17-i

CHAPTER 17. REGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

17.1 INTRODUCTION................................................................................................17-1

17.2 NON-REGULATORY POLICIES........................................................................17-2

17.2.1 Methodology ........................................................................................................17-2

17.2.2 Assumptions Regarding Non-Regulatory Policies.................................................17-3

17.2.3 Policy Interactions................................................................................................17-4

17.3 NON-REGULATORY POLICY ASSUMPTIONS...............................................17-4

17.3.1 No New Regulatory Action...................................................................................17-4

17.3.2 Consumer Rebates................................................................................................17-5

17.3.2.1 Methodology ...................................................................................... 17-5

17.3.2.2 Analysis ............................................................................................. 17-6

17.3.3 Consumer Tax Credits ..........................................................................................17-9

17.3.4 Manufacturer Tax Credits...................................................................................17-10

17.3.5 Voluntary Energy Efficiency Targets..................................................................17-12

17.3.6 Early Replacement..............................................................................................17-13

17.3.7 Bulk Government Purchases...............................................................................17-15

17.4 IMPACTS OF NON-REGULATORY ALTERNATIVES ..................................17-17

LIST OF TABLES

Table 17.1.1 Non-Regulatory Alternatives to National Standards .....................................17-1

Table 17.2.1 Efficiency Levels in Proposed Standard Level for Standard-Sized 

Residential Dishwashers ..............................................................................17-4

Table 17.3.1 Benefit/Cost Ratios Without and With Rebates for Standard-Sized 

Dishwashers (2010$)....................................................................................17-7

Table 17.3.2 Market Penetrations in 2013 Without and With Rebates for StandardSized Dishwashers.......................................................................................17-8

Table 17.3.3 Market Penetrations in 2013 Attributable to Consumer Tax Credits for 

Standard-Sized Dishwashers ......................................................................17-10

Table 17.3.4 Market Penetrations in 2013 Attributable to Manufacturer Tax Credits 

for Standard-Sized Dishwashers.................................................................17-11

Table 17.4.1 Impacts of Non-Regulatory Alternatives for Residential Dishwashers, 

Standard-Sized (TSL 2)..............................................................................17-18

LIST OF FIGURES

Figure 17.3.1 Market Penetration Curve for Standard-Sized Dishwashers..........................17-8
17-ii

Figure 17.3.2 Estimated Replacement Shipments of Standard-Sized Dishwashers 

With and Without an Early Replacement Program .....................................17-15

Figure 17.4.1 Market Penetration of Standard-Sized Dishwashers Meeting the Target 

Level in Policy Cases.................................................................................17-17
17-1

CHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

The U.S. Department of Energy (DOE) has determined that energy conservation 

standards for consumers of residential dishwashers constitute an “economically significant 

regulatory action” under Executive Order (E.O.) 12866, Regulatory Planning and Review. 58 FR 

51735, Volume 58, No. 190, page 51735. (October 4, 1993). Under 10 CFR part 430, subpart C, 

appendix A, section III.12, DOE committed to evaluating non-regulatory alternatives to proposed 

standards by performing a regulatory impact analysis (RIA). 61 FR 36981, Volume 61, No. 136, 

page 36978. (November 15, 1996). This RIA, which DOE has prepared pursuant to E.O. 12866, 

evaluates potential non-regulatory alternatives, comparing the costs and benefits of each to those 

of the proposed standards. 58 FR 51735, page 51741. As noted in E.O. 12866, this RIA is subject 

to review by the Office of Management and Budget’s Office of Information and Regulatory 

Affairs. 58 FR 51735, page 51740.

For this RIA, DOE used an integrated National Impact Analysis (NIA)-RIA model built 

on the NIA model discussed in chapter 10 for its analysis. DOE studied the impacts of the nonregulatory policies on the standard-sized product class.

DOE identified six non-regulatory policy alternatives that possibly could provide 

incentives for the same energy efficiency levels as the proposed standards for the products that 

are the subject of this rulemaking. The non-regulatory policy alternatives are listed in Table 

17.1.1. DOE evaluated each alternative in terms of its ability to achieve significant energy 

savings at a reasonable cost, and compared the effectiveness of each to the effectiveness of the 

proposed standard. 

Table 17.1.1 Non-Regulatory Alternatives to National Standards 

No New Regulatory Action

Consumer Rebates

Consumer Tax Credits

Manufacturer Tax Credits

Voluntary Energy Efficiency Targets

Early Replacement

Bulk Government Purchases

Sections 17.2 and 17.3 discuss the analysis of the six policies listed above. Section 17.4 

presents the results of the policy alternatives.
17-2

17.2 NON-REGULATORY POLICIES

This section describes the method DOE used to analyze the energy savings and cost 

effectiveness of the six non-regulatory policy alternatives (excluding the alternative of no new 

regulatory action) for the identified residential dishwashers. This section also describes the 

assumptions underlying the analysis. 

17.2.1 Methodology 

DOE used its integrated NIA-RIA spreadsheet model to calculate the national energy 

savings (NES) and net present value (NPV) associated with each non-regulatory policy 

alternative. Chapter 10 of the technical support document (TSD) describes the NIA spreadsheet 

model. Appendix 17-A, section 17-A.3, discusses the NIA-RIA integrated model approach.

DOE quantified the effect of each alternative on the purchase of products that meet target 

levels, which are defined as the efficiency levels in the proposed standards. After establishing the 

quantitative assumptions underlying each alternative, DOE appropriately revised inputs to the 

NIA-RIA spreadsheet model. The primary model inputs revised were market shares of products 

meeting target efficiency levels and product replacement rates. The shipments of products for 

any given year reflect a distribution of efficiency levels. DOE assumed that the proposed 

standards would affect 100 percent of the shipments of products that did not meet target levels in 

the base case,a whereas the non-regulatory policies would affect a smaller percentage of those 

shipments. DOE made certain assumptions about the percentage of shipments affected by each 

alternative policy. DOE used those percentages to calculate the shipment-weighted average 

energy consumption and costs of residential dishwashers attributable to each policy alternative. 

Increasing the efficiency of a product often increases its average installed cost. However, 

operating costs generally decrease because energy consumption declines. DOE therefore 

calculated an NPV for each non-regulatory alternative in the same way it did for the proposed 

standards. In some scenarios, increases in total installed cost are mitigated by government 

rebates or tax credits. Because DOE assumed that consumers would re-pay credits and rebates in 

some way (such as additional taxes), DOE did not include rebates or tax credits as a consumer 

benefit when calculating national NPV. DOE’s analysis also excluded any administrative costs 

for the non-regulatory policies; including such costs would decrease the NPVs slightly.

 

a The base case for the NIA is a market-weighted average of units at several efficiency levels.
17-3

The following are key measures for evaluating the impact of each alternative. 

• National energy savings, given in quadrillion Btus (quads), describes the cumulative 

national primary energy savings for products bought during the period from the 

effective date of the policy (2013) through the end of the analysis period (2047).

• Net present value represents the value in 2010$ (discounted to 2010) of net monetary 

savings from products bought during the period from the effective date of the policy 

(2013) through the end of the analysis period (2047). 

• DOE calculated the NPV as the difference between the present value of installed 

product cost and operating expenditures in the base case and the present value of 

those costs in each policy case. DOE calculated operating expenses (including energy

costs) for the life of the product.

17.2.2 Assumptions Regarding Non-Regulatory Policies 

The effects of non-regulatory policies are by nature uncertain, because they depend on 

program implementation, marketing efforts, and on consumers’ responses to a program. Because 

the projected effects depend on assumptions regarding the rate of consumer participation, they 

are subject to more uncertainty than are the impacts of mandatory standards, which DOE 

assumes will meet with full compliance. To increase the robustness of the analysis, DOE 

conducted a literature review regarding each non-regulatory policy and consulted with 

recognized experts to gather information on similar incentive programs that have been 

implemented in the United States. By studying experiences with the various types of programs,

DOE sought to make credible assumptions regarding potential market impacts. Section 17.3

presents the sources DOE relied on in developing assumptions about each alternative policy and 

reports DOE’s conclusions as they affected the assumptions that underlie the modeling of each 

policy.

Each non-regulatory policy that DOE considered would improve the average efficiency 

of new residential dishwashers relative to their base case efficiency scenario (which involves no 

new regulatory action). The analysis considered that each alternative policy would induce 

consumers to purchase units having the same efficiency levels as required by the proposed 

standards (the target levels). As opposed to the standards case, however, the policy cases may not 

lead to 100 percent market penetration of units that meet target levels.
17-4

Table 17.2.1 shows the efficiency levels stipulated in the proposed standards for 

residential dishwashers.

Table 17.2.1 Efficiency Levels in Proposed Standard Level for Standard-Sized 

Residential Dishwashers

Level

Annual 

Energy Use

Annual 

Water Use

kWh/year 1,000 gal/year

Baseline 355 1.40

2 307 1.08

DOE assumed that the effects of non-regulatory policies would last from the effective 

date of standards—2013—through the end of the analysis period, which is 2047. 

17.2.3 Policy Interactions 

DOE calculated the effects of each non-regulatory policy separately from those of the 

other policies. In practice, some policies are most effective when implemented in combination, 

such as early replacement implemented with consumer rebates, or early replacement 

implemented with bulk government purchases. However, DOE attempted to make conservative 

assumptions to avoid double-counting policy impacts. The resulting policy impacts are not 

additive; the combined effect of several or all policies cannot be inferred from summing their 

results. 

Section 17.4 presents graphs that show the market penetration estimated under each nonregulatory policy for residential dishwashers.

17.3 NON-REGULATORY POLICY ASSUMPTIONS

The following subsections describe DOE’s analysis of the impacts of the six nonregulatory policy alternatives to proposed standards for residential dishwashers. (Because the 

alternative of No New Regulatory Action has no energy or NPV impacts, essentially representing 

the NIA base case, DOE did not perform any additional analysis for that alternative.) DOE 

developed estimates of the market penetration of high-efficiency products both with and without 

each of the non-regulatory policy alternatives. 

17.3.1 No New Regulatory Action 

The case in which no new regulatory action is taken with regard to the energy efficiency 

of residential dishwashers constitutes the base case, as described in chapter 10, National Impact 

Analysis. The base case provides the basis of comparison for all other policies. By definition, no 

new regulatory action yields zero energy savings and an NPV of zero dollars.
17-5

17.3.2 Consumer Rebates

DOE considered the scenario in which the Federal government would provide financial 

incentives in the form of rebates to consumers for purchasing energy-efficient appliances. This 

policy provides a consumer rebate for purchasing residential dishwashers that operate at (or 

above) the same efficiencies as stipulated in proposed standards (target levels)

17.3.2.1 Methodology

To inform its estimate of the market impacts of consumer rebates, DOE performed a 

thorough search for existing rebate programs nationwide. It gathered data on utility or agency 

rebates for residential dishwashers throughout the country. DOE also reviewed the current State 

Energy Efficient Appliance Rebate Program (SEEARP) funded by the American Recovery and 

Reinvestment Act (ARRA).1,

b

2

This program may be considered a combination of a consumer 

rebate and an early replacement program, with intention to induce appliance sales during the 

economic recession. DOE analyzed summary material from DOE on SEEARP rebates for

residential dishwashers.

DOE based its evaluation methodology for consumer rebates on a comprehensive study 

of California’s potential for achieving energy efficiency. This study, performed by XENERGY, 

Inc.,c 3 summarized experiences with various utility rebate programs. XENERGY’s analytical 

method utilized graphs, or penetration curves, that estimate the market penetration of a 

technology based on its benefit/cost (B/C) ratio. DOE consulted with experts and reviewed other 

methods of estimating the effect of consumer rebate programs on the market penetration of 

efficient technologies. The other methods, developed after the referenced XENERGY report was 

published,4, 5, 6, 7, 8, 9 used different approaches: other economic parameters (e.g., payback 

period), expert surveys, or model calibration based on specific utility program data rather than 

multi-utility data. Some models in use by energy efficiency program evaluation experts were so 

client-specific that generic relationships between economic parameters and consumer response 

could not be established.7 DOE decided that the most appropriate available method for this RIA 

analysis was the XENERGY approach of penetration curves based on B/C ratio, which 

incorporates lifetime operating cost savings.

XENERGY’s model estimates market impacts induced by financial incentives based on 

the premise that two types of information diffusion drive the adoption of new technologies. 

Internal sources of information encourage consumers to purchase new products primarily 

through word-of-mouth from early adopters. External sources affect consumer purchase 

 

b DOE provided funding for State-run rebate programs for consumer purchases of new ENERGY STAR® qualified 

home appliances. The resulting SEEARP was implemented beginning in late 2009 by the 50 States and six U.S. 

territories, each selecting its own appliances, rebate levels, efficiency levels, appliance recycling requirements, and 

eligible populations.

c XENERGY is now owned by KEMA, Inc. (www.kema.com)
17-6

decisions through marketing efforts and information from outside the consumer group. Appendix 

17-A, section 17-A.4.1, contains additional details on internal and external information diffusion.

XENERGY’s model equation accounts for the influences of both internal and external 

sources of information by superimposing the two components. Combining the two mechanisms 

for information diffusion, XENERGY’s model generates a set of penetration (or implementation) 

curves for a measure. XENERGY then calibrated the curves based on participation data from 

utility rebate programs. The curves illustrate the increased penetration (i.e., increased market 

share) of efficient products driven by consumer response to changes in B/C ratio induced by 

rebate programs. The penetration curves depict various diffusion patterns based on perceived 

barriers (from no barriers to extremely high barriers) to consumer purchase of high-efficiency 

products.

DOE adjusted the XENERGY penetration curves based on expert advice founded on 

more recent utility program experience.7, 10 DOE also devised an interpolation method to create 

penetration curves based on relationships between the actual base case market penetrations and 

actual B/C ratios. Appendix 17-A, sections 17-A.4.2 and 17-A.4.3, contain discussion on DOE’s 

methodology for adjusting and interpolating the curves.

DOE modeled the effects of a consumer rebate policy for residential dishwashers by 

determining the increase in market penetration of products meeting the target level relative to 

their market penetration in the base case. It did this using the interpolated penetration curve 

created for standard-sized dishwashers based on the XENERGY methodology to best reflect the 

market barrier level faced by this product class. Section 17.3.2.2 shows the interpolated curve 

used in the analysis. 

17.3.2.2 Analysis 

For the standard-sized product class, DOE estimated the effect of increasing its B/C ratio 

via a rebate that would pay part or all of the increased installed cost of a unit that met the target 

efficiency level compared to one meeting the baseline efficiency level.

d DOE based the rebate 

amounts on a large sample of utility and agency rebate programs for residential dishwashers. 

DOE gathered data on 124 rebates for standard-sized dishwashers initiated by 104 utilities or 

agencies in various States. (Appendix 17-A, section 17-A.5, identifies the rebate programs.) To 

represent the rebate level, DOE used the simple average of the rebate amounts for units meeting 

the target level in these programs. DOE assumed that these average rebates amounts would apply 

to models at all efficiency levels at or above the target level for this product class.

 

d The baseline technology for each product class is defined in the engineering analysis, chapter 5, as the technology 

that represents the basic characteristics of products in that class. A baseline unit typically is one that just meets 

current Federal energy conservation standards and provides basic consumer utility. 
17-7

DOE assumed that rebates would remain in effect at the same levels throughout the 

forecast period (2013–2047). 

For standard-sized dishwashers, DOE first calculated the B/C ratio without a rebate using 

the difference in total installed costs and lifetime operating cost savings between the unit meeting 

the target level and the baseline unit. It then calculated the B/C ratio given a rebate for the unit 

meeting the target efficiency level. Because the rebate reduced the incremental cost, the unit 

receiving the rebate had a larger B/C ratio. Table 17.3.1 shows the effect of consumer rebates on 

the B/C ratio. The B/C value for units given rebates represents a weighted averagee of the values 

for the efficiency levels at or above the target level to which the rebate would apply.

Table 17.3.1 Benefit/Cost Ratios Without and With Rebates for Standard-Sized 

Dishwashers (2010$)

B/C Ratio Without Rebate 1.2

Rebate Amount $37.23

B/C Ratio With Rebate 4.4

Calculated Market Barrier 

Curve No 

DOE used these B/C ratios along with the penetration curve shown in Figure 17.3.1 to 

estimate the percentage of consumers who would purchase dishwashers that meet the target 

levels both with and without a rebate incentive. The curve calculated by DOE to represent the 

market behavior for standard-sized dishwashers was the no barriers penetration curve. 

 e The weighting factor is the 2013 base-case market share of each corresponding efficiency level. 
17-8

Figure 17.3.1 Market Penetration Curve for Standard-Sized Dishwashers

DOE next estimated the percent increase represented by the change in penetration rate 

shown on the penetration curve. It then added that percent increase to the market share of units 

that meet the target level in the base case to obtain the market share of units that meet the target 

level in the rebate case. Table 17.3.2 summarizes the market shares for standard-sized 

dishwashers in 2013. DOE used the resulting annual increases in market shares as inputs to 

represent the rebate policy case scenario in its NIA-RIA model. Appendix 17A, Table 17A.2.1, 

shows the annual market share increases due to this policy. Section 17.4 presents the resulting 

efficiency trends for the policy case of consumer rebates for standard-sized dishwashers.

Table 17.3.2 Market Penetrations in 2013 Without and With Rebates for StandardSized Dishwashers

Base-Case Market Share of Units 

that Meet Target Levels 63.9

Market Share of Units that Meet 

Target Levels With Rebates 85.2

Increased Market Share of Units that 

Meet Target Level With Rebates 21.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 10 20 30 40 50 60 70 80 90 100

Penetration Rate

Benefit/Cost Ratio

No Estimated Low No Rebate With Rebate
17-9

17.3.3 Consumer Tax Credits

DOE estimated the effects of tax credits on consumer purchases based on its previous 

analysis of consumer participation in tax credits. DOE supported its approach using data from 

Oregon State’s tax credit program for energy-efficient appliances. DOE also incorporated 

previous research that disaggregated the effect of rebates and tax credits into a direct price effect, 

which derives from the savings in purchase price, and an announcement effect, which is 

independent of the amount of the incentive.

11,12 The announcement effect derives from the 

credibility that a technology receives from being included in an incentive program, as well as 

changes in product marketing and modifications in markup and pricing. DOE assumed that the 

rebate and consumer tax credit policies would encompass both direct price effects and 

announcement effects, and that half the increase in market penetration associated with either 

policy would be due to the direct price effect and half to the announcement effect.

In estimating the effects of a tax credit on purchases of consumer products that meet new 

efficiency standards, DOE assumed the amount of the tax credit would be the same as the 

corresponding rebate amount discussed above. 

DOE estimated that fewer consumers would participate in a tax credit program than 

would take advantage of a rebate. Research has shown that the delay required for a consumer to 

receive a tax credit, plus the added time and cost in preparing the tax return, make a tax credit 

incentive less effective than a rebate received at the time of purchase. Based on previous 

analyses, DOE assumed that only 60 percent of the consumers who would take advantage of a 

rebate would take advantage of a tax credit.13

In preparing its assumptions, DOE also reviewed other tax credit programs that have been 

offered at both the Federal and State levels for energy-efficient appliances.

The Energy Policy Act of 2005 (EPACT 2005) included Federal tax credits for 

consumers who purchase energy-efficient products, including home heating and cooling products

for new or existing homes.14 Those tax credits were in effect in 2006 and 2007, expired in 2008, 

reinstated for 2009–2010 by ARRA, and extended by Congress for 2011 with some 

modifications.

1, 15DOE reviewed Internal Revenue Service data on the numbers of taxpayers who 

claimed the tax credits during tax years 2006 and 2007. DOE also reviewed data from an earlier 

Federal energy conservation tax credit program in place in the 1980s. However, DOE did not 

find data specific enough to dishwashers to warrant adjusting its analysis method for the 

Consumer Tax Credits policy case. Appendix 17-A, section 17-A.6.1, contains more information 

on Federal consumer tax credits. 

DOE also reviewed its previous analysis on Oregon’s tax credits for clothes washers to 

provide support for its assumptions.

16 In the previous analysis, DOE compared the market shares 

of ultra-high efficiency (UHE) residential clothes washers in Oregon, which offered both State 

tax credits and utility rebates, with those in Washington State, which offered only utility rebates 

during the same period. Based on this analysis, DOE estimated that in Oregon the impact of tax 
17-10

credits was 62 percent of the impact of rebates for UHE clothes washers having equivalent

efficiency. This finding supports its original assumption that participation in a tax credit program 

would be about 60 percent of participation in a rebate program. Additional discussion of State

tax credits for Oregon and other states is in Appendix 17-A, section 17-A.6.3.

DOE applied the assumed 60 percent participation described above to the penetration 

rates estimated for the rebate policy to estimate penetration rates attributable to consumer tax 

credits. In doing so, DOE incorporated the assumptions for consumer response to financial 

incentives from the penetration curve selected for standard-sized dishwashers. 

Table 17.3.3 summarizes DOE’s assumptions for standard-sized dishwashers regarding 

the market penetration of units in 2013 that meet target efficiency levels given a consumer tax 

credit. 

Table 17.3.3 Market Penetrations in 2013 Attributable to Consumer Tax Credits for 

Standard-Sized Dishwashers

Base-Case Market Share of Units that 

Meet Target Levels 63.9

Market Share of Units that Meet Target 

Levels With Consumer Tax Credits 76.7

Increased Market Share of Units that 

Meet Target Level With Consumer Tax 

Credits 12.8

DOE assumed that this policy would transform the market permanently, so that the 

increase in market share seen in the first year of the program would be maintained throughout the 

forecast period. The increased market shares attributable to consumer tax credits shown in Table

17.3.3 were used as inputs in the NIA-RIA model. Appendix 17-A, Table 17-A.2.1, shows the 

annual market share increases due to this policy. Section 17.4 presents the resulting efficiency 

trends for the policy case of consumer tax credits for standard-sized dishwashers that meet target 

efficiency levels.

17.3.4 Manufacturer Tax Credits 

To analyze the potential effects of a policy that offers tax credits to manufacturers that 

produce residential dishwashers that meet target efficiency levels, DOE assumed that a 

manufacturer tax credit would lower the consumer’s purchase cost by an amount equivalent to 

that provided by the consumer rebates or tax credits described above. DOE further assumed that 

manufacturers would pass on some of their reduced costs to consumers, causing a direct price 

effect. DOE assumed that no announcement effect would occur, because the program would not 
17-11

be visible to consumers.f

11

Because the direct price effect is approximately equivalent to the 

announcement effect, DOE estimated that a manufacturer tax credit would induce half the 

number of consumers assumed to take advantage of a consumer tax credit to purchase more 

efficient products. This assumed participation rate is equal to 30 percent of the number of 

consumers who would participate in a rebate program. 

DOE attempted to investigate manufacturer response to the Energy Efficient Appliance 

Credits for manufacturers mandated by EPACT 2005.17 Those manufacturer tax credits were in 

effect for dishwasher models produced in 2006 and 2007, reinstated for 2009 and 2010, and 

extended to 2011 with modifications in the eligibility requirements. DOE was unable to locate 

data from the Internal Revenue Service or other sources on manufacturer response to the Federal 

credits. Appendix 17-A, section 17-A.6.2, presents details on Federal manufacturer tax credits.

DOE applied the assumption of 30 percent participation to the penetration rates predicted 

for the rebate policy to estimate the effects of a manufacturer tax credit policy. In doing so, the 

Department incorporated the assumptions for consumer response to financial incentives from the 

penetration curve selected for standard-sized dishwashers. 

Table 17.3.4 summarizes DOE’s assumptions for standard-sized dishwashers regarding 

the market penetration of units in 2013 meeting target efficiency levels given a manufacturer tax 

credit.

Table 17.3.4 Market Penetrations in 2013 Attributable to Manufacturer Tax Credits

for Standard-Sized Dishwashers

Base-Case Market Share of Units that Meet 

Target Levels 63.9

Market Share of Units that Meet Target 

Levels With Manufacturer Tax Credits 70.3

Increased Market Share of Units that Meet 

Target Level With Manufacturer Tax 

Credits 6.4

DOE assumed that this policy would transform the market permanently, so that the 

increases in market share seen in the first year of the program would be maintained throughout 

the forecast period. The increased market shares attributable to a manufacturer tax credit shown 

in Table 17.3.4 were used as inputs in the NIA-RIA model. Appendix 17-A, Table 17-A.2.1, 

shows the annual market share increases due to this policy. Section 17.4 presents the resulting 

efficiency trends for the policy case of manufacturer tax credits for standard-sized dishwashers.

 

f Note that this is a conservative assumption, since it is possible that manufacturers or utility/agency efficiency 

programs might promote the models for which manufacturers increase production due to the tax credits, which in 

turn might induce some announcement effect. However, DOE found no data on such programs on which to base an 

estimate of the magnitude of this possible announcement effect on consumer behavior.
17-12

17.3.5 Voluntary Energy Efficiency Targets 

For each product, DOE assumed that voluntary energy efficiency targets would be 

achieved as manufacturers gradually stopped producing units that operated below the target 

efficiency levels. DOE assumed that the impetus for phasing out production of low-efficiency 

units would be a program similar to the ENERGY STAR labeling program conducted by the 

Environmental Protection Agency (EPA) and DOE. The ENERGY STAR program specifies the 

minimum energy efficiencies that various products, including residential dishwashers, must have 

to receive the ENERGY STAR label. ENERGY STAR encourages consumers to purchase

efficient products via marketing that promotes consumer label recognition, various incentive 

programs that adopt the ENERGY STAR specifications, and manufacturers’ promotion of their 

qualifying appliances. ENERGY STAR projects market penetration of compliant appliances and 

estimates the percentage of sales of compliant appliances that are attributable to the ENERGY 

STAR program. 

Researchers have analyzed the ENERGY STAR program’s effects on sales of several 

consumer products. Program efforts generally involve a combination of information 

dissemination and utility or agency rebates. The analyses have been based on State-specific data 

on percentages of shipments of various appliances that meet ENERGY STAR specifications. The 

analyses generally have concluded that the market penetration of ENERGY STAR-qualifying 

appliances is higher in regions or States where ancillary promotional programs have been 

active.18, 19,20

DOE based its estimates of market penetration on the ENERGY STAR program’s 

estimates of historic shipments meeting the ENERGY STAR level for standard-sized residential 

dishwashers.

21 DOE estimated the percentage of market shares attributable to the existing 

ENERGY STAR program for each product. DOE then assumed that an enhanced ENERGY 

STAR program for each product would produce an additional 50 percent above the annual 

increases in market penetration shown by the existing programs, beginning in 2013. From this 

forecast DOE calculated the annual percent increases in market share for units represented by the 

shipments attributed to ENERGY STAR. DOE added those percent increases to the market 

shares of residential dishwashers that met the target levels in the RIA base case, starting in 2013, 

to obtain the annual market shares of units meeting the target efficiency level in the voluntary

energy efficiency targets case.

DOE estimated that the programs developed in support of the voluntary energy efficiency 

targets policy would increase market shares of efficient units. Appendix 17-A, Table 17-A.2.2, 

shows the annual market share increases due to this policy used as inputs to the NIA-RIA model. 

Section 17.4 presents the resulting efficiency trends for the policy case of voluntary energy 

efficiency targets for residential dishwashers that meet target efficiency levels.
17-13

17.3.6 Early Replacement 

The non-regulatory policy of early replacement refers to a program to replace 

residential appliances before the ends of their useful lives. The purpose of such a policy is to 

replace old, inefficient units with higher efficiency units. The economic feasibility of early 

replacement depends on the vintage of the unit being replaced, the installed cost of the new unit, 

and the energy cost savings. DOE examined several resources to inform its analysis of the

policy. One report detailed the Connecticut Appliance Retirement Program (ARP), which was

conducted in 2004.22 Another was a 2006 study of the potentials for electric energy efficiency 

performed for the State of Vermont.23

The Connecticut ARP was conducted from June through December 2004 by Nexus 

Market Research, Inc., and RLW Analytics, Inc., for Northeast Utilities–Connecticut Light and 

Power and the United Illuminating Company’s State programs. The purpose of the ARP was to 

help Connecticut utility customers overcome barriers to recycling room air conditioners (RACs), 

secondary refrigerators, and freezers. The program picked up used appliances at customers’ 

homes or at turn-in events, paid participants to retire their units, and educated customers about 

the costs of operating older appliances. In addition, the program provided consumers with 

financial incentives to replace inefficient RACs with ENERGY STAR-qualified units. DOE 

considers the RAC program to most closely resemble the early replacement policy scenario for 

residential clothes washers, because consumers replaced primary units rather than retiring second 

units. Nexus/RLW used program data and surveys to estimate the number of RACs retired by 

ARP participants, the percentage of retired units that were replaced with an ENERGY STAR 

model, and the number of RACs replaced by non-participants during the program. According to 

the Nexus/RLW analysis, about 7 percent of all RACs retired during the program were retired 

through the ARP, and 63 percent of those were replaced with ENERGY STAR models. Thus the 

program resulted directly in about 4 percent of total eligible RAC consumers deciding on early 

replacement of inefficient units. 

In 2006, GDS Associates, Inc., conducted a study for the State of Vermont of the 

potential for reducing electricity use and peak demand through energy efficiency and fuel 

conversion measures. The study took an aggressive, multi-program approach, one aspect of 

which was early replacement of appliances. GDS considered that under the program residential 

appliances, including RACs, would be replaced during 4 years (2006–2009). GDS estimated 

achievable market penetrations assuming that consumers would receive a financial incentive 

equal to 50 percent of the incremental cost of each program measure. GDS assumed a maximum

80-percent penetration. For early replacement of RACs, GDS estimated a maximum achievable 

participation of 5 percent of eligible single-family or multi-family homes in the year before the 

program began (2005).

DOE also reviewed a study it had conducted in the 1990s, under EPACT 1992, which 

analyzed the effectiveness of Federal programs that supported early retirement of appliances.

24

The study identified policy options for early replacement that included a direct national program;
17-14

replacement of Federally owned appliances; and promotion through product manufacturers, 

consumer incentives, incentives to utilities, and building regulations.g

For this RIA analysis, DOE analyzed a program to target installed units having efficiency 

levels lower than target levels and encourage their early replacement with products that perform 

at target levels. DOE modeled the effects of the early replacement policy by increasing by 4

percent per year the retirement rate of units that were in the stock in the first year of the analysis 

period (2013). DOE used the 4-percent rate from the Connecticut study, because it was based on 

actual program experience. DOE assumed that the early replacement program would continue 

until it had facilitated the replacement of all eligible residential standard-sized dishwashers in the 

stock in the year the program began (2013). Shipments of new units in 2013 and beyond were 

not affected by the program, but remained at base-case efficiency levels. After the stock of 

inefficient units was replaced completely, the policy would produce no additional impacts. 

An early replacement policy would create a fairly immediate jump in shipments of 

products that meet target efficiency levels relative to the base case, as shown in Figure 17.3.2. 

High-efficiency units would be brought quickly into the stock, leading to an immediate gain in 

the market share of efficient units compared to the base case. As opposed to the policy cases 

discussed previously, however, an early replacement policy results in market shares of efficient 

units returning to base-case percentages as the eligible market is depleted. In addition, because 

units removed early from the stock would have been replaced later (at the ends of their useful 

lives) without the program, as the figure illustrates the number of shipments in later years drops 

slightly below the base-case shipments forecast. 

The shipments shown in Figure 17.3.2 represent units that replace existing units 

(replacement shipments). Appendix 17-A, Table 17-A.2.2, shows the projected market shares 

due to the early replacement policy. Section 17.4 presents the resulting efficiency trends for the 

policy case of early replacement for dishwashers.

 g The analysis concluded that, although cost-effective opportunities for early replacement exist, a widespread 

Federal program was not justified economically. Because early retirement means that a unit may be replaced by an 

appliance less efficient than the eventual replacement would have been, energy savings would be less than 

anticipated. Early replacement programs also could increase long-term sales volatility by encouraging a temporary 

increase in production, followed by a lull in demand. Early replacement could be economical in localities subject to

high energy costs or environmental constraints; when replacement appliances are much more efficient than existing 

stock; or when a major technology breakthrough has occurred, creating the need for a ready market.
17-15

Figure 17.3.2 Estimated Replacement Shipments of Standard-Sized

Dishwashers With and Without an Early Replacement Program

17.3.7 Bulk Government Purchases 

DOE assumed that a policy requiring bulk government purchases would lead to Federal, 

State, and local governments purchasing products that meet target efficiency levels. Combining 

the market demands of multiple public sectors also would provide a market signal to 

manufacturers and vendors that some of their largest customers seek products that meet an 

efficiency target at favorable prices. Such a program also could induce “market pull,” whereby 

manufacturers and vendors would achieve economies of scale for high efficiency products.

Most of the previous bulk government purchase (procurement) initiatives at the Federal, 

State, and municipal levels have not tracked data on number of purchases or degree of 

compliance with procurement specifications. In many cases, procurement programs are 

decentralized, being part of larger State or regional initiatives. DOE based its assumptions 

regarding the effects of a policy calling for bulk government purchases on studies the Federal 

Energy Management Program (FEMP) performed regarding the savings potential of its 

procurement specifications for appliances and other products. FEMP, however, does not track 

purchasing data, because of the complex range of purchasing systems, number of vendors, etc. 

States, counties, and municipalities have demonstrated increasing interest and activity in “green 

purchasing." Although many of the programs target office equipment, the growing infrastructure 

for developing and applying efficient purchasing specifications indicates that bulk government 

purchase programs are feasible.

25, 26

6

7

8

9

10

11

20132014201520162017201820192020202120222023202420252026202720282029203020312032

2033203420352036

20372038203920402041204220432044

Millions

Base Case Early Replacement
17-16

DOE assumed that government agencies, such as the Department of Housing and Urban 

Development, would administer a bulk purchasing program for residential dishwashers. The bulk 

purchasing policy also could be incorporated at the Federal level into the FEMP program, which 

has established procurement guidelines. Federal construction requirements include the FEMP 

guidelines for installing or replacing equipment. The FEMP program currently has procurement 

specifications in place for residential dishwashers.

27

DOE also reviewed its own previous research on the potential for market transformation 

through bulk government purchases. Its major study analyzed several scenarios based on the 

assumption that 20 percent of Federal equipment purchases in the year 2000 already incorporated 

energy efficiency requirements based on FEMP guidelines. One scenario in the DOE report 

showed energy-efficient Federal purchasing ramping up during 10 years from 20 percent to 80 

percent of all Federal purchases.28 

Based on its study described above, DOE estimated that a bulk government purchase

program instituted within a 10-year period would result in at least 80 percent of governmentpurchased residential dishwashers meeting target efficiency levels. 

DOE assumed that bulk government purchases would affect a subset of housing units for 

which government agencies purchased or influenced the purchase of dishwashers. This subset 

would consist primarily of public housing and housing on military bases. DOE defined this 

subset based on publicly owned housing identified in the American Housing Survey (AHS) for 

2009, which was 1.8 million households, or about 1.4 percent of all U.S. households.

29 (The 

AHS reports 130.0 million U.S. households.30

) According to the 2005 Residential Energy 

Consumption Survey (RECS 2005), 15 percent of publicly owned households had dishwashers.

31

DOE therefore estimated that 0.2 percent of U.S. housing units represent publicly owned 

households using dishwashers; this constitutes the population to which this policy would apply.

DOE estimated that each year of a bulk government purchase policy (2013) an increasing

percent of shipments of government-purchased units beyond the base case would meet target 

efficiency levels. DOE estimated that within 10 years (by 2022) bulk government purchasing 

programs would result in 80 percent of the dishwasher market for publicly owned housing 

meeting target levels. DOE modeled the bulk government purchase program assuming that the 

market share for each product achieved in 2022 would be maintained throughout the rest of the 

forecast period. Appendix 17-A, Table 17-A.2.2, shows the annual market share increases due to 

this policy used as inputs to the NIA-RIA model. Section 17.4 presents the resulting efficiency 

trends for the policy case of bulk government purchase of residential dishwashers.
17-17

17.4 IMPACTS OF NON-REGULATORY ALTERNATIVES 

Figure 17.4.1 shows the effects of each non-regulatory policy on market penetration for

residential dishwashers. The market share of products that meet the target level in the base case 

is forecasted to be constant after 2015. Relative to the base case, the policy cases increase the 

market shares that meet the target level. Note that the proposed standards (not shown in the 

figures) would result in a 100-percent market penetration of products that meet the target 

efficiency level.

Figure 17.4.1 Market Penetration of Standard-Sized Dishwashers Meeting the 

Target Level in Policy Cases

Table 17.4.1 shows the national energy savings and net present value (NPV) for six nonregulatory policies analyzed in detail for residential dishwashers. The target level for each policy 

equals the efficiency level in the corresponding proposed standard. 

The case in which no regulatory action is taken with regard to residential dishwashers

constitutes the base case (or "No New Regulatory Action" scenarios), in which energy savings 

and NPV are zero by definition. For comparison, the tables include the impacts of the proposed 

standards. Energy savings are given in quadrillion British thermal units (quads). The NPVs

shown in Table 17.4.1 are based on two discount rates, 7 percent and 3 percent.

The consumer rebates policy provides the most national energy savings of the nonregulatory policies, while the bulk government purchases policy provides the least savings. 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

20132014201520162017201820192020202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044

Consumer Rebate

Consumer Tax Credit

Manufacturer Tax Credit

Voluntary Efficiency Targets

Early Replacement

Bulk Purchasing

Base Case
17-18

Table 17.4.1 Impacts of Non-Regulatory Alternatives for Residential Dishwashers, 

Standard-Sized (TSL 2) 

Policy Alternative

Primary Energy 

Savings

Net Present Value*

quads

7% Discount 

Rate

billion 2010$

3% Discount 

Rate

Consumer Rebates 0.059 0.142 0.566

Consumer Tax Credits 0.035 0.085 0.339

Manufacturer Tax Credits 0.018 0.043 0.170

Voluntary Energy Efficiency Targets 0.053 0.159 0.614

Early Replacement 0.005 0.008 0.032

Bulk Government Purchases 0.001 0.001 0.007

Proposed Standards 0.085 0.201 0.805

* For products shipped in 2013─ 2047
17-19

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