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 11, 2013
i

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 ANALYSIS FOR RULEMAKING............................................................12

5. MARKET AND TECHNOLOGY 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 ANALYSIS ....................................................................................................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 ANALYSIS..................................................................................................28
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9.1 Estimating Annual Energy Consumption of Boilers ..................................................30

10. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ...........................................32

10.1 Overview................................................................................................................32

10.2 Approach................................................................................................................32

10.3 Energy Prices..........................................................................................................34

10.4 Maintenance and Repair Costs................................................................................35

10.5 Installation Costs....................................................................................................35

10.6 Product Lifetime.....................................................................................................36

10.7 Discount Rates........................................................................................................36

10.8 Energy Efficiency in the Base Case ........................................................................37

11. SHIPMENTS ANALYSIS ..................................................................................................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 SUBGROUP ANALYSIS.............................................................................41

14. MANUFACTURER IMPACT 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 ANALYSIS ...................................................................................................44

16. MONETIZING CO2 AND OTHER EMISSIONS................................................................46

17. UTILITY IMPACT ANALYSIS .........................................................................................47

18. EMPLOYMENT IMPACT ANALYSIS..............................................................................47

19. REGULATORY IMPACT ANALYSIS ..............................................................................48

APPENDIX A – LIST OF ITEMS FOR COMMENT .................................................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 .............................................................................................................13
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LIST OF ACRONYMS

ACCA Air-conditioning Contractors of America

AEMTCA American Energy Manufacturing Technical Corrections Act

AEO Annual Energy Outlook

AFUE Annual Fuel Utilization Efficiency

AHRI Air-conditioning, Heating, and Refrigeration Institute

AHS American 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 bill of materials

BPM brushless permanent magnet

BT Building Technologies Program

Btu British thermal unit

CAIR Clean Air Interstate Rule

CEC California Energy Commission

CFR Code of Federal Regulations

CHP combined heat and power

CO2 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 2007

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 Greenhouse 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 mercury

IEC International Electrotechnical Commission

ImSET Impact of Sector Energy Technologies

I-O U.S. Benchmark National Input-Output

LCC life-cycle cost
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LPG liquefied petroleum gas

MIA manufacturer impact analysis

MPC manufacturer production cost

MSP manufacturer selling price

NAECA National Appliance Energy Conservation Act

NCI 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

NOX 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 State Energy Data System

SG&A selling, general, and administrative costs

SMPS switching mode power supply

SO2 sulfur dioxide

TFI trail-for-ignition period

TSD technical support document

TSL trial standard level

U.S. United States

U.S.C. United States Code
1

RULEMAKING FRAMEWORK DOCUMENT FOR RESIDENTIAL BOILERS

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 purpose of this Framework Document 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 procedures, 

respectively. Sections 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 standards for residential boilers to determine whether

such standards are technologically feasible and economically justified and provide significant 

energy savings. DOE will maintain information about this 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 this 

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 

analyses required for this 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 Authority

Title III, Part B1of the 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 Energy Conservation Program for Consumer Products 

Other Than Automobiles, a program covering most major household appliances and certain 

industrial and commercial equipment.2This program authorized DOE to establish 

technologically feasible, economically justified energy efficiency regulations for certain products 

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 residential boilers3 — 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 determine 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, 1994. (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 energy 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, on 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 energy conservation standards for residential 

boilers. More specifically, EISA 2007 revised the minimum AFUE requirements for residential 

boilers and set several design requirements 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 technical amendment to the 2007 furnaces 

and boilers 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 reasons, 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. 112-210 (Dec. 18, 2012).

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) by 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 EISA 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 incremental 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 issuance 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 standards. (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 Rulemaking Process

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 new 
4

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 maximum 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 conservation standard for 

covered products under EPCA, DOE must consider to the greatest extent practicable the 

following seven factors:

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

the product subject to such standard; 

(2) The savings in operating costs throughout the estimated average life of 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) The total projected amount of energy (or as applicable, water) savings likely to result 

directly from the standard; 

(4) Any lessening of the utility or the performance of the covered products likely to result 

from the standard; 

(5) The effect of any lessening of competition, as determined in writing by the U.S. 

Attorney General, that is likely to result from the standard; 

(6) The need for national energy and water conservation; and 

(7) Other factors the Secretary considers relevant. 

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

Additional statutory requirements 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 and 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 

interest 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 participation of all interested parties 

during the comment periods provided at each stage of the rulemaking.

The standards rulemaking process for residential boilers will involve three public notices

(in addition to this Framework Document), which are published in the Federal Register: (1) the 

preliminary analysis; (2) the notice of proposed rulemaking (NOPR); and (3) the final rule. After 

publication of this Framework Document, 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 outlines next steps for the residential boilers

energy conservation standards rulemaking:
5

Preliminary Analysis (section 1.2.2). DOE plans to publish preliminary analyses 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 

planned product classes and candidate standard levels (CSLs), which span the range of 

efficiencies from baseline products to products utilizing the most efficient technology. 

DOE will hold a public meeting and webinar 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 standards on consumers, manufacturers, and the Nation; DOE’s weighting of 

these impacts; and any proposed standard levels for public comment. DOE will hold a 

public meeting and webinar 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 technologies

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 analysis to determine 

whether a given technology should be eliminated from further consideration: (1) technological 

feasibility; (2) practicability to manufacture, install, and service; (3) adverse impacts on product 

utility or availability; and (4) adverse impacts on health or safety. Technologies that pass the 

screening 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 preliminary 

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 conducts other 

principal analyses which are explained in subsequent sections of this Framework Document, 

including:

The engineering analysis (section 7); 

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

The national impact analysis, which considers national energy savings (NES) and 

national consumer net present value (NPV) (section 12); and 

A preliminary manufacturer 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 CSLs 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 use 

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 energy use levels considered in 

the preliminary analyses. In addition to the efficiency levels corresponding to the maximum 

technologically feasible (“max-tech”)4design, DOE generally selects levels or design options for 

consideration that span the full range of technologically achievable efficiencies. DOE typically 

analyzes the following range of efficiency levels:

The 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; 

The highest energy efficiency level or lowest energy consumption level that is 

technologically feasible (i.e., the “max-tech” level); and

Levels that incorporate noteworthy technologies or fill in large gaps between other 

efficiency levels 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 preliminary 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 efficiency level considered in the engineering analysis.

5 Materials 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 Rulemaking

In developing the NOPR, DOE will first review and consider all the comments it receives

during the preliminary analysis 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 

also 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 manufacturer 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 its 

website for review and comment. DOE will present the analytical results in the NOPR, with the 

details of the analysis provided in an accompanying TSD. The 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 proposed 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 during 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 burdens 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 the 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 impacts 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 public 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, making

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 publishes 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 determination 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. SCOPE OF COVERAGE

2.1 Current Scope of Coverage

Residential 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 current, or singlephase electric current or DC current in conjunction with natural gas, propane, or 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 furnace, 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 central 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 water 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 references 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 additional 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: 

Boiler: a self-contained fuel-burning or electrically heated appliance for supplying lowpressure steam or hot water for space-heating application.

Boiler, 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 Preliminary 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 includes four product classes of boilers (steam gas 

boilers, hot water gas boilers, steam oil boilers, and hot water oil boilers). DOE is also 

considering including 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 heating 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 combination appliances by rating the efficiency of the unit when 

performing their primary function (i.e., space heating for boiler tankless coil combination units 

or water heating for water heater fan-coil units). On December 11, 2009, DOE published a
10

NOPR (hereafter the “December 2009 NOPR”) for water heaters 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 procedures 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 Federal test procedure for 

combination appliances. However, on 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). Electric boilers typically utilize electric resistance coils as their heating 

elements, which are highly efficient. Furthermore, the current DOE test procedure for 

determining AFUE considers boilers indoor units and, thus, considers 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. Therefore, 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 be negligible. However, DOE does intend to consider standby mode 

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

This rulemaking will establish energy conservation standards for energy consumption of 

boilers operating in standby mode and off mode. As discussed above, section 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 accounts 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 annualized 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 current 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 FR 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 Test Procedure

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 procedure 

amendments were primarily based on and incorporate by reference provisions of the 

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

electrical appliances—Measurement of standby power.” On December 31, 2012, DOE published 

a final rule which updated 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 of 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 the test 

engineer to omit the heat-up and cool-down tests if certain conditions are met. 78 FR 7681. 

Specifically, the DOE test procedure allows condensing boilers (and furnaces) to omit the heatup and cool-down tests, 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. For two-stage and modulating condensing furnaces and boilers, 

ASHRAE 103-1993 (and by extension 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 is selected. The only equation provided in the test procedure to 

calculate 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 two new equations needed to 

account for the use of section 9.10 for two-stage and modulating condensing furnaces and

boilers.

 

7 American Society of Heating Refrigerating and Air-Conditioning 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, on January 4, 2013, DOE published an 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 residential furnaces and boilers. Key issues discussed in the RFI 

include avenues for reducing 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 2007), 

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 ANALYSIS FOR RULEMAKING

The purpose of the analyses conducted in support of the standards rulemaking is to ensure 

that DOE selects energy conservation standards that achieve the maximum improvement in 

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 in 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 burden 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. In 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 the 

overall standards-setting framework.
13

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

Rulemaking

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Markups for

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analysis

National Impact

Analysis

Energy Use

Revise Pre-NOPR

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Cost-Efficiency Relationship

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail Prices

Design Energy

Notice of Public Meeting (NOPM)

• Efficiency/Performance

• Manufacturing Cost

Candidate

Standard 

Levels

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy 

Prices

• Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review
14

5. MARKET AND TECHNOLOGY 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 rulemaking 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, and 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 indicators of future shipments and prices. Similarly, DOE 

plans to use market structure data for the MIA, which will be particularly useful for 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 capable of achieving significant 

energy savings. Therefore, DOE encourages interested parties to submit data that will improve 

DOE’s understanding of the residential boilers 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 manufacturers and other 

organizations in preparing aggregated results for DOE’s analyses. These aggregated results do 

not divulge the sensitive, individual raw data, but enable other interested parties to comment on 

the aggregated dataset.

Alternatively, interested 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 have the 
15

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

association for manufacturers 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 Product 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 Database10 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 boilers market.

Item 5-1 DOE welcomes 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 necessary, 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

heat transfer medium a performance-related feature that merits a separate 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 information 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 person 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.

Because steam boilers generally cannot reach the same efficiency levels as hot water boilers,

combining 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 preliminary conclusion 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 Department should not undertake analysis to determine if the efficiency 

standards should be upgraded?

5.2 Technology Assessment

The technology assessment focuses on understanding how residential boilers use energy 

and on identifying potential technology changes that would improve the efficiency of these 

products. Measures 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, DOE 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 options 
17

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

the product in the engineering analysis, and will assist DOE 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 mode 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 power (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 electrical energy consumption, DOE does not address them further in 

this Framework Document. 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 Heat 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 exchanger 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 the water that is distributed to the heated space. The improved

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 keeping 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, a 
18

lower 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 requirements 

more precisely. When low 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.

Installing a damper at these points improves AFUE by preventing heat from escaping and 

minimizing off-cycle heat losses.

5.2.5 Direct Vent

Direct-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 combustion air through 

a heat exchanger in contact with the flue gases. The combustion air does not mix with the flue 

gases, and manufacturers typically accomplish this preheat design by running the inlet and 

exhaust vents concentrically. Direct vent boilers improve 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 its 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

Premixing 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 the 
19

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 

The 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 fouling of the small 

internal passages, leading to bad spray patterns and poor combustion performance. To overcome 

the low input limitations of conventional oil burners, Brookhaven National Laboratory developed 

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

combustion air for lean-burning, ultra-clean combustion. A lower level of excess air generally 

improves AFUE rating.

5.2.9 Delayed-Action Oil Pump Solenoid Valve

A delayed-action oil pump solenoid valve is installed 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 discharge the oil into the combustion chamber without dripping. This 

ensures that the oil burns more completely, which improves efficiency. 

5.2.10 Electronic Ignition

Boilers 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 thermally ignites the main burner directly 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: All 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 interrupted 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 improves AFUE. As a 

result of the prohibition on 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 standby 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/off 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 (where “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 Conservation 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 supply. 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 with 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). The identified candidate technology options will 

encompass all those technologies that may improve the efficiency of residential boilers. DOE 

then reviews 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 relevant 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 the 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 product generally 

available in the United States at the time, it will not consider that technology further.

4. Adverse impacts on health or safety. If DOE determines that a technology will have 

significant adverse impacts on health or safety, it will not consider that technology 

further.
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 estimates the increase in manufacturer selling price associated with 

technology changes that increase 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 and 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 characteristics of the products considered in this 

standard rulemaking, DOE may select a smaller subset of representative products to analyze. 

Typically, each representative product would capture the features and characteristics common to 

the majority of the shipments. 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 class.

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 

boilers 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 highestefficiency unit that is technologically feasible within each product class using a computer-based 

modeling tool. DOE will ensure that these technologies meet the screening criteria listed in 

section 6.

7.2 Engineering Analysis Approach

For the engineering analysis, DOE will examine incremental increases in the 

manufacturer selling price associated with 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 technology options used

can be identified. DOE encourages interested parties to submit test data or information that will 

improve DOE’s understanding of residential boiler performance as it relates to the different 

technology options. DOE will also use this information to select the characteristics of units that 

are representative of the boilers in each product class. DOE will then focus its analyses on these 

representative units.

7.2.1 Baseline Models

For each product class, DOE will identify one or more baseline models that will serve as 

a reference point against which DOE can measure changes resulting from potential energy 

conservation standards. The baseline 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 Levels

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 levels 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 residential 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 collect 
24

residential boiler efficiency data from various manufacturer catalogs and the AHRI Directory, 

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 notes that the maximum efficiency levels available in residential boilers currently 

on the market may not necessarily correspond to the max-tech levels. Models at the highest

efficiency available on the market today may not incorporate all possible design options for 

increasing efficiency and, therefore, may not achieve the highest possible efficiency at the maxtech 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 working 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 mentioned, 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 

efficiency levels that should be examined as part of its analysis.

Item 7-2 DOE seeks comment 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 seeks 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 efficiency 

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 twostage and modulating condensing furnaces and boilers that are tested using section 9.10 of ASHRAE 103-1993, 

which permits 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 to 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 other 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 will use the cost data generated by the 

engineering analysis in the manufacturer impact analysis (see section 14). If possible, DOE will

then aggregate the cost numbers by weighing individual data points 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 discussions 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 efficiency 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 efficiency 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-available financial 

information (e.g., Securities and Exchange Commission 10-K reports14) and supplement the 

estimates with information obtained during discussions with manufacturers.

7.2.4 Cost-Efficiency Relationship and Analysis

The engineering analysis primarily involves estimating the production cost of boilers at 

various levels of increased efficiency. These estimates are then used to identify the costefficiency relationship for the products. DOE typically structures its estimation of the costefficiency relationship 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 increases 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 materials (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 potential 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 analysis 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 manufacturers 

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 mode 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 baseline 

model to max-tech for each product class. After selecting both the baseline and incrementally 

more-efficient substitutes, DOE will generate BOMs by disassembling multiple manufacturers’ 

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

detail, 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 

various levels. The cost model will be a detailed, component-focused model for calculating the 

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

the overhead costs associated with production. 

DOE will determine an average manufacturer markup by examining the annual Securities 

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 the manufacturer 

selling prices and construct industry cost-efficiency curves. DOE may also estimate production 

costs for units that it does not physically disassemble by using catalog data, in conjunction with 

industry expertise and information gathered from physical teardowns, to estimate MPCs.

7.2.5 Proprietary Designs

DOE will consider in its engineering and economic analyses all technologies that are 

commercially available or present in a working prototype, including proprietary designs that 

meet the screening criteria discussed in 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 that efficiency level from further analysis. DOE will reject a standard 

level that can only be met with a single proprietary technology, because it could result in an anticompetitive market, a principle consistently applied in past DOE rulemakings as economically 

unjustifiable. However, if 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 manufacturer 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 (section 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 channels for residential boilers:

Figure 8.1: Replacement Distribution Channel

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

channel for residential boilers: 

Figure 8.2: New Construction Distribution Channel

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); the 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 Consumer
28

DOE will rely on Economic Census data from the United States Census Bureau15 and 

input from industry 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 contractor markups 

based on firm income statements from the HARDI 2012 Profit Report16 and from the Air 

Conditioning Contractors of America (ACCA) 2005 Financial Analysis,

17 respectively. DOE 

plans to calculate regional general contractor markups from Residential Building 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 Clearinghouse19 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 overall markup to estimate the 

customer price of baseline equipment. DOE uses the overall incremental markup to estimate 

changes in the customer price resulting from an amended energy conservation 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 retail prices that may be produced by manufacturers’ higher 

production volumes of more-efficient products as required by the standard.

Item 8-1 DOE welcomes suggestions and comments concerning its proposed approach 

to developing estimates of future residential 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 efficiencies. DOE uses 

the annual energy consumption and energy-savings potential in the LCC and PBP analysis to 

establish the savings in consumer operating costs 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 Profit Report (2011 Data) (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 climate zones. The annual energy consumption 

includes use of natural gas, liquefied petroleum gas (LPG), oil, or electricity for heat 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 2001 version of RECS, which was the most current survey available at that time.

DOE will use data from RECS 2009 for the current rulemaking. 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 boilers, 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 plans to 

account for the 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 

extent. 

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 households, 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 States)

(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 consumption 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 

determined using the boiler vintage22 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 electricity 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 the 

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 existing water heater performance 

models 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 literature.

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 will 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 be 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 with 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.regulations.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 plans 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 materialize.

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 

multiple 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 fractions of oil-fired and gas-fired hotwater 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 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 moreefficient 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-CYCLE 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 establishes 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 calculating the LCC and PBP,

incorporating the engineering performance data (described in section 7), the product retail price 

(described in section 8), and the energy consumption data (described in section 9). Inputs to the 

calculation of LCC and PBP include the total installed cost to the consumer (purchase price plus 

any installation cost) and operating cost (energy expenditures and, if applicable, repair and 

maintenance costs). Additional inputs to the LCC calculation 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 preliminary analysis 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 

Carlo approach provides a significant advantage over alternative approaches (e.g., an approach 

using typical or average values to characterize inputs) because it identifies the percentages of 

consumers benefiting from or being impacted 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 simulation 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 analytical 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 analysis, 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 methodologies for developing maintenance/repair and 

installation costs are described in sections 10.4 and 10.5 respectively.
33

As described in section 8, DOE will derive markups (other than manufacturer markups) 

and sales taxes using probability distributions that capture their regional variability, in order to 

calculate the equipment cost.

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

is the expected distribution of product 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 (2020).

DOE will determine the LCC and PBP for a particular standard level relative to the basecase distribution of efficiencies. In performing 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 LCC and PBP calculation will reveal that a consumer is not impacted by the 

standard level. By accounting for consumers who already purchase more-efficient products, 

DOE avoids overstating the potential benefits from increasing product efficiency. To enable

DOE to use this methodology, DOE asks stakeholders to provide data on the current mix of 

product 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 analysis 

whether there may be a rebound (or “take back”) effect associated with more-efficient boilers. 

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, the 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 anticipated 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 and 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 applies (where the higher installed cost of more energyefficient 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. 6295(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. Although 

DOE will examine the rebuttable-presumption criteria, DOE determines whether potential 

standards are economically justified through an analysis of the economic impacts of increased 
34

efficiency pursuant to section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. 6295(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 reviews all the comments it receives on the 

preliminary analysis LCC analysis, makes any necessary revisions to the analysis, and if 

necessary, evaluates additional parameters not included in the preliminary analysis.

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 plans 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 household 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 provided 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 from EIA’s State Energy Data System (SEDS).

29 SEDS includes annual fuel oil prices for 

residential, commercial, industrial, and transportation consumers by State. For areas with more 

than one State, DOE weights each State’s average price by its number of households. 

To determine monthly prices for use in the analysis, DOE plans to develop monthly 

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 addition, for electricity 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 prices 

consumers pay for the last unit of energy used. DOE uses the marginal energy prices for each 

 

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

28 Available at http://tonto.eia.doe.gov/dnav/ng/ng_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 bill 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 

Census Division 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 Repair 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 maintenance costs over baseline 

products. Products having efficiencies that are significantly higher than the baseline are more 

likely to incur increased repair and maintenance costs, because 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 typically undergoes maintenance 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 required 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 sources. 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 capture 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 vent); 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 fraction 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

Product lifetime is the age at which an appliance is retired from service. In the past, DOE 

used 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 analysis 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 lifetime. A 2011 paper31 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 boilers.

10.7 Discount Rates

DOE uses 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 boilers, 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 Lifetimes 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 differs 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 triennial 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 considers 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 conservation 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 rebate 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 moreefficient residential boilers.

Item 10-8 DOE 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 shipments projections to calculate the national impacts of energy conservation 

standards and to calculate the future cash flows of manufacturers. DOE develops 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 publiclyavailable 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 have 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. Saturations at the Census Region level are provided by the 

Census Bureau’s American Housing Survey (AHS).

36

DOE plans 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 construction 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 projections 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 

boiler 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 segments: (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 boilers, these segments would primarily refer to homes built 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 these market segments to calibrate the historical projections (i.e., 

backcasts) to historical shipments. In order to reduce the discrepancy between the backcasts and 

historical shipments, DOE plans to derive a historical rate of product adoption for the noncentrally-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 develop a set of shipment projections for each set of efficiency levels analyzed 

for each product class. DOE uses these standards-case projections to evaluate the impacts of 

amended standards on product shipments. Because the standards-case projections take into 

account the increase in purchase price and the decrease in operating costs caused by amended 

standards, projected shipments for a standards case typically deviate from those for the base case. 

Household income also factors into consumer purchase decisions. Therefore, the magnitude of 

the difference between the shipment projections 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 to have a larger impact than operating cost on appliance purchase 

decisions, standards-case projections typically show a decrease 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 boilers. If the data required to develop those sensitivities are 

unavailable, DOE will consider modeling standards-case shipments projections 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 ANALYSIS

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 performs 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 

efficiencies forecasted over time for the base case (without new standards) and each standards 

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-weighted efficiency for the 

assumed compliance date of the standard. To forecast base-case efficiencies over the 30-year 

period, 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 with them. For 

the residential boilers 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 will “roll up” to meet the new standard level; and (2) product efficiencies that 

exceed the standard level under consideration will not be affected.39 After DOE establishes the 

average efficiency for the assumed compliance date of a standard, it estimates future efficiency

by using the same rate of forecasted efficiency growth as for the base-case efficiency trend.

 

38 Several examples of 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” scenario, 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 longrun changes in residential boiler energy efficiency independent of 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 boilers. 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-fuel-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 51281. While DOE stated in that notice that it intended 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 evaluating 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 presentation 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 determination 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 ANALYSIS

In the consumer subgroup analysis, DOE analyzes the consumer impact of any new 

standards by dividing consumers into subgroups that comprise subsets 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 analysis.

In comparing potential effects on different consumer subgroups, DOE will evaluate 

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

a new 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 

energy conservation standards on manufacturers of residential boilers. A wide range of 

quantitative and qualitative effects may occur following the adoption of an amended standard 

that may require changes to manufacturing practices. DOE will identify these 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 earlier provide important information that DOE will use 

as inputs for the MIA. Such information includes financial parameters developed in the market 
42

assessment (section 5), cost data developed in the engineering analysis (section 7), and 

shipments forecasts (section 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 standards 

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 information 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 Analysis 

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 uses 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 

determine 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 new 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 primary sources: (1) the 

analyses conducted to this point; and (2) interviews with manufacturers and other interested 
43

parties. Information gathered from previous analyses will include financial parameters, 

manufacturing costs, price forecasts, and shipments forecasts. 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 manufacturers, 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 

manufacturers 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 on 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 Assessment

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 

the 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 manufacturers. 

DOE will base this 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 asymmetrical cost increases to some manufacturers, increased 

proportion of fixed costs potentially increasing business risks, and potential barriers to market 

entry (e.g., proprietary technologies). DOE will provide the Attorney General with a copy of the 

NOPR 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 regulations (Federal, State, local, or international) may apply to manufacturers of

residential boilers covered under this rulemaking and to other equipment made by these
44

manufacturers. Multiple regulations may result in a significant, cumulative regulatory burden on 

these manufacturers. DOE will consider the impact on these manufacturers of multiple, productspecific 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 (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2), and mercury (Hg) from 

potential amended energy conservation 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 

“upstream” emissions. Together, these emissions account for the full-fuel-cycle. In accordance 

with DOE’s FFC Statement of Policy (76 FR 51281 (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 data 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.

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual 

emissions cap on SO2 for affected EGUs in the 48 contiguous States and the District of Columbia 

(D.C.). SO2 emissions from 28 eastern States 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. See 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 SO2 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 SO2

emissions by any regulated EGU. In past rulemakings, DOE recognized that there was 

uncertainty about the effects of efficiency standards on SO2 emissions covered by the existing 

cap-and-trade system, but it concluded that negligible reductions in power sector SO2 emissions 

would occur as a result of standards.

Beginning in 2015, however, SO2 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), and also 

established a standard for SO2 (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, SO2 emissions will be reduced as a result of the control technologies 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 SO2 emissions. Under the MATS, NEMS shows a reduction in SO2

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 SO2 emissions allowances resulting from the lower electricity demand would be needed 

or used to permit offsetting increases in SO2 emissions by any regulated EGU. Therefore, DOE 

believes that efficiency standards will reduce SO2 emissions in 2015 and beyond.

CSAPR established a cap on NOX emissions in 28 eastern States and the District of 

Columbia. Energy conservation standards are expected to have little effect on NOX emissions in 

those States covered by CSAPR because excess NOX emissions allowances resulting from the 

lower electricity demand could be used to permit offsetting increases in NOX emissions.

However, standards would be expected to reduce NOX emissions in the States not affected by 

CSAPR, so DOE estimates NOX 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 standards would likely reduce Hg emissions.

Power plants may emit particulates from the smoke stack, which are known as direct 

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. The 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 chemical reactions that often involve the gaseous 

emissions of power plants, mainly SO2 and NOx. The monetary benefits that DOE estimates for 

reductions in SO2 and NOx 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 CO2 AND OTHER EMISSIONS

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

emissions of CO2 and NOX 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 

CO2, DOE plans to use the most current Social Cost of Carbon (SCC) values developed and/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, property 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 CO2 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 CO2 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 contribution of CO2 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 NOX emissions resulting

from the standard levels it considers. For NOx 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 calculated the monetary benefits using each of the economic values 

for NOX and real discount rates 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 For 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 

State, Local, and Tribal Entities.

43 OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
47

Item 16-1 DOE requests comments on the approach it plans to use for estimating 

monetary benefits associated with emissions reductions.

17. UTILITY IMPACT ANALYSIS

In the utility impact analysis, DOE analyzes the changes in electric installed capacity and 

generation that result for each trial standard 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 uses 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 ANALYSIS 

Employment impacts include direct and indirect changes in the domestic workforce 

resulting from new or amended energy conservation standards. Direct 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 

employment 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 

economic 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 and the model is run 

under various policy scenarios that are variations on DOE/EIA assumptions, DOE refers to it by the name NEMSBT. (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 capitalintensive and less labor-intensive than other sectors. Energy conservation standards have the 

effect of reducing 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 rulemaking, 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 technologies. 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 general 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 ImSET may over-estimate actual job impacts over the long run. DOE may 

consider the use of other modeling 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 ANALYSIS

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 of 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 non-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 conservation 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 Analysis, 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-18412),

Pacific Northwest National Laboratory (2009) (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 Planning 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 rulemaking.

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 some product classes with such low volumes of annual shipments 

that the Department 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 

out 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 seeks 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 (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.
51

Item 9-5 DOE seeks stakeholder input on what fractions of oil-fired and gas-fired hotwater 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 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 moreefficient 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.

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.

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 longrun 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 approach to assessing national 

employment impacts.