CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM 

INTERESTED PARTIES, AND DEPARTMENT OF ENERGY RESPONSES

TABLE OF CONTENTS

2.1 INTRODUCTION ...................................................................................................1

2.2 BACKGROUND .....................................................................................................3

2.3 MARKET AND TECHNOLOGY ASSESSMENT................................................4

2.3.1 Scope of Coverage ...................................................................................................5

2.3.2 Market Assessment ................................................................................................10

2.3.3 Equipment Classes.................................................................................................10

2.3.4 Technology Assessment.........................................................................................12

2.4 SCREENING ANALYSIS ....................................................................................14

2.5 ENGINEERING ANALYSIS................................................................................16

2.6 MARKUPS ANALYSIS .......................................................................................18

2.7 ENERGY USE ANALYSIS..................................................................................20

2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ...........................24

2.8.1 Inputs to Total Installed Cost.................................................................................25

2.8.2 Inputs to Operating Cost ........................................................................................26

2.9 SHIPMENTS ANALYSIS ....................................................................................30

2.10 NATIONAL IMPACT ANALYSIS......................................................................30

2.10.1 National Energy Savings Analysis.........................................................................31

2.10.2 Net Present Value Analysis ...................................................................................32

2.11 CONSUMER SUBGROUP ANALYSIS ..............................................................32

2.12 MANUFACTURER IMPACT ANALYSIS..........................................................32

2.12.1 Sources of Information for the Manufacturer Impact Analysis.............................33

2.12.2 Industry Cash-Flow Analysis.................................................................................33

2.12.3 Direct Employment Impact Analysis.....................................................................34

2.12.4 Manufacturer Subgroup Analysis..........................................................................34

2.12.5 Competitive Impacts Assessment ..........................................................................34

2.12.6 Cumulative Regulatory Burden .............................................................................35

2.12.7 Preliminary Results for the Manufacturer Impact Analysis ..................................35

2.13 EMISSIONS ANALYSIS......................................................................................37

2.14 MONETIZATION OF EMISSIONS REDUCTIONS BENEFITS.......................39

2.15 UTILITY IMPACT ANALYSIS...........................................................................40

2.16 EMPLOYMENT IMPACT ANALYSIS...............................................................41

2.17 REGULATORY IMPACT ANALYSIS ...............................................................41

LIST OF TABLES

Table 2.3.1. Equipment Classes Considered for Preliminary Analysis........................... 11

i
CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM INTERESTED 

PARTIES, AND DEPARTMENT OF ENERGY RESPONSES

2.1 INTRODUCTION

The U.S. Department of Energy (DOE) Appliances and Equipment Standards Program, 

within the Office of Energy Efficiency and Renewable Energy’s Building Technologies Office, 

develops and promulgates energy conservation standards for certain consumer appliances and 

commercial and industrial equipment. The process for developing standards involves analysis, 

public notice and comment, and consultation with interested parties. Interested parties include 

manufacturers, trade associations, consumers/users, energy conservation and environmental 

advocates, State and Federal agencies, and any other groups or individuals with an interest in 

these standards. The DOE Appliance Standards Program Report to Congress, initially submitted 

on January 31, 2006 and updated twice a year since first publication, identifies the numerous 

rulemakings for a variety of products and equipment that DOE has scheduled for completion and 

explains many of the techniques DOE will apply during the rulemaking process to meet this 

schedule.1 

Title III, Part C,

2 of the Energy Policy and Conservation Act of 1975 (EPCA), Pub. L. 

94-163 (42 U.S.C. 6311-6317, as codified), added by Pub. L. 95-619, Title IV, §441(a), sets 

forth a variety of provisions designed to improve energy efficiency, and it established the 

"Energy Conservation Program for Certain Industrial Equipment," a program covering certain 

commercial and industrial equipment (hereafter referred to as "covered equipment"), Covered

equipment includes the commercial packaged boilers (hereafter referred to as "CPB" or 

“boilers’) that are the subject of this rulemaking.3 Part A-1 includes definitions (42 U.S.C. 

6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), 

labeling provisions (42 U.S.C. 6315), and the authority to require compliance information and 

certification reports from manufacturers of covered equipment (42 U.S.C. 6316). This program 

authorizes DOE to establish technologically feasible, economically justified energy conservation

regulations for certain products and equipment that would be likely to result in substantial 

national energy savings. 

This chapter provides a description of the analytical framework that DOE is using to 

evaluate potential amended energy conservation standards for commercial packaged boilers. 

This chapter sets forth the methodology, analytical tools, and relationships among the various 

analyses that are part of this rulemaking. The analyses performed as part of the preliminary 

1 U.S. Department of Energy. Energy Conservation Standards Activities; Submitted pursuant to Section 141 of the 

Energy Policy Act of 2005 (EPACT 2005), Pub. L. 109-58, and in response to section 305 of the Energy 

Independence and Security Act of 2007 (EISA 2007), Pub. L. 110-140; U.S. Department of Energy (Available at: 

http://www1.eere.energy.gov/buildings/appliance_standards/reports_and_publications.html). 2

 For editorial reasons, upon codification in the United States Code (U.S.C.), Part C was redesignated Part A-1. 3 All references to EPCA in this document refer to the statute as amended through the American Energy 

Manufacturing Technical Corrections Act, Pub. L. 112-210 (Dec. 18, 2012).

1

 
analysis stage and reported in this preliminary technical support document (TSD) are listed 

below.

• A market and technology assessment to characterize relevant equipment, their markets,

and technology options for improving their energy efficiency, including prototype 

designs.

• A screening analysis to review each technology option and to determine if it is 

technologically feasible; is practicable to manufacture, install, and service; would 

adversely affect equipment utility or availability; or would have adverse impacts on 

health and safety.

• An engineering analysis to develop relationships that show the price of achieving 

increased efficiency.

• A markups analysis to develop distribution channel markups that relate the manufacturer 

production cost (MPC) to the cost to the commercial consumer.

• An energy use analysis to determine the annual energy use of the considered equipment 

in a representative set of users.

• A life-cycle cost (LCC) and payback period (PBP) analysis to calculate savings in 

operating costs at the consumer level throughout the life of covered equipment compared 

with any increase in installed cost for the equipment likely to result directly from 

adoption of a standard.

• A shipments analysis to forecast equipment shipments, which are then used to calculate 

the national impacts of standards on energy, net present value (NPV), and future 

manufacturer cash flows.

• A national impact analysis (NIA) to assess the aggregate impacts at the national level of

potential energy conservation standards for the considered equipment, as measured by the 

NPV of total commercial consumer economic impacts and the national energy savings 

(NES).

• A preliminary manufacturer impact analysis (MIA) to assess the potential impacts of 

energy conservation standards on manufacturers’ capital conversion expenditures, 

marketing costs, shipments, and research and development costs.

In the subsequent notice of proposed rulemaking (NOPR), DOE will present the tentative 

results of the above analyses, incorporating any revisions to the analyses in light of comments 

and new information received. DOE will also present tentative results of the following 

additional analyses in the NOPR:

• A consumer subgroup analysis to evaluate variations in commercial consumer

characteristics that might cause a standard to affect particular commercial consumer subpopulations (such as small businesses) differently than the overall population.

• An MIA to estimate the financial impact of potential standards on manufacturers and to 

calculate impacts on competition, employment, and manufacturing capacity.

2
• An employment impact analysis to assess the aggregate impacts of the considered

standards on national employment.

• A utility impact analysis to estimate effects of the considered standards on electric 

utilities’ power generation capacity.

• An emissions analysis to assess the effects of the considered standards on emissions of 

carbon dioxide (CO2), nitrogen oxides (NOX), mercury (Hg), and other airborne 

emissions.

• An emissions monetization that estimates the economic value of reductions in CO2 and 

NOX emissions from the considered standards.

• A regulatory impact analysis (RIA) to evaluate non-regulatory alternatives to amended 

energy conservation standards in order to assess whether such alternatives could achieve 

substantially the same goal at a lower cost.

2.2 BACKGROUND

The Energy Policy Act of 1992 (EPACT 1992), Public Law 102−486, amended EPCA to 

add commercial packaged boilers as a type of covered equipment. EPACT 1992 also amended 

EPCA with respect to packaged boilers by providing a definition, as well as provisions setting 

forth applicable requirements for energy conservation standards, test procedures, labeling, and 

compliance certification. (42 U.S.C. 6311(11)(B); 6313(a)(4); 6314(a)(4); 6315(e); 6316(a)-(b)) 

Most recently, DOE amended its energy conservation standards for commercial packaged boilers 

through a final rule published in the Federal Register (FR) on July 22, 2009 (hereafter referred to 

as the “July 2009 final rule”). 74 FR 36312. More specifically, the July 2009 final rule updated 

the energy conservation standards for commercial packaged boilers to correspond to the levels in 

the 2007 revision of ASHRAE Standard 90.1, Energy Standard for Buildings Except Low-Rise 

Residential Buildings, (i.e., ASHRAE Standard 90.1-2007). Id. at 36355-56. Compliance with 

the amended standards was required beginning on March 2, 2012.

4

 

DOE initiated this rulemaking pursuant to 42 U.S.C. 6313(a)(6)(C), which requires that 

every six years, DOE must publish either a notice of determination that standards for the 

equipment do not need to be amended or a NOPR including new proposed energy conservation 

standards. As noted above, DOE’s last final rule for commercial packaged boilers was published

on July 22, 2009 (74 FR 36312), so as a result, DOE is required to act by July 22, 2015.

5

 Once 

complete, this rulemaking will satisfy this statutory obligation.6

4

 DOE notes that for small and large gas-fired steam commercial packaged boilers, ASHRAE adopted a second tier 

of standards with compliance required on and after March 2, 2022. Pursuant to 42 U.S.C. 6313(a)(6)(A)(ii), DOE 

adopted those standards into DOE’s regulations as well. 5

 If DOE determines that amended standards are warranted, it must publish a final rule containing such standards no 

later than two years after the NOPR is published. (42 U.S.C. 6313(a)(6)(C)(iii)(I))

6

 DOE notes that since its last final rule in 2009, ASHRAE has not acted to amend its standards for commercial 

packaged boilers, as would trigger DOE rulemaking action under 42 U.S.C. 6313(a)(6)(A).

3

 
DOE developed this analytical framework and documented its findings in the 

Rulemaking Framework Document for Commercial Packaged Boilers (August 28, 2013). On 

that same day (August 28, 2013), DOE issued the Notice of Public Meeting and Availability of 

the Framework Document for commercial packaged boilers, which was published in the Federal 

Register on September 3, 2013. 78 FR 54197. In conjunction, DOE posted the Framework 

Document to the DOE website.7

In response to the publication of the Framework Document and the Framework public 

meeting, DOE received comments from interested parties regarding DOE’s analytical approach. 

This chapter (chapter 2) summarizes the comments DOE received from interested parties and 

presents DOE’s responses to those comments. In addition, in subsequent sections of this chapter, 

DOE has summarized any significant changes in analytical approach made since publishing the 

Framework Document that DOE used in its preliminary analyses. Lastly, in the Executive 

Summary to this preliminary TSD, DOE identified a number of issues on which it seeks public 

comment. DOE has explained each of those issues in the relevant analytical sections below.

2.3 MARKET AND TECHNOLOGY ASSESSMENT

When DOE commences an energy conservation standards rulemaking, it develops 

information that provides an overall snapshot of the market for the equipment considered, 

including the nature of the equipment, market characteristics, and industry structure. This 

activity consists of both quantitative and qualitative efforts based primarily on publicly-available 

information. The market assessment examined manufacturers, trade associations, and the 

quantities and types of equipment offered for sale.

DOE recognizes that there may be limited public information on national shipments, 

manufacturing costs, channels of distribution, and manufacturer market shares of CPBs. Such

data are an important input for analyses to determine whether potential energy conservation

standards are economically justified and will result in significant energy savings. Therefore, 

DOE encourages interested parties to submit any data that will improve DOE’s understanding of 

the market. These data may be provided under a confidentiality agreement with DOE’s 

contractor responsible for this part of the rulemaking analysis: Navigant Consulting, Inc. (NCI). 

In other rulemakings, NCI has worked with confidential data provided by manufacturers and 

other organizations in preparing aggregated results for DOE’s analysis. These aggregated results 

do not divulge the sensitive, individual raw data, but enable other interested parties to comment 

on the aggregated dataset.

Alternatively, interested parties may submit confidential data to DOE, indicating in 

writing which data should remain confidential. Interested parties must submit confidential 

information to DOE according to the procedures outlined in Title 10 of the Code of Federal 

Regulations (CFR) section 1004.11. Pursuant to 10 CFR 1004.11, any person submitting 

information that he or she believes to be confidential and exempt by law from public disclosure 

7 The August 28, 2013 commercial packaged boilers Framework Document is available at the following link:

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/79.

4

 
should submit two copies. One copy of the document shall include all the information believed 

to be confidential, and the other copy shall have the information believed to be confidential 

deleted. DOE will make its own determination about the confidential status of the information 

and treat it accordingly.8

DOE reviewed relevant literature and interviewed manufacturers to develop an overall 

snapshot of the commercial packaged boiler industry in the United States. Industry publications 

and trade journals, government agencies, and trade associations provided the bulk of the 

information for the market and technology assessment. DOE gathered information from 

manufacturer websites and public databases9 on 2,354 boiler models, which was used to inform 

the market and technology analysis and the downstream analyses. The data gathered on each 

boiler model included important information for all boiler models such as input capacity, fuel 

type, heating medium, draft type, material and other properties (condensing or modulating). The 

analyses developed as part of the market and technology assessment are described in chapter 3 of 

this preliminary TSD.

2.3.1 Scope of Coverage

EPCA authorizes DOE to regulate certain commercial and industrial equipment, such as 

packaged boilers. EPCA defines the term “packaged boiler” as “a boiler that is shipped complete 

with heating equipment, mechanical draft equipment, and automatic controls; usually shipped in 

one or more sections.” (42 U.S.C. 6311(11)(B)) DOE’s regulations provide further clarification 

of this term, as well as others addressing different subsets of boilers. To understand the types of 

boilers which DOE is authorized to regulate under EPCA and the scope of coverage for the 

present rulemaking, terms related to commercial packaged boilers are defined below.

In its regulations, DOE clarifies the term “packaged boiler” to exclude a boiler that is 

“custom designed and field constructed,” and it further provides that if the boiler is shipped in 

more than one section, the sections may be produced by more than one manufacturer, and may 

be originated or shipped at different times and from more than one location. 10 CFR 431.82.

DOE’s regulations define the term “commercial packaged boiler” as “a type of packaged 

low pressure boiler that is industrial equipment with a capacity, (rated maximum input) of 

300,000 Btu per hour (Btu/h) or more which, to any significant extent, is distributed in 

8

 Factors that DOE considers when evaluating requests to treat submitted information as confidential include: (1) a 

description of the items; (2) whether and why such items are customarily treated as confidential within the industry; 

(3) whether the information is generally known by or available from other public sources; (4) whether the 

information has previously been made available to others without obligation concerning its confidentiality; (5) an 

explanation of the competitive injury to the submitting person which would result from public disclosure; (6) a date 

after which such information might lose its confidential character; and (7) why disclosure of the information would 

be contrary to the public interest.

9 The primary source of information was the Air-Conditioning Heating and Refrigeration Institute’s directory of 

certified commercial boilers, which provides an extensive list of boiler models that are manufactured by AHRI’s 

members. This database can be accessed at: 

https://www.ahridirectory.org/ahridirectory/pages/cblr/defaultSearch.aspx .(Last accessed in November 2013).

5

 
commerce: (1) For heating or space conditioning applications in buildings; or (2) For service 

water heating in buildings but does not meet the definition of ‘hot water supply boiler’ in [10 

CFR part 431].” 10 CFR 431.82.

In addition, DOE’s regulations define the term “packaged low pressure boiler” as “a 

packaged boiler that is: (1) A steam boiler designed to operate at or below a steam pressure of 15 

psig [pounds per square inch gauge]; or (2) A hot water boiler designed to operate at or below a 

water pressure of 160 psig and a temperature of 250 °F; or (3) A boiler that is designed to be 

capable of supplying either steam or hot water, and designed to operate under the conditions in 

paragraphs (1) and (2) of this definition.” 10 CFR 431.82.

The current energy conservation standards in DOE’s regulations for commercial 

packaged boilers are divided into 10 equipment classes with corresponding energy efficiency 

levels for each.

10 10 CFR 431.87. These equipment classes are based on: (1) size (input 

capacity); (2) heating media (hot water or steam); and (3) type of fuel used (oil or gas).11 The 

gas-fired steam commercial boilers are further classified according to draft type (thereby creating 

two additional equipment classes).

On August 13, 2013, DOE published in the Federal Register a notice of proposed 

determination (NOPD) regarding coverage of natural draft commercial packaged boilers (August 

2013 NOPD). 78 FR 49202. Under DOE’s interpretation of the relevant statutory provisions, 

natural draft commercial packaged boilers are currently included as covered equipment with 

standards at 10 CFR 431.87. However, DOE is performing a coverage determination to 

explicitly clarify its statutory authority under EPCA to cover natural draft commercial packaged 

boilers, because explicit coverage of this equipment is necessary to carry out the purposes of part 

A-1 of EPCA. Coverage will promote conservation of energy and provide a more level playing 

field to the variety of commercial packaged boilers on the market, thereby discouraging potential 

substitution effects. Id. at 78 FR 49204. If the outcome of the coverage determination is 

positive, DOE will categorize boiler models further into natural draft and mechanical draft

equipment classes. Although the outcome of this coverage determination is pending, DOE 

tentatively plans to consider natural draft boilers as part of this rulemaking and, accordingly, has 

analyzed a total of 16 commercial packaged boiler equipment classes for this preliminary TSD.

DOE considered several issues in determining the scope of coverage for this rulemaking, 

as discussed earlier in the August 2013 Framework Document. DOE sought comment from 

interested parties on each of the issues at that time. The first issue pertains to the size of 

commercial packaged boilers. Large commercial packaged boilers are, in part, defined as having

an input capacity greater than 2,500 kBtu/h. However, there is no upper limit requirement on the

input capacity of a covered CPB. In the Framework Document (Item 2-4 at page 12), DOE 

10 These standard levels were adopted in the July 2009 final rule. 74 FR 36312 (July 22, 2009). 11 Under subpart E of 10 CFR part 431, commercial packaged boilers are divided into equipment classes based on 

input capacity (i.e., size category). Throughout this document, DOE refers to units with an input capacity of ≥ 

300,000 Btu/h and ≤ 2,500,000 Btu/h as “small” and units with an input capacity > 2,500,000 Btu/h as “large.” See

10 CFR 431.87.

6

 
sought comments from interested parties about whether any size-related issues may render

energy conservation standards infeasible for very large CPBs. 

The second and third issues address consideration of electric commercial packaged 

boilers and standby mode/ off mode energy consumption, respectively. DOE did not consider 

electric commercial packaged boilers in this rulemaking, because DOE estimates that such

boilers account for only 1,500-2,100 units shipped annually and that their efficiencies approach 

100 percent. Thus, DOE has tentatively concluded that there is little room for improvement in 

efficiency as would result in significant energy savings. Because many commercial packaged 

boilers do not operate continuously, DOE did not consider standby mode and off mode energy 

consumption for this preliminary analysis. DOE did seek comments on both issues in the 

Framework Document (Items 2-2 and 2-3 at page 12) and invites further comment here. 

Lastly, DOE sought comment in the Framework Document about whether any other type 

of boiler should or should not be included as part of the rulemaking process (Item 2-1 at page 

12).

In response to the questions raised in the Framework Document, DOE received a number 

of comments from interested parties related to the scope of this rulemaking. These comments 

and DOE’s responses are discussed immediately below.

Size

First, regarding whether size would make energy conservation standards infeasible for 

very large CPBs, the Air-conditioning, Heating and Refrigeration Institute (AHRI) stated that the 

scope of rulemaking is too broad in terms of input rating. It recommended limiting the scope of 

the test procedure and energy conservation standards rulemakings to a maximum input capacity 

of 5,000kBtu/h. (AHRI, No. 17 at pp. 1-2) The American Boiler Manufacturers Association 

(ABMA) suggested capping the input rating of covered large boilers at 2,500 kBtu/h and not 

requiring repeat testing of already-tested models of the same boiler equipment line. ABMA 

argued that there were several issues related to testing large boilers which made this limitation 

reasonable and necessary, including: (1) cost of testing; (2) inapplicability of BTS-2000 test 

procedure pressure conditions to large steam boilers (with the possibility of high strain fatigue in 

some parts of the boiler); and (3) the necessary coordination of production and testing schedules, 

the high degree of control by testing agencies in the form of inspection, testing considerations 

and other checks, and the high degree of product control involved. (ABMA, No. 14 at pp. 2-3) 

Cleaver-Brooks suggested capping covered boiler capacity to 2,500 kBtu/h for cost and 

practicality reasons. Cleaver-Brooks stated that for large boilers, the time required for 

manufacturing can be as long as several months, and the cost of manufacturing and testing a 

larger boiler can approach a million dollars. As a result, compliance and certification testing of 

large boilers is financially burdensome and impractical. (Cleaver-Brooks, No. 12 at p. 1) A 

similar view was expressed by Burnham, which commented on the difficulty of testing large 

boilers in terms of capabilities of different testing centers and the cost of o4utfitting test facilities 

to accommodate such boilers. (Burnham, No. 15 at p. 2) Burnham suggested limiting

certification and compliance testing to boilers having input ratings 2,500 kBtu/h, or to accept the 

7
test carried out on single unit of a boiler series as sufficient to certify the entire equipment line,

without a requirement for retesting each year.

Heat Transfer Products (HTP) recommended delineating boilers further on the basis of 

input rating. Specifically, HTP recommended three commercial boiler classifications: “small” 

with input ratings ≥300 kBtu/h to <2,500 kBtu/h; “medium” with input ratings ≥2,500 kBtu/h 

and <5,000 kBtu/h; and “large” with input ratings ≥5,000 kBtu/h. HTP stated that the cost of 

fuel, installation, testing, and operation all increase proportionally to the size of the boiler, while

the accuracy of testing decreases as the size of boiler being tested increases. As a consequence,

HTP recommended adopting different standards and test procedures for boilers having input 

ratings greater than 5,000 kBtu/h. HTP argued that the benefits of delineating commercial

boilers in this manner are as follows: (1) very few test centers are capable of testing boilers 

having input rating greater than 5,000 kBtu/h; (2) due to difficulties involved in testing such 

large boilers, a separate test procedure may be warranted; and (3) this would provide DOE the 

opportunity to use combustion efficiency as an efficiency metric for boilers greater than 5,000

kBtu/h and to adopt a different metric for boilers with lower input ratings. (HTP, No. 18 at pp. 

1-2)

DOE considered the comments submitted by interested parties about a limit to the 

maximum input rating for covered commercial packaged boiler. While DOE acknowledges the 

difficulty of testing very large CPBs, it has tentatively determined that limiting the scope to 

exclude very large CPBs (e.g., CPBs with input ratings above 5,000 kBtu/h) could violate

EPCA’s anti-backsliding provision. The current energy conservation standards under 10 CFR 

431.87 cover CPBs without defining an upper limit above which standards would not apply. 

DOE has determined that establishing such a limit would, in effect, eliminate existing standards 

for any very large boilers. DOE is also conducting a test procedure rulemaking, and will consider 

comments related to the practicality of testing of very large CPBs in that proceeding.

Electric boilers 

DOE received several comments about whether to consider and potentially set standards 

for electric CPBs. Energy efficiency advocacy groups – the American Council for an EnergyEfficient Economy (ACEEE), the Appliance Standards Awareness Project (ASAP), and the 

Natural Resources Defense Council (NRDC) – submitted a joint comment (the “Joint Advocates 

Comment”) which recommended including such boilers in the scope and suggested that DOE 

consider a requirement for the boiler’s jacket insulation to meet a high performance level. (Joint 

Advocates, No. 16 at p. 2) Likewise, HTP recommended including electric boilers in this 

rulemaking, stating that the greatest impact would be expected by addressing the standby mode

and off mode power consumption of this equipment. (HTP, No. 18 at p. 2) However, AHRI and 

ABMA opposed including electric CPBs in the scope of this rulemaking. (AHRI, No. 17 at p. 3; 

ABMA, No. 14 at p. 1)

DOE notes that none of the information about electric CPBs provided by interested 

parties offers sufficient support to justify changing its earlier conclusion that the small number of 

annual electric CPB shipments, with efficiencies approaching 100 percent, means there would be

very limited potential for significant energy savings from standards. Consequently, DOE did not 

consider electric CPBs in preparing its preliminary analysis, nor does it plan to prospectively

8
include such equipment in its rulemaking analysis. As discussed immediately below, DOE is not 

considering standby mode and off mode energy consumption for CPB, including electric CPB.

Standby mode and off mode 

AHRI and ABMA asserted that DOE should not develop standby mode and off mode 

energy conservation standards for commercial package boilers. AHRI argued that DOE may not 

have the authority to specify multiple efficiency standards for commercial boilers. AHRI also 

stated that any reduction in standby mode or off mode power consumption will have an 

insignificant impact on overall energy use. (AHRI, No. 17 at p. 3) ABMA stated that adopting 

standby mode or off mode standards could present safety issues during testing. Current standby

mode or off mode test procedures require 100-percent shut-off of the stack damper on a down 

cycle. This “has the potential to increase the likelihood of a combustion explosion should gas 

valves start leaking. This could be particularly severe on natural draft fired boilers, in which the 

open sides will allow the gas to enter the space around the boiler, whereas with an open stack the 

gas would normally vent to atmosphere.” Instead, the commenter argued that consideration 

should be given to an 80 to 90 percent shutoff. For forced-draft-fired boilers “the use of 100 

percent shutoff at the combustion air intake damper will provide a safer approach than a stack 

damper.” (ABMA, No. 0014 at pp. 1-2) In light of the ABMA comment, DOE understands that 

there may be safety issues associated with standby mode or off mode testing and that testing may 

be considered at 80-percent to 90-percent shut-off of the stack damper or, in the case of forced 

draft systems, 100-percent shut-off of the intake air damper. On the other hand, HTP encouraged

DOE to adopt the same requirements as are in place for residential boiler products, which require 

testing according to International Electrotechnical Commission (IEC) 62301 – “Household 

electrical appliances - Measurement of standby power.” HTP stated that establishing energy 

conservation standards for CPB standby mode and off mode would reduce standby mode or off 

mode power consumption of this equipment. (HTP, No. 18 at p. 2) The Joint Advocates stated 

that adopting standby mode and off mode energy conservation standards may provide an 

opportunity to save energy; however, power consumption during standby mode and off mode is a 

very small fraction of the total energy consumed by the boiler. The Joint Advocates stated that 

adding standby mode or off mode standards should not hinder innovative boiler control strategies

and safety features which may present a greater opportunity for energy savings. (Joint 

Advocates, No. 16 at p. 2) ACEEE requested that DOE provide information on the fraction of 

annual savings that would be possible by adopting standby mode and off mode standards. 

(ACEEE, No. 13 at p. 27) 

After considering the comments related to this issue, DOE initially notes regarding its 

authority that through EISA 2007, Congress amended EPCA to make clear that DOE should 

consider energy savings opportunities related to standby mode and off mode energy 

consumption. Accordingly, DOE has estimated the standby mode and off mode annual energy 

use for mechanical draft commercial packaged boilers, which is about 0.02 percent of the total 

boiler annual energy use. DOE is seeking further comment regarding commercial packaged 

boilers’ standby mode and off mode energy consumption, and in particular, data on the 

magnitude of energy consumed in the different operational modes.

Lastly, DOE received comments about the proposed coverage determination for natural 

draft CPBs. AHRI disagreed with the definition of a “natural draft commercial packaged boiler”

9
proposed in the August 2013 NOPD, arguing that it is unnecessarily complex and includes 

mention of dampers, which is irrelevant in defining a natural draft boiler. AHRI also stated that 

DOE should include the words “as required” after “mechanical draft” in the definition of 

“packaged boiler” and that this would make the requirement of a separate definition for “natural 

draft commercial packaged boiler” unnecessary. (AHRI, No.7 p.1-2) Both Laclede Gas 

Company (Laclede) and American Public Gas Association (APGA) supported DOE's proposed 

differentiation of natural draft equipment classes and suggested that DOE should promulgate the 

definition of “natural draft commercial packaged boiler.” The commenters also stated that 

DOE's concerns relating to potential substitution effects from a lack of explicit coverage of 

natural draft commercial packaged boilers are justified. (APGA, No. 6 at p. 2; Laclede, No. 8 at 

p. 2)

DOE will consider the above comments about natural draft commercial packaged boilers 

when making its final determination about coverage of and the definition for “natural draft 

commercial packaged boiler,” as proposed in the August 2013 NOPD. DOE would note at this 

juncture that it is not at liberty to modify or expand the definition of “packaged boiler,” which is 

defined by statute.

2.3.2 Market Assessment

As part of the market and technology assessment, DOE gathered information for an 

overall picture of the market for commercial packaged boiler equipment, including the nature of 

the equipment, market characteristics, and industry structure. DOE collected quantitative and 

qualitative information, primarily from publicly-available sources. The market assessment 

examined manufacturers, trade associations, and the quantities and types of equipment sold and 

offered for sale. DOE reviewed relevant literature and interviewed manufacturers to develop an 

overall picture of the commercial boiler industry in the United States. Industry publications and 

trade journals, government agencies, and trade organizations provided much of the information, 

including: (1) manufacturers and their market shares; (2) shipments by equipment type; (3) 

equipment information; and (4) industry trends. Through surveying manufacturer literature and 

online equipment listings from manufacturer trade associations, such as AHRI, DOE compiled a

database of 2,354 boiler models and their characteristics. This information, along with other 

sources, was used to carry out the market analysis and inform the downstream analyses. DOE 

also interviewed manufacturers to further understand market conditions. The analyses for the 

market assessment are described in chapter 3. 

2.3.3 Equipment Classes

When evaluating and establishing energy conservation standards, DOE generally divides 

covered equipment into classes by the type of energy used, capacity, or other performancerelated features that affect efficiency. Different energy conservation standards may apply to 

different equipment classes. DOE then conducts its analysis and considers establishing standards 

to provide separate standard levels for each equipment class.

In the Framework Document, DOE sought comment on the appropriateness of the 

equipment classes which were established for commercial packaged boilers and considered for 

the analysis. DOE received only one comment from AHRI, which agreed with the equipment 

10
classes created by DOE in the Framework Document, including the current 10 equipment 

classes. (AHRI, No. 17 at p. 5)

For the preliminary analysis, DOE considered 16 equipment classes initially divided by 

draft type (natural draft vs mechanical draft). For the sake of analysis, DOE assumed that the 

outcome of the August 2013 NOPD for natural draft commercial packaged boilers will be 

positive and analyzed those equipment classes for this preliminary analysis. (If the 

determination is ultimately negative, DOE would not adopt standards for the natural draft 

equipment classes, as that equipment would not be covered.) The equipment classes were further 

divided based on fuel type (gas or oil), heating medium (steam or hot water), and size (small 

(300 kBtu/h – 2,500 kBtu/h) or large (> 2,500 kBtu/h)). Accordingly, for this preliminary 

analysis, DOE has analyzed the 16 equipment classes in Table 2.3.1, and addresses these

analyses in Chapter 3. DOE requests comments from interested parties about the 16 equipment 

classes in Table 2.3.1.

Table 2.3.1. Equipment Classes Considered for Preliminary Analysis

Draft Type Size Category Fuel Type Heating 

Medium Full Name

Natural 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Gas-fired Hot Water Small Gas-fired Natural Draft Hot Water CPB

Natural 

Draft Large (>2,500,000 Btu/h) Gas-fired Hot Water Large Gas-fired Natural Draft Hot Water CPB

Natural 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Oil-fired Hot Water Small Oil-fired Natural Draft Hot Water CPB

Natural 

Draft Large (>2,500,000 Btu/h) Oil-fired Hot Water Large Oil-fired Natural Draft Hot Water CPB

Natural 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Gas-fired Steam Small Gas-fired Natural Draft Steam CPB

Natural 

Draft Large (>2,500,000 Btu/h) Gas-fired Steam Large Gas-fired Natural Draft Steam CPB

Natural 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Oil-fired Steam Small Oil-fired Natural Draft Steam CPB

Natural 

Draft Large (>2,500,000 Btu/h) Oil-fired Steam Large Oil-fired Natural Draft Steam CPB

Mechanical 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Gas-fired Hot Water Small Gas-fired Mechanical Draft Hot Water CPB

Mechanical 

Draft Large (>2,500,000 Btu/h) Gas-fired Hot Water Large Gas-fired Mechanical Draft Hot Water CPB

Mechanical 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Oil-fired Hot Water Small Oil-fired Mechanical Draft Hot Water CPB

Mechanical 

Draft Large (>2,500,000 Btu/h) Oil-fired Hot Water Large Oil-fired Mechanical Draft Hot Water CPB

Mechanical 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Gas-fired Steam Small Gas-fired Mechanical Draft Steam CPB

Mechanical 

Draft Large (>2,500,000 Btu/h) Gas-fired Steam Large Gas-fired Mechanical Draft Steam CPB

11
Mechanical 

Draft

Small (≥300,000 Btu/h 

and ≤2,500,000 Btu/h) Oil-fired Steam Small Oil-fired Mechanical Draft Steam CPB

Mechanical 

Draft Large (>2,500,000 Btu/h) Oil-fired Steam Large Oil-fired Mechanical Draft Steam CPB

2.3.4 Technology Assessment 

DOE typically uses information relating to existing and past technology options and 

prototype designs as inputs to determine what technologies manufacturers use to attain higher 

performance levels. In consultation with interested parties, DOE develops a list of technologies 

for consideration. Initially, these technologies encompass all those DOE believes are 

technologically feasible.

Based on the information obtained through market analysis, DOE conducted a review of 

existing boiler technologies and upcoming technologies which can potentially improve boiler 

performance. DOE developed its list of technologically feasible design options for the 

considered equipment through consultation with manufacturers of components and systems, and 

from trade publications and technical papers. Since many options for improving efficiency are 

available in existing units, product literature examination provided additional information. An 

initial list of technologies was presented in the Framework Document, upon which DOE sought 

comment.12 These technology options broadly include:

(1) Technology options to improve combustion and/or thermal efficiency

a. Jacket insulation

b. Heat exchanger improvements (including condensing heat exchanger and external 

and internal tube surface enhancement)

c. Burner derating

d. Improved burner technology

e. Combustion air preheaters

f. Economizers

g. Integrated, high-efficiency steam boilers

h. Blowdown waste heat recovery

(2) Technology options to reduce seasonal boiler energy consumption

a. Modulating burners

b. Electronic ignition

c. Dampers

d. Temperature reset controls

e. Thermal post-purge controls

12 As noted in section 2.3.1, DOE has tentatively decided not to include standby mode and off mode energy 

conservation standards in the scope of the current energy conservation standards rulemaking. As a result, although 

DOE listed technology options that reduce standby mode and off mode energy consumption in the Framework 

Document, these options were not considered further in the preliminary analysis phase.

12

 
f. Delayed-action oil pump solenoid valve

DOE requested comment from interested parties on appropriateness of the listed 

technology options and if any new options could be added to the list. 

DOE received several comments from interested parties about the technology assessment. 

AHRI stated that the actual list of technology options available to improve efficiency would be 

much smaller than that reported in the Framework Document. (AHRI, No. 17 at p. 5) 

According to AHRI, options such as improving jacket insulation and burner derating have 

already been explored by most manufacturers, and there is no possibility for further efficiency 

improvement by implementing these options. (AHRI, No. 17 at p. 5) AHRI also stated that 

combustion air pre-heaters would provide only minor improvement in efficiency but at great cost 

in terms of implementation, and that improving burner technology would in itself not increase 

efficiency. AHRI stated that using economizers for large commercial boilers would result in 

improved efficiency. Further, AHRI stated that none of the technology options aimed at 

reducing standby mode or off mode energy consumption should be considered; according to 

AHRI, the potential energy savings from these techniques is negligible, as compared to the 

overall energy consumption of the boiler. (AHRI, No. 17 at p. 6). 

HTP stated that derating burners would not be beneficial, as derating is equivalent to 

oversizing the heat exchanger. HTP also stated that adopting pulse combustion is difficult in the 

field. HTP suggested the use of pre-mix combustion systems, as they have the potential to 

increase efficiency and at the same time significantly reduce emissions. HTP also suggested 

additional technology options, especially for modulating boilers, which can improve air-fuel 

mixing, such as venturies, swirl plates, and servo-driven orifices. (HTP, No. 18 at p. 6)

The Joint Advocates suggested internationally adopted technologies in the European and 

Asian markets. (Joint Advocates, No. 16 at p. 3) ACEEE also commented that derating 

competes with (or is similar to) using a part-load measure, and so if a part-load measure is 

adopted (as in the case of a modulating burner), the user automatically gets the benefit of an 

oversized heat exchanger for 90-percent of the bin hours. (ACEEE, Public Meeting Transcript 

No. 13 at pp. 55-56) Burnham suggested using electronically-commutated motors (ECMs) for 

pumps as a technology that should be analyzed. (Burnham, No.15 at p. 2)

NW Natural suggested that opportunities to advance technological approaches for higherefficiency natural draft boilers need to be investigated. (NW Natural, No. 5 at pp. 1-2) ABMA 

stated that safety aspects should be analyzed as part of the overall evaluation of technologies,

particularly the combustion pre-heater technology. (ABMA, Public Meeting Transcript No.13 at 

pp. 50-51) Lochinvar noted that none of the technology options suggested by DOE have the 

potential to create huge improvements in efficiency and stated that DOE should not expect a vast 

increase in minimum efficiency levels. (Lochinvar, Public Meeting Transcript No. 13 at p. 52)

DOE considered the comments received from the interested parties in performing the 

technology assessment and screening analysis. DOE notes that the technology assessment is an 

effort to identify any and all technologies that could possibly be used to reduce energy 

consumption for CPBs, and DOE later removes technologies that have already been 

implemented, that would not improve the efficiency as rated (and thus, is unlikely to be 

13
implemented as a result of amended energy conservation standards), or that are screened out 

based on the screening criteria (see section 2.4). DOE has considered a number of technologies 

in chapter 3 of this TSD, Market and Technology Assessment, and has also carefully evaluated

these comments when deciding which technologies to should be considered downstream. 

Specifically, DOE agrees that derating is not a viable design option, and has screened it out, as it

would reduce utility by reducing the heat output of the CPB. DOE also agrees with HTP’s

comments on improving burner combustion performance and has considered those technologies 

accordingly. DOE has included premix burners, low-pressure air-atomized burner and pulse 

combustion as potential technology options that improve efficiency. As suggested, DOE has 

explored all avenues for identifying potential technology options, including exploring 

international markets. Further details are provided in chapter 3 of this preliminary TSD.

In light of these comments, DOE re-examined its list of technology options and has 

tentatively concluded that the largest gains in energy efficiency can be achieved through 

modification of the heat exchanger. Any improvement in the effectiveness or overall heat 

transfer coefficient of the heat exchanger would significantly enhance boiler efficiency. 

Therefore, most of the technology options identified by DOE in TSD Chapter 3, Market and 

Technology Assessment, are aimed at improving heat exchanger performance. This includes but

is not limited to: (1) addition of a secondary heat exchanger; (2) improving tube design; (3)

incorporating turbulators; and (4) introduction of baffles. DOE notes that air or flue-gas side 

performance is usually the limiting factor for a typical gas-liquid heat exchanger. Therefore, 

DOE has provided an assessment of fin designs to improve air-side performance. Some of these 

options would also address concerns regarding investigating efficiency improvement 

technologies for natural draft commercial packaged boilers. The market and technology 

assessment (Chapter 3 of this preliminary TSD) lists all the technology options that were 

considered for the screening analysis. DOE notes that the screening analysis (chapter 4 of the 

preliminary TSD) will eliminate some of the technologies identified in the technology 

assessment. In addition, in the engineering analysis, DOE only considers technologies which 

have a significant impact on the efficiency, as rated by the DOE test method, which could be 

implemented as the result of an amended energy conservation standard.

2.4 SCREENING ANALYSIS

The purpose of the screening analysis is to evaluate the energy-saving technologies 

identified in the technology assessment to determine which ones to consider further and which 

ones to screen out. DOE consulted with industry and other interested parties in developing a list 

of feasible technologies for the technology assessment. DOE then applied screening criteria to 

determine which technologies are not suitable for further consideration in this rulemaking. 

Chapter 4 of this preliminary TSD, Screening Analysis, contains details about DOE’s screening 

criteria.

As detailed below, the screening analysis examines whether various technologies: (1) are 

technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an 

adverse impact on equipment utility or availability; and (4) have adverse impacts on health and 

safety. If the technology option does not meet the first two criteria or if the technology option 

does meet the last two criteria, DOE will not consider that technology option further. In 

addition, DOE notes that the four screening criteria do not directly address the proprietary status 

14
of design options. DOE only considers efficiency levels achieved through the use of proprietary 

designs in the engineering analysis if they are not part of a unique pathway to achieve that 

efficiency level (i.e., if there are other non-proprietary technologies capable of achieving the 

same efficiency). DOE reviewed the list of commercial package boiler technologies according to 

these criteria. In the engineering analysis, DOE further considers the efficiency-enhancement 

technologies that it did not eliminate in the screening analysis.

1. Technological feasibility. DOE screens out technologies that are not incorporated in 

commercially-available equipment or working prototypes.

2. Practicability to manufacture, install, and service. If DOE determines that mass 

production of a technology in commercial equipment and reliable installation and 

servicing of the technology could not be achieved on the scale necessary to serve the 

relevant market by the time of the compliance date of the standard, it will not further 

consider that technology.

3. Adverse impacts on equipment utility or availability. If DOE determines a technology 

has a significant adverse impact on the utility of the equipment for significant 

consumer subgroups or results in the unavailability of any covered equipment type 

with performance characteristics (including reliability), features, size, capacities, and 

volumes that are substantially the same as equipment generally available in the United 

States at the time, it will not further consider that technology.

4. Adverse impacts on health or safety. If DOE determines that a technology will have 

significant adverse impacts on health or safety, it will not further consider that 

technology.

HTP commented on the screening analysis for different technology options. HTP stated 

that the choice of materials which can be used to construct condensing boilers is limited, and 

unless significant innovation occurs in this field, no alternative material choice would be an 

option. HTP also stated that derating the combustion system is equivalent to oversizing the heat 

exchanger and only has a limited application. Lastly, HTP identified several technology options 

which have had reliability issues: (1) pulse combustion; (2) air pre-heaters and economizers; (3) 

hot surface igniters; and (4) cast iron heat exchangers. (HTP, No. 18 at p. 6)

DOE considered these comments when performing the screening analysis. DOE notes 

that the screening analysis only removes technologies for the four reasons listed above (i.e., 

technological feasibility; practicability to manufacture, install, and service; adverse impacts on 

equipment utility or availability; and adverse impacts on health and safety). Technologies which 

were screened out based on the four criteria and the justification for the screening are contained 

in chapter 4, Screening Analysis, of this preliminary TSD. 

Out of the list of technology options that passed the screening test, few options were 

removed because they have a negligible improvement in combustion or thermal efficiency when 

tested using DOE’s test procedure. These options and the reasons behind their removal from 

further consideration; are contained in chapter 4 Screening Analysis, of this preliminary TSD.

15
The remaining technology options which passed the screening analysis and which will be further 

considered by DOE include:

1. Addition of condensing or secondary heat exchanger;

2. Increased primary heat exchanger surface area;

3. Incorporation of heat exchanger surface features (such as dimples) and internal features 

(such as turbulators, corrugation, or rifling) with the purpose of inducing turbulent flow 

on either the flue-gas or water side of the heat exchanger;

4. Introduction of baffles which increase effective flow length (or surface area) and 

residence time of fluid inside the heat exchanger;

5. Introduction of micro-fin tubes to enhance water-side boiling performance;

6. Replacing flat straight fins with wavy or louvered fins to improve flue-gas side heat 

transfer performance. Staggering may also improve thermal as well as hydraulic 

performance; and

7. Introduction of premix burners, pulse combustion and low pressure – air atomized oil 

burners as improved burner technology options.

DOE is requesting comments on the technology options which passed the screening 

analysis with regard to their technological and economic feasibility. In particular, DOE is 

interested in knowing about technology options which can improve efficiency of natural draft 

boilers.

2.5 ENGINEERING ANALYSIS

The engineering analysis (chapter 5 of the TSD) establishes the relationship between 

manufacturer selling price and increased efficiency for each commercial packaged boiler 

equipment class. This relationship serves as the basis for cost-benefit calculations in terms of 

modified equipment designs intended to improve energy efficiency for individual commercial 

consumers, manufacturers, and the Nation. Chapter 5 discusses the equipment classes analyzed, 

representative baseline units, incremental efficiency levels, the methodology used to develop 

price estimates at each efficiency level, price-efficiency curves, and the impact of efficiency 

improvements on the considered equipment. To determine the cost to commercial consumers of 

CPBs at higher efficiency levels, DOE estimated manufacturer selling prices at various 

efficiency levels, and markups in the distribution chain. Contractors and manufacturers provided 

price lists for different commercial packaged boiler models, which were aggregated to determine 

an average price for each efficiency level. Thermal and combustion efficiency levels of the 

boiler models were verified using the AHRI database and boiler catalogues. 

DOE sought comment about several aspects of the engineering analysis in the Framework 

Document. In particular, DOE requested comment on the range of efficiency levels and key 

efficiency levels for the analysis, the appropriate max-tech levels, representative characteristics, 

and any characteristics which would require multiple representative equipment types within an 

equipment class.

16
Regarding the efficiency levels, AHRI commented that vent categorization is important, 

and that combustion efficiency of 83 percent is generally a line of demarcation between models 

that are not designed to condense in the vent and those models that are. AHRI stated that models 

with efficiency ratings above 83 percent combustion efficiency require vent systems that are 

different from the common Type B vent systems used in many existing installations. (AHRI, 

No. 17 at p. 6) HTP recommended that DOE review AHRI’s historical updates to identify the 

kind of efficiency levels associated with new products being released. (HTP, No. 18 at p. 7).

AHRI commented that the “max-tech” for the purposes of this analysis should only 

consider models which are commercially available and for which there is significant field 

experience in North America. AHRI argued that market forces are already driving 

manufacturers to develop higher-efficiency equipment in this class, and it is therefore unlikely 

that DOE will identify a technology not already in commercial use that is safe, reliable, and cost 

effective. (AHRI, No. 17 at p. 6) AHRI also commented that max-tech hot water boilers 

currently employ condensing technology, and that slight differences in the ratings near the maxtech level may be due to variability in the test procedure, or slight differences in input rating, 

factors for which DOE should account. (AHRI, No. 17 at pp. 6-7) AHRI stated that for gas and 

oil steam boilers, there are often situations where no practical alternatives to natural draft venting 

exist, and, therefore, the practical “max-tech” level for these classes should be limited to an 

efficiency appropriate for traditional natural draft venting systems. (AHRI, No. 17 at p. 7) HTP 

stated that it is currently developing a max-tech prototype CPB using currently-available 

components, and the commenter pointed out that there are several types of equipment listed with 

efficiencies at or above 98-percent thermal efficiency.

In response to these comments, DOE reviewed the market, including manufacturer 

literature and public equipment databases, to identify the most common efficiency levels of 

equipment being offered in the U.S. market. DOE selected max-tech efficiency levels for each 

equipment class based on the maximum available efficiency in that class. DOE selected 

intermediate efficiency levels based primarily on the most common efficiency levels offered, but 

also on whether that level represented a significant change in technology (e.g., condensing).

DOE notes AHRI’s concern regarding max-tech efficiency ratings, and, as suggested, DOE has 

identified max-tech levels based on products currently on the market. DOE considered whether 

slight differences in the input rating impact the max-tech level, but found that models currently 

on the market generally show little trend between input rating and efficiency (see chapter 3 of 

this preliminary TSD). Regarding variations in ratings due to issues related to the test procedure, 

DOE assumes that all manufacturers have conducted adequate testing to determine an efficiency 

rating that is representative of performance of their equipment under the DOE test procedure, 

and that the result is repeatable. If there is a specific issue concerning repeatability of the test 

procedure, DOE seeks comment on that issue within the context of its test procedure rulemaking 

for commercial packaged boilers.13 In response to AHRI’s other comment on limiting max-tech 

efficiency levels of natural draft boilers, DOE reiterates that the max-tech efficiency levels are 

13 DOE is conducting a separate rulemaking to address the test procedures for commercial packaged boilers (Docket 

Number EERE-2014-BT-TP-0006). For more information see: 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=87. 

17

 
chosen based on efficiency rating of equipment that is available in the market, and are chosen 

individually for each equipment class. Additional details about the selection of efficiency levels 

are included in chapter 5, Engineering Analysis, of the preliminary TSD.

Regarding the representative characteristics, AHRI stated that there is no single set of 

characteristics or representative capacity that can be used as a baseline model for CPBs. AHRI 

recommended that DOE consider the following characteristics for each equipment class when 

conducting its analysis: (1) heat exchanger materials (stainless steel, steel, copper, aluminum, 

cast iron); (2) heat exchanger construction (single-pieced, sectional, water tube, fire-tube); and 

(3) burner type (atmospheric, induced, premix, power). (AHRI, No. 17 at p. 7) HTP commented 

that a wide range of CPB efficiencies is possible, which is not tied to the size (input rate) of the 

boiler, and a review of AHRI data indicates that equipment with a thermal efficiency of 98

percent is available from the smaller sizes of boilers up through boilers operating at more than 

4,000 kBtu/h. HTP further stated that there is a significant cost difference between a 501 kBtu/h 

boiler and a 999 kBtu/h boiler, and as a result, HTP recommended that DOE not use a 

representative capacity within this range. (HTP, No. 18 at p. 8)

DOE considered these comments when selecting boiler models for analysis. To simplify 

the analysis, DOE selected a representative capacity for each equipment class, with the 

representative capacity being 800 kBtu/h for the “small” equipment classes and 3,000 kBtu/h for 

the “large” equipment classes. Although DOE recognizes the significant variation in price

attributable to size differences, DOE has determined that these input ratings are adequate to 

represent the other boiler models in the equipment classes, on average. DOE also considered 

various features, such as heat exchanger material, while conducting the analysis. Additionally, 

only the boiler models that are commercially available and have verifiable efficiency levels listed 

in the AHRI database were considered for the analysis. Additional details of the engineering 

analysis are contained in chapter 5 of this preliminary TSD. DOE welcomes comments from 

interested parties on the methodology adopted and incremental price results obtained from this 

engineering analysis. DOE would also welcome any price-related information, especially on 

natural draft CPBs which would improve DOE’s future analyses for this current rulemaking.

2.6 MARKUPS ANALYSIS

DOE uses distribution channel markups to convert the manufacturer selling price 

estimates from the engineering analysis to commercial consumer prices, which are then used in 

the LCC and PBP analysis and in the manufacturer impact analysis. Retail prices are necessary 

for the baseline efficiency level and all other efficiency levels under consideration. 

Before developing markups, DOE defines key market participants and identifies

distribution channels. In the Framework Document, DOE described several distribution 

channels that included three market participants: (1) wholesalers; (2) mechanical contractors 

(including dealers and installers); and (3) general contractors (including builders). DOE used

three types of distribution channels to describe how most commercial packaged boilers pass from 

the manufacturer to the consumer: (1) replacement market; (2) new construction, and (3) national 

accounts. The national accounts channel is an exception to the usual distribution channel; it is 

only applicable when manufacturers sell large, custom-built commercial packaged boilers 

directly to the commercial consumer. 

18
In the Framework Document, DOE requested comment about the distribution channels for 

commercial packaged boilers. ABMA stated that the wholesaler is not a part of the distribution 

chain for large boilers. (ABMA, No. 0014 at p. 5) ACEEE, ASAP, and NRDC stated that the 

role of the “manufacturer’s representative” is critical in many sectors. ACEEE, ASAP, and 

NRDC believe that these actors generally do not actually buy and hold equipment, in contrast to 

wholesalers. (ACEEE, ASAP, NRDC, No. 0016 at p. 3) AHRI, ACEEE, and ABMA agree that 

for larger boilers, the manufacturer’s representative sells to a mechanical contractor. (AHRI, No. 

0017 at p. 7; ACEEE, No. 0013 at pl. 77; ABMA, No. 0013 at p. 78) 

For the preliminary analysis, DOE included the manufacturer’s representative instead of a 

wholesaler in the distribution channels for large commercial packaged boilers. DOE agrees that 

the manufacturer’s representative generally sells the equipment but does not actually buy and 

hold it, which could result in lower markup than wholesalers who usually stock inventories. 

However, there is not enough information to differentiate markups between manufacturer’s 

representatives and wholesalers. Therefore, DOE applied the same markup for both entities. 

DOE requests data on markups related to manufacturer’s representatives and wholesalers, as well 

as data on the relative difference between them.

AHRI stated that DOE should assign appropriate distribution channels by input capacity. 

(AHRI, No. 0013 at p. 80) For the preliminary analysis, DOE defined separate distribution 

channels for small (≥300,000 Btu/h and ≤2,500,000 Btu/h) and large (>2,500,000 Btu/h) 

commercial packaged boilers. AHRI also stated that DOE should recognize that the distribution 

channels most often used for built-to-stock commercial packaged boilers will be different from

those for built-to-order commercial packaged boilers. (AHRI, No. 0017 at p. 7) DOE applied 

the national accounts channel to a fraction of large (custom-built) boilers that manufacturers sell 

directly to the commercial consumer.

After defining the distribution channels, DOE develops markups to transform the 

manufacturer selling price into a commercial consumer purchase price. DOE uses baseline 

markups to determine the sales price of baseline models. Incremental markups are coefficients 

that DOE applies to the incremental cost of higher-efficiency models. Because companies mark 

up the price at each point in the distribution channel, both baseline and incremental markups are 

dependent on the particular distribution channel.

In the Framework Document, DOE stated its intention to use data from the Heating, Airconditioning & Refrigeration Distributors International (HARDI),14 the Air Conditioning 

Contractors of America (ACCA),15 the 2007 Economic Census,16 the Commercial Building 

14 Heating, Air Conditioning & Refrigeration Distributors International 2013 Profit Report, (Available at:

http://www.hardinet.org/Profit-Report) (Last accessed May 2014). 15 Air Conditioning Contractors of America (ACCA), Financial Analysis for the HVACR Contracting Industry: 2005 

(2005) (Available at: https://www.acca.org/store/product.php?pid=142) (Last accessed March 2014). 16 U.S. Census Bureau, 2007 Economic Census (Last accessed March 2014) (Available at: 

http://www.census.gov/econ/census/)

19

 
Energy Consumption Survey 2003 (CBECS 2003),17 the Residential Energy Consumption 

Survey 2009 (RECS 2009),18 and the Sales Tax Clearinghouse19 to determine markups and retail 

prices.

AHRI stated that the markups approach to develop estimates of commercial packaged 

boiler retail prices may be valid, but given the complexities of the commercial boiler market, it is 

unlikely to provide a reasonable estimate of price. It added that the markups that occur at 

various stages include additional components for the heating system or additional services, 

making it difficult to discern the price increase that can be actually attributed to increased

efficiency. (AHRI, No. 0017 at p. 8)

DOE acknowledges that there are complexities in the commercial packaged boiler market, 

but it believes that the markups approach is reasonable for the purposes of DOE’s analysis, 

which is primarily concerned with incremental price differences between efficiency levels rather 

than absolute price levels. DOE’s markups do not include additional components or services. 

Commenters provided no recommended alternative approach.

See chapter 6, Markup Analysis, of this preliminary TSD for additional details.

2.7 ENERGY USE ANALYSIS

The purpose of the energy use analysis is to determine the annual energy consumption of 

commercial packaged boilers in representative U.S. buildings and to assess the energy savings 

potential of increased boiler efficiency. DOE estimated the annual energy consumption of 

commercial packaged boilers at specified energy efficiency levels across a range of climate 

zones. The annual energy consumption includes the fuel use (oil or natural gas) by the boiler for 

space heating and water heating (if applicable), as well as the electricity use of auxiliary 

components, including blower fan, igniter, and pumps. The annual energy consumption of 

commercial packaged boilers is used in subsequent analyses, including the LCC and PBP 

analysis and the national impact analysis.

DOE primarily used CBECS 2003 energy data and weather data from the National 

Oceanic and Atmospheric Administration (NOAA) to estimate weather-normalized energy use of 

commercial packaged boilers.20 CBECS is a national sample survey of commercial building 

units that collects statistical information on the consumption of and expenditures for energy in 

commercial building units along with data on energy-related characteristics of the commercial 

17 U.S. Department of Energy: Energy Information Administration, Commercial Buildings Energy Consumption 

Survey (2003) (Available at: http://www.eia.gov/consumption/commercial/data/2003/index.cfm?view=microdata) 

(Last accessed November 2013).

18 U.S. Department of Energy: Energy Information Administration, Residential Energy Consumption Survey: 2009 

RECS Survey Data (2013) (Available at: http://www.eia.gov/consumption/residential/data/2009/) (Last accessed 

March 2014).

19 Sales Tax Clearinghouse Inc., State Sales Tax Rates Along with Combined Average City and County Rates (2014) 

(Available at: http://thestc.com/STrates.stm) (Last accessed May 27, 2014). 20 National Oceanic and Atmospheric Administration, NNDC Climate Data Online (Available at: 

http://www7.ncdc.noaa.gov/CDO/CDODivisionalSelect.jsp) (Last accessed March 15, 2013).

20

 
building units and occupants (e.g., vintage of the building, square footage, fuels used, heating 

energy use). For commercial packaged boilers used in residential applications, DOE used the 

RECS 2009 building sample, which provides similar information as CBECS. 

Commenting on the Framework Document, AHRI stated that the analysis should not 

consider any energy used by the commercial packaged boiler other than the fuel supplied to fire 

the boiler. (AHRI, No. 0017 at p. 8) DOE recognizes that the primary energy use is from the 

fuel supplied to fire the boiler and that the energy use from auxiliary electrical components is 

small. However, these components have been included in the analysis to be comprehensive and 

because the electrical energy use varies by efficiency level.

In the Framework Document, DOE requested input on the fraction of commercial 

packaged boilers used in residential applications. AHRI stated that the multi-family residential 

application market is large enough for DOE to take into account. AHRI also stated that it does 

not make a difference whether commercial packaged boilers are used in residential or 

commercial applications, as the boilers will be meeting a commercial-sized load regardless of the 

application. (AHRI, No. 0013 at pp. 100, 103)

DOE agrees with AHRI, and considers a commercial packaged boiler in any residential 

or commercial building with a commercial-sized load (≥300,000 Btu/h). Based on data from 

CBECS 2003 and RECS 2009, DOE estimated that 84 percent of commercial packaged boilers 

are installed in commercial buildings and 16 percent are in residential buildings.

In the Framework Document, DOE sought input on the planned approach for determining 

the energy consumption of commercial packaged boilers in commercial buildings. HTP stated

that the intended approach is reasonable, but noted that the origin of the data presented in the 

cited references should also be considered. For example, although the ASHRAE handbooks 

were recently updated, the hot water usage data presented in their sizing methods may not have 

been updated within the last ten or more years, depending upon which table is considered. HTP 

further stated that the data presented in the tables have often been collected from small sample 

sizes and do not necessarily accurately account for a cross-section of the entire country. (HTP, 

No. 0018 at p. 8)

To estimate the annual energy consumption of commercial packaged boilers, DOE 

calculated the building heating load based on the CBECS and RECS estimates of the annual 

energy consumption of the boiler for each building. DOE then used the building heating load to 

determine the burner operating hours, which are needed to calculate the fuel consumption and 

electricity consumption. To calculate the electricity consumption of the pump and other 

auxiliary components, DOE utilized data from manufacturer equipment literature. In response to 

HTP, DOE considered the origin of the data for all cited sources. Hot water energy use is based 

on the reported hot water usage data from CBECS 2003 and RECS 2009, not the ASHRAE 

handbooks.

HTP stated that significant changes to all aspects of building construction have occurred

in the past several decades. (HTP, No. 0018 at pp. 10-11) DOE accounted for changes in 

building characteristics by incorporating the building shell efficiency index from the Energy 

21
Information Administration’s (EIA) Annual Energy Outlook (AEO) 2013.

21 The index

represents the change in heating load based on the change in physical size and shell attributes for 

buildings in the future (which takes into account efficiency gains from better insulation and 

windows).

Regarding the method for determining energy use of commercial packaged boilers, 

ACEEE, ASAP, and NRDC stated that thermal efficiency by itself may not be well-correlated 

with annual energy use because it measures only peak load. ACEEE, ASAP, and NRDC stated

that because loads vary seasonally and since most boilers are said to be oversized, it is likely that 

few boilers (except in boiler trains) ever operate at full load for significant periods of time. 

ACEEE, ASAP, and NRDC suggested that DOE adapt the “prototype buildings” simulation 

approach used to support ASHRAE 90.1 analyses, running representative buildings through 

hourly simulations. (ACEEE, ASAP, NRDC, No. 0016 at p. 3) 

In the preliminary analysis, DOE did not use whole building simulation data. Instead, 

DOE used an approach that adjusted the rated thermal efficiency to account for differences in 

efficiency related to part-load operation, return water temperature, and cycling losses. The 

adjustments are based on weather data and information published in manufacturer literature. 

DOE believes that the proposed approach adequately represents annual energy use.

Regarding the efficiency metrics used by DOE, HTP stated that for equipment with 

inputs above approximately five million Btu/h, the dominant metric reported is combustion 

efficiency, with little data about the thermal efficiency of the equipment. As the thermal 

efficiency should be lower than the combustion efficiency, HTP expects a statistical relationship 

between the two parameters to exist at higher inputs. HTP noted that due to uncertainty in 

measurements and the effects of condensation, the combustion efficiency is sometimes measured 

to be lower than the thermal efficiency for higher-efficiency products. (HTP, No. 0018 at p. 9)

DOE determined a relationship between combustion efficiency and thermal efficiency by 

equipment class for the models in the AHRI database, which lists both efficiencies. For the 

energy use analysis, DOE used this relationship between the two efficiency metrics to determine 

the thermal efficiency for the equipment classes that use the combustion efficiency metric. DOE 

recognizes the impact of the measurement uncertainty that may cause the combustion efficiency 

measurement to be lower than the thermal efficiency measurement, but it used the efficiency 

values as reported in the AHRI database, as these are the only available data.

In the Framework Document, DOE requested comment about whether the rated thermal 

efficiencies for all commercial packaged boilers should be adjusted to reflect return-water 

conditions, which was previously done for condensing boilers. HTP encouraged DOE to adjust 

the rated thermal efficiency for all commercial packaged boiler equipment to reflect return-water 

temperature conditions, because all products are occasionally installed in conditions that do not 

allow the equipment to operate at the highest possible efficiencies. (HTP, No. 0018 at p. 9) On 

21 U.S. Department of Energy-Energy Information Administration, Annual Energy Outlook 2013 (Available at: 

http://www.eia.gov/forecasts/aeo/pdf/0383%282013%29.pdf) (Last accessed March 15, 2014).

22

 
the other hand, AHRI stated that DOE should not attempt to adjust rated thermal efficiencies to 

reflect return-water conditions. AHRI stated that, as DOE does not have the data needed to 

determine what typical return water temperatures are in the field, any adjustment would be an 

unsupported estimate. AHRI further stated that many installations today employ an outdoor 

reset, which adjusts the boiler operation based on the heating load. AHRI stated that with the use 

of this control, the typical return water temperature becomes more difficult to characterize. 

(AHRI, No. 0017 at p. 9)

DOE recognizes that boiler efficiency is dependent upon boiler design and operating 

conditions, particularly the return water temperature. DOE understands that it is difficult to 

characterize average return water temperatures, as they vary with installations. However, DOE 

believes that the return water temperature used during efficiency testing could be lower than that 

used in most installations, and some adjustment should be made to account for this. Similarly, 

boiler control strategies vary with installations. DOE determined average return water 

temperatures for each U.S. climate zone and boiler type (condensing vs. non-condensing), 

including the impact of outdoor temperature reset controls. See chapter 7, Energy Use Analysis, 

of this preliminary TSD for details on the assumptions and methodology used to adjust boiler 

efficiency to account for these factors.

Burnham stated that not all boilers share the same design, so some will perform better or 

worse than others at higher or lower water temperatures. (Burnham, No. 0015 at p. 2) Burnham 

also stated that when highly-efficient boilers are installed in systems that operate at high return 

water temperatures, their efficiencies are very similar to non-condensing technologies. 

(Burnham, No. 0015 at p. 1) 

DOE accounted for a fraction of condensing boilers installed in systems with high return 

water temperatures. In such cases, DOE assumed that the boiler will not operate in condensing 

mode, thus resulting in reduced overall efficiency for those condensing boiler installations. 

AHRI, ABMA, and HTP stated that DOE’s analysis needs to consider the increased use 

of multiple-boiler systems that are controlled to operate sequentially as the heating demand 

increases. The total input of the boilers is sized to meet the design heating load, but each 

individual boiler has a lower input rate. Other installations use a combination of one or more 

high-efficiency boilers and a standard-efficiency boiler, where the high-efficiency boilers operate 

the majority of time when the heating load is less than the designed maximum heating load, and 

the standard-efficiency boiler only operates on the coldest days to meet the heating load. (AHRI, 

No. 0017 at p. 11; AMBA, No. 0013 at p. 91; HTP, No. 0013 at pp. 106-107)

DOE acknowledges that some commercial packaged boiler installations may have 

multiple smaller boilers instead of one large boiler. In the preliminary analysis, DOE assumed 

that for buildings equipped with boiler equipment over 600 kBtu/h, 50 percent of buildings use a 

single boiler, while the remaining 50 percent use two identical boilers that operate sequentially 

depending on the heating load. DOE assumed that for buildings equipped with boiler equipment

under 600 kBtu/h, the buildings are served by a single boiler.

23
AHRI, ABMA, and HTP stated that the installation of two-stage and modulating 

commercial boilers has been common in the past several years, resulting in increased efficiency

because boilers with these control types can operate at reduced input in response to the heating 

load. (AHRI, No. 0017 at p. 11; AMBA, No. 0013 at p. 91; HTP, No. 0013 at pp. 106-107) 

DOE’s analysis accounts for the operation at reduced input for two-stage and modulating 

commercial packaged boilers.

Chapter 7, Energy Use Analysis, of this preliminary TSD describes the details of the 

energy use analysis methodology.

2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

In determining whether an energy conservation standard is economically justified, DOE 

considers the economic impact of potential standards on consumers. The effect of new or 

amended standards on individual consumers usually includes a reduction in operating cost and an 

increase in purchase cost. DOE uses the following two metrics to measure consumer impacts:

• LCC (life-cycle cost) is the total consumer cost of an appliance product or piece of 

equipment, generally over the life of the product or equipment. The LCC calculation 

includes total installed cost (equipment manufacturer selling price, distribution chain 

markups, sales tax, and installation costs), operating costs (energy, repair, and 

maintenance costs), equipment lifetime, and discount rate. Future operating costs are 

discounted to the time of purchase and summed over the lifetime of the product or 

equipment.

• PBP (payback period) measures the amount of time it takes commercial consumers to 

recover the assumed higher purchase price of more energy-efficient equipment through 

reduced operating costs.

DOE analyzed the net effect of potential amended commercial packaged boiler standards 

on commercial consumers by calculating the LCC and PBP using the engineering performance 

data, the energy-use data, and the markups. Inputs to the LCC calculation include the total 

installed cost to the commercial consumer (purchase price plus installation cost), operating 

expenses (energy expenses, and, if applicable, repair costs and maintenance costs), the lifetime 

of the equipment or other defined period of analysis, and a discount rate. Inputs to the payback 

period calculation include the installed cost to the commercial consumer and first-year operating 

costs.

DOE generated LCC and PBP results as probability distributions using a simulation

approach based on Monte Carlo analysis methods, in which certain key inputs to the analysis 

consist of probability distributions rather than single-point values. Therefore, the Monte Carlo 

analysis produces a range of LCC and PBP results which allows DOE to identify the fraction of 

customers achieving LCC savings or incurring net cost at the considered efficiency levels.

DOE is also required to perform a PBP analysis to determine whether the rebuttable 

presumption of economic justification applies (where the higher installed cost of more energyefficient equipment is less than three times the value of the energy savings in the first year of the 

24
energy conservation standard). However, DOE routinely conducts a full economic analysis that 

considers the full range of impacts, including those to the consumer, manufacturer, Nation, and 

environment. The results of this analysis serve as the basis for DOE to definitively evaluate the 

economic justification for a potential standard level (thereby supporting or rebutting the results 

of any preliminary determination of economic justification).

2.8.1 Inputs to Total Installed Cost

Purchase Price

To calculate the purchase price paid by commercial packaged boiler purchasers, DOE 

multiplied the manufacturing product costs (MPCs) developed from the engineering analysis by 

the industry markups to derive the manufacturer selling prices (MSPs). The MSPs in turn are 

multiplied by supply chain markups (along with sales taxes) to estimate the initial cost to the 

commercial consumer. DOE used the supply chain markups that include separate markups on 

the baseline MSP and the incremental cost of each higher efficiency level considered.

Installation Costs

DOE estimated the installation costs associated with placing a boiler in a new building

unit or as a replacement for an existing boiler using RS Means data, manufacturer literature, and 

information from expert consultants.22,23,24 The analysis includes costs, such as venting and 

piping modifications, which would be required to install equipment in various installation cases. 

For higher-efficiency boilers, DOE also incorporated additional considerations, such as stainless 

steel venting and condensate removal requirements. The installation cost of both condensing and 

non-condensing boilers vary significantly with vent length, which is independent of boiler 

efficiency. 

Commenting on the Framework Document, AHRI noted that the proposed analysis does 

not consider possible changes that may be required for the heating system radiators to achieve 

the lower return water temperatures that are specified for condensing commercial boilers. 

(AHRI, No. 0017 at p. 10) DOE did not consider changes that may be made to heating systems 

to accommodate conditions specific for condensing boilers. Instead, DOE assumed that a 

fraction of condensing boilers operate in high temperature systems where they will always 

operate in non-condensing mode when the return temperature conditions are higher than required 

for condensing operation.

22 RS Means Company Inc., RS Means Facilities Construction Cost Data. 26th Annual Edition ed. (2011) 

(Available at: http://rsmeans.reedconstructiondata.com/default.aspx). 23 RS Means Company Inc., RS Means Mechanical Cost Data. 36st Annual Edition ed. (2013) (Available at: 

http://rsmeans.reedconstructiondata.com/default.aspx). 24 RS Means Company Inc., RS Means Plumbing Cost Data, 36th Annual Edition ed. (2013) (Available at: 

http://rsmeans.reedconstructiondata.com/default.aspx).

25

 
ACEEE, ASAP, and NRDC stated that condensing and non-condensing equipment may 

differ in terms of installation costs, but possibly in counterintuitive ways. For example, for a

fraction of commercial packaged boiler replacements, substituting a condensing boiler may 

reduce installation costs if the efficiency upgrade allows abandoning a masonry chimney that 

otherwise requires repointing and annual inspection. (ACEEE, ASAP, NRDC, No. 0016 at p. 4) 

In contrast, Burnham stated that any proposed standard that changes the use of chimneys will add 

costs. (Burnham, No. 0015 at p. 2) 

In DOE’s analysis, the installation cost depends on various building and boiler 

characteristics and are not solely determined by whether the boiler is condensing or noncondensing. Regarding masonry chimneys, DOE assumes that a fraction of installations that 

have chimneys will be relined when the boiler is replaced. See appendix 8-D of the preliminary 

TSD for more details on the installation cost methodology.

2.8.2 Inputs to Operating Cost

Energy Use (described in section 2.7)

In the Framework Document, DOE sought comment on the rebound effect that may be 

associated with more-efficient commercial packaged boilers. A rebound effect occurs when a 

piece of equipment that is made more efficient is used more intensively, so that the expected energy 

savings from the efficiency improvement may not fully materialize. AHRI and Lochinvar stated

that the rebound effect is not a significant factor in commercial boiler installations. (AHRI, No. 

0017 at p. 9; AHRI, No. 0013 at p. 105, Lochinvar, No. 0013 at p. 104) Lochinvar stated that the

building occupants do not even know if they have high-efficiency equipment, and AHRI 

confirmed that the recipients of space heating are not necessarily the ones controlling the boiler 

operation. Similarly, HTP stated that it is not aware of such a rebound effect in this market 

segment. (HTP, No. 0018 at p. 10) DOE agrees with the stakeholders that it is unlikely that 

commercial consumers of commercial packaged boilers would use more-efficient equipment 

more intensively because maintaining proper comfort is essential in commercial buildings and it 

is not impacted by the equipment efficiency. Consequently DOE did not include a rebound 

effect in the analysis.

Energy Prices

DOE derived average monthly natural gas, oil, and electricity prices for the nine Census 

Divisions in CBECS 2003 and 30 geographic areas in RECS 2009 using the latest data from 

EIA.25,26,27 DOE assigned an appropriate energy price to each building in the sample, depending 

25 U.S. Department of Energy-Energy Information Administration, Form EIA-826 Database Monthly Electric Utility 

Sales and Revenue Data (2013) (Available at: http://www.eia.doe.gov/cneaf/electricity/page/eia826.html). 26 U.S. Department of Energy-Energy Information Administration, Natural Gas Navigator (2013) (Available at: 

http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm).

26

 
on its location. For future prices, DOE used the projected annual changes in average energy 

prices in AEO 2014.

Maintenance and Repair Costs

DOE used the most recent RS Means Facilities Maintenance & Repair Cost Data to 

develop appropriate repair and maintenance costs for baseline units.28 DOE included increased 

repair and maintenance costs for higher-efficiency and condensing equipment, accounting for 

regular replacement of condensate neutralizer and more expensive heat exchanger repair 

compared to lower-efficiency boilers.29

In the Framework Document, DOE requested comment on frequency and cost of 

maintenance, major repair issues, repair frequency, and repair costs for commercial packaged 

boilers at different efficiency levels. ACEEE, ASAP, and NRDC found in informal analyses 

based on earlier data that the distribution of maintenance cost frequencies was very asymmetric, 

and, therefore, suggested caution in the distributions assumed in the Monte Carlo analysis. 

(ACEEE, ASAP, NRDC, No. 0016 at p. 4) ACEEE stated that a number of New England States 

have announced schedules for requirements of ultra-low sulfur fuel (15 ppm or less). (ACEEE, 

No. 0013 at p. 115) AHRI stated that there is a significant Environmental Protection Agency 

(EPA) rulemaking addressing emissions from boilers that includes an annual tune-up 

requirement to maintain emission levels. (AHRI, No. 0013 at p. 114)

For the preliminary analysis, DOE determined the frequency of maintenance using 

CBECS and data from RS Means rather than a probability distribution. DOE assumed that 

annual maintenance is required for all commercial packaged boilers. The only exception is that 

for gas-fired hot water commercial packaged boilers that reported non-regular maintenance in 

CBECS (6 percent of these boilers) DOE assumed that maintenance is conducted every 3 years. 

DOE accounted for the impact of low-sulfur fuel requirements in various States on 

maintenance frequency and costs. The EPA tune-up requirement is assumed to be included in 

regular maintenance costs. See appendix 8-E of the preliminary TSD for details on the 

maintenance and repair cost methodology.

Equipment Lifetime

27 U.S. Department of Energy-Energy Information Administration, 2012 State Energy Consumption, Price, and 

Expenditure Estimates (SEDS) (2013) (Available at: http://www.eia.doe.gov/emeu/states/_seds.html). 28 RS Means, 2013 Facilities Maintenance & Repair Cost Data (Available at: 

http://rsmeans.reedconstructiondata.com/60303.aspx) (Last accessed April 10, 2013).

29 “Replacement Cartridge for Condensate Neutralizing Kit,” The Home Depot (Available at: 

http://www.homedepot.com/p/Unbranded-Replacement-Cartridge-for-Condensation-Neutralizing-Kit-JM-2-

R/202809241?cm_mmc=shopping-_-googleads-_-pla-_-

202809241&skwcid&kwd=&ci_sku=202809241&ci_kw=&ci_gpa=pla&ci_src=17588969) (Last accessed June 27, 

2014).

27

 
DOE modeled commercial packaged boiler lifetimes using data from the ASHRAE 

Service Life Database and a literature review of research studies and field data reports. 30, 31 The 

data allowed DOE to develop a distribution of boiler lifetimes. DOE applied the same lifetime 

distribution for all boilers included in the analysis. See appendix 8-F for details on the 

methodology used to determine boiler lifetime.

HTP questioned the accuracy of using the ASHRAE database for developing lifetime 

estimates due to insufficient and possibly inaccurate data. (HTP, No. 0018 at pp. 10-11) For the 

development of boiler lifetimes, DOE used the ASHRAE database but also relied on the 

literature review conducted by DOE and warranty information. 

AHRI stated that DOE should address the estimated lifetime of non-condensing and 

condensing gas boilers separately. According to AHRI, the greater part of the installed base of 

commercial packaged boilers is non-condensing models, which have a long history of use that 

allows for an acceptable estimate of product lifetime. Condensing gas commercial packaged 

boilers, which are relatively new to the market, have a comparatively short history of field use 

from which to try to estimate a product lifetime, and, thus, the lifetime for these models must be 

determined differently. (AHRI, No. 0017 at p. 10) Burnham stated that high-efficiency boilers 

are not easily repaired; if there is any issue with a heat exchanger, it needs to be pulled and sent 

back to the manufacturer for repair or, more likely, to be discarded. Steel, cast iron, and copper 

heat exchangers, which are typical for non-condensing boilers, can be repaired in the field and,

thus, boost the expected lifetime of equipment. (Burnham, No. 0015 at pp. 1-2)

DOE did not find sufficient information to justify different lifetimes for condensing and 

non-condensing boilers and, therefore, assumed that the lifetimes of non-condensing and 

condensing boilers are essentially the same. DOE requests data and other information regarding

any equipment lifetime differential between condensing and non-condensing commercial 

packaged boilers. For the NOPR, DOE may conduct sensitivity analysis using alternate lifetime 

assumptions.

Discount Rates

The discount rate is the rate at which future operating costs are discounted to establish 

their present value in the LCC analysis. The discount rate value is applied to future year energy 

costs and non-energy operations and maintenance costs to calculate the estimated net life-cycle 

cost of equipment of various efficiency levels and life-cycle cost savings as compared to the 

baseline for a representative sample of commercial end users. DOE’s method views the 

purchase of a higher-efficiency appliance as an investment that yields a stream of energy cost 

savings. For commercial applications, DOE derived the discount rates for the LCC analysis by 

estimating the weighted average cost of capital of equity and debt financing for companies that 

purchase commercial packaged boilers. For residential applications, DOE used publicly-available 

30 Available at http://xp20.ashrae.org/publicdatabase/. 31 See appendix 8-F of the preliminary TSD for a list of the sources used in the literature review.

28

 
data (the Federal Reserve Board’s Survey of Consumer Finances) to estimate a consumer’s 

opportunity cost of funds related to appliance energy cost savings and maintenance costs.32

Base-Case Efficiency Distribution

To estimate the share of commercial consumers expected to be affected by an energy 

conservation standard at a particular efficiency level, DOE’s LCC and PBP analysis considers

the projected distribution (i.e., market shares) of equipment efficiencies in the compliance year 

under the base case (i.e., the case without new or amended energy conservation standards).

In the Framework Document, DOE requested comment on the base-case efficiency 

distribution, including the likelihood and degree of improvement in efficiency of commercial 

packaged boilers in the next five years as a result of market forces or industry trends (in the 

absence of amended energy conservation standards). 

AHRI stated that a review of the listings in AHRI’s Directory of Commercial Packaged 

Boiler Efficiency Ratings would provide some information on the available mix of commercial 

packaged boiler efficiencies in the market, but the listing information does not represent the 

actual mix of efficiencies of commercial packaged boiler being sold and installed, and the AHRI 

directory does not include all models of commercial packaged boilers on the market. In 

particular, the AHRI directory show few models with input ratings in the 6 to 8 million Btu/h 

range, no gas-fired models with input rates higher than 9.5 million Btu/h, and no oil-fired models 

with input rates higher than 8.5 million Btu/h. (AHRI, No. 0017 at p. 9) DOE recognizes that 

there are limitations with deriving the base-case efficiency distribution from the AHRI database, 

but no other data were available, and commenters provided no other suitable alternative. 

AHRI stated that most new models of commercial packaged boilers that are being 

introduced into the U.S. market are high-efficiency designs, particularly for models with input 

ratings of five million Btu/h or less. In addition, AHRI stated that there are incentive programs 

offered in many locations that promote the installation of high-efficiency boilers. The continued 

existence of these programs will increase the percentage of higher-efficiency boilers in the field. 

(AHRI, No. 0017 at pp. 10-11) On the other hand, HTP believes that in the absence of amended 

energy conservation standards, further improvements in the efficiency of commercial packaged 

boilers are uncertain at best. (HTP, No. 0018 at p. 11)

For the preliminary analysis, DOE used the AHRI directory to analyze trends in product 

classes and efficiency levels from 2007 to 2014 to determine the anticipated base-case efficiency 

distribution in 2019, the assumed compliance year for amended standards. The trends show the 

market moving towards higher-efficiency boilers, and DOE accounted for the trend in its basecase projection. See appendix 8-H of the preliminary TSD for details on how the base-case

efficiency distribution was determined.

32 The Federal Reserve Board, Survey of Consumer Finances 1989, 1992, 1995, 1998, 2001, 2004, 2007, 2010 

(Available at: http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html) (Last accessed April 2014).

29

 
2.9 SHIPMENTS ANALYSIS

DOE uses forecasts of equipment shipments to calculate the national impacts of standards 

on energy use, NPV, and future manufacturer cash flows. DOE develops shipment forecasts 

based on an analysis of key market drivers for each equipment class. 

DOE estimated commercial packaged boiler shipments by projecting boiler shipments in 

three market segments: (1) replacements; (2) new construction; and (3) new owners in buildings 

that did not previously have a commercial packaged boiler.

To forecast commercial packaged boiler replacement shipments, DOE developed

retirement functions for boilers from the lifetime estimates and applied them to the existing 

equipment in the building stock. The existing stock of equipment is tracked by vintage and 

developed from historical shipments data. 

To forecast shipments to the new construction market, DOE used AEO 2014 for forecasts 

of new buildings. Boiler saturation rates in new buildings are derived from recently constructed 

buildings in CBECS 2003 and RECS 2009.

In the Framework Document, DOE sought input on the potential impact of amended 

standards on commercial packaged boiler shipments. HTP does not expect that increases in 

minimum efficiencies will significantly impact shipments of commercial packaged boilers. 

(HTP, No. 0018 at p. 12) In contrast, AHRI stated that any standard level that significantly 

increases the installed cost of a commercial packaged boiler would reduce boiler shipments,

because the majority of commercial packaged boiler sales are for replacement installations. 

AHRI argued that more so than other commercial equipment, there is a general inclination to 

repair and replace commercial packaged boilers parts rather than install a new boiler. According 

to AHRI, efficiency standards that result in products with higher installed costs would reinforce 

that inclination. (AHRI, No. 0017 at p. 11)

DOE has determined that, consistent with economic theory and its past practice, it is 

reasonable to expect that standards that result in higher boiler prices will have some dampening 

effect on sales. Some commercial consumers might choose to repair their existing boiler rather 

than purchase a new one. To estimate the impact of the price increase for the considered 

efficiency levels, DOE used a relative price elasticity approach. This approach gives some 

weight to the operating cost savings from higher-efficiency equipment. The impact of higher 

boiler prices due to higher efficiency is expressed as a percentage drop in market share for each 

year during the analysis period. 

2.10 NATIONAL IMPACT ANALYSIS

The NIA assesses the NES and the NPV from a national perspective of total commercial 

consumer costs and savings expected to result from new or amended energy conservation 

standards at specific efficiency levels. DOE determined the NPV and NES for the standard

levels considered for the commercial packaged boiler equipment classes analyzed. To make the 

analysis more accessible and transparent to all interested parties, DOE prepared a computer

spreadsheet that uses typical values (as opposed to probability distributions) as inputs. To assess 

30
the effect of input uncertainty on NES and NPV results, DOE has developed its spreadsheet 

model to conduct sensitivity analyses by running scenarios on specific input variables. 

A key component of DOE’s NIA analysis is the energy efficiencies forecasted over time 

for the base case (without new standards) and each of the standards cases. The forecasted 

efficiencies represent the annual shipment-weighted energy efficiency of the equipment under 

consideration during the forecast period (i.e., from the assumed compliance date of a new 

standard to 30 years after compliance is required). To forecast the efficiency trend in the base 

case (i.e., no new standards for commercial packaged boilers), DOE derived a growth rate in the 

market share of different equipment classes by extrapolating the trend from 2007 to 2014 AHRI 

model data.

To estimate the impact that potential amended standards may have in the year of required 

compliance, DOE has generally used a “roll-up” scenario, a “shift” scenario, or both in its 

standards rulemakings. Under the “roll-up” scenario, DOE assumes: (1) equipment efficiencies 

in the base case that do not meet the standard level under consideration would “roll-up” to meet 

the new standard level; and (2) equipment efficiencies above the standard level under 

consideration would not be affected. Under the “shift” scenario, DOE retains the pattern of the 

base-case efficiency distribution but re-orients the distribution at and above the new minimum 

energy conservation standard. 

Commenting on the Framework Document, AHRI stated that DOE should continue to 

use the roll-up approach as it has for other rulemakings in the past. (AHRI, No. 0017 at p. 12) 

For the preliminary analysis, DOE used a roll-up scenario to establish the distribution of 

efficiencies for the year that compliance with the potential amended standards is assumed to be

required.

2.10.1 National Energy Savings Analysis

The inputs for determining the national energy savings for each equipment type analyzed 

are: (1) annual energy consumption per unit; (2) shipments; (3) equipment stock; (4) national 

energy consumption; and (5) site-to-primary energy conversion factors. DOE calculated the 

national energy consumption by multiplying the number of units (stock) of equipment (by 

vintage or age) by the unit energy consumption (also by vintage). DOE calculated annual NES 

based on the difference in national energy consumption for the base case and for each potential

standards case. DOE estimated energy consumption and savings based on site energy and 

converted the electricity consumption and savings to primary energy using annual conversion 

factors derived from the most recent version of the National Energy Modeling System 

(NEMS).33 Cumulative energy savings are the sum of the NES for each year over the timeframe 

of the analysis.

33 For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information 

Administration documentation. A useful summary is National Energy Modeling System: An Overview 2009, 

DOE/EIA-0581 (October 2009) (Available at: http://www.eia.gov/oiaf/aeo/overview/).

31

 
DOE has historically presented NES in terms of primary energy savings. In response to 

the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency Standards” appointed by the National Academy of Sciences, 

DOE published a final statement of policy in the Federal Register that announced its intention to 

use full-fuel-cycle (FFC) measures of energy use and greenhouse gas and other emissions in the 

national impact analyses and emissions analyses included in future energy conservation 

standards rulemakings. 76 FR 51281 (August 18, 2011). After evaluating the approaches 

discussed in the August 18, 2011 notice, DOE published a statement of amended policy in the 

Federal Register, in which DOE explained its determination that NEMS is the most appropriate 

tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (August 

17, 2012). The approach used for the preliminary analysis is described in appendix 10-C of this 

preliminary TSD.

Chapter 10 of this TSD presents both the primary NES and the FFC NES for the 

considered candidate standard levels.

2.10.2 Net Present Value Analysis

The inputs for determining NPV are: (1) total annual installed cost; (2) total annual 

savings in operating costs; and (3) a discount factor to calculate the present value of costs and 

savings. DOE calculated net savings each year as the difference between the base case and each 

standards case in terms of total savings in operating costs versus total increases in installed costs. 

DOE calculated savings over the lifetime of equipment shipped in the forecast period. DOE 

calculated NPV as the difference between the present value of operating cost savings and the 

present value of total installed costs. For future energy prices, DOE used the projected annual 

changes in average commercial and residential sector energy prices in AEO 2014. 

DOE estimates the NPV of commercial consumer benefits using both a 3-percent and a 7-

percent real discount rate, in accordance with guidance provided by the Office of Management 

and Budget (OMB) to Federal agencies on the development of regulatory analysis (OMB 

Circular A-4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits and Costs”).

2.11 CONSUMER SUBGROUP ANALYSIS

At the NOPR stage of this rulemaking, DOE will conduct a consumer subgroup analysis. 

A commercial consumer subgroup comprises a subset of the population that may be affected 

disproportionately by new or revised energy conservation standards (e.g., small businesses). The 

purpose of a subgroup analysis is to determine the extent of any such disproportional impacts. 

2.12 MANUFACTURER IMPACT ANALYSIS

The purpose of the MIA is to identify the likely impacts of higher energy conservation 

standards on manufacturers of commercial packaged boilers. In conducting this analysis, DOE 

will seek input from manufacturers and other interested parties and consider financial impacts, as 

well as a wide range of quantitative and qualitative industry impacts that might occur after the 

32
adoption of amended standards. For example, a particular standard level could require changes 

to manufacturing practices of commercial packaged boilers. DOE will identify and discuss these 

potential impacts in interviews with manufacturers and other interested parties during the NOPR 

stage of the analysis.

DOE conducts the MIA in three phases and further tailors its analytical framework based 

on the comments it receives. In phase I, DOE creates an industry profile to characterize the 

industry and to identify important issues that require consideration. In phase II, DOE prepares 

an industry cash-flow model and determines what information it will discuss with manufacturers 

during manufacturer interviews. In phase III, DOE interviews manufacturers and assesses the 

impacts of potential standards both quantitatively and qualitatively. DOE calculates industry and 

subgroup cash flow and industry net present value (INPV) using the Government Regulatory 

Impact Model (GRIM). DOE then assesses impacts on competition, manufacturing capacity, 

employment, and regulatory burden based on manufacturer interview feedback.

DOE evaluates and reports preliminary MIA information in this preliminary analysis

phase. DOE gathers the information for the analysis during manufacturer interviews. See 

chapter 12 of this preliminary TSD for more detailed information on the MIA.

2.12.1 Sources of Information for the Manufacturer Impact Analysis

The MIA uses outputs from other upstream analyses, such as the engineering analysis, 

the NIA, and the markup analysis. These analyses provide important information for the MIA, 

including the number of shipments, the manufacturer production costs, and the markups for each 

equipment class. DOE also uses publicly-available information, such as Securities and Exchange 

Commission (SEC) 10-K filings34, to gather company financial data within the industry and 

refines these figures based on feedback during the manufacturer interviews. This helps DOE 

estimate industry financial parameters, such as the tax rate, the research and development (R&D) 

rate, the capital expenditure rate, the depreciation rate, and industry discount rate, all of which 

are utilized as inputs in the MIA analysis.

The interview process plays an important role in the MIA. DOE conducts detailed 

interviews with manufacturers to gain insight into the range of potential impacts of standards. 

Typically, DOE solicits both quantitative and qualitative information during the interviews on 

the potential impacts of various proposed efficiency levels on sales, direct employment, capital 

assets, and industry competitiveness. In order to protect manufacturer confidentiality, DOE 

aggregates information obtained in interviews to create a combined industry opinion or estimate.

2.12.2 Industry Cash-Flow Analysis

The industry cash flow analysis relies primarily on the GRIM. DOE uses the GRIM to 

analyze the financial impacts of more-stringent energy conservation standards on the industry. 

The GRIM analysis uses several inputs to determine industry annual cash flows with and without 

amended energy conservation standards. These inputs include shipments, production costs, 

34 SEC filings are available at: http://www.sec.gov/edgar/searchedgar/companysearch.html. 

33

 
equipment markups, conversion costs for higher efficiency standards, and industry financial 

parameters. DOE then compares the industry annual cash flows resulting from base-case 

projections and scenarios where more-stringent energy conservation standards are mandated.

The financial impact of amended energy conservation standards is the difference between the 

two sets of discounted industry annual cash flows. Other performance metrics, such as return on 

invested capital, are also available from the GRIM. See chapter 12 of this preliminary TSD for 

more information on the industry cash flow analysis.

2.12.3 Direct Employment Impact Analysis

The impact of amended energy conservation standards on employment is an important 

consideration in the rulemaking process. Manufacturer interviews play a significant role in 

assessing how domestic employment patterns might be impacted by amended conservation 

standards. DOE explores current employment trends in the commercial packaged boiler industry

and solicits feedback from manufacturers on changes in employment patterns that may result 

from more-stringent standards. See chapter 12 of this preliminary TSD for more information on 

the direct employment impact analysis.

2.12.4 Manufacturer Subgroup Analysis

Average industry impacts may not adequately show differential impacts among 

subgroups of manufacturers that have different cost structures or operate within different 

regulatory frameworks. For example, small and niche manufacturers, or manufacturers whose 

cost structure differs significantly from the industry average, could experience more negative 

impacts. Ideally, DOE would consider the impact on every firm individually; however, because 

this usually is not possible, DOE typically uses the results of the industry characterization to 

group manufacturers exhibiting similar characteristics. One common subgroup identified is 

small business manufacturers. DOE will analyze impacts on small business manufacturers 

consistent with the Regulatory Flexibility Act. (5 U.S.C. 601 et seq.) 

During the interview process, DOE discusses with manufacturers the potential subgroups 

and subgroup members it has identified for the analysis. DOE will encourage manufacturers to 

recommend subgroups or characteristics that are appropriate for the subgroup analysis. At the 

framework public meeting, Burnham suggested that DOE consider subgroups that primarily 

manufacture their heat exchangers in the U.S., compared to those that primarily import their heat 

exchangers from abroad. (Burnham, 0015 at p. 1) DOE will investigate this subgroup during the 

NOPR phase of this rulemaking and alter its analysis where appropriate. See chapter 12 of this 

preliminary TSD for more detail on the manufacturer subgroup analysis.

2.12.5 Competitive Impacts Assessment

EPCA directs DOE to consider any lessening of competition likely to result from the 

imposition of standards. It further directs the Attorney General to determine, in writing, the 

impacts, if any, of any lessening of competition. 

In manufacturer interviews, DOE focuses on gathering information that would help in 

assessing impacts on competition, such as asymmetrical cost increases to some manufacturers, 

increased proportion of fixed costs potentially escalating business risks, and potential barriers to 

34
market entry (e.g., proprietary technologies, limited access to resources). DOE will provide the 

Attorney General with a copy of any NOPR for consideration in evaluating the impact of 

standards on the lessening of competition. DOE will publish the Attorney General’s letter and 

address any related comments in any final rule.

2.12.6 Cumulative Regulatory Burden

Other regulations may apply to the commercial packaged boilers covered under this 

rulemaking, and to other products and equipment produced by commercial packaged boiler

manufacturers. DOE recognizes that multiple regulations could result in a significant cumulative 

regulatory burden on manufacturers. DOE’s initial analysis of regulations affecting commercial 

packaged boilers is located in the market and technology assessment (chapter 3 of this

preliminary TSD). During the NOPR phase of this rulemaking, DOE plans to investigate the 

regulations manufacturers mentioned in interviews and the public meeting, and will further 

analyze and consider the impact of multiple, equipment-specific regulatory actions on 

commercial packaged boiler manufacturers. DOE will consider the impacts of any additional 

regulations these manufacturers could face three years prior to and three years after the 

compliance date of potential amended standards arising from this rulemaking process.

Several interested parties commented about cumulative regulatory burden issues at the 

framework public meeting. AHRI commented that in addition to the energy conservation 

standards rulemaking, a parallel test procedure rulemaking will contribute to the cumulative 

regulatory burden. (AHRI, 0013 at p. 146) HTP and Burnham also expressed testing concerns. 

HTP commented that every product they make is up for review or update of minimum 

efficiencies or method of test within the next few years. (HTP, 0013 at p. 147) Burnham 

commented that manufacturers had all recently gone through annual BTS-2000 certification for 

their equipment. (Burnham, 0015 at p. 1) DOE acknowledges that testing costs could contribute 

to the overall regulatory burden for the current commercial packaged boilers rulemaking and will 

consider any impacts of these costs in the NOPR analysis.

AHRI also commented that DOE should consider the following in examining the 

cumulative regulatory burden for commercial packaged boiler manufacturers: (1) the increased 

minimum efficiencies and design requirements implemented for residential boilers in 2012; (2) 

the current rulemaking to revise test procedures for residential boilers; (3) the testing and 

certification requirements of the EPA Energy Star program for residential boilers; (4) the revised 

FTC EnergyGuide labels and regulations; (5) the pending revised DOE regulations on 

certification and enforcement of efficiency standards for commercial equipment; and (6) the EPA 

emission regulations for boilers that are major or area sources. DOE acknowledges that these 

regulations could contribute to the overall regulatory burden for the current commercial 

packaged boilers rulemaking and will consider any impacts in the NOPR analysis. For more 

information on the cumulative regulatory burden, please see chapter 12 of this preliminary TSD.

2.12.7 Preliminary Results for the Manufacturer Impact Analysis

One important aspect of the preliminary MIA is the opportunity it creates for DOE to 

identify key manufacturer issues early in the evaluation of amended energy conservation 

standards. During preliminary interviews, manufacturers identified four major areas of concern:

35
(1) increased testing burden may be associated with amended standards; (2) condensing boilers 

are not appropriate for many commercial applications; (3) not many American companies 

produce condensing heat exchangers; and (4) amended standards could reduce equipment

durability and reliability.

2.12.7.1 Testing Burden

Several manufacturers expressed concern regarding the testing burden associated with 

amended energy conservation standards. Manufacturers argued that amended standards and an 

altered test procedure will result in them having to retest all of their equipment, which they 

pointed out is a costly and logistically challenging process because of the large size of the 

equipment and the fact that a lot of commercial packaged boilers are customized for particular 

end users. Manufacturers stated that retesting all of their models would put a strain on their 

testing laboratory resources and would be financially burdensome. 

2.12.7.2 Condensing Boilers are Not Appropriate for Many Commercial 

Applications

Several manufacturers expressed concern that they would only be able to meet certain 

efficiency levels with condensing technology in gas-fired hot water equipment and pointed out 

that condensing mode operation is not possible in many commercial applications. They argued 

that condensing boilers will not operate in condensing mode in larger applications and will not 

realize any efficiency gains when the whole building and heat distribution system is not designed 

around condensing technology. Manufacturers noted that it is very difficult to sell condensing 

boilers in the replacement market (which, according to manufacturers, comprises about 90

percent of commercial packaged boiler sales) because customers would have to make expensive 

retrofit changes to venting and distribution systems.

Manufacturers also pointed out that condensing boilers may not save energy in 

commercial applications, even if they were to operate in condensing mode. Several 

manufacturers argued that condensing equipment requires higher pump force power and higher 

horsepower blower motors and, thus, more electricity. They noted that even if the boiler were 

operating in condensing mode, the fuel savings could be at least partially offset by higher 

electricity use.

2.12.7.3 Not Many American Companies Produce Condensing Heat 

Exchangers

Several manufacturers expressed concern that if DOE were to mandate efficiency levels 

that could only be achieved with condensing technology for gas-fired hot water equipment, 

companies would likely face high conversion costs. While many companies in the United States 

currently produce condensing equipment, most condensing heat exchangers are sourced from 

European or Asian companies. American companies would have to decide whether to develop 

their own condensing heat exchanger production capacity, or assemble a baseline product around 

a condensing heat exchanger. Developing condensing heat exchanger production capacity would 

require large capital investments in new production lines and new equipment to handle the 

different metals that are required. Companies that are currently heavily invested in lower36
efficiency equipment may not be able to make these investments. The other option would be for 

companies to drop their noncondensing equipment and assemble equipment around a sourced 

heat exchanger. In this scenario, companies would lose a significant piece of the value chain.

2.12.7.4 Reduced Product Durability and Reliability

Several manufacturers commented that higher-efficiency condensing boilers on the 

market have not demonstrated the same level of durability and reliability as lower-efficiency 

equipment. Manufacturers stated that condensing equipment requires more upkeep and 

maintenance and generally does not last as long as non-condensing equipment. Several 

manufacturers pointed out that they generally incur large after-sale costs with their condensing 

equipment because of additional warranty claims. Maintenance calls for these boilers require 

more skilled technicians and occur more frequently than they do with non-condensing boilers.

2.13 EMISSIONS ANALYSIS

In the emissions analysis, DOE will estimate the impacts on power sector and site 

combustion emissions of carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2),

mercury (Hg), methane (CH4) and nitrous oxide (N2O) from potential amended energy 

conservation standards for the considered equipment. In addition, DOE will estimate emissions 

impacts in production activities (extracting, processing, and transporting fuels) that provide the 

energy inputs to power plants. These are referred to as “upstream” emissions. Together, these 

emissions account for the full-fuel-cycle (FFC). In accordance with DOE’s FFC Statement of 

Policy (76 FR 51281 (August 18, 2011)), as amended at 77 FR 49701 (August 17, 2012), the 

FFC analysis also includes impacts on emissions of methane and nitrous oxide, both of which are 

recognized as greenhouse gases. 

Because the on-site operation of commercial packaged boilers requires use of fossil fuels 

and results in emissions of CO2, NOX, and SO2 at the sites where these appliances are used, DOE 

will account for the reduction in these site emissions and the associated upstream emissions due 

to potential amended standards.

DOE conducts the emissions analysis using emissions factors that are primarily derived 

from data in the latest version of EIA’s AEO, supplemented by data from other sources. EIA 

prepares the AEO using the National Energy Modeling System (NEMS). Each annual version of 

NEMS incorporates the projected impacts of existing air quality regulations on emissions. The 

text below refers to AEO 2014, which generally represents current legislation and environmental 

regulations, including recent government actions, for which implementing regulations were 

available as of October 31, 2013. The NOPR will use emissions factors derived from the most 

current available AEO data.

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual 

emissions cap on SO2 for affected EGUs in the 48 contiguous States and the District of Columbia 

(D.C.). (42 U.S.C. 7651 et seq.) SO2 emissions from 28 eastern States and D.C. were also 

37
limited under the Clean Air Interstate Rule (CAIR), which created an allowance-based trading 

program that operates along with the Title IV program in those States and D.C. 70 FR 25162 

(May 12, 2005). CAIR was remanded to the Environmental Protection Agency (EPA) by the 

U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), but it remained in 

effect.35 In 2011, EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule 

(CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C. Circuit issued a 

decision to vacate CSAPR.36 The court ordered EPA to continue administering CAIR. AEO 

2014 assumes that CAIR remains a binding regulation through 2040.37

The attainment of emissions caps is typically flexible among EGUs and is enforced 

through the use of emissions allowances and tradable permits. Under existing EPA regulations, 

any excess SO2 emissions allowances resulting from the lower electricity demand caused by the 

adoption of an efficiency standard could be used to permit offsetting increases in SO2 emissions 

by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about 

the effects of efficiency standards on SO2 emissions covered by the existing cap-and-trade 

system, but it concluded that no reductions in power sector emissions would occur for SO2 as a 

result of standards.

Beginning in 2016, however, SO2 emissions will fall as a result of the Mercury and Air 

Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the final MATS 

rule, EPA established a standard for hydrogen chloride as a surrogate for acid gas hazardous air 

pollutants (HAP), and also established a standard for SO2 (a non-HAP acid gas) as an alternative 

equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and 

non-HAP acid gas; thus, SO2 emissions will be reduced as a result of the control technologies 

installed on coal-fired power plants to comply with the MATS requirements for acid gas. AEO 

2014 assumes that, in order to continue operating, coal plants must have either flue gas 

desulfurization or dry sorbent injection systems installed by 2016. Both technologies, which are 

used to reduce acid gas emissions, also reduce SO2 emissions. Under the MATS, emissions will 

be far below the cap that would be established by CAIR, so it is unlikely that excess SO2

emissions allowances resulting from the lower electricity demand would be needed or used to 

permit offsetting increases in SO2 emissions by any regulated EGU. Therefore, DOE believes 

that efficiency standards will reduce SO2 emissions in 2016 and beyond.

35 See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 

2008). 

36 See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 

81 U.S.L.W. 3696, 81 U.S.L.W. 3702 (2013) (No. 12-1182).

37 On April 29, 2014, the U.S. Supreme Court reversed the judgment of the D.C. Circuit and remanded the case for 

further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's 

methodology for quantifying emissions that must be eliminated in certain States due to their impacts in other 

downwind States was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision 

that provides statutory authority for CSAPR. See EPA v. EME Homer City Generation, No 12-1182, slip op. at 32 

(U.S. April 29, 2014). Because DOE is using emissions factors based on AEO 2014, the analysis assumes that 

CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant for the 

purpose of DOE's analysis of SO2 emissions.

38

 
CAIR established a cap on NOX emissions in eastern States and the District of 

Columbia.38 Energy conservation standards are expected to have little or no physical effect on 

these emissions in those States covered by CAIR because excess NOX emissions allowances 

resulting from the lower electricity demand could be used to permit offsetting increases in NOX

emissions. However, standards would be expected to reduce NOX emissions in the States not 

affected by the caps, so DOE estimates NOX emissions reductions from potential standards in the 

States where emissions are not capped.

The MATS limit mercury emissions from power plants, but they do not include emissions 

caps and, as such, DOE’s energy conservation standards would likely reduce mercury emissions. 

DOE will estimate mercury emissions reduction using emissions factors based on AEO 2014,

which incorporates the MATS.

Power plants may emit particulates from the smoke stack, which are known as direct 

particulate matter (PM) emissions. NEMS does not account for direct PM emissions from power 

plants. DOE is investigating the possibility of using other methods to estimate reduction in PM 

emissions due to standards. The great majority of ambient PM associated with power plants is in 

the form of secondary sulfates and nitrates, which are produced at a significant distance from 

power plants by complex atmospheric chemical reactions that often involve the gaseous 

emissions of power plants, mainly SO2 and NOX. The monetary benefits that DOE estimates for 

reductions in SO2 and NOX emissions resulting from standards are in fact primarily related to the 

health benefits of reduced ambient PM.

2.14 MONETIZATION OF EMISSIONS REDUCTIONS BENEFITS

DOE plans to consider the estimated monetary benefits likely to result from the reduced 

emissions of CO2 and NOX that are expected to accompany each of the potential standard levels 

considered. 

To estimate the monetary value of benefits resulting from reduced emissions of CO2, 

DOE plans to use the most current Social Cost of Carbon (SCC) values developed and/or agreed 

to by an interagency process. The SCC is intended to be a monetary measure of the incremental 

damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net 

agricultural productivity loss, human health effects, property damage from sea level rise, and 

changes in ecosystem services. Any effort to quantify and to monetize the harms associated with 

climate change will raise serious questions of science, economics, and ethics. But with full 

regard for the limits of both quantification and monetization, the SCC can be used to provide 

estimates of the social benefits of reductions in GHG emissions. 

38 CSAPR also applies to NOX, and it would supersede the regulation of NOX under CAIR. As stated previously, the 

current analysis assumes CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR 

with regard to DOE’s analysis of NOX is slight.

39

 
The Interagency Working Group on Social Cost of Carbon released an update of its 

previous report in 2013.39 The most recent estimates of the SCC in 2015, expressed in 2013$, 

are $12.0, $40.5, $62.4, and $119 per metric ton of CO2 avoided. For emissions reductions that 

occur in later years, these values grow in real terms over time. Additionally, the interagency 

group determined that a range of values from 7-percent to 23-percent should be used to adjust the 

global SCC to calculate domestic effects, although DOE will give preference to consideration of 

the global benefits of reducing CO2 emissions. 

DOE multiplies the CO2 emissions reduction estimated for each year by the SCC value 

for that year in each of the four cases. To calculate a present value of the stream of monetary 

values, DOE discounts the values in each of the four cases using the discount rates that had been 

used to obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

DOE also estimates the potential monetary benefit of reduced NOX emissions resulting 

from the standard levels it considers. Estimates of monetary value for reducing NOX from 

stationary sources, range from $476 to $4,893 per ton in 2013$.40 DOE calculates monetary 

benefits using a medium value for NOX emissions of $2,684 per short ton (in 2013$), and real 

discount rates of 3 percent and 7 percent, in accordance with OMB guidance.41

DOE is evaluating an appropriate valuation of avoided SO2 and Hg emissions. Whether 

monetization of these emissions will occur in this rulemaking is yet to be determined.

2.15 UTILITY IMPACT ANALYSIS

In the utility impact analysis, DOE analyzes the changes in electric installed capacity and 

generation that result for each trial standard level (TSL). The utility impact analysis is based on 

output of the DOE/Energy Information Administration (EIA)’s National Energy Modeling 

System (NEMS). NEMS is a public domain, multi-sectored, partial equilibrium model of the 

U.S. energy sector. Each year, DOE/EIA uses NEMS to produce an energy forecast for the 

United States, the Annual Energy Outlook (AEO). The EIA publishes a reference case, which 

incorporates all existing energy-related policies at the time of publication, and a variety of side 

cases which analyze the impact of different policies, energy price, and market trends. As of 

39 Interagency Working Group on Social Cost of Carbon, United States Government, Technical Update of the Social 

Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. May 2013; revised November 2013. 

http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf 40 U.S. Office of Management and Budget (OMB), 2006 Report to Congress on the Costs and Benefits of Federal 

Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2006) (Available at: 

www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf). 41 OMB. Circular No. A-4, Regulatory Analysis (2003).

40

 
2014, DOE is using a new methodology based on results published for the AEO 2014 Reference 

case and a set of side cases that implement a variety of efficiency-related policies.

2.16 EMPLOYMENT IMPACT ANALYSIS

The adoption of energy conservation standards can affect employment both directly and 

indirectly. Direct employment impacts are changes in the number of plant employees up to the 

line-supervisor level who are directly involved in producing and assembling the covered 

equipment. Workers performing services that are closely associated with production operations, 

such as material handling with a forklift, are also included as production labor. DOE will 

evaluate direct employment impacts in the MIA.

Indirect employment impacts may result from expenditures shifting between goods (the 

substitution effect) and changes in income and overall expenditure levels (the income effect) that 

occur due to standards. DOE defines indirect employment impacts from standards as net jobs 

eliminated or created in the general economy as a result of modified spending driven by 

increased equipment prices and reduced spending on energy. 

The indirect employment impacts will be investigated in the employment impact analysis 

using the Pacific Northwest National Laboratory’s “Impact of Sector Energy Technologies” 

(ImSET) model.42 The ImSET model was developed for DOE’s Office of Planning, Budget, and 

Analysis to estimate the employment and income effects of energy-saving technologies in 

buildings, industry, and transportation. Compared with simple economic multiplier approaches, 

ImSET allows for more complete and automated analysis of the economic impacts of energy 

conservation investments.

2.17 REGULATORY IMPACT ANALYSIS

At the NOPR stage, DOE will prepare a regulatory impact analysis (RIA) that evaluates 

potential non-regulatory policy alternatives, comparing the costs and benefits of each to those of 

the proposed standards. DOE recognizes that non-regulatory policy alternatives can substantially 

affect energy efficiency or reduce energy consumption. DOE will base its assessment on the 

actual impacts of any such initiatives to date, but also will consider information presented by 

interested parties regarding the potential future impacts of current initiatives.

42 Roop, J. M., M. J. Scott, and R. W. Schultz, ‘‘ImSET: Impact of Sector Energy Technologies,’’ PNNL–15273. 

Pacific Northwest National Laboratory (2005). 

41