EE-PI-96-001 COMMENT 14
Artfur I) Lie

Process Improvement for

Appliance Efficiency

Standards Rulemaking

"Major Themes" of U.S. Department of Energy

Stakeholder Christine A. Ervin

Consultations Assistant Secretary

Energy Efficiency and Renewable

March 19, 1996 Energy

Arthur D. Little, Inc.

Brookman-King Collaborative

Solutions, Inc.

EE-PI-96-001 COMMENT 14

rUur Little 

Process Improvement for 

Appl iance Efficiency 

Standards Rulemaking 

"Major Themes" of 

Stakeholder 

Consultations 

March 19, 1996 

U.S. Department of Energy 

Christine A. Ervin 

Assistant Secretary 

Energy Efficiency and Renewable 

Energy 

Arthur D. Little, Inc. 

Brookman-King Collaborative 

Solutions, Inc. 
Process Improvement Agenda

Background

Process

i

LF47603mtyO396-12 b&w

Ar r D Lk e

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Background I 

Process I 

Analysis I 

Decision Making I 

Prioritization I 

Potential Improvements I 

LF47603mly0396-12 b&w 1 

.... It •• r • .ramle 
Process Improvement Agenda

LF47603mty0396-12 b&w 2

Ar r D1L`

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Background I 

LF47603mty0396-12 b&w 2 
Process Improvement Background Stakeholder Participation

The Department of Energy is committed to enhanci ng the standards

setting process in conjunction with appliance manufacturers, energy

efficiency advocates, states, utilities, and other intereste d parties.

• Since Vice President Gore's National Performance Review

recommendations were issued on September 7, 1993, DOE has used

new approaches in carrying out its rulemaking responsibilities in the area

of energy conservation standards.

• Whenever possible DOE has invited early stakeholder participation in the

development of rulemaking proposals and encouraged `interested

parties" to work towards agreement-based proposals.

• In recent rulemakings the department engaged in a wide range of

consensus-building mechanisms-such as technical sessions,

workshops and an agreement-based process-to supplement the

traditional rulemaking proceeding.

LF47603mty0396-12 b&w 3

EE-PI-96-001 COMMENT 14

Process Improvement Background Stakeholder Participation 

The Department of Energy is committed to enhancing the standards 

setting process in conjunction with appliance manufacturers, energy 

efficiency advocates, states, utilities, and other interested parties. 

• Since Vice President Gore's National Performance Review 

recommendations were issued on September 7, 1993, DOE has used 

new approaches in carrying out its rulemaking responsibilities in the area 

of energy conservation standards. 

• Whenever possible DOE has invited early stakeholder participation in the 

development of rulemaking proposals and encouraged 'interested 

parties" to work towards agreement-based proposals. 

• In recent rulemakings the department engaged in a wide range of 

consensus-building mechanisms-such as technical sessions, 

workshops and an agreement-based process-to supplement the 

traditional rulemaking proceeding. 

LF47603mly0396-12 b&w 3 
Process Improvement Background Workshop

The first part of today's workshop presents the findings of extensive

stakeholder consultations and solicits further input from participants.

• Recent rulemakings highlighted the need to address a number of

complex, controversial and important issues concerning the impact of

standards on consumers, manufacturers and other stakeholders.

• As part of its efforts to make continuous improvements, DOE initiated a

major process improvement effort for appliance standards rulemakings.

• Interviews were held with stakeholders to gather information on various

aspects of the rulemaking process and methodology. Five areas were

explored:

- The formal regulatory process contemplated by the laws

- The weighing of benefits and burdens of standards

- Technical and economic models/methodology

- Cooperative rulemaking

- Alternatives to product standards

LF47603mty0396.12 b&w 4

Air D Lice

EE-PI-96-001 COMMENT 14

Process Improvement Background Workshop 

The first part of today's workshop presents the findings of extensive 

stakeholder consultations and solicits further input from participants. 

• Recent rulemakings highlighted the need to address a number of 

complex, controversial and important issues concerning the impact of 

standards on consumers, manufacturers and other stakeholders. 

• As part of its efforts to make continuous improvements, DOE initiated a 

major process improvement effort for appliance standards rulemakings. 

• Interviews were held with stakeholders to gather information on various 

aspects of the rulemaking process and methodology. Five areas were 

explored: 

- The formal regulatory process contemplated by the laws 

- The weighing of benefits and burdens of standards 

- Technical and economic models/methodology 

- Cooperative rulemaking 

- Alternatives to product standards 

LF47603mty0396·12 b&w 4 
Process Improvement Background Standards Impact

The Department of Energy is concerned about the impact of standards

on stakeholder groups.

• Need for national energy

conservation

• Competitiveness and job

creation for a sustainable

economy

• Energy security

• Emission reductions

Return on equity

Competitiveness

International trade

• Product price

• Product utility

• Operating costs

Avoided costs

Competitive impacts

M

t-F47603mty0396-12 b&w 5

EE-PI-96-001 COMMENT 14

Process Improvement Background Standards Impact 

The Department of Energy is concerned about the impact of standards 

on stakeholder groups. 

::"::: '" .~~i~ietu~~ Btamlarls<, ' ,,', I ~/:' " ~ c 

• Need for national energy 

conservation 

• Competitiveness and job 

creation for a sustainable 

economy 

• Energy security 

• Emission reductions 

• Return on equity 

• Competitiveness 

• I nternational trade 

• Product price 

• Product utility 

• Operating costs 

• Avoided costs 

• Com etitive im acts 

LF47603mty0396-12 b&w 5 
Process Improvement Background Methodology

A series of meetings was held with stakeholders who methodically

identified opportunities for improvement.

• Department of

Energy, Office of

Energy Efficiency

and Renewable

Energy

• Policy

• General

Counsel

• Program office

• Brookman-King

• Arthur D. Little, Inc.

• Issue identification

• Problem definition

• Root cause

identification

• Improvement

opportunities

• Appliance

manufacturers

• Trade associations

• Energy efficiency

advocates

• State energy

conservation

offices

• Gas utilities

• Electric utilities

LF47603mty0396 .12 b&w 6

Aith r D LktJ*

EE-PI-96-001 COMMENT 14

Process Improvement Background Methodology 

A series of meetings was held with stakeholders who methodically 

identified opportunities for improvement.. 

, , Study ream , '! , , \ 

• Department of 

Energy, Office of 

Energy Efficiency 

and Renewable 

Energy 

• Policy 

• General 

Counsel 

• Program office 

• Brookman-King 

• Arthur D. Little, Inc. 

• Issue identification 

• Problem definition 

• Rootcause 

identification 

• Improvement 

opportunities 

• Appliance 

manufacturers 

• Trade associations 

• Energy efficiency 

advocates 

• State energy 

conservation 

offices 

• Gas utilities 

• Electric utilities 

LF47603mty0396.12 b&w 6 
Process Improvement Background Approach

Four general improvement areas were identified and becam e the

major themes for a series of stakeholder group meetin gs.

E

Process

January 3, 1996

Study

Team

Work

Program

Meetings

Interviews

Stakeholders

Prioritization

January 3, 1996

W

Analysis

January 17 & 18,1996

Preliminary Meeting,

November 23, 1995 Decision-making

February 13, 1996

LF47603mty0396-12 b&w

EE-PI-96-001 COMMENT 14

Process Improvement Background Approach 

Four general improvement areas were identified and became the 

major themes for a series of stakeholder group meetings. 

Study 

Team 

Stakeholders 

Preliminary Meeting, 

November 23, 1995 

February 13, 1996 

LF47603mty0396-12 b&w 7 
Process Improvement Agenda

rRF-x7?M: ir;

1F47603mty0396-12 b&w 8

Aithtr D Lie

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Process I 

LF47603mly0396-12 b&w 8 
Process Improvement Process Stakeholder Interviews

A majority of stakeholders consider DOE's current rulemaki ng

process as overly complex , hard understand and impossible

infl uence.

"When the NOPR came out no one in industry had prior knowledge of

its contents, so the whole thing was a real shock."

Ballast Manufacturer

"The ANOPR was published and asked for costing information that

industry was uncomfortable/unable/unwilling to supply-so they didn't.

As a result, when the NOPR came out two years later and industry

saw the data DOE used, they flipped."

Trade Association

"There is no process to assure industry that corrections will happenthe problem is that the communication flow is unidirectional from

comments to DOE-we need an informal multidirectional process with

dialogue."

Energy Efficiency Advocate

"Need deadlines for DOE and a threat if DOE doesn't deliver-this

worked for the refrigerator/freezer process."

Energy Efficiency Advocate

LF47603mty0396-12 b&w 9

EE-PI-96-001 COMMENT 14

Process Improvement Process Stakeholder Interviews 

A majority of stakeholders consider DOE's current rulemaking 

process as overly complex, hard to understand and impossible to 

influence. 

"When the NOPR came out no one in industry had prior knowledge of 

its contents, so the whole thing was a real shock." 

, Ballast Manufacturer 

"The ANOPR was published and asked for costing information that 

industry was uncomfortable/unable/unwilling to supply-so they didn't. 

As a result, when the NOPR came out two years later and industry 

saw the data DOE used, they flipped." 

Trade Association 

"There is no process to assure industry that corrections will happenthe problem is that the communication flow is unidirectional from 

comments to DOE-we need an informal multidirectional process with 

dialogue." 

Energy Efficiency Advocate 

"Need deadlines for DOE and a threat if DOE doesn't deliver-this 

worked for the refrigerator/freezer process." 

Energy Efficiency Advocate 

LF47603mly0396-12 b&w 9 
Process Improvement Process Stakeholder Interviews

The common element in many of the stakeholders suggestions for an

improved process: more participation by all groups in all stages of

the standards setting process.

"We need a speedy consensus-based process."

Lamp Manufacturer

"Involve all parties throughout the process from the very beginning

stages."

Lamp Manufacturer

"If there must be standards, workshops for technical and economic

analysis are the way to go."

Ballast Manufacturer

"If there was sharing of information sooner, then buy-in would be better."

Energy Efficiency Advocate

"An ideal process needs earlier inputs by key stakeholders prior to the

ANOPR. There needs to be a proactive effort to involve participants

before the ANOPR."

Utility Interest

Ar D Lamle

EE-PI-96-001 COMMENT 14

Process Improvement Process Stakeholder Interviews 

The common element in many of the stakeholders suggestions for an 

improved process: more participation by all groups in all stages of 

the standards setting process. 

"We need a speedy consensus-based process." 

Lamp Manufacturer 

"Involve all parties throughout the process from the very beginning 

stages." 

Lamp Manufacturer 

"If there must be standards, workshops for technical and economic 

analysis are the way to go." 

Ballast Manufacturer 

"If there was sharing of information sooner, then buy-in would be better." 

Energy Efficiency Advocate 

"An ideal process needs earlier inputs by key stakeholders prior to the 

ANOPR. There needs to be a proactive effort to involve participants 

before the ANOPR." 

Utility Interest 

LF47603mty0396-12 b&w 10 
Process Improvement Process Current Process

The current rulemaking process results in insufficient stakeholder

involvement and does not provide opportunity for dialog.

Identify problem

Substantiate problem

Determine solution

Triggering

Event

Comment

Advance

Notice of

Proposed

Rulemaking

Proposed

Rulemaking

Final

Rule

Comment

Hearing

Effective

Date

LF47603mty0396 -12 b&w 11

EE-PI-96-001 COMMENT 14

Process Improvement Process Current Process 

The current rulemaking process results in insufficient stakeholder 

involvement and does not provide opportunity for dialog. 

• Identify problem 

• Substantiate problem 

• Determine solution 

Triggering 

Event 

Advance 

Notice of 

Proposed 

Rulemaking 

, ~, ' '" 

leml-~lImual 

~':",:, 'a~lIelj1l'a '",' ,"" " 

Proposed 

Rulemaking 

Final 

Rule 

~ll:.ffective 

Date 

LF47603mly0396-12 b&w 11 
Process Improvement Process Suggested Process

Stakeholders suggested an open process with more opportunity for

stakeholder dialog.

Stakeholder Dialog

M

Triggering

Event

Advance

Notice of

Proposed

Rulemaking

Proposed

Rulemaking

Ar ar I) Lamle

Final

Rule

Effective

Date

LF47603mty0396-12 b&w 12

EE-PI-96-001 COMMENT 14

Process Improvement Process Suggested Process 

Stakeholders suggested an open process with more opportunity for 

stakeholder dialog. 

Triggering 

Event 

Stakeholder Dialog 

Advance 

Notice of 

Proposed 

Rulemaking 

Proposed 

Rulemaking 

Final 

Rule 

Effective 

Date 

LF47603mty0396-12 b&w 12 
Process Improvement Agenda

Analysis

wrovemen:

1F47603mty0396-12 b&w 13

Ai rPLie

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Analysis I 

LF47603m1y0396-12 b&w 13 
Process Improvement Analysis Agenda

Consumers

Manufacturers

LF47603mty0396-12 b&w 14

A tlirD Little

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Agenda 

Analysis ' ' 1: , ~ 

,~....... ~ ... ,m y.....-.;"' .. ,"".. "'M~ ,~ ... _ .. oN .. :.; =~~, .. ~, ,"'r ,~.... ,if "", " "''''N:':':''V,,' ¥.-~« .... ,. " ..... 'A'~' V.',( ... .. ~:,:,.r.:. ,t 

Products I 

Consumers 

I 

Manufacturers I 

National I 

lF47603mty0396-12 b&w 14 

- ........ e 
Process Improvement Analysis

The following analysis issues were considered for products,

consumers, manufacturers, and the nation.

Data Issues

Contractor Issues

Model/Methods

Overview

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Overview 

The following analysis issues were considered for products, 

consumers, manufacturers, and the nation. 

~ ); ..., . 

,

) 

: "Consumers ~ ... ,': ' ( 

:' Manufa'cturer~, ~: , ' ... , , , 

Statutory/Policy Statutory/Policy Statutory/Policy Statutory/Policy 

Issues Issues Issues Issues 

Data Issues Consumer Choice Data Issues Model Issues 

Issues 

Contractor Issues Financial Model Market Solutions 

Financial Model Issues 

Model/Methods Issues Utility Emissions 

Economic Model 

Equity Methods Issues 

LF47603mly0396-12 b&w 15 
Process Improvement Analysis

The following product issues were identified.

Statutory Issues

• Should

"Technologically

Feasible" include

manufacturing

practicality?

• Is the existence of a

support infrastructure a

relevant criteria?

-Suppliers, buyers,

distributors, service

• Have concerns of

product utility, reliability

and safety been

adequately

considered?

• How can "economically

justified" and

speculative forecasts

be reconciled?

• Should "MAX Tech" be

pursued?

Data Issues

• How can confidential

manufacturing cost

data be obtained?

• How should data

spread be treated?

• How should uncertainty

be portrayed?

• How can the data

obtained be validated?

• What can be done

when no data is

available?

• How do anticompetitive laws

restrict data

availability?

9MOORM

Contractor ssues

• How should support

contractors be

selected?

• What level of review is

appropriate?

• What should be the

nature of the support

contract?

Product Issues

Models/Methods

• Does the analysis

reflect that the impact

of design options is

different for different

firms?

• How should the

product classes be

selected?

LF47603mtyO396.12 b&w 16

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Product Issues 

The following product issues were identified. 

""'<~""i'/';"" :'" ' : ::N , ',,', ,', IRriochJotlsSU9$, ,':",',,:,,~~':/:",':',,":,r;'>~;~":~,':i,,"~',::\~~,~~;;1/(~:'~:i;\:,{~~~t~1 l-,V'«{~,V""~MWh~?}X~~'",,,~"~A'M' ... ~V~ ~",">;'<)WW"""~'Xo}~:l'~~",~ .. ~ .. ",'~~'~ .;.~Xo}~»~" «xp,,~~x~/. ~,~'" N"'X~,~?,~,"""V",~"~~'"' "~~{"",~;h'~'~ ~~~i} .. ~~'~'~<'~~?""X,"~«'i}"X .. ~««{>&(""~~'''~~ww,;,«~''~~~", """'K<""""~" ... "" x:.IM·~ ~,,~ '"' ........ ~:0~ ... 

• Should 

"Technologically 

Feasible" include 

manufacturing 

practicality? 

• Is the existence of a 

support infrastructure a 

relevant criteria? 

-Suppliers, buyers, 

distributors, service 

• Have concerns of 

product utility, reliability 

and safety been 

adequately 

considered? 

• How can "economically 

justified" and 

speculative forecasts 

be reconciled? 

• Should "MAX Tech" be 

pursued? 

• How can confidential 

manufacturing cost 

data be obtained? 

• How should data 

spread be treated? 

• How should uncertainty 

be portrayed? 

• How can the data 

obtained be validated? 

• What can be done 

when no data is 

available? 

• How do anticompetitive laws 

restrict data 

availability? 

• How should support 

contractors be 

selected? 

• What level of review is 

appropriate? 

• What should be the 

nature of the support 

contract? 

• Does the analysis 

reflect that the impact 

of design options is 

different for different 

firms? 

• How should the 

product classes be 

selected? 

LF47603mly0396-12 b&w 16 
Process Improvement Analysis Product Issues-Engineering Analysis

Stakeholders support the concept of employing technical experts and

providing extensive peer review . Also...

"DOE should hire industry people. Maybe even hire more people than

they have now and be less reliant on a contractor."

Trade Association

"We need competent consultants with industry experience to perform

the engineering analysis."

Lamp Manufacturer

"(Engineering) analysis should be done by experienced, impartial

technical people."

Water Heater Manufacturer

"The contractor is doing its best, but they need peer review."

Electric Utility Interest

"Paralysis by analysis is a concern."

Energy Efficiency Advocate

...interim analyses results should be publicized to allow for early

comment.

LF47603mty0396-12 b&w 17

Arthir I) Lie

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Product Issues-Engineering Analysis 

Stakeholders support the concept of employing technical experts and 

providing extensive peer review. Also ... 

"DOE should hire industry people. Maybe even hire more people than 

they have now and be less reliant on a contractor." 

Trade Association 

"We need competent consultants with industry experience to perform 

the engineering analysis." 

Lamp Manufacturer 

"(Engineering) analysis should be done by experienced, impartial 

technical people." 

Water Heater Manufacturer 

"The contractor is doing its best, but they need peer review." 

Electric Utility Interest 

"Paralysis by analysis is a concern." 

Energy Efficiency Advocate 

.. .interim analyses results should be publicized to allow for early 

comment. 

LF47603mly0396-12 b&w 17 
Process Improvement Analysis Product Issues-MAX Tech

The law requires that standards promote the achievement the

maximum efficiency potential"technologically feasible" a nd

"economically justified."

"At the levels originally set in NA CA and EPAct, the standards were

not `pushing' technology. As standards are revised, this is an entirely

different ball game. If standards are too high, they could drive out of

business the smaller manufacturers as capital needs and proprietary

designs become dominant issues."

Trade Association

"Standards should not drive technology to its limits, but rather remove

low-end products from the market."

Trade Association

"The statute is biased toward conservation. Setting a high level first

and then lowering it in response to well-documented comments is a

safe approach for DOE to use given the statute and possible legal

challenges."

Trade Association

This approach is an example of "technology driven standards,"

or "technology forcing" and is the source of much de bate.

LF47603mty0396.12 b&w 18

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Product Issues-MAX Tech 

The law requires that standards promote the achievement of the 

maximum efficiency potentiai-"technologically feasible" and 

"economically justified." 

"At the levels originally set in NAECA and EPAct, the standards were 

not 'pushing' technology. As standards are revised, this is an entirely 

different ball game. If standards are too high, they could drive out of 

business the smaller manufacturers as capital needs and proprietary 

designs become dominant issues." 

Trade Association 

"Standards should not drive technology to its limits, but rather remove 

low-end products from the market." -

Trade Association 

"The statute is biased toward conservation. Setting a high level first 

and then lowering it in response to well-documented comments is a 

safe approach for DOE to use given the statute and possible legal 

challenges." 

Trade Association 

This approach is an example of "technology driven standards," 

or "technology forcing" and is the source of much debate. 

LF47603mly0396·12 b&w 18 
Process Improvement Analysis

The following consumer issues were identified.

^^r^rrr^-r,.rrrrrrr^rr

• Are product

features preserved?

.i cIa. M'i`d

Consumer Issues

• Has consumer • What is the • What are the

choice been appropriate distributive impacts

limited? Enhanced? discount rate for of standards?

• Are increased first- life-cycle cost -on different

costs preventing calculations? regions (varying

some consumer • Should average weather and

classes from energy costs be be utility rates)

purchasing the used? -on consumer

product? • Should average rate classes

consumer usage -income level

patterns be -home size considered?

-age

-on end-use

patterns

LF47603mtyO396-12 b&w 1 9

Amour D LRUe

EE-PI-96-001 COMMENT 14

Process Improvement Analysis 

The following consumer issues were identified. 

• Are product 

features preserved? 

rD - e 

• Has consumer 

choice been 

limited? Enhanced? 

• Are increased firstcosts preventing 

some consumer 

classes from 

purchasing the 

product? 

• What is the 

appropriate 

discount rate for 

life-cycle cost 

calculations? 

• Should average 

energy costs be be 

used? 

• Should average 

consumer usage 

patterns be 

considered? 

Consumer Issues 

• What are the 

distributive impacts 

of standards? 

- on different 

regions (varying 

weather and 

utility rates) 

- on consumer 

rate classes 

-income level 

-home size 

-age 

-on end-use 

patterns 

LF47603mly0396-12 b&w 19 
Process Improvement Analysis Consumer Issues

Regional energy costs, climate conditions, and appliance usage

patterns have varying impacts on consumers.

"We

^/ need to look at average consumers"

Energy Efficiency Advocate

"This is not a big problem and should have a low priority."

Energy Efficiency Advocate

"Standards impact differently in different geographic regions of the

U.S. This issue is worthy of discussion."

Utility Interest

This issue is weighed differently by different s takeholder groups.

LF47603mty0396.12 6&w 20

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Consumer Issues 

Regional energy costs, climate conditions, and appliance usage 

patterns have varying impacts on consumers. 

"We need to look at average consumers" 

Energy Efficiency Advocate 

"This is not a big problem and should have a low priority." 

Energy Efficiency Advocate 

"Standards impact differently in different geographic regions of the 

U.S. This issue is worthy of discussion." 

Utility Interest 

This issue is weighed differently by different stakeholder groups. 

LF47603mty0396-12 b&w 20 
Process Improvement Analysis

The following manufacturer issues were identified.

t° ' : 1 U` 6-

Have standards

resulted in a lessening

of competition?

Should the "Jobs

Impact" of proposed

standards be

considered?

-Total jobs?

-Jobs displaced?

Should standard levels

that change industry

structure be

mandated?

-Number of

competitors

-Competitors'

market share

-Dominant

technology

• How can confidential

manufacturer data be

obtained?

• What are appropriate

sources of public data?

.......................................................

• How will the price

increase affect demand

for the product?

• How much of the cost

increase will be

passed-through to the

consumer?

• What qualitative

methodologies would

improve manufacturer

impact analysis?

-Interviews?

-Site visits?

Manufacturer Issues

• How can foregone

investments be

valued?

• How can stranded

assets be valued?

• How can the

cumulative burden of

multiple standards be

measured?

• How can the analysis

characterize different

manufacturers?

LF47603mty0396-12 b&w 21

Air D L

EE-PI-96-001 COMMENT 14

Process Improvement Analysis 

The following manufacturer issues were identified. 

• Have standards 

resulted in a lessening 

of competition? 

• Should the "Jobs 

Impact" of proposed 

standards be 

considered? 

-Total jobs? 

-Jobs displaced? 

• Should standard levels 

that change industry 

structure be 

mandated? 

-Number of 

competitors 

-Competitors' 

market share 

-Dominant 

technology 

• How can confidential 

manufacturer data be 

obtained? 

• What are appropriate 

sources of public data? 

• How will the price 

increase affect demand 

for the product? 

• How much of the cost 

increase will be 

passed-through to the 

consumer? 

• What qualitative 

methodologies would 

improve manufacturer 

impact analysis? 

-Interviews? 

-Site visits? 

Manufacturer Issues 

• How can foregone 

investments be 

valued? 

• How can stranded 

assets be valued? 

• How can the 

cumulative burden of 

multiple standards be 

measured? 

• How can the analysis 

characterize different 

manufacturers? 

LF47603mty0396-12 b&w 21 
Process Improvement Analysis Manufacturer Issues

Accurately evaluating the impact of standards on manufactu rers may

require substantial revisions to the current analysis methodologies.

"Manufacturer impact analysis is a key issue. The key factors are the

impact of price on consumer demand and manufacturer mark-up. We

need better data to define these parameters."

Energy Efficiency Advocate

"DOE uses models that industry does not relate to. Key models are

overly complex and not sufficiently validated."

Trade Association

"The detailed theoretical academic models used have virtually no

connection to the realities of a competitive free marketplace. We

question whether or not such studies have any practical value."

Ballast Manufacturer

"In the Federal program, determining the economic impact on

manufacturers is the controlling issue."

State Energy Office

More "qualitative" measures should be added to e nhance the

analysis.

LF47603mty0396.12 b&w 22

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Manufacturer Issues 

Accurately evaluating the impact of standards on manufacturers may 

require substantial revisions to the current analysis methodologies. 

"Manufacturer impact analysis is a key issue. The key factors are the 

impact of price on consumer demand and manufacturer mark-up. We 

need better data to define these parameters." 

Energy Efficiency Advocate 

"DOE uses models that industry does not relate to. Key models are 

overly complex and not sufficiently validated." 

Trade Association 

"The detailed theoretical academic models used have virtually no 

connection to the realities of a competitive free marketplace. We 

question whether or not such studies have any practical value." 

Ballast Manufacturer 

"In the Federal program, determining the economic impact on 

manufacturers is the controlling issue." 

State Energy Office 

More "qualitative" measures should be added to enhance the 

analysis. 

LF47603mly0396-12 b&w 22 
Process Improvement Analysis

The following national issues were identified.

• What forces drive

the nation's needs

for energy

conservation?

• Security

• Environmental

quality

• Economic benefits

from energy savings

• What is a

"significant" level of

savings for the mid1990's and

beyond?

• How should the

baseline energy

consumption be

calculated?

• How will energy

price forecasts

change the

program's benefits?

Aln

• Are market forces

accurately

represented in the

baseline energy

consumption

forecast?

• Could other

regulatory-nonregulatory methods

achieve similar

results?

National Issues

rrr°:,arraaarrerr

• Should

environmental

costs/benefits be

monetized?

LF47603mty0396 -12 b&w 23

Air LftUG

EE-PI-96-001 COMMENT 14

Process Improvement Analysis National Issues 

The following national issues were identified. 

" National Issues ,_""" , v,~ ..... ~):~ ~, h ,,'"- ,.""~,,, " ... w.v~»'X;':':): ,,",...,VNo- Z-v:-; ",A"" ...... ~ .... :::~ ......... _ .............. " hMW~' ... ;.:., ... ....,.......>.;.;I~:.... >:Q; ~,.,.; " ...... ,,.... ..... *="" ... ... ~v ... » ~,"'''' ~y ... ", '( '" ....... ~ v ... ,~ 

• What forces drive 

the nation's needs 

for energy 

conservation? 

• Security 

• Environmental 

quality 

• Economic benefits 

from energy savings 

• What is a 

"significant" level of 

savings for the mid1990's and 

beyond? 

rD n-lie 

• How should the 

baseline energy 

consumption be 

calculated? 

• How will energy 

price forecasts 

change the 

program's benefits? 

• Are market forces 

accurately 

represented in the 

baseline energy 

consumption 

forecast? 

• Could other 

regulatory-nonregulatory methods 

achieve similar 

results? 

• Should 

environmental 

costs/benefits be 

monetized? 

LF47603m\y0396-12 b&w 23 
Process Improvement Analysis National Issues

A clearer definition of what constitutes a "significant " level of energy

savings is required.

"The law of diminishing returns is catching up with us. Why regulate

an appliance that consumes $14 of energy per year?"

Appliance Manufacturer

"We are getting closer to Carnot efficiency. The gains in efficiency are

obtained at a higher cost."

Utility Interest

"Efficiency changes can be evolutionary or revolutionary. Evolutionary

changes cost increasingly more to implement."

Appliance Manufacturer

" In the absence of major leaps in technology, products should be

"graduated" from the standards program."

Appliance Manufacturer

LF47603mty0396-12 b&w 24

EE-PI-96-001 COMMENT 14

Process Improvement Analysis Nationa//ssues 

A clearer definition of what constitutes a "significant" level of energy 

savings is required. 

"The law of diminishing returns is catching up with us. Why regulate 

an appliance that consumes $14 of energy per year?" 

Appliance Manufacturer 

"We are getting closer to Carnot efficiency. The gains in efficiency are 

obtained at a higher cost." 

Utility Interest 

"Efficiency changes can be evolutionary or revolutionary. Evolutionary 

changes cost increasingly more to implement." 

Appliance Manufacturer 

" In the absence of major leaps in technology, products should be 

"graduated" from the standards program." 

Appliance Manufacturer 

LF47603mly0396-12 b&w 24 
Process Improvement Agenda

nd r

TERFOUR=

Ait huu P Lice

LF47603mty0396.12 b&w 25

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Decision Making I 

LF47603mly0396·12 b&w 25 

rtlur e 
Process Improvement Decision Making

The uncertainty of any quantitative analysis must be conveyed to DOE

decision makers.

• Projected energy savings for each standard level

• Impact on consumers (product energy use, costs, and paybacks)

• Impact on manufacturers (return-on-equity and projected product

shipments)

• Other relevant factors (net present value, environmental impacts, and

benefit/cost ratios)

Reviewing the briefing materials would provide an additional

opportunity for stakeholder participation.

LF47603mtyO396-12 b&w 26

A ur D Lime

EE-PI-96-001 COMMENT 14

Process Improvement Decision Making 

The uncertainty of any quantitative analysis must be conveyed to DOE 

decision makers. 

• Projected energy savings for each standard level 

• Impact on consumers (product energy use, costs, and paybacks) 

• Impact on manufacturers (return-an-equity and projected product 

shipments) 

• Other relevant factors (net present value, environmental impacts, and 

benefit/cost ratios) 

Reviewing the briefing materials would provide an additional 

opportunity for stakeholder participation. 

LF47603m1y0396-12b&w 26 

l.ittle 
Process Improvement Agenda

1. ni..t.

S. ki

......... ..................

prou.

LF47603mtyO396.12 b&w 27

Arthur D LkHe

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Prioritization I 

LF47603mty039S·12 b&w 27 

.1Ilr1ll~_ rD ittIe 
Process Improvement Prioritization Stakeholder Consultations

Prioritization of rulemakings was emphasized as a fundamental means

of improving the efficacy of the appliance program.

• Most believed that the department could not realistically achieve the

original rulemaking timetable set by legislation.

• DOE should be given more flexibility in priority setting.

• Stakeholders noted that the department's regulatory agenda, as currently

conducted and published in the Federal Register, has limited value.

• Whatever prioritization plan DOE does adopt, stakeholders should be

consulted.

• Many participants stated the need for a more dynamic strategic plan for

the appliance program-one that considers a larger government-wide

view and inter-agency involvement.

LF47603mty0396-12 b&w 28

EE-PI-96-001 COMMENT 14

Process Improvement Prioritization Stakeholder Consultations 

Prioritization of rulemakings was emphasized as a fundamental means 

of improving the efficacy of the appliance program. 

• Most believed that the department could not realistically achieve the 

original rulemaking timetable set by legislation. 

• DOE should be given more flexibility in priority setting. 

• Stakeholders noted that the department's regulatory agenda, as currently 

conducted and published in the Federal Register, has limited value. 

• Whatever prioritization plan DOE does adopt, stakeholders should be 

consulted. 

• Many participants stated the need for a more dynamic strategic plan for 

the appliance program-one that considers a larger government-wide 

view and inter-agency involvement. 

LF47603mly0396-12 b&w 28 
Process Improvement Prioritization Stakeholder Consultations

The department received suggestions of possible criteria it should

use in planning and prioritizing future rules.

• The legislated schedule

• The potential for energy savings

• An evaluation of market direction

• The status of test procedure revisions, if required

• The current status of regulation development (amount of analysis and

other work completed)

• The presence of unresolved issues

• The status of other DOE or other agency regulations

• The cumulative burden on multi-product manufacturers

• Other factors found relevant

LF47603mty0396-12 b&w 29

Air a LftUe

EE-PI-96-001 COMMENT 14

Process Improvement Prioritization Stakeholder Consultations 

The department received suggestions of possible criteria it should 

use in planning and prioritizing future rules. 

• The legislated schedule 

• The potential for energy savings 

• An evaluation of market direction 

• The status of test procedure revisions, if required 

• The current status of regulation development (amount of analysis and 

other work completed) 

• The presence of unresolved issues 

• The status of other DOE or other agency regulations 

• The cumulative burden on multi-product manufacturers 

• Other factors found relevant 

LF47603mty0396-12 b&w 29 

~III"!U·" D· e 
Process Improvement Agenda

,bapkgroani

ens': 29F mss °.:'s J

Potential Improvements

LF47603mty0396.12 b&w 30

Arthur D Lift e

EE-PI-96-001 COMMENT 14

Process Improvement Agenda 

Potential Improvements I 

LF47603mty0396·12 b&w 30 

.......... -" ... rD Little 
Process Improvement Potential Improvements Process

Incorporating stakeholder views, a list of potential improvements to

the current rulemaking process was develope d.

Initiate stakeholder consultations before the

ANOPR and before the NOPR is published

Consider the concept of informal consensus

standards if stakeholders perceive that the

benefits justify the effort

LF47603mty0396.12 b&w 31

EE-PI-96-001 COMMENT 14

Process Improvement Potential Improvements Process 

Incorporating stakeholder views, a list of potential improvements to 

the current rulemaking process was developed. 

Initiate stakeholder consultations before the 

ANOPR and before the NOPR is published 

Consider the concept of informal consensus 

standards if stakeholders perceive that the 

benefits justify the effort 

LF47603mty0396·12 b&w 31 
Process Improvement Potential Improvements

Possible solutions to product issues were suggested.

Ensure that contractors performing the

engineering analysis possess the

appropriate design and manufacturing

expertise 11

Consult stakeholders early and often to

address engineering and data issues.

Analysis

LF47803mty0396.12 b&w 32

Ar r D Lamle

EE-PI-96-001 COMMENT 14

Process Improvement Potential Improvements 

Possible solutions to product issues were suggested. 

"~.:-.. :. ,~'.:~:" PoJentiallmprovements (An~lysi~) "," .$,':; .. ".S?:·"':'~:;~ ., ., . ;; .... .,..,...,..,y ... .,...."""~h ... N ''''l:':"W>-N ~,,~~~,...~, ... ~ ... ,-" v.';';"" ~ -!- «A:N~ ~.;..!.!.!." ..... :.<-.:A~ ~ ... ,"''''':M~ .No ~,~ >,,..., ~~ ...... ,'V ... ~_~~ ~/ ... .;..:...:..' ... .z -...... , .............. :.!«V.w-... ~"'M'" ... ~ ,~.w.fo ... < ..... ...:w. ;.!:-:.:; N 

Ensure that contractors performing the 

engineering analysis possess the 

appropriate design and manufacturing 

expertise 

I Peer review contractor work 

Consult stakeholders early and often to 

address engineering and data issues. 

I 

Analysis 

LF47603mly0396-12 b&w 32 
Process Improvement Potential Improvements Analysis

Despite the shortcomings of models, stakeholders generally recognize

their usefulness.

kz

Data

Assumptions

• The modeling process should make explicit that the

models are uncertain and the data often unavailable.

• The key assumptions must be understood, accepted,

and output trusted.

Review • Over reliance on assumptions and models can produce

inaccurate results, expert judgment and qualitative

analysis is needed to provide a "reality check."

Participation • Increased stakeholder participation in the development

of models and in the analyses is required to ensure

accuracy, transparency and valid results.

0

LF47603mty0396-12 b&w 33

EE-PI-96-001 COMMENT 14

Process Improvement Potential Improvements Analysis 

Despite the shortcomings of models, stakeholders generally recognize 

their usefulness. 

Data • The modeling process should make explicit that the 

models are uncertain and the data often unavailable. 

Assumptions • The key assumptions must be understood, accepted, 

and output trusted. 

Review • Over reliance on assumptions and models can produce 

inaccurate results, expert judgment and qualitative 

analysis is needed to provide a "reality check." 

Participation • Increased stakeholder participation in the development 

of models and in the analyses is required to ensure 

accuracy, transparency and valid results. 

LF47603mly0396-12 b&w 33 
Process Improvement Potential Improvements

Prioritization

To enhance planning and coordination with respect to both new and

existing regulation, stakeholders suggested a number of possible

department actions.

Receive public input on the estimate of

energy savings

Improve test procedure linkage to new

standards

11

LF47603mtyO396-12 b&w 34

^^^ Ike

EE-PI-96-001 COMMENT 14

Process Improvement Potential Improvements Prioritization 

To enhance planning and coordination with respect to both new and 

existing regulation, stakeholders suggested a number of possible 

department actions. 

'i "~ :~;, ", ;,' Potential Improvements : ":", ':<,'>,;,':::~~:~i~:, h v , v' V V~h ~v h ~,~, ~~ :::., ",-,'.,. h" ~.:::....::'-'": v~':;':"",; ..... ~h 'v ::.v"'~n." ,,,",,-.oJ.. h' ..... WA:;"..,. V;<I'~V"-M ~~< ... ,-!<->>>.., .... "v:,:.:.~~h~""""~';;'::: ~<~;;-!-!V! '"" ¥::: h V 

Make regulatory agenda preparation an 

opportunity for stakeholder input 

Receive public input on the estimate of . energy savings 

Improve test procedure linkage to new 

standards 

LF47603mty0396-12 b&w 34 
EE-PI-96-001 COMMENT 14