13 A-i 

### A PPENDIX 13A. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE S

TABLE OF CONTENTS

13A.1 FLUORESCENT LAMP BALLAST MANUFACTURER IMPACT ANALYSIS

INTERVIEW GUIDE ..................................................................................................................... 1

13A.2 FLUORESCENT LAMP BALLAST SMALL BUSINESS MANUFACTURER

IMPACT ANALYSIS INTERVIEW GUIDE .............................................................................. 2013A -1 

### APPENDIX 13A MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES

13A.1 FLUORESCENT LAMP BALLAST MANUFACTURER IMPACT ANALYSIS

INTERVIEW GUIDE



# Manufacturer Impact Analysis Interview Guide for Fluorescent Lamp Ballasts

July 23, 201013A -2 

### T he U.S. Department of Energy (DOE) is conducting a manufacturer impact analysis (MIA) a s part of the rulemaking process to amend energy conservation standards for fluorescent lamp

ballasts . In this analysis, DOE uses publicly available information and information provided during interviews to assess possible impacts on manufacturers due to amend ed energy

conservation standards.

1 TEST PROCEDURE FOLLOW

- UP

DOE defines ballast efficiency (BE) as lamp arc power divided by ballast input power as measured while the ballast is operating a lamp . When encountering the term throughout the rest of this interview guide, please refer to this definition.

1.1 Are there any burdens or drawbacks due to the direct use of ballast efficiency as a metric for setting energy conservation standards (i.e., no correlations to BEF)?

1.2 Are there any burdens or drawbacks due to the use of power measurements to determine ballast factor? In this technique, the measured output power (lamp arc power) would be compared to the arc power listed in ANSI C78.81, rather than comparing photocell output of a test and reference system. Will the variation in reference lamp measured power lead to variation in BF as measured and calculated by this method?

1.3 ANSI C82.13-2002 defines a high- frequency ballast as a device that operates at a supply frequency of 50 or 60 Hz and operates the lamp at fre quencies greater than 10 kHz. DOE is aware that lamps operate more efficiently at high frequency as compared to low frequency. Is this difference in lamp efficacy captured in the ballast efficiency metric? If not, can you suggest

a reduction in efficien cy to be applied to low frequency ballasts that will capture this difference?

1.4 What is the typical variation in ballast efficiency due to testing (instrumentation, materials, procedure)? What is the typical variation due to manufacturing variability (with in multiple samples of the same model number)? Do you have any test data that you can provide to

illustrate this variation?

1.5 Are you aware of any issues that might arise if DOE were to require testing at NVLAP

accredited labs?

2 PRELIMINARY ANALYSIS FOLLOW

- UP

On March 24, 2010 DOE published a Federal Register notice announcing the availability of the preliminary technical support document. 1 

### The following questions expand upon topics discussed in that document and at the April 26, 2010 public meeting.

Scope of Coverage

1 For more details about the analysis that has been done to date, please visit DOE’s website at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts.html

.13A -3 

### 2.1 Manufacturers commented that magnetic ballasts may be required for certain EMF/EMI sensitive applications where no “noise” can be tolerated. Can you please provide examples of these applications (and their associated EMI tolerances)? How large is the market for these types

of ballasts?

2.2 Some ballasts that operate F96T8HO lamps are advertised to start in temperatures down to -20°F, though these ballasts are not marketed as cold temperature sign ballasts. Can traditional F96T8HO ballasts be used in outdoor sign applications?

2.3 ANSI C82.13 provides definitions for instant-start (IS), modified rapid-start, programmed start (PS), rapid

- start (RS), and switch

- start (preheat) systems. How many of these starting methods are present in commercially av ailable ballasts? Should DOE use the ANSI definitions to distinguish between the various starting methods?

Product Classes

2.4 In the preliminary analysis, DOE put forward energy conservation standards specific to particular ballast factor bins. Do you beli eve this approach is necessary if BE were the metric? If so, should the ranges attributed to each ballast factor bin be revised (Low: BF ≤ 0.78, Normal: 0.78 < BF < 1.10, High: BF ≥ 1.10)?

2.5 NEMA provided recommended standard levels that indicate that BE i ncreases with increasing BF. However based on an initial survey of commercially -available products, normal ballast factor ballasts often have the highest efficiency. Can you explain this trend?

2.6 All other things being equal, DOE believes that a programmed -start ballast should be less

efficient than an instant

- start ballast due to cathode heating. However, DOE’s preliminary test data found this to not always be the case. In fact, about a third of the time, a PS ballast was more efficient than a comparable IS ballast. Do you know why this might be occurring? What trend would you expect to see?

2.7 What are the cathode heating losses associated with rapid start and programmed start ballasts that operate 4 -foot MBP, 8-foot RDC HO, 4-foot T5 MiniBP SO, and 4-foot T5 MiniBP HO lamps?

2.8 NEMA provided recommended standard levels that indicate that BE increases withnumber of lamps operated by the ballast. However based on an initial survey of commerciallyavailable products, two-lamp and four-lamp ballasts often ha ve the highest efficiency (relative to one-, three-, and six- lamp ballasts). Can you explain this trend?

2.9 Residential ballasts are subject to different power factor requirements than commercial ballasts. Can you estimate the additional power losses asso ciated with the power factor correction stage in commercial ballasts?13A -4 

### 2.10 The FCC requires residential ballasts to meet stricter EMI requirements than commercial ballasts. Can you estimate the additional power losses associated with the addition of an EMI

fi lter?

Engineering Analysis

DOE explicitly analyzes the ten representative product classes listed in the table below. DOE is currently considering between one and three efficiency levels (E Ls ) for each product class that correspond to higher ballast efficiency than the existing standards. In responding to this questionnaire, please refer to the ELs in the table below. The ballast efficiencies presented are mean tested efficiencies – taking into account products from several manufacturers. These levels do not take into account any kind of reduction (as recommended by NEMA) due to reporting requirements. DOE explains how it intends to determine the minimum efficiencies for the remaining product classes in the engineering chapter of the technical support document. 2

2 Please see http://www1.eere.energy.gov/buildings/appliance_standards/residential/flu orescent_lamp_ballasts_ecs_prelim_tsd.h

tml for a complete description.13A -5 

### Table 2.1 Efficiency Levels and Manufacturer Selling Prices for Representative Product

Classes

Ref

# Product Class EL BE +
(%) MSP ++
($) Product Line

1 Two Lamp Normal BF

4ft MBP IS & RS Baseline 81.0

Baseline/EL 1 86.0

EL 2 90.0

EL 3 91.6

EL 4* 92.0

2 Two Lamp Normal BF

4ft MBP PS Baseline 84.3

EL 1 89. 1

EL 2* 90.2

3 Four Lamp Normal BF

4ft MBP IS & RS Baseline 90.5

EL 1 92.0

EL 2 * 93.1

4 Four La mp Normal BF

4ft MBP PS Baseline 83.9

EL 1 89.4

EL 2 * 92.5

5 Two Lamp Normal BF

8ft SP Slimline Baseline

Baseline/EL 1 90.0

EL 2 92.2

EL 3* 93.8

6 Two Lamp 8ft RDC HO

IS & RS Baseline

EL 1

EL 2

EL 3*

7 Two Lamp Normal BF

4ft T5 MiniBP SO Baseline 79.1

EL 1 87.1

EL 2* 89.6

8 Two Lamp 4ft T5

MiniBP HO Baseline 74.2

EL 1 87.8

EL 2* 90.3

9 Two Lamp 4ft MBP IS

& RS Residential Baseline 75.7

Baseline/EL 1 86.4

EL 2 88.5

EL 3* 90.4

10 Four Lamp Sign Ballasts Baseline

EL 1

EL 2*

+ The blank boxes in this column have not yet been determined due to ongoing testing.

++ The MSPs reported in this column were provided at a previous interview for the prelim inary analysis and represent the typical price to an OEM fixture manufacturer. *The highest EL in each product class represents the “best in market” or the most efficient ballast as tested by DOE



### 2.11 If possible, please fill in the blank boxes in Table 2.1 to identify the representative BE or13A -6 

### MSP for each efficiency level. In addition, please indicate which efficiency levels are representative of your product lines.

2.12 Do you agree with the efficiency levels described in the table abo ve? Do you suggest any

modifications or additions?

2.13 Are the manufacturer selling prices and incremental costs developed in the engineering analysis and displayed in Table 2.1 representative of your company’s products? If not, plea se provide a quantitative indication of the differences.

2.14 Do you believe that efficiency required to qualify for NEMA Premium would be the same if the program were extended to all ballast types identified in Table 2.1 ?

Max Tech

2.15 Max Tech: The efficiency levels in Table 2.1 are based on commercially available products. However, DOE is required to consider the maximum technologically feasible energy conservation standard. To this point, DOE intends to ana lyze an efficiency level above the most efficient commercially available ballast.

Table 2.2 lists the most efficient level in each representative product class. Please provide any efficiency improvements that m ay be possible as well as the associated cost increase expected.13A -7 

### Table 2.2 Fluorescent Lamp Ballast Max Tech Levels for Representative Product Classes

Ref

# Product Class Highest Efficiency Commercially

Avai lable Product Analyzed Potential Efficiency Improvement Design Pathway Associated

Cost Increase

1 Two Lamp Normal BF

4ft MBP IS & RS 92.0 %

2 Two Lamp Normal BF

4ft MBP PS 90.2 %

3 Four Lamp Normal BF

4ft MBP IS & RS 93.1 %

4 Four Lamp Normal BF

4ft MBP PS 92.5 %

5 Two Lamp Normal BF

8ft SP Slimline 93.8 %

6 Two Lamp 8ft RDC

HO IS & RS 89.4% *

7 Two Lamp Normal BF

4ft T5 MiniBP SO 89.6%

8 Two Lamp 4ft T5

MiniBP HO 90.3%

9 Two Lamp 4ft MBP IS

& RS Residential 90.4 %

10 Four Lamp Sign

Ballasts 90.4% *

*This value is from the preliminary analysis. DOE is currently retesting all ballasts in this product class.



### 2.16 Does your company currently sell any products that exceed the max

- tech efficiency levels listed in the table above? If so, which ones?

Residential Sector

2.17 What are the characteristics (BE, BF, starting method, number of lamps, etc.) of the most common, least efficient ballast in the residential sector? For T8s, what percent are IS versus PS?

What is the distribution of ballast factor in the residential sector?

2.18 In the residential sector, what percent are T12 versus T8 systems? Is it possible for T12 and T8 systems in the residential sector to have similar light output?

3 KEY ISSUES

3.1 In general, what are the key issue s for your company regarding amended energy conservation standards and this rulemaking?

3.2 For the issues identified, how significant are they for each efficiency level?

3.3 Are any of the issues more or less significant for different product classes or ballast13A -8 

### types?

3.4 Do you have any suggestions for incorporating the identified issues into DOE’s manufacturing impact model?

4 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interest ed in understanding manufacturer impacts at the plant or profit cente r level directly pertinent to fluorescent lamp ballast production. However, the context within which the plant operates and details of plant production and costs are not always readily available from public sources. Therefore, DOE invites you to provide th ese details confidentially , in your own words, to the extent possible and practical. Understanding the organizational setting around the fluorescent lamp ballast profit center will help DOE understand the probable future of the manufacturing activity with and without amended energy conservation standards.

4.1 Do you have a parent company, and/or any subsidiaries relevant to the fluorescent lamp ballast industry?

4.2 What is your company’s approximate market share of the fluorescent lamp ballast

market? Does this vary significantly for any particular product class that you manufacture?

4.3 Do you manufacture any products other than fluorescent lamp ballasts? If so, what other products do you manufacture? What percentage of your total manufacturing revenue corresponds to fluorescent lamp ballasts?

4.4 What percentage of your fluorescent lamp ballast manufacturing corresponds to each ballast type, both in terms of revenue and shipments? Please indicate if you do not manufacture a particular type of ballast.

Table 4.1 Fluorescent Lamp Ballast Percent Revenue and Shipment Volumes by Ballast Type

Ballast Type 2009 Revenue 2009 Shipments

4- foot MBP IS and RS

4- foot MBP PS

8- foot SP Slimline

8- foot RDC HO

4- foot T5 Min iBP SO

4- foot T5 MiniBP HO

Residential Ballasts

Sign Ballasts13A -9 

### 5 MARKUPS AND PROFITABILITY

One of the primary objectives of the MIA i s to assess the impact of amended energy conservation standards on industry pro fitability. In this section, DOE would like to understand the current markup structure of the industry and how amended energy conservation standards would impact your company’s markup structure and profitability.

DOE estimated the manufacturer product ion costs for the ten representative product classes of fluorescent lamp ballasts . DOE defines manufacturer production cost as all direct costs associated with manufacturing a product : direct labor, direct materials, and overhead (which includes depreciation). The manufacturer markup is a m ultiplier applied to manufa cturer production cost to cover non-production costs, such as SG&A and R&D, as well as profit. It does not reflect a “profit margin.”

The manufacturer production cost times the manufacturer markup equals the manufacturer

selli ng price. Manufacturer s elling price is the price manufacturers charge their first customers

, but does not include additional costs along the distribution channels.

DOE estimated a baseline markup of 1.50 for fluorescent lamp ballasts

.

5.1 Is the 1.50 baseline markup representative of an average industry markup?

5.2 Please comment on the baseline markup DOE calculated as compared to your company’s baseline markups for the fluorescent lamp ballast representative product classes. 3



### 5.3 Please explain if profit lev els vary by product class or product line. If yes, please indicate why.

5.4 Because the market disruption caused by efficiency standards can alter the pricing of premium products, DOE is interested in understanding how margins currently change with

efficienc y. Within each product class, do markups vary by efficiency level? If yes, please provide information about the markups at higher efficiencies.

5.5 What factors besides efficiency affect the profitability of fluorescent lamp ballasts within a product class?

5.6 Does your markup change with selected design options? Is the markup on incremental costs for more efficient designs different than the markup on the baseline models (as is assumed for retailer markups used in the analyses)?

5.7 Would you expect changes in yo ur estimated profitability following an amended energy

3 Please refer to Table 2.1 for a list of representative product classes.13A

- 10 

### conservation standard? If so, please explain why. Can you suggest any scenarios that would model these expected changes?

5.8 In its preliminary analysis, DOE developed average markups for electrical whole salers using publicly- available financial data. The surveyed wholesalers distribute other electrical products in addition to lighting; however, the available financial data does distinguish between their product lines. Within the same electrical wholesal er company, would you expect pricemarkups for lighting products to be more, less, or no different than markups for other nonlighting electrical products?

6 SHIPMENT PROJECTIONS

An amended energy conservation standard can change overall shipments by alt ering product attributes, marketing approaches, product availability, and price s. The industry revenue

calculations are based on the shipment projections developed in DOE’s shipments model. The shipments model includes forecasts for the base case shipments (i.e., total industry shipments absent amended energy conservation standards) and the standards case shipments (i.e., total industry shipments with amended energy conservation standards). DOE modeled two base case scenarios: an Existing Technologies sc enario and an Emerging Technologies scenario. The latter assumes greater penetration of alternative lighting technologies, such as LEDs.

To determine efficiency distributions after the compliance date of the standard, DOE modeled two scenarios for 2014 and subsequent years: “roll-up” and “shift. ” In the roll- up scenario , DOE assumed that product efficiencies in the base case that did not meet the standard under consideration would roll up to meet the new standard in 2014. In the shift scenario, some prod ucts that exceed the new standard level in the base case shift to even higher efficiencies in

the standards case.

6.1 For each ballast type considered for coverage, what is the proportion of ballasts shipped by NEMA companies versus non- NEMA companies?

6.2 What kind of substitution between ballast types do you observe now? What shifts do you expect to see over time? Do you expect substitution trends to change as a result of standards?

6.3 How do you think amended energy conservation standards will impact the sales of more efficient products? For example, would customers continue to buy products that exceed the energy conservation standard level? Would your response change for higher mandated efficiency

levels?

6.4 DOE assumed that revised standards that increase purchase price do not result in reduced demand or shipments (price inelasticity). Do you agree with this assumption? If not, how sensitive do you think shipments will be to price changes? Does it vary with product class?

6.5 Do you expect characteristics of ballast s to change in response to the standards? For13A

- 11 

### example, would new ballast factors or starting methods enter the market?

6.6 Would you expect your market share to change when higher energy conservation

standards take effect?

6.7 Currently, DOE analyzes two replacement scenarios – one where lumen output is unchanged when replacing a ballast (because spacing can be changed) and one where lumen output does change (because the fixture spacing is fixed). Are both scenarios realistic for the

commercial market? Are both scenarios realistic for the residential market? Can DOE assume that equal lumen replacements will exist at all efficiency levels?

6.8 For cold temperature sign ballasts, DOE estimated historical shipments based on U.S. Census data for 800-1000 mA rapid- start magnetic ballasts. This Census product category was not disaggregated by lamp length, lamps operated, cold temperature design, etc., and indicated total shipments of approximately 2.7 million units per year from 1990-2005, on average. What proportion of this Census shipments category is attributable to F96T12HO cold temp/sign ballasts? What are the proportions of ballasts shipped by number of lamps operated (e.g., 2- lamp, 4-lamp, etc.)? What proportion of sign ballasts shipped are magnetic versus electronic? Absent new energy conservation standards, do you expect these proportions to change over time? If so, how?

7 FINANCIAL PARAMETERS

Navigant Consulting, Inc. has developed a “strawman” model of the fluorescent lamp ballast industry financial performan ce called the Government Regulatory Impact Model (GRIM) using publicly available data. However, this public information might not be reflective of manufacturing at the fluorescent lamp ballast profit center. This section attempts to understand

the financia l parameters for fluorescent lamp ballast manufacturing and how your company’s

financial situation could diffe r from the industry aggregate picture.13A

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### 7.1 In order to accurately collect information about fluorescent lamp ballast manufacturing, please compare your financial parameters to the GRIM parameters tabulated below.

Table 7.1 Financial Parameters for Fluorescent Lamp Ballast Manufacturers

GRIM Input Definition Industry

Estimated

Value Your Actual (If Signifi cantly

Different from DOE’s Estimate)

Income Tax

Rate Corporate effective income tax paid (percentage of earnings before taxes, EBT) 27.6%

Discount Rate Weighted average cost of capital (inflation

- adjusted weighted average of corporate cost of debt and return on equity) 7.0%

Working Capital Current assets less current liabilities (percentage of revenues) 8.3%

Net PPE Net plant property and equipment (percentage of revenues) 14.6%

SG&A Selling, general, and administrative expenses (percentage of rev enues) 19.4%

R&D Research and development expenses (percentage of revenues) 3.8%

Depreciation Amortization of fixed assets (percentage of revenues) 3.7%

Capital Expenditures Outlay of cash to acquire or improve capital assets (percentage of revenues, not including acquisition or sale of business units) 4.2%

Cost of Goods

Sold Includes material, labor, overhead, and depreciation (percentage of revenues) 66.7%



### 7.2 Do any of the financial parameters in Table 7.1 change significantly based on product class? Please describe any differences.

7.3 Do any of the financial parameters in Table 7.1 change for a particular subgroup of manufacturers? Please describe any differences.

7.4 How would you expect an amended energy conservation standard to impact any of the financial parameters for the industry?

8 CONVERSION COSTS

DOE understands that amended energy conservation standards may cause your company to incur capital and product conversion costs to redesign existing products and make changes to existing production lines. Understanding the nature and magnitude of the conversion costs is a critical portion of the MIA. Depending on their magnitude, the conversion costs can have a subst antial impact on the outputs used by DOE to evaluate the industry impacts. The MIA considers two types of conversion costs:

• Capital conversion costs are o ne-time investments in plant, property, and equipment13A

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### (PPE) necessitated by an amended energy conserv ation standard. These may be

incremental additions to existing PPE or the replacement of existing PPE. Included are expenditures on buildings, equipment, and tooling.

• Product conversion costs are costs related to research, pr oduct development, testing,

ma rketing and other costs for redesigning products necessitated by an amended energy

conservation standard.

Table 8.1 shows the design options used to research higher efficiencies for the major product categories covered by this ru lemaking. DOE asks a number of questions to understand the nature and magnitude of your expected capital and product conversion costs. Please refer to Table 8.1 when considering your response to the following questions. In general, improved components include lower loss magnetic components and electrical components such as mosfets and diodes.

Table 8.1 Design Options Used to Improve Efficiency for each Analyzed Product Class

Ref # Pr oduct Class EL Design Options

1 Two Lamp Normal BF

4ft MBP IS & RS 1 T8 diameter, IS starting method

2 EL1 + better components, active feedback and control

3 EL2 + even better components

4 EL3 + the best components and circuit designs

2 Two Lamp Normal BF

4ft MBP PS 1 Better components, cathode cutout

2 EL1 + even better components, smart controls

3 Four Lamp Normal BF

4ft MBP IS & RS 1 Better components, active feedback and control

2 EL1 + the best components and circuit designs

4 Four L amp Normal BF

4ft MBP PS 1 Better components, cathode cutout

2 EL1 + better components, smart controls

5 Two Lamp Normal BF

8ft SP Slimline 1 T8 Diameter

2 EL1 + better components, active feedback and control

3 EL2 + the best components, high/low temperature operation

6 Two Lamp Normal BF

8ft RDC HO IS & RS 1 Electronic ballasts

2 EL1 + cathode control, feedback/constant lumen

3 EL2 + the best components and circuit designs

7 Two Lamp Normal BF

4ft T5 MiniBP SO 1 Electronic ballasts

2 E L1 + the best components and circuit designs

8 Two Lamp 4ft T5

MiniBP HO 1 Electronic ballasts

2 EL1 + the best components and circuit designs

9 Two Lamp 4ft MBP

IS & RS Residential 1 T8 diameter

2 EL1 + Better components, active feedback and contr ol

3 EL2 + the best components and circuit designs

10 Four Lamp Sign

Ballasts 1 Electronic ballasts

2 EL1 + the best components and circuit designs13A

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### 8.1 At your manufacturing facilities, would these design options be difficult to implement? If

so, wou ld your company modify the existing facility or develop a new facility?

8.2 Are there certain design options that would require relatively minor changes to existing products? Are there certain efficiency levels where the capital or product conversion costs

si gnificantly increase over the previous efficiency levels? Would your answer change for different product classes? Please describe these changes qualitatively.

8.3 For each of the product classes shown in Table 8.1 , which ELs could be made within existing platform designs and which would result in major product redesigns?

8.4 Please provide estimates for your capital conversion costs by product class in Table 8.2 below. In the description column, DOE is interested in understanding the kinds of changes that would need to be implemented to production lines and production facilities at each efficiency level. Where applicable, please quantify the number and cost of new production equipment, molds, etc., that would be required to implement the specified design changes.13A

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### Table 8.2 Expected Capital Conversion Costs for Fluorescent Lamp Ballasts

Ref # Product Class EL Total Capital

Conversio n Costs Description

1 Two Lamp Normal BF 4ft MBP IS & RS 1

2

3

4

2 Two Lamp Normal BF 4ft MBP PS 1

2

3 Four Lamp Normal BF 4ft MBP IS & RS 1

2

4 Four Lamp Normal BF 4ft MBP PS 1

2

5 Two Lamp Normal BF 8ft SP Sliml ine 1

2

3

6 Two Lamp Normal BF 8ft RDC HO IS & RS 1

2

3

7 Two Lamp Normal BF 4ft T5 MiniBP SO 1

2

8 Two Lamp 4ft T5 MiniBP HO 1

2

9 Two Lamp 4ft MBP IS & RS Residential 1

2

3

10 Four Lamp Sign Ballasts 1

2



### 8.5 Would the changes in question 8.4 be similar across all of your production lines and factories for each product class?

8.6 What level of product development and other product conversion costs would you expect

to in cur for each of these design changes for each product class? Please provide your estimates in

Table 8.3 below considering such expenses as product development expenses, prototyping, testing, certification, and mark eting. In the description column, please describe the assumptions behind the estimates provided.13A

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### Table 8.3 Expected Product Conversion Costs for Fluorescent Lamp Ballasts

Ref # Product Class EL Total Produc t

Conversion Costs Description

1 Two Lamp Normal BF 4ft MBP IS & RS 1

2

3

4

2 Two Lamp Normal BF 4ft MBP PS 1

2

3 Four Lamp Normal BF 4ft MBP IS & RS 1

2

4 Four Lamp Normal BF 4ft MBP PS 1

2

5 Two Lamp Normal BF 8 ft SP Slimline 1

2

3

6 Two Lamp Normal BF 8ft RDC HO IS & RS 1

2

3

7 Two Lamp Normal BF 4ft T5 MiniBP SO 1

2

8 Two Lamp 4ft T5 MiniBP HO 1

2

9 Two Lamp 4ft MBP IS & RS Residential 1

2

3

10 Four Lamp Si gn Ballasts 1

2



### 8.7 Please provide any additional qualitative information that might help DOE understand the types and nature of your investments, including the plant and tooling changes and the product development effort required at different efficiency levels.

9 CUMULATIVE REGULATORY BURDEN

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of

new or revised DOE standards and/or other regulatory actions affecting the same product or indust ry.

9.1 Below is a l ist of regulations that could affect manufacturers of fluorescent lamp ballasts. Please provide any comments on the listed regulations and provide an estimate for your expected compliance cost.13A

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### Table 9.1 Othe r Regulations Identified by DOE

Regulation Estimated or Actual Effective Date(s) Expected Expense for Compliance Comments

DOE’s Energy Conservation

Standards for Other Products and Equipment International Energy Efficiency

Standards Line Voltage D isconnect Requirements

UL1598 Revision End of Life Requirements (Europe) Electromagnetic Field (EMF) Requirements

Restriction of Hazardous Substances (RoHS)

9.2 Are there any other recent or impending regulations that fluorescent lamp ball ast manufacturers face (from DOE or otherwise)? If so, please identify the regulation, the corresponding effective dates, and your expected compliance cost.

9.3 Under what circumstances would you be able to coordinate any expenditure related to

these other r egulations with an amended energy conservation standard?

9.4 DOE research has not identified any production tax credits for manufacturers of fluorescent lamp ballasts. Do you know of any current or future tax credits or other benefits available to your compan y for manufacturing more efficient fluorescent lamp ballasts? If so, please describe.

9.5 Please discuss any intellectual property considerations regarding RoHS-compliant

solders.

10 DIRECT EMPLOYMENT IMPACT ASSESSMENT

The impact of amended energy conservation standards on employment is an important consideration in the rulemaking process. This section of the interview guide seeks to explore

current trends in fluorescent lamp ballast employment and solicit manufacturer views on how domestic employment patterns might be a ffected by amended energy conservation standards.

10.1 Where are your fluorescent lamp ballast facilities that produce products for the United States located? What types of products are manufactured at each location? Please provide annual shipment figures for your company’s fluorescent lamp ballast manufacturing at each location by13A

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### product class. Please also provide employment levels at each of these facilities.

Table 10.1 Fluorescent Lamp Ballast Manuf acturing Facilities

Facility Location Product Types Manufactured Employees Annual Shipments

Example Jackson, TN PC 1, PC 8 650 300,000 for PC 1, 200,000 for PC 8

1

2

3

4

5



### 10.2 Would your domestic employment levels be expected to change significantly under amended energy conservation standards? If so, please explain how and why they would change if higher efficiency levels were required.

10.3 Would the workforce skills necessary under amended energy conservation standards require extensiv e retraining or replacement of employees at your manufacturing facilities?

10.4 Would amended energy conservation standards require extensive retraining of your service/field technicians? If so, could you expand on how your service infrastructure would be impa cted in general as a result of amended energy conservation standards?

11 MANUFACTURING CAPACITY AND NON

- US SALES

11.1 How would amended energy conservation standards impact your company’s manufacturing capacity?

11.2 For any design changes that would require new production equipment, please describe how much downtime would be required. What impact would downtime have on your business? Are there any design changes that could not be implemented before the compliance date of the final rule for certain product classes?

11.3 What percentage of your company’s fluorescent lamp ballast sales are made within the

United States?

11.4 What percentage of your fluorescent lamp ballast sales are produced in the United

States?

11.5 What percentage of your U.S. production of fluorescent lamp b allasts is exported?13A

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### 11.6 Are there any foreign companies with North American production facilities?

11.7 Would amended energy conservation standards impact your domestic vs. foreign manufacturing or sourcing decisions? Is there an efficiency level that would cause you to move existing domestic production facilities outside the U.S.?

12 IMPACT ON COMPETITION

Amended energy conservation standards can alter the competitive dynamics of the market. This can include prompting companies to enter or exit the market, or to merge. DOE and the Department of Justice are both interested in any potential reduction in competition that would result from an amended energy conservation standard.

12.1 How would industry competition change as a result of amended energy conservation

standar ds? How would amended energy conservation standards affect your ability to compete in the marketplace? Would the effects on your company be different than others in the industry?

12.2 Do any firms hold intellectual property that gives them a competitive advan tage following amended energy conservation standards?

13 IMPACTS ON SMALL BUSINESS

13.1 The Small Business Administration (SBA) denotes a small business in the fluorescent lamp ballast manufacturing industry as having less than 750 total employees, including the parent company and all subsidiaries. 4 

### By this definition, is your company considered a small

business?

13.2 Are there any reasons that a small business manufacturer might be at a disadvantage relative to a larger business under amended energy conservation standards? Please consider such factors as technical expertise, access to capital, bulk purchasing power for materials/components, engineering resources, and any other relevant issues.

13.3 To your knowledge, are there any small businesses for which the adoption of amended energy conservation standards would have a particularly severe impact? If so, why?

13.4 To your knowledge, are there any niche manufacturers or component manufacturers for which the adoption of amended energy conservation standards would have a part icularly severe impact? If so, why?

4 DOE uses the small business size standards published on August 22, 2008, as amend ed, by the SBA to determine whether a company is a small business. To be categorized as a small b usiness, a power, distribution, and specialty

transformer manufacturer and its affiliat es may employ a maximum of 750 employees. The 750 employee threshold

inc ludes all employees in a business’s parent company and any other subsidiaries.13A

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### 13A.2 FLUORESCENT LAMP BAL LAST SMALL BUSINESS MANUFACTURER

IMPACT ANALYSIS INTERVIEW GUIDE

August 17, 201013A

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### The Department of Energy (DOE) conducts the manufacturer impact analysis (MIA) as part of the rulemaking process to amend energy conservation standards for fluorescent lamp ballasts. In this analysis, DOE uses publicly available information and information provided during interviews to assess possible impacts on manufacturers due to amended energy conservation

standards.

1 INTRODUCTION

1.1 Are you aware of the US Department of Energy’s (DOE’s) ongoing rulemaking to amend national minimum energy conservation standards for fluorescent lamp ballasts? If you are not already in it, would you lik e to be added to DOE’s email database for updates relating to this rulemaking?

1.2 We are assessing the impacts of a potential energy conservation standard on small businesses. Is your company a small business (defined as less than 750 employees by the US

Sm all Business Administration (SBA), including all subsidiaries and parent companies, and employees in all countries where you operate)?

1.3 Are there any reasons that a small business manufacturer might be at a disadvantage relative to a larger business under amended energy conservation standards? Please consider such factors as technical expertise, access to capital, bulk purchasing power for materials/components, engineering resources, and any other relevant issues.

1.4 To your knowledge, are there any small businesses for which the adoption of amended energy conservation standards would have a particularly severe impact? If so, why?

DOE explicitly analyzes the ten representative product classes listed in Table 1.1 below. 5 

### DOE is

curre ntly considering between one and four efficiency levels (ELs) for each product class that correspond to higher ballast efficiency than the existing standards. In responding to this questionnaire, please refer to the ELs in the table below. DOE explains how it intends to determine the minimum efficiencies for the remaining product classes in the engineering chapter of the technical support document. 6

5 When evaluating and establishing energy conservation standards, DOE divides covered products into classes by the type of energy used, capacity, or other performance

- related features that affect efficiency, and factors such as the utility of the product to users. DOE then conducts its analysis and considers establishing or amending standards to provide separate standard levels for each product class. For ballasts, separate product classes are established based on lamp length, certain lamp diameters, ballast factor, lumen package, maximum number of lamps operated, certain start methods, and market sector.

6 Please see http://www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts_ecs_prelim_tsd.h

tml for a complete description.13A

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### Table 1.1 Baseline and Efficiency Levels for Representative Product Classes

Number Designation Product Class Description EL BE (%)

1 Two Lamp Normal BF

4ft MBP

IS & RS T12 Electronic Baseline 81.0

T8 Single Voltage (Std Eff) Baseline / EL 1 86.0

T8 Universal (Std Eff) EL 2 90.0

T8 Universal (High E ff) EL 3 91.6

EL 4* 92.0

2 Two Lamp Normal BF

4ft MBP PS T8 (Std Eff) Baseline 84.3

T8 (High Eff) EL 1 89.1

EL 2* 90.2

3 Four Lamp Normal BF 4ft MBP IS &

RS T8 (Std Eff) Baseline 90.5

T8 (High Eff) EL 1 92.0

T8 Best in Market EL 2* 93.1

4 Four Lamp Normal BF 4ft MBP PS T8 (Std Eff) Baseline 83.9

T8 (High Eff) EL 1 89.4

T8 Best in Market EL 2* 92.5

5 Two Lamp Normal BF 8ft SP Slimline T12 Electronic Baseline

- T8 (Std Eff) Baseline / EL 1 90.0

T8 (High Eff) EL 2 92.2

T8 B est in Market EL 3* 93.8

6 Two Lamp 8ft RDC HO IS & RS T12 Magnetic Baseline

-
T12 Electronic EL 1

-
T8 Electronic EL 2

-
EL 3*

-

7 Two Lamp Normal BF 4ft T5 MiniBP

SO T5 Magnetic Baseline 79.1

T5 (Std Eff) EL 1 87.1

T5 Best in Market EL 2* 89.6

8 Two Lamp 4ft T5 MiniBP HO T5 Magnetic Baseline 74.2

T5 (Std Eff) EL 1 87.8

T5 (High Eff) EL 2* 90.3

9 Two Lamp 4ft MBP IS & RS

Residential T12 Electronic Baseline 75.7

T8 (Std Eff) Baseline / EL 1 86.4

T8 (High Eff) EL 2 88.5

EL 3* 90.4

10 Four Lamp Sign Ballasts T12 Magnetic Baseline

-
T12 Electronic EL 1

-
EL 2*

-



### 1.5 Do you agree with the ELs described in the table above? Do you suggest any

modifications or additions?13A

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### 2 KEY ISSUES

2.1 In general, what are the key issues for your company regarding amended energy conservation standards and this rulemaking?

2.2 For the issues identified, how significant are they for each efficiency level?

2.3 Are any of the issues more or less significant for different product classes?

3 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

3.1 Do you have a parent company, and/or any subsidiaries relevant to the fluorescent lamp ballast industry?

3.2 What types of fluorescent lamp ballasts do you manufacture? Could you provide energy efficiency figures for those identified models? What is your company’s approximate market share of the fluorescent lamp ballast market? Does this vary significantly for any particular product class that you manufacture?

3.3 Do you manufacture any products other than fluorescent lamp ballasts? If so, what other products do you manufacture? What percentage of your total manufacturing revenue corresponds to fluorescent lamp ballasts?

4 MARKUPS AND PROFITABILITY

One of the primary objectives of the MIA is to assess the impact of amend ed energy conservation standards on industry profitability. In this section, DOE would like to understand the current markup structure of the industry and how amended energy conservation standards would impact your company’s markup structure and profitabil ity.

DOE estimated the manufacturer production costs for ten representative product classes of fluorescent lamp ballasts. DOE defines manufacturer production cost as all direct costs associated with manufacturing a product: direct labor, direct materials , and overhead (which includes depreciation). The manufacturer markup is a multiplier applied to manufacturer production cost to cover non-production costs, such as SG&A and R&D, as well as profit. It does not reflect a “profit margin.”

The manufacturer production cost times the manufacturer markup equals the manufacturer selling price. Manufacturer selling price is the price manufacturers charge their first customers,

but does not include additional costs along the distribution channels.

DOE estimate d a baseline markup of 1.50 for fluorescent lamp ballasts.13A

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### 4.1 Please comment on the baseline markup DOE calculated as compared to your company’s baseline markups for the fluorescent lamp ballast representative product classes.

4.2 Please explain if profit lev els vary by product class or product line. If yes, please indicate why.

4.3 Because the market disruption caused by standards can alter the pricing of premium products, DOE is interested in understanding how margins currently change with efficiency.

Within e ach product class, do markups vary by efficiency level? If yes, please provide information about the markups at higher efficiencies.

4.4 Does your markup change with selected design options? Is the markup on incremental costs for more efficient designs diffe rent than the markup on the baseline models (as is assumed for retailer markups used in the analyses)?

4.5 Would you expect changes in your estimated profitability following an amended energy conservation standard? If so, please explain why. Can you suggest any scenarios that would model these expected changes?

5 FINANCIAL PARAMETERS

Navigant Consulting, Inc. has developed a “strawman” model of the fluorescent lamp ballast industry financial performance called the Government Regulatory Impact Model (GRIM) us ing publicly available data. However, this public information might not be reflective of manufacturing at the fluorescent lamp ballast profit center. This section attempts to understand the financial parameters for fluorescent lamp ballast manufacturing an d how your company’s financial situation could differ from the industry aggregate picture.

5.1 In order to accurately collect information about fluorescent lamp ballast manufacturing, please compare your financial parameters to the GRIM parameters tabulated below.

Table 5.1 Financial Parameters for Fluorescent Lamp Ballast Manufacturers

GRIM Input Definition Industry

Estimated

Value Your Actual (If Significantly

Different from

DOE’s Estimate)

Income Tax Rate Cor porate effective income tax paid (percentage of earnings before taxes, EBT) 27.6%

Discount Rate Weighted average cost of capital (inflation

adjusted weighted average of corporate cost of debt and return on equity) 7.0%

Working Capital Current assets le ss current liabilities (percentage of revenues) 8.3%

Net PPE Net plant property and equipment (percentage of revenues) 14.6%13A

- 25 SG&A Selling, general, and administrative expenses (percentage of revenues) 19.4%

R&D Research and development expenses (perc entage of revenues) 3.8%

Depreciation Amortization of fixed assets (percentage of revenues) 3.7%

Capital Expenditures Outlay of cash to acquire or improve capital assets (percentage of revenues, not including acquisition or sale of business units) 4.2%

Cost of Goods

Sold Includes material, labor, overhead, and depreciation (percentage of revenues) 66.7%



### 5.2 Do any of the financial parameters in Table 5.1 change significantly based on product class? Please describe any differe nces.

5.3 Do any of the financial parameters in Table 5.1 change for a particular subgroup of manufacturers? Please describe any differences.

5.4 Would you expect an amended energy conservation standard to impact any of the

financial parameters for your company?

6 CONVERSION COSTS

DOE understands that amended energy conservation standards may cause your company to incur capital and product conversion costs to redesign existing products and make changes to existing production lines. Understanding the nature and magnitude of the conversion costs is a critical portion of the MIA. Depending on their magnitude, the conversion costs can have a substantial impact on the outputs used by DOE to evaluate the industry impacts. The Manufacturer Im pact Analysis considers two types of conversion costs:

• Capital conversion costs are one -time investments in plant, property, and equipment (PPE) necessitated by an amended energy conservation standard. These may be incremental additions to existing PPE or the replacement of existing PPE. Included are expenditures on buildings, equipment, and tooling.

• Product conversion costs are costs related to research, product development, testing, marketing and other costs for redesigning products necessitated by an amended energy

conservation standard.

DOE seeks to understand the type (qualitative description) and magnitude (quantitative estimate) of the conversion expenditures that your company would expect to incur under the efficiency level scenarios described below. DOE recognizes that there are many variables and tradeoffs your company would ultimately need to consider in evaluating its conversion options under any of the below scenarios. DOE asks for your current best estimate of what your most likely path would be and what that path would cost.13A

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### In considering Table 6.1 below, your estimates should include all conversion expenditures associated with the ballast “product family” represented by given product classes. For example, Ref #1 represents all 2 -lamp 4ft MBP low and high BF products, as well as the one-lamp products.

Depending on your manufacturing processes, it may be easier to group together certain product classes in the table below for the purposes of estimating expenditures (all 4ft MBP products, for example). DOE invites you to do so, if helpful.

PRODUCT AND CAPITAL CONVERSION COSTS

6.1 Looking at your high-volume product classes in Table 6.1 , are there certain efficiency levels where the capital or product conversion costs significantly increase over the previous efficiency levels? Please describe these changes qualitatively.

6.2 Is there a typical cost required to upgrade a given product line (e.g., 2- lamp 4 ft MBP, etc.)?

6.3 Please provide estimates for your capital conversion costs by product class in Table 6.1

below.

As an example, if the minimum energy efficiency level were set at EL2 for the Reference Product Class 1, all ballasts in this product class would have to be converted to this level. To complete this conversion, what changes to PPE would your company need to make to its production facility (e.g., number and type of new equipment; modifications to exis ting equipment)? What amount of capital expenditure would your company expect to incur as a result of these changes?

6.4 Similarly, what level of product conversion costs would you expect to incur for each of efficiency levels for each product class? Do you outsource your product design operations or do keep them in -house? Please provide your estimates in Table 6.1 below considering such expenses as product development expenses, prototyping, testing, certification, and marketing. In the description column, please describe the assumptions behind the estimates provided.13A

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### Table 6.1 Product and Capital Conversion Costs for Representative Product Classes

Ref

# Product C lass EL BE +
(%) Capital

Conversion

Cost Description of Changes

to PPE Product

Conversion

Cost Description (e.g., R&D, product development, etc.)

1 Two Lamp

Normal BF

4ft MBP IS & RS Baseline 81.0 NA NA NA NA

Baseline / EL 1 86.0

EL 2 90.0

EL 3 91.6

EL 4* 92.0

2 Two Lamp

Normal BF

4ft MBP PS Baseline 84.3 NA NA NA NA

EL 1 89.1

EL 2* 90.2

3 Four Lamp

Normal BF

4ft MBP IS & RS Baseline 90.5 NA NA NA NA

EL 1 92.0

EL 2* 93.1

4 Four Lamp

Normal BF

4ft MB P PS Baseline 83.9 NA NA NA NA

EL 1 89.4

EL 2* 92.5

5 Two Lamp

Normal BF

8ft SP Slimline Baseline

- NA NA NA NA

Baseline / EL 1 90.0

EL 2 92.2

EL 3* 93.8

6 Two Lamp 8ft

RDC HO

IS & RS Baseline

- NA NA NA NA

EL 1

-

EL 2

-13A

- 28 Ref

# Product C lass EL BE +
(%) Capital

Conversion

Cost Description of Changes

to PPE Product

Conversion

Cost Description (e.g., R&D, product development, etc.)

EL 3*

-

7 Two Lamp

Normal BF

4ft T5 MiniBP SO Baseline 79.1 NA NA NA NA

EL 1 87.1

EL 2* 89.6

8 Two Lamp 4ft T5

MiniBP HO Baseline 74.2 NA NA NA NA

EL 1 87.8

EL 2* 90.3

9 Two Lamp 4ft

MBP IS & RS

Residen tial Baseline 75.7 NA NA NA NA

Baseline / EL 1 86.4

EL 2 88.5

EL 3* 90.4

10 Four Lamp Sign

Ballasts Baseline

- NA NA NA NA

EL 1

-

EL 2*

-



### 7 DIRECT EMPLOYMENT IMPACT ASSESSMENT

The impact of amended energy conservation standards on employment is an important consideration in the rulemaking process.

7.1 Do you manufacturer any of your products domestically?

7.2 Would your domestic employment levels be expected to change significantly under amended energy conservation standards ? If so, please explain how and why they would change if higher efficiency levels are required.