Energy Conservation Standards Rulemaking Framework Document for

Residential Boilers

RIN: 1904

- AC88

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

Building Technologies Program

February 1 1 , 201 3i TABLE OF CONTENTS

1. INTRODUCTION

................................ ................................ ................................ ................... 1

1.1 History of Residential Boiler Standards and Authority

................................ ................ 2

1.2 Overview of the Rulemaking Process

................................ ................................ .......... 3

1.2.1 Rulemaking Process and Participation of Interested Parties

.............................. 3

1.2.2 Preliminary Analysis

................................ ................................ ........................ 5

1.2.3 Notice of Proposed Rulemaking

................................ ................................ ....... 7

1.2.4 Final Rule

................................ ................................ ................................ ........ 8

2. SCOPE OF COVERAGE

................................ ................................ ................................ ........ 8

2.1 Current Scope of Coverage

................................ ................................ ......................... 8

2.2 Preliminary Scope of Coverage

................................ ................................ ................... 9

3. TEST PROCEDURES

................................ ................................ ................................ .......... 11

4. OVERVIEW OF ANALY SIS FOR RULEMAKING

................................ ............................ 12

5. MARKET AND TECHNO LOGY ASSESSMENT

................................ ............................... 14

5.1 Market Assessment

................................ ................................ ................................ ... 14

5.1.1 Product Classes

................................ ................................ .............................. 15

5.2 Technology Assessment

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

5.2.1 Heat Exchanger Improvements

................................ ................................ ...... 17

5.2.2 Burner Derating

................................ ................................ ............................. 17

5.2.3 Modulating Operation

................................ ................................ .................... 18

5.2.4 Dampers

................................ ................................ ................................ ........ 18

5.2.5 Direct Vent

................................ ................................ ................................ .... 18

5.2.6 Pulse Combustion

................................ ................................ .......................... 18

5.2.7 Premix Burners

................................ ................................ .............................. 18

5.2.8 Low

- Pressure, Air

- Atomized Oil Burner

................................ ........................ 19

5.2.9 Delayed

- Action Oil Pump Solenoid Valve

................................ ..................... 19

5.2.10 Electronic Ignition

................................ ................................ ....................... 19

5. 2.11 Toroidal Transformer (Standby/Off Mode)

................................ .................. 20

5.2.12 Control Relay for Models with Brushless Permanent Magnet (BPM) Motors (Standby Mode/Off Mode)

................................ ................................ ........... 20

5.2.13 Switching Mode Power Supply (Standby Mode/Off Mode)

.......................... 20

6. SCREENING ANALYSI S

................................ ................................ ................................ .... 21

7. ENGINEERING ANALYSIS

................................ ................................ ................................ 22

7.1 Engineering Analysis Overview

................................ ................................ ................ 22

7.2 Engineering Analysis Approach

................................ ................................ ................ 23

7.2.1 Baseline Models

................................ ................................ ............................ 23

7.2.2 Efficiency Levels

................................ ................................ ........................... 23

7.2.3 Methodology

................................ ................................ ................................ . 24

7.2.4 Cost

- Efficiency Relationship and Analysis

................................ .................... 25

7.2.5 Proprietary Designs

................................ ................................ ....................... 26

8. MARKUPS ANALYSIS

................................ ................................ ................................ ....... 27

9. ENERGY USE ANALYS IS

................................ ................................ ................................ .. 28ii

9.1 Es timating Annual Energy Consumption of Boilers

................................ .................. 30

10. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

................................ ........... 32

10.1 Overview

................................ ................................ ................................ ................ 32

10.2 Approach

................................ ................................ ................................ ................ 32

10.3 Energy Pr ices

................................ ................................ ................................ .......... 34

10.4 Maintenance and Repair Costs

................................ ................................ ................ 35

10.5 Installation Costs

................................ ................................ ................................ .... 35

10.6 Product Lifetime

................................ ................................ ................................ ..... 36

10.7 D iscount Rates

................................ ................................ ................................ ........ 36

10.8 Energy Efficiency in the Base Case

................................ ................................ ........ 37

11. SHIPMENTS ANALYS IS

................................ ................................ ................................ .. 37

11.1 Impact of Amended Standards on Product Shipments

................................ ............. 38

12. NATIONAL IMPACT ANALYSIS

................................ ................................ .................... 39

12.1 Projected Efficiency Trends

................................ ................................ .................... 39

12.2 National Energy Savings

................................ ................................ ......................... 40

12.3 Net Present Value of Consumer Savings

................................ ................................ . 40

13. CONSUMER SUBGROU P ANALYSIS

................................ ................................ ............. 41

14. MANUFACTURER IMP ACT ANALYSIS

................................ ................................ ........ 41

14.1 Sources of Information for the Manufacturer Impact Analysis

................................ 41

14.2 Industry Cash

- Flow Analysis

................................ ................................ .................. 42

14.3 Manufacturer Subgroup Analysis

................................ ................................ ............ 43

14.4 Competitive Impacts Assessment

................................ ................................ ............ 43

14.5 Cumulative Regulatory Burden

................................ ................................ ............... 43

15. EMISSIONS ANALYS IS

................................ ................................ ................................ ... 44

16. MO NETIZING CO 2 AND OTHER EMISSIONS

................................ ................................ 46

17. UTILITY IMPACT A NALYSIS

................................ ................................ ......................... 47

18. EMPLOYMENT IMPAC T ANALYSIS

................................ ................................ .............. 47

19. REGULATORY IMPAC T ANALYSIS

................................ ................................ .............. 48

APPENDIX A

– LIST OF ITEMS FOR CO MMENT

. ................................................ 50

LIST OF TABLES

Table 1.1 Energy Conservation Standards for Residential Boilers Manufactured on or after

September 1, 2012

................................ ................................ ................................ ..... 3

Table 5.1 Proposed Residential Boiler Product Classes

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

LIST OF FIGURES

Figure 4.1 Flow Diagram of Analyses Conducted for an Energy Conservation Standards

Rulemaking

................................ ................................ ................................ ............. 13iii LIST OF ACRONYMS

ACCA Air

- conditioning Contractors of America

AEMTCA Am erican Energy Manufacturing Technical Corrections Act

AEO Annual Energy Outlook

AFUE Annual Fuel Utilization Efficiency

AHRI Air

- conditioning, Heating, and Refrigeration Institute

AHS A merican Housing Survey

ANSI American National Standards Institute

ASHRAE American Society of Heating, Refrigerating and Air

- Conditioning Engineers

BLS Bureau of Labor Statistics

BOH burner operating hours

BOM b ill of materials

BPM brushless permanent magnet

BT Building Technologies Program

Btu British t hermal u nit

CAIR Clean Air Interstate Rule

CEC California Energy Commission

CFR Code of Federal Regulations

CHP c o mbined heat and power

CO 2 carbon dioxide

CSAPR Cross

- State Air Pollution Rule

CSL candidate standard level

D.C. District of Columbia

DOE U.S. Department of Energy

DOJ U.S. Department of Justice

DSI direct spark ignition

EERE Office of Energy Efficiency and Renewable Energy

EGU electric generating unit

EIA Energy Information Administration

EISA 2007 Energy Independence and Security Act of 20 07

EPA U.S. Environmental Protection Agency

EPCA Energy Policy and Conservation Act

FFC full fuel

- cycle

FR Federal Register

GAMA Gas Appliance Manufacturers Association

GHG greenhouse gas

GREET G reenhouse Gases, Regulated Emissions, and Energy Use in Transportation

GRIM Government Regulatory Impact Model

HARDI Heating, Air

- conditioning & Refrigeration Distributors International

HDD heating degree

- day Hg m ercury IEC International Electrotechnical Commission

ImSET Impact of Sector Energy Technologies

I

- O U.S. Benchmark National Input

- Output

LCC life

- cycle costiv

LPG li quefied petroleum gas

MIA manufacturer impact analysis

MPC manufacturer production cost

MSP manufacturer selling price

NAECA National Appliance Energy Conservation Act

NC I Navigant Consulting, Inc.

NEMS National Energy Modeling System

NES national energy savings

NESHAP national emissions standards for hazardous air pollutants

NIA national impact analysis

NOPR notice of proposed rulemaking

NO X oxides of nitrogen

NPV net present value

OMB U.S. Office of Management and Budget psig pounds per square inch gauge

PM particulate matter

PNNL Pacific Northwest National Laboratory

PBP payback period

R&D research and development

RFI request for information

RIMS Regional Input

- Output Modeling System

RECS Residential Energy Consumption Survey

SCC social cost of carbon

SEC Securities and Exchange Commission

SEDS S tate Energy Data System

SG&A selling, general, and administrative costs

SMPS switching mode power supply

SO 2 sulfur dioxide

TFI trail

- for

- ignition period

TSD technical support document

TSL trial standard level

U.S. United States

U.S.C. United States Code1

RULEMAKING FRAMEWORK DOCUMENT FOR RESIDEN TIAL BOILER S

1. INTRODUCTION

The U.S. Department of Energy (DOE) Appliances and Equipment Standards Program, within the Office of Energy Efficiency and Renewable Energy’s (EERE’s) Building Technologies Program (BT), develops and promulgates energy conservation standards for certain consumer appliances and industrial equipment

. The process for developing standards involves analysis, public notice and comment, and consultation with interested parties. Interested parties include manufacturers, trade associations, consumers/users , energy conservation and environmental advocates, State and Federal agencies, and any other groups or individuals with

an interest in these standards.

The p urpose of this F

ramework D ocument is to describe the procedural and analytical approaches DOE anticipates using to evaluate potential amended energy conservation standards

for residential boilers (see section 1.1 for a discussion of the statutory authority for this rulemaking). Residential boilers include gas

- fired, oil

- fired, and electric hot water and steam

boilers.

This document is intended to inform interested parties of the process DOE will follow and to encourage and facilitate the input of interested parties during the rulemaking. This document serves as the starting point for developing potential amended energy conservation standards and is not a definitive statement on any issue to be determined in the rulemaking. This Framework Document is comprised of 19 sections related to the rulemaking. Section 1 of this document provides an overview of DOE’s rulemaking process and of the history and authority for regulation of residential boilers

. Sections 2 and 3 discuss scope of coverage and test pr ocedures, respective ly

. Sec tions 4 through 19 discuss analyses DOE intends to conduct to fulfill the statutory requirements for this energy conservation standards rulemaking. DOE will analyze potential amended energy conservation standa rds for residential boilers to determin e whether

such standards are technologically feasible and economically justified and provide significant energy savings

. DOE will maintain information about th is rulemaking on its website at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.html

Item 1

- 1 While DOE invites comment on all aspects of the material presented in th is

document

, several specific issues on which DOE seeks comment are set out in

comment boxes like this one. DOE uses these comment boxes to highlight issues and

to ask specific questions on the approaches DOE plans to follow to conduct the analys e s requir ed for th is energy conservation standards rulemaking. Such requests for feedback are numbered sequentially throughout the document and are repeated in Appendix A.2

1.1 History of Residential Boiler Standards and A uthorit y

T itle III , Part B 1 of t he Energy Policy and Conservation Act of 1975 (EPCA) , Pub. L. 94

- 163 (42 U.S.C. 6291

- 6309, as codified ) , sets forth a variety of provisions designed to improve energy efficiency and established the E nergy C onservation P rogram for Consumer Products

Other T h an Automobiles, a program covering most major household appliances and certain industrial and commercial equipment. 2 This program authorized DOE to establish technologically feasible, economically justified energy efficiency regulations for certain produc ts and equipment that would be likely to result in substantial national energy savings. (42 U.S.C. 6295(o)(2)(B)(i)(I)

- (VII)) Amendments to title III of EPCA have given DOE the authority to regulate the energy efficiency of several products, including re sidential boilers 3

— the products

that are the focus of this document. (42 U.S.C. 6292(a)(5)) The National Appliance Energy Conservation Act of 1987 (NAECA) , Pub. L. 100

- 12, amended EPCA to establish energy

conservation standards for residential furnaces and boilers, as well as requirements to conduct

two cycles of rulemaking to determin e whether these standards should be amended. (42 U.S.C. 6295( f ))

Specifically, NAECA set minimum standards for boilers in terms of the annual fuel utilization efficiency (AFUE) and required that DOE publish a final rule to determine whether

the standard should be amended no later than January 1, 19 94

. (42 U.S.C. 6295(f)(1) and (4)(B)) It also required that DOE publish a final rule to determine whether standards in effect for such products should be amended after January 1, 1997 and before January 1, 2007. ( 42 U.S.C. 6295(f)( 4 )( C ) )

On November 19, 2007, DOE published a final rule in the Federal Register (hereafter

referred to as the “November 2007 final rule”) revising the e nergy conservation standards for furnaces and boilers, which addressed the first required review of minimum standards for boilers

under 42 U.S.C. 6295 (f)(4)( B )

. 72 FR 65136

. Compliance with the standards in the November 2007 final rule would have been required by November 19

, 2015

. However, o n December 19,

2007

, the Energy Independence and Security Act of 2007 (EISA 2007), Pub. L. No. 110

- 140, was signed into law

, which further revised the ener gy conservation standards for residential

boilers

. More specifically, EISA 2007 revis ed the minimum AFUE requirements for residential

boilers and set several design requirement s for each product class (42 U.S.C. 6295(f)(3)) , which

are shown in Table 1

. 1 below

. EISA 2007 required compliance with the amended energy conservation standards for residential boilers beginning on September 1, 2012

.

Only July 15, 2008, DOE issued a final rule tech nical amendment to the 2007 f urnace s and b oiler s final rule , which was published in the Federal Register on July 28, 2008, to codify the energy conservation standard levels, the design requirements

, and compliance dates for

1 For editorial rea sons, upon codification in the U.S. Code, Part B was redesignated Part A.

2 All references to EPCA in this document refer to the statute as amended through the American Energy Manufacturing Technical Corrections Act ( AEMTCA ), Pub. L. 11 2

- 210 (Dec. 1 8 , 20 1 2 ).

3 Under 42 U.S.C. 6292(a)(5), the statute establishes “furnaces” as covered products. Originally, boilers were considered a class of furnaces. However, amendments to EPCA in EISA 2007 distinguished between furnaces and boilers in 42 U.S.C. 6295(f) b y adding the text “and boilers” to the title of that section and by prescribing standards for those products. Although EISA 2007 did not similarly update 42 U.S.C. 6292(a)(5), it is implicit that this coverage continues to include boilers.3

residential boilers outlined EIS A 2007

. 73 FR 43611

. For gas

- fired hot water boilers, oil

- fired hot water boilers, and electric hot water boilers, EISA 2007 requires that residential boilers manufactured after September 2012 have an automatic means for adjusting water temperature

. 10 CFR 430.32(e)(2)(ii)

- (iv). The automatic means for adjusting water temperature must automatically adjust the water temperature of the water supplied by the boiler to ensure that an incremental change in the inferred heat load produces a corresponding incr emental change in the temperature of the water supplied. EISA 2007 also disallows the use of constant

- burning pilot lights in gas

- fired hot water boilers and gas

- fired steam boilers

.

Table 1

. 1 Energy Conservation Standards for Residential Boilers Manufactured on or after September 1, 2012

Product Class Minimum Annual

Fuel Utilization Efficiency Design Requirements

Gas Hot Water 82% No Constant

- Burning Pilot,

Automatic Means for Adjusting Water Temperature

Gas Steam 80% No Constant

- Burning Pilot

Oil Hot Water 84% Automatic Means for Adjusting Temperature

Oil Steam 82% None

Electric Hot Water None Automatic Means for Adjusting Temperature

Electric Steam None None

DOE is initiating this rulemaking pursuant to 42 U.S.C. 6295(f)(4)(C), which requires DOE to conduct a second round of amended standards rulemaking for residential boilers. EPCA

, as amended by EISA 2007

, also requires that not later than 6 years after iss uance of any final rule establishing or amending a standard, DOE must publish either a notice of the determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation stand ards . ( 42 U.S.C. 6295(m)(1) ) As noted above, DOE’s last final rule for residential boilers was issued on July 15 , 2008, so as a result, DOE must act by July 15

, 2014

. This rulemaking will satisfy both statutory provisions.

Furthermore, EISA 2007 amended EPCA to require that any new or amended energy conservation standard adopted after July 1, 2010, shall address standby mode and off mode

energy use pursuant to 42 U.S.C. 6295(o). (42 U.S.C. 6295(gg)(3)) DOE will consider standby

mode and off mode energy use as part of this rulemaking for residential boilers.

1.2 Overview of the R ulemaking P rocess

1.2.1 Rulemaking Process and Participation of Interested Parties

EPCA requires that any standard shall be designed to achieve the maximum improvement in energy efficiency that 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 or ne w4

standard if such standard would not result in a significant conservation of energy or is not technologically feasible or economically justified. ( 42 U.S.C. 6295(o)(3)(B) ) In no case may the Secretary prescribe any amended standard which increases the m aximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) When DOE evaluates any new or amended energy conservatio n standard for covered products under EPCA, DOE must consider to the greatest extent practicable the following seven factors:

(1) T he economic effect of the standard on the manufacturers and on the consumers of

the product subject to such standard; (2) T he savings in operating costs throughout the estimat ed average life o f the covered product in the type (or class) compared to any increase in the price, or in the initial charges for, or maintenance of the covered product which are likely to result from the standard; (3) T he total projected amount of energy (or as applicab le, water) savings likely to result directly from the standard; (4) A ny lessening of the utility or the performance of the covered products likely to result from the standard; (5) T he effect of any lessening of competition, as determined in writin g by th e U.S. Attorney General, that is likely to result from the standard; (6) T he need for national energy and water conservation; and (7) O ther factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)

- (VII))

Additional statutory requireme nts of general applicability for prescribing new or amended standards are set forth in 42 U.S.C. 6295(o)(2)(A), (2)(B)(ii)

- (iii), and (3)

– (5).

The processes for developing energy conservation standards and test procedures involve analysis, public notice a nd comment, and consultation with interested parties. Interested parties generally include manufacturers, trade associations, consumers, environmental and energy

– efficiency advocates, State and Federal agencies, and other groups and individuals with an

i nterest in energy conservation standards and test procedures. DOE considers the participation of interested parties to be a very important part of the process for setting new and amended energy conservation standards. Accordingly, DOE encourages the part icipation of all interested parties during the comment period s provided at each stage of the rulemaking

.

T he standards rulemakin g process for residential boilers will involve three public notices (in addition to this F

ramework Document ) , which are publish ed in the Federal Register : (1) the preliminary analysis ; (2) the notice of proposed rulemaking (NOPR) ; and (3) the final rule. A fter publication of this F

ramework D ocument , the preliminary analysis, and the NOPR, DOE will hold public meetings to solicit comment from interested parties in order to enhance the rulemaking process. After the NOPR public meeting, DOE will conclude the rulemaking with the publication of the final rule. The following outl ines next steps for the residential boilers energy conservation standards rulemaking:5

Preliminary Analys i s ( section 1.2.2 ). DOE plans to publish preliminary analy ses to publicly vet the data, models, and tools that DOE expects to use in the rulemaking, and to facilitate public participation in developing the proposed rule. These data will include

p lann ed product classes and candidate standard levels (CSLs), which span the range of

efficiencies from baseline product s to products utilizing the most efficient technology. DOE will hold a public meeting and web inar related to the preliminary analyses and will seek public comment.

Notice of Proposed Rulemaking ( section 1.2.3 ). The NOPR will present a discussion of comments received in response to the preliminary analyses; DOE’s analysis of the effects of potential standa rds on consumers, manufacturers, and the N ation; DOE’s weighting of

these impacts ; and any proposed standard levels for public comment. DOE will hold a public meeting and web inar related to the NOPR and will again seek public comment.

Final Rule ( section 1.2.4 ). The final rule will present a discussion of and response to

comments received on the NOPR, the revised analysis ( as appropriate ) of the impacts of any amendments to the standards, DOE’s weighting of the impacts , and new or amended

standard levels ( if any ) that DOE is adopting. The final rule also will establish the compliance date of any standards.

DOE encourages interested parties to develop and submit joint recommendations and will carefully consider any such recommendations in its decision making.

1.2.2 Preliminary Analysis

DOE’s preliminary analysis activities include identifying available product tech nologies and determining whether they warrant detailed analysis or can be eliminated from further

consideration. This process includes a market and technology assessment ( section 5 ) and a screening analysis (section 6 ). DOE applies four criteria in the screening analysi s to determine whether a given technolog y should be eliminate d from further consideration: (1) technological feasibility; (2) practicabili ty to manufacture, install, and service; (3) adverse impacts on product utility or availability; and (4) adverse impacts on health or safety. T echnologies that pass the

screenin g analysis are considered in the engineering analysis (section 7 ) as methods of improving the efficiency of the covered products.

DOE consults with interested parties and independent technical experts and researches industry literature to identify the key issues and design options or efficiency levels that DOE will consider in the rulemaking

. Also at this stage of the analysis, DOE collects manufacturer cost data, historical shipment data, shipment

- weighted average efficiency data, and pre liminary manufacturer impact data ( e.g. , capital conversion expenditures, marketing costs, and research and development (R&D) costs). As part of the preliminary analysis, DOE also co nducts other principal analyses which are explained in subsequent section s of this F ramework D ocument

, including :

T he engineering analysis (section 7 );

T he consumer life

- cycle cost (LCC) and payback period (PBP) analysis (section 10 ) ;6

T he national impact analysis, which considers national energy savings (NES) and national consumer net present value (NPV) (section 12 ); and

A preliminary manufa cturer impact analysis (MIA) (section 14 )

.

DOE will present its results of these analyses in the preliminary technical support document (TSD) , which will be made available at the time of publication of the preliminary analysis

.

DOE selects CSL s from the energy efficiency or energy use levels considered in the preliminary analysis. Discussion of various CSLs in the preliminary analysis will facilitate review by interested parties of the spreadsheet models that underpin the analyses. DOE will us e

comments from interested parties to refine the models for the rulemaking analysis at the NOPR stage, where DOE will propose specific energy conservation standard levels for adoption. Based on the results, DOE selects CSLs from the energy efficiency or e nergy use levels considered in the preliminary analyses. In addition to the efficiency levels corresponding to the maximum

tech nologically feasible (“max

- tech”) 4 design, DOE generally selects levels or design options for consideration that span the full r ange of technologically achievable efficiencies. DOE typically analyzes the following range of efficiency levels :

T he baseline efficiency level ( i.e. , the minimum level) is represented by the product with the lowest energy efficiency level currently sold on the market for a given product class; for classes where minimum energy efficiency standards already exist, the baseline efficiency level is typically defined by the existing energy conservation standard;

T he highest energy efficiency level or lowest energy consumption level that is technologically feasible ( i.e. , the “max

- tech” level); and

L evels that incorporate noteworthy technologies or fill in large gaps between other efficiency level s being considered.

The preliminary analyses rely on 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 DOE uses to conduct the LCC and PBP analyses and to determine the NES and NPV of prospective standards. Preliminary results may facilitate discussions among interested parties on potential joint recommendations for standard

levels.

DOE will make the spreadsheet tools and results of the preliminary analyses available on

its website for review. 5 When it publishes the preliminary analysis, DOE will also make the preliminary TSD available, which will contain details of all the analyses performed to date. After publication of the preli minary analysis, DOE provides a public comment period and holds a public meeting to discuss these analyses.

4 The “max

- tech ” level represents the most efficient design that is commercialized or has been demonstrated in a prototype with materials or technologies available today. “Max

- tech” is not constrained by economic justification, and typically is the most expensive effici ency level considered in the engineering analysis.

5 M aterials associated with the residential boiler rulemakings will be available on DOE’s website at www1.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.html

.7

1.2.3 Notice of Proposed Rulemakin g

In developing the NOPR, DOE will first review and consider all the comments it receive s during the preliminary analysi s public meeting and in written comments during the comment period following publication of the preliminary analysis

. This process may result in revisions or refinements to the preliminary analyses, including the engineering and LCC analyses. DOE will

al so conduct additional economic and environmental impact analyses at this stage of the rulemaking. These analyses generally include a consumer LCC subgroup analysis (section 13 ), a complete manufa cturer impact analysis (section 14), a utility impact analysis (section 17 ), an employment impact analysis (section 18 ), an emissions analysis (section 15 ) , and a regulatory impact analysis (section 19 ).

DOE will describe the methodology it used and post the results of all the analyses on i ts
website for review and comment. DOE will present the analy tical results in the NOPR, with the details of the analysis provided in an accompanying TSD. Th e NOPR analytical process

culminates in the selection of proposed standard levels (if any), which DOE will present in the

NOPR. DOE selects these proposed standard levels from the trial standard levels (TSLs) 6
analyzed prior to publication of the NOPR. The NOPR, published in the Federal Register , will document the evaluation and selection of any prop osed standards levels, along with a discussion of other TSLs considered but not selected (and the reasons for not selecting them). Based on comments by interested parties, further revisions to the analysis and proposed standard levels may be undertaken dur ing the final rule stage.

For each product class, DOE will identify the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible. Beginning with

the max

- tech level, DOE will weigh the benefits and burde ns of each level to determine whether that level meets the criteria outlined in EPCA discussed above (section 1.2.1 ). If DOE proposes

a level that is below th e max

- tech level, it will explain the reasons for eliminating higher levels, beginning with the highest level considered.

DOE considers many factors in selecting proposed standards, as described in section

1.2.1

. These factors are established by EPCA and consider the many benefits, costs, and impacts of energy conservation standards.

When DOE publishes the NOPR, it will provide the U.S. Department of Justice (DOJ ) with a copy of the NOPR and TSD to solicit feedback on the competitive impact of the proposed

standard levels. DOJ will review these proposed standard levels to help assess the impac ts from 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 (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 public comment period that includes a p ublic meeting.

6 TSLs are assembled from the candidate standard levels analyzed for the individual product classes based on a set of criteria from the analytical results.8

1.2.4 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

, mak ing modifications as necessary. 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

. DOE publishe s DOJ ’s comments and DOE’s response as part of the final rule.

The standards rulemaking will conclude with publication of the final rule. DOE will determine whether to amend existing standards, and if such determi nation is positive, select the

final energy conservation standard levels based on the complete record of the standards rulemaking. The final rule will promulgate the final standard levels and the compliance date (or dates) , and will explain the basis for their selection. The final rule will be accompanied by a

final rule TSD.

2. SC OPE OF COVERAGE

2.1 Current Scope of Coverage

R esidential boilers are defined in EPCA as a type of furnace

. Specifically

, the term
“furnace” is defined as: “ a product which utilizes only single

- phase electric cu rrent

, or single

phase electric current or DC current in conjunction with natural gas, propane, o r home heating oil, and which

–

(A) is designed to be the principal heating source for the living space of a residence;

(B) is not contained within the same cabinet with a central air conditioner whose rated cooling capacity is above 65,000 Btu [British thermal units] per hour;

(C) is an electric central furnace, electric boiler, forced

- air central furnace, gravity

central furnac e, or low pressure steam or hot water boiler; and

(D) has a heat input rate of less than 300,000 Btu per hour for electric boilers and low pressure steam or hot water boilers and less than 225,000 Btu per hour for forced

- air central furnaces, gravity cent ral furnaces , and electric central furnaces. ”

(42 U.S.C. 6291(23))

DOE has incorporated this definition into its regulations at 10 Code of Federal Regulations ( CFR ) 430.2. In addition, DOE has defined “electric boiler” and “low pressure

steam or hot water boiler” at 10 CFR 430.2 as follows:9

Electric boiler means an electrically powered furnace designed to supply low pressure steam or hot water for space heating application. A low pressure steam boiler operates at or below 15 pounds per square inch gauge (psig) steam pressure; a hot water boiler operates at or below 160 psig water pressure and 250 °F water temperature.

Low pressure steam or hot water boiler means an electric, gas or oil burning furnace designed to supply low pressure steam or hot wa ter for space heating application. A low pressure steam boiler operates at or below 15 pounds psig steam pressure; a hot water boiler operates at or below 160 psig water pressure and 250 °F water temperature.

Appendix N to Subpart B of 10 CFR Part 430 re ferences the definitions section of the American Society of Heating, Refrigerating, and Air

- Conditioning Engineers ( ASHRAE ) 103

- 1993 (Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers) , which contains addi tional refinements of the definitions of a boiler, many of which

are similar to those refinements listed above. Specifically, ASHRAE 103

- 1993 defines the following terms :

B oiler: a self

- contained fuel

- burning or electrically heated appliance for supplying low

pressure steam or hot water for space

- heating application.

B oiler, finned

- tube : a boiler whose heat exchanger consists of only finned

- tubes.

Boiler, low

-

pressure steam or hot water : an electric, gas, or oil

- burning boiler designed to supply low

- pressure steam or hot water for space

- heating applications. A low

- pressure steam boiler operates at or below 15 psig steam pressure; a hot water boiler operates at or below 160 psig water pressure and 250°F water temperature.

DOE’s regulations for residential boilers that are currently in effect cover gas

- fired hot water boilers, gas

- fired steam boilers, oil

- fired hot water boilers, oil

- fired steam boilers, and electric hot water boilers that meet the definitions outlined above, as applicable.

2.2 Preli minary Scope of Coverage

DOE plans to maintain the scope of coverage as defined by its current regulations for this analysis of amended AFUE standards, which include s four product classes of boilers ( steam gas boilers

, hot water gas boilers

, steam oil boilers , and hot water oil boilers )

. DOE is also considering includ ing combination appliances in its analysis of amended AFUE requirements

residential boilers , but does not plan to include an analysis of an AFUE standard level for electric

boilers for the reasons explained below

.

Combination appliances are used to provide both space h eating and domestic hot water to
a residence

. These products are currently available on the market in two major configurations including a water heater fan

- coil combination unit and a boiler tankless coil combination unit. Manufacturers currently certify c ombination appliances by rating the efficiency of the unit when performing their primary function ( i.e. , space heating for boiler tankless coil combination unit s or water heating for water heater fan

- coil units )

. On December 11

, 20 0 9 , DOE published a10

N O P R (hereafter the “December 2009 NOPR”) for w ater h eaters in which it stated that pursuant to 42 U.S.C. 6295(o)(5), EPCA authorizes DOE to cover combination water heater/space heating products, including a separate standard for each function. 74 FR 65852, 65867. Nonetheless

, because DOE’s existing test pr ocedure s were not applicable for combination appliances and

DOE had not yet adopted a test procedure to determine the energy efficiency of combination appliances , DOE did not evaluate these products in the 2010 water heater rulemaking

. 75 FR 20112, 20130 (April 16, 2010)

. At this time there is still no F ederal test proc edure for combination appliances. However, o n January 4, 2013, DOE published a request for information (RFI) regarding the modification of the current furnace and boiler test procedure

, which stated
DOE’s intention to consider an expansion of the scope of the current test procedure to include

definitions and test methods for combination appliances and requested comment on how best to

measure the energy use of these products

. 78 FR 675 , 679

. DOE will make a determination with regard to energy conservation standards for combination appliances based on the outcome of the test procedure rulemaking.

DOE does not plan to include electric boilers in the analysis of amended AFUE

standards

. Electric boilers currently do not have an AFUE requirement under 10 CFR 430.32(e)(2)(ii). E lectric boilers typically utilize electric resistance coils as their heating

elements , which are highly efficient

. Furthermore, t he current DOE test procedure for determining AFUE considers boilers indoor units and

, thus

, consi ders jacket heat loss as usable

heat

, since those losses would go to the heated space for an indoor unit

. The efficiency of these products already approaches 100 percent AFUE

. T herefore

, there are no options for increasing

the rated AFUE of this product

, and the impact of setting AFUE energy conservation standards for these products would b e negligibl e. However, DOE does intend to consider standby mode

and off mode standards for electric boilers as described in the paragraph immediately below

.

This rule making will establish energy conservation standards for energy cons umption of

boilers operating in standby mode and off mode. As discussed above, s ection 310(3) of EISA 2007 amended EPCA to require that energy conservation standards published after July 1 , 2010, address standby mode and off mode energy use (42 U.S.C. 6295(gg) (3) ), if justified by the criteria for adoption of standards in section 325(o) of EPCA (42 U.S.C. 6295(o)). Many residential boilers do not operate continuously. The AFUE metric acco unts for fossil fuel consumption in standby mode and off mode but does not take electricity consumption into

account in these modes

. Accordingly, this rulemaking will consider the electrical consumption of boilers in standby mode and off mode, as required by EPCA.

Item 2

- 1 DOE welcomes comment on the preliminary scope of coverage and on whether there are any additional types of residential boilers that should or should not be included in the scope of this rulemaking.

Item 2

- 2 DOE welcomes comments regarding the need to include combination appliances and electric boilers in this rulemaking.11

3. TEST PROCEDURES

DOE’s current energy conservation standards for residential boilers are expressed as

minimum annual fuel utilization efficiencies. AFUE is an ann ualized fuel efficiency metric that fully accounts for fuel consumption in active, standby, and off modes. The existing DOE test procedure for determining the AFUE of residential boilers is located at Appendix N to Subpart B

of 10 CFR Part 430. The curre nt DOE test procedure for residential boilers was originally established by a May 12, 1997 final rule, and it references ASHRAE Standard 103

- 1993 ( Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and

Boilers )

. 7 62 F R 26140, 26157.

On October 20, 2010

, DOE updated its test procedures for residential boilers in a final

rule published in the Federal Register (hereafter referred to as the “ October 2010 T est P rocedure

Rule ”), which amended DOE’s test procedure for furnaces and boilers to establish a method for measuring the electrical energy use in standby mode and off mode for gas and oil

- fired boilers pursuant to requirements established by EISA 2007. 75 FR 64621. These test pro c edure amendments were primarily based o n and incorporate by reference p rovisions of the

International Electrotechnical Commission (IEC) Standard 62301 (First Edition) , ‘‘Household

electrical app liances

— Measurement of standby power. ” On December 31, 2012

, DOE published

a final rule which update d the incorporation by reference of the standby mode and off mode test procedure provisions to refer to the latest edition of IEC Standard 62301 (Second Edition). 77

FR 76831

.

On February 4

, 2013, DOE published a notice of proposed rulemaking in the Federal Register (hereafter the “February 2013 NOPR”) that proposed to modify the existing testing procedures for residential furnaces and boilers . The proposed modification would address the

omission o f equations needed to calculate AFUE for two

- stage and modulating condensing

furnaces and boilers that are tested using an optional procedure provided by section 9.10 of

ASHRAE 103

- 1993 (incorporated by reference into DOE’s test procedure), which allows th e test engineer to omit the heat

- up and cool

- down tests if certain conditions are met

. 78 FR 7681

. Specifically, t he DOE test procedure allows condensing boilers (and furnaces) to omit the heat

up and cool

- down test s, provided that the units have no measurable airflow through the combustion chamber and heat exchanger during the burner off period and have post

- purge period ( s ) of less than 5 seconds. F or two

- stage and modulatin g condensing furnaces and boilers,

ASHRAE 103

- 1993 ( and by extensio n the DOE test procedure ) does not contain equations to calculate the heating seasonal efficiency (which contributes to the ultimate calculation of AFUE)

when the option in section 9.10 i s selected. The only equation provided in the test procedure to

calcu late the heating seasonal efficiency for two

- stage and modulating condensing furnaces and boilers requires values for the part

- load efficiencies, which are based on the results of the heat

- up and cool

- down tests. The February 2013 NOPR proposed to adopt t wo new equations needed to
account for the use of section 9.10 for two

- stage and modulating condensing furnaces and

boilers.

7 America n Society of Heating Refrigerating and Air

- Conditi oning Engineers, American National Standards Institute (ANSI)/ASHRAE 103

- 1993 : Method of Testing for Annual Fuel Utilization Efficiency of Residential

Central Furnaces and Boilers (1993)

.12

As noted, o n January 4, 2013 , DOE published a n RFI that requested comment and information on a variety of issues relating to the residential furnace and boiler AFUE test

method. 78 FR 675

. The RFI is the first step in DOE’s process to update the test procedure for determining the efficiency of resid ential furnaces and boilers. Key issues discussed in the RFI

include avenues for reduc ing test burden and the addition of a performance test for automatic means of adjusting water temperature in hot water boilers

. EPCA, as amended by EISA 2007, requires that DOE must review test procedures for all covered products at least once every 7 years. (42 U.S.C 6293( b )(1)( A )) Accordingly, DOE must complete this test procedure rulemaking no later than December 19, 2014 ( i.e., 7 years after the enactment of EISA 20 07), which is before the expected completion of this standards rulemaking

. DOE must base the analysis of amended standards on the most recent version of its test procedures, and accordingly,

DOE will use the amended test procedure when considering product efficiencies, energy use, and efficiency improvements in its analyses.

4. OVERVIEW OF A NALYSIS FOR R ULEMAKING

The purpose of the analyses conducted in support of the standards rulemaking is to ensure that DOE selects energy conserva tion standards that achieve the maximum improvement in efficiency that is technologically feasible and economically justified, and will result in significant energy savings. Economic justification includes the consideration of economic

factors set forth i n EPCA (see section 1.2.1 ), which encompass the economic impacts on domestic manufacturers and consumers, national benefits including environmental impacts,

issues of consumer utility, and impacts from any lessening of competition. DOE expects the selection of such standards to achieve the maximum energy savings that are technologically feasible and economically justified without imposing an excessive financial bur den on any particular party.

Figure 4

. 1 summarizes the analytical components of the DOE 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. The identified 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

. I n support of this rulemaking, DOE will also develop relevant information or collect such information from interested parties or experts with special knowledge. Key outputs from each analysis feed directly into the rulemaking. Arrows indicate the flow of information among the various analyses. DOE ensures a consistent approach to its analyses throughout the rulemaking by considering each analysis as a part of th e overall standards

- setting framework

.13

Figure 4

. 1 Flow Diagram of Analyses Conducted for an Energy Conservation Standards Rulemaking14

5. MARKET AND TECHNOLOG Y ASSESSMENT

The market and technology assessment will provide information about the residential boiler industry and performance attributes of various types of residential boilers

. DOE uses this information throughout the rulemaking. This assessment is particularly important at the outset of

the rulemak ing for developing product classes and for identifying technologies that improve efficiency for each of the boiler types being considered in this rulemaking

.

5.1 Market Assessment

In the market assessment, DOE will qualitatively and quantitatively characterize the

structure of the market for residential boilers. DOE will identify and characterize the manufacturers of this product; estimate market shares and trends; and address regulatory and

non

- regulatory initiatives intended to improve the efficiency or reduce the energy use of covered

boilers

.

The market assessment phase allows DOE to gather data that can help identify important issues ( e.g. , potential small business impacts, competitive disruptions, an d other factors that may arise from enacting standards). The market assessment will also establish the context for this rulemaking and serve as a resource to guide the analyses that follow. For example, DOE may use historical shipments and prices as indi cators of future shipments and prices. Similarly, DOE plans to use market structure data for the MIA, which will be particularly useful fo r assessing competitive effects

.

DOE recognizes that there may be limited publicly

- available information on national shipments, manufacturing costs, distribution channels , and manufacturer market shares of

residential boilers. This type of data is an important input for analyses that determine if potential energy conservation standards are economically justified and ca pable of achieving significant energy savings. Therefore, DOE encourages interested parties to submit data that will improve DOE’s understanding of the residential boiler s market.

These data may be provided under a confidentiality agreement with DOE’s contractor responsible for this part of the rulemaking analysis, Navigant Consulting, Inc. (NCI). In other rulemakings, NCI routinely works with confidential data provided by manufact urers and other organizations in preparing aggregated results for DOE’s analys e s. These aggregated results do not divulge the sensitive, individual raw data, but enable other interested parties to comment on the aggregated dataset.

Alternatively, interes ted parties may submit confidential data to DOE, indicating in writing which data should remain confidential. Interested parties must submit confidential information to DOE according to the procedures outlined in 10 CFR 1004.11. Under 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit two copies. One copy of the document shall include all the information believed to be confidential, and the other copy shall h ave the15

information believed to be confidential deleted. DOE will make its own determination about the confidential status of the information and treat it accordingly. 8

The Air

- C onditioning, Heating, and Refrigeration Institute ( AHRI ) is the trade

associ ation for manufacture r s of residential boilers ; DOE expects that AHRI will play an important role in providing market information, including information on manufacturers, market shares, and trends in the market.

AHRI maintains the Directory of Certified P roduct Performance, 9 which is a database of product ratings for all manufacturers who elect to participate in the program. DOE plans to use the data in this directory in its market assessment. DOE also plans to examine other data

sources
, such as the California Energy Commission (CEC) Appliance D atabase 10 and the

ENERGY STAR database

, 11 as well as manufacturer literature, technical reports, and any other

relevant information to provide a broad insight into the residential boiler s market

.

Item 5

- 1 DOE we lcomes data that would contribute to the market assessment, including but not limited to information on national historical shipments, manufacturing costs, distribution channels, and manufacturer market shares of

residential boilers

.

5.1.1 Product Classes

When n ecessa ry, DOE divides covered products into classes by : (a) the type of energy used; ( b) the capacity of the product ; or (c) any other performance

- related feature that justifies different standard levels, such as features affecting consumer utility. (42 U .S.C. 6295(q)) DOE then conducts its analyses and considers establishing standards at different levels for each product class.

DOE plans to maintain the existing product classes for residential boilers. 10 CFR 430.32(e)(2) (ii)

. The current product classes are divided by the type of energy used (fuel type) and by the heat transfer medium ( i.e. steam or hot water)

, as shown in Table 5.1

. The type of energy used is explicitly called out as a criterion for creating a separate product class in EPCA,

and fuel type typically does have an impact on the energy efficiency of the product. Further, in creating separate standards for steam and hot water boilers in EISA 2007, Congress has deemed

h eat transfer medium a performance

- related feature that merits a se parate product class

. Steam

8 Factors that DOE considers when evaluating requests to treat submitted information as confidential include: (1) a description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the inform ation is generally known by or available from other public sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting p erson which would result from public disclosure; (6) a date after which such information might lose its confidential character; and (7) why disclosure of the information would be contrary to the public interest.

9 See http://www.ahridirectory.org/ahridirectory/pages/home.aspx

. 10 See http://www.energy.ca.gov/appliances/database/

. 11 See http://www.energystar.gov/index.cfm?fuseaction=find_a_product.showProductGroup&pgw_code=BO

.16

offers a few benefits over hot water as a heat transfer medium , such as higher operating temperatures and less moving parts , that DOE believes may be desirable for certain consumers.

B ecause steam boilers generally ca nnot reach the same efficiency levels as hot water boilers

,

c ombining steam boilers and hot water boilers into a single product class could result in

standards that would potentially eliminate steam boilers from the market. Federal law does not

allow DOE to promulgate efficiency standards that would result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those currently on the market (42 U.S.C. 6295(o)(4)) , and thus, DOE believes that the product classes for steam heating medium should be maintained. DOE has also examined the role of capacity in influencing efficiency level and has come to the pre liminary conclusi on that input capacity does not warrant the creation of separate product classes , because there is no noticeable trend between input capacity and AFUE ratings of boilers currently on the market

.

Table 5

. 1 Proposed Residential Boiler Product Classes

Fuel Type Heat Transfer Medium

Gas Steam

Hot Water

Oil Steam

Hot Water

Electric Steam

Hot Water

Item 5

- 2 DOE welcomes comments on its proposed product classes. Does capacity or any performance

- related features warrant the creation of another product class for residential boilers in accordance with the requirements of 42 U.S.C. 6295(q )?

Item 5

- 3 Are there some product classes with such low volumes of annual shipments

that the D epa rtment should not undertake analysis to determine if the efficiency standards should be upgraded?

5.2 Technology Assessment

The technology assessment focuse s on understanding how residential boilers use energy and on identifying potential technology changes that would improve the efficiency of these products

. Measur es that improve the rated product efficiency are called technology options, and they are based on existing technologies

, as well as working prototypes. In consultation with interested parties, DO E will create a list of technology options for consideration in this rulemaking. Following research into this list of technology options, DOE will consider each option in light of the four screening criteria discussed in section 6

. Those technology options17

that pass the screening criteria will be considered suitable options for improv ing the efficiency of

the product in the engineering analysis, and will assist DO E in determining the max

- tech design.

DOE is studying technology options by reviewing residential boiler manufacturer specification sheets and product literature , recent trade publications, technical journals, and patent filings. DOE also intends to consult with technical experts who have worked on residential boiler designs and to conduct manufacturer interviews about these technology options. At this time, DOE is aware of a set of technology options (discussed in further detail below) that could be used to improve residential boiler efficiency. The list of technologies below is focused on measures that would improve either the rated AFUE (the mandated statutory metric for furnace efficiency) or reduce standby mode and/or off mod e electrical energy consumption (also statutorily mandated)

. DOE is aware of technologies that improve overall efficiency of residential boilers but do not improve AFUE or reduce standby mode /off mode energy consumption, such as micro

- combined heat and po wer (micro CHP), improved fan and pump motor efficiency, positive shut

- off valve for oil burner nozzles, and heat pump boilers. Because DOE has preliminarily determined that these technologies will not affect AFUE or reduce standby mode /off mode electrica l energy consumption, DOE does not address them further in

this F ramework D ocument. However, if commenters demonstrate that such technologies do impact the regulating metrics, DOE may address these technologies in more detail at later rulemaking stages.

5.2.1 H eat Exchanger Improvements

Improvements to the heat exchanger can be achieved by modifying baseline designs of

standard boilers to : (1) increase heat exchanger surface area ; (2) modify or add heat exchanger

surface features ; (3) modify or add heat exchange r baffles and turbulators ; and (4) increase the corrosion resistance of the heat exchanger to withstand flue gas condensation.

Mechanical draft systems can be added to boilers to enable the use of more

- efficient heat exchangers. In natural draft systems, the movement of air through the boiler is driven by the buoyancy of the flue gases. Mechanical draft systems allow for extended heat exchange surfaces and/or tighter flueways by overcoming the drop in pressure associated with restrictive flow passages in more

- efficient heat exchangers and by supplementing the loss of buoyancy in cooler flue gases to provide sufficient airflow to the burners.

Improving the heat exchanger for boilers can increase the rate of heat transfer from the hot combustion gases to t he water that is distributed to the heated space. The improve d effectiveness of the heat exchanger improves the AFUE.

5.2.2 Burner Derating

Derating is the operation of a boiler at less than its maximum firing rate. Reducing burner firing rate for gas and oil boilers while keep ing heat exchanger geometry, the surface

area , and the fuel

- to

- air ratio the same will increase the ratio of heat transfer surface area to energy input, thereby increasing the AFUE

. However, depending on the degree of reduction, a18

l ower energy input means that less heat, and

, thus

, lower utility may be provided than with conventional burner firing rates.

5.2.3 Modulating Operation

Two

- stage and modulating combustion allows boilers to meet heating load re quirements more precisely. When lo w heating load conditions exist, a two

- stage or modulating boiler can operate at a reduced input rate for an extended period of burner on

- time to meet the reduced heating load.

When combustion air supply is also modulated to match the fuel input rate, the ratio of heat transfer surface area to energy input is increased , making the heat exchanger more effective in periods of lower heat demand, thereby raising the AFUE.

.

5.2.4 Dampers

Off

- cycle (which refers to the burner off

- cycle) dampers restrict the intake and exhaust air flow through the venting system during standby mode by closing when the burner is not operating, thereby trapping residual heat in the heat exchanger. During the burner off

- cycle, the boiler loses heat by natural convection and conduction through the combustion air inlet and flue.

Installi ng a damper at these points improves AFUE by prevent ing heat from escaping and minimizing off

- cycle heat losses

.

5.2.5 Direct Vent

Di rect

- vent appliances use ducts to provide outdoor air for combustion. Non

- direct

- vent appliances typically use air from the appliance's environment for combustion. Direct

- vent systems may use a combustion

- air preheat system that passes the outdoor combus tion air through a heat exchanger in contact with the flue gases. The combustion air does not mix with the flue

gases , and m anufacturers typically accomplish this preheat design by running the inlet and exhaust vents concentrically. Direct vent boilers i mprove AFUE by reducing the heat loss through draft

, because direct vent systems are sealed systems in which combustion air is brought in from outside, rather than from the space surrounding the boiler

.

5.2.6 Pulse Combustion

Pulse combustion burners operate on self

- sustaining resonating pressure waves that alternately rarefy the combustion chamber (drawing a fresh fuel

- air mixture into the chamber) and pressurize it (causing ignition by compression heating of the mixture to it s flash point). Pulse combustion systems feature high heat transfer rates, and have a high combustion efficiency in comparison to conventional boiler designs

.

5.2.7 Premix Burners

P remix ing fuel gas and combustion air prior to arrival at the flame results in more complete combustion using lower levels of excess air. The lower levels of excess air raise the19

temperature of the gases entering the heat exchanger which enhances heat exchange and improves efficiency. Lower levels of excess air also raises the water vapor due point which

facilitates condensation and the recovery of latent heat and improves AFUE when the unit is operating in condensing mode.

5.2.8 Low

- Pressure, Air

- Atomized Oil Burner

T he residential oil burner market is currently dominated by the pressure

- atomized

retention head burner. The fuel input rate is controlled by the size of the nozzle orifice.

Pressure

- atomizing nozzles that are designed for low firing rates suffer rapid fo uling of the small internal passages, leading to bad spray patterns and poor combustion performance. To overcome the low input limitations of conven tional oil burners, Brookhaven National Laboratory developed

a low

- pressure, air

- atomized oil burner. In a ddition, it can operate with low levels of excess

combustion air for lean

- burning, ultra

- clean combustion. A lower level of excess air generally imp roves AFUE rating.

5.2.9 Delayed

- Action Oil Pump Solenoid Valve

A delayed

- action oil pump solenoid valve is insta lled between the oil pump and the burner nozzle to supplement the fuel pump regulator

. It does so by delaying the fuel release by three to six seconds after the igniter and burner blower start until the oil pressure reaches the level required to fully dis charge the oil into the combustion chamber without dripping. This ensures that the oil burns more completely , which improves efficiency

.

5.2.10 Electronic Ignition

B oilers are equipped with electronic ignition systems, which light the burner with an

electrical component upon a call for heat.

There are different types of electronic ignition systems including:

(1) Hot Surface Ignition : The igniter in this system is an electrically

- heated resistance

element that ther mally ignites the main burner d irectly without the use of a pilot light.

(2) Intermittent Pilot Ignition : This is a device that lights a pilot light by generating a spark. The pilot light in turn lights the main burner.

(3) Direct Spark Ignition (DSI) : DSI ignites the main burner directly by generating a spark.

( 4 ) Interrupted Duty Ignition Systems : A ll modern oil burners have a type of electronic ignition called interrupted duty ignition. A step

- up transformer supplies power to two electrodes, which causes a spark to jump. The interru pted duty ignition system for an oil burner activates the spark only until either a steady flame is established or the end of a

timed trail

- for

- ignition (TFI) period.20

Unlike standing pilot ignition systems that consume fuel continuously, electronic devices

and their control modules operate only during the active mode , which i mprove s AFUE

. As a

result of t he prohibition o n the use of constant

- burning pilot lights in gas

- fired boilers, electronic ignition is now present in all gas

- fired and oil

- fired boilers.

5.2.11 Toroidal Transformer (Standby/Off Mode)

A toroidal transformer has an annular core made of very tightly

- wound, grain

- oriented,

silicon steel ribbons , which are arranged such that all their molecules are aligned with the

direction of flux. This allows better performance ( i.e. , more quiet and efficient operation) than a traditional laminated transformer, in which unaligned molecules increase the core’s reluctance, or capacity for opposing magnetic induction. These improvements in efficiency allow an up to 50 percent reduction in size and weight, such that they can be used in new, innovative applications. Overall efficiency of toroidal transformers is 90 to 95 percent.

Because transformers continue to supply power to the control board in all modes of operation ( including standby mode ) , increasing their operating efficiency will also reduce the

boiler ’s standby electrical power consumption.

5.2.12 Control Relay for Models with Brushless Permanent Magnet (BPM) Motors (Standby Mode /Off Mode)

During testing of standby mode and off mode components performed for the DOE furnace and central air conditioner rulemaking

, 12 DOE found that BPM motors and their

associated controls consume power while in standby and/or off modes , while PSC motors did not have any stand by or off mode power draw. Therefore for those boilers that utilize them , the BPM

motor and associated controls could be disconnected while the system is in standby mode or off mode through the use of a control relay to further reduce a system’s standby/ of f mode power consumption. A typical control relay activates a switch when current runs through it and when there is no current a spring holds the switch in the open position.

5.2.13 Switching Mode Power Supply (Standby Mode /Off Mode)

While linear power supplies regulate voltage supply to the dc circuit with a series element, switching mode power supplies (SMPS) do so in an alternative, more effective way. In a switching mode power supply, power handling electronics switch on and off (w here “ on ”

means the switch is closed and voltage drop is negligible

, and “ off ” means the switch is open and current is negligible) with high frequency, effectively connecting and disconnecting the output

12 U.S. Department of Energy

, Office of Energy Efficiency and Renewable Energy

, Energy Co nservation Program for Consumer Products: Technical Support Document: Energy Efficiency Standards for Consumer Products: Residential Furnaces and Central Air Conditioners and Heat Pumps Including: Market and Technology Assessment ( 2010 ) (Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp_direct_ f inal_rule_tsd.html ).21

(load) to the input source. Continuous power flow to the load can be maintained/controlled by varying the duty cycle or frequency of the SMPS.

Linear power supplies experience significant heat losses because they use resistance elements, which convert electrical energy to heat energy, to regulate power su pply. By using a switch to control energy flow instead, switching mode power supplies avoid such heat losses and have much higher efficiency. SMPS do introduce transient losses that increase with frequency, but these losses are negligible in comparison wit h the energy saved

. Thus, replacing a linear power supply with an SMPS has the potential to reduce the electrical power consumption of residential boilers in standby mode and off mode.

Item 5

- 4 DOE welcomes comments on the technologies identified as well as additional technology options which have not been identified.

6. SCREENING ANALYSIS

The purpose of the screening analysis is to screen out technology options that DOE will not analyze further in the engineering analysis or downstream analyses

. DOE will develop a list of technology options (through its own research and in consultation with interested parties) as part of the technology assessment (section 5.2 )

. Th e identified candidate technology options will encompass all those technologi es that may improve the efficiency of residential boilers

. DOE

then review s each technology option considering the following four criteria, as provided in sections 4(a)(4) and 5(b) of 10 CFR Part 430, Subpart C, Appendix A:

1. Technological feasibility

. DOE will screen out technologies that are not incorporated in commercially

- available products or working prototypes.

2. Practicability to manufacture, install, and service

. If DOE determines that mass production and reliable installation and servicing of the technology cannot be achieved on the scale necessary to serve the releva nt market by the time of the compliance date of the standard, it will not consider that technology further.

3. Adverse impact on product utility or availability

. If DOE determines that a technology will have a significant adverse impact on the utility of t he relevant product for significant consumer subgroups, or will 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 pr oduct 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 cons ider that technology

further.22

DOE will fully document the reasons for eliminating any design options during the screening analysis and solicit interested parties’ comment.

Item 6

- 1 Of the technologies listed in section 5.2 , are there any that should be screened out based on the four screening criteria? If so, which criteria apply and why?

7. ENGINEERING ANALYSIS

After conducting the screening analysis, DOE will perform an engineering analysis based on the remaining technologies that are available to improve residential boiler efficiency. This

section provides an overview of the engineering analysis (section 7.1 ), discusses baseline models (section 7.2.1 ), describes DOE’s planned approach for determining the cost

- efficiency relationship (section 7.2.4 ), and addresses proprietary designs (section 7.2.5 )

.

7.1 Engineering Analysis Overview

The purpose of the engineering analysis is to determine the relationship between boiler efficiency and the manufacturer selling price (MSP). In determining the cost

- efficiency relationship, DOE estimate s the increase in manufacturer selling price associated with technology changes that i ncrease the efficiency of residential boilers relative to the baseline

model

. DOE will develop cost estimates for boilers at a range of efficiency levels based on the technologies incorporated into products at those levels and the associated changes in material, labor, shipping, and overhead costs. This relationship between price a nd efficiency serves as the basis for cost/benefit calculations to individual consumers in the LCC analysis and to the Nation in the national impact analysis (NIA).

DOE will develop separate engineering analyses for each of the baseline models it analyzes for the product classes considered in this rulemaking

. DOE intends to use residential

boiler teardowns and efficiency tests to develop cost

- efficiency relationships for the residential

boilers analyzed

.

Due to the large variation of sizes and character istics of the products considered in this standard rulemaking, DOE may select a smaller subset of representative product s to analyze. Typicall y, each representative product would capture the features and characteristics common to

the majority of the shipm ents. However, in cases where products with different characteristics account for significant market share but cannot be reasonably assumed to be representative of the remaining products, multiple representative products may be analyzed within a product c lass.

Once DOE has identified the cost

- efficiency relationships for the representative units, the analysis may be scaled to include boiler with other features (such as different capacities ) if there is a significant difference between the cost

- efficiency relationships of such units

.

The engineering analysis will identify and evaluate commercially

- available residential

boiler s within each product class that incorporate technologies that improve efficiency. The engineering analysis will also identify the highest

- efficiency model that is technologically

feasible within each product class ( i.e., the “ max

- tech ” model). DOE may determine the max

-23

tech model by investigating the existence of any residential boiler working prototypes with higher efficiency than those commercially available. DOE may consider modeling the highest

efficiency unit that is technologically feasible within each product class using a computer

- based modeling tool. DOE will ensure that these technologies meet the screeni ng criteria list ed in

section 6

.

7.2 Engineering Analysis Approach

For the engineering analysis, DOE will examine incremental increases in the manufacturer selling price associated wi th increases in residential boiler efficiency. For the preliminary analysis phase of the rulemaking , DOE intends to utilize publicly

- available data from manufacturer websites and catalogs for residential boilers in the market to categorize relationships between efficiency and technological options

, where the technolog y options used

can be identified. DOE encourages interested parties to submit test data or information that will improve DOE’s understanding of res idential boiler performance as it relates to the different technology options

. DOE will also use this information to select the characteristics of u nits that

are representative of the boilers in each product class

. DOE will then focus its analyses on the se representative units.

7.2.1 Baseline Models

For each product class, DOE will identify one or more baseline model s that will serve as a reference point against which DOE can measure changes resulting from potential energy

conservation standards. The baselin e model (or models) will represent the characteristics and input capacity of a typical residential boiler in a given product class. The baseline model is typically the most common, least

- efficient product sold in a given product class , and just meets (but does not exceed) current energy conservation standards

. DOE may select more than one representative baseline model for the product class if all models in that class cannot be reasonably represented by a single set of common characteristics.

7.2.2 Efficiency L evels

For each product class , 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 engineering, LCC, and PBP analyses at various efficiency levels for each product class. DOE will select efficiency levels between the baseline and max

- tech levels based on information obtained in the market and technology assessment and during product testing

. The efficiency

levels between the baseline and max

- tech level s will be based on the most common efficiencies of models available or on significant technologies for improving efficiency.

To establish the efficiency levels DOE intends to consider, DOE will analyze the design changes associated with improving resident ial boiler efficiency from the baseline through the

max

- tech model. This will include considering the technologies identified in the technology assessment that are passed on through the screening analysis. DOE also intends to collect24

residential boiler e fficiency data from various manufacturer catalogs and the AHRI D irectory

, and confirm that efficiency data through laboratory testing, 13 to establish the range of efficiencies currently available on the market in the market assessment (see section 5 )

. DOE will also use these data to categorize relationships between efficiency and technological options where the technological options used can be identified.

DOE note s that the maximum efficiency levels available in residential boilers currently

on the market may not necessarily correspond to the max

- tech levels. M odels at the highest efficiency available on the market today may not incorporate all possible design opt ions for increasing efficiency and, therefore, may not achieve the highest possible efficiency at the max

tech level. It is also possible that some of the design options that have met the screening criteria ( i.e. , passed the screening analysis) may be wor king prototypes that are not yet commercially available and, therefore, would not be found in today’s available maximum efficiency products. DOE will seek input from interested parties to determine appropriate max

- tech efficiency levels. As previously me ntioned, DOE may consider modeling the highest

- efficiency unit ( i.e. , the

“max

- tech” model) that is technologically feasible within each product class by using a modeling

tool. DOE will ensure that such units meet the screening criteria in section 6 using other means,

such as information gathered from manufacturer interviews.

Item 7

- 1 DOE seeks input regarding the range of efficiency levels and any key effi ciency levels that should be examined as part of its analysis.

Item 7

- 2 DOE seeks comment on the appropriate max

- tech level s for residential

boilers.

Item 7

- 3 DOE seeks input on the representative capacity and other representative characteristics for each residential boiler product class.

Item 7

- 4 DOE seek

s input on characteristics which may require multiple representative products within a single product class.

7.2.3 Methodology

After identifying the representative model for each product class and selecting eff iciency levels for analysis, DOE plans to purchase, test, and tear down selected residential boilers within

each product class. The residential boilers will be tested for efficiency according to the DOE test

13 As previously noted, the DOE test procedure currently omits equations necessary to calculate the AFUE for two

stage and modulating condensing furnaces and boilers that are tested using section 9.10 of ASHRAE 103

- 1993, which permit s the test engineer to omit the heat

- up and cool

- down tests. As a result, DOE believes that manufacturers of such models that have used the option to omit the heat

- up and cool

- down tests may have incorrect AFUE ratings, so DOE will test all models prior t o tear down to determine the efficiency rating before incorporating such results in its downstream analyses.25

procedure for residential boilers

. DOE will disassemble and inventory the residential boilers to
derive the material and labor costs.

DOE may supplement the findings from its tests and teardowns through: (1) a review of data collected from manufacturers about prices, efficiencies, and othe r features of various models

of residential boilers , and (2) interviews with manufacturers about the techniques and associated costs used to improve efficiency. In addition, DOE w ill use the cost data generated by the engineering analysis in the manufactu rer impact analysis ( see section 14 )

. If possible, DOE w ill then aggregate the cost numbers by weighing individual data p oints by company

- level sales

volumes for each product class

.

Manufacturer cost information should reflect the variability in baseline models, design strategies, and cost structures that exist among manufacturers. DOE will verify any aggregated

cost

- efficiency data using information obtained through follow

- up discus sion s with

manufacturers. These interviews will provide a deeper understanding of the various combinations of technologies used to increase residential boiler efficiency, as well as their associated manufacturing costs.

DOE will estimate the contribution of the depreciation of capital conversion expenditures

to the incremental overhead. During the interviews with manufacturers, DOE will gather information about the capital expenditures needed to increase the efficiency of baseline models

to various effici ency levels. DOE will also gather information about the depreciation method(s) used to expense the conversion expenditures.

The proposed approach will enable DOE to characterize the cost

- efficiency relationship

for residential boilers across the entire ef ficiency range for each product class. DOE will maintain the confidentiality of proprietary data while allowing the public to examine the cost and design assumptions that underlie the cost

- efficiency estimates.

After determining estimates for the manufacturer production cost, DOE plans to apply

estimated manufacturer markups to convert manufacturer production costs to manufacturer selling prices

. DOE intends to estimate manufacturer markups from publicly

- availabl e financial information ( e.g. , Securities and Exchange Commission 10

- K reports 14 ) and supplement the estimates with information obtained during discussions with manufacturers

.

7.2.4 Cost

- Efficiency Relationship and Analysis

The engineering analysis primarily invo lves estimating the production cost of boiler s at various levels of increased efficiency. These estimates are then used to identify the cost

efficiency relationship for the products. DOE typically structures its estimation of the cost

efficiency relation ship around one of three methodologies: (1) the design

- option approach, which calculates the incremental cost of adding specific design options to the baseline model; (2) the efficiency

- level approach, which calculates the incremental costs of achieving in creases in energy efficiency, without regard to the particular design options used to achieve such increases; and (3) the reverse engineering cost

- assessment approach, which involves a “bottom

- up” manufacturing cost assessment based on a detailed bill of m aterials (BOM) derived from

14 See http://www.sec.gov/edgar.shtml

.26

teardowns of products being analyzed. Deciding which methodology to use for the engineering analysis depends on the product, the technologies under study, and any historical data DOE can draw upon. For the analysis of potentia l amended AFUE standards, DOE has tentatively decided to use both the efficiency

- level approach to identify incremental improvements in efficiency for each product and the cost

- assessment approach to develop a cost for each efficiency level. For the analy sis of standby mode and off mode energy consumption, DOE is considering a design option approach. The reason for using a design option approach for the analysis of standby

mode and off mode energy consumption standards is two

- fold: (1) boiler manufacture rs typically do not provide information on standby mode and off mode electrical power consumption, making an efficiency level approach infeasible; and (2) DOE believes that current boiler designs are unlikely to utilize technologies that reduce standby mod e and off mode electrical energy consumptions, making a reverse engineering approach infeasible.

Prior to the engineering analysis, DOE plans to test a number of residential boilers according to the DOE test procedure being developed (see section 3) in order to gather measured

data on residential boiler efficiency. In the engineering analysis, DOE will use the test results to

select a series of residential boilers with incrementally increasing efficiency from the basel ine

model to max

- tech for each p roduct class

. After selecting both the baseline and incrementally

more

- efficient substitutes, DOE will generate BOMs by disassembling mult iple manufacturers’

residential boilers spanning a range of efficiency levels. The BOMs describe the products in

det ail, including all manufacturing steps required to make and/or assemble each part. DOE will then develop a cost model to convert the BOMs into manufacturer production costs (MPCs) at
vari ou s levels

. The cost model will be a detailed, component

- focused mo del for calculating the

m anufacturing cost of a product, which will include estimates of the cost of materials, labor, and

the overhead c osts associated with production

.

DOE will determine an average manufacturer markup by examining the annual Securitie s and Exchange Commission (SEC) 10

- K reports filed by publicly

- traded manufacturers of appliances whose product range includes residential boilers. By applying the manufacturer markup to the MPCs that are obtained from the cost model , DOE will calculate t he manufacturer selling prices and construct industry cost

- efficiency curves. DOE may also estimate production

costs for units that it does n o t physically disassemble by us ing catalog data, in conjunction with industry expertise and information gathered from physical teardowns

, to estimate MPCs

.

7.2.5 Proprietary Design s

DOE will consider in its engineering and econ omic analyses all technologies that are commercially available or pre sent in a working prototype , including proprietary designs t hat meet the screening criteria discussed i n section 6

. However, DOE will consider a proprietary design in the subsequent analyses only if it does not represent a unique path to a given efficiency

level. If the proprietary design is the only approach available to achieve a given efficiency level,

then DOE will eliminate th at efficiency level from further a nalysis. DOE will reject a standard level that can only be met with a single proprietary technology

, because it could result in an anti

competitive market, a principle consistently applied in past DOE rulemakings as economically unjustifiable. However, i f a given energy efficiency level can be achieved by a number of design approaches, including a proprietary design, DOE will continue to examine the given efficiency level, in spite of the proprietary nature of that one design.27

DOE is sensitive to manufac turer concerns about proprietary designs and will take steps to maintain the confidentiality of any proprietary data provided by manufacturers. This information will provide input to the competitive impacts assessment and other economic analyses.

8. MARKUPS ANALYSIS

DOE uses retail (consumer) price data in its LCC, PBP, and national impact analyses. DOE typically uses distribution channel markups (and sales tax) to convert estimates of the manufacturer selling price derived from the engineering analysis (sec tion 7 ) to consumer prices.

Before developing markups , DOE first needs to identify how distribution from the

manufacturer to the consumer takes place

. Two different markets exist for heating systems: (1)

new construction and (2) replacements. Figure 8. 1 shows how DOE plans to characterize the replacement distribution channel s for residential boilers :

Figure 8.1: Replacement D istribution C hannel

Figure 8.2 shows how DOE plans to characterize the new construction distribution

channel for residential boilers:

Figure 8.2: New C onstruction D istribution C hannel

In addition, DOE plans to consider a new owners market segment ( i.e.

, existing households that do not already own a boiler and purchase one ) ; t he markups for this market are assumed to be the same as for the replacement market.

Manufacturer Wholesaler Mechanical
Contractor Consumer

Manufacturer Wholesaler Mechanical
Contractor General

Contractor Consumer28

DOE will rely on E conomic C ensus data from the United States Census Bureau 15 and input from indust ry trade associations such as the Heating, Air

- Conditioning, and Refrigeration Distributors International (HARDI) to define how boilers are marked up from the manufacturer

to the consumer. DOE plans to calculate regional wholesaler and mechanical contract or markups

based on f

irm income statements from the HARDI 201 2 Profit Report 16 and from the Air Conditioning Contractors of America ( ACCA ) 2005 Financial Analysis

, 17 respectively. DOE plans to calculate regional general contractor markups from Residential B uilding Construction

sector financial data from the 2007 Economic Census

. 18

DOE will also develop and include regional sales taxes to calculate retail prices for replacement units. The State Tax Clearinghouse 19 is an on

- line source that DOE intends to use to calculate applicable sales taxes. DOE may use collected retail price data to validate the

overall manufacturer

- to

- consumer markup.

The overall markups are different for new and replacement installations, since different markups apply to each of these applications

. DOE will use o verall markup to estimate the customer price of baseline equipment. DOE uses the overall incremental markup to estimate changes in the customer price resulting from a n amended energy conservatio n standard to raise equipment efficiency.

The markups analysis will generate retail prices for each potential efficiency level, assuming that each level represents a new minimum efficiency standard. DOE makes this assumption to capture the effect on reta il price s that may be produced by manufacturer s’ higher production volumes of more

- efficient products as required by t he standard.

Item 8

- 1 DOE welcomes suggestions and comments concerning its proposed approach to developing estimates of future residentia l boiler retail prices.

9. ENERGY USE ANALYSIS

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

the residential boiler product classes described in the engineering analysis for representative U.S.

homes and to assess the energy

- savings potential of increased product efficienc ies

. DOE uses the annual energy consumption and ener gy

- savings potential in the LCC and PBP analys i s to
establish the savings in consumer operating cost s at various product efficiency levels.

15 U.S. Census Bureau

, Plumbing, Heating, and Air

- Conditioning Contractors

, Sector 23: 238220

, Construction: Industry Series

, Preliminary Detailed Statistics for Establishments ( 2007 ) (Available at: http://www.census.gov/econ/ )

. 16 Heating, Air Conditioning & Refrigeration Distributors International , 2012 Prof it Report ( 2011 D ata) (Available

at: http://www.hardinet.org/Profit

- Report )

. 17 Air Conditioning Contractors of America

, Financial Analysis for the HVACR Contracting Industry (2005) (Available at: https://www.acca.org/store/product.php?pid=142 )

. 18 U.S. Census Bureau

. Residential Building Construction

, Sector 23: 236115

- 236118

, Construction: Industry Series: Preliminary Detailed Statistics for Establishments ( 2007 ) (Available at: http://www.census.gov/econ / )

. 19 Sales Tax Clearinghouse, Inc. provides State sales tax rates

, along with combined average city and county rates. ( Available at: http://thestc.com/STrates.stm

. )29

DOE will estimate the annual energy consumption of residential boilers at specified energy efficiency levels across a range of clima te zones. T he annual energy consumption

includes use of natural gas, liquefied petroleum gas (LPG), oil, or electricity for he at production

, as well as use of electricity for the circulation pump and auxiliary components.

In its rulemaking for residential boilers that ended in 2007 , DOE used data from the Energy Information Administration’s (EIA) Residential Energy Consumption Survey (RECS) 20
to determine the energy consumption of households using the covered equipment. Specifically,

DOE used the 200 1 version of RECS , which was the most current survey available at that time

. DOE will use data from RECS 2009 for the current rule making. From RECS, DOE will develop household samples for each product class. 21 According to RECS 2009, boilers serving individual housing units can be found in 4.2 million housing units with gas

- fired boilers, 2.7 million housing units with oil

- fired boi lers, and 0.23 million housing units with electric boilers. RECS 2009 does not distinguish between hot water and steam boilers, so DOE plans to use the same sample for units with both types of heat transfer medium

.

DOE plans to look separately at boilers serving multiple housing units. According to RECS 2009, boilers serving multiple housing units can be found in 3.6 million housing units with gas

- fired boilers, 1.3 million housing units with oil

- fired boilers, and 0.22 million housing

units with electric boilers. DOE plans to develop criteria to remove large boilers serving multiple housing units that are non

- residential (commercial) boilers from this sample, based on RECS values regarding the number of apartment units and floors of multi

- family buildings.

Furthermore, DOE plans to account for the energy used to heat domestic hot water for the fraction of boilers that provide both space heating and domestic hot water. DOE also plan s to
account for th e energy use of boilers used together with hydronic air handlers.

DOE does not plan to look at commercial applications for residential boilers, because it is unlikely that residential boilers would be used for commercial applications to any significant

ex tent

.

RECS survey data provide information on the age of the equipment

, as well as associated

energy use in residential housing units. The survey includes information on the physical characteristics of housing units, demographic characteristics of house holds, heating and cooling equipment used, fuels used, energy consumption and expenditures, and other residential

characteristics data.

Details on how DOE will use RECS to determine the annual energy consumption of residential boilers is 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 10 ).

20 See http://www.eia.gov/consumption/residential/

. 21 RECS 2009 is based on a sample of 12,083 households statistically selected to represent 113.6 million housing units in the United States. RECS 2009 data are available for 27 geographical areas (including 16 large S tates) (Available at: http://www.eia.gov/consumption/residential/ )

.30

9.1 Estimating Annual Energy Consumption of Boilers

To estimate the annual energy consumption of boilers meeting higher efficiency levels, DOE will first calculate the house heating load based on the RECS estimates of the annual

energy c onsumption of the boiler for each household. For each household with a boiler , RECS estimates the equipment’s annual energy consumption from the household’s energy bills using conditional demand analysis. DOE will estimate the house heating load by reference to the existing boiler’s characteristics, specifically its capacity and efficiency (AFUE), as well as by the heat generated from the electrical components. The AFUE of the existing boilers will be

dete rmined using the boiler vintage 22 from RECS and historical data on the market share of boilers by AFUE. 23

DOE will then use the house heating load to determine the burner operating hours (BOH) , which are needed to calculate the fuel consumption and electric ity consumption using the proposed DOE furnace and boiler test procedure

. 78 FR 675 (Jan. 4, 2013). To calculate

pump and other auxiliary components’ electricity consumption, DOE plans to utilize data from manufacturer product literature.

For hot

- water boilers used for both space heating and domestic hot water, in addition to accounting for the energy use for space heating, DOE plans to account for the energy use used for heating domestic hot water. DOE plans to use RECS and other sources to determine t he fraction of households that use boilers for heating domestic hot water in addition to space heating. In order to calculate the energy used for domestic hot water, DOE plans to develop methodologies that will utilize the hot water draw model and existin g water heater performance

model s applied during the 2010 residential water heater rulemaking. 24 To estimate the recovery efficiency parameter

, DOE plans to adopt methodologies that will use AFUE values and performance data from manufacturer product litera ture.

DOE also plans to account for boiler heat losses , which vary depending on the efficiency

. The analysis will be based on a set of criteria to determine boiler location using household characteristics data provided for each household in RECS

. DOE wi ll use information about the

boiler insulation from manufacturer product literature data and other sources to calculate the loss to the surrounding environment.

To adjust the data to normal weather, the RECS 2009 household energy consumption

values will b e adjusted based on 10

- year average heating degree

- day (HDD) data (2002

- 2011) for each geographical region

. 25 In addition, DOE will make adjustments to the house heating load to reflect the expectation that housing units in the year in which compliance wit h the

22 The term “vintage” refers to the year of installation of the equipment in question.

23 Gas Appliance Manufacturers Association (GAMA), Shipment Data for Residential Furnaces and Boilers provided to DOE in 2001 and 2005 (Available at: http://www.regulations.gov/#!documentDetail;D=EERE

- 2006

- STD

- 0102

- 0056 and http://www.regulation s.gov/#!documentDetail;D=EERE

- 2006

- STD

- 0102

- 0139 ).

24 See http://www1.eere.energy.gov/buildings/appliance_standards/residential/heating_products_fr.html

. 25 10

- year average is used in order to match with EIA’s Annual Energy Outlook methodology (see Residential Demand Module on pg. 32

- URL: http://www.eia.gov/forecasts/aeo/assumptions/pdf/residential.pdf )

.31

amended standards is expected to be required will have a somewhat different heating load than the housing units in RECS 2009. The adjustment considers projected improvements in building thermal efficiency (due to improvement in home insulation and other thermal efficiency practices) and increases in house floor area between 2009 and the compliance date of the

standards.

DOE also p lans to consider the “rebound effect” in the energy use analysis

. A rebound effect occurs when a piece of equipment that is made more efficient is used more intensively, so that the expected energy savings from the efficiency improvement may not fully m aterialize. Based on limited research, the rebound effect for residential space heating appears to be highly variable, ranging from 10 to 30 percent ( i.e. , 70 to 90 percent of the expected energy savings

from more efficient equipment will actually occur). 26

Item 9

- 1 DOE seeks stakeholder input on the planned approach of using RECS data for determining the energy consumption of residential boilers in residential buildings.

Item 9

- 2 DOE seeks stakeholder input on what fraction of large boilers serving multipl e housing units are non

- residential (commercial) boilers, and what criteria to use to remove such units from the sample.

Item 9

- 3 DOE seeks historical shipment

- weighted boiler efficiency data between 2003

and 2011.

Item 9

- 4 DOE seeks stakeholder input on data sources that it can use to characterize the variability in annual energy consumption for boilers. DOE is particularly interested in field monitoring studies and data.

Item 9

- 5 DOE seeks stakeholder input on what fractio ns of oil

- fired and gas

-

fired hot

water boilers are used both for space heating and domestic hot water

.

Item 9

- 6 DOE seeks input on the fraction of residential boilers that is use d in combination with hydronic air handlers.

It em 9

- 7 DOE seeks input on the fraction of residential boilers that is use d in commercial applications. I s this market large enough that DOE should take it into

account?

Item 9

- 8 DOE seeks comments on the rebound effect that may be associated with more

efficient residential boilers.

26 Greening, L. et al. , “Energy Efficiency and Consumption

- The Rebound Effect

- A Survey,” Energy Policy 28 (2000), 389

- 401.32

10. LIFE

- C YCLE COST AND PAYBACK PERIOD ANALYSIS

This section describes the life

- cycle cost and payback period analysis that DOE will perform for boilers, including how DOE develops the inputs to the calculation. The LCC analysis establi shes the total cost of an appliance over its lifetime (including purchase price

, installation cost, and operating costs). The PBP analysis calculates the amount of time required for energy cost savings to pay back any increased cost of a higher

- efficiency product.

10.1 Overview

The effects of amended energy conservation standards on the consumer of a product include a change in operating cost (usually decreased) and a change in purchase price (usually increased). DOE analyzes the net effect on consumers by ca lculating the LCC and PBP

, incorporat ing the engineering performance data (described in section 7 ), the product retail price (described in section 8 ), and the energy consumption data (described i n section 9 ). Inputs t o the

calculation of LCC and PBP include the total installed cost to the consumer (purchase price plus any installation cost) and operating cost (energy expen ditures and, if applicable, repair and maintenance costs). Additional inputs to the LCC calculati on include energy price projections

, the lifetime of the appliance or other defined period of analysis, and discount rates.

10.2 Approach

DOE will conduct the LCC and PBP analysis for the product classes on which it plans to perform an analysis (section 5. 1.1 ). In the p reliminary a nalysis stage of the residential boilers rulemaking, DOE will conduct the LCC and PBP analysis by using Monte Carlo simulation and probability distributions to model both the uncertainty and variability in the inputs. The Monte

Car lo approach provides a significant advantage over alternative approaches ( e.g. , an approach using typical or average values to characterize inputs) b ecause it identifi es the percentages of consumers benefiting from or being impact ed by a prospective standard.

DOE plans to develop an LCC and PBP model that incorporates both Monte Carlo simulation and probability distributions by using computer spreadsheets combined with a commercially

- available add

- in program. Each Monte Carlo si mulation will consist of 10,000

LCC and PBP calculations. The model will perform each calculation using input values sampled from probability distributions where possible, or characterized using single

- point values in other

cases. The analy tical results are 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.

DOE will use probability distributions to characterize most of the operating cost inputs to

the LCC and PBP an alysis, including product lifetimes and consumer discount rates. As

described in section 9 , DOE will use RECS 2009 to establish the annual energy consumption of each product class. As described in section 10.3 , the LCC and PBP analysis will capture the regional variability in energy prices. The methodolog ies for developing maintenance / repair and

installation costs are described in section s 10.4 and 10.5 respectively

.33

As described in section 8

, DOE will derive markups (other than manufacturer markup s )

and sales taxes us ing probability distributions t hat capture their regional variability , in order to calculate the equipment cost

.

Another factor in identifying how consumers would be impact ed by a particular standard

is the expected distribution of pro duct efficiencies in the absence of amended standards (the base case)

. In the case of boilers , product efficiency is expressed as annual fuel utilization efficiency

. DOE plans to develop probability distributions to characterize the current product mix , and will consider likely trends in projecting the efficiency distribution in the anticipated year of compliance (20 20 )

.

DOE will determine the LCC and PBP for a particular standard level relative to the base

case distribution of efficiencies. I n perfor ming an iteration of the Monte Carlo simulation for a given consumer, product efficiency will be chosen based on its probability. If the chosen product efficiency is greater than or equal to the efficiency of the standard level under consideration, the LC C and PBP calculation w ill reveal that a consumer is not impacted by the

standard level. By accounting for consumers who already purchase more

- efficient products,

DOE avoid s overstating the potential benefits from increasing product efficiency. To enable DOE to use this methodology, DOE ask s stakeholders to provide data on the current mix of

pro duct efficiencies. DOE also plans to use the AHRI data described in section 5. 1 to develop efficiency distributions based on availability of various models

.

As described in section 9.1

, DOE will determine as part of the LCC and PBP analys i s whether there may be a rebound (or “take back”) effect associated with more

- eff icient boiler s. The “ take

- back ” in energy consumption associated with the rebound effect typically involves greater use that can result from increases in energy efficiency and the associated reduction in operating costs. As previously specified, t he rebound effect assumes that consumers will increase their overall annual usage of a more

- efficient product, thereby decreasing their overall annual savings

. For example, a consumer who purchases a more

- efficient air conditioner and is aware of the anticip ated energy savings may opt to use the unit more frequently, thereby increasing comfort but returning a portion of the expected energy savings.

The following sections discuss the methodologies DOE plans to use to develop several of the inputs to the LCC a nd PBP analysis, including : (1) electricity prices; (2) maintenance, repair, and installation costs; (3) product lifetimes; and (4) discount rates. The other inputs to the LCC and PBP analysis

— manufacturer costs (section 7 ), markups for the determination of consumer retail prices (section 8 ) , and annual energy consumption ( section 9 )

— were discussed previously.

DOE is also required to perform a PBP analysis to determine whether the rebuttable presumption of economic justification app lies (whe re the higher installed cost of more energy

efficient equipment is less than three times the value of the lowered operating costs in the first year of the energy conservation standard )

. (42 U.S.C. 6 295(o)(2)(B)(iii)) To determine the

rebuttable

- presumption PBP, DOE will determine the value of the first year’s energy savings by calculating the quantity of those savings in accordance with DOE’s test procedure. A lthough

DOE will examine the rebuttable

- presumption criteria

, DOE determine s whether potential standards are economically justified through a n analysis of the economic impacts of increased34

efficiency pursuant to section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. 6 295(o)(2)(B)(i)) The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification).

In preparing the NOPR, DOE carefully review s all th e comments it receives on the

p reliminary a nalysis LCC analysis , make s any necessary revisions to the analysis, and if

necessary
, evaluate s additional parameters not included in the p reliminary a nalysis.

Item 10

- 1 DOE seeks stakeholder input on its proposed approach of using probability distributions and Monte Carlo simulation to conduct the LCC and PBP analysis

.

Item 10

- 2 DOE requests data from stakeholders to characterize the current mix of boiler efficiencies in the market.

10.3 Energy Prices

DOE plan s to derive average monthly natural gas, LPG, electricity

, and fuel oil prices for

the 27 geographic areas in RECS 2009 by using the latest data from EIA and monthly energy price factors. DOE will develop the 27 regional energy prices based on the househo ld population in each region

. DOE will assign an appropriate price to each household in the sample, depending

on its location.

To calculate annual electricity prices for residential consumers in each of the geographic areas, DOE will use information prov ided by electric utilities as summarized in the most recent

EIA Form 861 data. 27 To calculate annual natural gas prices, DOE will use data from EIA’s Natural Gas Navigator, 28 which includes monthly natural gas prices by State for residential, commercial, and industrial customers. To calculate annual LPG and oil prices, DOE will use

data f rom EIA’s State Energy Data System ( SEDS )

. 29 SEDS includes annual fuel oil prices for

res idential, commercial, industrial, and transportation consumers by S tate. For areas with more than one State, DOE weight s each State’s average price by its number of households.

To determine monthly prices for use in the analysis, DOE plans to develop mo nthly energy price factors for each fuel based on long

- term price data from EIA

. DOE then plans to multiply the annual prices described above by the monthly price factors for each fuel type and by geographical area to derive prices for each month.

In ad dition, for e le ctricity and natural gas prices, DOE plans to adjust the monthly average energy prices by using seasonal marginal price factors to come up with monthly marginal electricity and monthly natural gas prices. Marginal energy prices are the pric es consumers pay for the la st unit of energy used. DOE uses the marginal energy prices for each

27 Availa ble at www.eia.doe.gov/cneaf/electricity/page/eia861.html

. 28 Available at http://tonto.eia.doe.gov/dnav/ng/n g_pri_sum_dcu_nus_m.htm

. 29 Available at http://www.eia.doe.gov/emeu/states/_seds.html

.35

house to calculate the cost of saved energy associated with the use of higher

- efficiency equipment. Since marginal prices reflect a change in a consumer’s bil l associated with a change in energy consumed, such prices are appropriate for determining energy cost savings associated

with a possible change to efficiency standards. DOE plans to derive the seasonal marginal price factors using RECS 2005 billing data or 2009 billing data

, if available.

DOE will use projections of average natural gas, LPG, electricity

, and fuel oil prices by

C ensus D ivision for residential consumers to estimate future energy prices. Otherwise, DOE
will use the most recent available edition of EIA’s Annual Energy Outlook (AEO) as the default source of projections for future energy prices.

Item 10

- 3 DOE seeks input on the planned approach for estimating future energy prices.

10.4 Maintenance and Repai r Costs

DOE will consider any expected changes to maintenance, repair, and installation costs for

the residential boilers subject to amended standards

. Typically, small incremental changes in product efficiency incur little or no change in repair and main tenance costs over baseline products. Products having efficiencies that are significantly higher than the baseline are more likely to incur increased repair and maintenance costs, becaus e such products are more likely to incorporate technologies that are not widely available. DOE will use input from manufacturers

and other stakeholders to develop appropriate repair and maintenance cost estimates, as

necessary. DOE will use data provided in RECS and other surveys to determine how often boiler equipment ty

pically undergoes maint enance or repair.

Item 10

- 4 DOE seeks stakeholder input on the maintenance and repair costs approach

. Specifically, DOE requests comment on frequency and cost of maintenance, major repair issues, repair frequency, and repair costs for boilers that meet the minimum efficiency

standards

, as well as for higher

- efficiency boilers.

10.5 Installation Costs

DOE plans to estimate all the installation costs associated with fitting a boiler in a new housing unit or as a replacement for an existing boiler. This figure will include any additional costs of changes ( such as venting and piping modifications ) that would be re quired to install equipment at various efficiency levels. Installation costs will be based on data from the latest version of RS Means Residential Cost Data, 30 as well as manufacturer product literature, survey data, and information from industry expert so urces. DOE plans to estimate installation costs for each sample household based on building characteristics provided in RECS. Since labor rates vary significantly from region to region of the country, DOE plans to use RS Means city cost

indices data to c apture this regional variability.

30 RS Means Company Inc., RS Means Residential Cost Data ( 31st Annual Edition ed. 2012 ) (Available at: http://rsmeans.reedconstructiondata.com/60172.aspx ).36

DOE plans to take into account installation cost items such as piping, vent length, vent material, number of elbows, vent terminations, vent connectors, water treatment, and modifications to the building such as drilling holes. In addition, DOE plans to take into consideration the fraction of boilers installed in common with a water heater, the fraction of households with different venting types ( e.g. , unlined/lined masonry

, type B double wall

, stainless steel, plastic ve nt); the fraction of boilers using isolated combustion; the fraction of single wall and double wall vent connectors; the fraction of households requiring stainless steel venting; and the f

raction of condensing boilers that would require a condensate pump.

Item 10

- 5 DOE seeks stakeholder input on its proposed installation cost approach

. Specifically, DOE requests data on the fractions of installations that would entail significant additional installation expenses

.

10.6 Product Lifetime

P roduct lifetime is the age at which a n appliance is retired from service. In the past , DOE

use d information from various literature sources , such as Appliance Magazine , handbooks published by the American Society of Heating, Refrigerating, and Air

- Conditioning Engineers (ASHRAE )

, and input from manufacturers and other stakeholders to determine a range for the

lifetime of residential boilers

. For this rulemaking

, DOE plans to use an approach that more accurately accounts for boiler lifetimes in the field. It is based on an anal ysis of lifetime in the field using a combination of shipments data, the stock of boilers, and RECS data on the age of

the boilers in homes. The data will allow DOE to estimate a survival function, which also provides an average and a median appliance lif etime. A 2011 paper 31 using a similar method

calculated the best fit Weibull survival function for residential gas boilers , and the results reported a median lifetime of 17.5 years and a mean average of 25.3 years

. 32 DOE plans to update these results and add a calculation for residential oil

- fired boilers based on more recent data, including RECS 2009, the American Housing Survey (AHS) for 2009 and 2011, and updated historical shipment data.

Item 10

- 6 DOE seeks comments on the methodology used to determine product lifetimes for residential boiler

s.

10.7 Discount Rates

DOE use s a 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. 33 For residential consumers of boiler s, DOE plans to use estimates of the finance cost to purchase residential appliance products. The finance cost can be interpreted as : (1) the

31 Lutz, et al ., “ Using National Survey Data to Estimate Life times of Residential Appliances,” HVAC&R Research (October 2011) (Available at: http://www.tandfonline.com/doi/abs/10.1080/10789669.2011.558166#preview ).

32 The median is the middle value in set of ordered values.

33 The consumer discount rate d iffers from the discount rates used in the national impact analysis, which are intended to represent the rate of return on capital in the U.S. economy, as well as the societal rate of return on private consumption.37

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). Much of the data required for determining the cost of debt and equity comes
from the Federal Reserve Board’s trienn ial Survey of Consumer Finances

. 34

Item 10

- 7 DOE seeks stakeholder input on its planned approach for estimating discount rates for residential consumers.

10.8 Energy Efficiency in the Base Case

To estimate the share of consumers affected by a standard at a particular efficiency level, DOE’s LCC and PBP analysis consider s the projected distribution ( i.e. , market shares) of product efficiencies that consumers will purchase in the first compliance year under the base case (the case without amended energy conser vation standards).

Projected market shares will use available data on recent market trends in residential

boiler efficiency and will take into account the potential impacts of the ENERGY STAR program and other programs or policies (such as consumer rebat e programs or State tax credits to

consumers for the purchase of more

- efficient products, and manufacturer tax credits that encourage the production of more

- efficient products) that may affect the demand for more

efficient residential boilers.

Item 10

- 8 DO E seeks comments on the appropriate distribution of energy efficiencies for residential boilers in the absence of amended energy conservation standards.

11. SHIPMENTS ANALYSIS

DOE uses s hipments projections to calculate the national impacts of energy conserva tion

standards and to calculate the future cash flows of manufacturers. DOE develop s shipments projections based on an analysis of key market drivers for a particular product.

To establish historical shipments by product class, DOE plans to rely on public ly

available sources
, including Appliance Magazine

. 35 DOE also plans to utilize regional data

, if

available

, so that the national shipments data can be further disaggregated. After the historical shipments data ha ve been compiled, DOE plans to validate the existing equipment stock developed from the historical shipments data and the estimated lifetime with data on product

saturations in the housing stock

. S aturations at the Census Region level are provided by the

Ce nsus Bureau’s American Housing Survey (AHS)

. 36

DOE p lans to project shipments of residential boilers by primarily accounting for sales to two market segments: (1) the replacement market

, and (2) new construction

. To project

34 Available at www.federalreserve.gov/econresdata/scf/scfindex.htm

. 35 Available at: http://www.appliancemagazine.com/

. 36 See http://www.census.gov/hhes/www/housing/ahs/ahs.html

.38

shipments to the new construct ion market, DOE plans to utilize estimates of projected new housing construction (from the latest available edition of EIA’s AEO ) and saturation rates of various boiler types in new housing provided by the U.S. Census Bureau’s Characteristics of

New Housing

. 37 In projecting future new housing saturation rates of residential boilers, DOE will consider expected trends in builder and consumer preferences, including competition from other space heating products. Both EIA’s residential construction projec tions and the Census Bureau’s historical product saturation rates are broken down regionally , thereby allowing DOE to estimate regional new construction shipments.

To project shipments to the replacement market, DOE assumes that consumers replace a

boile r with the same type of equipment. The stock model accounts for retirements using methodology that applies the boiler survival function described in section 10.6.

In addition to the new construction and replacement market segments, DOE plans to

consider two additional market segment s: (1) existing households that do not already own a

boiler and purchase one
, and (2) households that switch to a different boiler fuel type

. In the

case of residential boiler s, th ese s egments would primarily refer to homes bu ilt without central heating in which a boiler is later installed or to oil

- fired boilers that are replaced by natural gas or

LPG boilers

. DOE plans to use th ese market segment s to calibrate the historical projections ( i.e.

, backcasts) to historical shipme nts. In order to reduce the discrepancy between the backcasts and historical shipments, DOE plans to derive a historical rate of product adoption for the non

centrally

- heated market. DOE plans to project future adoption rates by considering the historical

trend as well as market saturation effects.

Item 11

- 1 DOE seeks historical boiler shipments data from stakeholders, disaggregated by product class and efficiency level if possible.

11.1 Impact of Amended Standards on Product Shipments

DOE will develo p a set of shipment projections for ea ch set of efficiency levels analyzed for each product class. DOE uses the se standards

- case projection s to evaluate the impacts of

amended standards on product shipments. B ecause the standards

- case projections take in to account the increase in purchase price and the decrease in operating costs caused by amended standards, project ed shipments for a standards case typically deviate from those for the base case. Household income also factors into consumer purchase decisi ons. Therefore, the magnitude of

the difference between the shipment projection s for the standards case and base case depends on the estimated purchase price increase and operating cost savings relative to household income. Because purchase price tends t o have a larger impact than operating cost on appliance purchase decisions, standards

- case projection s typically show a d ecrease in product shipments relative to

the base case.

DOE’s past standards analyses have attempted to quantify the sensitivity of shipments to increased purchase price and operating cost savings

, as well as to changes in household income. DOE has conducted literature reviews and analyses of historical appliance price and efficiency

37 Available at: http://www.census.gov/construction/chars/

.39

data to develop sensitivities. DOE will attempt to develop purchase price and operating cost

sensitivities specific to residential boiler s

. If the data required to develop th o se sensitivities are unavailable, DOE will consider modeling standards

- case shipments projection s using scenarios ( i.e. , specified impacts to product shipments).

Item 11

- 2 DOE seeks input from stakeholders on the potential impact of amended

standards on residential boiler shipments

.

12. NATIONAL IMPACT ANAL YSIS

In the national impact analysis (NIA) , DOE estimates national energy savings (NES)

from new or amended energy conservation standards and the net present value (NPV) of total

consumer benefits

. The NIA considers: (1) NES attributable to each potential standard ; (2) monetary value of the NES to purchasers of the considered equipment ; (3) increased total installed cost of the equipment because of standards ; and (4) NPV of the difference between the operating cost savings and increased total installed cost

. DOE perform s all NIA calculations using a computer spreadsheet model. 38 The spreadsheets combine the calculations for determining the NES and NPV for each considered product class with input from the shipments

model.

12.1 Projected Efficiency Trends

A key component of DOE’s estimates of NES and NPV are the product energy

efficienc ies forecasted over time for the bas e case (without new standards) and each st andards

case. Forecasted efficiencies represent the shipment

- weighted annual energy consumption of

covered residential boilers during the forecast period ( i.e. , from the assumed compliance date of

a new or amended standard to 30 years after that date).

Section 10 describes how DOE establishes the shipment

- weigh t ed efficiency for the

assumed compliance date of the standard

. T o forecast base

- case efficiencies over the 30

- year

pe riod , DOE intends to extrapolate from the historical trends to the extent that is reasonable

.

The market

- share efficiency data will enable DOE to estimate the effect that new or amended standards may have in the year manufacturers must begin to comply wi th them

. For

the residential boiler s rulemaking

, DOE plans to use a “roll

- up” scenario. Under this scenario,

DOE assumes : (1) product efficiencies in the base case that do not meet the standard level under

consideration w ill “roll up” to meet the new standard level; and (2) product efficiencies that

exceed the standard level under consideration w ill not be affected. 39 After DOE establishes the average efficiency for the assumed compliance date of a standard, it estimate s futu re efficiency by using the same rate of forecasted efficiency growth as for the base

- case efficiency trend

.

38 Several examples o f NES spreadsheet models from previous rulemakings can be found on DOE’s website at: http://www.eere.energy.gov/buildings/appliance_standards/

.

39 DOE believes that a “shift” scenari o, in which there is an overall change in the market above the standard level, is not likely for residential boilers due to the limited consumer interest in the efficiency of this product.40

Item 12

- 1 DOE seeks comments on the appropriate assumptions to use regarding long

run changes in residential boiler energy efficiency independent o f amended energy

conservation standards.

12.2 National Energy Savings

DOE will calculate annual national energy savings by fuel type for each standards case analyzed

. The energy savings are measured over the entire lifetime of products purchased in the

30

- year shipments projection period. 40

DOE intends to determine whether there is a rebound effect associated with more

efficient boiler s. If data indicate that there is a rebound effect, DOE will account for the rebound

effect in its calculation of NES.

DOE has historically presented NES in terms of primary energy savings. On August 18, 2011, DOE published a Federal Register notice announcing its intention to use full

- f uel

- cycle (FFC) measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings.

76 FR 5128 1

. While DOE stated in that notice that it intend ed to use the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model to conduct the analysis, it also said it would review alternative methods, including the use of the National Energy Modeling System ( NEMS )

. After evaluatin g both models and the approaches discussed in the August 18, 2011 notice, DOE has determined NEMS is a more appropriate tool for this purpose

. 77 FR 49701 (Aug. 17, 2012). Therefore, DOE intends to use the NEMS model to conduct FFC analyses. The method used to derive the FFC multipliers will be described in the preliminary

TSD.

12.3 Net Present Value of Consumer Savings

The inputs for determining NPV of the total costs and benefits experienced by consumers of the considered appliances are: (1) total annual installed cost ; (2) total annual savings in operating costs ; (3) a discount factor ; (4) present value of costs ; and (5) present value of savings. DOE calculates net savings each year as the difference between the base case and each standards

case in terms of the total savings in operating costs and total increases in installed costs. DOE calculates savings over the life of each product. DOE calculates NPV as the difference between the present value of operating cost savings and the present value of total installed costs.

DOE calculates increases in total installed costs as the difference in total installed cost

between the base case and a standards case. DOE expresses savings in operating costs as decreases associated with the lower energy consumption of products bought in the standards case compared to the base case. Total savings in operating costs are the product of savings per unit and the number of units of each vintage that survive in a given year.

40 In the past, DOE presented energy savings results for only the 30

- year period that begins in the year of compliance . In the calculation of economic impacts, however, DOE considered operating cost savings measured over the entire lifetime of products purchased in the 30

- year period. DOE has chosen to modify its presentat ion of

national energy savings to be consistent with the approach used for its national economic analysis.41

Based on U.S. Office of Management and Budget (OMB) guidelines for Federal agencies, DOE will conduct two NPV calculations, one using a real discount rate of 3 percent and another using a real discount rate of 7 percent (OMB, Circular A

- 4: Regulatory Analysis ( 2003 ) ). The discount rates for the deter mination of NPV are in contrast to the discount rates used in the LCC analysis, which are designed to reflect a consumer’s perspective. The 7

- percent real value is an estimate of the average before

- tax rate of return to private capital in the U.S.

economy

. The 3

- 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.

13. CONSUMER SUBGROUP AN ALYSIS

In the consumer subgroup analysis, DOE analyzes the co nsumer impact of any new standards by dividing consumers into subgroups that comprise subset s of the population that are likely, for one reason or another, to be affected disproportionately by new or amended energy conservation standards. The purpose of a subgroup analysis is to determine the extent of this disproportional impact. DOE expects that low

- income and senior

- only households may comprise subgroups that merit consideration. DOE will analyze the consumer subgroups during the NOPR stage of the ana lysis.

In comparing potential effe cts on different consumer subgroups, DOE will evaluate

variations in energy prices, energy use profiles, and purchase prices that might affect the LCC of

a n ew or amended energy conservation standard for identified consumer subgroups.

Item 13

- 1 The Department requests input as to what consumer subgroups are appropriate to evaluate for residential boilers.

14. MANUFACTURER IMPACT ANALYSIS

DOE intends the MIA to provide an assessment of the potential impacts of amended

e nergy conservation standards on manufacturers of residential boilers

. A wide range of quantitative and qualitative effects may occur following the adoption of a n amended standard that may require changes to manufacturing practices. DOE will identify thes e potential effects through interviews with manufacturers and other experts.

For the NOPR, DOE will conduct an industry

- wide cash

- flow analysis using the Government Regulatory Impact Model (GRIM), identify and analyze subgroups of

manufacturers whose businesses vary significantly from the industry as a whole, perform a competitive impacts assessment, and review the cumulative regulatory burden for the industry.

14.1 Sources of Information for the Manufacturer Impact Analysis

Many of the analyses described e arlier provide important information that DOE will use as inputs for the MIA. Such information includes financial parameters developed in the market42

assessment ( s ection 5 ), cost data developed in the engineering analysis ( s ection 7 ), and shipments forecas ts ( s ection 11 ). DOE will supplement this information with data gathered during manufacturer interviews, as discussed below.

During the preliminary analysis phase, DOE will conduct interviews with manufacturers to gain insight into the range of possible impacts from potential amended energy conservation

standards. These interviews will coincide with preliminary technical interviews for the engineering analysis.

During the NOPR phase, DOE will conduct more detailed MIA interviews with

manufacturers. The interview process plays a key role in the MIA, because 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 potential amended s tandards on manufacturing costs, product prices, sales, direct employment, capital assets, and industry competitiveness. Both qualitative and quantitative information are valuable in this analysis. DOE prefers an interactive interview process because it helps to clarify manufacturer input and provides the opportunity to identify additional issues.

DOE will ask interview participants to identify confidential information and will protect confidential information from disclosure, consistent with applicable law. DOE will also ask participants to identify any information they wish to have included in the public record, but do not want to have associated with their interview (thereby identifying that particular manufacturer). DOE will incorporate such informa tion into the public record, without

attribution.

DOE will collate the interview results and prepare a summary of the major issues and

outcomes. This summary will become part of the technical support document for this rulemaking.

14.2 Industry Cash

- Flow Analy sis

The industry cash

- flow analysis relies primarily on the GRIM. DOE uses the GRIM to analyze the financial impacts of new or amended energy conservation standards on the industries that produce the products covered by the standard.

The GRIM analysis u ses a number of inputs

— annual expected revenues; manufacturer costs such as costs of goods sold; selling, general, and administrative (SG&A) costs; taxes; and capital expenditures (both ordinary capital expenditures and those related to standards)

— to
deter mine a series of annual cash flows beginning from the announcement of the new or amended standard and continuing through the analysis period

. DOE compares the results against

base

- case projections that involve no new standards. The financial impact of ne w or amended

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 primar y sources: (1) the analyses conducted to this point ; and (2) interviews with manufacturers and other interested43

parties. Information gathered from previous analyses will include financial parameters, manufacturing costs, price forecasts, and shipments fore casts. Interviews with manufacturers and other interested parties supplement this information.

14.3 Manufacturer Subgroup Analysis

Average industry cost values may not reveal differential impacts among residential boiler manufacturer subgroups. Smaller manufa cturers, niche players, and manufacturers exhibiting a cost structure that differs significantly from the industry average may be affected differently by

new or amended 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

manufact urers into subgroups, as appropriate. For residential boilers

, DOE is interested in feedback about potential subgroups , including small businesses

. DOE will conduct a Regulatory Flexibility Act analysis to determine the impacts of any amended standards o n small businesses consistent with the Regulatory Flexibility Act.

Item 14

- 1 DOE seeks comment on appropriate manufacturer subgroups, if any, that DOE should consider in a manufacturer subgroup analysis for residential boilers.

14.4 Competitive Impacts Asses sment

EPCA directs DOE to consider any lessening of competition likely to result from the imposition of energy conservation standards. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It further directs

t he Attorney General to determine in writing the impacts, if any, of any lessening of competition likely to result from standards. (42 U.S.C . 6295(o)(2)(B)(ii))

DOE will make a determined effort to gather firm

- specific information regarding financial

and other impacts associated with amended energy conservation standards and report the anticipated aggregate impact of the amended standard on manufacturers. A key aspect of the competitive impacts analysis will be to focus on assessing impacts on smaller man ufacturers.

DOE will base th is assessment on manufacturing cost data and information collected from

interviews with manufacturers. The manufacturer interviews will focus on gathering information that would help in assessing asymmetrica l 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 and the TSD for consideration in his evaluation of the impact of amended standards in

terms of the lessening of competition. DOE will publish the Attorney General’s letter and address any related comments in the final rule.

14.5 Cumulative Regulatory Burden

Other regulati ons (Federal, State, local, or international) may apply to manufacturers of

residential boilers covered under this rulemaking and to other equipment made by these44

manufacturers. Multiple regulations may result in a significant, cumulative regulatory burde n on these manufacturers. DOE will consider the impact on these manufacturers of multiple, product

specific regulatory actions

.

Item 14

- 2 DOE welcomes comments on what other existing regulations or pending regulations it should consider in its examination of cumulative regulatory burden.

15. EMISSIONS ANALYSIS

In the emissions analysis, DOE will estimate the reduction in power sector emissions of carbon dioxide (CO 2 ), nitrogen oxides (NO X ), s ulfur dioxide ( SO 2 )

, and mercury (Hg) from potential amended energy c onservation standards for residential boiler products. In addition, DOE will estimate emissions impacts in production activities (extracting, processing, and transporting fuels) that provide the energy inputs to power plants. These are referred to as “up stream” emissions. Together, these emissions account for the full

- fuel

- cycle. In accordance with DOE’s FFC Statement of Policy (76 FR 5128 1 (Aug. 18, 2011)), the FFC analysis also includes impacts of standards on emissions of methane and nitrous oxide, both of which are recognized as greenhouse gases.

DOE will conduct the emissions analysis using emissions factors derived from data in the

latest version of EIA’s Annual Energy Outlook ( AEO )

, supplemented by dat a from other sources. EIA prepares the Annual Energy Outlook using NEMS. Each annual version of NEMS incorporates the projected impacts of existing air quality regulations on emissions. The text

below refers to AEO 2012.

SO 2 emissions from affected elect ric generating units (EGUs) are subject to nationwide and regional emissions cap

- and

- trad e programs. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for affected EGUs in the 48 contiguous S tates and the District of Columbia (D.C.). SO 2 emissions from 28 eastern S tates and D.C. were also limited under the Clean Air Interstate Rule (CAIR, 70 FR 25162 (May 12, 2005)), which created an allowance

- based trading program that operates along with the Title IV program

. CAIR was remanded to the U. S. Environmental Protection Agency ( EPA ) by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) (see North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008)),

but it remained in effect. On July 6, 2011 EPA issued a replacement for CAIR, the Cross

- State Air Pollution Rule ( CSAPR ). 76 FR 48208 (August 8, 2011). The AEO 2012 NEMS assumes the implementation of the CSAPR

. 41

The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations,

41 On December 30, 2011, the D.C. Circuit stayed the new rules while a panel of judges reviews them, and told EPA

to continue administering CAIR

. S ee EME Homer City Generation, LP v. EPA

, Order, No. 11

- 1302 , Slip Op. at *2 (D.C. Cir. Dec. 30

, 2011). On August 21, 2012, the D.C. Circuit issued a decision to vacate CSAPR. See EME Homer City Generation, LP v. EPA

, No. 11

- 1302

, 2012 WL 3570721 at *24 ( D.C. Cir. Aug. 21, 2012). The court again ordered EPA to continue administering CAIR. AEO 2012 had been finalized prior to both these decisions; however. DOE understands that CAIR and CSAPR are similar with respect to their effect on emissions impacts of energy conservation standards.45

any excess SO 2 emissions allowances resulting from the lower electricity demand caused by the adoption of an energy conservation standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about the effects of efficiency standards on SO 2 emissions covered by the existing

cap

- and

- trade system, but it concluded that negligible reductions in power sector SO 2 emissions

would occur as a result of standards.

Beginning in 2015, however, SO 2 emissions will fall as a result of the Mercury and Air Toxics Standards (MATS) for power plants , which were announced by EPA on December 21,

2011

. 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a standard for hydrogen chloride as a surrogate for acid gas hazardous air pollutants (HAP), a nd also

established a standard for SO 2 (a non

- HAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non

- HAP acid gas; thus, SO 2 emissions will be reduced as a result of the control tec hnologies installed on coal

- fired power plants to comply with the MATS requirements for acid gas. AEO 2012 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection systems installed by 2015. Both technologies, which are used to reduce acid gas emissions, also reduce SO 2 emissions. Under the MATS, NEMS shows a reduction in SO 2 emissions when electricity demand decreases ( e.g ., as a result of energy efficiency standards). Emissions will be far below the cap that would be established by CSAPR, so it is unlikely that

excess SO 2 emissions allowan ces resulting from the lower electricity demand would be needed

or used to permit offsetting increases in SO 2 emissions by any regulated EGU. Therefore, DOE believes that efficiency standards will reduce SO 2 emissions in 2015 and beyond.

CSAPR establishe d a cap on NO X emissions in 28 eastern S tates and the District of

Columbia. E nergy conservation standards are expected to have little effect on NO X emissions in those States covered by CSAPR because excess NO X emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NO X emissions. However, standards would be expected to reduce NO X emissions in the States not affected by

CSAPR , so DOE estimates NO X emissions reductions from potential standards in the States where emissions are not capped.

The MATS limit mercury emissions from power plants, but they do not include emissions

caps
, and, as such, DOE’s energy conservation standard s wou ld likely reduce Hg emissions.

Power plants may emit particulates from the smoke stack, which are known as dir ect particulate matter (PM ) emissions. NEMS does not account for direct PM emissions from power plants. DOE is investigating the possibility of using other methods to estimate reduction in PM

emissions due to standards. T he great majority of ambient PM associated with power plants is in the form of secondary sulfates and nitrates , which are produced at a significant distance from power plants by complex atmospheric c hemical reactions that often involve the gaseous emissions of power plants, mainly SO 2 and NO

x . The monetary benefits that DOE estimates for

reductions in SO 2 and NO

x emissions resulting from standards are in fact primarily related to the

health benefits of reduced ambient PM.

DOE will also account for the emissions from the boiler combustion at the building site.46

Item 15

- 1 DOE seeks input on its approach to conduct the emissions analysis for the

residential boiler products covered by this rulemaking

.

16. MONETIZING CO 2 AND OTHER EMISSIONS

DOE plans to consider the estimated monetary benefits likely to result from the reduced

emissions of CO 2 and NO X that are expected to result from each of the amended energy

conservation standard levels considered.

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

CO 2 , DOE plans to use the most current Social Cost of Carbon (SCC) values developed a nd/or agreed to by an interagency process. The SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net agricultural productivity loss, human health effects, prope rty damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantification and monetization, the SCC can be used to provide

estimates of the social benefits of reductions in GHG emissions.

At the time of this notice, the most recent interagency estimates of the potential global benefits resulting from reduced CO 2 emissions in 2015, expressed in 2011$, were $6.1, $25.4, $41.0, and $77.7 per metric ton avoided. For emissions reductions that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects, although DOE will give preference to consideration of the global benefits of reducing CO 2 emissions. To calculate a present value of the stream of monetary values, DOE will discount the values in each of the four cases using the discount rates that had been used to

obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to

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

DOE also estimates the potential monetary benefit of reduced NO X emissions resulting

from the standard levels it considers. For NO

x emissions, available estimates suggest a very wide range of monetary values, ranging from $460 to $4,722 per ton in 2011$). 42 In accordance with OMB guidance, 43 DOE calculat ed the monetary benefits using each of the economic values

for NO X and real discount rate s of 3 percent and 7 percent

.

DOE is investigating appropriate valuation of Hg emissions. Whether monetization of reduced Hg emissions will occur in this rulemaking is not yet certain.

42 F or additional information , refer to U.S. Office of Management and Budget , Office of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on

Sta te, Local, and Tribal Entities

. 43 OMB, Circular A

- 4: Regulatory Analysis ( Sept. 17, 2003).47

Item 1 6

- 1 DOE re quests comments on the approach it plans to use for estimating

monetary benefits associated with emissions reductions.

17. UTILITY IMPACT ANALY SIS

In the utility impact analysis, DOE analyzes the changes in electric installed capacity and generation that result for each trial sta ndard level. The utility impact analysis uses a variant of EIA’s

NEMS

, 44 which is a public domain, multi

- sectored, partial equilibrium model of the U.S. energy

sector. Each year, DOE/EIA uses NEMS to produce an energy forecast for the United States, the Annual Energy Outlook ( AEO )

. DOE use s a variant of this model, referred to as NEMS

- BT, 45 to
account for selected utility impacts of new or amended energy conservation standards. DOE’s analysis consists of a comparison between model results for the most recent AEO Reference Case and

for cases in which energy use is decremented to reflect the impact of potential standards

. For the analysis of standards on residential boilers , DOE will use the version of NEMS based on the

most recent AEO.

Item 17

- 1 DOE welcomes input from stakeholders on its proposed approach to conduct the utility impact analysis.

18. EMPLOYMENT IMPACT AN ALYSIS

Employment impacts include direct and indirect changes in the domestic workforce resulting from new or amended energy conservation standards

. D irect employment impacts are any changes in the number of employees of manufacturers of the product subject to standards

. The MIA addresses impacts in the number of employees working for the manufacturers

. Indirect employ ment impacts from standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, caused by: (1) reduced spending by end users on energy; (2) reduced spending on new energy supply by the utility industry; (3) increased spending on new products to which the new standards apply; and (4) the effects of those three factors throughout the economy.

One method for assessing the possible effects on the demand for labor of such shifts in

econ omic activity is to compare sector employment statistics developed by the Labor Department’s Bureau of Labor Statistics (BLS). The BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and

44 For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview 2003 , DOE/EIA

- 0581(2003), March, 2003.

45 DOE/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 an d the model is run under various policy scenarios that are variations on DOE/EIA assumptions, DOE refers to it by the name NEMS

BT. (BT is DOE’s Building Technologies Program, under whose aegis this work has been performed.)48

indirectly) than expenditures in other sectors of the economy. 46 There are many reasons for these differences, including wage differences and the fact that the utility sector is more capital

intensive and less labor

- intensive than other sectors. Energy conservation standards have the

effect of reduci ng consumer utility bills. Because reduced consumer expenditures for energy likely lead to increased expenditures in other sectors of the economy, the general effect of efficiency standards is to shift economic activity from a less labor

- intensive sector ( i.e. , the utility sector) to more labor

- intensive sectors ( e.g. , the retail and service sectors).

In the NOPR stage of this rule making , DOE plans to estimate indirect national employment impacts using an input/output model of the U.S. economy called Impact of Sector Energy Technologies version 3.1.1 (ImSET). 47 ImSET is a special

- purpose version of the “U.S. Benchmark National Input

- Output” (I

– O) model, which was designed to estimate the national employment and income effects of energy

- saving technolog ies. The ImSET software includes a
computer

- based I

– O model having structural coefficients that characterize economic flows among 187 sectors most relevant to industrial, commercial, and residential building energy use

.

DOE notes that ImSET is not a gen eral equilibrium forecasting model and understands the uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Because ImSET does not incorporate price changes, the employment effects predicted by Im SET may over

- estimate actual job impacts over the long run. DOE may

consider the use of other modelin g approaches for examining long

- run employment impacts

.

Item 18

- 1 DOE welcomes feedback on its proposed approach to assessing national employment impacts

.

19. REGULATORY IMPACT AN ALYSIS

In the NOPR stage of this rulemaking, DOE will prepare a regulatory impact analysis that will address the potential for non

- regulatory approaches to supplant or augment energy conservation standards to improve the efficiency o f residential boilers 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 n on

- regulatory initiatives and compare such effects with those projected to result

from amended energy conservation standards. DOE will attempt to base its assessment on the actual impacts of any such initiatives to date, but will also consider information presented regarding the impacts that any existing initiative might have in the future.

If DOE proposes amended energy conser vation standards for residential boilers and the NOPR constitutes a significant regulatory action, DOE would prepare and submit to OMB for

46 See Bureau of Economic Anal ysis, Regional Multipliers: A User Handbook for the Regional Input

- Output Modeling System (RIMS II)

, U.S. Department of Commerce ( 1992 )

. 47 J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies ( PNNL

- 1 8412), Pacific Northwest National Laboratory ( 200 9) ( Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL

- 18412.pdf ).49

review the assessment of costs and benefits required under section 6(a)(3) of Executive Order 12866, “Regulatory Plan ning and Review,” 58 FR 51735 (Oct

. 4, 1993).50 APPENDIX A

– LIST OF ITEMS FOR COMMENT

Item 1

- 1 DOE invites comment on all aspects of the material presented in this

document

. Item 2

- 1 DOE welcomes comment on the preliminary scope of coverage and on whether

there are any additional types of residential boilers that should or should not be included in the scope of this rulemaking.

Item 2

- 2 DOE welcomes comments regarding the need to include combination

appliances and electric boilers in this rulemakin g. Item 5

- 1 DOE welcomes data that would contribute to the market assessment, including

but not limited to information on national shipments, manufacturing costs, distribution channels, and manufacturer market shares of residential boilers.

Item 5

- 2 DOE welcomes comments on its proposed product classes. Does capacity or

any performance

- related features warrant the creation of another product class for residential boilers in accordance with the requirements of 42 U.S.C. 6295(q )?

Item 5

- 3 Are there so me product classes with such low volumes of annual shipments

that the D epartment should not undertake analysis to determine if the efficiency standards should be upgraded?

Item 5

- 4 DOE welcomes comments on the technologies identified as well as additional

technology options which have not been identified.

Item 6

- 1 Of the technologies listed in section 5.2 , are there any that should be screened

ou t based on the four screening criteria? If so, which criteria apply and why ?

Item 7

- 1 DOE seeks input from interested parties regarding the range of efficiency

levels that should be examined as part of its analysis.

Item 7

- 2 DOE seeks comments on the appropriate max

- tech levels for residential

boilers.

Item 7

- 3 DOE seeks input on the representative capacity and other representative

characteristics for each residential boiler product class.

Item 7

- 4 DOE seek s input on characteristics which may require multiple representative

products within a single product class.

Item 8

- 1 DOE welcomes suggestions and comments concerning its proposed approach

to developing estimates of future residential boiler retail prices.

Item 9

- 1 DOE seeks stakeholder input on the planned approach of using RECS data for

determining the energy consumption of residential boilers in residential buildings.

Item 9

- 2 DOE seeks stakeholder input on what fraction of large boilers serving multiple

housing units are non

- residential (comm ercial) boilers, and what criteria to use to remove such units from the sample.

Item 9

- 3 DOE seeks historical shipment

- weighted boiler efficiency data between 2003

and 2011.

Item 9

- 4 DOE seeks stakeholder input on data sources that it can use to characte rize the

variability in annual energy consumption for boilers. DOE is particularly interested in field monitoring studies and data.51

Item 9

- 5 DOE seeks stakeholder input on what fractions of oil

- fired and gas

- fired hot

water boilers are used both for spac e heating and domestic hot water

. Item 9

- 6 DOE seeks input on the fraction of residential boilers that is used in

combination with hydronic air handlers.

Item 9

- 7 DOE seeks input on the fraction of residential boilers that is used in

commercial applications. Is this market large enough that DOE should take it

into account?

Item 9

- 8 DOE seeks comments on the rebound effect that may be associated with more

efficient residential boilers.

Item 10

- 1 DOE seeks stakeholder input on its proposed approach of using probability

distributions and Monte Carlo simulations to conduct the LCC and PBP analysis.

Item 10

- 2 DOE requests data from stakeholders to characterize the current mix of boiler

efficiencies in the market.

Item 10

- 3 DOE seeks input on the planned approach for estimating future energy prices.

Item 10

- 4 DOE seeks stakeholder input on the maintenance and repair costs approach

.

Specifically, DOE requests comment on frequency and cost of maintenance, major repair issues, repair frequency, and repair costs for boilers that meet the minimum efficiency standards

, as well as for higher

- efficiency boilers.

Ite m 10

- 5 DOE seeks stakeholder input on its proposed installation cost approach

.

Specifically, DOE requests data on the fractions of installations that would

entail significant additional installation expenses

. Item 10

- 6 DOE seeks comments on the methodology used to determine product lifetimes

for residential boilers.

Item 10

- 7 DOE seeks stakeholder input on its planned approach for estimating discount

rates for residential consumers.

Item 10

- 8 DOE seeks comments on the appropriate distribution of energy efficiencies for

residential boilers in the absence of amended energy conservation standards.

Item 11

- 1 DOE seeks historical shipments data from stakeholders, disaggregated by

efficiency level if possible.

Item 11

- 2 DOE seeks input from stakeholders on the potential impact of amended

standards on residential boiler shipments

. Item 12

- 1 DOE seeks comments on the appropriate assumptions to use regarding long

run changes in residential boiler energy efficiency independent of amended energy conservation standards.

Item 13

- 1 The Department requests input as to what consumer subgroups are appropriate

to evaluate for residential boilers.

Item 14

- 1 DOE seeks comment on appropriate manufacturer subgroups, if any, that DOE

should consider in a manufacturer subgroup analysis for residential boilers.

Item 14

- 2 DOE welcomes comments on what other existing regulations or pending

regulations it should consider in its examination of cumulative regulatory

burden.

Item 15

- 1 DOE seeks input on its approach to conduct the emissions analysis for the

residential boiler products covered by this rulemaking.

Item 16

- 1 DOE requests comments on the approach it plans to use for estimating

monetary values associated with emissions reductions.52

Item 17

- 1 DOE welcomes input from stakeholders on its proposed use of NEMS

- BT to

conduct the utility impact analysis.

Item 18

- 1 DOE welcomes feedback on its proposed approa ch to assessing national

employment impacts.