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### S m all Electric M otors The Energy Policy and Conservation Act (EPCA) of 1975 established an energy conservation program for major household appliances. The National Energy Conservation Policy Act of 1978 amended EPCA to add Part C of Title III, which established an energy conservation program for certain industrial equipment. The Energy Policy Act of 1992 (EPACT) also amended EPCA, and included amendments that expanded title III to include small electric motors. The Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program conducts the program that develops equipment energy conservation standards and has overall responsibility for rulemaking activities for small electric motors in fulfillment of the law. Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader. Deter m ination Analysis
o Departmental Determination Concerning the Potential for Energy Conservation Standards for Small Electric Motors, Federal Register, July 10, 2006, (PDF 112 KB) ® Technical Support Document: Analysis of Energy Conservation Standards for Small Electric Motors, June 2006, (PDF 625 KB) o Draft Report: "Analysis of Energy Conservation Standards for Small Electric Motors," June 2003, (PDF 256 KB)

Contact Information Antonio Bouza Project Manager (202) 586-4563

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http://www.eere.energy.gov/buildings/appliancestandards/commercial/small_electric_motors.html 8/14/200738799 

# Proposed Rules

This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules.

DEPARTMENT OF ENERGY Office of Energy Efficiency and Renewable Energy 10 CFR Part 431 [Docket No

. EE-DET-02-002] RIN 1904-AA87 Energy Conservation Program for Certain Industrial Equipment: Determination Concerning the Potential for Energy Conservation Standards for Small Electric Motors AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Departmental determination. SUMMARY : The Department of Energy (DOE or the Department) has determined, based on the best information currently available, that energy conservation standards for certain single-phase, capacitor-start, induction-run, small electric motors are technologically feasible and economically justified, and would result in significant energy savings. This determination initiates the process of establishing, by notice and comment rulemaking, test procedures and energy conservation standards for this equipment. ADDRESSES : For access to the docket (EE-DET-02-002) to read background documents or comments received, visit the U.S. Department of Energy, Forrestal Building, Room 1J-018 (Resource Room of the Building Technologies Program), 1000 Independence Avenue, SW., Washington, DC, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Ms. Brenda Edwards-Jones at the above telephone number for additional information regarding visiting the Resource Room. Please note: The Department's Freedom of Information Reading Room (formerly Room 1E-190 at the Forrestal Building) is no longer housing rulemaking materials. FOR FURTHER INFORMATION CONTACT: Antonio Bouza, U.S. Department of Energy, Building Technologies Program (EE-2j), Office of Energy Efficiency and Renewable Energy, 1000 Independence Avenue, SW., Washington, DC 20585- 0121. Telephone (202) 586-4563, or antonio.bouza@ee.doe.gov. Thomas B. DePriest, Esq., U.S. Department of Energy, Office of General Counsel, Mail Station GC-72, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone (202) 586-7432, or th om as. d epri es tCQ@h q. d o e.gov. SUPPLEMENTARY INFORMATION: I. Introduction A. Authority B. Rulemaking Procedures C. Background II. Discussion of the Analysis of Small Motors A. Purpose and Content B. Methodology 1. Market Research 2. Engineering Analysis 3. Life-Cycle Cost Analysis 4. National Energy Savings Analysis 5. National Consumer Impacts Analysis C. Analysis Results 1. Engineering Analysis 2. Life-Cycle Cost and Payback Period Analysis 3. National Energy Savings and Consumer Impacts D. Discussion 1. Significance of Energy Savings 2. Impact on Consumers III. Conclusion A. Determination B. Future Proceedings 1. Introduction A. Authority The National Energy Conservation Policy Act of 1978, amended the Energy Policy and Conservation Act (EPCA or the Act) to add a part C to title III ofEPCA, to establish an energyconservation program for certain industrial equipment. (42 U.S.C. 6311- 6317) The Energy Policy Act of 1992 (EPACT), Public Law 102-486, also amended EPCA, and included amendments that expanded title III to include small electric motors. Specifically, EPACT amended section 346 of EPCA (42 U.S.C. 6317) to provide in paragraph (b) that the Secretary of Energy must prescribe testing requirements and energy conservation standards for those small electric motors for which the Secretary determines that standards "would be technologically feasible and economically justified, and Federal Register Vol. 71, No. 131 Monday, July 10, 2006

would result in significant energy savings." (42 U.S.C. 6317(b)(1)). DOE construes section 346 in light of the provisions of section 325(n) and (o) of EPCA (which are in part B of title III of EPCA and apply specifically to residential appliances). DOE does so for two reasons. First, section 346(c) specifically makes the criteria in section 325(n) applicable to the determination for small motor standards. (42 U.S.C. 6317(c)) Second, and more generally, section 345(a) makes subsections (1) through (s) of section 325 applicable to provisions of part C of title III of EPCA which includes section 346. (42 U.S.C. 6316(a)). Section 325(n) deals with petitions for amended standards. Paragraph (n)(2) of section 325(n) provides for an initial determination by DOE of technological feasibility, economic justification, and significant energy savings in deciding whether to grant a petition. This initial determination does not focus on specific standard levels. Paragraph (n)(2) further provides that the initial determination does not create any presumption with regard to the application of these statutory criteria for promulgating specific standards in a rulemaking pursuant to DOE's decision to grant a petition. Section 325(o)(2) requires that determinations of technological feasibility, economic justification, and significant energy saving must ultimately be based on specific standards levels that were proposed for public comment. (42 U.S.C. 6295(o)(2)) The textual linkage of these provisions of section 325 to section 346(b) implies that today's determination is similar in character and legal effect to an initial determination upon a petition for new or amended standards and that it does not create any presumptions with regard to the determination of specific standard levels yet to be proposed. In addition to this structural analysis of EPCA, DOE is also of the view that, as a matter of policy, it is impractical to proceed on any other basis. It is impractical because, even if one or more design options have the potential for achieving energy savings, a determination that such savings could in fact be achieved cannot be made without first having developed test procedures to measure the energy efficiency of small motors designs, and then conducting an in-depth analysis of each design option. Such analysis might38800 Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Proposed Rules

show that no standard meets all three of promulgation of test procedures and the prescribed criteria: i.e., standards for small electric motors. In technological feasibility, economic conducting rulemakings generally, the justification and significant energy Department must, at a minimum, adhere savings. to the procedures required by the For these reasons, the Department Administrative Procedure Act (5 U.S.C. construes section 346(b) and related 551 et seq.) and section 501 of the provisions as requiring it to: (1) Department of Energy Organization Act Determine preliminarily whether (DOE Organization Act) (42 U.S.C. standards for small motors would be 7191). Section 501 of the DOE "technologically feasible and Organization Act in essence requires the economically justified, and would result following: (1) Issuance of a notice of in significant energy savings," and (2) if proposed rulemaking (NOPR), (2) an energy conservation standards appear to opportunity for comment, (3) an be warranted under these criteria, opportunity for presentation of oral prescribe test procedures and conduct a comments, if there exists "a substantial rulemaking concerning such standards. issue of fact or law" or if the rule will During the standards rulemaking, the have a "substantial impact," and (4) Department would describe whether, publication of the final rule and at what level(s), to promulgate accompanied by appropriate energy conservation standards. This explanation. Pursuant to Executive decision would be based on in-depth Order 12889, "Implementation of the consideration, with public participation, North American Free Trade of the technological feasibility, Agreement," December 27, 1993, the economic justification, and energy comment period on a NOPR must be at savings of potential standard levels in least 75 days. the context of the criteria and Consistent with section 345(a), in procedures for prescribing new or promulgating test procedures for small amended standards established by electric motors, the Department will section 325(o) and (p) (42 U.S.C. also use procedures prescribed for 6295(o), (p)). adopting test procedures under parts B Section 340(13)(F) of EPCA (42 U.S.C. and C of EPCA. (42 U.S.C. 6293(b)(2) 6311(13)(F)) provides the following and 6314(b)) Therefore, in addition to definition for "small electric motor": the generic procedural requirements The term "small electric motor" means described above, the Department will a NEMA [National Electrical provide an opportunity for oral Manufacturers Association] general- comment (i.e., hold a public meeting) on purpose alternating-current single-speed the proposed test procedures, regardless induction motor, built in a two-digit of the "substantial issue" or "substantial frame number series in accordance with impact" criteria, as it does in other NEMA Standards Publication MG1- EPCA test procedure rulemakings. See, 1987. for example, 42 U.S.C. 6314(b). In NEMA Standards Publication Consistent with section 345(a), in MG1-1987, which is entitled "Motors determining by rule whether to impose and Generators," the two-digit frame a specified standard level, the series encompasses NEMA frame sizes Department will use the following 42, 48, and 56, and motors with procedures: horsepower ratings ranging from 1/4 to 3 1. The Department will issue an horsepower. These motors operate at 60 advance notice of proposed rulemaking hertz and have either a single-phase or (ANOPR), followed by a comment a three-phase electrical design. period (42. U.S.C. 6295 ( p )(1)); Section 346(b)(3) of EPCA (42 U.S.C. 2. The Department will issue a NOPR 6317(b)(3)) specifies that a standard setting forth the maximum efficiency prescribed for small electric motors improvement that is technologically shall not apply to any small electric feasible and, if the proposed standard motor that is a component of a covered does not achieve this level, an product under section 322(a) of EPCA explanation of why (42 U.S.C. (42 U.S.C. 6292(a)) or of covered 6295(p)(2)); and equipment under section 340 (42 U.S.C. 3. The Department will hold a public 6311). Such products and equipment meeting following issuance of the include residential air conditioners and NOPR. (42 U.S.C. 6306(a)(1).) heat pumps, furnaces, refrigerators and In addition, the Department also has freezers, clothes washers and dryers, a policy, in conducting rulemakings on and commercial packaged air- appliance standards, of allowing 75 conditioning and heating equipment. days for comment on an ANOPR (rather B. Rulemakin g Procedures than the 60 days required by EPCA), with at least one public hearing or EPCA does not explicitly identify the meeting during this period. Procedures rulemaking procedures that govern for Consideration of New or Revised Energy Conservation Standards for Consumer Products, 10 CFR part 430, subpart C, Appendix A (Process Rule). C. Background The Department began the analysis for this determination by collecting information from manufacturers of small motors and others. The Department conducted preliminary analyses and shared its preliminary findings regarding efficiency improvement in small motors. Subsequently, the Department received data and information, including that provided by both the National Electrical Manufacturers Association (NEMA) and the Small Motors and Motion Association (SMMA) (the NEMA/ SMMA Working Group). A key issue that arose early in this determination process is the definition of a "small electric motor" and precisely which motors are covered by this rulemaking. The definition of a "small electric motor" derives from the definition of the term "general purpose motor." The EPCA definition 1 of a small motor is tied to the NEMA Standards Publication MG1-198 7 performance requirements that NEMA has established for general purpose motors, such as the minimum levels for breakdown and locked rotor torque for small electric motors presented in MG1- 1987 paragraph 12.32. In this determination process, the Department considered only those classes of small electric motors covered under the EPCA definition which satisfy the performance requirements for general purpose motors established by NEMA Standards Publication MG1- 1987, and which are not a component of another product covered under EPCA. In consideration of the above, DOE finds that of the motors that satisfy theframe-size requirements of the smallmotors definition, only a subset satisfies the other performance requirements of
EPCA does not define the term "general purpose motor," although it does define the terms "definite purpose motor" and "special purpose motor." According to EPCA, "definite purpose motor" means "any motor designed in standard ratings with standard operating characteristics or standard mechanical construction for use under service conditions other than usual or for use on a particular type of application and which cannot be used in most general purpose applications." Section 340(13)(B). (42 U.S.C. 6311 (13)(B)) Likewise, "special purpose motor" means "any motor, other than a general purpose motor or definite purpose motor, which has special operating characteristics or special mechanical construction, or both, designed for a particular application. " Id. at (C). Consequently, DOE must derive the term "general purpose" by eliminating those definite purpose motors and special purpose motors and must subsequently define the term within the context of NEMA performance characteristics that can operate successfully in many different applications.Federal Register /Vol. 71, No. 131 /Monday, July 10, 2006 /Proposed Rules 38801

the definition. Among single-phase motors with a two-digit frame size, theDepartment found that only capacitorstart motors, including both capacitorstart, induction run and capacitor-start, capacitor-run motors, can meet thetorque requirements for NEMA generalpurpose motors. Among three-phase small motors, the Department found that only non-servo motors can meet the NEMA performance requirements for general-purpose motors. Hence, the Department's analysis covered only these types of single- and three-phase small motors, and the Department identifies them in this determination as "considered small motors." The annual commercial sales volume of considered small motors is approximately four million units for capacitor-start motors and one million units for three-phase motors. These motors are used in a wide variety of commercial and industrial machine and processing applications, with the largest being pumping equipment and commercial/industrialheating, ventilating, and airconditioning equipment rated over 760,000 British thermal units per hour (Btu/h). The Department then conducted an analysis that estimated the likely range of energy savings and economic benefits that would result from energy conservation standards for small electric motors, and prepared a report describing its analysis. In June 2003, the Department made the report "Analysis of Energy Conservation Standards for Small Electric Motors" available for public comment on its Web site at http://www.eere.energy.govlbuildingsl a p pl i an ce_stan d and s/commercial / small electric motors.html. The report made no recommendation concerning the determination that the Department should make. The Department received comments concerning its analysis of small motors from NEMA, SMMA, and the American Council for an Energy-Efficient Economy (ACEEE). In general, the comments received did not criticize specific elements of the Department's technical analysis. The ACEEE comment indicated that ACEEE found the analysis to be "technically robust." (ACEEE, No. 3 at p. 1) 2 However, NEMA asserted that energy conservation standards for certain small motors were not
2 A notation in the form "ACEEE, No. 3 at p. 1" identifies a written comment the Department has received and has included in the docket of this rulemaking. This particular notation refers to a comment (1) by the American Council for an Energy-Efficient Economy (ACEEE), (2) in document number 3 in the docket of this rulemaking (maintained in the Resource Room of the Building Technologies Program), and (3) appearing on page 1 of document number 3. economically justified and would harm U.S. motor manufacturers, and ACEEE claimed that energy conservation standards for small motors are unlikely to save much energy and would be a diversion from exploring other energy savings approaches. (NEMA, No. 1 at p. 2; ACEEE, No. 3 at p. 2) ACEEE commented that the Department could achieve greater energy savings if it did not restrict its analysis to capacitor-start, capacitor-run and capacitor-start, induction-run single-phase motors, and three-phase motors. ACEEE commented that these categories of small motors account for only four percent of domestic shipments and that much greater energy savings could be realized by switching between different types of small motors. (ACEEE, No. 3 at p. 1) ACEEE suggested that the Department encourage users of small motors to shift between classes of motors, such as from split-phase and shaded-pole motors to capacitor-start, capacitor-run and capacitor-start, induction-run motors; it commented that the substitution would yield greater savings than improvements that are restricted to the category of capacitor-start, induction-run motors. Further, ACEEE suggested replacing considered small motors with advanced types, such as electronically commutated permanent magnet motors. (ACEEE, No. 3 at p. 1) While the Department understands ACEEE's concern, the market transformation that ACEEE suggests is outside the scope of this determination since the purpose of energy conservation standards is to increase the energy performance of regulated products rather than change the product-purchase-and-use behavior of consumers. The SMMA generally supported the findings of the NEMA/SMMA Working Group. (SMMA, No. 2 at p. 1) The main findings of the NEMA/SMMA Working Group pertained to the cost-efficiency relationship for small motors, and these findings were incorporated into the Department's engineering analysis for this determination. NEMA commented that many small motors are used in other equipment that is subject to Federal energy conservation standards, and that small motors in those product applications are not within the scope of the Department's analysis and proceeding. (NEMA, No. 1 at p. 1) The Department agrees with NEMA, insofar as the EPCA definition of small motors and exclusions constrain the motors considered in the Department's analysis to a subset of the total population of small electric motors. As stated above, pursuant to section 346(b)(3) of EPCA (42 U.S.C. 6317(b)(3)), the Department did not consider in its analysis motors that are a component of a covered product or equipment. In a related comment, NEMA requested that the Department designate small motors as "covered equipment,"which it asserted was done for generalservice incandescent lamps although there was no standard for such lamps, and cited 59 FR 49468 (September 28, 1994). NEMA requested the designation so that States that are attempting to set efficiency standards for small motors would be preempted by the Federal action. (NEMA, No. 1' at p. 1) Section 345(a) of EPCA (42 U.S.C. 6316(a)) provides in part that section 327 of the Act (42 U.S.C. 6297), which addresses preemption of State energy conversation requirements by EPCA, shall apply to various equipment covered by part C of title III of EPCA, which includes small electric motors. Thus, State energy use and efficiency requirements for "small electric motors," as defined in 42 U.S.C. 6311(13)(F), are already preempted to the extent provided in section 327 of EPCA (42 U.S.C. 6297). No further action by DOE is needed to provide for such preemption. Small motors that are not within EPCA's definition of small motors are not covered by EPCA; therefore, the Act does not preempt State energy use and efficiency requirements with respect to motors not covered by EPCA. II. Discussion of the Analysis of Small Motors A. Purpose and Content The Department performed an analysis of the feasibility of achieving significant energy savings as a result of energy conservation standards for considered small electric motors. The Department presents the results of this analysis in a technical support document (TSD) for this determination. In subsequent analyses for the standards ANOPR, NOPR, and final rule, DOE will perform the more robust analyses required by EPCA. These analyses will involve more precise and detailed information that the Department will develop and receive during the standards rulemaking process, and will detail the effects of proposed energy conservation standards for small electric motors. B. Methodology To address EPCA requirements that DOE determine whether energy conservation standards for small motors would be technologically feasible and economically justified, and result in significant energy savings (42 U.S.C. 6317(b)(1)), the Department's analysis38802 Federal Register /Vol. 71, No. 131 /Monday, July 10, 2006 /Proposed Rules

consisted of five major elements: (1) Market research to better understand where and how small motors are used, (2) engineering analysis to estimate how different design options affect efficiency and cost, (3) life-cycle cost (LCC) analysis to estimate the costs and benefits to users from increased efficiency in small motors, (4) national energy savings analysis to estimate the potential energy savings on a national scale, and (5) national consumer impacts analysis to estimate potential economic costs and benefits that would result from improving energy efficiency in the considered small motors. The following is a brief description of each element. 1. Market Research The Department conducted research on the market for considered small motors, including annual shipments, the current range of energy efficiencies, motor applications and utilization, market structure, and distribution channels. It used information from original equipment manufacturers (OEMs), trade associations that support industrial sectors, consultation with small motor manufacturers, and independent experts. Also, NEMA provided data, on its own initiative, tothe Department on sales of two-digitframe small motors to domestic customers by its member manufacturers, covering the period from 1971 to 2001. Based on its market research, the Department estimated that, on average, capacitor-start and three-phase small motors are used 2,500 hours annually at a loading of 70 percent of rating. Based on its market research, including input from OEMs that incorporate small motors into their products and the NEMA/SMMA Working Group, the Department used seven years as the mean lifetime for capacitor-start motors, and nine years for three-phase motors. Also based on its market research, the Department determined that the small motors considered in this determination are used in commercial and industrial settings with the corresponding tariffs. The Department estimated that approximately three-fourths of capacitor-start motors are used by utility customers on a commercial tariff, while virtually all users of small, three-phase motors are on an industrial tariff. Industrial electricity prices tend to be lower than commercial prices. 2. Engineering Analysis In the engineering analysis, the Department examined methods for increasing energy efficiency that included increasing the amount of active material (e.g., the diameter of wire conductors), substituting a higher grade of steel for the magnetic components, improving the mechanical components and design (winding, bearings, and fan), and improving the quality control of components and assembly. Manufacturers of small motors use all of these methods of motor-efficiency improvement in their design and production processes. In general, the Department found that these methods may increase either the motor cost or size if there are no other changes in the motor-design parameters. In particular, the Department evaluated several ways to achieve increased efficiency, including (1) changing the quality of the grade of electrical steel, (2) changing the quantity of electrical steel (stack length), and (3) changing the magnetic flux density by adjusting the effective turns in the copper windings and/or changing the thickness of the steel laminations in the core of a small motor. In its preliminary engineering evaluation, the Department found the efficiency improvement method of changing flux density to be the most expensive of the three methods. As a result, the Department analyzed only the two lower-cost efficiency improvement methods to help maintain the simplicity and clarity of its analysis. In particular, the Department examined a one-half-horsepower, capacitor-start, induction-run motor and a one-horsepower, three-phase motor as prototypes for improving the energy efficiency of small motors. To estimate the efficiency changes and additional costs resulting from design changes, the Department used two sets of data. The Department derived the first set by engaging an independent motorindustry expert to estimate motorefficiency costs from motor test data and design cost estimates. The expert obtained motor test data for a sample of small motors using a traditional motor performance program based on equivalent-circuit analysis to calculate efficiency changes resulting from changes in steel grades and stack lengths. This methodology was similar to methods commonly used by motor manufacturers. The NEMA/SMMA Working Group provided, on its own initiative, a comparable set of data in an aggregated form. The Department had a concern that the cost-efficiency curves presented in the June 2003 report "Analysis of Energy Conservation Standards for Small Electric Motors" were based on 2001 materials pricing data, which represented a relative low-price point for many electrical steels (i.e., the steel used for building electric motor rotors and stators). The price of electrical steels has increased since 2001. However, the slope of the engineering analysis cost-efficiency curves depends on the price difference between the baseline unit (i.e., low efficiency steel) and the higher efficiency unit (i.e., better grade steel). Electrical steel price data collected in 2005 for the distribution transformer standards rulemaking along with a check of 2001 and 2005 pricing for specific steels used in small motors verified that the price differential between the baseline and high-efficiency steels did not increase between 2001 and 2005. For this reason, the Department determined that it was not necessary to update the material prices for the engineering analysis, because updating the material prices, or calculating average material prices representative of a multi-year period, would not significantly change the Department's engineering results. 3. Life-Cycle Cost Analysis Based on its engineering analysis of the available technical data, the Department conducted a life-cycle cost (LCC) analysis to estimate the net benefit to users from increasedefficiency in capacitor-start and threephase small motors. The LCC analysis compared the additional up-front cost of a higher-efficiency motor to the discounted value of electricity savings over the life of the motor. The Department's LCC analysis used the following inputs: estimated average motor use in terms of hours and loading and typical motor lifetime (discussed above), estimated average prices for base motors and more-efficient motors, average electricity prices paid by users of capacitor-start and three-phase small motors, and the discount rate. The Department received significant comment regarding its estimates of motor lifetimes. The Department understands that the typical lifetime of a small motor is not well documented. Most industry experts with whom the Department consulted suggested the average life for considered motors is at most ten years, depending on the use and physical environment. The NEMA/ SMMA Working Group estimated anaverage life of five years for a capacitorstart motor and ten years for a threephase motor. In view of these considerations, the Department estimated the mean lifetime for a capacitor-start motor at seven years and a three-phase motor at nine years. Moreover, the Department believes that the potential lifetime of a considered motor may be greater than that of the driven equipment. Thus, the actual motor lifetime may be limited by theFederal Register /Vol. 71, No. 131/Monday, July 10, 2006/Proposed Rules 38803

lifetime of the equipment it drives. In view of this issue, NEMA commented that the economic justification of energy conservation standards for the user was not good. Where simple payback periods range from 4.9 to 9 years, NEMA questioned whether the equipment driven by the small motor will last that long and, thus, enable the payback for the higher cost of improved efficiency to be realized. (NEMA, No. 1 at p. 2). The Department acknowledges that a small motor's lifetime could be limited by the life of the equipment it drives. The Department used a distribution of lifetimes for small electric motors in its analysis. For capacitor-start motors, the analysis used the range of 5 to 9 years for the lifetime, and for polyphase motors the Department used a range of 7 to 11 years. Given existing data and the balance of diverse stakeholder and expert comments, the Department considers its current lifetime estimates to be reasonable and accurate for this determination analysis. The Department estimated the base purchase price of typical capacitor-start and three-phase small motors using (1) prices listed in the 2001-2002 W.W. Grainger, Inc., catalog, (2) estimates of the percentage of the list price paid in different motor distribution channels, and (3) estimates of the distribution of sales among the three channels (motor manufacturer to OEM, motor manufacturer to distributor to original equipment manufacturer, and motor manufacturer to distributor to end user). The Department derived the price for a motor that incorporated design changes to improve efficiency by applying the estimated percentage of incremental cost from the engineering analysis to the average base price of the motor estimated from the Grainger, Inc., catalog. The Department estimated average commercial and industrial electricity prices using the 2010 and 2020 forecasts from the Energy Information Administration's (EIA) Annual Energy Outlook 2006. It then derived average prices paid by users of capacitor-start and three-phase small motors based on the tariff classes of users (discussed above). Given that relatively small industrial establishments useconsidered small, polyphase (i.e., threephase) motors more than larger establishments, and that small industrial establishments have higher electricity tariffs than larger industry, the Department estimated the electricity price for polyphase motors as five percent higher than the national average industrial price of electricity. The Department derived a discount rate based on the weighted-average cost of capital for representative companies using products containing the considered small motors. After deducting for expected inflation, the Department estimated the average cost of capital for considered small motor owners as 7.5 percent. 4. National Energy Savings Analysis To estimate national energy savings for small motors sold from 2010 through 2030, the Department calculated the energy consumption of two typical sizes of small motors: One-half horsepower, capacitor-start, induction-run motors, and one-horsepower, three-phase motors. The Department used both its own data and the NEMA/SMMA Working Group data for capacitor-start, induction-run motors. However, it used only its own data for three-phase motors because the NEMA/SMMA Working Group based its analysis on a one-half horsepower motor, which is less common than the one-horsepower motor, and which therefore has losses that may not be representative of considered small, three-phase motors. The Department calculated the energy efficiencies of small motors withimproved-steel-grade and increasedstack-length design options, and extrapolated the results to a national average for all new capacitor-start, induction-run and three-phase motors (constituting the energy conservation standards cases). The Department estimated the energy savings of the standards cases relative to two base cases-little improvement and moderate improvement in efficiency-in the absence of any standards. The Department formulated each base case using information from historical trends, and input from the NEMA/ SMMA Working Group, provided on its own initiative. The Department also evaluated two small-motors-shipments scenarios, estimating national energy savings for average annual growth in shipments of 1 percent and 1.5 percent. These shipments scenarios are also based upon historical trends and input from the NEMA/SMMA Working Group. To estimate potential energy savings from a possible energy conservation standard, the Department used an accounting model that calculated total end-use electricity savings in each year of a 35-year forecast. The model featured a product-retirement function to calculate the number of units sold in a given year, or vintage, which would still be in operation in future years. Some of the small motors sold in 2030 will operate through 2040. The retirement function assumed that individual motor lifetime is evenly distributed in a five-year interval around the mean lifetime. The Department calculated primary energy savings associated with end-use electricity savings using data from EIA's Annual Energy Outlook 2006 (AEO). These data provided an average multiplier for relating end-use electricity to primary energy use (energy consumption by the power plant) for each year from 2010 to 2020. The Department extrapolated the trend in these years to derive factors for 2021 to 2040. 5. National Consumer Impacts Analysis The Department estimated national economic impacts on end users in terms of the net present value (NPV) of cumulative benefits from 2010 to 2040. It considered these impacts under the same range of scenarios as it did for estimating national energy savings. It used the incremental equipment costsand energy savings for each energyefficiency level that it applied in the LCC analysis. To simplify the analysis, the Department estimated the value of energy savings using the average AEO forecast electricity price from 2010 to 2020. The Department discounted futurecosts and benefits by using a sevenpercent discount rate, according to the "Guidelines and Discount Rates for Benefit Analysis of Federal Programs," issued by the Office of Management and Budget in 1992 (Circular No. A-94, Revised). C. Analysis Results 1. Engineering Analysis As described above, the Department conducted separate analyses of changes in the grade of electrical steel and a change in the stack length to improve the energy efficiency of small motors. In each case, the Department gave the base motor a "per-unit" cost of one. The Department related all design-option changes to the base motor per-unit cost of one. For example, if a change in electrical steel created a 10 percent change in the cost of materials, such as electrical steel, the Department assigned the per-unit number of 1.10 for the new design. In addition, the NEMA/SMMA Working Group provided, on its own initiative, comparable data, where each of four manufacturers selected a typical small motor to use as the base motor. For steel-grade design options, the NEMA data refer to the average valuesof the four manufacturers. For stackchange design options, the NEMA/ SMMA Working Group provided data that it considered most typical. Tables 1 and 2 summarize the results of the analysis of steel-grade and stack-length38804 Federal Register /Vol. 71, No. 131 /Monday, July 10, 2006 /Proposed Rules

changes. For capacitor-start motors, the that are common for one-half Department analyzed the cost of horsepower motors. efficiency improvements for both 56- Overall, the Department's analysis frame and 48-frame motors. These two and the NEMA/SMMA Working Group frames represent distinct frame sizes data were more comparable for the stack-change design options than they were for the design options related to steel-grade changes. The NEMA/SMMA Working Group estimated a much smaller efficiency improvement due to steel grade improvements than the Department's analysis. TABLE 1.-CAPACITOR-START MOTORS, 1/ 2 HORSEPOWER , 4-POLE, OPEN DRIP-PROOF

Grade A Steel

- Grade Design Options Grade B Grade B+ M47

DOE Analysis, 56-Frame: Per-unit Cost ............................................................................................. 1.00 1.03 1.08 1.25 Efficiency .................................................................................................. 53.9% 57.4% 59.3% 60.5% DOE analysis, 48-Frame: Per-unit Cost ............................................................................................. 1.00 1.03 1.10 1.25 Efficiency .................................................................................................. 62.6% 65.4% 66.8% 69.0% Grade 1 Grade 2 Grade 3 NEMA/SMMA data: Per-unit Cost ......................................................................................................................... 1.00 1.10 1.21 Efficiency .............................................................................................................................. 60.0% 61.7% 62.9% Base Plus stack Plus 2 stack Plus 3 stack Stack-Change Design Options DOE analysis, 56-Frame: Per-unit Cost ............................................................................................. Efficiency DOE analysis, 48-Frame:. Per-unit Cost ............................................................................................. Efficiency .................................................................................................. NEMA/SMMA data: Per-unit Cost ............................................................................................. Efficiency .................................................................................................. 1.00 53.9%
1.00 62.6% 1.00 62.0% 1.09

58.1% 1.07 63.5%
1.10 64.3% TABLE 2.-POLYPHASE MOTORS, 4-POLE, OPEN DRIP-PROOF Grade A+ Steel-Grade Design Options 1.19 60.3%
1.15 64.4% 1.20 65.5%

Grade B+ 1.29 62.0%
1.22 65.1% 1.30 66.5%

M47

DOE analysis, 1 horsepower: Per-unit Cost ......................................................................................................................... 1.0 1.04 1.20 Efficiency .............................................................................................................................. 76.4% 78.3% 81.2% Grade 1 Grade 2 Grade 3 NEMA/SMMA data, 1/2 horsepower: Per-unit Cost ......................................................................................................................... 1.00 1.10 1.20 Efficiency .............................................................................................................................. 68.1% 70.7% 72.1% Base Plus stack Plus 2 stack Plus 3 stack Stack

-Change Design Options DOE analysis , 1 horsepower: Per-unit Cost

............................................................................................. 1.00 1.06 1.18 1.24 Efficiency

.................................................................................................. 76.4% 77.2% 78.9% 79.2% NEMA/SMMA analysis , 1/2 horsepower: Per-unit Cost

............................................................................................. 1.00 1.08 1.16 1.24 Efficiency

.................................................................................................. 72.2% 73.1% 73.9% 74.1%

As stated above, the Department received no comments criticizing specific elements of its technical analysis. NEMA agreed with the Department's conclusions that it is technically feasible to increase the efficiency of small motors in frame sizes 42, 48, and 56 for three-phase and single-phase motors, and that improving grades of steel and redesigning laminations will provide increased efficiency, but at much higher capital costs. (NEMA, No. 1 at p. 2) ACEEE found the Department's analysis to be "technically robust." (ACEEE, No. 3 at p. 1). NEMA commented that manufacturer costs and impacts from a possibleFederal Register /Vol. 71, No. 131/Monday, July 10, 2006 /Proposed Rules 38805

standard may be high. It asserted that there will be high capital costs and, presumably, less economic benefit to the manufacturer than the Department described in its June 2003 determination report "Analysis of Energy Conservation Standards for Small Electric Motors." (NEMA, No. 1 at p. 2) While the economic impacts of a possible standard on manufacturers may be substantial, DOE did not evaluate the full impact of possible standards on manufacturers in this determination. The Departmentinstead used the presence of highefficiency designs in the marketplace as an indicator of the probable economic feasibility of manufacturing high efficiency designs. The Department will address detailed economic impacts on manufacturers at such time that it conducts a manufacturer impact analysis for an energy efficiency standards rulemaking. In addition, NEMA commented that there was a strong likelihood that OEMs will switch to alternative small motors that are not covered to avoid any added costs resulting from energy conservation standards. (NEMA, No. 1 at p. 2) The Department believes that shifting from, for example, a capacitor-start, induction-run small motor to a less efficient shaded-pole or split-phase small motor design would reduce potential energy savings. However, the Department understands that small motors are not generally interchangeable. Physical constraints in some current equipment designs may preclude the substitution of another type of motor for a considered small motor. Lacking clear evidence or data regarding the change in sales of considered small motors due to possible standards, the Department did not model this potential phenomenon in the determination analysis. (As explained below, the Department intends to undertake a rulemaking to develop standards for small motors. If it appears to DOE in the initial phases of the rulemaking that the potential for motor switching warrants further examination, the Department will address that issue in its analyses during the rulemaking.) 2. Life-Cycle Cost and Payback Period Analysis The Department presents key results for capacitor-start motors in Tables 3 and 4 below. Using the DOE data for capacitor-start motors, the steel-grade options all have lower LCC than the base motor. However, results using the NEMA/SMMA average data show an increase in LCC at steel grade 3, with no change in LCC at steel grade 2. The DOE analysis shows the stack-length options increasing the LCC, while the NEMA/ SMMA results show a slight decrease for the first option, but then an increase in LCC for the higher-efficiency stack change options. TABLE 3.-IMPACTS OF EFFICIENCY IMPROVEMENT ON TYPICAL END USER, CAPACITOR-START, 1/ 2 HORSEPOWER, DOE DATA* Steel grade

Motor Price

- Buyer**

................................. Annual Operating Cost ............................ Life-Cycle Cost (7.5% DR) ...................... Change in LCC (WRT Base) ................... Percent Change in LCC ........................... Payback Period ( years) ........................... Grade A (base)

Grade 1 (base) Grade B Grade B+ M47

* Data refer to a specific typical motor. ** Based on actual motor price in Grainger catalog. $106 $72 $487 -$14.07 -2.8% 1.0 Plus stack
$111 $74 $502 $1.51 0.3% 6.7

TABLE 4.-IMPACTS OF EFFICIENCY IMPROVEMENT ON TYPICAL END USER, CAPACITOR-START, 1/2 HORSEPOWER, NEMA/ SMMA DATA Steel grade *

Motor Price

- Buyer ***

............................... Annual Operating Cost ............................ Life-Cycle Cost (7.5% DR) ...................... Change in LCC (WRT Base) ................... Percent Change in LCC ........................... Payback Period (years) ...........................

* Data are average of four manufacturers. ** Data reflect costs and performance of a typical motor.

- Estimated by DOE based on Grainger catalog prices.
Tables 5 and 6 present results for small, polyphase motors. Although the base motors are different in the DOE and NEMA/SMMA data sets , it is the relative change for each motor that is of most interest. Using the DOE data, the Grade 2
$128 $76 $532 -$0.01 0.0% 5.3 $114

$70 $486 -$14.47 -2.9% 2.2

Grade 3 $141 $75 $537 $5.20 1.0% 6.7 $129

$68 $490 -$11.37 -2.3% 3.7

Base

steel-grade options both have lower LCC than the base motor. However, results based on the NEMA/SMMA average data show an increase in LCC at steel grade 3, with the LCC at steel grade 2 being equivalent to that for the base Stack change** Plus stack
$128 $73 $516 -$2.63 -0.5% 4.3 $119

$73 $505 $4.05 0.8% 7.2

$140 $72 $520 $1.41 0.3% 5.6 Plus 3 stack

$126 $72 $508 $7.47 1.5% 7.9

Plus 3 stack
$152 $71 $526 $7.36 1.4% 6.7

motor. Using the DOE data, the stacklength options moderately increase the LCC relative to the base motor, while the increase in LCC is more pronounced in the results based on the NEMA/ SMMA data. Stack change

Plus 2 stack

Plus 2 stack38806 Federal Register /Vol. 71, No. 131 /Monday, July 10, 2006 /Proposed Rules

TABLE 5.-IMPACTS OF EFFICIENCY IMPROVEMENT ON TYPICAL END USER, POLYPHASE 1 HORSEPOWER, DOE DATA* Steel grade Grade A (base) Motor Price

- Buyer"

......................................................... Annual Operating Cost .................................................... Life-Cycle Cost (7.5% DR) .............................................. Change in LCC (WRT Base) ........................................... Percent Change in LCC ................................................... Payback Period (years) ...................................................

* Data refer to a specific typical motor. ** Based on actual motor price in Grainger catalog.

Grade 1 (base) Grade B+
$124 $96 $736 -$10.49 -1.4% 2.0 Plus stack
$126 $97 $747 $0.86 0.1% 7.3 $140

$95 $748 $1.69 0.2% 6.9

TABLE 6.-IMPACTS OF EFFICIENCY IMPROVEMENT ON TYPICAL END USER, POLYPHASE 1/2 HORSEPOWER, NEMA/SMMA DATA Steel grade *

Motor Price-Buyer *** ............................... Annual Operating Cost

............................ Life-Cycle Cost (7.5% DR ) ...................... Change in LCC (WRT Base ) ................... Percent Change in LCC ........................... Payback Period (years ) ...........................

* Data are average of four manufacturers. ** Data reflect costs and performance of a typical motor.

- Estimated by DOE based on Grainger catalog prices.
3. National Energy Savings and Consumer Impacts The Department estimated national energy savings and consumer impacts of energy conservation standards for the considered small motors using its own engineering analysis data and the NEMA/SMMA Working Group data. The Department assumed that energy conservation standards would take effect in 2010, and estimated cumulative energy savings and NPV impacts relative to alternative base cases. Grade 2
$138 $51.9 $469 -$0.02 0.0% 6.4 $151

$50.9 $475 $6.02 1.3% 8.4 M47

$143 $93 $733 -$12.98 -1.7% 4.1

Base

The results using the Department's analysis of design options indicatecumulative energy savings for capacitorstart, induction run-small motors ranging from 0.47 to 0.59 quad (see table 7). The corresponding NPV ranges from $0.28 to $0.35 billion. The results based on the data provided by the NEMA/ SMMA Working Group, on its own initiative, show lower energy savings and economic benefits. The results using the Department'sanalysis of design options for threephase small motors indicate cumulative energy savings from 0.14 to 0.19 quad Stack change** Plus stack $136 $50.2 $456 $6.48 1.4% 17.9 Stack change Plus 2 stack

Plus 2 stack
$146 $49.7 $463 $12.96 2.9% 17.9 Plus 3

Stack $148 $95 $752 $6.14 0.8% 8.1

Plus 3 stack $156 $49.5 $472 $22.14 4.9% 23.9

(see table 8 ). The corresponding NPV ranges from $0.08 to $0.11 billion. For the three-phase motors, the Department did not estimate national impacts using the data provided by the NEMA/SMMA Working Group, on its own initiative,because these data were based on a onehalf horsepower motor instead of the more typical one-half horsepower size.The NEMA/SMMA data for halfhorsepower motors show some efficiency gains, but with an increase in LCC, which would lead to a negative NPV. TABLE 7.-CUMULATIVE ENERGY AND CONSUMER IMPACTS OF ENERGY EFFICIENCY IMPROVEMENT FOR 1/ 2 HORSEPOWER CAPACITOR START-INDUCTION- RUN MOTORS PROJECTED TO BE SOLD IN THE 2010-2030 PERIOD*

Future scenario Energy savings (quads)

DOE NEMA/SMMA (year 2005 dollars in billions, NPV discounted at 7 percent to

2005) DOE Low-efficiency

-gain base case , low shipments growth

................................... Low-efficiency

-gain base case , high shipments growth

.................................. Moderate-efficiency

-gain base case , low shipments growth

........................... Moderate-efficiency

-gain base case, high shipments growth

.........................Grade 3

0.54 0.59 0.47 0.51 0.19

0.21 0.12 0.12 0.33

0.35 0.28 0.30 NEMA/ SMMA

0.04 0.04 -0.05 -0.05*The values given for each scenario correspond to the design option with the combination of highest energy savings and most favorable consumer NPV.Federal Register /Vol. 71, No. 131 /Monday, July 10, 2006 /Proposed Rules 38807

TABLE 8.-CUMULATIVE ENERGY AND CONSUMER IMPACTS OF ENERGY EFFICIENCY IMPROVEMENT FOR ONEHORSEPOWER THREE-PHASE MOTORS PROJECTED To BE SOLD IN THE 2010-2030 PERIOD*

Future scenario Energy savings (quads)

DOE NEMA/SMMA NPV (year 2005 dollars in billions, discounted at 7 percent to

2005)
DOE Low-efficiency-gain base case, low shipments growth ................................... Low-efficiency-gain base case, high shipments growth .................................. Moderate-efficiency-gain base case, low shipments growth ........................... Moderate-efficiency-gain base case, high shipments growth ......................... 0.17 0.19 0.14 0.15 (I) (') (') (') 0.10

0.11 0.08 0.09 NEMA/ SMMA

(') (/') (1)*The values given for each scenario correspond to the design option with the combination of highest energy savings and most favorable consumer NPV. 1 Not available.

The differences between the results using the Department's analysis of design options and those using the data that the NEMA/SMMA Working Group provided on its own initiative reflect differences in estimates of the efficiency and cost increases associated with different design options. D. Discussion 1. Significance of Energy Savings Section 346(b)(1) of EPCA (42 U.S.C. 6317(b)(1)) mandates the Department to determine whether energy conservation standards for small motors would result in "significant energy savings." NEMA commented that energy conservation standards for the considered small motors are not likely to save the threshold amount of one quad. (NEMA, No. 1 at p. 1) While the term "significant" is not defined in the Act, the U.S. Court of Appeals, in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended "significant" energy savings in a similar context in section 325 of the Act (42 U.S.C. 6295(o)(3)(13)) to be savings that were not "genuinely trivial." Using the Department's analysis of design options, the estimated energy savings of 0.61 to 0.78 quad over a 20- year period for the considered small motors are comparable to those the Department found to be significant for room air conditioners, where energy savings projected to result from standards ranged from 0.36 to 0.96 quad over a 30-year period. 62 FR 50122, 50142 (September 24, 1997). The Department believes that the estimated energy savings for the considered small motors are not "genuinely trivial," and are, in fact, "significant." 2. Impact on Consumers Section 346(b)(1) of EPCA requires that energy conservation standards for small motors be economically justified (42 U.S.C. 6317(b)(1)). Using the methods and data described in section II.B., the Department conducted an LCC analysis to estimate the net benefits to users from increased efficiency in the considered small motors. The Department then aggregated the results from the LCC analysis to the national level to estimate national energy savings and national economic impacts. Given the results on energy savings and economic benefits, the Department concluded that there is also likely to be reduced emissions from decreased electricity generation, decreased demand for the construction of electricity power plants, and potentially net indirect employment benefits fromshifting expenditures from the capitalintensive utility sector to consumer expenditures. While the Department did not quantify these potential benefits, it concluded that the benefits are likely to be positive based on the results of the Department's analyses regarding energy conservation standards for similar products. The Department will provide detailed estimates of such impacts as part of the standards rulemaking process that will result from this determination. III. Conclusion A. Determination Based on its analysis of the information now available, the Department has determined that energy conservation standards for certain small electric motors appear to be technologically feasible and economically justified, and are likely to result in significant energy savings. Consequently, the Department willinitiate the development of energyefficiency test procedures and standards for certain small electric motors. All design options addressed in today's determination notice are technologically feasible. The Department's data, and data submitted by manufacturers, on their own initiative, show that the considered technologies are available to all manufacturers. These technologies include increased use of higher-grade steel, and greater amounts of electrical steel. The machinery and tools used to produce more-energy-efficient small motors are generally available to manufacturers. The scenarios examined in the Department's analysis show that there is potential for significant energy savings. The combined savings for capacitor-start and polyphase motors range from 0.61 to 0.78 quad using DOE's data. They are lower using the NEMA/SMMA data. For the considered capacitor-start, induction-run motors and using the DOE engineering data, all of the scenarios evaluated would result in economic benefits to the Nation as shown by the positive NPV. For the same motors, using the NEMA/SMMA data, three of the four scenarios evaluated have positive NPV. For the considered three-phase motors and using the DOE engineering data, all of the scenarios evaluated have positive NPV for at least one design option (national NPV was not calculated for three-phase motors based upon the NEMA/SMMA engineering data, because the data provided were for an unrepresentative size ). While it is still uncertain whether further analyses will confirm these findings, the Department believes that standards for considered small motors appear economically justified based on balanced consideration of the information and analysis available to the Department at this time. The Department has not produced detailed estimates of the potential adverse impacts of a national standard on manufacturers or on individual categories of users. The Department isinstead relying on the presence of highefficiency designs in the market place today as an indicator of the probable economic feasibility for manufacturers to exclusively produce high-efficiency designs if required by standards. During38808 Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Proposed Rules

the course of the standards rulemaking process, the Department will perform a detailed analysis of the impact of possible standards on manufacturers, as well as a more disaggregated assessmentof their possible impacts on usersubgroups. B. Future Proceedings The Department will begin, therefore, the process of establishing testing requirements for small electric motors, which it expects will result in the publication of a proposed rule. During the rulemaking process, the Department will consider the Institute of Electrical and Electronics Engineers (IEEE) Standard 114-2001, Test Procedures for Single-Phase Induction Motors. The Department also will begin a proceeding to consider establishment of energy conservation standards for small electric motors. Throughout the rulemaking process, the Department intends to adhere to the provisions of the Process Rule, where applicable. During the standards rulemaking, the Department will review and analyze the likely effects of industry-wide voluntary programs, such as ENERGY STAR and NEMA Premium©. In addition, any efforts by NEMA and SMMA to strengthen their efforts to promote voluntary standards for small motors will be considered. The Department will collect additional information about design options, inputs to the engineering and LCC analyses, and potential impacts on the manufacturers and consumers of small motors. During the standards rulemaking process, the Department will evaluate whether standards are technologically feasible and economically justified, and are likely to result in significant energy savings in accordance with the requirements of EPCA. (42 U.S.C. 6295(o)) If further analyses reveal that standards are not warranted, DOE will revise this determination and will not proceed to promulgate standards. Issued in Washington, DC, on June 27, 2006. Alexander A. Karsner, Assistant Secretary, Energy Efficiency and Renewable Energy. [FR Doc. E6-10437 Filed 7-7-06; 8:45 am] BILLING CODE 6450-01-P DEPARTMENT OF COMMERCE Patent and Trademark Office
37 CFR Part 1 [Docket No.: PTO-P

-2005-0024] RIN 0651-AB95 Changes To Information Disclosure Statement Requirements and Other Related Matters AGENCY : United States Patent and Trademark Office, Commerce. ACTION : Notice of proposed rulemaking. SUMMARY : The United States Patent and Trademark Office (Office) is proposing changes to information disclosure statement (IDS) requirements and other marked to the attention of Hiram H. Bernstein. Although comments may be submitted by mail or facsimile, the Office prefers to receive comments via the Internet. Comments may also be sent by electronic mail message over the Internet via the Federal eRulemaking Portal. See the Federal eRulemaking Portal Web site (http:// www.regulations.gov) for additional instructions on providing comments via the Federal eRulemaking Portal. The comments will be available for public inspection at the Office of Patent Legal Administration, Office of the Deputy Commissioner for Patent Examination Policy, currently located at Room 7D74 of Madison West, 600 Dulany Street, Alexandria, Virginia, and related matters to improve the quality will be available through anonymous and efficiency of the examination file transfer protocol (ftp) via the process. The proposed changes will Internet (address: http:// enable the examiner to focus on the www.uspto.gov). Because comments will relevant portions of submitted be made available for public inspection, information at the very beginning of the information that is not desired to be examination process, give higher quality made public, such as an address or first actions, and minimize wasted phone number, should not be included steps. The Office is proposing the following changes relating to submissions of IDSs by applicants/ patent owners: Before a first Office action on the merits, require additional disclosure for English language documents over twenty-five pages, for any foreign language documents, or if more than twenty documents are submitted, but documents submitted in reply to a requirement for information or resulting from a foreign search or examination report would not count towards the twenty document limit; permit the filing of an IDS after a first Office action on the merits only if certain additional disclosure requirements have been met; and eliminate the fees for submitting an IDS. Updates to the additional disclosure requirements would be required as needed for every substantive amendment. The Office is also proposing to revise the protest rule to better set forth options that applicants have for dealing with unsolicited information received from third parties. DATES : To be ensured of consideration, written comments must be received on or before September 8, 2006. No public hearing will be held. ADDRESSES : Comments should be sent by electronic mail over the Internet addressed to: AB95.comments@uspto.gov. Comments may also be submitted by mailaddressed to: Mail Stop CommentsPatents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-1450; or by facsimile to (571) 273-7707, in the comments. FOR FURTHER INFORMATION CONTACT: Hiram H. Bernstein ((571) 272-7707), Senior Legal Advisor, Office of Patent Legal Administration, Office of the Deputy Commissioner for Patent Examination Policy; or Robert J. Spar ((571) 272-7700), Director of the Office of Patent Legal Administration, Office of the Deputy Commissioner for Patent Examination Policy, directly by phone, or by facsimile to (571) 273-7707, or bymail addressed to: Mail Stop CommentsPatents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-1450. SUPPLEMENTARY INFORMATION : The Office is proposing changes to the rules of practice in title 37 of the Code of Federal Regulations (CFR) to revise IDS practice. The Office is specifically proposing changes to §§ 1.17, 1.48, 1.55, 1.56, 1.97, 1.98, 1.99 1.291, 1.312, 1.555, and 1.948. The Office will post a copy of this notice on its Internet Web site (http:// www.uspto.gov). Additionally, individuals or organizations that need a copy for the purpose of providing comments, may send a request by phone or e-mail to Terry Dey at ((571) 272- 7730 or terry.dey@uspto.gov) to receive an e-mail copy of the notice. When making a request for an e-mail copy, it is requested that persons please specify whether they wish to receive the document in MS-Word, WordPerfect, or HTML format. The following definitions are intended to facilitate an understanding of the discussion of the proposed rules.

## Analysis of Energy Conservation Standards for Small Electric Motors 

## Technical Support Document

Final Draft



### June 2006

Building Technologies Office of Energy Efficiency and Renewable Energy

U.S. Department of Energy

### TABLE OF CONTENTS

EXECUTIVE SUMMARY ........................................................................................................................................1 PURPOSE ................................................................................................................................................................ 1 SCOPE OF MOTORS ANALYZED ....................................................................................................................... 1 METHODOLOGY .................................................................................................................................................. 1 SUMMARY OF RESULTS ..................................................................................................................................... 2 CHAPTER 1. INTRODUCTION .............................................................................................................................. 3 1.1 BACKGROUND ....................................................................................................................................... 3 1.2 OVERVIEW OF CONSIDERED SMALL MOTORS .............................................................................. 4 1.3 APPLICATIONS FOR CONSIDERED SMALL MOTORS .................................................................... 5 1.4 STUDY APPROACH ................................................................................................................................ 6 CHAPTER 2. GENERAL CHARACTERIZATION OF SMALL ELECTRIC MOTORS ................................ 7 2.1 THREE-PHASE, SQUIRREL

- CAGE INDUCTION MOTORS ................................................. ............. 7 2.2 SINGLE

-PHASE, SQUIRREL

- CAGE INDUCTION MOTORS ............................................................. 8 2.3 ENERGY EFFICIENCY : BASIC CONSIDERATIONS

.......................................................................... 9 CHAPTER 3. THE MARKET FOR CONSIDERED SMALL MOTORS .......................................................... 11 3.1 ANNUAL SHIPMENTS

......................................................................................................................... 11 3.2 FEATURES OF CONSIDERED SMALL MOTORS

............................................................................. 11 3.3 RANGE OF ENERGY EFFICIENCIES

................................................................................................. 14 3.4 MARKET STRUCTURE ........................................................................................................................ 15 3.5 MOTOR PURCHASING

........................................................................................................................ 17 CHAPTER 4. ENGINEERING ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF CONSIDERED SMALL MOTORS ........................................................................................................................ 19 4.1 APPROACH ............................................................................................................................................ 19 4.2 EFFICIENCY AND COST IMPACTS OF DESIGN OPTIONS ............................................................ 22 CHAPTER 5. LIFE-CYCLE COST ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF SMALL MOTORS ................................................................................................................................................... 27 5.1 METHOD AND DATA .......................................................................................................................... 27 5.2 RESULTS FOR CAPACITOR-START, INDUCTION-RUN MOTOR DESIGN OPTIONS ............... 30 5.3 RESULTS FOR POLYPHASE MOTOR OPTIONS ............................................................................. 32 CHAPTER 6. POTENTIAL NATIONAL ENERGY AND CONSUMER IMPACTS OF ENERGY CONSERVATION STANDARDS FOR SMALL MOTORS ............................................................................... 36 6.1 METHOD ................................................................................................................................................ 36 6.2 ESTIMATES OF POTENTIAL ENERGY AND CONSUMER IMPACTS .......................................... 39 APPENDIX A. INFORMATION COLLECTION PROCESS ON USE OF SMALL MOTORS .............. 44 APPENDIX B. METHOD FOR ESTIMATING CONSIDERED SMALL MOTORS SHIPMENTS BY INDUSTRY SECTOR ... ........................................................................................................................................... 46 APPENDIX C. SMALL MOTORS DISCOUNT-RATE CALCULATIONS ............................................... 48

### LIST OF FIGURES

Figure 1.1 Total Domestic Shipments of Fractional Horsepower Motors in 1999 .................. 5 

### Figure 3.1 Capacitor-Start, Induction-Run Motors - Shipments in 2000 .............................. 12 Figure 3.2 Small Polyphase Motors - Shipments in 2000 ..................................................... 13 Figure 3.3 Figure 4.1 Listed Efficiency (full load) of Small Motor Models ...........................................

Increase in Efficiency and Cost from Steel-grade Change, Capacitor- Start, %2 

### 14 horsepower, NEMA/SMMA data* ............................................................................................... 22 Figure 5.1 Capacitor-start %2 horsepower -- DOE Data .......................................................... 31 Figure 5.2 Capacitor-start '/2 horsepower -- NEMA/SMMA data .............................. Figure 5.3 Polyphase One horsepower -- DOE Data ............................................................. 33 Figure 5.4 Polyphase %2 horsepower -- NEMA/SMMA data ................................................. 34 Figure 6.1 Capacitor-Start Motors, National Energy and Consumer Impacts, DOE Analysis.. 

### 39 Figure 6.2 Capacitor-Start Motors, National Energy and Consumer Impacts, NEMA/SMMA data ............................................................................................................................... 40 Figure 6.3 Polyphase Motors, National Energy and Consumer Impacts, DOE Analysis ...... 42


### LIST OF TABLES Table 1.1 Major Applications for Considered Small Motors ...................................................... 6 Table 3.1 Leading Manufacturers of Considered Small Motors Sold in the U.S ..................... 15 Table 3.2 Average Use Characteristics for General Purpose Small Motors by Type of Application

................................................................................................................................... 16 Table 3.3 Estimated Annual Shipments of General Purpose Small Motors by Type of Application ................................................................................................................................... 17 Table 3.4 Motor Purchases ........................................................................................................ 17 Table 4.1 Electrical Steel Options Considered .................................. 20

......................... .............. Table 4.2 Capacitor-start DOE #4K , % 2 horsepower, 4-pole, ODP ........................................... 22 Table 4.3 Capacitor

- start DOE #6K, % 2 horsepower , 4-pole, ODP ........................................... 23 Table 4.4 Capacitor

- start NEMA, % 2 horsepower, 4-pole, ODP ............................................... 23 Table 4.5 Capacitor

- start DOE #4K, 1/2 horsepower, 4-pole, ODP ........................................... 23 Table 4.6 Capacitor

- start DOE #6K, 1/2 horsepower, 4-pole, ODP ........................................... 23 Table 4.7 Capacitor

- start NEMA, % 2 horsepower, 4-pole, ODP ............................................... 24 Table 4.8 Polyphase DOE #3N, % 2 horsepower, 4-pole, ODP .................................................. 24 Table 4.9 Polyphase DOE #2N, % 2 horsepower, 4-pole, ODP .................................................. 24 Table 4.10 Polyphase NEMA, %2 horsepower, 4-pole, ODP .................................................. 24 Table 4.11 Polyphase DOE #3N, One horsepower , 4-pole, ODP .......................................... 25 Table 4.12 Polyphase DOE #3N, % 2 horsepower, 4-pole, ODP .............................................. 25 Table 4.13 Polyphase DOE #2N, 1/2 horsepower , 4-pole, ODP .............................................. 25 Table 4.14 Polyphase NEMA, %2 horsepower, 4-pole, ODP .................................................. 26 Table 4.15 Polyphase DOE #3N, One horsepower , 4-pole, ODP .......................................... 26 Table 5.1 Calculated Average Purchase Prices for Prototype Motors ...................................... 27 Table 5.2 Electricity Prices ....................................................................................................... 29 Table 5.3 Impacts of Efficiency Improvement on Typical End User , Capacitor

- Start, %2 horsepower, DOE Data * ............................................................................................................... 30

iiTable 5.4 Impacts of Efficiency Improvement on Typical End User, Capacitor-Start, 1/2

horsepower, NEMA/SMMA data ................................................................................................. 31 Table 5.5 Impacts of Efficiency Improvement on Typical End User, Polyphase One horsepower, DOE Data* ............................................................................................................... 33 Table 5.6 Impacts of Efficiency Improvement on Typical End User, Polyphase 1/2 horsepower, NEMA/SMMA data ...................................................................................................................... 34 Table 6.1 Cumulative Energy and Consumer Impacts of Energy Efficiency Improvement for Capacitor-Start, Induction-Run Motors Projected to be Sold in the 2010-2030 Period* ............. 41 Table 6.2 Cumulative Energy and Consumer Impacts of Energy Efficiency Improvement for Polyphase Motors Projected to be Sold in the 2010-2030 Period* .............................................. 42 Table C.1 Cost of Capital Factors .............................................................................................. 49 Table C.2 Real Discount Rates by Small Motors Ownership Category ..................................... 50

iii

### ABBREVIATIONS AND ACRONYMS

AC alternating current
Btu British thermal unit Btu/h British thermal units per hour CAPM Capital Asset Pricing Model CSCR capacitor-start, capacitor-run CSIR capacitor-start, induction-run
DC direct current DOE Department of Energy EIA Energy Information Administration EPCA Energy Policy and Conservation Act ERP equity risk premium GDP gross domestic product
hertz Hz 

### hp horsepower HVAC heating, ventilation, and air conditioning
Hz hertz IZR the expression of heat loss in watts where I is measured current and R is resistance LBNL Lawrence Berkeley National Laboratory 

### LCC life-cycle cost NAICS North American Industry Classification System
NEMA National Electrical Manufacturers Association

ivNPV net present value

ODP open drip-proof OEM original equipment manufacturer PSC permanent-split capacitor 

### PU per unit Quad (one) quadrillion (1015) British thermal units (Btu) or 293.1 billion kilowatt hours rpm revolutions per minute 

### rps revolutions per second
SMMA Small Motors and Motion Association

V

### EXECUTIVE SUMMARY

PURP OSE Section 346(b)(1) of the Energy Policy and Conservation Act (EPCA) (42 U.S.C. 6317(b)(1)) requires the Department of Energy (DOE or the Department) to determine whether energy conservation standards for certain small electric motors would be technologically feasible and economically justified, and would result in significant energy savings. To have a basis for a determination, the Department performed the analysis described in this document.



### SCOPE OF MOTORS ANALYZED Under section 340(13)(F) of EPCA, 42 U.S.C. 6311( 13)(F), the term " small electric motor" means a National Electrical Manufacturers Association (NEMA) general

-purpose, alternatingcurrent, single

- speed, induction motor, built in a two

- digit frame-number series in accordance with NEMA Standards Publication MG1-1987, "Motors and Generators ." The two- digit frame series encompasses NEMA frame sizes 42, 48, and 56

. The horsepower ratings for the two-digit frame series range from 1/4 to three horsepower

. These motors operate at 60 Hertz and have either a single-phase or a three

-phase (polyphase) electrical design. Section 346 (b)(3) of EPCA, 42 U.S.C. 6317(b)(3), also states that a standard prescribed for small electric motors shall not apply to any small electric motor that is a component of a covered product under section 332(a) of EPCA or covered equipment under section 340. Among single-phase, two-digit frame motors, only capacitor-start motors-including both capacitor-start, induction-run (CSIR) and capacitor-start, capacitor-run (CSCR) motors-can meet the torque requirements for NEMA general-purpose motors. Among three-phase, small motors, servo motors do not meet the NEMA performance requirements for general-purpose motors. Hence, the analysis covers only non-servo three phase small motors. Market research indicates that the annual commercial sales volume of CSIR, CSCR, and polyphase small motors meeting the EPCA definition is approximately four million units for capacitor-start (with 95% CSIR and 5% CSCR) and one million units for polyphase designs. These motors are used in a wide variety of commercial and industrial applications, with the largest being pumping equipment and commercial/industrial heating, ventilating, and air conditioning equipment rated over 240,000 British thermal units per hour (Btu/h).

METHODOLOGY The analysis consists of five major elements: (1) market research that defines the commercial and industrial applications of small motors; (2) engineering analysis that estimates the relationship between efficiency and cost; (3) life-cycle cost (LCC) analysis which estimates the costs and benefits to users from increased efficiency in small motors; (4) national energy savings analysis that determines the potential energy savings on a national scale; and (5) national consumer impacts analysis that estimates potential direct economic costs and benefits that may result from small motor energy conservation standards. The Department conducted actual independent testing of a sample of motors to provide input data for these analyses. In conducting the engineering and LCC analyses, DOE used two sets of data. It obtained the first set from the motor testing and design costing conducted by an independent motor industry expert. The

1Department obtained the second set of engineering input data from consultations with a working

group comprised of major small motor manufacturers.



### SUMMARY OF RESULTS Energy-efficiency-enhancing design options that DOE considered have the energy savings potentials described below. The Department presents a range of national economic impacts for the considered small motors. The Department presents a range of results because it obtained cost and efficiency information through two sets of engineering data, as described above. Moreover, the Department considered four scenarios based on different assumptions about shipment growth and base case efficiency trends. 

### Capacitor-start, induction-run motors The analysis based on DOE's motor testing and costing shows potential cumulative energy savings from motor efficiency improvement ranging from 0.47 to 0.59 quadrillion Btu (quad) of energy over the period 2010 to 2040 for motors sold between 2010 and 2030. The corresponding cumulative economic benefit for consumers, expressed in terms of net present value (NPV) of benefits, ranges from $0.28 billion to $0.35 billion. 

### Analysis based on average data from the NEMA/ Small Motors and Motion Association (SMMA) working group indicates lower potential energy savings and economic benefits. The highest savings scenario, which in this case refers to the stack-change design option, shows energy savings of 0.21 quad with an NPV of $0.04 billion. In the scenario with least savings, the all design-options have negative NPV. Polyphase motors The analysis based on DOE's motor testing and costing shows cumulative energy savings from steel-grade changes ranging from a low of 0.14 quad to a high of 0.19 quad over the period 2010 to 2040 for motors sold between 2010 and 2030. The corresponding cumulative NPV range is from $0.08 billion to $0.11 billion. For polyphase motors, DOE did not estimate national impacts using the NEMA/SMMA data because the manufacturers' analysis was based on a 1/2 horsepower motor that is not representative of the size of motors in this product class which are more typically one horsepower in size.

2

### CHAPTER 1. INTRODUCTION

1.1 BACKGROUND Under 346(b)(1) of the Energy Policy and Conservation Act (EPCA), 42 U.S.C. 6317(b)(1), the Department of Energy (DOE or the Department) is required to determine whether energy conservation standards for certain small electric motors would be technologically feasible and economically justified, and would result in significant energy savings. The purpose of this draft analysis is to provide a basis on which the Department can make its determination. Under section 340(13)(F) of EPCA, 42 U.S.C. 6311(13)(F), the term "small electric motor"means a National Electrical Manufacturers Association (NEMA) general-purpose, alternatingcurrent, single-speed induction motor, built in a two-digit frame-number series in accordance with NEMA Standards Publication MG1-1987, "Motors and Generators." The two-digit frame series encompasses NEMA frame series 42, 48, and 56. The horsepower ratings for the two-digit frame series range from 1/4 to three horsepower. These motors operate at 60 Hertz and have either a single-phase or a three-phase (also known as "polyphase") electrical design. Typical applications for such small electric motors include pumps, fans and blowers, woodworking machinery, conveyors, air compressors, commercial laundry equipment, service industry machines, food processing machines, farm machinery, machine tools, packaging machinery, and major residential and commercial equipment. EPCA section 346(b)(3) states that any energy conservation standard prescribed under subsection (b)(2) "shall not apply to any small electric motor which is a component of a covered product under section 322(a) or a covered equipment under section 340." Such covered products and equipment that contain small electric motors include residential air conditioners and heat pumps, furnaces, refrigerators and freezers, clothes washers and dryers, and dishwashers; and commercial package air conditioning and heating equipment, packaged terminal air conditioners and heat pumps, and warm-air furnaces. EPACT 2005 increased the number of products covered under EPCA. In response the Department adjusted its estimates and forecasts of the shipments of considered small motors to exclude those motors that are a component of these newly coveredproducts. Newly covered products include commercial/industrial heating, ventilating, and airconditioning equipment rated from 240,000 to 760,000 British thermal units per hour (Btu/h), and commercial clothes washers. 

### As a result of the above definitions and exclusions, small electric motors covered by EPCA section 346(b)(1) only comprise about four percent of the total shipments of small electric motors. Nevertheless, these motors, which the Department identifies here as "considered small motors," account for a major portion of the energy consumed by the total population of small motors because of their size and use.

3

### 1.2 OVERVIEW OF CONSIDERED S MALL MOTORS

As described above, the motors considered in this report are a subset of the total population of small electric motors. Further, the term "general purpose" in the EPCA definitiona of a small motor is tied to the NEMA Standards Publication MG1-1987 performance requirements that NEMA established for general purpose motors, such as the minimum levels for breakdown and locked-rotor torque for small electric motors presented in MG1-1987 paragraph 12.32.Among considered, single-phase, two-digit motors, those motors with shaded-pole, permanentsplit capacitor designs, and those with split-phase designs do not meet the torque requirements of NEMA general-purpose motors. Capacitor-start motors, including both capacitor-start, induction-run (CSIR) and capacitor-start, capacitor-run (CSCR) motors, can provide the torque requirements for NEMA general purpose motors. Other single-phase motors, such as universal,drip-proof, and series alternating current (AC) motors, are designed for definite or specialpurpose applications. The CSCR motor is not interchangeable with the CSIR motor in most cases, because of differences in size and starting torque. The addition of a second running capacitor to the motor changes the dimensional envelope of the motor but not the frame size. In this analysis, the Department considers the CSIR and CSCR motors as separate product classes, but analyzes in detail only CSIR motors since they represent 95% of sales of capacitor start motors. Although CSIR and CSCR are not interchangeable for all applications, there may be some applications for which the CSCR offers a higher-efficiency alternative to a CSIR motor. Among polyphase, small motors, synchronous-stepper motors cannot provide the torque requirements of NEMA general-purpose motors, while polyphase servo motors are for definite purpose applications. Polyphase non-servo motors do meet the NEMA requirements for general purpose motors. 

### For the purposes of this analysis, the considered small electric motors that meet the EPCA definition fall into three product classes:

o Single-phase, capacitor-start, induction-run motors • Single-phase, capacitor-start, capacitor-run motors o Polyphase (non-servo) motors

a EPCA does not define the term "general purpose motor," although it does define the terms "definite purpose motor" and "special purpose motor." According to EPCA, "definite purpose motor" means "any motor designed in standard ratings with standard operating characteristics or standard mechanical construction for use under service conditions other than usual or for use on a particular type of application and which cannot be used in most general purpose applications." (42 U.S.C. 6311 (13)(B)). Likewise, "special purpose motor" means "any motor, other than a general purpose motor or definite purpose motor, which has special operating characteristics or special mechanical construction, or both, designed for a particular application." (42 U.S.C. 6311 (13)(C)). Consequently, the Department must derive the term "general purpose" by eliminating those definite and special purpose motors, and subsequently must define the term within the context of NEMA performance characteristics that can operate successfully in many different applications.

4These classes accounted for close to four percent of total domestic shipments (capacitor start -

three percent and other polyphase - one percent) of all fractional horsepower motors in 1999 (Figure 1.1). This is because the largest categories of small motors do not fit the starting torque requirements for "general purpose" motors as defined by NEMA Standards Publication MG1- 1987.

Source: US Census Bureau, C :ri-e.zr Iiid trim Reports, Motors and Generators - . 335H Figure 1.1 Total Domestic Shipments of Fractional Horsepower Motors in 1999 Not all capacitor-start and polyphase non-servo motors are NEMA general-purpose motors. Those in the "definite-purpose" category include many motors used for fans and blowers and specific types of pumps.



### 1.3 APPLICATIONS FOR CONSIDERED SMALL MOTORS The applications for the considered small motors are listed below:

5Table 1.1 Ma j or Applications for Considered Small Motors Pumps and pumping equipment 

### Commercial and industrial HVAC / refrigeration equipment Farm machinery Conveyors 

### Industrial and commercial fans and blowers Machine tools Textile machinery Woodworking machinery Food products machinery Air and gas compressors Packaging machinery 

### General industrial machinery Commercial laundry machinery Service industry machinery Many motors used in pumps and pumping equipment and industrial and commercial fans and blowers are definite

-purpose motors , but a significant number of general

-purpose motors are also used

. In commercial and industrial heating, ventilating , and air-conditioning (HVAC) equipment, the HVAC equipment that is covered under other EPCA requirements (section 340) is rated at less than 760,000 Btu per hour (cooling capacity).



### 1.4 ST UDY APPROACH The Department ' s analyses consisted of five major components: • Market research to better understand usage patterns of considered motors; • Engineering analysis to estimate the impact on efficiency and cost of feasible design options; 

### • Life-cycle cost (LCC) analysis to estimate the benefits and costs of efficiency improvement for end

-users of small motors; • National energy savings analysis to estimate the potential national energy savings from efficiency improvement of considered motors; and 

### • National consumer impacts analysis to estimate the potential direct economic costs and benefits resulting from efficiency improvement of considered motors. In the chapters that follow, this report first discusses the general characteristics of small motors in Chapter 2, and then discusses the market research, engineering analysis, and LCC analysis in Chapters 3 through 5 respectively

. Chapter 6 discusses both the national energy saving and national consumer economic impacts. Lastly , Chapter 7 provides the summary and concluding commentary of this report.

6

### CHAPTER 2. GENE RAL CHARACTERIZATION OF SMALL ELECTRIC MOTORS

2.1 THREE-PHASE, SQUIRREL-CAGE INDUCTION MOTORS Three-phase, squirrel-cage induction motors are the prime movers for the majority of commercial and industrial sector mechanical applications requiring more than a few horsepower, and in many smaller applications as well. The typical three-phase induction motor employs a wound stator and a "squirrel cage" rotor. Magnetic force acting between the stator and rotor units produces motor torque. The stator consists of a hollow cylindrical core formed by a stack of thin steel laminations. Insulated copper windings are assembled into slots formed around the inner circumference of the core. The stator winding carries current through one slot and then back though a companion slot located approximately one pole pitch distant from the first. For atwo-pole motor, the pole pitch is half the circle, while for four- or six-pole machines it is onequarter or one-sixth of the circle, respectively. The rotor unit consists of a laminated steel core press fitted to the steel shaft. Like the stator, the rotor core also has windings set into slots, but these are deployed around its outer circumference. Moreover, in the squirrel-cage rotor configuration, the rotor windings consist of solid conductor bars that are interconnected at either end with solid-conductor end rings. Absent the laminated steel core, this assembly of bars and end rings would look like a "squirrel cage"; hence the nomenclature for this very sturdy and cost-effective construction. When the stator windings are energized by a three-phase electrical source, a radially directed magnetic flux is established in the "air gap" between the rotor and the stator. This flux rotates at a speed determined by the electrical frequency and number of poles given by the stator-winding configuration. For example, with 60-hertz (Hz) excitation and a two-pole (or one-pole-pair) winding, the flux rotates at a so-called "synchronous" speed of 60 revolutions per second (rps) or 3,600 revolutions per minute (rpm). When an application exerts a torque on the motor, a difference arises between the synchronous speed and the actual speed of the motor which is termed "slip." Thus the fully loaded speed is slightly less than the synchronous motor speed. The flux produced by the energized stator windings envelops the rotor cage bars and, due to its motion, induces current to flow in these conductors. The interaction of the rotating stator flux and the rotor bar currents develops motor-drive torque. Important characteristics of the three-phase squirrel cage induction motor are simplicity, ruggedness, inherently high starting torque (without the start-assisting devices required for single-phase motors), and the potential to achieve high efficiency. Compared with larger motors, the efficiency of small (one horsepower and below), three-phase induction motors declines rapidly as the load drops below 70 percent of rated load. Polyphase motors in a two-digit NEMA frame size range from 1/4 horsepower to three horsepower, although the majority are one horsepower or less. They are available in two-, four-, or six-pole configurations (corresponding to speeds of 3500, 1750, or 1150 rpm, respectively). A four-pole configuration is the most common.

7

### 2.2 SINGLE-PHASE, SQUIRREL-CAGE INDUCTION MOTORS

The basic principal of operation of a single-phase, squirrel-cage, induction motor is similar to a three-phase induction motor. A rotating magnetic field is easily established with three-phase excitation of motor windings, as described in the preceding subsection. In a single-phase induction motor, two counter-rotating fields are produced which develop equal and opposite rotor torque components when the motor is at standstill. However, if means are provided to urge rotation in one direction or the other, net torque will be developed to sustain the rotation and drive the attached load. While the electromagnetic torque acting on the rotor of a three-phasemotor is relatively smooth and free from pulsating disturbances, this is not the case in the singlephase motor. In this instance, the torque may pulsate from zero to a maximum value at twice the power-line frequency-e.g., 120 Hz. In most applications, this is of little consequence, as the inertia of the motor and the driven load act to smooth out the torque pulsations. 

### The basic construction of the single-phase induction motor includes a rotor and stator; eachcontains a stack of electromagnetic grade steel laminations, as previously described for the threephase motor. The "squirrel cage" rotor has a series of aluminum bars cast lengthwise into the rotor laminations. These bars are connected with rings located at each end of the stack. The stator laminations contain a series of slots for the windings that are aluminum or copper wire. Two sets of windings are provided, at a 90°-phase difference. The "main" or "run" winding operates directly from line current, and stays energized as long as the motor is running. Single-phase motors are categorized according to the way the "start and run," "secondary," or "auxiliary" winding is used for starting the motor and then running it at normal speed. Widely used single-phase motor categories are: • The split-phase motor -- This configuration is the least costly. The start winding has a higher resistance-to-reactance ratio than the main winding, which is achieved by using a relatively small diameter wire. This reduces both the amount and the cost of the copper in the start winding and the space taken up in the stator slots by this winding. • The CSIR motor -- This configuration is a comparatively low-efficiency motor that provides higher starting torque than the split-phase motor. • The permanent-split capacitor (PSC) motor -- This configuration has a high potential efficiency depending on the design. • The CSCR motor -- This has an efficient run configuration, with a large capacitance at start-up providing a large starting torque. The start capacitance is typically three to five times the size of the run capacitor, but can be packaged compactly, because continuous operation (and the resulting heat dissipation) is not a consideration. 

### Split-phase and CSIR motors use the secondary winding for starting only; the capacitor-start version provides higher starting torque. The secondary winding uses a much smaller diameterwire energized for a limited time without overheating and automatically disconnected after startup by a centrifugal switch. In PSC and CSCR motors, the secondary winding continues

8operating when the motor is running. The capacitor in series with this winding shifts the phase

of the input voltage approximately 90°, so the two windings together create a rotating magnetic field. The benefits achieved by PSC and CSCR motors are the suppression of torque pulsations and the improved use of both the windings and the iron in the motor. These benefits increase the efficiency and the power factor of the motor, but at an added cost associated with the capacitor. Single-phase motors in a two-digit NEMA frame size range from 1/4 horsepower to one horsepower and are available in two-, four-, or six-pole configurations. A four-pole configuration is the most common.



### 2.3 ENERGY EFFICIENCY: BASIC CONSIDERATIONS The application of a motor to do work creates energy losses that are both external and internal to the motor. Losses that are external to the motor are influenced by the power factor of the motor. The power factor is the ratio of real power to apparent power, and ranges from zero to one. The real power (measured in watts) is used to create the useful work (and waste heat) of the motor. Reactive power (measured in volt-amps reactive) is used to create the magnetic field needed for the motor to operate, but it does not contribute to the mechanical power generated by the motor. 

### Internal energy losses are usually categorized as conductive, magnetic, mechanical, and stray. All of these energy losses appear as heat in the motor. Losses are strongly dependent on design and quality control of motor components. The conventional methods for reducing losses include increasing the amount of active material (e.g., the diameter of wire conductors); substituting a higher grade of steel for the magnetic components; improving the mechanical components and design (winding, bearings, and fan); and improving the quality control of components and assembly. These methods may increase either the motor cost or size if no other changes in the motor are made. The precise impacts on motor cost and efficiency will depend on how the designer makes tradeoffs between added performance from improved materials or design, and maintenance of the motor performance. A designer cannot ignore interaction among different motor losses in the process of optimizing. The I2R (the expression of heat loss in watts where I is measured current and R is resistance) of the rotor is a key loss, as are windage, friction, and stray losses. Options that may reduce the stray loss can increase the core loss, while those that can reduce the windage loss may increase the I2R loss.Often a measure that enhances efficiency improves motor performance such that other costsaving changes can be made to offset the cost of the efficiency improvement. An example of this is the use of more-expensive, high-permeability steel in place of iron. This leads to higher efficiency, smaller motor size, and improved torque, and also allows the volume of copper used in the motor to be reduced while maintaining performance. Various component additions to a single-phase motor are known to improve the efficiency while increasing the cost and usually changing the motor's dimensions. Adding an auxiliary winding

9with a capacitor, adding an auxiliary winding with a starting capacitor and switch, or adding an

auxiliary winding with starting capacitor, switch, and running capacitor to a single-phase motor can reduce energy losses, increase torque, and improve the power factor. The additional winding may be continuously energized as in the CSCR motor, or disconnected with a centrifugal switch as is often done in the CSIR motor. The CSCR motor has a switch added in series with the starting capacitor and adds a second running capacitor in parallel to the starting capacitor that is not switched out of the circuit after starting. The auxiliary winding and running capacitor of the CSCR motor contribute to motor output, allowing it to approach the efficiency of a polyphase motor.

10

### CHAPTER 3. THE MARKET FOR CONSIDERED SMALL MOTORS

For its determination analysis, the Department examined five aspects of the market structure of considered small motors. The first key piece of information for the Department's analysis is the size of the market including estimates of current shipments and estimates of long term shipment trends. Second, the Department examined the relative market shares of different small motors with different characteristics and features. Third, the Department reviewed the range of existing motor efficiencies in the market. Fourth, the Department investigated the market structure in terms of how considered electric motors are distributed and the proportion of motors used in different applications. And fifth, the Department examined how motor prices are affected by the distribution channel employed.

3.1 ANNUAL SHIPMENTS The historic trend in annual shipments of considered small motors is uncertain. Data from the U.S. Census Bureaua show little growth in the 1990s, but these data only include motors produced in the U.S.' NEMA provided confidential data on two-digit-frame-size, fractional-horsepower motor sales to domestic customers by NEMA manufacturers, covering the period from 1971 to 2001. These data, after interpolation, show an average annual growth rate of 1.5 percent. The three-phase and capacitor-start motors DOE is analyzing make up only around 20 percent of the motors covered by these data. A joint NEMA/SMMA survey in 2000 estimated U.S. sales of CSIR and polyphase motors at 5.4 and 1.3 million, respectively. CSIR motors accounted for approximately 95 percent of total shipments of capacitor-start motors.



### 3.2 FEATURES OF CONSIDERED SMALL MOTORS Figures 3.1 and 3.2 show the year-2000 market shares of considered small motors with different basic features (according to the NEMA/SMMA survey). Open motors account for 93 percent of total CSIR shipments. The most important size categories (with roughly equal shares) are 1/3, 1/2, and 3/4 horsepower. The average size is 1/2 horsepower. Four-pole motors account for a somewhat higher share than two- and six-pole motors.b For polyphase motors, enclosed motors account for two-thirds of total shipments, reflecting the greater use of such motors in industrial environments. The largest sales categories are 3/4 and one horsepower. The average size is one horsepower. Four-pole motors account for two-thirds of the total.

a The Department has included all single-phase motors, one horsepower and over, with capacitor-start motors. b The shares of two- and six-pole motors are estimated values, as complete data were lacking.

11N"du i 1:Er of P.ugs

Figure 3.1 Capacitor

- Start, Induction

-Run Motors

- Shipments in 2000

12Hci- eJ + til; sire.- Figure 3.2 Small Polyphase Motors

- Shipments in 2000

13

### 3.3 RANGE OF ENERGY EFFICIENCIES

The Department collected data from manufacturers' catalogs on the listed nominal, full-load efficiency and other features of more than 700 different models.2 While these data provide an approximate picture of the spread of efficiencies on the market, two caveats are necessary. First, the reported efficiencies are not precisely comparable among different manufacturers, since they are not all based on the same test procedure. Second, many of the models likely have a low sales volume; thus, the spread of available model data does not portray any information about relative shipments of models. Figure 3.3 shows the full-load efficiency versus the nominal horsepower of a sample of capacitor-start and three-phase motors available in the market in the year 2000. Generally speaking, larger motors have a higher efficiency than smaller motors in a given class. For open, four-pole, capacitor-start motors, the efficiency range is greater for 3/4 horsepower motors than for 1/3 and 1/2 horsepower motors. Some of the highest-efficiency motors larger than one horsepower are CSCR motors. For three-phase motors, there is also a significant range in efficiency. 

### The range of efficiencies for a given type and size is likely due in part to different methods of testing among the manufacturers, as well as differences in specific features.

`::np, ac i : r ' 'tai-t AIotnz~: Open. 4 FnI

l l it, tote ,: Fn1o .=± 3, 4 Pole

7E

2
Source: A.D. Little (2001) 

### Figure 3.3 Listed Efficiency (full load) of Small Motor Models

14

### 3.4 MARKET STRUCTURE

The Department estimates the distribution channels for considered small motors as follows:
1. Motor manufacturers ? original equipment manufacturers (OEMs) 40 percent 

### 2. Motor manufacturers ? distributors ? OEMs 25 percent 3. Motor manufacturers ? distributors ? end users 35 percent The motors in the last category are motors sold to end users as replacements or spares. A high percentage of considered small motors sold in the U.S. are domestically manufactured. In addition to imported stand-alone motors, some considered small motors are imported as components of equipment built in other countries. The magnitude of such imports is difficult to determine. Table 3.1 lists the manufacturers that produce most of the considered small motors sold in the U.S.
Table 3.1 Leading Manufacturers of Considered Small Motors Sold in the U.S. Manufacturer Brand 

### A.O. Smith A.O. Smith, MagneTek, Baldor Electric Baldor Electric Co. Emerson Motors Emerson, U.S. Motors General Electric GE Motors Regal-Beloit Lincoln Motors, Marathon Electric 

### Rockwell Automation Reliance Electric TECO Electric and Machinery Co. Ltd. TECO, TECO-Westinghouse Motor Company 

### Toshiba International Corporation Toshiba International Corporation WEG Electric Motor Corp. WEG There are dozens of OEMs that incorporate considered small motors in industrial, agricultural, and commercial equipment. These range in size from large to small companies. The users of equipment containing considered small motors primarily consist of firms that have the applications listed in Table 3.2. The large diversity of applications poses challenges with respect to accurately characterizing typical motor usage patterns. To determine how considered small motors are used, the Department reviewed trade literature and conducted interviews with manufacturers that produce the equipment into which small motors are incorporated.3 See Appendix A for a more detailed description of how the Department gathered its information for this product.

15

### The estimated typical annual hours of use range from 800 hours for air and gas compressors to

5000 hours for industrial/commercial fans and blowers. Many of the values are in the 2000- 3000 range.
Table 3

. 2 Average Use Characteristics for General Purpose Small Motors by Type of

Application Application Hours/year Motor loading (% of rated) 

### Farm machinery 1000 70% Conveyors 3000 50% Machine tools 2000 60% 

### Textile machinery 3000 70% Woodworking machinery 2000 35% Food machinery 3000 60% Pumps and pumping equipment 3000 65% Air and gas compressors 800 85% 

### Industrial and commercial fans and blowers 5000 80% Packaging machinery 3000 60% General industrial machinery 2000 n/a Commercial laundry machinery 2000 60% Commercial and Industrial HVAC/refrigeration equipment 2500 60% Service industry machinery 1500 n/a Source: Easton Consultants (2001) The Department also investigated typical motor-loading practices. The motor loading is commonly in the 60-70 percent range, although it is higher in two cases, air and gas compressors and industrial/commercial fans and blowers, and lower in two cases, conveyors and woodworking machinery. To assess the relative importance of different application categories , the Department estimated the magnitude of annual shipments of considered small motors to each group , shown in Table 3.3 (see Appendix B for more discussion of its method). Motors used in pumps and pumping equipment and in commercial and industrial HVAC/refrigeration equipment each account for approximately 30 percent of the total shipments for capacitor

- start motors

. No other category accounts for more than 10 percent. Motors used in pumps and pumping equipment are the largest category for polyphase motors, followed by commercial and industrial HVAC/refrigeration equipment and conveyors.

16

### Table 3.3 Estimated Annual Shipments of General Purpose Small Motors by Type of

A li ti Cap. Start Polyphase pp ca on 

### `000 % `000 % Farm machinery 457 10.9 33 3.0 Conveyors 497 11.8 207 18.8 Machine tools 81 1.9 81 7.3 Textile machinery 18 0.4 13 1.2 Woodworking machinery 101 2.4 34 3.1 

### Food machinery 90 2.1 90 8.2 Pumps and pumping equipment 1723 41.1 364 33.0 Air and gas compressors 338 8.1 101 9.2 

### Industrial and commercial fans and blowers 248 5.9 62 5.6 Packaging machinery 12 0.3 11 1.0 General industrial machinery 101 2.4 38 3.4 Commercial laundry machinery 52 1.2 4.5 0.4 Commercial and Industrial HVAC/refrigeration equipment 354 8.4 47.8 4.3 

### Service industry machinery 125 3.0 16 1.5 TOTAL 4197 100 1102 100 Source: Easton Consultants (2001), adjusted by DOE in 2006 to account for motors in newly covered products.



### 3.5 MOTOR PURCHASING An end-user will almost always replace a worn-out motor with the same model, which means that the motor purchase decision is effectively made by the OEMs, and not by the end-users who use the motors and pay for the electricity to operate them. The price paid for a motor depends on the type of purchaser and the volume purchased. The Department's research indicates typical ranges as follows:
Table 3.4 Application

Motor Purchases Channel Purchase price (% of list) Motor Manufacturers ? OEMs 37-40 Motor Mfrs ? Distributors ? OEMs 46-48 Motor Mfrs ? Distributors ? End Users 65-75 In its interviews with OEMs, the Department inquired about their attitudes toward motor energy efficiency. A summary of the views of the OEM representatives follows:

17

### 1. Efficiency is not a high priority in selection of motors for most of the equipment studied. The OEMs stated that they have not given much attention to motor efficiency in this size range primarily because their customers do not request more-efficient motors, and are more concerned with first cost than with small reductions in operating cost. 2. The OEMs stated that there was more interest in energy efficiency in select industrial categories-conveyors, food products machinery, industrial pumps, and packaging equipment-than others. They indicated that their customers expressed more interest in energy efficiency where hours of operation are longer and the end-user customer is a more sophisticated, cost-sensitive operator. These categories in total represented about 40 percent of two-digit motors. (The response from the HVAC category was mixed, with some OEMs quite interested in greater efficiency, and others not.) 

### 3. Several OEMs interviewed expressed interest in total-motor

-system efficiency, particularly adjustable

- speed drives . There is wide recognition that energy can be saved with the installation of adjustable

- speed drives and other devices to control motor systems, particularly in HVAC fans and industrial pumps. Many of the product designers noted that there are few premium-efficient, two-digit motors available. They stated that, even if an OEM wanted to use a more efficient motor, it would be difficult because motor manufacturers offer very few premium-efficient motors in these frame sizes. In the case of several manufacturers of single-phase motors, the CSCR motors are designated "premium efficient" in contrast to CSIR motors. However, the former are not always physically interchangeable with a CSIR motor.

REFERENCES 1. U.S. Census Bureau, Current Industrial Reports, Motors and Generators - MA335H. 2. Arthur D. Little, 2001. Small motor database (prepared for this study). 3. Easton Consultants, 2001. Analysis of considered motors use by principal machinery categories (prepared for this study).

18

### CHAPTER 4. ENGINEERING ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF CONSIDERED S MALL MOTORS

The engineering analysis provides the relationship between motor cost and efficiency that the Department used as a key input to its analysis of economic justification

. The Department employed two methods for obtaining this cost

- efficiency data. The first method was to retain an independent expert to estimate the cost of modifying baseline motors that are currently available in the market to versions that have higher efficiency designs. The second method was to sharethe preliminary cost-efficiency analysis with manufacturers and to solicit similar, aggregate costefficiency data from a committee of manufacturer representatives

. The two cost

- efficiency data collections provide significantly different sets of cost-efficiency data. Because of the small number of shipments for the CSCR motors relative to CSIR motors, the Department analyzed only CSIR designs in its engineering analysis and refers to the two product classes collectively as "capacitor

- start" motors.



### 4.1 APPROACH The Department used a design-option approach to estimate cost

- efficiency curves for considered small motors

. In this approach, the Department selects a baseline design that is then modified by different design options that increase motor efficiency

. The design options are sorted from least expensive to most expensive , and the sorted list of designs and corresponding production costs provide a cost-efficiency relationship

. The Department used an independent expert to estimate one set of cost

- efficiency data, and solicited another set of cost

- efficiency data from a committee of motor manufacturers. The Department began its design option selection by first considering which types of design changes would provide the most practical and cost-effective efficiency improvements

. The most practical ways to adjust motor performance to achieve increased efficiency for the considered small motors are: (1) change the grade of electrical steel ; (2) change the stack length ; and (3) change the flux density by adjusting the effective turns or changing the thickness of the steel. The Department estimated the first two design options to be the most cost-effective for increasing motor efficiency , and therefore examined only the first two design

- option types in this determination analysis. The justification for this approach is that if the analysis on a subset of the design options shows that energy efficiency can be increased cost-effectively , then an analysis on the complete set of design options would result in the same conclusion. 

### As shown in Table 4.1, the characteristics of the steel for the steel

- grade-improvement design options covered approximately the same range of steel

- grade characteristics for the DOE analysis and the manufacturers' analysis. Both analyses included both cold-rolled and semi

-processed electrical steel

. The DOE analysis examined steel thicknesses ranging from 0.031 inch to 0.019 inch, while the manufacturers ' analysis examined a steel thickness range from 0.031 inch to 0.018 inch.

19For the stack-length change design options, the Department considered incremental increases of

0.25 inch in stack length in its sample motors. The Department's independent expert used motor design software combined with sample motor test data to estimate the impacts of the stack length changes on stator and rotor I2R losses, steel losses, friction and windage losses, and stray losses to estimate the efficiencies of the longer stack-length motors. The Department presented its preliminary results regarding the efficiency improvements that would result from steel-grade and stack-length changes before the manufacturers provided their cost-efficiency estimates.
Table 4.1 Electrical Steel Op tions Considered


### Grade Type Maximum Loss (watts/lb @15kg, 60 hz) Thickness (inch)
DOE Analysis 

### Grade A Cold rolled 4.51 0.031 Grade B Cold rolled 4.15 0.031 Grade A+ Cold rolled 4.04 0.025 Grade B+ Cold rolled 2.78 0.022 M47 Semi-processed electrical* 1.53 0.019 Manufacturers' Analysis 

### Grade 1 Cold rolled 0.026-0.031 Grade 2 Cold rolled 0.022-0.025 Grade 3 Semi-processed electrical* 0.018-0.022 * Semi-processed steel with full anneal after punching

4.1.1 The Department 's Cost-Efficiency Analysis 

### The Department developed cost-efficiency data by retaining an independent expert to test a set of baseline or prototype motors, and then analyzed the impact on cost and efficiency of steel-grade changes and stack-length changes to these baseline designs. The Department used two prototype motors each for its capacitor

- start motor analysis and its polyphase motor analysis

. For the capacitor start analysis, the Department ' s expert selected Dayton motors with model numbers 4K856 and 6K965 as the prototype designs and assigned the results corresponding to these two baseline motors as "DOE #4K" and "DOE #6K ." These two motors have NEMA frame sizes 56 and 48, respectively , and so have different cost

- efficiency characteristics.

20For polyphase motors, the Department ' s expert used two I/2-horsepower Dayton motors and one

one-horsepower motor with model numbers 3N641 , 2N103, and 3N102. The Department refers to the data derived from these three baseline motors as "polyphase DOE #3N, 1/ 2 horsepower,"

"polyphase DOE #2N, %2 horsepower ," and "polyphase DOE #3N, 1 horsepower ," respectively. 

### The Department's analysis of the cost impacts of efficiency improvements only considered the increased cost of improved electrical steel , copper winding, and aluminum rotor bar/end ring. The Department calculated these material costs based on typical costs when purchased in volume

. No other materials are normally affected by the design changes considered. The Department did not consider labor and burden because these cost components are small and are not expected to vary substantially with higher efficiency

. It also did not consider the impact on set-up time and the introduction of new part numbers , because such costs are uncertain and are also likely to be small. In each case, DOE gave the baseline motor a "per-unit " (PU) cost of one. All changes to the motor cost are related to the PU cost of one. For example, if a change in electrical steel represented a 10-percent change in the total motor cost , the PU number would be 1.10 for the new design. 4.1.2 Cost-Efficiency Data Submitted by Motor Manufacturers In addition to the analysis described above, the Department asked a working group of motor manufacturers established by NEMA and SMMA to provide comparable data. The results for steel

- grade changes , provided by four manufacturers , show considerable variability in both baseline motor efficiency and the incremental cost of efficiency improvements (Figure 4.1). Each manufacturer selected a typical motor to use as the "baseline motor." The Department believes that each manufacturer used somewhat different methods and assumptions concerning efficiency and cost changes

. Furthermore , the precise steel grades considered varied , so the data are presented in terms of Grades 1, 2, and 3 (see Table 4.1 above).

21Figure 4.1 Increase in Efficiency and Cost from Steel-grade Change , Capacitor

- Start, 1/z horsepower , NEMA/SMMA data* *Cost for Companies A, B, and D includes capital for new production tooling For steel-grade options, the NEMA/SMMA data in the tables below refer to the average values of the four submissions. In calculating the average cost-efficiency relationship, the Department averaged the PU values and efficiencies of the four submissions for each grade (i.e. "Grade 1", "Grade 2," and "Grade 3"). For stack-length change options, the NEMA/SMMA working group provided data that it considered most typical.



### 4.2 EFFICIENCY AND COST IMPACTS OF DESIGN OPTIONS The tables below present the results of the analyses of steel-grade and stack-length change design options. All calculations assume operation at 70 percent of the rated load. 4.2.1 Capacitor

- Start Motors: Steel

-grade Options The Department presents engineering data for steel

-grade design options in the capacitor-start motors in Tables 4.2 to 4.4. The Department examined efficiency improvements for 56 frame and 48 frame motors which the Department refers to as 4K and 6K , respectively . The NEMA average data show much less efficiency gain than does the DOE analysis. 

### Table 4.2 Cap acitor

- start DOE #4K, % horsep ower, 4-p ole, ODP Grade A Grade B Grade B+ M47 P.U. Cost 1.00 1.03 1.08 1.25 Input (Watts) 492 462 447 438 Output (Watts) 265 265 265 265 Loss (Watts) 227 197 182 173 Efficiency 53.9% 57.4% 59.3% 60.5%

22Table 4.3 Cap acitor-start DOE #6K, 1/2 horsepower, 4- pole, ODP 

### Grade A Grade B Grade B+ M47 P.U. Cost 1.00 1.03 1.10 1.25 Input (Watts) 417 399 391 378 Output (Watts) 261 261 261 261 Loss (Watts) 156 138 130 117 Efficiency 62.6% 65.4% 66.8% 69.0%

Table 4.4 Cap acitor-start NEMA, 1/ horse ower , 4-p ole, ODP Grade 1 Grade 2 Grade 3 

### P.U. Cost 1.00 1.10 1.21 Input (Watts) 435 423 415 Efficiency 60.0% 61.7% 62.9%

4.2.2 Capacitor

- Start Motors : Stack-change Options The Department presents engineering data for stack-length change design options in the capacitor-start motors in Tables 4.5 to 4.7. In the Department's analysis, the stack-length change options yield less efficiency gain (for the DOE 6K) than do the steel-grade options discussed above. The NEMA/SMMA analysis shows somewhat greater efficiency gain from stack changethan does DOE's analysis of the 6K motor, and a greater efficiency improvement for stacklength change than the NEMA/SMMA analysis for steel-grade improvement. 

### Table 4.5 Cap acitor

- start DOE #4K, 1 / horsep ower, 4 p ole, OD Base Plus stack Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.09 1.19 1.29 Input (Watts) 492 458 441 429 output 265 266 266 266 Loss (Watts) 227 192 175 163 Efficiency 53.9% 58.1% 60.3% 62.0%

Table 4.6 Cap acitor

- start DOE #6K, % horse ower, 4 p ole, ODP - Base Plus stack 

### Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.07 1.15 1.22 Input (Watts) 417 411 405 401 Output (Watts) 261 261 261 261 Loss (Watts) 156 150 144 140 Efficiency 62.6% 63.5% 64.4% 65.1%

23

### Table 4.7 Cap acitor-start NEMA, % horsep ower, 4-p ole, ODP Base Plus stack Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.10 1.20 1.30 Input (Watts) 421 406 398 392 Efficiency 62.0% 64.3% 65.5% 66.5%

4.2.3 Polyphase Motors : Steel-grade Options The Department presents engineering data for steel-grade design options in the polyphase motors in Tables 4.8 to 4.11. DOE analyzed efficiency improvements for three baseline motors: Dayton motors with model numbers 3N641, 2N103, and 3N102. The Department refers to the data derived from these three baseline motors as "polyphase DOE #3N, %2 horsepower," "polyphase DOE #2N, %2 horsepower," and "polyphase DOE #3N, 1 horsepower" respectively. In DOE's analyses, the lowest-loss option (M47) yields an efficiency gain of approximately 5.0 to 5.5 percentage points. The NEMA average shows an increase of four percentage points from the baseline motor to Grade 3. 

### Table 4.8 Polyphase DOE #3N, !Y / 2 

### h rse ower, 4- p ole, ODP Grade A Grade B Grade B+ M47 P.U. Cost 1.00 1.03 1.07 1.15 Input (Watts) 361 352 347 338 Output (Watts) 267 267 267 267 Loss (Watts) 94 85 80 71 Efficiency 74.0% 75.8% 76.9% 79.0%

Table 4.9 Polyp hase DOE #2N, 1/ 2 horse ower, 4-pole, ODP Grade A Grade B Grade B+ M47 P.U. Cost 0.93 0.96 1.00 1.14 Input (Watts) 381 368 363 353 Output (Watts) 266 266 267 267 Loss (Watts) 115 102 96 86 Efficiency 70.1% 72.3% 73.5% 75.6%

Table 4.10 Pol

### yphase NEMA, 1/ 2 

### horse ower, 4-p ole, ODP

Grade 1 Grade 2 Grade 3 

### P.U. Cost 1.00 1.10 1.20 Input (Watts) 383 369 362 Efficiency 68.1 70.7 72.1

24

### Table 4.11 Polyp hase DOE #3N, One horsepower, 4-pole, ODP Grade A+ Grade B+ M47 P.U. Cost 1.0 1.04 1.20 Input (Watts) 699 682 658 Output (Watts) 534 534 534 Loss (Watts) 165 148 124 Efficiency 76.4% 78.3% 81.2% Note: Grade B yields same efficiency as Grade A+

4.2.4 Polyphase Motors: Stack

- change Options The Department presents engineering data for stack-change design options in the polyphase motors in Tables 4.12 to 4.15. The efficiency gain from an increase in stack length is quite dependent on the baseline motor design. For the DOE #3N, '/2 horsepower motor, the efficiency increase is only 1.5 percent from base to plus 3 stack, while for the DOE #2N, %2 horsepower motor, the improvement is 4.7 percent. The NEMA/SMMA data for a %2 horsepower motor shows a relatively small improvement from stack length changes of only 1.9 percent. 

### Table 4.12 Pol hase DOE #3N, % 2 horsep ower, 4- pole, ODP Base Plus stack Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.10 1.17 1.23 Input (Watts) 361 359 354 355 Output (Watts) 267 268 266 268 Loss (Watts) 94 91 88 87 Efficiency 74.0% 74.7% 75.1% 75.5%
Table 4.13 Pol hase DOE #2N, 1 / horsep ower, 4-p ole, ODP Base Plus stack Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.08 1.23 1.37 Input (Watts) 363 358 347 340 Output (Watts) 267 267 266 266 Loss (Watts) 96 91 88 87 Efficiency 73.5% 74.6% 76.6% 78.2%

25

### Table 4.14 Pol phase NEMA, 1/ z horse ower, 4-p ole , ODP Base Plus stack Plus 2 stack Plus 3 stack P.U. Cost 1.00 1.08 1.16 1.24 Input (Watts) 361 357 353 352 Efficiency 72.2% 73.1% 73.9% 74.1%

Table 4.15 Pol phase DOE ON, One horsep ower, 4-pole, ODP Base Plus stack Plus 2 stack Plus '3 stack P.U. Cost 1.00 1.06 1.18 1.24 Input (Watts) 699 692 677 674 Output (Watts) 534 534 534 534 Loss (Watts) 165 158 143 140 Efficiency 76.4% 77.2% 78.9% 79.2%

26

### CHAPTER 5. LIFE-CYCLE COST ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF SMALL MOTORS

5.1 METHOD AND DATA To assess the LCC to end users of designs that improve motor efficiency, the Department conducted an analysis that compares the incremental first cost to the value of electricity savings. In particular, the LCC analysis compares the incremental first cost to the discounted value of electricity savings over the life of the motor. The simple payback period analysis calculates the amount of time required for the electricity savings to equal the incremental first cost, assuming the electricity savings in future years is constant and equal to that in the first year. The analysis requires several inputs: 

### 1. Typical use in terms of hours and loading; 2. Typical price for the baseline motors (so the percentage change in per unit cost can be expressed in dollar terms); 3. Typical motor lifetime; 4. Electricity price; and 5. Discount rate (to convert future operating cost savings into present value terms). 

### The Department discusses these variables below.
5.1.1 Motor Use The estimates of average annual hours of use, loading, and shipments for each application category (see Chapter 3) yield shipments-weighted-average values as follows: • Annual hours of use: 2500 (for both capacitor-start and polyphase) • Average loading (percent of rating): 70%
5.1.2 Price for the Motors The Department calculated average purchase prices for the prototype motors using the following assumptions:
Table 5.1 Calculated Avera ge Purchase Prices for Proto typ e Motors Channel Distribution of sales (%o) Purchase price

(% of list) Motor Manufacturers ? OEMs 40 38 

### Motor Mfrs ? Distributors ? OEMs 25 47 Motor Mfrs ? Distributors ? End Users 35 70

27The resulting weighted-average price is 51 percent of list. The Department applied this value for

each motor analyzed. For the motors it analyzed, the Department used model-specific list prices given in the 2001/02 Grainger catalog.' For the motors analyzed by the NEMA/SMMA working group, the Department estimated list prices based on representative motors in the Grainger 

### catalog. The Department assumes that the full incremental cost of higher-efficiency motors is passed on to equipment buyers by the OEMs without additional markup. This assumption affects 65 percent of the sales as shown in the two rows with OEM end-users in Table 5.1 above. Also, for each product class, the Department chose the cost-efficiency data that corresponded to the baseline motor that is most representative of the product class (today). For the Department's capacitor start analysis, the Department selected the "DOE 6K" data, while for the Department's polyphase motor analysis, the Department used the "polyphase DOE #3N, one horsepower" data. 

### 5.1.3 Motor Lifetime The typical lifetime of small motors in the field is not well understood. Studies by one manufacturer show that small motors have an "L10" life (defined as the point where 10 percent of test population has failed) under typical operating conditions of around 25,000 hours ("typical" assumes no start/stop or excessive vibration, 75° C bearing temperatures, normal mineral-oil-based bearing lubricants, and regular-sized lubricant reservoirs). For an average use of 2500 hours per year, that would yield a ten-year L10 life. The key input parameter for the Department's analysis is the average lifetime. Because only 10% of motors have failed at the L10 life, the L10 life underestimates the average lifetime which is likely to be one to several years longer. 

### The life of a motor depends on a variety of factors in the service conditions of the application. These include environment (largely temperature), loading of the motor, and speed of rotation. The studies cited above have shown that bearing failure is by far the most common cause of motor failure. In turn, the main reason for bearing failure is failure of the lubricant, mainly due to heat generation and consequent lubricant degradation. The three-phase integral motor in mostly three-digit sizes has an average life of 11 or 12 years. While most integral-horsepower motors have grease fittings on the bearings (per industry standards), all two-digit motors and fractional horsepower motors have permanently sealed bearings. This means the life of the two-digit motor is no longer than the breakdown point of the lubricant and, as a result, the life of the two-digit motor will likely be shorter than that of the three-digit motor. Motor-industry experts consulted by the Department suggest that the average life for two-digit motors is at most 10 years, depending on the usage and physical environment. The Department received some input on motor lifetime from OEMs. A complicating factor is that, in some cases, the potential lifetime of the motor may be longer than that of the equipment. Thus, the actual motor lifetime is limited by the lifetime of the equipment. Similarly, replacement motors, which account for about one-third of the market for the considered motors,

28

### may have a shorter average lifetime than motors installed in original equipment if the equipment

fails sooner than anticipated. The NEMA/SMMA small-motor-efficiency task force agreed with an estimated average life of 5to 10 years for fractional horsepower motors, with the average being closer to 10 years for threephase and closer to 5 years for single-phase motors. Based on the above considerations, the Department elected to use a mean lifetime of seven years for capacitor-start motors and nine years for polyphase motors, as the approximate values that are most consistent with available motor lifetime information. 5.1.4 Electricity Price The Department determined the relevant price of electricity based on the type of entities that purchase and own considered small motors. The Department estimates that, based on the market research done by Easton Consultants, approximately three-fourths of capacitor-start motors are used by utility customers on a commercial tariff, while most users of small, polyphase motors are on an industrial tariff.2 The Department based commercial and industrial electricity prices on the average of the 2010 and 2020 forecasts from the Energy Information Administration's Annual Energy Outlook 2006.3 For capacitor-start motors, the Department derived an average price, giving a 0.75 weighting to the commercial price. For polyphase motors, the Department increased the industrial price of electricity by five percent to reflect its belief that use of these motors is weighted toward smaller facilities, which would pay a higher tariff than large, industrial customers. Table 5.2 Electricity Prices Motor Type Price used in the analysis (cents/kWh*) Capacitor-start 

### 7.2 Polyphase 5.6 *Cents in year 2005 values
5.1.5 Discount Rate 

### The discount rate is the rate at which future expenditures are discounted to estimate their present value. The Department derived the LCC discount rates for considered small motors from data it collected for the LCC discount rate estimates in the distribution transformer rulemaking. Following financial theory, the cost of capital can be interpreted in three ways: 1) it is the discount rate that should be used to reduce the future value of cash flows to be derived from a typical company project or investment; 2) it is the economic cost to the firm of attracting and retaining capital in a competitive environment; and 3) it is the return that investors require from their investment in a firm's debt or equity. The Department primarily used the first interpretation. Most companies use both debt and equity capital to fund investments; for most companies, therefore, the cost of capital is the weighted average of the cost to the firm of equity and debt financing.

29

### Appendix C presents the details of the Department's estimates of the cost of capital for

commercial and industrial companies. The Department estimates the real (i.e., inflationadjusted) cost of capital for commercial companies as 7.3 percent, and that of industrial companies as 7.5 percent. Because industrial companies purchase the bulk of small motors, the Department used the 7.5 percent discount rate for its LCC analysis.


### 5.2 RESULTS FOR CAPACITOR-START, INDUCTION-RUN MOTOR DESIGN OPTIONS The tables and figures below present key results of the LCC and payback period analyses. The Department only presents results for the most typical motors. Specifically, for the Department's engineering data, the Department selected the "DOE 6K " data for the capacitor start product class, while for the Department's polyphase motor analysis , the Department used the "polyphase DOE #3N, one horsepower " data. Note that the baseline motors are different in the DOE and NEMA/SMMA analyses. In the DOE analysis, the steel-grade options all have lower LCC than the baseline motor. The Department presents these results numerically in Table 5.3 and graphically in Figure 5.1. In contrast, the steel-grade results based on the NEMA/SMMA average data, presented in Table 5.4 and Figure 5.2, show essentially no change in LCC for grade 2 and then an increase in LCC for grade 3. The DOE results in Table 5.3 and Figure 5.1 show that the stack

- length options increase the LCC. The NEMA results, presented in Table 5.4 and Figure 5.2, show a slight decrease for the first stack

-length option, but then an increase in LCC for the stack

-change options that result in higher efficiencies. Table 5.3 Impacts of Efficiency Improvement on Typical End User, Capacitor-Start, 'h horsepower, DOE Data* Steel Grade Stack Change Grade A (Base) Grade B Grade B+ M47 Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer* * $103 $106 $114 $129 $111 $119 $126 Annual Operating Cost $75 $72 $70 $68 $74 $73 $72 Life-Cycle Cost (7.5% DR) $501 $487 $486 $490 $502 $505 $508 Change in LCC (WRT Base) -$14.07 -$14.47 -$11.37 $1.51 $4.05 $7.47 Percent Change in LCC -2.8% -2.9% -2.3% 0.3% 0.8% $1.5% Payback Period (years) 1.0 2.2 3.7 6.7 7.2 7.9 *Data refer to a specific typical motor **Based on actual motor price in Grainger catalog.

30$520
$510

Stack Change
Steel Grade

$460
$45060% 62% 64% 66% 68% 70% Efficiency Figure 5.1 Capacitor

- start 1/ a horsepower

-- DOE Data Table 5.4 Impacts of Efficiency Improvement on Typical End User, Capacitor-Start, 1/2 

### horsepower, NEMA/SMMA data Steel Grade* Stack Change** Grade 1 (Base) Grade 2 Grade 3 Base Plus Stack Plus 2 Stack Plus 3

Stack Motor Price-Buyer*** $117 $128 $141 $117 $128 $140 $152 Annual Operating Cost $78 $76 $75 $76 $73 $72 $71 Life-cycle Cost (7% DR) $532 $532 $537 $518 $516 $520 $526 Change in LCC (WRT Base) -$0.01 $5.20 -$2.63 $1.41 $7.36 Percent Change in LCC 0.0% 1.0% -0.5% 0.3% 1.4% Payback Period (years) 5.3 6.7 4.3 5.6 6.7 * Data are average of four manufacturers ** Data reflect costs and performance of a typical motor *** Estimated by DOE based on Grainger catalog prices

31$550 -- $ 540 $530 $520 $510 $500 $490 $480 $470 $460 $45059% 61% 63% 65% 67% 69% 

### Efficiency Figure 5.2 Capacitor-start % horsepower -- NEMA/SMMA data Steel Grade Stack Change



### In summary, for capacitor start motors, the Department's analysis shows large economically justified (from the perspective of the `average owner') energy savings for steel-grade changes, and no economically justified potential savings from stack-length change design options. In contrast, the NEMA/SMMA data shows potentially economically justified savings for small improvements obtained from both stack-length change and steel-grade improvements.

5.3 RESULTS FOR POLYPHASE MOTOR OPTIONS Tables 5.5 and 5.6 present key results of the LCC analysis for the most typical polyphase motors. Table 5.5 presents results based on the DOE data, and Table 5.6 presents results based on the NEMA/SMMA data. Graphical results are provided in Figures 5.3 and 5.4, respectively. Note that the baseline motors are different in the DOE and NEMA/SMMA analyses. In the DOE analysis, the steel

- grade options all have lower LCC than the baseline motor. However, the NEMA/ SMMA average results show essentially equivalent results for grades I and 2, followed by a slight increase in LCC for grade 3. In both the DOE and NEMA/SMMA analyses, the stack-length options increase the LCC relative to the baseline motors, although the "plus stack" and "plus 2 stack " options have life-cycle costs that are only slightly higher than the baseline motor in the DOE analysis.

32

### Table 5.5 Impacts of Efficiency Improvement on Typical End User, Polyphase One
Steel Grade Stack Change Grade A+ (Base) Grade B+ M47 Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer* * $119 $124 $143 $126 $140 $148 Annual Operating Cost $98 $96 $93 $97 $95 $95 Life-cycle Cost (7.5% DR) $746 $736 $733 $747 $748 $752 Change in LCC (WRT Base) -$10.49 -$12.98 $0.86 $1.69 $6.14 Percent Change in LCC -1.4% -1.7% 0.1% 0.2% 0.8% Payback Period (years) 2.0 4.1 7.3 6.9 8.1 *Data refer to a specific typical motor **Based on actual motor price in Grainger catalog.

$760 -

$750

Stack Change
-s-- Steel Grade

$710

$700 76% 77% 78% 79% 80% 81% 82% 

### Efficiency Figure 5.3 Polyphase One horsepower -- DOE Data

horsepower, DOE Data*

33Table 5.6 Impacts of Efficiency Improvement on Typical End User, Polyphase %
Steel Grade * Stack Change** Grade 1 (Base) Grade 2 Grade 3 Base Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer*** $125 $138 $151 $126 $136 $146 $156 Annual Operating Cost $53.9 $51.9 $50.9 $50.8 $50.2 $49.7 $49.5 Life-cycle Cost (7% DR) $469 $469 $475 $450 $456 $463 $472 Change in LCC (WRT Base) -$0.02 $6.02 $6.48 $12.96 $22.14 Percent Change in LCC 0.0% 1.3% 1.4% 2.9% 4.9% Payback Period (years) 6.4 8.4 17.9 17.9 23.9 * Data are average of four manufacturers ** Data reflect costs and performance of a typical motor *** Estimated by DOE based on Grainger catalog prices

$500 $490 $480 $470 $460 $450 $440 $430 $420 $410 $400 67% 68% 69% 70% 71% 72% 

### Efficiency 73% 74%



### Figure 5.4 Polyphase % horsepower -- NEMA/SMMA data 75% -4- Steel Grade Stack Change



### In summary, for polyphase motors, the Department's analysis shows economically justified (from the perspective of the `average owner') energy savings for steel-grade changes, and no economically justified potential savings from any stack-length change design options. The

horsep ower, NEMA/SMMA data

34

### NEMA/SMMA data show small economically justified savings for small improvements obtained

from steel

-grade improvements , and no economically justified savings for improvements obtained from stack-length changes.
REFERENCES 1. Grainger Industrial Supply, 2001. Catalog No. 392. 2. Easton Consultants, 2001. Analysis of considered motors use by principal machinery categories (prepared for this study). 3. Energy Information Administration, Annual Energy Outlook 2006, DOE/EIA-0383(2006), U.S. Department of Energy, Washington, D.C., February 2006.

35

### CHAPTER 6. POTENTIAL NATIONAL ENERGY AND CONSUMER IMPACTS OF ENERGY CONSERVATION STANDARDS FOR SMALL MOTORS For this determination analysis, the Department analyzed a range of forecast scenarios and potential efficiency improvements to characterize the national impacts of a possible energy conservation standard for considered small motors. National impacts depend on the base-case motor efficiency, potential shipments growth, and the source of motor cost-efficiency data (since the Department's the NEMA/SMMA data are substantially different). For each national impact result and each cost-efficiency data source, the Department provides four results corresponding to the following forecast scenarios: 1. Low-efficiency-gain base case (1/4 precent average gain relative to year 2000), low

shipments growth (1 percent per year) 2. Moderate-efficiency-gain base case (1 percent average gain relative to year 2000), high

shipments growth (1 percent per year) 3. Low-efficiency-gain base case (1/4 percent average gain relative to year 2000), high

shipments growth (1.5 percent per year) 4. Moderate-efficiency-gain base case (1 percent average gain relative to year 2000), high

shipments growth (1.5 percent per year) The next two sections present details of the methodology and results of the national impact estimates.



### 6.1 METHOD In each product class, the Department used the characteristics of a representative motor of average size as a primary input into the estimation of national impacts: • Capacitor-start motors 1/2 horsepower • Polyphase motors one horsepower The Department used the results of the DOE and manufacturers' engineering analyses (Chapter 4) to provide the cost-efficiency characteristics of the representative motor. Specifically for the Department's capacitor start analysis, the Department selected the "DOE 6K" data, while for the Department's polyphase motor analysis, the Department used the "polyphase DOE #3N, one horsepower" data. For polyphase motors, however, the Department only used the DOE results, as the manufacturers' analysis was based only on 1/2 horsepower motors which is 1/2 of the average size of motors of this product class, and thus is not representative of this product class's cost-efficiency characteristics. For each design option, the Department expresses the estimated savings relative to the base case. 

### The Department believes that the motors it analyzed (open drip-proof, four-pole) serve as reasonable proxies for enclosed motors and two- and six-pole motors. The Department would expect, however, that an analysis that developed separate estimates for two, four, and six-pole

36

### motors would show somewhat different results, as would one that made discrete estimates for

different horsepower ratings. A simplifying assumption in the calculation is that each level of energy-efficiency improvement reflects an average attained by all new motors sold in each considered year. Thus, if a standard were set at a specific level of energy-efficiency improvement, the savings attributable to the standard are a function of the difference in efficiency relative to the base-case motor. The Department assumed standards take effect in 2010 and calculated impacts for motors sold in the 2010-2030 period. The accounting model calculates total end-use electricity savings in each year with surviving motors (some of the motors sold in 2030 operate through 2040). The model uses a product retirement function to calculate the number of units in a given vintage that are still in operation in a given year. The retirement function assumes that there is a five-year range of individual motor lifetimes centered around the mean lifetime, and equal numbers of motors are retired in each of these five years. For example, for a seven-year average lifetime, twenty percent of motors are retired in five, six, seven, eight, and nine years respectively. The Department calculated primary energy savings associated with end-use electricity savings using data from the EIA's Annual Energy Outlook 2006.1 These data yield an average multiplier for end-use electricity to primary energy (power plant consumption) for each year for 2010-2020. The Department extrapolated the 2010-2020 trend for the 2021-2040 period. For assessing direct economic impacts on end users, the Department used the incremental equipment costs for each energy-efficiency improvement level presented in Chapter 5. The Department assumed that the current estimated incremental costs remain the same in the 2010- 2030 period of motor sales. In addition, the Department assumed that electricity prices remain at the projected 2010-2020 average through 2040. The Department discounted future costs and benefits using a discount rate of seven percent, in keeping with "Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs" issued by the Office of Management and Budget in 1992.2 This rate approximates the marginal (inflation-adjusted) pre-tax rate of return on an average investment in the private sector in recent years. 

### 6.1.1 Projection of Future Shipments As discussed in Chapter 3, the past growth in annual shipments of the considered motors (including imported motors) is not known, but NEMA did provide confidential data on two-digit frame-size, fractional-horsepower motor sales to domestic customers by NEMA manufacturers, covering the period from 1971 to 2001. Based on the NEMA shipments data, the Department estimated the average annual growth rate to be 1.5 percent. Although the motors that the Department analyzed make up only around 20 percent of the motors covered by these data, industry experts suggest that growth in sales of the considered motors is likely to be similar tothat of all fractional horsepower motors because the demand for both considered and nonconsidered fractional horsepower motors is closely tied to overall growth in the U.S. economy.

37Several factors suggest that the growth in future sales may be slower than in the past. First, at a

basic level, U.S. economic growth is expected to be slightly slower than that in the 1970-2000 period. Second, continuation of the current trend toward greater use of defmite-purpose small motors would mean that sales of the general-purpose motors considered in this analysis would increase more slowly. Finally, foreign manufacturers of end-use equipment incorporating considered small motors may have lower production costs sufficient to gain market share at the expense of U.S. -based manufacturers, which would reduce U.S. domestic demand for small motors. Based on the above considerations, the Department estimated impacts for two scenarios of average annual growth in shipments in the 2010-2030 period: one with 1.0 percent growth and the other with 1.5 percent growth. The Department refers to these two scenarios, respectively, as the "low shipments growth" and "high shipments growth" scenarios.
6.1.2 Base-case Efficiencies 

### In addition to the problem of forecasting future shipments, the Department is faced with uncertainty about product efficiencies in the base case. The Department has only limited knowledge regarding the past trend in efficiency because of insufficient data-availability. This imperfect historical knowledge means that it is difficult to establish a single base case efficiency forecast. For this reason, the Department used two base-case efficiency scenarios. The perspective of the NEMAISMMA working group and of other motor industry experts with whom the Department consulted is that the past 20-30 years have seen "very little to moderate" improvement in efficiency. Some gains occurred in the 1970s as electricity prices rose, and there has also been some spillover into small motors from efficiency improvement in integral horsepower motors. A number of manufacturers have introduced "premium-efficiency," small, polyphase motors. In the case of capacitor-start motors, there has been some growth in the use of more-efficient capacitor-run models, which to some extent has lessened the need to improve the more common induction-run models. Following the above discussion, the Department identified the following two base-case efficiency scenarios: In the Low-Efficiency-Improvement base case, the average efficiency of motors sold in the 2010-2030 period is % percent better than the current-base-case motors (e.g., 62.25 percent compared to 62 percent). In the Moderate-Efficiency-Improvement base case, the average efficiency is one point better than the current-base-case motors. The Department believes that these two cases plausibly bound future efficiency improvements in the absence of standards.

38

### 6.2 ESTIMATES OF POTENTIAL ENERGY AND CONSUMER IMPACTS

In this section, the Department provides estimates of the potential energy savings and national consumer impacts from potential motor efficiency improvements. The Department provides the results in graphical form for all design options, showing the energy savings as a function of design option in the form of a blue bar in units of "quads," quadrillion British thermal units, and showing net national economic impacts as squares (connected by a thin blue line) in Figures 6.1 through 6.3. The results for those design options that maximize energy savings while remaining economically justified are presented in tabular form for each economic forecast scenario and each set of engineering analysis data that the Department applied to the national impact analysis. 

### 6.2.1 Capacitor-Start Motors Figure 6.1 shows the results of the Department's national impact analysis for each of the Department's engineering design options for the four forecast scenarios for capacitor-start motors. For all scenarios, the M47 steel grade design option provides the greatest amount of potential energy savings. It also provides a positive national NPV for all forecast scenarios. Thus the results for this design option provide the Department's estimate of potential savings and potential net benefits from a standard for capacitor-start motors. As summarized in Table 6.1, the energy savings for motors sold between 2010 to 2030 ranges from 0.47 to 0.59 quad, and the national NPV ranges from $0.28 to $0.35 billion, depending on the forecast scenario. Capacitor Start 1/2 HP 6K 1/4% Efficiency Improvement Base Case

- 1.6% Shipments Growth

1.00

0.50

0.00 Primary Energy Savings ( Quads) -0- NPV ( billion $)

Grade B Grade B+ M47 Plus Stack Phis Y-'3tack, Plus 3 Stack

0.50
Capacitor Start 1/2 HP 6K 114% Efficiency Improvement Base Case -1 1% ShipmentGrowth

1.00

0.50

0.00

-0.50 Grade B Grade B+ Primary Energy Savings (Quads) -0- NPV ( billion $)

M47 1.50

1.00

0.50 Ca paci t or Start 1/2 HIP 6K S ^ ^- - 1% Efficiency Improvement Base Case - • 1 1.6 % Shipments Growth Primary Energy Savings (Quads) -0- NPV ( billion $)

0.00 4-

-0.50 1. Grade B Grade B + M47 Plus Stack Plus 2 Stack^ ' PNs$"Gtack

Capacitor Start 1/2 HP 6K 1% Efficiency Improvement Base Case - 1% Shipments Growth Primary Energy Savings ( Quads) -0- NPV ( billion $) 1.00

0.50

0.00

-0.50 LL^_...TL_ tiv...l1

Grade B Grade B+ M47 Plus Stack Plus 2 Stack I'IOs-'stack
Figure 6.1 Capacitor-Start Motors, National Energy and Consumer Impacts, DOE

Analysis

39Figure 6.2 shows the same information as Figure 6.1 except for the NEMA/SMMA engineering

data inputs rather than the Department's engineering data. The left portion of the plots represent the steel grade design options, while the right hand portion of the plots represent the results from the stack-length change design options. For the NEMA/SMMA data, the greatest energy savings is found for the design option with the largest stack-length change. But this option does not have positive national NPV for any of the forecast scenarios. However, three of the four scenarios have a positive national NPV for the smallest stack change option. For this design option and the NEMA/SMMA data, the energy savings ranges from 0.12 to 0.21 quad and a national NPV ranging from a negative $0.05 billion to a positive $0.04 billion as Table 6.1 details.

Capacitor Start 112 HP - NEMA 1/4% Efficiency Improvement Base Case -1.6 % Shipments Growth Primary Energy Savings (Quads) -L- NPV ( billion $)

Capacitor Start 112 HP - NEMA 1/4% Efficiency Improvement Base Case

- 1% Shipments Growth 1 50

. - - ..-.._...........__.....^.._.._._____ Primary Energy Savings (Quads)

00 1 ,s^ NPV(billion $)

.

0.50

0.00 j^ '((III

.nom r_.^-. q .-,-.E^.

- Grade 2 Gr0e 3 Plus Stack Plus 2 Stack-..plus 3 Stack

-0.50 ............................................................................................................................................................................................................ Capacitor Start 1/2 HP - NEMA 1% Efficiency Improvement Base Case -1.6% Shipments Growth 1.50 ............................................................................................................................................................................................ Primary Energy Savings (Quads) --t}- NPV (billion $) 1 00

.

50 0

.

0.00 -^- q

Grade 2~~~ Grade 3 Plus Stack Plus-Z. tack Plus 3 Stack

-0.50
Capacitor Start 1 /2 HP - NEMA

1% Efficiency Improvement Base Case -1% Shipments Growth 50 1

. Primary Energy Savings (Quads) ....fl....._ NPV (billion $) 1 00 .

0.50

0.00 -,--,-

Grade 2 Grade 3 Plus Stack Plus2btack Plus 3 Stack 1^7 -0.50
........................................................................................................................................................................................................... Figure 6.2 Capacitor-Start Motors, National Energy and Consumer Impacts,

NEMAISMMA data

40Table 6.1 Cumulative Energy and Consumer Impacts of Energy Efficiency Improvement for Capacitor-Start, Induction-Run Motors Projected to be Sold in the 2010-2030 Period* NPV Energy Savings (Year 2005 dollars in billions, (Quads) discounted at 7 percent to Future Scenario 2005) 

### NEMA/ NEMA/ DOE SMMA DOE SMMA Low-efficiency-gain base case, low 0.54 0.19 0.33 0.04 shipments growth 

### Low-efficiency-gain base case, high 0 59 0 21 0 35 04 0 shipments growth . . . . Moderate-efficiency-gain base case, low 47 0 0 12 0 28 -0 05 

### shipments growth . . . . Moderate-efficiency-gain base case, high 

### shipments growth 0.51 0.12 0.30 -0.05 * The values given for each scenario correspond to the design option with the combination of highest energy savings and most favorable consumer NPV.


### 6.2.2 Polyphase Motors Figure 6.3 shows the results of the Department's national impact analysis for each of the Department's engineering design options for the four forecast scenarios for polyphase motors. As with capacitor-start motors, the M47 steel-grade design option provides the greatest amount of potential energy savings for all forecast scenarios. It also provides a positive national NPV for all forecast scenarios. Thus the results for this design option provide the Department's estimate of potential savings and potential net benefits from a standard for polyphase motors. As summarized in Table 6.2, the energy savings for motors sold between 2010 to 2030 ranges from 0.14 to 0.19 quad, and the national NPV ranges from $0.08 to $0.11 billion, depending on the forecast scenario.

41Polyphase Motors - DOE 114% Efficiency Improvement Base Case

- 1.6% Shipments Growth 0.30, ................................................................................................................................................................................................

0.20 Primary Energy Savings (Quads) --C NPV ( billion $) Polyphase Motors - DOE 1% Efficiency Improvement Base Case

- 1.6% Shipments Growth 0.30 Primary Energy Savngs (Quads) 0.20 -0- NPV (billion $)

0.10
0.00 .;:-

- q - ^_
Grade B+ M47 Plus Stack Plus 2 Stack Plus' Stack 0 10 - .

20 -0

. 0.10
0.00 Grade B+ M47 Plus Stack Plus 2 Stack-Prus-5Stack 0.10

0.20
Polyphase Motors - DOE 1/4% Efficiency Improvement Base Case

- 1% Shipments Growth 0.30 .._.._.._..__...__.....___._._...___.__._.._ Primary Energy Savings (Quads) 0.20 °{J-- NPV (billion $)

0.10

0.00 Grade B + M47 Plus Stack Plus 2 Stack PI0s4}, htack 0 10 - .

-0.20 --._.._.___..____._ ...........________......______._...__..__._.^...._._._.^.._. Polyphase Motors - DOE 1% Efficiency Improvement Base Case

- 1 % Shipments Growth 0.30

0.20

0.10

0.00

0.10

-0.20 Primary Energy Savings (Quads) t3..... NPV (billion $)

Grade B+ M47 Plus Stack Plus 2 Stack Pus 3-Stack[

Figure 6.3 Polyphase Motors, National Energy and Consumer Impacts, DOE Analysis

Table 6.2 Cumulative Energy and Consumer Impacts of Energy Efficiency

Improvement for Polyphase Motors Projected to be Sold in the 2010-2030 Period*
NPV Energy Savings (Year 2005 dollars in (Quads) billions, discounted at 7 Future Scenario percent to 2005 ) 

### NEMAI NEMA/ DOE SMMA DOE SMMA Low-efficiency-gain base case, low Not Not 

### shipments growth 0.17 Available 0.10 Available Low-efficiency-gain base case, high Not Not shipments growth 0.19 Available 0.11 Available Moderate-efficiency-gain base case, low Not Not shipments growth 0.14 Available 0.08 Available Moderate-efficiency-gain base case, high Not Not shipments growth . 0.15 Available 0.09 Available * The values given for each scenario correspond to the design option with the combination of highest energy savings and most favorable consumer NPV.

42

### 6.2.3 Total Energy and Economic Savings

Given the national impact results for the capacitor start and polyphase motor product classes, the results based on the Department's engineering analysis indicate a potential energy savings ranging from 0.61 to 0.78 quad and a national NPV ranging from $0.36 to $0.46 billion.
Based on the NEMA/SMMA engineering data, estimates of national energy savings and national NPV are approximately 1/3 of the magnitude of the estimates based on the Department's engineering data (for capacitor

- start motors).



### REFERENCES 1. Energy Information Administration, Annual Energy Outlook 2006, DOE/EIA-03 83(2006), U.S. Department of Energy, Washington, D.C., February 2006. 2. U.S. Office of Management and Budget. Circular No. A-94. Appendix C. 2002. (Last accessed November, 2002.) This material is available in Docket #86. Contact Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW, Washington, DC, 20585-0121, telephone (202) 586-2945 for more information. <http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html>

43

### APPENDIX A. INFORMATION COLLECTION PROCESS ON USE OF SMALL MOTORS

Small motors are used in a variety of equipment. Easton Consultants identified 14 industrial categories and North American Industry Classification System (NAICS) categories and more than 45 categories of equipment that use small motors as defined. These include such diverse types of equipment as farm milking machines, industrial pumps, packaging machines, and machine tools. 

### The information collected for each category included the following three types: Type 1 - Usage information • Horsepower range, ® Average horsepower, ® Average hours of use, 

### ® Qualitative information on specific applications (e.g., ambient conditions), ® Estimate of typical motor loading, and • Other application-specific information. Type 2 - Motor selection information ® Information on motor-purchasing practices and procedures by OEMs who use considered motors in their products, ® The degree to which changes in motor size related to improved efficiency may be incompatible with equipment designs used by OEMs, 

### ® The degree to which motor efficiency is a significant consideration for OEMs, and ® Other selection-related information. Type 3 - Quantitative (shipments) information Annual shipments of each considered motor type (capacitor-start and polyphase) for each category. 

### The Department used an information-collection process that followed a sequence of stepsmoving from general sources to specific sources, as needed. The Department proceeded step-bystep for each of the 14 categories as follows: ® Step 1 -In-house expertise . The Department started with its own expertise on each of the categories from past projects. The Department assembled this information as the starting point. 

### ® Step 2 --Industry associations . The Department contacted the association or associations servicing each of the categories for general information on the industry, important players, industry characteristics and trends, and motor use.

44® Step 3 --Industry literature search . The Department conducted a review of the relevant trade magazines and reports available publicly for relevant motor-related information on motor selection and use. ® Step 4 --Company information review . The Department explored the information available on one or two leading motor-using company web sites (particularly product specifications), requesting specifications from the sales department where not available on the Internet. 

### ® Step 5 --Expert assistance . The Department worked with a former director of market research of a motor manufacturer who has extensive industry background. ® Step 6 --Direct motor-using company informal discussion . After the above-sources had been fully utilized, the Department conducted a series of informal telephone interviews with equipment designers and engineers in each of the sectors. It designed these interviews to collect the specific information needed, and varied them for each category depending on the specifics of what was needed for that category. In these interviews the Department discussed: o Types of motors used in the particular equipment, to identify the approximate proportion of all motors that are considered motors, 

### o Sizes of motors used, o Typical hours of operation of the motors, o Motor loading against its rated horsepower, 

### o Role of energy efficiency in the decision and the rationale, o Health of the industry, o Technical changes expected that would affect motor use, o Typical life of the motor in this equipment's service, and o Other related subjects.

45

### APPENDIX B. METHOD FOR ESTIMATING CONSIDERED SMALL

. MOTORS SHIPMENTS BY INDUSTRY SECTOR

As part of the effort to support the DOE project, "Development of Application Information for General Purpose Small Electric Motors Considered for Efficiency Standards ," Easton Consultants conducted an analysis to estimate the shipments of considered small motors to each of 14 industry segments. There is no single source that provides a measurement of the shipments of considered motors in the principal industries of use. As a result , the Department had to rely on a variety of sources of information, each of which provided only a piece of the puzzle. By integrating all of those available and then applying judgment, the Department has developed a reliable "first cut" estimate

. The cornerstone of the estimates was first-hand research with a number of manufacturers of small

- motor-using equipment. 

### The data sources used included the following:
1. Discussion with 4

- 10 equipment OEMs (product designers , engineers) in each of the small-motor-using equipment industries. 

### 2. Survey of the small-motors manufacturers conducted by NEMA to measure the total shipments of considered motors. 3. The U.S. Census Bureau ' s Census of Manufacturers ( 1997), which measures equipment shipments and certain component usage by each of the principal small-motor-using industries. 4. Industry associations that cover the principal small-motor

-using industries. 5. Catalogs of equipment using small motors. 6. Expert counsel from an individual who was formerly a market research manager with a leading motor manufacturer. 7. Past Easton projects on small

-motor use, particularly the 1995 project conducted for DOE. In the following chart , the Department has defined the role of each source of information in determining the estimates. The Department compiled the initial set of shipments estimates in the year 2001 for this analysis. Subsequently, additional legislation resulted in more products being covered by energy conservation standards . Thus the Department adjusted its shipments estimates . The two key newly covered products are commercial clothes washers , and HVAC equipment from 240,000 to 760,000 Btu/hour. The Department assumed a reduction in shipments of 50 percent and 80 percent for considered small motors for these two applications as a result of the products being newly covered and made the corresponding adjustment to capacitor

- start and polyphase motor shipments . This analysis provided new shipments estimates that the Department related to the earlier shipments with a shipments adjustment factor of 0.74 and 0.85 for capacitor- start and polyphase motors respectively.

46

### Table B.1 Data and information source descriptions

Information Description Principal Value Limitations Importance Source of Source OEM Discussions First hand inputs The sample of OEMs Very High Interviews with from engineers and was necessarily a small

manufacturers designers who make sample of the many of small motor the motor selection companies using small using decisions in the user motors. equipment industries
NEMA Survey Survey of Provided a reliable Did not provide any High

principal small measure of the total information on the motors number of equipment in which the manufacturers considered small motors are used

motor shipments by size and type Census of Survey of U.S. (1) Shipments of Difficult in most cases Low Manufacturers Manufacturers motor using to match equipment (1997) equipment definitions with motor type (2) Shipments of Data given for all High small motors to each shipments; considered industry motors not broken out. Industry Organizations Information on Most information could Low Associations supporting sector structure (e.g. not be tied directly to

industrial major companies), motor use sectors trends, economic

health, Equipment Equipment Often explicit as to Most catalogs do not Low catalogs descriptions for the type and size of provide motor use

sales purposes motors used information; only a few were useful Expert counsel Review by an "Reality check" on Motor manufacturers do Medium

experienced estimates not have good market information on where research head small motors are used formerly with a motor manufacturer
Past Easton Easton files on A variety of Information generally Medium Reports small motor information, esp. dated

use from the 1995 from past report on small projects motors

47

### APPENDIX C. SMALL MOTORS D ISCOUNT-RATE CALCULATIONS

The discount rate is the rate at which future expenditures are discounted to estimate their present value. The Department derived the LCC discount rates for considered small motors from data it collected for the LCC discount rate estimates in the distribution transformer rulemaking. Following financial theory, the cost of capital can be interpreted in three ways : 1) it is the discount rate that should be used to reduce the future value of cash flows to be derived from a typical company project or investment ; 2) it is the economic cost to the firm of attracting and retaining capital in a competitive environment ; and 3) it is the return that investors require from their investment in a firm's debt or equity. The Department primarily used the first interpretation

. Most companies use both debt and equity capital to fund investments ; for most companies, therefore , the cost of capital is the weighted average of the cost to the firm of equity and debt financing. The Department estimated the cost of equity financing using the Capital Asset Pricing Model (CAPM). The CAPM, among the most widely used models to estimate the cost of equity financing , assumes that the cost of equity is proportional to the amount of systematic risk associated with a firm

. For example , the cost of equity financing tends to be high when a firm faces a large degree of systematic risk, and the cost tends to be low when the firm faces a small degree of systematic risk. 

### The degree of systematic risk facing a firm and the subsequent cost of equity financing are determined by several variables , including the risk coefficient of a firm (beta, or B), the expected return on risk-free assets (Rf), and the additional return expected on assets facing average market risk (which is known as the equity risk premium , or ERP). The beta indicates the degree of risk associated with a given firm , relative to the level of risk (or price variability) in the overall stock market. Betas usually vary between 0.5 and 2.0. A firm with a beta of 0.5 faces half the risk of other stocks in the market; a firm with a beta of 2.0 faces twice the overall stock-market risk. Following this approach , the cost of equity financing for a particular company is given by the equation:



### where: ke=R.f+(B xERP) Eq. C.1

ke = the cost of equity for a company, Rf = the expected return of the risk

-free asset, B = the beta of the company stock, and ERP = the expected equity risk premium, or the amount by which investors expect the future return on equities to exceed that on the riskless asset. The cost of debt financing (kd) is the yield or interest rate paid on money borrowed by a company (raised, for example, by selling bonds ). As defined here, the cost of debt includes compensation for default risk and excludes deductions for taxes.

48

### The Department estimated the cost of debt for companies by adding a risk adjustment factor to

the current yield on long-term corporate bonds (the risk-free rate). This procedure is used to estimate current (and future) company costs to obtain debt financing. The adjustment factor is based on indicators of company risk, such as credit rating or variability of stock returns. The discount rate of companies is the weighted-average cost of debt and equity financing, less expected inflation. The Department estimated the discount rate using the equation:



### where: k=(ke Xwd+(kd Xwd) 

### Eq. C.2
k = the (nominal) cost of capital, ke and kd = the expected rates of return on equity and debt, respectively, and we and wd = the proportion of equity and debt financing, respectively. The real discount rate deducts expected inflation from the nominal rate. The expected return on risk-free assets, or the risk-free rate, is defined by the current yield on long-term government bonds. The ERP represents the difference between the expected (average) stock market return and the risk-free rate. As shown in Table C. 1, the Department used an ERP estimate of 5.5 percent, which it took from the Damodaran Online site (a private website, associated with New York University's Stern School of Business, that aggregates information on corporate finance, investment, and valuation).' The Department calculated an expected inflation of 2.3 percent from the average of the last five quarters' change in Gross Domestic Product (GDP) prices.2 The Department obtained the cost of debt, percent debt financing, and systematic firm risk from information provided at the Damodaran Online website.' Table C.1 shows average values across all private companies. However, the cost of debt, percent debt financing, and systematic firm risk vary by sector. Table C.1 Cost of Cap ital Factors Variable Symbol Average Value Source 

### Risk-free asset return Rf 5.5% Bloomberg Professional Equity risk premium ERP 5.5% Damodaran Online' 

### Expected inflation r 2.3% U.S. Bureau of Economic Analysis Cost of debt (after tax) kd 9.0% Damodaran Online' Percent debt financing wd 27% Damodaran Online' Systematic firm risk B 0.99 Damodaran Online' Small motors are purchased and owned by commercial and industrial companies. The Department used a sample of 3,182 companies to represent small motor owners. It took the sample from the list of companies included in the Value Line investment survey and listed on the Damodaran Online website.''4 The Department obtained the cost of debt, the firm beta, the

49

### percent of debt and equity financing, the risk-free return, and the equity risk premium from

Damodaran Online.I The Department estimated the cost of debt financing for these companies from the long-term government bond rate and the standard deviation of the stock price.5 As previously mentioned, the cost of capital may be viewed as the discount rate that should be used to reduce the future value of typical company project cash flows. It is a nominal discount rate, since anticipated future inflation is included in both stock and bond expected returns. Deducting expected inflation from the cost of capital provides estimates of the real discount rate by small motor ownership category (see Table C.2). Table C.2 Real Discount Rates by Small Motors Ownershi p Cate gory 

### Ownership Category SIC Codes * Mean Real Discount Rate (%) Standard Deviation (%) Number of

Observations 

### Industrial Companies 1-4 7.5 3.2 2409 Commercial Companies 5-8 7.3 4.7 1773 *SIC Codes refer to the U.S. Standard Industrial Classification system. Source: Lawrence Berkeley National Laboratory (LBNL) calculations based on firms sampled from the Damodaran Online website. Because industrial companies purchase the bulk of small motors, the Department used the 7.5 percent discount rate for its LCC analysis. The Department's approach for estimating the cost of capital provides a measure of the discount rate spread as well as the average discount rate. The Department inferred the discount rate spread by ownership category from the standard deviation, which ranges between 3.2 percent and 4.7 percent (Table C.2).


### REFERENCES 1. Damodaran, A. Damodaran Online. 2003. Stern School of Business, New York University. (Last accessed February, 2003.) This material is available in Docket #86. Contact Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW, Washington, DC, 20585-0121, telephone (202) 586-2945 for more information. <http://www.stem.nyu.edu/-adamodar/New-Home-Page/data.html.> 2. U.S. Department of Commerce - Bureau of Economic Analysis. GDP price change: Q3, 2000 - Q3, 2001. 2002. (Last accessed February, 2003.) This material is available in Docket #86. Contact Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW, Washington, DC, 20585-0121, telephone (202) 586-2945 for more information. Note: this quarterly report is no longer accessible from the BEA site. <http://www.bea.doc.gov/bea/glance.htm> 3. Bloomberg, L. P. Bloomberg Professional. 2003. (Last accessed February, 2003.) This material is available in Docket #86. Contact Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW,

50

### Washington, DC, 20585-0121, telephone (202) 586-2945 for more information.

<http://about.bloomberg.com/professional/profservice.html> 4. Value Line. Value Line Investment Survey. 2003. (Last accessed January, 2003.) This material is available in Docket #86. Contact Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW, Washington, DC, 20585-0121, telephone (202) 586-2945 for more information. <http://www.valueline.com>
5. Federal Reserve Board. Statistics: Releases and Historical Data - Selected Interest Rates - State and Local Bonds. 2002. (Last accessed February, 2003.) This material is available in Docket #86. Contact Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW, Washington, DC, 20585-0121, telephone (202) 586-2945 for more information. <http://www.federalreserve.gov/releases/hl 5/data/m/slbond.txt> 6. Ibbotson Associates. Cost of Capital 2001 Yearbook. 2001. Ibbotson Associates: Chicago, IL.

51

### Analysis of Energy Conservation Standards for Small Electric Motors

Draft forPublic Comment

June 2003
Building Technologies Office of Energy Efficiency and Renewable Energy

U.S. Department of Energy

### TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS ...........................................v EXECUTIVE SUMMARY ..................................................... vi

1 INTRODUCTION .......................................................1 1.1 Background ...................................................... 1 1.2 Overview of Considered Small Motors ................................. 2 1.3 Applications for Considered Small Motors .............................. 3 1.4 Study Approach ................................................... 4
2. GENERAL CHARACTERIZATION OF SMALL ELECTRIC MOTORS ........... 5 2.1 Three-phase Squirrel Cage Induction Motors ............................ 5 2.2 Single-phase Squirrel Cage Induction Motors ............................ 6 2.3 Energy Efficiency: Basic Considerations ................................ 7
3. THE MARKET FOR CONSIDERED SMALL MOTORS ........................ 9 3.1 Annual Shipments

................................................. 9 3.2 Features of Considered Small Motors

.................................. 9 3.3 Range of Energy Efficiencies

........................................ 12 3.4 Market Structure and Actors

........................................ 13 3.5 Motor Purchasing

................................................. 16


### 4. ENGINEERING ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF CONSIDERED SMALL MOTORS ................ 18 4.1 Approach ....................................................... 18 4.2 Efficiency and Cost Impacts of Design Options ......................... 21 4.3 Discussion ...................................................... 25 

### 5. LIFE-CYCLE COST ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF SMALL MOTORS ............................. 27 5.1 Method and Data ................................................. 27 5.2 Results for Capacitor

- Start, Induction

-Run Motor Options ................. 30 5.3 Results for Polyphase Motor Options ................................. 33
6. POTENTIAL NATIONAL ENERGY AND CONSUMER IMPACTS OF ENERGY CONSERVATION STANDARDS FOR SMALL MOTORS ..................... 35 6.1 Method ......................................................... 35 6.2 Estimates of Potential Energy and Consumer Impacts .................... 37


### 7. SUMMARY OF RESULTS .............................................. 41

### APPENDIX A. INFORMATION COLLECTION PROCESS ON USE OF SMALL MOTORS ................................................. 43
APPENDIX B. METHOD FOR ESTIMATING CONSIDERED SMALL MOTORS

SHIPMENTS BY INDUSTRY SECTOR ........................ 45
APPENDIX C. SMALL MOTORS DISCOUNT RATE CALCULATIONS ......... 47

iii

### LIST OF FIGURES

Figure 1-1 Total Domestic Shipments of Fractional Horsepower Motors in 1999 ......... 3 Figure 3-1 Capacitor-Start IR Motors - Shipments in 2000 ......................... 10 Figure 3-2 Small 3-Phase Motors - Shipments in 2000 ............................ 11 Figure 3-3 Listed Efficiency (full load) of Small Motor Models ..................... 13Figure 4-1 Increase in Efficiency and Cost from Steel Grade Change, CapacitorStart, 1 /2 horsepower, NEMA Data ................................... 20 Figure 6-1 Capacitor-Start Motors, National Energy and Consumer Impacts,

LBNL Analysis .................................................. 38 Figure 6-2 Capacitor-Start Motors, National Energy and Consumer Impacts,

NEMA Data ..................................................... 39 Figure 6-3 Polyphase Motors, National Energy and Consumer Impacts, LBNL Analysis .. 40


### LIST OF TABLES Table 1-1 Major Applications for Considered Small Motors .......................3-4 Table 3-1 Leading Manufacturers of Considered Small Motors Sold in the U.S. ........ 14 Table 3-2 Average Utilization Characteristics for General Purpose Small Motors by

Type of Application ............................................... 15 Table 3-3 Estimated Annual Shipments of General Purpose Small Motors by Type of

Application ...................................................... 16 Table 4-1 Electrical Steel Options Considered .................................. 19Table 5-1 Impacts of Efficiency Improvement on Typical End User, CapacitorStart, 1/2 horsepower LBNL Data .................................... 31Table 5-2 Impacts of Efficiency Improvement on Typical End User, CapacitorStart 1/2 horsepower, NEMA Data ................................... 32 Table 5-3 Impacts of Efficiency Improvement on Typical End User,

Polyphase 1 horsepower, LBNL Data ................................. 33 Table 5-4 Impacts of Efficiency Improvement on Typical End User, Capacitor



### Start 1/2 horsepower, NEMA Data ................................... 34

ivABBREVIATIONS AND ACRONYMS

CSCR capacitor-start, capacitor-run CSIR capacitor-start, induction-run EPCA Energy Policy and Conservation Act hp Horsepower HVAC Heating, ventilation, and air conditioning LBNL Lawrence Berkeley National Laboratory LCC Life-cycle cost NAICS North American Industry Classification System
NEMA National Electrical Manufacturers Association NPV Net present value 

### ODP Open dripproof OEMs Original equipment manufacturers quad One quadrillion (1015) British thermal units (Btu) or 293.1 billion kilowatt hours
SMMA Small Motor and Motion Association

V

### EXECUTIVE SUMMARY

Purpose Under 346(b)(1) of the Energy Policy and Conservation Act (EPCA) (42 U.S.C. 6317(b)(1)) the Department of Energy (DOE or Department) may determine whether energy conservation standards for certain small electric motors would be technologically feasible, economically justified, and would result in significant energy savings. In order to have a basis for a determination, the Department performed this analysis. 

### Scope of Motors Analyzed Under section 340(13)(F) of EPCA, 42 U.S.C. 6311(13)(F), the term "small electric motor" means a National Electrical Manufacturers Association (NEMA) general purpose, alternating current, single-speed, induction motor, built in a two-digit frame number series in accordance with NEMA Standards Publication MG1-1987, "Motors and Generators." The two-digit frame series encompasses NEMA frame sizes 42, 48 and 56. The horsepower ratings for the two-digit frame series range from 1/4 to 3 horsepower. These motors operate at 60 Hertz and have either a single-phase or a three-phase (polyphase) electrical design. Section 346(b)(3) of EPCA, 42 U.S.C. 6317(b)(3), also states that a standard prescribed for small electric motors shall not apply to any small electric motor that is a component of a covered product under section 332(a) of EPCA or covered equipment under section 340. Among single-phase two-digit frame motors, only capacitor-start motors, including both capacitor-start, induction-run (CSIR) and capacitor-start, capacitor-run (CSCR), can meet the torque requirements for NEMA general purpose motors. Among three-phase small motors, only non-servo motors can meet the NEMA performance requirements for general purpose motors. Hence, the analysis covers only these types of small motors. Market research indicates that the annual commercial sales volume of CSIR, CSCR and polyphase small motors meeting the EPCA definition is approximately 4 million units for capacitor start and 1 million units for polyphase designs. These motors are used in a wide variety of commercial and industrial applications, with the largest being pumping equipment and commercial/industrial heating, ventilating, air conditioning equipment rated over 240,000 Btu/h. 

### Methodology The analysis methodology consisted of five major elements: (1) Market research to better understand how small motors are used; (2) engineering analysis to estimate how different design options affect efficiency and cost; (3) life-cycle cost analysis to estimate the costs and benefits to users from increased efficiency in small motors; (4) national energy savings analysis to estimate the potential energy savings on a national scale; and (5) national consumer impacts analysis to estimate potential direct economic costs and benefits that would result from energy efficient small motors. Actual testing of sample motors was conducted. In conducting the engineering and life-cycle cost analyses, the Department utilized two sets of data. The first set was derived

vifrom motor testing and design costing conducted by an independent motor industry expert in

consultation with a working group comprised of major manufacturers of small motors. The methodology used is similar to methods commonly used by motor manufacturers. The second set of data was submitted by the aforementioned working group. 

### Summary of Results Energy efficiency-enhancing design options considered in this study have the energy savings potential described below. Differences in estimates of the efficiency and cost increases associated with the options and uncertainty about future shipments and efficiency trends produce a range of estimates for economic impacts for the considered motors. Capacitor-start, induction

-run motors

. The analysis based on DOE's motor testing and costing shows potential cumulative energy savings from motor efficiency improvement ranging from 0.6 to one quadrillion British thermal units (quads) of energy over the period 2010 to 2040. The corresponding cumulative economic benefit for consumers , expressed in terms of net present value of benefits (NPV) ranges from $ 0.4 billion to just over $ 1 billion. Analysis based on average data from the NEMA/SMMA working group indicates lower potential energy savings and economic benefits

. The highest savings scenario , which in this case refers to the stack change design option, shows energy savings of 0.6 quads with an NPV of $0.1 billion. In the scenario with least savings, the options all have negative NPV. Polyphase motors. The analysis based on DOE's motor testing and costing shows cumulative energy savings from steel grade changes ranging from a low of 0.15 quad to a high of 0.21 quad over the period 2010 to 2030

. The corresponding cumulative NPV range is from $0.09 billion to $ 0.27 billion

. The design options do not show positive NPV in most cases. For polyphase motors, DOE did not make estimates of national impacts using the NEMA/SMMA data because the manufacturers ' analysis was based on a 1/2 horsepower motor instead of the more typical one horsepower size. Furthermore , the manufacturers ' analysis shows some efficiency gains, but with an increase in life-cycle cost , which would lead to a negative NPV.

vii

### INTRODUCTION

1.1 Background Under 346(b)(1) of the Energy Policy and Conservation Act (EPCA), 42 U.S.C. 6317(b)(1), the Department of Energy (DOE or Department) may determine whether energy conservation standards for certain small electric motors would be technologically feasible, economically justified, and would result in significant energy savings. The purpose of this draft analysis is to provide a basis upon which the Department can make its determination. Under section 340(13)(F) of EPCA, 42 U.S.C. 6311(13)(F), the term "small electric motor" means a National Electrical Manufacturers Association (NEMA) general purpose alternating current single-speed induction motor, built in a two-digit frame number series in accordance with NEMA Standards Publication MG1-1987, "Motors and Generators." The two-digit frame series encompasses NEMA frame series 42, 48 and 56. The horsepower ratings for the two-digit frame series range from 1/4 to three horsepower. These motors operate at 60 Hertz and have either a single-phase or a three-phase electrical design (also known as "polyphase"). 

### Typical applications for such small electric motors include pumps, fans and blowers, woodworking machinery, conveyors, air compressors, commercial laundry equipment, service industry machines, food processing machines, farm machinery, machine tools, packaging machinery, and major residential and commercial equipment. EPCA section 346(b)(3) states that any energy conservation standard prescribed under subsection (b)(2) "shall not apply to any small electric motor which is a component of a covered product under section 322(a) or a covered equipment under section 340." Such covered products and equipment that contain small electric motors include residential air conditioners and heat pumps, furnaces, refrigerators and freezers, clothes washers and dryers, and dishwashers; and commercial package air conditioning and heating equipment, packaged terminal air conditioners and heat pumps, and warm air furnaces. As a result of the above definitions and exclusions, small electric motors covered by EPCA section 346(b)(1) only comprise about four percent of the total population of small electric motors. Nevertheless, these motors, which the Department identifies here as "considered small motors," account for a major portion of the energy consumed by the total population of small motors because of their size and use.

1.2 Overview of Considered Small Motors 

### As a result of the above EPCA definitions and exclusions , the motors considered in this report are a subset of the total population of small electric motors. Further , the term "general purpose"

### in the EPCA definition' of a small motor is tied to the NEMA Standards Publication MG 1-1987

performance requirements that have been established for general purpose motors, such as the minimum levels for breakdown and locked rotor torque for small electric motors presented in MG 1-1987 paragraph 12.32. Among considered, single-phase, two-digit motors, those of shaded pole, permanent split capacitor, and split phase designs do not meet the torque requirements of NEMA general purpose motors. Capacitor-start motors, including both capacitor-start, induction-run (CSIR) and capacitor-start, capacitor-run (CSCR), can provide the torque requirements for NEMA general purpose motors. Other single-phase motors such as universal, drip-proof, and series AC are designed for definite or special-purpose applications. 

### The CSCR motor is not interchangeable with the CSIR motor in most cases because of differences in size and starting torque. The addition of a second running capacitor to the motor changes the dimensional envelope of the motor but not the frame size. In this analysis, the Department considers the CSIR and CSCR motors as separate product classes. Although not interchangeable for all applications, there may be some applications for which the CSCR offers a high efficiency alternative to a CSIR motor. Among polyphase small motors, synchronous stepper motors cannot provide the torquerequirements of NEMA general purpose motors, while polyphase servo motors are for definitepurpose applications. Polyphase non-servo motors do meet the NEMA requirements for general purpose motors. 

### For the purposes of this analysis, the considered small electric motors that meet the EPCA definition fall into three product classes: • Single-phase, capacitor-start, induction-run motors • Single-phase, capacitor-start, capacitor-run motors • Polyphase (non-servo) motors These classes accounted for close to 4 percent of total domestic shipments of fractional horsepower motors in 1999 (Figure 1-1).

' EPCA does not define the term "general purpose motor," although it does define the terms "definite purpose motor" and "special purpose motor." According to EPCA, "definite purpose motor" means "any motor designed in standard ratings with standard operating characteristics or standard mechanical construction for use under service conditions other than ususal or for use on a particular type of application and which cannot be used in most general purpose applications." Section 340(13)(B), (42 U.S.C. 6311 (13)(B)). Likewise, "special purpose motor" means "any motor, other than a general purpose motor or definite purpose motor, which has special operating characteristics or special mechanical construction, or both, designed for a particular application." Id. at (C). Consequently, the term general purpose must be derived by eliminating those definite and special purpose motors and subsequently defined within the context of NEMA performance characteristics that can operate successfully in many different applications.
2Figure 1-1 Total Domestic Shipments of Fractional Horsepower Motors in 1999 Other polyphase -\Small Motor Shipments, 1999
1% Other single Capacit r start 3% Skeleton type hase p 10% shaded pole

Conventional type shaded pole 39%

Source: US Census Bureau, Current Industrial Reports, Motors and Generators -- MA335H Not all capacitor-start and polyphase non-servo motors are NEMA general purpose motors. Those in the "definite-purpose" category include many motors used for fans and blowers and specific types of pumps. 1.3 Applications for Considered Small Motors The applications for considered small motors are listed below: Table 1-1 Major Applications for Considered Small Motors
Pumps and Pumping Equipment Commercial and Industrial HVAC/Refrigeration Equipment Farm Machinery Conveyors 

### Industrial and Commercial Fans and Blowers Machine Tools Textile Machinery Woodworking Machinery Food Products Machinery

3

### Air and Gas Compressors

Packaging Machinery 

### General Industrial Machinery Commercial Laundry Machinery Service Industry Machinery

Many motors used in pumps and pumping equipment and industrial and commercial fans and blowers are definite-purpose motors, but a significant number of general-purpose motors are also used. In commercial and industrial HVAC equipment, the HVAC equipment that is covered under other EPCA requirements (section 340) is rated at less than 240,000 Btu per hour (cooling capacity). Motors under consideration in this study are used in larger equipment. 

### 1.4 Study Approach This study consisted of five major components: • Market research to better understand usage patterns of considered motors; • Engineering analysis to estimate the impact on efficiency and cost of feasible design options; 

### • Life-cycle cost analysis to estimate the benefits and costs of efficiency improvement for end users of small motors; and • National energy savings analysis to estimate the potential national energy savings from efficiency improvement of considered motors. 

### • National consumer impacts analysis to estimate the potential direct economic costs and benefits resulting from efficiency improvement of considered motors. The methods and data sources used are discussed in the relevant chapters.

4

### 2. GENERAL CHARACTERIZATI ON OF SMALL ELECTRIC MOTORS

2.1 Three-phase Squirrel Cage Induction Motors Three-phase squirrel cage induction motors are used as the prime mover for the majority of commercial and industrial sector motor applications requiring over a few horsepower, and in many smaller applications as well. The typical three-phase induction motor employs a wound stator and a "squirrel cage" rotor. Magnetic force acting between the stator and rotor units produces motor torque

. The stator consists of a hollow cylindrical core formed by a stack of thin steel laminations

. Insulated copper windings are assembled into slots formed about the inner circumference of the core. Stator winding carries current through one slot and then back though a companion slot located approximately one pole pitch distant from the first

. For a two-pole motor, the pole pitch is half the circle , while for four

- or six-pole machines , it is one-quarter or one-sixth of the circle, respectively. 

### The rotor unit consists of a laminated steel core press fitted to the steel shaft. Like the stator, the rotor core also has windings set into slots , but these are deployed about its outer circumference. Moreover, in the squirrel

-cage rotor configuration the rotor windings consist of solid conductor bars that are interconnected at either end with solid-conductor end rings

. Absent the laminated steel core, this assembly of bars and end rings would look like a "squirrel cage" and hence the nomenclature for this very sturdy and cost-effective construction. When the stator windings are energized by a three

-phase electrical source, a radially directed magnetic flux is established in the "air gap" between the rotor and the stator. This flux rotates at a speed determined by the electrical frequency and number of poles given by the stator-winding configuration

. For example , with 60 Hz excitation and a two-pole (or one
-pole-pair) winding, the flux rotates at a so

- called " synchronous " speed of 60 revolutions per second (rps) or 3,600 revolutions per minute (rpm). The flux produced by the energized stator windings envelops the rotor cage bars and due to its motion, induces current to flow in these conductors. The interaction of the rotating stator flux and the rotor bar currents develops motor drive torque. Important characteristics of the three

-phase squirrel cage induction motor are simplicity and ruggedness , inherently high starting torque (without the start-assisting devices required for single

-phase motors), and the potential to achieve high efficiency. Compared with larger motors, the efficiency of small (one horsepower and below) three-phase induction motors declines rapidly as the load drops below 70 percent of rated load. Polyphase motors in a two-digit NEMA frame size range from 1/4 horsepower to three horsepower, though the majority are one horsepower or less. They are available in two-, four-, or six-pole configurations (corresponding to speeds of 3500 , 1750 , or 1150 rpm, respectively). A four-pole configuration is the most common.

52.2 Single-phase Squirrel Cage Induction Motors



### The basic principal of operation of a single

-phase, squirrel

- cage, induction motor is similar to a three-phase induction motor. A rotating magnetic field is easily established with three-phase excitation of motor windings as described in the preceding subsection

. In a single-phase induction motor, two counter-rotating fields are produced which develop equal and opposite rotor torque components when the motor is at standstill

. However, if means are provided to urge rotation in one direction or the other , net torque will be developed to sustain the rotation and drive the attached load

. While the electromagnetic torque acting on the rotor of a three-phasemotor is relatively smooth and free from pulsating disturbances, this is not the case in the singlephase motor. In this instance , the torque may pulsate from zero to a maximum value at twice the power line frequency

- e.g., 120 Hz. In most applications, this is of little consequence as the inertia of the motor and the driven load act to smooth out the torque pulsations. The basic construction of the single

-phase induction motor includes a rotor and stator; eachcontains a stack of electromagnetic grade steel laminations as previously described for the threephase motor

. The "squirrel cage" rotor has a series of aluminum bars cast lengthwise into the rotor laminations

. These bars are connected with rings located at each end of the stack. The stator laminations contain a series of slots for the windings that are aluminum or copper wire. Two sets of windings are provided , at a 90 °-phase difference. The "main" or "run" winding operates directly from line current, and stays energized as long as the motor is running. Single phase motors are categorized according to the way the "start and run," "secondary," or "auxiliary" winding is utilized for starting the motor and then running it at normal speed. Widely used single-phase motor categories are: • The Split-Phase Motor -- This configuration is the least costly. The start winding has a higher resistance

-to-reactance ratio than the main winding, which is achieved by using a relatively small diameter wire. This reduces both the amount and the cost of the copper in the start winding and the space taken up in the stator slots by this winding. • The Capacitor-Start, Induction-Run (CSIR) Motor -- This configuration is a relatively low-efficiency motor that provides higher starting torque than the split-phase motor. • The Permanent Split Capacitor (PSC) Motor -- This configuration has a high potential efficiency depending on the design. • The Capacitor-Start, Capacitor-Run (CSCR) Motor -- This is an efficient run configuration, with a large capacitance at start-up providing a large starting torque. The start capacitance is typically three to five times the size of the run capacitor, but can be packaged compactly, because continuous operation (and the resulting heat dissipation) is not a consideration. Split phase and CSIR motors use the secondary winding for starting only ; the capacitor start version provides higher starting torque. The secondary winding uses a much smaller diameter wire energized for a limited time without overheating and automatically disconnected after start

6up by a centrifugal switch. In PSC and CSCR motors, the secondary winding continues

operating when the motor is running

. The capacitor in series'with this winding shifts the phase of the input voltage approximately 90°, so the two windings together create a rotating magnetic field

. The benefits achieved by PSC and CSCR motors are the suppression of torque pulsations and the improved utilization of both the windings and the iron in the motor. These benefits increase the efficiency and the power factor of the motor, but at an added cost associated with the capacitor. Single-phase motors in a two-digit NEMA frame size range from 1/4 horsepower to one horsepower and are available in two-, four -, or six-pole configurations

. A four-pole configuration is the most common.

2.3 Energy Efficiency: Basic Considerations The application of a motor to do work creates energy losses that are both external and internal to the motor

. Losses that are external to the motor are influenced by the power factor of the motor. The power factor is the ratio of real power to apparent power, and ranges from zero to one. The real power (measured in watts) is used to create the useful work (and waste heat) of the motor. Reactive power (measured in volt-amps reactive ) is used to create the magnetic field needed for the motor to operate, but it does not contribute to the mechanical power generated by the motor. 

### Internal energy losses are usually categorized as conductive , magnetic, mechanical, and stray. All of these energy losses appear as heat in the motor

. Losses are strongly dependent on design and quality control of motor components. The conventional methods for reducing losses include increasing the amount of active material (e.g., the diameter of wire conductors); substituting a higher grade of steel for the magnetic components ; improving the mechanical components and design (winding, bearings, and fan); and improving the quality control of components and assembly. These methods may increase either the motor cost or size if no other changes in the motor are made.The precise impacts on motor cost and efficiency will depend on how the designer makes tradeoffs between added performance from improved materials or design and maintenance of the motor performance. A designer cannot ignore interaction among different motor losses in the process of optimizing

. The I2R (the expression of heat loss in watts where I is measured current and R is resistance) of the rotor is a key loss, as are windage, friction and stray losses. Options that may reduce the stray loss can increase the core loss; those that can reduce the windage loss may increase the I2R loss ; those that may reduce the slip loss may increase the core loss.

### Often a measure that enhances efficiency improves motor performance such that other costsaving changes can be made to offset the cost of the efficiency improvement. An example of this is the use of more expensive high permeability steel in place of iron

. This leads to higher efficiency, smaller motor size, and improved torque, and also allows the volume of copper used
7

### in the motor to be reduced while maintaining performance.

Various component additions to a single-phase motor are known to improve the efficiency while increasing the cost and usually changing the motor's dimensions. Adding an auxiliary winding with a capacitor, adding an auxiliary winding with a starting capacitor and switch, or adding an auxiliary winding with starting capacitor, switch, and running capacitor to a single-phase motor can reduce energy losses, increase torque, and improve the power factor. The additional winding may be continuously energized as in the CSCR motor, or disconnected with a centrifugal switch as is often done in the CSIR motor. The CSCR motor has a switch added in series with the starting capacitor and adds a second running capacitor in parallel to the starting capacitor that is not switched out of the circuit after starting. The auxiliary winding and running capacitor of the CSCR motor contribute to motor output, allowing it to approach the efficiency of a polyphase motor. The efficiency increase of the CSCR motor over the CSIR motor ranges from about five percent to about 24 percent (EPRI, 1987).



### REFERENCES
Electric Power Research Institute , 1987. Optimization of Induction Motor Efficiency, Vol. 2: Single-Phase Induction Motors. EPRI EL-2152.

8

### 3. THE MARKET FOR CONSID ERED SMALL MOTORS

3.1 Annual Shipments


### The historic trend in annual shipments of considered small motors is uncertain. Data from the U.S. Census Bureau' show little growth in the 1990s, but these data only include motors produced in the U.S. NEMA provided confidential data on two-digit-frame-size, fractional-horsepower motor sales to domestic customers by NEMA manufacturers, covering the period from 1971 to 2001. After interpolating the data, the average annual growth rate is 1.5 percent. The three-phase and capacitor-start motors being analyzed make up only around 20 percent of the motors covered by these data. A joint NEMA/SMMA survey of U.S. sales of considered small motors in 2000 estimated values of 5.4 and 1.3 million for capacitor-start, induction-run (CSIR) and polyphase motors, respectively. CSIR motors accounted for approximately 95 percent of total shipments of capacitor-start motors.

3.2 Features of Considered Small Motors The basic features of considered small motors sold in 2000 (according to the NEMA/SMIVIA survey) are shown in Figures 3-1 and 3-2. Open motors account for 93 percent of total CSIR shipments. The most important size categories (with roughly equal shares) are 1/3, 1/2, and 3/4 horsepower. The average size is 1/2 horsepower. Four-pole motors account for a somewhat higher share than two- and six-pole motors.3 

### For polyphase motors, enclosed motors account for two-thirds of total shipments, reflecting the greater use of such motors in industrial environments. The largest sales categories are 3/4 and one horsepower. The average size is one horsepower. Four-pole motors account for two-thirds of the total.

2 US Census Bureau, Current Industrial Reports, Motors and Generators -- MA335H. The Department has included all single-phase motors, one horsepower and over, with capacitor-start motors.

s The shares of two- and six-pole motors are estimated values, as complete data were lacking.
9

### Figure 3-1 Capacitor-Start, Induction-Run Motors - Shipments in 2000

Horsepower

Source: NEMA/SMMA survey

10

### Figure 3-2 Small Polyphase Motors - Shipments in 2000

Source: NEMA/SMMA survey

113.3 Range of Energy Efficiencies



### The Department assembled data from manufacturers' catalogs on the listed nominal full-load efficiency and other features of over 700 different models (A.D. Little, 2001). While these data provide an approximate picture of the spread of efficiencies on the market, two caveats bear mention

. First, the reported efficiencies are not precisely comparable among different manufacturers, since they are not all based on the same test procedure. Second, many of the models likely have a low sales volume , so looking at the spread of the data may not give an accurate portrait of what is actually being sold. Figure 3-3 shows the full-load efficiency versus , the nominal horsepower of capacitor

- start and three-phase motors in a popular design. Generally speaking , larger motors have higher efficiency than smaller motors in a given class. For open , four-pole capacitor

- start motors, the efficiency range is greater for 3 /4 horsepower motors than for 1 /3 and 1/2 horsepower motors. Some of the highest-efficiency motors larger than one horsepower are capacitor

- start, capacitor-run motors. For three

-phase motors, there is also a significant range in efficiency. The range of efficiencies for a given type and size is likely due in part to different methods of testing among the manufacturers

. Differences in specific features also play a role.

12Figure 3-3 Listed Efficiency ( full load) of Small Motor Models

85 80 75 70 C 65 60 55 50 45 0

80
75

60 55 Capacitor Start Motors: Open, 4 Pole

I

1 /2 1

Horsepower Polyphase tors: Endosed, 4 Pole



### I

50 1 0 1/2 1 11/2 2 Hasepower



### Source: A.D. Little (2001)
3.4 Market Structure and Actors 

### The Department estimates the distribution channels for considered small motors as follows: Motor Manufacturers 4 Original Equipment Manufacturers (OEMs) 40% Motor Manufacturers - Distributors 4 OEMs 25% Motor Manufacturers 4 Distributors 4 End Users 35% 

### The latter are motors sold to end users as replacements or spares. A high percentage of considered small motors sold in the U.S. are domestically manufactured. In addition to imported stand-alone motors, some considered small motors are imported as components of equipment built in other countries

. The magnitude of such imports is difficult to determine.

13

### Table 3-1 lists the manufacturers that produce most of the considered small motors in the U.S.

Table 3-1 Leading Manufacturers of Considered Small Motors Sold in the U.S. Manufacturer Brand A.O. Smith A.O. Smith, MagneTek, 

### Baldor Electric Baldor Electric Co. Emerson Motors Emerson, U.S. Motors General Electric GE Motors Regal-Beloit Lincoln Motors, Marathon Electric Rockwell Automation Reliance Electric TECO Electric and Machinery Co. Ltd. TECO, TECO-Westinghouse Motor Company 

### Toshiba International Corporation Toshiba International Corporation WEG Electric Motor Corp. WEG
There are dozens of OEMs that incorporate considered small motors in industrial, agricultural, and commercial equipment. These range in size from large to small companies. The users of equipment containing considered small motors primarily consist of firms that have the applications listed in Table 3-2. The large diversity of applications poses challenges with respect to accurately characterizing typical motor usage patterns. To determine how considered small motors are used, the Department conducted considerable research, including review of trade literature and interviews with manufacturers that produce the equipment into which small motors are built (Easton Consultants , 2001). See Appendix A for description of the information gathering process. The estimated typical annual hours of use ranges from 800 hours for air and gas compressors to 5000 hours for industrial/commercial fans and blowers. Many of the values are in the 2000-3000 range.

14Table 3-2 Average Utilization Characteristics for General Purpose Small Motors by
Application Hours/ year Motor loading

(% of rated) 

### Farm Machinery 1000 70% Conveyors 3000 50% Machine Tools 2000 60% Textile Machinery 3000 70% Woodworking Machinery 2000 35% 

### Food Machinery 3000 60% Pumps and Pumping Equipment 3000 65% Air and Gas Compressors 800 85% 

### Industrial/Commercial Fans and Blowers 5000 80% Packaging Machinery 3000 60% General Industrial Machinery 2000 n/a Commercial Laundry Machinery 2000 60% Commercial and Industrial HVAC/Refrigeration Equipment 2500 60% Service Industry Machinery 1500 n/a 

### Source: Easton Consultants (2001) The Department also investigated typical motor loading practices. The motor loading is commonly in the 60-70 percent range, though it is higher in two cases, and lower in two cases. To assess the relative importance of different application categories , the Department estimated the magnitude of annual shipments of considered small motors to each group (see Appendix B for method). Motors used in pumps and pumping equipment and in commercial and industrial HVAC/refrigeration equipment each account for approximately 30 percent of the total shipments for capacitor

- start motors. No other category accounts for more than ten percent. Motors used in pumps and pumping equipment are the largest category for polyphase motors, followed by commercial and industrial HVAC/refrigeration equipment and conveyors.



### Type of Application

15

### Table 3-3 Estimated Annual Shipments of General Purpose Small Motors by Type of

Application Capacitor

- Start Polyphase 

### `000 % `000 % Farm Machinery 457 8.1 33 2.5 Conveyors 497 8.8 207 16.0 Machine Tools 81 1.4 81 6.2 Textile Machinery 18 0.3 13 1.0 Woodworking Machinery 101 1.8 34 2.6 Food Machinery 90 1.6 90 7.0 Pumps and Pumping Equipment 1723 30.4 364 28.1 Air and Gas Compressors 338 6.0 

### 101 7.8 Industrial/Commercial Fans and Blowers 248 4.4 62 4.8 

### Packaging Machinery 12 0.2 11 0.8 General Industrial Machinery 101 1.8 38 2.9 Commercial Laundry Machinery 104 1.8 9 0.7 Commercial and Industrial HVAC/Refrig Equip. 1770 31.2 239 18.4 Service Industry Machinery 125 2.2 16 1.2 

### TOTAL, 5664 100 1297 100 Source: Easton Consultants (2001)


### 3.5 Motor Purchasing An end user will almost always replace a worn

-out motor with the same model , which means that the motor purchase decision is effectively made by the OEMs, and not by the actors who use the motors and pay for the electricity to run them. The price paid for a motor depends on the type of purchaser and the volume purchased. Our research indicates typical ranges as follows:

Channel Purchase price (% of list) Motor Manufacturers - OEMs 37-40 Motor Mfrs 4 Distributors -> OEMs 46-48 Motor Mfrs - Distributors - End Users 65-75



### App lication

16

### Our interviews with OEMs inquired about their attitudes towards motor energy efficiency. Most

of the OEMs took a view of motor efficiency that can be summarized as follows: 1 Efficiency is not a high priority in selection of motors for most of the equipment studied. The respondents characteristically stated that they have not given much attention to motor efficiency in this size range primarily because their customers do not request more efficient motors, and are more concerned with first cost than small reductions in operating cost. 2. Somewhat more interest in energy efficiency was shown in some industrial categories -- conveyors, food products machinery, industrial pumps, and packaging equipment -- than others. Relatively more interest in energy efficiency in general was expressed in these industries where hours of operation are longer and the end-user customer is a more sophisticated cost-sensitive operator. These categories in total represented about 40 percent of two-digit motors. (The response from the HVAC category was mixed, with some OEM respondents quite interested in greater efficiency, and others not.) 

### 3. In several instances some interest was shown in total motor system efficiency, particularly adjustable speed drives. There is wide recognition that energy can be saved with the installation of adjustable-speed drives and other devices to control motor systems, particularly in HVAC fans and industrial pumps. Many of the product designers noted that there are few premium-efficient, two-digit motors available. They stated that even if an OEM wanted to use a more efficient motor it would be difficult because motor manufacturers offer very few premium-efficient motors in these frame sizes. In the case of several manufacturers of single-phase motors, the CSCR motors are designated "premium efficient" in contrast to CSIR motors. However, the former are not always physically interchangeable with a CSIR motor.

REFERENCES Arthur D. Little, 2001. Small motor database (Prepared for this study). Easton Consultants, 2001. Analysis of considered motors use by principal machinery categories (Prepared for this study).

17

### ENGINEERING ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF CONSIDERED SMALL MOTORS

4.1 Approach The most practical ways to adjust motor performance to achieve increased efficiency for the considered small motors are: (1) change the grade of electrical steel; (2) change the stack length; and (3) change the flux density by adjusting the effective turns or changing the thickness of the steel. The latter option is only done at severe expense to the production process, so the Department did not analyze it in this study. The Department did not analyze optimizing of winding and wire. With respect to winding, although there are optimum flux densities and torque per ampere characteristics that will yield the best efficiencies, the gains may be at the expense of other performance characteristics. With respect to wire, increased slot fill and proper end turn configurations will yield less I2R losses, but there are limitations as to how much wire can be inserted automatically. Hand insertion, which is an option in larger motors, is not practical for fractional motors. For each product class, the Department selected several popular models to analyze. The Department engaged a recently retired engineering executive from the motor industry (Austin Bonnett) to conduct the analysis. The testing of the sample motors followed industry practice for these motor types. It used the dynamic reaction torque procedure with a controlled acceleration cycle using a d.c. drive motor. In three seconds 2000 data points were collected that characterized the motor performance. Loss segregation was then achieved through computer modeling and correlation. The influence of temperature is not included in this type of testing because obtaining accurate results for this size of motor is problematic and this factor is not significant. 

### The Department conducted separate analyses of change in the grade of electrical steel and change in the stack length. The electrical steel options considered are shown in Table 4-1 (see section below for discussion of the motor manufacturers' analysis). For stack changes, the options considered involve incremental increases of 0.25 inch with respect to the sample motors.

Note: In this chapter, the term "Capacitor-Start" refers to capacitor-start motors with induction run.

18

### Table 4-1 Electrical Steel Op tions Considered

Grade Type* Maximum Loss (watts/lb 15k 60 hz Thickness (inch) 

### LBNL Analysis
Grade A Cold rolled 4.51 0.031
Grade B Cold rolled 4.15 0.031
Grade A+ Cold rolled 4.04 0.025
Grade B+ Cold rolled 2.78 0.022
M47 Semi-processed electrical 1.53 0.019 Manufacturers'Analysis


### Grade 1 Cold rolled 0.026-0.031
Grade 2 Cold rolled 0.022-0.025
Grade 3 Semi-processed electrical 0.018-0.022 * Semi-processed steel with full anneal after punching
The efficiency change for each design package was calculated using the traditional motor performance program based on equivalent circuit analysis, which is used by most motor manufacturers. The stator and rotor are assumed to be at ambient temperature. The I2R losses are understated due to a lower resistance being used in the calculations. The effect could be overstatement of motor efficiency in the 0.25-0.75 load range. However, the relationship among various design options will be accurate. Costing Changes in Design 

### The Department's analysis only considered the active material cost changes. These materials include the electrical steel, copper winding and aluminum rotor bar/end ring. The active material costs were calculated based upon typical costs when purchased in volume. No other materials are normally affected by the design changes considered. Labor and burden were not considered because the cost of labor is minor and the burden is spread over a large number of manufacturing activities. The impact on set-up time and the introduction of new part numbers were also not considered because such costs are uncertain and likely small.

19

### The Base motor in each case was given a "per-unit" (PU) cost of one. All active material

changes are related to the PU cost of one. If a change in electrical steel represented a 10 percent change in the total active material cost, for example, the PU number would be 1.10 for the new design. This methodology is quite commonly used by the motor industry (with some slight variations) for an initial cost estimate of the impact of design changes. It is based on the assumption that labor costs are a very small part of the total cost for motors of this type, where extensive automation is employed. Of course, if the design change prevents the normal processes from being used, this method is less accurate. Other costs can be broken into fixed and variable. The fixed costs normally do not change, and the variable portion is absorbed based on large volume runs, and hence is not included in the analysis. Analysis Submitted by Motor Manufacturers In addition to the analysis described above, the Department asked a working group of motor manufacturers established by NEMA and SMMA to provide comparable data. The results, provided by four manufacturers, show considerable variability (Figure 4-1). Each manufacturer selected a typical motor to use as the "base motor." The Department believes that each manufacturer used somewhat different methods and assumptions concerning efficiency and cost changes. Furthermore, the precise steel grades considered varied, so the data are presented in terms of Grades 1, 2, and 3 (see Table 4-1). Figure 4-1 Increase in Efficiency and Cost from Steel Grade Change, Capacitor-Start,

1/2 horsepower,NEMA Data*

1.5
1.4
1.3

N U 1.2
1.1
1.0
0.9 53 55 57 59 61 63 65 67 69 % % % % Effkie.c4 % % % -o--Company A --p-Company B --Company C Company D Four Company Average

* Cost for Companies A, B and D includes capital for new production tooling

20For steel grade options, the NEMA data in the tables below refer to the average values of the four

submissions. For stack change options, the NEMA/SMMA working group provided data that it considered most typical.


### 4.2 Efficiency and Cost Impacts of Design Options The tables below present the results of the analyses of steel grade and stack length change. All calculations assume operation at 70 percent of the rated load. Capacitor

-Start Motors: Steel Grade Options. 

### The 4K motor has relatively low efficiency, so the design options yield proportionately more efficiency gain than for the more typical 6K motor. The NEMA average data show much less efficiency gain than does the LBNL analysis.

Grade A Grade B Grade B' M47 P.U. Cost 1.00 1.03 1.08 1.25 Input (Watts) 492 462 447 438 Outpot (Watts) 265 265 265 265 Loss (Watts) 227 197 182 173 Efficiency 53.9% 57.4% 59.3% 60.5%

Grade A Grade B Grade B+ M47 P.U. Cost 1.00 1.03 1.10 1.25 Input (Watts) 417 399 391 378 Output (Watts) 261 261 261 261 Loss (Watts) 156 138 130 117 Efficiency 62.6% 65.4% 66.8% 69.0%

Capacitor-Start LBNL #4K, 1/2 horsepower, 4-pole, ODP

Ca acitor-Start LBNL #6K, 1/2 horse p ower, 4-p ole, ODP

21

### Grade 1 Grade 2 Grade 3

P.U. Cost 1.00 1.10 1.21 Input (Watts) 435 423 415 Efficiency 60.0% 61.7% 62.9% 

### Capacitor

-Start Motors : Stack Change O ptions The stack change options yield less efficiency gain (for the LBNL 6K and NEMA motors) than do the steel grade options. The NEMA/SMMA analysis shows somewhat greater efficiency gain from stack change than does LBNL's analysis of the 6K motor.



### Base Plus stack Plus 2 stack Plus 3 stack P.U. Cost 1.00 1 .09 1.19 1.29 Input (Watts) 492 458 441 429 Output 265 266 266 266 Loss (Watts) 227 192 175 163 Efficiency 53.9% 5 8.1% 60.3% 62.0%

Base Plus stack Plus 2 stack Plus 3 stack P.U. Cost 1.00 1 .07 1.15 1.22 Input (Watts) 417 411 405 4012 Output (Watts) 261 261 261 261 Loss (Watts) 156 150 144 140 Efficiency 62.6% 63.5% 64.4% 65.1%

Ca acitor-Start NE NM , 1/2 horsepower, 4-pole, OD



### Cap acitor-Start LBNL #4K, 1/2 horse power, 4-p ole, ODP

Ca acitor-Start LBNL #6K, 1/2 horse power, 4-p ole, ODP

22

### Base Plus stack Plus 2 stack Plus 3 stack

P.U. Cost 1.00 1 .10 1.20 1.30 Input (Watts) 421 406 398 392 Efficiency 62.0% 64.3% 65.5% 66.5%

Polyphase Motors: Steel Grade O ptions In LBNL's analyses, the lowest-loss option (M47) yields an efficiency gain of approximately five points. The NEMA average shows an increase of four points from the base motor to Grade 3.



### Grade A Grade B Grade B+ M47 P.U. Cost 1.00 1 .03 1.7 1.15 Input (Watts) 361 352 347 338 Output (Watts) 267 267 267 267 Loss (Watts) 94 85 80 71 Efficiency 74.0% 75.8% 76.9% 79.0%

Grade A Grade B Grade B+ M47 P.U. Cost 0.93 0.96 1.00 1.14 Input (Watts) 381 368 363 353 Output (Watts) 266 266 267 267 Loss (Watts) 115 102 96 86 Efficiency 70.1% 72.3% 73.5% 75.6%

Cap acitor

- Start NEMA, 1/2 horse ower, 4- p ole, ODP



### Polyp hase LBNL #3N, 1/2 horsepower, 4- p ole, ODP

Polyphase LBNL #2N, 1/2 horsepower, 4- p ole, ODP

23

### Grade 1 Grade 2 Grade 3

P.U. Cost 1.00 1.10 1.20 Input (Watts) 383 369 362 Efficiency 68.1 70.7 72.1

Grade A+ Grade B+ M47 P.U. Cost 1.0 1.04 1.20 Input (Watts) 699 682 658 Output (Watts) 534 534 534 Loss (Watts) 165 148 124 Efficiency 76.4% 78.3% 81.2% Note: Grade B yields same efficiency as Grade A+

Polyphase Motors: Stack Change Options The efficiency gain from stack changes is less than that for the steel grade options . For the "plus stack" option , the LBNL and NEMA analyses agree reasonably well.

Base Plus stack Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.10 1.17 1.23 Input (Watts) 361 359 354 355 Output (Watts) 267 268 266 268 Loss (Watts) 94 91 88 87 Efficiency 74.0% 74.7% 75.1% 75.5%

Polyp hase NEMA, 1/2 horse ower, 4-pole, OD

Polyphase LBNL #3N, 1 horse ower, 4-pole, ODP

Polyphase LBNL #3N, 1/2 horsepower , 4-pole, ODP

24Base Plus stack Plus 2 stack Plus 3 stack



### P.U. Cost 1.00 1.08 1.23 1.37 Input (Watts) 363 358 347 340 Output (Watts) 267 267 266 266 Loss (Watts) 96 91 88 87 Efficiency 73.5% 74.6% 76.6% 78.2%

Base Plus stack Plus 2 stack Plus 3 stack P.U. Cost 1.00 1.08 1.16 1.24 Input (Watts) 361 357 353 352 Efficiency 72.2% 73.1% 73.9% 74.1 %

Base Plus stack Plus 2 stack Plus 3 stack 

### P.U. Cost 1.00 1.06 1.1 1.24 Input (Watts) 699 692 677 674 Output (Watts) 534 534 534 534 Loss (Watts) 165 158 143 140 Efficiency 76.4% 77.2% 78.9% 79.2%

4.3 Discussion 

### Changing to a lower-loss grade of steel may involve a change in thickness. The major disadvantage of altering the thickness is that it usually requires new lamination punching dies, because these are usually optimized for a finite thickness. Standardizing on one die can cause excessive burr and slugs to stick in the dies. Most manufacturers only use one gauge of steel for a particular diameter of stator.

Polyphase LBNL #2N, 1/2 horse p ower, 4-pole, ODP

Polyphase NENIA, 1/2 horsepower, 4-pole, ODP

Polyphase LBNL ON, 1 horse p ower, 4-pole, ODP

25

### Changing the stack length could cause the active material of the motor to exceed the mechanical

package that houses the stator and rotor, hence affecting the motor interchangeability for some applications. If the motor frame is longer due to the increase in stack length, the motor may not fit on the application. If the stack is too long for a given frame, it might restrict the ventilation through the motor.

26

### 2. LIFE-CYCLE COST ANALYSIS OF DESIGN OPTIONS TO IMPROVE EFFICIENCY OF SMALL MOTORS

5.1 Method and Data To assess the life-cycle cost to end users of designs that improve motor efficiency, the Department conducted an analysis that compares the additional up-front cost to the value of electricity savings. The life-cycle cost analysis compares the cost to the discounted value of electricity savings over the life of the motor. The simple payback analysis calculates the amount of time required for the electricity savings to match the incremental cost. The analysis requires several inputs: 

### 1. Typical utilization in terms of hours and loading; 2. Typical price for the base motors (allows us to express the percentage change in per unit cost in dollar terms); 

### 3. Typical motor lifetime; and 4. Discount rate (to express the present value of future money savings). 

### The Department discusses these variables below.

Motor Utilization 

### The estimates of average annual hours of use, loading, and shipments for each application category (see Chapter 3) yield weighted-average values as follows: Annual hours of use: 2500 (for both capacitor-start and polyphase) Average loading (percent of rating): 70%

Price for the Base Motors The Department calculated average purchase prices for the prototype motors using the following assumptions:

27Purchase price Distribution 

### Channel (% of list) of sales Motor Manufacturers - OEMs 40% 38 Motor Mfrs 4 Distributors -) OEMs 25% 47 Motor Mfrs 4 Distributors 4 70 

### 35% End Users The resulting weighted average price is 51 percent of list. The Department applied this value for each motor analyzed. For the motors analyzed, the Department used model-specific list prices given in the 2001/02 Grainger catalog (Grainger, 2001). For the motors analyzed by the NEMA/SMMA working group, the Department estimated list prices based on representative motors in the Grainger catalog.' 

### The Department assumes that the full incremental cost of higher-efficiency motors is passed on to equipment buyers by the OEMs without additional markup. Motor Lifetime 

### The typical lifetime of small motors in the field is not well determined. Studies at one manufacturer show that small motors have an "L 10" life (defined as the point where 10 percent of test population has failed) under typical operating conditions of around 25,000 hours ("typical"assumes no start/stop or excessive vibration, 75° C bearing temperatures, normal, mineral-oilbased, bearing lubricants, and regular-sized lubricant reservoirs).5 For an average utilization of 2500 hours per year, that would yield a ten-year L10 life. The life of a motor depends on a variety of factors in the service conditions of the application. These include environment (largely temperature), loading of the motor, and speed of rotation. The studies cited above have shown that bearing failure is by far the most critical factor in motor failure. In turn, the main reason for bearing failure is failure of the lubricant, mainly due to heat generation.
The three-phase integral motor in mostly three digit sizes has an average life of 11 or 12 years. While these motors have grease fittings on the bearings (per industry standards), all two-digit motors have permanently sealed bearings. This means the life of the two-digit motor is no longer than the breakdown point of the lubricant, and as a result, the life of the two-digit will likely be shorter than that of the three-digit. Motor industry experts consulted suggest that the average life for two-digit motors is at most ten years, depending of course on the usage and physical environment. The Department received some input on motor lifetime from OEMs. A complicating factor is that in some cases the potential lifetime of the motor may be greater than that of the equipment.

28

### Thus, the actual motor lifetime is limited by the lifetime of the equipment. Similarly,

replacement motors, which account for about one third of the market for the considered motors, may have a shorter average lifetime than motors installed in original equipment if the equipment fails sooner than anticipated. The NEMA/SMMA small motor efficiency task force agreed with an estimated average life of five to ten years for fractional motors, with the average being closer to ten years for three-phase and to five years for single-phase motors. The studies mentioned earlier did not find a major difference between small single and three-phase motors, however. Based on the above considerations, the Department elected to use a mean lifetime of seven years for capacitor-start motors and nine years for polyphase motors.

Electricity Price The Department estimates that, based on the market research done by Easton Consultants, approximately three-fourths of capacitor-start motors are used by utility customers on a commercial tariff, while most users of small polyphase motors are on an industrial tariff. The Department based commercial and industrial electricity prices on the average of the 2010 and 2020 forecasts from EIA's Annual Energy Outlook 2001. For capacitor-start motors, the Department derived an average price giving a 0.75 weighting to the commercial price. For polyphase motors, the Department increased the industrial price slightly to reflect its belief that use of these motors is weighted toward smaller facilities, which would pay a higher tariff than large industrial customers. Motor Type Price used in the analysis (cents/kWh) 

### Capacitor-start 5.6 Polyphase 4.0

Discount Rate 

### Economists recommend that the discount rate applied to relatively broad categories of investment should be set equal to the opportunity cost of the capital used to finance investments of equivalent risk. In some cases, the opportunity cost of capital is the expected return to a company stock. However, many firms use the company cost of capital as a general discount rate. The company cost of capital is a weighted average of the expected return on the company's stock and the interest rate that it pays for debt. This approach is correct as long as the capital investment in question is typical for the companyas a whole. It can be misleading, however, if the capital investment has more or much less nondiversifiable risk than the company as a whole. In general, the appropriate discount rate to

29

### evaluate low risk investments should be lower than the discount rate used to evaluate higher risk

investments. In particular, the discount rate used to evaluate electricity efficiency investments, which have low risk, may be quite a bit lower than the rate used to evaluate other investments by the firm. The Department assumes that the ultimate investors in motor efficiency improvement are the end users of the equipment. For the small motors considered herein, the end users are broadly distributed across manufacturing and commercial sectors of the economy. A list of companies was chosen to represent buyers of small motors (see Appendix C for details). The cost of debt, cost of equity, debt share, equity share and beta (market risk) value for these companies was obtained from the Damodaran financial data base. These data were then used to calculate the weighted average cost of capital for each company. The weighted average cost of capital for the representative companies, after deducting for expected inflation, ranges from four percent to 11 percent. The average cost of capital for the companies is 6.0 percent. The standard deviation of the cost of capital is 1.4 percent. Based on the above, the Department used a discount rate of six percent for assessing efficiency improvement as a typical investment.

5.2 Results for Capacitor-Start, Induction-Run Motor Options Key results of the financial analysis are presented in the tables and figures below. The Department only presents results for the most typical motors. Note that the base motors are different in the LBNL and NEMA/SMMA cases. This difference is not of much importance, however, since it is the relative change for each motor that is of most interest. 

### In the LBNL analysis, the steel grade options all have lower LCC than the base motor. Results using the NEMA average data show an increase in LCC, however. The LBNL analysis shows the stack length options increasing the LCC. The NEMA results show a slight decrease for the first option, but then increase. 

### The difference in results for the two design options reflects the varying situation of different manufacturers. Some are able to improve efficiency at lower cost using a change of steel grade, while others can do so better using a stack change.

30Table 5-1 Impacts of Efficiency Improvement on Typical End User, Capacitor-Start, 1/2 horsepower, LBNL Data* Steel Grade Stack Change Grade A (Base) Grade B Grade B+ M47 Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer** $91 $94 $100 $114 $97 $105 $111 Annual Operating Cost $58 $55 $54 $52 $57 $56 $56 Life-Cycle Cost (7% DR) $414 $403 $403 $407 $416 $418 $422 Change in LCC (WRT Base) -$11.21 -$11.02

- $7.43 $1.73 $4.37 $7.65
Percent Change in LCC -2.7% -2.7%
- 1.8% 0.4% 1.1% $1.8%
Payback Period (years) 1.1 2.5 4.2 7.7 8.2 9.0 *Data refer to a specific typical motor **Based on actual motor price in Grainger catalog.


### Capacitor Start 1/2 HP -- LBNL Data

d w J $430

$420

$390

$380

$370 1 61% 62% 63% 64% 65% 66% 67% 68% 69% 70% Stack Change

--4-- Steel Grade

Efficiency

31Table 5-2 Impacts of Efficiency Improvement on Typical End User, CapacitorSteel Grade * Stack Change**
Grade 1 (Base ) Grade 2 Grade 3 Base Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer*** $103 $113 $125 $103 $113 $123 $134 Annual Operating Cost $60 $59 $58 $58 $56 $55 $54 Life-cycle Cost (7% DR) $440 $441 $446 $429 $428 $432: $437 Change in LCC (WRT Base) $0.80 $5.93 -$1.42 $2.67 $8.32 Percent Change in LCC 0.2% 1.3% -0.3% 0.6% 1.9% Payback Period (years) 6.1 7.7 4.9 6.5 * Data are average of four manufacturers ** Data reflect costs and performance of a typical motor *** Estimated by LBNL based on Grainger catalog prices 

### Capacitor Start 1/2 HP -- NEMA Data

$450

$440

- $430 0 U a, 0 $420 U dvi $410

$400

$39061% 62% 63% 64% 65% 66% 67% 68% 69% 70% 

### Efficiency Start, 1/2 horse ower , NEMA Data

-+-Steel Grade

Stack Change

32

### 5.3 Results for Polyphase Motor Options

Key results of the fmancial analysis for the most typical motors are presented in the tables below. The Department only presents results for the most typical motors. Note that the base motors are different in the LBNL and NEMA/SMMA analyses. In the LBNL analysis, the steel grade options all have lower LCC than the base motor. The NEMA average results show an increase in LCC, however. In both analyses, the stack length options increase the LCC relative to the base motors. Table 5-3 Impacts of Efficiency Improvement on Typical End User, Polyphase 1

Steel Grade Stack Change Grade A+ (Base) Grade B+ M47 Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer** $105 $109 $126 $111 $124 $130 Annual Operating Cost $71 $69 $66 $70 $68 $68 Life-cycle Cost (7% DR) $585 $578 $578 $587 $589 $593 Change in LCC (WRT Base) -$7.49 -$7.19 $1.49 $3.77 $8.01 Percent Change in LCC -1.3% -1.2% 0.3% 0.6% 1.4% Payback Period (years) 2.4 5.1 8.9 8.5 *Data refer to a specific typical motor **Based on actual motor price in Grainger catalog. Polyphase 1 HP -- LBNL Data horsepower, LBNL Data*

$600

$590

$580

$570

$560

$550

76% $540 77% 78% 79% Efficiency 80% 81% 82% Stack Change

--®- Steel G rade

33Table 5-4 Impacts of Efficiency Improvement on Typical End User, Polyphase

Steel Grade * Stack Change**
Grade 1 (Base ) Grade 2 Grade 3 Base Plus Stack Plus 2

Stack Plus 3

Stack Motor Price-Buyer*** 110.6 121.7 132.7 111.0 119.9 128.8 137.6 Annual Operating Cost $38.7 $37.3 $36.6 $36.5 $36.1 $35.7 $35.6 Life-cycle Cost (7% DR) $396 $396 $402 $380 $385 $391 $399 Change in LCC (WRT Base) $0.65 $6.32 $5.90 $11.81 $19.95 Percent Change in LCC 0.2% 1.6% 1.6% 3.1% 5.3% Payback Period (years) 7.8 10.3 22.0 22.0 * Data are average of four manufacturers ** Data reflect costs and performance of a typical motor *** Estimated by LBNL based on Grainger catalog prices



### Polyphase 1/2 HP, NEMA Data 1/2 horsep ower , NEMA Data

$440 $430 $420 $410 $400 $390 $380 $370 $360 $350

67% 68% 69% 70 % 71% 72% 73% 74% $340 Efficiency 75% -4-Steel Grade

Stack Change

34

### 6. POTENTIAL NATIONAL ENERGY AND CONSU MER IMPACTS OF ENERGY CONSERVATION STANDA RD S FOR SMOTORS

6.1 Method In each product class, the Department used the average size motor as the basis for the estimation of national impacts: Capacitor-start motors 1/2 horsepower Polyphase motors 1 horsepower 

### The Department used the results of the LBNL and manufacturers' engineering analyses (Chapter 4) as the basis for national energy savings estimates. For polyphase motors, however, the Department only used the LBNL results, as the manufacturers' analysis was based on a 1/2 horsepower motor. (The manufacturers' analysis shows some efficiency gains, but with an increase in life-cycle cost.) For each design option, the estimated savings are relative to the Base Case. The Department believes that the motors analyzed (open drip-proof, four-pole) serve as reasonable proxies for enclosed motors and two- and six-pole motors. The Department would expect, however, that an analysis that developed separate estimates for four, two, and six-pole motors would show somewhat different results, as would one that made discrete estimates for different horsepower ratings. A simplifying assumption in the calculation is that each level of energy efficiency improvement reflects an average attained by all new motors sold in each considered year. Thus, if a standard were set at a specific level of energy efficiency improvement, the savings attributable to the standard are a function of the difference in efficiency relative to the Base Case motor. The Department assumes standards take effect in 2010 and calculates impacts for motors sold in the 2010-2030 period. The accounting model calculates total end-use electricity savings in each year with surviving motors (some of the motors sold in 2030 operate through 2040). The model uses a product retirement function to calculate the number of units in a given vintage that are still in operation in a given year. The retirement function assumes that individual motor lifetime is normally distributed around the mean lifetime. The Department calculated primary energy savings associated with end-use electricity savings using data from EIA's Annual Energy Outlook 2001. These data yield an average multiplier for end-use electricity to primary energy (power plant consumption) for each year for 2010-2020. The Department extrapolated the 2010-2020 trend for the 2021-2040 period.

35For assessing direct economic impacts on end users, the Department used the incremental

equipment costs for each energy efficiency improvement level presented in Chapter 5. The Department assumed that the current estimated incremental costs remain the same in the 2010- 2030 period of motor sales

. In addition, the Department assumes that electricity prices remain at the projected 2010-2020 average through 2040. The Department discounted future costs and benefits using a rate of seven percent, in keeping with " Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs" issued by the Office of Management and Budget in 1992 (Circular No

. A-94, Revised). This rate approximates the marginal pretax rate of return on an average investment in the private sector in recent years.
Projection of Future Shipments As discussed in Chapter 3, the past growth in annual shipments of the considered motors (including imported motors) is not known, but NEMA did provide confidential data on two-digit frame-size , fractional

-horsepower motor sales to domestic customers by NEMA manufacturers, covering the period from 1971 to 2001

. After interpolating the data, the average annual growth rate is 1.5 percent. Although the motors being analyzed make up only around 20 percent of the motors covered by these data, industry experts suggest that growth in sales of the considered motors is likely similar to that of all fractional motors because the demand for both considered and non-considered fractional motors is closely tied to the general U.S. economy. 

### Several factors suggest that the growth in future sales may be slower than in the past. At a basic level, U.S

. economic growth is expected to be slightly slower than that in the 1970

-2000 period. Second, continuation of the current trend toward greater use of definite

-purpose small motors would mean that sales of the general

-purpose motors considered in this analysis would increase more slowly

. Finally, foreign manufacturers of end

-use equipment incorporating considered small motors may have lower production costs sufficient to gain market share at the expense of U.S.-based manufacturers, which would reduce U.S

. domestic demand for small motors.
Based on the above considerations , the Department estimated impacts for two scenarios of average annual growth in shipments in the 2010-2030 period: one with one percent and the other with 1. 5 percent.

Base Case Efficiencies Apart from the problem of estimating future market behavior, the Department has only limited knowledge regarding the past trend in efficiency because of insufficient data that are available. The perspective of the NEMA/SMMA working group and other motor industry experts the Department consulted is that the past 20-30 years have seen "very little to moderate" improvement in efficiency

. Some gains occurred in the 1970 's as electricity prices rose , and there

36

### has also been some spillover into small motors from efficiency improvement in integral

horsepower motors. A number of manufacturers have introduced "premium efficiency" small polyphase motors. In the case of capacitor-start motors, there has been some growth in use of more efficient capacitor-run models, which to some extent had lessened the need to improve the more common induction-run models. Current expectations for future commercial and industrial electricity prices show a slight declining trend in the long run. While customer interest in efficiency of small motors may continue to be limited, manufacturers may use performance (which includes efficiency) as aselling point to gain advantage in a competitive market. In sum, it seems reasonable that a lowerbound case for future efficiency would envision very little improvement, while an upper-bound case would envision moderate gains. The Department expressed the above qualitative cases into actual numbers as follows: In the Low Efficiency Improvement base case, the average efficiency of motors sold in the 2010-2030 period is `/ point better than the current base case motors (e.g., 62.25 percent compared to 62 percent). In the Moderate Efficiency Improvement base case, the average efficiency is one point better than the current base case motors. 6.2 Estimates of Potential Energy and Consumer Impacts


### Capacitor-Start Motors For options with positive NPV, the cumulative energy savings, based on the LBNL analysis of steel grade change, range from a low of 0.6 quad to a high of one quad (Figure 6-1). The corresponding cumulative NPV range is $0.6 billion to just over $1 billion. None of the stack change options have positive NPV. Using the NEMA average data, the Department sees positive NPV only in a few instances (Figure 6-2). In the most favorable case (Low Efficiency Improvement base case, High Shipments Growth), there are savings of 0.6 quad with an NPV of just under $0.1 billion (plus 2 stack option). Polyphase Motors The LBNL analysis shows cumulative energy savings from steel grade change ranging from a low of 0.15 quad to a high of 0.21 quad (Figure 6-3). The corresponding cumulative NPV range is $0.09 billion to $0.27 billion. The stack change options generally do not show positive NPV. 

### Use of the NEMA average data for 1/2 horsepower motors would show lower savings than the above.

37Figure 6-1 Capacitor-Start Motors, National Energy and Consumer Impacts, LBNL Analysis

1.50

1.00

0.50

0.00

-0.50

-1.00

1.50

1.00

0.50

0.00

-0.50

-1.00 

# u- i Grade B Grade M47 Plus Plus 2 - Rt j 3

B+ Stack Stack Stack i

Moderate Eff. Improvement Base Case - High Shipments Growth

Low Eff

. Improvement Base Case - ---------- . _......___.........._...._.......__......__............_.__.._......_.....__...._.._..__... Low Annual Shipments Growth Primary Energy Savings (Quads) NPV ($Billions)

M3 Primary Energy Savings (Quads) -0- NPV ($Billions) Low Eff. Improvement Base Case - High Shipments Growth

Moderate Eff. Improvement Base Case - Low ipments rowt Primary Energy Savings (Quads) -t7-NPV ($Billions)

Primary Energy Savings (Quads) I I -0- NPV ($ Billions)

38Figure 6-2 Capacitor-Start Motors, National Energy and Consumer Impacts, NEMA Data

0.80

0.60
0.40

0.20
0.00
-0.20
-0.40
-0.60

-0.80 Low Eff. Improvement Base Case -

High Shipments Growth

Low Eff

. Improvement Base Case - Low Shipments Growth Plus 3 1 Primary Energy Savings (Quads) -0-NPV ($Billions)

Primary Energy Savings (Quads) 0- NPV ($Billions) 0.80

0.60

0.40
0.20

0.00
-0.20
-0.40

-0.60
-0.80

0.80
0.60
0.40 _I 3

Grade 2 Gr8e 3 Plus PlbA Plus 3 Stack Staok^"Stacy

Moderate Eff. Improvement Base Case - High Shipments Growth Primary Energy Savings (Quads) J- NPV ($Billions)

0.20
0.00 Grade 1Z Grade 3 Plats Plus 2 Plus 3 -0.20
-0.40
-0.60

-0.80 Moderate Eff. Improvement Base Case -

Low Shipments Growth Primary Energy Savings (Quads) -0- NPV ($Billions)

39Figure 6-3 Polyphase Motors, National Energy and Consumer Impacts , LBNL Analysis

0 40
.
0 30
.
0 20
.
0 10
. 0.00 LiM Primary Energy Grade M47 Plus Plus 2 Plus 3 Savings (Quads) 0 10 B+ Stack Stack Stack NPV Billi - . -0- ($ ons)

0 20 - .
-0.30 J

Low Eff. Improvement Base Case -

High Shipments Growth

0.40
0.30

0.20
0.10
0.00 Grade M47

+ -0.10
-0.20

-0.30 --- Low Eff. Improvement Base Case -

Low Shipments Growth

Plus Plus 3 3tack Stack k

-

- - - ---- - - --- - -------------- -------- 0.40 1
0.30

0.20
0.10

0.00 EGad" I I 1 I I IL^^ Primary Energy Savings (Quads) -0.10
-0.20

-0.30 Grade M47 Plus Plus 2 Plus 3

B+ Stack Stack Stack q-- NPV ($Billions)

Moderate Eff. Improvement Base Case - High Shipments Growth

0 40

. 0 30

. 0 20

. 0 10

. 0 00 Primary Energy . L Primary Energy Savings (Quads) Grade M47 Plus PI 13 Savings (Quads) 0 10 R+ St irk $t^rk Stark 0- NPV ($Billions) - . -0- NPV ($ Billions) -0.20

-0.30 Moderate Eff. Improvement Base Case -

Low Shipments Growth

40

### 7. SUMMARY OF RESULTS

The most attractive design options for improving the energy efficiency of the considered small motors involve changes in steel grade and stack length. The relative merits of one versus the other vary among motor manufacturers. The design options considered in this study have the energy savings potential shown below. Differences in estimates of the efficiency and cost increase associated with the options and uncertainty about future shipments and efficiency trends produce a range of estimates for economic impacts. Capacitor-start, induction-run motors. The analysis of design options conducted by LBNL shows cumulative energy savings from steel grade changes, the more favorable design option in this analysis, ranging from 0.6 to one quad (Table 7-1). The corresponding cumulative NPV range is $0.4 billion to just over $1 billion. 

### Analysis based on average data provided by the NEMA/SMMA working group indicates lower potential energy savings and economic benefits. The highest savings scenario, which in this case refers to the stack change design option, shows energy savings of 0.6 quads with an NPV of 0.1 billion. In the scenario with least savings, the options all have negative NPV. Table 7-1 Cumulative Energy and Consumer Impacts of Energy Efficiency

Improvement for Capacitor

- Start, Induction

- Run Motors Projected to be Sold in the 2010-2030 Period*

Future Energy Savings (Quads) NPV (Year 2000 dollars in billions, discounted at 7 percent) 

### Scenario LBNL NEMA/SMMA LBNL NEMA/SMMA Low efficiency gain 0.85 0.6 0.9 0.1 base case, high shipments growth Moderate efficiency 1.0 0.2 1.05 0.05 gain base case, high shipments growth Low efficiency gain 0.7 0.25 0.65 0.05 base case, low shipments growth Moderate efficiency 0.6 0.1 0.4 -0.05 gain base case, low shipments growth * The values given for each scenario correspond to the design option with the combination of highest energy savings and most favorable consumer NPV.

41The LBNL and NEMA/SMMA data are in reasonably close agreement with respect to the stack

change design option

. For steel grade changes, however, the data are not in agreement. The reasons for the differences between the LBNL and NEMA/SMMA data are somewhat uncertain, as the NEMA/SMMA working group did not wish to share details of the calculations from the four companies that submitted data. 

### Better resolution of the uncertainty would require both more information from the NEMA/SMMA group and estimates of the market shares of the major manufacturers for the considered motors. The former would help us evaluate the individual data submissions by the companies, while the latter would allow us to better weight the data according to the market share of each manufacturer. Polyphase motors. The LBNL analysis shows cumulative energy savings from steel grade changes ranging from a low of 0.15 quad to a high of 0.21 quad (Table 7-2). The corresponding cumulative NPV range is from $0.09 billion to $0.27 billion. The stack change options do not show positive NPV in most cases. For polyphase motors, the Department did not make estimates of national impacts using the NEMA/SMMA data, as the manufacturers' analysis was based on a 1 /2 horsepower motor instead of the more typical one horsepower size. Furthermore, the manufacturers' analysis shows 

### some efficiency gains, but with an increase in life-cycle cost, which would lead to a negative NPV. Table 7-2 Cumulative Energy and Consumer Impacts of Energy Efficiency

Improvement for Polyphase Motors Projected to be Sold in the 2010-2030 Period*

Future Energy Savings ( Quads) NPV (Year 2000 dollars in billions, discounted at 7 percent) 

### Scenario LBNL NEMA/SMMA LBNL NEMA/SMMA Low efficiency gain 0.21 Not 0.27 Not base case, high Available Available shipments growth Moderate efficiency 0.18 Not 0.21 Not gain base case, high Available Available shipments growth Low efficiency gain 0.2 Not 0.1 Not 

### base case, low Available Available shipments growth Moderate efficiency 0.17 Not 0.09 Not gain base case, low Available Available shipments growth 

### * The values given for each scenario correspond to the design option with the combination of

42

### highest energy savings and most favorable consumer NPV.

APPENDIX A. INFORMATION COLLECTION PROCESS ON USE OF S MALL

MOTORS Small motors are used in a variety of equipment

. Easton Consultants identified 14 industrial categories and North American Industry Classification System (NAICS) categories and over 45 categories of equipment that use small motors as defined

. These include such diverse types of equipment as farm milking machines , industrial pumps, packaging machines, and machine tools. 

### The information collected for each category included the following three types: Type 1 - Usage information • Horsepower range, • Average horsepower, • Average hours of use, 

### • Qualitative information on specific applications (e.g. ambient conditions), • Estimate of typical motor loading, and • Other application specific information. Type 2 - Motor selection information 

### • Information on motor purchasing practices and procedures by OEMs who use considered motors in their products; • The degree to which changes in motor size related to improved efficiency may be incompatible with equipment designs used by OEMs; 

### • The degree to which motor efficiency is a significant consideration for OEMs; and • Other selection related information. Type 3 - Quantitative (shipments) information • Annual shipments of each considered motor type (capacitor-start and polyphase) for each category. 

### The Department used an information collection process that followed a sequence of steps moving from general sources to specific as needed. The Department proceeded step-by-step for each of the 14 categories as follows: • Step 1

- In-house expertise . The Department started with our expertise on each of the categories from past projects. The Department assembled this information as the starting point. • Step 2

--Industry associations . The Department contacted the association or associations servicing each of the categories for general information on the industry, important players, industry characteristics and trends, and motor use. 

### • Step 3 --Industry literature search . The Department conducted a review of the relevant trade magazines and reports available publicly for relevant motor-related information on motor selection and use. • Step 4

-- Company information review . The Department explored the information

allavailable on one or two leading motor-using company web sites (particularly product specifications), requesting specs from the sales department where not available on the web. Step 5

--Expert assistance . The Department worked with a former director of market research of a motor manufacturer who has extensive industry background to extend our expertise. 

### Step 6 --Direct motor-using company informal discussion . After the above sources had been fully utilized, the Department conducted a series of informal phone interviews with equipment designers and engineers in each of the sectors. These were designed to collect the specific information needed, and varied for each category depending on the specifics of what was needed for that category. In these interviews the Department discussed: ® Types of motors used in the particular equipment to identify the approximate

proportion of all motors that are considered motors, 

### ® Sizes of motors used, • Typical hours of operation of the motors, • Motor loading against its rated horsepower, ® Role of energy efficiency in the decision and the rationale, ® Health of the industry, ® Technical changes expected that would affect motor use, ® Typical life of the motor in this equipment's service, and ® Other related subjects.

as

### APPENDIX B. METHOD FOR ESTIMATING CONSIDERED SMALL MOTORS SHIPMENTS BY INDUSTRY SECTOR

As part of the effort to support the LBNL project, "Development of Application Information for General Purpose Small Electric Motors Considered for Efficiency Standards," Easton Consultants conducted an analysis to estimate the shipments of considered small motors to each of 14 industry segments.


### There is no single source that provides a measurement of the shipments of considered motors in the principal industries of use. As a result the Department had to rely on a variety of sources of information, each one of which provided only a piece of the puzzle. By integrating all of those available and then applying judgment, the Department has developed a reliable "first cut" estimate. The cornerstone to the estimates was first-hand research with a number of manufacturers of small motor-using equipment. 

### The data sources used included the following: 1. Discussion with four to ten equipment OEMs (product designers, engineers) in each of the small-motor using equipment industries. 

### 2. Survey of the small motors manufacturers conducted by NEMA to measure the total shipments of considered motors. 3. The Census of Manufacturers (1997), which measures equipment shipments and certain component usage by each of the principal small motor using industries. 4. Industry associations that cover the principal small motor using industries. 5. Catalogs of equipment using small motors. 6. Expert counsel from an individual who was formerly a market research manager with a leading motor manufacturer. 7. Past Easton projects on small motor use, particularly the 1995 project conducted for LBNL. 

### In the following chart the Department has defined the role of each source of information in making the estimates.

11 1;Information Description Principal Value Limitations Importance



### Source of Source

OEM Discussions First hand inputs The sample of OEMs Very High Interviews with from engineers and was necessarily a

manufacturers designers who small sample of the of small motor make the motor many companies using using selection decisions small motors. equipment in the user



### industries NEMA Survey Survey of Provided a reliable Did not provide any High



### principal measure of the total information on the small motors number of equipment in which manufacturers considered small the motors are used

motor shipments by size and type Census of Survey of U.S. (1) Shipments of Difficult in most cases Low Manufacturers Manufacturers motor using to match equipment (1997) equipment defmitions with motor 

### type (2) Shipments of Data given for all High small motors to shipments; considered each industry motors not broken out. Industry Organizations Information on Most information Low 

### Associations supporting sector structure could not be tied

industrial (e.g. major directly to motor use sectors companies), trends,

economic health, Equipment Equipment Often explicit as to Most catalogs do not Low catalogs descriptions the type and size of provide motor use



### for sales motors used information; only a purposes few were useful Expert counsel Review by an "Reality check" on Motor manufacturers Medium

experienced estimates do not have good market information on where research head small motors are used formerly with a motor 

### manufacturer Past Easton Easton files A variety of Information generally Medium Reports on small information, esp. dated

motor use from the 1995 from past report on small projects motors

ar,

### APPENDIX C. S MALL MOTORS DISCOUNT RATE CALCULATIONS

A list of companies was chosen to represent buyers of considered small motors. The cost of debt, cost of equity, debt share, equity share and beta (market risk) value for these companies was obtained from the Damodaran web site financial data base (Table C-1).' These data were then used to calculate the weighted average cost of capital for each company. The weighted average cost of capital of companies is a common measure of the discount rate appropriate for evaluating typical company investments. The weighted average cost of capital for the list of representative companies ranges from 4 percent to 11 percent (Figure 1). The average cost of capital, after deducting for expected inflation, is 6.0 percent. The standard deviation of the cost of capital is 1.4 percent.

Figure 1. Distribution of Discount Rates for the Small Motors Analysis

40% 35% 30%

10%

5%

0% 1 2 3 4 5 6 7 8 9 Discount Rate (WACC Measure)

The sample of companies included for this analysis included heavy manufacturing (43 percent), large commercial (retail, grocery and real estate) (40 percent) and water agency and agricultural companies (17 percent).

'Aswath Damodaran web site. This site is hosted at New York University Stern Business School. The site includes a data base with financial information covering over 7,000 companies representing different economic sectors of the economy. http://www.stem.nyu.edu/-adamodar/New Home Page/data.html
a'7Table C-1. Cost of Capital of Representative Firms Purchasing Small Motors

Company Beta Cost Equity Cost Debt WACC-no Company Name Industry Name (1) (2) We (3) (4) Wd (5) WACC (6) inflation (7) Manufacturing Firms Ivanhoe Energy Inc Petroleum (Producing) 0.7 9.35% 100% 9.00% 0.22% 9.35% 6.9% Caledonia Mining Corpor Metals & Mining (Div.) 0.35 7.43% 100% 9.00% 0.00% 7.43% 5.0% Kaiser Alum. Metals & Mining (Div.) 0.95 10.73% 110/0 8.00% 88.52% &31% 5.9% Coeur d'Alene Mines Gold/Silver Mining 0.50 8.25% 15% 9.00% 84.76% 8.89% 6.4% Hecla Mining Gold/Silver Mining 0.40 7,70% 51% 9.00% 49.01% 8.34% 5.9% Brigham Exploration Co Petroleum (Producing) 1.00 11.00% 36% 9.00% 63.76% 9.72% 7.3% Enbridge Inc. Petroleum (Producing) 0.55 8.53% 52% 6.00% 48.13% 7.31% 4.9% Exploration Co Petroleum (Producing) 0.80 9.90% 97% 9.00% 3.18% 9.87% 7.4% Intrawest Corporation Homebuilding 0.75 9.63% 53% 5.72% 46.61% 7.81% 5.4% ConAgra Foods Food Processing 0.70 9.35% 65% 4.02% 34.73% 7.50% 5.1% Kellogg Food Processing 0.60 8.80% 86% 4.44% 14.50% 8.17% 5.7% Boise Cascade Paper & Forest Product 1.20 12.10% 50% 3.55% 49.92% 7.83% 5.4% Louisiana-Pacific Paper & Forest Product 1.00 11.00% 41% 4.89% 59.26% 7.38% 5.0% Dow Chemical Chemical (Basic) 1.00 11.00% 83% 4.27% 17.47% 9.82% 7.4% ChemFirst Inc. Chemical (Diversified) 0.80 9.90% 87% 3.91% 12.83% 9.13% 6.7% Goodyear Tire Tire & Rubber 1.15 11.83% 52% 5.33% 48.31% 8.69% 6.2% Bayou Steel Steel (General) 0.75 9.63% 4% 7,00% 96.28% 7.10% 4.7% Thomas & Betts Electrical Equipment 1.10 11.55% 64% 7.00% 35.54% 9.93% 7.5% Overseas Shipholding Maritime 0.80 9.90% 48% 4.53% 51.95% 7.11% 4.7% Northwest Airlines 'A' Air Transport 1.35 12.93% 26% 4.71% 74.14% 6.83% 4.4%
Commercial Firms Costco Wholesale Retail Store 1.30 12.65% 95% 4.20% 5.03% 12.22% 9.7% Kmart Corp. Retail Store 1.15 11.83% 46% 5.35% 54.47% 8.30% 5.9% Neiman Marcus Retail Store 1.25 12.38% 86% 4.34% 14.47% 11.21% 8.7% Penney (J.C.) Retail Store 1.10 11.55% 55% 5.47% 45.28% 8.80% 6.4% Target Corp. Retail Store 1.30 12.65% 84% 4.00% 15.75% 11.29% 8.8% Wal-Mart Stores Retail Store 1.15 11.83% 92% 4.13% 7.93% 11.21% 8.7% Toys 'R' Us Retail (Special Lines) 1.20 12.10% 71% 5.70% 29.29% 10.23% 7.7% Safeway Inc. Grocery 0.75 9.63% 76% 3.80% 23.68% &25% 5.8% Smart & Final Grocery 0.80 9.90% 69% 4.00% 31.21% 8.06% 5.6% Village Super Market 'A' Grocery 0.55 8.53% 61% 4.01% 38.84% 6.77% 4.4% Whole Foods Market Grocery 1.10 11.55% 89% 4.43% 11.40% 10.74% 8.2% Winn-Dixie Stores Grocery 0.75 9.63% 73% 4.92% 26.82% 8.36% 5.9% Security Cap Group Inc R.E.I.T. 0.50 8.25% 99% 4.72% 0.98% 8.22% 5.8% Rouse Co. R.E.I.T. 0.65 9.08% 39% 5.96% 60.94% 7.18% 4.8% Bedford Ppty Invs R.E.I.T. 0.55 8.53% 56% 5.75% 44.19% 7.30% 4.9% HMG Courtland Prop R.E.I.T. 0.40 7.70% 44% 8.00% 56.21% 7.87% 5.4% Health Care Property R. E.I.T. 0.55 8.53% 61% 5.75% 38.89% 7.45% 5.0% Bedford Ppty Invs R. E.I.T. 0.55 8.53% 56% 5.75% 44.19% 7.30% 4.9% Catellus Development R. E.I.T. 0.90 10.45% 62% 3.58% 38.40% 7.81% 5.4% Agricultural Firms ML Macadamia Orchards LI Food Processing 0.6 8.80% 82% 6.25% 17.59% 8.35% 5.9% Sylvan Inc. Food Processing 0.5 8.25% 61% 5.04% 39.05% 7.00% 4.6% Tejon Ranch Co. Food Processing 0.8 9.90% 89% 6.50% 11.33% 9.51% 7.1% Chiquita Brands Int'l Food Processing 0.4 7.70% 3% 9.00% 96.66% 8.96% 6.5% Water Utilities Amer. Water Works Water Utility 0.5 8.25% 60% 3.93% 40.49% 6.50% 4.1% California Water Water Utility 0.6 8.80% 66% 3.61% 34.43% 7.01% 4.6% Middlesex Water Water Utility 0.45 7.98% 66% 4.18% 33.51% 6.70% 4.3% Southwest Water Water Utility 0.45 7.98% 72% 4.09% 28.20% 6.88% 4.5% (Group Averages 0.79 9.9% 62.4% 5.6% 37.6% 8.4% 6.0%

Source: 1. Damodaran data base. Covariance between company return and stock market return. 2. Risk free bond rate (5.5%) plus company beta times the expected return on common stocks minus the risk free bond rate (5.5%). 3. Damodaran data base. Proportion of equity in company financial position. 4. Damodaran data base. After tax interest paid on debt. 5. Damodaran data base. Proportion of debt in company financial position. 6. WACC. Cost of equity times the proportion of equity (We) plus the cost of debt times the proportion of debt (Wd). 7. Inflation rate is 2.3%.

AR