### 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. 

### rUur Little

Process Improvement for Appliance 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 Process Improvement Agenda


### Background 

# I
Process 

# I Analysis 

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Decision Making 

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Prioritization 

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Potential Improvements 

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LF47603mly0396-12 b&w 1

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LF47603mty0396-12 b&w 2 Ar r 

### D1L` Process Improvement Agenda


### Background 

# I

LF47603mty0396-12 b&w 2Process 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 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 3Process 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 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 4Process Improvement Background Standards Impact



### The Department of Energy is concerned about the i mpact 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 Process Improvement Background Standards Impact 

### The Department of Energy is concerned about the impact of standards on stakeholder groups.



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• 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 • Com etitive im acts

LF47603mty0396-12 b&w 5Process 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 

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### tJ* 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 6Process 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 Wo r k

P rogram 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 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 7r

Process Improvement Agenda -1

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1F47603mty0396 -12 b&w 8 

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Process 

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



### A majority of stakeholders consider DOE's current rulemaki ng process as overly complex , hard understand an d impossi ble 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 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 EfficiencyAdvocate 

### "Need deadlines for DOE and a threat if DOE doesn't deliver-this worked for the refrigerator/freezer process." Energy EfficiencyAdvocate
LF47603mly0396-12 b&w 9Process 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 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 EfficiencyAdvocate "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 10Process 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 F in al

Rule

Comment Hearing Effective

Date

LF47603mty0396 -12 b&w 11 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 

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



### Stakeholders suggested an open process with more opportunity for stakeholder dialog.


### Stakeholder Dialog

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### Triggering Event Advance

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LF47603mty0396-12 b&w 12 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 12Process Improvement Agenda



### Analysis



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1F47603mty0396-12 b&w 13 

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LF47603m1y0396-12 b&w 13Process Improvement Analysis Agenda



### Consumers Manufacturers

LF47603mty0396-12 b&w 14 

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LF47603mly0396-12 b&w 15Process 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? 9MOOR

### M

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 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·~ ~,,~**  '"'

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• 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 16Process 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 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 EfficiencyAdvocate



### .. .interim analyses results should be publicized to allow for early comment. LF47603mly0396-12 b&w 17Process 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 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 18Process 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 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 19Process Improvement Analysis Consumer Issues



### Regional energy costs , climate conditions , and appliance u sage 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 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" EnergyEfficiencyAdvocate "This is not a big problem and should have a low priority." EnergyEfficiencyAdvocate "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 20Process 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 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 21Process 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 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." EnergyEfficiencyAdvocate "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 22Process 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 ofsavings 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 otherregulatory-nonregulatory methods achieve similar results? National Issues

rrr°:,arraaarrerr • Should environmental costs/benefits be monetized?

LF47603mty0396 -12 b&w 23 

### Ai r 

### LftUG Process Improvement Analysis National Issues The following national issues were identified. " National Issues ,_""" ,**v,~** .....**~):~ ~,**  h ,,'"-**,.""~,,,** "
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• 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 otherregulatory-nonregulatory methods achieve similar results? • Should environmental costs/benefits be monetized?

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



### A clearer definition of what constitutes a "significant " level of energy savin gs 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 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 24Process Improvement Agenda

nd r
TERFOUR=



### Ait huu P Lice LF47603mty0396.12 b&w 25 Process Improvement Agenda

Decision Making 

# I

LF47603mly0396·12 b&w 25 rtlur eProcess 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 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 

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LF47603mtyO396.12 b&w 27 

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### Prioritization 

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LF47603mty039S · 12 b&w 27**.1Ilr1ll~_** rD ittIeProcess 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 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 28Process 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 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·**  

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LF47603mty0396.12 b&w 30 

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LF47603mty0396· 12 b&w 30



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... rD LittleProcess Improvement Potential Improvements Process



### Incorporating stakeholder views , a list of potential i mprovements 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 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 31Process 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 

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...**~"'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 32Process 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.

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LF47603mty0396-12 b&w 33 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 33L. L- L L L L

Process Improvement Potential Improvements 1

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 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.

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....**"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