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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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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 EERE-2007-BT-STD-0010 COMMENT 02.2
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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 EERE-2007-BT-STD-0010 COMMENT 02.2
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

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 EERE-2007-BT-STD-0010 COMMENT 02.2
RoHS 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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 EERE-2007-BT-STD-0010 COMMENT 02.2
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/

 EERE-2007-BT-STD-0010 COMMENT 02.2
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.

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 EERE-2007-BT-STD-0010 COMMENT 02.2
rulemaking (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>

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 EERE-2007-BT-STD-0010 COMMENT 02.2
1.2 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).

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 EERE-2007-BT-STD-0010 COMMENT 02.2
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.

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 EERE-2007-BT-STD-0010 COMMENT 02.2
DOE 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>

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 EERE-2007-BT-STD-0010 COMMENT 02.2
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?

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

7

 EERE-2007-BT-STD-0010 COMMENT 02.2
promotes 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.

8

 EERE-2007-BT-STD-0010 COMMENT 02.2
At 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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.

11

 EERE-2007-BT-STD-0010 COMMENT 02.2
Approaches

• 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)

r • • Department of Justice Review'

• 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

13

 EERE-2007-BT-STD-0010 COMMENT 02.2
clothes 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).

14

 EERE-2007-BT-STD-0010 COMMENT 02.2
classes.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.

15

 EERE-2007-BT-STD-0010 COMMENT 02.2
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).

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/)

16

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 3-3 Clothes Dryer Technologies

Dryer Control or Drum Upgrades

1. Improved termination

2. Increased insulation

3. Modified operating conditions

4. Reverse tumble

5. Improved drum design

Methods of Exhaust Heat Recovery (vented models only)

6. Recycle exhaust heat

7. Inlet air preheat

8. Inlet air preheat, condensing mode

Heat Generation Options

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.

17

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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. Technologicalfeasibility. 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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 air

conditioners, as explained below. For residential clothes dryers, DOE intends to use a design22

 EERE-2007-BT-STD-0010 COMMENT 02.2
option 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. cg ca/equipment/english/clothes-dryers-search.efm?attr=4.

23

 EERE-2007-BT-STD-0010 COMMENT 02.2
efficiencies 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

24

 EERE-2007-BT-STD-0010 COMMENT 02.2
efficiency 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.

25

 EERE-2007-BT-STD-0010 COMMENT 02.2
DOE 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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 technologically feasible 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

27

 EERE-2007-BT-STD-0010 COMMENT 02.2
rulemaking 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 transition

to 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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.

29

 EERE-2007-BT-STD-0010 COMMENT 02.2
section 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.

30

 EERE-2007-BT-STD-0010 COMMENT 02.2
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 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 manufacturer

selling 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>

31

 EERE-2007-BT-STD-0010 COMMENT 02.2
To 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

32

 EERE-2007-BT-STD-0010 COMMENT 02.2
either 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 not

impacted 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

33

 EERE-2007-BT-STD-0010 COMMENT 02.2
does 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 entire

RECS 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.

34

 EERE-2007-BT-STD-0010 COMMENT 02.2
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.

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.

35

 EERE-2007-BT-STD-0010 COMMENT 02.2
EIA'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.

36

 EERE-2007-BT-STD-0010 COMMENT 02.2
8.5 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 of Consumer 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.

37

 EERE-2007-BT-STD-0010 COMMENT 02.2
DOE 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.

38

 EERE-2007-BT-STD-0010 COMMENT 02.2
9.2 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.

39

 EERE-2007-BT-STD-0010 COMMENT 02.2
10.1 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"

40

 EERE-2007-BT-STD-0010 COMMENT 02.2
scenario 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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.

42

 EERE-2007-BT-STD-0010 COMMENT 02.2
In 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

44

 EERE-2007-BT-STD-0010 COMMENT 02.2
continuing 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.

45

 EERE-2007-BT-STD-0010 COMMENT 02.2
12.5 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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/.

47

 EERE-2007-BT-STD-0010 COMMENT 02.2
DOE 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

48

 EERE-2007-BT-STD-0010 COMMENT 02.2
inclusion 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.

49

 EERE-2007-BT-STD-0010 COMMENT 02.2
While 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 environmentalfactors 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
APPENDIX Al - ENGINEERING ANALYSIS DATA REQUEST SHEETS FOR

RESIDENTIAL CLOTHES DRYERS

52

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table Al-1 Residential Clothes Dryer Shipment and Shipment-Weighted Average

Efficiency Data

Shipment-Weighted Average EfTci il' enc°

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

53

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 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.

54

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
APPENDIX A2 - ENGINEERING ANALYSIS DATA REQUEST SHEETS FOR

ROOM AIR CONDITIONERS

56

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 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)

57

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 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)

58

 EERE-2007-BT-STD-0010 COMMENT 02.2
Table 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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?

60

 EERE-2007-BT-STD-0010 COMMENT 02.2
6. 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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2
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

 EERE-2007-BT-STD-0010 COMMENT 02.2