattage system, DOE first calculated the total lamp arc power of the

reduced wattage lamp

- and

- ballast system. DOE assumed that BF does not change when operating reduced wattage lamps and therefore used the catalog BF of the ballast when operating full wattage lamps to calculate the total lamp arc power for both full wattage and red uced

wattage systems.

In general, as lamp arc power increases or decreases, BLE increases or decreases as

well. e In the 2011 Ballast Rule, f DOE defined this relationship using the equation above. In this rulemaking, DOE assumed that this relationship hold s true for individual ballasts. Therefore, DOE assumed that an individual ballast operating full wattage lamps would have the same

coefficient B when operating reduced wattage lamps. The appropriate exponent C is dependent

e For more information on the power versus efficiency relationship of ballasts, please see TSD chapter 3 of the 2011 Ballast Rule, available on regulations.gov, docket number EERE

- 2007

- BT

- STD

- 0016 at www.regulations.gov/#!docketDetail;D=EERE

- 2007

- BT

- STD

- 0016

. f The final rule amending energy conservation standards for fluorescent lamp ballasts published in 2011 with a

c ompliance date of November 14, 2014. 76 FR 70548 (Nov. 14, 2011 ) . The full text and all related documents of the 2011Ballast Rule can be found on regulations.gov, docket number EERE

- 2007

- BT

- STD

- 0016 at www.regulations.gov/#!docketDetail;D=EERE

- 2007

- BT

- STD

- 0016

.

5

- 9on the ballast starting method , a nd was found to be 0.25 for Rapid Start ballasts

. g The coefficient

A was assumed to be one. h Using these assumptions and rearranging Eq. 5

. 2 to solve for B, DOE

was t hen able to calculate the new BLE for reduced wattage lamps by using the total lamp arc power when operating reduced wattage lamps and using the values for the coefficient B , the

exponent C , and the coefficient A as described above . Given this expected BLE and total lamp arc power calculated in the previous steps, DOE determined the system input power of the reduced wattage lamp

- and

- ballast system using Eq. 5

. 1

.

5.3.2.5 Candidate Standard Levels

DOE adopted an equation

- based approach to establish CSLs for CFLKs

. To develop the general form of the equation (shown in Eq. 5

. 3 ), DOE evaluated lamps with similar characteristics, such as technology, bulb shape, and lifetime, across a range of wattages.

Efficacy = A

1 + 9 ( W + 12 )

− 1
Eq. 5

. 3

For each representative lamp unit, DOE calculated the numerator

, A

, of the equation from the lamp efficacy . DOE then evaluated the equation against lamps with the same design options as the representative lamp unit for each C SL and made slight adjustments to capture the efficacy of lamps with those design options across a range of wattages.

The continuous equations specify a minimum lamp efficacy requirement across wattages and represent the efficacy a lamp achieves. Because t he equations account for variation in efficacy due to wattage, they can account for market shifts to new lamp wattages.

As mentioned, for each representative product class, DOE considered two scenarios: a lamp replacement scenario and a fixture replacement scenario. DOE selected CSLs that could be met by the more efficacious substitutes identified in the lamp replacement scenario. DOE also identified more efficacious fixture substitutes for the fixture replacement scenario that had efficacies equ al to or greater than the efficacies of the corresponding CSL based on the lamp replacement scenario.

In general terms, DOE based its CSLs on the design options described below.

CSL 1 : This candidate standard level can be achieved in the lamp replacement scenario

with a reduce d wattage, improved efficacy lamp or in the fixture replacement scenario with a one

socket fixture and an improved efficacy lamp

.

g The exponent C was found to be 0.25 for Instant Start/Rapid Start ballasts in the 2011 Ballast Rule. See chapter 5 of the 2011 Ballast Rule TSD, available on regulations.gov, docket number EERE

- 2007

- BT

- STD

- 0016 at www.regulations.gov/#!docketDetail;D=EERE

- 2007

- BT

- STD

- 0016

. h The coefficient A was used as an adjustment factor for testing variation when developing efficiency levels in the 2011 Ballast Rule. In this rulemaking, A was assum ed to be one as no adjustments were made to the ballast specifications used in the calculation.

5

- 10Figure 5.3

. 1 illustrates the CSL on a plot with the representative lamp unit s. The square box identifies the baseline lamp. The plot also shows the more efficacious substitute s DOE considered as replacement s

. For the lamp replacem ent scenario, t he replacement w as selected

such that it has both a lower lamp wattage and higher efficacy than the previous level and

maintain s lamp light output within 10 percent of the baseline lamp. For the fixture replacement scenario, b ecause proposed standards are based on lamp efficacy, not fixture efficacy, the lamp efficacy of each representative lamp unit is plotted. However, the replacement w as selected such

that it has both a lower fixture wattage and higher fixture efficacy than the previous le vel and

maintain s fixture light output within 10 percent of the baseline fixture.

Figure 5.3

. 1 Candidate Standard Level for CFLKs with Externally

- Ballasted or Driven Lamps

Table 5.3

. 6 presents detailed information on the representative lamps used in determining

the CSLs in the lamp replacement scenario for the Externally

- Ballasted/Driven representative product class. The CSLs identified are based on lamp efficacy.

5

- 11Table 5.3

. 6 CFLKs with Externally

- Ballasted or Driven Lamps Product Class Design Options: Lamp Replacement Scenario

Efficacy

Level Lamp Type Lamp

Diameter Base Type Nominal Wattage ANSI

Rated Wattage System Input

Power Lamp

Initial Light Output System

Initial Light Output CRI CCT Lamp

Lifetime Starting

Method Ballast

Factor BEF Lamp

Rated Efficacy * System Efficacy

W W W lm lm K hr lm/W lm/W

Baseline Fluorescent T9 G10q 22 22.5 17.0 950 855 80 4,100 12,000 RS i 0.9 5.29 42.2 50.3

CSL 1 Fluorescent T9 G10q 20 19 14.3 920 828 80 4,100 12,000 RS 0.9 6.29 48.4 57.9
* Lamp Rated efficacy is catalog initial lumen output divided by the ANSI rated wattage.

Table 5.3

. 7 presents detailed information on the representative lamps used in determining the CSLs in the fixture replacement scenario for the Externally

- Ballasted/Driven product class.

Table 5.3

. 7 CFLKs with Externally

- Ballasted or Driven Lamps Product Class Design Options: Light Kit Fixture Replacement Scenario

Efficacy

Level Lamp Type Lamp

Diameter Base Type Fixture

Sockets Lamp Wattage Fixture Wattage * System Input

Power Lamp

Initial Light Output System

Initial Light Output CRI CCT Lamp

Lifetime Starting

Method Ballast

Factor BEF Lamp

Rated Efficacy ** System Efficacy

W W W lm lm K hr lm/W lm/W

Baseline Fluorescent T9 G10q 1 22 22.5 17.0 950 855 80 4,100 12,000 RS 0.9 5.29 42.2 50.3

CSL 1 CFL

- G24q

- 1 1 13 13 16.0 900 900 82 4,100 17,000 PS j 1.0 6.25 69.2 56.3

* ANSI rated wattage of the lamp, or catalog wattage if the ANSI rated wattage was not a vailable.

* * Lamp Rated efficacy is catalog initial lumen output divided by the ANSI rated wattage.

Table 5.3

. 8 summarizes the efficacy requirements at CSL 1 for the Externally

- Ballasted/Driven product class.

i Rapid Start

j Programmed Start

5

- 12Table 5.3

. 8 CSL 1 for CFLKs with Externally

- B allasted or Driven Lamps

Candidate Standard Level Efficacy Requirement

CSL 1 62 /(1+9 * ( (W+12)

- 1 )) W = rated lamp wattage

5.3.3 All Other CFLKs Representative Product Class

5.3.3.1 Existing Standards

Current standards for CFLKs are divided into the Medium Screw Base, Pin

- B ased , and Other Base Type product classes

, as discussed in section 5.3.2.1 . Current standards require lamps in the Medium Screw Base product class to “meet the ENERGY STAR Program requirements for Compact Fluorescent Lamps, version 3.” 10 CFR 430.32(s) The minimum e fficacy requirements specified in the ENERGY STAR Program requirements for Compact Fluorescent Lamps, version 3 2 are summarized in Table 5.3

. 9

.

Table 5.3

. 9 Medium Screw Base Product Class Current Standard Efficacy Requirements

Configuration Lamp Power Minimum Efficacy

W lm/W

Bare lamp < 15 45.0

> 15 60.0

Covered lamp (no reflector) < 15 40.0

15 < lamp power < 19 48.0

19 < lamp power < 25 50.0

> 25 55.0

With reflector < 20 33.0

> 20 40.0

DOE determined that the products in the All Other CFLKs product class are subjected to the same efficacy standards as the existing Medium Screw Base product class. Because DOE

determined that lamp configuration is not a class setting factor in the new product class structure proposed in this analysis , the baseline efficacy requirements are determined by lamp wattage. Therefore, for products less than 15 W , DOE set the baseline efficacy at 45 lm/W, the highest of the existing st andards for that wattage bin

, to prevent backsliding. For the All Other CFLKs product class, DOE used the catalog lumens and the catalog wattage of the lamp to calculate efficacy

. The baseline efficacy requirements are shown in Table 5.3

. 10

.

5

- 13Table 5.3

. 10 All Other CFLKs Product Class Current Standard Efficacy Requirements

Lamp Power Minimum Efficacy

W lm/W

< 15 45.0

> 15 60.0

5.3.3.2 Baseline Lamps

DOE selects baseline lamps that are typically the most common, least efficacious lamps in a CFLK that meet existing energy conservation standards. Specific lamp characteristics are used to characterize the most common lamps packaged with CFLKs today ( e.g. , wattage and light output). To identify baseline lamps, DOE reviews product offerings in catalogs and manufacturer feedback obtained during interviews.

In this preliminary analysis, DOE selected lamps representative of the most common,

least efficacious la mps packaged with CFLKs in the All Other CFLKs product class that just meet existing CFLK standards. DOE selected baseline lamps as reference points from which to measure changes resulting from potential energy conservation standards. To determine energy

s avings and changes in price, DOE compared representative lamp units at each higher efficacy

level with the baseline unit.

DOE considered a number of criteria

, such as lamp type, base type, wattage, CRI, CCT,

and lifetime when selecting which commercially a vailable lamp would serve as a baseline. DOE

found that the most common lamp s packaged with CFLKs that just meet existing standards are medium base (E26)

, non

- dimmable

, bare spiral lamps with wattages of 13 W or 14 W. DOE

selected a 14 W CFL baseline based on its lower efficacy compared to comparable 13 W products. For the 14 W lamp, DOE identified a CRI of 82, a CCT of 2,700 K, and a rated lifetime of 10,000 hours as the typical performance characteristics among commercially

available CFLs

.

As noted, t ypic ally, a baseline product is a unit that just meets the existing energy conservation standard for the product (45 .0 lm/W for less than 15 W products in this product

class , see section 5.3.3.1 for further details ). DOE identified a lamp with an efficacy of 52.1 lm/W to be the most common, least efficacious 14 W bare spiral CFL available. DOE acknowledges that the baseline product does not fall right at the baseline level. However, DOE conducted a thorough review o f product catalogs and determined that this lamp was the least efficacious lamp with common characteristics.

Table 5.3

. 11 provides detailed information on the All Othe r CFLKs baseline representative lamp unit used in the engineering analysis and subsequent analyses.

5

- 14Table 5.3

. 11 All Other Product Class Baseline Lamp : Lamp Replacement

Bulb Shape Base Type Lamp Type Lamp Wattage Initial Light Output Efficacy Lamp

Lifetime CRI CCT

W lm lm/W hr K

Spiral E26 CFL 14 730 52.1 10,000 82 2,700

Baseline Fixture

As with the E xternally

- B allasted/ D riv e n product class ( see section 5.3.2.2 ) , DOE selected baselines and more efficacious substitutes taking into consideration two different substitution scenarios: (1) a lamp replacement scenario and (2) a light kit fixture replaceme nt scenario. In the lamp replacement scenario, the more efficacious substitute must have the same base type as the baseline lamp and no changes to the fixture are made. In the fixture replacement scenario, a more efficacious fixture is chosen, allowing for a more efficacious lamp substitute with a different base type than the baseline lamp and a change in number of sockets.

Both the lamp and fixture replacement scenario use the same baseline lamp. However, in the fixture replacement scenario

, DOE also iden tified a baseline fixture consisting of the most

common number of sockets, each containing the baseline lamp. Specifically, b ased on commercially available product information, DOE determined that the most common number of

sockets in All Other CFLKs is two

.

5.3.3.3 More Efficacious Substitutes

After choosing a baseline lamp, DOE identifies commercially available lamps that can

serve as more efficacious substitutes. When identifying higher efficacy replacement lamps, DOE used lamp efficacy values determined using catalog lumens and catalog wattage

. DOE utilized a database of commercially available lamps and selected substitute lamps that both save energy k
and maintain comparable light output to the baseline lamp

. Specifically, DOE ensured that potential substitutio ns maintained light output within 10 percent of the baseline lamp lumen output (for the lamp replacement scenario) and within 10 percent of the baseline fixture lumen output (for the light kit fixture replacement scenario)

. Further, DOE considered only

tec hnologies that met all four criteria in the screening analysis.

Regarding the lamp characteristics of the substitutes, DOE selected replacement lamp units with lifetimes greater than or equal to the lifetime of the baseline lamp. DOE also selected replacem ent lamp units with a CRI and CCT that was comparable to that of the baseline representative lamp unit

.

As mentioned previously , for each representative product class, DOE considered more efficacious lamps under two different substitution scenarios: (1) a lamp replacement scenario and (2) a light kit fixture replacement scenario. In the lamp replacement scenario, DOE assumed that

k DOE allows for substitutions that both save energy and do not save energy in the NIA.

5

- 15manufacturers would maintain the original fixture design, including the number of sockets, and only replace the lamp. Thus, the base types of the more efficacious substitutes were selected to be the same as the baseline lamp base type.

In the light kit fixture replacement scenario, DOE accounted for the possibility that manufacturers may change fixture designs. Thus, the base type s of the more efficacious substitutes were not required to be the same as the baseline lamp and the number of sockets could be changed. DOE determined that the most common number of sockets in All Other CFLKs is two; thus DOE selected a baseline fixture wi th two socket s, each containing the baseline lamp. DOE considered more efficacious replacement fixtures with between one and four sockets, which are the common socket counts in CFLKs on the market. Varying the number of sockets allows for a wider variety of lamp types, wattages and lumen packages to be considered. DOE calculated the total lumen output and wattage of the fixture as the product of the lumen output of each lamp or wattage of each lamp, respectively, and the total number of lamps. More

efficacious s ubstitu t es were selected such that they have a both a lower fixture wattage and higher efficacy than the previous level and maintain fixture light output within 10 percent of the

baseline fixtu re.

5.3.3.4 Candidate Standard Levels

DOE adopted an equation

- based approach to establish CSLs for CFLKs. To develop the general form of the equation (shown in Eq. 5

. 4 ), DOE e valuated lamps with similar characteristics, such as technology, bulb shape, and lifetime, across a range of wattages.

Efficacy = A

1 + 5 ( W + 10 )

− 1
Eq. 5

. 4

For each representative lamp unit, DOE calculated the numerator, A

, of the equation from the lamp efficacy . DOE then evaluated the equation against lamps with the same design options as the representative lamp unit for each CSL and made slight adjustments to capture the efficacy of lamps with those desig n options across a range of wattages.

The continuous equations specify a minimum lamp efficacy requirement across wattages and represent the efficacy a lamp achieves. Because the equations account for variation in efficacy due to wattage, they can account for design options of new lamp wattages based on a technology curve

.

As mentioned, for each representative product class, DOE considered two scenarios: a lamp replacement scenario and a fixture replacement scenario. DOE selected CSLs that could be met by the more efficacious substitutes identified in the lamp replacement scenario. DOE also identified more efficacious fixture substitutes for the fixture replacement scenario that had efficacies equal to or greater than the efficacies of the corresponding CSL based on the lamp replacement scenario.

In general terms, DOE based its CSLs on the design options described below.

5

- 16CSL 1 : This candidate standard level can be achieved in the lamp replacement scenario

with a n improved efficacy lamp

. This level can also be achieved in the fixture replacement

scenario with a one

- socket fixture and an improved efficacy lamp

.

CSL 2 : This candidate standard level can be achieved in the lamp replacement scenario

with a more improved efficacy lamp

. This lev el can also be achieved in the fixture replacement

scenario with a three

- socket fixture and more improved efficacy lamps

.

CSL 3 : This candidate standard level can be achieved in the lamp replacement scenario

with a n advanced efficacy lamp

. This level can a lso be achieved in the fixture replacement

scenario with a four

- socket fixture and advanced efficacy lamps

.

CSL 4 : This candidate standard level can be achieved in the lamp replacement scenario

with a more advanced efficacy lamp can be used to increase efficacy

. This level can also be

achieved in the fixture replacement scenario with a one

- socket fixture and a more advanced efficacy lamp

.

CSL 5 : This candidate standard level can be achieved in the lamp replacement scenario

with the maximum technologicall y feasible lamp

. This level can also be achieved in the fixture replacement scenario with a three

- socket fixture and lamps achiev ing the maximum technologically feasible level

.

Figure 5.3

. 2 illustrates the five CSLs on a plot with the representative lamp units for the lamp replacement scenario . The line at 45 .0 lm/W for wattages less than or equal to 15 W and

60 .0 lm/W for wattages greater than 15 W denotes the existing energy conservation standard. The square box identifies the baseline lamp. The plot also shows more efficacious substitutes that DOE considered as replacements. These replacements were selected such that they have

both a lower lamp wattage and higher efficacy than the previous level and maintain lamp light output within 10 percent of the baseline lamp

.

5

- 17Figure 5.3

. 2 Candidate Standard Levels for All Other CFLKs: Lamp Replacement

Scenario

Figure 5.3

. 3 illustrates the five initial CSLs on a plot with the representative lamp units for the fixture replacement scenario. Because proposed standards are based on lamp efficacy, not fixture efficacy, the lamp efficacy of each representative lamp unit is plotted. However, t hese replacements were selected such that they have both a lower fi xture wattage and higher fixture efficacy than the previous level and maintain fixture light output within 10 percent of the

baseline fixture.

5

- 18Figure 5.3

. 3 Candidate Standard Levels for All Other CFLKs: F ixture Replacement

Scenario

Table 5.3

. 12 presents detailed information on the representative lamps used in determining the CSLs in the lamp replacement scenario for the All Other CFLKs representative product class. The CSLs identifi ed are based on lamp efficacy.

Table 5.3

. 12 All Other CFLKs Product Class Design Options: Lamp Replacement

Scenario

Efficacy

Level Lamp Type Base Type Bulb Shape Wattage Initial Light Output Efficacy CRI CCT Lamp

Lifetime

W lm lm/W K hr

Baseline CFL E26 Spiral 14 730 52.1 82 2,700 10,000

CSL 1 CFL E26 Spiral 13 800 61.5 82 2,700 12,000

CSL 2 CFL E26 Spiral 11 730 66.4 82 2,700 10,000

CSL 3 LED E26 A19 10 700 70.0 75 3,000 50,000

CSL 4 LED E26/E27 A19 9 680 75.6 80 3,000 50,000

CSL 5 LED E26 G25 8 680 85.0 75 2,700 50,000

Table 5.3

. 13 presents detailed information on the representative lamps used in determining the CSLs in the fixture replacement scenario for the All Other CFLKs product class.

5

- 19Table 5.3

. 13 All Other CFLKs Product Class Design Options: Light Kit Fixture Replacement Scenario

Efficacy

Level Lamp Type Base Type Bulb Shape Fixture

Sockets Lamp Wattage Fixture Wattage Lamp

Initial Light Output Fixture

Initial Light Output Efficacy CRI CCT Lamp

Life

W W lm lm lm/W K hr

Baseline CFL E26 Spiral 2 14 28 730 1,460 52.1 82 2,700 10,000

CSL 1 CFL E26 Spiral 1 23 23 1,500 1,500 65.2 82 2,700 10,000

CSL 2 CFL E26 Spiral 3 7 21 450 1,350 64.3 82 2,700 12,000

CSL 3 LED E26 A19 4 5 20 340 1,360 68.0 75 2,700 50,000

CSL 4 LED E26 A21 1 19 19 1,600 1,600 84.2 94 2,700 50,000

CSL 5 LED E26 A19 3 6 18 500 1,500 83.3 80 2,700 50,000

Table 5.3

. 14 summarizes the efficacy requirements at CSL 1 through CSL 5 for the All Other CFLKs product class.

Table 5.3

. 14 CSL s for All Other CFLKs Produc t Class

Candidate Standard Level Efficacy Requirement

CSL 1 73/(1+5*((W+10)

- 1 ))

CSL 2 81/(1+5*((W+10)

- 1 ))

CSL 3 87/(1+5*((W+10)

- 1 ))

CSL 4 94/(1+5*((W+10)

- 1 ))

CSL 5 108/(1+5*((W+10)

- 1 ))
W = rated lamp wattage

5

- 205.3.4 Scaling to Other Product Classes

DOE identified and selected certain product classes as representative and analyzed these product classes directly. DOE chose these representative product classes due to high market

volume and /or distinct characteristics . In general, C SLs for product classes that were not analyzed (“non

- representative product classes”) are then determined by scaling from the CSLs of the representative product classes. Because DOE chose to analyze all product classes as representative

, no scaling was req uired.

5.3.5 Summary of All Candidate Standard Levels for CFLKs

Table 5.3

. 15 shows a summary of the CSLs for all CFLKs covered by this rulemaking. The representative CFLK product class es are indicated by gray shading.

Table 5.3

. 15 Summary of Candidate Standard Levels for CFLKs

Representative Product Class Candidate Standard Level Efficacy

lm/W

CFLKs with Externally

- Ballasted or Driven Lamps CSL 1 62 /(1+9*((W+12)

- 1 ))

All Other CFLKs CSL 1 73/(1+5*((W+10)

- 1 ))

CSL 2 81/(1+5*((W+10)

- 1 ))

CSL 3 87/(1+5*((W+10)

- 1 ))

CSL 4 94/(1+5*((W+10)

- 1 ))

CSL 5 108/(1+5*((W+10)

- 1 ))
W = rated lamp wattage

5

- 21R EFERENCES

1 ENERGY STAR Program Requirements f or Residential Light Fixtures: Version 4.0. (Last accessed February 17, 2014). https://www.energystar.gov/ia/partners/prod_de velopment/revisions/downloads/fixtures/RLF _V4FINALSpec.pdf?38af

- 96ae

.

2 ENERGY STAR Program Requirements for CFLs: Version 3.0. October 30, 2003. (Last accessed February 17, 2014). http://www.energystar.gov/ia/partners/product_specs/program_reqs/archive/cfls_prog_req_V 3.pdf?b9d3

- 4c25

.

5

- 22CHAPTER 6. EN ERGY USE ANALYSIS

TABLE OF CONTENTS

6.1 INTRODUCTION

................................ ................................ ................................ ........... 6

- 1

6.2 OPERATING HOURS

................................ ................................ ................................ .... 6

- 1

6.2.1 Residential Sector

................................ ................................ ................................ 6

- 1

6.2.2 Commercial Sector

................................ ................................ ............................... 6

- 4

6.3 INPUT POWER

................................ ................................ ................................ ............... 6

- 5

6.3.1 All Other Ceiling Fan Light Kits

................................ ................................ ......... 6

- 5

6.3.2 Ceiling F an Light Kits with Externally Ballasted or Driven Lamps

................... 6

- 8

6.4 RESULTS

................................ ................................ ................................ ........................ 6

- 9

REFERENCES

................................ ................................ ................................ .......................... 6

- 14

LIST OF TABLES

Table 6.2.1 Distribution of Ceiling Fans and CFLKs by Room Type

.............................. 6

- 2

Table 6.2.2 Average Hours of Use of CFLKs in Various Residential Rooms by Region

................................ ................................ ................................ ............ 6

- 3

Table 6.2.3 National Average Daily HOU of CFLKs in Commercial Buildings

............. 6

- 4

Table 6.3.1 Weighted Average Total Lumens for All Other CFLKs

............................... 6

- 7

Table 6.3.2 Calculation of Input Power for All Other CFLKs: Lamp Replacement

Scenario

................................ ................................ ................................ .......... 6

- 8

Table 6.3.3 Calculation of Input Power for All Other CFLKs: Light Kit Fixture Replacement Scenario

................................ ................................ .................... 6

- 8

Table 6.3.4 Representative Characteristics at each CSL for CFLKs with Externally Ballasted or Driven Lamps

................................ ................................ ............ 6

- 9

Table 6.4.1 Annual Energy Use for Externally Ballasted/Driven CFLKs in the

Residential Sector

................................ ................................ ........................ 6

- 10

Table 6.4.2 Annual Energy Use for Externally Ballasted/Driven CFLKs in the

Commercial Sector

................................ ................................ ....................... 6

- 11

Table 6.4.3 Annual Energy Use (kWh/year) for All Other CFLKs in the

Residential Sector

................................ ................................ ........................ 6

- 12

Table 6.4.4 Annual Energy Use (kW h/year) for All Other CFLKs in the

Commercial Sector

................................ ................................ ....................... 6

- 13

LIST OF FIGURES

Figure 6.3.1 Lumens Variation for All Other CFLKs with Efficacies Above the

Restructured Baseline

................................ ................................ .................... 6

- 7

6

- iCHAPTER 6. ENERGY USE ANALYSIS

6.1 INTRODUCTION

This chapter describe s the methodology the U.S. Department of Energy (DOE) followed

to estima te the annual energy use of typical ceiling fan light kits (CFLKs) as used by consumers

in homes and businesses

. The results of this analysis are key inputs to the life

- cycle cost and payback period analys i s, described in chapter 8 of this technical support document ( TSD ), and the national impact analysis , described in chapter 10. DOE requires information on annual energy use to determine the potential energy and operating cost savings consumers would realize

from the use of more efficient products.

DOE determined the annual energy use of CFLKs using information on their input power consumption and the way consumers use them ( their operating hours per year). DOE derives the annual energy consumption of CFLKs by multiplying the input power by the number of hours of operation per year :

Annual Energy Use = Operating Hours × Input Power

DOE has not include d standby powe r consumption in its estimation of CFLK energy consumption for reasons described in the concurrent notice of proposed rulemaking for CFLK test procedures.

The energy use analysis is developed for CFLKs using the representative lamps described in the engineering analysis (chapter 5 of this TSD). The CFLKs are assumed to have a total lumen output that is characterized by the current market and the individual C FLKs are assumed to use only a single lamp type, as is characteristic of the vast majority of the current market. The following sections d escribe the inputs and calculations DOE used to develop annual operating

hours , input power , and annual energy use for the products considered in this analysis.

6.2 OPERATING HOURS

This section discusses how DOE calculated operating hours for CFLKs used in both the

residential and commercial sectors.

6.2.1 Residential Sector

To determine the average hours of use (HOU) of CFLKs in the residential sector, DOE

combined data on the rooms where CFLKs are located with data on the HOU of residential light fixtures installed in ceilings in various types of rooms

. The data on CFLK location came from a

national consumer survey conducted o n Amazon Mechanical Turk

, 1 in which respondents indicated which rooms in their houses have ceiling fans and whether those ceiling fans have

CFLKs. Table 6.2

. 1 shows the national distribution of CFLKs by room type based on those data

. The data on lighting HOU by room type for 27 U.S. regions (states or groups of states) were obtained from DOE ’s Resi dential Lighting End Use Consumption Study ( RLEUCS )

. 2

6

- 1Table 6.2

. 1 Distribution of Ceiling Fans and CFLKs by Room Type

Turk Survey Room Type N o. Ceiling Fans Reported in Survey Responses Distribution of Ceiling Fans by Room Type (%) P ercentage of

Fan s with Light Kits (%) Distribution of CFLKs by Room Type (%)

Bedroom 3

, 908 50 89 52

Dining Room 703 9 90 9

Living Room 1

, 587 20 83 20

Family Room 526 7 81 6

Kitchen 518 7 88 7

Outdoor/Patio 252 3 68 3

Bathroom 83 1 84 1

Other 183 2 73 2

Total 7

, 760 100 100

Source: Kantner et al

. (2013) 1

Table 6.2

. 2 shows daily HOU by room and region. The distribution of CFLKs by room type shown in Table 6.2

. 1 were used as weighting factors to determine the national weighted average HOU for use in the energy use analysis. Based on th o se calculations, DOE estimates that

CFLKs are used an average of 1.4 hours per day in the residential sector.

6

- 2Table 6.2

. 2 Average Hours of Use of CFLKs in Various Residential Rooms by Region

U.S. Region (RECS domain) HOU by Room Type (% of CFLKs in room) Weight

factor

( w ) * HOU Weighted Average Bathroom (1%) Bedroom (52%) Dining Room (9%) Exterior (3%) Kitchen (7%) Living Room (26%) Other Room (2%)
01. CT, ME, NH, RI 1.13 1.07 1.51 2.77 2.23 1.63 1.24 2.0% 1.39

02. MA 1.17 1.12 1.53 2.82 2.28 1.68 1.28 1.4% 1.44

03. NY 1.16 1.11 1.54 2.81 2.27 1.67 1.27 3.4% 1.43

04. NJ 1.10 1.04 1.48 2.74 2.20 1.60 1.21 2.7% 1.36

05. PA 1.13 1.07 1.49 2.77 2.23 1.63 1.23 4.0% 1.39

06. IL 1.07 1.01 1.45 2.71 2.17 1.57 1.18 4.3% 1.33 07. IN, OH 1.12 1.06 1.49 2.77 2.22 1.63 1.23 6.0% 1.39

08. MI 1.15 1.08 1.50 2.79 2.24 1.65 1.25 2.7% 1.40

09. WI 1.06 1.00 1.42 2.68 2.16 1.55 1.16 1.6% 1.32 10. IA, MN, ND, SD 1.08 1.02 1.45 2.72 2.18 1.58 1.19 3.0% 1.34 11. KS, NE 1.06 1.00 1.42 2.69 2.15 1.55 1.16 1.9% 1.32

12. MO 1.03 0.97 1.38 2.66 2.12 1.53 1.13 2.4% 1.29

13. VA 1.04 0.98 1.40 2.68 2.13 1.53 1.14 3.0% 1.29 14. DE, DC, MD, 1.05 0.99 1.43 2.69 2.15 1.55 1.16 3.0% 1.31

15. GA 1.10 1.05 1.48 2.75 2.20 1.61 1.22 4.3% 1.37 16. NC, SC 1.15 1.09 1.53 2.80 2.25 1.65 1.26 5.6% 1.41

17. FL 1.14 1.08 1.51 2.78 2.24 1.64 1.25 8.6% 1.40 18. AL, KY, MS 1.12 1.06 1.49 2.76 2.22 1.62 1.23 6.0% 1.38

19. TN 1.15 1.10 1.53 2.80 2.26 1.65 1.26 2.4% 1.42 20. AR, LA, OK 1.18 1.12 1.56 2.83 2.28 1.68 1.29 4.9% 1.44

21. TX 1.17 1.12 1.55 2.82 2.28 1.68 1.29 10.3% 1.44

22. CO 1.07 1.01 1.44 2.71 2.16 1.57 1.17 1.2% 1.33 23. ID, MT, UT, WY 1.14 1.08 1.49 2.78 2.24 1.65 1.25 1.4% 1.40

24. AZ 1.10 1.04 1.42 2.75 2.20 1.60 1.21 3.0% 1.36 25. NV, NM 1.12 1.06 1.48 2.77 2.22 1.62 1.24 1.6% 1.38

26. CA 1.16 1.11 1.53 2.81 2.27 1.66 1.27 7.5% 1.42 27. AK, HI, OR, WA 1.14 1.08 1.50 2.78 2.24 1.64 1.25 1.8% 1.40 U.S. Average 1.10 1.10 1.50 2.80 2.20 1.60 1.20 1.39

* The weighting factor s (w), based on data reported in RECS (2 0 09), 4 are equal to the RECS household weighting factor multiplied by the number of ceiling fans reported for the household , and summed over all households in the RECS domain.

6

- 36.2.2 Commercial Sector

The a verage daily operating hours for CFLKs in c ommercial building s were developed using lighting data for 15 commercial building types obtained from the 2010 U.S. Lighting

Market Characterization (LMC)

. 3 Industrial sector lighting data were not used

, because DOE’s

research indicates that CFLKs are designed almost solely for low

- volume (low air

- flow) ceiling

fans

. Low

- volume ceiling fans generally are not suitable for th e large spaces characteristic of most industrial buildings. DOE took t he steps described below to estimate the national average

HOU of CFLKs in the commercial sector , with intermediate steps and final results presented in

Table 6.2

. 3

.

For each commercial building type presented in the LMC, DOE determined the fraction of lamps having light source technologies typically used in CFLKs , which are reported in LMC

Table 4

- 18. Th o se lamps hereafter are referred to as “CFLK lamps

. ” R esults are reported in

Table 6.2

. 3 , column A. Using data on the commercial HOU for each CFLK lamp (LMC/Table 4

- 20) and weighting th o se data by the percentage of lamps that are of each lamp type in each building type (LMC, Table 4

- 18), DOE estimated the weighted average HOU of CFLK lamps in each building type. R esults are reported in Table 6.2

. 3 , column B. B ased on the calculations,

DOE estimates that CFLKs are used an average of 10.6 hours per day in the commercial sector.

Table 6.2

. 3 National Average Daily HOU of CFLKs in Commercial Buildings

Building Type A: Percentage of All Lamps in Each Building Type that are CFLK Lamps (%) B: Weighted Average

HOU of CFLKs (hrs/day)

Education 12 10.6

Food Service 29 10.3

Food Store 5 10.7

Health Care

– Inpatient 15 10. 5

Health Care

– Outpatient 11 10.4 Lodging 45 10.4 Offices (Non

- medical) 16 10. 5 Public Assembly 30 10.4 Public Order and Safety 8 10.7 Religious Worship 13 10.4

Retail

– Mall & Non

- Mall 18 11. 2

Services 6 10.8 Warehouse and Storage 8 10.8

Other 15 10.9

Total 10.6

6

- 46.3 INPUT POWER

The engineering analysis (chapter 5 of this TSD) presents the power consumption data for representative lamp s and lamp

- ballast systems in CFLKs . DOE utilized those data to estimate

the power consumption of CFLK s for each candidate standard level ( CSL ) for the two product classes considered in this rulemaking : CFLKs having Externally B allasted or Driven L amps (hereafter referred to as “Externally Ballasted/Driven CFLKs”) and All O ther CFLKs

. As described more fully in chapter 3 of this TSD, the new product class structure effectively combines the current product classes 1 and 3 into the All Other CFLKs product class

, and assigns the previous produc t class 2 to the Externally Ballasted /Driven CFLKs product class. a

6.3.1 All Other Ceiling Fan Light Kits

As described in the introduction to this chapter, DOE’s analysis of product energy use (and the subsequent analyses of life

- cycle cost, shipments and NIA ) is intended to represent the

energy use of products in th e field. At any given efficiency level, a CFLK’s power consumption is directly proportional to lumen output. Given that lumen output is the primary service that CFLKs provide to consumers, CFLK’s und er a standard should provide the same level of service

as CFLKs not under a standard. Therefore, DOE developed its estimate of the power consumption of All Other CFLKs, to account for lumen output of CFLKs in the market.

Stakeholders have criticized DOE’s requirement that current product class 3 products include wattage limiters, indicat ing that the wattage limit constrains the light output of CFLKs with low efficiency lamps to levels below those preferred by consumers. (ALA, No. 39 at p. 43; Monte Carlo, No. 41 at p.1; Westinghouse, No. 29 at p. 2) b DOE therefore did not consider the lumen output of CFLKs that are so constrained

— CFLKs with candelabra sockets that use low efficacy lamps

— to be representative of the lumen output desired by consumers. Therefor e, in developing its assessment of CFLK lumen output, it considered the lumen output of these CFLKs separately from the rest of All Other CFLKs. This approach also makes sense because DOE is considering removing the wattage limiter requirement under the ne w product class structure under consideration in this rulemaking, in which case that constraint on lumen output would no longer exist s

.

Accordingly, using the most recently available market data on CFLKs and the lamps therein, DOE estimated th e average l umen output of All Other CFLKs on the market , separating

out CFLKs with candelabra sockets , essentially all of which use low efficacy (below baseline) lamps , from All Other CFLKs with other socket types. To do so, DOE used in

- store shelf surveys (which rep resent about 95% of the CFLK market) to calculate model s of CFLKs (sold

a CFLKs that use LED lamps that have external drivers would be an exception; they would be classified under product class 3 and thus would be included in the Externally Ballasted/Driven product class. DOE knows of no such lamps on the market, however, and of no CFLKs that use such lamps.

b A notation in this form provides a reference for information that is in the docket of DOE’s rulemaking to develop

en ergy conservation standards for CFLKs (Docket No. EERE

– 2012

– BT

– STD

– 0045), which is maintained at www.regulations.gov . For the ALA reference, for example, the notation indicates that the citation refers to

informat ion contained in document number 39 in the docket for the CFLK energy conservation standards rulemaking, and appears on page 43 of that document.

6

- 5with or without a ceiling fan ), as discussed in chapter 3 of this TSD. DOE collected data on socket types, socket numbers, light source technologies, lamp wattages, and retail prices. DOE then applied the weighting scheme discussed in chapter 3 of this TSD for those data

.

D ata regarding lamp efficacy generally are not available for the lamps packaged with

CFLKs

. DOE therefore consulted online lamp retailers for data (by socket type, lamp wattage, and light source technology) on the efficacy of lamps found in All Other CFLKs

. Because DOE

assumes that CFLKs typically are packaged with low

- cost lamps, DOE applied the price

weighting scheme d escribed in chapter 3 of this TSD. Using this method , DOE was able to estimate the weighted average efficacies of lamps packaged with All Other CFLKs for the socket

types

, light source technologies , and the representative wattages of lamps applicable to All Other

CFLKs.

Using these lamp efficacies, DOE then calculated the lumen output for each CFLK ( sold

with and without a ceiling fan ) found in the shelf surveys. The results of this analysis are presented in Table 6.3

. 1 , which also shows the market shares of the dominant socket types included in the sample . The table presents CFLK lumen output data for two main categories of

CFLKs:

1) CFLKs having lamps with candelabra base types, which have efficacies below the

baseline set for the new product class structure considered in this rulemaking . The weighted average lumens for these CFLKs was estimated to be 1,663 lumens 2) CFLKs having lamps with medium

- screw and GU24 base types , wh ich have efficacies

above the baseline set for the new product class structure considered in this rulemaking

. The weighted average lumens for these CFLKs was estimated to be 1,960 lumens

The results in Table 6.3

. 1 are consistent with manufacturer comments that CFLKs with

candelabra sockets tend to have a lower lumen ou tput compared to the rest of the market. Because all products presented in the engineering analysis h ave efficacies above the restructured baseline, and because the wattage limit constraint would not exist under the amended standards considered in this rulemaking, DOE excluded CFLKs with candelabra base sockets in its characterization of a representative CFLK for All Other CFLKs under standards

. DOE used data on CFLKs with medium screw base and GU24 sockets, because they constitute the majority of

the CFLK market with efficacies above the restructured baseline. Therefore, DOE estimated that the weighted av erage lumen output for All Other CFLKs (i.e., after amended standards, at or above the restructured baseline) is 1,960 lumens. Figure 6.3

. 1 shows the lumen output histogram of All Other CFLKs, excluding those with candelabra sockets.

6

- 6Table 6.3

. 1 Weighted Average Total Lumens for All Other CFLKs

Lamp Efficacies Base Type Market Share (2012) Weighted Average

CFLK Total Lumens

Below restructured baseline Candelabra 79% 1,663

Above restructured baselin e Medium Screw 15% 1,960 GU24 5%

Vary All Other 1% (excluded)

Total 100%

Figure 6.3

. 1 Lumens Variation for All Other CFLKs with Efficacies Above the

Restructured Baseline

DOE then used the weighted average total lumen output representative of All Other

CFLKs (1960 lumens) to scale the results of the engineering analysis , and to reflect t he broader

CFLK market. DOE scaled the power input of the CSL 0 CFLK to reflect an average market lumen output of 1960 lumens for eac h of the engineering scenarios. That is, DOE used the lamp

characteristics of CSL 0 for the lamp replacement scenario and t he fixture characteristics of CSL 0 for the light kit fixture replacement scenario. This implies a scaling factor of 2.7 (=1960/730) for the representative lamp lumens and wattages in the lamp replacement scenario, and a factor

of 1 .3 (=1960/1460) scaling factor for the representative fixture lumens and wattage in the

fixture replacement scenario

. Then the wattage and lumens for all other CSLs were scaled with those same scaling factors to preserve the proportionality of lumens and wattages at the different

C S Ls of the representative units in the engineering analysis. Table 6.3

. 2 and Table 6.3

. 3 show

the results of input power calculations for the lamp replacement scenario and the light kit fixture replacement scenario, respectively

.

6

- 7Table 6.3

. 2 Calculation of Input Power for All Other CFLKs : Lamp Replacement

Scenario

Candidate

Standard

L evel Lamp Input

Power (watts) * Lamp Light Output (lumens) * Scaled CFLK Ligh t Outp ut (lumens) Scaled CFLK Input Power (watts)

Baseline (CSL 0) 14 730 1960 37.6

CSL 1 13 800 21 50 34.9

CSL 2 11 730 1960 29.5

CSL 3 10 700 18 80 26.8

CSL 4 9 680 18 30 24.2

CSL 5 8 680 18 30 21.5

*Values come from chapter 5 of this TSD

.

Table 6.3

. 3 Calculation of Input Power for All Other CFLKs: Light Kit Fixture Replacement Scenario

Candidate

Standard

L evel Fixture Input

Power * (watts) Fixture Light Output* (lumens) Scaled CFLK Light Outp ut (lumens) Scaled CFLK Input Power (watts)

Baseline (CSL 0) 28 1,460 1960 37.6

CSL 1 23 1,500 201 0 30.9

CSL 2 21 1,350 181 0 28.2

CSL 3 20 1,360 18 30 26.8

CSL 4 19 1,600 21 50 25.5

CSL 5 18 1,500 201 0 24.2

*Values come from chapter 5 of this TSD

.

6.3.2 Ceiling Fan Light Kits with Externally Ballasted or Driven Lamps

DOE was un able to collect sufficient data on the light output of Externally

Ba llasted/Driven CFLKs because the y occupy a very small market share . In addition, most of the lamps in this product class are circline lamps, and DOE’s market research indicates that CFLKs with circline lamps include no more than one lamp. For those reasons, DOE did not scale the light output of the representative products within this product class to calculate the lumen level s of All Other CFLKs, but rather assumed that the total lumen output of each Externally Ballasted/Driven CFLK is the lumen output of the representative lamp

- ballast system derived in the engineering analysis (chapter 5 of this TSD). I n the energy use analysis, DOE therefore assumed that the input power of each representative lamp

- b allast for Externally Ballasted/Driven

CFLKs is the input power of the CFLK.

The r epresentative characteristics of CFLKs having Externally Ballasted or Driven

L amps at each CSL are shown in Table 6.3

. 4 . Representative lamp s are based on the lamp and fixture replacement scenario s in the engineering analysis (chapter 5 of this TSD).

6

- 8Table 6.3

. 4 Representative Characteristics at each CSL for CFLKs with Externally Ballasted or Driven Lamps

Candidate

Standard

L evel S cenario Lamp Input

Power ( ANSI

rated
wattage ) Initial Light Output (lumens) CFLK Light Output (lumens) CFLK Input

Power (watts)

CSL 0 22 .5 950 855 17.0

CSL 1 Lamp Replacement 19 920 828 14.3

Fixture Replacement 13 900 900 16.0

6.4 RESULTS

The following tables present results of the energy use analysis for CFLKs in kilowatt

hours per year (kWh/yr)

. Table 6.4

. 1 presents the results for Externally Ballasted /Driven CFLKs in residential buildings. Table 6.4

. 2 prese nts the results for Externally Ballasted/Driven CFLKs in commercial buildings

. Table 6.4

. 3 p resent s the energy use analysis results for A ll O ther

CFLK s in residential building s

. Last ly, Table 6.4

. 4 present s the results for A ll O ther CFLK s in commercial buildings.

6

- 9Table 6.4

. 1 Annual Energy Use for Externally Ballasted/Driven CFLKs in the

Re sidential Sector

RECS 4 Reportable

Domain CSL 0 (kWh/yr) CSL 1 (kW h/yr)

Lamp Replacement

Scenario Fixture Replacement

Scenario

01. CT, ME, NH, RI, VT 8.65 7.27 8.14

02. MA 8.91 7.50 8.39

03. NY 8.86 7.45 8.34

04. NJ 8.44 7.10 7.95

05. PA 8.60 7.24 8.10

06. IL 8.28 6.97 7.80

07. IN, OH 8.60 7.23 8.09

08. MI 8.71 7.33 8.20

09. WI 8.16 6.87 7.68

10. IA, MN, ND, SD 8.33 7.01 7.84

11. KS, NE 8.18 6.88 7.70

12. MO 7.99 6.72 7.52

13. VA 8.04 6.76 7.56

14. DE, DC, MD, WV 8.16 6.86 7.68

15. GA 8.48 7.14 7.98

16. NC, SC 8.77 7.38 8.26

17. FL 8.68 7.30 8.17

18. AL, KY, MS 8.57 7.21 8.07

19. TN 8.79 7.39 8.27

20. AR, LA, OK 8.95 7.53 8.42

21. TX 8.92 7.50 8.39

22. CO 8.24 6.93 7.75

23. ID, MT, UT, WY 8.69 7.31 8.18

24. AZ 8.42 7.08 7.92

25. NV, NM 8.57 7.21 8.07

26. CA 8.84 7.44 8.32

27. AK, HI, OR, WA 8.70 7.32 8.19

U.S. Average 8.66 7.29 8.15

6

- 10Table 6.4

. 2 Annual Energy Use for Externally Ballasted/Driven CFLKs in the

Commercial Sector

Building Type CSL 0 (kWh/yr ) CSL 1 ( kWh /yr)

Lamp Replacement

Scenario Fixture Replacement

Scenario

Education 66.0 55.5 62.1

Food Service 64.2 54.0 60.4

Food Store 66.6 56.1 62.7

Health Care

– Inpatient 65.0 54.7 61.2

Health Care

– Outpatient 64.6 54.3 60.8

Lodging 64.6 54.3 60.8

Offices (Non

- medical) 64.9 54.6 61.1

Public Assembly 64.7 54.4 60.9

Public Order and Safety 66.4 55.8 62.5

Religious Worship 64.6 54.3 60.8

Retail

– Mall & Non

- Mall 69.4 58.4 65.3

Services 67.1 56.4 63.1

Warehouse and Storage 67.0 56.4 63.1

Other 67.7 56.9 63.7

U.S. Average 65.8 55.4 62.0

6

- 11Table 6.4

. 3 Annual Energy Use (kWh/year) for All Other CFLKs in the Residential Sector

RECS Reportable Domain CSL 0 Lamp Replacement Scenario Fixture Replacement Scenario

CSL 1 CSL 2 CSL 3 CSL 4 CSL 5 CSL 1 CSL 2 CSL 3 CSL 4 CSL 5

01. CT, ME, NH, RI, VT 19.1 17.8 15.0 13.7 12.3 10.9 15.7 14.3 13.7 13.0 12.3

02. MA 19.7 18.3 15.5 14.1 12.7 11.3 16.2 14.8 14.1 13.4 12.7

03. NY 19.6 18.2 15.4 14.0 12.6 11.2 16.1 14.7 14.0 13.3 12.6

04. NJ 18.7 17.3 14.7 13.3 12.0 10.7 15.3 14.0 13.3 12.7 12.0

05. PA 19.0 17.7 14.9 13.6 12.2 10.9 15.6 14.3 13.6 12.9 12.2

06. IL 18.3 17.0 14.4 13.1 11.8 10.5 15.0 13.7 13.1 12.4 11.8

07. IN, OH 19.0 17.7 14.9 13.6 12.2 10.9 15.6 14.3 13.6 12.9 12.2

08. MI 19.3 17.9 15.1 13.8 12.4 11.0 15.8 14.5 13.8 13.1 12.4

09. WI 18.0 16.8 14.2 12.9 11.6 10.3 14.8 13.5 12.9 12.2 11.6

10. IA, MN, ND, SD 18.4 17.1 14.5 13.2 11.8 10.5 15.1 13.8 13.2 12.5 11.8

11. KS, NE 18.1 16.8 14.2 12.9 11.6 10.3 14.9 13.6 12.9 12.3 11.6

12. MO 17.7 16.4 13.9 12.6 11.4 10.1 14.5 13.2 12.6 12.0 11.4

13. VA 17.8 16.5 14.0 12.7 11.4 10.2 14.6 13.3 12.7 12.1 11.4

14. DE, DC, MD, WV 18.0 16.7 14.2 12.9 11.6 10.3 14.8 13.5 12.9 12.2 11.6

15. GA 18.8 17.4 14.7 13.4 12.1 10.7 15.4 14.1 13.4 12.7 12.1

16. NC, SC 19.4 18.0 15.2 13.9 12.5 11.1 15.9 14.5 13.9 13.2 12.5

17. FL 19.2 17.8 15.1 13.7 12.3 11.0 15.8 14.4 13.7 13.0 12.3

18. AL, KY, MS 18.9 17.6 14.9 13.5 12.2 10.8 15.6 14.2 13.5 12.9 12.2

19. TN 19.4 18.0 15.3 13.9 12.5 11.1 16.0 14.6 13.9 13.2 12.5

20. AR, LA, OK 19.8 18.4 15.6 14.1 12.7 11.3 16.3 14.8 14.1 13.4 12.7

21. TX 19.7 18.3 15.5 14.1 12.7 11.3 16.2 14.8 14.1 13.4 12.7

22. CO 18.2 16.9 14.3 13.0 11.7 10.4 15.0 13.7 13.0 12.4 11.7

23. ID, MT, UT, WY 19.2 17.8 15.1 13.7 12.4 11.0 15.8 14.4 13.7 13.0 12.4

24. AZ 18.6 17.3 14.6 13.3 12.0 10.6 15.3 14.0 13.3 12.6 12.0

25. NV, NM 19.0 17.6 14.9 13.5 12.2 10.8 15.6 14.2 13.5 12.9 12.2

26. CA 19.6 18.2 15.4 14.0 12.6 11.2 16.1 14.7 14.0 13.3 12.6

27. AK, HI, OR, WA 19.2 17.9 15.1 13.7 12.4 11.0 15.8 14.4 13.7 13.1 12.4

U.S. Average 19.0 17.7 15.0 13.6 12.2 10.9 15.6 14.3 13.6 12.9 12.2

6

- 12Table 6.4

. 4 Annual Energy Use (kWh/year) for All Other CFLKs in the Commercial Sector

LMC Building Type CSL 0 Lamp Replacement Scenario Fixture Replacement Scenario

CSL 1 CSL 2 CSL 3 CSL 4 CSL 5 CSL 1 CSL 2 CSL 3 CSL 4 CSL 5

Education 146 136 115 104 93.8 83.4 120 109 104 99.1 93.8

Food Service 142 132 111 101 91.2 81.1 117 106 101 96.3 91.2

Food Store 147 137 116 105 94.7 84.2 121 111 105 100 94.7

Health Care

– Inpatient 144 134 113 103 92.4 82.2 118 108 103 97.6 92.4

Health Care

– Outpatient 143 133 112 102 91.8 81.6 117 107 102 96.9 91.8

Lodging 143 133 112 102 91.8 81.6 117 107 102 96.9 91.8

Offices (Non

- medical) 144 133 113 103 92.3 82.0 118 108 103 97.4 92.3

Public Assembly 143 133 112 102 91.9 81.7 117 107 102 97.0 91.9

Public Order and Safety 147 136 115 105 94.4 83.9 121 110 105 99.6 94.4

Religious Worship 143 133 112 102 91.8 81.6 117 107 102 96.9 91.8

Retail

– Mall & Non

- Mall 154 143 121 110 98.7 87.7 126 115 110 104 98.7

Services 148 138 117 106 95.3 84.8 122 111 106 101 95.3

Warehouse and Storage 148 138 116 106 95.3 84.7 122 111 106 101 95.3

Other 150 139 118 107 96.2 85.5 123 112 107 102 96.2

U.S. Average 146 135 114 104 93.6 83.2 120 109 104 98.8 93.6

6

- 13REFERENCES

1. Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.

— Results of a Survey on Amazon Mechanical Turk. July 2013. Lawrence Berkeley National Laboratory, Berkeley, CA. Report No. LBNL

- 6332E. (Last Accessed March 27, 2014) http://www.escholarship.org/uc/item/ 3r67c1f9

2. DNV KEMA Energy and Sustainability, Pacific Northwest Laboratory. Residential Lighting End

- Use Consumption Study: Estimation Framework and Baseline Estimates. Prepared for the Solid

- State Lighting Program, Building Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy. December 2012. (Last Accessed March 27, 2014) http://apps1.eere.energy.g ov/buildings/publications/pdfs/ssl/2012_residential

- lighting

study.pdf

3. Navigant Consulting, Inc. Final Report: 2010 U.S. Lighting Market Characterization. Prepared for the Solid

- State Lighting Program, Building Technologies Program, Office of Energy E fficiency and Renewable Energy, U.S. Department of Energy. January 2012. (Last Accessed March 27, 2014.) http://apps1.eere.energy.gov/buildings/publica tions/pdfs/ssl/2010

- lmc

- final

- jan

- 2012.pdf

.

4. U.S. Department of Energy

– Energy Information Administration. Residential Energy Consumption Survey. 2009 RECS Survey Data. 2009. Washington, D.C. (Last Accessed March 27, 2014.) http://www.eia.gov/consumption/residential/data/2009/

.

6

- 14CHAPTER 7. PRODUCT PRICE DETERMINATION

TABLE OF CONTENTS

7.1 INTRODUCTION

................................ ................................ ................................ ........... 7

- 1

7.2 METHODOLOGY

................................ ................................ ................................ .......... 7

- 1

7.2.1 Premium Determination

................................ ................................ ....................... 7

- 2

7.2.2 Consumer Price Determination

................................ ................................ ............ 7

- 2

7.3 RESULTS

................................ ................................ ................................ ........................ 7

- 3

7.3.1 Consumer Prices for CFLKs with Externally

- Ballasted or Driven Lamps

Product Class

................................ ................................ ................................ ....... 7

- 3

7.3.2 Consumer Prices for All Other CFLKs

................................ ................................ 7

- 4

LIST OF TABLES

Table 7.3.1 Consumer Prices for CFLKs with Extern ally

- Ballasted or Driven Lamps Product Class: Lamp Replacement Scenario

................................ ..... 7

- 4

Table 7.3.2 Consumer Prices for CFLKs with Externally

- Ballasted or Driven Lamps Product Class: Fixture Replacement Scenario

................................ ... 7

- 4

Table 7.3.3 Consumer Prices for All Other CFLKs Product Class: Lamp Replacement Scenario

................................ ................................ .................... 7

- 5

Table 7.3.4 Consumer Prices for All Other CFLKs Product Class: Fixture

Re placement Scenario

................................ ................................ .................... 7

- 5

7

- iCHAPTER 7. PRODUCT PRICE DETERMINATION

7.1 INTRODUCTION

This chapter describes the methodology the U.S. Department of Energy (DOE) followed in developing consumer prices for ceiling fan light kits (CFLKs) considered in this rulemaking. It also provides the results for the consumer prices of lamps sold in CFLKs.

In energy conservation standards rulemakings, DOE often develops cost

- efficiency relationships in the engineering analysis. Then, DOE applies markups to derive consumer prices. For this rulemaking, DOE derived candidate standard levels (CSLs) in the engin eering analysis and prices in this chapter of the technical support document ( TSD ) . The product price determination develops consumer prices directly because reverse

- engineering a lamp is impractical, as lamps are not easily disassembled. By combining the results of the engineering analysis and the product price determination, DOE derived typical inputs for use in the life

- cycle cost (L CC; chapter 8 of this TSD) analysis and the national impact analysis (NIA; chapter 10 of this TSD).

7.2 METHODOLOGY

Because the efficiency of the CFLK is based on the efficacy of the lamps it is packaged with, DOE develops a product price determination for the lamp component of the CFLK. Typically, DOE develops manufacturer a selling prices (MSPs) for covered products and applies markups to create consumer prices to use as inputs to the LCC analysis and NIA. Because lamps

are difficult to reverse

- engineer ( i.e.

, not easily disassembled), DOE directly derives consumer prices for the lamps in this rulemaking. DOE estimates consumer prices for lamps by establishing premiums applied to CFLK manufacturer suggested prices. Consumer price refers to the average product p rice a consumer pays before tax and installation

.

DOE based its product price determination on publicly available pricing data and aggregated information received in manufacturer interviews. In its review of publicly available prices, DOE observed a range of consumer prices for ceiling fans ( CF s ) and CFLK s , depending on the distribution channel through which they are purchased. Based on feedback from manufacturer interviews, DOE identified three main distribution channels for CFLKs: electrical/specialty cen ters, home centers, and lighting showrooms. DOE started with a consistent set of aggregated manufacturer suggested distributor net prices for CFs sold with light kits and CFLKs sold alone. Using consumer prices for the CF sold with light kits and CFLKs sol d alone determined for each distribution channel, DOE calculated the average premium applied to the distributor net prices. Using these premiums, DOE developed t hree different consumer prices as representative of a range of publicly available prices : low p rice, based on the electrical/specialty channel; medium price, based on the home center channel; and high price, based on the lighting

showroom channel

.

a Manufacturer refers to CFLK manufacturer unless otherwise noted.

7

- 17.2.1 Premium Determination

DOE first collected manufacturer suggested distributor net price lists

, which indicate prices stock distributors should pay b for CFs sold with CFLKs and CFLKs sold alone. Starting

with these consistent set of distributor net prices, DOE calculated an average premium corresponding to prices for CF s sold with CFLKs and CFLKs sold alon e offered in electrical/specialty centers, home centers, and lighting showrooms. In general, DOE found that the premiums did n ot differ significantly with the efficiency of the CFLK, and therefore did not vary premiums by efficiency. DOE calculated two set s of premiums for each distribution

channel : one for the CF sold with a CFLK and the other for the CFLK sold alone. The light ing

showroom channel s applied the greatest premium to the distributor net price followed by the

home center s , and the electrical/sp ecialty centers.

DOE then developed consumer prices for CFs sold with light kits and CFLKs sold alone

, weighted by distribution channel. Using manufacturer feedback from interviews, DOE determined an aggregated percentage of shipments that go through each of the channels: electrical/specialty channel at 12 percent, home center channel at 80 percent, and lighting

showroom channel at eight percent. DOE then applied these percentages respectively to the low price determined for electrical/specialty channels, to the medium price determined for home center stores, and to the high price determined for lighting showrooms. Using the sum of these weighted prices, DOE obtained the consumer prices for CFs sold with light kits and CFLKs sold

alone. Based on manufacture r feedback, DOE determined that a basic light kit fixture comprises 20 percent of the consumer price of a CF sold with a light kit. DOE applied this percentage to the

consumer price of the CF sold with the light kit to obtain the consumer price for the CFL K. DOE

used the consumer price for the CFLK sold alone and the consumer price for the CFLK sold with a fan to determine an average consumer CFLK price. DOE welcomes comments on this

determination of the consumer price percentage of a light kit packaged with a CF.

7.2.2 Consumer Price Determination

In chapter 5 of this TSD, DOE identified representative lamp unit s for each CSL analyzed in the CFLK representative product classes. In the product price determination analy sis

, DOE developed consumer prices for each representative lamp unit analyzed. To do so, DOE determined the component of the CFLK consumer price developed as described in section 7.2.1

that is attributable to the lamp with which it is packaged. Based on manufacturer feedback, DOE determined that a fluorescent lamp, CFL, or LED in a CFLK comprise 15 percent of the CFLK

consumer price. DOE applied this percentage to th e CFLK consumer price to obtain the

consumer price of the lamp packaged with the CFLK.

Because DOE ensured that all baseline lamps were found in CFLKs in the engineering analysis (chapter 5 of this TSD) , the baseline lamp consumer prices were developed as described

in section 7.2.1 . However, in some cases the representative lamp units at the CSLs under

consideration were not sold in CFLKs or the CFLKs in which they were sold did not have

available distributor net prices . In these cases, DOE developed a ratio of the consumer price of

b These prices may be discounted for larger orders.

7

- 2the baseline lamp packaged with the CFLK to the blue

- book price c of the representative lamp

unit at the baseline . DOE then applied this ratio to the blue

- book value of the representative lamp

unit at that CSL to obtain its consumer price if it were packaged with a CFLK. Where blue

- book prices were not available for representative lamp units, DOE extrapolated prices by using the

blue

- book prices of equivalent lamps from an alternative lamp m anufacturer or by developing ratios based on lamps characteristics such as technology, wattage, and efficacy.

As mentioned, DOE also included the incremental cost due to changes in socket configuration when applicable. Based on manufacturer feedback, DOE estimated the cost of different socket types to the manufacturer and then applied the appropriate manufacturer and distributor markups to obtain the consumer price of the socket. Specifically, DOE estimated that medium screw base ( E26 ) sockets cost $0.15 to the manufacturer and GU24 and pin

- base sockets
cost $0.35 to the manufacturer. The consumer prices for these socket types was determined by applying the appropriate manufacturer markup (see chapter 12 of this TSD) and the distribution markup for ceiling fan parts weighted by 2013 market shares (see chapter 6 of th e CF Preliminary Analysis TSD).

Once DOE calculat ed consumer prices for lamps packaged with CFLKs , DOE added sales tax and, if appropriate, installation costs to derive the total, installed consumer cost. The

consumer prices derived for lamps packaged with CFLKs was used in the main LCC analysis (chapter 8 of this TSD) and NIA (chapter 10 of this TSD).

7.3 RESULTS

Section s 7.3.1 and 7.3.2 summarize the consumer prices for lamps packaged in CFLKs

.

7.3.1 Consumer Prices for CFLKs wit h Externally

- Ballasted or Driven Lamps Product

Class

The following tables present the consumer price s for CFLKs with Externally

- Ballasted or Driven Lamps

. The prices presented do not include sales tax.

c Blue

- book prices refer to suggested retail prices issued by lamp manufacturers and are usually specified for bulk quantity purchases.

7

- 3Table 7.3

. 1 Consumer Prices for CFLKs with Externally

- Ballasted or Driven Lamps Product Class : Lamp Replacement

Scenario

CSL Lamp Type Lamp

Diameter Base Type Lamp

Nominal Wattage Lamp Rated Wattage Lamp Initial Light Output Lamp Rated

E fficacy Lamp

Lifetime Weighted Average Lamp

Consumer Price

W W l m lm/W hr 2013$

Baseline Fluorescent T 9 G10q 22 22.5 950 42.2 12,000 $7.32

CSL 1 Fluorescent T 9 G10q 20 19 920 48.4 12,000 $9.26

Table 7.3

. 2 Consumer Prices for CFLKs with Externally

- Ballasted or Driven Lamps Product Class : Fixture Replacement

Scenario

CSL Lamp Type Lamp

Diameter Base Type Fixture

Sockets Lamp

Nominal Wattage Fixture

Rated Wattage Lamp

Initial Light Output Fixture

Initial Light Output Lamp

Rated Efficacy Lamp

Lifetime Weighted Average

Lamp

Consumer

Price Socket

Consumer Price

W W l m l m lm/W hr 2013$ 2013$

Baseline Fluorescent T9 G10q 1 22 22.5 950 855 42.2 12,000 $7.32 $0. 73

CSL 1 CFL

- G24q

- 1 1 13 13 900 900 69.2 17,000 $12.98 $0. 73

7.3.2 Consumer Prices for All Other CFLKs

The following tables present the consumer price s for the All Other CFLKs product class. The prices presented do not include

sales tax.

7

- 4Table 7.3

. 3 Consumer Prices for All Other CFLKs Product Class : Lamp Replacement Scenario

CSL Lamp Type Base Type Wattage Lamp Initial Light Output Lamp Efficacy Lamp Lifetime Weighted Average Lamp

Consumer Price

W l m lm/W hr 2013$

Baseline CFL E26 14 730 52.1 10,000 $3.45

CSL 1 CFL E26 13 800 61.5 12,000 $3.68

CSL 2 CFL E26 11 730 66.4 10,000 $3.83

CSL 3 LED E26 10 700 70.0 50,000 $19.38

CSL 4 LED E26/E27 9 680 75.6 50,000 $21.38

CSL 5 LED E26 8 680 85.0 50,000 $24.72

Table 7.3

. 4 Consumer Prices for All Other CFLKs Product Class : Fixture Replacement Scenario

CSL Lamp Type Base Type Fixture

Sockets Lamp Wattage Fixture Wattage Lamp

Initial Light Output Fixture

Initial Light Output Lamp Efficacy Lamp

Lifetime Weighted Average

Lamp

Consumer

Price Socket

Consumer

Price

W W lm lm lm/W hr 2013$ 2013$

Baseline CFL E26 2 14 28 730 1,460 52.1 10,000 $3.45 $0. 63

CSL 1 CFL E26 1 23 23 1,500 1,500 65.2 10,000 $6.91 $0.31

CSL 2 CFL E26 3 7 21 450 1,350 64.3 12,000 $2.36 $0. 94

CSL 3 LED E26 4 5 20 340 1,360 68.0 50,000 $9.41 $1. 25

CSL 4 LED E26 1 19 19 1,600 1,600 84.2 50,000 $50.30 $0.31

CSL 5 LED E26 3 6 18 500 1,500 83.3 50,000 $18.17 $0. 94

7

- 5CHAPTER 8. LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION

................................ ................................ ................................ ........... 8

- 1

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analysis

................ 8

- 1

8.1.2 Overview of Life

- Cycle Cost and Payback Period Inputs

................................ ... 8

- 2

8. 2 LIFE

- CYCLE COST INPUTS

................................ ................................ ........................ 8

- 5

8.2.1 Overview

................................ ................................ ................................ .............. 8

- 5

8.2.2 Building Samples

................................ ................................ ................................ . 8

- 6

8.2.3 Ceiling Fan Light Kit Lumen Output

................................ ................................ ... 8

- 7

8.2.4 Market Distribution of Ceiling Fan Light Kits by Candidate Standard

Level

................................ ................................ ................................ .................... 8

- 8

8.2.5 Price Learning

................................ ................................ ................................ ...... 8

- 9

8.2.6 Total Installed Cost Inputs

................................ ................................ ................. 8

- 10

8.2.7 Operating Cost Inputs

................................ ................................ ........................ 8

- 11

8.2.7.1 Electricity Cost

................................ ................................ ......................... 8

- 12

8.2.7.2 Operating Hours

................................ ................................ ....................... 8

- 12

8.2.7.3 Electricity Pric es

................................ ................................ ...................... 8

- 13

8.2.7.4 Electricity Price Trends

................................ ................................ ............ 8

- 14

8.2.7.5 Lifetime

................................ ................................ ................................ .... 8

- 15

8.2.7.6 Replacement Costs

................................ ................................ ................... 8

- 19

8.2.7.7 Disposal Cost

................................ ................................ ............................ 8

- 21

8.2.7.8 Lamp Residual Value

................................ ................................ ............... 8

- 22

8.2.7.9 Discount Rates

................................ ................................ .......................... 8

- 22

8.3 PAYBACK PERIOD INPUT S

................................ ................................ ...................... 8

- 29

8.4 LIFE

- CYCLE COST AND PAYBA CK PERIOD RESULTS

................................ ...... 8

- 29

8.4.1 Externally Ballasted/Driven Ceiling Fan Light Kits

................................ .......... 8

- 30

8.4.2 All Other Ceiling Fan Light Kits

................................ ................................ ....... 8

- 33

8.4.3 Rebuttable Presumption Payback Period

................................ ........................... 8

- 39

REFERENCES

................................ ................................ ................................ .......................... 8

- 40

LIST OF TABLES

Table 8.1.1 Summary of Inputs to Life

- Cycle Cost and Payback Period

......................... 8

- 5

Table 8.2.1 CFLK Market Distribution in the No

- Standard Case in 2019

....................... 8

- 9

Table 8.2.2 Average Sales Tax Rates by Census Division and Large State

................... 8

- 11

Table 8.2.3 CFLK Operating Hours Ranges

................................ ................................ ... 8

- 13

Table 8.2.4 Average Electricity Prices

................................ ................................ ............ 8

- 14

Table 8.2.5 Lamp Replacement Options for Externally Ballasted/Driven CFLKs

........ 8

- 20

Table 8.2.6 Lamp Replacement Options for All Other CFLKs

................................ ...... 8

- 20

Table 8.2.7 Types of Household Debt and Equity by Percentage Shares

....................... 8

- 23

Table 8.2.8 Average Nominal Interest Rates for Household Debt

................................ . 8

- 23

Table 8.2.9 Average Real Effective Interest Rates for Household Debt

........................ 8

- 24

Table 8.2.10 Average Nominal and Real Interest Rates for Household Equity

............... 8

- 25

8

- iTable 8.2.11 Average Interest on Household Debt and E quity

................................ ........ 8

- 25

Table 8.2.12 Data Used to Calculate Real Effective Mortgage Rates

.............................. 8

- 26

Table 8.2.13 Risk

- free rate and equity risk pr emium, 2010

- 2012

................................ .... 8

- 28

Table 8.2.14 Weighted Average Cost of Capital for Analyzed Sectors

........................... 8

- 29

Table 8.4.1 Average LCC and PBP Re sults by Candidate Standard Level for Externally

- Ballasted/Driven CFLKs

................................ ............................ 8

- 31

Table 8.4.2 Average LCC Savings for Externally Ballasted/Driven CFLKs*

............... 8

- 31

Table 8.4.3 Average LCC and PBP Results by CSL for All Other CFLKs

.................... 8

- 34

Table 8.4.4 Average LCC Savings for All Other CFLKs*

................................ ............. 8

- 35

LIST OF FIGURES

Figure 8.1.1 Flow Diagram for Typical Calculation of Life

- Cycle Cost and Payback

Period

................................ ................................ ................................ ............. 8

- 4 Figure 8.2.1 Trends in Residen tial Electricity Prices

................................ ....................... 8

- 15 Figure 8.2.2 Trends in Commercial Electricity Prices

................................ ..................... 8

- 15 Figure 8.2.3 Survival Function for Ceilin g Fans

................................ .............................. 8

- 18 Figure 8.4.1 Composition of Average LCC for Externally Ballasted/Driven CFLKs

in the Residential Sector

................................ ................................ .............. 8

- 32 Figure 8.4.2 Composition of Average LCC for Externally Ballasted/Driven CFLKs

in the Commercial Sector

................................ ................................ ............. 8

- 32 Figure 8.4.3 Range of LCC Savings in Residential Sector (left) and Commercial Sector (right ) at CSL 1 for Externally Ballasted/Driven CFLKs

................. 8

- 33 Figure 8.4.4 Composition of Average LCC for All Other CFLKs in the Residential

Sector

................................ ................................ ................................ ........... 8

- 36 Figure 8.4.5 Composition of Average LCC for All Other CFLKs in the Commercial

Sector

................................ ................................ ................................ ........... 8

- 36 Figure 8.4.6 Range of LCC Savings in Residential Sector for All Other CFLKs

............ 8

- 37 Figure 8.4.7 Range of LCC Savings in Commercial Sector for All Other CFLKs

.......... 8

- 37 Figure 8.4.8 LCC Savings Distribution in Residential Sector for All Other CFLKs

at CSL 2

................................ ................................ ................................ ....... 8

- 38 Figure 8.4.9 LCC Savings Distribution in Commercial Sector for All Other CFLKs

at CSL 2

................................ ................................ ................................ ....... 8

- 39

8

- iiCHAPTER 8. LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

8.1 INTRODUCTION

The effect of standards on individual consumers typically includes a reduction in operating expense and a n increase in purchase cost

. This chapter describes the methodology that

the U.S. Department of Energy ( DOE) uses to analyze the economic impacts on consumers of

energy conservation standards for ceiling fan light kits (CFLKs). The metrics used are the following :

• Life

- cycle cost (LCC) is the total consumer a expense over the life of a product, including

purc hase and installation costs and operating costs (which in turn include maintenance, repair, and energy costs). DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product.

• Payback period (PBP) measures the am ount of time it takes consumers to recover the assumed higher purchase price of more energy

- efficient products through lower operating

costs.

The chapter presents key inputs and results

. Inputs to the LCC and PBP calculations are

discussed in section s 8.2 and 8.3 of this chapter, respectively. Results for the LCC and P BP analysis

, for the different candidate standard levels (CSLs)

, are presented in section 8.4

. Key

variab les and calculations are presented for each metric.

DOE performed the calculations discussed here using a Microsoft Excel® spreadsheet, which is accessible on DOE’s rulemaking website for CFLKs ( http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/76 ). Details on the spreadsheet, and instructions for using it

, are included in a ppendix 8A

.

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analys i s

Recognizing that several inputs to the determination of consumer LCC and PBP are either variable or uncertain, DOE conducts the LCC and PBP analys i s by modeling both the uncertainty and variability in the inputs

, using Monte Carlo simulation and probability

distributions. To do this, DOE developed spreadsheet models combined with Crystal Ball®

, which is a commercially available add

- on program for Microsoft Excel®

.

In addition to characterizing several of the inputs to the analys i s with probability distributions, DOE developed a sample of individual buildings in the residential and commerc ial

sector s that include CFLKs

. b By developing building samples, DOE was able to account for the variability in energy consumption

, energy price

, or both associated with CFLK purchases made in each sampled building.

a For the purposes of the PBP and LCC analysis, a cons umer is someone who purchases a CFLK.

b DOE believes that CFLKs used in the industrial sector are a very small portion of the current market. Therefore, DOE excluded the industrial sector from this analysis.

8

- 1DOE displays the LCC results as distributions of impacts compared to the no

- standards

case conditions. Results are presented at the end of this chapter and are based on 10,000 samples per Monte Carlo simulation run. To illustrate the implications of the analys i s, DOE generated a frequency chart depicting the variation in LCC for each potential standard level considered.

8.1.2 Overview of Life

- Cycle Cost and Payback Period Inputs

DOE categoriz es inputs to the LCC and PBP analys i s for each CSL as follows: (1) inputs for establishing the total installed cost ( i.e., purchase price plus installation cost) , and (2) inputs for calculating the operating cost.

The primary inputs for establishing the t otal installed cost are c :

• End

- User Product Price : The LCC analysis includes only the end

- user, weighted

- average CFLK lamp prices from in the engineering analysis, and socket prices. The balance

- of

system costs are ignored

, because these are assumed to be the same for all CFLKs regardless of efficiency. See chapter 7 of this technical support document ( TSD ) for details on the product price methodology.

• Sales tax : The State and local retail sales tax.

The primary inputs for calculating the operating cost ar e:

• Power rating : The site electricity usage rate associated with operating the CFLK. Chapter 5 of this TSD details how DOE determined the power ratings for the representative CFLKs considered in this analysis.

• Annual Operating Hours : The hours that a CFLK is estimated to be in use during a year. Chapter 6 of this TSD discusses how DOE estimated the CFLK operating hours for the various geographical regions and building types.

• Energy prices : The prices paid by consumers for electricity.

• Energy price trends : F orecasted electricity prices. DOE used electricity price forecasts reported in the Energy Information Administration’s Annual Energy Outlook 201 4 ( AEO201 4 )

. 1

• Repair and maintenance costs : Repair costs are those associated with repairing or replacing components that have failed. Maintenance costs are those associated with

mainta ining the operation of the product. DOE considered lamp replacements for failed lamps during the lifetime of the CFLK as the only repair and maintenance c ost associated with changes in product efficiency.

c DOE did not take into account installation cos t as one of the total installed cost inputs. As discussed in the framework document, DOE assumes that the installation cost, which represents all costs required to install the CFLK, is not affected by changes in product efficiency and is therefore the same for all CSLs and product classes for both the residential and commercial sectors. DOE seeks comment on this approach.

8

- 2• Disposal Cost : After CFLK lamps reach the end of t heir life, some consumers pay to recycle or discard those lamps. The CFLK disposal cost represents the cost of recycling these lamps and is only applicable to those consumers in the commercial sector.

• Lamp Residual Value : The remaining value of the surviv ing lamp(s) at the end of the

CFLK lifetime.

• Lifetime : The age at which the CFLK is retired from service.

• Discount rate : The rate at which DOE discounts future expenditures to establish their present value.

The data inputs to the PBP are the total install ed cost of the product to the consumer for each energy efficiency level and the annual operating expenses for each energy efficiency level. In this preliminary analysis, DOE used a “simple” PBP calculation, which does not take into account changes in opera ting cost over time

. d Thus, the inputs to the total installed cost are the

end

- user product price, including the sales tax, and the inputs to the annual operating expenses are the annual operating hours, the CFLK power rating, and the electricity price in the compliance year of this rulemaking (2019)

.

Figure 8.1

. 1 depicts the relationships among inputs for installed cost and operating costs that

DOE used to calculate the LCC and PBP. T he yellow boxes indicate inputs, the green bo xes indicate intermediate outputs, and the blue boxes indicate final outputs (the LCC and PBP).

d For the notice of proposed rulemaking (NOPR), DOE is considering implementing a PBP that incorporates changes in operating cost over t ime

.

8

- 3Figure 8.1

. 1 Flow Diagram for Typical Calculation of Life

- Cycle Cost and Payback

Period

8

- 4Table 8.1

. 1 Summary of Inputs to Life

- Cycle Cost and Payback Period Inputs Average or Typical Value Characterization Total Installed Cost Inputs

Product Price Varies by e fficiency l evel and

p roduct c lass Single

- point value

S ales Tax 7.1 1 % Varies by region Operating Cost Inputs

Power Rating Varies by efficiency level and product class Single

- point value

Operating Hours Residential sector : 1.4 hrs/day

Commercial sector : 10.6 hrs/day D istribution (see section 8.2.7.2 )

Electricity Prices Residential sector: 0.125 $/kWh
Commercial sector: 0.109 $ kWh Var y by region and sector

Electricity Price

Trends AEO201 4 reference case Vary by AEO growth scenario

Lamp Replacements For both sectors lamp repl acements have lumen outputs similar to initially packaged lamps Vary by initially packaged lamps, lamp lumen range, and year of replacement

Lamp Disposal Costs Residential sector: None
Commercial sector: 0.1$ for CFLs

and LEDs Var y by lamp type and sector

Product Lifetime Mean: 13.8 years Median: 13.0 years Weibull d istribution

Discount Rate Residential sector: Mean real discount rates rang e from 0 % to

1 1% for various finance methods.

Commercial sector: Mean real discount rates range from 5.1% to

6.1% f or various building types D istribution (see appendix 8 C )

Assumed Date

Standards Become

Effective 2019 ( 3 years after expected publication of a potential final rule) Single

- point value

8.2 LIFE

- CYCLE COST INPUTS

8.2.1 Overview

The LCC analysis calculates the a verage life

- cycle cost of CFLKs for U.S. consumers at each CSL based on the LCCs of purchases of representative products. LCC is the total consumer expense over the life of a product , including purchase expense s and operating costs ( which

includ e energy ex penditures). DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product.

8

- 5For an individual purchase, DOE defines LCC by the following equation:

LCC = IC + � OC t ( 1 + r ) t − RV N N

t = 1 Eq. 8

. 1

Where:

LCC = life

- cycle cost in dollars,

IC = total installed cost in dollars,

Σ = sum over the lifetime, from year 1 to year N,

N = lifeti me of product in years,

OC = annual operating cost in dollars,

RV = residual value in dollars of CFLK lamps at the end of CFLK lifetime

, e

r = discount rate, and

t = year for which operating cost is being determined.

DOE expresses costs in 2013$. Tot al installed cost, o perating cost, lifetime, and discount rate are discussed in the following sections. T he year of product purchase is assumed to be 2019,

the assumed compliance date of this rulemaking

.

To determine the impact of standards on the average LCC for all U.S. CFLK consumers, DOE must address how all of the many inputs that affect the LCC vary across U.S. residential and commercial CFLK consumers and how the standard itself affects the LCC through its indirect effect on equipment and operating costs . The following sections develop the inputs necessary to address those factors.

8.2.2 Building Sample s

DOE used the EIA’s 200 9 Residential Energy Consumption Survey (RECS) 2 and the 2003 Commercial Buildings Energy Consumptio n Survey (CBECS) 3 to develop building samples for CFLKs in the residential and commercial sector, respectively

. RECS and CBECS

were cons tructed by the EIA to be a national representation of the residential and commercial

sector in the United States. RECS is a national sample survey of housing units that collects statistical information on the consumption of

, and expenditures for

, energy in housing units, along with data on energy

- related characteristics of the housing units and occupants. RECS 2009 included data from 12,083 housing units to represent almost 113.6 million households. CBECS collects energy

- related data for commercial building s in the United States. CBECS 2003 included data from 5,215 buildings to represent 4.9 million buildings.

e The residual value is calculated by multiplying the fraction of the lamp’s original lifetime that is left at the year that the CFLK is retired by the price of the CFLK lamp at that year. For LED CFLK lamps, the price is adjusted due to price learnin g

8

- 6To establish the variability of annual electricity price and energy use of CFLKs

, DOE

used the RECS and CBECS data on the variation in annual CFLK en ergy use and energy price

associated with the sample s for the household s and commercial building s

. The variability across the sampled households or buildings contributes to the range of LCCs and PBPs calculated for any particular standard level

.

For the r esidential sector, DOE used a subset of the 2009 RECS data that included houses with ceiling fans f (8

, 762 houses). For each of those house s , DOE applied a selection weight quantified by the RECS sampling weight ( RECS variable NWEIGHT) multiplied by the num ber of ceiling fans in each household ( RECS variable NUMCFAN)

.

For the commercial sector, DOE first divided the 2003 CBECS sample in to building

types characterized by their principal building activity (CBECS variable PBA8) using a subset of

the data that excluded non

- vacant buildings (5,080 buildings). For that subset , DOE then applied a selection weight equal to the square footage of each sampled building (CBECS variable SQFT8) multiplied by the adjusted CBECS sampling weight (CBECS variable ADJWT8) and the CFLK weighting factor of each building type. The CFLK weighting factor is derived by multiplying the fraction of light source technologies used in CFLKs (or ‘CFLK lamps’ as defined in chapter 6 of this TSD) by the number of lamps per 1

, 000 ft 2

, corresp onding to each of the building types (based on PBA8).

8.2.3 Ceiling Fan Light Kit Lumen Output

To account for the e ffect of effic i ency level on the LCC of an individual CFLK purchase, DOE ideally compares the LCC of a lower and a higher efficiency product that deliver the same level of consumer utility. DOE believes that the primary utility of CFLKs is their light output,

measured in lumens. I n this preliminary analysis, DOE considered two product classes of CFLKs, as described in chapter 3 of this TSD: CFLKs w ith externally ballasted or drive n lamps (Externally Ballasted/Driven CFLKs) and all other CFLKs (All Other CFLKs).

For All Other CFLKs, DOE estimated their weighted average CFLK lumen output based on CFLK market data and efficacy data for lamps packaged with CFLKs, as discussed in chapter

6 of this TSD. Using the market average lumen output of All Other CFLKs and the data on wattage and lumen output for the representative lamps specified for All Other CFLKs in the engineering analysis (chapter 5 of this TSD), DOE was able to calculate the CFLK input power. For more details on this approach, see chapter 6 of this TSD.

For Externally Ballasted/Driven CFLKs

, as discussed in chapter 6 of this TSD, DOE assumed that the total lumen output of each CFLK is the lumen output of the representative lamp

- ballast system derived in the engineering analysis (chapter 5 of this TSD). In LCC and PBP analysis, DOE therefore assumed that the input power of each representative lamp

- ballast for Externally Ballasted/Driven CFLK s is the input power of the CFLK.

f All ceiling fan data referred to in this chapter are for low

- volume ceiling fans, as defined in the concurrent ceiling fans test procedures rulemaking, where volume refers to air flow. DOE has determined that CFLKs are designed almost solely for the lo w

- volume ceiling fan market. Hereafter in this document ceiling fans refers to low

- volume ceiling fans.

8

- 7To capture the possibility that consumers might want different light output levels from CFLKs in the future, DOE considered two additional lumen output scenarios

, specifically for All

Other CFLKs (which represent more th an 99 percent of the market ) : a high, and a low lumen

scenario. For example, if the trend continues toward the ownership of more lamps per household

4 , consume rs might want lower lumen output per CFLK. To set bounds on these scenarios, DOE

examined the lumen variation across All Other CFLKs found in its shelf survey of ceiling fans and CFLKs, as discussed in chapter 3 of this TSD. The high and low lumen scenario s were determined by adding (reducing) one standard deviation (7 11 lumens) to the weighted average CFLK lumen output (1

, 9 60 lumens). Thus, the high lumen scenario used 2, 671 lumens, while the

low lumen scenario used 1,24 9 lumens

, as the weighted average lu men output of All Other CFLKs. Appendix 8B, Uncertainty and Variability in LCC Analysis

, presents the LCC results for

these scenarios.

8.2.4 Market Distribution of C eiling Fan Light Kits by Candidate Standard Level

To estimate the average LCC savings of a CSL

, DOE first considers the market

distribution by efficiency level of CFLK purchases in the compliance year in the absence of an amended standard (hereafter referred to as the ‘ no

- standard case ’ )

, and then considers which purchases in that distribution would be required to buy more

- efficient products if a standard were in place. The average LCC savings result from those consumers that switch to more

- efficient products as a result of the standards.

DOE began by estimating the market distribution in 2012 by ef ficiency level, as represented by the CSLs under consideration in this preliminary analysis . For All Other CFLKs,

DOE first bin ned CFLKs on the market by socket type and light source technology, as presented in chapter 3 of this TSD. This distribution was then converted to a distribution by energy use, by assigning power consumption values to socket types by light source technology. The power consumption values were based on a market assessment of lamps packaged with CFLKs , as discussed in chapter 6 of this TSD

. DOE found insufficient data to estimate the market efficiency

distribution for Ex ternally Ballasted/Driven CFLKs. DOE therefore assumed an even split in market share between the CSL 0 and CSL 1 for this product class. DOE then used the modified

consu mer

- choice model described in chapter 9 of this TSD to project the market distribution of shipments from 2012 to 2019, accounting for light

- emitting diode ( LED ) incursion and price learning (described in the following section)

. Tab le 8.2

. 1 presents the results of that analysis.

8

- 8Table 8.2

. 1 CFLK Market Distribution in the No

- Standard Case in 2019

Product Class CSL Market Share (%)

Externally

Ballasted/Driven CSL 0 0.2

Lamp Replaceme nt Scenario CSL 1 0.1

Fixture Replacement Scenario CSL 1 0.1

All Other

CFLKs Below CSL 0 57.9

CSL 0 0.0

Lamp Replacement Scenario CSL 1 5.6

CSL 2 1.9

CSL 3 0.0

CSL 4 0.1

CSL 5 13.2

Fixture Replacement Scenario CSL 1 5.6

CSL 2 1.9

CSL 3 0.0

CSL 4 0.1

CSL 5 13.2

Total 100

In this preliminary LCC analysis, DOE assumes that consumers who, in the no

- standard case would have purchased a CFLK with an efficacy less that the CSL under consideration, will

in

, the presence of a sta ndard

, purchase a CFLK that just meets that CSL. DOE uses the representative lamps from the engineering analysis to represent those CSLs. DOE further assumes that 50% of those CFLKs are of the type used in the lamp replacement scenario, and the remaining 5 0% are of the type used in the fixture replacement scenario.

8.2.5 Price Learning

As described in section 8.1.2 , lamp prices in the compliance year are an input to the LCC analysis. DOE uses a price learning analysis to account for c hanges in lamp prices that are expected to occur between the time that it has data for lamp prices (2012) and the assumed compliance year of the rulemaking (2019). Desroches et al. (2013) summarize the data and literature currently available that are relev ant to price learning forecasts for selected appliances and equipment. 5 Price learning reflects reductions in price that frequently occur as a result of increased volume of production and distributi on of a product as it matures in the market. In the early years , learning rates tend to be fast. Because learning is a function of cumulative production, prices tend to become relatively stable as a product matures and the rate of growth in cumulative prod uction slows.

8

- 9In this preliminary analysis, DOE assumed that only LED lamps undergo price learning

because of their recent introduction into the market. g While traditional lamps and compact fluorescent lamps used in CFLKs are relatively mature technologie s with relatively constant prices, LED lamps have been undergoing very rapid price reductions in the few years they have

been on the market. Price learning of LED lamps used in CFLKs will be driven by the entire LED lamp market

, not just by those packaged with CFLKs.

DOE estimated price trends for LED lamps using projections of the LED market from DOE’s report on Energy Saving s Potential for Solid State Lighting in General Illumination Applications

. 6 The report only projects prices to 2030. After 2030, DOE assumed that LED prices remain constant. DOE also assumed that

, for a given year, more efficacious LEDs would

have a d ifferent learning rate compared to less efficacious LEDs based on the time the more

efficacious LEDs become available on the market. (More efficacious LEDs appear on the market

after less efficacious LEDs

. ) Chapter 9 of this TSD provides more details on ho w DOE estimated the LED efficacy distribution for a given year.

8.2.6 Total Installed Cost Inputs

As discussed in chapter 3 of this TSD, the efficiency of the CFLK is based on the efficacy of the lamps it is packaged with ; therefore, DOE’s product price determin ation accounted for the difference in lamp (and associated socket) costs at the different CSLs. These changes in incremental costs are accounted for in the LCC savings analysis.

DOE also applied sales tax to the CFLK incremental costs. The sales tax is a multiplicative factor that represents state and local sales taxes applied to the consumer price. DOE derived state and local taxes from data provided by the Sales Tax Clearinghouse 7 . DOE derived population

- weighted average 8 tax values for each Census divis ion and large state, as

shown in Table 8.2

. 2 :

g DOE requests comments on the assumption that only LEDs will continue to undergo significant cost reduction due to price learning. For the NOPR, DOE m ay consider price learning for additional light source technologies.

8

- 10Table 8.2

. 2 Average Sales Tax Rates by Census Division and Large State

Census Division & Large State 2013 Population 2014 Tax Rate (%)
New England 14,618,806 5.69

Middle Atlantic 21,673,140 6.63

East North Central 46,662,180 6.91

West North Central 20,885,710 7.09

South Atlantic 42,230,787 6.07

East South Central 18,716,202 8.02

West South Central 11,435,411 8.65

Mountain 22,881,24 5 6.44

Pacific 13,040,657 5.30

New York 19,651,127 8.40

California 38,332,521 8.45

Texas 26,448,193 7.90

Florida 19,552,860 6.65

Population weighted average 7.11

DOE calculated the total installed cost based on the following equation:

IC = � ( LC + SC ) × N S � × TAX
Eq. 8

. 2

Where:

LC = the end

- user weighted

- average CFLK lamp price

, in dollars,

SC = the CFLK socket price h

, in dollars,

N

S = the number of sockets in the CFLK , and

TAX = sales tax markup

.

8.2.7 Operating Cost Inputs

DOE defines the operating cost (OC) for CFLKs in year t by the following equation:

O C t = E C t + R C t + D C t Eq. 8

. 3

Where:

EC = electricity cost associated wi th operating the CFLK

, in dollars

, RC = replacement cost for CFLK lamps that fail during the lifetime of the CFLK

, in dollars

, DC = disposal cost for CFLK lamps that fail during the lifetime of the CFLK

, in dollars

, and

t = year for which the operatin g cost is being determined

.

h For the LCC and PBP analysis, DOE calculated socket prices for 2019, in $2013, using the methodology described in chapter 7 of this TSD. In this calculation, DOE updated the distributio n markup for ceiling f an s from 1.525 (in 2013) to 1.515 (in 2019). For further details, see chapter 6 of th e ceiling fan Preliminary Analysis TSD.

8

- 11DOE used electricity price trends to forecast electricity prices into the future and, along with the product lifetime and discount rate, to establish the present value of lifetime energy costs.

8.2.7.1 Electricity Cost

DOE calculated th e electricity cost in year t based on the following equation:

E C t = AE C t × E P t Eq. 8

. 4

Where:

AE C t = annual energy consumption of the CFLK at year t , in kWh per year , and

E P t = electricity price at year t

, in dollars per kWh

.

The annual energy consumption, as discussed in chapter 6 of this TSD, is equal to the operating hours of the CFLK multiplied by the CFLK input power. The following sections discuss in detail the electricity cost inputs.

8.2.7.2 Operating Hours

DOE determined the weighted average C FLK operating hours in chapter 6 of this TSD using data from the Residential Lighting End

- Use Consumption Study (RLEUCS) 9 for the residential sector, and data from the 2010 Lighting Market Characterization 4 report for the

commercial sector . The estimated CFLK hours of use (HOU) vary by RECS reportable domain ( i.e., State, or group of States) in the residential sector and by building type in the commercial

sector.

According to the RLEUCS

, at a national l evel, CFLK i operating hours vary widely by

room type with a minimum of 1.1 HOU per day for bedrooms and a maximum of 2.8 HOU per day for outdoor spaces. Across RECS reportable domains, t he room

- weighted average operating

hours that DOE calculated in the en ergy use analysis range between 1.29 HOU per day and 1.44 HOU per day. I n the commercial sector, the weighted average CFLK operating hours were estimated to range between 10.3 HOU per day for food service buildings and 11.2 HOU per day for retail buildings

.

T o capture the variability in CFLK HOU for individual consumers , DOE applied an additional variation to the weighted average CFLK HOU when it con ducted its LCC and PBP analys i s

. This is based on the findings of the RLEUCS, which indicate wider operatin g hour ranges across different room types. To reflect these data , DOE applied a triangular distribution to each sampled CFLK purchase with a minimum of 80% and a maximum of 120% of the corresponding weighted average HOU value for each RECS reportable domai n and building type, for the residential and commercial sectors, respectively. For more information on distribution types , see appendix 8B, Uncertainty and Variability in LCC Analysis

. Table 8.2

. 3

shows the range in CFLK operating hours with and without the additional variation applied in the LCC and PBP analys i s. The table shows that, for the residential sector, the range in CFLK

i The RLEUCS actually provides ceiling fixture operating hours by room type, which DOE uses as a proxy for

C FLK operating hours.

8

- 12operating hours with the additional variation included is within the bounds of the variation in

averag e HOU from RLEUCS for different room types. For the commercial sector, DOE assum es that a similar variation in operating hours is also reasonable

.

Table 8.2

. 3 CFLK Operating Hours Ranges

CFLK HOU per Day ( Weighted Average) CFLK HOU per Day (with Added Variation)

Sector M in M ax M in M ax

Residential 1.29 1.44 1.03 1.73

Commercial 10.3 1 1

. 2 8.27 13.4

8.2.7.3 Electricity Prices

For its energy price analysis, DOE used average annual electricity prices for 2012 for 9

C ensus divisions and 4 large states shown in Table 8.2

. 4 . Using these data, DOE assigned an appropriate electricity price to each purchase made in the residential and commercial sector in the sample, depending on its location.

D OE derived average e lectricity prices from data that are published annually based on

EIA Form 861. 10 Those data include, for every utility that serves final consumers, annual electricity sales i n kilowatt

- hours

, revenues from electricity sales

, and number of customers in

the residential and commercial sectors. For each utility, DOE estimated average electricity price for each sector by dividing the sector’s revenues by the sector’s sales volume. DOE then calculated annual electricity prices by weighting each utility’s average price by the number of electricity consumers in each utility’s service area within each reportable domain. DOE converted the electricity prices to 2013$ using the gross domes tic product ( GDP ) price deflator published by the Bureau of Economic Analysis. 11 The assum ed electricity prices for each region

are shown in Table 8.2

. 4

.

8

- 13Table 8.2

. 4 Average Elec tricity Prices

Census Division & Large State Residential Electricity Prices (2013$/kWh) Commercial Electricity Prices (2013$/kWh) New England $0.159 $0.142

Middle Atlantic $0.143 $0.120

East North Central $0.124 $0.102

West North Central $0.108 $0.090

South Atlantic $0.116 $0.096

East South Central $0.105 $0.104

West South Central $0.092 $0.081

Mountain $0.112 $0.094

Pacific $0.122 $0.115

New York $0.190 $0.159

California $0.156 $0.142

Texas $0.112 $0.099

Florida $0.116 $0.100 Population weig hted average $0.127 $0.110
Source: EIA Form 861, Release Date for 2012: Oct. 29, 2013.

8.2.7.4 Electricity Price Trends

To calculate operating costs over the lifetime of the product, DOE requires a forecast of energy prices over the lifetime of the product. To ar rive at prices in future years, DOE multiplied

the average 2012 electricity prices by the forecast of annual average price changes for each

C ensus division from EIA’s AEO201 4

. 1 For each purchase sampled, DOE applied the projection

for the C ensus division in which the purchase was located.

DOE used the AEO Reference Case scenarios for the 9 C ensus divisions. The reference

case is a business

- as

- usual estimate, given known market, demographic, and technological

trends. DOE also included AEO High Growth and AEO Low Growth scenarios in the analysis. The high

- and low

- growth cases show the projected effects of alternative growth assumptions on energy markets. To estimate the trends after 2040, DOE followed past guidelines provided to the Federal Energy Management Program (FEMP) by EIA and used the average rate of change during 2025

– 2040.

Figure 8.2

. 1 and Figure 8.2

. 2 show residential and commercial electricity price trend s based on the three AEO201 4 projections. For the LCC results presented in section 8.4 , DOE used

the electricity price forecasts from the AEO refer ence case only. Appendix 8B of this TSD, Uncertainty and Variability in LCC Analysis

, presents LCC results for the high

- and low

economic growth scenarios.

8

- 14Figure 8.2

. 1 Trends in Residential Electricity Prices

Figure 8.2

. 2 Trends in Commercial Electricity Prices

8.2.7.5 Lifetime

As described in chapter 3 of this TSD, DOE uses ceiling fan lifetime as a proxy for CFLK lifetime. DOE used a lifetime distribution function to account for the variability in CFLK lifetime. This was developed by fitting a survival probability function (hereafter referred to as the survival function) to data of ceiling fan histo rical shipments and the 2012 age distribution of ceiling fan installed stock. The age distribution data for currently installed ceiling fan stock were obtained from a Lawrence Berkeley National Laboratory (LBNL) study of ceiling fan owners in

2012. 12 By combining data f rom the LBNL study with a history of c eiling fan shipments (see chapter 3 for more information o n historical shipments), DOE estimated the percentage of ceiling 90% 95% 100% 105% 110% 115% 120% 125% 130%

2010 2020 2030 2040 2050Percent of 2012 Electricity Price

Years Ref High Low

90% 95% 100% 105% 110% 115% 120% 125% 130%

2010 2020 2030 2040 2050Percent of 2012 Electricity Price

Years Ref High Low

8

- 15fans of a given age still in operation. This survival function, which DOE assumed has the form of a cumulative Weibull distribution, provides an average and median appliance lifetime.

The Weibull distribution is a probability distribution commonly used to measure failure rates. Its form is similar to an exponential distribution, which models a fixe d failure rate, except that a Weibull distribution allows for a failure rate that changes over time in a particular fashion.

The survival function, which is modeled by the cumulative Weibull distribution

, takes the form:

P ( x ) = e − � x

− θ

α � β fo r x > θ and

P ( x ) = 1 for x ≤ θ Eq. 8

. 5

Where:

P ( x ) = probability that the appliance is still in use at age x
,

x = appliance age,

α = scale parameter, which would be the decay length in an exponential dis tribution, β = shape parameter, which determines the way in which t he failure rate changes through

time

, and

θ = delay parameter, which allows for a delay before any failures occur.

When β = 1 , the failure rate is constant over time, giving the distribut ion the form of a cumulative exponential distribution. In the case of appliances, β commonly is greater than 1, reflecting an increasing failure rate as appliances age.

DOE used the LBNL study 12 as the source for the ceiling fan age distribution. The survey asked respo ndents to identify the age of the most

- used ceiling fan in increments of two years. Households that did not know the age of their ceiling fan s were allocated among the remaining age bins according to the distribution of respondents who did report ceiling f an age.

DOE used the ceiling fan age distribution, combined with shipments history, to develop the survival function for ceiling fans. For example, DOE summed the total shipments from 4 to 6 years before the LBNL study and then compared this number to the number of units still in use at the time of the LBNL study to approximate the percentage of surviving appliances within that age bin. DOE combined the data from all age bins in the LBNL study to build a fit to a Weibull distribution and find the parameter s ( α
, β

, θ ) that best approximate the surviving units. DOE weighted each bin’s contribution to the sum of squares by the inverse of the variance estimated for the LBNL study results ; this weighting controls for the changes in sample size between bins

and th rough time. DOE added the simultaneous constraint that the shipments history multiplied by the survival function sum to the estimate of installed stock from 2009 RECS. The equation for the sum of squares that DOE minimized is:

8

- 16� ( Surve y i − Sur vive i ) 2

σ

Surve y i 2

i + � ∑ S h ipments ( j ) ∗ P � ag e j � j − stoc k RECS � 2

σ

RECS 2

Eq. 8

. 6

Where:

i = identifier for an age bin from the LBNL study,

S urve y i = number of appliances reported by the LBNL study in bin i

, Sur vive i = the number of surviving appliances in bin i predicted by the Weibull distribution applied to the number of appliances shipped (a function of α
, β , and θ )

,

σ

Surve y i = the standard error of the LBNL study data point for bin i

, j = shipments year at the beginning of the historical time series and ending at 2009,

S h ipments ( j ) = shipments in year j

, ag e j = shipments vintage relati ve to the year 2009,

P � ag e j �

= survival probability of an appliance at ag e j , stoc k RECS = estimate of installed stock at year 2009, and

σ

RECS = the standard error for stock measurement from RECS.

The survival function , show n in Figure 8.2

. 3 is characterized by parameters ( α
, β

, θ ) = ( 10

. 93

, 2

. 0

, 4

. 14 )

. This distribution has a mean ceiling fan lifetime of 13.8 years and a median lifetime of 13.0 years.

This estimate is consistent with the estimate fr om Appliance Magazine 13

, which estimates typical

lifetimes within t he range of 7 and 18 years, as well as estimates received from a technical expert

and feedback from manufacturers.

8

- 17Figure 8.2

. 3 Survival Function for Ceiling Fans

DOE notes that the method used to calc ulate product lifetimes incorporates several assumptions , as detailed here

.

• Appliance lifetime can be modeled by a survival function. In particular, a Weibull distribution is an appropriate survival function.

• The appliance survival function does not chang e form through time.

• The survival function is independent of household factors (such as household size or geographic region) as well as product class.

• Survey respondents neither systematically overestimated nor underestimated the current age of their appli ance.

• The historical shipment data are accurate.

• The shipped appliances are installed predominantly in residences.

• A Weibull shape parameter, β ≥ 2

.

Three of these assumptions reflect analytical choices made by DOE. The first is the assumption that a Weibu ll distribution is the appropriate distribution to use for observed rates of appliance retirement , which include other factors outside of failure rate ( e.g., retirement due to reasons other than product failure)

. T his distribution has been used for this pu rpose in TSDs for other energy conservation standard rulemaking s , but it is not guaranteed to reflect actual real

world experience . The second assumption is that consumer behavior and mechanical appliance

lifetime have not ch anged over time . The third assu mption concerns the Weibull failure rate

parameter . DOE constrain ed the shape parameter ( β ) to values larger than two in order to avoid

8

- 18potential unlikely occurrences , such as sharp changes in consumer behavior or appliance survival immediately following t he delay period represented by the delay parameter ( θ )

.

8.2.7.6 Replacement Costs

While DOE considers the lifetime of a CFLK to be equivalent to the lifetime of the ceiling fan to which it is attached, DOE acknowledges that the lamps packaged with the CFLK may hav e a shorter lifetime than the lifetime of the CFLK. CFLK standard s affect only the efficacy of lamps packaged with the CFLK, but the lifetime energy use of the CFLK is also affected by the lamps that replace those that are shipped with the CFLK at the end of the shipped lamps’ lifetimes. I n the calculation of the LCC of CFLKs, lamps replacement costs are considered maintenance costs and are included in CFLK operating costs.

In the LCC analysis, DOE assumes that in both of the commercial and residential sec tors, lamps fail only at the end of the lamp service life. The service life (in years) is determined by dividing the lamps’ lifetime (in hours) by the lamps’ average operating hours per year

.

Replacement costs include , in principle, both the lamps and la bor associated with replacing a CFLK lamp at the end of its lifetime. However, DOE assumes that labor costs for lamp replacement s are not affected by changes in product efficiency and are

, therefore

, the same for all CSLs and product classes for both the r esidential and commercial sectors. Therefore, DOE

considers that the only costs associated with lamp replacements are lamp purchase costs to

consumer s

.

DOE assumed that consumers replace failed lamps with new lamps chosen from options

available in the lig hting market that have the same base

- type and provide an equivalent lumen output. DOE modeled this decision using a consumer

- choice model, which incorporates consumer sensitivity to first cost and operation and maintenance (O&M) cost. DOE accounted

for the first cost associated with purchasing a replacement lamp, the electricity consumption and operating costs depending on replacement lamp wattage, and the residual value of the lamp at the end of the CFLK lifetime. In this section, DOE describes the methodo logy to calculate the effects of relamping in the LCC analysis

.

Lamp Replacement options

. In replacing a failed CFLK lamp, DOE considered different lamp options available to consumers for both product classes; hereafter, these lamp options are

referred t o as "lamp replacement options".

For Externally Ballasted/Driven CFLKs, DOE assumed that consumers would replace the failed CFLK lamp with the same lamp type that was originally packaged with the light kit. DOE assumes that no LED replacements are availa ble for this product class

, because DOE knows of no LED lamps with external drivers that are currently available on the market a nd does not anticipate a large market in these kinds of lamps, particular ly LEDs designed to be replacements for pin

- based fluor escents. The average replacement lamp options and characteristics for this product class are shown in Table 8.2

. 5 and are derived from the engineering analysis.

To estimate consumer prices that are consistent with the prices of the representative lamps presented in the engineering analysis, DOE adjusted the end

- user lamps prices to omit the

8

- 19CFLK manufacturer market up. j Therefore, DOE estimated the price at which consumers purchase replacement lamps in Ta ble 8.2

. 5 by dividing the lamp end

- user prices from the engineering analysis data by 1.37, which is the CFLK manufacturer markup on the lamp. See chapter 12 of this TSD for details on the CFLK manufacturer markup.

Table 8.2

. 5 Lamp Replacement Options for Externally Ballasted/Driven CFLKs

Lamp Lumens Lamp Efficacy (lm/w) Wattage (W) Lifetime (hrs) Price ($)

855 42.2 17 .0 12 ,000 5.3

828 48.4 14 .3 12 ,000 6.8

900 69.2 16 .0 17 ,000 9.5

For All Other CFLKs, consumers were constrained to purchase lamps of the same socket type and lumen range. The model allows replacement lamps to have a different light source technolog y from those that the CFLK were packaged with. DOE categorized lamps as low, medium, or high e fficacy to characterize the lamp replacement options. To determine lamp characteristics, DOE used market research data for low efficacy lamps and data from lamps

included in the engineering analysis for medium and high efficacy lamps k

. Table 8.2

. 6 shows the average efficacies, watts, prices, and lifetimes for every lamp replacement option in each lumen

range bin for All Other CFLKs.

Table 8.2

. 6 Lamp Replacement Options for All Oth er CFLKsLumenRange Low Efficacy Lamp Medium Efficacy Lamp High Efficacy LampEfficacy(lm/w)Wattage(W)Lifetime(hrs)Price($)Efficacy(lm/w)Wattage(W)Lifetime(hrs)Price($)Efficacy(lm/w)Wattage(W)Lifetime(hrs)Price($)

300

– 550 1 4.1 29 1000 3.1 64.3 7 12,000 1.7 75.7 6 50,000 3.8

600

- 900 16.5 46 1331 4.0 58.0 13 10,500 2.6 76.9 9 50,000 6.1

1350

- 1700 20.7 72 1000 3.7 65.2 23 10,000 5.0 84.2 19 50,000 14.0

Relamping Matrices

. DOE developed a relamping matrix for each lamp packaged with a

CFLK for both the residential and com mercial sector. The relamping matrix determines the year a lamp used with a CFLK will fail and estimates the probability associated with a consumer choosing each possible lamp replacement option. T he matrix tracks the probability that each lamp replacement option will replace failed CFLK lamps as a function of time, as prescribed by

j Unlike the lamps packaged with the CFLK, which first receive a manufacturer markup and then a distributor markup, lamps purchased by consumers are assumed to only receive the distributor markup.

k When more than one medium or high ef ficacy lamp was specified in a given lumen range in the engineering analysis, DOE used the average efficacy, wattage, price, and lifetime of those lamps.

8

- 20a consumer

- choice model. The lifetime of the lamps originally packaged with the CFLK dictate s the year of the first la mp replacement based on the lamps’ lifetime. Subsequent relampings of the replacement lamps, should they fail before the CFLK is retired, are tracked over the lifetime of the CFLK. Each lamp option packaged with a CFLK will have a unique relamping matrix b ased on the lifetime of the packaged lamp option, the CFLK operation hours, and the characteristics of the replacement lamp options. The different usage patterns in the residential and commercial sector also require unique relamping matrices for each secto r for each lamp packaged with a

CFLK.

The consumer

- choice model uses a conditional logit model to calculate the probability of a consumer choosing a lamp replacement option from a finite set of options based on consumer sensitivity to first cost and O&M c ost. DOE used the sector

- specific consumer

- choice parameters (also referred to as β s in chapter 9 of this TSD) found in the general service fluorescen t lamp and incandescent reflector lamp 14 energy conservation standards rulemaking. Other factors that

influence consumer

- purchasing behavior other than first cost and O&M cost are accounted for through the use of acceptance factors. Acceptance factors limit the total market share that can be assigned to a product and are nominally set to 1. As indicated previously , the consumer

- choice model assumes that consumers replace lamps with the same base type and similar lumen output.

DOE assumed the market share of LED lamp options follow s the L ED incursion curve developed for the shipments analysis in chapter 9 of this TSD. The curve is adopted from DOE’s

report on Energy Savings Potential for Solid State Lighting in General Illumination Appliances 6

. In a given year, the market share apportioned to LED lamps was first determined using the incursion curve. The remaining market share for non

- LED replacement lamps was apportioned using the consumer

- choice model described previously

.

Lamp Replacement Costs

. DOE considers lamp replacement costs as the purchase costs of replacement lamps in the year the failed lamp is replaced. The purchase cost of a replacement lamp is the purchase price in the year the replacement occurs, multiplied by the sales tax and discounted back to the analysis start year. Because lamps in Externally Ballasted/Driven CFLKs are replaced with the same lamp they are packaged with, the purchase co st for replacement lamps is the lamp price in Table 8.2

. 5 . However, lamp replacements for “All Other CFLKs” are based on a weighted

- average of different lamp replacement options

. DOE estimated the purchase cost for these replaceme nt lamps as the weighted average of the lamp prices in Table 8.2

. 6

, based on the probability of each lamp replacement option being selected in the consumer choice model

. Furthermore, DOE applied price learning , as described in se ction 8.2.5

, to the lamp price of high efficacy ( LED ) lamps

.

8.2.7.7 Disposal Cost

When CFLK lamps fail, some consumers choose to recycle the lamps. The cost of recycling the CFLK lamps is the CFLK disposal cost. According to the Assoc iation of Lighting and Mercury Recyclers

, 23% of fluorescent lamps (including linear fluorescent) are recycled

nationwide l . DOE performed market research on the recycling costs of compact fluorescents

l http://www.almr.org/almr_project_web.html Last accessed March 11, 2014

8

- 21( CFLs m ) and found that, on average, disposing of a CFL costs about $1 per lamp. DOE did not find any data for LED bulb disposal costs, but assumed that their disposal costs would be the same as for CFLs. DOE assumed that commercial sector consumers pay recycling costs for 10% of CFL and LED lamp failures. Beca use few residential sector consumers recycle lamps, and because residential consumers generally do not pay to recycle lamps, DOE did not apply disposal

costs to this sector. DOE applied these assumptions in the LCC calculation, by assigning a $0.1 disposal cost for all CFLs and LEDs in the commercial sector. DOE requests comment and relevant data on the disposal cost assumptions for the different light source technologies used in

CFLKs.

8.2.7.8 Lamp Residual Value

The residual value , defined in section 8.2.1

, represents the remaining dollar value of surviving lamps at the end of the CFLK lifetime

. DOE assumed that all lamps with lifetimes

shorter than the CFLK lifetime are replaced. To account for the value of lamps with remaining

lif e to the consumer, the LCC model applies this residual value as a “credit” at the end of the

CFLK lifetime and discounts it back to the start of the analysis period. Additionally, due to high efficacy lamps undergo ing price learning, the residual value of these lamps is calculated based on the high efficacy lamp price in the year the CFLK is retired.

8.2.7.9 Discount Rates

The discount rate is the rate at which future expenditures and savings are discounted to establish their present value. The cost of capital is commonly used to estimate the present value of cash flows to be derived from an investment. Following financial theory, the finance cost of raising funds for expenditure s can be interpreted as: (1) the financial cost of any debt incurred to maintain equip ment, or (2) the opportunity cost of any equity used to maintain equipment. Similarly, the value of cost savings can be interpreted as: (1) the cost avoided by decreasing debt, or (2) the return earned from increasing equity holdings.

DOE estimates discou nt rates separately for residential and commercial end users. For

residential end users, DOE calculates discount rates as the weighted average real interest rate across consumer debt and equity holdings. For commercial end users, DOE calculates

commercial discount rates as the weighted average cost of capital (WACC), using the Capital Asset Pricing Model (CAPM).

Discount Rates for Residential Consumers. In the concurrent energy conservation

standard s rulemaking on ceiling fans, DOE estimated that 82 perc ent of ceiling fans sold in the

residential sector are replacement products purchased by existing households , and 18 percent are installed in new homes. DOE assumed that CFLK purchases are split similarly across existing

homes and new construction.

Disco unt Rates for CFLKs sold for Existing Homes DOE calculates the weighted average interest rate across the various types of consumer debt and equity and applies this weighted average rate as the consumer discount rate. DOE

m Based on available vendors on the EPA website: http://www2.epa.gov/cfl/recycling

- and

- disposal

- after

- cfl

- burns

out (Last accessed, March 11, 2 014)

8

- 22estimated the average percentage sh ares of the various types of debt and equity in the average U.S. household using data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010. 15 Table 8.2

. 7 shows the average percentages of each considered type of debt or equity. DOE derived the mean percentages of each source of financing throughout the 8 ye ars surveyed.

Table 8.2

. 7 Types of Household Debt and Equity by Percentage Shares

Type of Debt or Equity 1989 (%) 1992 (%) 1995 (%) 1998 (%) 2001 (%) 2004 (%) 2007 (%) 2010 (%) Mean (%)

Home equity loan 4.3 4.5 2.7 2.8 2.8 4.4 4.6 4.4 3.8

Credit card 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1 2.1

Other installment loan 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.3 1.6

Other residential loan 4.4 6.9 5.2 4.3 3.1 5.8 7.1 7.3 5.5

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.8 0 .5

Checking account 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.3 4.4

Savings or money market account 19.2 18.8 14.0 12.8 14.2 15.1 13.0 16.2 15.4

Certificate of deposit 14.5 11.7 9.4 7.0 5.4 5.9 6.5 6.7 8.4

Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 0.7 0.6 1.3

Bonds 1 3.8 12.3 10.5 7.0 7.9 8.4 6.7 7.3 9.2

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 23.4 28.3

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 25.6 19.5

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Sources: Federal Reserve Board. Survey of Co nsumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010.

DOE estimated interest or return rates associated with each type of equity and debt. The source for interest rates for loans, credit cards, and lines of credit was the Federal R eserve Board’s SCF for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Table 8.2

. 8 shows the average nominal rates in each year and the inflation factors used to calculate real rates. DOE calculated

effective interest rates for home equity loans in a similar manner as for mortgage rates, because

interest on both such loans is tax deductible. Table 8.2

. 9 shows the average effective real rates in each year and the mean rate across years. Because the interest r ates for each type of household debt reflect economic conditions throughout numerous years, they are expected to be representative of rates that may be in effect in the compliance year

.

Table 8.2

. 8 Average N ominal Interest Rates for Household Debt

Type of Debt 1989 (%) 1992 (%) 1995 (%) 1998 (%) 2001 (%) 2004 (%) 2007 (%) 2010 (%) Mean (%)

Home equity loan 11.5 9.6 9.6 9.8 8.7 5.7 7.9 6.0 8.6

Credit card*

- - 14.2 14.5 14.2 11.7 12.6 13.9 13.5

Other insta llment

loan 9.0 7.8 9.3 7.8 8.7 7.4 10.4 10.4 8.8

8

- 23Other residential loan 8.8 7.6 7.7 7.7 7.5 6.0 6.3 6.0 7.2

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 12.7 10.6 12.4

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85 1.64

Sources: Federal Reser ve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010.

* No data on interest rates available for credit cards in 1989 or 1992.

Table 8.2

. 9 Average Real Effective Interest Rates for Household Debt

Type of Debt 1989 (%) 1992 (%) 1995 (%) 1998 (%) 2001 (%) 2004 (%) 2007 (%) 2010 (%) Mean (%)

Home equity loan 3.8 4.3 4.4 5.8 3.8 1.9 2.1 3.1 3.8

Credit card*

- - 11.0 12.7 11.1 9.1 3.3 12.1 11.0

Other installment

loa n 4.9 5.8 7.0 6.6 6.1 5.4 9.7 9.0 6.7

Other residential loan 4.0 4.7 4.8 6.0 4.6 3.3 3.4 4.3 4.4

Other line of credit 9.6 9.4 9.3 10.2 11.7 6.0 9.7 8.8 9.4

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 200 1, 2004, 2007, and 2010.

* No data on interest rates available for credit cards in 1989 or 1992.

No similar rate data are available from the SCF for classes of assets, so the Department

derived that information from national historical data. The interest rates associated with certificates of deposit, 16 savings bonds, 17 and bonds (AAA corporate bonds) 18 were collected

from Federal Reserve Board time

- series data for 1977

– 201 2 . DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts came from Cost of Savings Index data covering 1984

– 201 2

. 19 The rates for stocks are the annual returns on the Standard and

Poor’s 500 for 1977

– 201 2

. 20 Rates for mutual funds are a weighted average of the stock rates (two

- thirds weight) and the bond rates (one

- third weight) in each year for 1977

– 201 2 . DOE adjusted the nominal rates to real rates using the annual inflation rate for each year. Average

nominal and real interest rates for the classes of household assets are listed in Table 8.2

. 10

. Because the interest and return rates for each type of asset reflect economic conditi ons throughout numerous years, they are expected to be representative of rates that may be in effect over the course of the product lifetime.

8

- 24Table 8.2

. 10 Average Nominal and Real Interest Rates for Househo ld Equity
Type of Equity Average

Nominal Rate (%) Average

Real Rate (%)

Checking account

- 0.0

Savings and money market

accounts 5.1 2.1

Certificate of deposit 6.1 2.0

Savings bond 7.4 3.3

Bonds 8.2 4.0

Stocks 11.8 7.6

Mutual funds 10.4 6.1

Table 8.2

. 11 summarizes the mean real effective rates of each type of equity or debt.

DOE determined the average percentage of each type of debt and asset using SCF data for 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010. Each year of SCF data provides the percentages of debts and assets for U.S. households. DOE averaged those percentages for the 8 years of survey data to arrive at the percentages shown in Table 8.2

. 11 . The average rate across all type s of household debt and equity, weighted by the percentages of each type, is 5.0 percent

.

Table 8.2

. 11 Average Interest on Household Debt and Equity
Type of Debt or Equity Average Percentage of

Household De bt plus Equity* (%) Mean Effective Real

Rate** (%)

Home equity loan 3.8 3.8

Credit card 2.1 11.0

Other installment loan 1.6 6.7

Other residential loan 5.5 4.4

Other line of credit 0.5 9.4

Checking account 4.4 0.0

Savings and money market accounts 15 .4 2.1

Certificate of deposit 8.4 2.0

Savings bond 1.3 3.3

Bonds 9.2 4.0

Stocks 28.3 7.6

Mutual funds 19.5 6.1

Total/weighted

- average discount rate 100.0 5.0

* Not including primary mortgage or retirement accounts.

** Adjusted for inflation and, for home equity loans, tax deduction of interest.

8

- 25DOE developed a normal probability distribution of interest rates for each asset type by using the mean value and standard deviation from the distribution. To account for variation among households, DOE sample d a rate for each household from the distributions for the appropriate asset class.

Discount Rates for CFLKs for New Construction

DOE estimated discount rates for new

- housing CFLKs using the effective real (after

inflation) mortgage rate for homebuyers. This rate corresponds to the interest rate after deduction of mortgage interest for income tax purposes and after adjusting for inflation (using the Fisher formula). n For example, a 6% nominal mortgage rate has an effective nominal rate of 4.5% for a

house hold at the 25% marginal tax rate. When adjusted for an inflation rate of 2%, the effective

real rate becomes 2.45%.

The data sources DOE used for mortgage interest rates were the SCF in 1989, 1992, 1995, 1998, 2001, 200 4 , 2007, and 2010. Using the approp riate SCF data for each year, DOE adjusted the mortgage interest rate for each relevant household in the SCF for mortgage tax deduction and inflation (see Table 8.2

. 12 ). In cases where the effective interest rate is equal to or

be low the inflation rate (resulting in a negative real interest rate), DOE set the real effective

interest rate to zero.

The average nominal mortgage rate carried by homeowners in these 6 years was 7.9%. As the mortgage rates carried by households in these years were established over a range of time, DOE believes they are representative of rates that may apply when the new standards take effect. After adjusting for inflation and interest tax deduction, effective real interest rates on mortgages

across the si x surveys averaged 3.0%.

Table 8.2

. 12 Data Used to Calculate Real Effective Mortgage Rates

Year Mortgage Interest Rates in Selected Years

%

Average

Nominal Interest

Rate Inflation Rate 21 Marginal Tax Rate Applicable to Mortgage

Interest 20 Average Rea l

Effective Interest

Rate

1989 9.7 4.82 24.1 2.4

1992 9.1 3.01 23.2 3.9

1995 8.2 2.83 24.2 3.3

1998 7.9 1.56 25.0 4.3

2001 7.6 2.85 24.2 2.8

2004 6.2 2.66 20.9 2.2

2007 6.3 2.85 20.6 2.1

2010 5.7 1.64 20.0 2.9

Average 7.6 3.0

n Fisher formula is given b y: Real Interest Rate = [(1 + Nominal Interest Rate) / (1 + Inflation Rate)]

– 1.

8

- 26To account for vari ation among households, DOE sampled a rate for each household in the RECS samples from a distribution of mortgage rates. DOE developed the distribution based

on the SCF data

.

Discount Rates for Commercial Sector Consumers. Most companies use both debt an d equity capital to fund investments, so their cost of capital is the weighted average of the cost to the firm of equity and debt financing. 19

, 22 DOE defines the discount rate as the real WACC, calculated as the weighted average of the cost of equity financing and the cost of debt financing, as estimated from financial data for publicly traded firms in the sectors that purchase ceiling f an light kits.

Damodaran Online is a widely used source of information about company debt and equity financing for most types of firms and was the primary source of data for this analysis

. 20
Companies included in the Damodaran Online database were assigned to the aggregate categories listed below:

• Retail

• Restaurant

• Office / O ther

• Hotel

• Medical Services

• Education

DOE estimated the cost of equity using the CAPM. 23 The CAPM ass umes that the cost of equity ( k

e ) for a particular company is proportional to the systematic risk faced by that company, where high risk is associated with a high cost of equity and low risk is associated with a low cost of equity. The systematic risk faci ng a firm is determined by several variables: the risk coefficient of the firm ( β ), the expected return on risk

- free assets ( R f ), and the equity risk premium ( ERP ). The risk coefficient of the firm indicates the risk associated with that firm relative to the price variability in the stock market. The expected return on risk

- free asset s is defined by the yield on long

- term government bonds. The ERP represents the difference between the expected stock market return and the risk

- free rate. The cost of equity financing is estimated using the following equation, where the variables are defi ned as described previously :

k
e = R f + ( β × ERP )

Eq. 8

. 7

Where:

k
e = cost of equity,

R

f = expected return on risk

- free assets, β = risk coefficient of the firm, and

ERP = equity risk premium.

Several parameters of the cost of capital equations can vary substantially over time, and therefore the estimates can vary with the time period over which the data is selected and the

technical details of the data

- averaging method. For guidance on the time period for selecting and

8

- 27averaging data for key parameters and the averaging method, DOE used Federal Reserve methodologies for calculating these parameters. In its use of the CAPM, the Federal Reserve uses a forty

- year period for calculating discount rate averages, utilizes the gross domestic product price deflator for estimating inflation, and considers the best method for determining the

risk

- free rate as one where “the time horizon of the investor is matched with the term of the risk

free security. ” 24

By taking a forty

- year geometric average of Federal Reserve data on annual nominal

returns for 10

- year Treasury bills, DOE found for this analysis the following risk

- free rates for

2010

- 201 3 ( Table 8.2

. 13 ). 21 DOE also estimated the ERP by calculating the difference between

risk

- free rate and stock market return for the same time period. 20

Table 8.2

. 13 Risk

- free rate and equity risk premium, 2010

- 2012

Year Risk

- free rate (%) ERP (%)

2010 6.74% 3.23%

2011 6.61% 2.94%

2012 6 .41% 3.99%

The cost of debt financing ( k d

) is the interest rate paid on money borrowed by a company. The cost of debt is estimated by adding a risk adjustment factor ( R

a ) to the risk

- free rate. This risk adjustment factor depends on the variability of st ock returns represented by standard deviations in stock prices. So for firm i , the cost of debt financing is:

k di = R f + R ai Eq. 8

. 8

Where:

k di = cost of debt financing for firm, i

, R

f = expected return on risk

- free assets, and

R ai = risk adjustment factor to risk

- free rate for firm, i.

D OE estimates the WACC using the following equation:

WACC = k
e × w e + k d × w d Eq. 8

. 9

Where:

WACC = weighted average cost of capital,

w

e = proportion of equity financing, and

w d = proportion of debt financing.

By adjusting for the influence of inflation, DOE estimates the real weighted average cost of capital, or discount rate, for each company. DOE then aggregates the company real weighted average cost of capital to estimate the discount rate for each of the six broader ownership types

8

- 28in the CFLK analysis. An overall average is estimated by weighting each ownership type’s discount rate by its estimated share of the CFLK market. These values are presented in Table

8.2

. 14 . While WACC values for any category may trend higher or lower over substantial periods of time, these values represent a private sector cost of capital that is averaged over major business cycles.

Table 8.2

. 14 Weighted Average Cost of Capital for Analyzed Sectors

Sector Discount Rate Standard Deviation Market Share

Retail 5.66% 1.18% 15%

Restaurant 5.69% 0.59% 17%

Office / Other 5.34% 0.62% 42%

Hotel 6.05% 1.35% 17%

Medical Services 5.19 % 0.62% 4%

Education 5.11% 1.11% 4%

Average Discount Rate: 5.50 %

Source: Damodaran Online Data Page: Costs of Capital by Industry Sector, 2010, 2011, 2012.

8.3 PAYBACK PERIOD INPUTS

The payback period is the amount of time it takes the consumer to recover the estimated higher purchase expense of more energy

- efficient products as a result of lower operating costs. As is typical in DOE rulemaking analyses, DOE has used simple payback period as the metric. Simple PBP does not take into account changes in oper ating expense over time or the time value of money; the calculation is done at an effective discount rate of zero percent.

The equation for PBP is:

PBP = ΔIC

ΔOC Eq. 8

. 10

Where:

ΔIC = d ifference in the total installed cost between the more energy

- efficient design and the baseline design, and

ΔOC = difference in annual operating expenses.

Payback periods are expressed in years. Payback periods greater than the life of the product indicate that the i ncreased total installed cost is not recovered with the reduced operating

expenses.

8.4 LIFE

- CYCLE COST AND PAYBACK PERIOD RESULTS

This section presents the results of the LCC and PBP analysis for CFLKs . As discussed in

section 8.1. 1 , DOE’s approach to the LCC analysis relied on developing samples of CFLK

8

- 29consumers. DOE also used probability distributions to characterize the uncertainty in many of the inputs to the analysis. DOE used Monte Carlo simulation to perform the LCC calcula tions for the consumers in the sample. In addition, as described in section 8.1.2 , the calculated LCCs include only the end

- user weighted

- average CFLK lamp prices and socket prices.

For each set of sample consumers in each pr oduct class, DOE calculated the average installed cost, first year operating cost, lifetime operating cost, and LCC for each CSL . These averages are calculated assuming that all of the sample consumers purchase a product at each

CS L. This allows the instal led cost, operating costs, and LCCs for each CSL to be compared under the same conditions, across a variety of sample consumers . DOE used these average values to calculate the PBP for each CSL, relative to least efficient product currently available on the

market

.

DOE also calculated LCC savings for each CSL

. DOE used a “roll

- up” approach to calculate the LCC savings

, relative to the LCC that each sample consumer would experience in

the no

- standard case

. DOE assigned products to consumers by using the di stribution of energy

efficiencies in the no

- standard case

. DOE assumed that all consumer s who would purchase a

CFLK that was less efficient than the CSL being analyzed in the ‘no standards case’ , would purchase a CFLK at the CSL being analyzed in the stand ards case being analyzed . DOE assumed

that all consumer s who would purchase a CFLK that was as efficient as, or more efficient than,

the CSL being analyzed in the ‘no standards case’ , would purchase the same CFLK in the standards case ( i.e., at the same CS L as in the no

- standard case). Therefore, DOE assigned an LCC savings value of zero to all consumers , who in the no

- standard case, would purchase a

CFLK that was as efficient as, or more efficient than, the CSL being analyzed. For this reason, the average LCC savings are not equal to the difference between the LCC of a specific CSL and

the LCC of the least efficient product available on the market . For each efficiency level, DOE

calculated the share of consumer s receiving a net LCC cost. DOE considered a consumer to receive a net LCC cost if the customer had negative LCC savings at the CSL being analyzed.

The following sections present the key LCC and PBP findings, as well as figures that illustrate the range of LCC and PBP effects among sample consumers

. From Table 8.4

. 1 to Table

8.4

. 4 , CSL 0 represents the new baseline that DOE is considering for the combined and restructured product classes (hereafter referred to as the ‘restructured b aseline’).

8.4.1 Externally Ballasted/Driven C eiling Fan Light Kits

Table 8.4

. 1 and Table 8.4

. 2 show the LCC and PBP results for all efficiency levels considered for Externally

- Ballasted/Driven CFLKs

.

8

- 30Table 8.4

. 1 Average LCC and PBP Results by Candidate Standard Level for Externally

Ballasted/Driven CFLKs

CSL Average Costs

2013$ Simple
Payback

years Average

Lifetime

years I nstalled Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $8.6 $1.1 $10 $19

-- 13.8

1 $13 $1.0 $7.7 $20 33.7 13.8

Commercial Sector

0 $8.6 $7.7 $81 $90

-- 13.8

1 $13 $6.8 $76 $88 4.9 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

Table 8.4

. 2 Average LC C Savings for Externally Ballasted/Driven CFLKs*

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $0.0

1 37%

- $0.8

Commercial Sector

0 0% $0.0

1 26% $0.7

*Relative to the project ed distribution of CFLK efficacies in the no standard case in the compliance year. ** The calculation includes households with zero LCC savings (no impact).

Figure 8.4

. 1 and Figure 8.4

. 2 show the LCC fo r each CSL (blue bars) and how each of the basic inputs to the LCC (total installed price, cumulative electricity cost, relamping cost, and residual value) contribute to the LCC, for each CSL , for the residential and commercial sector, respectively (multi

- colored bars)

. The negative costs of the black striped bars represent the residual value of the lamps at the end of the CFLK lifetime. Note that the cumulative electricity cost reflects the total discounted electricity cost of the CFLK, which includes the electricity consumption of the initially packaged lamps and of replacement lamp s over the CFLK lifetime. As expected, in the commercial sector, the cumulative electricity cost makes up the majority of the LCC, due to much higher operating hours than in the residential sector

.

8

- 31Figure 8.4

. 1 Composition of Average LCC for Externally Ballasted/Driven CFLKs in the

Residential Sector

Figure 8.4

. 2 Composition of Average LCC for Externally Ballasted/Driven CFLKs in the

Commercial Sector

Figure 8.4

. 3 show s the range of LCC savings for all C SLs in the residential and

commercial sector for E xternally B allasted/ D riven CFLKs

. T he top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The solid bar indicates the median; 50 percent of the households have LCC savings above this value. The horizontal lines above and below each box indicate the 95th and 5th percentiles , respectively. The small box shows the

8

- 32average LCC savings at the CSL

. A negative average LCC savings means that the average LCC with the standard is greater than it is without the standard.

Figure 8.4

. 3 Range of LCC Savings in Residential Sector (left) and Commercial Sector (right) at CSL 1 for Externally Ballasted/Driven CFLKs

8.4.2 All Other C eiling Fan Light Kits

Table 8.4

. 3 and Table 8.4

. 4 present the ke y findings for A ll O ther CFLKs in both the

commercial and residential sectors. The positive average LCC savings for residential and

commercial consumers at CSL 0 represent s a positive impact of the new product class structure being considered in this analy sis for this product class. These represent the estimated savings of a standard set at CSL 0. There are savings at CSL 0

, because there are products currently on the

market in that product class with efficiencies below CSL 0. o

CFLKs with efficiencies be low CSL 0 are assumed to be packaged with lamps with the following properties: an efficacy of 7.3 lumens per watt, power consumption of 60 watts, a 1,500

- hour lifetime, and a price in 2013$ of $1.60 per lamp. CFLKs with efficacies below CSL

0 are also ass umed t o have 3 sockets (because they operate with a 190

- watt limiter ) , and have a lumen output of approximately 1420 lumens. As shown in chapter 3 of this TSD, those products constitute approximately 80% of the current market.

Note that

, in the commerc ial sector, the calculated operating costs do not always decrease at higher CSLs , as is typically the case . This is because the operating costs calculated over the

o Essentially all CFLKs currently on the market with candelabra sockets are packaged with lamps that have

efficacies below CSL 0.

8

- 33lifetime of the CFLK include the operating costs of the lamps used as replacements for the

r egulated lamps packaged with the CFLK

. Depending on the lamp replacement options available at a given CSL and lumen bin

, shown in Table 8.2

. 6

, the consumer may choose a lamp with a higher total equipment and operating cost

. These lamp replacement s can offset the energy cost saving s of the package d lamps at the higher CSLs. This effect is seen in the commercial sector

more than in the residential sector

, because the packaged lamps are replaced much sooner and

more often in the comm ercial sector because of the higher operating hours of lamps in that

sector . The magnitude of the effect is also sensitive to the lifetime of the packaged lamps.

Table 8.4

. 3 Average LCC and PBP Results by CSL for All Other CFLKs

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $10.8 $2.4 $23.8 $34.6 0.5 13.8

1 $10.9 $2.1 $20.5 $31.4 0.5 13.8

2 $11.7 $1.9 $17.8 $29.5 0.6 13.8

3 $24.2 $1.7 $14.2 $38.4 1.8 13.8

4 $26.1 $1.6 $11.9 $38.0 2.0 13.8

5 $27.5 $1.5 $9.90 $37.4 2.1 13.8

Commercial Sector

0 $10.8 $16.9 $122 $133 0.1 13.8

1 $10.9 $14.8 $116 $127 0.1 13.8

2 $11.7 $13.0 $109 $120 0.1 13.8

3 $24.2 $12.1 $113 $138 0.3 13.8

4 $26.1 $11.2 $104 $130 0.3 13.8

5 $27.4 $10.3 $96.0 $123 0.3 13.8

Note: The results for each CSL are calculated assuming that all consumers use products w ith that efficiency level.

The PBP is measured relative to the least efficient product currently available on the market.

8

- 34Table 8.4

. 4 Average LCC Savings for All Other CFLKs*

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $30.7

1 0% $32.5

2 3% $33.9

3 14% $27.3

4 14% $27.6

5 13% $28.1

Commercial Sector

0 0% $143

1 0% $147

2 3% $151

3 12% $139

4 9% $144

5 6% $149

*Relative to the projected distribution of CFLK efficacies under cu rrent CFLK standards. ** The calculation includes households with zero LCC savings (no impact).

Figure 8.4

. 4 and Figure 8.4

. 5 show the contribution s of the total installed price,

cumulative electricity c ost, relamping cost, and residual value to the LCC, for each CSL, for the residential and commercial sector, respectively for All Other CFLKs

. As for the corresponding tables for the Externally Ballasted/Driven product class, the blue bars represent the LC C for each

CSL

, and the multi

- colored bars represent the contribution s to the LCC of the various inputs. In the figures, CSL

- 1 represents the market of lamps with efficacies below the CSL 0 baseline

.

8

- 35Figure 8.4

. 4 Composition of Average LCC for All Other CFLKs in the Residential Sector

Figure 8.4

. 5 Composition of Average LCC for All Other CFLKs in the Commercial

Sector

Figure 8 .4

. 6 and Figure 8.4

. 7 show the range of LCC savings for each C SL in the residential and commercial sector, respectively, for A ll O ther CFLKs

. For each CSL, t he top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The solid bar in the box indicates the median; 50 percent of the households have LCC savings above this value. The horizontal lines above and below each box indicate the 95th and 5th percentiles, respectively. The small box shows the average LCC savings at each CSL

.

8

- 36Figure 8.4

. 6 Range of LCC Savings in Residential Sector for All Other CFLKs

Figure 8.4

. 7 Range of LCC Savings in Commercial Se ctor for All Other CFLKs

Figure 8.4

. 8 and Figure 8.4

. 9 show the distribution of LCC impac ts for CSL 1 in the residential sector and commercial sector, respectively, for A ll O ther CFLKs. The figures are presented as frequency charts that show the distribution of LCC impacts with their corresponding probability of occurrence. DOE generated the figures for the distributions from a Monte Carlo

8

- 37simulation run based on 10,000 samples. As shown in the figures, about 4,100 (41%) of purchases have $0 LCC savings. T his number reflects the fraction of consumers that experience no impact from CSL 1, as indicated in Table 8.4

. 4 . DOE presents the distribution of impacts for All Other CFLKs (w hich represent the vast majority of the market) and at CSL 2 for illustrative

purposes , and because this is the case with the highest LCC savings.

Figure 8.4

. 8 LCC Savings Distribution in Residential Sec tor for All Other CFLKs at CSL

2

8

- 38Figure 8.4

. 9 LCC Savings Distribution in Commercial Sector for All Other CFLKs at

CSL 2

8.4.3 Rebuttable Presumption Payback Period

DOE also uses the results of the payback p eriod analysis as a preliminary test of the economic justification of standards. By statute, there is a rebuttable presumption that a standard level is economically justified if the additional costs to the consumer of purchasing a product complying with th e standard are less than thr ee times the value of the first year ’s energy cost savings. (42 U.S.C. §6295 (o)(2)(B)(iii)) However, the statute also specifies that: “A determination by the Secretary that such criterion is not met shall not be taken into cons ideration in the Secretary’s determination of whether a standard is economically justified.”

The criterion of the rebuttable presumption is equivalent to a given CSL having a simple payback period of less than three years. Using the simple payback periods presented in Table

8.4

. 3 , the rebuttable presumption criterion is met for All Other CFLKs ; these products at all

CSLs have a simple PBP of less than three years

. The criterion is not met f or Extern ally

Ballasted/Driven CFLKs as s hown from the simple payback periods in Table 8.4

. 1

.

8

- 39REFERENCES

1. U.S. Department of Energy

- Energy Information Administration. Annual Energy Outlook 2014 with Projections to 2040. Report No. DOE/EIA

- 038320 14. Washington, D.C. http://www.eia.gov/forecasts/aeo/pdf/0383(2014).pdf

2. Administration., U.S. Department of Energy

– Energy Information Manufacturing Energy Consumption Survey. 2010 MECS Survey Data. 2013. Washington, D.C. (Last Accessed September 11, 2 014) http://www.eia.gov/consumption/manufacturing/data/2010/.

3. U.S. Department of Energy

– Energy Information Administration. Commercial Building Energy Consumption Survey. Micro

- level data: File 1 General Building Information and Energy End Uses. 2003. W ashington, D.C. (Last Accessed March 27, 2014) http://www.eia.gov/consumption/commercial/data/2003/index.cfm?view=microdata

4. Navigant Consulting, Inc. Final Report: 2010 U.S. Lighting Market Characterization. Prepared for the Solid

- State Lighting Progra m, Building Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy. January 2012. (Last Accessed March 27, 2014) http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2010

- lmc

- final

- jan

- 2012.pdf.

5. Desroc hes, L

- B, K. Garbesi, C. Kantner, R. D. Van Buskirk, and H.

- C. Yang. “Incorporating Experience Curves in Appliances Standards Analysis”, Energy Policy. 2013. Vol. 52, pp. 402

- 416 (Last Accessed March 28, 2014) http://dx.doi.org/10.1016/j.enpol.2012.09.066

6. Navigant Consulting, Inc. Energy Savings Potential of Solid

- State Lighting in General Illumination Applications. Prepared for the Solid

- State Lighting P rogram, Building Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy. January 2012. (Last Accessed March 27, 2014) http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/ssl_energy

- savings

report_jan

- 2012 .pdf

7. Sales Tax Clearinghouse, Inc. State Sales Tax Rates Along with Combined Average City and County Rates. 2014. (Last Accessed September 26, 2014) http://thestc.com/STrates.stm

8. Bureau., U.S. Census Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2013 to July 1, 2013. 2013. (Last Accessed September 26, 2014) http://www.census.gov/popest/data/national/totals/2013/index.html

9. DNV KEMA Energy and Sustainability, Pacific Northwest Laborat ory. Residential Lighting End

- Use Consumption Study: Estimation Framework and Baseline Estimates. Prepared for the Solid

- State Lighting Program, Building Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy. Dec ember 2012. (Last Accessed March 27, 2014)

8

- 40http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2012_residential

- lighting

study.pdf

10. U.S. Department of Energy

- Energy Information Administration. Form EIA

- 861 Release Date for 2012: Oct. 29, 20 13. (Last Accessed Sept 23, 2014) http://www.eia.doe.gov/cneaf/electricity/page/eia861.html

11. U.S. Department of Commerce

– Bureau of Economic Analysis. Table 1.1.9. Implicit Price Deflators for Gross Domestic Product. (Last Accessed September 23, 2014 ) http://www.bea.gov/iTable/

12. Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.

— Results of a Survey on Amazon Mechanical Turk. July 2013. Lawrence Berkeley National Laboratory, Berkeley, CA . Report No. LBNL

- 6332E. (Last Accessed March 27, 2014) http://www.escholarship.org/uc/item/3r67c1f9

13. The 22nd Portrait of the U.S. Appliance Industry. Appliance Magazine. 2001.

14. U.S. Department of Energy

- Office of Energy Efficiency and Renewabl e Energy. Energy Conservation Program for Consumer Products: Energy Conservation Program: Energy Conservation Standards for General Service Fluorescent Lamps and Incandescent Reflector Lamps. February 2013. Washington, D.C. (Last Accessed September 23, 201 4) http://www.regulations.gov/#!docketDetail;D=EERE

- 2011

- BT

- STD

- 0006

15. Board of Governors of the Federal Reserve System. Research Resources: Survey of Consumer Finances. 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010. (Last Accessed September 26, 20 14) http://www.federalreserve.gov/econresdata/scf/scfindex.htm>

16. The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: CDs (secondary market), Maturity: 6

- month, Frequency: Annual, Descrip tion: Average rate on 6

- month negotiable certificates of deposit (secondary market), quoted on an investment basis. Washington, D.C. (Last Accessed September 26, 2014.) http://www.federalreserve.gov/releases/H15/data.htm

17. The Federal Reserve Board. Fed eral Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: State and local bonds, Maturity: 20

- year, Frequency: Monthly, Description: Bond buyer go 20

- bond municipal bond index. Washington, D.C. (Last Accessed September 26, 201 4.) http://www.federalreserve.gov/releases/H15/data.htm

18. The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: Corporate bonds/Moody’s Seasoned AAA, Frequency: Annual, Description: Moody’s yield on seasoned corporate bonds

— all industries, AAA. Washington, D.C. (Last Accessed September 26, 2014.) http://www.federalreserve.gov/releases/H15/data.htm

8

- 4119. Mortgage

- X

– Mortgage Information Service. Cost of Savings Index (COSI) Index History.

2010. (Last Accessed September 26, 2014) http://mortgage

x.com/general/indexes/default.asp.

20. Damodaran Online. Historical Returns on Stocks, Bonds and Bills

– United States. Use link for Updated Data: Data Sets. A. Damodaran, New York University. 2014. (Last Accessed September 26, 2014) http://pages.stern.nyu.edu/~adamodar/

21. Board of Governors of the Federal Reserve System. H.15 Historical Data Selected

Interest Rates. (Last Accessed September 26, 2014) http://www.federalreserve.gov/releases/H15/data.htm

22. Modigliani, F. and M. Miller. The Cost of Capital, Corporations Finance and the Theory

of Investment. American Economic Review. 1958. Vol. 48, No. 3, pp. 261

- 297 (Last Accessed March 28, 2014.) http://www.jstor.org/stable/1809766

23. Ibbotson Associat es. Cost of Capital 2001 Yearbook. 2001. Chicago, IL.

24. Board of Governors of the Federal Reserve System. Federal Reserve Bank Services Private Sector Adjustment Factor. 2005. Washington, D.C.

8

- 42APPENDIX 8A. USER INSTRUCTIONS FOR LIFE

- CYCLE COST ANALYSIS

SPREADSHEET

TABLE OF CONTENTS

8A.1 INTRODUCTION

................................ ................................ ................................ ........ 8A

- 1

8A.2 DESCRIPTION OF LIFE

- CYCLE COST WORKSHEET

................................ .......... 8A

- 1

8A.3 BASIC INSTRUCTIONS

................................ ................................ ............................. 8A

- 3

8A

- iAPPENDIX 8A. USER INSTRUCTIONS FOR LIFE

- CYCLE COST ANALYSIS

SPREADSHEET

8A.1 INTRODUCTION

It is possible to examine and reproduce the detailed results of the life

- cycle cost ( LCC ) and payback period ( PBP ) analysi s using a Microsoft Excel spreadsheet available on the U.S. Department of Energy’s rulemaking website for ceiling fan light kits (CFLKs)

. a To fully execute the spreadsheet

, both Microsoft Excel and Crysta l Ball b software are required . Both applications

are comme rcially available. The spreadsheet post ed on the DOE website represent s the latest

version

, which has b een tested with Microsoft Excel 2010

.

8A.2 DESCRIPTION OF LIFE

- CYCLE COST WORKSHEET

DOE created a single LCC workbook file containing a collection of worksheets. Each worksheet represents a conceptual component within the LCC calculation. To facilitate navigation and to identify how worksheets are linked , each worksheet contains an area on the extreme left showing variables imported to and exported from the worksheet. The LCC

workbook contains the following worksheets:

Summary The Summary worksheet contains a user interface to man ip ulate energy price trends, start year

, number of trials in the Crystal Ball simulation , and SSL price learning

. It also includes a button to run the Crystal Ball simulation.

LCC and PBP simulation results for each candidate standard level (CSL) are display ed on this sheet

. LCC & Payback The LCC & Payback worksheet shows LCC calculation results for different

CSL s for a single sampled household and a single sampled commercial building

. During a Crystal Ball simulation, the spreadsheet records the LCC

and PBP values for every sampled household and building

.

Parameters The Parameters worksheet contains data from the engineering analysis used in this LCC and PBP analysis. Other parameters on the worksheet include: total light kit price, lumen output scenario values, replacement options, disposal costs, and SSL price learning for CSL 3 to CSL 5. The LED and CFL replacement options are determined from the data from the engineering analysis.

a http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/76

. (Last a ccessed April 1,

2014

. ) This material is available in Docket # EERE

- 201 2

- BT

- STD

- 004 5 at regulations.gov.

b Crystal Ball is available at http://www.oracle.com/us/products/applications/crystalball/overview/index.html

. (Last Accessed April 1, 2014.)

8A

- 1Residential Op.

Hours (Res_HOU) The Re sidential Operating Hours worksheet is used to determine average residential operating hours for a household and a distribution of residential operating hours. During a Crystal Ball simulation, DOE uses the household

selected from the data to determine the analysis parameters like operating

hours and census division

. Commercial Op.

Hours (Com_HOU) The Commercial Operating Hours worksheet is used to determine average commercial operating hours for a building type and a distribution of commercial operating h ours. During a Crystal Ball simulation, DOE uses the building selected from the data to determine the analysis parameters like operating hours and census division

Residential

Discount Rate (Res_DR) The Residential Discount Rate worksheet contains the distributions of

discount rates in the residential sector

.

Commercial

Discount Rate (Com_DR) The Commercial Discount Rate worksheet contains the distributions of

discount rates in the commercial sector

.

Lifetime The Lifetime worksheet contains the distribution of lifetimes for CFLKs

.

Base Case

Distribution The BaseCase Distribution worksheet includes the product efficiency

distribution for the effective year of the standard

. Electricity Prices (E_Prices) The Electricity Pric es worksheet shows the estimated electricity price by census division and large state

. Electricity Price

Trend (E_Trends) The Electricity Price Trend worksheet shows the future price trend for electricity. DOE used energy price data and forecasts from the Energy Information Administration’s (EIA's) Annual Energy Outlook 201 4 for the period until 20 40 and extrapolated (using the rate of change between 2025 and 2040) beyond 2040.

Sales Tax The Sales Tax work sheet shows the estimated sales tax in 2013 by census division and large state

Relamping The Relamping worksheet calculates the energy use and costs associated with changing the lamps of the light kit at the end of the lamp lifetime over the analysis per iod. The estimates of the residual value of the lamps that are in the light kit at the end of the lifetime of the light kit are also shown.

LCC Box Plots The LCC Box Plots worksheet can display box plots of the LCC savings for all efficiency levels and p roduct classes. Box plots for a single product are visible at any given time. The user can select the product to show on the

sheet.

8A

- 28A.3 BASIC INSTRUCTIONS

Basic instructions for operating the LCC spreadsheet are as follows:

1. Once the LCC spreadsheet has been downloaded, open the file using Excel. Click

“Enable Content ” when prompted and then click on the tab for the Summary worksheet.

2. Use Excel's View/Zoom commands at the top menu bar to change the size of the display

to f it your monitor.

3. Users can change the parameters listed under "User Input: " on the Summary worksheet.

There are five drop

- down boxes. The default parameters are:

a. Energy Price Trend: Defaults to “AEO 201 4 Reference Case.” To change the input, use the dr op

- down menu and select the desired trend (Reference, Low, or High).

b. Start Year: Defaults to “ 2019 .” To change the value, use the drop

- down menu and select the desired year.

c. # of Trials: Defaults to “10 ,000.” To change the value, use the drop

- down menu and select the desired number of trials ( 100, 1,000, 2,000, 5,000, 10,000 , or 25 ,000 ).

d. SSL Price Learning: Defaults to “Yes.” To change the input, use the drop

- down menu and select whether to turn SSL Price Learning on or off (Yes or No).

e. Lumen Output Sc enario: Defaults to “Reference.” To change the value, use the drop

- down menu and select the desired lumen output (Reference, Low, or High).

4. To run the Cryst al Ball simulation, click the “R un” button (you must re

- run after changing any parameters). The sp readsheet will then be minimized. You can monitor the progress of the simulation by watching the count of iterations at the left bottom corner. When the simulation is finished, the worksheet named Summary will reappear with the

results. The results for all product class es will reflect the results of the new simulation

.

8A

- 3APPENDIX 8B. UNCERTAINTY AND VARIABILITY IN LCC ANALYSIS

TABLE OF CONTENTS

8B.1 INTRODUCTION

................................ ................................ ................................ ......... 8B

- 1

8B.2 UNCERTAINTY AND VARI ABILITY

................................ ................................ ....... 8B

- 1

8B.2.1 Approaches to Address Uncertainty and Variability

................................ ......... 8B

- 1

8B.3 PROBABILITY ANALYSIS AND THE USE OF CRYST AL BALL

......................... 8B

- 2

8B.4 ALTERNATIVE SCENARIO RESULTS FOR CFLK LCC ANALYSIS

................... 8B

- 3

8B.4.1 Lumen Output Scenarios

................................ ................................ .................... 8B

- 4

8B.4.1.1 High Lumen Output Scenario

................................ ................................ .. 8B

- 4

8B.1.1.1 Low Lume n Output Scenario

................................ ................................ ... 8B

- 6

8B.4.2 Economic

- Growth Electricity Price Trend Scenarios

................................ ........ 8B

- 8

8B.4.2.1 High

- Growth AEO 2014 Scenario

................................ ........................... 8B

- 8

8B.4.2.2 Low

- Growth AEO 2014 Scenario

................................ .......................... 8B

- 11

LIST OF TABLES

Table 8B.4.1 Hi gh Lumen Output Scenario: Average LCC and PBP for All Other

CFLKs in the Residential and Commercial Sector

................................ ...... 8B

- 4

Table 8B.4.2 High Lumen Output Scenario: Average LCC Savings for All Other

CFLKs in the Residential and Commercial Sector

................................ ...... 8B

- 5

Table 8B.4.3 Low Lumen Output Scenario: Average LCC and PBP for All Other

CFLKs in the Residential and Commercial Sector

................................ ...... 8B

- 6

Table 8B.4.4 Low Lumen Output Scenario: Average LCC Savings for All Other

CFLKs in the Residential and Commercial Sector

................................ ...... 8B

- 7

Table 8B.4.5 High

- Growth AEO 2014 Scenario: Average LCC and PBP for Externally

- Ballasted/Driven CFLKs in the Residential and

Commercial Sector

................................ ................................ ....................... 8B

- 8

Table 8B.4.6 High

- Growth AEO 2014 Scenario: Average LCC Savings for Externally

- Ballasted/Driven CFLKs in the Residential and

Commercial Sector

................................ ................................ ....................... 8B

- 8

Table 8B.4.7 High

- Growth AEO 2014 Scenario: Average LCC and PBP for All

Other CFLKs in the Residential and Commercial Sector

............................ 8B

- 9

Table 8B.4.8 High

- Growth AEO 2014 Scenario: Average LCC Savings for All

Other CFLKs in the Residential and Commercial Sector

.......................... 8B

- 10

Table 8B.4.9 Low

- Growth AEO 2014 Scenario: Average LCC and PBP for Externally

- Ballasted/Driven CFLKs in the Residential and

Commercial Sector

................................ ................................ ..................... 8B

- 11

Table 8B.4.10 Low

- Growth AEO 2014 Scenario: Average LCC Savings for Externally

- Ballasted/Driven CFLKs in the Residential and

Commercial Sector

................................ ................................ ..................... 8B

- 11

Table 8B.4.11 Low

- Growth AEO 2014 Scenario: Average LCC and PBP for All

Other CFLKs in the Residential and Commercial Sector

.......................... 8B

- 12

8B

- iTable 8B.4.12 Low

- Growth AEO 2014 Scenario: Average LCC Savings for All

Other CFLKs in the Residential and Commercial Sector

.......................... 8B

- 13

8B

- iiAPPENDIX 8B. UNCERTAINTY AND VARIABILITY IN LCC ANALYSIS

8B.1 INTRODUCTION

This appendix discusses uncertainty and variability and describes how DOE incorporated

these into the life

- cycle cost (LCC) and payback period (PBP) analys i s conducted for the ceiling fan light kits (C F LKs ) energy conservation standards (ECS) rulemaking reported in this preliminary analysis technical support document (TSD) . The two key approaches are (1) to use distributions to capture uncertainties and variations in input variables when such distributions are reasonably well defined, and (2) to use scenarios that capture the bounds of uncertainty when they are less well de fined . They key variables considered in these analyses are operating hours, CFLK lumen output, discount rates, sales tax, and electricity prices.

8B.2 UNCERTAINTY AND VARIABILITY

DOE’s analyses of the impacts of proposed energy conservation standards employ

ma thematical models developed for those purposes. The models generate outputs (e.g., the life

cycle cost impact of proposed standards) based on inputs that are often uncertain and/or variable.

Variability means that the quantity of interest takes on different values at different times

or under different conditions . Variability may be caused by many factors. For example

, the

energy use of a light fixture depend s on environmental factors (e.g., diurnal variations in light) and behavioral factors (e.g

. , the schedules and preferences of the inhabitants of a house). Manufacturing irregularities can also cause variability . For example, 10 lamps of the same model may each have a slightly different energy use. DOE attempts to account for major sources of

varia bility in its analyses.

Uncertainty has many sources. Variability may lead to uncertainty in model inputs, because analysts fre quently must estimate the values of interest based on samples of a variable quantity (for example, the hours of use of lighting in a home). Measurement uncertainty is another source of uncertainty

, which may result from instrumental uncertainties (resulting, for example from drift, bias, and precision of resolution) and human factors (e.g., variations in experimental setup, errors instrumen t readings or recordings). DOE attempts to address the major source of uncertainties in its analys e s.

8B.2.1 Approaches t o Address Uncertainty a nd Variability

This section describes two approaches to address uncertainty and variability in numerical modeling that in practice are often used in tandem, as they are in this CFLK rulemaking :

• scenario analysis, and

• probability analysis.

Scenario analysis uses a single numerical value for each quantity in a calculation, then changes one (or more) of the numerical values and repeats the calculation. A number of calculations are done, which provide some indication of the extent to which the result depends

8B

- 1upon the assumptions. For example, the life

- cycle cost of an appliance could be calculate d for energy rates of 2, 8, and 14¢ per kWh.

The advantages of scenario analysis are that each calculation is simple; a range of estimates is used and crossover points can be identified. (An example of a crossover point is the energy rate above which the life

- cycle cost is reduced, holding all other inputs constant. That is, the crossover point is the energy rate at which the consumer achieves savings in operating expense that more than compensate for the increased purchase expense.) The disadvantage of

s cenario analysis is that there is no information about the likelihood of each scenario.

Probability anal ysis considers the probability that a variable has a given value over its range of possible values . For quantities with variability (e.g., electricity rates in different households), surveys

, or other forms of measurement sampling, can be used to generate a frequency distribution of numerical values (e.g., the percentage of households with electricity rates at particular levels) to estimate the probabili ty of each value.

The major disadvantage of the probability approach is that it requires more information, namely information about the shapes and magnitudes of the variability and uncertainty of each quantity. The advantage of the probability approach i s that it provides greater information about the outcome of the calculations, that is, it provides the probability that the outcome will be in a particular range.

Scenario and probability analysis provide some indication of the robustness of the policy

g iven the uncertainties and variability. A policy is robust when the impacts are acceptable over a wide range of possible conditions.

8B.3 PROBABILITY ANALYSIS AND THE USE OF CRYSTAL BALL

To quantify the uncertainty and variability that exist in inputs to the en gineering, LCC, and payback period (PBP) analyses, DOE used Microsoft Excel spreadsheets combined with Crystal Ball, a commercially available so ftware add

- in, to conduct probability analyses. The probability analyses used Monte Carlo simulation and probabi lity distributions.

Simulation refers to any analytical method meant to imitate a real

- life system, especially when other analyses are too mathematically complex or too difficult to reproduce. Without the aid of simulation, a spreadsheet model will only r eveal a single outcome, generally the most likely or average scenario. Probabilistic risk analysis uses both a spreadsheet model and simulation to automatically analyze the effect of varying inputs on outputs of the modeled system. One type of spreadsheet simulation is Monte Carlo simulation, which randomly generates values for uncertain variables again and again to simulate a model. Monte Carlo simulation was named for Monte Carlo, Monaco, where the primary attractions are casinos containing games of chanc e. Games of chance

, such as roulette wheels, dice, and slot machines, exhibit random behavior. The random behavior in games of chance is similar to how Monte Carlo simulation selects variable values at random to simulate a model. When you r oll a die, you

know that a 1, 2, 3, 4, 5, or 6 will come up, but you do not know which for any particular roll. It's

8B

- 2the same with the variables that have a known range of values but an uncertain value for any particular time or event (e.g., equipment lifetime, discount r ate, and installation cost).

For each uncertain variable (one that has a range of possible values), possible values are defined with a probability distribution. The type of distribution selected is based on the conditions surrounding that variable. Proba bility distribution types include:

Figure 8B.3

. 1 Normal, Triangular, Uniform, Weibull, and Custom Probability

Distributions

During a simulation, multiple scenarios of a model are calculated by repeatedly sampling values from the probability distributions for the uncertain variables and using those values for the cell. Crystal Ball simulations can consist of as many trials (or s cenarios) as desired

— hundreds or even thousands. During a single trial, Crystal Ball randomly selects a value from the defined possibilities (the range and shape of the probability distribution) for each uncertain variable and

then recalculates the LCC and PBP for that trial

.

8B.4 ALTERNATIVE SCENARIO RESULTS FOR CFLK LCC ANALYSIS

DOE addressed input uncertainties in its LCC analysis for this CFLK ECS rulemaking preliminary analysis in both its reference case analys e s and in its scenario analyses . DOE used the Monte Carlo approach to address uncertainty and variability in key inputs in its calculation of LCC analysis outputs: the life

- cycle cost of representative products that meet each CSL, the average LCC savings of the population at each CSL relative to the n o

- standards case , and the payback per iod . DOE

use d scenario runs to determine how thos e results change under different assumptions about future electricity prices (based on the high

- and low

- economic

- growth electricity price trends projected by the Energy Information Administration in i t s Annual Energy Outlook 201 4 ( AEO 201 4 ) a and about the average lumen output of CFLKs. This section presents the results of the LCC and PBP for those

alternative scenario analys e s

.

a Energy Information Administration, Annual Energy Outlook 201 4 with Projections to 2040. Report No. DOE/EIA

03832014. Washington, D .C. http://www.eia.gov/forecasts/aeo/pdf/0383(2014).pdf NORMAL UNIFORM TRIANGULAR

WEIBULL CUSTOM

8B

- 38B.4.1 Lumen Output Scenarios

This section presents results for the product class that contains “ A ll O ther CFLKs” in commercial and residential sectors using the AEO 2014 reference case electricity prices and a high (2,671 lumens) or low (1,249 lumens) total CFLK lumen output scenario. Note that t he high and low lumen scenarios were determined by adding and subtracting, respectively, one standard deviation (711 lumens) to the weighted average CFLK lumen output of 1,960 lumens discussed in chapter

3 of this TSD

. For the externally

- ballas ted/driven CFLKs, the lumen output scenario did not affect the LCC and PBP results because each CFLK in this product class was assumed to have only one socket, which therefore indicated that the lumens for externally

- ballasted/driven CFLKs are the same

in the three lumen output scenarios (High, Low, and Reference).

8B.4.1.1 High Lumen Output Scenario

Table 8B.4

. 1 and Table 8B.4

. 2 present the average LCC, PBP, and LCC savings based on 10,000 Monte Carlo runs for a high lumen output scenario for the product class with “ A ll O ther

CFLKs”

.

Table 8B.4

. 1 High Lumen Output Scenario: Average LCC and PBP for All Other CFLKs

in the Residential and Commercial Sector

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $14.7 $3.3 $32.5 $47.2 1.0 13.8

1 $14.8 $2.9 $28.0 $42.8 1.0 13.8

2 $15.9 $2.6 $24.2 $40.1 1.1 13.8

3 $33.0 $2.4 $19.3 $52.3 2.9 13.8

4 $35.6 $2.2 $16.2 $51.8 3.1 13.8

5 $37.4 $2.0 $13.49 $50.9 3.2 13.8

Commercial Sector

0 $14.7 $23.1 $166 $181 0.1 13.8

1 $14.8 $20.2 $158 $173 0.1 13.8

2 $15.9 $17.7 $148 $164 0.2 13.8

3 $33.0 $16.5 $154 $187 0.4 13.8

4 $35.6 $15.2 $142 $178 0.4 13.8

5 $37.4 $14.0 $13 1 $168 0.5 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

8B

- 4Table 8B.4

. 2 High Lumen Output Scenario: Average LCC Savings for All Other CFLKs

in the Residential and Commercial Sector

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $23.3

1 0% $25.8

2 3% $27.7

3 14% $18.7

4 14% $19.1

5 13% $19.7

Commercial Sector

0 0% $115

1 0% $120

2 3% $126

3 12% $109

4 9% $116

5 6% $123

*Relative to the projected distribution of CFLK efficacies under current CFLK standards.

** The calculation includes households with zero LCC savings (no impact).

8B

- 58B.1.1.1 Low Lumen Output Scenario

Table 8B.4

. 3 and Table 8B.4

. 4 present the average LCC

, PBP , and LCC savings results based on 10,000 Monte Carlo runs for a low lumen output scenario for each product class

.

Table 8B.4

. 3 Low Lumen Output Scenario: Average LCC and PBP for All Other CFLKs

in the Residential and Commercial Sector

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $6.9 $1.6 $15.2 $22.1 0.1 13.8

1 $6.9 $1.4 $13.1 $20.0 0.1 13.8

2 $7.4 $1.2 $11.3 $18.8 0.1 13.8

3 $15.4 $1.1 $9.0 $24.5 0.9 13.8

4 $16.6 $1.0 $7.6 $24.2 1.0 13.8

5 $17.5 $0.9 $6.3 $23.8 1.1 13.8

Commercial Sector

0 $6.9 $10.8 $78 $85 0.0 13.8

1 $6.9 $9.4 $74 $81 0.0 13.8

2 $7.4 $8.3 $69 $77 0.0 13.8

3 $15.4 $7.7 $72 $88 0.1 13.8

4 $16.6 $7.1 $66 $83 0. 1 13.8

5 $17.5 $6.6 $61 $79 0.2 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

8B

- 6Table 8B.4

. 4 Low Lumen Output Scenario: Average LCC Savings for All Other CFLKs in

the Residential and Commercial Sector

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $38.0

1 0% $39.2

2 3% $40.1

3 14% $35.9

4 14% $36.1

5 13% $36.4

Commercial Sector

0 0% $172

1 0% $174

2 3% $177

3 12% $169

4 9% $172

5 6% $176

*Relative to the projected distribution of CFLK efficacies under current CFLK standards.

** The calculation includes households with zero LCC savings (no impact).

8B

- 78B.4.2 Economic

- Growth Electricity Price Trend Scenarios

This section presents results for each product class in commercial and residential sectors using the reference lumen output scenario and a high

- or low

- economic

- growth electricity price

trends

.

8B.4.2.1 High

- Growth AEO 2014 Scenario

Table 8B.4

. 5 to Table 8B.4

. 8 present the average LCC, PBP, and LCC savings results based on 10,000 Monte Carlo runs using electricity prices from the high

- economic growth AEO 201 4 scenario for each product class.

Table 8B.4

. 5 High

- Growth AEO 2014 Scenario: Average LCC and PBP for Externally

Ballasted/Driven CFLKs in the Residential and Commercial Sector

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $8.6 $1.1 $10 $19

--- 13.8

1 $12.7 $1.0 $7.7 $20.4 33.6 13.8

Commercial Sector

0 $8.6 $7.2 $79 $87

--- 13.8

1 $13 $6.5 $73 $86 5.1 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

Table 8B.4

. 6 High

- Growth AEO 2014 Scenario: Average LCC Savings for Externally

Ballasted/Driven CFLKs in the Residential and Commercial Sector

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $0.0

1 37%

- $0.8

Commercial Sector

0 0% $0.0

1 26% $0.5

*Relative to the projected distribution of CFLK efficacies under current CFLK standards. ** The calculation includes households with zero LCC savings (no impact).

8B

- 8Table 8B.4

. 7 High

- Growth AEO 2014 Scenario: Average LCC and PBP for All Other

CFLKs in the Residential and Commercial Sector

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $10.8 $2.4 $23.9 $34.7 0.5 13.8

1 $10.9 $2.1 $20.6 $31.5 0.5 13.8

2 $11.7 $1.9 $17.8 $29.5 0.6 13.8

3 $24.2 $1.7 $14.2 $38.5 1.8 13.8

4 $26.1 $1.6 $11.9 $38.1 2.0 13.8

5 $27.5 $1.5 $9.96 $37.4 2.1 13.8

Commercial Sector

0 $10.8 $16.0 $117 $128 0.1 13.8

1 $10.9 $14.0 $112 $123 0.1 13.8

2 $11.7 $12.3 $105 $116 0.1 13.8

3 $24.2 $11.4 $109 $133 0.3 13.8

4 $26.1 $10.6 $100 $126 0.3 13.8

5 $27.4 $9.7 $92.4 $120 0.3 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

8B

- 9Table 8B.4

. 8 High

- Growth AEO 201 4 Scenario: Average LCC Savings for All Other

CFLKs in the Residential and Commercial Sector

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $30.7

1 0% $32.5

2 3% $33.9

3 14% $27.3

4 14% $27.6

5 13% $28.1

Commercial Sector

0 0% $140

1 0% $143

2 3% $147

3 12% $135

4 10% $140

5 7% $145

*Relative to the projected distribution of CFLK efficacies under current CFLK standards. ** The calculation includes households with zero LCC savings (no impact).

8B

- 108B.4.2.2 Low

- Growth AEO 2014 Scenario

Table 8B.4

. 9 to Table 8B.4

. 12 present the average LCC, PBP, and LCC savings results based on 10,000 Monte Carlo runs using electricity prices from the low

- economic growth AEO 201 4 scenario for each product class.

Table 8B.4

. 9 Low

- Growth AEO 2014 Scenario: Average LCC and PBP for Externally

Ballasted/Driven CFLKs in the Residential and Commercial Sector

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $8.6 $1.1 $10 $19

--- 13.8

1 $12.7 $1.0 $7.7 $20.3 33.9 13.8

Commercial Sector

0 $8.6 $7.4 $78 $86

--- 13.8

1 $13 $6.6 $73 $85 5.1 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

Table 8B.4

. 10 Low

- Growth AEO 2014 Scenario: Average LCC Savings for Externally

Ballasted/Driven CFLKs in the Residential and Commercial Sector

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $0.0

1 37%

- $0.8

Commercial Sector

0 0% $0.0

1 26% $0.5

*Relative to the projected distribution of CFLK efficacies under current CFLK standards. ** The calculation includes households with zero LCC savings (no impact).

8B

- 11Table 8B.4

. 11 Low

- Growth AEO 201 4 Scenario: Average LCC and PBP for All Other

CFLKs in the Residential and Commercial Sector

CSL Average Costs

2013$ Simple
Payback

Years Average

Lifetime

years Installed Cost First Year’s
Operating Cost Lifetime
Operating Cost LCC

Residential Sector

0 $10.8 $2.4 $23.9 $34.6 0.5 13.8

1 $10.9 $2.1 $20.5 $31.4 0.5 13.8

2 $11.7 $1.9 $17.8 $29.5 0.6 13.8

3 $24.2 $1.7 $14.2 $38.4 1.8 13.8

4 $26.1 $1.6 $11.9 $38.0 2.0 13.8

5 $27.5 $1.5 $9.91 $37.4 2.1 13.8

Commercial Sector

0 $10.8 $16.3 $117 $128 0.1 13.8

1 $10.9 $14.2 $111 $122 0.1 13.8

2 $11.7 $12.5 $104 $116 0.1 13.8

3 $24.2 $11.6 $108 $132 0.3 13.8

4 $26.1 $10.8 $99 $125 0.3 13.8

5 $27.4 $9.9 $91 $119 0.3 13.8

Note: The results for each CSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the least efficient product currently available on the market.

8B

- 12Table 8B.4

. 12 Low

- Growth AEO 2014 Scenario: Average LCC Savings for All Other

CFLKs in the Residential and Commercial Sector

CSL Life

- Cycle Cost Savings

% of Consumers that
Experience Average Savings**

Net Cost 2013$

Residential Sector

0 0% $30.7

1 0% $32.5

2 3% $33.9

3 14% $27.3

4 14% $27.6

5 13% $28.1

Commercial Sector

0 0% $140

1 0% $143

2 3% $147

3 12% $135

4 10% $140

5 6% $145

*Relative to the projected distribution of CFLK efficacies under current CFLK standards. ** The calculation includes households with zero LCC savings (no impact).

8B

- 13APPENDIX 8C. DISCOUNT RATE DISTRIBUTIONS

TABLE OF CONTENTS

8C.1 INTRODUCTI ON

................................ ................................ ................................ ......... 8C

- 1

8C.2 DISTRIBUTION OF RATE S FOR DEBT CLASSES C ONSIDERED FOR

REPLACEMENT PRODUCTS

................................ ................................ .................... 8C

- 1

8C.3 DISTRIBUTION OF RATE S FOR EQUITY CLASSES CONSIDERED FOR

REPLACEMENT PRODUCTS

................................ ................................ .................... 8C

- 3

8C.4 DISTRIBUTION USED FO R COMMERCIAL DISCOUN T RATES

........................ 8C

- 5

REFERENCES

................................ ................................ ................................ .......................... 8C

- 6

LIST OF TABLES

Table 8C.2.1 Household Debt: Real Interest Rate Distributions

................................ ....... 8C

- 2

Table 8C.3.1 Household Assets: Time Series of Real Interest Rates

................................ 8C

- 4

Table 8C.4.1 Real Interest Rate Distribution for Commercial Buildings

.......................... 8C

- 5

8C

- iAPPENDIX 8C. DISCOUNT RATE DISTRIBUTIONS

8C.1 INTRODUCTION

DOE derived consumer discount rates for the life

- cycle cost (LCC) analysis using data on

interest or return rates for various types of debt and equity. To account for variation among households in rates for each of the types, DOE sampled a rate for each household from a distribution of rates for each debt and equity type.

8C.2 DISTRIBUTION OF RATES FOR DEBT CLASSES CONSIDERED FOR

REPLACEMENT PROD UCTS

Table 8C.2

. 1 show s the distribution of real interest rates for different types of debt used

to finance replacement products . The data source for the interest rates for first mortgages, home equity loans, credit cards, installment loans, other residence loans, and other lines of credit is the

Federal Reserve Board’s SCF in 1989, 1992, 1995, 1998, 2001, 2004, 2007 , and 2010

. 1 DOE adjusted the nominal rates to real rates using the annual inflation rate in each year. For home equity loans, DOE calculated effective interest rates in a similar manner as for mortgage rates,

because interest on such loans is tax deductible.

8C

- 1Table 8C.2

. 1 Househol d Debt: Real Interest Rate Distributions

1st Mortgage Home Equity Credit Card Installment Loans Other Residence Other LOC

Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%)

0.5 5.6 0.4 10.2 0.0 5.6 0.0 33.8 0.2 12.3 0.1 4.6

1.6 17.4 1.5 9.8 1.4 1.8 1.4 2.1 1.5 6.2 1.4 3.6

2.5 30.9 2.5 14.8 2.5 1.9 2.4 4.0 2.5 8.9 2.5 3.2

3.5 24.9 3.5 26.3 3.5 3.1 3.4 5.1 3.5 16.2 3.5 4.5

4.4 13.9 4.5 17.4 4.5 4.2 4.5 5.6 4.5 16.1 4.5 7.0

5.4 3.8 5.4 10.0 5.6 5.5 5.6 6.1 5.5 17.0 5.5 11.3

6.3 1.9 6.4 4.3 6.6 6.7 6.6 7.1 6.5 11.8 6.6 9.0

7.4 0.7 7.5 3.3 7.4 4.3 7.5 3.6 7.5 5.3 7.6 5.3

8.5 0.3 8.4 1.6 8.6 6.1 8.5 4.2 8.6 2.2 8.6 8.1

9.4 0.2 9.4 1.0 9.6 5.3 9.5 3.6 9.4 1.3 9.5 8.4

10.4 0.1 10.5 0.4 10.5 5.6 10.5 3.0 10.4 0.6 10.5 6.7

11.6 0.1 11.5 0.3 11.5 5.8 11.5 1.8 11.5 0.6 11.6 5.9

12.5 0.1 12.5 0.3 12.5 4.8 12.5 3.0 12.5 0.5 12.5 6.0

13.2 0.0 13.8 0.1 13.5 4.5 13.5 1.9 13.1 0.0 13.5 1.7

14.4 0.0 14.7 0.2 14.7 7.7 14.7 3.3 14.7 0.4 14.7 3.6

16.6 0.0 15.7 0.1 15.6 6.8 15.6 1.6 15.7 0.1 15.5 1.9

22.8 0.0 16.6 0.0 16.4 5.6 16.4 2.2 16.6 0.2 16.4 2.9

17.1 0.0 17.5 5.3 17.5 2.0 17.5 0.1 17.3 1.2

22.0 0.0 18.4 2.1 18.4 1.4 18.0 0.0 18.4 1.0

42.6 0.0 19.3 2.6 19.3 1.0 20.0 0.1 19.1 1.2

155.8 0.0 20.4 1.5 20.5 0.8 20.2 0.9

21.5 1.1 21.4 1.0 21.6 1.3

22.7 0.5 22.5 0.3 22.6 0.3

23.7 0.1 23.5 0.3 23.5 0.2

24.7 0.4 24.6 0.3 25.4 0.3

25.6 0.3 25.3 0.2 173.8 0.4

26.8 0.5 26.8 0.2

27.7 0.2 27.9 0.1

28.5 0.0 28.5 0.0

29.5 0.1 29.3 0.1

30.9 0.0 33.3 0.0

33.8 0.0 34.1 0.0

36.9 0.0 36.1 0.0

39.2 0.0

43.6 0.0

44.3 0.0

47.5 0.0

181.2 0.3

8C

- 28C.3 DISTRIBUTION OF RATES FOR EQUITY CLASSES CONSIDERED FOR

REPLACEMENT PRODUCTS

Table 8C.3

. 1 show s the distribution of real interest rates for different types of equity used to finance replacement products . Data for equity classes are not available from the Federal

Reserve Board’s SCF , so DOE derived data for these classes from national

- level historical data. The interest rates associated with certificates of deposit (CDs), 2 savings bonds, 3 and AAA corporate bonds 4 are from Federal Reserve Board time

- series data covering 1977 to 201 2 . DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts are from Cost of Savings Index data covering 1984 to 201 2

. 5 The rates for stocks are the annual

ret urns on the Standard and Po or’s (S&P) 500 from 1977 to 201 2

. 6 The mutual fund rates are a weighted average of the stock rates (two

- thirds weight) and the bond rates (one

- third weight ) in each year from 1977 to 201 2 . DOE adjusted the nominal rates to real rates using the annual inflation rate in each year.

8C

- 3Table 8C.3

. 1 Household Assets: Time Series of Real Interest Rates

Year Savings Accounts (%) CDs 6 Months (%) Treasury Sav Bonds (%) Corp AAA Bonds (%) Stocks S&P 50 (%) Mutual Funds (%)

1977

- - 0.6 1.2 1.4

- 12.7

- 8.0

1978

- 0.9 0.8 1.1

- 1.0

- 0.4

1979

- 0.1

- 1.9

- 1.5 6.4 3.7

1980

- - 0.5

- 2.0

- 1.4 16.1 10.1

1981

- 5.0 2.8 3.5

- 13.6

- 8.1

1982

- 6.0 6.2 7.2 13.4 11.0

1983

- 5.9 7.7 8.6 18.5 14.9

1984 5.5 6.1 7.8 8.0 1.8 3.8

1985 5.4 4.5 7.0 7.5 26.7 20.1

1986 6.0 4.6 5.8 7.0 16.3 12.8

1987 3.3 3.2 4.8 5.5 2.1 3.0

1988 3.1 3.6 4.6 5.4 11.9 9.5

1989 3.0 4.1 3.5 4.2 25.4 18.1

1990 2.4 2.6 3.0 3.7

- 8.0

- 4.3

1991 2.7 1.6 3.8 4.4 25.0 17.9

1992 2.1 0.7 4.5 5.0 4.4 4.4

1993 1.1 0.3 3.5 4.1 6.8 5.7

1994 1.3 2.3 4.7 5.3

- 1.2 0.8

1995 2.2 3.1 3.9 4.6 33.4 23.6

1996 2.0 2.4 3.6 4.3 20.3 14.7

1997 2.7 3.4 4.2 4.9 28.9 20.7

1998 3.4 3.8 4.0 4.9 26.4 18.9

1999 2.3 3.2 3.6 4.7 18.3 13.4

2000 1.7 3.1 2.5 4.1

- 12.0

- 7.2

2001 1.8 0.8 2.6 4.1

- 14.3

- 8.7

2002 1.3 0.2 3.8 4.8

- 23.2

- 14.2

2003

- 0.2

- 1.1 2.6 3.3 25.5 17.9

2004

- 0.7

- 0.9 2.3 2.9 7.9 6.0

2005

- 0.1 0.3 1.2 1.8 1.4 1.3

2006 1.1 2.0 1.6 2.3 12.0 8.5

2007 2.0 2.3 1.9 2.6 2.6 2.4

2008 0.2

- 0.7 0.4 1.7

- 38.9

- 25.8

2009 3.6 1.2 4.5 5.7 26.4 19.1

2010 0.6

- 1.2 2.6 3.2 13.0 9.5

2011

- 1.0

- 2.7 0.7 1.4

- 1.1

- 0.5

2012

- 0.1

- 1.6 0.8 1.6 13.5 9.3

Avg. 2.0 1.9 3.2 3.9 7.7 6.2

Min

- 1.0

- 2.7

- 2.0

- 1.5

- 38.9

- 25.8

Max 6.0 6.1 7.8 8.6 33.4 23.6

Std. Dev. 1.8 2.3 2.2 2.3 16.3 11.1

8C

- 48C.4 DISTRIBUTION USED FOR COMMERCIAL DISCOUNT RATES

Table 8C.4

. 1 shows the distribution used for commercial discount rates

.

Table 8C.4

. 1 Real Interest Rate Distribution for Commercial Buildings

Retail Restaurant Office / Other Hotel Medical Services Education

Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%)

0.0 0.0 0.0 0.0 0.6 0.1 0.0 0.0 0.0 0.0 0.0 0.0

1.8 0.4 0.0 0.0 1.6 0.4 1.4 0.8 1.8 0.3 1.1 1.3

2.5 2.0 0.0 0.0 2.6 2.4 2.7 2.3 2.5 1.7 2.1 2.7

3.6 7.6 3.7 4.2 3.6 9.7 3.8 2.3 3.7 9.4 3.5 8.0

4.5 19.5 4.5 23.1 4.5 26.2 4.6 13.5 4.5 30.9 4.7 30.7

5.5 29.7 5.5 33.6 5.5 32.4 5.6 27.8 5.5 38.3 5.4 38.7

6.5 27.0 6.5 30.1 6.5 21.5 6.5 35.3 6.4 15.4 6.4 17.3

7.4 11.0 7.5 7.0 7.4 5.7 7.5 12.8 7.4 2.3 7.9 1.3

8.4 1.8 8.6 2.1 8.3 1.5 8.3 3.0 8.1 0.7

9.3 0.9 9.5 0.2 9.4 0.8 9.7 0.7

10.7 0.2 10.1 0.0 10.4 1.5 10.9 0.3

8C

- 5REFERENCES

1. Board of Governors of the Federal Reserve System. Research Resources: Survey of Consumer Finances. 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010. (Last

Accessed October 15, 2014 ) http://www.federalreserve.gov/econresdata/scf/scfindex.htm >

2. The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: CDs (secondary market), Maturity: 6

- month, Frequency: Annual, Description: Average rate on 6

- month negotiable certificates of deposit (sec ondary market), quoted on an investment basis. Washington, D.C. (Last Accessed October 15, 2014 .) http://www.federalreserve.gov/releases/H15/data.htm

3. The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: State and local bonds, Maturity: 20

- year, Frequency: Monthly, Description: Bond buyer go 20

- bond municipal bond index. Washington, D.C. (Last Accessed October 15, 2014 .) http://www.federalreserve.gov/releases/H15/data.htm

4. The Federal Reserve Board. Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: Corporate bonds/ Moody’s Seasoned AAA, Frequency: Annual, Description: Moody’s yield on seasoned corporate bonds

— all industries, AAA. Washington, D.C. (Last Accessed October 15, 2014 .) http://www.federalre serve.gov/releases/H15/data.htm

5. Mortgage

- X

– Mortgage Information Service. Cost of Savings Index (COSI) Index History. 2010. (Last Accessed October 15, 2014 .) http://mortgage

x.com/general /indexes/default.asp

.

6. Damodaran Online. Historical Returns on Stocks, Bonds and Bills

– United States. Use link for Updated Data: Data Sets. A. Damodaran, New York University. 2014. (Last

Accessed October 15 , 201 4 .) http://pages.stern.nyu.edu/~adamodar/

8C

- 6CHAPTER 9. SHIPMENTS ANALYSIS

TABLE OF CONTENTS

9.1 INTRODUCTION

................................ ................................ ................................ ........... 9

- 1

9.1.1 Representative Products Analyzed in the Shipments Analysis

............................ 9

- 1

9.2 SHIPMENTS MODEL OVER VIEW

................................ ................................ .............. 9

- 4

9.2.1 Shipments Demand Mo del

................................ ................................ ................... 9

- 4

9.2.2 Stock Accounting Model

................................ ................................ ..................... 9

- 5

9.2.3 Consumer

- Choice Model

................................ ................................ ..................... 9

- 6

9.3 MODEL IMPLEMENTATION

................................ ................................ ....................... 9

- 7

9.3.1 Historical Shipments

................................ ................................ ............................ 9

- 7

9.3.2 Shipments Projections by Market Segment

................................ ......................... 9

- 8

9.3.3 Light

- Emitting Diode Incursion and Distribution by Efficiency Level

............. 9

- 10

9.3.4 Consumer

- Choice Model

................................ ................................ ................... 9

- 11

9.3.5 Summary

................................ ................................ ................................ ............ 9

- 12

9.4 IMPACT OF ENERGY CON SERVATION STANDARDS ON SHIPMENTS

.......... 9

- 13

9.4.1 Application of Relative Price Elasticity

................................ ............................. 9

- 15

9.5 AFFECTED STOCK

................................ ................................ ................................ ..... 9

- 16

9.6 IMPACT OF A CEILING FAN STANDAR D ON CFLK SHIPMENTS

.................... 9

- 16

9.7 ALTERNATIVE SHIPMENT S SCENARIO

................................ ................................ 9

- 17

9.7.1 Alternative Light

- Emitting Diode Incursion Curve

................................ ........... 9

- 17

9.8 SHIPMENTS PROJECTION S

................................ ................................ ...................... 9

- 18

REFERENCES

................................ ................................ ................................ .......................... 9

- 22

LIST OF TABLES

Table 9.1.1 Characteristics of Representative CFLKs used in the Shipments Analysis: All Other CFLKs

................................ ................................ ........... 9

- 3

Table 9.1.2 Characteristics of Representative CFLKs used in the Shipments Analysis: Externally

- Ballasted/Driven CFLKs

................................ .............. 9

- 4

Table 9.4.1 Change in Relative Price Elasticity Following a Purchase Price Change

................................ ................................ ................................ ......... 9

- 15

Table 9.8.1 Cumulative CFLK Shipments from 2019

- 2048 (millions of units) from a CFLK Standard with an Assumed Ceiling Fan Standard and without a Ceiling Fan Standard

................................ ................................ ................. 9

- 21

9

- iLIST OF FIGURES

Figure 9.3.1 Historical Shipments of CFLKs

................................ ................................ ..... 9

- 8 Figure 9.3.2 CFLK Retirement Function

................................ ................................ ........... 9

- 9 Figure 9.3.3 LE D Incursion Curve for CFLKs

................................ ................................ 9

- 11 Figure 9.7.1 Alternate and Reference LED Incursion Curve

................................ ........... 9

- 18 Figure 9.8.1 Total CFLK Shipments Projections by Market Segment for Reference Case with an Assumed Ceiling Fan Standard

................................ .............. 9

- 19 Figure 9.8.2 Total CFLK Shipments in the no CFLK Standard Case and with a Ceiling Fan Standard

................................ ................................ .................... 9

- 20 Figure 9.8.3 Shipments Projection for Externally Ballasted/Driven CFLKs in Reference Case with an Assumed Ceiling Fan Standard

............................. 9

- 20 Figure 9.8.4 Shipments Projection for All Other CFLKs in Reference Case with an Assumed Ceiling Fan Standard

................................ ................................ .... 9

- 21

9

- iiCHAPTER 9. SHIPMENTS ANALYSIS

9.1 INTRODUCTION

This chapter describes the data and methods the U.S. Department of Energy (DOE) used

to project annual product ship ments with and without standards and presents resul ts for both ceiling fan light kit ( CFLK ) product classes being considered in this analysis. Estimates of future product shipments are necessary input s to the national energy savings (NES) and net present

v alue (NPV) calculations , as well as to the manufacturer impact analysis (MIA).

Because the majority of CFLKs are sold with ceiling fans , the shipments model for

CFLKs is nece ssarily coupled to shipments of ceiling fan s

. a DOE developed a national stock

acc ounting model to estimate annual sh ipments of ceiling fans

, which wa s then used to estimate shipments of CFLKs

. To apportion CFLK shipments into different product classes and candidate standard levels (CSLs), DOE developed a modified consumer

- choice model based on the shipments modeling methodology developed by DOE for the general service fluorescent lamp and incandescent reflector lamp energy conservations standards rulemaking

. 1

The shipments model was executed as a separate computer model written in the Python programming language . The input s and outputs of the shipments models were embedded in the national impact assessment (NIA) model, which is implemented in a Microsoft Excel spreadsheet, available on regulations.gov, docket number EERE

- 2012

- BT

- STD

- 004 5 at http://www.regulations.gov/#!docketDetail;D=EERE

- 2012

- BT

- STD

- 0045 . Appendix 10A

discusses how to access and utilize the NIA spreadsheet. The rest of this chapter explains the shipments models in more de tail. Section 9.2 presents the methodology behind the models;

section 9.3 describes the data inputs and calibration of the model; section 9.4 discusses impacts on shipme nts from standards; section 9.5 discusses the affected stock; section 9.6 discusses the impact of a ceiling fan standard of CFLK shipments; section 9.7 discusses alterna tive shipment

scenarios ; and section 9.8 presents the shipments projections f or the different CSLs

.

9.1.1 Representative Products Analyzed in the Shipments Analysis

As described in chapter 3 of this technical support document ( TSD )

, DOE is considering a new product class structure in this preliminary analysis that is constituted of two product

classes : CFLKs with externally

- ballasted or driven lamps (hereafter “ Externally

Ballasted/Driven CFLKs ”) and “ All O ther CFLKs ”

. In chapter 5 of this TSD, DOE described the

CSLs it has developed, and it identified representative products that could meet each CSL. The representative products are specified by the lamps (or lamp

- and

- ballast systems, in the case of Externally

- Ballasted/Driven CFLKs) t hat could be packaged with the CFLK to meet each CSL.

a All ceiling fan data referred to in this chapter are for low

- volume ceiling fans, as defined in the concurrent ceiling fans test procedures rulemaking ; for these purposes, volume refers to air flow. DOE has determined that CFLKs are designed almost solely for the low

- volume ceiling fan market. Hereafter in this document the term ceiling fans

refers to low

- volume ceiling fans.

9

- 1As described in chapter 5 of this TSD

, DOE assumed that two different options were

available to manufacturers to meet the CSLs

. In the lamp replacement scenario, the manufacturer

is assumed to meet ea ch CSL by using more efficacious packaged lamps, but is assumed to leave all other aspects of the fixture unchanged. In the fixture replacement scenario, DOE assumes that

the manufacture r may substitute the base type and number of sockets. Accordingly, two representative options (lamp or lamp

- and

- ballast) were developed for each CSL, as well as for

the baseline.

Chapter 7 of this TSD determined lamp and socket prices associated with energy efficiency improvements for representative products. These prices are key inputs to the

consumer

- choice based shipments modeling presented in this chapter. Table 9.1

. 1 and Table

9.1

. 2 present the characteristics of representative CFLKs based on the representative lamp s and

socket s specified for the lamp and fixture replacement scenario s

. b For All Other CFLKs ( Table

9.1

. 1 ), the values for CFLK wattage and lumen output, and the portion of the CFLK end

- user price that is associated with the lamps a nd sockets (“CFLK End

- User Price for Lighting Components”)

, were based on the per

- lamp and per

- socket values for representative units described in the product price determination chapter (chapter 7). For the baseline product (CSL 0), those values were scal ed to make them representative of the average CFLK that is not constrained by a wattage limiter (hereafter “representative CFL K ”) , which has a light output of

1960 lumens. c For all other CSLs, those values were scaled by the same amount as the baseline

pro duct, to preserve the percentage variations in lumen output between CSL levels that were identified for the representative lamps and fixtures in the engineering analysis.

The values for the Externally

- Ballasted/Driven CFLKs ( Table 9.1

. 2 ) were not scaled, because DOE was not able to obtain a large enough sample for these types of CFLKs to obtain a robust estimate of an average product

. The differences in the prices at the different CSLs represent the incremental price of efficienc y improvements, which are key inputs to the shipments and NIA analyses.

b For example, $9.26 of the total cost of a baseline CFLK is a ssumed to be associated with the lamps. However, included in that $9.26 is both a manufacturer on the manufacturers cost of lamps and a distributor markup on that.

c Chapter 6 of this TSD describes how DOE obtained a value for the lumen output of the avera ge CFLK not constrained by a wattage limiter.

9

- 2Table 9.1

. 1 Characteristics of Representative CFLKs used in the Shipments Analysis: All

Other CFLKs

Candidate

Standard

L evel CFLK Lig h t Outp ut (lumens) CFLK Input Power (watts) CFLK End

- User Price for Lighting Components in 2019 (2013$)

Lamp Replacement Scenario* All lamps

CSL 0 1960 37.6 $9. 26

CSL 1 21 50 34.9 $ 9.88

CSL 2 1960 29.5 $ 10.28

CSL 3 18 80 26.8 $ 21

. 76

CSL 4 18 30 24.2 $ 21

. 91

CSL 5 18 30 21.5 $ 23

. 46

Fixture Replacement Scenario** All lamps and sockets

CSL 0 1960 37.6 $ 10. 1 0

CSL 1 201 0 30.9 $ 9.69

CSL 2 181 0 28.2 $ 1 0

. 75

CSL 3 18 30 26.8 $ 22

. 80

CSL 4 21 50 25.5 $ 26

. 18

CSL 5 201 0 24.2 $ 27

. 12

* Representative lamp lum ens, wattages, and prices presented in chapter 7 are each scaled by 2.7 times, to obta in values representative CFLK, which has a light output of 1960 lumens. Lamp prices are projected to 2019 values assuming price learning for solid

- state lighting. ** Repr esentative fixture lumens, wattages, and prices given in chapter 7 are each scaled by 1.3 times, to obtain values representative of the average CFLK, which has a light output of 1960 lumens. Lamp and socket prices are then summed and multiplied by the numb er of sockets to obtain the total CFLK total end

- user prices for lamps plus

sockets. Similarly, the lamp and socket prices presented in chapter 7 were scaled by a factor of 1.3 and then multiplied by the number of sockets in the representative CFLK

. The so cket price used in this table is determined using markup channels projected for 2019 (the starting period of the analysis). Lamp prices are projected to 2019 values assuming price learning for solid

- state lighting.

9

- 3Table 9.1

. 2 Characteristics of Representative CFLKs used in the Shipments Analysis: Externally

- Ballasted/Driven CFLKs

Candidate

Standard

Level CFLK Light Output (lumens) CFLK Input Power ( ANSI rated wattage ) CFLK End

- User Price for Lighting Compo nents in 2019 (2013$) *

Lamp Replacement Scenario ** All lamps

CSL 0 855 22.5 $7.32

CSL 1 828 19 $9.26

Fixture Replacement Scenario ** All l amps and sockets

CSL 0 855 22.5 $8.0 5

CSL 1 900 13 $13. 71

* All CLFK lighting component prices assume that th e CFLK has one socket, as is the case for all Externally

Ballasted CFLKs with circline lamps, which dominate this product class. The socket price used in this table is determined using markup channels projected for 2019 (the starting period of the analysis ). ** Source: Chapter 7 of this TSD

9.2 SHIPMENTS MODEL OVERVIEW

DOE developed a model to project CFLK shipments, by product class and efficiency level, over the 30

- year analysis period (2019

– 2048). The model pro jects shipments for both the

no

- standard case and for each CSL. The shipments model consists of three main interacting

elements: (1) a shipments demand model that determines the total new CFLKs purchased (hence shipped) in a given year, (2) a stock model that tracks the age distribution of the stock o ver the analysis period, and (3) a modified consumer

- choice model, which determines the distribution (market shares) of those purchases across product types and efficiency level

. The following sections describe these elements of the shipments model in gene ral terms . Section 9.3 describes the calibration and implementation of the model.

9.2.1 Shipments D emand Model

The shipments model considers three market segments in developing the total CFLK shipments projection : replacements for r etired stock

, addition s due to new building construction,

and additions due to expanded demand in existing buildings. Total shipments for CFLKs in a given year are given by:

S h ip ( j ) = Rpl ( j ) + NI ( j ) + EB ( j ) Eq. 9

. 1

Where:

S h ip ( j ) = total number of units shipped in year j

, Rpl ( j ) = units retired and replaced in year j

, NI ( j ) = number of new construction installations in year j , and

EB ( j ) = number of units installed in existing buildings in year j

.

9

- 4The details of how demand from replacements, new construction

, and expanded demand in existing building is quantified in section 9.3.2

.

9.2.2 Stock Accounting Model

As indicated in Eq. 9

. 1 , shipm ents project ions depend in part on a projection of the number of units in the existing stock that need to be replaced in any given year because of stock retirements. Determining how many units are retired in a given year, requires knowledge of the age dis tribution of the stock. A stock accounting model is used to track th e age distribution of the

stock , based on an accounting of additions to the stock (shipments) and retirements. The age

distribution of stock in 2012 is estimated using results of an online survey of ceiling fan owners conducted by Lawrence Berkeley National Lab (LBNL). 2 The stock age distribution is updated in subsequent years using projected shipments and retirements determined by the stock age distribution and a product retirement function. The age distrib ution of stock is also a k ey input to

both the NES and NPV calculations

, because the operating costs for any year depend on the age

distribution of the sto ck. Older, less efficient units may have higher operating costs, while newer , more efficient units ha ve lower operating costs.

DOE calculates the total stock of each product by integrating historical shipments beginning with the start year of the historical data. New units are then added to the stock to replace older units that are retired and to accoun t for growth in demand

.

Assuming a low probability for retirements within the first year, t he number of one

- year old units is equal to the number of new units purchased the previous year:

Stock ( j

, age = 1 ) = S h ip ( j

− 1 ) Eq. 9

. 2

Where:

Stock ( j

, age ) = number of units of a particular age
, j = year for which the stock is being estimated, and

S h ip ( j

– 1 ) = number of units purch ased in year j

– 1

.

Over time, a fraction of the stock is removed due to retirements . That fraction is determined by a retirement probability function, prob Rtr ( age ) , which is described in section

9.3.2

. Accordingly

, DOE tracks existing stock of units accounting for units that retire using the following:

Stock ( j + 1

, age + 1 ) = Stock ( j

, age )

− S h ipments ( j

− age ) × prob Rtr ( age + 1 ) ) Eq. 9

. 3

Whe re:

Stock ( j

, age ) = number of units of a particular age, j = year for which the stock is being estimated,

S h ip ( j

− age ) = number of units purchased in year j

− age , and

pro b Rtr ( age + 1 ) = the probability a unit is retired at a g e + 1

.

9

- 59.2.3 Consumer

- Choice Model

The consumer

- choice model determines the distribution (market shares) of purchases in any given year by estimating the likelihood that a consumer will purchase a particular CFLK option, based on sector

- specific sensitivities to first cost and operat ion and maintenance (O&M)

cost. The consumer

- choice model is used to determine the market allocations for both the no

standard case and the standards cases considered. The consumer

- choice model allows for voluntary conversions to more efficient technologies based on economic incentives. The model allocates the shipments to the representative products described in chapter 5 of this TSD, assuming the prices for those representative products described in chapter 7 of this TSD.

The consum er

- choice model uses a conditional logit model to calculate the probability that a consumer will purchase product j based on the logistic curve probability function of the

form:

P j ( z ) = e z j
∑ e z i

n i = 1 Eq. 9

. 4

Where:

P

j ( z ) = the probability a consumer will purchase product j among n possible options, and

z = the ‘logit’, which is defined as follows

z

j = β FC ∗ F C j + β OM ∗ O M j Eq. 9

. 5

W here:

β FC = consumer sensitivity to first cost,

F C j = first cost of product option j

, β OM = consumer sensitivity to operations and maintenance cost, and

O M j = operations and maintenance cost of product option j

.

The regression coefficients ( β values) represent the consumer’s sensitivity to first cost ( β FC ) and O&M cost ( β OM ). The coefficients are determined using historical shipments ' market

share data. Consumer sensitivities are sector

- specific and vary bet ween residential and

commercial purchasers. Other parameters that influence consumer

- purchasing behavior not captured by the logit model are calibrated using acceptance factors. Acceptance factors limit the total market share that can be assign ed to a product and nominally are set to 1.

The consumer

- choice model allows for consumers to choose between options that provide similar utility across product classes

. As LED technology options are currently only

available in the All Other CFLK s product class, DOE allows for product class switching from the

9

- 6Externally Ballasted/Driven p roduct class to All Other CFLKs, but does not expect product class switching from All Other CFLKs to the Externally Ballasted/Driven product class. d

9.3 MODEL IMPLEMENTATION

9.3.1 H istorical Shipments

DOE’s analysis of the CFLK market indicates that a majority of CFLKs are pa ckaged and

sold with ceiling fans. DOE used historical shipments data of ceiling fans to calibrate its CFLK shipments model by assuming a constant fraction of ce iling fan shipments include s a CFLK.

Based on an analysis of shipments data purchased from the NPD G roup and an online survey of ceiling fan owners conducted by LBNL 2 , DOE found 88% of ceiling fans purchased within the last four years include CFLKs.

DOE used three sources of data to establish historical shipment s trends in the total

number of ceiling fans: (1) data from Appliance M agazine’s Statistical Review from the period

1991

- 2006, e (2) data from ENERGY STAR Annual Reports from the period 2003

- 2011, f and (3) data purch ased from the NPD G roup from 2007

- 2011. DOE took an average value in cases where data from multiple sources overlap. As explained previously

, DOE assumed that 88% of ceiling fan shipments include a CFLK to estimate CFLK shipments

.

Figure 9.3

. 1 presents DOE’s estima te of CFLK hi storical shipments from 1991

- 201 1.

d CFLKs that use LED lamps that have external drivers would be an exception; they would be included in the Externally Ballasted/Driven product class. DOE knows of no such lamps on the market, however, and of n o CFLKs that use such lamps.

e Appliance® Statistical Review, Annual Report, Appliance Magazine (2003

- 2006). Appliance Magazine sources may include the Air

- Conditioning and Refrigeration Institute; Appliance Magazine, Association of Home Appliance

Manufact urers; Consumer Electronics Association; Gartner; Gas Appliance Manufacturers Association; Hearth, Patio & Barbeque Association; International Data Corporation; Outdoor Power Equipment Institute; and the Water Quality Association. The data have not includ ed exports since 1997.

f ENERGY STAR takes partner

- reported data to be representative of qualified ceiling fan shipments without adjusting for partners who do not report their shipments. This means that the ENERGY STAR data represent a

conservative estima te, although the response rate among ceiling fan manufacturers is typically high, for example, 89 percent in 2010. In order to estimate the market share of ENERGY STAR

- qualified ceiling fans, ENERGY STAR estimates U.S. shipments based on modeled and docum ented data. Ceiling fan industry data are used as a direct input whenever possible and compared to forecast assumptions to ensure data comparability. Industry sources may include ceiling fan manufacturer associations, publications, and commercially avail able market research.

9

- 7Figure 9.3

. 1 Historical Shipments of CFLKs

9.3.2 Shipments Projections by Market Segment

Section 9.2.1 describes how shipments are projected based on sales to the following market segments: product replacement s due to retirements

, increased demand from new building

constru ction

, and increased demand in existing buildings. This section describes how demand from each of these market segments is quantified.

Replacement Shipments Estimated sales due to replacements in a given year are equal to the total stock of the appliance minus the sum of the appliances sold in previous years that still

remain in th e stock. DOE assumed that the relevant lifetime in projecting replacements for

CFLKs is the lifetime of the ceiling fan to which it is attached. The following equation represents how DOE estimated replacement shipments:

Rpl ( j ) = � S h ip ( i ) × prob Rtr j

− 1

i = N ( age = j

− i )

Eq. 9

. 6

Where:

Rpl ( j ) = Units retired and replaced in year j

, S h ip ( j ) = Total shipments in year j

, pro b Rtr ( age ) = Probability that a ceiling fan of a part icular age will be retired,

N = Start year when the model begins its stock accounting.

9

- 8The retirement function, pro b Rtr ( age ) , is based on the product lifetime distribution , as discussed in chapter 8 of this TSD . The product lifetime distr ibution has an average value of 1 3.8 years, and m inimum and maximum values of 4.1 years and 30 years , respectively

. Figure 9.3

. 2

shows the retirement function for a CFLK that DOE used to estimate replacement shipments.

Figure 9.3

. 2 CFLK Retirement Function

Shipments to New Construction

. The number of installations due to new construction is estimated using projections for new construction starts , product saturation, and the avera ge number of CFLK units installed per building

. DOE adopted the projections from the DOE ’s Energy Information Administration ’s (EIA’s ) Annual Energy Outlook ( AEO201 4 ) for 2010

- 2040. 3 DOE estimated a current penetration rate of ceiling fans in homes of 73%

, using data

from Residential Energy Consumption Survey ( RECS ) 2009

, with an average of 3.1 ceiling fans

installed in a single new installation. DOE a ssumed 88% of these installations include a CFLK to

determine shipments of CFLKs to new construction

.

Installations into Existing Buildings

. The number of new first

- time owners was estimated using trends in the penetration of ceiling fans in existing buil dings over time from RECS data from 1993, 1997, 2001, 2005, and 2009. DOE estimated the rate at which the number

of buildings without ceiling fans decreased between RECS year s

. DOE determined that the

number of buildings without ceiling fans decreased at a n average rate of 2.8% each year. However, DOE found that using a first

- time owner rate of 2.8% over

- estimated shipment s model estimates for 2010 and 2011 compared to historical data. To match the shipments data from 2010 and 2011, DOE assumed that market saturation occurs at a penetration rate of 75% for purchases of ceiling fans in all buildings . DOE also considered the addition of ceiling fans into buildings that already have ceiling fans and assumed that the average number of ceiling fans in buildings

w ith ceiling fans does not exceed 3.1 ceiling fans per building

. DOE assumed 88% of ceiling fan

9

- 9installations into existing buildings included a CFLK. The market for CFLKs in existing buildings quickly decreases as the market reaches its saturation point

, u sing the previously

described assumptions

. By the start of the analysis period (2019), installations into existing buildings make up 1% of CFLK shipments.

Commercial Sector Shipments

. Based on feedback from manufacturers , DOE estimated

that 5% of total CF LK shipments go to the commercial sector. DOE assumed this fraction

remained fixed over the course of the analysis period

.

9.3.3 Light

- Emitting Diode Incursion and Distribution by Efficiency Level

Although products with LED technology currently make up less than 1% of the market,

i nterviews with CFLK manufacture r s indicated that there would be rapid penetration of LED

tec hnology into the CFLK market in the next 5 years. In the absence of significant CFLK market data for LED technology, DOE modeled the market shar e for LED products as an exogenous component of the model. DOE developed an incursion curve f or LEDs based on estimates in its

report Energy Saving Potential for Solid State Lighting in General Illumination Applications

. 4
The growth of LEDs into the CFLK market was assumed to be similar to the growth of LED s into the general service lamp m arket of the residential sector. DOE modeled LED incursion as a

Bass diffusion curve. Due to the small market share of CFLKs using LED technology currently available, DOE shifted the introduction year used in its analyses to 2013 for LEDs in the CFLK market, compared to the 2010 introduction of LEDs in the general service lamp market. In a given year the market share apportioned to LED products was first determined from the

incursion cur ve, shown in Figure 9.3

. 3 . T he remaining market share for CFLKs was then apportione d between non

- LED lamp options and product classes using a modified consumer

choice model.

DOE assumed that the LED incursion curve represented the total penetration of LED products into the CFLK market. The model apportions thi s total market share among the LED lamp options from the engineering analysis (chapter 5 of this TSD).

DOE split the total market share for LED technology between CSLs based on a projection for the evolution of LED lamp efficacy as a function of time rep orted in DOE’s report

on Energy Saving Potential for Solid State Lighting in Ge neral Illumination Applications

. 1 The report indicates a rapid increase in efficacy of LED technology. Those values represent the projected maximum performance achievable by LE Ds for a given year.

DOE analyzed data of currently available LED products online and determined the

average LED efficacy for 2013. To determine the average LED efficacy over the course of the analysis period, DOE assumed the ratio between the average LE D efficacy and the maximum LED efficacy for 2013 would remain constant over the analysis period

. DOE then assumed that

, for a given year, the distribution of LED efficacy was normally distributed

, with a mean given by the average LED efficacy and a standar d deviation given by the difference between the max LED efficacy and the average LED efficacy divided by 3. In other words, the maximum LED efficacy represents the 3 σ upper confidence level ( i.e., the 99.9 th percentile ) of efficiency. DOE then

determined the relative fraction of the LED efficiency distribution that would fall into each LED

9

- 10CSL . DOE found that by the start of the analysis period, 2019, 98.6% of LED market share would be at the highest LED efficiency level presented in chapter 5 of this TSD

.

Figure 9.3

. 3 LED Incursion Curve for CFLKs

9.3.4 Consumer

- Choice Model

The total shipments within each product class must be allocated by efficiency level. To do so, the shipments model uses a hybrid approach in which allocations to light

- emitting diodes (LED) lighting are accounted for separately from allocations to other technologies. DOE uses projections of LED incursion developed by the SSL Program in this preliminary analysis, as

described in section 9.3.3 . DOE assumes that LED lighting will displace conventional lighting in both product classes at the same rate. The non

- LED shipments in any year are allocated by the

consumer

- choice model.

DOE implemented a consumer

- choice mod el, as described in Section 9.2.3 , with

modifications to account for DOE’s observation that purchasers of CFLKs are not choosing the lamps packaged with CFLKs

. Instead, CFLK manufacturers purchase the lamps for CFLKs,

ultimatel y deciding which lamp options are available for consumers of CFLKs. The options

available to the consumer

- choice model for CFLKs correspond to the CSLs shown in Table 9.1

. 1

and Table 9.1

. 2

.

DOE assumed that for a given socket type and lamp technology, CFLK manufacturers are primarily sensitive to the first cost of the lamp

, as there is no economic incentive for CFLK manufacturers to purchase a more efficacious lamp to package with a CFLK

. For example, a

manufacturer who is planning to packag e a medium

- screw base CFLK with a compact
fluorescent lamp is assumed to purchase the lowest first cost compact fluorescent lamp available

.

9

- 11After the consumer

- choice model identifies which options manufacturers will make available to

consumers , the model calculates the market share for CSLs based on Eq. 9

. 4 and Eq. 9

. 5

. Note that the logit value (defined in Eq. 9

. 5 ) for non

- LED CS Ls remains a constant value over the analysis period

, as DOE assume s no price learning for non

- LED CS Ls.

The first cost of the CFLK associated with a ny given lamp option is given by :

P

CFLK = P base + P lamps + P sockets Eq. 9

. 7

Where:

P

CFLK = t otal CFLK p rice ( 2013$ )

, P

base = p rice of the CFLK not including sockets and lamps ( 2013$ )

, P

socket s = total p rice of socket s ( 2013$ ) , and

P

lamps = total price of lamps packaged with CFLK ( 2013$ )

.

T he total price of lamps plus sockets ( P lamps + P sockets ) is reported in Table 9.1

. 1 an d

Table 9.1

. 2 for each representative CFLK product.

To determine P base , DOE performed an analysis of available market data for CFLKs and

us ed the lamp and socket prices provided by the engineering analysi s (see chapter 5 of this TSD)

. DOE found an average P base = $18

. 26 for the All Other CFLK product class after accounting for the price of sockets and lamps

. DOE had insufficient market data to determine P base for the Externally

- Ballasted/Driv en product class and assumed the same value as that derived for All

Other CFLKs. DOE assumed that P base is the same across all lamp options.

The manufacturers of CFLK s have a multitude of ways to meet a standard while maintaining a fixed utility ( in this case a suitable lumen output). In this analysis, DOE considered two possible scenarios to meet each CSL : (1) replacing the packaged lamps in the

baseline CFLK

, and (2) changing the light kit fixture (including the number of sockets and /or base type ) to meet the CSL. DOE lacked the data necessary to calibrate the consumer

- choice

model to forecast how consumers will choose between these two scenarios

. For its analysis, after allocating market share to a CSL, DOE split market share for each CSL evenly between the lamp

- replacement scenario and the light kit fixture

- change scenario.

9.3.5 Summary

To summarize, the CFLK shipments model works in the following way:

1. Total shipments are estimated using a stock

- accounting methodology

, which accounts for shipments du e to replacements, installation in new buildings , and additional installations

of CFLKs in existing buildings.

2. For a given year, m arket share is first appropriated to LED lamp options as dictated by

the LED incursion curve. Market share between LED lamp op tions is determined from projections of the average LED efficacy as a function of time.

9

- 123. The remaining market share is split between CSLs that do not use LED technology as determined by the modified consumer

- choice model. The model assumes manufacturers

wil l choose the lowest price lamp option available on the market.

4. Market share for a given CSL is divided evenly between lamp

- replacement and fixture

replacement scenarios

.

9.4 IMPACT OF ENERGY CONSERVATION STANDARDS ON SHIPMENTS

DOE projects that appliance stand ards often result in an increase in the price of the product. Economic theory suggests that, all else being equal, an increase in the price of a normal good would lead to a decrease in demand for that good . DOE conducted a literature review and an analysis of appliance price and efficiency data to estimate the effects on product shipments from increases in product price. DOE also considered the decreases in operating costs from higher energy efficiency and changes over time in household income. Appendix 9A provides a detailed explanation of the methodology DOE used to quantify the impacts of these variables on shipments.

In the literature, DOE found only a few studies of appliance markets that are relevant to

the issue at hand. DOE identified no studies tha t use time

- series data of product price and shipments data after 1980. The information that can be summarized from the literature suggests that the demand for appliances is price

- inelastic. Other information in the literature suggests that appliances are a normal good, such that rising incomes increase the demand for appliances. Finally, the literature suggests that market behavior indicates relatively high “implicit discount rates” when comparing appliance prices and appliance operating costs.

DOE found insufficient data on product purchase price and operating cost to perform a thorough analysis of dynamic changes in the appliance market. Instead, it used purchase price and efficiency data specific to residential refrigerators, clothes washers, and dishw ashers over the period 1980

– 2002 to evaluate broad market trends and conduct simple regression analyses. These data indicate that there has been a rise in appliance shipments and a decline in appliance purchase price and operating costs over the time perio d. Household income has also risen during

this time.

To simplify the analysis, DOE combined the available economic information into one variable, termed the relative price, and used this variable in an analysis of market trends, as well

as to conduct a r egression analysis. The relative price is defined with the following expression:

9

- 13RP = TP

Income = PP + PVOC

Income Eq. 9

. 8

Where:

RP = r elative price,

TP = t otal price,

Income = h ousehold income,

PP = p urchase price, and

PVOC = p resent value of operating cost.

DOE used an “implicit discount rate” of 37 percent to determine the present value of operating costs. This value is an average from values derived by several studie s described in a 1985 journal article.

DOE’s regression analysis yields a relative price elasticity of demand, averaged over the three appliances, of

- 0.34. For example, a relative price increase of 10 percent results in a 3.4 percent decrease in shipmen ts . Because the relative price elasticity incorporates the impacts from three effects ( i.e., purchase price, operating cost, and household income), the impact from any single effect is somewhat mitigated by changes from the other two effects.

The relativ e price elasticity of

- 0.34 is consistent with estimates in the literature (see appendix 9A for a summary) . Nevertheless, DOE stresses that the measure is based on a small data set, using simple statistical analysis. More importantly, the measure is based on an assumption that economic variables, including purchase price, operating costs, and household income, explain most of the trend in appliances per household in the United States since 1980. Changes in appliance quality and consumer preferences may have occurred during this period, but DOE did not account for them in this analysis. Despite these uncertainties, DOE believes that its estimate of the relative price elasticity of demand provides a reasonable assessment of the impact that purchase price, oper ating cost, and household income have on product shipments.

DOE considers the relative price elasticity provided by the preceding analysis to be a

short

- run value. Because DOE’s projections of shipments and national impacts due to standards

is over a 30

- y ear time period, it needed to consider how the relative price elasticity is affected once a new standard takes effect. It was unable to identify sources specific to household durable goods, such as appliances, to indicate how short

- run and long

- run price e lasticities differ. To estimate how the relative price elasticity changes over time, DOE relied on a study pertaining to automobiles. This study shows that the automobile price elasticity of demand changes in the years following a purchase price change. W ith increasing years after the purchase price change, the price elasticity becomes smaller (more inelastic) until it reaches a terminal value around the tenth year after the price change. Table 9.4

. 1 shows the relative change in t he price elasticity of demand for automobiles over time. DOE developed a time series of relative price elasticities for home appliances based on the relative change in the automobile price elasticity of demand. For years not shown in the table, DOE perform ed a linear interpolation to obtain the relative price elasticity.

9

- 14Table 9.4

. 1 Change in Relative Price Elasticity Following a Purchase Price Change Years Following Price Change

1 2 3 5 10 20 Change in

El asticity

Relative to 1 st

year 1.00 0.78 0.63 0.46 0.35 0.33

Relative Price Elasticity - 0.34

- 0.26

- 0.21

- 0.16

- 0.12

- 0.11

9.4.1 Application of Relative Price Elasticity

DOE estimated shipments in each CSL using the relative price elasticities described in

th e previous section , along with the change in the relative price between a standards case and the

no

- standard case

. Because CFLKs are sold mostly with ceiling fans, the relative price reflects the

comb ined price of a CFLK sold with the average price of a ce iling fan. Because household

income is the same in the standards case and the no

- standard case , it does not figure into the calculation of the change in the relative price. Note that

, in the following equation, the relative price and the relative price ela sticity are functions of the year because both change with time.

S h ip STD ( j ) = ( Rp l BASE ( j ) + N I BASE ( j ) + EB BASE ( j ) ) × ( 1 + e RP ( j ) × R P STD ( j )

− R P BASE ( j )

R P BASE ( j ) )

Eq. 9

. 9

Where:

S h i p STD ( j ) = total shipments under the CFLK standards case in year j

, Rp l NO STD ( j ) = units under the no CFLK standard case retired and replaced in year j

, N I NO STD ( j ) = number of new construction installations u nder the no CFLK standard case in

year j

, EB NO STD ( j ) = units installed in existing buildings under the no CFLK standard case in year j

,

e RP ( j ) = relative price elasticity in year j (equals

- 0.34 for yea r 1),

R P STD ( j ) = relative price of a ceiling fan after implementation of a ceiling fan standard level

in year j , and

RP BASE ( j ) = average relative price of a ceiling fan in absence of a ceiling fan standard in

year j

.

In the case of C FLKs, DOE assumed consumers were only sensitive to purchase price and did not consider operating cost in its calculation of the relative price. In this case, only the purchase price contributes to the relative price. This is consistent with the assumption made for

low

- volume ceiling fans in the concurrent ceiling fan energy conservation standards rulemaking.

9

- 159.5 AFFECTED STOCK

In addition to the projection of product shipments under both the no

- standard case and the standards case, the affected stock is a key o utput of DOE’s shipments models. The affected stock (stock that is affected by a standards level) consists of those in

- service units that are purchased in or after the year the standard has taken effect, as described by the following equation:

Aff S tock ( j ) = ∑ S h ip ( i ) × pro b
surv ( age = j

− i ) j

i = St d yr Eq. 9

. 10

Where:

Aff Stock ( j ) = affected stock of units of all vintages that are in service in year j

, S h ip ( i ) = sh ipments in year i

, pro b
surv ( age ) = probability a unit will survive to age
, age = age of the units (years), and

St d yr = compliance year of the standard.

For its analysis, DOE assumed that amended energy conservation standar ds will become

effective in 201 9 . Thus, all appli ances purchased starting in 2019 are affected by the standard

level.

9.6 IMPACT OF A CEILING FAN STANDARD ON CFLK SHIPMENTS

DOE is concurrently pursuing an energy conservation standard rulemaking on ceiling

fans. A s CFLKs are primarily sold coupled to ceiling fans, a ceiling fan standard that increases the average price of a ceiling fan will increase the average price of a ceiling fan and CFLK system. This price increase will decrease the shipments of CFLKs in both a no

- standard case and

a standards case. T he shipments of CFLKs in the no CFLK standard s case can be expressed as:

S h i p NO STD

, CF STD ( j ) = � Rp l NO STD ( j ) + N I NO STD ( j ) + EB NO STD ( j ) � ∗ ( 1 + e RP ( j ) ∗ R P S T D

, CF ( j )

− R P BASE ( j )

R P BASE ( j ) )

Eq. 9

. 11

Where:

S h i p NO STD

, CF STD ( j ) = total shipments under no CFLK standard and with a ceiling fan standard in year j

, Rp l BAS E ( j ) = units under the no ceiling fan and no CFLK standard case and replaced in year j

, N I BASE ( j ) = number of new construction installations u nder the no ceiling fan and no CFLK

standard case in year j

, EB BASE ( j ) = units installed in existing buildings under the no ceiling fan and no CFLK

standard case in year j

,

e RP ( j ) = relative price elasticity in year j (equals

- 0.34 for year 1),

9

- 16R P BASE

, ( j ) = average relative price of a ceiling fan and CFLK system without a c eiling fan or CFLK standard level in year j

, and

R P STD

, CF ( j ) = average relative price of a ceiling fan and CFLK system in presence of a ceiling fan standard level in year j

.

Shipments in the case of a CFLK standard c an be expressed as:

S h i p STD

, CF STD ( j ) = � Rp l NO STD ( j ) + N I NO STD ( j ) + EB NO STD ( j ) � ∗ � 1 + e RP ( j ) ∗ R P STD

, CF ( j )

− R P BASE ( j )

R P BASE ( j ) �

∗ ( 1 + e RP ( j ) ∗ R P STD

, CFLK ( j )

− R P BASE ( j )

R P BASE ( j ) )

Eq. 9

. 12

Where:

S h i p STD

, CF STD ( j ) = total shipments under a CFLK standard and with a ceiling fan standard in

year j

, Rp l NO STD ( j ) = units under the no ceiling fan a nd no CFLK standard case and replaced in

year j

, N I NO STD ( j ) = number of new construction installations u nder the no ceiling fan and no

CFLK standard case in year j

, EB NO STD ( j ) = units installed in existing buildings under the no c eiling fan and no CFLK

standard case in year j

,

e RP ( j ) = relative price elasticity in year j (equals

- 0.34 for year 1),

R P BASE

, ( j ) = average relative price of a ceiling fan and CFLK system without a ceiling fan or CFLK standard level in ye ar j

, R P STD

, CF ( j ) = average relative price of a ceiling fan and CFLK system in presence of a ceiling fan standard level in year j , and

R P STD

, CFLK = average relative price of a ceiling fan in presence of a CFLK standard level in

year j

.

9.7 ALTERNATIVE SHIPMENTS SCENARIO

9.7.1 Alternative Light

- Emitting Diode Incursion Curve

As discussed in Section 9.3.3 , DOE assumed in its reference scenario that LED lighting technology would penetrate the CFLK market. To simplify the shipments model, DOE does not

include LEDs as an explicit choice in the consumer

- choice model. The incursion of LED lighting technology into the CFLK market is modeled as a logistic curve. The form of the curve is assumed to be a Bass adoption curve b ased on the analysis in the SSL report. To match the curve from the SSL report to current market observations, the curve wa s shifted along the time axis such that market penetration of LEDs begins in 2013.

9

- 17Interviews with manufacturers indicated that adop tion of the LED technology in the

CFLK market would occur significantly faster than what is expected from DOE’s reference LED

incursion curve. Manufacturers indicated that LED technology would make up 66% of the market by 2018. DOE scaled the LED incursion curve presented in Section 9.3.3 to match this

estimate as an alternative scenario. Figure 9.7

. 1 compares the a lternative LED incursion curve to

the r eference LED incursion curve.

Figure 9.7

. 1 Alternate and Reference LED Incursion Curve

9.8 SHIPMENTS PROJECTIONS

This section presents the shipments projections for the CSLs

, which DOE considered for CFLKs, including the no

- standard s case. These shipments a re considered the reference scenario

, and use the following assumptions: AEO reference projections for construction growth and electricity prices, LED incursion discussed in Section 9.3.3

, and a ceiling fan standard

. Figure

9.8

. 1 shows DOE’s projections for the total number of CFLK shipments in the reference scenario disaggregated by market segment in the absence of a CFLK standard.

As discussed in Section 9.6 , a ceiling fa n standard may potentially increase the average price of a ceiling fan

, leading to a decrease in shipments of ceiling fans packaged with CFLKs. Figure 9.8

. 2 shows the projected impact of a ceiling fan standard on CFLK shipments in the no

CFLK standard case.

DOE generally expects that a standard on CFLKs will increase per unit price of a given product, which will lead to a decrease in shipments. Figure 9.8

. 3 and Figure 9.8

. 4 show DOE’s

9

- 18projections for shipments in the reference case. In some cases, the change in shipments between

the candidate standards case and the no

- standard case is so small that it is indistinguishable on the figure s . In that case, the higher standard level ov erwrites the lower standard level on the plot

. Table 9.8

. 1 shows the cumulative CFLK shipments over the analysis period for the reference

scenario and the no ceiling fan standard scenario for each CSL

, along with the percent chang e expected from a ceiling fan standard

.

Figure 9.8

. 1 Total CFLK Shipments Projections by Market Segment fo r Reference Case

with an Assumed Ceiling Fan Standard

9

- 19Figure 9.8

. 2 Total CFLK Shipments in the no CFLK Standard Case and with a Ceiling

Fan Standard

Figure 9.8

. 3 Shipments Projection for Externally Ballasted/Driven CFLKs in Reference

Case with an Assume d Ceiling Fan Standard

9

- 20Figure 9.8

. 4 Shipments Projection for All Other CFLKs in Reference Case with an

Assumed Ceiling Fan Standard

Table 9.8

. 1 Cumulative CFLK Shipments from 2019

- 2048 (millions of units) from a

CFLK Standard with a n Assumed Cei ling Fan Standard and without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF

Standard Percent Change

due to CF

Sta ndard CF

Standard No CF

Standard Percent Change

due to CF

Standard

No

CFLK

Standard 0.7 44 0.7 73 4% 644.6 6 64.1 3%

0 0.744 0.773 4% 644.1 663.4 3%

1 0.742 0.771 4% 644.1 663.4 3%

2 644.0 663.2 3%

3 643.1 661.7 3%

4 643.1 661.7 3%

5 643.1 661.7 3%

9

- 21REFERENCES

1. U.S. Department of Energy

- Office of Energy Efficiency and Renewable Energy. Notice of Proposed Rulemaking Technical Support Document Energy Conservation Program for

Consumer Products and Certain Commercial and Industrial Equipment: General Service Fluorescent Lamps and Incandescent Reflector Lamps. April 2014. Washington, D.C. (Last Accessed April 23, 2014.) http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/24

2. Kantner, C.L .S., S.J. Young, S.M. Donovan, and K. Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.

— Results of a Survey on Amazon Mechanical Turk. July 2013. Lawrence Berkeley National Laboratory, Berkeley, CA. Report No. LBNL

- 6332E. (Last Accessed March 27, 2014) http://www.escholarship.org/uc/item/3r67c1f9

3. Energy Information Administration. Annual Energy Outlook 2014 with Projections to

2040. Report No. DOE/EIA

- 03832014. Washington, D.C. http://www.eia.doe.gov/oiaf/aeo/

4. U.S. Department of Energy

- Energy Efficiency & Renewable Energy Building Technologies Program. Energy Savings Potential of Solid

- State Lighting in General Illumination Applications. January 2012. Washington, D.C. (Last Accessed March 28, 2014.) http://apps1.eere.energy.gov/buildin gs/publications/pdfs/ssl/ssl_energy

- savings

report_jan

- 2012.pdf

9

- 22APPENDIX 9A. RELATIVE PRICE ELASTICITY OF DEMAND FOR APPLIANCES

TABLE OF CONTENTS

9A.1 INTRODUCTION

................................ ................................ ................................ ........ 9A

- 1

9A.2 LITERATURE REVIEW

................................ ................................ ............................. 9A

- 1

9A.2.1 Price

................................ ................................ ................................ .................. 9A

- 1

9A.2.2 Income

................................ ................................ ................................ ............... 9A

- 1

9A.2.3 Appliance Efficiency and Discount Rates

................................ ........................ 9A

- 1

9A.3 VARIABLES DESCRIBING THE MARKET FOR REFRI GERATORS, CLOTHES WASHERS, AND DISH WASHERS

................................ ........................ 9A

- 2

9A.3.1 Physical Household/Appliance Variables

................................ ......................... 9A

- 2

9A.3.2 Economic variables

................................ ................................ ........................... 9A

- 3

9A.4 REGRESSION ANALYSIS OF VARIABLES AFFECTING APPLIANCE

SHIPMENTS

................................ ................................ ................................ ................ 9A

- 4

9A.4.1 Broad Trends

................................ ................................ ................................ ..... 9A

- 5

9A.4.2 Specification of Model

................................ ................................ ...................... 9A

- 7

9A.4.3 Discussion of Model

................................ ................................ ......................... 9A

- 8

9A.4.4 Analysis Results

................................ ................................ ................................ 9A

- 8

9A.4.4.1 Individual Appliance Model

................................ ................................ .... 9A

- 8

9A.4.4.2 Combined Appliance Model

................................ ................................ ... 9A

- 9

9A.4.5 Additional Regression Specifications and Results

................................ ......... 9A

- 10

9A.4.5.1 Lower Consumer Discount Rate

................................ ........................... 9A

- 10

9A.4.5.2 Disaggregated Variables

................................ ................................ ....... 9A

- 10

9A.5 LONG RUN IMPACTS

................................ ................................ .............................. 9A

- 11

9A.6 SUMMARY

................................ ................................ ................................ ................ 9A

- 12

9A.7 DATA USED IN THE ANA LYSIS

................................ ................................ ........... 9A

- 13

REFERENCES

................................ ................................ ................................ ....................... 9A

- 15

LIST OF TABLES

Table 9A.2.1 Estimates of the Impact of Price, Income and Efficiency on Automobile and Appliance Sales

................................ ................................ 9A

- 2

Table 9A.3.1 Physical Household/Appliance Variables

................................ ................... 9A

- 3

Table 9A.3.2 Economic Variables

................................ ................................ .................... 9A

- 4

Table 9A.4.1 Estimate of Total Price Elasticity of Demand

................................ ............. 9A

- 6

Table 9A.4.2 Tabular Estimate of Relative Price Elasticity of Appliance Demand

......... 9A

- 7

Table 9A.4.3 Individual Appliance Model Results

................................ .......................... 9A

- 9

Table 9A.4.4 Combined Appliance Model Result

................................ ............................ 9A

- 9

Table 9A .4.5 Combined and Individual Results, 20 percent discount rate

..................... 9A

- 10

Table 9A.4.6 Disaggregated Regression Results, 37 percent discoun t rate

.................... 9A

- 11

Table 9A.5.1 Change in Price Elasticity of Demand for Automobiles following a Purchase Price Change

................................ ................................ .............. 9A

- 12

Table 9A.5.2 Change in Relative Price Elasticity for Home Appliances following a Purchase Price Change

................................ ................................ .............. 9A

- 12

9A

- iLIST OF FIGURES

Figure 9A.3.1 Trends in Appliance Shipment, Housing Starts and Replacements

............ 9A

- 4 Figure 9A.4.1 Residual Shipments and Appliance Price

................................ ................... 9A

- 6

9A

- iiAPPENDIX 9A. RELATIVE PRICE ELASTICITY OF DEMAND FOR APPLIANCES

9A.1 INTRODUCTION

This appendix summarizes DOE’s study of the price elasticity of demand for home appliances, including refrigerators, clothes washers and dishwashers. DOE chose t his particular

set of appliances because of the availability of data to determine a price elasticity. Section 9A.2

review s the existing economics literature describing the impact of ec onomic variables on the sa le of durable goods. Section 9A.3 describes the market for home appliances and the changes that

have occurred over the past 20 years . In section 9A.4 , DOE summarizes the results of its regression analysis and present s estimates of the price elasticity of demand for the three appliances. In section 9A.5 , DOE presents development of an ‘effective’ purchase price elasticity. DOE’s interpretation of its re sul ts is presented in section 9A.6

. Finally, section 9A.7 describes the data used in DOE’s analysis.

9A.2 LITERATURE REVIEW

R elatively few studies measur e the impact of price, income and efficiency on the sale of household appliances. T his section briefl y review s the literature that describes the likely importance of these variables on the purchase of household appliances

.

9A.2.1 Price

DOE reviewed many studies that sought to measure the impact of price on sales in a dynamic market. One study of the automobile m arket prior to 1970 finds the price elasticity of demand to decline over time. The author explains this as the result of buyers delaying purchases after a price increase but eventua lly making the purchase ( Table 9A.2

. 1 ). 1 A contrasting study of household white goods also prior to 1970, finds the elasticity of demand to increase over time as

more p rice

- conscious buyers enter the market. 2 A n analysis of refrigerator market survey data finds that consumer purchase probability decreases with survey asking price. 3 Estimates of the price elasticity of demand for different brands of the same product tend to vary. A review of 41 studies of the impact of price on market share found the average price elasticity to be

- 1.75. 4 The average estimate of price elasticity of demand reporte d in these studies is

- 0 .33 in the appliance

market and

- 0 .47 in the combined automobile and appliance markets.

9A.2.2 Income

Higher income households are more li kely to own household appliance

. 5 The impact of income on appliance shipments is explored in two econometric studies of the automobile and appliance markets. 1

, 2 The average income elasticity of demand is 0 .50 in the appliance study cited in the literature review, much larger in th e automobile study ( Table 9A.2

. 1 ).

9A.2.3 Appliance Efficiency and Discount Rates

Many studies estimate the impact of appliance efficiency on consumer s’ choice of appliance. Typically, this impact is summarized by the implicit disc ount rate ; that is , the rate consumers use to compare future savings in appliance operating costs against a higher initial

9A

- 1purchase price of a n appliance. One early and much cited study co ncludes that consumers use a 20 percent implicit discount rate when purchasin g room air conditioners ( Table 9A.2

. 1 )

. 6 A survey of several studies of different appliances suggests that the consumer implicit discount rate

has a broad range and averages about 37 percent

. 7

Table 9A.2

. 1 Estimates of the Impact of Price, Income and Efficiency on Automobile and Appliance Sales

Durable Good Price Elasticity Income Elasticity Brand

Price Elasticity Implicit

Discount

Rate Model Data

Years Time

Period

Automobiles 1

- 1.07 3.08

- - Linear Regression, stock adjustment - Short run

Automobiles 1

- 0.36 1.02

- - Linear Regression, stock adjustment - Long run

Clothes Dryers 2

- 0.14 0.26

- - Cobb

- Douglas, diffusion 1947

- 1961 Mixed

Room Air

Conditioners 2 - 0.37 8 0.45

- - Cobb

- D ouglas, diffusion 1946

- 1962 Mixed

Dishwashers 2

- 0.42 0.79

- - Cobb

- Douglas, diffusion 1947

- 1968 Mixed

Refrigerators 3

- 0.37

- - 39% Logit probability, survey

data 1997 Short run

Various 4

- - - 1.76 9

- Multiplicative regression

- Mixed

Room Air

Conditioners 5 - - - 1.72

- Non

- linear diffusion 1949

- 1961 Short run

Clothes Dryers 5

- - - 1.32

- Non

- linear diffusion 1963

- 1970 Short run

Room Air

Conditioners 6 - - - 20% Qualitative choice, survey

data - -

Household Appliances 7 - - - 37% 1 0 Assorted

- -

Sources: 1 S. Hymens. 1971; 2 P. Golder and G. Tellis, 1998; 3 D. Revelt and K. Train, 1997;

4 G. Tellis, 1988; 5 D. Jain and R. Rao; 6 J. Hausman; 7 K. Train, 1985.

Notes: 8 Logit probability results are not directly comparable to other elasticity estimates in this table.

9 Average brand price elasticity across 41 studies.

10 Averaged across several household appliance studies referenced in this work.

9A.3 VARIABLES DESCRIBING THE MARKET FOR REFRIGERATORS,

CLOTHES WASHERS, AND DISHWASHERS

In this section DOE evaluate s variables that appear to account for refrigerator, clothes washer and dishwasher shipments, including physical household/appliance variables and

economic variables.

9A.3.1 Physical Household/Appliance Variables

Several va riables influence the sale of refrigerators, clothes washers and dishwashers. The most important for explaining appliance sales trends are the annual number of new households formed (housing starts) and the number of appliances reaching the end of their

op erating life (replacements). Housing starts influence sales because new homes are often

9A

- 2provided with, or soon receive, new appliances, including dishwashers and refrigerators. Replacements are correlated with sales because new appliances are typically pur chased when old

ones wear out. In principle, if households maintain a fixed number of appliances, shipments should equal housing starts plus appliance replacements.

9A.3.2 Economic variables

Appliance price, appliance operating cost and household income are impo rtant economic variables affecting shipments. Low prices and costs encourage household appliance purchases and a rise in income increases householder ability to purchase appliances. In principle, changes in economic variables should explain changes in the number of appliances per household.

During a 1980

– 2002 study p eriod, annual shipments grew 69 percent for clothes washers, 81 percent for refrigerators a nd 105 percent for dishwashers ( Table 9A.3

. 1 ). This rising shipments trend is explained in part by housing starts, which increased 6 percent and by appliance repl acements, which rose between 49 percent and 90 percent, depending on the

a pp liance, over the period ( Table 9A.3

. 1 ). a For mature markets such as these, replacements exceed appliance sales associated with new housing construction.

Table 9A.3

. 1 Physical Household/Appliance Variables

Shipments i (millions) Housing Starts ii (millions) Replacements iii (millions)
Appliance 1980 2002 Change 1980 2002 Change 1980 2002 Change
Refrigerators 5.124 9.264 81% 1.723 1.822 6% 3.93 5.84 49%

Clothes Washers 4.426 7.492 69% 1.723 1.822 6% 3.66 5.50 50%

Dishwashers 2.738 5.605 105% 1.723 1.822 6% 1.99 3.79 90%

i Shipments: Number of units sold. Sources: AHAM Fact Book and Appliance Magazine.

ii Housing Starts: Annual number of new homes constructed. Source: U.S. Census.

iii Replacements: Average of annual lagged shipments, with lag equal to expected appliance operating life, ± 5 years.

S hipments increased somewhat more rapidly than housing starts and replacements. This is shown by comparing the beginning and end points of lines that represent “starts plus replacements” (uppermost solid line in Figure 9A.3

. 1 ) and “shipment s” (diamo nd linked line in Figure 9A.3

. 1 ). In 1980 the “shipment” line begins below the “starts plus replacements” line. In 2002, the “shipments” line ends above the “starts plus replacements” line. This more rapid increase in shipments, compared to housing starts plus replacements, suggests that the appliance per household ratio increase d over the study period.

a Appliance replacements are determined from the expected operating life of refrigerators (19 years), clothes washers (14 years), and dishwashers (12 years) and from past shipments. Replacements are further discussed in

section 9A.3 . The dishwasher lifetime used in this analysis does not match the dishwasher used in the primary analysis.

9A

- 3Figure 9A.3

. 1 Trends in Appliance Shipment, Housing Starts and Replacements

Economic variables, including price, cost and income, may explain this increase in appliances per household. Over the period , appliance prices decreased 40 percent to 50 percent

, operating costs fell between 33 percent and 72 percent, and median household incom e rose 16 percent ( Table 9A.3

. 2 ).

Table 9A.3

. 2 Economic Variables

Price i (1999$) Operating Cost ii (1999$) Household Income iii (1999$)
Appliance 1980 2002 Change 1980 2002 Change 1980 2002 Change
Refrigerators 1208 726

- 40% 333 94

- 72% 37,447 43,381 16%

Clothes Washers 779 392

- 50% 262 175

- 33% 37,447 43,381 16%

Dishwashers 713 369

- 48% 183 95

- 48% 37,447 43,381 16%

i Price: Shipment weighted retail sales price. Sources: AHAM Fact Book and Appliance Magazine.

ii Operating Cost: Annual electricity price times electricity consumption. Source: AHAM Fact Book.

iii Income: Mean Household income. Source: U.S. Census.

9A.4 REGRESSION ANALYSIS OF VARIABLES AFFECTING APPLIANCE

SHIPMENTS

Few data are available to estimat e the impact of economic variables on the demand for appliances. Industry operating cost data is incomplete

— appliance energy use data are available for only 12 years of the 1980

- 2002 study period. Industry price data are also incomplete

— available for only 8 years of the study period for each of the appliances.

The lack of data suggests that regression analysis can at best evaluate broad data trends, utilizing relatively few explanatory variables. This section begin s by describing broad trends apparent in t he economic and physical household data sets and then specifies a simple regression model to measure these trends, making assumptions to minimize the number of explanatory

variables. Finally, results of the regression analysis are presented along with an e stimate of the price elasticity of demand for appliances. In section 9A.4.5

, DOE present s the results of Refrigerator Shipments

0 1 2 3 4 5 6 7 8 9 10

1980 1984 1988 1992 1996 2000Millions New Housing

Retirements

Shipments Clothes Washer Shipments

0 1 2 3 4 5 6 7 8

1980 1984 1988 1992 1996 2000Millions Dishwasher Shipments

0 1 2 3 4 5 6

1980 1984 1988 1992 1996 2000Millions

9A

- 4regression analysis performed with more complex models, wh ich are used to test assumptions underlying the simple model. These results support the specification of the simple model and the price elasticity of appliance demand estimated with that model.

9A.4.1 Broad Trends

In this section DOE review s trends in the physical household and economic data sets and posit s a simple approach for estimating the price elasticity of appliance demand. As noted above, the physical household variables ( housing starts and appliance replacements) explain most of the variability in appliance shipments during the study period (1980

- 2002)

. b DOE assume s the rest of the variability in shipments ( referred to as “ residual shipments ” ) is explained by economic

variables . Below, DOE present s a tabular method for measuring price elasticities.

To illustrate this tabular approach, DOE define s two new variables

— residual shipments and total price. Residual shipments are defined as the difference between shipments and physical household demand (starts plus replacements). Total price , represented by the following equation, is defined as appliance price plus the present value of lifetime appliance operating cost : c

TP = PP + PVOC Eq. 9A

. 1

W here:

TP = Total price,

PP = Appliance purchase price, and

PVOC = Present value of operating cost.

Over the study period, residual shipments increased in proportion to total shipments by 30 percent for refrigerators, 19 percent for clothes washers

, a nd 23 percent for dishwashers. At

the sa m e time, total prices declined 47 percent, 45 percent and 48 percent for refrigerators,

clothes washers

, and dishwashers, respectively. Assuming that total price explains the entire change in per household appliance usage, a rough estimate is calculated of the total price elasticity of demand equal to

- 0 .48 for refrigerators,

- 0 .32 for clothes washers a nd

- 0.3 7 for dishwashers ( Table 9A.4

. 1 ).

b A log regression of the form: Shipments = a + b • Housing Starts + c • Retire ments, indicates that these two variables explain 89 percent of the variation in refrigerator shipments, 97 percent of the variation in clothes washer shipments, and 97 percent of the variation in dishwasher shipments.

c Present value operating cost is cal culated assuming a 19

- year operating life for refrigerators, 14

- year operating life for clothes washers, and a 12

- year operating life for dishwashers. A 37 percent discount rate is used to sum annual operating costs into a present value operating cost.

9A

- 5Table 9A.4

. 1 Estimate of Total Price Elasticity of Demand

Residual Shipments (millions) Total Price (1999$)

Elasticity Appliance 1980 2002 Difference Change 1980 2002 Change

Refrigerators

- 0.5 1.6 2.1 30% 1541 820

- 61%

- 0.48

Clothes Washers

- 1.0 0.2 1.1 19% 1042 567

- 59%

- 0.32

Dishwashers

- 1.0

- 0.01 1.0 23% 896 464

- 64%

- 0.37

The negative correlation between total price and residual shipments suggested by these negative price elasticities is illustrated in a graph of residual shipments on the y

- axis and to tal price on the x

- axis ( Figure 9A.4

. 1 ).

Yellow points are observed price data; red points are interpolated price data. Figure 9A.4

. 1 Residual Shipments and Appliance Price

Household income rose during the study period, making it easier for households to purchase appliances. Assuming that a rise in i ncome has a similar impact on shipments as a decline in price, the impact of income is incorporated by defining a third variable, termed

relative price, which is calculated as total price divided by household income and represented by the following equatio n. d

RP = TP

Income Eq. 9A

. 2

W here:

RP = Relative price,

TP = Total price, and

Income = Household income.

d R ecall that the income elasticity of demand cited in the literature review is 0.50 and the price elasticity of demand cited in the review averages

- 0.35. This suggests that combining the effects of income and price will yield an elasticity less negative tha n price elasticity alone. Refrigerators

400 800 1200 1600 2000

-2.0 -1.0 0.0 1.0 2.0

Total PriceResidual Shipments Clothes Washers

400 600 800 1000 1200

-1.5 -1.0 -0.5 0.0 0.5

Total PriceResidual Shipments Dishwashers

200 400 600 800 1000

-2.0 -1.5 -1.0 -0.5 0.0 0.5

Total PriceResidual Shipments

9A

- 6The percent decline in relative price for the three appliances divided by the percent decline in residual shipments suggests a rough estimate of relative price elasticity equal to

- 0 .40 for refrigerators,

- 0 .26 for clothes washers a nd

- 0.3 0 for dishwashers ( Table 9A.4

. 2 ).

Table 9A.4

. 2 Tabular Estimate of Relative Price Elasticity of Appliance Demand

Residual Shipments (millions) Relative Price (1999$)

Elasticity Appliance 1980 2002 Change 1980 2002 Change

Refrigerators

- 0.532 1.597 30% 0.041 0.019

- 74%

- 0.40

Clothes Washers

- 0.953 0.174 19% 0.028 0.013

- 72%

- 0.26

Dishwashers

- 0.974

- 0.005 23% 0.024 0.011

- 76%

- 0.30

9A.4.2 Specification of Model

The limited price data suggest it is appropriate to us e a simple regression model to estimate the impact of economic variables on shipments, using few explanatory variables. The following equation

, chosen for this analysis

, includes one physical household vari able ( housing starts plus replacements) and one relative price variable (the sum of purchase price plus

ope rating cost, divided by income).

S h ip = a + b × RP + c × [ Starts + Rplc ]
Eq. 9A

. 3

W here:

S h ip = Quantity of appliance sold,

RP = Relative price,

Starts = Number of new homes, and Rplc = Number of appliances at the end of their operating life.

The natural logs are taken of all variables so that the estimated coefficients for each

varia ble in the model may be interpreted as the percent change in shipments associated with the percent change in the variable. Thus, the coefficient b in this model is interpreted as the relative price elasticity of demand for the three appliances.

DOE used the following combined regression equation to estimate an average price elasticity of demand across the three appliances, using pool ed data in a single regression. A combined regression specification is justified, given the limited data availab le and the s imilarity in price and shipment behavior across appliances ( see Figure 9A.4

. 1 ). Thus, the model represented by the combined regression equation is considered the basic model in DOE’s analysis of appliance shipments.

S h ip = a + b × RP + c × [ Starts + Rplc ] + d × CW + e × DW Eq. 9A

. 4

W here:

CW = Quantity of clothes washers sold, and

DW = Quantify of dishwashers sold.

9A

- 79A.4.3 Discussion of Model

The most important assumption used to specify this model is that changes in economic variables over the study period

— income, price

, and operating cost

— are responsible for all observed growth in residual appliance shipments. In other wo rds, DOE assume s no impact from other possible factors , such as changing consumer preferences or increases in the quality of appliances. This assumption seems unlikely

, but without additional data, the impact of this assumption on the price elasticity of d emand cannot be measured. DOE effectively assume s that changes in consumer preferences and appliance characteristics, while affecting which models are purchased, have relatively little impact on the total number of appliances purchased in a year.

Three ad ditional assumptions used to specify this model deserve comment. The relative price variable is specified in the model, assuming that (1) the correct implicit discount rate is used to combine appliance price and operating cost and that (2) rising income ha s the same impact on shipments as falling total price. The “ starts + replacements ” variable is specified, assuming (3) that starts and replacements have similar impacts on shipments.

To investigate the first assumption about discount rates, DOE calculated “present v alue operating cost” using a 20 percent implicit discount rate and performed a second regression analysis based on the mod els described in Eq. 9A

. 3 and Eq. 9A

. 4

. The results of this analysis, presented in secti on 9A.4.5 , indicate that the elasticity of relative price is fairly insensitive to changes in the discount rate.

To investigate the second and third assumptions, DOE specified a regression model

separa ting income from total price and replacements from starts, th ereby adding two additional explanatory variables to the basic mo del as shown in the following equation:

S h ip = a + b × RP + C × Income + d × Start + e × Rplc + f × CW + g × DW Eq. 9A

. 5

The results of the regression analysis of this model are presented in section 9

- A.4.5

. These results suggest that the elasticity of total price (coefficient b ) is relatively insensitive to changes i n the treatment of income and “starts + r eplacements ” in the model.

9A.4.4 Analysis Results

The following sections describe results of analyses using both the individual and combined models for appliances and the effects of a lower consumer discount rate and disaggregated vari ables.

9A.4.4.1 Individual Appliance Model

The individual appliance regression eq uations are specified in the following equation.

S h ip = a + b × RP + c × [ Starts + Rplc ]
Eq. 9A

. 6

9A

- 8In regression analysis of this mod el, the elasticity of relative price ( b ) is estimated to be

- 0 .4 0 for refrigerators,

- 0 .31 for clothes washers and

- 0 .32 for dishwashers ( Table 9A.4

. 3 ), averaging

- 0 .35. These elasticities are similar to those reported in the literatur e surv ey for appliances ( Table 9A.2

. 1 ). They are remarkably similar to the price elasticity calculated using a

tabular a pproach ( Table 9A.4

. 2 ).

The estimated coefficient associated with the “s tarts + r eplacements ” variable is close to

one. A coefficient equal to one for this variable would imply that, holding economic variables

constant

, shipments increase in direct proportion to an increase in “s tarts + r eplacements. ” The high R

- sq uared values (above 95) and t

- statistics (above 5) in the results provide a measure of confidence in this analysis, despite the very small data set.

Table 9A.4

. 3 Individual Appliance Model Results

Refrigerator Clothes Washer Dishwasher

Variable Coefficient t

- stat Coefficient t

- stat Coefficient t

- stat
Intercept

- 1.51

- 7.26

- 1.47

- 8.23

- 2.08

- 16.78

Relative Price

- 0.40

- 6.60

- 0.31

- 5.69

- 0.32

- 7.03
Starts + Replacements 1.05 5.90 1.08 6.41 1.35 11.46

R 2 0.954 0.954 0.975

Observations 23 23 23

9A.4.4.2 Combined Appliance Model

The combined appliance regression equation is specified in the following equation.

S h ip = a + b × RP + c × [ Starts + Rplc ] + d × CW + e × DW Eq. 9A

. 7

This regression analysis indicates that the model fits the existing shipments data well (high R

- squared) and that the variables included in the model are st atistically significant ( Table

9A.4

. 4 ). Estimated with this model, t he elasticity of relative price is

- 0 .34, close to the average value estimated in the individual appliance models (

- 0 .35). It is also similar to elasticity estimates rep orted in the literature survey and calculated using the tabular approach in Table

9A.4

. 2

.

Table 9A.4

. 4 Combined Appliance Model Result

Variable Coefficient t

- statistic
Intercept

- 1.60

- 15.54

Relative Price

- 0.34

- 10.74
Starts + Replacements 1.21 13.95

CW

- 0.20

- 9.04

DW

- 0.32

- 6.58

R 2 0.983

Observations 69

9A

- 99A.4.5 Additional Regression Specifications and Results

As described in section 9A.4.3 , DOE used three assumptions to specify its appliance models. The first, made to aggregate appliance price and operating cost , is that the implicit price variable in the basic regressio n model is specified using a 37 percent implicit discount rate. The

second states that the implicit price variable is defined assuming that rising income has the same impact on shipments as falling total p rice. The third states that the “s tarts + r eplacements ” variable is defined assuming that housing starts have a similar impact on shipments as appliance replacements.

9A.4.5.1 Lower Consumer Discount Rate

To investigate the first assumption about discount rates, DOE calculated “present value operating cost” using a 20 percent implicit discount rate and performed a second regression analysis based on the models described in Eq. 9A

. 3 and Eq. 9A

. 4

. The estimated coefficient

associated with the relative price variable in these regressions is almost identical to the

coefficients estimated for the same variable based on a 37 percent impli cit discount rate. The elasticity of relative price calculated using a 20 percent discount rate is

- 0 .33 in the c ombined regression and averages

- 0 .35 f or the three appliances ( Table 9A.4

. 5 ). The elasticity o f price calculated using a 37 percent discount rate is

- 0 .34 in the combined regression and averages

- 0.35 for the three appliances. DOE conclude s from this analysis that the elasticity of relative price is fairly i nsensitive to changes in the discount rate.

Table 9A.4

. 5 Combined and Individual Results, 20 percent discount rate

9A.4.5.2 Disaggregated Variables

To investigate the second and third assumptions, DOE constructed a regression model

that separat es income from total price and replacements from starts, thus adding two additional explanatory variables to the basic model ( as shown earlier as Eq. 9A

. 5 and shown below ). Three Appliances

Variable Coefficient t-Stat
Intercept -1.53 -14.61

Total Price / Income -0.33 -10.69

Starts + Retirements 1.20 13.65

CW -0.18 -8.69

DW -0.32 -6.57

R 2 0.982

Observations 69

Refrigerator Clothes Washers Dishwasher

Variable Coefficient t-Stat Coefficient t-Stat Coefficient t-Stat
Intercept -1.36 -6.26 -1.41 -7.49 -2.04 -17.23

Total Price / Income -0.38 -6.50 -0.32 -5.29 -0.33 -7.30

Starts + Retirements 1.04 5.73 1.06 5.83 1.34 11.64

R 2 0.953 0.950 0.977

Observations 23 23 23

9A

- 10S h ip = a + b × RP + c × Income + d × Start + e × Rplc + f × CW + g × DW Eq. 9A

. 8

The estimated coefficient associated with the total price variable in these regressions is

almost identical to the coefficients estimated for the relative price variable reported above. The elasticity of total price in the above equation is

- 0 .36 in the co mbined appliance regression and

averages

- 0 .35 f or the three appliances ( Table 9A.4

. 6 ). The elasticity of relative price based on

the model described in Eq. 9A

. 4 is

- 0 .34 in the combined regression ( Table 9A.4

. 4 ) and averages

- 0 .35 across t he individual appliances ( Table 9A.4

. 3 ). DOE conclude s that the price elasticity calculated in this analysis is relatively insensitive to the specifi cation of household i ncome and

“s tarts + r eplacements ” variables in the model.

Table 9A.4

. 6 Disaggregated Regression Results, 37 percent discount rate

9A.5 LONG RUN IMPACTS

As noted above i n Table 9A.2

. 1 , the literature review provides price elasticities over short and long time periods, also referred to as short run and long run price elasticities. As noted in the

first two rows of Table 9A.2

. 1 , one source (i.e., Hymans) shows that the price elasticity of demand is significantly different over the short r un and long run for automobiles. 1 Because DOE’s forecasts of shipments and national impacts due to standards is over a 30

- year time period, consideration must be given to how the relative price elasticity is affected once a new

standa rd takes effect.

DOE considers the relative price elasticities d etermined above in section 9A.4 to be short run elasticities. DOE was unable to identify sources specific to household durable goods, such as appliances, to indicate how short run and long run price elasticities differ. The refore, to estimate

how the relative price elasticity changes over time, DOE relied on the Hymans study pertaining to automobiles. Based on the Hymans study, Table 9A.5

. 1 shows how the automobile price elasticity of demand changes in the years following a purchase price change. With increasing Three Appliances

Variable Coefficient t-Stat
Intercept -2.92 -1.26

Income 0.58 2.92

Total Price -0.36 -7.06 Housing Starts 0.44 10.02

Retirements 0.62 8.12

CW -0.24 -9.25

DW -0.46 -7.68

R 2 0.985

Observations 69

Refrigerator Clothes Washers Dishwasher

Variable Coefficient t-Stat Coefficient t-Stat Coefficient t-Stat Intercept -6.19 -2.24 -6.64 -1.63 1.00 0.23

Income 0.89 3.80 0.87 2.31 0.20 0.52

Total Price -0.35 -5.48 -0.27 -2.51 -0.43 -5.18 Housing Starts 0.41 7.38 0.25 3.29 0.62 8.24

Retirements 0.56 6.06 0.56 2.09 0.65 5.86

R 2 0.984 0.958 0.979

Observations 23 23 23

9A

- 11years after the price change, the price elasticity becomes more inelastic until it reaches a terminal value around the tenth ye ar after the price change.

Table 9A.5

. 1 Change in Price Elasticity of Demand for Automobiles following a Purchase Price Change
Years Following Price Change

1 2 3 5 10 20
Price Elasticity of Demand

- 1.20

- 0.93

- 0.75

- 0.55

- 0.42

- 0.40
Relative Change in Elasticity to 1 st year 1.00 0.78 0.63 0.46 0.35 0.33

Source: Hymans, 1971.

Based on the relative change in the automobile price elasticity of demand shown i n Table

9A.5

. 1 , DOE developed a time series of relative price elasticities for home appliances. Table

9A.5

. 2 present s the time series.

Table 9A.5

. 2 Change in Relative Price Elasticity for Home Appliances following a Purchase Price Change
Years Following Price Change

1 2 3 5 10 20
Relative Change in Elasticity to 1 st year 1.00 0.78 0.63 0.46 0.35 0.33

Relative Price Elasticity

- 0.34

- 0.26

- 0.21

- 0.16

- 0.12

- 0.11

9A.6 SUMMARY

This appendix describes the results of a literature search, tabular analysis

, and regression analys e s of the impact of price and other variables on appliance shipments. In the literature, DOE

f ound only a few studies of appliance markets that are relevant to this analysis and no studies

after 1980 using time series price and shipments data. The information that can be summarized

from the literature s uggests that the demand for appliances is price inelastic. Other information in the literature suggests that appliances are a normal good, such that rising incomes increase the demand for appliances. Finally, the literature suggests that consumers use rela tively high implicit discount rates, when comparing appliance prices and appliance operating costs.

There are too few price and operating cost data available to perform complex analysis of dynamic changes in the appliance market. In this analysis, DOE us e d data available for refrigerators, clothes washers

, and dishwashers to evaluate broad market trends and perform simple regression analysis.

These data indicate an increase in appliance shipments and a decline in appliance price and operating cost over the study period 1980

- 2002

. Household income has also risen during this

9A

- 12time. To simplify the analysis, DOE combined the available economic information into one variable, termed relative price, and used th at variable in a tabular analysis of market trends and a regression analysis.

DOE’s tabular analysis of trends in the number of appliances per household suggests that the price elasticity of demand for the three appliances is inelastic. Our regression analysis of these same variables suggests that the rel ative price elasticity of demand is

- 0.34

. The price elasticity is consistent with estimates in the literature. Nevertheless, DOE stress es that the measure is based on a small data set, using very simple statistical analysis. More important, the

measure i s based on an assumption that economic variables, including price, income and operating costs, explain most of the trend in appliances per household in the United States since 1980. Changes in appliance quality and consumer preferences may have occurred du ring this period, but they are not accounted for in this analysis.

9A.7 DATA USED IN THE ANALYSIS

• Appliance Shipments are defined as the annual number of units shipped in millions. These

data were collected from the Association of Home Appliance Manufacturers ( AHAM ) 8

, 9 and Appliance Magazine 10 as annual values for each year, 1980

– 2002

. AHAM was used for the period 1989

– 2002 while Appliance Magazine was used for the period 1980

– 1988.

• Appliance Price is defined as the shipments weighted retail sales price of the unit in 1999

dollars. Pric e values for 1980, 1985, 1986, 1991, 1993, 1994, 1998 , and 2002 were collected

from AHAM Fact B ook s. 11 Price values for other years were interpolated from these eight years of data.

• Housing Sta rts data were collected from the U.S. Census construction statistics (C25 reports) as annual values for each year, 1980

– 2002. 12

• Replacements , driven by equipment retirements, are estimated with the assumption that

some fraction of sales arise from consumers replacing equipment at the end of its useful life. Since each appliance has a different expected lifespan (19 years for refrigerators, 13 14 years for clothes washers, 14 12 years for dishwashers 15 ), replacements are calculated differently for each appliance type. Replacements are estimated as the average of shipments 14

– 24 years previous for refrigerators, 9

– 19 years prev ious for clothes washers, and 7

– 17 years previous

for dishwashers. Historical shipments data were collected from AHAM and Appliance Magazine.

• Annual Electricity Consumption (UEC) is defined as the energy consumption of the un it in

kilowatt

- hours. Electricity consumption depend s on appliance capacity and efficiency. These data were provided by AHAM for 1980, 1990

– 1997 and 1999

– 2002. 9 Data were interpolated in the years for which data were not availa ble.

• Operating Cost is the present value of the electricity consumption of an appliance over its expected lifespan. The lifespans of refrigerators, clothes washers and dishwashers are

9A

- 13assumed to be 19, 14, and 12 years resp ectively. Discount rates of 20 p ercent 6 and 3 7
percent 16 were used, producing similar estimates of price elasticity. A study by Hausman

recommend ed a discount rate of “about 20 percent ” in its introduction and pres ented results ranging from 24.1 percent to 29 percent b ased on his calculations for room air conditioners. A study by Train suggests a range of impli cit discount rates averaging 35 percent for appliances.

• Income : Median annual household income in 2003 dollars. Th ese data w ere collected for each year, 1980

– 2002, from Table H

- 6 of the U.S. Census

. 17

9A

- 14REFERENCES

1. Hymans, S. Consumer Durable Spending: Explanation and Prediction. Brookings Papers on Economic Activity. 1971 (1).

2. Golder, P. N., and G. J. Tellis. Beyond Diffusion: An Affordability Model of the Growth

of New Consumer Durables. Journal of Forecasting. 1998. 17.

3. Revelt, D., and K. Train. Mixed Logit with Repeated Choices: Household's Choice of Appliance Efficiency Level. Review of Economics and Statistics. 1997.

4. Tellis, G. The Price Elasticity of Selective Demand: A Meta

- Analysis of Econometric

Models of Sales. Journal of Marketing Research 1988.

5. U.S. Department of Energy

- Energy Information Agency. The Effect of Income on Appliances in U.S. Households. 2002. Washington, DC. (Last Accessed April 3, 2014. ) http://www.eia.doe.gov/emeu/recs/appliances/appliances.html

6. Hausman, J. Individual discount rates and the purchase and utilization of energy using

durables. The Bell Journal of Economics. 1979.

7. Train, K. Discount Rates in Consumers' Energy

- Related Decisions. Energy: The

International Journal. 1985. 10(12).

8. Associati on of Home Appliance Manufacturers. AHAM 2000 Fact Book. 2000. Washington, D.C.

9. Association of Home Appliance Manufacturers. AHAM 2003 Fact Book. 2003. Washington, D.C.

10. Statistical Review. Appliance Magazine. April 1990.

11. Association of Home Appliance Manufacturers. AHAM Fact Books. 1987, 1988, 1993, 1995, 2000, and 2003. Washington, D.C.

12. U.S. Census Bureau. Current Construction Reports, C25

– New One

- Family Houses

Sold. Washington, D.C. (Last Accessed April 3, 2014.) http://www.census.gov/prod/www/abs/c25.html

13. Duemling, R., Energy and Resources Group, University of California. 1999. Berkeley,

CA.

14. U.S. Department of Energy

- Office of Building Research and Standards. Fina l Rule Technical Support Document (TSD): Energy Efficiency Standards for Consumer Products: Clothes Washers. 2000. U.S. Department of Energy. Washington, DC. (Last

9A

- 15Accessed April 3, 2014.) http://eaei.lbl.gov/publications/final

- rule

- technical

- support

document

15. U.S. Department of Energy

- Office of Codes and Standards. Technical Support Document: Energy Conservation Standards for Consumer Products: Dishwashers,

Clothes W ashers, and Clothes Dryers including: Environmental Impacts, Regulatory Impact Analysis. December, 1990. Washington, D.C. (Last Accessed April 3, 2014.) http://papyrus.lbl.gov/

16. Train, K.E., and T. Atherton. Rebates, loans, and customers’ choice of appliance efficiency level: combining stated

- and revealed

- preference data. The Energy Journal.

1995.

17. U.S. Census Bureau. Income, Historical Income Tables

– Households, Table H

- 6. Washington, D.C. (Last Accessed April 3, 2014.) http://www.census.gov/hhes/www/income/histinc/inchhtoc.html

9A

- 16CHAPTER 10. NATIONAL IMPACT A NALYSIS

TABLE OF CONTENTS

10.1 INTRODUCTION

................................ ................................ ................................ ......... 10

- 1

10.2 ECONOMIC IMPACTS OF PRODUCT CLASS REDEFI NITI ON

............................ 10

- 1

10.3 NATIONAL ENERGY SAVI NGS

................................ ................................ ............... 10

- 2

10.3.1 Primary Energy Savings

................................ ................................ .................... 10

- 2

10.3.2 Full

- Fuel

- Cycle Energy Savings

................................ ................................ ........ 10

- 3

10.3.3 National Energy Savings Inputs

................................ ................................ ......... 10

- 4

10.3.3.1 Shipments and Affected Stock

................................ ................................ . 10

- 4

10.3.3.2 Average Unit Energy Consumption

................................ ......................... 10

- 4

10.3.3.3 Site

- to

- Power

- Plant Conversion Factor

................................ ................... 10

- 5

10.3.3.4 Primary Energy to Full

- Fuel

- Cycle Multipliers

................................ ....... 10

- 5

10.3.3.5 Rebound Rate Factor

................................ ................................ ................ 10

- 5

10.4 NATIONAL NET PRESENT VALUE

................................ ................................ ......... 10

- 6

10.4.1 Definition

................................ ................................ ................................ ........... 10

- 6

10.4.2 Net Present Value Inputs

................................ ................................ ................... 10

- 7

10.4.2.1 Total Annual Installed Cost Increases

................................ ...................... 10

- 7

10.4.2.2 Total Annual Operating Cost Savings

................................ ...................... 10

- 8

10.4.2.3 Discount Factor

................................ ................................ ...................... 10

- 10

10.5 RESULTS

................................ ................................ ................................ .................... 10

- 10

10.5.1 National Energy Savings Results

................................ ................................ ..... 10

- 10

10.5.2 Net Present Value Results

................................ ................................ ................ 10

- 12

REFERENCES

................................ ................................ ................................ ........................ 10

- 19

LIST OF TABLES

Table 10.5.1 Estimates of Cumulative Full

- Fuel Cycle Energy Savings (quads) for CFLKs With an Assumed Ceiling Fan (Reference Case)

.......................... 10

- 11

Table 10.5.2 Estimates of Full

- Fuel Cycle Energy Savings (quads) for CFLKs With an Assumed Ceiling Fan Standard and Without a Ceili ng Fan Standard

.. 10

- 11

Table 10.5.3 Cumulative Net Present Value of Consumer Benefits for CFLKs at 3%

Discount Rate With an Assumed Ce iling Fan Standard

............................ 10

- 13

Table 10.5.4 Cumulative Net Present Value of Consumer Benefits for CFLKs at 7%

Discount Rate With an Ceili ng Fan Standard

................................ ........... 10

- 13

Table 10.5.5 Cumulative Net Present Value for CFLKs at 3% Discount Rate With an Assumed Ceiling Fan Standard an d Without a Ceiling Fan Standard

.. 10

- 14

Table 10.5.6 Cumulative Net Present Value for CFLKs at 7% Discount Rate With

an Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

.. 10

- 14

Table 10.5.7 Cumulative Equipment Cost Increase of Consumer Benefits for CFLKs at 3% Discount Rate With an Assumed Ceiling Fan Standard

..... 10

- 15

Table 10.5.8 Cumulative Equipment Cost Increase of Consumer Benefits for CFLKs at 7% Discount Rate With an Assumed Ceiling Fan Standard

..... 10

- 16

10

- iTable 10.5.9 Cumulative Equipment Cost Increase f or CFLKs at 3% Discount Rate With an Assumed Ceiling Fan Standard and Without a Ceiling Fan

Standard

................................ ................................ ................................ ..... 10

- 16

Table 10.5.10 Cumulative Equipment Cost Increase for CFLKs at 7% Discount Rate With an Assumed Ceiling Fan Standard and Without a Ceiling Fan

Standard

................................ ................................ ................................ ..... 10

- 16

Table 10.5.11 Cumulative Operating Cost Savings of Consumer Benefits for CFLKs at 3% Discount Rate With an Assumed Ceiling Fan Standard

.................. 10

- 17

Table 10.5.12 Cumulative Operating Cost Savings of Consumer Benefits for CFLKs at 7% Discount Rate With an Assumed Ceiling Fan Standard

.................. 10

- 17

Table 10.5.13 Cumulative Operating Cost Savings for CFLKs at 3% Discount Rate With an Assumed Ceiling Fan Standard and Without a Ceiling Fan

Standard

................................ ................................ ................................ ..... 10

- 18

Table 10.5.14 Cumulative Operating Cost Savings for CFLKs at 7% Discount Rate With an Assumed Ceiling Fan Standard and Without a Ceiling Fan

Standard

................................ ................................ ................................ ..... 10

- 18

LIST OF FIGURES

Figure 10.5.1 Annual FFC NES for All Other CFLKs in the Reference Scenario (quads)

................................ ................................ ................................ ........ 10

- 12 Figure 10.5.2 Total NPV at 7% Discount for All Other CFLKs in the Reference

Scenario

................................ ................................ ................................ ...... 10

- 15

10

- iiCHAPTER 10. NATIONAL IMPACT ANALYSIS

10.1 INTRODUCTION

This chapter describes the method the U.S. Department of Energy (DOE) used to estimate national impacts of new energy conservation standards for cei ling fan light kits (CFLKs) . To estimate those impacts, DOE calculated the quantity and net value to consumers of future national energy savings (NES) and the net present value (NPV) of consumer benefits resulting from the various candidate standard levels ( CSLs ). Results described include (1) national energy consumption and savings, (2) monetary value of national energ y savings

associated with each CSL , (3) increased total installed costs nationwide due to CSLs , and (4) the NPV of consumer benefits (difference between value of energy savings and increased total installed costs).

DOE determined both the NE S and the NPV for all the CSLs considered for CFLKs . All calculations were performed using a Microsoft Exce l spreadsheet model. The spreadsheet model, referred to as the national impact analysis (NIA) model, incorporates the calculations of NES and NPV, along with input from the shipments model described in chapter 9. Details and instructions for using the NIA model are provided in appendix 10A.

Chapter 9 provides a detailed description of the shipments model DOE used to project future purchases of CFLKs through a stock

- accounting approach coupled with a modified

consumer

- choice model

. The model also estimates the impact of a CFLK standard on shipments

based on sensitivities related to total installed cost, operating costs, and household income.

10.2 ECONOMIC IMPACTS OF PRODU CT CLASS REDEFINITION

As described in chapter 3 of this technical support document ( TSD ) , the current energy conservation standards divide CFLKs into three product classes depending on the type of light

socket used: ( product class 1 ) CFLK s with medium

- screw based sockets, ( product class 2 )

CFLK s with pin

- based sockets for fluorescent lamps , a nd (product class 3) any CFLK s other than those in product class 1 and 2

. In each case, the standards require that the CFLKs be packaged with lamps to fill all sockets. However, as descri bed in c hapter 3 of this TSD, DOE is considering redefining CFLKs int o the following two product classe s :

1. CFLKs with externally ballasted or driven lamps (hereafter “Externally Ballasted/Driven CFLKs”) . This proposed product class would include all products in the current product

class 2.

2. All other CFLKs (hereafter “All Other CFLKs”)

.

As described in chapter 5 of this TSD, and required by law ( 42 U.S.C. 6295(o)(1) )

, DOE developed baselines for the new product classes under consideration in this rulemaking in a way

that ensure s that amended standards woul d no t decrease the minimum required efficiency of a ny covered product. Because there are some CFLKs currently on the market (product class 3 CFLKs with low efficiency candelabra lamps) that would fall into the All Other CFLKs product class, but are less ef ficacious than the redefined baseline for these products, even a standard set

10

- 1at the new ba seline would have energy and economic impacts with respect to the no

- standard

case (i.e., in the absence of an energy conservation standards rulemaking that would am end the

current standards ) . Therefore, this chapter evaluates the economic implications of the product class redefinition that is under consideration in this rulemaking , as well as evaluating the total impacts of a candidate standard set at each CSL. These two sets of results are presented side by

side in section 10.5

.

10.3 NATIONAL ENERGY SAVINGS

This section describes DOE’s calculation of the NES for CFLKs under the CS Ls considered in this preliminary analysis. In all cases, energy savings are calculated with respect

to the no

- standard case. As described in chapter 9 of this TSD, the consumer

- choice based shipments model projects a dynamically changing market in both t he standards cases and the no

standard case, which accounts for a n economically driven shift toward more efficient solid

- state lighting throughout the analysis period.

10.3.1 Primary Energy Savings

The annual NES quantifies the difference in energy use between the no

- standard cas e and a higher CSL in a given year:

NE S y = � AE C
no std

, y − AE C std

, y � × RF
Eq. 10

. 1

Where:

NE S y = na tional energy savings in year y (quads),

AE C
no std

, y = annual national energy consumption in the no

- standard case at the power plant

for all affected stock in year y (quads),

AE C std

, y = standards case annual national energy consumption at the po wer plant for all

affected stock in year y (quads), and

RF = rebound rate factor = 1

- rebound rate

.

Positive values of NES correspond to a net energy savings following a standards implementation, or, in other words, annual energy consumption ( AEC ) in the standards case is

less than AEC in the no

- standard case

.

The cumulative national energy s avings is the sum of each NE S y for all affected stock

. The analysis tracks the energy use of the stock shipped during the analysis period until the last

unit is retired in 2077 . The cumulative NES is computed as follows:

10

- 2NE S
cum = � NE S y

y Eq. 10

. 2

Where:

NE S
cum = cumulative national energy savings (quads)

.

DOE calculated the AEC of the affect ed stock in product class i as follows:

AE C y = � AE C i

, y

i Eq. 10

. 3

Where:

AE C i

, y = the annual energy consumption of product class i in year y , defined as follows.

AE C i

, y = � � STOC K i

, v × UE C i

, v

v �

× S P y

Eq. 10

. 4

Where:

STOC K i

, v = affected units of stock in product class i

, of vintage v
, UE C
v = u nit energy consumption of vintage v
, given by Eq. 10

. 7 (kWh/unit), and

S P y = time variable site

- to

- power

- plant energy consumed at the power plant (quads/kWh).

10.3.2 Full

- Fuel

- Cycle Energy Savings

DOE has historically presented the NES computed based on the primary energy savings at the power plant, as described in the previous section. Per DOE’s 2011 Statement of Policy for Adopting Full

- Fuel

- Cycle Analyses, DOE now uses full

- fuel

- cycle (FFC) measures of energy use and emissions in its energy conservation standards analyses. 1 In addition to accounting for the primary energy used at the power plant to supply electricity to the site of use and

transmission and distrib ution losses, the FFC analysis also accounts for energy consumed up

stream of the power plant in extracting, processing, and transporting or distributing the primary fuels to the power plant, as described in appendix 10B.

As shown in Eq. 10

. 5 , the FFC national energy savings NE S FFC are obtained by multiplying the primary energy savings ( Eq. 10

. 1 ) by the FFC multiplier computed for the same

year, μ y .

10

- 3NE S FCC

, y = � AE C
no std

, y − AE C std

, y � × RF × μ y Eq. 10

. 5

Where:

μ y = the FFC multiplier in year y , and

a ll other variables as defined in Eq. 10

. 1

.

The cumulative FFC energy savings is calculated by summing the annual FFC energy saving from 2019

- 2077.

NE S FFC

, cum = � NE S FCC

, y

y Eq. 10

. 6

10.3.3 National Energy Savings Inputs

As described in the preceding sections, the following inputs are used for calculating the national energy savings:

• shipm ents and stock shipped during the analysis period,

• average unit energy consumption (UEC),

• site

- to

- power

- plant conversion factor (SP),

• primary energy to FFC multipliers (μ), and

• rebound rate factor (RF).

These inputs are further discussed in the following sections.

10.3.3.1 Shipments and Affect ed Stock

The shipments model, described in chapter 9 of this TSD, calculated the shipments of

CFLKs and market share distributi on among product classes and CSLs for different scenarios, for each year of the 30

- year (2019

- 2048) shipments analysis. Based on that analysis, the model developed a description of the stock affected by the rulemaking.

10.3.3.2 Average Unit Energy Consumption

DOE calculated the UEC for each product for each year by multiplying the sector

dependent hours of operation by the average input power consumed by the CFLK

.

10

- 4UE C p

, s ( y ) = HOU
s × Input Powe r p ( y )
Eq. 10

. 7

Where:

UE C p

, s ( y ) = annual energy consumption of product p in year y in sector s
, HOU
s = operating hours (hours of use) in sector s , and Input Powe r p ( y ) = input power consumed by product p in year y

.

Details on DOE’s estimates of hours of use (HOU) fo r each sector are given in chapter 6

of this TSD.

The average input power consumed by a CFLK may be time

- dependent if the lamps packaged with the CFLK fail before the CFLK is retired. In this case, CFLK owners will replace the failed lamp with a lamp chosen from possible lamp replacement options in the lighting

market that provide a similar l umen output . The selection of a replacement lamp is determined using a consumer

- choice model calibrated to the residential lamps market. In this case,

consumers are sensitive to the first cost and operating cost of available lamp replacement options . See chapter 8 of this TSD for m ore details on the relamping of CFLKs . DOE accounted

for light

- emitting diode ( LED ) incursion using the LED incursion curve presented in chapter 9 of

this TSD. For this preliminary analysis, DOE does not account for energy savin gs incurred by use of dimming functionality associated with CFLKs with such functionality . DOE intends to include the impact of dimming on UEC and its downstream effects at the NOPR stage.

10.3.3.3 Site

- to

- Power

- Plant Conversion Factor

To estimate the energy use d at the power plant that is required to supply the electricity

used on

- site by CFLKs , DOE multiplied the site energy, UE C y by a site

- to

- power

- plant
conversion factor, which account s for average losses associated with the generation, transmission, and distribution of electricity from the fleet of U.S. power plants to the point of

use. DOE used annual site

- to

- source conversion factors based on the version of the National Energy Modelin g System (NEMS) that corresponds to the Energy Information Administrat ion’s Annual Energy Outlook 2013 ( AEO2013 ). 2 The factor changes over time in re sponse to projected changes in generation sources (the types of power plants projected to provide electricit y to the country)

.

10.3.3.4 Primary Energy to Full

- Fuel

- Cycle Multipliers

For this preliminary analysis, DOE calculated FFC energy savings using a methodolo gy described in appendix 10B. As discussed previously, the FFC energy savings are obtained by multiplying the primary energy savings at the power plant by the FFC multiplier. The estimated FFC multiplier (μ) is essentially constant, ranging between 1.040 a nd 1.041 from 2019 to 2077

.

10.3.3.5 Rebound Rate Factor

A rebound effect accounts for increased usage of an appliance by consumers after the implementation of a standard, reducing the energy savings attributed to a standard. DOE generally accounts for the direct rebound effect in its estimates of the NES

. Based on the

10

- 5discussion of the rebound rate for general service fluorescent lamp/incandescent reflector lamp ( GSFL/IRL ) a and feedback from manufacturers , DOE assumed a rebound rate of 0 for CFLKs in

its reference case. As a sensitivity scenario, DOE considered a rebound rate of 15% in the residential and commercial sectors based on rates used in the National Energy Modeling System

. DOE invites comment on this assumption for CFLKs.

10.4 NATIONAL NET PRESENT VALUE

10.4.1 Defini tion

The NPV is the difference between the present value of savings (PVS) in operating cost resulting from the use of more

- efficient appliances under the standard and the present value of increased total installed costs (PVC) of those appliances. The NPV i s described by the following equation:

NPV = PVS

− PVC Eq. 10

. 8

Where:

PVS = present value of savings in ope rating cost (2013$) for all CFLKs shipped during the analysis period, and

PVC = present value of increase in total installed cost (including costs for equipment, installation, and disposal in 2013$) for all CFLKs shipped during the analysis period.

Under this definition, reductions in operating costs contribute positively to the NPV

, while increases in total installed costs contribute negatively to the NPV

.

DOE determined the PVS and PVC according to the following expressions:

PVS = � OC S y × D F y

y Eq. 10

. 9

PVC = � EC I y × D F y

y Eq. 10

. 10

Where:

OC S y = the total operating cost savings from the affect ed stock in year y , relative to the no

standard case (2013$)

, EC I y = total annual equipment cost increase for shipments in year y , relative to the no

standard case (2013$) , and

D F y = discount factor in each year (defined in section 10.3.3.5 )

.

a See appendix 10

- C: R ebound Rate of the GSFL/IRL energy conservation rulemaking.

10

- 6DOE calculated PVC from 2019 to 2048 (the duration of the shipments ana lysis period)

and PVS from 2019 to 2077 (to account for the full lifetime of all affected stock ). The

contributions to PVC and PVS for each year were discount ed to 2014 . The following sections

describe how DOE derives the variables in Eq. 10

. 9 and Eq. 10

. 10

.

10.4.2 Net Present Value Inputs

The inputs to DOE’s calculation of the NPV of costs and sa vings for the nation are:

• total annual installed cost ( TIC ) in the no

- standard case and the standards cases,

• total annual operating cost ( TOC ) for the affected stock in the no

- standard case and the standards cases, and

• discount factor ( DF ).

The computation of these inputs from the outputs of upstream analyses is detailed in the following sections.

10.4.2.1 Total Annual Installed Cost Increases

DOE calculated the total annual equipment cost increa se of using more efficient CFLKs

in the standards cases relative to the no

- standard case a s the difference between the TIC in the

standards case and the no

- standard case:

EC I y = TI C std

, y − TI C
no std

, y Eq. 10

. 11

Where:

TI C std

, y = the total installed cost of equipment shipped in ye ar y in the standards case (2013 $), and

TI C
no std

, y = the total installed cost of equipment shipped in year y in the no

- standard case (2013 $).

Due to the higher cost of more

- effic ient products in the standards case versus the no

standard case, cost increases appear as negative values in the NPV

.

For CFLKs , the per

- unit installed cost includes the first cost of the CFLK and any installation cost. Therefore

, the TIC is given by the following equation

10

- 7TIC = �

s i

, y × ( p i

, y + I C i

, y )

i Eq. 10

. 12

Where:

s i

, y = total shipments of CFLK option i in year y (number of units),

p i

, y = purchase price of CFLK option i in year y, includin g corrections for learning (2013 $/unit), and

I C i

, y = installation cost of a CFLK (2013 $/unit).

The CFLK shipments and purchase price s referenced in Eq. 10

. 12 are described in chapter 9 of this TSD. DOE assumed the installation cost of a CFLK was attributed to the

installation cost for a ceiling fan and

, therefore, is not included in this analysis

.

10.4.2.2 Total Annual Operating Cost Savings

DOE expresses savings in operating costs as cost reductions associated with the lower energy consumption of products shipped in the standards case compared to the no

- standard case. DOE calculated the total annual oper ating cost savings as the difference between the TOC in the

standards case and the no

- standard case. As for the computation of the NES , the TOC need s to be

calculated for the affected stock:

OC S y = TO C
no std

, y − TO C std

, y Eq. 10

. 13

Where:

OC S y = the total operating cost saving of the affected stock in year y (2013 $),

TO C base

, y = the total operating cost of the affected stock in year y in the no

- standard case (2013 $), and

TO C std

, y = the total operating cost of the affected stock in year y in the standards case (2013 $).

For CFLKs

, the annual operating cost is primarily the c ost of electricity consumption. However, CFLK owners also incur a cost for any lamp repla cement of failed lamps that occurs during the lifetime of the CFLK. The replacement lamp may also have a different wattage than the original lamp packaged with the CFLK

, leading to different operating costs

. D OE accounted for relamping in its model using a consumer

- choice model calibrated against the residential lighting market

. The options available for lamp replacement are drawn from lamps with the same base and similar lumen output as the lamp packaged with the CFLK. See chapter 8 of this TSD for more discussion regarding how DOE calculated the impacts to energy use and operating and maintenance cost due to relamping.

The model credits CFLK owners for any residual life left in the lamp when the CFLK

fails. DOE derive d a weighted

- average residual lamp value for each CFLK packaged lamp option ( i.e., the lamp included with the CFLK at time of purchase) and vintage in the following

way: DOE first calculated the average residual lamp value for a CFLK that fails for each ye ar in

10

- 8the full range of lifetime values between 1 to 30 years. DOE then computed the weighted

average residual value using the retirement probability function as weights f or each age. DOE

then attributed the weighted

- average residual value as a savings 14 years (average lifetime of a CFLK) after the CFLK was shipped. Note that the residual value is a negative value in the context of the total operating cost.

As described in the life

- cycle cost (LCC) and payback period (PBP) analysis (chapter 8

of this TSD ), DOE calculated total annual operating costs based on national average electricity prices. DOE used the reference

- case, sector

- specific electricit y price projections from AEO2013

to establish al l electricity prices. As AEO2013 o nly projects prices throug h 2040 , electricity prices in later years wer e extrapolated based on the trend from 2030

- 2040 and projected through

2077 for each sector. DOE performed sensitivity analyses using the high

- and low

- economic growth scenarios from AEO2013 to establish electri city prices.

DOE calculated annual TOC for CFLKs by summing over the ope rating costs of all product classes and sectors in the affected stock , according to the following expression:

TO C y = p E

, y × �

s i

, y × UE C i

, y

i + � RP L i

, y

i − � Res i

, y

i Eq. 10

. 14

Where:

TO C y = annual total operating cost in year y for all affect ed stock of CFLKs (2013$)

, p E

, y = the price of electricity, in year y , as forecasted in the AEO2013 reference scenario (2013 $/kWh),

S i

, y = the affected stock of CFLKs in year y (number of units)

, UE C i

, y = the averag e unit energy consumption of a CFLK of type i in year y , as computed using Eq. 10

. 7 (kWh/unit),

RP L i

, y = th e average re lamping replacement costs for CFLK type i in year y (2013$) , and

Re s i

, y = the residual value of lamps remaining in retired CFLK s of type i in y ear y (2013$)

.

The stock of a product depends on annual shipments and the lifetime of the product. As described in chapter 9, DOE projected product shipments under the no

- standard case and the standards cases. DOE projected that shipments under the standards cases would be slightly lower

than under the no

- standard case , because DOE believes that the higher purchase cost of more

efficient products would cause some consumers to foreg o purchasing new products.

To avoid including savings attributable to shipments displaced because of standards, DOE used the projected standards

- case shipments and, in turn, the standards

- case stock, to calculate the annual energy consumption for the no

- standard case.

As discussed in section 10.3.3.5 , DOE included in this analysis scenarios that include various assumptions about rebound to adjust its estimates of NES. In principle, the rebound effect also affects the energy costs to consumers in the standards case. However, the take

- back in energy consumption associated with the rebound effect provides consumers with increased value.

10

- 9As described in the 2012 reside ntial furnace fan TSD, 3 DOE believes that, if it were able to monetize the increased value to consumers of the rebound effect, this value would be similar in value to the forgone energy savings. Therefore, the economic impacts on consumers with or without the rebound effect are the same, so DOE does not adju st operating cost savings in the

NIA based on rebound.

10.4.2.3 Discount Factor

DOE multiplied monetary values in future years by a discount factor (DF) to determine the present value. The DF is described by the equation:

DF = 1

( 1 + r ) � y

− y p �

Eq. 10

. 15

Where:

r = discount rate,

y = year of the monetary value, and

y

p = year for which the present value is being determined.

DOE estimated NPV using both a 3

- percent and a 7

- percent real discount rate, in accordance with the Office of Management and Budget’s guidance to Federal agencies on the development of regulatory analysis, particularly section E therein: Identifying and Me asuring Benefits and Costs

. 4 DOE defined the present year as 2014

.

10.5 RESULTS

This section presents the results of the NIA for CFLKs

. As discussed in chapter 9 , DOE is concurrently pursing a n energy conservation standard on ceiling fans, which could affect shipments of CFLKs

. DOE assumed a ceiling fan standard in its reference scenario . To determine the maximum potential impact of this assumption, DO E also conducted a sensitivity analysis that assumes no ceiling fan standard.

As discussed in s ection 10.2 , DOE presents results for the All Other CFLK s product class separated into savings associated with (1) going from the market distribution in the absence of an amended standard to the restructured baseline, (2) going from the restructured baseline to a CSL, and (3) the total savings from (1) and (2)

. The results of (1) reflect the impact of combining

p roduct classes for each CSL.

10.5.1 National Energy Savings Results

Table 10.5

. 1 show s the cumulative full

- fuel cycle NES for CFLKs by product class for the reference case which assumes a ceiling fan standard

. As described above, results for the All Other CFLK product class are broken into savings associated with product class restructuring, savings associated with meeti ng a given CSL with respect to CSL 0 , and the total energy savings. To display the full impact of a potential ceiling fan standard on CFLKs, Table 10.5

. 2 shows full

fuel cycle NES for the reference scenario and the no ceiling fan standard scenario. Figure 10.5

. 1

10

- 10illustrate s FFC energy savings

, respectively

, over the course of the analysis period for All Other

CFLKs

.

Table 10.5

. 1 Estimates of Cumulative Full

- Fuel Cycle Energy Savings (quads) for CFLKs

With a n Assumed Ceiling Fan (Reference Case)

CSL Externally

Ballasted/Driven CFLKs All Other CFLKs

Total Impact of Meeting CSL 0 Impact of Going From

CSL 0 to Listed CSL Total

1 0.00005 0.286 0.000 0.286

2 0.286 0.045 0.330

3 0.284 0.110 0.394

4 0.284 0.110 0.394

5 0.284 0.110 0.394

Table 10.5

. 2 Estimates of Full

- Fuel Cycle Energy Savings (quads) for CFLKs W ith a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF

Standard

1 0.00005 0.00005 0.286 0.298

2 0.330 0.344

3 0.394 0.409

4 0.394 0.409

5 0.394 0.409

10

- 11Figure 10.5

. 1 Annual FFC NES for All Other CFLKs in the Reference Scenario (quads)

10.5.2 Net Present Value Results

Table 10.5

. 3 and Table 10.5

. 4 give the result s for cumulative net present value for

CFLKs at 3

- percent and 7

- percen t discount rates for the reference scenario with a n assumed ceiling fan standard . For comparison, DOE presents results for cumulative NPV in the no ceiling

fan standard scenario in Table 10.5

. 5 and Table 10.5

. 6 for 3

- percent and 7

- percent discount rates, respectively. Figure 10.5

. 2 illustrates NPV using a 7

- percent discount rate over the analysis period for All Other CFLKs

. 

### -0.005 0 0.005

0.01 0.015

0.02 0.025

0.03 0.035

0.04

2019 2029 2039 2049 2059 2069 2079Full Fuel Cycle Energy Savings(quads)



### Year CSL 1

CSL 2

CSL 3

CSL 4

CSL 5

10

- 12Table 10.5

. 3 Cumulative Net Present Value of Consumer Benefits for CFLKs at 3%

Discount Rate With a n Assumed Ceiling Fan Standar d

CSL Externally

Ballasted/Driven All Other

Total Impact of Meeting

CSL 0 Impact of Going

From CSL 0 to

Listed CSL Total

M illion 2013$ Billion 2013$

1

- 0.34 3.39 0.00 3.39

2 3.39 0.28 3.66

3 3.37 0.52 3.89

4 3.37 0.52 3.89

5 3.37 0.52 3.89

Table 10.5

. 4 Cumulative Net Present Value of Consumer Benefits for CFLKs at 7%

Discount Rate With a n Ceiling Fan Standar d

CSL Externally

Ballasted/Driven All Other

Total Impact of Meeting

CSL 0 Impact of Going

From CSL 0 to

Listed CSL Total

Million 2013$ Billion 2013$

1

- 0.37 2.22 0.00 2.22

2 2.22 0.13 2.35

3 2.21 0.04 2.25

4 2.21 0.04 2.25

5 2.21 0.04 2.25

10

- 13Table 10.5

. 5 Cumulative Net Present Value for CFLKs at 3% Discount Rate With a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF Standard

Millions 2013$ Billions 2013$

1

- 0.34

- 0.36 3.39 3.54

2 3.66 3.82

3 3.89 4.03

4 3.89 4.03

5 3.89 4.03

Table 10.5

. 6 Cumulative Net Present Value for CFLKs at 7% Discount Rate With a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF Standard

Millions 2013$ Billions 2013$

1

- 0.37

- 0.39 2.22 2.32

2 2.35 2.46

3 2.25 2.34

4 2.25 2.34

5 2.25 2.34

10

- 14Figure 10.5

. 2 Total NPV at 7% Discount for All Other CFLKs in the Reference Scenario

Table 10.5

. 7 and Table 10.5

. 8 give results for the cumulative equipment cost increase for

CFLKs at 3

- percent and 7

- percent discount rates for the scenario with a ceiling fan standard . For comparison, DOE presents results for the cumulative equipment cost increase in the no ceiling

fan standard scenario in Table 10.5

. 9 and Table 10.5

. 10 for 3

- percent and 7

- percent discount rates, respectively.

Table 10.5

. 7 Cumulative Equipment Cost Increase of Consumer Benefits for CFLKs at

3% Discount Rate With a n Assumed Ceiling Fan Standard

CSL Externally

Ballasted/Driven All Other

Total Impact of Meeting

CSL 0 Impact of Going

From CSL 0 to

Listed CSL Total

Million 2013$ Billion 2013$

1 1.05 0.39 0.00 0.39

2 0.39 0.08 0.47

3 0.39 0.82 1.21

4 0.39 0.82 1.21

5 0.39 0.82 1.21

10

- 15Table 10.5

. 8 Cumulative Equipment Cost Increase of Consumer Benefits for CFLKs at

7% Discount Rate With a n Assumed Ceiling Fan Standard

CSL Externally

Ballasted/Driven All Other

Total Impact of Meeting

CSL 0 Impact of Going

From CSL 0 to

Listed CSL Total

Million 2013$ Billion 2013$

1 0.69 0.26 0.00 0.26

2 0.26 0.05 0.31

3 0.26 0.60 0.86

4 0.26 0.60 0.86

5 0.26 0.60 0.86

Table 10.5

. 9 Cumulative Equipment Cost Increase for CFLKs at 3% Discount Rate With

a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF Standard

Million 2013$ Billion 2013$

1 1.05 1.10 0.39 0.41

2 0.47 0.49

3 1.21 1.26

4 1.21 1.26

5 1.21 1.26

Table 10.5

. 10 Cumulative Equipment Cost Increase for CFLKs at 7% Discount Rate With

a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF Standard

Million 2013$ Billion 2013$

1 0.69 0.72 0.26 0.27

2 0.31 0.32

3 0.86 0.89

4 0.86 0.89

5 0.86 0.89

10

- 16Table 10.5

. 11 and Table 10.5

. 12 give the cumulative operating cost savings for CFLKs at

3

- percent and 7

- percent d iscount rates for the scenario with a ceiling fan standard . For comparison, DOE presents results for cumulative operating cost savings in the no ceiling fan

standard scenario in Table 10.5

. 13 and Table 10.5

. 14 for 3

- percent and 7

- percent discount rates, respectively.

Table 10.5

. 11 Cumulative Operating Cost Savings of Consumer Benefits for CFLKs at 3%

Discount Rate With a n Assumed Ceiling Fan Standa rd

CSL Externally

Ballasted/Driven All Other

Total Impact of Meeting

CSL 0 Impact of Going

From CSL 0 to

Listed CSL Total

Million 2013$ Billion 2013$

1 0.71 3.78 0.00 3.78

2 3.78 0.35 4.13

3 3.75 1.34 5.10

4 3.75 1.34 5.10

5 3.75 1.34 5.10

Table 10.5

. 12 Cumulative Operating Cost Savings of Consumer Benefits for CFLKs at 7%

Discount Rate With a n Assumed Ceiling Fan Standard

CSL Externally

Ballasted/Driven All Other

Total Impact of Meeting

CSL 0 Impact of Going

From CSL 0 to

Listed CSL Total

Million 2013$ Billion 2013$

1 0.32 2.48 0.00 2.48

2 2.48 0.18 2.66

3 2.46 0.64 3.10

4 2.46 0.64 3.10

5 2.46 0.64 3.10

10

- 17Table 10.5

. 13 Cumulative Operating Cost Savings for CFLKs at 3% Discount Rate With

a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF Standard

Millions 2013$ Billions 2013$

1 0.71 0.74 3.78 3.94

2 4.13 4.31

3 5.10 5.29

4 5.10 5.29

5 5.10 5.29

Table 10.5

. 14 Cumulative Operating Cost Savings for CFLKs at 7% Discount Rate With

a n Assumed Ceiling Fan Standard and Without a Ceiling Fan Standard

CSL Externally

- Ballasted/Driven CFLKs All Other CFLKs

CF Standard No CF Standard CF Standard No CF Standard

Millions 2013$ Billions 2013$

1 0.32 0.34 2.48 2.59

2 2.66 2.78

3 3.10 3.23

4 3.10 3.23

5 3.10 3.23

10

- 18REFERENCES

1. United States

- Office of the Federal Register. Federal Register. Vol. 76, No. 160, pp.

51281

- 51868. August 18, 2011. UNT Digital Library. Washington D.C.

2. Energy Information Administration. Annual Energy Outlook 2014 with Projections to

2040. Report N o. DOE/EIA

- 03832014. Washington, D.C. http://www.eia.doe.gov/oiaf/aeo/

3. U.S. Department of Energy

- Office of Energy Efficiency and Renewable Energy. Energy Conservation Program for Consumer Products: Preliminary Analysis Technical Support

Document: Energy Efficiency Standards for Consumer Products and Certain Commercial and Industrial Equipment: Residential Furnace Fan. July 2012. Washington, D.C. (Last Accessed April 23, 2014.) http://www.regulations.gov/#!documentDetail;D=EERE

- 2010

- BT

- STD

- 0011

- 0037

4. U.S. Office of Management and Budget. Circular No. A

- 4, Regulatory Analysis. 2003. Washington, DC. (Last Accessed March 27, 2014.) http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a

- 4.pdf

10

- 19APPENDIX 10A. USER INSTRUCTIONS FOR SHIPMENTS AND NIA

SPREADSHEETS

TABLE OF CONTENTS

10A.1 INTRODUCTION

................................ ................................ ................................ ...... 10A

- 1

10A.2 BASIC INSTRUCTIONS

................................ ................................ ........................... 10A

- 2

10A

- iAPPENDIX 10A. USER INSTRUCTIONS FOR SHIPMENTS AND NIA

SPREADHSEETS

10A.1 INTRODUCTION

The results obtained for the shipments analysis and the national impact analysis (NIA) can be examined and reproduced using the Microsoft Excel spreadsheet available on the U.S. Department of Energy Building Technologies website at: http://www.eere.energy.gov/building s/appliance_standards/

.

T he spreadsheet s are post ed o n the DOE website a and represent the latest version that has

b een tested with Microsoft Excel 2010.

To execute the sprea dsheet requires Microsoft Excel 2003 or a later version. The N IA spreadsheet performs calculations to project the change in national energy use and net present

value (NPV) due to an energy conservation standard. The energy use and associated costs for a given standard are determined first by calculating the shipments an d then calculating the energy use and costs for all equipment shipped under that standard. The differences between the

standards and no standards case can then be compared and the overall energy savings and present

values determined.

The N IA spreadsheet or workbook consists of the following worksheets:

NIA options and C ontains user input selections under “ Options ” an d a s ummary

summary table with Cumulative Energy Savings , Operating Cost Savings,

Increased Installed Cost and NPV for the selected product class, shipments scenario, and electricity price s cenario

. The summary contains results for the candidate standard levels being considered

for CFLKs.

NIAres Contains calculation s of energy use , operating cost , and installed

cost in the reside ntial sector for the no

- standards case, the CSL0

case and the standards case

.

NIAcom Contains calculations of energy use, operating cost, and installed

cost in the commercial sector for the no

- standards case, the CSL0

case and the standards case.

NIA Sav ings Calculated NIA savings for a potential standard

.

Parameters and Contains parameters and assumptions used in the shipments and Assumptions NIA models

.

a http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/76

. (La st a ccessed April 1,

2014

. ) This material is available in Docket # EERE

- 201 2

- BT

- STD

- 004 5 at regulations.gov.

10A

- 1AEO New Construction Contains projections for new co nstructions starts from AEO 2014

.

Full

- Fuel Cycle Contains the annual site to power plant and upstream conversation Multipliers factors

.

Shipments Contains projected shipments of CFLKs in the no standards case

and the standards case for selected scenario

.

Price Contains price trends for CFLKs for selected scenario

.

Historical Shipmen ts Contains estimated data for historical shipments of CFLKs

.

Electricity Prices Contains projected average energy prices for the three electricity price scenarios.

Lifetime Contains the probability of survival of a CFLK at a given age and the average lifetime of a unit.

10A.2 BASIC INSTRUCTIONS

Basic instructions for operating the NIA spreadsheet s are as follows:

1. Once the N IA spreadsheet s have been downloaded from the World Wide Web, open the file using Excel. A t the bottom, click on the tab for the worksheet ‘Input and Summary’

.

2. Use Excel’s View/Zoom commands at the top menu bar to change the size of the display to make it fit your monitor.

3. The user can change the model parame ters listed in the grey box labelled “User Inputs ”. The parameters are:

a. Discount Year: To change discount rate year, click on highligh ted cell and enter desired year.

b. Rebound Rate: To change the rebound rate , click on highlighted cell and enter

desired r ebound rate.

c. Product Class: To change product class, use the drop

- down arrow and select the desired product class to analyze.

d. Shipments Scenario: To change value, use the drop

- down arrow and select the desired shipments scenario.

e. Electricity Price Scenario : To the change value, use the drop

- down arrow and

select the desired scenario (Reference, Low, or High).

4. The results are automatically updated and are reporte d in the summary table to the right of the Options box. Results are shown for the selected input s for each CSL

.

10A

- 2APPENDIX 10B. FULL

- FUEL

- CYCLE MULTIPLIERS

TABLE OF CONTENTS

10B.1 INTRODUCTION

................................ ................................ ................................ ............... 1

10B.2 METHODOLOGY

................................ ................................ ................................ .............. 1

10B.3 ENER GY MULTIPLIERS FOR T HE FULL FUEL CYCLE

................................ ............. 3

REFERENCES

................................ ................................ ................................ ................................ 4

LIST OF TABLES

Table 10B.2.1 Dependence of FFC Parameters on AEO Inputs

................................ ................ 3

Table 10B.3.1 Energy Multipliers for the Full Fuel Cycle (Based on AEO2014 )

..................... 3

10B

- iAPPENDIX 10B. FULL

- FUEL

- CYCLE MULTIPLIERS

10B.1 INTRODUCTION

This appendix summarizes the methods the U.S. Department of Energy (D OE ) used to

calculate the full

- fuel

- cycle (FFC) energy savings estimated from potential standards for ceiling fan light kits . The FFC measure includes point

- of

- use (site) e nergy ; the energy losses associated with generation, transmission, and distribution of electricity ; and the en ergy consumed in extracting, processing, and transporting or distributing primary fuels. DOE’s method of analysis previously encompassed only site energy and the energy los t through generation, transmission, and distribution of electricity. In 2011 DOE ann ounced its intention, based on recommendations from the National Academy of Sciences

, to use FFC measures of energy use and emissions when analyzing proposed energy conservation standards. 1 This appendix summarizes the methods

DOE used to incorporate impacts o f the ful l fuel cycle into the analysis.

This analysis uses several terms to describe aspects of energy use. The physical sources of energy are primary fuels such as coal, natural gas, or liquid fuel. Primary energy is equal to the heat content ( British thermal units [ Btu ] ) of the primary fuel us ed to produce an end

- use service. Site energy use is defined as the energy consumed at the point of use in a house or establishment . Whe n natural gas or petroleum fuels are consumed at the site (for example in a n

on

- site furnace), site energy is identical to primary energy, with both equal to the heat content of the primary fuel consumed.

For electricity generated by a n off

- site power plant , site energy is measured in kilowatt

hours ( kWh ) . In such a case the primary energy is equal to the quads (quadrill ion Btu) of primary energy required to generate and deliver electricity to the site. For the FFC analysis, upstream energy use is defined as the energy consumed in extracting, processing, and transporting or distributing primary fuels. FFC energy use is the sum of primary plus upstream energy use

.

Both primary fuels and electr icity are used in upstream activities. The treatment of electricity in full

- fuel

- cycle analysis must distinguish between electricity generated by fossil fuels and uranium and electricity generated from renewable sources (wind, solar

, and hydro). For

the fo rmer, the upstream fuel cycle relates to the amount of fuel consumed at the power plant.

T here is no upstream component for the latter, because no fuel per se is used

.

10B.2 METHODOLOGY

The mathematical approach to determining FCC is discussed in Coughlin (201 2). 2 D etai ls

on analyzing the fuel production chain are presented in Coughlin (2013). 3 The methods used to calculate FFC energy use are summarized here. When all energy quantities are normalized to the same units, FFC energy use can be represented as the product of the primary energy use and an FFC multiplier

. Mathematically t he FFC multiplier is a function of a set of parameters that represent the e nergy intensity and material losses at each stage of energy production. Th o se parameters depend only on physical data, so the calculations require no assumptions about prices

10 B

- 1or other economic factor s

. Although the parameter values often differ by geograph ic region, this analysis utilizes national averages.

The fuel cycle parameters are defined as follows.

• a x is the quantity of fuel x burned per unit of electricity produced , on average, for grid electricity. The calculation of a

x includes a factor to account for losses incurred through the transmission and distribution system s

.

• b y is the amount of grid electricity used in producing fuel y , in MWh per physical unit

of fuel y

.

• c xy is the amount of fuel x consumed in producing one u nit of fuel y

.

• q x is the heat content of fuel x (MBtu/physical unit)

.

• z x (s) is the emissions intensity for fuel x (mass of pollutant s per physical unit of x produced )

.

All t he parameters are calculated as function s of an annual time step; hence, when evaluating the effects of potential new standards, a time series of annual values is used to estimate the FFC energy and emissions savings in each year of the analysis period and cumulatively . Fossil fuel quantities are converted to energy units using the heat content factor q

x . To convert electricity in kWh to primary energy units, on

- site electricity consumption is multiplied by the site

- to

- power

- plant energy use factor

, described in chapter 10. The site

- to

power

- plant energy use factor is defined as the ratio of the total primary energy consumption by the electric power sector (in quad s ) divided by the total electricity generated each year.

The FFC multiplier is denoted μ (mu). A separate multiplier is calculated for each fuel

used on site . A lso cal culated is a multiplier for electricity that reflects the fuel mix used in its generation. The multipliers are dimensionless numbers applied to primary energy savings to obtain the FFC energy savings. The upstream component of the energy savings is proport ional to (μ

- 1). The fuel type is denoted by a subscript on the multiplier μ.

When DOE estimates energy savings attributable to appliance standards, the method for performing the full

- fuel

- cycle analysis utilizes data and projections published in the Annua l Energy Outlook (AEO) ; in the case of ceiling fan light kits

, the AEO201 4

. 4 Table 10B.2

. 1

summa rizes the AEO 201 4 data used as inputs to the calculation of various parameters

. The

column titled "AEO Table " gives the name of the table that provided the reference data.

10 B

- 2Table 10B.2

. 1 Dependence of FFC Parameters on AEO Inputs

Parameter (s) Fuel (s) AEO Table Variables

q x All Conversion factors MMBtu per physical unit

a x All Electricity supply, disposition, prices, and emissions Generation by fuel type

Energy consumption by sector

and source Electric energy consumption by the power sector

b

c , c nc , c pc Coal Coal production by region and

type Coal p roduction by type and

sulfur content

b p , c np , c pp Petroleum Refining industry energy consumption Refining

- only energy use

Liquid fuels supply and disposition Crude supply by source

International liquids supply and disposition Crude oil imports

Oil and gas supply Domestic c rude oil production

c nn Natural gas Oil and gas supply U

. S

. dry gas production

Natural gas supply, disposition, and prices Pipeline, lease, and plant fuel

z x All Electricity supply, disposition, prices, and emissions Power sector emissions

The AEO 201 4 does not provide all the information needed to estimate total energy use in the fuel production chain. Coughlin ( 2013 ) describes the additional data sources needed to complete the analysis. The time dependence in the FFC multipliers for ceiling fan light kits

, however, arises exclusively from variables taken from the AEO201 4

.

10B.3 ENERGY MULTIPLIERS FOR THE FULL FUEL CYCLE

FFC energy multipliers for selected years are presented in Table 10B.3

. 1

. The 2040 value

was held constant f or the analysis period beyond 2040

, which is the last year in the AEO 201 4 projection . The multiplier for electricity reflects the shares of various primary fuels in total electricity generation throughout the forecast period.

Table 10B.3

. 1 Energy Multipliers for the Full Fuel Cycle (Based on AEO201 4 )

2019 2020 2025 2030 2035 2040

Electricity 1.04 3 1.04 4 1.04 5 1.04 6 1.04 7 1.04 7

Natural gas 1.10 8 1.10 9 1.1 11 1. 113 1. 114 1.1 14

Petroleum fuels 1.1 76 1.1 76 1.1 76 1.1 74 1.1 72 1.1 70

10 B

- 3REFERENCES

1. United States

- Office of the Federal Register. Federal Register. Vol. 76, No. 160, pp.

51281

- 51868. August 18, 2011. UNT Digital Library. Washington D.C.

2. Coughlin, K. A Mathematical Analysis of Full Fuel Cycle Energy Use. Energy. 2012. 37(1): pp. 698

- 708.

3. Coughlin, K. Projections of Full

- Fuel

- Cycle Energy and Emissions Metrics. 2013. Lawrence Berkeley National Laboratory. Report No. LBNL

- 6025E. (Last Accessed March 31, 2014.) http://ees.lbl.gov/sites/all/files/lbnl6025e_ffc.pdf

4. U.S. Department of Energy

- Energy Information Administration. Annual Energy Outlook 2014 with Projections to 2040. Report No. DOE/EIA

- 03832014. Washington, D.C. http://www.eia.gov/forecasts /aeo/pdf/0383(2014).pdf

10 B

- 4CHAPTER 11. CONSUMER SUBGROUP ANALYSIS

TABLE OF CONTENTS

11.1 METHODOLOGY ........................................................................................................ 11-1

11-iCHAPTER 11. CONSUMER SUBGROUP ANALYSIS

11.1 METHODOLOGY

The consumer subgroup analysis evaluates impacts on any identifiable groups or consumers who may be disproportionately affected by a national energy conservation standard. DOE will conduct this analysis as one of the analyses for the notice of proposed rulemak ing (NOPR). DOE will accomplish this, in part, by analyzing the life

- cycle costs (LCCs) and payback periods (PBPs) for those customers that fall into any identifiable groups. DOE plans to evaluate variations in regional energy prices, variations in energy use, and variations in installation costs that might affect the net present value of a standard to customer subpopulations. To the extent possible, DOE will obtain estimates of each input parameter’s variability and will consider this variability in its ca lculation of consu mer impacts.

DOE will determine the impact on c onsu mer subgroups using the LCC Spreadsheet Model, which allows for different data inputs. The standard LCC analysis (described in chapter 8) focuses on the customers that use ceiling fan light kits. DOE can use the LCC Spreadsheet Model to analyze the LCC for any subgroup by sampling only that subgroup. (Chapter 8 explains in detail the inputs to the model used in determining LCC and PBPs.) In the case of ceiling fan light kit s, one subgroup DOE plans to consid er is low-income households.

DOE will be especially sensitive to increases in the purchase price of the product due to amended standards, to avoid negative impacts on identifiable population groups that may not be able to afford significant increases in product price.

11-1CHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANALYSIS

TABLE OF CONTENTS

12.1 INTRODUCTION

................................ ................................ ................................ ......... 12

- 1

12.2 METHODOLOGY

................................ ................................ ................................ ........ 12

- 1

12.2.1 Phase I: Industry Profile

................................ ................................ ..................... 12

- 2

12.2.2 Phase II: Industry Cash Flow Analysis and Interview Guide

............................ 12

- 2

12.2.2.1 Industry Cash Flow Analysis

................................ ................................ ... 12

- 2

12.2.2.2 Interview Guide

................................ ................................ ........................ 12

- 2

12.2.3 Phase III: Subgroup An alysis

................................ ................................ ............. 12

- 3

12.2.3.1 Manufacturer Interviews

................................ ................................ .......... 12

- 3

12.2.3.2 Revised Industry Cash

- Flow Analysis

................................ ..................... 12

- 3

12.2.3.3 Manufacturer Subgroup Analysis

................................ ............................. 12

- 3

12.2.3.4 Comp etitive Impact Assessment

................................ .............................. 12

- 4

12.2.3.5 Manufacturing Capacity Impact

................................ ............................... 12

- 4

12.2.3.6 Employment Impact

................................ ................................ ................. 12

- 4

12.2.3.7 Cumulative Regulatory Burden

................................ ................................ 12

- 4

12.3 INDUSTRY OVERVIEW

................................ ................................ ............................. 12

- 4

12.3.1 Industry Cost Structure

................................ ................................ ...................... 12

- 4

12.3.2 Inventory Levels

................................ ................................ ................................ 12

- 6

12.4 INTERVIEW TOPICS AND PRELIMINARY FINDINGS

................................ ......... 12

- 6

12.4.1 Market Shares and Industry Consolidation

................................ ........................ 12

- 6

12.4.2 Production and Product Mix

................................ ................................ .............. 12

- 7

12.4.2.1 Impact on Product Mix

................................ ................................ ............. 12

- 7

12.4.2.2 Product Utility

................................ ................................ .......................... 12

- 8

12.4.3 Manufacturer Markups

................................ ................................ ....................... 12

- 8

12.4.4 Conversion Costs

................................ ................................ ............................... 12

- 8

12.4.5 Cumulative Regulatory Burden

................................ ................................ ......... 12

- 8

12.5 OVERALL KEY ISSUES

................................ ................................ ............................. 12

- 9

12.5.1 Duplicative Regulation

................................ ................................ ...................... 12

- 9

12.5.2 Shift to Air Conditioning

................................ ................................ ................... 12

- 9

LIST OF TABLES

Table 12.3.1 Ceiling Fan Light Kit and Part Industry Employment and Earnings

........... 12

- 5

Table 12.3.2 Ceiling Fan Light Kit and Part Industry Material and Payroll Costs

........... 12

- 5

Table 12.3.3 Ceiling Fan Light Kit and Part Industry End

- of

- Year Inventory

................. 12

- 6

12

- iCHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANALYSIS

12.1 INTRODUCTION

The purpose of the manufacturer impact analysis (MIA) is to identify and quantify the likely impacts of amended energy conservation standards on manufacturers of ceiling fan light kits (CFLKs)

. The Process Rule a provides guidance for conducting this analysis with input from manufacturers and other interested parties. The U.S. Department of Energy (DOE) will appl y this methodology to its evaluation of amended standards for CFLK s

. DOE will consider financial impacts and a wide range of quantitative and qualitative industry impacts that might result from

amended standards

. For example, a particular standard level could quantitatively change the costs associated with manufacturing CLFKs while qualitatively requir ing changes to manufacturing practices

. DOE will identify and analyze these impacts through interviews with

manuf acturers and other interested parties during the n otice of p roposed r ul emaking ( NOPR ) stage of the analysis.

DOE announced changes to the MIA format through a report issued to Congress in January 2006 (as required by section 141 of the Energy Policy Act of 2005 (EPACT 2005) )

, entitled “Energy Conservation Standards Activities.” b Previously, DOE did not report any MIA

results before the NOPR phase ; however, under this new format, DOE collects, evaluates, and reports preliminary information and data in the preliminary a nalysis

. Such information includes market data, key issues, product mixes, conversion costs, foreign competition, market shares, industry consolidation, and cumulative regulatory burden information. DOE solicits this information during the pre liminary manufacturer interviews and reports the results in this chapter.

12.2 METHODOLOGY

DOE conduct s the MIA in three phases. In p hase I , DOE creates an industry profile to characterize the industry and conduct s preliminary MIA interviews to identify importa nt issues that require consideration. Section 12.3 of this chapter present s initial findings of the p hase I analysis. In p hase II , DOE prepares an industry cash

- flow model and an interview guide that is

used in subsequent discussions with manufacturers

. In p hase III, DOE interviews manufacturers

and assesses the impacts of amended energy conservation standards both quantitatively and qualitatively. DOE assesses in dustry and subgroup cash

- flow impacts and the industry net present value (I NPV ) using the Government Regulatory Impact Model (GRIM). DOE then

assesses impacts on competition, manufacturing capacity, employment, and regulatory burden

a On July 15, 1996, the Department of Energy published a Process Improvement Rule establishing procedures, interpretations and policies to guide the Department in the consideration of new or revised appl iance efficiency standards (Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products). 61 FR 36974.

b This report is a vailable on the DOE website at http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/congressional_report_013106.pdf

12

- 1based on manufacturer i nterviews and discussions. The Federal Register NOPR and technical support document ( TSD ) will both present results of the p hase II and phase III analys e s.

12.2.1 Phase I: Industry Profile

In p hase I of the MIA , DOE collects pertinent qualitative and quantitative financial and

market information. This includes research and development (R&D) expenses; s elling, g eneral

, and a dministrative (SG&A) e xpenses ; capital expenditures; property, plant, and equipment

expenses; tax rate information ; and depreciation rate infor mation for CFLK manufacturers as well as wages, emp loyment, and manufacturer cost information for the CFLK industry

. Sources of information include reports published by industry groups, trade journals, the U.S. Census Bureau, and Securiti es Exchange Commis sion (SEC) 10

- K filings. In addition, DOE relies on information from its market and technology assessment, engineering analysis, life

- cycle cost analysis, and consumer price analysis to characterize the CFLK manufacturing industr y

.

12.2.2 Phase II: Industry Cash Flow Analysis and Interview Guide

In p hase II, DOE perform s a preliminary industry cash

- flow analysis and prepare s a questionnaire, or interview guide, for interviewing manufacturers.

12.2.2.1 Industry Cash Flow Analysis

DOE uses the GRIM to analyze the financial i mpacts of amended energy conservation

standards. The implementation of these standards may require additional investment, raise production costs, and/or affect rev enue through higher prices and l ower shipments. The GRIM

uses several factors to determine a series of annual cash flows for the year s leading up to the

effective date of amended energy conservation standards and for several years after the implementation of the standards

. These factors include annual expected revenues, costs of sales,

SG&A costs, taxes, and capital expenditures

. Inputs to the GRIM include financial information, manufacturing costs, shipment forecasts, and price forecasts developed in other analyses.

Financial information is developed based on publicly available data and con fidentially submitted

manufacturer information. DOE compares the GRIM results for the standards case at each trial

standard level (TSL) against the results for the base case in which no standards are in place. The financial impact of amended standards is t he difference between the two sets of discounted

annual cash flows.

12.2.2.2 Interview Guide

DOE conduct s interviews with manufacturers to gathe r information on the e ffects

amended energy conservation standards could have on revenues and finances, direct employment , capital assets, and industry competitiveness. These interviews take place during

p hase III of the MIA. Before the interviews, DOE distribute s an interview guide that will help identify the impacts of amended standards on individual manufacturers or subgr oup s of

manufacturers within the CFLK industr y

. The interview guide covers production costs; shipment projections ; market share; product mix; conversion costs; markups and profitability ; assessment of the impact on competit ion ; manufacturing capacity ; and other relevant topics

.

12

- 212.2.3 Phase III: Subgroup Analysis

Phase III activities occur after publication of the preliminary a nalysis . These activities include manufacturer interviews; revisi on of the industry cash

- flow analysis; a manufacturer subgroup analysi s; an assessment of the impacts on industry competition , manufacturing capacity, direct employment

, and the cumulative regulatory burden ; and other qualitative impacts

.

12.2.3.1 Manufacturer Interviews

DOE supplement s the information g athered in p hase I and the cash

- flow analysis performed in p hase II with information gathered through interviews with manufacturers during

p hase III. The interview process plays a key role in the MIA because it provides an opportunity for interested parties to express their views pr ivately on important issues.

DOE conduct s detailed interviews with manufacturers to gain insight into the potential impacts of amended energy conservation standards on sales, direct employment, capital assets, and industry competitiveness. Interviews are s cheduled well in advance to provide every opportunity for key individuals to be available for comment. Although a written response to the questionnaire is acceptable, DOE prefers interactive interview s , which help clarify responses and provide the opportun ity to identify additional issues.

A non

- disclosure agreement allow s DOE to consider confidential or sensitive information

in the decision

- making process. C onfidential information , however, is not made available in the public record

. At most, sensitive or confidential information may be aggregated and presented in industry

- wide representation s

.

12.2.3.2 Revised Industry Cash

- Flow Analysis

During the interviews, DOE request s information about profitability impacts, necessary plant changes, and o ther manufacturing impacts. Following the interviews, DOE revise s the preliminary GRIM prepared in p hase II based on the feedback it receives during interviews

.

12.2.3.3 Manufacturer Subgroup Analysis

The use of average cost assumptions to develop an industry cash

- flow estimate does not adequate ly assess differential impacts of amended energy conservation standards among manufacturer subgroup s. Smaller manufacturers, niche players, and manufacturers exhibiting a cost structure that differs largely from the industry average could be more negatively affected. Ideally, DOE would consider the impact on every firm individually; however, it typically uses the results of the industry characterization to group manufacturers with similar characteristics. During the interviews , DOE discuss es the potential subgroup s that have been identified for the analysis. DOE ask s manufacturers and other interested parties to suggest what subgroup s or characteristics are most appropriate for the analysis.

One common subgroup typically identi fied is small business manufacturers. Should DOE determine this rulemaking impacts any small business manufacturers, DOE will conduct a regulatory flexibility analysis pursuant to the Regulatory Flexibility Act. (5 U.S.C. 601 et seq.)

12

- 312.2.3.4 Competitive Impact As sessment

Section 342 (6)(B)(i)(V) of the Energy Policy Act of 1992 (EPACT 1992 ) directs DOE to consider any lessening of competition likely to result from the imposition of standards.

EP A C T 1992 further directs the U.S. Attorney General to determine any likely impacts resulting

from a decrease in competition. DOE gather s firm

- specific financial information and attempts to determine the impact of amended standards on industry competition. T he results of this effort are reported in the competitive impact as sessment

. The competitive impact assessment is based on

manufactur er cost data and information collected from the manufacturer interviews. The interviews focus on assessing asymmetrical cost increases to some manufacturers, the potential

increase in busine ss risks from an increased proportion of fixed costs, and potential barriers to market entry ( e.g.

, proprietary technologies). The competitive impact analysis also focus es on assessing any differential im pacts to smaller manufacturers.

12.2.3.5 Manufacturing Capaci ty Impact

One of the significant outcomes of amended energy conservation standards can be the obsolescence of existing manufacturing assets, including tooling and other investment s

. The manufacturer interview guide has a series of questions to help identify impacts on manufacturing capacity, specifically capacity utilization and plant location decisions in North America with and

without amended standard s ; the ability of manufacturers to upgrade or remodel existing facil ities to accommodate the new requirements; the nature and value of any stranded assets; and estimates for any one

- time restructuring or other charges, where applicable.

12.2.3.6 Employment Impact

The impact of amended energy conservation standards on employment is an important consideration in the rulemaking process. DOE relies on m anufacturer interviews to assess how domestic employment patterns might be impacted by amended sta ndards. The interview guide contains a series of questions that are designed to explore c urrent employment trends in the

CFLK industr y and to solicit manufacturers’ views on changes in employment patterns that may

result from increased standard s . These questions focus on current employment levels at production facilities, expected future emplo yment levels with and without amended standard s , differences in workforce skills, and employee retraining.

12.2.3.7 Cumulative Regulatory Burden

DOE seeks to mitigate the overlapping effects on manufacturers of energy conservation standards and other regulatory act ions affecting the same products or companies. DOE analyze s and consider s the impact of multiple, product

- specific regulatory actions on manufacturers

.

12.3 INDUSTRY OVERV IEW

The following section summarize s publicly available industry data

.

12.3.1 Industry Cost Structure

DOE developed the CFLK industry cost structure from the U.S. Census Bureau, Annual Survey of Manufacturers : Statistics for Industry Groups and Industries with data from 200 3 to

12

- 420 11

. CFLK manufacturing is classified under the North American Indus try Classification System (NAICS) code 3352 1 0 ( Small Electrical Appliance Manufacturing ).

DOE is unaware of any publicly available industry

- wide cost data specific to only

manufacturers of CFLK s . DOE presents the data below as a broader industry proxy for the

CFLK industr y

.

Table 12.3

. 1 presents the CFLK manufacturer employment levels and payr oll from 200 3

to 20 11 . The statistics show a 55 percent decrease in the number of production workers and all employees from 200 3 to 20 11 with a corresponding 3 8 percent de crease in the overall industry payroll from 2003 to 2011

.

Table 12.3

. 1 Ceiling Fan Light Kit and Part Industry Employment and Earnings

Year Production Workers All Employees Payroll for All Employees thousand current year dollars

2003 12,682 16,752 556,821

2004 11,475 14,913 509,143

2005 9,680 13

, 297 641,753

2006 9,870 12

, 715 609,740

2007 10,816 13,502 526,607

2008 8,833 11,290 457,438

2009 8,205 10

, 676 427,348

2010 6,383 8

, 536 365,276

2011 5,713 7

, 619 347,556

U.S. Census Bureau. Annual Survey of Manufacturers: 2005 and Earlier Years ; Annual Survey of Manufacturers: 2006 and 2005 ; Annual Survey of Manufacturers: 2008 and 2007 ; Annual Survey of Manufacturers: 2009 and 2008 ; and Annu al Survey of Manufacturers: 2011 and 2010

Table 12.3

. 2 presents the costs of CFLK and part materials and industry payroll as a percentage of shipment value from 200 3 to 20 11

. While t he cost of materials has increased by

three percent as a percent age of shipment value from 200 3 to 20 11

, t he cost of payroll for production workers and all employees has decreased by 12 and 11 percent

, respectively

, as a percentage of shipment value from 2 003 to 2011

.

Table 12.3

. 2 Ceiling Fan Light Kit and Part Industry Material and Payroll Costs

Year Cost of Materials percent of shipment value Cost of Payroll for

Production Workers percent of shipment value Cost of Payroll for All Employees percent of shipment value

2003 51.6 7.7 12.9

2004 51.9 7.9 13.0

2005 52.8 7.3 16.9

2006 54.1 7.9 16.6

2007 54.8 8.0 13.0

2008 53.9 7.0 11.7

2009 50.2 6.3 11.0

2010 49.1 6.1 11.0

2011 53.2 6.8 11.5

U.S. Census Bureau. Annual Survey of Manufacturers: 2005 and Earlier Years ; Annual Survey of Manufacturers: 2006 and 2005 ; Annual Survey of Manufacturers: 2008 and 2007 ; Annual Survey of Manufacturers: 2009 and 2008 ; and Annual Survey of Manufacturers: 2 011 and 2010

12

- 512.3.2 Inventory Levels

Table 12.3

. 3 shows the year

- end inventory for the CFLK and part industry obtained from the U.S. Census Bureau, Annual Survey of Manufacturer : Statistics fo r Industry Groups and

Industries with data from 2005 to 201 1

. The industry’s end

- of

- year inventory from 200 5 to 20 11 significantly increased by 127 percent when expressed in dollars

, and grew by 18 8 percent when expressed as a percentage of shipment value

.

Table 12.3

. 3 Ceiling Fan Light Kit and Part Industry End

- of

- Year Inventory

Year End

- of

- Year Inventory thousand current year dollars End

- of

- Year Inventory percent of shipment value

2005 186,863 4.9

2006 192,103 5.2

2007 520,998 12.8

2008 516,782 13.2

2009 437,135 11.3

2010 427,877 12.9

2011 424,356 14.1

U.S. Census Bureau. Annual Survey of Manufacturers: 2005 and Earlier Years ; Annual Survey of Manufacturers: 2006 and 2005 ; Annual Survey of Manufacturers: 2008 and 2007 ; Annual Survey of Manufacturers: 2009 and 2008 ; and Annual Survey of Manufacturers: 2011 and 2010

12.4 INTERVIEW TOPICS AND PRELIMINARY FINDINGS

The following section summarize s information gathered during interviews held in the

third and fourth quarters of 2013 for the preliminary MIA.

12.4.1 Market Shares and Industry Consolidation

Amended energy conservation standards can alter the competitive dynamics of the marketplace, prompting companies to enter the market , exit the market, or merge with other companies. The preliminary MIA interview questions ask ed manufacturers to share their perspectives on industry consolidation both in the absence of amended standards and assuming

amended standards at various efficienc y levels. The interview questions focus ed on gathering

information that assess ed:

• disproportionate cost increases to some manufacturers;

• increased proportion of fixed costs potentially increasing business risks; and

• potential barriers to market entry ( e.g.

, proprietary technologies).

The need to assess anti

- competitive effects of proposed amended energy conservation standards comes from the need to protect consumer interests. During the interviews, DOE

solicited informat ion to determine whether amended sta ndards could result in disproportionate economic or performance penalties for particular consumer or user subgroups. Manufact urers were also asked if amended sta ndards could result in products that will be more or less desirable

to consu mers due to changes in product functionality, utility, or other features.

12

- 6Market Shares : DOE inquired about the current market share of manufacturers in the

CFLK industr y and how those market shares might change due to the imposition of amended energy conservation standards

. The CFLK industry consists of a few large manufacturers and a

handful of smaller manufacturers. As described in chapter 3 of the preliminary TSD, three large manufacturers hold approximately half of the domestic market share of CFLKs. The majority of

cei ling fan (CF) manufacturers also produce CFLKs, resulting in comparable market shares between manufacturers in both industries. However, not all CFLK manufacturers, specifically smaller manufacturers, manufacture CF s.

While m ost manufacturers expect their market share to remain constant

, some manufacturers raised concerns that the total CFLK market could potentially shrink a s a result of

amended standards since more efficacious lamps used in light kits could increase the price of

CFs and CFLKs . Incre ased retail prices could result in consumers purchasing alternate lighting and cooling systems , thereby reducing the number of CFs and CFLKs sold

. Additionally, amended standards requiring more efficacious lamps could eliminate certain lower

- efficacy lamps from the CFLK market. While some manufacturers may lose CFLK sales while designing and manufacturing compliant products, other manufacturer s that already produce efficacious

CFLK s expect their market share would grow

.

Industry Consolidation: Mo st manufact urers that DOE interviewed do not think there would be significant consolidation in the CFLK i ndustr y in the absence of standards. However,

some manufacturers pointed out that amended standards c ould lead to some industry

consolidation

. Several manufacturers stated that smaller CFLK manufacturers could be disproportionately affected by an amended standard that requires significant conversion costs.

Amended CFLK standards that may require costly, more efficacious lamps could p otential ly

increase C FLK retail prices, eliminate existing product lines, and compound potential market impacts due to upcoming CF standards . These potential effects of amended standard s could lead

some manufac turers to exit the CFLK market.

12.4.2 Production and Product Mix

DOE requ ested manufacturers’ feedback on what they perceive d to be the possible impact of amended energy conservation standards on cash flow and profitability. For instance, the capital and product conversion outlays needed to upgrade or redesign products or any manufacturing equipment that would become obsolete before the end of its useful life may create significant conversion costs, resulting in reduced cash flow and stranded investments. Higher energy conservation standards could also result in higher p er

- unit costs that could cause

consumers t o shift to alternate lighting and cooling systems

.

12.4.2.1 Impact on Product Mix

Manufacturers believe that amended energy conservation standards c ould affect the product mix of CFLK s depending on the effic acy level s selected for the standard s

. Manufacturers stated that standard s requiring the use of more efficacious lamps in CFLK s c ould

have a considerable impact on product mix

. A standard requiring more efficacious lamps in

CFLK s could possibly eliminate a significa nt number of existing products from the CFLK

market as well as potentially increase the retail price of CFs with light kits.

12

- 712.4.2.2 Product Utility

Most manufacturers agreed that amended energy conservation standards would not decrease product utility. Some m anufacturers stated that t he most efficacious lamps have similar,

if not better

, lighting characteristics and product utility than the baseline lamps used in CFLKs. The main concern among most manufacturers remains the potential to increase the cost of

CFL Ks if standards require the use of more efficacious lamps in CFLKs

.

12.4.3 Manufacturer Markups

The manufacturer production costs (MPCs) for CFLKs are the manufacturers’ factory costs for those units. These costs include materials, direct labor, depreciation, and overhead, which are collectively referred to as the cost of goods sold. The manufacturer selling price (MSP) is the price received by CFLK manufacturers from their customers, typically a distributor, regardless of the downstream distribution channel throu gh which the CFLKs are ultimately sold. The MSP is not necessarily the cost the consumer pays for CFLKs because there are typically multiple sales along the distribution chain and various markups applied to each sale. The MSP equals the MPC multiplied by t he manufacturer markup. The manufacturer markup covers all the

CFLK manufacturer’s non

- production costs ( i.e., SG&A, R&D, and interest) as well as profit. Total industry revenue for CFLK manufacturers equals the MSPs at each efficacy level for each product class multiplied by the number of shipments at that efficacy level.

Based on manufacturer interviews and an analysis of any publically traded CFLK manufacturers, DOE estimated the typical CFLK manufacturer markup to be 1.37. This represents the markup CFL K manufacturers apply to their MPCs to arrive at their MSPs. A manufacturer markup of 1.37 corresponds to a gross margin of 27 percent. DOE request s comment on the 1.37 manufacturer markup used in the preliminary analysis.

12.4.4 Conversion Costs

In some instance s, manufacturers may be able to meet proposed standard levels by modifying existing products or eliminating certain product lines

. More stringent energy conservation standards may require manufacturers to completely redesign their product lines

. In

either case , amended standard s c ould cause manufacturers to incur one

- time capital and product

conversion costs

. C apital conversion costs are one

- time investments in property, plant and equipment. Product conversion costs include one

- time investments in research, product development, testing

, and marketing. All manufacturers stated that the conversion costs

associated with amended standards would depend on the efficiency level established by those

standards.

12.4.5 Cumulative Reg ulatory Burden

While any one regulation may not impose a significant burden on manufacturers, the combined effects of several impending regulations may have serious consequences for individual manufacturers, groups of manufacturers, or entire industries. A ssessing the impact of a single regulation may overlook this cumulative regulatory burden.

12

- 8Expenditures associated with meeting other regulations are an important aspect of DOE’s consideration of the cumulative regulatory burden the industry faces. The ma nufacturer interviews help ed DOE identify the level and timing of investments manufacturers are expecting to incur because of these regulations. Manufacturers we re also asked under what circumstances they might be able to coordinate expenditures related to regulations and energy conservation

standards.

S everal international, F ederal and state regulatory programs may affect the markets for

CFLK s , such as the Energy Independence and Security Act of 2007 ( EISA 2007 )

, the California Energy Commission Regulation, and the Dodd

- Frank Act . See c hapter 3 of this TSD for a list and description of the regulatory requirements that DOE identified . The majority of the CFLK

manufacturers also manufacture CF s , for which amended standards are concurrently being

eva luated

.

12.5 OVERALL KEY ISSUES

One important aspect of the preliminary MIA is the opportunity it creates for DOE to identify key manufacturer issues early in the evaluation of new and amended energy conservation standards. During preliminary interviews

, manufa cturers identified two major areas

of concern: (1) duplicative regulation and (2) shift to air conditioning.

12.5.1 Duplicative Regulation

Some manufacturers commented that a separate regulation specifically for CFLK s was unnecessary, since most lamps placed in CFLK s would be covered by other lighting energy conservation standards, such as the ongoing general service lamps rulemaking. These manufacturers claim that there would not be significant additional energy savings from separate

CFLK standards.

12.5.2 Shift to Air Conditioning

Manufacturers were also concerned about a potential technology shift in the CFLK market as a result of energy conservation standards. Manufacturers stated that CFLK standards may require that more efficacious lamps be used in CFLKs, which cou ld significantly increase the price of the overall CF. Manufacturers pointed out that this could cause consumers to choose air conditioning systems rather than CFs. These m anufacturers claim this could result in more energy use, since CF s tend to be more e fficient at cooling rooms than air conditioners.

12

- 9CHAPTER 13. EMISSIONS ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION ......................................................................................................... 13-1

13.2 APPROACH .................................................................................................................. 13-1

13.3 AIR QUALITY REGULATIONS AND EMISSIONS IM PACTS ............................... 13-1

RE FERENCES .......................................................................................................................... 13-4

13-iCHAPTER 13. EMISSIONS ANALYSIS

13.1 INTRODUCTION

The U.S. Department of Energy (DOE) conducts an emissions analysis for the notice of proposed rulemaking (NOPR) stage

. In the emissions analysis, DOE estimate s the reduction in
power sector and site combustion emissions of carbon dioxide (CO 2 ), nitrogen oxides (NO X ), sulfur dioxide (SO 2 ), m ercury (Hg)

, methane (CH 4 ) and nitrous oxide (N 2 O) from potential energy conservation standards for ceiling fan light kit s . In addition, DOE estimate s emissions impacts in production activities (extracting, processing, and transporting fuels) that provide the energy inputs to power plants and for site combustion . These are referred to as “upstream” emissions. Together, these emissions account for the full- fuel

- cycle (FFC). In accordance with DOE’s FFC Statement of Policy (76 FR 51282 (August 18, 2011)), the FFC analy sis includes impacts on emissions of methane and nitrous oxide, both of which are recognized as greenhouse

gases.

13.2 APPROACH

DOE conducts the emissions analysis using emissions factors that are primarily derived from data in the latest version of the Energy Information Administration’s (EIA’s) Annual Energy Outlook (

AEO ), supplemented by data from other sources. EIA prepares the AEO using the National Energy Modeling System (NEMS). a Site emissions of CO 2 and NO X are estimated using emissions intensity factors from a publication of the Environmental Protection Agency (EPA)

. 1 Combustion emissions of CH 4 and N 2 O are estimated using emissions intensity factors published by the EPA GHG Emissions Factors Hub. b The FFC upstream emissions are estimated based on the methodology developed by Coughlin (2013). 2 The upstream emissions include both

emissions from fuel combustion during extraction, processing and transportation of fuel, and “fugitive” emissions (direct leakage to the atmosphere) of CH 4 and CO 2

.

13.3 AIR QUALITY REGULATIONS AND EMISSIONS IMPACTS

Each annual version of NEMS incorporates the projected impacts of existing air quality regulations on emissions. The text below refers to AEO 2014, which generally represents current legislation and environmental regulations, including recent government actions, for which implementing regulations were availab le as of October 31, 2013. The NOPR will use emissions

factors derived from the most current available AEO data

.

SO 2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap and trading programs. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for affected EGUs in the 48 contiguous states and the Dis trict of Columbia

a For more information about NEMS, please refer to the U.S. Department of Energy, Energy Information

Administration documentation

. A useful summary is National Energy Modeling System: An Overview 200 9

, DOE/EIA

- 0581 ( October 200 9 ), available at: http://www.eia.gov/oiaf/aeo/overview/

. b http://www.epa.gov/climateleadership/inventory/ghg

- emissions.html

.

13-1(D.C.). SO 2 emissions from 28 eastern states and D.C. were also limited under the Clean Air Interstate Rule (CAIR), which created an allowance -based trading program that operates along with the Title IV program in those States and D.C. 70 FR 25162 (May 12, 2005). CAIR was remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), but it remained in effect. c On July 6, 2011 EPA issued a replacement for CAIR, the

Cross

- State Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012,

the D.C. Circuit issued a decision to vacate CSAPR. d The court ordered EPA to continue administering CAIR. AEO 2014 assumes that CAIR remains a binding regulation through 2040. e

The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO 2 emissions allowances resulting from the lower electricity demand caused by the adoption of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about the effects of efficiency standards on SO 2 emissions covered by the existing cap-and- trade system, but it concluded that no reductions in power sector emissions would occur for SO 2 as a result of standards.

Beginning in 2016, however, SO 2 emissions will fall as a result of the Mercury and Air Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012) In the final MATS rule, EPA established a standard for HCl as a surrogate for acid gas hazardous air pollutants (HAP),

and also established a standard for SO 2 (a non- HAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non

- HAP acid gas; thus, SO 2 emissions will be reduced as a result of the control technologies installed on

coal -fired power plants to comply with the MATS requirements for acid gas. AEO 201 4 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection systems installed by 2016. Both technologies, which are used to reduce acid gas emissions, also reduce SO 2 emissions. Under the MATS, em issions will be far below the cap that would be established by CSAPR, so it is unlikely that excess SO 2 emissions allowances resulting from the lower electricity demand would be needed or used to permit offsetting increases in SO 2 emissions by any regulate d EGU. Therefore, DOE believes that efficiency standards will reduce

SO 2 emissions in 2016 and beyond.

c See North Ca rolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA , 531 F.3d 896 (D.C. Cir. 2008).

d See EME Homer City Generation, LP v. EPA , 696 F.3d 7, 38 (D.C. Cir. 2012).

e On April 29, 2014, the U.S. Supreme Court reversed the judgment of the D.C. Circuit and remanded the case for further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's methodology for quantifying emissions that must be eliminated in certain states due to their impacts in other

down wind states was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision that provides statutory authority for CSAPR. See EPA v. EME Homer City Generation , No 12

- 1182, slip op. at 32 (U.S. April 29, 2014). Because DOE i s using emissions factors based on AEO 201 4 , the analysis assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant for the purpose of DOE's analysis of SO 2 emissions.

13-2CSAPR established a cap on NO X emissions in eastern States and the District of Columbia. Energy conservation standards are expected to have little or no physical effect on these emissions in those States covered by CSAPR because excess NO X emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NO X emissions. However, standards would be expected to r educe NO X emissions in the States not affected by CSAPR. Therefore, DOE estimates NO X emissions reductions from potential standards in the States where emissions are not capped.

The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE’s energy conservation standards would likely reduce Hg emissions. For this rulemaking, DOE plans to estimate mercury emissions reductions using emi ssions factors

based on AEO 201 4 , which incorporates the MATS.

Power plants may emit particulates from the smoke stack, which are known as direct particulate matter (PM) emissions. NEMS does not account for direct PM emissions from power plants. DOE is investigating the possibility of using other methods to estimate reduction in PM emissions due to standards. The great majority of ambient PM associated with power plants is in the form of secondary sulfates and nitrates, which are produced at a significant d istance from power plants by complex atmospheric chemical reactions that often involve the gaseous emissions of power plants, mainly SO 2 and NO X . The monetary benefits that DOE estimates for

reductions in SO 2 and NO X emissions resulting from standards are in fact primarily related to the

health benefits of reduced ambient PM.

13-3REFERENCES

1. U.S. Environmental Protection Agency. Compilation of Air Pollutant Emission Factors. AP 42. Fifth Edition Volume I: Stationary Point and Area Sources. 1998. (Last Accessed March 31, 2014.) http://www.epa.gov/ttn/chief/ap42/

2. Coughlin, K. Projections of Full- Fuel

- Cycle Energy and Emissions Metrics. 2013. Lawrence Berkeley National Laboratory. Report No. LBNL- 6025E. (Last Accessed March 31, 2014.) http://ees.lbl.gov/sites/all/files/lbnl6025e_ffc.pdf

13-4CHAPTER 14. MONETIZATION OF EMISSIONS REDUCTION BENEFITS

TABLE OF CONTENTS

14.1 INTRODUCTION ......................................................................................................... 14-1

14.2 APPROACH .................................................................................................................. 14-1

REFERENCES .......................................................................................................................... 14-2

14-iCHAPTER 14. MONETIZATION OF EMISSIONS REDUCTION BENEFITS

14.1 INTRODUCTION

As part of its assessment of energy conservation standards, the U.S. Department of Energy ( DOE ) considers the estimated monetary benefits likely to result from the reduced

emissions of carbon diox ide (CO 2 ) and nitrogen oxides (NO X ) that are expected to result from the energy efficiency standards levels considered for ceiling fan light kit s. To make this

calculation

, similar to the calculation of the net present value (NPV) of consumer benefit, DOE considers the reduced emissions expected to result over the lifetime of the equipment shipped in

the projection period for each standard level.

14.2 APPROACH

T o estimate the monetary value of benefits resulting from reduced emissions of CO 2 , DOE plans to use the most current Social Cost of Carbon (SCC) values developed and/or agreed to by an interagency process. The SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net agricultural productivity loss, human health effects, property damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantification and monetization, the SCC can be used to provide

estimates of the social benefits of reductions in GHG emissions.

The Interagency Working Group on Social Cost of Carbon released an update of its previous report in 2013. 1 The most recent estimates of the SCC in 2015, expressed in 2013$, are $12.0, $40.5, $62.4, and $119 per metric ton of CO 2 avoided. For emissions reductions that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7- percent to 23 -percent should be used to adjust the global SCC to calculate domestic effects, although DOE will give preference to consideration of the global benefits of reducing CO 2 emissions. To calculate a present value of the stream of monetary values, DOE will discount the values in each of the four cases using the discount rates

that had been used to obtain the SCC values in each case.

DOE recognizes tha t scientific and economic knowledge continues to evolve rapidly as to

the contribution of CO 2 and other GHG to changes in the future global climate and the potential resulting damages to the world economy. Thus, these values are subject to change.

DOE als o estimates the potential monetary benefit of reduced NO X emissions resulting

from the standard levels it considers. E stimates of monetary value for reducing NO X from stationary sources range from $476 to $4,893 per ton in 2013$. 2 DOE calculate s monetary benefits using a medium value for NO X emissions of $2,684 per short ton (in 2013$ ), and real discount rates of 3-percent and 7- percent.

14-1REFERENCES

1. Interagency Working Group on Social Cost of Carbon Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866 United States Government (Last Accessed http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria _2013_update.pdf

2. Office of Management and Budge t Office of Information and Regulatory Affairs 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities Washington, DC (Last Accessed http://www.whitehouse.gov/omb/inforeg/2006_cb/2006_cb_final_report.pdf

14-2CHAPTER 15. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION

................................ ................................ ................................ ......... 15

- 1

15.2 METHODOLOGY

................................ ................................ ................................ ........ 15

- 2

REFERENCES

................................ ................................ ................................ .......................... 15

- 5

15

- iCHAPTER 15. UTILITY IMPACT ANALYSIS

15.1 INTRODUCTION

In the utility impact analysis, the U.S. Department of Energy (DOE) analyzes the changes in electric installed capacity and power generation that result for each trial standard level (TSL).

The utility impact analysis is based on output of the DOE/Energy Information Administration (EIA)’s National Energy Modeling System (NEMS). a NEMS is a public domain,

multi

- sectored, partial equilibrium model of the U.S. energy sector. Each year, DOE/EIA uses NEMS to produce an energy forecast for the United States, the Annual Energy Outlook (AEO)

. The EIA publishes a reference case, which incorporates all existing energy

- related policies at the time of publication, and a variety of side cases which analyze the impact of different policies, energy price and market trends. As of 2014, DOE is using a new methodology based on results published for the Annual Energy Outlook 201 4 (AEO 201 4 ) Reference case and a set of side cases that implement a variety of efficiency

- related policies

. 2

The new approach retains key aspects of DOE’s previous methodology, and provides some improvements:

• The assumptions use d in the AEO reference case and side cases are fully documented and receive detailed public scrutiny.

• NEMS is updated each year, with each edition of the AEO, to reflect changes in energy prices, supply trends, regulations, etc.

• The comprehensiveness of NEMS permits the modeling of interactions among the various energy supply and demand sectors.

• Using EIA published side cases to estimate the utility impacts enhances the transparency of DOE’s analysis.

• The variability in impacts estimates from one edition of AEO to the next will be reduced under the new approach.

On the average, however, over the full analysis period, the results from the new approach are comparable to results from the old approach.

a For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview

. 1

15

- 115.2 METHODOLOGY

DOE estimates the marginal impacts of reduct ion in energy demand on the energy supply sector. In principle, marginal values should provide a better estimate of the actual impact of energy conservation standards.

NEMS uses predicted growth in demand for each end use to build up a projection of the

t otal electric system load growth. The system load shapes are converted internally to load duration curves, which are then used to estimate the most cost

- effective additions to capacity. When electricity demand deviates from the AEO reference case, in general there are three inter

related effects: the annual generation in terawatt hours (TWh) from the stock of electric generating capacity changes, the total generation capacity itself in g igawatts (GW) may change, and the mix of capacity by fuel type may change. b Each of these effects can vary for different types of end use. The change in total generating capacity is sensitive to the degree to which the

end

- use is peak coincident, while the capacity mix is sensitive to the hourly load shape associated with the end use. Changes in generation by fuel type lead in turn to changes in total power sector emissions of sulfur dioxide ( SO 2 )

, nitrogen oxides ( NO X )

, mercury ( Hg ), and carbon dioxide ( CO 2 )

.

DOE’s new approach examines a series of AEO side cases to estimate the relationship between demand reductions and the marginal energy, emissions and capacity changes. The assumptions for each side case are documented in Appendix E of the AEO. c The si de cases, or scenarios, that incorporate significant changes to equipment efficiencies relative to the R eference

case are:

• 2013 Technology (leaves all technologies at 2013 efficiencies) ; • Best Available Technology (highest efficiency irrespective of c ost) ; • High Technology (higher penetration rates for efficiency and demand management) ; • Extended Policies (includes efficiency standards that are not in the reference)

.

Scenarios that incorporate policies that directly affect the power sector without changes in energy demand (for example

, subsidies for renewables, or high fuel price assumptions) are not appropriate for this analysis. The methodology proceeds in seven steps:

1. Supply

- side data on generation, capacity and emissions, and demand

- side data on electricity use by sector and end

- use, are extracted from each side case . The data are converted to

differences relative to the AEO R eference case.

b T he terawatt is equal to one trillion (10 12 ) watts. The total power used by humans worldwide (about 16 TW in 2006) is commonly measured in this unit. The gigawatt is equal to one billion (10 9 ) watts or 1 gigawatt = 1000 megawatts. This unit is often used for large power plants or power grids.

c Appendix E of AEO 2014 is available at http://www.eia.gov/forecasts/aeo/section_appendices.cfm and http://www.eia.gov/forecasts/aeo/data_side_cases.cfm

15

- 22. The changes in electricity use on the demand

- side data are allocated to one of three categories: on

- peak, s houlder, and off

- peak. These categories are used in the utility sector to

correlate end

- use consumption with supply types. For each of the end

- uses that are modeled explicitly in NEMS, load shape information is used to identify the fraction of annual

elect ricity use assigned to each category. On

- peak hours are defined as 12:00 noon to 5 :00

p

. m

. , June through September. Off

- peak hours are nights and Sundays. All other hours are assigned to the shoulder period.

3. For each year and each side case , the demand

- si de reductions to on

- peak, off

- peak and

shoulder

- period electricity use are matched on the supply

- side to reductions in generation by fuel type. The fuel types are petroleum fuels, natural gas, renewables, nuclear and coal. The

allocation is based on the fo llowing rules:

3.1. All petroleum

- based generation is allocated to peak periods ;

3.2. Natural gas generation is allocated to any remaining peak reduction; this is consistent with the fact that oil and gas steam units are used in NEMS to meet peak demand ;

3.3. Base

- load g eneration (nuclear and coal) is allocated proportionally to all periods ;

3.4. The remaining generation of all types is allocated to the remaining off

- peak and shoulder reductions proportionally

.

4. The output of S tep 3 defines fuel

- share weights giving the fraction of energy demand in each load category that is met by each fuel type as a function of time. These are combined with the weights that define the load category shares by end

- use to produce coefficients that all ocate a marginal reduction in end

- use electricity demand to each of the five fuel types

.

5. A regression model is used to relate reductions in generation by fuel type to reductions in emissions of power sector pollutants. The model produces coefficients that define the change in total annual emissions of a given pollutant resulting from a unit change in total annual generation for each fuel type, as a function of time. These coefficients are combined with the weights calculated in S tep 4 to produce coefficien ts that relate emissions changes to changes

in end

- use demand.

6. A regression model is used to relate reductions in generation by fuel type to reductions in installed capacity. The categories used for installed capacity are the same as for generation

except for peak: NEMS uses two peak capacity types (combustion turbine/diesel and oil and gas steam) which are combined here into a single “peak” category. The model produces coefficients that define the change in total installed capacity of a given type resulti ng from a unit change in total annual generation for the corresponding fuel type. These coefficients are combined with the weights calculated in S tep 4 to produce coefficients that relate installed capacity changes to changes in end

- use demand, as a functi on of time.

7. The coefficient time

- series for fuel share, pollutant emissions and capacity for the appropriate end use are multiplied by the stream of energy savings calculated in the NIA to produce estimates of the utility impacts.

15

- 3This analysis does no t take into account pumped storage, fuel cells

, and distributed generation , as t hese generation types are not affected by the policy changes modeled in the EIA side cases. The methodology is described in more detail in K. Coughlin, “ Utility Sector Impacts of Reduced Electricity Demand

. ” 3

15

- 4REFERENCES

1. U.S. Department of Energy

- Energy Information Administration. National Energy Modeling System: An Overview, 2009. Report No. DOE/EIA

- 0581 (2009). (Last Accessed August 10, 2014.) http://www.eia.gov/oiaf/aeo/overview/

2. U.S. Department of Energy

- Energy Information Administration. Annual Energy Outlook 2014 with Projections to 2040. Report No. DOE/EIA

- 03832014. Washington, D.C. http://www.eia.gov/forecasts/aeo/pdf/0383(2014).pdf

3. Coughlin, K. Utility Sector Impacts of Reduced Electric ity Demand. Lawrence Berkeley National Laboratory. Forthcoming.

15

- 5CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

16.1 INTRODUCTION ......................................................................................................... 16-1

16.2 METHODOLOGY ........................................................................................................ 16-1

REFERENCES .......................................................................................................................... 16-3

16-iCHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

16.1 INTRODUCTION

The U.S. Department of Energy’s (DOE’s) employment impact analysis estimate s indirect national job creation or job elimination resulting from possible new energy conservation standards, due to reallocation of the ass ociated expenditures for purchasing and operating certain equipment. DOE conducts this analysis for the notice of proposed rulemaking (NOPR) stage

where it estimate s national impacts on major sectors of the U.S. economy, using publicly

available data.

Ene rgy conservation standards can impact employment both directly and indirectly. Direct employment impacts are changes in the number of employees at the plants that produce the covered equipment, along with the affiliated distribution and service companies, resulting from standards. DOE evaluates direct employment impacts in its manufacturer impact analysis, as described in chapter 12 of this Technical Support Document. The employment impact analysis described in this chapter covers indirect employment impacts which may result from expenditures shifting between goods (the substitution effect) and changes in income and overall expenditure levels (the income effect) that occur due to the implementation of standards.

DOE expects new or amended energy conservation standards to decrease energy consumption and, therefore, reduce expenditures for energy. In turn, savings in energy expenditures may be redirected for new investment and other items. Notwithstanding, energy conservation standards may potentially increase the purchase price of equipment, including the retail price plus sales tax, and may increase installation costs.

Using an input-output model of the U.S. economy, the employment impact analysis seeks to estimate the year

- to

- year effect of these expenditure impacts on net national employment. DOE intends the employment impact analysis to quantify the indirect employment impacts of these expenditure changes.

16.2 METHODOLOGY

To investigate the and indirect employment impacts, DOE uses the Pacific Northwest

Nation al Laboratory’s (PNNL’s) “Impact of Sector Energy Technologies” (ImSET 3.1.1)

model. 1 PNNL developed ImSET, a spreadsheet model of the U.S. economy that focus es on 187 sectors most relevant to industrial, commercial, and residential building energy use , for DOE’s Office of Energy Efficiency and Renewable Energy. ImSET is a special -purpose version of the

U.S. Ben chmark National Input-Output (I- O) model, which has been designed to estimate the national employment and income effects of energy saving technologies that are deployed by DOE’s Office of Energy Efficiency and Renewable Energy. In comparison with the previous versions of the model used in earlier rulemakings, this version allows for more complete and automated analysis of the essential features of energy efficiency investments in buildings, industry, transportation, and the electric power sectors.

16-1The ImSE T software includes a c omputer- based I

- O model with structural coefficients to characterize economic flows among the 18 7 sectors. ImSET’s national economic I

- O structure is

based on the 2002 Benchmark U.S. table , specially aggregated to 187 sectors. 2

DO E intends to use the ImSet model to estimate changes in employment in the overall U.S. economy resulting from changes in expenditures in the various sectors of the economy. DOE has designed the employment impact analysis to estimate the year

- to

- year net na tional employment effect of these different expenditure flows.

16-2REFERENCES

1. Roop, J. M., M. J. Scott, and R. W. Schultz ImSET: Impact of Sector Energy Technologies Pacific Northwest National Laboratory Richland, WA PNNL- 15273 (Last

Accessed http://www.pnl.gov/main/publications/external/technical_reports/PNNL15273.pdf

2. Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and Jiemin Guo Benchmark Input-Output Accounts of the U. S. Economy, 1997 Survey of Current Business December pp. pp. 19- 117 (Last Accessed http://www.bea.gov/scb/pdf/2002/12December/1202I-OAccounts2.pdf

16-3CHAPTER 17. REGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

17.1 INTRODUCTION

................................ ................................ ................................ ......... 17

- 1

17.2 METHODOLOGY

................................ ................................ ................................ ........ 17

- 1

LIST OF TABLES

Table 17.1.1 Alternatives to Standards

................................ ................................ ............. 17

- 1

17

- iCHAPTER 17. REGULATORY IMPACT ANA LYSIS

17.1 INTRODUCTION

For “economically significant regulatory actions,” Executive Order 12866 requires Federal agencies to provide “a n assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable non

- regulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives. ” 58 FR 51735, 51741 (October 4, 1993)

. Accordingly, in the notice of proposed rulemaking (NOPR) stage, the U.S. Department of Energy (DOE) plans to analyze feasible alternat ives that possibly could provide incentives for the same energy efficiency levels as the proposed standards for the equipment that are subject of the ceiling fan light kit s rulemaking. In addition, DOE proposes to analyze five feasible policy

alternatives to energy conservation standards for the equipment considered in this rulemaking. The policy alternatives are listed below in Table 17.1

. 1

. DOE will evaluate each alternative in terms of its ability to achieve significant energy savings at a reasonable cost, and will compare

the effectiveness of each alternative to the effectiveness of each candidate standard

.

The technical support document (TSD) is prepared in support of DOE’s notice of proposed rulemaking and include s a complete quantitative analysis of each alternative, the methodology for which is briefly addressed below.

Table 17.1

. 1 Alternatives to Standards

No New Regulatory A ction

Consumer Rebates

Consumer Tax C redits

Manufacturer Tax C redits Voluntary Energy E fficiency Targets

Bulk Government P urchases

17.2 METHODOLOGY

DOE use s the n ational i mpact a nalysis (NIA) s preadsheet model to calculate the national energy savings and the net present value (NPV) corresponding to each alternative to proposed energy conservation standards. The NIA m odel is discussed in c hapter 10 of the TSD. To compare each alternative quantitatively to the proposed energy conservation standards, DOE quantif ies the effect of each alternative on the purchase and use of energy efficient equipment, such as ceiling fan light kit s . DOE then creates an integrated model, built on the NIA model, in

order to make the appropriate revi sions to the inputs in the NIA m odels. Key inputs that DOE may revise are the market shares of equipment meeting the target efficiency levels, which correspond to the efficiency levels set for the mandatory standards at each trial standard level.

17

- 1The following a re the key measures of the imp act of each alternative:

• National E nergy S avings (NES) , given in quadrillion Btus (quads), will describe the potential cumulative national primary energy to be saved over the lifetime of equipment purchased during t he 30

- year analysis period starting in the effective date of the policy

. a

• Net Present Value (NPV) , will represent the value of net monetary savings from equipment purchased during the 30

- year analysis period starting in the compliance date of the policy. DOE calculates NPV as the difference between the present value s of

installed equipment cost and operating expenditures in the base case and the present

value s of th o se costs in each policy case. DOE then calculate s operating expenses (inclu ding energy costs ) for the life of equipment.

a The British thermal unit (Btu) is the amount of energy needed to cool or heat one pound of liquid water by one degree Fahrenheit at a constant pressure of one atmosphere.

17

- 2