CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION

........................................................................................................... 2-1

2.2 BACKGROUND

............................................................................................................. 2-3

2.2.1 History of Standards Rulemakings for Fl uorescent Lamp Ballasts and Regulatory Authority

.............................................................................................................. 2-3

2.2.2 Test Procedure

..................................................................................................... 2-5

2.2.3 Standby and Off Mode Energy Consumption

...................................................... 2-8

2.3 SCOPE OF COVERAGE

................................................................................................ 2-9

2.3.1 Current Scope of Ballast Energy Conservation Standards

.................................. 2-9

2.3.2 Additional Fluorescent Lamp Ballasts

............................................................... 2-10

2.3.3 Rationale for Coverage

...................................................................................... 2-10

2.3.4 Analysis of Individual Ballast Types

................................................................. 2-11

2.3.5 Summary

............................................................................................................ 2-18

2.4 MARKET AND TECHNOLOGY ASSESSMENT

...................................................... 2-19

2.4.1 Market Assessment

............................................................................................ 2-20

2.4.1.1 Manufacturers of Fluorescent Lamp Ballasts

........................................ 2-20

2.4.1.2 Product Classes

...................................................................................... 2-21

2.4.1.3 Ballast Shipments

................................................................................... 2-26

2.4.1.4 Regulatory and Non-Re gulatory Programs

............................................ 2-27

2.4.2 Technology Assessment

..................................................................................... 2-28

2.5 SCREENING ANALYSIS

............................................................................................ 2-30

2.5.1 Technology Options Screened Out

.................................................................... 2-31

2.6 ENGINEERING ANALYSIS

........................................................................................ 2-32

2.6.1 Preliminary Engineering Analysis Approach

.................................................... 2-33

2.6.2 Representative Produ ct Classes

......................................................................... 2-36

2.6.3 Baseline Ballasts and Candidate St andard Levels Analyzed

............................. 2-37

2.6.4 Results

................................................................................................................ 2-40

2.6.5 Scaling Between Pr oduct Classes

...................................................................... 2-44

2.6.6 Price Analysis

.................................................................................................... 2-44

2.6.7 Other Key Issues

................................................................................................ 2-47

2.7 ENERGY USE AND END-USE LOAD CHARACTERIZATION

............................. 2-48

2.8 MARKUPS ANALYSIS

............................................................................................... 2-49

2.9 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

.................................. 2-50

2.10 SHIPMENTS ANALYSIS

............................................................................................ 2-52

2.11 NATIONAL IMPACT ANALYSIS

.............................................................................. 2-52

2.11.1 National Energy Savings Analysis

..................................................................... 2-53

2.11.2 Net Present Value Analysis

............................................................................... 2-53

2.11.3 Efficiency Scenarios and Trends

....................................................................... 2-54

2.12 LIFE-CYCLE COST SUBGROUP ANALYSIS

.......................................................... 2-54

2.13 MANUFACTURER IMPACT ANALYSIS

.................................................................. 2-55

2.13.1 Sources of Information for the Manufacturer Impact Analysis

......................... 2-55

2.13.2 Industry Cash-Flow Analysis

............................................................................. 2-56

2.13.3 Manufacturer Subgr oup Analysis

...................................................................... 2-56

2-i2.13.4 Competitive Impacts Assessment

...................................................................... 2-56

2.13.5 Cumulative Regulatory Burden

......................................................................... 2-56

2.13.6 Preliminary Results for the Manufacturer Impact Analysis

.............................. 2-57

2.13.7 Impacts on Profitability

...................................................................................... 2-57

2.13.8 Product Conversion Costs/Diminishing Returns to Consumers

........................ 2-57

2.13.9 Product Innovation

............................................................................................. 2-58

2.14 UTILITY IMPACT ANALYSIS

................................................................................... 2-58

2.15 EMPLOYMENT IMPACT ANALYSIS

....................................................................... 2-59

2.16 ENVIRONMENTAL ASSESSMENT

.......................................................................... 2-59

2.16.1 Carbon Dioxide

.................................................................................................. 2-59

2.16.2 Sulfur Dioxide

.................................................................................................... 2-60

2.16.3 Nitrogen Oxides

................................................................................................. 2-60

2.16.4 Mercury

.............................................................................................................. 2-61

2.16.5 Particulate Matter

............................................................................................... 2-61

2.16.6 Monetization of Emission s Reduction Benefits

................................................. 2-62

2.17 REGULATORY IMPACT ANALYSIS

....................................................................... 2-63

LIST OF TABLES

TABLE 2.4.1 PRODUCT CLASSES FOR FLUORESCENT LAMP BALLASTS

... 2-26

TABLE 2.4.2 BALLAST MARKET SHARE IN 2005

............................................... 2-27

TABLE 2.4.3 FLUORESCENT LAMP BALLAST TECHNOLOGY OPTIONS

...... 2-30

TABLE 2.6.1 REPRESENTATIVE AND SCALED PRODUCT CLASSES FOR

FLUORESCENT LAMP BALLASTS

.......................................................................... 2-37

TABLE 2.6.2 BASELINE BALLASTS FOR TWO-LAMP FOUR-FOOT AND TWOFOOT U-SHAPED MBP IS & RS NORMAL BF PRODUCT CLASS

....................... 2-39

TABLE 2.6.3 SUMMARY OF PROPOSED CANDIDATE STANDARD LEVELS

FOR REPRESENTATIVE FLUORESCENT LAMP BALLAST PRODUCT CLASSES

2-40

TABLE 2.6.4 TWO-LAMP FOUR-FOOT MBP RS AND IS PRODUCT CLASS WITH

F32T8 BASELINE

......................................................................................................... 2-42

TABLE 2.6.5 TWO-LAMP FOUR-FOOT MBP RS AND IS PRODUCT CLASS WITH

F34T12 BASELINE

....................................................................................................... 2-43

LIST OF FIGURES

FIGURE 2.6.1 FULL PRODUCTION COSTS

......................................................................... 2-45

FIGURE 2.8.1 BALLAST DISTRIBUTION CHANNELS

..................................................... 2-49

2-iiCHAPTER 2. ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

This chapter describes the analytical framework that the U.S. Department of Energy (DOE) is using to develop energy conservation standards for fluorescent lamp ballasts, including a description of the methodology, the analytical tools, and relationships among the various analyses that are part of th is rulemaking. Chapter 2 also provides an overview of the preliminary activities DOE conducted and discusses the comments it received. In addition, chapter 2 provides additional de tail on key issuesidentified in the executive summary. Finally, chapter 2 provides citations and crossreferences to the other chapters of the pr eliminary technical support document (TSD) that address DOE's analytical approach, inputs, and findings.

The analyses presented in this preliminary TSD include:

• a market and technology assessment that characterizes the fluorescent lamp ballast market, and reviews technologie s and designs that improve ballast efficiency;

• a screening analysis that reviews technolog y options to improve ballast efficiency and considers them according to four prescribed screening criteria;

• an engineering analysis that determines the manufacturer selling prices (MSPs) associated with more energy efficient fluorescent lamp ballasts by estimating the manufacturing production cost (MPC) a nd applying a manufacturer markup;

• an energy use characterization that generates energy use estimates for fluorescent lamp ballasts;

• a markup analysis that converts average MSPs to consumer installed prices;

• a life-cycle cost (LCC) analysis that calculates, at the consumer level, the discounted savings in operating costs th roughout the estimated average life of the ballast, compared to any increase in the installed costs likely to result directly from imposition of the standard;

• a payback period (PBP) analysis to estimate the amount of time it takes consumers to recover the higher purcha se expense of more energy efficient ballasts through lower operating costs;

• a shipments analysis that estimates shipments of fluorescent lamp ballasts over the time period examined in the analysis;

2-1• a national impact analysis (NIA) that assesses the aggregate impacts at the national level of potential en ergy conservation standards as measured by the net present value (NPV) of total consumer economic impacts and national energy savings (NES); and

• a preliminary manufacturer impact analysis (MIA) that begins to evaluate the effects on manufacturers that may result from a new efficiency standard.

DOE may revise any of its analyses based on comments and new information received. The analyses DOE will perform in the subsequent notice of proposed rulemaking (NOPR) stage in clude those listed below:

• an LCC subgroup analysis that evalua tes the economic impacts on identifiable groups of customers of fluorescent lamp ba llasts, including various categories of ballast purchasers or owners who may experience disproportionate impacts from a national energy conservation standard;

• a manufacturer impact analysis that estimates the financial impact of standards on

ballast manufacturers and cal culates impacts on competition, employment at the manufacturing plant, and manufacturing capacity;

• a utility impact analysis that estimates the effects of proposed standards on the installed capacity and the generating base of electric utilities;

• an employment impact analysis that estimates the impacts of standards on net jobs eliminated or created in the general economy as a consequence of increased spending on the installed price of balla sts and reduced customer spending on

energy;

• an environmental assessment to provide estimates of the effects of amended energy conservation standards on emissions of carbon (CO 2 ), sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (Hg); and

• a regulatory impact analysis (RIA) that presents major alternatives to proposed standards that may achieve comparable energy savings at a reasonable cost.

DOE developed this analytical framew ork and documented its findings in the Energy Conservation Standards Rulemaking Framework Document for Fluorescent Lamp Ballasts (January 14, 2008). a DOE presented the analytical approach to interested parties during a public meeting held on February 6, 2008.

a The framework document is available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts.html

.

2-2In response to the publication of the framework document and the framework public meeting, DOE received comments from interested parties on its analytical approach. This chapter summarizes the ke y comments DOE received, describes DOE’s responses, and summarizes any significant change s in the analytical approach made since DOE published the framework document. Lastly, in the executive summary of the preliminary TSD, DOE identifies issues on wh ich it seeks public comment, each of which is explained in the sections below.

2.2 BACKGROUND

2.2.1 History of Standards Rulemakings for Fluorescent Lamp Ballasts and Regulatory Authority

Amendments to the Energy Policy and Conservation Act of 1975 (EPCA) in the National Appliance Energy Conservati on Amendments of 1988 (NAECA 1988), Pub. L.100-357, established energy conservation st andards for fluorescent lamp ballasts. b (42 United States Code (U.S.C.) 6295( g)(5)) These same amendments also required that DOE (1) conduct two rulemaking cycles to dete rmine whether these standards should be amended; and (2) determine for each rulemaking cycle whether the standards for fluorescent lamp ballasts should be amended to be applicab le to additional fluorescent lamp ballasts. (42 U.S.C. 6295(g)(7)(A)-(B))

On September 19, 2000, DOE published a final rule in the Federal Register (FR) which completed the first of the two rulemaking cycles to evaluate and amend the energy conservation standards for fluorescent lamp ballasts (hereafter “the 2000 Ballast Rule”). c 65 FR 56740. This rulemaking established a consensus standard, representing an agreement between the fluorescent lamp ballast industry and energy efficiency advocacy organizations. The standard levels adopted replaced the ballast efficacy factors promulgated in NAECA 1988 for certain fluor escent lamp ballasts. These standards eliminated certain “magnetic” ballasts, which operate lamps at line frequency (60 Hertz)

and are less efficient than electronic ballast s, which operate lamp s at high frequency. d A

table of the codified standards can be found in appendix 3A of the preliminary TSD under 10 Code of Federal Regu lations (CFR) 430.32(m)(3).

b Although fluorescent lamp ballasts are typically understood to be used in the commercial and industrial sectors, the consumer products section of EPCA grants authority to DOE to cover and regulate this product. In Title III of EPCA, “Part A – Energy Conservation Program for Consumer Products Other Than Automobiles” includes a range of consumer products, some which may be classified for use primarily in the residential sector, such as refrigerators, dishwa shers, and clothes washers. Part A also includes consumer products that might also be used primarily in the commercial sector, however, such as fluorescent lamps, fluorescent lamp ballasts, and urinals. “Par t A-1 – Certain Industrial Equipment,” includes products that are used primarily in the commercial and industrial sectors, such as electric motors and pumps, as well as packaged terminal air conditioners and heat pumps.

c The final rule is available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/gs_fluorescent_lamps.html

. d The standard level eliminated magnetic ballasts that operate one and two nominally 40W medium bipin lamps (F40T12) and for ballasts that operate two nominally 75W 8-foot T12 single pin slimline lamps (F96T12).

2-3Congress then promulgated new energy conservation standards for certain fluorescent lamp ballasts under the Energy Policy Act of 2005 (EPACT 2005), Pub. L. 109-58. (EPACT section 135(c)(2); codified at 42 U.S.C. 6295(g)(8)(A)) On October 18, 2005, DOE published a final rule in the Federal Register codifying those new fluorescent lamp ballast standards into the Code of Federal Regulations at 10 CFR 430.32(m)(5). 70 FR 60407. These standards established minimum efficiency requirements for “energy saver” versions of full-wattage ballasts, such as the F34T12 ballast. A table of the standards promulgated by EPACT 2005 can be found in appendix 3A in the preliminary

TSD.

In summary, fluorescent lamp ballasts that are currently regulated under EPCA, as amended, include ballasts that are designed to operate

• one and two nominally 40 watt (W) and 34W 4-foot T12 medium bipin (MBP) lamps (F40T12 and F34T12);

• two nominally 75W and 60W 8-foot T12 single pin (SP) slimline lamps (F96T12 and F96T12/ES); and

• two nominally 110W and 95W 8-foot T12 recessed double contact high output lamps (F96T12 and F96T12/ES) at nominal input voltages of 120 or 277 volts with an input current frequency of 60 hertz. 10 CFR 430.32(m).

The following ballasts are excluded from current regulations:

• ballasts designed for dimming to 50 perc ent or less of its maximum output;

• ballasts designed for use with two F 96T12HO lamps at ambient temperatures of -20 degrees Fahrenheit ( ° F) or less and for use in an outdoor sign or ballasts designed for use with two F96T12HO/ES lamps at ambient temperatures of

20 ° F or less and for use in an outdoor sign; e

• ballasts with a power factor of less th an 0.90 and designed and labeled for use only in residential building applications; and

• replacement ballasts as define d in paragraph (m)(4)(ii). f
10 CFR 430.32(m)(2), (m)(4), and (m)(7).

On December 19, 2007, the President signed the Energy Independence and Security Act of 2007 (EISA 2007; Pub. L.110-140), which made numerous amendments to EPCA.

EISA 2007 did not amend standards for fluores cent lamp ballasts. Instead, it directed

e Note that in 10 CFR 430.32(m)(7), the temperature exemption granted under EPACT 2005 is slightly different than that contained in sections (m)(2) and (m)(4). In subsection (m)(7), ballasts designed for use with two F96T12HO/ES lamps at ambient temperatures of 20 degrees F or less and designated for use in an outdoor sign are exempt from the standards in paragraph (m)(5). The other sections require the ballast to be for ambient temperatures of negative 20 ° F or less.

f The exclusion provided for replacement ballasts requires that they meet certain cr iteria to be considered a replacement ballast, such as being designed to replace an existing ballast in a previously installed luminaire and being marked “FOR REPLACEMENT USE ONLY.” This exclusion only applies to replacement ballasts manufactured on or before June 30, 2010. After that date, replacement ballasts will no longer be excluded. (10 CFR 430.32(m)(4)(ii)(A)) See appendix A for the exact language of the exclusion for replacement ballasts.

2-4DOE to amend its test procedure for fluorescent lamp ballasts to incorporate a measure of standby mode and off mode energy c onsumption. (42 U.S.C. 6295(gg)(2)) DOE published a NOPR for the standby and off mode test procedure on January 21, 2009. 74 FR 3450. DOE is also directed to incorporate standby mode and off mode energy use in any amended (or new) standard adopted after July 1, 2010. (42 U.S.C. 6295(gg)(3)) Because this energy conservation standards rulemaking for fluorescent lamp ballasts will be completed in 2011, the re quirement is applicable.

This rulemaking encompasses DOE’s second cycle of review to determine

whether the standards in effe ct for fluorescent lamp ba llasts should be amended and whether the standards should apply to additi onal fluorescent lamp ballasts as stated under section 325(g)(7)(B) of EPCA. (42 U.S.C. 6295(g)(7)(B))

This rulemaking also addresses 42 U.S.C. 6295(gg)(3) in which DOE is directed to incorporate standby mode and off mode ener gy use in any amended (or new) standard adopted after July 1, 2010 pursuant to 42 U.S.C. 6295(o).

2.2.2 Test Procedure

As mentioned above, DOE published a NOPR on January 21, 2009 to amend its test procedure for fluorescent la mp ballasts to incorporate a measure of standby mode and off mode energy consumption. 74 FR 3450. g In that NOPR, DOE proposed that fluorescent lamp ballasts do not operate in an off mode as defined by EISA 2007. (42

U.S.C. 6291(gg)(1)(A)(ii)) DOE furthermore proposed that the only ballasts that consume power in a standby mode are thos e that are active components of lighting control systems, meaning the ballasts incorporate electronics that can receive a signal from a control system, and can respond to that signal by adjusting light output. 74 FR 3450, 3452 (January 21, 2009). Thus, DOE propose d a test procedure to measure only standby mode energy consumption. Standb y and off mode energy consumption is

discussed in more detail in section 2.2.3.

On February 6, 2008, DOE held a public meeting in Washington, DC, to discuss

the framework document for the fluorescent la mp ballast energy conservation standards rulemaking. The comments from this meeting prompted DOE to initiate a separate rulemaking to revise the existing test pro cedure for active mode energy consumption. The section contains comments regarding the active mode test procedure that are also relevant to this energy conservation sta ndards rulemaking. All other comments on the active mode test procedure can be found in the active mode test procedure NOPR.

The National Electrical Manufacturers Association (NEMA) expressed concern that BEF measurements made in accordance with the current fluorescent lamp ballast test procedure (in appendix Q to subpart B of 10 CFR 430) can have a measurement uncertainty on the order of 5 percent, which is similar to the range of T8 ballast BEFs

g EISA 2007 directed DOE to amend test procedures for fluorescent lamp ballasts to incorporate a measure of standby mode and off mode energy consumption. (42 U.S.C. 6295(gg)(2))

2-5observed on the market today. The measuremen t uncertainty would thus negatively affect DOE’s ability to set standards for ballasts. (NEMA, Public Meeting Transcript, No. 9 at pp. 11-12, 23, 35-36, 42, 56-58; NEMA, No. 11 at pp. 2, 6) NEMA stated that this level of measurement uncertainty comes from seve ral sources, such as lamp manufacturing variations (as the test pro cedure requires photomet ric measurements), lamp filament heating, and differences between high-frequ ency and low-frequency ballasts. (NEMA, Public Meeting Transcript, No. 9 at pp. 26, 38-39, 43, 73-74, 76-77, 99, 124-125; NEMA, No. 11 at p. 6) Acuity Brands Lighting also commented that much of the marketplace does not use the BEF metric and may not have knowledge of it; the primary users of BEF values in ballast purchasing decisions ar e luminaire manufacturers. (Acuity Brands Lighting, Public Meeting Tran script, No. 9 at pp. 45-46)

For these reasons, NEMA, the New York State Energy Research and Development Authority (NYSERDA), and a joint comment produced by the Appliance Standards Awareness Project (ASAP), the American Council for an Energy-Efficient Economy (ACEEE), the Alliance to Save Energy (ASE ), the Natural Resources Defense Council (NRDC), the Northeast Energy Efficiency Partnerships (NEEP), and the Northwest

Power and Conservation Council (NPCC) all recommended that DOE consider changing

the metric from BEF to an alternate me tric. (Joint Comment, No. 12 at p. 1)

NEMA expressed support for a generic metric that would establish minimum efficiency standards for ballasts that do not ha ve such standards. (NEMA, No. 11 at p. 3) The Joint Comment stated that any alternat e metric implemented by DOE should account for all power loads served by the ballast , including arc current, cathode power, and standby power consumption. (Joint Comment, No. 12 at p. 1) NEMA suggested ballast efficiency (BE), which has lower measurement uncertainty (on the order of 1 to 2 percent) and is the most appropriate metric for instant start ballasts. (NEMA, Public Meeting Transcript, No. 9 at pp. 25-27, 36-38, 76-77, 100-101; NEMA, No. 11 at p. 2) NEMA, NYSERDA, and the Joint Comment recommended the investigation of relative system efficiency (RSE) as a metric. (NYS ERDA, Public Meeting Transcript, No. 9 at pp. 27-28; NEMA, Public Meeting Transcript , No. 9 at pp. 33, 100; Joint Comment, No. 12 at pp. 6-7) Neither the BE nor the RS E metric would refl ect individual lamp characteristics; thus, these metrics could be used to compare ballasts that operate different lamp types. NYSERDA supported a me tric that could be normalized to allow for comparison among different ballast type s. (NYSERDA, Public Meeting Transcript, No. 9 at p. 75)

DOE understands the concerns expressed by interested parties about the BEF

measurement method in the current fluorescent lamp ballast test procedure. DOE agrees that a number of factors, including the ma nufacturing variability of lamps used during ballast testing, can interact to produce me asurement uncertainty. As discussed in the active mode test procedure NOPR, DOE is propo sing to use the ballast efficiency metric to reduce measurement variation, and then to use transfer equations so that BEF can be reported for consistency with 42 U.S.C. 6295(g)(5), (g)(8).

2-6DOE also understands the importance of the ability to fully characterize all power loads served by a fluorescent lamp ballast, as suggested by the Joint Comment. DOE believes that BEF does capture all power modes listed by the Joint Comment (arc current and cathode power). DOE does not believe, however, that it is feasible to incorporate standby power into the BEF metric. See section 2.2.3 for further discussion of this issue.

NEMA suggested that if DOE cannot change the metric from BEF in the test procedure, DOE should develop a test proce dure that requires the measurement of an alternate metric unrelated to lamp lumen out put, along with a correlation to BEF that takes lamp filament ef fects into account. (NEMA, Public Meeting Transcript, No. 9 at pp. 32, 37-38) DOE is investigating the implementation of an alte rnate metric and a set of

correlation functions so that BEF values ca n be produced reliably and accurately during ballast testing.

NEMA commented that it is studying the measurement uncertainty of BE through ballast testing and may eventually encour age the industry-wide usage of BE. Lamp

manufacturers as well as technical coordinators from the American National Standards Institute (ANSI) are involved, and NEMA has already initiated the usage of BE in its Premium Ballast Program. NEMA invited DOE a nd other interested parties to participate in the investigation. (NEMA, Public Meeting Transcript, No. 9 at pp. 23-25, 32, 37-39, 41-42, 45, 48-50, 53-55; NEMA, No. 11 at p. 3) ASAP encouraged DOE to partake in NEMA’s evaluation of a new metric. (ASAP, Public Meeting Transcript, No. 9 at pp. 47, 49) DOE participated in NEMA’s technical committee on ballast efficiency to obtain additional data that DOE is now using to develop the active mode test procedure.

Participants at the public meeting also discussed the lack of compliance and enforcement of efficiency standards. Two manufacturers, Acuity Brands Lighting and Osram Sylvania, stated that they have observed non-compliant ballast s that were labeled as compliant in the marketplace. (Acuity Brands Lighting, Public Meeting Transcript, No. 9 at pp. 88-89; Osram Sylvania, Public M eeting Transcript, No. 9 at p. 90) Acuity Brands Lighting suggested that DOE should share the legal responsibility for enforcing compliance with standards. (Acuity Brands Li ghting, Public Meeting Transcript, No. 9 at pp. 88-89)

Compliance with the fluorescent ballast standard has been required and enforceable since its effective year. Manufacturers, however, are not yet required to submit compliance certification reports under 10 CFR 430.62. Therefore, DOE is modifying reporting requirements for ballasts in the active mode test procedure NOPR. DOE believes that modifying these reporting requirements will aid in the certification and enforcement of energy conservation standa rds for ballasts. DOE requests comments on other ways that it can enhance the certification and enforcement procedures.

More information about the active mode TP NOPR can be found on DOE’s

website at http://www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp _ballasts.html

.

2-72.2.3 Standby and Off Mode Energy Consumption

EISA 2007, enacted December 19, 2007, requires DOE to amend test procedures to include standby mode and off mode en ergy consumption in the overall energy efficiency, energy consumption, or other energy descriptor for each covered product for which DOE’s current test procedures do not fully account for standby mode and off mode energy consumption. If that is technically infeasible, DOE must prescribe a separate standby mode and off mode energy use test procedure, if technically feasible. (42 U.S.C. 6295(gg)(2)(A)) In January 2009, DOE prescrib ed a separate standby mode test procedure and determined that fluorescent la mp ballasts do not exhibit off mode energy use. In addition, DOE stated that the onl y ballasts subject to standby mode power measurements would be those that incorporate some electronic circuit enabling the ballast to communicate with and be part of a lighting control system ( e.g. , a digitally addressable lighting interface (DALI)). 74 FR 3450.

The amendments to EPCA contained in s ection 310(3) of EISA 2007 direct that any final rule establishing or revising a sta ndard for a covered product adopted after July 1, 2010 incorporate standby mode and off mode energy use into a single amended or new standard if feasible or sepa rate standard if not feasible. (EPCA section 325(gg)(3); 42

U.S.C. 6295(gg)(3)) In addition, the single amended new or separate standard must achieve the maximum improvement in energy ef ficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A))

The Joint Comment argued that DOE should use an alternate metric to BEF that would account for all power loads served by the ballast, including standby power consumption. (Joint Comment, No. 12 at p. 1) The current active mode test procedure determines ballast efficiency, whereas sta ndby mode test procedure reports energy consumption. Ballast efficiency is reported in terms of BEF for consistency with 42

U.S.C. 6295(g)(5) and (g)(8), however, while en ergy consumption is expressed in watts. Because BEF is a measure of efficiency and standby mode power is a measure of energy consumption, DOE does not believe it is feasible to incorporate a measure of standby mode energy use into the BEF metric. Therefore, DOE intends to establish a separate metric for standby mode energy consum ption as allowed by EPCA. (42 U.S.C. 6295(gg)(3)(B))

As stated earlier, the only ballasts that exhibit standby mode energy use are those that incorporate an electronic circuit that enables the ballast to communicate with and be part of a lighting control interface ( e.g. , DALI-enabled ballasts). DOE believes that the only commercially available ballasts that incorporate an electronic circuit to communicate with a lighting control interface are dimming ballasts. With the exception of dimming ballasts, NEMA agreed that fluorescent lamp ballasts typically do not consume power in standby mode. (NEMA, P ublic Meeting Transcript, No. 9 at p. 69; NEMA, No. 11 at p. 2) In considering the preliminary scope of coverage discussed in section 2.3, DOE maintains the exclusion of dimming ballasts from energy conservation standards. Therefore, none of the ballasts under consideration for coverage exhibit any standby mode energy use. Because it is not technologically feasible to reduce standby mode or off mode energy use for any balla st currently being considered for amended

2-8energy conservation standards, DOE tenta tively concludes that it cannot establish a separate standard that incorporates standby or off mode energy use. If DOE chooses to revise the scope of coverage to include dimming ballasts and ballasts that exhibit a lighting control interface, DOE will re-evaluate whether standby mode standards are justified.

2.3 SCOPE OF COVERAGE

EPCA directs DOE to amend energy conservation standards for fluorescent lamp

ballasts and to determine wh ether current standards shoul d be made applicable to additional fluorescent lamp ballasts. (42 U.S.C. 6295(g)(7)(B)) After identifying additional ballasts for consideration, DOE conducted a preliminary assessment of

whether a standard for these ballasts would have the potential to meet the criteria for prescribing new or amended standards

⎯ i.e. , demonstrating the potential for energy savings and being technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) As discussed, DOE’s preliminary analysis has determined that certain

ballasts meet the criteria for new or am ended energy conservation standards.

2.3.1 Current Scope of Ballast Energy Conservation Standards

The current energy conservation standards for ballasts originate from two

sources

⎯ an energy conservation standard prom ulgated in the 2000 Ballast Rule and

EPACT 2005. The 2000 Ballast Rule set standards for 4-foot and 8-foot T12 lamps that

took effect in 2005. These standards covere d ballasts that operate F40T12, F96T12, and F96T12HO lamps, but included several exemptions h . Additional energy conservation standards from the 2000 Ballast Rule apply to replacement F40T12 ballasts and F34T12 ballasts and take effect in 2010. EPACT 2005 pr escribed energy conservation standards specific to ballasts designed for lower wattage applications that have an initial effective date of July 1, 2009. These prescribed sta ndards cover ballasts de signed to operate F34T12 lamps, F96T12/ES lamps, a nd F96T12HO/ES lamps. (See 10 CFR 430.32(m)(4)(ii) and 430.32(m)(5)-(6)) In summary, current ballast standards cover the following ballasts with the exclusions previously noted:

• F34T12

• F40T12

• F96T12

• F96T12/ES

• F96T12HO

• F96T12HO/ES

h Ballasts designed for dimming to 50 percent or less of its maximum output, ballasts for use with two F96T12HO lamps at ambient temperatures of

− 20 °F or less and for use in an outdoor sign, ballasts with a power factor of less than 0.90 and designed and labeled for use only in residential building applications, and replacement ballasts are excluded from the standards promulgated in the September 2000 fluorescent lamp ballast energy conservation standard final rule.

2-92.3.2 Additional Fluorescent Lamp Ballasts

According to the definition set forth in 42 U.S.C. 6291(29)(A), “[t]he term ‘fluorescent lamp ballast’ means a device whic h is used to start and operate fluorescent lamps by providing a starting voltage and current and limiting the current during normal operation.” In determining which fluorescen t lamp ballasts would be suitable for consideration under 42 U.S.C. 6295(g)(7)(B), DOE intends to focus its inquiry on those ballasts that operate fluorescent lamps with generic physical and operational features closely matching the Illuminating Engineering Society of North America’s (IESNA) widely accepted definition of “fl uorescent lamp,” as contained in The IESNA Lighting Handbook: Reference and Application ” Ninth Edition, 2000, p. G-14:

The definition of a fluorescent lamp is “a low-pressure mercury electricdischarge lamp in which a fluorescing coating (phosphor) transforms some of the UV energy generated by the discharge into light.”

This IESNA definition is consistent with the general description of a “fluorescent lamp” in the introductory language of 42 U.S.C. 6291(30)(A). i Because the only lamps with these features are commonly understood to be fluorescent lamps, DOE would only consider standards for ballasts that operate such fluorescent lamps. Therefore, in considering whether to amend the standards in effect for fluorescent lamp ballasts so that they apply to “additional” fluor escent lamp ballasts as specified in section 325(g)(7)(B) of EPCA, DOE will consider all fluorescent lamp ballasts (for which EPCA does not prescribe standards) that operate fluor escent lamps, as defined by IESNA.

ASAP commented that EPCA does not preclude DOE from considering previously exempt ballast types in this energy conservation standards rulemaking. (ASAP, Public Meeting Transcript, No. 9 at pp. 106-107) DOE has the authority to determine “whether to amend the standards in effect for fluorescent lamp ballasts, including whether such standards should be amen ded so that they would be applicable to additional fluorescent lamp ballasts.” (42 U.S.C. 6295(g)(7)(B)) Thus, Congress authorized DOE to consider setting standards for fluorescent lamp ballasts that had been excluded from the prescriptive standards set by EPCA, as amended. Accordingly, DOE has considered these ballast types in its preliminary assessment.

2.3.3 Rationale for Coverage

As mentioned in section 2.3, DOE c onsiders potential energy savings, technological feasibility and economic justif ication when determining the scope of coverage. DOE assessed the potential energy savings from market share estimates, potential ballast designs that improve ballast efficiency, a nd other factors. For market share estimates, DOE obtained quantitative shipment information for many ballast types. In the absence of specific shipment data, DOE estimated shipments and market share using information obtained during manufactu rer interviews. For example, based on

i The introductory language of 42 U.S.C. 6291(30)(A) is as follows: “the term ‘fluorescent lamp’ means a low pressure mercury electric-discharge source in which a fluorescing coating transforms some of the ultraviolet energy generated by the mercury discharge into light.”

2-10information from manufacturers, DOE was able to estimate the annual shipments for cold temperature outdoor sign ballasts as a percentage of a larger category reported in the U.S. Census. DOE invites comments on the shipment or market share data presented in this

section.

DOE also assessed the potential to achieve energy savings in certain ballasts by considering whether those ballasts serve as potential substitutes for other regulated ballasts. At the framework public meeting, ASAP suggested that DOE should anticipate market changes as a result of the ballast en ergy conservation standards. (ASAP, Public Meeting Transcript, No. 9 at pp. 63-64) DOE agrees that leaving potential substitutes unregulated runs the risk that regulation of one ballast type may lead to rapid increased sales of other, unregulated substitutes. This shift toward unregulated ballasts may result in decreased energy savings or even increased energy use. To avoid these consequences, DOE plans to consider coverage of ballasts that are potential substitutes for any ballast that has high energy savings potential and is likely to be regulated. Though the shipments of these substitute ballasts may not currently be high volume, energy savings could still be significant because these ballasts may capture increased market share if they are left unregulated. As long as efficiency improveme nts are technologically feasible, coverage of these additional substitute ballasts could not only yield energy savings, but also prevent potentially significant losses in energy savings through the substitution effect.

In addition to independent ly conducting its preliminary determination analysis,

DOE considered comments on the additional ballasts it should cover. The following subsections provide a discussion of the balla sts considered for coverage and related

comments. DOE invites comments on the rati onale for coverage presented in this preliminary determination. DOE also invites comments on the scope of coverage proposed in this pre liminary determination.

2.3.4 Analysis of Individual Ballast Types

As stated in section 2.2.1, current ballast standards cover ba llasts that operate F34T12, F40T12, F96T12, F96T12/ES, F96T12HO, and F96T12HO/ES lamps. Pursuant to its obligation to cover additional ballast types (42 U.S.C. 6295(g)(7)(B)), DOE considered various unregulated ballasts. At the framework public meeting, DOE stated it would consider expansion to unregulated ba llasts that operate the fluorescent lamps covered under EPCA, which include:

• 4-foot medium bipin, rated ≥ 28 watts;

• 2-foot medium bipin U-shaped lamps, rated ≥ 28 watts;

• 8-foot recessed double contact rapid start high output (HO) lamps, 0.800 nominal
amperes, as defined in ANSI C78.1–1991; and

• 8-foot single pin instant start slimline lamps, rated ≥ 52 watts, as defined in ANSI

C78.3–1991.

DOE noted that it was considering covering additional ballast type s that operate the lamps covered in the recently published rulemaking for general service fluorescent lamps.

2-11The scope of coverage outlined in the energy conservation standards rulemaking for general service fluorescent and incandescen t reflector lamps (hereafter “the 2009 Lamps Rule”) j included the following additional lamp types:

• 2-foot medium bipin U-shaped lamps with a rated wattage ≥ 25 and < 28;

• 4-foot medium bipin lamp s with a rated wattage ≥ 25 and < 28;

• 4-foot T5 miniature bipin straight-shape d standard output (SO) lamps with rated

wattage ≥ 26;

• 4-foot T5 miniature bipin straight -shaped HO lamps with rated wattage ≥ 49;

• 8-foot recessed double contact (RDC) rapid start HO lamps other than those

defined in ANSI Standard C78.1–1991;

• 8-foot RDC rapid start HO lamps other than 0.800 nominal amperes defined in

ANSI Standard C78.1–1991; and

• 8-foot single pin instant start slimline lamps with a rated wattage ≥ 52, not

defined in ANSI Standard C78.3–1991.

DOE selected lamps for coverage in th e 2009 Lamps Rule using the same criteria as in this rulemaking for fluorescent lamp ballasts. Therefore, if a lamp was deemed to have the potential for significant energy sa vings (based on shipment volume and other factors), the ballasts that operate those lamps will likely also have significant potential energy savings. The Joint Comment supports DOE’s decision to consider a broader scope of coverage through the ballasts noted in the framework document and framework public meeting. (Joint Comment, No. 12 at pp. 2-3, 8) In addition, ASAP urged DOE to consider a broader scope of coverage than in prev ious rulemakings. (ASAP, Public Meeting Transcript, No. 9 at p. 61)

The Joint Comment supports a scope of coverage limited to ballasts with input voltage to 120 to 277 volts. (Joint Comment, No. 12 at p. 5) DOE examined the ballast market and found input voltages of 120V to 277V to be common to the U.S. market. Ballasts outside this range are primarily de signed for foreign markets, such as 347V ballasts for the Canadian market. DOE’s preliminary determination of scope includes ballasts designed only for operation w ithin the range of 120 to 277 volts.

At the framework public meeting, NEMA commented that the maturity of ANSI

standards should be considered in the dete rmination of technological feasibility for a ballast product. (NEMA, Pub lic Meeting Transcript, No. 9 at p. 116) DOE understands that a product contained in a mature ANSIstandard would likely belong to a welldeveloped product line, but belie ves that investigating product offerings currently sold by

manufacturers is a better method to determine technological feasibility. DOE establishes technological feasibility by understanding the ra nge of energy efficient products available in a particular product class. When products are available at multiple levels of efficiency,

j The final rule for energy conservation standards for general service fluorescent and incandescent reflector lamps was published in the Federal Register on July 14, 2009. It is available at http://edocket.access.gpo.gov/2009/pdf/E9-15710.pdf

.

2-12energy conservation standards are technologic ally feasible. DOE does consider maturity of a product in the rulemaking process, but does not plan to use the maturity of ANSI standards as criterion for technological feasib ility. The following sections discuss each additional ballast type and de termine whether each type should be extended coverage.

Dimming ballasts . DOE received comments from ASAP at the framework public meeting and in the Joint Comment recommendi ng expanding the scope of coverage to include dimming ballasts. (ASA P, Public Meeting Transcript, No. 9 at pp. 62, 69, 108; Joint Comment, No. 12 at pp. 2-3) The cu rrent energy conservation standards promulgated by the 2000 Ballast Rule exclude ballasts designed for dimming to 50 percent or less of their maximum output. NEMA believes that dimming ballasts are beyond the scope of this rulemaking, alt hough ASAP disagrees with this conclusion. (NEMA, Public Meeting Transcript, No. 9 at p. 69; ASAP, Public Meeting Transcript, No. 9 at p. 69; NEMA, No. 11 at p. 2) NEMA commented that it is premature to set requirements for dimming ballasts because dimming ballast compatibility with lamps is still being defined. NEMA argued that BEF values from today's commercially available products are inappropriate for use in this ru lemaking analyses because BEF values will change once a lamp-ballast compatibility standard is developed. (NEMA, Public Meeting Transcript, No. 9 at pp. 108-109) NEMA also commented that the energy savings possible with dimming systems, using evidence from DOE's Commercial Lighting Initiative, can be on the order of 30 to 50 percent, and far outweigh any incremental gains of a few percent that can be realized by setting component standa rds on dimming ballasts. (NEMA, Public Meeting Transcript, No. 9 at p. 109) However, the Joint Comment stated that dimming ballasts exhibit a range of efficiencies. The Joint Comment urged DOE to consider setting an efficiency standard that removes the least efficient products from the market but allows flexibility for including features that affect total system efficiency, such as control systems. (Joint Comment, No. 12 at p. 4)

As discussed in section 2.3.2, DOE ha s determined it is not precluded from considering previously exempt ballasts as “additional fluorescent ballasts.” Data from the 2005 U.S. Census reveal that dimming ballast s have less than 1 percent market share. k
Although some manufacturers do not report thei r shipments, after interviewing ballast manufacturers, DOE concluded the current market share is likely close to the market share indicated by the U.S. Census. Therefor e, DOE has tentatively determined not to

include these ballasts in the sc ope of coverage for this rule making because of their small market share and their use in existing energy-saving systems.

After examining the potential for substitution from other ballast types, DOE also believes there is little risk of dimming ballasts becoming a substitute for other covered ballast types. Dimming ballasts are more expensive than comparable fixed-light output ballasts. Moreover, dimming ballasts require specialized control systems, resulting in additional upfront cost. For these reasons, DOE believes dimming ballasts are not a potential loophole for existing ballast standard s and currently represent a small ballast market segment. Therefore, DOE does not pl an to extend coverage to dimming ballasts.

k Except when otherwise specified, DOE used data from the 2005 U.S. Census, available at www.census.gov/cir/www/335/mq335c.html

.

2-13Mini-ballasts. The Joint Comment requested that DOE consider mini-ballasts used in under-cabinet fixtures. (Joint Comm ent, No. 12 at p. 5) DOE found that while mini-ballasts could be made more efficient, they represent a tiny fraction of the ballast market and will likely lose additional market share to LED fixtures. There is little potential for substitution for this ballast type because the light output is too small for typical fluorescent lamp-and-ballast systems. Based on these findings, DOE does not plan to include this ballast type in the scope of coverage.

Ballasts that operate straight and U-shaped lamps ranging in size from 2 to 8 feet and diameters from T5 to T12. The Joint Comment recommended that DOE cover ballasts that operate less common lamp types in addition to high volume ballasts. The comment suggested covering ballasts for straight and U-shaped lamps ranging from 2 feet to 8 feet and diameters from T5 to T12, as well as reduced-wattage lamps. (Joint Comment, No. 12 at p. 4) DOE’s research f ound that many of these lamps and ballasts have very small market shares . Though a ballast can operate lamps other than the one it is designed to operate, DOE believes there is low risk of substitution. There has been no substitution effect under current and previous energy conservation standards, when the impacts could have been even greater. Th e 2009 Lamps Rule did not cover lamps of alternate lengths, diameters, or bases for similar reasons

⎯ low market share with limited potential for growth. For these reasons, and becau se these ballasts are unlikely to be used as substitutes, DOE does not plan to include them in this rulemaking.

Cold temperature ballasts for outdoor signs. The most recent standards exclude ballasts designed to operate two F96T12HO la mps at ambient temperatures of 20 °F or less and for use in an outdoor sign. ( 10 CFR 430.32(m)) As discussed earlier, DOE believes it has the statutory authority under 42 U.S.C. 6295(g)(7)(B) to consider these ballasts for the current energy conservati on standards rulemaking. Cold temperature ballasts for outdoor signs were originally ex cluded because electronic sign ballasts were

not available at the time of the 2000 Ballast Rule. Now, electronic sign ballasts are gaining acceptance in the market. DOE received multiple comments requesting that cold temperature ballasts be included in this ru lemaking. (Joint Comment, No. 12 at pp. 2-3; ASAP, Public Meeting Transcript, No. 9 at p. 62) The Joint Comment suggested that low temperature ballasts, such as those used in outdoor signage and in refrigeration applications, should be covered. Otherwise, low temperature ballasts could become a substitute for regulated ballasts in standard applications. (Joint Comment, No. 12 at p. 5)

DOE found that the market share of cold temperature ballasts was about 1 percent in 2005. Sales of LEDs in outdoor signage c ould rise in the future. However, DOE believes LEDs will have a more immediate impact in the neon sign market than in the market for large fluorescent outdoor signs. Though high output ballasts have a relatively small market share, the energy savings potential per ballast is substantial. Moving from a magnetic to an electronic sign ballast could reduce energy consumption by as much as 25 to 35 percent. Given that sign ballasts exist at multiple efficiency levels, DOE has determined it is technologically feasible to cover sign ballasts. Preliminary results from

2-14the LCC and NIA analyses indicate that setting standards would be economically justified.

Cold temperature ballasts for outdoor sign s are typically designed to operate a range of lamp lengths and numbers of lamps. Based on product catalogs and

conversations with manufactur ers, DOE found that sign ballasts can be designed to operate HO lamps between 1.5 and 10 feet and between 1 a nd 6 lamps per ballast. DOE plans to include these ballasts in the scope of coverage.

T5 ballasts. DOE received comments both for and against covering T5 ballasts. Both ASAP and the Joint Comment encourag ed DOE to carefully consider additional ballast types such as T5 ballasts. (Joint Comment, No. 12 at p. 3; ASAP, Public Meeting Transcript, No. 9 at p. 108) Conversely, NE MA did not support including T5 ballasts

because it believes T5 ballasts to be an immature technology that is not yet established in the marketplace. (NEMA, Public Meeting Tr anscript, No. 9 at p. 106; NEMA, No. 11 at

p. 3)

The U.S. Census reports that T5 ballasts comprised about 4 percent of the ballast market in 2005. Shipment data are available only for T5 high output ballasts, so the actual market share is likely larger than this. T5 ballast shipments have been steadily increasing since the shipments were first reported in 2002. Furthermore, DOE research indicates that T5 high output ballasts are ra pidly taking market share from metal halide systems used in high bay industrial applica tions. DOE concluded that T5 ballasts are a growing market segment of significant size and represent significant potential energy savings. In its interviews, DOE learned th at some ballast manuf acturers are concerned that a low-cost, inefficient product could enter the market if T5 ballasts were not subject

to standards. This inefficient T5 ballast could take market share from more efficient T5 or T8 ballasts, decreasing potential energy saving s. If T5 lamps were subject to standards, the possibility of substitution would be eliminated. Because higher-efficiency versions of some of these ballasts are already present in the market, DOE tentatively concludes that standards for these ballasts are technologic ally feasible. Based on DOE’s preliminary analysis of these ballasts in the LCC and NIA, coverage of T5 ballasts would be economically justified. DOE believes T5 ballasts have a significant and growing market share, and also have the potential to beco me a loophole in ballast standards if not included. In addition, DOE believes the T5 ballast market is sufficiently established that it will not be adversely affected by energy conservation standards.

DOE found that T5 ballasts and lamps exist in a variety of lengths and wattages. Although standard T5 lamps include watta ges ranging from 14W to 80W, and lengths ranging from nominally 2 feet to 6 feet, the primary driver of T5 ballast and lamp market share growth is substitution for currently regulated 4-foot T8 MBP ballasts and lamps. Therefore, DOE proposes to cover only the balla sts designed to operate nominally 4-foot lengths of T5 miniature bipin (miniBP) lamps. These include one and two-lamp 4-foot T5

miniBP SO ballasts and one through four-lamp 4-foot T5 miniBP HO ballasts.

2-15Low power factor ballasts. Low power factor ballasts have a power factor less than 0.9 and are typically used in residentia l applications. These ballasts are exempt from current energy conservation standards. DOE has the authority to consider previously exempted ballasts in this rulemaking and has received multiple comments on low power factor ballast coverage.

The Joint Comment encouraged DOE to ev aluate coverage of low power factor ballasts. (Joint Comment, No. 12 at pp. 2-3) It stated that the exemption for low power

factor ballasts should be rem oved due to improvements in electronic ballast technology and reduced production costs. Additionally, th e Joint Comment noted that the size of the

residential ballast market should be large enough to warrant inclusion in the scope of coverage. At the framework public meeting, ASAP also noted that residential ballasts have significant market share and suggested that DOE consider low power-factor ballasts for coverage. (ASAP, Public Meeting Transcript, No. 9 at pp. 61, 108)

Only magnetic residential ballast shipments are reported in the U.S. Census. The market for residential magne tic ballasts held steady at a bout 7 percent between 1995 and 2002, and then decreased to about 1.5 percen t in 2005. DOE believes the 2005 market share and total shipments to be much high er. Electronic ballasts are a common option for residential fluorescent lighting fixtures, but they are not reported in the Census data. Also, many residential ballast s are manufactured overseas by foreign companies that do not share shipment data with the U.S. Cens us. Because of these omissions, DOE believes residential ballasts represent a sizeable portion of the overall ballast market.

Residential ballasts do exhibit variation in energy e fficiency. Residential ballasts can be magnetic or electronic and also exis t in both T8 and T12 diameters. Therefore, DOE believes standards for low power factor ballasts are technologically feasible. Preliminary analysis in the LCC and NIA indicates that standards for residential ballasts are economically justified. For these reasons, DOE plans to include residential ballasts that operate 4-foot medium bipin or 2-foot U-shaped lamps in the scope of coverage.

Four-foot T8 MBP and 2-foot T8 U-shaped ballasts. At the framework public meeting, DOE stated its intention to expand th e scope of coverage to include ballasts that operate 4-foot medium bipin and 2-foot U-shaped lamps with rated wattages greater than or equal to 25 watts. These lamps were s ubject to standards in the 2009 Lamps Rule. DOE received several comments in support of c overing the T8 ballasts that operate these lamps, both from manufacturers and energy efficiency advocates (NEMA, No. 11 at p. 3; Joint Comment, No. 12 at p. 4; NEMA, Pub lic Meeting Transcript, No. 9 at p. 106)

According to the U.S. Census, the market share of 4-foot T8 MBP and 2-foot T8 U-shaped ballasts represented 55 percent of shipments in 2005. In addition, ballasts that operate 4-foot T8 MBP and 2-foot T8 U-shap ed lamps exhibit a range of efficiencies, thereby satisfying the technological feasibilit y requirement. Partly because of energy conservation standards promulgated for T12 balla sts, shipments of T8 ballasts have been increasing. T8 ballasts are being purchased and installed in applications previously popular for T12 systems. There is potential fo r significant energy savings by regulating

2-16the 4-foot T8 ballast market. Furthermore, preliminary analysis in the LCC and NIA demonstrated the potential for significant economic savings. For these reasons, DOE proposes to include ballasts that operate 4-foot T8 MBP and 2-foot T8 U-shaped lamps in the scope of coverage.

DOE received comments that ballasts designed to operate lower wattage lamps should be covered in addition to those designed to operate standard-w attage lamps. (Joint Comment, No. 12 at p. 3) Afte r investigating the ballast market, DOE agrees. DOE does not want to create a potential loophole wher e the standard-watta ge lamp-and-ballast systems that dominate the market can shift to reduced-wattage systems. Therefore, if DOE includes a ballast in its scope of coverage, it will also cover ballasts that can operate the same type of lamp (length, contacts, etc.) at reduced wattages. For example, DOE will not only cover the two-lamp ballast that opera tes the 32W T8 lamp, but also all ballasts that operate two straight-shaped lamps (commonly referred to as 4-foot medium bipin lamps) with medium bipin base s of nominal overall length of 48 inches and rated wattage

of 25 or more.

Eight-foot SP slimline T8 ballasts. At the framework public meeting, DOE announced its intention to expand the scope of coverage to include ballasts that operate 8­ foot single pin instant start slimline lamps with a rated wattage greater than or equal to 52 watts, as defined in ANSI C78.3–1991, as well as 8-foot single pin instant start slimline lamps with a rated wattage greater than or equal to 52, not defined in ANSI Standard C78.3–1991. These lamps were included in coverage in the 2009 Lamps Rule. DOE received comments in support of covering the T8 ballasts from many interested parties, including manufacturers and energy efficiency advocates. (NEMA, No. 11 at p. 3; Joint Comment, No. 12 at p. 4; NEMA, Public Meeting Transcript, No. 9 at p. 106)

According to the U.S. Census, 8-foot SP slimline T8 ballasts had about 2 percent market share in 2005; 8-foot SP slimline T 12 ballasts had about 3 percent. While the

market share for 8-foot SP slimline T8 balla sts is relatively small, the 2009 Lamps Rule will eliminate all currently commercially available T12 lamps, further increasing demand for T8 lamp-and-ballast systems. In add ition, while some 8-foot SP slimline T12 lamps are being replaced by two 4-foot T8 lamps, others are being replaced by 8-foot SP slimline T8 lamps. DOE believes there is potential for significant energy savings by regulating ballasts that operate 8-foot SP slimline T8 lamps and that these regulations are technologically feasible. Also, based on DOE’s preliminary analysis of these ballasts in the LCC and NIA, coverage of ballasts that operate 8-foot SP slimline T8 lamps would be economically justified. For these reasons, DOE plans to include balla sts that operate 8­ foot SP slimline T8 lamps in the scope of coverage.

Eight-foot HO T8 ballasts . At the framework public meeting DOE announced it planned to cover ballasts that operate 8-foot recessed double contact rapid start high output lamps, 0.800 and other than 0.800 nominal amperes, as defined in ANSI C78.1– 1991. These lamps were included in coverage in the 2009 Lamps Rule. Both T8 and T12 HO ballasts can drive 8-foot RDC lamps, but the current ballast energy conservation standard only regulates F96T12HO and F96T12HO/ES ballasts. In addition, DOE has

2-17received comments in support of covering the T8 ballasts from many interested parties, including manufacturers and energy efficiency advocates. (NEMA, No. 11 at p. 3; Joint Comment, No. 12 at p. 4; NEMA, Public Meeting Transcript, No. 9 at p. 106)

According to the U.S. Census, the market share of 8-foot HO (T8 and T12) ballasts (excluding cold temperature si gn ballasts) was about 0.5 percent in 2005. Because shipments of 8-foot RDC HO lamps are mostly T12 lamps, DOE believes most of the 8-foot HO ballasts currently shipped are T12. The 2009 Lamps Rule will reduce the number of T12 RDC HO lamps shipped by promulgating more stringent T12 lamp standards. In addition, DOE received comme nts on the 2009 Lamps Rule that T8 RDC HO lamps are replacing T12 RDC HO lamps. DOE believes the associated fluorescent lamp ballasts will follow a similar trend toward increased T8 RDC HO ballast shipments. Because T8 HO ballasts are currently unregulated, DOE believes cove ring these ballasts will prevent potential negative substitution effects. There is a range of efficiency levels for 8-foot T8 HO ballasts currently in th e market; therefore, energy conservation standards are technologically feasible. In addition, preliminary analysis in the LCC and NIA demonstrated the potential for sign ificant economic savings. Based on these findings, DOE proposes to include 8-foot HO T8 ballasts in the scope of coverage.

2.3.5 Summary

In summary, DOE is considering extending coverage to the following list of fluorescent lamp ballasts:

(1) ballasts that operate one, two, three, four, five, or six straight-shaped lamps (commonly referred to as 4-foot medium bipin lamps) with medium bipin bases, a nominal overall leng th of 48 inches, a rated wattage l of 25W or more, and an input voltage at or between 120V and 277V; (2) ballasts that operate one, two, three, four, five, or six U-shaped lamps (commonly referred to as 2-foot U- shaped lamps) with medium bipin bases, a nominal overall length between 22 and 25 inches, a rated wattage of 25W or more, and an input vo ltage at or between 120V and 277V; (3) ballasts that operate one or two rapid start lamps (commonly referred to as 8-foot high output lamps) with re cessed double contact bases, a nominal overall length of 96 inches, and an i nput voltage at or between 120V and 277V; (4) ballasts that operate one or two instant start lamps (commonly referred to as 8-foot slimline lamps) with single pin bases, a nominal overall length of 96 inches, a rated wattage of 52W or more, and an input voltage at or between 120V and 277V; (5) ballasts that operate one or two straight-shaped lamps (commonly referred to as 4-foot miniature bipin standard output lamps) with miniature bipin bases, a nominal length between 45 a nd 48 inches, a rated wattage of 26W or more, and an input voltage at or between 120V and 277V;

l The 2009 Lamps Rule adopted a new definition for rated wattage that can be found in 10 CFR 430.2.

2-18(6) ballasts that operate one, two, thr ee, or four straight-shaped lamps (commonly referred to as 4-foot minia ture bipin high output lamps) with miniature bipin bases, a nominal leng th between 45 and 48 inches, a rated wattage of 49W or more, and an input voltage at or between 120V and 277V; (7) ballasts that operate one, two, thre e, or four straight-shaped lamps (commonly referred to as 4-foot medi um bipin lamps) with medium bipin bases, a nominal overall length of 48 inches, a rated wattage of 25W or more, an input voltage at or between 120V and 277V, a power factor of less than 0.90, and are designed and labeled for use in residential applications; and (8) ballasts that operate one, two, three, four, five, or six rapid start lamps (commonly referred to as 8-foot hi gh output lamps) with recessed double contact bases, a nominal overall length of 96 inches, an input voltage at or between 120V and 277V, and operate at ambient temperatures of 20 °F or less and are used in outdoor signs.

DOE is considering exempting the following ballasts: (1) ballasts designed for dimming to 50 percent or less of the maximum output of the ballasts; (2) mini-ballasts designed for use in under-cabinet fixtures; (3) ballasts that operate lamps with lengths and wattages other than those described above; and (4) ballasts with input voltages out side of the covered range.

2.4 MARKET AND TECHNOLOGY ASSESSMENT When DOE begins an energy conser vation standards rule making, it gathers information that provides an overall picture of the market for the products concerned, including the nature and market characteristic s of the products and the industry structure. This activity consists of both quantitative and qualitative analysis based primarily on publicly available information. The subjects addressed in the market and technology assessment for the preliminary TSD analysis include the major manufacturers, product classes, retail market trends, shipment s of covered products , regulatory and nonregulatory programs, and technologies that c ould be used to improve the efficiency of fluorescent lamp ballasts. This informa tion serves as a resource throughout the rulemaking.

DOE reviewed existing literature and spoke with manufacturers to gain an understanding of the fluorescent lamp balla st industry in the United States. Industry publications ( e.g. , manufacturer catalogs, trade journals ), government agencies, and trade organizations provided the bulk of the inform ation. Using this information, DOE assessed the overall state of the industry, ballast manufacturing and market shares, shipments by ballast type, general technical inform ation on ballasts, a nd industry trends.

2-19The discussion below summarizes the analytical approach and the comments DOE received in response to the framework document. m A more detailed discussion on DOE’s approach can be found in the market and technology assessmen t (chapter 3 of the preliminary TSD).

2.4.1 Market Assessment

The market assessment focuses on developing a qualitative and quantitative characterization of the fluorescent lamp ballast industry. It characterizes the market structure based on publicly available informa tion and data supplied by manufacturers and other interested parties. The market as sessment also includes information about

manufacturers of fluorescent la mp ballasts, product classe s, ballast shipments, and existing regulatory and non-regulatory efficiency improvement initiatives.

2.4.1.1 Manufacturers of Fluorescent Lamp Ballasts

The majority of the domestic market share of fluorescent lamp ballasts is held by

four manufacturers: GE Consumer and Industr ial of General Electric, Inc. (hereafter, “GE”); OSRAM Sylvania of Siemens AG (hereafter “Osram Sylvania”); Advance Transformer of Philips Lighting (hereafter “Advance”); and Universal Lighting Technologies (hereafter “Universal”). In add ition to ballasts listed under this rulemaking, the lighting divisions of several of these co mpanies manufacture other products, such as fluorescent lamps, high intensity discharge lamps, and LED lighting.

All four companies are members of NEMA, a trade association that represents fluorescent lamp ballast manufacturers. NEMA provides an organizational framework for manufacturers of lighting products to work together on projects that affect their industry

and business.

Although the fluorescent lamp ballast mark et is predominantly supplied by large manufacturers, DOE intends to conduct a st udy of small businesses that manufacture fluorescent lamp ballasts for the NOPR stage of this rulemaking analysis. The Regulatory Flexibility Act (5 U.S.C. 601 et seq .) requires preparation of an initial regulatory flexibility analysis for every rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. A regulatory flexibility analysis examines the impact of the rule on small entities and considers alternative ways of reducing negative impacts. The Small Business Administration defines small business manufacturing enterprises for fluorescent la mp ballasts under the North American Industry Classification System product c ode 33511, Power, Distribution, & Specialty Transformer Manufacturing, which has a size standard of 750 employees or fewer. This includes the total number of employees in the parent company, not only those in the division that produces fluorescent lamp ballasts. DOE invites interested parties to provide

m

For more information on the framework document, visit http://www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts.html

.

2-20names and contact information for any sma ll businesses that manufacture fluorescent lamp ballasts and shoul d be consulted before DOE publishes a NOPR.

2.4.1.2 Product Classes

In general, when evaluating and estab lishing energy conservation standards, DOE divides covered product into cla sses by (1) the type of energy used; (2) the capacity of the product; or (3) any other performance-related feature that affects en ergy efficiency and justifies different standard levels, considering factors such as consumer utility. (42 U.S.C. 6295(q)) Different energy conservation standard s may apply to different product classes.

In the framework document, DOE considered amending the existing product classes for fluorescent lamp ballasts. DOE be lieved that the existing class divisions did not properly account for expected market ch anges due to existing standards or for a potentially expanded scope of coverage. DOE sought comments on prospective classsetting factors, specifically number of lamps, lamp length, lamp base, lamp wattage, lamp diameter, and input voltage. DOE received seve ral comments on its appr oach to defining product classes.

The Joint Comment argued that DOE shoul d use relative system efficiency as a performance metric instead of BEF (section 2.2.2). Because BEF depends on total lamp wattage operated by the ballast, the Joint Comment remarked that a large number of product classes would be require d to satisfy the proposed sc ope of coverage. The Joint Comment stated that by RSE as a performance metric instead of BEF, DOE could establish 30 product classes to cover a wide range of ballasts. Because RSE is BEF multiplied by total rated lamp power (a normalizing quantity), more comparisons are possible among ballasts that operate different lamp types. The Joint Comment proposed defining product classes for an RSE standard based on a combination of starting method, lamp length, lamp output, and lamp diam eter. (Joint Comment, No. 12 at pp. 6-9)

As discussed in section 2.2.2 and the active mode test procedure NOPR, for consistency with 42 U.S.C. 6295(g)(5), (g)(8), DOE has preliminarily determined that it cannot change the reported metric from BEF. For this reason, DOE is currently considering calculating BEF by measuring BE (using a resistor-based method) and then using transfer equations to correlate that m easurement to a reported BEF value. Though DOE did not consider product classes for fluores cent lamp ballasts in the context of an RSE standard, DOE did consider the four pr oduct class criteria recommended by the Joint Comment. For this preliminary analysis, with BEF as the efficiency metric, DOE considered 10 potential class-setting factors: (1) lamp length, (2) the maximum number of lamps operated, (3) ballast factor, (4) lumen package (or lamp output), (5) lamp diameter, (6) starting method, (7 ) market sector, (8) cold temperature operation, (9) input voltage, and (10) universal voltage. In general, when considering the above characteristics, DOE identified three main factors as affecting consumer utility: (1) thelumen package of the lamp-and-ballast system; (2) the physical constraints of the lampand-ballast system; and (3) the use of the ballast in an app lication for which other ballasts are not suitable. The potential class-setting factors DOE considered for the preliminary analysis are addressed below.

2-21The fluorescent ballasts considered for cove rage are designed to operate lamps with lengths of 4 or 8 feet. Because BEF is a f unction of ballast input power, and input power is highly dependent on the length of the lamp operated by the ballast, all else being equal, a ballast operating a shorter length lamp generally has a higher BEF than the same ballast operating a longer lamp. Furthermore, be cause consumers are often physically constrained by their building ceiling layout, systems operating 8-foot lamps and 4-foot lamps are not always substitutable for each ot her. Therefore, DOE believes that lamp length affects consumer utility. Given the impact that lamp length has on both BEF and utility, DOE is establishing separate product classes for ballasts that operate different lamp lengths.

DOE is considering covering ballasts th at operate different maximum numbers of lamps (from one to six lamps). Increasing the number of lamps a ballast operates increases the input power, thus resulting in a corresponding decrease in BEF. DOE believes that operating multiple lamps offers the consumer a distinct utility because this capacity affects the space required by fixtures (a four-lamp fixture requires more physical space than one-lamp fixture). Given this impact on both BEF and consumer utility, DOE has decided to establish sepa rate product classes based on th e maximum number of lamps a ballast operates.

The ballasts considered for coverage in this rulemaking are also available with a range of ballast factors. In applying DOE’s proposed amended active mode test procedure (as presented in the active m ode test procedure NOPR), DOE found that ballasts with high or low ba llast factors have lower BEFs than ballasts with a normal

ballast factor. n Furthermore, ballast factor is typicall y used to adjust the lumen package ofa lamp-and-ballast system. Lumen package refers to the quantity of light that a lamp-andballast system provides to a consumer. DOE has observed that consumers tend to use systems with different lumen packages for different applications. For example, low BF ballasts (with smaller lumen packages) are commonly used in applications where less light is desired. In consideration of the ef fect that ballast factor has on both BEF and consumer utility, DOE has decided in this preliminary TSD to establish separate product classes for low, normal, and high ballast factor ballasts.

The tendency of consumers to use system s with different lumen packages for different applications was also observed for ballasts that opera te certain types of lamps. For example, high output systems may be in stalled in certain hi gh-ceiling or outdoor applications where large quantities of light are needed. Alternatively, standard output systems might be installed in lower-ceiling applications such as offices or hospitals, where, for example, the distance between the light source and the illuminated surface is not as large. Notable differences in the application of ballasts designed to operate SO lamps versus HO lamps indicate a difference in utility. This difference in utility is accompanied by a difference in BEF, often due to the differences in ballast input power.. Therefore, given the observed utility distinctions and notable efficiency differences, DOE

n DOE classifies a low BF as less than or equal to 0.78, a normal BF as greater than 0.78 but less than 1.1, and a high BF as greater than or equal to 1.1.

2-22has tentatively decided to esta blish separate product classes for ballasts that operate SO lamps and ballasts that operate HO lamps.

With regard to ballasts that operate lamps of differing diameters, NEMA

commented that DOE should not combine balla sts for T8 and T12 lamps in the same product class because T8 systems are inhere ntly more efficient than T12 systems. (NEMA, No. 11 at p. 3) While DOE agrees with NEMA that T8 systems are generally more efficient than T12 systems and that T8 ballasts generally have higher BEFs than T12 ballasts, DOE does not belie ve that this alone justif ies creating separate product classes for ballasts that operate T8 and T12 lamps. Consistentwith its approach in past rulemakings (74 FR 16920, 16937 (April 13, 2009 )), DOE maintains that T8 lamp-andballast systems are commonly used as substitutes for T12 lamp-and-ballast systems, suggesting that there is no unique utility associated with T12 systems. Manufacturer marketing literature and general guidance on lighting design and installation often promote T8 lamp-and-ballast systems as energy saving substitutes for T12 systems. Such substitute systems have the same lengths and bases, offer comparable lumen output, and can fit within the same fixtures. DOE recognizes that the diameter of the lamp may affect ballast BEF, but the utility provided to the end-user is comparable and/or equivalent. o Therefore, DOE has tentatively decided to in clude ballasts that opera te T8 and T12 lamps in the same product class.

However, DOE has decided to establish a separate product cla ss for ballasts that operate T5 lamps. All else being equal, 4-foot T5 ballast s generally have lower input power (due to the lower wattage of the test lamp), and therefore higher BEF than T8 or T12 ballasts. These systems, though often us ed to replace T8 and T12 systems, are not viable substitutes in all applications. Because T5 lamps have similar total lumen output as T8 and T12 lamps over a significantly smaller surface area, T5 lamp-and-ballast systems are often marketed as too bright for use in direct lighting fixtures. To prevent eliminating lamps appropriate for direct lighting app lications, DOE has tentatively decided to establish separate produc t classes for ballasts th at operate T5 lamps.

DOE received several comments encouraging the consideration of more than just ballast efficiency when creating product cl asses. NEMA commented that DOE should consider the efficiency of the whole system instead of just the ballast efficiency. (NEMA, Public Meeting Transcript, No. 9 at pp. 57, 103-104, 124, 211-212; NEMA, No. 11 at p. 5) NEMA advised DOE to create product classe s and set standards so as not to prevent new technologies from entering the market that may be less efficient than existing

ballasts but more efficient when considered as part of a system (with a lamp and fixture). (NEMA, Public Meeting Transcript, No. 9 at pp. 104, 124) Furthermore, NEMA commented that DOE should consider the application in which ballasts are used because this can affect total energy savings. (NEMA, Public Meeting Transcript, No. 9 at p. 104;

o However, recognizing that different ballasts operate T12 and T8 lamps and in order to consider separately the impact of standards on consumers of both types of ballasts, DOE structured the analytical tools (including the LCC and NIA spreadsheets) so that eac h consumer subgroup could be analyzed separately. Thus, for example, the LCC results are reported separately for baseline ballasts that operate T8 and T12 lamps.

2-23NEMA, No. 11 at p. 5) For example, progra mmed start ballasts are commonly used with occupancy sensors and dimming ballasts are often used with control systems. Both of these combinations typically provide significant energy savings when compared to an installation of just a lamp and ballast. Programmed start and dimming ballasts, however, are generally less efficient than instant start ballasts. NEMA encouraged DOE to create a separate product class for progr ammed start ballasts. (NEMA, Public Meeting Transcript, No. 9 at pp. 41, 106) If extending coverage to dimming ballasts, the Joint Comment encouraged DOE to account for daylight ha rvesting when setting product classes because its benefits are not captured in the BEF metric. (Joint Comment, No. 12 at p. 4)

In response, DOE agrees with NEMA that programmed start ballasts warrant separate product classes from instant start and rapid start ballasts. As discussed in chapter 3 of the preliminary TSD, programmed start ballasts have inherently lower BEFs than instant start ballasts. However, programmed start ballasts are commonly used in conjunction with occupancy sensors because of their ability to maintain the lifetime of the fluorescent lamp. DOE’s research indicates that use of instant start ballasts with occupancy sensors can result in an 80 percent reduction in lamp lifetime. Because of the application in which they are used, programme d start ballasts offer the user a distinct utility. In consideration of its affect on both BEF and utility, DOE has tentatively decided to establish separate product classes for programmed start ballasts.

As DOE did not extend coverage to dimming ballasts in this preliminary analysis (section 2.3.4), DOE did not study how to incorp orate daylight harvesting into a ballast efficiency metric. Should d imming ballasts be included in future coverage, however, DOE notes the Joint Comment’s suggestion that energy savings due to daylight harvesting be included in any efficiency metric.

Regarding different market segments, Ac uity Brands Lighting commented that if

DOE were to cover residential ballasts, they should be addr essed separately because the

residential market and its consumers are very different from their commercial counterparts. (Acuity Brands Lighting, Pub lic Meeting Transcript, No. 9 at pp. 110-111) As discussed in section 2.3, DOE has initiall y included them in its expanded scope of coverage. As discussed in chapter 3, separa te minimum power factor and electromagnetic interference requirements exist for residential ballasts as compared to commercial ballasts. Residential ballasts have more stringent (or lower maximum allowable) electromagnetic interference requirements than commercial ballasts, they also have less stringent (or lower minimum allowable) pow er factor requirements. These differing requirements between commercia l and residential products re sult in differing BEFs. In addition to their effect on BEF, these tw o requirements offer the consumer a unique utility in that they serve distinct market sectors and applications. Therefore, DOE has tentatively decided to establish a separate pr oduct classes for ballasts that operate in the

residential sector and commercial sector.

Ballasts that are designed for use in co ld temperature outdoor signs have slightly different characteristics than those ballasts that operate in the commercial or residential sectors. First, sign ballasts are designed to operate in cold temperature environments – as

2-24low as -20 °F. Second, sign ballasts are classifi ed by the total length (in feet) of lamps they can operate as well as the total number of lamps. To operate in cold temperature

environments and to be able to handle numer ous lamp combinations, sign ballasts contain more robust components compared to ballasts in the commercial sector that operate 8­ foot HO lamps and therefore sign ballasts are in herently less efficient. Regular 8-foot HO ballasts cannot be used as substitutes due to their inability to operate in cold temperature environments. For this reason, DOE believes cold temperature sign ballasts offer the consumer a distinct utility. Therefore, DO E has initially establis hed separate product classes for cold temperature sign ballasts.

In addition to the criteria discussed above, DOE also considered establishing product classes by input voltage of the ballast. Fluorescent lamp ballasts are available at a variety of input voltages, but the two most common input voltages are 120V and 277V. In examining test data between ballasts that operate only at 120V and ballasts that operate only at 277V, DOE found that there was not a significant difference in BEF. In addition, in its research, DOE found that the ballasts with the highest BEF allowed operation at both 120V and 277V. For this reason, DOE does not consider input voltage to be a factor in determining product classes.

Universal voltage ballasts can opera te at multiple input voltages ( e.g., 120V and 277V). To accommodate multiple voltages, th ese ballasts contain more components than dedicated voltage ballasts (balla sts that operate only one input voltage). Universal ballasts are growing in popularity because they can be used in multiple applications and serve as replacements for multiple ballasts. This allows distributors to stock fewer types of

ballasts and allows contractor s to keep fewer on hand for maintenance. Consolidation of products creates economies of scale for manu facturers, which can lead to reduced production costs. DOE compared test data between ballasts that operate only at one voltage and universal voltage ballasts operating at that volta ge and found that there was not a significant difference in BEF between the two. Therefore, DOE does not consider operating at multiple voltage s to be a factor in de termining product classes.

In summary, after considering all potential class-setting factors, DOE decided to define product classes based on lamp length, lumen package, maximum number of lamps operated, starting method, ballast factor, and market sector. These class-setting factors created 70 product classes, summarized in Table 2.4.1. DOE requests comments on these proposed product classes. A mo re detailed discussion of each class-setting factor that DOE considered can be found in chapter 3 of this preliminary TSD.

2-25Table 2.4.1 Product Classes for Fluorescent Lamp Ballasts

Number of Lamps Ballast and Lamp Type Starting

Method Ballast

Factor One Two Three Four Five Six

High 1 2 3 4 5 6

Normal 7 8 9 10 11 12 IS and RS

Low 13 14 15 16 17 18

High 19 20 21 22 23 24

Normal 25 26 27 28 29 30 4-Foot MBP and 2-Foot U-Shaped

PS

Low 31 32 33 34 35 36

High 37 38 N/A N/A N/A N/A

Normal 39 40 N/A N/A N/A N/A 4-Foot T5 MiniBP SO All

Low 41 42 N/A N/A N/A N/A

4-Foot T5 MiniBP HO All All 43 44 45 46 N/A N/A

High 47 48 N/A N/A N/A N/A

Normal 49 50 N/A N/A N/A N/A 8-Foot SP Slimline All

Low 51 52 N/A N/A N/A N/A

IS and RS All 53 54 N/A N/A N/A N/A 8-Foot RDC HO PS All 55 56 N/A N/A N/A N/A

IS and RS All 57 58 59 60 N/A N/A Residential Ballast, 4­ Foot MBP, and 2-Foot U-Shaped PS All 61 62 63 64 N/A N/A

Sign Ballast All All 65 66 67 68 69 70

2.4.1.3 Ballast Shipments

To calculate the national energy savings fr om an energy conservation standard for fluorescent lamp ballasts, DOE presents shipment estimates disaggregated by product class. In chapter 3 of the preliminary TSD, DOE prepared historical shipments data based on public shipment records from the U.S. Census.

DOE used this data for three main purposes . First, the shipment data and market trend information contributed to the shipments analysis and base-case forecast for ballasts (chapter 9 of the preliminary TSD). Second, DOE used the data to select the representative product classes and representa tive units for analysis (chapter 5 of the preliminary TSD). Third, DOE used the data to develop the installed stock of ballasts for the national impact analysis (chapter 10 of the preliminary TSD).

The Census data indicates that 83,440 ballast s were shipped in the United States in

2005. p The U.S. Census data is organized in to many subcategories, beginning with

p The total number of shipments is likely higher than indicated because every manufacturer does not report ballast shipments to the U.S. Census.

2-26magnetic versus electronic type ballasts. Under each technology type, the shipments are categorized by a variety of characteristics in cluding commercial versus residential sector, starting method, maximum number of lamps driven (1, 2, 3, or 4), lamp wattage, lamp diameter, and a few additional specific charac teristics. The shipment data does not include specific information for every permut ation of design characteristics, but it does indicate major trends in the market. Table 2.4.2 shows the market share of major ballast types in 2005.

Table 2.4.2 Ballast Market Share in 2005

Ballast Type 2005 Market Share (%)

T8 56

T12 18

CFL 8

T5 4

Residential 2 Linear Dimming 1 Cold Temperature Outdoor Sign 1

Other 10 A total of 83,440 ballasts were shipped in 2005.

The most significant trend in fluorescent lamp ballast shipments to date has been a shift away from magnetic T12 ballasts to electronic T8 ballasts. Magnetic ballasts commanded a majority of shipments in 1990 but were overtaken by electronic ballasts in

2005. Part of this trend has been driven by energy conservation standards for T12

ballasts.

In addition, consumer demand is changing for some ballast subcategories. For example, 8-foot SP slimline T12 lamp-and-balla st systems are moving toward both 8-foot slimline SP T8 lamp-and-ballast systems and two 4-foot T8 MBP lamp-and-ballast systems. T5 ballasts have also seen an in crease in shipments, partly because F54T5HO ballasts are being used as substitutes for hi gh bay metal halide systems in industrial applications.

2.4.1.4 Regulatory and Non-Regulatory Programs

Several Federal and international regulatory programs affect the market for fluorescent lamp ballasts. U.S., Canadian, and European regulatory initiatives relevant to the ballasts covered by this rulemaking are currently in place. While the following summary is not exhaustive in describing all regulatory action related to fluorescent lamp ballasts, it indicates notable initiatives that characterize recent developments in the lighting market. Chapter 3 of the preliminary TSD discusses these programs and

initiatives in additional detail.

In the United States, EPCA established an energy conservation program for major household appliances. Subsequently, NAE CA 1988 expanded DOE’s authority to regulate the energy efficiency of several products, including fluorescent lamp ballasts. NAECA 1988 prescribed standards and requi red DOE to conduct two rulemakings on

2-27fluorescent lamp ballasts. The first of thes e two rulemakings was completed in 2000 (the 2000 Ballast Rule); the second is this rule making. In addition, EPACT 2005 prescribed energy conservation standards for a dditional fluorescent lamp ballasts.

In Canada, the Natural Resources Canada (NRCan) Office of Energy Efficiency regulates the energy efficiency of fluores cent lamp ballasts. In 1992, Parliament passed the Energy Efficiency Act (S.C. 1992, c. 36), which concerns minimum performance levels for energy using products, effective in February 1995. Fluorescent lamp ballasts were included in the first set of energy efficiency regulations in 1994 and were amended in April 2003 to adopt the standards prom ulgated by DOE in the 2000 Ballast Rule. Finally, Amendment 9, published in the Canadian Gazette Part II on November 15, 2006 further amended Canadian energy efficiency standards.

In Europe, Directive 2005/32/EC of the Eu ropean Parliament and the Council of the European Union amended Council Directive 92/42/EEC and Dir ectives 96/57/EC and

2000/55/EC to establish a framework for se tting energy efficiency requirements for energy using products.

2.4.2 Technology Assessment

In the technology assessment, DOE identifie s technology options that appear to be a feasible means of improving product effici ency. This assessment provides the technical background and structure on which DOE bases its screening and engineering analyses. The following discussion provides an overvie w of the salient aspects of the technology assessment, including issues on which DOE seeks public comment. Chapter 3 of the preliminary TSD provides detailed descriptions of the basic construction and operation of fluorescent lamp ballasts, followed by a discu ssion of technology options to improve the ballast efficacy factor of a fluorescent lamp ballast.

In the framework document, DOE requested comments on a list of preliminary technology options that DOE intended to study further. These technology options included cathode cutout or hybrid ballasts, electronic ballasts, integrated circuits, higher grade components, and improved circuit de signs. NEMA provided comments on each of these technology options.

NEMA recommended that cathode cutout technology be evaluated as a technology option. (NEMA, No. 11 at p. 4; NE MA, Public Meeting Transcript, No. 9 at

p. 113) DOE agrees that cathode cut out technolog y can be used to increase the efficiency of a ballast by removing fila ment heating after the lamp has started. Therefore, DOE is considering this a method to improve a ballast’s BEF in th e technology assessment. After reviewing this technology option further, DOE has determined that this technology is a type of improved circuit design.

NEMA also recommended that DOE consider electronic ballasts as a technology option. NEMA stated that DOE should establish an electronic ballast efficiency level for all future rulemakings. (NEMA, No. 11 at p. 4; NEMA, Public Meeting Transcript, No. 9 at p. 113) DOE considers electronic ballasts to be a technology option and will consider

2-28NEMA’s comment about establishing an electr onic ballast efficiency level for all ballasts when DOE proposes a standard in the fluorescent lamp ballast NOPR.

NEMA commented that the use of integr ated circuits by themselves do not directly influence ballast effica cy factor and thus should not be a factor in establishing energy conservation standards. (NEMA, No. 11 at p. 4; NEMA, Public Meeting Transcript, No. 9 at p. 113) DOE agrees that not all integrated circuits directly influence ballast efficacy factor. However, DOE believes that some do. For example, there is an integrated circuit that can increase ballast efficacy factor by replacing transistors in the direct current (DC) to alternating current (AC) inverter. q Therefore, DOE is maintaining integrated circuits as a technology option in the technology assessment.

NEMA stated that higher grade compon ents should be considered a technology option because these components can reduce en ergy loss. NEMA also noted that DOE should evaluate the cost impact of su ch improvements in determining energy conservation standards for fluorescent lamp ballasts. (NEMA, No. 11 at p. 4; NEMA, Public Meeting Transcript, No. 9 at p. 113) DOE agrees that higher grade components like improved transformers, diodes, capacitors, and resistors should be considered a technology option as these components can redu ce energy loss. Once DOE determines if this technology option meets the screening criteria discussed in section 2.5, DOE will analyze the cost impact of the design option in the engineering analysis. More information on higher grade components can be found in chapter 3 of the preliminary

TSD.

In discussing improved circuit designs, DOE stated in the framework document that improving a ballast’s power factor could improve a ballast’s BEF. NEMA stated that raising the power factor is not an option for the majority of commercial ballasts and that increasing the power factor for residential ba llasts would increase ballast losses. (NEMA, No. 11 at p. 4; NEMA, Public Meeting Transc ript, No. 9 at pp. 113-114) DOE agrees that increasing a commercial or residential ballast’s power factor may not necessarily increase

the ballast’s BEF. r Therefore DOE is not considering this a technology option. DOE continues to believe that changing the circuit design of a ballast ca n increase a ballast’s BEF and therefore maintains improved ci rcuit designs as a technology option.

In discussing improved circuit designs, NEMA stated that it was unaware of any emerging technology that promises to lowe r ballast losses while maintaining the same level of performance as today’s state-of-the-a rt ballast designs. (NEMA, Public Meeting Transcript, No. 9 at pp. 114, 118; NEMA, N o. 11 at p. 4) DOE appreciates NEMA’s comment on the existence of emerging tec hnologies. DOE will only consider technology options in the engineering analysis that satisfy the screening criteria ( i.e. , technological feasibility; practicability to manufacture, install, and service; adverse impacts on

qInternational Rectifier. International Rectifier Introduces Robus t Self-Oscillating Electronic Ballast Lighting Control IC . November 22, 2005. (Last accessed March 19, 2009.) <http://www.irf.com/whatsnew/nr051122.html>

r ANSI 82.77-2002 already requires commercial ballasts to have a power factor greater than or equal to

0.90 and residential ballasts to have a power factor greater than or equal to 0.50.

2-29equipment utility or equipment availability; and adverse impacts on health or safety).

DOE invites comments on all of the technol ogy options it considered for fluorescent lamp ballasts (listed in Table 2.4.3), including any omissions or revisions necessary to have a more comprehensive technology asse ssment. In the context of commenting on technology options, DOE also requests in formation on the feasibility, performance improvement, and cost of the technology options , as well as any recent developments in their technical maturity. More information concerning these technology options can be found in chapter 3 of the preliminary TSD.

Table 2.4.3 Fluorescent Lamp Ballast Technology Options

Technology Option Description

Magnetic Ballast Magnetic Ballast Design

Electronic Ballast Electronic Ballast Design

Lamp Diameter Vary the lamp diameter to improve system performance.

Improved Components Transformers Use grain-oriented silicon steel or amorphous steel to reduce core

losses.

Laminated sheets of amorphous steel to reduce core losses.

Litz Wire reduces winding losses.

Diodes Diodes with lower losses.

Capacitors Capacitors with a lower effective series resistance.

Transistors Transistors with low drain-to-source resistance.

Improved Circuit Design Cathode Cutout Remove filament heating after lamp has started.

Integrated Circuits Substitute discrete components with an integrated circuit.

Starting Method Use instant start instead of rapid start as a starting method for lamp operation.

In the engineering analysis, DOE only cons iders technology options that meet the criteria in the screening analysis, discussed below. DOE was not able to identify working products or prototypes that have a dis tinguishably higher BEF than commercially available ballasts. Therefore, the most efficient ballasts in the engineering analysis are the most efficient tier of commercially available ballasts, and represent the “max-tech” level that DOE determined for this preliminary rulemaking. However, DOE presents additional research in appendix 5D of the preliminary TSD to explore whether technologies used in products similar to ballasts can be used to improve the efficiency of ballasts currently on the market. DOE requests comments on the feasibility, performance improvement, and cost of these technology options.

2.5 SCREENING ANALYSIS

After DOE identified the technologies that might improve the energy efficiency of fluorescent lamp ballasts, DOE conducted the screening analysis. The purpose of the screening analysis is to determine which opti ons to consider further and which options to screen out. DOE consults with industry, techni cal experts, and other interested parties in

2-30developing a list of design options. DOE then applies the following set of screening criteria to determine which design options ar e unsuitable for further consideration in the rulemaking (10 CFR Part 430, subpart C, appendix A at 4(a)(4) and 5(b)):

• Technological Feasibility: DOE will consider technologies incorporated in commercial equipment or in working protot ypes to be technologically feasible.

• Practicability to Manufactu re, Install, and Service: If mass production of a technology in commercial equipment and re liable installation a nd servicing of the technology could be achieved on the scale necessary to serve the relevant market at the time of the effective date of the standard, then DOE will consider that technology practicable to manufacture, install, and service.

• Adverse Impacts on Equipment Utility or Equipment Availability: If DOE determines a technology to have significant adverse impact on the utility of the equipment to significant subgroups of consumers, or to result in the unavailability of any covered equipment type with pe rformance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time, it will not further consider this technology.

• Adverse Impacts on Health or Safety: If DOE determines that a technology will have significant adverse impacts on health or safety, it will not further consider this technology.

NEMA commented that DOE should not consid er technology options with significant adverse impacts on health and safety. (NEM A, No. 11 at p. 5; NEMA, Public Meeting Transcript, No. 9 at p. 117) DOE agrees and maintains this as a screening criterion. For a complete discussion of the screening analysis, refer to chapter 4 of the preliminary TSD. The following section focuses on one t echnology option that was screened out due to its failure to comply with one or more of the screening criteria.

2.5.1 Technology Options Screened Out

In considering technologies in the screen ing analysis, NEMA stated that the only technologies that have been shown to be pr actical to manufacture, to have no adverse impacts on reliability, and to have no impact on the marketplace are used in commercially available products (which may not include all products that appear in manufacturer catalogs). Therefore, NEMA argued that only technologies used in currently commercially available products should be considered when setting standards for ballasts. NEMA noted that examining the ballasts listed in the NEMA Premium program could be one method of determining which products are actually used in the marketplace and therefore commercially available. (NEMA, Public Meeting Transcript, No. 9 at pp. 115-116; NEMA, No. 11 at p. 5) Acuity Brands Lighting agreed with NEMA, stating that data on reliability is ava ilable only for those products that have been commercially available. (Acuity Brands Lightin g, Public Meeting Transcript, No. 9 at pp. 118-119) ASAP disagreed, arguing that DOE sh ould not screen out a technology based on whether that technology has gained mark et acceptance. (ASAP, Public Meeting

2-31Transcript, No. 9 at p. 119) NYSERDA also not ed that there may be some emerging technologies that should not be screened out as the lighting industry moves very fast and these standards are 7 years from applicati on. (NYSERDA, Public Meeting Transcript, No. 9 at pp. 117-118)

DOE agrees that technologies should not be screened out based on whether they are used in a commercially available product. The screening criteria define technological feasibility to include technology incorporated into working prototypes as well as commercially available products. It is possible that a technology that is not commercially available or simply has not gained noticeable market share could increase the efficiency of a ballast and meet all of the screening criteria. Therefore, DOE will not screen out a technology based on its presence in commercially available products.

After considering all of the technology options identified in the technology assessment, DOE determined that improving ba llast efficiency by employing an inductor composed of laminated sheets of amorphous st eel did not meet the screening criteria. DOE screened out this technology option be cause this method increases the size and weight of the ballast. Therefore, DOE be lieves this option is not practicable to manufacture, install, and service. Employin g this technology option may cause problems with installing and servicing ballasts because the ballasts could be too large to fit in a fixture. DOE also believes this technology op tion fails the screening criterion of adverse impacts on consumer utility. Specifically, increasing the size and weight of the ballast may limit the places a consumer could use the ballast in a building. DOE is unaware of available data on whether this technology op tion is technologically feasible or has adverse impacts on health or safety be cause it is not commercially available.

In summary, after examining all of th e options presented in the technology assessment, DOE screened out only one option (laminated sheets of amorphous steel) because it did not meet all of the screening criteria. All remaining technology options met the screening criteria, and therefore will be considered in the engineering analysis.

2.6 ENGINEERING ANALYSIS

DOE performed an engineering analysis to establish the relationship between the manufacturer production cost (MPC) and th e energy efficiency of ballasts. Therelationship between the MPC and energy efficiency serves as the basis of the costbenefit calculations for individual consumers, manufacturers, and the Nation. This section provides an overview of the engineer ing analysis, discusses the representative product classes, establishes baseline unit specifications for those product classes, discusses incremental efficiency levels, discusses the analysis and results for the representative product classes, and estab lishes a scaling methodology for those product classes DOE did not analyze.

The primary inputs to the engineering analysis are the design options from the screening analysis (see chapter 4 of the pr eliminary TSD). Additional inputs include cost and efficiency data derived from the physical teardowns and test data from independent

2-32labs. The primary output of the engineering anal ysis is a set of cost-efficiency curves. In a subsequent life-cycle cost analysis (chapter 8 of the preliminary TSD), DOE used the cost-efficiency curves to de termine customer prices for each product by applying the appropriate distributi on channel markups.

2.6.1 Preliminary Engineering Analysis Approach

DOE typically structures its engineering analysis around one of three methodologies: (1) the design-option approac h, which calculates the incremental cost of adding specific design options to the baselin e model; (2) the efficiency-level approach, which calculates the relative costs of achieving increases in energy efficiency levels, without regard to the particular design options used to achieve such increases; or (3) the reverse engineering cost-assessment a pproach, which involves a “bottom-up” manufacturing cost assessment based on a detailed bill of materials derived from teardowns of products being analyzed.

At the framework document public meetin g, DOE proposed using an efficiency level approach that included basing its determination of th e end-user retail prices for

ballasts off of marked-down manufact urer product price schedule lists. s DOE received several comments on this methodology. At the pu blic meeting, manufacturers stated that the proposed approach would yield inaccurate and misleading end-user prices for ballasts

as each manufacturer has a different method of deciding how to price products. (Osram Sylvania, Public Meeting Transcript, No. 9 at p. 138; GE Lighting, Public Meeting Transcript, No. 9 at pp. 140, 144; Acuity Bra nds Lighting, Public Meeting Transcript, No. 9 at pp. 140-141) One manufacturer stated that this method may work for lamps but not ballasts because lamps are primarily maintenance compone nts and purchased in large volumes, whereas ballasts are mostly new construction components. (Acuity Brands Lighting, Public Meeting Transcript, No. 9 at pp. 140-141) The Joint Comment argued that DOE should instead give greater weight to reverse engineering cost estimates as this methodology has a better track record of estima ting actual costs. (Joint Comment, No. 12 at p. 13)

In evaluating the most appropriate methodology for the engineering analysis, DOE determined that an efficiency level approach paired with reverse engineering cost estimates would yield the most realistic data. In this way, DOE would not rely on product lists or minimum cost data supplied by manufacturers. Because DOE was unable to reverse engineer some ballasts analyzed in the rulemaking due to potting (a tar-like fill

material which inhibits the visual obs ervation of the components), DOE conducted teardowns for only unpotted balla sts and ballasts removed fro m a manufacturing facility before the potting procedure.

s U.S. Department of Energy-Office of Energy Efficiency and Renewable Energy. Energy Conservation Program for Consumer Products: Framework Document: Energy Conservation Standards for Consumer Products: Fluorescent Lamp Ballasts. January 2008. Washington, DC.

< http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ballast_framework_011408.p

df

>

2-33DOE devised a scaling technique to estimate manufacturer product costs for additional ballasts types. Using online ballast supplier pricing, DOE developed ratios relating online prices to teardown-sourced MPCs. These ratios allowed DOE to estimate MPCs for additional ballasts by scaling from their online price. For more information on DOE’s pricing analysis, see section 2.6.6 or chapter 5 of the preliminary TSD.

The following discussion summarizes the general steps of the engineering analysis:

Representative product classes : DOE first reviews covered ballasts and the associated product classes. When a produc t has multiple product cl asses, DOE selects certain classes as “representative” and concentrates its analytical effort on these. DOE selects representative product classes primarily because of their high market volumes. For those product classes that are not analyzed, DOE extrapolates the candidate standard levels from representative product cl asses to other product classes.

Baseline ballasts : For each representative product cl ass, DOE establishes baseline

ballasts. The baseline serves as a referenc e point for each product class, against which DOE measures changes resulting from potential amended energy conservation standards. To determine energy savings and changes in price, DOE compares each energy efficiency level with the baseline unit. Generally, a baseline ballast is a commercially available ballast that just meets existing Federal ener gy conservation standa rds and provides basic consumer utility. If no standard exists for that specific ballast type, the baseline ballast represents the typical ballast sold within a product class with the lo west tested ballast efficacy factor. NEMA recommended that only documented non-commercial information from accredited testing laboratories be used for the engineering analysis because commercially available data overstates balla st efficiency. (NEMA, No. 11 at p. 6; Advance, Public Meeting Transcript, No. 9 at pp. 125-126) DOE agrees with NEMA and

therefore has not relied on information in product catalogs when determining the BEF for

ballasts.

To develop the engineering analysis, DOE purchased a range of commercially available ballasts and tested them at two accredited testing laboratories for ballast efficacy factor and ballast efficiency. All test results are presented in appendix 5C of the preliminary TSD. For the baseline ballast, DOE selected specific characteristics such as starting method, ballast factor, and input vo ltage to characterize the most common

ballast. DOE also selected mu ltiple baseline ballasts in some product classes to ensure

consideration of different ba llast types and their associ ated consumer economics.

Candidate lamp-and-ballast designs: DOE selects commercially available ballasts with a higher BEF as replacements for each baseline ballast in th e representative product classes by considering the design options identified in the tec hnology assessment and screening analysis (preliminary TSD chapter 4). DOE is able to explicitly identify many of the distinguishing design options associated with each ballast. However, at some levels, these design options are considered to be implicitly used in the ballast to achieve a

2-34higher BEF. t In identifying more efficient substitutes, DOE identifies ballasts using a database of commercially available ballasts. DOE then tests these ballasts to establish BEF and ballast efficiency. All test re sults are presented in appendix 5C.

Because fluorescent lamp ballasts are desi gned to operate fluorescent lamps, DOE pairs each ballast with the most common fluor escent lamp in its re spective product class. DOE develops the engineering analysis based on two substitution cases. In the first case, the consumer is not allowed to change the sp acing of their fixtures and therefore replaces

one baseline ballast with a more efficacious ballast. In this case, light output is maintained to within 10 percent of the baseline system lumen output. u In the second case, the consumer is allowed to change the spacing of the fixture. Therefore, light output is normalized and the consumer either installs more or fewer ballasts to maintain light

output.

Candidate standard levels . After identifying the more efficient substitutes for each baseline ballast, DOE develops candidate standard levels (CSLs). DOE based its analysis on two factors: (1) the design options associated with the specific ballasts studied, and (2) the maximum technologically feasible efficiency level. Advance suggested that DOE should consider onl y commercially available systems when developing candidate standard levels due to time constraints. (Advance, Public Meeting Transcript, No. 9 at pp. 131-132) As stated in the screening analysis, DOE believes that all technologies that pass the screening cr iteria are used in commercially available ballasts or working prototypes and therefor e based its engineering analysis on those technologies.

DOE is required by section 325(o) of EPCA to determine the maximum improvement in BEF that is technologically feasible (“max-tech”) for fluorescent lamp ballasts. (42 U.S.C. 6295(o)). To determine th is level, DOE conducted a survey of the fluorescent lamp ballast market and the research fields that support the market. DOE believes that within a given product class, no working products or prototypes exist that have a distinguishably higher BEF than commercially available ballasts. Therefore, the highest CSL presented, which represents the most efficient commercially available ballasts, is the max-tech level that DOE determined for this preliminary rulemaking. However, DOE presents additional research in appendix 5D of the preliminary TSD to explore whether technologies used in products similar to ballasts can be used to improve the efficiency of ballasts currently on th e market. DOE requests comments on this analysis.

NEMA argued that DOE should not es tablish a CSL that would require a proprietary technology, as this would give one company an advantage over another. (NEMA, No. 11 at p. 6; NEMA, Public Meetin g Transcript, No. 9 at p. 130) DOE agrees

t Ballast catalogs usually designate whether the ballast is magnetic or electronic and what diameter lamp it is designed to operate. The catalogs do not, however, specify the quality of components used or all aspects of the circuit design.

u In some instances ( e.g. , when switching from T12 to T8 ballasts), light output goes slightly beyond these limits. These instances are discussed in more depth in chapter 5 of the preliminary TSD.

2-35and considers proprietary designs in its en gineering analysis only if there are other technology pathways to meet th at efficiency level. DOE does not regard a standard level that can be met by only one proprietary de sign to be economically justified. DOE believes, however, that no CSL in this ru lemaking requires the use of a proprietary technology. DOE requests comments on its c onclusions that no commercially available products use proprietary designs and that CSLs that require the use of proprietary designs are not economically justified.

Price analysis . After identifying both the baseline ballast and the more efficient substitutes at each CSL, DOE generates a bill of materials (BOM) by disassembling multiple manufacturers’ ballasts that span a range of efficiency levels for each of the representative product classes. The BOMs desc ribe the product in detail, including all manufacturing steps required to make and/or assemble each part. DOE then develops a

cost model that converted the BOMs and effi ciency levels into MPCs. By applying derived manufacturer markups to the MPCs , DOE calculated the manufacturer selling prices and constructed industry cost-efficiency curves.

DOE was not able to generate a BOM for all ballasts in the engineering analysis. In this case, DOE evaluated retail prices and estimated a MSP for each ballast. For fluorescent lamps, DOE referenced the retail price in the 2009 Lamps Rule.

2.6.2 Representative Product Classes

As discussed in the market and tec hnology assessment (preliminary TSD chapter 3), DOE revised the existing product classes fo r ballasts to include 70 product classes, as shown in Table 2.6.1. Of these 70 product classes, DOE chose to analyze 10 as representative product classes. DOE chose to analyze at least one representative product class for each lamp type analyzed. For the most prevalent ballast type ( e.g. , for ballasts that operate two 4-foot MB P and 2-foot U-shaped lamps), DOE choose to analyze multiple representative product classes. DOE based the repr esentative product classes on the most common lamp-and-ba llast configurations. Alt hough DOE did not create a separate engineering analysis for every pr oduct class, DOE established standards for these product classes based on the representa tive product classes directly analyzed. For instance, DOE extended its proposal for ballast s that operate two 4-foot T5 MiniBP HO lamps by observing the relationship between test data for ballasts that operate one, three, and four lamps and determinin g an appropriate scaling factor. Section 2.6.5 and chapter 5 of the preliminary TSD provide more inform ation on extending standards to the product classes DOE did not analyze.

2-36Table 2.6.1 Representative and Scaled Product Classes for Fluorescent Lamp

Ballasts

Number of Lamps Ballast and Lamp Type Starting

Method Ballast

Factor One Two Three Four Five Six

High Scaled Scaled Scaled Scaled Scaled Scaled

Normal Scaled Representative

Product Class Scaled Representative

Product Class Scaled Scaled IS and

RS

Low Scaled Scaled Scaled Scaled Scaled Scaled

High Scaled Scaled Scaled Scaled Scaled Scaled

Normal Scaled Representative

Product Class Scaled Representative

Product Class Scaled Scaled 4-Foot MBP and 2­

Foot U-shaped

PS

Low Scaled Scaled Scaled Scaled Scaled Scaled

High Scaled Scaled N/A N/A N/A N/A

Normal Scaled Representative

Product Class N/A N/A N/A N/A 4-Foot T5 MiniBP

SO All

Low Scaled Scaled N/A N/A N/A N/A

4-Foot T5 MiniBP

HO All All Scaled Representative

Product Class Scaled Scaled N/A N/A

High Scaled Scaled N/A N/A N/A N/A

Normal Scaled Representative

Product Class N/A N/A N/A N/A 8-Foot SP Slimline All

Low Scaled Scaled N/A N/A N/A N/A

IS and

RS All Scaled Representative

Product Class N/A N/A N/A N/A 8-Foot RDC HO

PS All Scaled Scaled N/A N/A N/A N/A

IS and

RS All Scaled Representative

Product Class Scaled Scaled N/A N/A Residential Ballast, 4-Foot MBP, and 2­

Foot U-Shaped PS All Scaled Scal ed Scaled Scaled N/A N/A

Sign Ballasts All All Scaled Scaled Scaled Representative

Product Class Scaled Scaled

2.6.3 Baseline Ballasts and Candidate Standard Levels Analyzed

For each representative product class, DOE selected a baseline model as a reference point against which to measure changes resulting from energy conservation standards. Typically, a baseline ballast is a unit that just meets current Federal energy conservation standards and provides basic consumer utility. To determine energy savings and changes in price, DOE compared each higher energy efficiency level with the

baseline unit.

2-37DOE considered the ballast’s characteris tics in choosing the most appropriate baseline ballast for each product class (the baseline ballast exhibits the characteristics of the least efficient and most common ballast.) These characteristics include the ballast’s starting method ( e.g. , rapid start (RS), instant start (IS) , or programmed start (PS)), input voltage (277V vs. 120V), type (electronic vs. magnetic), power factor (PF), total harmonic distortion, ballast fact or (BF), input power, BEF, and whether the ballast can operate at multiple voltages v (universal voltage) or only one (single voltage). Finally, DOE considered whether the ballast just meets existing Federal minimum energy

conservation standards.

After choosing a baseline ballast, DOE surveyed and tested many of the manufacturers’ product offerings for BEF and ballast efficiency to identify the efficiency levels corresponding to the highest number of models. DOE identified the most prevalent BEF values in the range of available pr oducts and established CSLs based on those products. Because the baseline ba llasts have different BEF va lues and represent various design options, CSLs affect only one of the two baseline lamps in some product classes. For example, CSL1 may require a more effi cient T12 ballast than the baseline T12 ballast, but not require a ballast more efficient than the T8 baseline. However, the full range of CSLs ultimately specifies requirement s that are above the BEF values of all the baseline ballasts sold, and therefore affect all baseline ballasts.

The following discussion outlines DOE’s choice of baseline ballasts and CSLs for the two-lamp normal BF IS a nd RS 4-foot MBP product cla ss. For this product class, DOE chose to analyze two baseline ballasts. Ce nsus data indicates that 2001 shipments of 4-foot and 2-foot U-shaped MBP T12 ballast s represented 14 percent of all shipments, while 4-foot and 2-foot U-shaped MBP T8 ballasts represente d 86 percent of all shipments. w Therefore, DOE analyzed both a T12 a nd T8 ballast as a baseline ballast. Because F34T12 lamps are the most common T12 lamps, DOE chose to analyze only those ballasts that operate F34T12 lamps for th is rulemaking. DOE also chose to analyze only those ballasts that operate F32T8 lamps because this lamp is the most common 4­ foot MBP T8 lamp.

The Federal minimum energy conservation standards for ballasts that operate two F34T12 lamps became effectiv e for ballasts manufactured on or after July 1, 2009. (10 CFR Part 430.32 (m)(5)) This energy conserva tion standard effectively allowed only electronic F34T12 ballasts. Therefore, DOE chose an electronic ballast as the F34T12 baseline ballast. To determine the BEF of the baseline ballast, DOE tested multiple ballasts operating a reference F34T12 lamp. Table 2.6.2 shows the BEF, BF, and input power of the most common T12 ballast that just meets the minimum energy conservation standard of 1.35. The majority of T12 electr onic ballasts in product catalogs are RS, are single voltage, have a high PF (around 0.98), and have a THD less than 20 percent. The ballast that just meets the energy conservation standard also exhibits these characteristics.

v Universal voltage ballasts can operate at 120V or 277V.

w More recent Census data for ballasts is available. However, shipments of T12 ballasts have not been publicly released after 2001.

2-38DOE also chose a ballast that has an input voltage of 277V ballast because the majority of ballasts operate in comme rcial buildings at 277V.

There is no Federal minimum energy conservation standard for ballasts that operate F32T8 lamps. Therefore, DOE chose the most common, least efficient ballast on the market as the baseline ballast for this lamp type. DOE tested a range of F32T8 ballasts from multiple ba llast manufacturers and found that the least efficient but most

common ballast exhibited the characteristics shown in Table 2.6.2. The vast majority of T8 ballasts are IS, are electronic, and have a high PF (around 0.98). Furthermore, the least efficient T8 ballasts are single voltage and have a THD less than 20 percent. Finally, DOE chose a ballast that has an input voltage of 277V, because the majority of ballasts operate in commercial buildings at 277V.

Table 2.6.2 Baseline Ballasts for Two-Lamp Four-Foot and Tw o-Foot U-Shaped

MBP IS & RS Normal BF Product Class

For operation

of Starting Method, Input Voltage, Ballast Type, PF, THD Ballast Efficiency BF Input

Power BEF Federal Energy

Conservation

Standard

Two

F34T12

lamps RS, 277V, Electronic, Single Voltage 0.98 PF,

<20% THD 80.1%* 0.86 63.5 1.359 1.35

Two

F32T8 lamps IS, 277V, Electronic, Single Voltage, 0.98

PF, <20% THD 85.4%* 0.88 60.4 1.450 N/A

* DOE was unable to test the ballast efficiency of these particular ballasts. DOE estimates are based on a measured BEF value and the established relationship between BEF and ballast efficiency determined by the active mode test procedure. For the IS and RS representative product class, the BEF of a ballast is related to ballast efficiency in the following manner:

BEF=1.697*BE.

As discussed in the screening analysis (chapter 4 of the preliminary TSD), DOE used design options that achieve a higher BEF than the baseline ballast. Because the

baseline ballast is an electr onic ballast, improvements require d the use of the following design options: lamp diameter, improved components, and improved circuit design. The following discussion outlines the candidate standard levels associated with the two-lamp

normal BF IS and RS 4- foot MBP product class.

CSL1 . BEF: 1.450; Efficiency: 85.4 percent

This level affects the F34T12 baseline balla st but not the F32T8 baseline ballast. It requires the use of improved lamp diameter s (T8 instead of T12). Therefore, no T12

ballasts meet this level. In addition, ballasts must use improve d circuit designs (a starting method that is IS rather than RS).

CSL2 . BEF: 1.535; Efficiency: 90.5 percent

2-39This level affects both baseline ballasts. Ho wever, no T12 ballast that is commercially available can meet this level. Ballasts at this level use better components and more efficient circuit designs than those ballasts that just meet CSL1.

CSL3 . BEF: 1.561; Efficiency: 92.0 percent

This level again affects both baseline ballasts and represents the maximum technologically feasible level. This level re presents a modest improvement in efficiency over CSL2. Ballasts at this level again use s lightly better component s and circuit designs than those ballasts that just meet CSL2.

Chapter 5 of the preliminary TSD provides a more detailed discussion on how DOE selected baselines and CSLs for all representative product class, which technologies they represent, and which design option lamps DOE used at these CSLs for each representative unit. Table 2.6.3 outlines the CSLs for all representativ e product classes:

Table 2.6.3 Summary of Proposed Candidate Standard Levels for Representative Fluorescent Lamp Ballast Product Classes

Representative Product Class CSL1 CSL2 CSL3

BEF BEF BEF Two-Lamp Normal BF 4-Foot MBP IS & RS 1.450 1.535 1.561 Two-Lamp Normal BF 4-Foot MBP PS 1.518 N/A N/A Four-Lamp Normal BF 4-Foot MBP IS & RS 0.781 N/A N/A Four-Lamp Normal BF 4-Foot MBP PS 0.755 N/A N/A Two-Lamp Normal BF 4-Foot T5 MiniBP SO 1.441 1.482 N/A Two-Lamp 4-foot T5 MiniBP HO 0.791 0.837 N/A Two-Lamp Normal BF 8-Foot SP Slimline 0.807 N/A N/A Two-Lamp Normal BF 8-Foot RDC HO IS & RS 0.500 0.549 N/A Two-Lamp Low BF 4-Foot MBP IS & RS Residential 1.457 1.492 N/A Four-Lamp Sign Ballasts 0.238 N/A N/A

2.6.4 Results

As discussed above, DOE ev aluated multiple baseline ballasts for the relevant product classes to provide a comprehensive understanding of the consumer economics. DOE based its engineering analysis on two s ubstitution cases. In the first case, the consumer is not allowed to change the spacin g of their fixtures and therefore replaces one baseline ballast with a more efficacious ballast. In this case, light output is maintained to within 10 percent of the baseline system lume n output. Percentage change in mean lumen output is show in each table below. In the se cond case, the consumer is allowed to change the spacing of the fixture. To show how energy savings would change due to this change, DOE shows the normalized system input pow er. The following formula is used to normalize the system input power of the standards-case system to the mean lumen output of the baseline system:

2-40MLO Baseline NormalizedInputPower = ∗ InputPower S tan dardsCase S tan dardsCase MLO S tan dardsCase Equation 2.6.1

NormalizedInputPower S = Input power of the standards-case system that

tan dardsCase matches the light output of the baseline system

MLO Baseline = Mean lumen output of the baseline system

MLO S = Mean lumen output of the standards-case system

tan dardsCase InputPower S tan = Input power of the standards-case system dardsCase

The results tables also present the retail price of the replacement lamps ( e.g. , if it is a two-lamp system the retail price is th e price of two lamps). Table 2.6.4 presents the engineering characteristics of the ballast replacement options for the baseline F32T8 system in the two-lamp 4-foot MBP normal BF RS and IS product class. Because the BFs of the standards-case systems are slightly lower than the baseline system, the normalized input power is slightly higher than the meas ured input power. If a direct substitution is made, mean lumen output does not change by more than 2 percent relative to the mean lumen output of the baseline system.

For all F32T8 ballasts, DO E generated an MSP from teardowns. As shown in Table 2.6.5, physical teardown information sugge sts that the F32T8 ballast at CSL3 is less costly than the less efficient CSL2 ballast, but both CSL2 and CSL3 are more costly

than CSL1.

2-41Table 2.6.4 Two-Lamp Four-Foot MBP RS andIS Product Class with F32T8 Baseline

Candidate Standard Level For Operation of Ballast Type Starting Method Input Voltage Universal or Single Voltage Power Factor THD Ballast Factor Input Power BEF Ballast Efficiency System Initial Light Output System Mean Light Output Percentage Change Mean Lumen Output Ballast Manufacturer Selling Price Lamp Retail Price Normalized Input PowerVWlmlm%$$WBaseline/CSL1Two F32T8LampsElectronicIS277Single>0.98<20%0.8860.41.45085.4%*5,2504,988N/A7.435.6560.4CSL2Two F32T8LampsElectronicIS277Universal>0.98<10%0.8656.01.53590.5%5,1614,903-1.7%10.015.6557.0CSL3Two F32T8LampsElectronicIS277Universal>0.97<10%0.8756.41.56192.0%5,2424,980-0.2%8.935.6556.5*DOE was unable to test the efficiency of these particular ballasts. DOE estimates are based on the relationship between BEF and ballast efficiency determined by theactive mode test procedure. For the IS and RS representative product class, the BEF of a ballast is related to ballast efficiency in the following manner: BEF=1.697*BE.Table 2.6.5 presents the engineering characteristics of the ballastreplacement options for the baseline F34T12 system in the two-lamp4-foot MBP normal BF RS and ISproduct class. If a direct substitution is made, mean lumen output does not change by more than3percent from that of the baseline system. For the F34T12 baselineballast, DOE used the online price scaling technique to develop aprice. DOE found that the MSP for the F34T12 ballast was higherthan for any of the F32T8 ballasts. The F34T12 electronic ballast issold at lower volumes than the electronicF32T8 ballasts represented by CSL1, CSL2, and CSL3. DOE attributes the smaller shipmentvolume to its high cost relative to efficiency.2-42Table 2.6.5 Two-Lamp Four-Foot MBP RS andIS Product Class with F34T12 Baseline

Candidate Standard Level For Operation of Ballast Type Starting Method Input Voltage Universal or Single Voltage Power Factor THD Ballast Factor Input Power BEF Ballast Efficiency System Initial Light Output System Mean Light Output Percentage Change Mean Lumen Output Ballast Manufacturer Selling Price Lamp Retail Price Normalized Input PowerVWlmlm%$$WBaseline2 F34T12LampsElectronicRS277Single>0.98<20%0.8663.51.35980.1%*5,4124,872N/A10.2611.6563.5CSL12 F32T8LampsElectronicIS277Single>0.98<20%0.8860.41.45085.4%*5,2504,9882.4%7.435.6559.0CSL22 F32T8LampsElectronicIS277Universal>0.98<10%0.8656.01.53590.5%5,1614,9030.6%10.015.6555.7CSL32 F32T8LampsElectronicIS277Universal>0.97<10%0.8756.41.56192.0%5,2424,9802.2%8.935.6555.2*DOE was unable to test the efficiency of these particular ballasts. DOE estimates are based on the relationship between BEF and ballast efficiency determined by theactive mode test procedure. For the IS and RS representative product class, the BEF of a ballast is related to ballast efficiency in the following manner:BEF=1.697*BE.2-43Chapter 5 of the preliminary TSD presents results for all other product classes.

2.6.5 Scaling Between Product Classes

As discussed earlier, DOE reduced the analytic al burden associated with fluorescent lamp ballasts by identifying and studying select representative units for analysis. DOE then extrapolated the findings from those representative ballasts to ot her covered product classes that were not analyzed.

At the public meeting, DOE discussed sca ling to other product cl asses and requested

comments. NEMA advised DOE to be careful wh en extrapolating efficiency metrics from one product type to another, particularly with respect to BEF as BEF is lamp dependent. (NEMA, No. 11 at pp. 5-6) Therefore, DOE is establishing a test procedure that requires manufacturers to use one type of load if opera ting a specific type of lamp ( e.g. , a 4-foot MBP T8 lamp). For more information on that test procedure, see section 2.2.2. DOE also recognizes that BEF depends on a variety of other factors, like the number of lamps a ballast operates. Theref ore, in scaling product classes, DOE will examine test data to develop scaling relationships for all factors that affect the BEF of the ballast, including dependence on the lamp. Chapter 5 of the preliminary TSD presents detail on the scaling relationships between product classes and DOE’s methodology.

DOE invites comments on the use of this scalin g relationship to extrapolate findings from the representative product classes to other product classes.

2.6.6 Price Analysis

Developing the manufacturer selling price for different fluorescent lamp ballasts involved two main inputs, a teardown analysis to de velop the manufacturer pr oduct costs and a markup analysis to arrive at the MSP. Figure 2.6.1 shows the general breakdow n of costs and profit associated with manufacturing and selling a product. The full cost of production is broken down into two main costs, the full production costor manufacturing production cost, and the nonproduction cost. The non-production cost is equal to the manufacturer markup minus profits.

DOE totaled the cost of material s, labor, and direct overhead used to manufacture a product in

order to calculate the MPC. x

x When viewed from the company-wide perspective, the su m of all material, labor, and overhead costs equals the company’s sales cost, also referred to as the cost of goods sold (COGS).

2-44Figure 2.6.1 Full Production Costs

The MPC is composed of direct labor, direct material, and ove rhead costs. Direct material costs represent the direct purchase price of components (resistors, connecting wires, etc.). To estimate direct material and labor costs for early 2009 (the time at which the ballast teardowns occurred), DOE obtained customized teardown analyses for certain fluorescent lamp ballasts. DOE estimated the manufacturer overhead from a representative electronic fabrication company’s U.S. Securities and Exchange Commission (SEC) 10-k’s aggregated confidential manufacturer selling prices.

NEMA expressed concern that a change in commodity materials prices would affect payback calculations for ballasts. (NEMA, No. 11 at p. 6; Advance, Public Meeting Transcript, No. 9 at p. 133) DOE understands that prices for ballast components have fl uctuated in the past. To establish the price for an average ballast, DOE determined the January 2009 commodity price index and a 5-year average commodity pric e index (spanning 2004 through 2008) for each component from the Bureau of Labor St atistics Producer Price Indices (PPIs). y DOE then evaluated how the January 2009 material costs for ballasts varied from the 5-year average price for all ballasts. Although there was a large differe nce in cost for some components, overall, the difference in ballast price between the 2009 index and the 5-year average was negligible. Therefore, DOE believes that the prices in the engineering analysis as estimated in 2009 reflect a long-term average for commodity prices. For more information on this analysis, see chapter 5 and appendix 5A of the preliminary TSD. DOE requests comments on this analysis.

DOE carefully selected ballasts for the teardown analysis to create useful data to estimate manufacturer production costs. DOE mapped out a matrix of product specifications and selected ballasts so that comparisons could be made amon g ballasts that differed by only one characteristic (such as starting method or input vol tage). Ballasts are described by a long list of specifications, so DOE concentrated on the specificati ons that were expected to have the greatest impact on efficiency—high versus regular adve rtised efficiency, maximum number of lamps driven, starting method, and universal versus si ngle input voltage. DOE submitted 13 ballasts for teardowns. For the CSLs that these ballasts just met, DOE assigned the MPC from the teardown directly to the CSL.

y U.S. Department of Labor, Bureau of Labor Statis tics, Producer Price Indices. Last accessed May 13, 2009.

< http://www.bls.gov/ppi>.

2-45DOE was able to select only unpotted ballast s for the teardown analysis. Some ballast manufacturers add potting, a type of black pitch, to the ballast enclosure to improve durability and manage heat distribution. Because the sticky potting inhibits visual observation of the components, DOE was unable to reverse engineer many ballasts through a teardown analysis.

To estimate MPCs for ballasts that were not submitted for teardowns, DOE used online ballast supplier pricing to develop ratios relatin g online prices to teardown-sourced MPCs. After developing a ratio specific to each manufacturer, DOE could then estimate the MPC for a particular CSL. DOE identified ballasts from multiple manufacturers that just meet the CSL and then marked down the online prices to the MPC using the manufacturer-specific MPC ratio. DOE averaged the MPCs for all the ballasts just meeting the CSL to calculate the MPC.

Once MPCs were assigned to each CSL, DOE developed a markup to scale the MPC to the manufacturer selling price. DOE relied on in come statements found in 10-K reports from publicly owned ballast manufacturing companies. Using multi-year average financial data, DOE used the ratio of net sales to cost of g oods sold to mark up the MPC to the MSP.

As NEMA suggested at the framework public meeting, DOE also contacted individual manufacturers for price data on a confidential basis. (NEMA, Public Meeting Transcript, No. 9 at

p. 141) Using this confidential data, DOE was able to verify scaled prices and appropriate markup and overhead estimates. The Joint Comment recommended that when using manufacturer data, DOE should use the minimum co st data submitted rather than the average cost data because the low-cost manufacturer determines prices in a market in equilibrium. (Joint Comment, No. 12 at p. 13) Because DOE used a “bottom up” approach by generating MPCs from BOMs and marking up the MPC to an MSP, DOE did not need to choose between minimum cost and average cost data. When calculating the MPC through the BOM, DOE assigned prices to components based on high volume purchasing. DOE believes this method generated an accurate estimation of the MSP.

The Joint Comment urged DOE to review rev ealed pricing for the 2000 Ballast Rule to calibrate the accuracy of DOE price predicti ons. In addition, the Joint Comment recommended that in developing a calibration of revealed prices, DOE should separate commodity price impacts from impacts associated with a new effici ency standard. (Joint Comment, No. 12 at p. 13)

DOE believes that it should not calibrate pric es based on revealed historical pricing for two reasons. First, DOE is not using same pr icing methodology as it used in the 2000 Ballast Rule. The methodology in the 2000 Ballast Rule re lied on surveying distribut ors of magnetic and

electronic ballasts to determine the appropriate distributor pri ce and then using one markup to reflect the end user price. z Because DOE is using a different methodology to develop ballast prices (a reverse engineering cost estimate), DOE feels a calibration would be inappropriate. Second, DOE believes that conditions may be sign ificantly different for the 2000 Ballast Rule

z U.S. Department of Energy-Office of Energy Efficiency and Renewable Energy. Energy Conservation Program for Consumer Products: Technical Support Document: Energy Conservation Standards for Consumer Products: Fluorescent Lamp Ballasts. Chapter 3: Engineering Analysis. September 2000. Washington, D.C. < http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/chap3.pdf >

2-46than they are today. For example, there have be en substantial fluctuations in energy prices; pressure to move manufacturing facilities out of the United States; and changes in distribution channels, such as the dominance of “big box” retailers. For similar reasons, markups may not follow past behavior because numerous factors influence business costs and decisions on profit margins throughout the distribution chain. For these reasons, DOE does not believe it should calibrate the prices in this analysis according to historical pricing. For more information on DOE’s price analysis, see chap ter 5 of the preliminary TSD.

2.6.7 Other Key Issues

NEMA expressed concern that several possi ble upcoming regulations would affect the engineering and LCC analysis for fluorescent lamp ballasts. Specifically, NEMA is concerned about four possible regulations: safety requirements for system interconnects, safety requirements for lamp end-of-life protection, electromagnetic fiel d requirements, and hazardous material regulation. NEMA stated that these pot ential requirements could result in lower ballast efficiency and affect payback calculations (NEMA, No. 11 at p. 6; NEMA, Public Meeting Transcript, No. 9 at pp. 133-134)

DOE agrees that safety requirements for syst em interconnects and lamp end-of-life might lower the efficiency of commercially available ba llasts. However, DOE is not able to account for this lower efficiency until the requirements are established. For DOE to prepare for this possible regulation, DOE requests comments on how these re quirements will affect the efficiency of commercially available ballasts. DOE also reques ts information on how safety requirements may affect the cost of both low and high efficien cy ballasts so that DOE can assess how these requirements might affect payback calculations.

NEMA also expressed concern about possi ble electromagnetic field regulations. Specifically, NEMA is concerned that current internationally accepted electromagnetic interference (EMI) levels may be modified. (NEM A, No. 11 at p. 6; Advance, Public Meeting Transcript, No. 9 at pp. 133-134) DOE believes that if EMI levels are modified, the efficiency of commercially available ballasts ma y be lowered. However, DOE is not able to account for this lower efficiency until the requirements are established. Again, to prepare for this potential regulation, DOE requests comments on how these re quirements will affect the efficiency of commercially available ballasts. DOE also requests information on the cost of both low and high efficiency ballasts that meet these regulations so that DOE can assess how these requirements may affect payback calculations.

Finally, NEMA expressed concern that hazardous material regulations may be implemented. If impleme nted, NEMA believes these regula tions could affect component availability and payback calculations. (NEMA, No. 11 at p. 6; NEMA, Public Meeting Transcript, No. 9 at p. 133) DOE believes that if hazardous material regulations are implemented, the cost of ballasts may be higher . If costs increase more or less for higher efficiency ballasts than for lower efficiency ballasts, then payback calculations will be affected. As stated above, however, DOE cannot account for this effect unless regulations are established. DOE requests comments on when NEMA believe s hazardous material regulations may be

2-47adopted and how these requirements will affect the cost or efficiency of commercially available

ballasts.

2.7 ENERGY USE AND END-USE LOAD CHARACTERIZATION

The energy use characterization provides estimates of annual energy use for representative lamp-and-ballast systems that DOE evaluates in the LCC and PBP analyses and the NIA. To develop annual energy use es timates, DOE multiplied a nnual usage (in hours per year) by the system input power (in watts).

DOE selected the most common fluorescent lamp used with each analyzed ballast to develop representative lamp-and-ballast systems. Fluorescent lamps will not be regulated under the proposed ballast rulemaking; however, the in put power of the comp lete lamp-a nd-ballast system is considered for the energy use analys is because ballasts are not intended to operate without lamps. DOE developed the system input power estimates in the engineering analysis (chapter 5 of the preliminary TSD). To charact erize the country’s average use of lamp-andballast systems for a typical year, DOE develope d annual operating hours by sector, using data published in the U.S. Lighting Market Characterization: Volume I (LMC), Residential Energy Consumption Survey (RECS), the Commercial Bu ilding Energy Consumption Survey (CBECS), and the Manufacturer Energy Consumption Survey (MECS).

Lighting controls can reduce operating hours for affected lamp-and-ballast systems. At the public meeting, NYSERDA asked if DOE would consider lighting controls in its analyses (NYSERDA, Public Meeting Transcript, No. 9 at p. 151). With the exception of PS ballasts— which are often paired with occupancy sensors to maintain or extend lamp life—DOE did not modify the operating hour data from LMC for ot her ballast product cla sses in the preliminary analyses. While DOE recognizes that there probably are more lighting controls in use today, DOE does not believe the level of penetration wo uld be significantly different from LMC, which was published in 2002. Further, DOE believes the ove rall national leve l of penetrati on of lighting controls at the individual level ( i.e. , those that would respond to one individual’s office) is still relatively low. Finally, DOE is unsure how it w ould account for lighting controls, as there is uncertainty about which control systems are being recommended, and DOE was not able to identify nationally representative data sources on the impact of lighting controls. However, DOE invites additional comments on this issue, partic ularly on the type, prevalence, and operating hour reductions due to lighting controls used se parately in the commerc ial, industrial, and

residential sectors.

In the case of PS ballasts operating 4-foot MB P T8 lamps, DOE assumed these lamp-andballast systems are operated on occupancy sensor s in the commercial sector. Based on the range of estimated energy savings from occupancy sensors, DOE assumed energy savings of 30 percent and accounted for these energy savings with a 30 percent reduction in average operating hours for affected lamp-and-ballast systems. aa

aa

E Source. Purchasing Advisor Web Page – Lighting: Occupancy Sensors. 2009. (Last Accessed May 5, 2009.)

< http://www.esource.com/BEA/demo/BEA_esource/PA_10.html >

2-48See chapter 6 of the preliminary TSD for additional detail on the energy use

characterization.

2.8 MARKUPS ANALYSIS

In this rulemaking, DOE performed teardo wn analyses and a manufacturer markup analysis to develop MSPs for representative ballast designs (chapter 5 of the preliminary TSD). DOE then applied distribution channel markups and sale s tax to derive end-user prices. By combining the engineering analysis results and the distribution channel markups analysis, DOE derived typical inputs for use in the LCC analysis and the NIA.

The end-user equipment price depends on how the end-user purchases the equipment. As illustrated in Figure 2.8.1, two types of distribu tion channels describe how most ballasts pass from the manufacturer to the end-user. The first distribution channel applies to ballasts installed in fixtures. In this distribution channel, the manufacturer sells the ballast to an original equipment manufacturer (OEM)—in this case, th e fixture manufacturer—who in turn sells it to an electrical wholesaler ( i.e. , distributor), then to a contractor , and finally to the end-user. The second distribution channel applies to ballasts not installed in fixtures ( e.g. , replacement ballasts). In this distribution channel, the ma nufacturer sells the ballast to an electrical wholesaler, then to a contractor , and finally to the end-user.

Figure 2.8.1 Ballast Distribution Channels

Publicly owned companies are required to disclose financial information on a regular basis by filing different forms with the U.S. Securities and Exchange Commission (SEC). Filed annually, SEC form 10-K provides a comprehens ive overview of the company’s business and

financial conditions. To estimate OEM and wholesaler markups, DOE used financial data from

2-4910-K reports from publicly owned lighting fixtur e manufacturers and electrical wholesalers, respectively. DOE assumed a contractor markup c onsistent with that used in the 2000 Ballast Rule, and developed sales tax values using current State and local sales tax data. Chapter 7 of the preliminary TSD provides details of the markups analysis.

2.9 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

Energy conservation standards on equipmen t usually reduce operating expenses and increase end-user prices. DOE analyzed the net effect of amended standards on end-users by evaluating the net LCC using the cost-efficiency relationship derived in the engineering analysis, as well as the energy usage and costs derived fro m the energy use characterization. Inputs to the LCC calculation include the installed cost to the end-user (purchase price plus installation cost), disposal costs (ballast and lamp recycling) , operating expenses (energy expenses and maintenance costs), the lifetime of the ballast, and a discount rate. Chap ter 8 of the preliminary TSD describes these inputs.

At the framework public meeting, Osram Sylvania commented that installation and

maintenance costs should not differ between the baseline and standards-case ballast designs. (Osram Sylvania, Public Meeting Transcript, No. 9 at p. 165) DOE agrees, but distinguished the ballast replacement and new construction/renovation purchasing even ts by adding 2.5 minutes of labor time for installing a luminai re disconnect in the new cons truction/renovation case. This additional labor time and cost are not related to ballast design, but instead reflect current National Electric Code requirement s for new fixture installations.

When a ballast or fluorescent lamp fails, some consumers choose to recycle the system components. The cost of recycling the ballast or la mp is its disposal cost. Ballast recycling rate data were not available, so DOE conservatively assumed 5 perc ent of ballasts used in the

commercial and industrial sector s were recycled, and that no ballasts are recycled in the

residential sector. One commenter noted that DOE should address the energy consumption required for ballast disposal and recycling in its LCC and PBP analyses, (Farrior, No. 10 at p. 2) DOE was not, however, able to obtain sufficiently detailed information on ballast recycling rates

or methods to estimate associated energy consumption and costs.

DOE estimates electricity prices for commercial, industrial, and residential consumers by using Energy Information Administration (EIA) data. EIA’s Annual Energy Outlook (

AEO2009 ) was the default source of projections for future electricity prices. DOE received a number of comments on the potential effects of energy-efficient ballast designs on electricity demand charges and how DOE accounts for these effects in its LCC and PBP analyses. (ASAP, Public Meeting Transcript, No. 9 at pp. 159, 161–162; Jo int Comment, No. 12 at p. 12; NYSERDA, Public Meeting Transcript, No. 9 at p. 161; Osram Sylvania, Public Meeting Transcript, No. 9 at pp. 160, 162) Similarly, the Joint Comment discus sed how DOE’s approach to forecasting energy prices does not consider impacts of amended standards on utility infrastructure, natural gas demand, or overall electricity cost s. (Joint Comment, No. 12 at pp. 11–12)

Factors such as infrastructure impacts and demand charge effects would primarily be addressed in the utility impacts analysis. DOE bases this analysis on the Buildings version of the

2-50National Energy Modeling System (NEMS-BT), which does not have the capability to address demand load profiles ( i.e. , usage by time of day). Therefore, DOE is unable to quantify the potential impacts on peak demand for electricity fr om changes in product efficiency. DOE also considered reporting overall na tural gas and electricity price impacts but found that the uncertainty of price projections, together with th e fairly small anticipated impact of the amended standards relative to total electricity demand, ma kes these price changes highly uncertain. Given the current complexity of utility regulation in the United States (with significant variances among States), it does not seem appropriate to attempt to measure impacts on infrastructure costs and prices where there is likely to be significant overlap. As a result, DOE believes that they should not be weighed heavily in the de cision concerning the standard level.

Several commenters noted that DOE should c onsider whether energy-efficient ballasts have a longer lifetime, based on presumed cooler operating temperatures. (ASAP, Public Meeting Transcript, No. 9 at pp. 166–167; Joint Comment, No. 12 at p. 8; Philips, Public Meeting Transcript, No. 9 at pp. 167–168) Philips al so commented on the trend toward compact design in the lighting industry and how this would result in higher operating temperatures. (Philips, Public Meeting Transcript, No. 9 at p. 168) DOE acknowledges the trend toward compact design in energy-efficient ballasts and fixtures, and assumes a compact format will result, on average, in ballast operating temperatures equal to or greater than those for current ballast designs. Consequently, DOE assumes no ex tended life for energy efficient ballast designs in this rulemaking. NEMA and Osram Sylvania commented that energy efficient ballast designs should not affect lamp life. (NEMA, No. 11 at p. 8; Osram Sylvania, Public Meeting Transcript, No. 9 at pp. 165–166) DOE agrees with these comments and did not assume any extended lamp life in its LCC and PBP analyses.

DOE developed discount rates by estimating the cost of capital to end users that purchase the ballasts covered under this rulemaking. For commercial and industrial end users, DOE used the cost of capital to estimate the present va lue of cash flows to be derived from a typical company project or investment. Most companie s use both debt and equity capital to fund investments, so the cost of capital is the weighted -average cost to the firm of equity and debt financing. This corporate finance approach is referr ed to as the weighted-average cost of capital. DOE used currently available economic data in developing discount ra tes and will update the data as appropriate for the NOP R stage of this rulemaking.

For residential end users, DOE derived the discount rates from estimates of the interest or “finance cost” to purchase residential products. The finance cost of raising funds to purchase residential products can be interpreted as (1) the financial cost of any debt incurred to purchase residential products, princi pally interest charges on debt; or (2 ) the opportunity cost of any equity used to purchase residential products, princi pally interest earnings on household equity. Household equity is represented by holdings in a ssets such as stocks and bonds, as well as the return on homeowner equity. DOE obtained data required to determine th e cost of debt and equity from the Federal Reserve Board’s triennial Survey of Consumer Finances

.

For more detail on the LCC and PBP analyses, see chapter 8 of the preliminary TSD.

2-512.10 SHIPMENTS ANALYSIS

Shipments of ballasts are key inputs to the na tional energy savings and net present value calculations in the NIA model. Shipments are also a necessary input to the MIA, which DOE will conduct for the NOPR stage of this rulemaking . DOE requested but was not able to obtain manufacturer historical shipments data for the preliminary analysis. Consequently, DOE followed a three-step process to forecast ballast sh ipments. First, DOE used historical shipment

data from the U.S. Census Bureau to estimate the total historical shipments of each ballast type analyzed. Second, DOE calculated an installed stoc k for each ballast type based on the average service lifetime of each ballast type. Third, by modeling ballast purchasing events, such as replacement and new construction, and applying growth rate, replacement rate, and emerging technologies penetration rate assumptions, DOE developed annu al shipment projections.

At the public meeting, Philips and Osram Sylvania commented on anticipated impacts of emerging technologies ( e.g. , solid-state lighting), lighting c ontrols, and daylight harvesting on future ballast shipments. (P hilips, Public Meeting Transcript, No. 9 at pp. 176, 189–191; Osram Sylvania, Public Meeting Transcript, N o. 9 at pp. 193–194) DOE addressed emerging technologies in its shipments analysis using assumptions and methodology from the 2009 Lamps Rule. To address lighting controls ( e.g. , occupancy sensors), DOE modeled the growing market for 4-foot T8 MBP systems using PS ballasts but lacked sufficient information to model the market effects of other control types, including th ose used for daylight harvesting. Acuity Brands Lighting commented that DOE should consider th e effects of California energy efficiency regulations on future ballast shipments. (Acuity Brands Lighting, Public Meeting Transcript, No. 9 at p. 200) For its preliminary analyses, DOE conducted manufacturer in terviews to help identify future shipment trends, and assumes that these trends integrate various regulatory and non-regulatory initiatives in the lighting marketplace.

To determine the cumulative NES and NPV of amended standards, DOE compared forecasted shipments of a base to a standards case over the NIA analysis period. Chapter 9 of the preliminary TSD provides details on the shipments analysis.

2.11 NATIONAL IMPACT ANALYSIS

The national impact analysis assesses the net present value of total end-user LCC and NES. DOE determined both the NPV and NES for the performance levels considered for the ballast product classes analyzed. To make the analysis more tran sparent to all interested parties, DOE prepared an NES spreadsheet model to fo recast energy savings and the national economic costs and savings resulting from amended standards. The NES model does not use probability distributions for inputs or outputs. To assess the impact of input uncertainty on the NES and NPV results, DOE can conduct sensitivity analyses by running scenarios on input variables relevant to interested parties. DOE assessed the aggregate economic impacts at the national level for this preliminary analysis.

The Joint Comment noted that DOE’s current NIA methodology does not sufficiently address energy price impacts, environmental externalities, or other broad consumer impacts. (Joint Comment, No. 12 at p. 11) DOE acknowledg es that there may be certain “external”

2-52benefits resulting from the improved efficiency of ballasts that are not captured by equipment users. These include both environmental and energy security-related externalities that are not already reflected in energy prices, such as reduced emissions of greenhouse gases and reduced use of natural gas and oil for electricity generation. DOE inv ites comments on the nature and magnitude of these impacts.

2.11.1 National Energy Savings Analysis

The inputs for determining NES are (1) annual energy consumption per unit; (2) shipments; (3) equipment stock; (4) national en ergy consumption (calculated from consumption per unit and equipment stock); (5) site-to-source conversion factors; (6) a heating, ventilation, air conditioning (HVAC) factor; and (7) rebound rates.

DOE calculated the national energy consumption by multiplying the number of units, or stock, of lamp-and-ballast systems (by vintage, wh ich represents the age of the ballasts) by the unit energy consumption (also by vintage). The n, DOE calculated national annual energy savings from the difference between national energy c onsumption in the base case (without amended efficiency standards) and in each higher-eff iciency standards case. DOE estimated energy consumption and savings based on site energy, and converted th e electricity consumption and savings to source energy. DOE also examined potential energy savings due to HVAC interactions, as well as rebound effects (an energy savings “take-back”) based on consumer usage patterns. Cumulative energy savings are the sum of the annual NES, which DOE determined over specific time periods.

2.11.2 Net Present Value Analysis

The inputs DOE used to determine the NPV were (1) total annual inst alled cost, (2) total annual operating cost savings, (3) discount factor , (4) present value of costs, and (5) present value of savings. DOE calculates net savings ea ch year as the difference between total operating cost savings and increases in total installed co sts (including equipmen t price and installation cost). DOE calculates savings over the life of th e equipment, accounting for differences in yearly energy rates. DOE calculates NPV as the difference between the present value of operating cost savings and the present value of increased total installed costs. DOE discounts future costs and savings to the present with a discount factor.

DOE calculated increases in total installed co sts as the product of the difference in the

total installed cost between th e base case and standards case and the annual shipments in the standards case. Because purchase costs of the higher-efficiency equipment in the standards case are generally greater than the purchase costs of equipment in the base case, price increases appear as negative values in the NPV. DOE expressed operating cost savings as decreases in operating costs associated with the lower energy consumption of equipment in the standards case compared to the base efficiency case. Total opera ting cost savings are the product of savings per unit and the number of units of each vintage surviving in a particular year.

2-53The Joint Comment urges DOE to give prima ry weight to NPV results based on the 3­ percent discount factor, citing academic research th at indicates appr opriate societal discount rates of 3 percent or less. (Joint Comment, No. 12 at p. 13) In its preliminary analyses, DOE estimated national impacts with both a 3-per cent and 7-percent real discount rate, per OMB guidelines on discount factors used in regulatory analyses. (OMB Circular A-4 (September 17, 2003), particularly section E, “Identif ying and Measuring Benefits and Costs”) Consistent with this guidance, DOE will use 3-percent and 7-percent real discount rates for rele vant calculations in the NOPR stage of this rulemaking.

2.11.3 Efficiency Scenarios and Trends

Several of the inputs for th e determination of NES ( e.g. , the annual energy consumption per unit) and NPV ( e.g. , the total annual installed cost a nd the total annual operating cost savings) depend on equipment efficiency. Thus, DOE developed base ca se and standards case efficiency trends. These trends specified the a nnual historical and forecasted shipment-weighted average equipment efficiencies.

For ballasts, DOE developed tw o shipment scenarios: “roll up” and “shift.” The roll-up scenario represents a standards case in which all product efficiencies in the base case that do not meet the standard would roll up to meet the new st andard level. Consumers in the base case who purchase ballasts above the standard level are not affected as they are assumed to continue to purchase the same base-case ballast or lamp -and-ballast system. The roll-up scenario characterizes consumers primarily driven by th e first-cost of the analyzed equipment.

In contrast, the shift scenario models a standards case in which the standard affects all base-case consumer purchases (regardless of whether their base-case efficiency is below the standard). In this scenario, any consumer may purchase a more efficient ballast. As the standard level increases, market share incrementally accumulates at the highest standard level because it represents max tech ( i.e. , moving beyond this efficiency level is not achievable with today’s technology). The shift scenario characterizes consumers primarily concerned with system energy consumption and reflects an upper bound scenario.

Chapter 10 of the preliminary TSD provides additional details on the national impacts analysis.

2.12 LIFE-CYCLE COST SUBGROUP ANALYSIS

The LCC subgroup analysis evaluates economic impacts on selected groups of consumers who might be adversely affected by a change in the national energy conservation standards for the considered products. DOE evaluates impacts on pa rticular subgroups of consumers in part by analyzing the LCC impacts and PBP for those particular consumers.

DOE will use the LCC spreadsheet model to evaluate impacts on consumer subgroups. DOE can analyze the LCC for any subgroup by applying the LCC spreadsheet model to only that subgroup. DOE is particularly sensitive to increas es in the consumer price of the considered

2-54products as it wishes to avoid a negative econo mic impact on any identified consumer subgroup. See chapter 11 of the preliminary TSD for more information on the LCC subgroup analysis.

2.13 MANUFACTURER IMPACT ANALYSIS

The purpose of the MIA is to identify the lik ely impacts of higher energy conservation

standards on manufacturers. The Process Rule provides guidance for conducting this analysis with input from manufacturers and other interested parties. DOE will apply this methodology to its evaluation of standards for fluorescent lamp ba llasts. The Process Rule gives guidelines for considering financial impacts and a wide rang e of quantitative and qua litative industry impacts that might occur after adoption of a standard. Fo r example, a particular standard level could require changes to manufacturing practices of fluorescent lamp ballasts. DOE will identify and discuss these impacts in interviews with manufacturers and other interested parties during the NOPR stage of the analysis.

DOE will conduct the MIA in three phases, and will further tailor the analytical

framework based on the comments it receives. In Phase I, DOE creates an industry profile to characterize the industry and identify important i ssues that require consideration. In Phase II, DOE prepares an industry cash-flow model and an interview questionnaire to guide subsequent discussions. In Phase III, DOE interviews manufa cturers, and assesses the impacts of standards both quantitatively and qualitativ ely. DOE assesses industry and subgroup cash flow and NPV using the Government Regulatory Impact Model (GRIM). DOE then assesses impacts on competition, manufacturing capacity, employment, and regulatory burden based on manufacturer

interview feedback and discussions.

Until recently, DOE reported MIA results in its standards rulemakings only in the NOPR phase of the rulemaking. However, DOE is now evaluating and reporting preliminary MIA information at this preliminary analytical phase. DOE gathered the information for the analysis during the manufacturer interviews conducted af ter the engineering analysis. See chapter 12 of the preliminary TSD for more detail on the MIA.

2.13.1 Sources of Information for the Manufacturer Impact Analysis

Many of the analyses described above provi de important informati on applicable to the MIA. Such information includes manufacturing costs and prices from the engineering analysis, retail price forecasts, and shipment forecasts . DOE will supplement this information with company financial data and other information ga thered during interviews with manufacturers.

The interview process plays a key role in the MIA. DOE aggregates information across manufacturers, creating a combined opinion or estimate for DOE.

DOE conducts detailed interviews with manufacturers to gain insight into the range of potential impacts of standards. Typically, DOE solicits both quantitative and qualitative information during the interviews on the potential impacts of efficiency levels on sales, direct employment, capital assets, and industry competitiveness. DOE pref ers an interactive interview process, rather than a written response to a que stionnaire, because it help s clarify responses and

2-55identify additional issues. Before the intervie ws, DOE will circulate a draft document showing estimates of the financial parameters based on publicly available information. DOE will solicit comments on these estimates during the interviews. See chapter 12 of the preliminary TSD for more detail on the methodology used in the MIA.

2.13.2 Industry Cash-Flow Analysis

The industry cash-flow analysis relies primarily on the GRIM. DOE uses the GRIM to analyze the financial impacts of more stringent energy conservation standards on the industry.

The GRIM analysis uses several factors to determine annual cash flows from an amended energy conservation standard: annual expected re venues; manufacturer costs, including cost of goods sold, depreciation, research and devel opment, selling, and general and administrative expenses; taxes; and conversion capital expenditures. DOE compares the results against base case projections that involve no amended energy conservation sta ndards. The financial impact of amended energy conservation standards is the di fference between the two sets of discounted annual cash flows. Other performance metrics, such as return on invested capital, also are available from the GRIM. See chapter 12 of the preliminary TSD for more information on the industry cash-flow analysis.

2.13.3 Manufacturer Subgroup Analysis

Industry cost estimates are inadequate to assess differential impacts among subgroups of manufacturers because these subgroups may have different cost structures or regulatory frameworks that affect their respective business models. For example, small and niche manufacturers, or manufacturers whose cost st ructure differs significantly from the industry average, could experience a more negative impact. Ideally, DOE would consider the impact on every firm individually; however, because this usually is not possible, DOE typically uses the results of the industry characterization to group manufacturers exhibiting similar characteristics.

During the interview process, DOE will discuss the potential subgroups and subgroup members it has identified for the analysis. DOE will encourage manufacturers to recommend subgroups or characteristics that are appropriate for the subgroup analysis. See chapter 12 of the preliminary TSD for more detail on the manufacturer subgroup analysis.

2.13.4 Competitive Impacts Assessment

Section 342 (6)(B)(i)(V) of EPCA directs DOE to consider any lessening of competition likely to result from imposition of standards. DOE will consider whether an amended energy conservation standard is likely to reduce industr y competition and will ask the Attorney General to determine the impacts, if any. The assessment will be based on manufacturing cost data and

information collected from manufacturer interviews. DOE will make a determined effort to gather and report firm-specific fi nancial information and impacts.

2.13.5 Cumulative Regu latory Burden

DOE recognizes and seeks to mitigate the overlapping effects on manufacturers of new or amended DOE standards and other regulatory actions affecting the same equipment. DOE will

2-56analyze and consider the impact on manufacturers of multiple, equipment-specific regulatory

actions.

During the public meeting, several manu facturers raised concerns about existing regulations. Advance stated that California is very active and aggressive in writing legislation for energy efficiency for lighting products. Manufact urers look to the Federal government to keep

the same standards across all 50 states. DOE should keep abreast of California's regulations to ensure that the same standards are in place across all States. (Advance, Public Meeting Transcript, No. 9 at pp. 200-201) Acuity Brands Lighting commented that section 3313(g) of EISA 2007 requires that the Administrator of Gene ral Services purchase more energy efficient lighting products that adhere to the Buy America Act. Because efficient electronics for lighting products are produced abroad, Acuity Brands Li ghting suggested that DOE obtain an exemption from the Buy American provision of EISA 2007 for certain lighting equipment. (Acuity Brands Lighting, Public Meeting Tr anscript, No. 9 at pp. 93-94)

In response to these comments, DOE investigated the regulations manufacturers

mentioned in the market and technology assessment (chapter 3 of the preliminary TSD). In investigating the provisions in section 3313 (g) of EISA 2007, DOE agrees that the legislation may be burdensome for manufacturers but EPCA does not authorize DOE to allow for such an exemption. During the NOPR, however, DOE plan s to further investigat e overlapping burdens

on the manufacturers of fl uorescent lamp ballasts.

2.13.6 Preliminary Results for the Manufacturer Impact Analysis

DOE conducted a series of preliminary interv iews with manufacturers to discuss impacts that may result from a regulatory standard for fluorescent lamp ballasts. In general, manufacturers and other parties identified three areas of concern: (a) impacts on profitability, (b) product conversion costs/diminishing return s to consumers, and (c) product innovation.

2.13.7 Impacts on Profitability

Some manufacturers commented that pr ofit margins would decrease with the implementation of amended energy conservation standards, especial ly for the original equipment manufacturer (OEM) distribution channels. For example, a higher standard could cause consumers to switch from residential ballasts, which are more price sensitive, to less efficient lighting products. According to the manufacturers DOE interviewed, consistent profitability is not common across all types of fluorescent lamp ba llasts. Manufacturers also noted that pricing is extremely variable depending on the appli cation (commodities, ol d products, new products, niche, etc). Some products are sold at a loss, some are sold at cost to load overhead, and some are sold for a profit.

2.13.8 Product Conversion Costs/Diminishing Returns to Consumers

Certain manufacturers commented that raising existing energy conservation standards would force them to purchase more expensive and energy efficient components to improve existing lines as well as design new product lin es. The majority of those costs would be

2-57attributed to engineering and education. Due to higher conversion costs associated with increasing energy conservation standards, consumer s would eventually be confronted with more expensive products.

2.13.9 Product Innovation

Manufacturers also expressed concern over the impact amended energy conservation standards would have on produc t innovation. Because personnel may be spending more time redesigning products to comply w ith standards, the resources av ailable for the development of new products would significantly decrease.

2.14 UTILITY IMPACT ANALYSIS

The utility impact analysis includes an analysis of the effect of amended energy conservation standards on the electric and the ga s utility industries. For this analysis, DOE will use a variant of NEMS, a large multi-sectoral, partial-equilibrium model of the U.S. energy sector that the EIA has developed throughout th e past decade, primarily for preparing EIA’s

AEO . In previous rulemakings, a variant of NEMS (currently termed NEMS-BT, BT referring to the DOE’s Building Technologies Program version of NEMS), was developed to better address the specific impacts of an energy conservation standard.

Available in the public domain, NEMS produ ces a widely-recognized baseline energy forecast for the United States through 2030. Th e typical NEMS outputs include forecasts of electricity sales, prices, a nd electric generating capacity. DOE conducts the utility impact analysis as a scenario that departs from the latest AEO reference case. In other words, the energy savings impacts from amended energy conserva tion standards are modeled using NEMS-BT to generate forecasts that deviate from the AEO reference case.

ASAP and the Joint Comment stated that DOE should address the impacts of amended standards on energy commodity prices. (ASAP, P ublic Meeting Transcript, No. 9 at p. 96; Joint Comment, No. 12 at pp. 9–11) For electric products such as fluorescent lamps and ballasts, DOE considered reporting gas and electricity price imp acts but found that the uncertainty of price projections, together with the fairly small impact of the standards relative to total electricity demand, makes these price changes highly uncertai n. As a result, DOE believes that changes to energy commodity prices should not be weighed h eavily in the decision concerning the standards level. Given the current complexity of utility regulation in the United States, with significant variation among States, DOE did not believe it was appropriate to measure impacts on infrastructure costs and prices where there is likely to be significant overlap and uncertainty.

DOE also received comments on the potential ef fects of amended standards on external benefits such as energy security ( e.g. , reduced natural gas usage), utility infrastructure, and pollution reductions. (ASAP, P ublic Meeting Transcript, No. 9 at pp. 95–96, 202–203; Joint Comment, No. 12 at pp. 9, 11–12) Historically, DOE’ s approach to the utility impact analysis, based on NEMS, has been to evaluate the impact of standards only on utility energy sales. NEMS is not suited to characterizing impacts of standards on utilities other than those measured by sales, and DOE is unaware of any analytical to ols that would enable an analysis of financial

2-58impacts on utilities at a national level. Therefore, DOE plans to continue using NEMS for the utility impact analysis, but it invites input from in terested parties on the potential use of other tools for such analysis.

As discussed in section 0, DOE acknowledge s external benefits of amended standards— such as energy security and pollution reductions—that are not captured solely by utilities or ballast end users, but also by the public. DOE invites comments on the na ture and magnitude of

these benefits.

Chapter 13 of the preliminary TSD provides additional details on the utility impact analysis.

2.15 EMPLOYMENT IMPACT ANALYSIS

The imposition of standards can affect employ ment both directly a nd indirectly. Direct employment impacts are changes in the number of employees at the plants that produce the covered equipment and at affiliated distribution and service companies. DOE evaluates the direct employment impacts in the MIA. Indirect employment impacts may result from expenditures shifting between goods (the substitution effect) and changes in income and overall expenditure levels (the income effect). As part of the NO PR stage of this rulemaking, DOE will seek input from interested parties on the potential employment impact. and DOE will investigate the combined direct and indirect employment impacts in the employment impact analysis using the Pacific Northwest National Laboratory’s “Impact of Sector Energy Technologies” (ImSET) model. The ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis to estimate the employment and income effects of energy-saving technologies on buildings, industry, and transportation. Compared to simp le economic multiplier appr oaches, ImSET allows for more complete and automated analysis of the economic impacts of energy conservation investments. Details can be found in chapter 14 of the preliminary TSD.

2.16 ENVIRONMENTAL ASSESSMENT

The intent of the environmental assessment is to quantify and consid er the environmental effects of amended energy conservation standa rds for fluorescent lamp ballasts. The primary environmental effects of these standards would be reduced power plant emissions resulting from reduced consumption of electricity. DOE will assess these environmental effects by using NEMS-BT to provide key inputs to its analysis . The portion of the environmental assessment that will be produced by NEMS-BT considers carbon dioxide (CO 2 ), nitrogen oxides (NO X ), and mercury (Hg). The environmental a ssessment also considers impacts on SO 2 emissions. After a brief discussion of general methodology, this sect ion will address each of th e relevant emissions. This section then explains how DOE plans to m onetize the benefits asso ciated with emissions

reductions.

2.16.1 Carbon Dioxide

In the absence of any Federal emissions cont rol regulation of power plant emissions of

CO 2 , a DOE standard is likely to result in reductions of these emissions. The CO 2 emission

2-59reductions likely to result from a standard will be estimated using NEMS-BT and national energy savings estimates drawn from the NIA spreadsheet model. The net benefit of the standard is the difference between emissions estimated by NEMS-BT at each standard level considered and the

AEO Reference Case. NEMS-BT tracks CO 2 emissions using a deta iled module that provides results with broad coverage of all sector s and inclusion of interactive effects.

2.16.2 Sulfur Dioxide

DOE has preliminarily determined that SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and regional emissions cap and trading programs that are likely to eliminate the standards’ impact on SO 2 emissions. The costs of meeting such emission cap requirements are reflected in the electricity prices and forecasts used in DOE’s analysis of

the standards. Title IV of the Clean Ai r Act sets an annual emissions cap on SO 2 for all affected

EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (DC) are also limited under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005)), which creates an allowance-based trading program that will gradually replace the Title IV program in thos e States and DC. (The recent legal history surrounding CAIR is discussed below.) The attainme nt of the emissions caps is flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO 2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. However, if the standard resulted in a permanent increase in the quantity of unused emission allowances, there would be an overall

reduction in SO 2 emissions from the standards. While th ere remains some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap and trade system, the NEMS-BT modeling system that DOE plans to use to forecast emissions reductions currently indicates that no phys ical reductions in power sector emissions would occur for SO 2

.

Even if there is no significant redu ction in the overall emissions of SO 2 that results from the standard, there may still be some ec onomic benefit from reduced demand for SO 2 emission allowances that is not fully reflected in the co st savings experienced by individual consumers. Electricity savings that decrease the overall demand for SO 2 emissions allowances could lower allowance prices and thereby result in some econo mic benefits for all electricity consumers, not just those that reduced their electricity use as a result of an efficiency standard. These lowered allowance prices were noted in ASAP’s comments. (ASAP, Public Meeting Transcript, No. 9 at pp. 206–207) DOE does not plan to monetize this par ticular benefit because the effect on the SO 2 allowance price from any single energy conservati on standard is likely to be small and highly

uncertain.

2.16.3 Nitrogen Oxides

NEMS-BT also has an algorithm for estimating NO X emissions from power generation. The impact of these emissions, however, will be affected by the CAIR, which the Environmental Protection Agency (EPA) issued on May 12, 2005. CAIR will permanently cap emissions of

NO X in 28 eastern states and the District of Columbia. 70 FR 25162 (May 12, 2005).

2-60Much like SO 2 emissions, a cap on NO X emissions means that the amended fluorescent lamp ballast standards may have little or no physical effect on these emissions in the 28 eastern States and the DC covered by CAIR. Although CA IR has been remanded to the EPA by the DC Circuit, it will remain in effect until it is replaced by a rule cons istent with the Court’s July 11, 2008, opinion in North Carolina v. EPA. 531 F.3d 896 (DC Cir. 2008); see also North Carolina

v. EPA, 550 F.3d 1176 (DC Cir. 2008). Because all States covered by CAIR opted to reduce

NO X emissions through participation in cap-and- trade programs for electric generating units, emissions from these sources are capped across the CAIR region.

Standards may produce an envir onmental-related econo mic benefit in the form of lower prices for emissions allowance credits, as noted in ASAP’s comments. (ASAP, Public Meeting Transcript, No. 9 at pp. 206–207) As with SO 2 allowance prices, DOE does not plan to monetize this particular benefit because the effect on the NO X allowance price from any single energy conservation standard is likely small and highly uncertain.

Earth Justice requested that DOE quantify NO X emission reductions outside of areas where allowance trading occurs. (Earth Justice, Public Meeting Transcript, No. 9 at pp. 204–205) Accordingly, DOE plans to use NEMS-BT to es timate the emissions reductions from possible

standards in the 22 States wh ere emissions are not capped.

2.16.4 Mercury

Similar to emissions of SO 2 and NO X , future emissions of Hg would have been subject to emissions caps. In May 2005, EPA issued th e Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 2005). CAMR would have permanently capped emissions of mercury for new and existing coal-fired power plants in all States by 2010. However, on February 8, 2008, the DC

Circuit issued its decision in New Jersey v. Environmental Protection Agency , in which the DC Circuit, among other actions, vacated th e CAMR. 517 F.3d 574 (DC Cir. 2008). EPA has decided to develop emissions standards for pow er plants under the Clean Air Act (Section 112),

consistent with the DC Circ uit’s opinion on the CAMR. See http://www.epa.gov/air/mercuryr ule/pdfs/certpetition_withdrawal.pdf . Pending EPA's forthcoming revisions to the rule, DOE is excluding the CAMR from its Environmental Analysis. In the absence of CAMR, a DOE sta ndard would likely reduce Hg emissions and DOE plans to use NEMS-BT to estimate these emission reductions.

2.16.5 Particulate Matter

DOE acknowledges that particulate matter (PM) impacts are of concern due to human exposures that can impact health. But impact s of PM emissions reduction are much more difficult to estimate than other emissions reductions due to the complex interactions between PM, other power plant emissions, meteorology, and atmospheric chemistry that impact human exposure to particulates. Human exposure to PM us ually occurs at a significant distance from the power plants that are emitting particulates and particulate precursors. When power plant emissions travel this distance, they undergo highly complex atmospheric chemical reactions. Although the EPA does keep inventories of direct PM emissions of power plants, in its source attribution reviews, the EPA doe s not separate direct PM emissions from power plants from the

2-61sulfate particulates indirectly produced through complex atmos pheric chemical reactions. The great majority of PM emissions from power plan ts are of these seconda ry particles (secondary sulfates). Thus, it is not useful to examine how the amended standard impacts direct PM emissions independent of indir ect PM production and atmospheric dynamics. Therefore, DOE is not planning to assess the impact of these standa rds on particulate emissions. Further, even the cumulative impact of PM emissions from power plan ts and indirect emissions of pollutants from other sources is unlikely to be significant.

2.16.6 Monetization of Emissi ons Reduction Benefits

Several commenters noted that there are also external benefits to pollutant emission

reductions that should be monetized and we ighed in DOE’s deter mination of maximum efficiency levels for ballasts. (ASAP, Public Meeting Transcript, No. 9 at p. 95; Joint Comment, No. 12 at pp. 9–10) For those emissions for which real national e mission reductions are anticipated (CO 2 , Hg, and NO X for 22 states), only ranges of estimated economic values based on environmental damage studies of varying quality and applicability are available. Therefore, DOE plans on reporting estimates of monetary benefits derived using these values and plans to consider these benefits in weighing the costs and benefits of each of the standard levels

considered.

In order to estimate the monetary value of benefits resulting from reduced emissions of

CO 2 emissions, it is DOE’s intent to use in its an alysis the most current Social Cost of Carbon (SCC) values developed a nd/or agreed to by interagency reviews. The SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net agricultural productivity loss, human health effects, property damage from sea level rise, and changes in ecosy stem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantifi cation and monetization, the SCC can be used to provide estimates of the social benefits of reduc tions in GHG emissions.

At the time of this notice, the most recen t interagency estimates of the potential global benefits resulting from reduced CO 2 emissions in 2010 were $4.7, $21.4, $35.1, and $64.9 per

metric ton in 2007 dollars. These values are then adjusted to 2009$ using the standard GDP deflator value for 2008 and 2009. For emissions (or emission reductions) that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 per cent should be used to adjust the global SCC to calculate domestic effects, although preference will be given to consideration of the global benefits of reducing CO2 emissions. See appendix EA-SCC to the environmental assessment report in the preliminary TSD for the full ra nge of annual SCC estimates from 2010 to 2050. To calculate a present value of the stream of monetary values, DOE will discount the values in each of the four cases using the discount rates that had been used to obtain the SCC values in each

case.

DOE recognizes that scientific and economic kno wledge continues to evolve rapidly as to

the contribution of CO 2 and other GHG to changes in the fu ture global climate and the potential resulting damages to the world economy. Thus, these values are subject to change.

2-62DOE also intends to estimate the potential monetary benefit of reduced NO X , and Hg emissions resulting from the standard levels it considers. For NO X emissions, available estimates suggest a very wide range of monetary values for NO X emissions, ranging from $370 per ton to $3,800 per ton of NO X from stationary sources, measured in 2001$ (equivalent to a range of $442 to $4,540 per ton in 2008$). Refer to the OMB, Office of Information and Regulatory Affairs, “2006 Report to Congre ss on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Trib al Entities,” for additional information.

For Hg emissions reductions, DOE has previous ly determined that the impact of mercury emissions from power plants on humans is c onsidered highly uncertain. However, DOE identified two estimates of the environmental damage of mercury based on two estimates of the adverse impact of childhood exposure to methyl mercury on intelligence quotient (IQ) for American children, and subsequent loss of life time economic productivit y resulting from these IQ losses. The high-end estimate is based on an estimate of the current aggregate cost of the loss of IQ in American children that results from ex posure to mercury of U.S. power plant origin ($1.3 billion per year in year 2000$), which wo rks out to $33.3 million per ton emitted per year (2008$). Refer to L. Trasande et al ., “Applying Cost Analyses to Drive Policy that Protects Children,” 1076 Ann. N.Y. Acad. Sci. 911 (2006) for additional information. The low-end estimate is $0.66 million per ton emitted (i n 2004$) or $0.745 million per ton in 2008$. DOE derived this estimate from a publis hed evaluation of mercury contro l using different methods and assumptions from the first study but also based on the present value of the lifetime earnings of children exposed to mercury. See Ted Gaye r and Robert Hahn, “Designing Environmental Policy: Lessons from the Regulation of Mercury Emissions,” Regulatory Analysis 05–01, American Enterprise Institute-Brookings Joint Center for Regulatory Studies, Washington, DC (2004). A version of this paper was publishe d in the Journal of Regulatory Economics in 2006. The estimate was derived by back-calculating the annual benefits per ton from the net present value of benefits reported in the study.

In accordance with U.S. Office of Management and Budget (OMB) guidance, DOE will

conduct two calculations of the m onetary benefits derived using each of the economic values

used for NO X and Hg, one using a real discount rate of 3 percent and another using a real

discount rate of 7 percent. bb

For more detail on the environmental assessment, refer to the environmental assessment report in the preliminary TSD.

2.17 REGULATORY IMPACT ANALYSIS

In the NOPR stage of this rulemaking, DOE expects to prepare a regulatory impact analysis (RIA) pursuant to Executive Order 12866 , “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993), which is subject to review under the Executive Order by the Office of Information and Regulatory Affairs at the Offi ce of Management and Budget. The RIA addresses the potential for non-regulatory approaches to supplant or augment energy conservation

bb OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).

2-63standards to improve the energy efficiency or reduce the energy consumption of ballasts covered under this rulemaking.

Voluntary and other non-regulatory efforts by manufacturers, utilities, and other interested parties can result in substantial improvements to energy efficiency or reductions in energy consumption. DOE intends to consider th e likely effects of non-regulatory initiatives on ballast energy use, consumer utility, and LCCs. DOE will base its assessment on the actual impacts of any such initiatives to date, but also will consider information about the impacts that any existing initiative might have in the future.

In the framework document, DOE identified tw o sources of market failures: lack of consumer information and/or information pro cessing capabilities about energy efficiency opportunities in the lighting market, and asymmetric information and/or high transaction costs. The Joint Comment stated that DOE has accurately characterized some of the market failures in the framework document. However, the Joint Comment noted that other market failures characterized in a recent paper by ACEEE and ASAP might apply. The Joint Comment also emphasized that a market failure occurs when firms tend to consider capital costs and operating costs independently. For example, decision makers face more pressure to reduce capital costs than operating costs due to financial procedures or the time horizon of the current management. (Joint Comment, No. 12 at pp. 8-9)

DOE agrees with many of the market failu res identified in the recent paper by ACEEE, which the Joint Comment suggested DOE study. cc In the framework document, DOE addressed many of the demand-side barriers characterized in the paper. These barriers include lack of awareness and uninformed decision makers (both symptoms of lack of consumer information and/or information processing capabilities), and third-party decision makers (a type of high transaction cost). However, DOE did not addre ss all barriers identified in the paper. These include financial procedures (or the time horizon of management) that over-emphasize initial costs and de-emphasize operatin g costs (as discussed in the Joint Comment), small per unit savings, limited stocking of effi cient products, efficiency bundled into premium products only, and manufacturer price competition. DOE agrees that all of these are potential market failures for fluorescent lamp ballasts that warrant agency action. As ASAP noted, it is important to examine market data rather than rely on theoretical a ssumptions about the marketplace. (ASAP, Public Meeting Transcript, No. 9 at p. 93) DOE agrees a nd therefore is continuing to seek data that

would enable it to conduct tests of these mark et failures. DOE requests comments and data on potential market failures for fluorescent lamp ballasts. For more information, refer to the regulatory impact analysis report in the preliminary TSD.

cc S. Nadel, A. DeLaski, M. Eldridge, and J. Kliesch, “Leading the Way: Continued Opportunities for New State Appliance and Equipment Efficiency Standards,” 2006. <http://www.standardsasap.org/documents/a062.pdf>.

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