REGULATORY IMPACT ANALYSIS FOR PROPOSED

ENERGY CONSERVATION STANDARDS FOR

RESIDENTIAL FURNACES AND BOILERS

September 2006

U.S. Department of Energy

Assistant Secretary

Office of Energy Efficiency & Renewable Energy

Building Technologies Program

Appliances and Commercial Equipment Standards

Washington, DC 20585

 EE-RM/STD-01-350 COMMENT 104.2

REGULATORY IMP ACT ANALYSIS FOR PROPOSED 

ENERGY CONSERVATION STANDARDS FOR 

RESIDENTIAL FURNACES AND BOILERS 

September 2006 

u.s. Department of Energy 

Assistant Secretary 

Office of Energy Efficiency & Renewable Energy 

Building Technologies Program 

Appliances and Commercial Equipment Standards 

Washington, DC 20585 
REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY CONSERVATION

STANDARDS FOR RESIDENTIAL FURNACES AND BOILERS

TABLE OF CONTENTS

1.0 INTRODUCTION .................................................. RIA-1

2.0 NON-REGULATORY POLICIES ..................................... RIA-2

2.1 Methodology ................................................ RIA-2

2. 1.1 Modeling Method ....................................... RIA-2

2.1.2 Policy Assumptions ..................................... RIA-3

2.1.3 Policy Interactions ...................................... RIA-4

2.2 Non-Regulatory Policy Assumptions .............................. RIA-4

2.2.1 No New Regulatory Action ............................... RIA-4

2.2.2 Financial Incentives Policies .............................. RIA-5

2.2.3 Voluntary Energy-Efficiency Targets .......... RIA-10

2.2.4 Early Replacement ..................................... RIA-12

2.2.5 Bulk Government Purchases ............................. RIA-13

2.3 Non-Regulatory Policy Market Share Impacts ..................... RIA-14

2.4 Results Summary for Non-Regulatory Alternatives ................. RIA-16

LIST OF TABLES

Table RIA.1 Policy Alternatives to Proposed National Furnace and Boiler Standards .. RIA-1

Table RIA.2 Trial Standard Levels for Residential Furnaces and Boilers ............ RIA-3

Table RIA.3 Benefit/Cost Ratios for Proposed Standard and Rebate Policy Cases ..... RIA-7

Table RIA.4 Increased Market Share Penetration Levels from Voluntary Furnace

and Boiler Programs .......................................... RIA-11

Table RIA.5 Non-Regulatory Alternatives with Target Levels at TSL 2 ............ RIA-16

Table RIA.6 Non-Regulatory Alternatives with Target Levels at TSL 2

(NWGF at TSL 3) ........................................... RIA-16

LIST OF FIGURES

Figure RIA.1 Market Penetration Curve for Non-Weatherized Gas Furnaces

at 80 Percent AFUE Level ................................... RIA-8

Figure RIA.2 Market Penetration Curve for Non-Weatherized Gas Furnaces

at 81 Percent AFUE Level ...................................... RIA-8

Figure RIA.3 Market Penetration Curve for Gas Boilers .......................... RIA-9

Figure RIA.4 Early Replacement Shipments Projections for

Non-Weatherized Gas Furnaces ................................. RIA-13

RIA-i

 EE-RM/STD-01-350 COMMENT 104.2

REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY CONSERVATION 

STANDARDS FOR RESIDENTIAL FURNACES AND BOILERS 

TABLE OF CONTENTS 

1.0 INTRODUCTION .................................................. RIA-l 

2.0 NON-REGULATORY POLICIES ..................................... RIA-2 

2.1 Methodology ................................................ RIA-2 

2.1.1 Modeling Method ....................................... RIA-2 

2.1.2 Policy Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RIA-3 

2.1.3 Policy Interactions ...................................... RIA-4 

2.2 Non-Regulatory Policy Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RIA-4 

2.2.1 No New Regulatory Action ............................... RIA-4 

2.2.2 Financial Incentives Policies .............................. RIA-5 

2.2.3 Voluntary Energy-Efficiency Targets .......... RIA-lO 

2.2.4 Early Replacement ..................................... RIA-12 

2.2.5 Bulk Government Purchases ............................. RIA-13 

2.3 Non-RegulatoryPolicyMarketShareImpacts ..................... RIA-14 

2.4 Results Summary for Non-Regulatory Alternatives ................. RIA-16 

LIST OF TABLES 

Table RIA. 1 Policy Alternatives to Proposed National Furnace and Boiler Standards RIA-I 

Table RIA.2 Trial Standard Levels for Residential Furnaces and Boilers ............ RIA-3 

Table RIA.3 Benefit/Cost Ratios for Proposed Standard and Rebate Policy Cases. . . .. RIA-7 

Table RIA.4 Increased Market Share Penetration Levels from Voluntary Furnace 

and Boiler Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RIA-II 

Table RIA.5 Non-Regulatory Alternatives with Target Levels at TSL 2 ............ RIA-16 

Table RIA.6 Non-Regulatory Alternatives with Target Levels at TSL 2 

(NWGF at TSL 3) ........................................... RIA-16 

LIST OF FIGURES 

Figure RIAl Market Penetration Curve for Non-Weatherized Gas Furnaces 

at 80 Percent AFUE Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RIA-8 

Figure RIA2 Market Penetration Curve for Non-Weatherized Gas Furnaces 

at 81 Percent AFUE Level ...................................... RIA-8 

Figure RIA3 Market Penetration Curve for Gas Boilers. . . . . . . . . . . . . . . . . . . . . . . . .. RIA-9 

Figure RIA4 Early Replacement Shipments Projections for 

Non-Weatherized Gas Furnaces ................................. RIA-13 

RIA-i 
Figure RIA.5 Penetration Rates for Nan-Weatherized Gas Furnaces

at 80 Percent AFUE .......................................... RIA-14

Figure RIA.6 Penetration Rates for Non-Weatherized Gas Furnaces

at 81 Percent AFUE .......................................... RIA-15

Figure RIA.7 Penetration Rates for Gas Boilers at 84 Percent AFUE ............... RIA-15

 EE-RM/STD-01-350 COMMENT 104.2

Figure RIA5 Penetration Rates for Non-Weatherized Gas Furnaces 

at 80 Percent AFUE .......................................... RIA-I4 

Figure RIA6 Penetration Rates for Non-Weatherized Gas Furnaces 

at 81 Percent AFUE .......................................... RIA-I5 

Figure RIA7 Penetration Rates for Gas Boilers at 84 Percent AFUE ............... RIA-I5 

RIA-ii 
REGULATORY IMPACT ANALYSIS FOR RESIDENTIAL FURNACES AND

BOILERS

1.0 INTRODUCTION

The Department of Energy has determined that residential furnace and boiler energyefficiency standards constitute an "economically significant regulatory action" under Executive

Order (E.O.) 12866 "Regulatory Planning and Review." 58 FR 51735, October 4,1993.

Therefore, the proposed energy conservation standards require a regulatory impact analysis

(RIA), which involves an evaluation of non-regulatory alternatives to the proposed standards.

This document evaluates several possible alternatives to the proposed standards, and compares

the costs and benefits of each to the proposed standards. As described in section 2 of this report,

the proposed standards are those in Trial Standard Level (TSL) 2. As an alternative in this RIA,

the Department also conducted the analysis assuming that the proposed standard is TSL 2, except

for non-weatherized gas furnaces which is TSL 3. (81 percent average fuel utilization efficiency

(AFUE)).

Under the Process Rule, the Department is committed to continually explore nonregulatory alternatives to standards. DOE has prepared this draft regulatory analysis pursuant to

E.O. 12866, which is subject to review under the Executive Order by the Office of Information

and Regulatory Affairs (OIRA). 58 FR 51735.

The Department identified six major non-regulatory alternatives to standards as

representing feasible policy options to achieve consumer product energy efficiency . These are

listed in Table RIA.1. The Department evaluated each alternative in terms of its ability to

achieve significant energy savings at a reasonable cost, and compared the effectiveness of each

one to the effectiveness of the proposed standards.

Table RIA.1 Policy Alternatives to Proposed National Furnace and Boiler Standards

No New Regulatory Action

Consumer Rebates

Consumer Tax Credits

Manufacturer Tax Credits

Voluntary Energy-Efficiency Targets

Early Replacement

Bulk Government Purchases

State Energy-Efficiency Standards

RIA-1

 EE-RM/STD-01-350 COMMENT 104.2

REGULATORY IMPACT ANALYSIS FOR RESIDENTIAL FURNACES AND 

BOILERS 

1.0 INTRODUCTION 

The Department of Energy has determined that residential furnace and boiler energyefficiency standards constitute an "economically significant regulatory action" under Executive 

Order (E.O.) 12866 "Regulatory Planning and Review." 58 FR 51735, October 4,1993. 

Therefore, the proposed energy conservation standards require a regulatory impact analysis 

(RIA), which involves an evaluation of non-regulatory alternatives to the proposed standards. 

This document evaluates several possible alternatives to the proposed standards, and compares 

the costs and benefits of each to the proposed standards. As described in section 2 of this report, 

the proposed standards are those in Trial Standard Level (TSL) 2. As an alternative in this RIA, 

the Department also conducted the analysis assuming that the proposed standard is TSL 2, except 

for non-weatherized gas furnaces which is TSL 3. (81 percent average fuel utilization efficiency 

(AFUE)). 

Under the Process Rule, the Department is committed to continually explore nonregulatory alternatives to standards. DOE has prepared this draft regulatory analysis pursuant to 

E.O. 12866, which is subject to review under the Executive Order by the Office of Information 

and Regulatory Affairs (OrRA). 58 FR 51735. 

The Department identified six major non-regulatory alternatives to standards as 

representing feasible policy options to achieve consumer product energy efficiency. These are 

listed in Table RIA.l. The Department evaluated each alternative in terms of its ability to 

achieve significant energy savings at a reasonable cost, and compared the effectiveness of each 

one to the effectiveness of the proposed standards. 

Table RIA.1 Policy Alternatives to Proposed National Furnace and Boiler Standards 

No New Regulatory Action 

Consumer Rebates 

Consumer Tax Credits 

Manufacturer Tax Credits 

Voluntary Energy-Efficiency Targets 

Early Replacement 

Bulk Government Purchases 

State Energy-Efficiency Standards 

RIA-l 
2.0 NON-REGULATORY POLICIES

2.1 Methodology

This section describes the approach used to analyze non-regulatory policies for the most

common furnace and the most common boiler product classes, which are non-weatherized gas

furnaces and gas boilers. DOE used a similar approach to estimate the impacts of the policy

alternatives for the other furnace and boiler product classes.

2.1.1 Modeling Method

To calculate the national energy savings (NES) and the net present value (NPV)

corresponding to each policy alternative, the Department used the NES Spreadsheet Model (see

Chapter 10 of the TSD for a description of the NES Spreadsheet Model). To compare each

alternative to the proposed standards, the Department quantified the effect of each alternative on

the purchase of furnace and boiler equipment meeting the target levels. Once it had made the

quantitative assumptions for each, DOE made the appropriate revisions to the inputs in the NES

Spreadsheet Model. The main model inputs that DOE revised were (1) market shares of

equipment at target efficiencies, and (2) equipment replacement rates.

The shipments for any given year are comprised of a distribution of efficiency levels. The

Department assumed that standards would affect 100 percent of the shipments, while the

non-regulatory policies affect a smaller percentage of the shipments. In each policy case, DOE

made particular assumptions about the percentage of shipments impacted by the policy under

analysis. The Department then calculated shipment-weighted average energy consumption and

cost using these market shares.

A shift in market share to higher efficiency may increase the average installed cost of

furnace and boiler equipment. Operating costs will generally decrease due to a decline in energy

consumption. Therefore , a NPV can be calculated for non-regulatory alternatives in the same

way as for the proposed standard. In some scenarios, total installed cost increases are partially

mitigated by government rebates or tax credits . The Department assumed that credits and rebates

would be paid for by consumers in another form (such as additional taxes), and therefore did not

include them as a benefit for the purposes of calculating the national NPV.

The key measures of the impact of each alternative are:

• National energy savings in quadrillion Btus (quads): Cumulative national primary energy

savings for equipment bought in the period from the effective date of the policy case

(2015) to the year 2038 . NES results account for a 15 percent rebound effect.

• Net present value: The value of net monetary savings from equipment bought in the

period from the effective date of the policy case (2015) to the year 2038. The Department

calculated the NPV as the difference between the present value of equipment and

RIA-2

 EE-RM/STD-01-350 COMMENT 104.2

2.0 NON-REGULATORY POLICIES 

2.1 Methodology 

This section describes the approach used to analyze non-regulatory policies for the most 

common furnace and the most common boiler product classes, which are non-weatherized gas 

furnaces and gas boilers. DOE used a similar approach to estimate the impacts of the policy 

alternatives for the other furnace and boiler product classes. 

2.1.1 Modeling Method 

To calculate the national energy savings (NES) and the net present value (NPV) 

corresponding to each policy alternative, the Department used the NES Spreadsheet Model (see 

Chapter 10 of the TSD for a description of the NES Spreadsheet Model). To compare each 

alternative to the proposed standards, the Department quantified the effect of each alternative on 

the purchase of furnace and boiler equipment meeting the target levels. Once it had made the 

quantitative assumptions for each, DOE made the appropriate revisions to the inputs in the NES 

Spreadsheet Model. The main model inputs that DOE revised were (1) market shares of 

equipment at target efficiencies, and (2) equipment replacement rates. 

The shipments for any given year are comprised of a distribution of efficiency levels. The 

Department assumed that standards would affect 100 percent of the shipments, while the 

non-regulatory policies affect a smaller percentage of the shipments. In each policy case, DOE 

made particular assumptions about the percentage of shipments impacted by the policy under 

analysis. The Department then calculated shipment-weighted average energy consumption and 

cost using these market shares. 

A shift in market share to higher efficiency may increase the average installed cost of 

furnace and boiler equipment. Operating costs will generally decrease due to a decline in energy 

consumption. Therefore, a NPV can be calculated for non-regulatory alternatives in the same 

way as for the proposed standard. In some scenarios, total installed cost increases are partially 

mitigated by government rebates or tax credits. The Department assumed that credits and rebates 

would be paid for by consumers in another form (such as additional taxes), and therefore did not 

include them as a benefit for the purposes of calculating the national NPV. 

The key measures of the impact of each alternative are: 

National energy savings in quadrillion Btus (quads): Cumulative national primary energy 

savings for equipment bought in the period from the effective date of the policy case 

(2015) to the year 2038. NES results account for a 15 percent rebound effect. 

• Net present value: The value of net monetary savings from equipment bought in the 

period from the effective date of the policy case (2015) to the year 2038. The Department 

calculated the NPV as the difference between the present value of equipment and 

RIA-2 
operating expenditures (including energy) in the base case, and the present value of

expenditures in each alternative policy case. The Department calculated operating

expenses (including energy) for the life of the equipment.

2.1.2 Policy Assumptions

The impacts of non-regulatory policies are by nature uncertain, since they depend on

program implementation and marketing efforts and the subsequent consumer behavior response.

The projected impacts depend on the assumptions for the consumer participation rate, and are

therefore subject to more uncertainties than the impacts of mandatory standards, which the

Department assumed will have full compliance. To increase the robustness of the analysis, the

Department conducted a literature review on each non-regulatory policy and consulted with key

experts to gather information on similar incentive programs that have been implemented in the

U.S. By studying field experience with sample programs of each type, DOE sought to make

credible assumptions of their potential market impacts. Section 2.2 below reports the

conclusions from this research as they apply to the policy modeling assumptions and includes the

corresponding literature citations.

Each of the policy alternatives to the proposed standards that DOE considered improves

the average efficiency of new furnace and boiler equipment relative to the base case (no new

regulatory action). The analysis considers that each alternative policy would induce residential

consumers to purchase units at the same efficiency levels as required by the proposed standards.

This report refers to these levels as target levels. In contrast to the proposed standards, however,

the penetration rate in the alternative policy cases may not be 100 percent.

The proposed standards are those in TSL 2 as shown in Table RIA.2.

Table RIA.2 Trial Standard Levels for Residential Furnaces and Boilers

T i l S d d

NWGF WGF MHF OF GB OB

r a tan ar

Levels AFUE % AFUE % AFUE % AFUE % AFUE % AFUE %

TSL 1 80 80 80 80 82 83

TSL 2 80 83 80 82 84 83

TSL 3 81 83 81 82 84 83

TSL 4 90 83 90 84 84 84

TSL 5 96 83 90 85 99 95

Product class list with current standard level in parentheses:

• NWGF =Non-Weatherized Gas Furnace (78%)

• WGF = Weatherized Gas Furnace (78%)

• MHF = Mobile Home Gas Furnace (75%)

• OF = Oil-fired Furnace (78%)

• GB = Gas Boiler (80%)

• OB = Oil-fired Boiler (80%)

RIA-3

 EE-RM/STD-01-350 COMMENT 104.2

operating expenditures (including energy) in the base case, and the present value of 

expenditures in each alternative policy case. The Department calculated operating 

expenses (including energy) for the life of the equipment. 

2.1.2 Policy Assumptions 

The impacts of non-regulatory policies are by nature uncertain, since they depend on 

program implementation and marketing efforts and the subsequent consumer behavior response. 

The projected impacts depend on the assumptions for the consumer participation rate, and are 

therefore subject to more uncertainties than the impacts of mandatory standards, which the 

Department assumed will have full compliance. To increase the robustness of the analysis, the 

Department conducted a literature review on each non-regulatory policy and consulted with key 

experts to gather information on similar incentive programs that have been implemented in the 

u.s. By studying field experience with sample programs of each type, DOE sought to make 

credible assumptions of their potential market impacts. Section 2.2 below reports the 

conclusions from this research as they apply to the policy modeling assumptions and includes the 

corresponding literature citations. 

Each of the policy alternatives to the proposed standards that DOE considered improves 

the average efficiency of new furnace and boiler equipment relative to the base case (no new 

regulatory action). The analysis considers that each alternative policy would induce residential 

consumers to purchase units at the same efficiency levels as required by the proposed standards. 

This report refers to these levels as target levels. In contrast to the proposed standards, however, 

the penetration rate in the alternative policy cases may not be 100 percent. 

The proposed standards are those in TSL 2 as shown in Table RIA.2. 

Table RIA.2 Trial Standard Levels for Residential Furnaces and Boilers 

NWGF WGF MHF OF GB OB 

Trial Standard 

Levels AFUE% AFUE% AFUE% AFUE% AFUE% AFUE% 

TSL 1 80 80 80 80 82 83 

TSL2 80 83 80 82 84 83 

TSL3 81 83 81 82 84 83 

TSL4 90 83 90 84 84 84 

TSL5 96 83 90 85 99 95 

Product class list with current standard level in parentheses: 

NWGF = Non-Weatherized Gas Furnace (78%) 

WGF = Weatherized Gas Furnace (78%) 

MHF = Mobile Home Gas Furnace (75%) 

OF = Oil-fired Furnace (78%) 

GB = Gas Boiler (80%) 

OB = Oil-fired Boiler (80%) 

RIA-3 
For non-weatherized gas furnaces the Department considered two scenarios. In one, the

non-regulatory policy efficiency target (and the proposed standard) is 80 percent AFUE (per TSL

2); in the other, the non-regulatory policy efficiency target (and the proposed standard) is 81

percent AFUE (per TSL 3).

The size of the eligible market for the policies varies among the product classes. The

NES model projects that 1.7 percent of the non-weatherized gas furnace market in 2015 will be

below 80 percent AFUE and 64 percent will be at 80 percent AFUE. Therefore, policies that

target an 80 percent AFUE level will impact some portion of 1.7 percent of the non-weatherized

gas furnace market, and those that target 81 percent AFUE will impact some portion of 64

percent of the market. For gas boilers, the NES model projects that 85 percent of the market will

be below the target level of 84 percent AFUE. Non-regulatory policies would thus impact some

fraction of this 85 percent portion of the market.

The Department assumed that the non-regulatory policy impacts last from the effective

date for proposed furnace and boiler standards, 2015, through the end of the analysis period,

2038.

The Department did not consider administrative costs for any of the non-regulatory

policies in its analysis. Inclusion of such costs would decrease their NPV by a small amount.

2.1.3 Policy Interactions

The Department calculated the impacts of each regulatory policy separately from those of

the other policies. In actual practice, certain policies are often most effective when implemented

in combination to provide incentives, such as early replacement with consumer rebates, or early

replacement with bulk government purchases. The Department attempted to make conservative

assumptions to avoid double counting policy impacts. Therefore, the policy impacts reported

below are not additive; the combined impact of several or all of the policies may not be inferred

from adding the results together.

Section 2.3 presents the resulting market penetration curves for non-weatherized gas

furnaces and gas boilers.

2.2 Non-Regulatory Policy Assumptions

2.2.1 No New Regulatory Action

The case in which no new regulatory action is taken with regard to residential furnace and

boiler efficiency constitutes the base case scenario described in Chapter 10 of the Furnace and

Boiler TSD. ` This case defines the basis of comparison for all other scenarios. By definition, no

new regulatory action yields zero energy savings and a net present value of zero dollars.

RIA-4

 EE-RM/STD-01-350 COMMENT 104.2

For non-weatherized gas furnaces the Department considered two scenarios. In one, the 

non-regulatory policy efficiency target (and the proposed standard) is 80 percent AFUE (per TSL 

2); in the other, the non-regulatory policy efficiency target (and the proposed standard) is 81 

percent AFUE (per TSL 3). 

The size of the eligible market for the policies varies among the product classes. The 

NES model projects that 1.7 percent of the non-weatherized gas furnace market in 2015 will be 

below 80 percent AFUE and 64 percent will be at 80 percent AFUE. Therefore, policies that 

target an 80 percent AFUE level will impact some portion of 1.7 percent of the non-weatherized 

gas furnace market, and those that target 81 percent AFUE will impact some portion of 64 

percent of the market. For gas boilers, the NES model projects that 85 percent of the market will 

be below the target level of 84 percent AFUE. Non-regulatory policies would thus impact some 

fraction of this 85 percent portion of the market. 

The Department assumed that the non-regulatory policy impacts last from the effective 

date for proposed furnace and boiler standards, 2015, through the end of the analysis period, 

2038. 

The Department did not consider administrative costs for any of the non-regulatory 

policies in its analysis. Inclusion of such costs would decrease their NPV by a small amount. 

2.1.3 Policy Interactions 

The Department calculated the impacts of each regulatory policy separately from those of 

the other policies. In actual practice, certain policies are often most effective when implemented 

in combination to provide incentives, such as early replacement with consumer rebates, or early 

replacement with bulk government purchases. The Department attempted to make conservative 

assumptions to avoid double counting policy impacts. Therefore, the policy impacts reported 

below are not additive; the combined impact of several or all of the policies may not be inferred 

from adding the results together. 

Section 2.3 presents the resulting market penetration curves for non-weatherized gas 

furnaces and gas boilers. 

2.2 Non-Regulatory Policy Assumptions 

2.2.1 No New Regulatory Action 

The case in which no new regulatory action is taken with regard to residential furnace and 

boiler efficiency constitutes the base case scenario described in Chapter 10 of the Furnace and 

Boiler TSD.l This case defines the basis of comparison for all other scenarios. By definition, no 

new regulatory action yields zero energy savings and a net present value of zero dollars. 

RIA-4 
2.2.2 Financial Incentives Policies

The Department considered scenarios in which the Federal government would provide

two types of financial incentives: tax credits and rebates. Tax credits could be granted to

consumers who purchased target-level furnace and boiler equipment, or the government could

issue tax credits to manufacturers to offset costs associated with producing such equipment. The

government also could provide consumers with a cash rebate at the time of purchase.

DOE's evaluation of financial incentive policies utilized a comprehensive study of the

potential for energy efficiency in California performed by Xenergy, Inc., which summarizes

experience with various utility rebate programs.' Xenergy developed a re-parameterized mixedsource information diffusion model to estimate market impacts induced by financial incentives

for energy-efficient appliances. The basic premise of this mixed-source model is that

information diffusion drives technology adoption. The model is formulated to characterize the

influences of both internal and external sources of information on consumer behavior by

superimposing two components in the equation, each capturing the effect of one of two different

types of information source. The effects of these two types of information diffusion mechanisms

are different. Internal sources of information influence consumers to purchase new products due

mainly to word-of-mouth from early adopters, while external information sources influence

consumers to change their adoption decisions as a result of marketing efforts and information

coming from outside the consumer group. The mixed-source model describes a combined

impact of the two information-source types, and specific parameterization determines consumer

adoption behavior. (Appendix X contains further details.)

Xenergy's model combined these two information diffusion mechanisms and generated a

set of "implementation curves," which Xenergy calibrated using evaluation data from utility

rebate programs conducted in the 1990s. Consumer response to rebate incentives appears to be a

combination of the two information source types. The implementation curves illustrate the

increased penetration of efficient equipment (i.e., increased market share) as a result of consumer

response to benefit/cost (B/C) ratio changes induced by a specific rebate program. The

implementation curves are used to depict various diffusion patterns based on perceived barriers

to consumer purchase of high-efficiency equipment. There are implementation curves for

varying levels of market barriers, from "no barriers" to "extremely high barriers." These curves

provide a means to study the impact of changing the B/C ratio, by reducing the initial equipment

cost through financial incentives, on the consumer participation rate.

To further understand the impacts of financial incentives policies, the Department used

studies on forecasting the impact of consumer tax credits.',' This research differentiated the

impact of tax credits into the "direct price effect," which arises from the incremental equipment

cost savings, and the "announcement effect," which is independent of the rebate amount. The

announcement effect derives from the credibility that a particular technology receives from its

inclusion in an incentive program, as well as changes in product marketing strategy, and the

resulting modifications in markups and pricing. The Department assumed that the direct price

effect and the announcement effect would also apply to rebate programs, and that half of the

RIA-5

 EE-RM/STD-01-350 COMMENT 104.2

2.2.2 Financial Incentives Policies 

The Department considered scenarios in which the Federal government would provide 

two types offmancial incentives: tax credits and rebates. Tax credits could be granted to 

consumers who purchased target-level furnace and boiler equipment, or the government could 

issue tax credits to manufacturers to offset costs associated with producing such equipment. The 

government also could provide consumers with a cash rebate at the time of purchase. 

DOE's evaluation of financial incentive policies utilized a comprehensive study of the 

potential for energy efficiency in California performed by Xenergy, Inc., which summarizes 

experience with various utility rebate programs. 2 Xenergy developed are-parameterized mixedsource information diffusion model to estimate market impacts induced by financial incentives 

for energy-efficient appliances. The basic premise of this mixed-source model is that 

information diffusion drives technology adoption. The model is formulated to characterize the 

influences of both internal and external sources of information on consumer behavior by 

superimposing two components in the equation, each capturing the effect of one of two different 

types of information source. The effects of these two types of information diffusion mechanisms 

are different. Internal sources of information influence consumers to purchase new products due 

mainly to word-of-mouth from early adopters, while external information sources influence 

consumers to change their adoption decisions as a result of marketing efforts and information 

coming from outside the consumer group. The mixed-source model describes a combined 

impact of the two information-source types, and specific parameterization determines consumer 

adoption behavior. (Appendix X contains further details.) 

Xenergy's model combined these two information diffusion mechanisms and generated a 

set of "implementation curves," which Xenergy calibrated using evaluation data from utility 

rebate programs conducted in the 19908. Consumer response to rebate incentives appears to be a 

combination of the two information source types. The implementation curves illustrate the 

increased penetration of efficient equipment (i.e., increased market share) as a result of consumer 

response to benefit/cost (B/C) ratio changes induced by a specific rebate program. The 

implementation curves are used to depict various diffusion patterns based on perceived barriers 

to consumer purchase of high-efficiency equipment. There are implementation curves for 

varying levels of market barriers, from "no barriers" to "extremely high barriers." These curves 

provide a means to study the impact of changing the B/C ratio, by reducing the initial equipment 

cost through financial incentives, on the consumer participation rate. 

To further understand the impacts of financial incentives policies, the Department used 

studies on forecasting the impact of consumer tax credits. 3

, 4 This research differentiated the 

impact of tax credits into the "direct price effect," which arises from the incremental equipment 

cost savings, and the "announcement effect," which is independent of the rebate amount. The 

announcement effect derives from the credibility that a particular technology receives from its 

inclusion in an incentive program, as well as changes in product marketing strategy, and the 

resulting modifications in markups and pricing. The Department assumed that the direct price 

effect and the announcement effect would also apply to rebate programs, and that half of the 

RIA-5 
increases in market penetration associated with rebates would be due to the direct price effect and

half to the announcement effect.

Consumer Rebates

The Department modeled the impact of the consumer rebate policy by determining the

increase in market penetration of target-level equipment relative to the base case.

For non-weatherized gas furnaces, the Department estimated the impact of increasing the

B/C ratio via a rebate that paid 29 percent of the incremental installed cost between a nonweatherized gas furnace meeting the base case efficiency levela and a unit meeting the target

efficiency. The Department based the 29 percent rebate amount on rebate programs for

condensing gas furnaces throughout the nation.',',',', 9, 10, 11, 12, 13 , 14 The average rebate in these

programs amounted to about 29 percent of the incremental installed cost for condensing

furnaces'.

For gas boilers, the Department assumed that the rebate would cover 79 percent of the

incremental installed cost between a boiler meeting the base case efficiency level and a unit

meeting the target efficiency. This amount was based on the average rebate level in programs for

85 percent AFUE gas boilers,' which amounted to about 79 percent of incremental installed

cost.5, 7, 8, 9, 10, 11, 15

The Department assumed the rebates would remain in effect until they had transformed

the market so that the market shift in efficiency shares seen in the first year of the program would

be maintained throughout the forecast period (2015-2038).

The Department first calculated the B/C ratio for the unit meeting the target level relative

to the base case with no rebate . It then calculated another B/C ratio for the unit meeting the

target level, with a rebate, relative to the base case unit. Because of the incremental cost

reduction due to the rebate, the B/C ratio for the rebate policy unit is larger (see Table RIA.3).

a The base case is a market weighted- average of units at several AFUE levels.

b While the target level (80 percent or 81 percent) is lower than the condensing furnace efficiency used for these

rebate programs, DOE assumed that a rebate program could be designed to pay an equivalent percentage of the

incremental installed costs of the targeted non-condensing gas furnaces.

While the target level (84 percent) is lower than 85 percent AFUE for these rebate programs , DOE assumed that a

rebate program could be designed to pay an equivalent percentage of the incremental installed costs of the targeted

gas boilers.

RIA-6

 EE-RM/STD-01-350 COMMENT 104.2

increases in market penetration associated with rebates would be due to the direct price effect and 

half to the announcement effect. 

Consumer Rebates 

The Department modeled the impact of the consumer rebate policy by determining the 

increase in market penetration of target-level equipment relative to the base case. 

For non-weatherized gas furnaces, the Department estimated the impact of increasing the 

B/C ratio via a rebate that paid 29 percent ofthe incremental installed cost between a nonweatherized gas furnace meeting the base case efficiency levela and a unit meeting the target 

efficiency. The Department based the 29 percent rebate amount on rebate programs for 

condensing gas furnaces throughout the nation.5, 6, 7, 8, 9,10,11,12,13,14 The average rebate in these 

programs amounted to about 29 percent of the incremental installed cost for condensing 

furnacesb

• 

For gas boilers, the Department assumed that the rebate would cover 79 percent of the 

incremental installed cost between a boiler meeting the base case efficiency level and a unit 

meeting the target efficiency. This amount was based on the average rebate level in programs for 

85 percent AFUE gas boilers,c which amounted to about 79 percent of incremental installed 

cost.5, 7, 8,9,10,11,15 

The Department assumed the rebates would remain in effect until they had transformed 

the market so that the market shift in efficiency shares seen in the first year of the program would 

be maintained throughout the forecast period (2015-2038). 

The Department first calculated the B/C ratio for the unit meeting the target level relative 

to the base case with no rebate. It then calculated another B/C ratio for the unit meeting the 

target level, with a rebate, relative to the base case unit. Because of the incremental cost 

reduction due to the rebate, the B/C ratio for the rebate policy unit is larger (see Table RIA.3). 

a The base case is a market weighted-average of units at several AFUE levels. 

b While the target level (80 percent or 81 percent) is lower than the condensing furnace efficiency used for these 

rebate programs, DOE assumed that a rebate program could be designed to pay an equivalent percentage of the 

incremental installed costs of the targeted non-condensing gas furnaces. 

C While the target level (84 percent) is lower than 85 percent AFUE for these rebate programs, DOE assumed that a 

rebate program could be designed to pay an equivalent percentage of the incremental installed costs of the targeted 

gas boilers. 

RIA-6 
Table RIA.3 Benefit/Cost Ratios for Proposed Standard and Rebate Policy Cases

NWGF

at 80 % AFUE

NWGF

at 8l %AFUE

GB

Standard at 84%

AFUE

Benefit (Lifetime Operating Cost Savings) $95 $59 $374

Incremental Installed Cost (Increased Installed Cost) $55 $68 $220

B/C Ratio with no rebate 1.7 0.9 1.7

Rebate Amount

Adjusted Incremental Installed Cost (Increased Installed

Cost after Rebate)

$16

$39

$20

$48

$174

$46

B/C Ratio for Rebate Policy Case 2.5 1.2 8.1

The Department then used the curves shown in Figures RIA.1, RIA.2 and RIA.3 to

estimate the increased percentage of consumers who would purchase the units that meet the

policy target levels if given a rebate incentive. For non-weatherized gas furnaces at the 80

percent standard level, DOE chose the "no barriers" curve since the bulk of the market is already

at 80 percent AFUE. For non-weatherized gas furnaces at the 81 percent standard level, DOE

chose the "moderate barriers" curve since 81 percent AFUE represented a small market in 2004

and there are considerations with regard to installation and safety. For gas boilers at the 84

percent standard level, DOE chose the "low barriers" curve since 84 percent is a common

product AFUE (albeit with relatively low market share in 2004). DOE also used the "low

barriers" curve for the other product classes.

Figures RIA.1 through RIA.3 show the penetration rates of target-level units as a function

of B/C ratios. Using this method, the Department estimated, that for the non-weatherized gas

furnace product class, the market share of equipment meeting the policy target due to a rebate

policy would increase by 8 percent at a target level of 80 percent AFUE and by 2 percent at a

target level of 81 percent AFUE. For the gas boiler product class, DOE estimated that the market

share of equipment meeting the policy target due to a rebate policy would increase by 33 percent.

To calculate the impacts of this policy, DOE adjusted the base case shipments projection in the

NES model to reflect these percentage increases in market share of efficient furnace and boiler

models.

 EE-RM/STD-01-350 COMMENT 104.2

T a bi e RIA . 3 B ene fit/C I os t R a f lOS £ or P ropose d St an d d d R b t P ar an e ae ole r C ases 

NWGF NWGF GB 

at 80% AFUE at 81 % AFUE Standard at 84% 

AFUE 

Benefit (Lifetime Operating Cost Savings) $95 $59 $374 

Incremental Installed Cost (Increased Installed Cost) $55 $68 $220 

B/C Ratio with no rebate 1.7 0.9 1.7 

Rebate Amount $16 $20 $174 

Adjusted Incremental Installed Cost (Increased Installed $39 $48 $46 

Cost after Rebate) 

B/C Ratio for Rebate Policy Case 2.5 1.2 8.1 

The Department then used the curves shown in Figures RIA. I, RIA.2 and RIA.3 to 

estimate the increased percentage of consumers who would purchase the units that meet the 

policy target levels if given a rebate incentive. For non-weatherized gas furnaces at the 80 

percent standard level, DOE chose the "no barriers" curve since the bulk of the market is already 

at 80 percent AFUE. For non-weatherized gas furnaces at the 81 percent standard level, DOE 

chose the "moderate barriers" curve since 81 percent AFUE represented a small market in 2004 

and there are considerations with regard to installation and safety. For gas boilers at the 84 

percent standard level, DOE chose the "low barriers" curve since 84 percent is a common 

product AFUE (albeit with relatively low market share in 2004). DOE also used the "low 

barriers" curve for the other product classes. 

Figures RIA. 1 through RIA.3 show the penetration rates of target-level units as a function 

ofB/C ratios. Using this method, the Department estimated, that for the non-weatherized gas 

furnace product class, the market share of equipment meeting the policy target due to a rebate 

policy would increase by 8 percent at a target level of 80 percent AFUE and by 2 percent at a 

target level of 81 percent AFUE. For the gas boiler product class, DOE estimated that the market 

share of equipment meeting the policy target due to a rebate policy would increase by 33 percent. 

To calculate the impacts of this policy, DOE adjusted the base case shipments projection in the 

NES model to reflect these percentage increases in market share of efficient furnace and boiler 

models. 

RIA-7 
1w%

. '

r3 --- --- -=-------------------------------------------------

6^ or

I ----------------------- 414D iuief&-----------------

Penetration Rate

S 62 & at BBC ratio of 1.7

a ---^^--------------------------------------------------------- ------ - d

E

7 40 E

m

m Aw++______________________________________________________________

2jtra,F______________________________________________________________

yj% -______________________________________________________________

+ 6 S 10 D 1+

Participant Benefit-Cost Ratio

Change of

Penetration

Rate=8`&

Figure RIA.1 Market Penetration Curve for Non-Weatherized Gas

Furnaces at 80 Percent AFUE Level

100%

Q'O% ------------------------------------------------------------

00% ------------------------------------------------------------

Nbderle B arriers Ct rue

------------------------------------------------------------

I

0%t -----------

50%- -------------------------------

-

+03'- ----------------------` -----------------------------------

Penetration Rate=1.5%

at BIC ratio of 0.86 399_ _______________ ______________-------_____________________

i

203: --- ----------------------------------------------

Penetration Rate = 3 J5 %

10 9: I - - j- - -

f at

- ------- --- -

Qc- ratioof 1.2

-

2

-----------------------------------

0% 4

0

Participant Bandit-Cost Ratio

Change of

Penetration

Rate = 2 %

Figure RIA.2 Market Penetration Curve for Non-Weatherized Gas

Furnaces at 81 Percent AFUE Level

+ t S 10 12 1+

RIA-8

 EE-RM/STD-01-350 COMMENT 104.2

100¥. 

9);+ 

iO¥+ 

., "Jl' • .i 

6 ill'" ~ 

,. 

-w 

c 

., :'(I' • a... 

E 

::J 

E Ill'. 

'x 

.. 

:::: ))¥. 

))~'+ 

].I)'" ,. 

o~. 

0 s 10 1+ 

Parti cipant Benefit- Cost Ratio 

Figure RIA.1 Market Penetration Curve for Non-Weatherized Gas 

Furnaces at 80 Percent AFUE Level 

100'. 

90'. 

so;. 

., 70% 

10 

cr: 

C 

. Q '0." • 

1! 

~ 50."+ ., 

a... 

E 

::J +Q;' 

.~ 

.. " 

:::: 3Q;. 

10.'. 

10;. 

0.,,+ 

fvbde"teB~ers Ctrve 

--------------------------------------Jl-------~~ ~--~ 

-------------------------------~----------------------- /~ 

- - - - - - - - - - - - - - - - - - - - - ;,/'!"..'-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --

Penetratim Rate = 1.5 % "''' at B/C ratio of 0.86 /' 

---------------;r-------------------------------------------

--t-----,:,,:?(~~;~;:;~ :-3-~~- ------------------------------ - - - -r~Jl.~-~-O-OjJ))- - -- - - - - - - - - - - -- - - -- - - - - - - - - - - - ----

s 10 12 

Parti d pant BenEfit-Cost Ratio 

Change of 

Penetration 

')- Rate = 2% 

Figure RIA.2 Market Penetration Curve for Non-Weatherized Gas 

Furnaces at 81 Percent AFUE Level 

RIA-8 
1009

+'« --------------------------La waaoiem -------------------------

Curve

------------------------------f ------------------^ -

40% ________________________ _---- _______________________________

N

+o% ______ Renatotion Rata-67%atD/Cr.UU}_______________________

f, of 5.1

a0?. - - ----------- -------------------------------------------

p < ---------- PenebT*,rRate - 24*3t-M--------------------------------

iatio of 1.1

10% ---------------------------------------------------------------

0 # i S 10 1? 1#

Participant Benefit-Cost Ratio

Figure RIA.3 Market Penetration Curve for Gas Boilers

Consumer Tax Credits

Change of

Penetration

Rate = 33 %

The Department assumed a consumer tax credit equivalent to the amount covered by

rebates (i.e., 29 percent of the incremental cost between non-weatherized gas furnace base case

equipment and equipment meeting the policy target levels and 79 percent of the incremental cost

for gas boilers). The Department estimated that the consumer participation rate would be lower

than that for consumer rebates. Research on tax credits has shown that the time delay to the

consumer in receiving a reimbursement via tax credit, plus the added transaction costs in tax

return preparation, make the tax credit incentive less effective than a rebate received at purchase

time. Based on previous analysis," DOE assumed that only 60 percent as many consumers

would take advantage of the tax credit as would take advantage of a rebate.

Using a similar approach for the rebate policy, DOE estimated that the market share of

target efficiency gas furnace units would increase due to consumer tax credits by 5 percent over

the base case at the 80 percent AFUE level and by 1 percent at the 81 percent AFUE level. For

gas boilers, the market share would increase by 20 percent. The Department assumed the impact

of this policy would be to permanently transform the market so that the shipment-weighted

efficiency gain seen in the first year of the program would be maintained throughout the forecast

period.

RIA-9

 EE-RM/STD-01-350 COMMENT 104.2

100~. 

90"+ 

~~'+ 

_________________________ JLQ~a~s. ________________________ _ 

Curve 

oJ) '!(J~:+ "' 0:: 

C 

0 'I)'!:<" ~ 

~ C 

oJ) 50'. "-

E 

::1 +0"'+ E 

.;;: 

::s '"30% 

-:::--::::::~:::::: -------/----::~~ratiO'" ~51.'I+ .1It.1iltc.r.tjo. - - - - - - - - - - - - - - - - - - - - - --

-----;(------------------------------------------------------- /.-

lO'!'t. ----------P~R~K-~~iM8--------------------------------

ratio of 1.1 

lOt. 

O~· ,+ 

10 H 

Parti oip<nt Benefit· Cost Rati 0 

Figure RIA.3 Market Penetration Curve for Gas Boilers 

Consumer Tax Credits 

Chal"Qe of 

Penetratim 

R~= 33"% 

The Department assumed a consumer tax credit equivalent to the amount covered by 

rebates (i.e., 29 percent of the incremental cost between non-weatherized gas furnace base case 

equipment and equipment meeting the policy target levels and 79 percent of the incremental cost 

for gas boilers). The Department estimated that the consumer participation rate would be lower 

than that for consumer rebates. Research on tax credits has shown that the time delay to the 

consumer in receiving a reimbursement via tax credit, plus the added transaction costs in tax 

return preparation, make the tax credit incentive less effective than a rebate received at purchase 

time. Based on previous analysis,16 DOE assumed that only 60 percent as many consumers 

would take advantage of the tax credit as would take advantage of a rebate. 

Using a similar approach for the rebate policy, DOE estimated that the market share of 

target efficiency gas furnace units would increase due to consumer tax credits by 5 percent over 

the base case at the 80 percent AFUE level and by I percent at the 81 percent AFUE level. For 

gas boilers, the market share would increase by 20 percent. The Department assumed the impact 

of this policy would be to permanently transform the market so that the shipment-weighted 

efficiency gain seen in the first year of the program would be maintained throughout the forecast 

period. 

RIA-9 
Manufacturer Tax Credits

The Department assumed that a manufacturer tax credit program would effectively result

in a lower price to the consumer by an amount equivalent to that provided by rebates (i.e., 30

percent of the incremental price difference for furnaces meeting base case efficiency levels and

those meeting the policy targets and 79 percent of the incremental price difference for boilers).

Because these tax credits would go to manufacturers instead of consumers, the Department

assumed that manufacturers would pass on the reduced costs, causing the direct price effect.

However, DOE assumed that the announcement effect would not occur because the program

would not be visible to the consumers. Since the direct price effect is approximately equivalent

to the announcement effect,3 the Department assumed that half of the consumers assumed to take

advantage of consumer tax credits would purchase more-efficient products with a manufacturer

tax credit program. As a result, DOE estimated that the market share of efficient nonweatherized gas furnaces would increase due to manufacturer tax credits by 2 percent over the

base case for at the 80 percent AFUE standard level, by 0.5 percent at the 81 percent AFUE

standard level, and by 10 percent for gas boilers. The Department assumed the impact of this

policy would be to permanently transform the market so that the shipment-weighted efficiency

gain seen in the first year of the program would be maintained throughout the forecast period.

2.2.3 Voluntary Energy-Efficiency Targets

For a non-weatherized gas furnace target level of 80 percent AFUE, DOE assumed that

the voluntary target would be achieved through manufacturer participation in a gradual phase-out

of production of units below 80 percent AFUE. It assumed that this phase-out would increase

linearly from 2015, reaching 75 percent of the eligible market in the tenth year of the program

(2024)d.

For a non-weatherized gas furnace target level of 81 percent AFUE and for gas boilers,

DOE modeled the voluntary efficiency target policy assuming expansion of existing ENERGY

STAR programs conducted by the Environmental Protection Agency and DOE for these two

products." The ENERGY STAR program sets minimum energy-efficiency specifications for

various products, including furnace and boiler equipment. ENERGY STAR encourages

consumer adoption of these products through marketing to promote consumer label recognition,

adoption of the specifications by various efficiency incentive programs, and manufacturer

production and promotion of ENERGY STAR-compliant appliances.

For the voluntary policy at the 81 percent AFUE target level, DOE assumed that

ENERGY STAR would conduct a parallel program that targeted 81 percent AFUE within the

non-condensing non-weatherized gas furnace market. It assumed that the program targeting 81

percent AFUE would cause a small increase in market penetration of efficient non-condensing

furnaces since furnace manufacturers have some concerns regarding the safety of 81 percent

AFUE units. For gas boilers, the Department estimated that an expanded ENERGY STAR

d DOE used an upper limit of 75 percent because there are some replacement situations in which installation of an 80

percent AFUE furnace is not easily accomplished.

RIA-10

 EE-RM/STD-01-350 COMMENT 104.2

Manufacturer Tax Credits 

The Department assumed that a manufacturer tax credit program would effectively result 

in a lower price to the consumer by an amount equivalent to that provided by rebates (i.e., 30 

percent of the incremental price difference for furnaces meeting base case efficiency levels and 

those meeting the policy targets and 79 percent of the incremental price difference for boilers). 

Because these tax credits would go to manufacturers instead of consumers, the Department 

assumed that manufacturers would pass on the reduced costs, causing the direct price effect. 

However, DOE assumed that the announcement effect would not occur because the program 

would not be visible to the consumers. Since the direct price effect is approximately equivalent 

to the announcement effect,3 the Department assumed that half of the consumers assumed to take 

advantage of consumer tax credits would purchase more-efficient products with a manufacturer 

tax credit program. As a result, DOE estimated that the market share of efficient nonweatherized gas furnaces would increase due to manufacturer tax credits by 2 percent over the 

base case for at the 80 percent AFUE standard level, by 0.5 percent at the 81 percent AFUE 

standard level, and by 10 percent for gas boilers. The Department assumed the impact of this 

policy would be to permanently transform the market so that the shipment-weighted efficiency 

gain seen in the first year of the program would be maintained throughout the forecast period. 

2.2.3 Voluntary Energy-Efficiency Targets 

For a non-weatherized gas furnace target level of 80 percent AFUE, DOE assumed that 

the voluntary target would be achieved through manufacturer participation in a gradual phase-out 

of production of units below 80 percent AFUE. It assumed that this phase-out would increase 

linearly from 2015, reaching 75 percent of the eligible market in the tenth year of the program 

(2024)d. 

For a non-weatherized gas furnace target level of 81 percent AFUE and for gas boilers, 

DOE modeled the voluntary efficiency target policy assuming expansion of existing ENERGY 

STAR programs conducted by the Environmental Protection Agency and DOE for these two 

products. 17 The ENERGY STAR program sets minimum energy-efficiency specifications for 

various products, including furnace and boiler equipment. ENERGY STAR encourages 

consumer adoption of these products through marketing to promote consumer label recognition, 

adoption of the specifications by various efficiency incentive programs, and manufacturer 

production and promotion of ENERGY STAR-compliant appliances. 

For the voluntary policy at the 81 percent AFUE target level, DOE assumed that 

ENERGY STAR would conduct a parallel program that targeted 81 percent AFUE within the 

non-condensing non-weatherized gas furnace market. It assumed that the program targeting 81 

percent AFUE would cause a small increase in market penetration of efficient non-condensing 

furnaces since furnace manufacturers have some concems regarding the safety of 81 percent 

AFUE units. For gas boilers, the Department estimated that an expanded ENERGY STAR 

d DOE used an upper limit of 75 percent because there are some replacement situations in which installation of an 80 

percent AFUE furnace is not easily accomplished. 

RIA-IO 
program that targeted 84 percent AFUE could moderately increase the market share at this level.

In both cases, the Department utilized estimates of the market impact of the existing ENERGY

STAR programs.1 , " The Department assumed that the programs resulting from this voluntary

efficiency targets policy would increase projected market share of the targeted units above the

penetration increases estimated by the ENERGY STAR program by 20 percent for nonweatherized gas furnaces at the 81 percent AFUE target level and by 50 percent for gas boilers.

Current ENERGY STAR efficiency specifications of 90 percent AFUE for gas furnaces target

condensing furnaces. The ENERGY STAR level for gas boilers is 85 percent.

Table RIA.4 shows the estimated market share increases from the voluntary efficiency

target policy.

Table RIA.4 Increased Market Share Penetration Levels from Voluntary Furnace and

Non-Weatherized Gas Furnaces Gas Boilers

Year of Efficiency Target, Efficiency Target, Efficiency Target,

Program 80% AFUE 81% AFUE 84% AFUE

2015 8% 0% 0%

2016 15% 0% 2%

2017 23% 0% 3%

2018 30% 0% 5%

2019 38% 0% 7%

2020 45% 1% 9%

2021 53% 1% 10%

2022 60% 1% 12%

2023 68% 1% 14%

2024 75% 1% 15%

2025 75% 1% 17%

2026 75% 1% 17%

2027 75% 1% 17%

2028 75% 1% 17%

2029 75% 1% 17%

2030 75% 1% 17%

2031 75% 1% 18%

2032 75% 1% 18%

2033 75% 1% 18%

2034 75% 2% 18%

2035 75% 2% 18%

2036 75% 2% 18%

2037 75% 2% 18%

2038 75% 2% 18%

* The percentages in each column refer to shares of the eligible market in each case.

Boiler Programs*

RIA-1 1

 EE-RM/STD-01-350 COMMENT 104.2

program that targeted 84 percent AFUE could moderately increase the market share at this level. 

In both cases, the Department utilized estimates of the market impact of the existing ENERGY 

STAR programs. IS, 19 The Department assumed that the programs resulting from this voluntary 

efficiency targets policy would increase projected market share of the targeted units above the 

penetration increases estimated by the ENERGY STAR program by 20 percent for nonweatherized gas furnaces at the 81 percent AFUE target level and by 50 percent for gas boilers. 

Current ENERGY STAR efficiency specifications of 90 percent AFUE for gas furnaces target 

condensing furnaces. The ENERGY STAR level for gas boilers is 85 percent. 

Table RIA.4 shows the estimated market share increases from the voluntary efficiency 

target policy. 

Table RIA.4 Increased Market Share Penetration Levels from Voluntary Furnace and 

B"l 01 er P rograms* 

Non-Weatherized Gas Furnaces Gas Boilers 

Year of Efficiency Target, Efficiency Target, Efficiency Target, 

Pro~ram 80%AFUE 81%AFUE 84%AFUE 

2015 8% 0% 0% 

2016 15% 0% 2% 

2017 23% 0% 3% 

2018 30% 0% 5% 

2019 38% 0% 7% 

2020 45% 1% 9% 

2021 53% 1% 10% 

2022 60% 1% 12% 

2023 68% 1% 14% 

2024 75% 1% 15% 

2025 75% 1% 17% 

2026 75% 1% 17% 

2027 75% 1% 17% 

2028 75% 1% 17% 

2029 75% 1% 17% 

2030 75% 1% 17% 

2031 75% 1% 18% 

2032 75% 1% 18% 

2033 75% 1% 18% 

2034 75% 2% 18% 

2035 75% 2% 18% 

2036 75% 2% 18% 

2037 75% 2% 18% 

2038 75% 2% 18% . . * The percentages III each column refer to shares of the eltglble market III each case . 

RIA-II 
2.2.4 Early Replacement

Early replacement refers to the replacement of furnace and boiler units before the end of

their useful lives. The purpose of this policy is to replace old, inefficient equipment with higherefficiency units.

In the 1990s, the Department studied the feasibility of a Federal program to promote early

replacement of appliances under the Energy Policy Act of 1992.20 This study identified policy

options for early replacement that included a direct national early replacement program,

replacement of federally owned appliances, promotion through equipment manufacturers,

consumer incentives, incentives to utilities, and building regulations.

For this analysis, the Department considered a program that targets the units in the stock

that have efficiency levels lower than the policy target level and encourages their early

replacement with products at the target efficiency level. Shipments not affected by the early

replacement program have base case efficiency levels. Shipments to new construction in 2015

and beyond are not affected by this program. (Chapter 9 of the TSD describes the general

approach for estimating replacements in each year; the NES model uses a retirement function

that tracks the percentage of units retiring and surviving for each vintage.)

The Department assumed that a portion of the furnace and boiler units in the existing

stock in 2015, the first year of the analysis period, would be replaced by models meeting the

target levels. It modeled this policy by assuming an increase of 20 percent (over the natural

replacement rate based on units being replaced at the end of their useful lives) in the number of

replaced units in the first year. It based this level on one of the cases in the report described

above. The Department assumed that the program would last as long as it took to completely

replace all of the eligible furnaces and boilers in the stock in the year that the program began

(2015).

The policy would create a jump in shipments relative to the base case in the early years of

the program (see Figure RIA.4). As a result, more higher-efficiency units that meet the policy

targets would be quickly brought into the equipment stock, leading to an immediate gain in the

weighted-average equipment efficiency compared to the base case. However, unlike the other

policy cases discussed, the weighted-average efficiency would drop back down to meet the levels

in the base case as the eligible stock of equipment for early replacement became depleted.

e The analysis concluded that while cost-effective opportunities for early replacement exist, a widespread federal

early replacement program was not economically justified. Because premature retirement means that a unit may be

replaced by an appliance less efficient than the eventual replacement would probably have been, energy savings

would be smaller than anticipated. Early replacement programs could increase sales volatility in the long run by

encouraging a temporary increase in production followed by a lull in demand. Early replacement could be

economical in localities with high energy cost conditions or environmental constraints, when replacement appliances

are much more efficient than existing stock, or when a major technology breakthrough has recently occurred,

creating the need for a ready market.

RIA-12

 EE-RM/STD-01-350 COMMENT 104.2

2.2.4 Early Replacement 

Early replacement refers to the replacement of furnace and boiler units before the end of 

their useful lives. The purpose of this policy is to replace old, inefficient equipment with higherefficiency units. 

In the 1990s, the Department studied the feasibility of a Federal program to promote early 

replacement of appliances under the Energy Policy Act of 1992?O This study identified policy 

options for early replacement that included a direct national early replacement program, 

replacement offederally owned appliances, promotion through equipment manufacturers, 

consumer incentives, incentives to utilities, and building regulationsc

• 

For this analysis, the Department considered a program that targets the units in the stock 

that have efficiency levels lower than the policy target level and encourages their early 

replacement with products at the target efficiency level. Shipments not affected by the early 

replacement program have base case efficiency levels. Shipments to new construction in 2015 

and beyond are not affected by this program. (Chapter 9 of the TSD describes the general 

approach for estimating replacements in each year; the NES model uses a retirement function 

that tracks the percentage of units retiring and surviving for each vintage.) 

The Department assumed that a portion of the furnace and boiler units in the existing 

stock in 2015, the first year of the analysis period, would be replaced by models meeting the 

target levels. It modeled this policy by assuming an increase of 20 percent (over the natural 

replacement rate based on units being replaced at the end of their useful lives ) in the number of 

replaced units in the first year. It based this level on one of the cases in the report described 

above. The Department assumed that the program would last as long as it took to completely 

replace all of the eligible furnaces and boilers in the stock in the year that the program began 

(2015). 

The policy would create a jump in shipments relative to the base case in the early years of 

the program (see Figure RIA.4). As a result, more higher-efficiency units that meet the policy 

targets would be quickly brought into the equipment stock, leading to an immediate gain in the 

weighted-average equipment efficiency compared to the base case. However, unlike the other 

policy cases discussed, the weighted-average efficiency would drop back down to meet the levels 

in the base case as the eligible stock of equipment for early replacement became depleted. 

e The analysis concluded that while cost-effective opportunities for early replacement exist, a widespread federal 

early replacement program was not economically justified. Because premature retirement means that a unit may be 

replaced by an appliance less efficient than the eventual replacement would probab ly have been, energy savings 

would be smaller than anticipated. Early replacement programs could increase sales volatility in the long run by 

encouraging a temporary increase in production followed by a lull in demand. Early replacement could be 

economical in localities with high energy cost conditions or environmental constraints, when replacement appliances 

are much more efficient than existing stock, or when a major technology breakthrough has recently occurred, 

creating the need for a ready market. 

RIA-12 
4 5.

4 0 Base base.

-, Early Replacement 3.5

Scenario

3.0

0

2 5.

E 2.0

r

a

L

U]

1.5

4

H

1.0

0 . 5

0 . 0 -

1985 1990 1995 2044 2005 2410 2415 2020 2025 2030 2035

Figure RIA.4 Early Replacement Shipments Projections for Non -Weatherized Gas

Furnaces

2.2.5 Bulk Government Purchases

The Department assumed that a bulk government purchase policy would encourage

Federal, State, and local governments to purchase equipment meeting the target levels.

Aggregating public sector demand could provide a market signal to manufacturers and vendors

that some of their largest customers seek suppliers with products that meet an efficiency target at

good prices. This program also could induce "market pull" impacts through the effects of

manufacturers and vendors achieving economies of scale for high-efficiency products.

The Department assumed that government agencies, such as the Department of Housing

and Urban Development (HUD), would administer such a program. At the Federal level, this

would be an enhancement to the existing Federal Energy Management Program (FEMP). The

FEMP program has procurement guidelines for Federal government equipment purchasing, and

Federal construction requirements include these guidelines for installing or replacing

equipment.'

The Department assumed that this policy would impact a subset of housing units for

which government agencies purchase or influence the purchase of furnaces and boilers. This

subset would mainly consist of public housing and housing on military bases. To represent this

subset, DOE considered low-income households identified in the Residential Energy

RIA-13

 EE-RM/STD-01-350 COMMENT 104.2

4.5~----------------------------------------------------~ 

4.0 

3.5 

--+- Base Case 

Eat1y Replacement 

Scenario 

W3.0+------------------------------+--~~----------------~ 

o 

~2.5t-----------~~~-+L~~~~~------------------------~ VI 

~ E 2.0+-------~~-+------------------------------------------~ 0. 

E 

(j) 

~ 1.5++~~~----------------------------------------------~ 

o 

I1.0+-----------------------------------------------------~ 

0.5+-----------------------------------------------------~ 

1985 1990 199s 2000 2005 2010 2015 2020 2025 2033 2035 

Figure RIA.4 Early Replacement Shipments Projections for Non-Weatherized Gas 

Furnaces 

2.2.5 Bulk Government Purchases 

The Department assumed that a bulk government purchase policy would encourage 

Federal, State, and local governments to purchase equipment meeting the target levels. 

Aggregating public sector demand could provide a market signal to manufacturers and vendors 

that some of their largest customers seek suppliers with products that meet an efficiency target at 

good prices. This program also could induce "market pull" impacts through the effects of 

manufacturers and vendors achieving economies of scale for high-efficiency products. 

The Department assumed that government agencies, such as the Department of Housing 

and Urban Development (HUD), would administer such a program. At the Federal level, this 

would be an enhancement to the existing Federal Energy Management Program (FEMP). The 

FEMP program has procurement guidelines for Federal government equipment purchasing, and 

Federal construction requirements include these guidelines for installing or replacing 

equipment. 21 

The Department assumed that this policy would impact a subset of housing units for 

which government agencies purchase or influence the purchase offurnaces and boilers. This 

subset would mainly consist of public housing and housing on military bases. To represent this 

subset, DOE considered low-income households identified in the Residential Energy 

RIA-13 
Consumption Survey (RECS) 2001 (see Chapter 11 of the TSD for description of the low-income

household sample). According to RECS 2001, 7.8 percent of the households with gas furnaces

and 17.5 percent of those with gas boilers were classified as low-income. DOE assumed that

these same percentages of furnace and boiler shipments would go to low-income households in

each year.

To estimate the market impact, the Department considered previous analysis of the bulk

government purchasing policy in the residential air conditioner RIAZZ, where it assumed a 5

percent increase in market share of higher-efficiency units over the base case due to the policy.

Since DOE envisions that the policy for furnaces and boilers would build on the existing FEMP

program for gas furnaces, DOE assumed that the government purchase policy would likely cause

a 10 percent increase in market share in each year. Thus, an additional 10 percent (above the

base case) of shipments to eligible low-income households would meet the target levels through

this policy. The result is an additional penetration of equipment meeting the target efficiency

levels of 0.8 percent and 1.8 percent (10 percent respectively).

2.3 Non-Regulatory Policy Market Share Impacts

Figures RIA.5 through RIA.7 show the market share (penetration rate) impacts for each of

the non-regulatory policy cases for non-weatherized gas furnaces and gas boilers. In each case,

the market penetration refers to the eligible market for the particular product. For each product

class, the proposed standard (not shown in the figures) would result in a 100 percent penetration.

70%

5rj%

10%

- ohrtiroTar!..t

-e- Om sime r Nbatz

^T- Coi s Arne r Tx Credit

-A-- MmIt"rerTxtCie<Rt

- 6ifGoenmeit Pi riaes

- EarIVRepkmemeit

1

2015 =0 X035

Figure RIA.S Penetration Rates for Non-Weatherized Gas Furnaces at 80

Percent AFUE

RIA-14

 EE-RM/STD-01-350 COMMENT 104.2

Consumption Survey (RECS) 2001 (see Chapter 11 of the TSD for description of the low-income 

household sample). According to RECS 2001, 7.8 percent of the households with gas furnaces 

and 17.5 percent of those with gas boilers were classified as low-income. DOE assumed that 

these same percentages of furnace and boiler shipments would go to low-income households in 

each year. 

To estimate the market impact, the Department considered previous analysis of the bulk 

government purchasing policy in the residential air conditioner RIA22, where it assumed a 5 

percent increase in market share of higher-efficiency units over the base case due to the policy. 

Since DOE envisions that the policy for furnaces and boilers would build on the existing FEMP 

program for gas furnaces, DOE assumed that the government purchase policy would likely cause 

a 10 percent increase in market share in each year. Thus, an additional 10 percent (above the 

base case) of shipments to eligible low-income households would meet the target levels through 

this policy. The result is an additional penetration of equipment meeting the target efficiency 

levels of 0.8 percent and 1.8 percent (10 percent respectively). 

2.3 Non-Regulatory Policy Market Share Impacts 

Figures RIA.5 through RIA.7 show the market share (penetration rate) impacts for each of 

the non-regulatory policy cases for non-weatherized gas furnaces and gas boilers. ill each case, 

the market penetration refers to the eligible market for the particular product. For each product 

class, the proposed standard (not shown in the figures) would result in a 100 percent penetration. 

/ 41 II II III II III II II II II II III III II 

fI' 

/ ./ -4-VoM I til{ 1<Irg!t> -

I -El-COlumer Ro!lliIE~ 

COl$uoe r "'" Cre(11t -

/ 'il.~llmtl re rTax C ,,(lit 

/ -Il- B I ~ Gooe nme It PllCla.!~ 

/l --t- Ealt{p.epa:.;melt -

I 

L M M 

2015 

... 

& 

;;mo 

~ 

Figure RIA.S Penetration Rates for Non-Weatherized Gas Furnaces at 80 

Percent AFUE 

RIA-14 
14%

127:

10%

-Q-VohibgTaFyt

-Z-09kMfIer NIk3VS

OSYa lrne r Tax wredtt

Rrbr MFAi re rT f Ce(I FZ

-re- B 1 1. Gomm. It P r riaes

- EakPkpbDmieit

4%

0

CrI4

2015

M

M20

Q

Figure RIA.6 Penetration Rates for Non-Weatherized Gas Furnaces at 81

Percent AFUE

W%

23%

1541.

10%

6%

09:

-0- Vole 14ar^ Tare

-^-C^arsune rPalaat:s

rorsane rTmCpd1t

-z- r1m itch re rTm Ga dt

-w.- BIkGrluenmertPmiaes

-r- EmV Pe 1weineit

r'

y--

Y ., n ^ a n ro-re ar si ^ r -^e ^r 'h^+--.poi ro re o., of sr ss--.,

2015

Figure RIA.7 Penetration Rates for Gas Boilers at 84 Percent AFUE

RIA- l s

 EE-RM/STD-01-350 COMMENT 104.2

I:;:+;; 

...... Vol. ItlF{ n. ry~ 

-hi-COIS Ufie r P"lla~S r---

",~ COluroe r TIn: Credit 

~l.qllt>1IlI re rTax Cied Fz 

'"" r--- ........ BU:GcIJeBrno. ItPW.~$ '., 

" -I- Eail{ P.epL't::emelt 

" 

10';; 

" ", , 

.""','\.., 

'-.., " 

"" ....... '''-,. 

~.,;~ -oa--- III II! II! II II! II 

..::. ~~.'i:' 

~ .~:. 

2015 :)J2(l 

Figure RIA.6 Penetration Rates for Non-Weatherized Gas Furnaces at 81 

Percent AFUE 

...... VOI.ltlF{ Tary~ -=- -... -e-Col .nne r P.el)~. 

Cou.roe rTax C p.(11t 

'A-lll1adue rTax Ce <II • 

.....,... B.~GOOeBroeltPw.~~ 

-r- E.lll{ P,epI<P::erne It 

15':4 

",,/~ iii ... iIo oil 01' s s .t- oO • -¥-1' 

~~ .// 

7"'... 10';; 

;/ 

.,./ ~~, 

"L/" -......... 

" 'I 'I I'. II! 'I "'~-.=~ IP. " " 'I I, 

/ 

2015 

Figure RIA.7 Penetration Rates for Gas Boilers at 84 Percent AFUE 

RIA-IS 
2.4 Results Summary for Non-Regulatory Alternatives

Tables RIA.5 and RIA.6 show the NES and NPV of each of the non-regulatory

alternatives. The results are for all six product classes. Table RIA.5 shows the results if the

efficiency target levels are equal to TSL 2, and Table RIA.6 shows the results if the efficiency

target levels are equal to TSL 2, with the exception of non-weatherized gas furnaces, for which

the target is TSL 3 (81 percent AFUE). The case in which no regulatory action is taken with

regard to furnaces and boilers constitutes the base case (or "No Action") scenario. Since this is

the base case, energy savings and NPV are zero by definition. For comparison, the table includes

the impacts of the proposed energy conservation standards. The NPV amounts shown in Tables

RIA.5 and RIA.6 refer to the NPV based on two discount rates (seven percent and three percent

real).

Table RIA.5 Non-Regulatory Alternatives with Tar et Levels at TSL 2

Primary

Energy

Net Present Values

(billion $2004)_

Policy Alternatives

Savings

(quads) 7% discount rate 3% discount rate

No New Regulatory Action 0.0 0.0 0.0

Consumer Rebates 0.078 0.086 0.369

Consumer Tax Credits 0.047 0.052 0.221

Manufacturer Tax Credits 0.023 0.026 0.111

Voluntary Energy Efficiency Targets 0.046 0.074 0.298

Early Replacement 0.025 0.059 0.160

Bulk Government Purchases 0.005 0.006 0.026

Proposed Standards at TSL 2 0.410 0.646 2.480

Table RIA.6 Non-Regulatory Alternatives with Tar et Levels at TSL 2 (NWGF at TSL 3)

Primary

Energy

Net Present Value*

(billion $2004)

Policy Alternatives

Savings

(quads) 7% discount rate 3% discount rate

No New Regulatory Action 0.0 0.0 0.0

Consumer Rebates 0 .083 0.083 0.374

Consumer Tax Credits 0.050 0.050 0.225

Manufacturer Tax Credits 0.025 0.025 0.112

Voluntary Energy Efficiency Targets 0.041 0.056 0.244

Early Replacement 0.050 0.048 0.183

Bulk Government Purchases 0.008 0 .006 0.030

Proposed Standards at TSL 2 (NWGF at TSL 3) 0.704 0.585 3.096

* Net present value is the value of a time series of costs and savings. The net present value was determined from

2015 to 2038 in billions of 2004 dollars.

RIA-16

 EE-RM/STD-01-350 COMMENT 104.2

2,4 Results Summary for Non-Regulatory Alternatives 

Tables RIA.5 and RIA.6 show the NES and NPV of each of the non-regulatory 

alternatives. The results are for all six product classes. Table RIA.5 shows the results if the 

efficiency target levels are equal to TSL 2, and Table RIA.6 shows the results if the efficiency 

target levels are equal to TSL 2, with the exception of non-weatherized gas furnaces, for which 

the target is TSL 3 (81 percent AFUE). The case in which no regulatory action is taken with 

regard to furnaces and boilers constitutes the base case (or "No Action") scenario. Since this is 

the base case, energy savings and NPV are zero by definition. For comparison, the table includes 

the impacts of the proposed energy conservation standards. The NPV amounts shown in Tables 

RIA.5 and RIA.6 refer to the NPV based on two discount rates (seven percent and three percent 

real). 

T a e bi RIA , 5 N R on- egUJa I t ory Alt erna ti ves WI 'th T arJ:!e t LIt eve sa TSL 2 

Net Present Value * Primary 

Energy (billion $2004) 

Savings 

Policy Alternatives (quads) 7% discount rate 3% discount rate 

No New Regulatory Action 0.0 0.0 0.0 

Consumer Rebates 0.078 0.086 0.369 

Consumer Tax Credits 0.047 0.052 0.221 

Manufacturer Tax Credits 0.023 0.026 0.111 

Vo luntary Energy Efficiency Targets 0.046 0.074 0.298 

Early Replacement 0.025 0.059 0.160 

Bulk Government Purchases 0.005 0.006 0.026 

Proposed Standards at TSL 2 0.410 0.646 2.480 

T a e bi RIA , 6 N R on- egu I a t ory Alt ern a f Ives WI 'th T arge t Lit eve s a TSL 2 (NWGF a t TSL 3) 

Net Present Value * Primary 

Energy (billion $2004) 

Savings 

Policy Alternatives (quads) 7% discount rate 3% discount rate 

No New Regulatory Action 0.0 0.0 0.0 

Consumer Rebates 0.083 0.083 0.374 

Consumer Tax Credits 0.050 0.050 0.225 

Manufacturer Tax Credits 0.025 0.025 0.112 

Voluntary Energy Efficiency Targets 0.041 0.056 0.244 

Early Replacement 0.050 0.048 0.183 

Bulk Government Purchases 0.008 0.006 0.030 

Proposed Standards at TSL 2 (NWGF at TSL 3) 0.704 0.585 3.096 

* Net present value is the value of a time series of costs and savings. The net present value was determined from 

2015 to 2038 in billions of 2004 dollars. 

RIA-16 
None of the alternatives DOE examined would save as much energy or have as high NPV

as the standards. Consumer rebates is the only policy that results in more than 20 percent of the

savings potential from the proposed standards. Also, several of the alternatives would require

new enabling legislation, such as consumer or manufacturer tax credits, since authority to carry

out those alternatives does not presently exist.

 EE-RM/STD-01-350 COMMENT 104.2

None of the alternatives DOE examined would save as much energy or have as high NPV 

as the standards. Consumer rebates is the only policy that results in more than 20 percent of the 

savings potential from the proposed standards. Also, several of the alternatives would require 

new enabling legislation, such as consumer or manufacturer tax credits, since authority to carry 

out those alternatives does not presently exist. 

RIA-I7 
REFERENCES

1. U.S. Department of Energy-Office of Energy Efficiency and Renewable Energy. Energy

Conservation Program for Consumer Products. Technical Support Document: Energy

Conservation Program for Consumer Products; Residential Furnaces and Boilers.

2005. Washington, D.C.

2. Rufo, M. and Fred Coito. California 's Secret Energy Surplus: The Potential for Energy

Efficiency., 2002. XENERGY Inc. Oakland, CA. Prepared for The Energy Foundation

and The Hewlett Foundation.

3. Koomey, J. G. "The Big Mistake" in forecasting technology adoption. Technological

Forecasting and Social Change. 2002. 69(2002): pp. 511-518.

4. Lawrence Berkeley National Laboratory-End-Use Forecasting Group. Analysis of Tax

Credits for Efficient Equipment. June 10, 2005.) The June 10, 2005 material from this

website is available in Docket #EE-RM/STD-00-550. For more information, contact

Brenda Edwards-Jones at (202) 586-2945.

<http://enduse.lbl.gov/Projects/TaxCredits.html>

5. NSTAR. High-Efficiency Heating Equipment Rebate Program. (Last accessed June 10,

2005.) The June 10, 2005 material from this website is available in Docket #EERM/STD-00-550. For more information, contact Brenda Edwards-Jones at (202) 586-

2945.

<http://www. nstaronline . com/customer_servic e/energy_efficiency/gas. asp#Heating%20E

quipment>

6. Colorado Spring Utilities. Residential Efficiency Program. (Last accessed June 10,

2005.) The June 10 , 2005 material from this website is available in Docket #EERM/STD-00-550 . For more information, contact Brenda Edwards-Jones at (202) 586-

2945.

<http://www.csu.org/files/other/5643.pdf>

7. Gas Networks. Residential High-Efficiency Programs. (Last accessed June 10, 2005.)

The June 10, 2005 material from this website is available in Docket #EE-RM/STD-00-

550. For more information, contact Brenda Edwards-Jones at (202) 586-2945.

<http : //www. gasnetworks . com/efficiency/re sid_heating. asp>

8. New Jersey's Clean Energy Program and Warm Advantage Program. Gas Furnace,

Boiler and Water Heater Rebate Program. (Last accessed June 10, 2005.) The June 10,

2005 material from this website is available in Docket #EE-RM/STD-00-550. For more

information, contact Brenda Edwards-Jones at (202) 586-2945.

<http://www.njcleanenergy.com/html/lresidential/2 warm advantage_lmay05.html>

RIA-18

 EE-RM/STD-01-350 COMMENT 104.2

REFERENCES 

1. U.S. Department of Energy-Office of Energy Efficiency and Renewable Energy. Energy 

Conservation Program for Consumer Products. Technical Support Document: Energy 

Conservation Program for Consumer Products; Residential Furnaces and Boilers. 

2005. Washington, D.C. 

2. Rufo, M. and Fred Coito. California's Secret Energy Surplus: The Potential for Energy 

Efficiency.,2002. XENERGY Inc. Oakland, CA. Prepared for The Energy Foundation 

and The Hewlett Foundation. 

3. Koomey,1. G. "The Big Mistake" in forecasting technology adoption. Technological 

Forecasting and Social Change. 2002. 69(2002): pp.511-518. 

4. Lawrence Berkeley National Laboratory-End-Use Forecasting Group. Analysis of Tax 

Credits for Efficient Equipment. June 10, 2005.) The June 10, 2005 material from this 

website is available in Docket #EE-RM/STD-00-550. For more information, contact 

Brenda Edwards-Jones at (202) 586-2945. 

<http://enduse.lbl.gov/Projects/TaxCredits.html> 

5. NSTAR. High-Efficiency Heating Equipment Rebate Program. (Last accessed June 10, 

2005.) The June 10,2005 material from this website is available in Docket #EERM/STD-00-550. For more information, contact Brenda Edwards-Jones at (202) 586-

2945. 

<http://www.nstaronline.com/customer _ service/energy _ efficiency/ gas.asp#Heating%20E 

quipment> 

6. Colorado Spring Utilities. Residential Efficiency Program. (Last accessed June 10, 

2005.) The June 10,2005 material from this website is available in Docket #EERM/STD-00-550. For more information, contact Brenda Edwards-Jones at (202) 586-

2945. 

<http://www.csu.org/files/other/5643.pdf> 

7. Gas Networks. Residential High-Efficiency Programs. (Last accessed June 10,2005.) 

The June 10,2005 material from this website is available in Docket #EE-RM/STD-OO550. For more information, contact Brenda Edwards-Jones at (202) 586-2945. 

<http://www.gasnetworks.com/efficiency/resid _ heating. asp> 

8. New Jersey's Clean Energy Program and Warm Advantage Program. Gas Furnace, 

Boiler and Water Heater Rebate Program. (Last accessed June 10,2005.) The June 10, 

2005 material from this website is available in Docket #EE-RM/STD-00-550. For more 

information, contact Brenda Edwards-Jones at (202) 586-2945. 

<http://www.njcleanenergy.com/html/ 1 residentiaV2 _warm_advantage _1 mayO 5 .html> 

RIA-IS 
9. Bay State Gas. Rebates for Heating Conversions. (Last accessed June 10, 2005.) The

June 10, 2005 material from this website is available in Docket #EE-RM/STD-00-550.

For more information, contact Brenda Edwards-Jones at (202) 586-2945.

<http://www.baystategas.com/forhome/rebates.htm>

10. Berkshire Gas. High Efficiency Heating System & Water Heating Rebate Programs.

(Last accessed June 10, 2005 .) The June 10, 2005 material from this website is available

in Docket #EE-RM/STD-00-550 . For more information , contact Brenda Edwards-Jones

at (202) 586-2945.

<http://www.berkshiregas. com/p_docs_f2/Resprgrmsflyr4_04web.pdf>

11. Energy Trust of Oregon Inc. Home Energy Savings. (Last accessed June 10, 2005.) The

June 10, 2005 material from this website is available in Docket #EE-RM/STD-00-550.

For more information, contact Brenda Edwards-Jones at (202) 586-2945.

<http://www.energytrust.org/residential/hes/forms/Form 320g_Incentive App.pdf>

12. Southern California Gas Company. 2005 Home Energy Efficiency Rebate Program.

(Last accessed June 10, 2005 .) The June 10, 2005 material from this website is available

in Docket #EE-RM/STD-00-550. For more information, contact Brenda Edwards-Jones

at (202) 586-2945. <http://socalgas.com/residential/savemoney/home_erp.shtml>

13. Pacific Gas and Electric Company. Rebates for Existing Single Family Homes. (Last

accessed June 10, 2005.) The June 10, 2005 material from this website is available in

Docket #EE-RM/STD-00-550. For more information, contact Brenda Edwards-Jones at

(202) 586-2945.

<http://www.pge.com/res/rebates/gas_fumaces/index.html>

14. Puget Sound Energy. Energy Efficiency Rebates. (Last accessed June 10, 2005.) The

June 10, 2005 material from this website is available in Docket #EE-RM/STD-00-550.

For more information , contact Brenda Edwards-Jones at (202) 586-2945.

<http://www.pse.com/yourhome/rebates/gasfamace.html>

15. Aquila. Innovative Heating Technologies Rebates. (Last accessed June 10, 2005.) The

June 10, 2005 material from this website is available in Docket #EE-RM/STD-00-550.

For more information, contact Brenda Edwards-Jones at (202) 586-2945.

<https://networks.aquila.com/online/my_hom/ProgSrv/ProgServDetail.j sp?url=/shared/pr

ods/innovative space_waterheater ia.html>

16. U.S. Department of Energy-Office of Codes and Standards. Technical Support

Document: Energy Efficiency Standards for Consumer Products: Refrigerators,

Refrigerator-Freezers, and Freezers, including Environmental Assessment and

Regulatory Impact Analysis. July, 1995. Washington, DC. Report No. DOE/EE-0064.

The material from this website is available in Docket #EE-RM/STD-00-550. For more

information, contact Brenda Edwards-Jones at (202) 586-2945.

RIA-19

 EE-RM/STD-01-350 COMMENT 104.2

9. Bay State Gas. Rebatesfor Heating Conversions. (Last accessed June 10,2005.) The 

June 10,2005 material from this website is available in Docket #EE-RM/STD-00-550. 

For more information, contact Brenda Edwards-Jones at (202) 586-2945. 

<http://www.baystategas.com/forhome/rebates.htm> 

10. Berkshire Gas. High Efficiency Heating System & Water Heating Rebate Programs. 

(Last accessed June 10,2005.) The June 10,2005 material from this website is available 

in Docket #EE-RM/STD-00-550. For more information, contact Brenda Edwards-Jones 

at (202) 586-2945. 

<http://www.berkshiregas.com/p_docs_f2/Resprgrmsflyr4_04web.pdf> 

11. Energy Trust of Oregon Inc. Home Energy Savings. (Last accessed June 10,2005.) The 

June 10,2005 material from this website is available in Docket #EE-RM/STD-00-550. 

For more information, contact Brenda Edwards-Jones at (202) 586-2945. 

<http://www . energytrust.org/residentiallhes/forms/F orm _3 20g_Incentive _ App .pdf> 

12. Southern California Gas Company. 2005 Home Energy Efficiency Rebate Program. 

(Last accessed June 10,2005.) The June 10,2005 material from this website is available 

in Docket #EE-RM/STD-00-550. For more information, contact Brenda Edwards-Jones 

at (202) 586-2945. <http://socalgas.com/residentiallsavemoney/home _ etp.shtml> 

13. Pacific Gas and Electric Company. Rebatesfor Existing Single Family Homes. (Last 

accessed June 10,2005.) The June 10,2005 material from this website is available in 

Docket #EE-RM/STD-00-550. For more information, contact Brenda Edwards-Jones at 

(202) 586-2945. 

<http://www.pge.com/res/rebates/ gas _ furnaces/index.html> 

14. Puget Sound Energy. Energy Efficiency Rebates. (Last accessed June 10,2005.) The 

June 10,2005 material from this website is available in Docket #EE-RM/STD-00-550. 

For more information, contact Brenda Edwards-Jones at (202) 586-2945. 

<http://www.pse.com/yourhome/rebates/ gasfurnace.html> 

15. Aquila. Innovative Heating Technologies Rebates. (Last accessed June 10,2005.) The 

June 10,2005 material from this website is available in Docket #EE-RM/STD-00-550. 

For more information, contact Brenda Edwards-Jones at (202) 586-2945. 

<https://networks.aquila.com/online/my_homlProgSrv /ProgServ Detai1.j sp ?ml =/ shared/pr 

ods/innovative_space _ waterheater _ia.html> 

16. U.S. Department of Energy-Office of Codes and Standards. Technical Support 

Document: Energy Efficiency Standards for Consumer Products: Refrigerators, 

Refrigerator-Freezers, and Freezers, including Environmental Assessment and 

Regulatory Impact Analysis. July, 1995. Washington, DC. Report No. DOEIEE-0064. 

The material from this website is available in Docket #EE-RM/STD-00-550. Formore 

information, contact Brenda Edwards-Jones at (202) 586-2945. 

RIA-19 
<http://www.osti.gov/bridge/product.bibliojsp?osti_id=90266>

17. U.S. Environmental Protection Agency and U.S. Department of Energy. Energy Star

Program. (Last accessed June 10, 2005.) The June 10, 2005 material from this website

is available in Docket #EE-RM/STD-00-550. For more information, contact Brenda

Edwards-Jones at (202) 586-2945.

<http://www.energystar.gov>

18. Webber, C. A., R.E. Brown, A. Mahajan, and J.G. Koomey. Savings Estimates for the

ENERGY STAR Voluntary Labeling Program. Energy Policy. 2000. 28(15): pp. 1137-

1150.

19. Webber, C. A., R.E. Brown, A. Mahajan, and J.G. Koomey. Savings Estimates for

ENERGY STAR Voluntary Labeling Program: 2001 Status Report. 2002. Lawrence

Berkeley Laboratory. Berkeley, CA. Report No. LBNL-48496.

20. U.S. Department of Energy. Early Replacement of Appliances. 1994. Lawrence

Berkeley Laboratory. Berkeley, CA. Unpublished report by James E. McMahon and J.P.

Harris.

21. U.S. Department of Energy-Federal Energy Management Program. Energy Efficiency

Recommendations. (Last accessed June 10, 2005.) The June 10, 2005 material from this

website is available in Docket #EE -RM/STD-00-550. For more information, contact

Brenda Edwards-Jones at (202) 586-2945.

<http://www. eere. energy. gov/femp/technologies/eep_gas_fumace. cfm>

22. U.S. Department of Energy-Energy Efficiency and Renewable Energy. Technical

Support Document: Energy Efficiency Standards for Consumer Products: Residential

Central Air Conditioners and Heat Pumps Including: Regulatory Impact Analysis. May,

2002. Washington, D.C. The material from this website is available in Docket #EERM/STD-00-550. For more information, contact Brenda Edwards-Jones at (202) 586-

2945.

<http://www. eere. energy.gov/buildings/appliance-standards/residential/pdfs/title_page.pd

f>

 EE-RM/STD-01-350 COMMENT 104.2

<http://www .osti.gov/bridge/product. biblio.j sp? osti _ id=90266> 

17. U.S. Environmental Protection Agency and U.S. Department of Energy. Energy Star 

Program. (Last accessed June 10,2005.) The June 10,2005 material from this website 

is available in Docket #EE-RM/STD-00-550. For more information, contact Brenda 

Edwards-Jones at (202) 586-2945. 

<http://www.energystar.gov> 

18. Webber, C. A., R.E. Brown, A. Mahajan, and lG. Koomey. Savings Estimates for the 

ENERGY STAR Voluntary Labeling Program. Energy Policy. 2000. 28(15): pp. 1137-

1150. 

19. Webber, C. A., R.E. Brown, A. Mahajan, and lG. Koomey. Savings Estimatesfor 

ENERGY STAR Voluntary Labeling Program: 2001 Status Report. 2002. Lawrence 

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<http://www . eere. energy .gov /femp/technologies/ eep _gas _ furnace.cfm> 

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2945. 

<http://www .eere. energy.gov /buildings/appliance _ standards/residential/pdfs/title yage. pd 

f> 

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