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- i CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS
1.1 PURPOSE OF THE DOCUMENT ................................................................................. 1 -1 1.2 OVERVIEW OF THE APPLIANCES AND COMMERCIAL EQUIPMENT STANDARDS PROGRAM ......................................................................................................... 1 -1 1.3 OVERVIEW OF HIGH-INTENSITY DISCHARGE LAMP STANDARDS ................ 1 -2 1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS ................... 1 -3 1.5 STRUCTURE OF THE DOCUMENT ............................................................................ 1 -5
LIST OF TABLES Table 1.4.1 Analyses Under the Process Rule ............................................................................. 1 -41

- 1 CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT This interim technical support document (TSD) provides the analytical approaches, inputs, and results associated with the U.S. Department of Energy’s (DOE’s) study of energy c onservation standards for high-intensity discharge (HID) lamps. The interim TSD also serves to pr ovide technical detail and is a compendium to the life-cycle cost (LCC) and payback period (PBP) and national impact analysis (NIA) spreadsheets that are posted on the DOE’s website for the interim analysi s. a

1.2 OVERVIEW OF THE APPLIANCES AND COMMERCIAL EQUIPMENT STANDARDS PROGRAM Title III, Part C of the Energy Policy and Conservation Act of 1975 (EPCA; 42 U.S.C. 6291 –6317 ), as amended, established the Energy Conservation Program for Certain Industrial Equipment, which includes the HID lamps addressed in this interim analysis. b Before DOE determines whether to adopt a proposed energy conservation standard, it first solicits comments on the proposed standard. DOE designs any new or amended standard to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) To determine whether economic justification exists, DOE must review comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the following seven factors: (1) the economic impact of the standard on the manufacturers and consumers of the equipment subject to the standard; (2) the savings in operating costs throughout the estimated average life of the equipment compared to any increases in the price, initial charges, or maintenance expenses for the equipment that are likely to result from the imposition of the standa rd; (3) the total projected amount of energy savings likely to result directly from imposition of the standard; (4) any lessening of the utility or the performance of the equipment likely to result from im position of the standard; (5) the impact of any lessening of competition, as determined in writing by the Attorney General, likely to result from imposition of the standard;

a The interim analysis can be found here: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/23

. b For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A- 1.1

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(6) the need for national energy conservation; and (7) other factors the Secretary considers relevant. (42 U.S.C. 6295(o)(2)(B)(i))

1.3 OVERVIEW OF HIGH-INTENSITY DISCHARGE LAMP STANDARDS
As me ntioned in the previous section, Title III, Part C of EPCA (42 U.S.C. 6291–63 17 ), as amended, established the Energy Conservation Program for Certain Industrial Equipment, whic h includes the HID lamps addressed in this interim analysis. EPCA requires DOE to pr escribe testing requirements for those HID lamps for which DOE makes a determination that energy conservation standards would be technologically feasible and economically justified, and would result in significant energy savings. (42 U.S.C. 6317(a)(1)) EPCA further requires DOE, withi n 18 months of prescribing any testing requirements for HID lamps, to prescribe energy conservation standards for those lamps. (42 U.S.C. 6317(a)(2)) Any standards would apply to lamps m anufactured 36 months after the date the standards rule is published. (42 U.S.C. 6317(a)(3)) DOE published a positive final determination c that standards for certain HID lamps are technologically feasible, economically justified, and would result in a significant energy savings, estimated at 11.4 quadrillion British thermal units (quads) of cumulative energy savings over 30 years. 75 FR 37975 (July 1, 2010). As a result of this determination, DOE is currently conducting a test procedure rulemaking for the specified lamps. d On February 28, 2012, DOE published a notice announcing the availability of the framework document, “Framework Document for High-Intensity Discharge Lamps,” and a public meeting to discuss the proposed a nalytical framework for the rulemaking. 77 FR 11785. DOE also posted the framework document on its website describing the procedural and analytical approaches DOE anticipated using to evaluate the establishment of energy conservation standards for HID lamps. DOE held the public meeting for the framework document on March 29, 2012, e to describe the various rulemaking analyses DOE would conduct, the methods for conducting them, and the relationship among the various analyses. This interim TSD provides the analytical approaches, inputs, and results for those analyses. During the standards rulemaking, DOE will decide whether and at what level(s) to promulgate energy conservation standards. The decision, which will incorporate public participation, will be based on the technological feasibility, economic justification, and energy savings of specific potential standard levels pursuant to the requirements of EPCA. ( See, e.g., 42 U.S.C. 6295(o)-(p) and 6316(a))

c The 2010 HID lamps final determination is available at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/23

. d DOE published a proposed test procedure NOPR on December 15, 2011. (76 FR 77914) Based on comments received on the test procedure NOPR and subsequent additional research, DOE is considering a supplemental notice of proposed rulemaking regarding potential revisions to and clarification of the proposed HID lamp test procedures.

e The framework document and public meeting information are available at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/23

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This rulemaking also addresses 42 U.S.C. 6295(o) in which DOE is directed to incorporate standby mode and off mode energy use in any new or amended standard adopted after July 1, 2010. P lease see chapter 2 of this interim TSD for a detailed discussion on DOE’s consideration of standby and off mode energy consumption.

1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS DOE considers stakeholder participation a very important part of the standards-setting process. DOE encourages the participation of all stakeholders during the comment period of each rule making stage. Beginning with the rulemaking framework document for HID lamps (hereafter the “framework document”) and during subsequent comment periods, interactions among stake holders provide a balanced discussion of the information that is required for the standards rulemaking. In conducting the test procedure and the energy conservation standard rulemakings, DOE i nvolves interested parties through formal public notifications (i.e., Fe deral Register n otices). For this HID lamp energy conservation standards rulemaking, DOE will employ the procedures set forth in DOE’s Process Rule (Procedures for Consideration of New or Revised Energy C onservation Standards for Consumer Products, 61 FR 36974, July 15, 1996, 10 CFR Part 430, Subpart C, Appendix A) to the extent they are appropriate for developing energy conservation standa rds for the lamps covered under this rulemaking.
B efore DOE determines whether to establish energy conservation standards for HID lamps, it must first solicit comments on a proposed standard. (42 U.S.C. 6295(o )( 2)(B)(i)) DOE must design each new standard for this equipment to achieve the maximum improvement in e nergy efficiency that is technologically feasible and economically justified, and would result in significant energy savings. (42 U.S.C. 6295(o)(2)(A) and (3)) To determine whether a proposed standa rd complies with these requirements, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens to the g reatest extent practicable, weighing the seven factors described above. Subsequent to the publication of the framework document, the standards rulemaking pr ocess involves interim analyses followed by two additional formal, major public notices, which a re published in the Federal Register

. The interim analyses are designed to publicly vet the models and tools used in the rulemaking and to facilitate public participation before the proposed rule stage. After the interim analyses are vetted, DOE issues the first major notice, the notice of pr oposed rulemaking (NOPR), which presents a discussion of comments received in response to the framework document and the interim analyses of the impacts of standards on customers, manuf acturers, and the nation; DOE’s weighing of the impacts; and the proposed standards. The se cond notice is the final rule, which presents a discussion of comments received in response to the N OPR; the revised analysis of the impacts of standards; DOE’s weighing of the impacts; the standards adopted by DOE; and the effective dates of the standards.1

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Table 1.4. 1 Analyses Under the Process Rule

Interim Analysi s NOPR Final Rule * Market and technology assessment Revised interim analyses Revised analyses Screening analysis Life

- cycle cost sub

- group analysis Engineering analysis Manufacturer impact analysis Energy use characterization Utility impact analysis Markup a nalysis Employment impact analysis Equipment price determination Emissions analysis Life

- cycle cost and payback period analys i s Monetization of Emissions

Shipments analysis Regulatory impact analysis National impact analysis Interim manufacturer impact analysis * During the final rule phase, DOE considers the comments submitted by the U.S. Department of Justice concerning the impact of any lessening of competition that is likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(v)) As previously mentioned, on February 28, 2012, DOE published a notice announcing the availability of the framework document and a public meeting to discuss the proposed analytical framework for the rulemaking. 77 FR 11785. DOE also posted the framework document on its website here: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/23

. DOE held a public meeting on March 29, 2012, to discuss procedural and analytical a pproaches to the rulemaking, and to inform and facilitate stakeholders’ involvement in the rulemaking process. The analytical framework presented at the public meeting described rule making analyses, such as the engineering analysis and the LCC and PBP analysis, the methods proposed for conducting them, and the relationships among the various analyses. See Ta ble 1.4. 1 for all the analyses discussed at the public meeting to be undertaken in each of the formal public rulemaking documents. PDF copies of the slides and other material associated with the public me eting are available at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/23

. During the p ublic meeting and the framework document comment period, stakeholders, including manufacturers, trade associations, environmental advocates, and other interested parties submitted several comments about the HID lamp rulemaking. The major issues discussed were : scope of coverage, metric, equipment classes, efficacy level approach, and shipment trends. Stakeholder comments submitted during the framework document comment period e laborated upon the issues raised at the public meeting. DOE considered all comments for this int erim analysis and a d etailed discussion of interested party comments will be included in the NOPR. As pa rt of the information gathering and sharing process, DOE organized and held interviews with HID lamp manufacturers who operate in the U.S. market. DOE had five objec tives for these interviews: (1) solicit feedback on the scope of coverage for the rulemaking; ( 2 ) solicit feedback on the engineering analysis; (3) solicit feedback on topics related to the1

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interim manufacturer impact analysis; (4) provide an opportunity early in the rulemaking process to ex press specific concerns to DOE; and (5) foster cooperation between manufacturers and DO E. During the manufacturer interviews, DOE discussed these and other issues regarding mar ket data, distribution channels, anticipated customer responses to standards, production and e quipment mix, conversion costs, and cumulative regulatory burden. Appendix 13 A contains a complete copy of the interview guide. DOE incorporated the information gathered at the meetings into its engineering analysis (chapter 5), equipment price determination (chapter 6), and the interim manufacturer impact a nalysis (chapter 1 3 ). Following the publication of the interim analysis, DOE intends to hold a dditional meetings with manufacturers as part of the consultative process for the manufacturer impact analysis conducted during the NOPR phase. For the LCC, PBP, and NIA, DOE developed spreadsheets using Microsoft Excel®. The LCC and PBP spreadsheets calculate the economic impacts of replacing HID lamps with standa rd-compliant ones. The NIA spreadsheets calculate the national energy savings (NES) and na tional net present values (NPVs) at various efficacy levels and include a model that forecasts the impacts of energy conservation standards at various levels on equipment shipments. These spre adsheets are available on the DOE website at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/23

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1.5 STRUCTURE OF THE DOCUMENT This interim TSD outlines the analytical approaches used in this rulemaking. The TSD c onsists of 18 chapters and four appendices.
C hapter 1 Introduction: provides an overview of the appliance standards program

a nd how it applies to the rulemaking for HID lamps, and outlines the structure of the document Chapter 2 Analytical Framework: d escribes the rulemaking process, and provid es

an overview of each analysis including rationale for preliminary de terminations Chapter 3 Market and Technology Assessment: characterizes the HID lamp

mar ket and the technologies available for increasing efficacy, and outlines equipment classes Chapter 4 Screening Analysis: determines which technology design options are

viable for consideration in the engineering analysis Chapter 5 Engineering Analysis: describes DOE’s approach to the engineering

a nalysis, and established candidate standard levels based on lamp efficacy Chapter 6 Equipment Price Determination: describes DOE’s approach to

determining the end-user prices for HID lamps1

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Chapter 7 Markups Analysis: discusses the methods DOE used for deriving

manufacturer selling prices from end-user prices using manufacturerto -customer markups Chapter 8 Energy Use Characterization: discusses the sources and methods for

de veloping energy use estimates for HID lamps Chapter 9 LCC and PBP Analyse s: discusses the economic effects of standards

and compares the LCC and PBP of HID lamps with and without higher e nergy conservation standards Chapter 10 Shipments Analysis: discusses the methods used for forecasting

shipm ents with and without higher energy conservation standards Chapter 11 National Impact Analysis: describes the national forecast of energy

c onsumption, efficacy of new lamps, and annual H ID lamp sales in the absence or presence of new standards Chapter 12 Customer Sub-Group Analysis: discusses the methods to be used to

stud y the effects of standards on a sub-group of HID lamp customer s a nd compares the LCC and PBP of equipment with and without higher e fficacy standards for these customers Chapter 13 Manufacturer Impact Analysis: discusses the methods to be used to

stud y the effects of standards on the finances and profitability of HID lamp manufacturers, and presents interim manufacturer impact a nalysis results Chapter 14 Employment Impact Analysis: discusses the methods to be used to

a nalyze the effects of standards on national employment Chapter 15 Utility Impact Analysis: discusses the methods to be used to study the

effects of standards on electric utilities Chapter 16 Emissions Analysis: discusses the methods to be used to study the

e ffects of standards on two pollutants, sulfur dioxide (SO 2 ) and nitrogen oxides (NOx), as well as carbon emissions Chapter 17 Monetization of Emission Reductions Benefits: discusses the basis for

the mone tary values that will be used for the reduced emissions carbon dioxide (CO 2 ) and nitrogen oxides (NO X ) Chapter 18 Regulatory Impact Analysis: discusses the methods to be used to

de termine the impact of non-regulatory alternatives to energy conservation standards1

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Appendix 6A HID Ballast and Fixture Equipment Price Determination: describes the

method used to determine the end -user prices for HID ballasts and fixtures Appendix 9 A User Instructions for Life-Cycle Cost and Payback Period Spreadsheet Appendix 9B Estimation of Potential Equipment Price Trends for High-Intensity

Discharge Lamps: describes the method used for estimating price trends Appendix 11 A User Instructions for Shipments and NIA Spreadsheet Appendix 13 A Interim Manufacturer Interview Guide Appe ndix 17A Social Cost of Carbon for Regulatory Impact Analysis Under

Executive Order 12866