### Energy Conservation Standards Rulemaking Framework Document for Residential Clothes Dryers and Room Air Conditioners

U.S. Department of Energy Office of Energy Efficiency and Renewable Energy

Building Technologies Program



### October 24, 2007

### TABLE OF CONTENTS

1. INTRODUCTION ................................................................................................................... 1 1.1 The Appliances and Commercial Equipment Standards Program .................................. 2 1.2 Overview of the Rulemaking Process ............................................................................. 4 1.2.1 Test Procedures ....................................................................................................... 4 1.2.2 Rulemaking Process and Stakeholder Participation ................................................ 7 1.3 Advance Notice of Proposed Rulemaking ...................................................................... 8 1.4 Notice of Proposed Rulemaking

................................................................................... 10 1.5 Final Rule ...................................................................................................................... 11 2. OVERVIEW OF ANALYSES FOR RULEMAKING ......................................................... 11 3. MARKET AND TECHNOLOGY ASSESSMENT ............................................................. 13 3.1 Market Assessment ....................................................................................................... 13 3.2 Product Classes ............................................................................................................. 13 3.3 Technology Assessment ................................................................................................16 4. SCREENING ANALYSIS .................................................................................................... 18 5. ENGINEERING ANALYSIS ............................................................................................... 19 5.1 Engineering Analysis Overview

.................................................................................... 19 5.2 Baseline Models ............................................................................................................ 20 5.3 Approach for Determining the Cost-Efficiency Relationship ....................................... 22 5.4 Efficiency Levels ........................................................................................................... 25 5.5 Proprietary Designs ....................................................................................................... 27 5.6 Outside Regulatory Changes Affecting the Engineering Analysis ............................... 28 

### 6. ENERGY USE DETERMINATION .................................................................................... 29 7. MARKUPS FOR EQUIPMENT PRICE DETERMINATION ............................................ 31 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ........................................... 32 8.1 Approach for Conducting the LCC and PBP Analysis ................................................. 32 8.2 Energy Prices ................................................................................................................. 35 8.3 Maintenance , Repair, and Installation Costs .................................................................36 8.4 Product Lifetimes .......................................................................................................... 36 8.5 Discount Rates ............................................................................................................... 37 9. SHIPMENTS ANALYSIS .................................................................................................... 37 9.1 Base-Case Forecast ....................................................................................................... 37 9.2 Standards Impacts on Product Shipments

..................................................................... 39 10. NATIONAL IMPACT ANALYSIS ..................................................................................... 39 10.1 Inputs to NES and NPV Forecasts

................................................................................ 40 10.2 National Energy Savings ...............................................................................................41 10.3 Net Present Value .......................................................................................................... 42 11. LIFE-CYCLE COST SUBGROUP ANALYSIS ..................................................................42 12. MANUFACTURER IMPACT ANALYSIS ......................................................................... 43 12.1 Sources of Information for the Manufacturer Impact Analysis .................................... 44 12.2 Industry Cash Flow Analysis ........................................................................................ 44 12.3 Manufacturer Subgroup Analysis .................................................................................. 45 12.4 Competitive Impacts Assessment .................................................................................. 45 12.5 Cumulative Regulatory Burden ..................................................................................... 46

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### 13. UTILITY IMPACT ANALYSIS ..........................................................................................47

14. EMPLOYMENT IMPACT ANALYSIS .............................................................................. 47 15. ENVIRONMENTAL ASSESSMENT .................................................................................. 48 16. REGULATORY IMPACT ANALYSIS ............................................................................... 50 APPENDIX A - DRAFT ENGINEERING ANALYSIS DATA REQUEST SHEETS .............. 51 APPENDIX B - SAMPLE QUESTIONS FOR ENGINEERING ANALYSIS FOLLOW-UP AND PRELIMINARY MANUFACTURER IMPACT ANALYSIS INTERVIEWS ....... 60 APPENDIX C - SUMMARY OF ITEMS FOR STAKEHOLDER COMMENT ....................... 63

LIST OF TABLES Table 3-1 Proposed Clothes Dryer Product Classes

...................................................................... 14 Table 3-2 Proposed Room Air Conditioner Product Classes

....................................................... 15 Table 3-3 Clothes Dryer Technologies .........................................................................................17 Table 3-4 Room Air Conditioner Technologies

............................................................................ 18 Table 5-1 Clothes Dryer Energy Conservation Standards and Proposed Baseline Unit Efficiencies .................................................................................................................................... 21 Table 5-2 Room Air Conditioner Energy Conservation Standards and Proposed Baseline Unit Efficiencies .................................................................................................................................... 22 Table 5-3 Efficiency Levels for Residential Vented Clothes Dryer Analysis

....................... 26 Table 5-4 Efficiency Levels for Room Air Conditioner (Representative ) Analysis ............. 27



### LIST OF FIGURES

Figure 2-1 Flow Diagram of Analyses for the Residential Clothes Dryer and Room Air

Conditioner Energy Conservation Standards Rulemaking Process ............................12

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### LIST OF ACRONYMS

AEO Annual Energy Outlook AHAM Association of Home Appliance Manufacturers ANOPR advance notice of proposed rulemaking ANSI American National Standards Institute ASHRAE American Society of Heating, Refrigerating, and Air Conditioning Engineers BT Building Technologies Program 

### Btu British thermal units CEC California Energy Commission CEE Consortium for Energy Efficiency CFC chlorofluorocarbon CFR Code of Federal Regulations 

### CO2 carbon dioxide CSL candidate standard level DOE U.S. Department of Energy DOJ U.S. Department of Justice EER energy efficiency ratio EERE Office of Energy Efficiency and Renewable Energy EF energy factor EIA Energy Information Administration EPACT Energy Policy Act of 2005 EPA U.S. Environmental Protection Agency EPCA Energy Policy and Conservation Act FR Federal Register GRIM Government Regulatory Impact Model HCFC hydrochlorofluorocarbon ImSET Impact of Sector Energy Technologies kWh kilowatt-hour 

### LCC life-cycle cost LS louvered sides NAECA National Appliance Energy Conservation Act of 1987 NCI Navigant Consulting, Inc. NECPA National Energy Conservation Policy Act of 1978 NEMS National Energy Modeling System NES national energy savings NIST National Institute of Standards and Technology NOPR notice of proposed rulemaking NO,, oxides of nitrogen NPV net present value NRCan Natural Resources Canada PBP payback period PNNL Pacific Northwest National Laboratory R&D research and development RECS Residential Energy Consumption Survey RMC remaining moisture content

iiiRoHS Reduction of Hazardous Substances directive

RC reverse cycle SEC Securities and Exchange Commission SG&A selling, general, and administrative costs SO2 sulfur dioxide SWEF shipment-weighted efficiency TSD technical support document TSL trial standard level U.S. United States U.S.C. United States Code

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### Rulemaking Framework Document for Residential Clothes Dryers and Room Air Conditioners

1. INTRODUCTION The United States (U.S.) Department of Energy (DOE) Appliances and Commercial Equipment Standards Program, within the Office of Energy Efficiency and Renewable Energy (EERE)'s Building Technologies Program (BT), develops and promulgates test procedures and energy conservation standards for consumer appliances and commercial equipment. As a general matter, the process for developing standards involves analysis, public notice, and consultation with interested parties. Such parties, collectively referred to as "stakeholders," include manufacturers, consumers, energy conservation and environmental advocates, State and Federal agencies, and any other groups or individuals with an interest in these standards and test procedures. 

### The purpose of this document is to describe the procedural and analytical approaches that DOE anticipates using to evaluate energy conservation standards for residential clothes dryers and room air conditioners. This document is also intended to inform stakeholders of the process of the standards rulemaking for residential clothes dryers and room air conditioners and to encourage and facilitate stakeholder input during the rulemaking. It should be noted that this document is merely the starting point for developing standards and is not a definitive statement with respect to any issue to be determined in the rulemaking. Section 1 provides an overview of the rulemaking process. Sections 2 through 16 discuss analyses DOE intends to conduct to fulfill the statutory requirements and guidance for this standards rulemaking. Although DOE is bundling the above two products into a single rulemaking, it will conduct separate analyses for each product to determine whether amended energy conservation standards are technologically feasible, economically justified, and would result in significant conservation of energy. In other words, for each of the two products examined in this rulemaking, DOE will perform a separate set of analyses, including an engineering analysis, a life-cycle cost (LCC) and payback period (PBP) analysis, a national impact analysis, and a manufacturer impact analysis. Information regarding this rulemaking will be maintained on the DOE website at: http://www.eere.energy.gov/buildings/appliance standards/While DOE invites stakeholder comment on all aspects of the material presented in this

document, comment boxes such as this one highlight issues on which DOE seeks comment and requests feedback from interested parties. In addition, DOE uses these comment boxes to ask specific questions on the approaches it is proposing to follow to conduct the analyses required for the standards rulemaking. Such requests for stakeholder feedback are numbered according to the section in which they appear.

1.1 The Appliances and Commercial Equipment Standards Program The Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94-163, (42 United States Code (U.S.C.) 6291-6309) established an energy conservation program for major household appliances. The National Energy Conservation Policy Act of 1978 (NECPA), Pub. L. 95-619, amended EPCA to add Part C of Title III (42 U.S.C. 6311-6317), which established an energy conservation program for certain industrial equipment. Additional amendments to EPCA have given DOE the authority to regulate the energy efficiency of several products, including residential clothes dryers and room air conditioners-the products that are the focus of this document. The amendments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA), Pub. L. 100-12, established prescriptive energy conservation standards for residential clothes dryers and performance energy conservation standards for room air conditioners, as well as requirements for determining whether these standards should be amended. (42 U.S.C. 6295(c) and (g)) DOE published draft data sheets containing energy savings potentials for all covered products in October 2005 as part of its fiscal year 2006 schedule-setting process. These data sheets summarize in table format for each covered product : ( 1) the potential energy savings from regulatory action in cumulative quads ' over the time period from 2010 to 2035; (2) the potential economic benefits or burdens ; (3) the potential environmental or energy security benefits ; (4) the status of required changes to test procedures ; (5) other regulatory actions; (6) recommendations by interested parties; (7) evidence of market

- driven or voluntary efficiency improvements; (8) regulatory issues; and (9) the 2005 priority

. However, DOE had completed the calculations for residential clothes dryers and room air conditioners in previous years. Therefore , the following sections cite the appropriate fiscal year's priority

- setting activities for which DOE completed the energy savings calculations for each product. NAECA established prescriptive standards for residential clothes dryers, requiring gas clothes dryers not to be equipped with constant burning pilots, and further required that DOE conduct two cycles of rulemakings to determine if more stringent standards are justified.2 (42 U.S.C. 6295 (g)(3) and (4)) On May 14, 1991, DOE published a final rule in the Federal Register (FR) establishing the first set of performance standards for residential clothes dryers; the new standards became effective on May 14, 1994. 56 FR 22250. DOE initiated a second standards rulemaking for residential clothes dryers by publishing an advance notice of proposed
A "quad" represents a quadrillion Btu (or 1015 Btu). 2 DOE defines " electric clothes dryer" under EPCA as "a cabinet

- like appliance designed to dry fabrics in a tumbletype drum with forced air circulation

. The heat source is electricity and the drum and blower(s) are driven by an electric motor(s)." 10 CFR 430 .2. Gas clothes dryers would have a similar definition , but the heat source would be gas.

2rulemaking (ANOPR) in the Federal Register on November 14, 1994. 59 FR 56423. However,

pursuant to the priority-setting process outlined in the July 15, 1996, Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products3 (the "Process Rule"), DOE classified the standards rulemaking for residential clothes dryers as a low priority for its fiscal year 1998 priority-setting process. As a result, DOE 

### suspended the standards rulemaking activities for them. As reported, DOE's draft data sheets for the fiscal year 2006 schedule-setting process included an updated analysis suggesting that amended standards for residential clothes dryers would have an energy savings potential ranging from 1.6 to 4.8 quadrillion British thermal units (Btu), or "quads," for electric clothes dryers and an energy savings potential of 0.06 quads for gas clothes dryers.4 DOE based the low- and high-potential energy savings estimates for electric clothes dryers on the use of microwave and heat pump technologies, respectively. DOE is unaware of any commercially-available microwave dryers that are currently for sale in the U.S., Europe, or Japan. There are at least four manufacturers of heat pump dryers in Europe and Japans, but DOE is unaware of any such models on the market in the U.S. NAECA established performance standards for room air conditioners that became effective on January 1, 1990, and directed DOE to conduct two cycles of rulemakings to determine if more stringent standards are justified.6 (42 U.S.C. 6295 (c)(1) and (2)) On March 4, 1994, DOE published in the Federal Register a notice of proposed rulemaking (NOPR) for several products, including room air conditioners. 59 FR 10464. As a result of the Process Rule, DOE suspended activities to finalize standards for room air conditioners. DOE subsequently resumed rulemaking activities related to room air conditioners, and, on September 24, 1997, DOE published a final rule establishing an updated set of performance standards, with an effective date of October 1, 2000. 62 FR 50122. As reported in DOE's draft data sheets for the fiscal year 2006 schedule-setting process, amended standards for room air conditioners would be expected to have an energy savings potential ranging from 0.8 to 1.5 quads.7 The low- and high-potential energy savings estimates corresponded to efficiency increases of 10 and 20 percent, respectively.

3 61 FR 36974 (July 15, 1996)(establishing 10 CFR Part 430, Subpart C, Appendix A). 4 DOE based these estimates on the 2003 prioritization analysis, with a small adjustment for the 2010-2035 timeframe. 5 Paul Roggema, Sustainability in Home Appliances, APPLIANCE MAGAZINE EUROPEAN EDITION, May 2007, p. 5. Available online at: http://www.appliancemagazine.con/editorial.php?article=1747&zone=208&first=l. 6 DOE defines "room air conditioner" under EPCA as a "consumer product, other than a `packaged terminal air conditioner,' which is powered by a single phase electric current and which is an encased assembly designed as a unit for mounting in a window or through the wall for the purpose of providing delivery of conditioned air to an enclosed space. It includes a prime source of refrigeration and may include a means for ventilating and heating." 10 CFR 430.2. 7 DOE based these energy savings estimates on an updated analysis of room air conditioners it conducted for its 2005 priority setting. The spreadsheet is available from the DOE Building Technologies Program, Appliances and Commercial Equipment Standards website at: <http://www. eere.energy. gov/buildings/appliance-standards/docs/2006-schedule_setting_spreadsheets. zip>



### 31.2 Overview of the Rulemaking Process
1.2.1 Test Procedures 

### DOE established its test procedure for residential clothes dryers in a final rule published in the Federal Register on May 19, 1981. 46 FR 27324. Although DOE has updated its test procedure for residential clothes washers since that time,8 it has not updated its residential clothes dryer test procedure since it was first established in 1981. In the revised residential clothes washer test procedure, a new parameter, the remaining moisture content (RMC) of the test cloth, was introduced. In addition, the average number of use cycles in a year was revised to reflect current consumer use patterns. The RMC of typical clothes loads and the average number of use cycles in the residential clothes washer test procedure should be consistent with the values defined in the clothes dryer test procedure. However, after the clothes washer test procedure revision, the assumed RMC in the clothes dryer test procedure may not reflect typical RMCs of actual clothes loads. In addition, the average number of dryer use cycles assumed in the revised clothes washer test procedure is inconsistent with the use cycles in the clothes dryer test procedures. In the case of the RMC, the revision to the clothes washer test procedure established a method for crediting the performance of clothes washers that lower the RMC and, thereby, reduce clothes drying energy use. During the course of the standards rulemaking for clothes washers which culminated in a final rule published in the Federal Register on January 12, 2001 (66 FR 3314), DOE estimated RMCs at specific efficiency levels. For example, for the standard that will become effective on January 1, 2007 (1.26 MEF), DOE estimated an RMC of 56 percent. Because the new clothes washer standard is a performance standard, manufacturers may choose any design path that results in an efficiency of 1.26 MEF or greater. Therefore, although DOE estimated that standard compliant washers would have a corresponding RMC of 56 percent, there is no assurance that washer designs will actually incorporate lower RMCs as a means of complying with the new standard. Because the value of typical RMCs is uncertain, it is unknown whether the residential clothes dryer test procedure's assumption regarding RMC, namely, that test loads have an RMC of 70 percent, is representative of the clothes loads emerging from today's clothes washers. Although the typical RMC is uncertain, there is a good chance the clothes dryer test procedure does not reflect the RMCs of actual clothes loads. Additional research needs to be conducted to conclusively determine if today's RMCs are indeed lower than what is assumed in the test procedure. The energy factor (EF) for clothes dryers is determined by measuring the total energy required to dry a standard test load of laundry to a "bone dry" state. As mentioned above, the test load currently is specified to have an RMC of 70 percent, and its weight is either seven or three pounds for standard and compact dryers, respectively. Therefore, if today's clothes loads have RMCs that are lower than 70 percent, revisions to the residential clothes dryer test procedure to reflect more realistic (i.e., lower) RMCs would result in the current EF rating increasing for a given clothes dryer, since the clothes dryer would have less water to remove. DOE invites comments on this issue. In the case of the average residential clothes washer annual use cycles, the DOE clothes washer test procedure revision lowered annual clothes washer to 392 cycles per year, a value which
8 See 62 FR 45484 (August 27, 1997); 68 FR 62198 (Oct. 31, 2003).



### 4

### DOE determined to be more representative of current usage patterns.9 Further, the revised DOE

clothes washer test procedure assumes that 84 percent of all clothes washer loads are dried in clothes dryers. Thus, based upon the parameters in the current residential clothes washer test procedure, the annual usage pattern for clothes dryers is calculated to be 329 cycles per year. In contrast, the current DOE residential clothes dryer test procedure assumes an average annual clothes dryer use of 416 cycles per year, which is 21 percent higher than the number of cycles per year derived from the current clothes washer test procedure. In addition to the above-discussed disconnect between the DOE test procedures for residential clothes washers and clothes dryers, a potential limitation of the clothes dryer test procedure for vent-less dryers (commonly referred to as "condensing dryers") has been suggested. Manufacturers of vent-less clothes dryers have informed DOE that the current clothes dryer test procedure is unable to test this type of clothes dryer. Vent-less clothes dryers do not vent exhaust air to the outside as a conventional dryer does; instead, they typically use ambient air in a heat exchanger to cool the hot, humid air inside the appliance, thereby condensing out the moisture. Alternatively, cold water can be used in the heat exchanger to condense the moisture from the air in the drum.10 In either case, the dry air exiting the drum is reheated and recirculated in a closed loop. Thus, there is no moisture-laden exhaust air to vent outside, only a wastewater stream that can either be collected in an included water container or discharged down the household drain. However, the process of condensing out the moisture in the recirculated air results in higher energy consumption than a conventional dryer, and it can significantly increase the ambient room temperature. To address the potential limitation of the clothes dryer test procedure for vent-less dryers, DOE proposed an alternate test procedure for vent-less dryers in 2006. 71 FR 49437, 49439 (August 23, 2006).11 The revisions under consideration consist of adding separate definitions for a "conventional clothes dryer" (which is vented) and a "condensing clothes dryer" (which is a vent-less design). Further, the proposed alternate test procedure qualified the requirement for an exhaust simulator so that it would only apply to conventional clothes dryers. In the notice, DOE stated that it is seeking comment on this proposed modification to the test procedure. At present, a final determination on such a revision has not yet been made. DOE requests further comment on this issue. Finally, DOE believes that the clothes dryer test procedure may not adequately measure the benefits of automatic termination, in which a sensor monitors either the exhaust air temperature or moisture in the drum to determine the length of the drying cycle. Currently, the test procedure credits the enhanced performance of clothes dryers equipped with automatic termination but does not distinguish between the type of sensing control system (e.g., temperature-sensing or moisture-sensing controls) and the sophistication of the control system. DOE seeks comment on such a test procedure revision.

9 The original clothes washer annual use cycles were 416. 10 This is a typical approach for combination clothes washer and dryer units that wash and dry a load in the same drum. 11 DOE's alternate test procedure for vent-less dryers was described in DOE's denial of an interim waiver to LG Electronics from the test procedures for residential clothes dryers.



### 5DOE redesignated and amended its test procedure for room air conditioners on June 29, 1979.

44 FR 37938. The room air conditioner test procedure cites two test standards that are each at least 25 years old: (1) American National Standards (since renamed American National Standards Institute (ANSI)) Z234.1-1972, "Room Air Conditioners" and (2) American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 16-69, "Method of Testing for Rating Room Air Conditioners." Both the ANSI and ASHRAE standards have been updated since DOE last redesignated its room air conditioner test procedure. The current standards are ANSI/Association of Home Appliance Manufacturers (AHAM) RAC-1-2003, "Room Air Conditioners," and ANSI/ASHRAE 16-1983 (RA 99), "Method of Testing for Rating Room Air Conditioners and Packaged Terminal Air Conditioners," respectively. Because it is likely that any manufacturer rating it products is using the most recent test standards, DOE may consider updating its test procedure to incorporate by reference the most recent test standards. DOE seeks comment on such a test procedure revision. 

### There are two other limitations of the room air conditioner test procedure: (1) the inability of the test procedure to measure the benefits of technologies that improve part-load performance, and (2) the assumed annual operational hours. In the case of measuring the performance of part-load technologies , the current room air conditioner test procedure measures only the full

-load performance at outdoor ambient conditions of 95 °F dry

-bulb and 75 °F wet-bulb. Therefore , technologies that improve part-load performance , such as multiple

- speed compressors and variable

- opening expansion devices, will not improve the rated performance of a room air conditioner under the current test procedure. In contrast, central air conditioners and heat pumps are rated with a seasonal energy efficiency descriptor, but the test procedure consists of multiple rating points that add time and expense when rating the product. In the case of the operational hours, the DOE test procedure currently assumes room air conditioners to have an average annual use of 750 hours. DOE's technical support document (TSD) from September 1997, issued in support of the most recent room air conditioner rulemaking , shows that the average annual operational hours are closer to 500 hours,"Z which would yield approximately 33 percent lower annual energy consumption than the annual energy consumption value determined using the 750 operational hours assumed in the current test procedure.

Item 1-1 DOE requests input from stakeholders on the merits of revising its test procedures for residential clothes dryers. If DOE determines that clothes loads have lower RMCs than what is specified in the clothes dryer test procedure, should DOE revise its test procedure to account for lower-RMC clothes loads? Also should DOE revise the test procedure to account for fewer use cycles, add the capability to test vent-less clothes dryers, and measure the benefits of enhanced automatic termination systems?

12 U.S. Department of Energy, Technical Support Document for Energy Conservation Standards for Room Air Conditioners. September 1997. Chapter 1, section 1 .5. Available at: <http://www.eere.energy.gov/buildings/appliance standards/residential/room ac.html>



### 6Item 1 -2 DOE requests input from stakeholders on the merits of revising its test

procedures for residential room air conditioners . Specifically, should DOE revise its test procedure for residential room air conditioners to incorporate by reference the most recent ANSI and ASHRAE test standards, account for fewer annual operating hours, and add the capability of measuring the impact of technologies that improve part-load performance?
1.2.2 Rulemaking Process and Stakeholder Participation When DOE evaluates any new or amended energy conservation standard for "covered products" under EPCA, the statute, as amended, specifies that any standard DOE prescribes for consumer products shall be designed to "achieve the maximum improvement in energy efficiency... which the Secretary [of Energy] determines is technologically feasible and economically justified." (42 U.S.C. 6295(o)(2)(A)) Moreover, EPCA states that the Secretary may not establish an amended standard if such standard would not result in "significant conservation of energy," or "is not technologically feasible or economically justified." (42 U.S.C. 6295(o)(3)(B)) In determining whether a standard is economically justified, DOE considers, to the greatest extent practicable, the following seven factors: 

### (1) The economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard; (2) The savings in operating costs throughout the estimated average life of the covered products in the type ( or class) compared to any increase in the price , or in the initial charges for, or maintenance expenses of the covered products which are likely to result from the imposition of the standard; 

### (3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the imposition of the standard; (4) Any lessening ofthe utility or the performance of the covered products likely to result from the imposition of the standard; (5) The impact of any lessening of competition , as determined in writing by the Attorney General, that is likely to result from the imposition of the standard; (6) The need for national energy and water conservation; and (7) Other factors the Secretary considers relevant. (42 U.S.C. 6295( o)(2)(B)(i) and 42 U.S.C. 6316(a)) Additional statutory requirements for prescribing new or amended standards are set forth in 42 U.S.C. 6295(o)(1)-(2)(A), ( 2)(B)(ii)-(iii), and (3)-(5) ); 42 U.S.C. 6316(a). The process for developing efficiency standards involves analysis , public notice, and consultation with interested parties. Such parties ( collectively referred to as stakeholders) generally include manufacturers , consumers , energy conservation and environmental advocates, State and Federal agencies , and any other groups or individuals with an interest in energy conservation standards and test procedures

. DOE considers stakeholder participation to be a very important part of the rulemaking process. Accordingly, DOE actively encourages the participation and interaction of all stakeholders during the comment period provided at each stage of the rulemaking. The broad array of stakeholders who routinely provide comments



### 7promotes a balanced discussion of critical information required to conduct the standards

rulemaking, beginning with public comment on the Framework Document. 

### In conducting the test procedure rulemakings and the energy (and water) conservation standards rulemakings, DOE involves stakeholders through a variety of means, including formal public notifications (i.e., Federal Register notices) and public meetings. As discussed in further detail below, the standards rulemaking process involves three major public notices, which are published in the Federal Register: Advance notice of proposed rulemaking (ANOPR, see section 1.3). The ANOPR is designed to publicly vet the models and tools that DOE will use in the rulemaking, and to facilitate public participation before the proposed rule stage. Candidate standard levels, which span the range of efficiencies from baseline products to the most efficient technology, are the basis for demonstrating the functionality of the models and tools. Notice of proposed rulemaking (NOPR, see section 1.4). The NOPR presents: a discussion of comments received in response to the ANOPR; the analysis of the impacts of standards on consumers, manufacturers, and the nation; DOE's weighting of the impacts; and the proposed standard levels for public comment. Final rule (see section 1.5). The final rule presents a discussion of comments received in response to the NOPR, the revised analysis of the impacts of standards, DOE's weighting of the impacts, the standard levels DOE is adopting. The final rule also establishes the effective date of the standards.

1.3 Advance Notice of Proposed Rulemaking As part of its initial rulemaking activities, DOE identifies available product design options and then subjects them to a screening analysis in which each such equipment technology option is analyzed in detail in order to determine whether it should be eliminated from further consideration. This process includes a market and technology assessment (see section 3) and a screening analysis (see section 4). DOE applies four screening criteria in the screening analysis to determine which technology options to eliminate from further consideration. These four criteria are: (1) technological feasibility; (2) practicability to manufacture, install, and service; (3) adverse impacts on product or equipment utility or availability; and (4) adverse impacts on health or safety. Technologies that pass through the screening analysis are referred to as "design options" in the engineering analysis. These activities include secondary research, consultations with stakeholders and independent technical experts who can assist with identifying the key issues and design options or efficiency levels for DOE to consider in the rulemaking. DOE intends this Framework Document, the public meeting following its publication, and the opportunity for comment on this Framework Document to initiate dialogue with stakeholders, and to provide an opportunity for comment and input into the structure and analytical approach proposed for this energy conservation standards rulemaking.



### 8At the start of the ANOPR analysis, DOE considers design options or efficiency levels for each

product class. DOE uses these design options or efficiency levels to collect manufacturer cost data, historical shipment data, shipment-weighted average efficiency data, and preliminary manufacturer impact data (e.g., capital conversion expenditures, marketing costs, research and development costs). During the ANOPR stage, DOE also conducts other principal analyses, including: (1) the engineering analysis (see section 5); (2) the consumer LCC and PBP analyses (see section 8); (3) the national impact analyses, which included national energy savings (NES) and consumer net present value (NPV) (see section 10) for a range of efficiency or energy use levels; and (4) a preliminary manufacturer impact analysis (see section 12). DOE will present the results of these analyses in the ANOPR Federal Register notice. Discussion of various candidate standard levels (efficiency levels) in the ANOPR will facilitate stakeholder review of the spreadsheet models that underpin the analyses. DOE will use stakeholder comments to refine the models for the next stage of the rulemaking analyses, where DOE will propose specific efficiency levels for adoption. Based on the results of the ANOPR analysis, DOE selects candidate standard levels (CSLs) from the energy efficiency or energy use levels considered in the ANOPR analysis. In addition to the efficiency corresponding to the maximum technologically feasible ("max-tech") design and the efficiency corresponding to the minimum LCC point, DOE generally selects levels or design options for consideration that span the full range of technologically-achievable efficiencies. The range of levels DOE typically analyzes includes: • The baseline efficiency level is defined by the product with the lowest energy efficiency level currently sold on the market for a given category. For product categories where minimum energy standards already exist, the baseline is typically defined by the existing energy conservation standard; • The highest energy efficiency level or lowest energy consumption level that is technologically feasible (the "max-tech" level); 

### • The level with the minimum LCC or greatest LCC savings; and • Levels that incorporate noteworthy technologies or fill in large gaps between other efficiency levels considered. The efficiency or energy use levels DOE analyzes serve to demonstrate the models' and tools' functions and outputs. At the ANOPR stage, DOE uses analytical models and tools to assess the different product classes at each efficiency or energy use level analyzed. Many of these analytical models and tools are in the form of spreadsheets, some of which are used to conduct the LCC and PBP analysis, as well as to determine the NES and NPV of prospective standards. In addition, preliminary ANOPR results may facilitate discussions among interested parties on potential joint recommendations for standard levels.



### 9

### DOE will make the spreadsheet tools and results of the ANOPR analyses available on its website

for review and will consider comments on them after publication of the ANOPR.13 When it publishes the ANOPR, DOE will also make available a TSD containing the details of all the analyses performed to date. After the publication of the ANOPR, DOE will provide a 75-day public comment period and hold one public meeting. At this point, DOE encourages stakeholders, to the extent possible, to develop joint recommendations for standard levels. 1.4 Notice of Proposed Rulemaking In developing the NOPR, DOE will first review and consider all the comments it received after the publication of the ANOPR. This process may result in revisions or refinements to the ANOPR analyses , including the engineering and LCC analyses. After the ANOPR, DOE will conduct further economic and environmental impact analyses at this stage of the rulemaking. These analyses generally include a consumer LCC subgroup analysis (see section 11), a complete manufacturer impact analysis see section 12), a utility impact analysis see section 13), an employment impact analysis (see section 14), an environmental assessment (see section 15), and a regulatory impact analysis (see section 16). 

### DOE will describe the methodology used and make the results of all the analyses available on its website for review and comments. Based on comments by stakeholders, further revisions to the analysis may be undertaken. This analytical process ends with the selection of proposed standard levels (if any) that DOE will present in the NOPR. DOE selects the proposed standard levels from the trial standard levels (TSLs) analyzed during the NOPR phase of the rulemaking. The NOPR, published in the Federal Register, will document the evaluation and selection of any proposed standards levels, along with a discussion of other TSLs considered but not selected (and the reasons for not selecting them). The selection process for proposed efficiency standards generally runs as follows. For each product class, DOE will identify the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible. If DOE proposes a level that is below this max-tech level, it will sequentially explain the reasons for eliminating higher levels, beginning with the highest level considered. DOE will present the analysis results in the NOPR, with the details of the analysis provided in an accompanying TSD. DOE considers many factors in selecting proposed standards, as described above in section 1.2.2. These factors and criteria are established by EPCA and take into account the many benefits, costs, and impacts of energy conservation standards. Additionally, DOE encourages stakeholders to develop joint recommendations for standard levels. DOE will carefully consider such recommendations in its decision process.

13 All materials associated with the residential clothes dryer and room air conditioner determination analyses, test procedures, and energy conservation standards are available on DOE's website at: http://www.ecre.eiierg,v.gov/buiIdings/apliliaiice standards/residential/clothes dryers.html for residential clothes dryers and http://www.eere.energy.gov/buildings/appliance standards/residential/room ac.html for room air conditioners.



### 10

### When DOE publishes the NOPR, it will provide the U.S. Department of Justice (DOJ) with a

copy of the NOPR and TSD, in order to solicit feedback on the impact of the proposed standard levels on competition. DOJ will review these standard levels in light of any lessening of competition that is likely to result from the imposition of standards . (42 U.S.C. 6295 (o)(2)(B)(i)(V) and (B)(ii)) DOE will consider DOJ's determination on the impacts of the proposed standard on competition in preparing the final rule

. The NOPR is followed by a 75-day public comment period that includes one public meeting.
1.5 Final Rule
After the publication of the NOPR, DOE will consider public comments it receives on the proposal (including TSLs) and accompanying analyses. On the basis of the public comments, DOE will review the engineering and economic impact analyses and proposed standards and make modifications as necessary

. In addition , before it issues the final rule, DOE will consider DOJ's comments on the NOPR relating to the impacts of the proposed standard levels on competition , to determine whether changes to these standard levels are needed. 

### The standards rulemaking will conclude with the publication of the final rule. DOE will select the final standard levels based on the complete record of the standards rulemaking

. The final rule will promulgate the final standard levels and their effective date and explain the basis for their selection

. The final rule will be accompanied by a final TSD.

2. OVERVIEW OF ANALYSES FOR RULEMAKING The purpose of the analyses conducted in support of the standards rulemaking is to ensure that DOE selects energy conservation standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified , and will result in significant energy savings

. DOE expects the selection of such standards to achieve the maximum energy savings that are economically justified without putting an unjust financial burden on any particular party. Economic justification includes consideration of the economic impacts on domestic manufacturers and consumers , national benefits including environmental impacts , and issues of consumer utility. 

### This section offers an overview of DOE's analytical methodology and discusses the major components of the analyses DOE will conduct. DOE will ensure a consistent approach to analysis throughout the rulemaking by considering each analysis as a part of the overall standards

- setting framework. Figure 2-1 summarizes the analytical components of the standards

- setting process. The "analyses" are presented in the center column. Each analysis has a set of "key inputs ," which are data and information required for the analysis . " Approaches " are the methods that DOE will use to obtain key inputs , which may vary depending on the information in question. For example, some key inputs exist in public databases; DOE will collect some inputs from stakeholders or others with special knowledge , and DOE will develop yet other information independently in support of the rulemaking. The results of each analysis are "key outputs," which feed directly into the rulemaking

. Arrows indicate the flow of information between the various analyses.



### 11Approaches

• Characterize Industry Key Inputs Analyses Key Outputs

• Identify Firms/Products • Historical Shipments • Market Segmentation Analysis of Market Data , • Non-Regulatory Programs

Analysis of Product Data • Product Prototypes • Efficiency-Level Approach • Design Option Approach • Manufacturing Cost

• Analysis of Energy Use Data • Efficiency/Performance

at • Define Distribution Channels • Economic Census Data Analysis • Retail Price Collection and Analysis

• Accounting Approach • Backcast and Forecas • Market Saturation >I Energy Use Markups for Equipment Price Determination • Energy Prices • Installation Costs • Maintenance & Repair Costs • Energy-Efficiency Levels

I I Shipments Analysis • Energy Price Forecasts • Site-to-Source Factors
• Manufacturer Prices • Average Costs UEC • Energy Prices National Impact Analysis • Installation Costs • Maint Costs • Repair Costs

Preliminary Manufacturer Impact Analysis

Advance Notice of Proposed Rulemaking ( ANOPR)

Manufacturer Interviews GRIM Analysis

NEMS-BT

IMSET

NEMS-BT • Stakeholder Comments

• Demographics

• Manufacturer Prices • Average Costs

• Manufacturer Financial Data', • Utility Load Factors • National Energy Savings • National Energy Savings • National Product Costs • National Operating Costs

• Emission Rates • National Energy Savings
• Non-Regulatory Alternatives Framework Document

Market and Technology Assessment
Product Classes 

## I Technology Options Screening Analysis Design Options Engineering Analysis Design Energy Use
• Annual Energy Use (UEC) Retail Prices Energy-Efficiency Levels

Life-Cycle Cost and Payback Period Analysis
Candidate Standard Levels

-r-01 Revise ANOPR

Analyses TSLs • Product Classes • Technology Options

• Design Options

Cost-Efficiency Relationship

• Life-Cycle Costs • Payback Periods

• National Energy Savings • Net Present Values

• Conversion Capital Expenditures • Direct Employment Impacts

• Trial Standard Levels (TSLs)

• Life-Cycle Costs Life-Cycle Cost Sub-Group Analysis
Manufacturer Impact Analysis Utility Impact Analysis Employment Impact Analysis
Environmental Assessment Regulatory Impact Analysis Emission Estimates

• National Energy Savings • Net Present Values

Notice of Proposed Rulemaking (NOPR) • Department of Justice Review' r • • Stakeholder Comments Revise Analyses • Revised Results

Final Rule Figure 2-1 Flow Diagram of Analyses for the Residential Clothes Dryer and Room Air Conditioner

Energy Conservation Standards Rulemaking Process • Payback Periods • Industry Cash Flow r • Sub-Group Cash-Flow • Direct Employment Impacts r • Competitive Impacts • Cumulative Regulatory Burden Difect Employment Impacts • Utility Impacts

• National Employment Impacts

12

### 3. MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment will provide information about the residential clothes dryer and room air conditioner industries and specifics about the performance attributes of these products. DOE will use this assessment throughout the rulemaking. This assessment is particularly important at the outset of the rulemaking to determine product classes and to identify potential design options or efficiency levels for each product class.

3.1 Market Assessment 

### DOE will qualitatively and quantitatively characterize the structure of the residential clothes dryer and room air conditioner industries and markets. In the market assessment, DOE will identify and characterize the manufacturers of this equipment, estimate market shares and trends, address regulatory and non-regulatory initiatives intended to improve the energy efficiency or reduce the energy consumption of products covered by this rulemaking, and explore the potential for technological improvements in the design and manufacturing of such equipment. The market assessment phase allows DOE to gather data that will assist in identifying important issues later in the rulemaking, such as potential small business impacts, competitive disruptions, and other factors that may arise from enacting standards. For example, DOE will use historical equipment shipments and prices as an indicator of future shipments and prices. Market structure data will be particularly useful for assessing competitive impacts as part of the manufacturer impact analysis. This phase also allows DOE to start updating design options by reviewing product literature, industry publications, and company web sites.

Item 3 -1 DOE requests information that would contribute to the market assessment for the residential clothes dryers and room air conditioners covered in this rulemaking (e.g., current product features and efficiencies, product feature and efficiency trends, historical product shipments and prices).

3.2 Product Classes 

### For each covered product (i.e., residential clothes dryers and room air conditioners), DOE intends to develop separate product classes. Because DOE will formulate a separate energy conservation standard for each product class, the criteria for separation into different classes are: (1) type of energy used; (2) capacity; or (3) other performance-related features such as those that provide utility to the consumer, or others deemed appropriate by the Secretary that would justify the establishment of a separate energy conservation standard. (42 U.S.C. 6295 (q) and 6316(a))
For residential clothes dryers, DOE plans to consider four product classes for vented and two product classes for vent-less dryers, as shown in Table 3-1. This is a new analytical structure for

13clothes dryers, recognizing the unique utility that vent-less clothes dryers offer to consumers.14

Another new entry with unique utility is the combination washer/dryer (i.e., a device which washes and then dries clothes in the same basket/cavity in a combined cycle). Combination washer/dryers are very popular in space-constrained environments (e.g., apartments, recreational vehicles), and all products of this type appear to utilize vent-less operation. Thus, like other vent-less dryers, such combination washer/dryers can be installed in locations where venting dryers would be precluded due to venting restrictions. While the current DOE test procedure assumes that a dryer has a vent to which an exhaust is fitted, DOE has proposed an alternate test procedure that removes the exhaust requirement for condenser clothes dryers, thereby facilitating testing of vent-less dryers (see section 1.2.1). This action will be finalized before DOE issues the NOPR for the standard-setting rulemaking for these products. DOE believes such a revision would be relatively simple to implement in testing of condenser clothes dryers (and, by extension, other vent-less clothes dryers) because it simply entails the elimination of an exhaust simulator. In addition, the National Institute of Standards and Technology (NIST) has conducted testing which compared energy efficiency performance of a representative vent-less condenser clothes dryer to that of a conventional, vented unit. 15 DOE interprets the test conditions established during this testing to be the same as those specified in the alternate clothes dryer test procedure. Therefore, DOE plans to include product classes for vent-less clothes dryers in this rulemaking analysis.

Table 3-1 Proposed Clothes Dryer Product Classes Vented dryers 1. Electric, Standard (4.4 cubic feet (ft) or greater capacity) 2. Electric, Compact (120 volts (v)) (less than 4.4 ft3 capacity) 3. Electric, Compact (240 v) (less than 4.4 ft3 capacity) 4. Gas Vent-less dryers 5. Electric, Compact (240 v) (less than 4.4 ft3 capacity) 6. Electric, Combination Washer/Dryer

For room air conditioners , NAECA initially specified 12 product classes which were applicable to units designed for single- or double-hung window installation and based on the following criteria: (1) cooling capacity; (2) the presence of louvered sides (LS); and (3) the capability of reverse cycle (i.e., the unit functions as a heat pump). (42 U.S.C. 6295(c)(1)) In the final rule published in the Federal Register on September 24, 1997, DOE established an updated set of performance standards (effective October 1, 2000) which included four additional product

14 Previously, DOE has described vent-less dryers as condensing dryers. The new designation reflects the actual consumer utility (i.e., no external vent required) and the market availability of vented dryers that also condense.. 15 Kao, J., "Energy Test Results of a Conventional Clothes Dryer and a Condenser Clothes Dryer," National Institute of Standards and Technology, Proceedings of the 49th International Appliance Technical Conference, pp. 11-21 (May 4-6, 1998).



### 14classes.16 Table 3-2 lists the existing 16 product classes for room air conditioners. Based on

DOE's estimate that higher-capacity units may be constrained by space limitations in their ability to incorporate design options that could raise energy efficiency, and the assumption that the increments in energy efficiency among the other product classes are well-defined by the increments in their associated minimum efficiency standards, DOE plans to conduct a full analysis of product classes 1, 3 and 5 room air conditioners without reverse cycle and with louvered sides with a cooling capacity of less than 6,000 Btu per hour (Btu/h), 8,000 to 13,999 Btu/h, and 20,000 Btu/h or more, respectively. DOE proposes to then extend this analysis numerically to the remaining 13 product classes. This approach is discussed in more detail in section 5.3.

Table 3-2 Proposed Room Air Conditioner Product Classes

Without reverse cycle and with louvered sides 1. Less than 6,000 Btu/h 2. 6,000 to 7,999 Btu/h 3. 8,000 to 13,999 Btu/h 4. 14,000 to 19,999 Btu/h 5. 20,000 Btu/h or more Without reverse cycle and without louvered sides 6. Less than 6,000 Btu/h 7. 6,000 to 7,999 Btu/h 8. 8,000 to 13,999 Btu/h 9. 14,000 to 19,999 Btu/h 10. 20,000 Btu/h or more With reverse cycle and with louvered sides 11. Less than 20,000 Btu/h 12. 20,000 Btu/h or more With reverse cycle and without louvered sides 13. Less than 14,000 Btu/h 14. 14,000 Btu/h or more Casement 15. Casement-Only 16. Casement-Slider

16 DOE divided the product class covering units with reverse cycle and with louvered sides into units of capacity less than 20,000 Btu/h and units 20,000 Btu/h or more. DOE split the product class covering units with reverse cycle and without louvered sides into units of capacity less than 14,000 Btu/h and units 14,000 Btu/h or more. In addition,DOE established two new product classes for units that are designed to be installed in casement-slider and casementonly windows. Due to the size constraints imposed by casement windows, casement units are small in size and typically deliver 5,000 to 10,000 Btu/h in cooling capacity.



### 15Item 3-2 For both residential clothes dryers and room air conditioners, DOE requests

input from stakeholders on the proposed product classes and the criteria used for creating these product classes. Are there other considerations of which DOE should be aware beyond those identified above as a basis for developing product classes? If so, please explain (citing specific examples to the extent possible).

Item 3 -3 Specific to clothes dryers, DOE seeks input from stakeholders on its proposal to add vent-less clothes dryer product classes, including combination washer/dryers.
Item 3-4 Specific to room air conditioners, DOE seeks input from stakeholders on its planned approach to analyze the three representative product classes of room air conditioners (i.e., without reverse cycle and with louvered sides with cooling capacities of less than 6, 000 Btu/h, 8, 000 to 13,999 Btu/h, and 20, 000 Btu/h or more), and to subsequently numerically extend the analysis to the remaining product classes.
3.3 Technology Assessment The technology assessment centers on understanding how energy is used by the product or equipment and potential changes that would reduce energy consumption. DOE typically uses information about existing "technology options," based on existing technologies and prototype designs and concepts as input in identifying technologies manufacturers of those products could use to attain higher energy efficiency levels. In consultation with interested parties, DOE will develop a list of technologies to consider in this analysis. Initially, this list will include all those technologies considered to be technologically feasible and will assist DOE in determining the max-tech design, based upon a review of efficiencies of available products and their features. For clothes dryers, DOE will consider technologies identified in DOE's ANOPR published on November 14, 1994 (59 FR 56423), supplemented by technologies described in recent trade publications, research reports, and manufacturer product offerings. DOE took the technologies listed below (Table 3-3) with exceptions noted below - from the November 14, 1994 ANOPR. DOE took the modulating gas dryer technology from an April 2005 report by TIAX LLC.17 Additionally, DOE's preliminary market research indicated the availability of hydronically-heated clothes dryers, so DOE has decided to include them in the clothes dryer heat generation technologies, but notes that significant revisions to the clothes dryer test procedure would be required to accommodate them. Specifically, DOE would have to incorporate a number of assumptions about the efficiency of the heat generation source used with these dryers.

17 Pescatore, P., Carbone,P., High Efficiency, High Performance Clothes Dryer, Final Report to: Department of Energy, TIAX LLC. Reporting Period: 9-30-01-3-31-03, Issued March 31, 2005. Contract Number: DE-FC26- 01NT41260. (This is document is available at: http://www.osti.gov/bridge/servlets/purl/888669-2VIDn8/)



### 16Table 3-3 Clothes Dryer Technologies Dryer Control or Drum U pgrades 1. Improved termination 2. Increased insulation 3. Modified operating conditions 4. Reverse tumble 5. Improved drum design Methods of Exhaust Heat Recover y (vented models only) 6. Recycle exhaust heat 7. Inlet air preheat 8. Inlet air preheat, condensing mode Heat Generation O ptions 9. Heat pump, electric only 10. Microwave, electric only 11. Modulating, gas only 12. Water-cooling, vent-less electric only 13. Indirect heating

For room air conditioners , DOE will consider technologies identified in its last standards rulemalcing that culminated in the September 24, 1997, final rule. 62 FR 50122. With the exception of microchannel heat exchangers, the technologies listed below (Table 3-4) are described in DOE's TSD from September 1997 and have not changed appreciably since that time. With regard to microchannel heat exchangers, research conducted at the University of Illinois has demonstrated that this technology can be applied to room air conditioner applications. 18

18 Kim, Man-Hoe, C.W. Bullard, Performance Evaluation of'a Window Room Air Conditioner with Microchannel Condensers, 124 JOURNAL OF ENERGY RESOURCES TECHNOLOGY, March 2002, at pp. 47-55.



### 17Table 3-4 Room Air Conditioner Technologies Increased Heat Transfer Surface Area 1. Increased frontal coil area 2. Increased depth of coil (add tube rows) 3. Increased fin density 4. Add subcooler to condenser coil Increased Heat Transfer Coefficients 5. Improved fin design 6. Improved tube design 7. Spray condensate onto condenser coil 8. Microchannel heat exchangers Component Improvements 9. Improved indoor blower and outdoor fan efficiency 10. Improved blower/fan motor efficiency 11. Improved compressor efficiency Part-Load Technology Improvements 12. Two-speed, variable-speed, or modulating-capacity compressors 13. Thermostatic or electronic expansion valves 14. Thermostatic cyclic controls In the 1997 room air conditioner TSD, increasing heat transfer performance by spraying condensate onto the condenser was also identified as a technology option. DOE determined at that time that all room air conditioner models used this technology. Since DOE believes that this is still the case, DOE now considers the technology to be a feature of baseline units, and accordingly, this will not be analyzed as a technology option to increase energy efficiency.

Item 3 -5 Of the technologies listed above, are there any that DOE should not consider because oftheir impacts on safety, performance, or consumer utility of the product?

Item 3-6 Are there other unlisted technologies that DOE should consider as design options and what, if any, impacts would the design options be expected to have on safety, performance, and consumer utility?



### 4. SCREENING ANALYSIS The purpose of the screening analysis is to screen out design options that DOE will not consider in the rulemakings for residential clothes dryers and room air conditioners. 

### As an initial matter, DOE will develop a list of design options (developed through its own research and in consultation with interested parties) for consideration in the engineering analysis (see section 5). The identified candidate design options will encompass all those technologies

18

### that may be technologically feasible. Thereafter, DOE will review each design option in light of

the following four criteria, as provided in sections 4(a)(4) and 5(b) of the Process Rule' 9 and tailored to the current rulemaking: 1. Technological

feasibility. DOE will not further consider technologies that are not incorporated in commercially

- available products or in working prototypes. 2. Practicability to manufacture, install, and service. If DOE determines that mass production of a technology in commercial products and reliable installation and servicing of the technology could not be achieved on the scale necessary to serve the relevant market by the time of the effective date of the standard, then it will not consider that technology further. 3. Adverse impacts on product or equipment utility or availability. If DOE determines a technology to have significant adverse impact on the utility of the product to significant subgroups of consumers , or result in the unavailability of any covered product type with performance characteristics (including reliability ), features , size, capacities , and volumes that are substantially the same as products generally available in the United States at the time, it will not consider that technology further.
4. Adverse impacts on health or safety. If DOE determines that a technology will have significant adverse impacts on health or safety, it will not consider that technology further. 

### DOE will fully document the reasons for eliminating any design options during the screening analysis and will publish this documentation for stakeholder review and comment as part of the ANOPR.

5. ENGINEERING ANALYSIS After conducting the screening analysis described above, DOE will perform an engineering analysis based on the remaining design options that would improve product efficiency. The engineering analysis consists of estimating the energy consumption and cost of products at various levels of increased efficiency

. This section provides an overview of the engineering analysis (section 5

. 1), and discusses baseline units (section 5.2), DOE's proposed approach for determining the cost-efficiency relationship (section 5

. 3), efficiency levels (section 5.4), proprietary designs (section 5

. 5), and cumulative regulatory burdens that might affect the engineering analysis (section 5

. 6). DOE will complete separate engineering analyses for residential clothes dryers and room air conditioners. 5.1 Engineering Analysis Overview 

### The purpose of the engineering analysis is to determine the relationship between manufacturer cost and energy efficiency for residential clothes dryers and room air conditioners. In

" 10 CFR Part 430, Subpart C, Appendix A.



### 19

### determining the cost-efficiency relationship, DOE will estimate the increase in manufacturer cost

associated with technological changes that increase the efficiency of these products relative to the baseline models. DOE will derive cost estimates for the engineering analysis (which it also will use in the manufacturer impact analysis) from a reverse-engineering process, supplemented by manufacturer-supplied data. The reverse-engineering process consists of a detailed product disassembly process, whereby: (1) representative units are torn down; (2) all components, processes, assembly, and manufacturing steps are noted in an activities-based cost model; and (3) all manufacturing costs are calculated. Representative units are chosen based on the range of efficiencies, design options, and capacities. The result is a "green-field" model20 of the subject unit and the factory in which it would be built. These unit-specific factory requirements can then be aggregated by market share, unit shipments, or any other method DOE wishes to utilize to derive industry-wide estimates. The industry-wide estimates will consist of detailed incremental cost data, disaggregated into the incremental costs of material,21 labor,22 and overhead.23 DOE will associate incremental costs with specific design options or design option combinations required to achieve a given efficiency level or with the efficiency levels themselves, depending on the analysis approach, as described in section 5.3. Therefore, DOE seeks design, efficiency, and cost information to determine the cost of improving the efficiency of the baseline models. In addition, in tandem with a review of the efficiencies of units currently on the market, DOE will use the reverse-engineering to identify design options or design option combinations associated with the most efficient products to establish the highest efficiency that is technologically feasible (i.e., the max-tech level) within each product class.
5.2 Baseline Models Once DOE establishes product classes, it will select a baseline model as a reference point for each product class against which it can measure changes resulting from energy conservation

20 A "green-field" model estimates the cost of a product as if it were built in a brand-new facility that had just broken ground. 21 Direct material costs are the costs of raw materials such as steel, copper, and insulation, and also include scrap metal that can be traced to final or end equipment. Direct material costs do not include indirect material costs which are attributed to supplies that may be used in the production process, but are not assigned to final pieces of equipment (e.g., lubricating oil for production machinery). 22 Labor costs are the earnings of workers who assemble parts into a finished good or operate machines in the production process. Direct labor includes the fringe benefits of direct laborers such as group health care, as well as overtime pay. Direct labor does not include indirect labor, which is defined as the earnings of employees who do not work directly in assembling a piece of equipment-such as supervisors, janitors, stockroom personnel, inspectors, and forklift operators. 23 Factory overhead excludes depreciation, but includes indirect labor, downtime, set-up costs, indirect material, expendable tools, maintenance, property taxes, insurance on assets, and utility costs. Factory overhead does not include selling, general, and administrative costs (SG&A), R&D, interest, or profit (which DOE accounts for separately).



### 20

### standards. The baseline model in each product class represents the characteristics of common or

typical equipment in that class. Typically, a baseline model would be a model that just meets current required energy conservation standards. At a subsequent stage in its analysis, DOE will use the baseline models to conduct the engineering analysis and the LCC and payback period analyses. To determine energy savings and changes in manufacturer selling price, DOE will compare each higher-energy-efficiency product design against the baseline model. As discussed above, the current minimum energy conservation standards for residential clothes dryers , as measured by the EF in pounds (lb) per kilowatt-hour (kWh), became effective on May 14, 1994. Table 5-1 sets forth the current minimum energy conservation standards for the four vented clothes dryer product classes. (10 Code of Federal Regulations (CFR) Part 430.32(h)(2)) DOE intends to use the existing energy conservation standards to characterize the baseline unit efficiency for each of the vented product classes. As discussed earlier, DOE is considering the creation of a new vent-less clothes dryer category, which would require amendments to the current test procedure (see section 1.2.1). DOE is unable to specify a baseline efficiency for vent-less dryers, because vent-less dryers cannot be measured by the current test procedure, and DOE is unable to establish whether the NIST data referenced in section 3.2 (which was obtained using the proposed amended test procedure) applies to a baseline or higher efficiency vent-less unit. Therefore, DOE seeks comment on appropriate baseline EFs for the two vent-less clothes dryer product classes.

Table 5-1 Clothes Dryer Energy Conservation Standards and Proposed Baseline Unit Efficiencies Product Class EF (lb/kWh) Vented dryers 1. Electric, Standard (4.4 ft3 or greater capacity) 3.01 2. Electric, Compact (120 v) (less than 4.4 ft3 capacity) 3.13 3. Electric, Compact (240 v) (less than 4.4 ft3 capacity) 2.90 4. Gas 2.67 Vent-less dryers 5. Electric, Compact (240 v) (less than 4.4 ft3 capacity) NA 6. Electric, Combination Washer/Dryer NA As previously discussed, the minimum energy conservation standards for room air conditioners , as measured by the energy efficiency ratio (EER) in Btu/h per watt, became effective on October 1, 2000. Table 5-2 sets forth the current minimum energy conservation standards for the 16 room air conditioner product classes. (10 CFR Part 430.32(b)) DOE intends to use the existing energy conservation standards to characterize the baseline unit efficiency for each product class. As mentioned in section 3.2, DOE plans to analyze only product classes 1, 3, and 5 (room air conditioners without reverse cycle and with louvered sides, with capacities of less than 6,000



### 21

### Btu/h, 8,000 to 13,999 Btu/h, and 20,000 Btu/h or more) and to subsequently extend the analysis

numerically to the other product classes. For more details on this approach, see section 5.3.

Table 5-2 Room Air Conditioner Energy Conservation Standards and Proposed Baseline Unit Efficiencies Product Class EER (Btu/h/W) Without reverse cycle and with louvered sides 1. Less than 6,000 Btu/h 9.7 2. 6,000 to 7,999 Btu/h 9.7 3. 8,000 to 13,999 Btu/h 9.8 4. 14,000 to 19,999 Btu/h 9.7 5. 20,000 Btu/h or more 8.5 Without reverse cycle and without louvered sides 6. Less than 6,000 Btu/h 9.0 7. 6,000 to 7,999 Btu/h 9.0 8. 8,000 to 13,999 Btu/h 8.5 9. 14,000 to 19,999 Btu/h 8.5 10. 20,000 Btu/h or more 8.5 With reverse cycle and with louvered sides 11. Less than 20,000 Btu/h 9.0 12. 20,000 Btu/h or more 8.5 With reverse cycle and without louvered sides 13. Less than 14,000 Btu/h 8.5 14. 14,000 Btu/h or more 8.0 Casement 15. Casement-Only 8.7 16. Casement-Slider 9.5

Item 5-1 DOE seeks input from stakeholders on whether the above energy efficiency levels are appropriate for characterizing the performance of baseline units.

Item 5-2 Specifically for residential clothes dryers, DOE seeks input on appropriate baseline unit efficiencies for vent-less clothes dryers, assuming the DOE test procedure is revised so as to be capable of measuring the performance of these units.
Item 5-3 DOE seeks information regarding the specific technological characteristics of the baseline model for each product class, including the technologies described in section 3.3.
5.3 Approach for Determining the Cost-Efficiency Relationship 

### DOE plans to use separate approaches for the residential clothes dryers and room airconditioners, as explained below. For residential clothes dryers, DOE intends to use a design22option approach, whereas room air conditioners will be examined using an efficiency-level

approach. 

### Under both approaches, DOE will use reverse-engineering, as described above, to identify the incremental cost and efficiency improvement associated with each design option or design option combination. DOE will also consider revising test procedures for either (or both) clothes dryers and room air conditioners as appropriate to capture the real-world energy consumption benefits of design options which are currently not credited by the test procedures. For example, DOE could consider switching the room air conditioner test procedure and rating from the current EER to the SEER, which is used for testing central air conditioning systems.

For residential clothes dryers, DOE intends to utilize a design-option approach, using reverse engineering (physical teardowns and testing of existing equipment in the market) to identify the incremental cost and efficiency improvement associated with each design option or design option combination. DOE has reviewed existing clothes dryer product databases, including those compiled by the California Energy Commission (CEC)2 and Natural Resources Canada (NRCan)25, and determined that there is little variation in EF for all clothes dryers on the market that are currently rated. Therefore, it is appropriate to analyze design options individually to understand what technologies manufacturers utilize to affect efficiency. DOE notes that should the clothes dryer test procedure be revised to capture the benefits of high-efficiency dryers (such as vent-less dryers that incorporate the heat pump technology option), a wider range in EF would result. DOE will analyze technologies and associated costs representative of baseline units as part of the reverse-engineering process. Whenever possible, DOE will attempt to reverse-engineer test units that share similar platforms in order to better identify the efficiency benefits and costs of design options. As units are torn down, all design options used in them are noted and reviewed. Prior to tear down, DOE also plans to conduct limited testing to establish what control strategies are being used by manufacturers in conjunction with design options and platform design. Unit testing will likely include the measurement of disaggregated energy consumption to identify the relationship between particular components and control strategies taken by manufacturers to achieve rated EFs. As part of the reverse-engineering process, DOE will attempt to generate a cost-efficiency relationship for each design option that is identified. In support of this design-option approach, DOE will seek to obtain incremental cost data from manufacturers for each clothes dryer design option. DOE intends the data to represent the average industry-wide incremental production cost for each technology. Drafts of the engineering analysis data-request sheets are contained in Appendix A.
For room air conditioners , DOE plans to use an efficiency-level approach, since data contained within the AHAM-certified product directory, for example, demonstrate a significant range of

24 A database of available electric and gas clothes dryer models for sale in California is available on CEC's website at: http://www.energy.ca.gov/appliances/appliance/excel based files/clothes dryers/. 2' A database of available electric clothes dryer models for sale in Canada is available on NRCan's website at: http://oee.nrean. c

g ca/equipment/english/clothes-dryers-search.efm?attr=4.



### 23efficiencies for most of the product classes. Efficiencies above the existing minimum standards

are promoted by an Energy Star program; current Energy Star models are rated at EERs of 10 to 33 percent higher than minimum standards. 

### DOE will conduct reverse-engineering through physical teardowns and testing on room air conditioner models at key efficiency levels to determine baseline manufacturing cost as well as incremental manufacturing costs above the baseline. DOE intends, at a minimum, to perform reverse engineering on units rated at baseline and Energy Star EERs for the three product classes being analyzed. DOE may supplement the reverse-engineering data with information pulled from catalogs, web sites, and trade publications to create a wider set of units for its efficiency-cost analysis. As with clothes dryers, DOE will quantify disaggregated energy consumption during testing to analyze the link between specific technologies and efficiency levels, in effect supplementing the efficiency-level approach with a design-option approach as needed. In support of this analysis, DOE will seek to obtain incremental cost data from manufacturers for each efficiency level defined for each product class. The data are intended to represent the shipment-weighted average, industry-wide incremental production cost associated with each level of efficiency improvement. Drafts of the engineering analysis data-request sheets are contained in Appendix A. To be useful in the manufacturer impact analysis, manufacturer cost information should reflect the variability in baseline models, design strategies, and cost structures that can exist among manufacturers. This information allows DOE to better understand the industry and its associated cost structure, and, thus, it helps predict the most likely impact that new energy efficiency regulations would have. For example, the reverse-engineering methodology allows DOE to estimate the "green-field" costs of building new facilities, yet the majority of plants in any given industry are comprised of a mix of assets in different stages of depreciation. Interviews with manufacturers not only help DOE refine its capital expenditure estimates, but they also allow DOE to refine depreciation and other financial parameters. DOE will attempt to qualify the cost-efficiency data it generates through the reverse-engineering activities with industry-supplied data and information arising from consultation with stakeholders or technical experts. Specifically, DOE will supplement these cost data with information obtained through follow-up manufacturer interviews. Sample questions that DOE plans to ask during the follow-up interviews are contained in Appendix B. If DOE is unable to reconcile information collected during the manufacturer interviews with the generated or collected cost data, or with information contained in the market and technology assessment, DOE will supplement the collected data via consultation with outside experts and/or further review of publicly available cost and performance information. 

### DOE will estimate the contribution of the depreciation of conversion capital expenditures to the incremental overhead. During the interviews, DOE will gather information about the capital expenditures that would be necessary to increase the efficiency of the baseline models to various

24efficiency levels (i.e., conversion capital expenditures by efficiency or energy-use level). DOE

will also request information about the depreciation method that manufacturers use to expense the conversion capital.

Item 5-4 DOE requests feedback on the use of a design-option approach to determine the relationship between manufacturer cost and energy efficiency for residential clothes dryers.
Item 5-5 DOE requestsfeedback on the use of an efficiency- level approach to determine the relationship between manufacturer cost and energy efficiencyfor room air conditioners.
5.4 Efficiency Levels Except as noted below, for each of the product classes presented in section 3.2, DOE will undertake analyses to determine potential efficiency levels and seek to develop incremental cost data at each of these levels. DOE plans to conduct an engineering analysis (and LCC and PBP analyses) on all product classes for which it suggests efficiency levels. The following tables present the efficiency levels DOE intends to analyze for residential clothes dryers and room air conditioners. It should be noted that the "maximum available" efficiency levels in the tables correspond to models with the maximum efficiency currently available in the market, but may not necessarily correspond to the "max-tech" levels. "Maximum available" models may not incorporate all possible design options for increasing efficiency and, therefore, may not achieve an efficiency level as high as the "max-tech" level. Also, it is possible that some of the design options that have met the screening criteria (i.e., passed the screening analysis) may not yet be commercially available (e.g., working prototypes, available technologies not currently in production) and, therefore, would not be found in today's "maximum available" products. In light of this potential dichotomy between max-tech and maximum available, and because DOE is required to analyze max-tech, it will seek stakeholder input to determine appropriate max-tech efficiency levels. (42 U.S.C. 6295 (p)(2)) DOE expects to analyze all product classes of residential clothes dryers . For product classes that DOE may not presently have adequate test procedures, DOE expects to develop the necessary test procedures. For residential clothes dryers, other than existing minimum energy efficiency standards, there are no existing energy efficiency programs or organizations such as the DOE and Environmental Protection Agency (EPA) Energy Star Program and the Consortium for Energy Efficiency (CEE). Therefore, for vented clothes dryers, DOE proposes initially to use the current maximum technology that is commercially available as determined by the vented models listed in the CEC clothes dryer energy efficiency product directory. DOE recognizes that this product directory does not include models from all major manufacturers, so DOE is seeking stakeholder input on the maximum available technology for the purposes of analyzing the cost-efficiency relationship of clothes dryers.



### 25DOE also intends to add two levels to fill the gap between the baseline and the current maximum

technology that is commercially available. It will set these gap-fill levels at EFs that are strongly represented in the CEC product listing. In addition, in some cases where the CEC product 

### directory did not list applicable models, DOE estimated energy factors from the NRCan electric clothes dryer database to obtain efficiency levels. DOE seeks timely stakeholder input on clothes dryer efficiencies to enable it to decide upon the efficiency levels for analysis as quickly as possible.

Table 5-3

3 Efficiency Levels for Residential Vented Clothes Dryer Analysis

3.01 I 3.13 Gap Fill* 3.10 3.23 2.98*** Gap Fill* 3.16 ** 3.07*** Maximum Available* 3.39 3.79 ** 2.77 3.02 * Source: CEC residential clothes dryer product directory as of June, 2007, except as noted. ** DOE is unable to obtain efficiency information for any models at this efficiency level, and therefore is currently unable to set this value. *** DOE estimated these values based on data contained within the NRCan electric clothes dryer database.
For room air conditioners , it is not practicable for DOE to evaluate every product class or capacity range on the market, as the possible permutations are enormous. Instead, DOE proposes to test three capacity ranges in its reverse-engineering analysis that represent the majority of shipments and to then interpolate and extrapolate to the other identified product classes. Most room air conditioner unit shipments do not feature reverse-cycle operation but do have louvered sides, so this will be the category within which DOE will conduct its reverse-engineering analysis. Three capacity ranges will be examined: less than 6,000 Btu/h, 8,000 to 13,999 Btu/h, and 20,000 Btu/h or more. The selection of these three product classes is based on the large number of shipments for both the 6,000 Btu/h capacity range and the 8,000 to 13,999 Btu/h range. The 20,000 Btu/h and higher capacity units are of interest because upgrading them to run at higher efficiencies is constrained by cabinet volume, weight, and other factors. 

### Once the incremental product costs and design options have been identified for these three capacity product classes, DOE intends to interpolate its results among them to determine similar results for the remaining product classes within the product category. The cost models that DOE will develop along with the reverse-engineering process will then be modified to extend the analysis the other product categories (e.g., casements, heat pumps), a process that is likely to feature limited teardowns of units from those categories to establish baseline costs.

26

### Table 5-4 provides both the efficiency level and the reference source of each level for the three

room air conditioner product classes that DOE will analyze. Most of the tabulated efficiency levels correspond to those set by energy efficiency programs or organizations, including the Energy Star Program and the CEE Super-Efficient Home Appliances Initiative, while DOE calculated the first efficiency level as a gap fill between'the current standard and Energy Star levels.

Table 5-4 Efficiency Levels for Room Air Conditioner (Representative) Analysis Efficiency Levels (Btu/h/W Efficiency `Without Reverse Without Reverse Without Reverse Cycle; Leve ,

Level Source .Cycle, With

ouyered Sides, Less Cycle, With Louvered Sides, With Louvered Sides, 20,000 Btu/" .r More Than 6,000 Btu/h 8,000 1- 13,999, Btu/h, baseline I DOE Standard 9.7 9.8 8.5 1 Gap Fill 10.2 10.3 9.0 2 Energy Star 10.7 10.8 9.4 3 11.2 11.3 9.8 4 CEE Tier 2 11.6** 11.8 10.2**

Maximum Available* N/A** 12.0 N/A**

* Source: Energy Star

- qualified room air conditioners as of June, 2007. ** The maximum available efficiency in this product class, as listed in the Energy Star-qualified room air conditioner product listing as of June , 2007, was an EER of 11.2 for less than 6 , 000 Btu/h and 9

. 9 for 20 , 000 Btu/h or more.

Item 5-6 DOE seeks input from stakeholders concerning the efficiency levels it proposes to use for collecting incremental cost data from manufacturers of residential clothes dryers and room air conditioners . DOE also seeks input from stakeholders on appropriate maximum technologicallyfeasible efficiency levels.
5.5 Proprietary Designs DOE will consider in its engineering and economic analyses all design options that are commercially available or present in a working prototype, including proprietary designs and technologies. However, DOE will consider a proprietary design in the subsequent analyses only if the achieved efficiency level can also be reached using other non-proprietary design options. If the proprietary design is the only approach available to achieve a given efficiency level, then DOE will reject that efficiency level, as the analytical results would appear to favor one manufacturer over others. DOE is sensitive to manufacturer concerns regarding proprietary designs and will make provisions to maintain the confidentiality of any proprietary data submitted by manufacturers or discussed during manufacturer interviews. This data may be provided under a confidentiality agreement with DOE's contractor responsible for this part of the



### 27rulemaking analysis, Navigant Consulting, Inc. (NCI). As in other rulemakings, NCI regularly

works with confidential data from manufacturers and other organizations, preparing aggregated results for DOE's analysis that do not divulge sensitive raw data, but that enable other 

### stakeholders to review and comment on the aggregated dataset. Alternatively, stakeholders may submit confidential data to DOE, indicating in writing which data should remain confidential. In order to prevent public disclosure of the data due to actions taken by a third party, stakeholders providing confidential information to DOE must submit that data according to 10 CFR 1004.11. This information will provide input to the manufacturer impact analysis and other economic analyses.

Item 5-7 Are there proprietary designs or technologies of which DOE should be aware for either of the products under consideration in this rulemaking? If so, how should DOE acquire the cost data necessary for evaluating these designs?


### 5.6 Outside Regulatory Changes Affecting the Engineering Analysis In conducting an engineering analysis, DOE takes into consideration the effects of regulatory changes outside DOE's statutory energy conservation standards rulemaking process that can impact the manufacturers of the covered equipment. Some of these changes can also affect the energy efficiency or energy consumption of the products covered under this rulemaking. For example, the EPA has mandated the phase-out of chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs), in all new equipment for sale in the U.S. by 2010. Hence,all manufacturers selling room air conditioners in the U.S. market must transition to non-ozonedepleting refrigerants. Currently, the most common refrigerant in the North American residential HVAC industry is R22, which is one of the refrigerants which cannot be used in new equipment after 2010. In previous rulemakings concerning other air-conditioning products , DOE noted that the replacement refrigerant of choice for the North American residential HVAC market is generally R-410A. This refrigerant operates at higher pressures than R22, and as a result, it requires stronger sealed systems. Room air conditioner manufacturers have also reported a much smaller product range of low-capacity , R-41OA-capable rotary compressors on the market. Based on research at NIST26 and manufacturer interviews, DOE expects the refrigerant transitionto result in a net system efficiency decrease of at least 5 to 7 percent. Since the 2010 R22 phaseout deadline is well before any new room air conditioner standards are likely to become 

### effective, the impact of the refrigerant phase-out will have to be accounted for in the engineering analysis. In other words, the baseline models developed for the engineering analysis will explicitly incorporate the refrigerant most likely to replace R22 for room air conditioners. DOE will attempt to identify this and all other cumulative engineering issues that could impact the engineering analysis. The consideration of these issues is closely related to the cumulative regulatory burden assessment that DOE will carry out as part of the manufacturer impact

26 Calm, J., and Domanski, P., R22 Replacement Status, AMERICAN SOCIETY OF HEATING, REFRIGERATING AND AIRCONDITIONING ENGINEERS (ASHRAE) JOURNAL, August 2004, 46(8):29-39.



### 28

### analysis. Based on consideration of the comments received on the engineering analysis

documented in the ANOPR, DOE will make the necessary changes to the analysis

. It will reflect those changes in the documentation of the NOPR.

Item 5-8 Are there additional outside regulatory issues that DOE should consider in its analysis of residential clothes dryers and room air conditioners?



### 6. ENERGY USE DETERMINATION The purpose of the energy use determination is to establish the annual energy consumption of the appliance and assess the energy-savings potential of different product efficiencies. DOE uses the annual energy consumption and energy

- savings potential in the LCC and PBP analysis to 

### establish the consumer operating savings of product efficiency levels. For residential clothes dryers and room air conditioners , DOE will use data from the Energy Information Administration (EIA)'s Residential Energy Consumption Survey27 (RECS) as a basis for estimating the annual energy consumption, as follows. From RECS, DOE will develop household samples for each product

. Because there is enough detail in RECS to specify or determine the usage of each product (i.e., use cycles for clothes dryers and compressor operational hours for room air conditioners ), DOE can determine the product ' s annual energy consumption

. Details on how DOE will use RECS to determine the annual energy consumption of residential clothes dryers and room air conditioners are provided below. DOE plans to use the household samples not only to establish each product ' s annual energy consumption but also as the basis for conducting the LCC and PBP analysis (see section 8). For clothes dryers , DOE will determine the annual energy consumption by multiplying the total per-cycle energy consumption by the number of use cycles in a year. It will determine the total clothes dryer per-cycle energy consumption by taking the bone-dry weight of the test load (either seven pounds for standard dryers or three pounds for compact dryers ) and dividing it by the EF. As noted in section 1.2.1, clothes dryers are currently rated assuming the initial RMC of the clothes load is 70 percent

. However, because today's clothes washers may yield clothes loads with lower RMCs, the actual EFs of clothes dryers may be greater than currently reported values. Further research needs to be conducted to conclusively determine the RMCs of clothes loads from today ' s clothes washers

. Depending on the outcome of this research , revisions to the clothes dryer test procedure may be required in order to ensure that rated EFs reflect actual. clothes dryer performance. 

### In determining the number of clothes dryer use cycles, DOE has reason to believe that the 416 cycles per year provided by the current DOE test procedure may no longer be representative of average residential dryer use patterns

. Rather, DOE will conduct its consumer economic analyses with usage data that is representative of today's consumer use patterns

. As discussed in

27 Available at: http ://www.eia

. doe.gov/emeu/recs/contents.html.



### 29section 1.2.1, data suggest that the number of annual average use cycles is closer to 329 cycles

per year. Therefore, DOE will use RECS to assist in establishing the appropriate number of dryer use cycles. Specifically, DOE will use RECS to develop a sample of households that use clothes dryers. Because RECS provides the frequency of clothes dryer use relative to how often the clothes washer is used, DOE intends to determine the dryer's use cycle for each household in the sample. Depending on the outcome from the analysis of the RECS data, revisions to the clothes dryer test procedure may be needed to reflect the actual clothes dryer usage. 

### Coupled with the total per-cycle energy consumption, DOE will use the dryer use cycles to calculate the product's annual energy use for each household in the RECS sample. For each household, DOE will use the total per-cycle energy consumption corresponding to the baseline and each efficiency level to calculate the annual energy consumption that corresponds to each level. The result will be a distribution of annual energy use values for the baseline and each efficiency level. DOE can then determine a weighted-average annual energy consumption value with its associated variability for the baseline and each efficiency level.

For room air conditioners , DOE will determine the annual energy consumption by multiplying the electrical power input (as measured according to the DOE test procedure) by the compressor operational hours in a year. Specifically, DOE will determine the room air conditioner electrical power input by dividing the measured cooling capacity (in Btu/h) by the EER (in Btu/h per watt). DOE plans on using the cooling capacities and EERs developed in the engineering analysis to determine the measured electrical power input for each product class's baseline and efficiency levels. To determine the room air conditioner compressor operational hours, DOE does not plan to use the average annual use of 750 hours provided by the DOE test procedure. As discussed previously in section 1.2.1, the average annual compressor operational hours are likely closer to 500 hours. As with clothes dryers, DOE plans to use RECS to establish the appropriate number of room air conditioner operational hours. Specifically, DOE will use RECS to develop a sample of households that use room air conditioners. For each household with a room air conditioner, RECS provides the room air conditioner's estimated annual energy consumption and the unit's age. Based on the age of the product, DOE will determine its capacity and EER by using historical shipment-weighted efficiency (SWEF) data from AHAM. After establishing the unit's annual energy use, EER, and capacity, DOE can estimate the annual operational hours of each room air conditioner in the household sample. Once the compressor annual operating hours have been determined for each household, DOE will use the electrical power input corresponding to the baseline and each efficiency level to calculate the annual energy consumption that corresponds to each level. The result will be a distribution of annual energy use values for the baseline and each efficiency level. DOE will determine a weighted-average annual energy use value with its associated variability for the baseline and each efficiency level.



### 30Item 6-1 DOE seeks stakeholder input on the approaches presented for estimating the

typical annual energy consumption of residential clothes dryers and room air conditioners. Specifically, DOE is interested in stakeholder input on whether to use RECS as the primary source ofinformation for establishing annual energy use as part of an amended test procedure.



### 7. MARKUPS FOR EQUIPMENT PRICE DETERMINATION Because DOE needs retail (consumer) prices for the baseline efficiency level and all other efficiency levels under consideration for use in the LCC and PBP analysis and the national impact analysis, DOE uses manufacturer-to-consumer markups to convert the manufacturerselling price estimates from the engineering analysis to consumer prices. The manufacturer-toconsumer markups are in addition to the mark-ups on production costs that DOE uses to estimate manufacturer selling price in the engineering analysis. To validate these markups, DOE will collect data on existing prices in the market by either purchasing large data sets or downloading data from retailer Internet sites. However, before it can develop markup information, DOE must first identify distribution channels (i.e., how the product is distributed from the manufacturer to the consumer). AHAM's 2005 Fact Book (the latest available version) shows that over 93 percent of all appliances are distributed from the manufacturer directly to some type of retailer. Retailers identified in AHAM's 2005 Fact Book include home improvement stores (such as Lowe's or Home Depot), membership warehouse clubs/stores (such as Sam's Club or Costco), department stores (such as Sears or Kohl's), discount stores (such as Wal-Mart or Kmart), and appliance or consumer electronics stores. Because an overwhelming majority of appliances are sold through retail stores, DOE plans to analyze residential clothes dryer and room air conditioner product sales based on the assumption that these appliances are sold in a manufacturer-to-consumer distribution channel consisting of three parties: (1) the manufacturers producing the products; (2) retailers purchasing the products from manufacturers and selling them to consumers; and (3) the consumers that purchase the products. DOE plans to determine an average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed by publicly traded manufacturers engaged in appliance manufacturing whose combined product range includes clothes dryers and room air conditioners. DOE will determine an average retailer markup by analyzing both economic Census data from the U.S. Census Bureau as well as the annual SEC 10-K reports filed by publicly traded retailers. 

### In addition to developing the manufacturer and retailer markups, DOE will develop and include sales taxes to calculate appliance retail prices. The Sales Tax Clearinghouse 28 is an Internet source that DOE intends to use to calculate applicable sales taxes.

28 Sales Tax Clearinghouse, Inc., State sales tax rates along with combined average city and county rates. Available at: <http://thestc.com/STrates.stm>



### 31To the extent possible, DOE also will use collected retail price data to validate the overall

manufacturer-to-consumer markup. One source for retail price data is the NPD Group, Inc., which sells sales-weighted retail price data for clothes dryers and room air conditioners for specific years. As an alternative to purchasing retail price data, DOE may rely on retailers' Internet sites, although the representativeness of any given price data point is unknown. This analysis will generate retail prices for each possible efficiency level, assuming that each level represents a new minimum efficiency standard. DOE makes this assumption in order to capture the effect that higher manufacturer production volumes of more efficient products due to the standard have on retail price. Because DOE expects to develop a range of price estimates, it may describe new retail prices within a range of uncertainty. If the range of retail prices for each product is large enough, DOE will develop retail price probability distributions to use as inputs to the LCC and PBP analysis to determine the impact of the uncertainty on the economic feasibility of amended energy conservation standards.

Item 7-1 DOE welcomes suggestions and comments concerning its proposed approach for developing estimates of future retail prices.



### 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS The effects of increased energy conservation standards on a consumer of a product include a change in operating expense (usually decreased) and a change in purchase price (usually increased). DOE analyzes the net effect on consumers by calculating the LCC and PBP using the engineering performance data (as described in section 5), the energy consumption data (as described in section 6), and the equipment retail prices (as described in section 7). Inputs to the LCC and PBP calculation include the total installed cost to the consumer (purchase price plus installation cost) and operating cost (energy expenses and, if applicable, repair costs, and maintenance costs). Additional inputs to the LCC calculation include energy price forecasts, the lifetime of the appliance or other defined period of analysis, and discount rates. 

### 8.1 Approach for Conducting the LCC and PBP Analysis In the ANOPR stage of the residential clothes dryer and room air conditioner rulemaking, DOE will conduct the LCC and PBP analysis by modeling both the uncertainty and variability in the inputs using Monte Carlo simulation and probability distributions. The Monte Carlo approach provides a significant advantage over less sophisticated approaches (e.g., an approach using typical or average values to characterize inputs) by identifying the percent of consumers benefiting and being burdened by a prospective standard. DOE will develop LCC and PBP models that incorporate both Monte Carlo simulation and probability distributions by using Microsoft Excel spreadsheets combined with Crystal Ball (a commercially available add-in program). Each Monte Carlo simulation will consist of 10,000 LCC and PBP calculations. The models will perform each calculation using input values that are



### 32either sampled from probability distributions and household samples or characterized with single

point values

. The analysis results will be a distribution of 10,000 data points showing the range of LCC savings and PBPs for a given efficiency level relative to the baseline level. With the exception of repair and maintenance costs, DOE will use probability distributions to characterize the operating cost inputs to the LCC and PBP analysis , including product lifetimes and consumer discount rates. As described previously in section 6, DOE will use RECS to establish a sample of individual households for each product

. For each household in the sample, DOE will then establish the product ' s annual energy consumption

. DOE will also use the household samples as a basis to establish each household ' s energy price. Using a household sample developed for each product, DOE will perform the LCC and PBP calculations on each household to account for the variability in energy consumption and energy pricing associated with the household sample. Therefore , the household sample for each product becomes, in effect, a probability distribution for annual energy consumption and energy price. DOE will likely describe maintenance and repair costs with single point values. The methodology for developing maintenance and repair costs is described in more detail below. DOE expects to use point values to characterize most of the total installed cost inputs, including the manufacturer markup, the retailer markup , and the installation costs. If the manufacturer cost estimates developed in the engineering analysis are characterized with uncertainty or variability, DOE will use probability distributions to capture this uncertainty and variability ; otherwise, DOE will use single point values for this input as well

. DOE intends to characterize sales taxes with probability distributions to capture their regional variability. Another factor in identifying which consumers benefit from or are burdened by a prospective standard is the distribution of product efficiencies currently being sold in the marketplace, referred to as market

- share efficiency data. Assuming these data are available , DOE can characterize the current product mix with probability distributions. DOE will assign a specific appliance efficiency to each household in its household sample based on the efficiency ' s salesweight. Because DOE intends to perform the LCC and PBP calculations on a household-byhousehold basis, DOE expects to determine the LCC and PBP for a particular standard level based on the appliance efficiency in the given household. For example , if DOE assigns a household a product efficiency that is greater than or equal to the efficiency of the standard level under consideration , the, LCC and PBP calculation would reveal that the household is notimpacted by the standard level. By accounting for the households that already purchase moreefficient products , DOE would avoid overstating the potential benefits from increasing product efficiency

. To enable DOE to use this methodology, DOE expects to ask stakeholders presumably either AHAM or individual manufacturers

- to provide data on the current mix of product efficiencies , to account for those households already purchasing high efficiency products. For clothes dryers , DOE intends to conduct the LCC and PBP analysis for the six product classes: (1) vented electric standard; (2) vented gas standard; (3) vented electric compact 120v; (4) vented electric compact 240v; (5) vent-less electric compact 240v; and (6) vent-less combination washer/dryer. DOE will divide the RECS household sample with clothes dryers into two groups: (1) those with electric dryers and (2) those with gas dryers. Because RECS



### 33does not provide the data necessary to distinguish between standard and compact dryers, DOE

plans to use the same electric dryer household group to conduct the LCC and PBP analysis for the five electric dryer product classes. To identify the consumers that benefit from or are burdened by a prospective standard, DOE requests market-share efficiency data from the industry for the four vented clothes dryer product classes. Because vent-less clothes dryers are currently not rated for efficiency, DOE assumes market-share efficiency data are not available for these product classes, but if such information is available, DOE would request such information as well. Appendix Al, Tables Al-2 and Al-3, specifically identify the market-share efficiency data that DOE is seeking.

For room air conditioners , DOE intends to conduct the LCC and PBP analysis only for the three product class on which it plans to perform an engineering analysis-i.e., units with louvered sides and without reverse cycle and with capacities of less than 6,000 Btu/h, 8,000 to 13,999 Btu/h, and 20,000 Btu/h. Because RECS does not provide the data necessary to distinguish among the various room air conditioner product classes, DOE will use the entireRECS room air conditioner household sample as if all the households use the types of room airconditioning unit covered under the above three product classes. Thus, DOE will use the same household sample to conduct the LCC and PBP analysis for each of the above three product classes. To identify the consumers that benefit from or are burdened by a prospective standard, DOE requests market-share efficiency data from the industry for this room air conditioner product. Appendix A2, Table A2-3, specifically identifies the market-share efficiency data that DOE is seeking. During the post-ANOPR (NOPR stage) consumer analysis, DOE may evaluate additional parameters not included in the ANOPR analysis, based upon information provided by stakeholders or which otherwise becomes available to the agency. Based on the results of the LCC analysis, DOE will select CSLs for the ANOPR analysis. The range of CSLs typically will include the efficiency level with the minimum LCC, the highest efficiency level that is technologically feasible, and other intermediate levels DOE has not yet determined. The following sections discuss the methodologies DOE plans to use to develop several of the inputs to the LCC and PBP analysis, including: (1) energy prices; (2) maintenance, repair, and installation costs; (3) product lifetimes; and (4) discount rates. The other inputs to the LCC and PBP analysis-namely, manufacturer costs (section 5), annual energy consumption (section 6 ), and markups for the determination of consumer retail prices (section 7)-have been discussed previously. For the NOPR, DOE will carefully review all of the comments it receives on the ANOPR LCC analysis, make any necessary revisions to the analysis, and evaluate additional parameters not included in the ANOPR analysis, if necessary.

Item 8-1 DOE seeks stakeholder input on the planned approach of using Monte Carlo simulation and probability distributions to conduct the LCC and PBP analysis.



### 34Item 8-2 DOE requests data from stakeholders to characterize the current mix of

residential clothes dryer and room air conditioner efficiencies in the market.

8.2 Energy Prices DOE plans on developing average energy prices from EIA data for each of 13 geographic areas - the nine U.S. Census divisions, with four large States (New York, Florida, Texas, and California) treated separately. For Census divisions containing one of these large States, DOE intends to calculate the regional average values, leaving out data for the large State-for example, the Pacific region average will not include California, and the West South Central region average will not include Texas. As just described in section 8.1, DOE plans to use RECS to develop a sample of individual households that use each of the appliances. Depending on the household's geographic location, DOE will assign the appropriate energy price from one of the 13 geographic areas. Therefore, DOE will be able to assess the variability of energy prices at the regional level for both residential clothes dryers and room air conditioners. 

### To calculate electricity prices for residential consumers in each of the above geographic areas, DOE intends to use information provided by electric utilities as summarized in the most recent EIA Form 861 data.29 These data are published annually and include annual electricity sales in kWh, revenues from electricity sales, and number of consumers , for the residential , commercial, and industrial sectors, for every utility serving final consumers

. The calculation of an average residential electricity price will proceed in two steps : ( 1) for each utility, estimate an average residential price by dividing the residential revenues by residential sales; and (2) calculate a regional average price , weighting each utility with customers in a region by the number of residential consumers served in that region. To calculate natural gas prices for residential consumers in each of the above geographic areas, DOE intends to use data from the EIA publication Natural Gas Monthly.30 This publication includes a compilation of monthly natural gas delivery volumes and average consumer prices by State, for residential , commercial , and industrial customers

. DOE plans on using the complete annual data for the most recent year available to calculate an average summer and winter price for each area. DOE plans to calculate seasonal prices because, for some end uses , seasonal variation in energy consumption is significant

. DOE will define " summer" as the months May through September, and "winter" as all other months. The calculation of natural gas average prices will proceed in two steps : ( 1) calculate the summer and winter prices for each State using a simple average over the appropriate months; and (2) calculate a regional price, weighting each State in a region by its population

. This method differs from the method used to calculate electricity prices because EIA does not provide consumer

- or utility

-level data on gas consumption and prices. DOE will use projections of national average energy prices to residential consumers to estimate future energy prices in its LCC analysis

. DOE will use the most recent available edition of

29 Available at: http://www.eia.doe.gov/cneaf/electricit /page/eia861.html. 30 Available at: http://www.eia.doe.gov/oil gas/natural gas/data publications/natural gas monthly/1igm.htm.



### 35EIA's Annual Energy Outlook (AEO) as the default source of projections for future energy

prices.

Item 8-3 DOE seeks stakeholder input on the planned approach for estimating current and forecasted energy prices.

8.3 Maintenance , Repair, and Installation Costs 

### DOE will consider any expected changes to maintenance, repair, and installation costs for the residential clothes dryers and room air conditioners covered in this rulemaking. Typically, small incremental changes in product efficiency incur little or no changes in repair and maintenance costs over baseline products. There is a greater probability that equipment with efficiencies that are significantly higher than the baseline will incur increased repair and maintenance costs, since such equipment is more likely to incorporate technologies that are not widely available. DOE will rely on input from manufacturers and other stakeholders in developing appropriate repair and maintenance cost estimates, as necessary. With regard to installation costs, unless the efficiency increases considered for this rulemaking result in significantly larger or heavier products, DOE expects that more-efficient clothes dryers and room air conditioners will not incur increased installation costs.

Item 8-4 DOE seeks stakeholder input on whether it is correct to assume that changes in maintenance, repair, and installation costs will be negligible for more-efficient residential clothes dryers and room air conditioners.

8.4 Product Lifetimes DOE's previous priority-setting analyses have established the product lifetimes of residential clothes dryers and room air conditioners. For clothes dryers , DOE's priority-setting activities for fiscal year 2003 estimated an average product lifetime of 13 years based on information from Appliance Magazine. For room air conditioners , DOE's priority-setting activities for fiscal year 2005 estimated an average product lifetime of 12.5 years based on information from DOE's 1997 room air conditioner TSD.
DOE will use information from various literature sources (e.g., Appliance Magazine, handbooks published by ASHRAE) as well as input from manufacturers and other stakeholders to establish whether the above product lifetimes are still representative.

Item 8-5 DOE seeks stakeholder input on appropriate product lifetimes for the residential clothes dryer and room air conditioner products covered in this rulemaking.



### 368.5 Discount Rates

The calculation of consumer LCC requires the use of an appropriate discount rate. DOE uses the discount rate to determine the present value of lifetime operating expenses

. The discount rate used in the LCC analysis represents the rate from an individual consumer's perspective.31 For consumers of residential clothes dryers and room air conditioners , DOE plans to use the same approach that it relied on to develop discount rates for residential furnaces and boilers-i.e., deriving the discount rates from estimates of the interest or "finance cost" to purchase residential products

. Following financial theory, the finance cost of raising funds to purchase these products can be interpreted as: (1) the financial cost of any debt incurred to purchase products (principally interest charges on debt), or (2) the opportunity cost of any equity used to purchase products (principally interest earnings on household equity ). Household equity is represented by holdings in assets such as stocks and bonds , as well as the return on homeowner equity. Much of the data required to determine the cost of debt and equity comes from the Federal Reserve Board's triennial Survey ofConsumer Finances.32

Item 8-6 DOE seeks stakeholder input on the planned approach for estimating discount rates for residential consumers.
Based on consideration of the comments received on the LCC and PBP analysis documented for the ANOPR, DOE will make the necessary changes to the analysis. It will reflect those changes in the documentation of the NOPR.



### 9. SHIPMENTS ANALYSIS Shipments forecasts are required in order to calculate the national impacts of standards (NES and NPV) and to calculate the future cashflows of manufacturers. DOE plans to develop shipments forecasts based on an analysis of key market drivers for the particular products.

9.1 Base-Case Forecast To evaluate the various impacts of standards, DOE develops a base-case forecast against which to compare forecasts for higher efficiency levels. (Higher efficiency level forecasts are also referred to as standards-case forecasts.) DOE designs the base case to depict what would be anticipated to happen to energy consumption and costs over time if DOE does not adopt energy conservation standards. In determining the base case for each set of products, DOE plans to calibrate its forecasts against historical shipments. As a result, DOE will need to collect data on historical product shipments and the market shares of the different efficiency levels offered in each product class.

31 The consumer discount rate is in contrast to the discount rates used in the national impact analysis, which are intended to represent the rate of return of capital in the U.S. economy as well as the societal rate of return on private consumption. Refer to section 10.3 for additional information. 32 Available at: http://www.federal•eserve.gov/pubs/oss/oss2/scfindex.html.



### 37DOE proposes to determine annual shipments in the base case by primarily accounting for sales

to two market segments: (1) new construction and (2) replacements. DOE intends to determine shipments to new construction by accounting for new housing construction and historical rates of product ownership (saturation rates). DOE plans to rely on the latest available edition of EIA's AEO to forecast new residential construction. With regard to historical product saturation rates, both AHAM's 2005 Fact Book and EIA's RECS provide relevant data. DOE plans to use both sources to establish product saturation rates. DOE will also take into consideration other input provided by stakeholders. To determine replacement shipments, DOE will use the same product lifetimes and retirement functions that it generates for the LCC and PBP analysis. In addition, DOE will consider other market segments as appropriate, such as existing households that do not already own the appliance. For example, for room air conditioners, the market segment of existing households without the appliance is probably more relevant than the new construction market segment.

Item 9-1 DOE seeks data on representative saturation rates for residential clothes dryers and room air conditioners.
For clothes dryers, DOE intends to develop a base-case shipments forecast for the following six product classes: (1) vented electric standard; (2) vented gas standard; (3) vented electric compact 120v; (4) vented electric compact 240v; (5) vent-less electric compact 240v; and (6) vent-less combination washer/dryer. Therefore, for purposes of developing calibrated base-case forecasts, DOE is seeking historical product shipments data for each of the six product classes. The AHAM 2005 Fact Book and Appliance Magazine offer historical shipments but the data are not disaggregated by product class. DOE hopes to collect from the industry disaggregated shipments data dating back at least five years. Appendix Al, Table Al-1, identifies the specific years for which DOE seeks historical shipments data.
For room air conditioners , DOE plans to develop a single base-case shipments forecast covering all 16 product classes. Therefore , for purposes of developing a calibrated base-case forecast, DOE will only require and use the historical room air conditioner shipments data in the AHAM 2005 Fact Book and Appliance Magazine

. Once the single base-case forecast has been established, DOE plans to divide it into 16 individual forecasts corresponding to each of the 16 product classes

. To perform this disaggregation , DOE will collect market share data for each of the 16 product classes. To enable DOE to perform an accurate and representative disaggregation, the market share data would ideally cover the time period starting in the year 2000. Appendix A2, Table A2- 1, identifies the specific years for which DOE seeks historical market share data for the 16 product classes.

Item 9-2 For residential clothes dryers, DOE seeks historical shipments data broken down by product class. For room air conditioners, DOE seeks historical market share data showing the percentage of product shipments in each product class.



### 389.2 Standards Impacts on Product Shipments



### For each product, DOE will develop a set of shipment forecasts for the covered equipment for each set of efficiency levels analyzed. It will use these standards-case forecasts to evaluate the impacts of standards on product shipments. DOE will derive standards-case forecasts using the same data sets as it used for the base-case forecasts. However, because the standards-case forecasts take into account the increase in purchase price and the decrease in operating costs caused by standards, forecasted shipments typically deviate from the base case. Household income also factors into consumer purchase decisions. Therefore, the magnitude of the difference between the standards-case and base-case shipment forecasts depends on the estimated purchase price increase and the operating cost savings caused by the standard, relative to household income. Because the purchase price tends to have a larger impact than operating cost on appliance purchase decisions, standards-case forecasts typically show a drop in product shipments relative to the base case. DOE's past standards analyses have attempted to quantify the sensitivity of shipments to

.increased purchase prices and operating cost savings as well as to changes in household income. For example , DOE has conducted literature reviews and analyses of historical appliance price and efficiency data to develop sensitivities

. Although DOE will attempt to develop purchase price and operating cost sensitivities for residential clothes dryers and room air conditioners, because the data required to develop these sensitivities are limited and often difficult to obtain, DOE will also consider modeling standards

- case shipments forecasts with scenarios (i.e., specified impacts to product shipments ), if necessary. Market-pull programs , such as consumer rebate programs that encourage the purchase of moreefficient products and manufacturer tax credits that encourage the production of more-efficient products , also affect standards-case shipments forecasts

. To the extent that such programs exist, DOE considers their impact on the forecast of both base

- case and standards

- case shipments.
Item 9-3 As part of its preliminary manufacturer impact analysis, DOE will seek input from manufacturers on the potential impact of new energy conservation standards on product shipments. Other stakeholders are also welcome to provide input. DOE also requests input on any market pull programs that currently exist to promote the adoption of more-efficient residential clothes dryer and room air conditioner products.



### 10. NATIONAL IMPACT ANALYSIS Section 8 discusses methods for estimating the LCC savings and PBP for individual consumers. This section discusses DOE's assessment of the aggregate impacts of potential efficiency standards at the national level. Measures of impact that DOE will report include the future NES from candidate standards and the NPV of total consumer life-cycle costs.



### 3910.1 Inputs to NES and NPV Forecasts

Analyzing impacts of Federal energy conservation standards for residential clothes dryers and room air conditioners requires a comparison of projected U.S. energy consumption with, and without, new or amended energy conservation standards. The forecasts contain projections of annual appliance shipments (as discussed in section 9), the annual energy consumption of new appliances (as discussed in section 6), and the purchase price of new appliances (as discussed in section 7). A key component of DOE's estimates of NES and NPV is the energy efficiencies forecasted over time for the base case (without new standards) and each of the standards cases. The forecasted efficiencies represent the annual shipment-weighted energy efficiency of the products under consideration over the forecast period (i.e., from the assumed effective date of a new standard to 30 years after the standard becomes effective). Because key inputs to the calculation of the NES and NPV (annual energy consumption for the NES, and retail prices and annual operating costs for the NPV) are dependent on the estimated efficiencies, these efficiencies are very important to the analysis. DOE intends to rely on input from stakeholders , in particular AHAM and appliance manufacturers , to develop base-case historical shipment

-weighted average efficiencies for residential clothes dryers and room air conditioners

. For past home appliance standards rulemakings , AHAM was able to provide historical shipment

-weighted efficiency data. DOE hopes that AHAM and manufacturers will provide the similar historical shipment-weighted average efficiency data for as many of the clothes dryer and room air conditioner product classes as possible . [Note that, although the AHAM 2005 Fact Book does provide historical shipmentweighted efficiency data for room air conditioners , these data are not disaggregated by product class.] To forecast base-case efficiencies , DOE intends to extrapolate from the historical trends as necessary to supplement manufacturer data. To develop shipment-weighted efficiencies for the various standards cases, DOE expects to collect market-share efficiency data (i.e., data on the distribution of product shipments by efficiency) for the various product classes of each appliance. As discussed in section 8, these are the same market-share efficiency data that DOE is requesting for the LCC and PBP analysis so DOE can accurately quantify the percent of consumers that benefit from an increase in the minimum energy conservation standard. Realizing that this information may be difficult to collect, DOE hopes to obtain market-share efficiency data for at least the most predominant residential clothes dryer and room air conditioner product classes from a recent year (i.e., 2005 or 2006). Due to the fact that vent-less dryers are currently not rated for efficiency, DOE assumes that market-share efficiency data for these products are unavailable, but if such information is available, DOE would request such information as well. 

### The market-share efficiency data will allow DOE to estimate the efficiency impact that standards may have in the year they become effective. For example, DOE has assumed a "roll-up"

40scenario for past standards rulemakings.33 Under this scenario, DOE assumes: (1) product

efficiencies in the base case that do not meet the standard level under consideration would "roll up" to meet the new standard level; and (2) product efficiencies above the standard level under consideration would not be affected. Once DOE establishes the shipment-weighed efficiency for the assumed effective date of the standard, it will estimate future shipment-weighted efficiencies using the same rate of forecasted efficiency growth as in the base-case efficiency trend. For clothes dryers , Appendix Al identifies the efficiency data DOE is requesting from the industry. As identified in Table Al-1, DOE is seeking historical shipment-weighted efficiency data for the following four product classes: (1) electric standard; (2) gas standard; (3) electric compact 120v; and (4) electric compact 240v. For the market-share efficiency data that DOE seeks, the efficiency bins encompass the efficiency levels listed in Tables AI-2 and Al-3. In the cases where market-share efficiency data are not available, DOE will use efficiency distributions based on available models as a proxy.
For room air conditioners , Appendix A2 identifies the efficiency data DOE is requesting from the industry. As identified in Table A2-2, DOE is seeking historical shipment-weighted efficiency data for as many of the 16 product classes identified in section 3.2 as stakeholders can provide. For the market-share efficiency data that DOE seeks, the efficiency bins encompass the efficiency levels in Tables A2-3 through A2-6. In the cases where market-share efficiency data are not available, DOE will use efficiency distributions based on available models as a proxy.
Item 10-1 For both residential clothes dryer ' s and room air conditioners , DOE seeks historical shipment

- weighted efficiency data byproduct class. DOE also seeks historical market share data showing the percentage of product shipments by efficiency level for as many product classes as possible.
10.2 National Energy Savings DOE intends to calculate national energy consumption for each year beginning with the expected effective date of the standards. It will calculate national energy consumption by fuel type for the base case and each standard level analyzed. DOE plans to perform this calculation through the use of a spreadsheet model that effectively multiplies annual shipment forecasts by unit energy savings, accounting for the stock of appliances affected by standards. In response to comments by stakeholders who asked for a simple, transparent model, DOE has developed NES spreadsheet models for its standards rulemakings since 1996, to forecast energy savings and to demonstrate how the growth in efficiency can be accounted for over time.34 Although these models are specific to each product, DOE can apply their general structure is applicable to the entire residential clothes dryers and room air conditioner market. DOE expects

33 For example, the residential central air conditioner standards rulemaking considered a "roll-up" scenario when estimating the impact of standards. Refer to the Chapter 7 of the central air conditioner TSD for more details, which is available at: http://www.eere.energy.gov/buildings/appliance standards/residential/ac central 1000 r.html. 34 Several NES spreadsheet models from previous rulemakings, including the rulemaking for residential clothes washers, can be found on DOE's website at www.eere.energy.gov/buildings/appliance standards/.



### 41

### the NES spreadsheet model it develops for this rulemaking to provide a credible , stand-alone

forecast of NES and NPV for residential clothes dryers and room air conditioners.

Based on consideration of the comments DOE may receive on the ANOPR, DOE will make any necessary changes to the analysis

. It will reflect those changes in the documentation for the NOPR.

Item 10-2 DOE seeks input on its plan to develop NES spreadsheet models for estimating national impacts of amended energy conservation standards for residential clothes dryers and room air conditioners.

10.3 Net Present Value DOE calculates the national NPV of energy conservation standards in conjunction with the NES. It calculates annual energy expenditures from annual energy consumption by incorporating forecasted energy prices , using the shipment and average energy efficiency forecasts described in section 9

. DOE calculates annual equipment expenditures by multiplying the price per unit times the forecasted shipments

. The difference between a base-case and a standards

- case scenario gives the national energy bill savings and increased equipment expenditures in dollars. The difference each year between energy bill savings and increased equipment expenditures is the net savings (if positive) or net costs (if negative). DOE discounts these annual values to the present time and sums them to give a net present value

. According to U.S. Office of Management and Budget (OMB) requirements , DOE will conduct two NPV calculations , one using a real discount rate of three percent and another using a real discount rate of seven percent (OMB, Circular A-4: Regulatory Analysis. 2003 ). The discount rates for the determination of NPV are in contrast to the discount rates used in the LCC analysis (which are developed from a consumer's perspective). The seven percent real value is an estimate of the average before-tax rate of return to private capital in the U.S. economy

. The three percent real value represents the "societal rate of time preference ," which is the rate at which society discounts future consumption flows to their present value. Based on consideration of the comments received on the ANOPR , DOE will make any necessary changes to the analysis and the CSLs.



### 11. LIFE-CYCLE COST SUBGROUP ANALYSIS This section described how DOE analyzes consumer impact of any new standards by dividing consumers into subgroups and accounting for variations in key inputs to the LCC analysis. A consumer subgroup comprises a subset of the population that is likely, for one reason or another, to be affected disproportionately by new or revised energy conservation standards

. The purpose of a subgroup analysis is to determine the extent of this disproportional impact. DOE will work with stakeholders early in the rulemaking process to identify any subgroups for consideration. In the case of residential clothes dryers and room air conditioners , some possible subgroups DOE may consider are: (1) low-income households ; and (2) senior citizens

. However, DOE will not analyze the consumer subgroups until the NOPR stage of the analysis.



### 42In comparing potential impacts on the different consumer subgroups, DOE will evaluate

variations in regional energy prices, variations in energy use profiles, and variations in installation costs that might affect the NPV of an energy conservation standard to certain consumer subgroups. In evaluating variations in energy use, DOE will take into account the effects of climate, specifically, how the climate associated with the consumer's geographic location impacts the energy consumption of the appliance. In the context of this rulemaking, DOE expects that climate effects will only be relevant to room air conditioners. To the extent possible, DOE may obtain estimates of the variability in each input variable and consider this variability in its calculation of consumer impacts. It will discuss with stakeholders the variability in each input variable and likely sources of information.

Item 11-1 DOE requests input as to what, if any, consumer subgroups are appropriate in considering standards for residential clothes dryers and room air conditioners.



### 12. MANUFACTURER IMPACT ANALYSIS DOE announced changes to the manufacturer impact analysis format through a report issued to Congress on January 31, 2006 (as required by section 141 of the Energy Policy Act of 2005 (EPACT 2005)). This report, titled "Energy Conservation Standards Activities" (Standards Activities), is available on the DOE website at: 

### http://www.eere.energy. gov/buildings/appliance standards/2006 schedule setting.html. Previously, DOE did not report any manufacturer impact analysis results during the ANOPR phase; however, under this new format, DOE will collect, evaluate, and report preliminary information and data in the ANOPR. (See Standards Activities, p. 48.) Such preliminary information includes the anticipated conversion capital expenditures by efficiency level and the corresponding anticipated impacts on employment. DOE will solicit further information during the ANOPR engineering analysis manufacturer interviews. Preliminary manufacturer impact analysis data needs are contained in Appendix B. DOE intends the manufacturer impact analysis to provide an assessment of the potential impacts of energy conservation standards on manufacturers of residential clothes dryers and room air conditioners. DOE will perform a separate manufacturer impact analysis for each of these two types of products. In addition to financial impacts, a wide range of quantitative and qualitative effects may occur following adoption of a standard that may require changes to the manufacturing practices for these products. DOE will identify these effects through interviews with manufacturers, as well as other stakeholders and experts. For the NOPR, DOE intends to supplement the results of the preliminary MIA conducted as part of the ANOPR with more detailed analyses, described in sections 12.1 through 12.5. Specifically, DOE will carry out an industry-wide cash flow analysis using the Government Regulatory Impact Model (GRIM), identify and analyze subgroups of manufacturers whose



### 43

### business varies significantly from the industry as a whole, perform a competitive impacts

assessment, and review the cumulative regulatory burden for the industry. 12.1 Sources of Information for the Manufacturer Impact Analysis Many of the analyses described earlier provide important information that DOE uses as inputs for the manufacturer impact analysis. Such information includes financial parameters developed in the market assessment (section 3.1), manufacturing costs and prices from the engineering analysis (section 5.3), retail price forecasts (section 7), and shipments forecasts (section 9). DOE supplements this information with information gathered during manufacturer interviews. DOE will conduct detailed interviews with manufacturers to gain insight into the range of potential impacts of standards. The interview process plays a key role in the manufacturer impact analysis, since it provides an opportunity for directly-affected parties to express their views on important issues. During the interviews, DOE will solicit information on the possible impacts of standards on manufacturing costs, equipment prices, sales, direct employment, capital assets, and industry competitiveness. Both qualitative and quantitative information are valuable in terms of this analysis. DOE will schedule interviews well in advance to provide every opportunity for key individuals to be available to participate. In addition, DOE will provide manufacturers with the questionnaire before the interviews in order to facilitate the gathering of the appropriate information. Although a written response to its questionnaire is acceptable, DOE prefers an interactive interview process, because it helps clarify responses and provides the opportunity to identify additional issues. DOE will prepare different questionnaires for residential clothes dryer and room air conditioner manufacturers. DOE will ask interview participants to identify all confidential information provided in writing or orally, and DOE will determine whether the information submitted is entitled to confidential treatment. It will consider information gathered, as appropriate, in the energy conservation standards decision-making process. However, DOE will not make confidential information available in the public record. DOE also will ask participants to identify all information that they wish to have included in the public record but that they do not want to have associated with their interview (thereby identifying that particular manufacturer); DOE will incorporate this information into the public record, but will report it without attribution. DOE will collate the completed interview questionnaires and prepare a summary of the major issues and outcomes. This summary will become part of the TSD produced for this rulemaking. 12.2 Industry Cash Flow Analysis The industry cash flow analysis relies primarily on the GRIM. DOE uses the GRIM to analyze the financial impacts of new or more stringent energy conservation standards on the industries that produce the products covered by the standard. The GRIM analysis uses a number of inputs-annual expected revenues; manufacturer costs such as costs of goods sold; selling, general, and administrative costs; taxes; and capital expenditures (both ordinary capital expenditures and those related to standards)-to determine a series of annual cash flows beginning from the announcement of the new standard and

44continuing for several years after its implementation. DOE compares the results against basecase projections that involve no new standards. The financial impact of new standards is the difference between the two sets of discounted annual cash flows. Other performance metrics, such as return on invested capital, also are available from the GRIM. 

### DOE will gather the inputs needed for the GRIM from two primary sources: (1) the analyses conducted to this point; and (2) interviews with manufacturers and other stakeholders. Information gathered from previous analyses will include financial parameters, manufacturing costs, price forecasts, and shipments forecasts. Interviews with manufacturers and other stakeholders will be essential in supplementing this information. 12.3 Manufacturer Subgroup Analysis 

### It is possible that the use of average industry cost values may not adequately assess differential impacts among subgroups of manufacturers. DOE recognizes that smaller manufacturers, niche players, and manufacturers exhibiting a cost structure that differs significantly from the industry average may be impacted differently by the imposition of standards. Ideally, DOE would consider the impact on every firm individually. In highly concentrated industries, this may be possible. In industries having numerous participants, however, DOE uses the results of the market and technology assessment to group manufacturers into subgroups, as appropriate. 

### The detailed manufacturer subgroup impact analysis will entail calculating cash flows separately for each defined class of manufacturer.

Item 12-1 If appropriate, what are potential manufacturer subgroups for residential clothes dryers and room air conditioners that DOE should consider in a manufacturer subgroup analysis?
12.4 Competitive Impacts Assessment EPCA directs DOE to consider any lessening of competition that is likely to result from an imposition of standards. (42 U.S.C. 6295(o)(2)(B)(i)(V) and 6316(a)) It further directs the Attorney General to determine in writing the impacts, if any, of any lessening of competition. (42 U.S.C. 6295(o)(2)(B)(ii) and 6316(a)) DOE will make a determined effort to gather and report firm-specific financial information and impacts, and it will then report the aggregated impact of the standard on manufacturers. The competitive impacts analysis will focus on assessing the impacts to smaller, yet significant, manufacturers. DOE will base the assessment on manufacturing cost data and on information collected from interviews with manufacturers. The manufacturer interviews will focus on gathering information that will help in assessing asymmetrical cost increases to some manufacturers, increased proportion of fixed costs potentially increasing business risks, and potential barriers to market entry (e.g., proprietary technologies). DOE will provide the Attorney General with a copy of the NOPR for consideration in his/her evaluation of the impact of standards on the lessening of competition.



### 4512.5 Cumulative Regulatory Burden

DOE is aware that other regulations may apply to equipment covered under this rulemaking, as well as to other equipment produced by the same manufacturers of equipment covered under this rulemaking. Multiple regulations may result in a significant, cumulative regulatory burden on these manufacturers. Accordingly, DOE will analyze and seek to mitigate the overlapping effects of amended DOE standards and other regulatory actions on manufacturers of residential clothes dryers and room air conditioners. DOE is aware that home appliance manufacturers and trade groups have issued public comments concerning the excessive regulation of the home appliance industry in comparison to others. It will take these issues into consideration during the manufacturer impact analysis. Regulations that could affect the industries impacted by this rulemaking include: • DOE standards for residential clothes dryers and room air conditioners enacted since 1990; • Anti-circumvention rulemaking - DOE recognizes that manufacturers may misapply a test procedure or violate the intent of a test procedure while claiming to adhere to a literal reading of it. If such violations occur on a wide scale, the benefits of an energy conservation standard could be significantly reduced. In response, DOE plans to conduct anti-circumvention rulemaking; 35 • Replacement of ozone-depleting refrigerants currently used in room air conditioners - EPA has mandated that as of January 1, 2010, no new appliances may be manufactured or imported which utilize certain HCFCs, including R22, a refrigerant commonly used in room air conditioners. (42 U.S.C. 7671a, 7671d, and 7671e.; 58 FR 65018 (Dec. 10, 1993)); • DOE standards for residential clothes washers that took effect on January 1, 2004 (66 FR 3314 (Jan. 12, 2001)); and • Reduction of Hazardous Substances (RoHS) directive - The Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment was adopted in February 2003 by the European Union (EU) and became effective July 1, 2006.36 RoHS identifies specific categories of products that can contain no more than threshold amounts of mercury, lead, cadmium, hexavalent chromium, and two fire retardants. While this legislation does not extend to the U.S., domestic manufacturers selling to the EU market must produce RoHS-compliant appliances. These manufacturers may choose to promulgate the associated design changes across their entire product line.

Item 12-2 What other regulations or pending regulations should DOE consider in its examination of cumulative regulatory burden?

35 "Energy Conservation Standards Activities", U.S. Department of Energy, Submitted Pursuant to Section 141 of the Energy Policy Act of 2005 and to the Conference Report (109-275) to the FY 2006 Energy and Water Development Appropriations Act, January 2006. A copy of this report is available online at: http://www.eere.energy.gov/buildings/appliance - standards/pdfs/congressional report 013 106.pdf 36 Available at: http://ec.europa.eu/environment/waste/weee/index en.htm.



### 46

### 13. UTILITY IMPACT ANALYSIS

To estimate the effects of energy conservation standards for residential clothes dryers and room air conditioners on electric and gas utility industries, DOE plans to use a variant of the ETA's National Energy Modeling System (NEMS), called NEMS-BT (BT refers to DOE's Building Technologies Program).37 NEMS is a large, multi-sectoral, partial-equilibrium model of the U.S. energy sector that EIA has developed over several years, primarily for the purpose of preparing the AEO. NEMS produces a widely-recognized reference case forecast for the United States through 2030 and is available in the public domain. The utility impact analysis is a comparison between the NEMS-BT model results for the base case and standards cases. Outputs of the utility impact analysis usually parallel results that appear in the latest AEO, with some additions. Typical outputs of the utility impact analysis include forecasts of electricity and gas sales, price, and avoided capacity. DOE plans to conduct the utility impact analysis as a scenario departing from the latest AEO reference case. In other words, DOE will model the energy savings impacts from amended energy conservation standards using NEMS-BT to generate forecasts that deviate from the AEO reference case.38
Item 13-1 DOE seeks input from stakeholders on its plans to use NEMS-BT to conduct the utility impact analysis.

Item 13-2 Should DOE consider using methods or tools other than NEMS in the utility impact analysis? If so, please discuss identified alternatives.



### 14. EMPLOYMENT IMPACT ANALYSIS The Process Rule includes employment impacts among the factors for DOE to consider in selecting a proposed efficiency standard, and it also provides guidance for consideration of the impact of CSLs on both direct and indirect employment. The Process Rule states a general presumption against any CSL that would directly cause plant closures or significant loss of domestic employment, unless specifically identified expected benefits of the standard would outweigh such adverse effects. (See the Process Rule, 10 CFR Part 430, Subpart C, Appendix A, sections 4(d)(7)(ii) and (vi), and 5(e)(3)(i)(B).)

37 For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000, DOE/EIA-0581(March 2000). EIA approves use of the name NEMS to describe only an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications and the model is run under various policy scenarios that are variations on EIA assumptions, DOE refers to the model by the name NEMS-BT ("BT" refers to DOE's Building Technologies Program, under whose aegis this work has been performed). 38 Several NEMS-BT models from previous rulemakings, including residential clothes washers, can be found on DOE's website at www.eere.energgov/buildings/appliance standards/.



### 47DOE estimates the impacts of standards on employment for equipment manufacturers, relevant

service industries, energy suppliers, and the economy in general. Its analysis covers both direct and indirect employment impacts. Direct employment impacts would result if standards led to a change in the number of employees at manufacturing plants and related supply and service firms. Direct impact estimates are covered in the manufacturer impact analysis. Indirect employment impacts are impacts on the national economy other than in the manufacturing sector being regulated. Indirect impacts may result both from expenditures shifting among goods (the substitution effect) and changes in income that lead to a change in overall expenditure levels (the income effect). DOE defines indirect employment impacts from standards as net jobs eliminated or created in the general economy as a result of increased spending driven by the increased equipment prices and reduced spending on energy. DOE will investigate the combined direct and indirect employment impacts in the employment impact analysis using the Pacific Northwest National Laboratory (PNNL)'s "Impact of Sector Energy Technologies" (ImSET) model. PNNL developed ImSET for DOE's Office of Planning,Budget, and Analysis. The model estimates the employment and income effects of energysaving technologies in buildings, industry, and transportation. In comparison with simple economic multiplier approaches, ImSET allows for more complete and automated analysis of the economic impacts of energy efficiency investments. Although DOE intends to use ImSET for its analysis of employment impacts, it welcomes input on other tools and factors it might consider.
Item 14-1 DOE welcomes feedback on its planned approach for assessing national employment impacts, both direct and indirect.



### 15. ENVIRONMENTAL ASSESSMENT The intent of the environmental assessment is to provide emissions results estimates and to fulfill requirements to properly quantify and consider the environmental effects of all new Federal rules. The primary environmental effects of energy conservation standards for residential clothes dryers and room air conditioners are likely to be reduced emissions resulting from reduced electrical energy consumption. The environmental impact analysis will focus on the impact of possible standards on the significant pollutants and emissions of electricity-generating power plants. Specifically, the environmental assessment for this rulemaking will consider three types of energy-related emissions - oxides of nitrogen (NOX), sulfur dioxide (SO2), and mercury (Hg); it will also consider one emission carbon dioxide (CO2). DOE intends to base these calculations on the NEMS-BT modeling work proposed for the utility impact analysis. This approach has the advantage of examining the marginal impact of standards for residential clothes dryers and room air conditioners on the utility generation mix and the subsequent environmental emissions.


### The NEMS-BT model tracks CO2 emissions with a specialized carbon emissions estimation subroutine , producing reasonably accurate results due to the broad coverage of all sectors and

48inclusion of interactive effects. Past experience with carbon results from NEMS suggests that

emissions estimates are somewhat lower than emissions based on simple average factors. One of the reasons for this divergence is that NEMS tends to predict that conservation displaces generating capacity in future years. On the whole, NEMS-BT provides carbon emissions results of reasonable accuracy, at a level consistent with other Federal published results. NEMS-BT also reports SO2, NOR, and mercury, which DOE has reported in past analyses. The Clean Air Act Amendments of 1990 set an SO2 emissions cap on all power generation. The attainment of this target, however, is flexible among generators through the use of emissions allowances and tradable permits. Although NEMS includes a module for SO2 allowance trading and delivers a forecast of SO2 allowance prices, accurate simulation of SO2 trading implies that the effect of efficiency standards on physical emissions will be zero because emissions will always be at or near. the ceiling. However, there is an SO2 benefit from energy conservation, in the form of a lower SO2 allowance price. But since the impact of any one standard on the allowance price is likely small and highly uncertain, DOE does not plan to monetize the SO2 benefit. NEMS-BT also has an algorithm for estimating NO, emissions from power generation. The impact of these emissions, however, will be affected by the Clean Air Interstate Rule (CAIR), which the EPA issued on May 12, 2005. CAIR will permanently cap emissions of NO,, in 28 eastern states and the District of Columbia. 70 FR 25162 (May 12, 2005). As with SO2 emissions, a cap on NOR emissions means that equipment efficiency standards may have little or no physical effect on these emissions. When NO,, emissions are subject to emissions caps, DOE's emissions reduction estimate corresponds to incremental changes in the prices of emissions allowances in cap-and-trade emissions markets rather than physical emissions reductions. Therefore, while the emissions cap may mean that physical emissions reductions will not result from standards, standards could produce an environmental-related economic benefit in the form of lower prices for emissions allowance credits. However, as with SO2 allowance prices, DOE does not plan to monetize this benefit because the impact on the NOR allowance price from any single energy conservation standard is likely small and highly uncertain. With regard to mercury emissions, NEMS-BT has an algorithm for estimating these emissions from power generation. However, the impact on mercury emissions will be affected by the Clean Air Mercury Rule (CAMR), which the EPA published on May 18, 2005. 70 FR 28606. CAMR will permanently cap emissions of mercury for new and existing coal-fired plants in all States. As with SO2 and NOX emissions, a cap on mercury emissions means that appliance efficiency standards may have no physical effect on these emissions. When mercury emissions are subject to emissions caps, DOE's emissions reduction estimate corresponds to incremental changes in the prices of emissions allowances in cap-and-trade emissions markets rather than physical emissions reductions. Therefore, while the emissions cap may mean that physical emissions reductions will not result from standards, standards could produce an economic benefit in the form of lower prices for emissions allowance credits. However, as with SO2 and NOR allowance prices, DOE does not plan to monetize this benefit because the impact on the mercury allowance price from any single energy conservation standard is likely small and highly uncertain.



### 49While NEMS-BT contains provisions for estimating emissions of CO2, NO,, and SO2 from

power generation, it does not estimate household emissions from gas appliances (e.g., gas clothes dryers). Therefore, for residential gas clothes dryers, DOE plans to conduct an analysis that includes separate estimates of the effect of energy conservation standards on household CO2, NO,,, and SO2 emissions, based on simple emissions factors derived from the literature. 

### Although they are likely to be small, DOE will report household NO,, and SO2 emissions savings because the NO,, and SO2 emissions caps do not apply to the residential sector.

Item 15-1 Are there any other environmental factors DOE should consider in this rulemaking?
Item 15-2 Are there other approaches to the environmental assessment that DOE should consider?



### 16. REGULATORY IMPACT ANALYSIS In the NOPR stage of this rulemaking, DOE will prepare a regulatory impact analysis, which addresses the potential for non-regulatory approaches to supplant or augment energy conservation standards to improve the efficiency of residential clothes dryers and room air conditioners on the market. DOE recognizes that voluntary or other non-regulatory efforts by manufacturers, utilities, and other interested parties can result in substantial efficiency improvements. DOE intends to analyze the likely effects of non-regulatory initiatives on product energy use, consumer utility, and LCCs. DOE will attempt to base its assessment on the actual impacts of any such initiatives to date, but also will consider information presented regarding the impacts that any existing initiative might have in the future. If DOE proposes energy conservation standards for residential clothes dryers and room air conditioners and the NOPR constitutes a significant regulatory action, DOE would prepare and submit to OMB for review the assessment of costs and benefits required under section 6(a)(3) of Executive Order 12866, "Regulatory Planning and Review," 58 FR 51735 (October 4, 1993).



### 50

### APPENDIX A - DRAFT ENGINEERING ANALYSIS DATA REQUEST SHEETS

DOE seeks average incremental production cost to take basic models in the categories shown from the current DOE minimum efficiency level (or proposed baseline level) to the specified efficiency level. For those product classes where more than one basic model may exist, please indicate the minimum and maximum incremental costs that would be incurred across the array of basic models. The data sheets are divided by product and contain tables requesting shipment and manufacturer cost data. Shipments 

### For residential clothes dryers and room air conditioners, the AHAM 2005 Fact Book offers historical shipments data (for both products) and efficiency data (for room air conditioners only), but the information is not disaggregated by product class. As shown in the "shipment request" tables below, DOE hopes to collect both shipments data and shipment-weighted average efficiency data dating back to 1993. In addition, DOE hopes to collect market share efficiency (i.e., data on the distribution of product shipments by efficiency) for each of the product classes. Manufacturer Costs 

### Incremental cost data (in U.S. dollars) include the materials, labor, and overhead needed to take basic models from the current minimum DOE baseline efficiency standard to each higher efficiency level. The depreciation of the conversion capital expenditures is an important component of the overhead for DOE to understand. Therefore, DOE is requesting information about conversion capital expenditures by efficiency level.

51

### APPENDIX Al - ENGINEERING ANALYSIS DATA REQUEST SHEETS FOR RESIDENTIAL CLOTHES DRYERS

52Table Al-1 Residential Clothes Dryer Shipment and Shipment-Weighted Average

Efficiency Data

° il' enc Shipment

-Weighted Average EfTci

1993 1994 1995 996 997 1998 1999 2000 2001 2002 2003 2004 2006 om act; Vent-less Electric
I Combo I Standard Vented Electric Compact 120v Compact

240v

Table Al

- 2 Residential Clothes Dryer Market Share Efficiency Data: Vented Electric Standard and Compact 120v

Vented Electric Standard Efficiency Bins Market Share for 2005 or 2006* (EE)
I I' (Percent)

* Total market share percentages should equal 100%. Vented Electric Compact 120v Efficiency Bins Market Share for 2005 or 2006* (EF) (Percent)

Table Al

-3 Residential Clothes Dryer Market Share Efficiency Data: Vented Electric Compact 240v and Gas

Vented Electric Compact 240v

2.90-2.96 2.97-3.06 3.07-3.17 > 3.17 * Total market share percentages should equal 100%. Vented Gas Efficiency Bins ( Market Share for 2005, or 2006* (EF) (Percent) WON

WE



### 53Table A1-4 Residential Clothes Dryer Manufacturer Cost Data: Vented Electric Standard and Electric Compact 120V T,,, ^1 yc ^, 8 3 ,0 A , 

# , \ fV aaFl Rn^¢ C^e ie o c 1(` Efficiency Level 1 2 3 1 2 3 EF (lb/KWh) 3.10 3.16 3.39 3.23 ++ 3.79 Design Options+
.'.^l Material Labor Overhead#

Material Labor Overhead#

.L. ^`•.7 `^5 l Material Labor Overhead# ` ^ i;, ;s Building CAPX Tooling/ Equipment CAPX

R&D Marketing +Manufacturer respondents should suggest the design option or design option combinations that they believe should be associated with each efficiency level. ++ DOE was unable to obtain data for any clothes dryers with efficiencies between the efficiency level of EF = 3.23 and the max available level of EF = 3.79. Therefore, manufacturer respondents should suggest a representative intermediate efficiency level. # Depreciation on the conversion capital expenditure should NOT be included in the incremental overhead. * Incremental costs per unit should be reported relative to the baseline unit's cost. The baseline unit complies with the current Federal standard for residential clothes dryers.



### 54Table A1-5 Residential Clothes Dryer Manufacturer Cost Data: Vented Elec

Efficiency Level 1 2 3 1 2 3 EF (lb/KWh) 2.98 3

. 07 3.23 2

. 75 2.77 3.02 Design Options+
?: "7f ft^, ld^'lBS_il^t Material Labor Overhead#

: _.-T' , . ,^{7 it illl7fll^i.`llli lrl ^.^^: Material Labor Overhead#

Material Labor Overhead# 5, 7 Building CAPX Tooling/ Equipment CAPX

,; H Yti3 -"' N. r2^:Yl•?^i. 1 1 ! ,{-1 ^1 ! I^^3 / 1^ti«` 1Y^_1t111^ ^i) 2 R&D Marketing +Manufacturer respondents should suggest the design option or design option combinations that they believe should be associated with each efficiency level. # Depreciation on the conversion capital expenditure should NOT be included in the incremental overhead. * Incremental costs per unit should be reported relative to the baseline unit's cost. The baseline unit complies with the current federal standard for residential clothes dryers.

Other Information: I. What depreciation method would your company use to depreciate the conversion capital expenditures?
Direct material - Costs of raw materials including scrap that can be traced to final or end products. Direct material costs do not include indirect material costs which are attributed to supplies that may be used in the production process but are not assigned to final products (e.g., lubricating oil for production machinery). Direct labor - The earnings of workers who assemble parts into a finished good for operate machines in the production process. Direct labor includes the fringe benefits of direct laborers such as group health care, as well as overtime pay. Direct labor does not include indirect labor which is defined as the earnings of employees who do not work directly in assembling a product, such as supervisors, janitors, stockroom personnel, inspectors, and forklift operators. Overhead - Factory overhead excluding depreciation. Factory overhead includes indirect labor, downtime, set-tip costs, indirect material, expendable tools, maintenance, property taxes, insurance on assets, and utility costs. Factory overhead does not include selling, general, and administrative costs (SG&A); research and development (R&D); interest; or profit (accounted for by DOE separately). Full Production Cost = Direct Material + Direct Labor + Overhead (factory) + Depreciation Full Cost of Product = Full Production Cost + Non-production Costs (SG&A, R&D, interest, and profit)



### 55

### APPENDIX A2 - ENGINEERING ANALYSIS DATA REQUEST SHEETS FOR ROOM AIR CONDITIONERS

56Table A2-1 Room Air Conditioner Market Share Product Class Data (percent)*

Year 2000 2001 2002 2003 2004 2005 2006 Without Reverse Cycle (RC) and

With Louvered Sides (LS) M 6-8k 8 -14k 14-20k >20k Without Reverse Cycle (RC) and Without Louvered Sides (LS)' ik 6-8k 8-14k 14-20k >20k

* Total market share percentages for each year should equal 100%. Table A2-2 Room Air Conditioner Shipment

-Weighted Efficiency Data (EER) Without Reverse Cycle (RC) and Without Louvered Sides (LS) >20k I <6k With RC and With LS With RC and

Without LS <20k I >20k 1<1dk

With RC and With LS >14k ( Only J Slider

With RC and Without LS <20k >20k <14k >14k Casement;° Only" I Slider

Table A2-3 Room Air Conditioner Market Share Efficiency Data: Without Reverse Cycle and With Louvered Sides Less than 6,000 Btu/h Efficiency Bins (EER) 9.7-10.0 10.1-10.5 10.6-11.0 > 11.0 percent) 6,000 to 7,999 Btu/h Efficiency Bins (EER) Market Share for

2005 or 2006* (percent) 9.7-10.0 10.1-10.5 10.6-11.0 > 11.0 * Total market share percentage should equal 100%.

<6

Without Reverse Cycle (RC) and With Louvered Sides (LS)

Market Share for 2005 or 2006* 8,000 to 13, 999 Btu/h Efficiency Bins (EER) 9.8-10.0 Market Share for

2005 or 2006* (percent)

10.1-10.5 10.6-11.0 > 11.0 14,000t o 19,999 Btu/h Efficiency Market Share for Bins 2005 or 2006* (EER) (percent) 9.7-10.0 10.1-10.5 10.6-11.0 > 11.0 20,000 Btu/h and more

8.5-8.9 9.0-9.4 9.5-9.9 > 9.9 Market Share for

2005 or 2006" (percent)



### 57Table A2-4 Room Air Conditioner Market Share Efficiency Data: Without Reverse Cycle and Without Louvered Sides Less than 6,000 Btu/h 6,000 to 7,999 Btu/h 8,000 to 13 ,999 Btu/h 14,000 to 19, 999 Btu/h 20,000Btu/h and more Efficiency Market Share for Efficiency Market Share for Efficiency Market Share for Efficiency Market Share for Efficiency Market Share for Bins 2005 or 2006 * Bins 2005 or 2006 * Bins 2005 or 2006* Bins 2005 or 2006* Bins 2005 or 2006* (EER) (percent) (EER) (percent) (EER) (percent) (EER) (percent) (EER) (percent) 9.0-9.4 9.0-9.4 8.5-8.9 8.5-8.9 8.5-8.9 9.5-9.9 9.5-9.9 9.0-9.4 9.0-9.4 9.0-9.4 10.0-10.4 10.0-10.4 9.5-9.9 9.5-9.9 9.5-9.9 > 10.4 > 10.4 Total market share percentage should equal 100%. > 9.9 > 9.9

Table A2-5 Room Air Conditioner Market Share Efficiency Data: With Reverse Cycle With Louvered Sides, With Louvered Sides, Less than 20,000 Btu/h 20,000 Btu/h and more Efficiency Market Share for Efficiency Market Share for Bins 2005 or 2006 Bins 2005 or 2006 (EER) (percent) (EER) (percent) 9.0-9.4 9.5-9.9 10.0-10.4 > 10.4 8.5-8.9 9.0-9.4 9.5-9.9 > 9.9 Total market share percentage should equal 100%. Without Louvered Sides, Less than 14,000 Btu/h Efficiency Market Share for Bins 2005 or 2006 (EER) (percent) 8.5-8.9 9.0-9.4 9.5-9.9 > 9.9

Table A2-6 Room Air Conditioner Market Share Efficiency Data: Casement Units

Efficiency Bins (EER) 8.7-9.0 9.1-9.5 9.6-10.0 > 10.0 2005 or 2006* (percent)

* Total market share percentage should equal 100%.

Casement-Only Market Share for Casement

- Slider Efficiency Market Share for Bins 2005 or 2006* (EER) (percent) 9.5-9.9 10.0-10.4 10.5-10.9 > 10.9 > 9.9

14,000 Btu/h and more Efficiency Bins (EER) 8.0-8.4 8.5-8.9 9.0-9.4 > 9.4 Market Share for

2005 or 2006 (percent)



### 58Table A2-7 Room Air Conditioner Manufacturer Cost Data

Efficiency Level I 1 1 2 1 3 1 4 1 1 1 2 1 3
EER 4 11.8 verage Incremental Costs ($ Per Unit)* Material Labor Overhead# Qinimum Incremental Costs ($ `Per Unit)* Material Labor Overhead# Maximum Incremental Costs ($ Per Unit)* Material Labor Overhead# Conversion Capital Expenditures ($ Millions) Building CAPX Tooling/ Equipment CAPX One-Time Product Conversion Expenses ($, Millions) R&D Marketing # Depreciation on the conversion capital expenditure should NOT be included in the incremental overhead. 12.0 9.0 9.4 9.8

* Incremental costs per unit should be reported relative to the baseline unit's cost. The baseline unit complies with the federal standard for room air conditioners and is equal to an EER of 9.7 Btu/h/W for a unit without reverse cycle and with louvered sides and with a capacity of less than 6,000 Btu/h, an EER of 9.8 Stu/h/W for a unit without reverse cycle and with louvered sides and with a capacity of 8,000 to 13,999 Btu/h, and an EER of 8.5 Btu/h/W for a unit without reverse cycle and with louvered sides and with a capacity of 20,000 Btu/h an more.
Other Information: 1. What depreciation method would your company use to depreciate the conversion capital expenditures?
Direct material - Costs of raw materials including scrap that can be traced to final or end products. Direct material costs do not include indirect material costs which are attributed to supplies that may be used in the production process but are not assigned to final products (e.g., lubricating oil for production machinery). Direct labor - The earnings of workers who assemble parts into a finished good for operate machines in the production process. Direct labor includes the fringe benefits of direct laborers such as group health care, as well as overtime pay. Direct labor does not include indirect labor which is defined as the earnings of employees who do not work directly in assembling a product, such as supervisors, janitors, stockroom personnel, inspectors, and forklift operators. Overhead - Factory overhead excluding depreciation. Factory overhead includes indirect labor, downtime, set-up costs, indirect material, expendable tools, maintenance, property taxes, insurance on assets, and utility costs. Factory overhead does not include selling, general, and administrative costs (SG&A); research and development (R&D); interest; or profit (accounted for by DOE separately). Full Production Cost = Direct Material + Direct Labor + Overhead (factory) + Depreciation Full Cost of Product = Full Production Cost + Non-production Costs (SG&A, R&D, interest, and profit)



### 59 10.2 10.7 1 11.2 11.6 1 10.3 I 10.8 1 11.3 10.2

### APPENDIX B - SAMPLE QUESTIONS FOR ENGINEERING ANALYSIS FOLLOW-UP AND PRELIMINARY MANUFACTURER IMPACT ANALYSIS INTERVIEWS

DESIGN FOR ENERGY IMPROVEMENT INFORMATION REQUEST DOE would like to confirm information on the incremental costs of increasing product efficiency by understanding the design,options involved in the efficiency improvement. Residential Clothes Dryers 1. Which design features impacting energy use are generally incorporated into a "baseline" clothes dryer in the following product classes:

a. Vented Electric Standard? b. Vented Electric Compact, 120V? c. Vented Electric Compact, 240V? d. Gas? e. Vent-less Electric Compact, 240V? f. Vent-less Electric Combination Washer/Dryer? 2. What design changes are associated with converting a baseline vented standard electric clothes dryer (3.01 EF) to the max-available level (3.39 EF)? Are these design changes comparable for vented electric compact and gas clothes dryers? What are the costs of the individual design options selected? Are the aggregated industry costs representative of your firm's costs? 3. What design changes are implemented to achieve higher efficiency levels for vent-less electric compact clothes dryers? Are these design changes comparable for vent-less electric combination washer/dryers? What are the costs of the individual design options selected? Are the aggregated industry costs representative of your firm's costs? 4. Do you believe that the gap-fill efficiency levels defined by DOE for vented electric standard, electric compact 120V, electric compact 240V, and gas clothes dryers are representative? If not, can you suggest appropriate gap-fill values? Can you suggest a second gap-fill efficiency level for vented electric compact 120V clothes dryers? Can you suggest baseline, gap-fill, and max-tech efficiency levels for vent-less electric clothes dryers? 

### 5. Are there fundamental differences between required design changes that make the cost increment much higher for some product classes than others?

606. Would you help DOE understand and estimate the conversion capital investments that would be necessary at each candidate standard level? What is the nature of the capital investments?

Room Air Conditioners 

### Which design features impacting energy use are generally incorporated into a "baseline" room air conditioner in the representative product classes (without reverse cycle, with louvered sides, less than 6,000 Btu/h, 8,000 to 13,999 Btu/h and 20,000 Btu/h or more)? 2. Which design changes are associated with converting a baseline representative room air conditioner with a capacity of 8,000 to 13,999 Btu/h (9.8 EER) to the max-available level (12.0 EER)? Are these design changes comparable for other product classes? Are there design changes that cannot be implemented at the lower and higher capacities (i.e., less than 6,000 Btu/h and 20,000 Btu/h and more)? What are the costs of the individual design options selected? Are the aggregated industry costs representative of your firm's costs? 3. Which design changes are implemented to achieve efficiency levels between the baseline and max-available for the representative product classes? What are the costs of the individual design options selected? Are the aggregated industry costs representative of your firm's costs? 

### 4. Are there fundamental differences between required design changes that make the cost increment much higher for some product classes than others? 5. Would you help DOE understand and estimate the conversion capital investments that would be necessary at each candidate standard level? What is the nature of the capital investments?

PRELIMINARY MANUFACTURER IMPACT ANALYSIS TOPICS
1 Issues 1.1 What are the key issues for your company regarding a possible future product rulemaking? 2 Shipment Projections 2.1 What is your company's approximate market share in each of the product classes? 

### 2.2 Would you expect your market share to change once standards become effective? Does your outlook change with higher efficiency levels? 2.3 How would you expect shipments to change for the industry as a whole as a function of standards and why? 2.4 Looking at price/cost effects only, how would you expect shipments to change for a 25%, 50%, 100%, or 200% manufacturer price/cost increase?



### 61

### 3 Conversion Costs

3.1 What level of capital expenditure and product conversion costs would you anticipate to make at higher standard levels? Please describe what they are and provide your best estimate of their respective magnitudes. 3.2 How would the imposition of new energy conservation standards affect capacity utilization and manufacturing assets at your domestic production facilities? Would a new standard result in stranded capital assets? Would any facilities be closed or downsized? Added or upgraded? 3.3 How might a new standard impact product innovation? 4 Product Mix and Profitability 4.1 How would your company's product mix and marketing strategy change with changes in the efficiency standard? 4.2 Would the current percentage of shipments at the ENERGY STAR level for room air conditioners or a "high efficiency" level for clothes dryers be the same under a new standard? 4.3 What distribution channels are used from the manufacturer to the retail outlet? What is the share of product going through each distribution channel? 

### 4.4 Generally how would new product standards impact your customer mix, distribution channels, and corresponding profit margins? 4.5 For room air conditioners, how might a new standard impact the ENERGY STAR program, and consequently your firm? 4.6 What is the approximate percentage of shipments (i.e., market share) for each product, or more specifically, for each product class? 5 Market Shares and Industry Consolidation 5.1 In the absence of new standards, do you expect any industry consolidation? 5.2 How would new standards affect your ability to compete? 

### 5.3 Could new standards disproportionately advance or harm the competitive positions of some firms? 5.4 Are there concerns over intellectual property? 5.5 Could new standards result in disproportionate economic or performance penalties for particular consumer/user subgroups? 5.6 Beyond price and energy efficiency, could new standards result in products that will be more or less desirable to consumers due to changes in product functionality, utility, or other features? 6 Cumulative Regulatory Burden 6.1 Are there recent or impending regulations on your specific product or other products that impose a cumulative burden on the industry? 

### 6.2 If so, what is the total expected impact of those other regulations?

62

### APPENDIX C - SUMMARY OF ITEMS FOR STAKEHOLDER COMMENT

Summary of all items for stakeholder comment contained in the Framework Document.
Item 1-1.... DOE requests input from stakeholders on the merits of revising its test procedures for residential clothes dryers. If DOE determines that clothes loads have lower RMCs than what is specified in the clothes dryer test procedure, should DOE revue its test procedure to account for lower-RMC clothes loads? Also should DOE revise the test procedure to account for fewer use cycles, add the capability to test vent-less clothes dryers, and measure the benefits of enhanced automatic termination systems? ...................................................................................................... 6

Item 1-2 DOE requests input from stakeholders on the merits of revising its test procedures for residential room air conditioners. Specifically, should DOE revise its test procedure for residential room air conditioners to incorporate by reference the most recent ANSI and ASHRAE test standards, account for fewer annual operating hours, and add the capability of measuring the impact of technologies that improve part-load performance? ......................................................... 7
Item 3-1 DOE requests information that would contribute to the market assessment for the residential clothes dryers and room air conditioners covered in this rulemaking (e.g., current product features and efficiencies, product-feature and efficiency trends, historical product shipments and prices) .................................................................................................................... 13
Item 3-2 For both residential clothes dryers and room air conditioners, DOE requests input from stakeholders on the proposed product classes and the criteria used for creating these product classes. Are there other considerations of which DOE should be aware beyond those identified above as a basis for developing product classes? If so, please explain (citing specific examples to the extent possible) ........................................................................................................................ 16


### Item 3-3 Specific to clothes dryers, DOE seeks input from stakeholders on its proposal to add vent-less clothes dryer product classes, including combination washer/dryers ............................ 16

Item 3-4 Specific to room air conditioners, DOE seeks input from stakeholders on its planned approach to analyze the three representative product classes of room air conditioners (i.e., without reverse cycle and with louvered sides with cooling capacities of less than 6,000 Btu/h, 8,000 to 13,999 Btu/h, and 20,000 Btu/h or more), and to subsequently numerically extend the analysis to the remaining product classes .....................................................................................16


### Item 3-5 Of the technologies listed above, are there any that DOE should not consider because of their impacts on safety, performance, or consumer utility of the product? ................. 18

Item 3-6 Are there other unlisted technologies that DOE should consider as design options and what, if any, impacts would the design options be expected to have on safety; performance, and consumer utility? .................................................................................................................... 18



### 63

### Item 5-1 DOE seeks input from stakeholders on whether the above energy efficiency levels

are appropriate for characterizing the performance of baseline units ........................................... 22
Item 5-2 Specifically for residential clothes dryers, DOE seeks input on appropriate baseline unit efficiencies for vent-less clothes dryers, assuming the DOE test procedure is revised so as to be capable of measuring the performance of these units .............................................................. 22 Item 5-3 DOE seeks information regarding the specific technological characteristics of the baseline model for each product class, including the technologies described in section 3.3........ 22

Item 5-4 DOE requests feedback on the use of a design-option approach to determine the relationship between manufacturer cost and energy efficiency for residential clothes dryers...... 25

Item 5-5 DOE requests feedback on the use of an efficiency-level approach to determine the relationship between manufacturer cost and energy efficiency for room air conditioners........... 25 Item 5-6 DOE seeks input from stakeholders concerning the efficiency levels it proposes to use for collecting incremental cost data from manufacturers of residential clothes dryers and room air conditioners

. DOE also seeks input from stakeholders on appropriate maximum technologically feasible efficiency levels ..................................................................................... 27

Item 5-7 Are there proprietary designs or technologies of which DOE should be aware for either of the products under consideration in this rulemaking? If so, how should DOE acquire the cost data necessary for evaluating these designs? ................................................................... 28


### Item 5-8 Are there additional outside regulatory issues that DOE should consider in its analysis of residential clothes dryers and room air conditioners? ................................................. 29

Item 6-1 DOE seeks stakeholder input on the approaches presented for estimating the typical annual energy consumption of residential clothes dryers and room air conditioners. Specifically, DOE is interested in stakeholder input on whether to use RECS as the primary source of information for establishing annual energy use as part of an amended test procedure ................. 31
Item 7-1 DOE welcomes suggestions and comments concerning its proposed approach for developing estimates of future retail prices ................................................................................... 32 Item 8-1 DOE seeks stakeholder input on the planned approach of using Monte Carlo simulation and probability distributions to conduct the LCC and PBP analysis .......................... 34 

### Item 8-2 DOE requests data from stakeholders to characterize the current mix of residential clothes dryer and room air conditioner efficiencies in the market ................................................ 35

Item 8-3 DOE seeks stakeholder input on the planned approach for estimating current and forecasted energy prices ................................................................................................................ 36



### 64

### Item 8-4 DOE seeks stakeholder input on whether it is correct to assume that changes in

maintenance , repair, and installation costs will be negligible for more-efficient residential clothes dryers and room air conditioners

................................................................................................... 36
Item 8-5 DOE seeks stakeholder input on appropriate product lifetimes for the residential clothes dryer and room air conditioner products covered in this rulemaking ............................... 36

Item 8-6 DOE seeks stakeholder input on the planned approach for estimating discount rates for residential consumers .............................................................................................................. 37

Item 9-1 DOE seeks data on representative saturation rates for residential clothes dryers and room air conditioners .................................................................................................................... 38

Item 9-2 For residential clothes dryers, DOE seeks historical shipments data broken down by product class. For room air conditioners, DOE seeks historical market share data showing the percentage of product shipments in each product class ................................................................ 38
Item 9 -3 As part of its preliminary manufacturer impact analysis, DOE will seek input from manufacturers on the potential impact of new energy conservation standards on product shipments. Other stakeholders are also welcome to provide input. DOE also requests input on any market-pull programs that currently exist to promote the adoption of more-efficient residential clothes dryer and room air conditioner products ......................................................... 39


### Item 10-1 For both residential clothes dryers and room air conditioners, DOE seeks historical shipment-weighted efficiency data by product class. DOE also seeks historical market share data showing the percentage of product shipments by efficiency level for as many product classes as possible ......................................................................................................................... 41

Item 10 -2 DOE seeks input on its plan to develop NES spreadsheet models for estimating national impacts of amended energy conservation standards for residential clothes dryers and room air conditioners .................................................................................................................... 42

Item 11-1 DOE requests input as to what, if any, consumer subgroups are appropriate in considering standards for residential clothes dryers and room air conditioners ........................... 43

Item 12-1 If appropriate, what are potential manufacturer subgroups for residential clothes dryers and room air conditioners that DOE should consider in a manufacturer subgroup analysis?

Item 12-2 What other regulations or pending regulations should DOE consider in its examination of cumulative regulatory burden? ............................................................................. 46
Item 13 -1 DOE seeks input from stakeholders on its plans to use NEMS-BT to conduct the utility impact analysis .................................................................................................................... 47



### 65

### Item 13-2 Should DOE consider using methods or tools other than NEMS in the utility

impact analysis? If so, please discuss identified alternatives ....................................................... 47
Item 14-1 DOE welcomes feedback on its planned approach for assessing national employment impacts, both direct and indirect .............................................................................. 48

Item 15-1 Are there any other environmental factors DOE should consider in this rulemaking? ...............................................................................................................................50

Item 15-2 Are there other approaches to the environmental assessment that DOE should consider? ...............................................................................................................................50



### 66