Vol. 80 Tuesday, 

No. 61 March 31, 2015 

Part III 

Department of Energy 

10 CFR Part 430 

Energy Conservation Program: Energy Conservation Standards for 

Residential Boilers; Proposed Rule 

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17222 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 430 

[Docket Number EERE–2012–BT–STD– 

0047] 

RIN 1904–AC88 

Energy Conservation Program: Energy 

Conservation Standards for 

Residential Boilers 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

and announcement of public meeting. 

SUMMARY: The Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended, prescribes energy 

conservation standards for various 

consumer products and certain 

commercial and industrial equipment, 

including residential boilers. EPCA also 

requires the U.S. Department of Energy 

(DOE) to periodically determine 

whether more-stringent, amended 

standards would be technologically 

feasible and economically justified, and 

would save a significant amount of 

energy. In this notice, DOE proposes 

amended energy conservation standards 

for residential boilers. The notice also 

announces a public meeting to receive 

comment on these proposed standards 

and associated analyses and results. 

DATES:

Meeting: DOE will hold a public 

meeting on Thursday, April 30, 2015 

from 9:00 a.m. to 4:00 p.m., in 

Washington, DC. The meeting will also 

be broadcast as a webinar. See section 

VII, ‘‘Public Participation,’’ for webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants. 

Comments: DOE will accept 

comments, data, and information 

regarding this notice of proposed 

rulemaking (NOPR) before and after the 

public meeting, but no later than June 

1, 2015. See section VII, ‘‘Public 

Participation,’’ for details. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue SW., 

Washington, DC 20585. To attend, 

please notify Ms. Brenda Edwards at 

(202) 586–2945. Please note that foreign 

nationals visiting DOE Headquarters are 

subject to advance security screening 

procedures. Any foreign national 

wishing to participate in the meeting 

should advise DOE as soon as possible 

by contacting Ms. Edwards to initiate 

the necessary procedures. Please also 

note that any person wishing to bring a 

laptop computer or tablet into the 

Forrestal Building will be required to 

obtain a property pass. Visitors should 

avoid bringing laptops, or allow an extra 

45 minutes. Persons may also attend the 

public meeting via webinar. For more 

information, refer to section VII, ‘‘Public 

Participation,’’ near the end of this 

notice. 

Instructions: Any comments 

submitted must identify the NOPR for 

Energy Conservation Standards for 

Residential Boilers, and provide docket 

number EE–2012–BT–STD–0047 and/or 

regulatory information number (RIN) 

number 1904–AC88. Comments may be 

submitted using any of the following 

methods: 

1. Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

2. Email: ResBoilers2012STD0047@

ee.doe.gov. Include the docket number 

and/or RIN in the subject line of the 

message. Submit electronic comments 

in Word Perfect, Microsoft Word, PDF, 

or ASCII file format, and avoid the use 

of special characters or any form on 

encryption. 

3. Postal Mail: Ms. Brenda Edwards, 

U.S. Department of Energy, Building 

Technologies Office, Mailstop EE–5B, 

1000 Independence Avenue SW., 

Washington, DC 20585–0121. If 

possible, please submit all items on a 

compact disc (CD), in which case it is 

not necessary to include printed copies. 

4. Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Office, 950 

L’Enfant Plaza SW., Suite 600, 

Washington, DC 20024. Telephone: 

(202) 586–2945. If possible, please 

submit all items on a CD, in which case 

it is not necessary to include printed 

copies. 

Written comments regarding the 

burden-hour estimates or other aspects 

of the collection-of-information 

requirements contained in this proposed 

rule may be submitted to Office of 

Energy Efficiency and Renewable 

Energy through the methods listed 

above and by email to Chad_S_

Whiteman@omb.eop.gov. 

No telefacsimilies (faxes) will be 

accepted. For detailed instructions on 

submitting comments and additional 

information on the rulemaking process, 

see section VII of this document (Public 

Participation). 

Docket: The docket, which includes 

Federal Register notices, public meeting 

attendee lists and transcripts, 

comments, and other supporting 

documents/materials, is available for 

review at www.regulations.gov. All 

documents in the docket are listed in 

the www.regulations.gov index. 

However, some documents listed in the 

index may not be publically available, 

such as those containing information 

that is exempt from public disclosure. 

A link to the docket Web page can be 

found at: http://www.regulations.gov/

#!docketDetail;D=EERE-2012-BT-STD0047. This Web page contains a link to 

the docket for this notice on the 

www.regulations.gov site. The 

www.regulations.gov Web page contains 

simple instructions on how to access all 

documents, including public comments, 

in the docket. See section VII, ‘‘Public 

Participation,’’ for further information 

on how to submit comments through 

www.regulations.gov. 

For further information on how to 

submit a comment, review other public 

comments and the docket, or participate 

in the public meeting, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Ronald Majette, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Office, EE–5B, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–7935. Email: 

residential_furnaces_and_boilers@

ee.doe.gov. 

Mr. Eric Stas, U.S. Department of 

Energy, Office of the General Counsel, 

GC–33, 1000 Independence Avenue 

SW., Washington, DC 20585–0121. 

Telephone: (202)-586-9507. Email: 

Eric.Stas@hq.doe.gov. 

For information on how to submit or 

review public comments, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Summary of the Proposed Rule 

A. Benefits and Costs to Consumers 

B. Impact on Manufacturers 

C. National Benefits 

D. Standby Mode and Off Mode 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Residential Boilers 

III. General Discussion 

A. Product Classes and Scope of Coverage 

B. Test Procedure 

C. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

D. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

E. Economic Justification 

1. Specific Criteria 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17223 

1For editorial reasons, upon codification in the 

U.S. Code, Part B was redesignated Part A. 

2All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act 

(AEMTCA), Public Law 112–210 (Dec. 18, 2012). 

a. Economic Impact on Manufacturers and 

Consumers 

b. Savings in Operating Costs Compared To 

Increase in Price (LCC and PBP) 

c. Energy Savings 

d. Lessening of Utility or Performance of 

Products 

e. Impact of Any Lessening of Competition 

f. Need for National Energy Conservation 

g. Other Factors 

2. Rebuttable Presumption 

IV. Methodology and Discussion of 

Comments 

A. Market and Technology Assessment 

1. Definition and Scope of Coverage 

2. Product Classes 

3. Technology Options 

B. Screening Analysis 

1. Screened-Out Technologies 

2. Remaining Technologies 

C. Engineering Analysis 

1. Efficiency Levels 

a. Baseline Efficiency Level and Product 

Characteristics 

b. Other Energy Efficiency Levels 

2. Cost-Assessment Methodology 

a. Teardown Analysis 

b. Cost Model 

c. Manufacturing Production Costs 

d. Cost-Efficiency Relationship 

e. Manufacturer Markup 

f. Shipping Costs 

g. Manufacturer Interviews 

D. Markups Analysis 

E. Energy Use Analysis 

1. Energy Use Methodology 

2. Standby Mode and Off Mode 

3. Comments on Boiler Energy Use 

Calculation 

F. Life-Cycle Cost and Payback Period 

Analysis 

1. Inputs To Installed Cost 

2. Inputs To Operating Costs 

a. Energy Consumption 

b. Energy Prices 

c. Maintenance and Repair Costs 

d. Product Lifetime 

e. Base-Case Efficiency 

G. Shipments Analysis 

H. National Impact Analysis 

1. National Energy Savings Analysis 

a. Full-Fuel-Cycle Energy Savings 

2. Net Present Value Analysis 

a. Discount Rates for Net Present Value 

I. Consumer Subgroup Analysis 

J. Manufacturer Impact Analysis 

1. Overview 

2. Government Regulatory Impact Model 

a. Government Regulatory Impact Model 

Key Inputs 

b. Government Regulatory Impact Model 

Scenarios 

3. Manufacturer Interviews 

K. Emissions Analysis 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

2. Valuation of Other Emissions 

Reductions 

M. Utility Impact Analysis 

N. Employment Impact Analysis 

O. General Comments on Residential Boiler 

Standards 

V. Analytical Results and Conclusions 

A. Trial Standard Levels 

1. TSLs for Energy Efficiency 

2. TSLs for Standby Mode and Off Mode 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Individual 

Consumers 

a. Life-Cycle Cost and Payback Period 

b. Consumer Subgroup Analysis 

c. Rebuttable Presumption Payback Period 

2. Economic Impacts on Manufacturers 

a. Industry Cash-Flow Analysis Results 

b. Impacts on Direct Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Subgroups of Manufacturers 

e. Cumulative Regulatory Burden 

3. National Impact Analysis 

a. Significance of Energy Savings 

b. Net Present Value of Consumer Costs 

and Benefits 

c. Indirect Impacts on Employment 

4. Impact on Product Utility or 

Performance 

5. Impact of Any Lessening of Competition 

6. Need of the Nation to Conserve Energy 

7. Other Factors 

8. Summary of National Economic Impacts 

C. Proposed Standards 

1. Benefits and Burdens of Trial Standard 

Levels Considered for Residential Boilers 

for AFUE Standards 

2. Benefits and Burdens of Trial Standard 

Levels Considered for Residential Boilers 

for Standby Mode and Off Mode 

3. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Orders 12866 

and 13563 

B. Review Under the Regulatory Flexibility 

Act 

C. Review Under the Paperwork Reduction 

Act of 1995 

D. Review Under the National 

Environmental Policy Act of 1969 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

VII. Public Participation 

A. Attendance at the Public Meeting 

B. Procedure for Submitting Requests to 

Speak and Prepared General Statements 

For Distribution 

C. Conduct of the Public Meeting 

D. Submission of Comments 

E. Issues on Which DOE Seeks Comment 

VIII. Approval of the Office of the Secretary 

I. Summary of the Proposed Rule 

Title III, Part B1 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified), established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles.2 These products include 

residential boilers, the subject of today’s 

notice. 

Pursuant to EPCA, any new or 

amended energy conservation standard 

must 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)) Furthermore, the 

new or amended standard must result in 

a significant conservation of energy. (42 

U.S.C. 6295(o)(3)(B)) EPCA specifically 

provides that DOE must conduct a 

second round of energy conservation 

standards rulemaking for residential 

boilers. (42 U.S.C. 6295(f)(4)(C)) The 

statute also provides that not later than 

6 years after issuance of any final rule 

establishing or amending a standard, 

DOE must publish either a notice of 

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)) DOE initiated this 

rulemaking as required by 42 U.S.C. 

6295(f)(4)(C), but once complete, this 

rulemaking will also satisfy the 6-year 

review provision under 42 U.S.C. 

6295(m)(1). 

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 

consumption pursuant to 42 U.S.C. 

6295(o). (42 U.S.C. 6295(gg)(3)) If 

feasible, the statute directs DOE to 

incorporate standby mode and off mode 

energy consumption into a single 

standard with the product’s active mode 

energy use. If a single standard is not 

feasible, DOE may consider establishing 

a separate standard to regulate standby 

mode and off mode energy 

consumption. 

In accordance with these and other 

statutory provisions discussed in this 

notice, DOE proposes amending the 

existing AFUE energy conservation 

standards and adopting new standby 

mode off mode electrical energy 

conservation standards for residential 

boilers. The proposed AFUE standards 

for each product class (described in 

section IV.A.2) are expressed as 

minimum annual fuel utilization 

efficiencies (AFUE), as determined by 

the DOE test method (described in 

section III.B), and are shown in Table 

I.1. Table I.2 shows the proposed 

standards for standby and off mode. 

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3The average LCC savings and PBP are measured 

relative to the base case efficiency distribution, 

which depicts the boiler market in the compliance 

year (see section IV.F.2.e). The LCC savings and 

PBP calculations are further described in section 

IV.F and in chapter 8 of the NOPR TSD. 4 DOE used a distribution of boiler lifetimes that 

ranges from 2 to 55 years. See appendix 8F of the 

NOPR TSD for details of the derivation of the 

average boiler lifetime. 

These proposed standards, if adopted, 

would apply to all products listed in 

Table I.1 and Table I.2 and 

manufactured in, or imported into, the 

United States on or after the date 5 years 

after the publication of the final rule for 

this rulemaking. 

TABLE I.1—PROPOSED AFUE ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS

Product class * 

Proposed standard: 

AFUE ** 

(%) 

Design requirement 

Gas-fired hot water boiler ...... 85 Constant-burning pilot not permitted. Automatic means for adjusting water temperature 

required (except for boilers equipped with tankless domestic water heating coils). 

Gas-fired steam boiler ............ 82 Constant-burning pilot not permitted. 

Oil-fired hot water boiler ......... 86 Automatic means for adjusting temperature required (except for boilers equipped with 

tankless domestic water heating coils). 

Oil-fired steam boiler .............. 86 None 

Electric hot water boiler ......... None Automatic means for adjusting temperature required (except for boilers equipped with 

tankless domestic water heating coils). 

Electric steam boiler ............... None None. 

* Product classes are separated by fuel source—gas, oil, or electricity—and heating medium—steam or hot water. See section IV.A.2 for a discussion of product classes. 

** AFUE is an annualized fuel efficiency metric that fully accounts for fuel consumption in active, standby, and off modes. See section III.B for 

a discussion of the AFUE test method. 

TABLE I.2—PROPOSED ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS STANDBY MODE AND OFF MODE

ELECTRICAL ENERGY CONSUMPTION

Product class 

Proposed standard: 

PW,SB

(watts) 

Proposed standard: 

PW,OFF

(watts) 

Gas-fired hot water boiler ................................................................................................................ 9 9 

Gas-fired steam boiler ..................................................................................................................... 8 8 

Oil-fired hot water boiler .................................................................................................................. 11 11 

Oil-fired steam boiler ....................................................................................................................... 11 11 

Electric hot water boiler ................................................................................................................... 8 8 

Electric steam boiler ........................................................................................................................ 8 8 

A. Benefits and Costs to Consumers 

Table I.3 presents DOE’s evaluation of 

the economic impacts of the proposed 

AFUE and standby mode and off mode 

standards on consumers of residential 

boilers, as measured by the average lifecycle cost (LCC) savings and the median 

payback period (PBP).3 Table I.4 

presents the same results for standby 

mode and off mode. The average LCC 

savings are positive for all product 

classes. The estimated PBP for the 

standard levels proposed for all product 

classes fall below the average boiler 

lifetime, which is approximately 25 

years.4 DOE has not conducted an 

analysis of an AFUE standard level for 

electric boilers as the efficiency of these 

products already approaches 100 

percent AFUE. 

TABLE I.3—IMPACTS OF PROPOSED AFUE ENERGY CONSERVATION STANDARDS ON CONSUMERS OF RESIDENTIAL

BOILERS

Product class 

Average LCC 

savings 

(2013$) 

Median payback 

period 

(years *) 

Gas-Fired Hot Water Boiler ............................................................................................................. 123 7.7 

Gas-Fired Steam Boiler ................................................................................................................... 61 1.3 

Oil-Fired Hot Water Boiler ............................................................................................................... 257 7.6 

Oil-Fired Steam Boiler ..................................................................................................................... 723 10.5 

Electric Hot Water Boiler ................................................................................................................. 1 N/A 1 N/A 

Electric Steam Boiler ....................................................................................................................... 1 N/A 1 N/A 

* The average PBP in years is 20.8 for Gas-Fired Hot Water Boiler, 3.7 for Gas-Fired Steam Boiler, 11.7 for Oil-Fired Hot Water Boiler, and 

13.9 for Oil-Fired Steam Boiler. 1 (No Standard). 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17225 

5The average LCC savings and PBP for both 

standards are calculated for each household. To 

calculate the PBP, DOE determined the combined 

installed cost to the consumer and the first-year 

operating costs for both standards. The combined 

LCC savings and PBP are compared to the base case 

efficiency distribution for both standards, which 

depicts the boiler market in the compliance year 

(see section IV.F.2.e). The combined results for all 

households are used to derive the average LCC 

savings and the median payback period values 

shown in Table I.5. 

6All monetary values in this document are 

expressed in 2013 dollars; discounted values are 

discounted to 2014 unless explicitly stated 

otherwise. 

7Energy savings in this section refer to full-fuelcycle savings (see section IV.H for discussion). 

8A quad is equal to 1015 British thermal units 

(Btu). 

9A metric ton is equivalent to 1.1 short tons. 

Results for emissions other than CO2 are presented 

in short tons. 

TABLE I.4—IMPACTS OF PROPOSED STANDBY MODE AND OFF MODE ELECTRICAL ENERGY CUNSUMPTION ENERGY

CONSERVATION STANDARDS ON CONSUMERS OF RESIDENTIAL BOILERS

Product class 

Average LCC 

savings 

(2013$) 

Median payback 

period 

(years) 

Gas-Fired Hot Water Boiler ............................................................................................................. 14 7.8 

Gas-Fired Steam Boiler ................................................................................................................... 15 7.4 

Oil-Fired Hot Water Boiler ............................................................................................................... 15 7.4 

Oil-Fired Steam Boiler ..................................................................................................................... 15 7.4 

Electric Hot Water Boiler ................................................................................................................. 8 11.0 

Electric Steam Boiler ....................................................................................................................... 9 10.9 

Estimates of the combined impact of 

the proposed AFUE and standby mode 

and off mode standards on the 

consumers are shown in Table I.5.5

TABLE I.5—COMBINED IMPACTS OF PROPOSED AFUE AND STANDBY MODE AND OFF MODE ENERGY CONSERVATION

STANDARDS ON CONSUMERS OF RESIDENTIAL BOILERS

Product class 

Average LCC 

savings 

(2013$) 

Median payback 

period 

(years) 

Gas-Fired Hot Water Boiler ............................................................................................................. 137 7.8 

Gas-Fired Steam Boiler ................................................................................................................... 76 7.3 

Oil-Fired Hot Water Boiler ............................................................................................................... 272 7.4 

Oil-Fired Steam Boiler ..................................................................................................................... 739 9.9 

Electric Hot Water Boiler ................................................................................................................. 8 11.0 

Electric Steam Boiler ....................................................................................................................... 9 10.9 

B. Impact on Manufacturers 

The industry net present value (INPV) 

is the sum of the discounted cash flows 

to the industry from the base year 

through the end of the analysis period 

(2014 to 2049). Using a real discount 

rate of 8.0 percent, DOE estimates that 

the INPV for manufacturers is $380.96 

million.6 DOE analyzed the impacts of 

AFUE energy conservation standards 

and standby/off mode electrical energy 

consumption energy conservation 

standards on manufacturers separately. 

Under the proposed AFUE standards, 

DOE expects that the change in INPV 

will range from ¥2.10 to 0.20 percent, 

which is approximately equivalent to a 

reduction of $7.99 million to an increase 

of $0.77 million. DOE estimates that 

residential boiler manufacturers will 

incur $4.28 million in conversion costs 

as a result of this proposed AFUE 

standard. Under the proposed standby 

mode and off mode standards, DOE 

expects the change in INPV will range 

from ¥0.28 to 0.06 percent, which is 

approximately equivalent to a decrease 

of $1.08 million to an increase of $0.22 

million. DOE estimates that residential 

boiler manufacturers will incur $0.21 

million in conversion costs as a result 

of this this proposed standby and off 

mode standard. DOE expects the 

combined impact of the TSLs proposed 

for AFUE and standby and off mode 

electrical consumption in this NOPR to 

range from ¥2.38 to 0.26 percent, 

which is approximately equivalent to a 

reduction of $9.07 million to an increase 

of $0.99 million. DOE estimates that 

residential boiler manufacturers will 

incur $4.49 million in conversion costs 

as a result of both proposed standards. 

Based on DOE’s interviews with 

residential boiler manufacturers, DOE 

does not expect any plant closings or 

significant loss of employment to result 

from the proposed standards for 

residential boilers. More information on 

DOE’s direct employment impact 

analysis can be found in section V.B.2.b 

of this NOPR. 

C. National Benefits 7

DOE’s analyses indicate that the 

proposed AFUE energy conservation 

standards for residential boilers would 

save a significant amount of energy. The 

lifetime energy savings for residential 

boilers purchased in the 30-year period 

that begins in the first full year of 

compliance with amended standards 

(2020–2049) amount to 0.21 quads 8 of 

full-fuel-cycle energy. This is a savings 

of 0.6 percent relative to the energy use 

of these products in the base case 

without amended standards. 

The cumulative net present value 

(NPV) of total consumer costs and 

savings for the proposed residential 

boilers AFUE standards ranges from 

$0.4 billion to $1.3 billion at 7-percent 

and 3-percent discount rates, 

respectively. This NPV expresses the 

estimated total value of future 

operating-cost savings minus the 

estimated increased product costs for 

residential boilers purchased in 2020– 

2049. 

In addition, the proposed residential 

boilers AFUE standards would have 

significant environmental benefits. The 

energy savings would result in 

cumulative emission reductions of 12.9 

million metric tons (Mt) 9 of carbon 

dioxide (CO2), 110.1 thousand tons of 

methane (CH4), 0.1 thousand tons of 

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10 DOE calculated emissions reductions relative 

to the Annual Energy Outlook 2013 (AEO 2013) 

Reference case, which generally represents current 

legislation and environmental regulations for which 

implementing regulations were available as of 

December 31, 2012. DOE notes that the proposed 

AFUE standards are estimated to cause a very slight 

increase in mercury emissions due to associated 

increase in boiler electricity use. 

11Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866, Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

assets/inforeg/technical-update-social-cost-ofcarbon-for-regulator-impact-analysis.pdf). 

12 DOE is currently investigating valuation of 

avoided Hg and SO2 emissions. 

nitrous oxide (N2O), 0.3 thousand tons 

of sulfur dioxide (SO2), 32.07 thousand 

tons of nitrogen oxides (NOX), and 

¥0.001 tons of mercury (Hg).10 The 

cumulative reduction in CO2 emissions 

through 2030 amounts to 1.4 Mt. 

The value of the CO2 reductions is 

calculated using a range of values per 

metric ton of CO2 (otherwise known as 

the Social Cost of Carbon, or SCC) 

developed by a recent Federal 

interagency process.11 The derivation of 

the SCC values is discussed in section 

IV.L. Using discount rates appropriate 

for each set of SCC values, DOE 

estimates the present monetary value of 

the CO2 emissions reduction is between 

$0.07 billion and $1.14 billion. 

Additionally, DOE estimates the present 

monetary value of the NOX emissions 

reduction to be $13.5 million to $35.5 

million at 7-percent and 3-percent 

discount rates, respectively.12

Table I.5 summarizes the national 

economic benefits and costs expected to 

result from the proposed AFUE 

standards for residential boilers. 

TABLE I.6—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED AFUE ENERGY CONSERVATION

STANDARDS FOR RESIDENTIAL BOILERS

[TSL 3] * 

Category Present value 

(billion 2013$) 

Discount rate 

(%) 

Benefits 

Consumer Operating Cost Savings ........................................................................................................... 0.64 7 

1.82 3 

CO2 Reduction Monetized Value ($12.0/t case) ** .................................................................................... 0.07 5 

CO2 Reduction Monetized Value ($40.5/t case) ** .................................................................................... 0.37 3 

CO2 Reduction Monetized Value ($62.4/t case) ** .................................................................................... 0.60 2 .5 

CO2 Reduction Monetized Value ($119/t case) ** ..................................................................................... 1.14 3 

NOX Reduction Monetized Value (at $2,684/ton) ** .................................................................................. 0.01 7 

0.04 3 

Total Benefits † ................................................................................................................................... 1.03 7 

2.22 3 

Costs 

Consumer Incremental Installed Costs ..................................................................................................... 0.29 7 

0.54 3 

Total Net Benefits 

Including Emissions Reduction Monetized Value † ................................................................................... 0.74 7 

1.69 3 

* This table presents the costs and benefits associated with residential boilers shipped in 2020–2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020–2049. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with a 3-percent discount rate 

($40.5/t in 2015). 

For the proposed standby mode and 

off mode standards, the lifetime energy 

savings for residential boilers purchased 

in the 30-year period that begins in the 

first full year of compliance with 

amended standards (2020–2049) amount 

to 0.045 quads. This is a savings of 18 

percent relative to the standby energy 

use of these products in the base case 

without amended standards. 

The cumulative NPV of total 

consumer costs and savings for the 

proposed standby mode and off mode 

standards for residential boilers ranges 

from $0.17 billion to $0.44 billion at 7- 

percent and 3-percent discount rates, 

respectively. This NPV expresses the 

estimated total value of future 

operating-cost savings minus the 

estimated increased product costs for 

residential boilers purchased in 2020– 

2049. 

In addition, the proposed standby 

mode and off mode standards would 

have significant environmental benefits. 

The energy savings would result in 

cumulative emission reductions of 2.1 

million metric tons (Mt) of carbon 

dioxide (CO2), 11.8 thousand tons of 

methane (CH4), 0.1 thousand tons of 

nitrous oxide (N2O), 2.2 thousand tons 

of sulfur dioxide (SO2), 1.91 thousand 

tons of nitrogen oxides (NOX), and 0.004 

tons of mercury (Hg). The cumulative 

reduction in CO2 emissions through 

2030 amounts to 0.25 Mt. 

As noted above, the value of the CO2

reductions is calculated using a range of 

values per metric ton of CO2 (otherwise 

known as the Social Cost of Carbon, or 

SCC) developed by a recent Federal 

interagency process. The derivation of 

the SCC values is discussed in section 

IV.L. Using discount rates appropriate 

for each set of SCC values, DOE 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17227 

13 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2014, the year used for discounting the 

NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

the latter, DOE used a range of discount rates, as 

shown in Table I.7. From the present value, DOE 

then calculated the fixed annual payment over a 30- 

year period (2020 through 2049) that yields the 

same present value. The fixed annual payment is 

the annualized value. Although DOE calculated 

annualized values, this does not imply that the 

time-series of cost and benefits from which the 

annualized values were determined is a steady 

stream of payments. 

estimates the present monetary value of 

the CO2 emissions reduction is between 

$0.01 billion and $0.18 billion. 

Additionally, DOE estimates the present 

monetary value of the NOX emissions 

reduction to be $0.8 million to $2.1 

million at 7-percent and 3-percent 

discount rates, respectively. 

Table I.6 summarizes the national 

economic benefits and costs expected to 

result from the proposed standby mode 

and off mode standards for residential 

boilers. 

TABLE I.6—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED STANDBY MODE AND OFF MODE

ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS

[TSL 3] * 

Category Present value 

(billion 2013$) 

Discount rate 

(%) 

Benefits 

Consumer Operating Cost Savings ........................................................................................................... 0.250 7 

0.596 3 

CO2 Reduction Monetized Value ($12.0/t case) ** .................................................................................... 0.012 5 

CO2 Reduction Monetized Value ($40.5/t case) ** .................................................................................... 0.058 3 

CO2 Reduction Monetized Value ($62.4/t case) ** .................................................................................... 0.094 2 .5 

CO2 Reduction Monetized Value ($119/t case) ** ..................................................................................... 0.180 3 

NOX Reduction Monetized Value (at $2,684/ton) ** .................................................................................. 0.001 7 

0.002 3 

Total Benefits † ................................................................................................................................... 0.309 7 

0.657 3 

Costs 

Consumer Incremental Installed Costs ..................................................................................................... 0.082 7 

0.158 3 

Total Net Benefits 

Including Emissions Reduction Monetized Value † ................................................................................... 0.226 7 

0.499 3 

* This table presents the costs and benefits associated with residential boilers shipped in 2020–2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020–2049. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with a 3-percent discount rate 

($40.5/t in 2015). 

The benefits and costs of today’s 

proposed energy conservation 

standards, for residential boiler 

products sold in 2020–2049, can also be 

expressed in terms of annualized values. 

Benefits and costs for the AFUE 

standards are considered separately 

from benefits and costs for the standby 

mode and off mode electrical 

consumption standards, because for the 

reasons explained in section I.D below, 

it was not technically feasible to 

develop a single, integrated standard. 

The annualized monetary values are the 

sum of: (1) The annualized national 

economic value of the benefits from 

consumer operation of products that 

meet the proposed new or amended 

standards (consisting primarily of 

operating cost savings from using less 

energy, minus increases in product 

purchase price and installation costs, 

which is another way of representing 

consumer NPV), and (2) the annualized 

monetary value of the benefits of 

emission reductions, including CO2

emission reductions.13

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, whereas the 

value of CO2 reductions is based on a 

global value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

residential boilers shipped in 2020– 

2049. The SCC values, on the other 

hand, reflect the present value of some 

future climate-related impacts resulting 

from the emission of one ton of carbon 

dioxide in each year. These impacts 

continue well beyond 2100. 

Estimates of annualized benefits and 

costs of the proposed AFUE standards 

are shown in Table I.7. The results 

under the primary estimate are as 

follows. Using a 7-percent discount rate 

for benefits and costs other than CO2

reduction (for which DOE used a 3- 

percent discount rate along with the 

average SCC series that uses a 3-percent 

discount rate ($40.5/t in 2015)), cost of 

the residential boiler standards 

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17228 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

proposed in today’s rule is $32.3 million 

per year in increased equipment costs, 

while the estimated benefits are $73 

million per year in reduced equipment 

operating costs, $21.8 million in CO2

reductions, and $1.53 million in 

reduced NOX emissions. In this case, the 

net benefit would amount to $64 million 

per year. Using a 3-percent discount rate 

for all benefits and costs and the average 

SCC series that uses a 3-percent 

discount rate ($40.5/t in 2015), the 

estimated cost of the residential boiler 

standards proposed in today’s rule is 

$31.7 million per year in increased 

equipment costs, while the estimated 

benefits are $108 million per year in 

reduced equipment operating costs, 

$21.8 million in CO2 reductions, and 

$2.10 million in reduced NOX

emissions. In this case, the net benefit 

would amount to $100 million per year. 

TABLE I.7—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AFUE ENERGY CONSERVATION STANDARDS FOR

RESIDENTIAL BOILERS

[TSL 3] 

Discount rate 

(%) 

(million 2013$/year) 

Primary estimate * Low net benefits 

estimate * 

High net benefits 

estimate * 

Benefits 

Consumer Operating Cost Savings 7 ..................................... 73 ................................... 71 ................................... 75. 

3 ..................................... 108 ................................. 105 ................................. 112. 

CO2 Reduction Monetized Value 

($12.0/t case) *.

5 ..................................... 6.1 .................................. 6.1 .................................. 6.2. 

CO2 Reduction Monetized Value 

($40.5/t case) *.

3 ..................................... 21.8 ................................ 21.6 ................................ 22.0. 

CO2 Reduction Monetized Value 

($62.4/t case) *.

2.5 .................................. 32.2 ................................ 31.9 ................................ 32.5. 

CO2 Reduction Monetized Value 

($119/t case) *.

3 ..................................... 67.6 ................................ 66.9 ................................ 68.2. 

NOX Reduction Monetized Value 

(at $2,684/ton) **.

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

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

1.53 ................................

2.10 ................................

1.52 ................................

2.08 ................................

1.53. 

2.12. 

Total Benefits † ....................... 7 plus CO2 range ........... 80 to 142 ........................ 79 to 140 ........................ 83 to 145. 

7 ..................................... 96 ................................... 94 ................................... 99. 

3 plus CO2 range ........... 116 to 177 ...................... 113 to 174 ...................... 121 to 183. 

3 ..................................... 132 ................................. 128 ................................. 136. 

Costs 

Consumer Incremental Installed 

Costs.

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

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

32.3 ................................

31.7 ................................

38.7 ................................

38.9 ................................

26.8. 

25.6. 

Net Benefits 

Total † ..................................... 7 plus CO2 range ........... 48 to 110 ........................ 40 to 101 ........................ 56 to 118. 

7 ..................................... 64 ................................... 56 ................................... 72. 

3 plus CO2 range ........... 84 to 146 ........................ 74 to 135 ........................ 95 to 157. 

3 ..................................... 100 ................................. 89 ................................... 111. 

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020–2049. These results include benefits 

to consumers which accrue after 2049 from the products purchased in 2020–2049. The results account for the incremental variable and fixed 

costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. 

In addition, incremental product costs reflect a medium decline rate for projected product price trends in the Primary Estimate, a low decline rate 

for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product price trends in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.1. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate 

($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using 

the labeled discount rate, and those values are added to the full range of CO2 values. 

Estimates of annualized benefits and 

costs of the proposed standby mode and 

off mode standards are shown in Table 

I.8. The results under the primary 

estimate are as follows. Using a 7- 

percent discount rate for benefits and 

costs other than CO2 reduction (for 

which DOE used a 3-percent discount 

rate along with the average SCC series 

that uses a 3-percent discount rate 

($40.5/t in 2015)), the estimated cost of 

the residential boiler standby mode and 

off mode standards proposed in today’s 

rule is $9.31 million per year in 

increased equipment costs, while the 

estimated benefits are $28 million per 

year in reduced equipment operating 

costs, $3 million in CO2 reductions, and 

$0.09 million in reduced NOX

emissions. In this case, the net benefit 

would amount to $22 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series that uses a 3-percent discount rate 

($40.5/t in 2015), the estimated cost of 

the residential boiler standby mode and 

off mode standards proposed in today’s 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17229 

rule is $9.35 million per year in 

increased equipment costs, while the 

estimated benefits are $35 million per 

year in reduced equipment operating 

costs, $3 million in CO2 reductions, and 

$0.12 million in reduced NOX

emissions. In this case, the net benefit 

would amount to $29 million per year. 

TABLE I.8—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDBY MODE AND OFF MODE ENERGY CONSERVATION

STANDARDS FOR RESIDENTIAL BOILERS

[TSL 3] 

Discount rate 

(%) 

(million 2013$/year) 

Primary estimate * Low net benefits 

estimate * 

High net benefits 

estimate * 

Benefits 

Consumer Operating Cost Savings 7 ..................................... 28 ................................... 27 ................................... 29. 

3 ..................................... 35 ................................... 34 ................................... 36. 

CO2 Reduction Monetized Value 

($12.0/t case) *.

5 ..................................... 1 ..................................... 1 ..................................... 1. 

CO2 Reduction Monetized Value 

($40.5/t case) *.

3 ..................................... 3 ..................................... 3 ..................................... 4. 

CO2 Reduction Monetized Value 

($62.4/t case) *.

2.5 .................................. 5 ..................................... 5 ..................................... 5. 

CO2 Reduction Monetized Value 

($119/t case) *.

3 ..................................... 11 ................................... 10 ................................... 11. 

NOX Reduction Monetized Value 

(at $2,684/ton) **.

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

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

0.09 ................................

0.12 ................................

0.09 ................................

0.12 ................................

0.09. 

0.13. 

Total Benefits † ....................... 7 plus CO2 range ........... 29 to 39 .......................... 28 to 38 .......................... 30 to 40. 

7 ..................................... 32 ................................... 30 ................................... 33. 

3 plus CO2 range ........... 36 to 46 .......................... 35 to 44 .......................... 38 to 47. 

3 ..................................... 39 ................................... 37 ................................... 40. 

Costs 

Consumer Incremental Installed 

Costs.

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

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

9.31 ................................

9.35 ................................

9.48 ................................

9.55 ................................

9.13. 

9.15. 

Net Benefits 

Total † ..................................... 7 plus CO2 range ........... 20 to 30 .......................... 19 to 28 .......................... 21 to 31. 

7 ..................................... 22 ................................... 21 ................................... 24. 

3 plus CO2 range ........... 27 to 37 .......................... 25 to 35 .......................... 28 to 38. 

3 ..................................... 29 ................................... 28 ................................... 31. 

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020¥2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020¥2049. The results account for the incremental variable and 

fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, 

and High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product price trends in the High 

Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.1. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate 

($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using 

the labeled discount rate, and those values are added to the full range of CO2 values. 

DOE has tentatively concluded that 

the proposed standards (for both AFUE, 

as well as standby mode and off mode) 

represent the maximum improvement in 

energy efficiency that is technologically 

feasible and economically justified, and 

would result in the significant 

conservation of energy. DOE further 

notes that products achieving these 

standard levels are already 

commercially available for all product 

classes covered by today’s proposal. 

Based on the analyses described above, 

DOE has tentatively concluded that the 

benefits of the proposed standards to the 

Nation (energy savings, positive NPV of 

consumer benefits, consumer LCC 

savings, and emission reductions) 

would outweigh the burdens (loss of 

INPV for manufacturers and LCC 

increases for some consumers). 

DOE also considered more-stringent 

energy efficiency levels as trial standard 

levels, and is still considering them in 

this rulemaking. However, DOE has 

tentatively concluded that the potential 

burdens of the more-stringent energy 

efficiency levels would outweigh the 

projected benefits. Based on 

consideration of the public comments 

DOE receives in response to this notice 

and related information collected and 

analyzed during the course of this 

rulemaking effort, DOE may adopt 

energy efficiency levels presented in 

this notice that are either higher or 

lower than the proposed standards, or 

some combination of level(s) that 

incorporate the proposed standards in 

part. 

DOE also added the annualized 

benefits and costs from the individual 

annualized tables to provide a combined 

benefit and cost estimate of the 

proposed AFUE and standby mode and 

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17230 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

14To obtain the combined results, DOE added the 

results for the AFUE standard in Table I.7 and for 

the standby standards in Table I.8. 

off mode standards as shown in Table 

I.10.14 The results under the primary 

estimate are as follows. Using a 7- 

percent discount rate for benefits and 

costs other than CO2 reduction, for 

which DOE used a 3-percent discount 

rate along with the average SCC series 

that uses a 3-percent discount rate 

($40.5/t in 2015), the estimated cost of 

the residential boilers AFUE and 

standby mode and off mode standards 

proposed in this rule is $41.7 million 

per year in increased equipment costs, 

while the estimated benefits are $101 

million per year in reduced equipment 

operating costs, $25.3 million per year 

in CO2 reductions, and $1.62 million 

per year in reduced NOX emissions. In 

this case, the net benefit would amount 

to $86.3 million per year. Using a 3- 

percent discount rate for all benefits and 

costs and the average SCC series that 

uses a 3-percent discount rate ($40.5/t 

in 2015), the estimated cost of the 

residential boilers AFUE and standby 

mode and off mode standards proposed 

in this rule is $41.0 million per year in 

increased equipment costs, while the 

estimated benefits are $143 million per 

year in reduced equipment operating 

costs, $25.3 million per year in CO2

reductions, and $2.22 million per year 

in reduced NOX emissions. In this case, 

the net benefit would amount to $129 

million per year. 

TABLE I.10—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AFUE AND STANDBY MODE AND OFF MODE ENERGY

CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS

[TSL 3] 

Discount rate 

(%) 

(million 2013$/year) 

Primary estimate * Low net benefits 

estimate * 

High net benefits 

estimate* 

Benefits 

Consumer Operating Cost Savings 7 .....................................

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

101 .................................

143 .................................

98 ...................................

138 .................................

104. 

149. 

CO2 Reduction Monetized Value 

($12.0/t case)*.

5 ..................................... 7.11 ................................ 7.04 ................................ 7.18. 

CO2 Reduction Monetized Value 

($40.5/t case)*.

3 ..................................... 25.3 ................................ 25.0 ................................ 25.6. 

CO2 Reduction Monetized Value 

($62.4/t case)*.

2.5 .................................. 37.3 ................................ 36.8 ................................ 37.7. 

CO2 Reduction Monetized Value 

($119/t case)*.

3 ..................................... 78.2 ................................ 77.3 ................................ 79.1. 

NOX Reduction Monetized Value 

(at $2,684/ton)**.

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

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

1.62 ................................

2.22 ................................

1.61 ................................

2.20 ................................

1.63. 

2.24. 

Total Benefits † ....................... 7 plus CO2 range ........... 110 to 181 ...................... 107 to 177 ...................... 113 to 185. 

7 ..................................... 128 ................................. 125 ................................. 131. 

3 plus CO2 range ........... 152 to 223 ...................... 148 to 218 ...................... 158 to 230. 

3 ..................................... 170 ................................. 165 ................................. 177. 

Costs 

Consumer Incremental Installed 

Costs.

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

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

41.7 ................................

41.0 ................................

48.2 ................................

48.5 ................................

35.9. 

34.8. 

Net Benefits 

Total † ..................................... 7 plus CO2 range ........... 68.1 to 139 ..................... 58.8 to 129 ..................... 77.0 to 149. 

7 ..................................... 86.3 ................................ 76.7 ................................ 95.4. 

3 plus CO2 range ........... 111 to 182 ...................... 99 to 169 ........................ 123 to 195. 

3 ..................................... 129 ................................. 117 ................................. 142. 

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020¥2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020¥2049. The results account for the incremental variable and 

fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, 

and High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate 

($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using 

the labeled discount rate, and those values are added to the full range of CO2 values. 

D. Standby Mode and Off Mode 

As discussed in section II.A of this 

NOPR, any final rule for amended or 

new energy conservation standards that 

is published on or after July 1, 2010 

must address standby mode and off 

mode energy use. (42 U.S.C. 6295(gg)(3)) 

As a result, DOE has analyzed and is 

proposing new energy conservation 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17231 

15For editorial reasons, upon codification in the 

U.S. Code, Part B was redesignated Part A. 

16All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act, 

Pub. L. 112–210 (enacted December 18, 2012). 

standards for the standby mode and off 

mode electrical energy consumption for 

residential boilers. 

AFUE, the statutory metric for 

residential boilers, does not incorporate 

standby mode or off mode use of 

electricity, although it already fully 

addresses use in these modes of fossil 

fuels by gas-fired and oil-fired boilers. 

In the October 2010 test procedure final 

rule for residential furnaces and boilers, 

DOE determined that incorporating 

standby mode and off mode electricity 

consumption into a single standard for 

residential furnaces and boilers is not 

technically feasible. 75 FR 64621, 

64626–64627 (Oct. 20, 2010). DOE 

concluded that a metric that integrates 

standby mode and off mode electricity 

consumption into AFUE is not 

technically feasible, because the standby 

mode and off mode energy usage, when 

measured, is essentially lost in practical 

terms due to rounding conventions for 

certifying furnace and boiler compliance 

with Federal energy conservation 

standards. Id. Therefore, in this notice, 

DOE is proposing amended boiler 

standards that are AFUE levels, which 

exclude standby mode and off mode 

electricity use, and DOE is also 

proposing separate standards that are 

maximum wattage (W) levels to address 

the standby mode (PW,SB) and off mode 

(PW,OFF) electrical energy use of boilers. 

DOE also presents corresponding trial 

standard levels (TSLs) for energy 

consumption in standby mode and off 

mode. DOE has tentatively decided to 

use a maximum wattage requirement to 

regulate standby mode and off mode for 

boilers. DOE believes using an 

annualized metric could add 

unnecessary complexities, such as 

trying to estimate an assumed number of 

hours that a boiler typically spends in 

standby mode. Instead, DOE believes 

that a maximum wattage standard is the 

most straightforward metric for 

regulating standby mode and off mode 

energy consumption of boilers and will 

result in the least amount of industry 

and consumer confusion. 

DOE is using the metrics just 

described—AFUE, PW,SB, and PW,OFF— 

in the amended energy conservation 

standards it proposes in this rulemaking 

for boilers. This approach satisfies the 

mandate of 42 U.S.C. 6295(gg)(3) that 

amended standards address standby 

mode and off mode energy use. The 

various analyses performed by DOE to 

evaluate minimum standards for 

standby mode and off mode electrical 

energy consumption for boilers are 

discussed further in section IV.E of this 

NOPR. 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying today’s proposal, as well as 

some of the relevant historical 

background related to the establishment 

of standards for residential boilers. 

A. Authority 

Title III, Part B15 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified) established the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles, a program covering most 

major household appliances 

(collectively referred to as ‘‘covered 

products’’).16 These products include 

the residential boilers that are the 

subject of this rulemaking. (42 U.S.C. 

6292(a)(5)) EPCA, as amended, 

prescribed energy conservation 

standards for these products (42 U.S.C. 

6295(f)(1) and (3)), and directed DOE to 

conduct further rulemakings to 

determine whether to amend these 

standards (42 U.S.C. 6295(f)(4)). Under 

42 U.S.C. 6295(m), the agency must 

periodically review established energy 

conservation standards for a covered 

product; under this requirement, such 

review must be conducted no later than 

6 years from the issuance of any final 

rule establishing or amending a 

standard for a covered product. This 

rulemaking satisfies both statutory 

provisions (42 U.S.C. 6295(f)(4) and 42 

U.S.C. 6295(m)). 

Pursuant to EPCA, DOE’s energy 

conservation program for covered 

products consists essentially of four 

parts: (1) Testing; (2) labeling; (3) 

establishing Federal energy 

conservation standards; and (4) 

certification and enforcement 

procedures. The Federal Trade 

Commission (FTC) is primarily 

responsible for labeling, and DOE 

implements the remainder of the 

program. Subject to certain criteria and 

conditions, DOE is required to conduct 

a second round of rulemaking under 42 

U.S.C. 6295(f)(4)(C) to consider 

amended energy conservation standards 

for residential boilers, and DOE is also 

required to consider amended standards 

under 42 U.S.C. 6295(m)(1) by July 15, 

2014 (i.e., with either: (1) A NOPR with 

proposed standards, or (2) a notice of 

determination not to amend the 

standards within six years of issuance of 

the last final rule for residential boilers). 

DOE is further required to develop test 

procedures to measure the energy 

efficiency, energy use, or estimated 

annual operating cost of each covered 

product prior to the adoption of a new 

or amended energy conservation 

standard. (42 U.S.C. 6295(o)(3)(A) and 

(r)) Manufacturers of covered products 

must use the prescribed DOE test 

procedure as the basis for certifying to 

DOE that their products comply with 

the applicable energy conservation 

standards adopted under EPCA and 

when making representations to the 

public regarding the energy use or 

efficiency of those products. (42 U.S.C. 

6293(c) and 6295(s)) Similarly, DOE 

must use these test procedures to 

determine whether the products comply 

with standards adopted pursuant to 

EPCA. (42 U.S.C. 6295(s)) The DOE test 

procedures for residential boilers appear 

at title 10 of the Code of Federal 

Regulations (CFR) part 430, subpart B, 

appendix N. In 2012, DOE initiated a 

rulemaking to review the residential 

furnace and boiler test procedure. In 

March 2015, DOE published a NOPR 

outlining the proposed changes to the 

test procedure. 80 FR 12876. Details 

regarding this rulemaking are discussed 

in section III.B. 

DOE must follow specific statutory 

criteria for prescribing amended 

standards for covered products, 

including residential boilers. As 

indicated above, any amended standard 

for a covered product must 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) and (3)(B)) Furthermore, 

DOE may not adopt any standard that 

would not result in the significant 

conservation of energy. (42 U.S.C. 

6295(o)(3)) Moreover, DOE may not 

prescribe a standard: (1) For certain 

products, including residential boilers, 

if no test procedure has been established 

for the product, or (2) if DOE determines 

by rule that the proposed standard is not 

technologically feasible or economically 

justified. (42 U.S.C. 6295(o)(3)(A)–(B)) 

In deciding whether a proposed 

standard is economically justified, after 

receiving comments on the proposed 

standard, DOE must determine whether 

the benefits of the standard exceed its 

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

DOE must make this determination by, 

to the greatest extent practicable, 

considering the following seven 

statutory factors: 

(1) The economic impact of the standard 

on manufacturers and consumers of the 

products subject to the standard; 

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(2) The savings in operating costs 

throughout the estimated average life of the 

covered products in the type (or class) 

compared to any increase in the price, initial 

charges, or maintenance expenses for the 

covered products that 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 impact of any lessening of 

competition, as determined in writing by the 

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 of Energy 

(Secretary) considers relevant. 

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

EPCA, as codified, also contains what 

is known as an ‘‘anti-backsliding’’ 

provision, which prevents the Secretary 

from prescribing any amended standard 

that either increases the maximum 

allowable energy use or decreases the 

minimum required energy efficiency of 

a covered product. (42 U.S.C. 

6295(o)(1)) Also, the Secretary may not 

prescribe an amended or new standard 

if interested persons have established by 

a preponderance of evidence that the 

standard is likely to result in the 

unavailability in the United States of 

any covered product type (or class) of 

performance characteristics (including 

reliability), features, sizes, capacities, 

and volumes that are substantially the 

same as those generally available in the 

United States. (42 U.S.C. 6295(o)(4)) 

Further, EPCA, as codified, 

establishes a rebuttable presumption 

that a standard is economically justified 

if the Secretary finds that the additional 

cost to the consumer of purchasing a 

product complying with an energy 

conservation standard level will be less 

than three times the value of the energy 

savings during the first year that the 

consumer will receive as a result of the 

standard, as calculated under the 

applicable test procedure. (42 U.S.C. 

6295(o)(2)(B)(iii)) 

Additionally, 42 U.S.C. 6295(q)(1) 

specifies requirements when 

promulgating an energy conservation 

standard for a covered product that has 

two or more subcategories. DOE must 

specify a different standard level for a 

type or class of covered product that has 

the same function or intended use, if 

DOE determines that products within 

such group: (A) Consume a different 

kind of energy from that consumed by 

other covered products within such type 

(or class); or (B) have a capacity or other 

performance-related feature that other 

products within such type (or class) do 

not have and such feature justifies a 

higher or lower standard. (42 U.S.C. 

6295(q)(1)) In determining whether a 

performance-related feature justifies a 

different standard for a group of 

products, DOE must consider such 

factors as the utility to the consumer of 

the feature and other factors DOE deems 

appropriate. Id. Any rule prescribing 

such a standard must include an 

explanation of the basis on which such 

higher or lower level was established. 

(42 U.S.C. 6295(q)(2)) 

Federal energy conservation 

requirements generally supersede State 

laws or regulations concerning energy 

conservation testing, labeling, and 

standards. (42 U.S.C. 6297(a)–(c)) DOE 

may, however, grant waivers of Federal 

preemption for particular State laws or 

regulations, in accordance with the 

procedures and other provisions set 

forth under 42 U.S.C. 6297(d). 

Finally, pursuant to the amendments 

contained in the Energy Independence 

and Security Act of 2007 (EISA 2007), 

Public Law 110–140, any final rule for 

new or amended energy conservation 

standards promulgated after July 1, 

2010, is required to address standby 

mode and off mode energy use. (42 

U.S.C. 6295(gg)(3)) Specifically, when 

DOE adopts a standard for a covered 

product after that date, it must, if 

justified by the criteria for adoption of 

standards under EPCA (42 U.S.C. 

6295(o)), incorporate standby mode and 

off mode energy use into a single 

standard, or, if that is not feasible, adopt 

a separate standard for such energy use 

for that product. (42 U.S.C. 

6295(gg)(3)(A)–(B)) DOE’s current test 

procedures for residential boilers 

address standby mode and off mode 

energy use. In this rulemaking, DOE 

intends to adopt separate energy 

conservation standards to address 

standby mode and off mode energy use. 

B. Background 

1. Current Standards 

In a final rule published on July 28, 

2008 (2008 final rule), DOE prescribed 

energy conservation standards for 

residential boilers manufactured on or 

after September 1, 2012. 73 FR 43611. 

These standards are set forth in DOE’s 

regulations at 10 CFR 430.32(e)(2)(ii) 

and are repeated in Table II.1 below. 

TABLE II.1—CURRENT FEDERAL ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS

Product class 

Minimum annual fuel 

utilization efficiency 

(%) 

Design requirements 

Gas-fired Hot Water Boiler ................................. 82 ................................ No Constant-Burning Pilot, Automatic Means for Adjusting Water 

Temperature.* 

Gas-fired Steam Boiler ....................................... 80 ................................ No Constant-Burning Pilot. 

Oil-fired Hot Water Boiler ................................... 84 ................................ Automatic Means for Adjusting Temperature.* 

Oil-fired Steam Boiler ......................................... 82 ................................ None. 

Electric Hot Water Boiler .................................... None ........................... Automatic Means for Adjusting Temperature.* 

Electric Steam Boiler ** ...................................... None ........................... None. 

* Excluding boilers equipped with a tankless domestic water heating coil. 

** Although the ‘‘Electric steam boiler’’ product class is not included in the table at 10 CFR 430.32(e)(2)(ii), according to 42 U.S.C. 6295(f), 

there are no minimum AFUE or design requirements for these products. DOE intends to clarify the standards for these products in this NOPR. 

2. History of Standards Rulemaking for 

Residential Boilers 

Given the somewhat complicated 

interplay of recent DOE rulemakings 

and statutory provisions related to 

residential boilers, DOE provides the 

following regulatory history as 

background leading to the present 

rulemaking. On November 19, 2007, 

DOE published a final rule in the 

Federal Register (November 2007 final 

rule) revising the energy conservation 

standards for furnaces and boilers, 

which addressed the first required 

review of 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, EISA 

2007, Public Law 110–140, was signed 

into law, which further revised the 

energy conservation standards for 

residential boilers. More specifically, 

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EISA 2007 amended EPCA to revise the 

AFUE requirements for residential 

boilers and set design requirements for 

most product classes. (42 U.S.C. 

6295(f)(3)) 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 

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 residential boilers 

outlined in 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 1, 2012 have an automatic 

means for adjusting water temperature. 

(42 U.S.C. 6295(f)(3)(A)–(C); 10 CFR 

430.32(e)(2)(ii)–(iv)) The automatic 

means for adjusting water temperature 

must ensure that an incremental change 

in the inferred heat load produces a 

corresponding incremental change in 

the temperature of the water supplied 

by the boiler. EISA 2007 also disallows 

the use of constant-burning pilot lights 

in gas-fired hot water boilers and gasfired steam boilers. 

DOE initiated today’s 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 proposed energy 

conservation standards. (42 U.S.C. 

6295(m)(1)) As noted above, 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 

consumption pursuant to 42 U.S.C. 

6295(o). (42 U.S.C. 6295(gg)(3)) If 

feasible, the statute directs DOE to 

incorporate standby mode and off mode 

energy consumption into a single 

standard with the product’s active mode 

energy use. If a single standard is not 

feasible, DOE may consider establishing 

a separate standard to regulate standby 

mode and off mode energy 

consumption. Consequently, DOE will 

consider standby mode and off mode 

energy use as part of this rulemaking for 

residential boilers. 

DOE initiated this current rulemaking 

by issuing an analytical Framework 

Document, ‘‘Rulemaking Framework for 

Residential Boilers’’ (February 11, 

2013). DOE published the notice of 

public meeting and availability of the 

Framework Document for residential 

boilers in the Federal Register on 

February 11, 2013. 78 FR 9631. The 

residential boiler energy conservation 

standards rulemaking docket is EERE– 

2012–BT–STD–0047. See: http://

www1.eere.energy.gov/buildings/

appliance_standards/

rulemaking.aspx?ruleid=112. 

The Framework Document explained 

the issues, analyses, and process that 

DOE anticipated using to develop 

energy conservation standards for 

residential boilers. DOE held a public 

meeting on March 13, 2013, to solicit 

comments from interested parties 

regarding DOE’s analytical approach. 

The comment period for the Framework 

Document closed on March 28, 2013. 

To further develop the energy 

conservation standards for residential 

boilers, DOE gathered additional 

information and performed an initial 

technical analysis. This process 

culminated in publication in the 

Federal Register on February 11, 2014, 

of the notice of data availability 

(NODA), which announced the 

availability of analytical results and 

modeling tools. 79 FR 8122. In that 

document, DOE presented its initial 

analysis of potential amended energy 

conservation standards for residential 

boilers, and requested comment on the 

following matters discussed in the 

analysis: (1) The product classes and 

scope of coverage; (2) the analytical 

framework, models, and tools that DOE 

is using to evaluate potential standards; 

and (3) the results of the preliminary 

analyses performed by DOE. Id. DOE 

also invited written comments on these 

subjects, as well as any other relevant 

issues, and announced the availability 

of supporting documentation on its Web 

site at http://www.regulations.gov/

#!documentDetail;D=EERE-2012-BTSTD-0047-0015. 

A PDF copy of the supporting 

documentation is available at http://

www.regulations.gov/

#!documentDetail;D=EERE-2012-BTSTD-0047-0011. The comment period 

closed on March 13, 2014. 

The supporting documentation in the 

NODA provided an overview of the 

activities DOE undertook in developing 

potential amended energy conservation 

standards for residential boilers, and 

discussed the comments DOE received 

in response to the Framework 

Document. It also described the 

analytical methodology that DOE used 

and each analysis DOE had performed 

up to that point. These analyses were as 

follows: 

• A market and technology 

assessment addressed the scope of this 

rulemaking, identified the potential 

product classes of residential boilers, 

characterized the markets for these 

products, and reviewed techniques and 

approaches for improving their 

efficiency; 

• A screening analysis reviewed 

technology options to improve the 

efficiency of residential boilers, and 

weighed these options against DOE’s 

four prescribed screening criteria; 

• An engineering analysis estimated 

the increase in manufacturer selling 

prices (MSPs) associated with more 

energy-efficient residential boilers; 

• An energy use analysis estimated 

the annual energy use of residential 

boilers at various potential standard 

levels; 

• A markups analysis converted 

estimated MSPs to consumer-installed 

prices. 

• A life-cycle cost (LCC) analysis 

calculated, at the consumer level, the 

discounted savings in operating costs 

throughout the estimated average life of 

the product, compared to any increase 

in installed costs likely to result directly 

from the adoption of a given standard; 

• A payback period (PBP) analysis 

estimated the amount of time it would 

take consumers to recover the higher 

expense of purchasing more-energyefficient products through lower 

operating costs; 

• A shipments analysis estimated 

shipments of residential boilers over the 

time period examined in the analysis 

(30 years), which were used in 

performing the national impact analysis; 

• A national impact analysis assessed 

the aggregate impacts at the national 

level of potential energy conservation 

standards for residential boilers, as 

measured by the net present value of 

total consumer economic impacts and 

national energy savings; 

The nature and function of the 

analyses in this rulemaking, including 

the engineering analysis, energy-use 

characterization, markups to determine 

installed prices, LCC and PBP analyses, 

and national impacts, are summarized 

in the February 2014 notice. 79 FR 8122, 

8124–28 (Feb. 11, 2014). 

Statements received after publication 

of the Framework Document, at the 

Framework public meeting, and 

comments received after the publication 

of the NODA have helped identify 

issues involved in this rulemaking and 

have provided information that has 

contributed to DOE’s resolution of these 

issues. The Department considered 

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these statements and comments in 

developing revised engineering and 

other analyses for this rulemaking. 

DOE received 30 comments in 

response to the February 2014 NODA. 

These commenters include: A joint 

comment from the American Council for 

an Energy-Efficient Economy (ACEEE), 

the Appliance Standards Awareness 

Project (ASAP), the Alliance to Save 

Energy (ASE), the Natural Resources 

Defense Council (NRDC), and the 

Northeast Energy Efficiency 

Partnerships (NEEP); a comment from 

the Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI); a 

comment from Edison Electric Institute 

(EEI); and a joint comment from the 

American Gas Association (AGA) and 

the American Public Gas Association 

(APGA). Manufacturers submitting 

written comments include: Energy 

Kinetics, Weil McLain, Weil McLain 

and various contractors and distributors 

(Weil McLain et al.), Crown Boiler, US 

Boiler, New Yorker Boiler, and HTP. 

Heating, ventilation, and air 

conditioning professionals and fuel 

companies who submitted written 

comments include: Belyea Brothers, Fire 

& Ice Heating &Cooling, Westmore Fuel 

Company, Maritime Energy, Brideau Oil 

Co., Hlavaty Plumb Heat and Cool, 

Rhoads Energy Corporation, Powers 

Energy Corporation, Sunshine Fuels & 

Energy Services, Petro Heating & Air 

Conditioning Services, OSI Comfort 

Specialists, Soundview Heating and Air 

Conditioning Corp, Aiello Home 

Services, Lombardi Oil, Boehm Heating 

Company, Kafin Oil Company, 

Wilkinson Oil Company, Santoro Oil 

Company, and Stocker Home Energy 

Services. This NOPR summarizes and 

responds to the issues raised in these 

comments. A parenthetical reference at 

the end of a comment quotation or 

paraphrase provides the location of the 

item in the public record. 

III. General Discussion 

DOE developed today’s proposed rule 

after considering verbal and written 

comments, data, and information from 

interested parties that represent a 

variety of interests. The following 

discussion addresses issues raised by 

these commenters. 

A. Product Classes and Scope of 

Coverage 

When evaluating and establishing 

energy conservation standards, DOE 

divides covered products into product 

classes by the type of energy used or by 

capacity or other performance-related 

features that justify a different standard. 

In making a determination whether a 

performance-related feature justifies a 

different standard, DOE must consider 

such factors as the utility of the feature 

to the consumer and other factors DOE 

deems appropriate. (42 U.S.C. 6295(q)) 

Existing energy conservation 

standards divide residential boilers into 

six product classes based on the fuel 

type (i.e., gas, oil, or electricity) and 

heating medium of the product (i.e., hot 

water or steam). For this rulemaking, 

DOE proposes to maintain the scope of 

coverage defined by its current 

regulations for the analysis of standards, 

so as to include six product classes of 

boilers: (1) Gas-fired hot water boilers; 

(2) gas-fired steam boilers; (3) oil-fired 

hot water boilers; (4) oil-fired steam 

boilers; (5) electric hot water boilers; 

and (6) electric steam boilers. DOE has 

not conducted an analysis of an AFUE 

standard level for electric boilers as the 

AFUE of these products already 

approaches 100 percent. DOE also did 

not conduct an analysis of a standard 

level for combination appliances as the 

DOE test procedure does not include a 

method with which to test these 

products. These reasons are explained 

in greater detail in section IV.A.1 of this 

NOPR. However, DOE did include 

electric boilers within the scope of its 

analysis of standby mode and off mode 

energy conservation standards. 

The scope and product classes 

analyzed for today’s NOPR are the same 

as those initially set forth proposed in 

the Framework Document and 

examined in DOE’s initial analysis. 

Comments received relating to the scope 

of coverage are described in section 

IV.A of this proposed rule. 

B. Test Procedure 

DOE’s current energy conservation 

standards for residential boilers are 

expressed in terms of annual fuel 

utilization efficiency (see 10 CFR 

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

part 430, subpart B, appendix N. The 

current DOE test procedure for 

residential boilers was originally 

established by a May 12, 1997 final rule, 

which incorporates by reference the 

American Society of Heating, 

Refrigerating and Air-Conditioning 

Engineers (ASHRAE)/American 

National Standards Institute (ANSI) 

Standard 103–1993, Method of Testing 

for Annual Fuel Utilization Efficiency of 

Residential Central Furnaces and 

Boilers (1993). 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 (October 2010 test procedure 

rule). 75 FR 64621. This rule amended 

DOE’s test procedure for residential 

furnaces and boilers to establish a 

separate metric for measuring the 

electrical energy use in standby mode 

and off mode for gas-fired, oil-fired, and 

electric boilers pursuant to requirements 

established by EISA 2007. In the final 

rule, DOE determined that due to the 

magnitude of the electrical standby/off 

mode vs active mode, a single efficiency 

metric is technically infeasible. The 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 in the Federal Register 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 July 10, 2013, DOE published a 

final rule in the Federal Register (July 

2013 final rule) that modified the 

existing testing procedures for 

residential furnaces and boilers. 78 FR 

41265. The modification addressed 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. Specifically, 

the DOE test procedure allows 

condensing boilers and furnaces to omit 

the heat-up and cool-down tests 

provided that the units have no 

measurable airflow through the 

combustion chamber and heat 

exchanger (HX) 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 the necessary 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 July 

2013 final rule adopted two new 

equations needed to account for the use 

of section 9.10 for two-stage and 

modulating condensing furnaces and 

boilers. Id. 

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 

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17 DOE also presents a sensitivity analysis that 

considers impacts for products shipped in a 9-year 

period. 

18 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. 

19 ‘‘Review of Site (Point-of-Use) and Full-FuelCycle Measurement Approaches to DOE/EERE 

Building Appliance Energy-Efficiency Standards,’’ 

(Academy report) was completed in May 2009 and 

included five recommendations. A copy of the 

Continued 

6293(b)(1)(A)) Accordingly, DOE must 

complete the residential furnaces and 

boiler 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 energy conservation standards 

rulemaking. On March 11, 2015, DOE 

published a notice of proposed 

rulemaking for the test procedure in the 

Federal Register (March 2015 Test 

Procedure NOPR), a necessary step 

toward fulfillment of the requirement 

under 42 U.S.C. 6293(b)(1)(A) for 

residential furnaces and boilers. 80 FR 

12876. DOE must base the analysis of 

amended energy conservation standards 

on the most recent version of its test 

procedures, and accordingly, DOE will 

use any amended test procedure when 

considering product efficiencies, energy 

use, and efficiency improvements in its 

analyses. Major changes proposed in the 

March 2015 Test Procedure NOPR 

included proposals to: 

• Adopt ANSI/ASHRAE 103–2007 by 

reference in place of the existing 

reference to ANSI/ASHRAE 103–1993; 

• Modify the requirements for the 

measurement of condensate under 

steady-state conditions; 

• Update references to installation 

manuals; 

• Update the auxiliary electrical 

consumption calculation to include 

additional measurements of electrical 

consumption; 

• Adopt a method for determining if 

the automatic means requirement has 

been met; 

• Adopt a method for qualifying the 

use of the minimum draft factor, and 

• Revising the required reporting 

precision for AFUE. 

DOE received several comments from 

stakeholders relating to the residential 

furnace and boiler test procedure. These 

comments were considered and 

addressed in that rulemaking 

proceeding. 

C. Technological Feasibility 

1. General 

In each energy conservation standards 

rulemaking, DOE conducts a screening 

analysis based on information gathered 

on all current technology and prototype 

designs that could improve the 

efficiency of the products or equipment 

that are the subject of the rulemaking. 

As the first step in such an analysis, 

DOE develops a list of technology 

options for consideration in 

consultation with manufacturers, design 

engineers, and other interested parties. 

DOE then determines which of those 

means for improving efficiency are 

technologically feasible. DOE considers 

technologies incorporated in 

commercially-available products or in 

working prototypes to be 

technologically feasible. 10 CFR part 

430, subpart C, appendix A, section 

4(a)(4)(i). 

After DOE has determined that 

particular technology options are 

technologically feasible, it further 

evaluates each technology option in 

light of the following additional 

screening criteria: (1) Practicability to 

manufacture, install, and service; (2) 

adverse impacts on product utility or 

availability; and (3) adverse impacts on 

health or safety. 10 CFR part 430, 

subpart C, appendix A, section 

4(a)(4)(ii)–(iv). Additionally, it is DOE 

policy not to include in its analysis any 

proprietary technology that is a unique 

pathway to achieving a certain 

efficiency level. Section IV.B of this 

notice discusses the results of the 

screening analysis for residential 

boilers, particularly the designs DOE 

considered, those it screened out, and 

those that are the basis for the trial 

standard levels (TSLs) in this 

rulemaking. For further details on the 

screening analysis for this rulemaking, 

see chapter 4 of the NOPR technical 

support document (TSD). 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt an 

amended standard for a type or class of 

covered product, it must determine the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use that is technologically 

feasible for such product. (42 U.S.C. 

6295(p)(1)) Accordingly, in the 

engineering analysis, DOE determined 

the maximum technologically feasible 

(max-tech) improvements in energy 

efficiency for residential boilers, using 

the design parameters for the mostefficient products available on the 

market or in working prototypes. The 

max-tech levels that DOE determined 

for this rulemaking include efficiency 

levels currently only achieved through 

the use of condensing technology for 

both the gas fired hot water and the oil 

fired hot water product classes. Details 

regarding the max-tech efficiency levels 

determined for this rulemaking are 

described in section IV.C of this 

proposed rule and in chapter 5 of the 

NOPR TSD. 

D. Energy Savings 

1. Determination of Savings 

For each TSL, DOE projected energy 

savings from the products that are the 

subject of this rulemaking purchased in 

the 30-year period that begins in the 

year of compliance with amended 

standards (2020–2049).17 The savings 

are measured over the entire lifetime of 

products purchased in the 30-year 

analysis period.18 DOE quantified the 

energy savings attributable to each TSL 

as the difference in energy consumption 

between each standards case and the 

base case. The base case represents a 

projection of energy consumption in the 

absence of amended energy 

conservation standards, and it considers 

market forces and policies that affect 

demand for more-efficient products. 

DOE used its national impact analysis 

(NIA) spreadsheet model to estimate 

energy savings from potential amended 

standards for the products that are the 

subject of this rulemaking. The NIA 

spreadsheet model (described in section 

IV.H of this NOPR) calculates energy 

savings in site energy, which is the 

energy directly consumed by products 

at the locations where they are used. For 

electricity, DOE reports national energy 

savings on an annual basis in terms of 

primary (source) energy savings, which 

is the savings in the energy that is used 

to generate and transmit the site 

electricity. To calculate this quantity 

(i.e., converting site energy to primary 

energy), DOE derives annual conversion 

factors from the model used to prepare 

the Energy Information Administration’s 

(EIA) most recent Annual Energy 

Outlook (AEO). 

DOE also has begun to estimate fullfuel-cycle (FFC) energy savings, as 

discussed in DOE’s statement of policy 

and notice of policy amendment. 76 FR 

51282 (August 18, 2011), as amended at 

77 FR 49701 (August 17, 2012). The FFC 

metric includes the energy consumed in 

extracting, processing, and transporting 

primary fuels (i.e., coal, natural gas, 

petroleum fuels), and, thus, presents a 

more complete picture of the impacts of 

energy efficiency standards. DOE’s 

evaluation of FFC savings is driven in 

part by the National Academy of 

Sciences’ (NAS) report on FFC 

measurement approaches for DOE’s 

Appliance Standards Program.19 The 

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study can be downloaded at: http://www.nap.edu/ 

catalog.php?record_id=12670. 

NAS report discusses that the FFC 

metric was primarily intended for 

energy conservation standards 

rulemakings where multiple fuels may 

be used by a particular product. DOE’s 

approach is based on the calculation of 

an FFC multiplier for each of the energy 

types used by covered products or 

equipment (oil, gas and electricity in the 

case of residential boilers). Although the 

addition of FFC energy savings in the 

rulemakings is consistent with the 

recommendations, the methodology for 

estimating FFC does not project how 

fuel markets would respond to this 

particular standards rulemaking. The 

FFC methodology simply estimates how 

much additional energy, and in turn 

how many tons of emissions, may be 

displaced if the estimated quantity of 

energy was not consumed by the 

residential boilers covered in this 

rulemaking. It is also important to note 

that inclusion of FFC savings did not 

affect DOE’s choice of proposed 

standards. For more information on FFC 

energy savings, see section IV.H.1. 

2. Significance of Savings 

To adopt more-stringent standards for 

a covered product, DOE must determine 

that such action would result in 

‘‘significant’’ energy savings. (42 U.S.C. 

6295(o)(3)(B)) Although the term 

‘‘significant’’ is not defined in the Act, 

the U.S. Court of Appeals for the District 

of Columbia Circuit, in Natural 

Resources Defense Council v. 

Herrington, 768 F.2d 1355, 1373 (D.C. 

Cir. 1985), opined that Congress 

intended ‘‘significant’’ energy savings in 

the context of EPCA to be savings that 

were not ‘‘genuinely trivial.’’ The energy 

savings for all of the trial standard levels 

considered in this rulemaking, 

including the proposed standards, are 

nontrivial, and, therefore, DOE 

considers them ‘‘significant’’ within the 

meaning of section 325 of EPCA. 

E. Economic Justification 

1. Specific Criteria 

EPCA provides seven factors to be 

evaluated in determining whether a 

potential energy conservation standard 

is economically justified. (42 U.S.C. 

6295(o)(2)(B)(i)(I)–(VII)) The following 

sections discuss how DOE has 

addressed each of those seven factors in 

this rulemaking. 

a. Economic Impact on Manufacturers 

and Consumers 

In determining the impacts of a 

potential amended standard on 

manufacturers, DOE conducts a 

manufacturer impact analysis (MIA), as 

discussed in section IV.J. DOE first uses 

an annual cash-flow approach to 

determine the quantitative impacts. This 

step includes both a short-term 

assessment—based on the cost and 

capital requirements during the period 

between when a regulation is issued and 

when entities must comply with the 

regulation—and a long-term assessment 

over a 30-year period. The industrywide impacts analyzed include: (1) 

Industry net present value (INPV), 

which values the industry on the basis 

of expected future cash flows; (2) cash 

flows by year; (3) changes in revenue 

and income; and (4) other measures of 

impact, as appropriate. Second, DOE 

analyzes and reports the impacts on 

different types of manufacturers, 

including impacts on small 

manufacturers. Third, DOE considers 

the impact of standards on domestic 

manufacturer employment and 

manufacturing capacity, as well as the 

potential for standards to result in plant 

closures and loss of capital investment. 

Finally, DOE takes into account 

cumulative impacts of various DOE 

regulations and other regulatory 

requirements on manufacturers. 

For individual consumers, measures 

of economic impact include the changes 

in LCC and PBP associated with new or 

amended standards. These measures are 

discussed further in the following 

section. For consumers in the aggregate, 

DOE also calculates the national net 

present value of the economic impacts 

applicable to a particular rulemaking. 

DOE also evaluates the LCC impacts of 

potential standards on identifiable 

subgroups of consumers that may be 

affected disproportionately by a national 

standard. 

b. Savings in Operating Costs Compared 

To Increase in Price (LCC and PBP) 

EPCA requires DOE to consider 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 of, or in the 

initial charges for, or maintenance 

expenses of, the covered product that 

are likely to result from a standard. (42 

U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts 

this comparison in its LCC and PBP 

analyses. 

The LCC is the sum of the purchase 

price of a product (including its 

installation) and the operating expense 

(including energy, maintenance, and 

repair expenditures) discounted over 

the lifetime of the product. The LCC 

analysis requires a variety of inputs, 

such as product prices, product energy 

consumption, energy prices, 

maintenance and repair costs, product 

lifetime, and consumer discount rates. 

To account for uncertainty and 

variability in specific inputs, such as 

product lifetime and discount rate, DOE 

uses a distribution of values, with 

probabilities attached to each value. For 

its analysis, DOE assumes that 

consumers will purchase the covered 

products in the first year of compliance 

with amended standards. 

The LCC savings and the PBP for the 

considered conservation levels are 

calculated relative to a base case that 

reflects projected market trends in the 

absence of amended standards. DOE 

identifies the percentage of consumers 

estimated to receive LCC savings or 

experience an LCC increase, in addition 

to the average LCC savings associated 

with a particular standard level. DOE’s 

LCC and PBP analyses are discussed in 

further detail in section IV.F. 

c. Energy Savings 

Although significant conservation of 

energy is a separate statutory 

requirement for adopting an energy 

conservation standard, EPCA requires 

DOE, in determining the economic 

justification of a standard, to consider 

the total projected energy savings that 

are expected to result directly from the 

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

As discussed in section IV.H, DOE uses 

the NIA spreadsheet to project national 

energy savings. 

d. Lessening of Utility or Performance of 

Products 

In establishing product classes and in 

evaluating design options and the 

impact of potential standard levels, DOE 

evaluates potential standards that would 

not lessen the utility or performance of 

the considered products. (42 U.S.C. 

6295(o)(2)(B)(i)(IV)) Based on data 

available to DOE, the standards 

proposed in this notice would not 

reduce the utility or performance of the 

products under consideration in this 

rulemaking. 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider the 

impact of any lessening of competition, 

as determined in writing by the 

Attorney General, that is likely to result 

from a proposed standard. (42 U.S.C. 

6295(o)(2)(B)(i)(V)) It also directs the 

Attorney General to determine the 

impact, if any, of any lessening of 

competition likely to result from a 

proposed standard and to transmit such 

determination to the Secretary within 60 

days of the publication of a proposed 

rule, together with an analysis of the 

nature and extent of the impact. (42 

U.S.C. 6295(o)(2)(B)(ii)) DOE will 

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20For 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 

2009, DOE/EIA–0581(2009) (October 2009) 

(Available at: http://www.eia.doe.gov/oiaf/aeo/

overview/index.html). 

transmit a copy of this proposed rule to 

the Attorney General with a request that 

the Department of Justice (DOJ) provide 

its determination on this issue. DOE 

will publish and respond to the 

Attorney General’s determination in the 

final rule. 

f. Need for National Energy 

Conservation 

In evaluating the need for national 

energy conservation, DOE expects that 

the energy savings from the proposed 

standards are likely to provide 

improvements to the security and 

reliability of the nation’s energy system. 

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

Reductions in the demand for electricity 

also may result in reduced costs for 

maintaining the reliability of the 

nation’s electricity system. DOE 

conducts a utility impact analysis to 

estimate how standards may affect the 

nation’s needed power generation 

capacity, as discussed in section IV.M. 

The proposed standards also are 

likely to result in environmental 

benefits in the form of reduced 

emissions of air pollutants and 

greenhouse gases associated with energy 

production. DOE reports the emissions 

impacts from today’s proposed 

standards and from each TSL it 

considered and discussed in sections 

IV.K and V.B.6 of this NOPR. DOE also 

reports estimates of the economic value 

of emissions reductions resulting from 

the considered TSLs, as discussed in 

section IV.L. 

g. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII)) To the extent 

interested parties submit any relevant 

information regarding economic 

justification that does not fit into the 

other categories described above, DOE 

could consider such information under 

‘‘other factors.’’ 

2. Rebuttable Presumption 

As set forth in 42 U.S.C. 

6295(o)(2)(B)(iii), EPCA creates a 

rebuttable presumption that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

standard is less than three times the 

value of the first year’s energy savings 

resulting from the standard, as 

calculated under the applicable DOE 

test procedure. DOE’s LCC and PBP 

analyses generate values used to 

calculate the effects that proposed 

energy conservation standards would 

have on the payback period for 

consumers. These analyses include, but 

are not limited to, the 3-year payback 

period contemplated under the 

rebuttable-presumption test. In addition, 

DOE routinely conducts an economic 

analysis that considers the full range of 

impacts to consumers, manufacturers, 

the Nation, and the environment, as 

required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE’s 

evaluation of the economic justification 

for a potential standard level (thereby 

supporting or rebutting the results of 

any preliminary determination of 

economic justification). The rebuttable 

presumption payback calculation is 

discussed in section V.B.1 of this 

proposed rule. 

IV. Methodology and Discussion of 

Comments 

This section addresses the analyses 

DOE has performed for this rulemaking 

with regard to residential boilers. 

Separate subsections will address each 

component of DOE’s analyses. 

DOE used three spreadsheet tools to 

estimate the impact of today’s proposed 

standards. The first spreadsheet 

calculates LCCs and payback periods of 

potential standards. The second 

provides shipments forecasts, and then 

calculates national energy savings and 

net present value impacts of potential 

standards. Finally, DOE assessed 

manufacturer impacts, largely through 

use of the Government Regulatory 

Impact Model (GRIM). All three 

spreadsheet tools are available online at 

the rulemaking portion of DOE’s Web 

site: http://www1.eere.energy.gov/

buildings/appliance_standards/

rulemaking.aspx?ruleid=112. 

Additionally, DOE estimated the 

impacts on utilities and the 

environment that would be likely to 

result from potential amended standards 

for residential boilers. DOE used a 

version of EIA’s National Energy 

Modeling System (NEMS) for the utility 

and environmental analyses.20 The 

NEMS simulates the energy sector of the 

U.S. economy. EIA uses NEMS to 

prepare its Annual Energy Outlook, a 

widely-known energy forecast for the 

United States. NEMS offers a 

sophisticated picture of the effect of 

standards, because it accounts for the 

interactions between the various energy 

supply and demand sectors and the 

economy as a whole. 

A. Market and Technology Assessment 

DOE develops information that 

provides an overall picture of the 

market for the products concerned, 

including the purpose of the products, 

the industry structure, manufacturers, 

market characteristics, and technologies 

used in the products. This activity 

includes both quantitative and 

qualitative assessments, based primarily 

on publicly-available information. The 

subjects addressed in the market and 

technology assessment for this 

residential boilers rulemaking include: 

(1) A determination of the scope of the 

rulemaking and product classes; (2) 

manufacturers and industry structure; 

(3) quantities and types of products sold 

and offered for sale; (4) retail market 

trends; (5) regulatory and non-regulatory 

programs; and (6) technologies or design 

options that could improve the energy 

efficiency of the product(s) under 

examination. The key findings of DOE’s 

market assessment are summarized 

below. See chapter 3 of the NOPR TSD 

for further discussion of the market and 

technology assessment. 

1. Definition and Scope of Coverage 

EPCA defines residential boilers as a 

type of furnace. Specifically, the term 

‘‘furnace’’ is defined as ‘‘a product 

which utilizes only single-phase electric 

current, or single-phase 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 in the Code of 

Federal Regulations (CFR) at 10 CFR 

430.2. DOE has generally defined an 

electric boiler as an electrically powered 

furnace designed to supply low pressure 

steam or hot water for space heating 

applications, including a low pressure 

steam boiler that operates at or below 15 

pounds per square inch gauge (psig) 

steam pressure and a hot water boiler 

that operates at or below 160 psig water 

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21See ANSI Z223.1–2009/NFPA 54, National 

Fuel Gas Code, 3.3.6.11.1 and 3.3.6.11.4 (2009). See 

also 2012 International Fuel Gas Code, at p. 16 

(2011). 

pressure and 250 °F water temperature. 

DOE has generally defined a low 

pressure steam or hot water boiler as an 

electric, gas or oil burning furnace 

designed to supply low pressure steam 

or hot water for space heating 

applications, including a low pressure 

steam boiler that 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. 

See 10 CFR part 430.2. 

For this rulemaking, DOE proposes to 

maintain the scope of coverage as 

defined by its current regulations for 

this analysis of new and amended 

standards, which includes six product 

classes of boilers (gas-fired hot water 

boilers, gas-fired steam boilers, oil-fired 

hot water boilers, oil-fired steam boilers, 

electric hot water boilers, and electric 

steam boilers). DOE has not conducted 

an analysis of an AFUE standard level 

for electric boilers or combination 

appliance for the reasons explained 

below. 

Combination appliances provide both 

space heating and domestic hot water to 

a residence. These products are 

available on the market in two major 

configurations, including a water heater 

fan-coil combination unit and a boiler 

tankless coil combination unit. 

Currently, manufacturers 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). In the 

March 2015 residential furnaces and 

boilers test procedure NOPR, DOE did 

not propose a method for which to 

calculate AFUE for combination 

appliances, because DOE chose not to 

delay or complicate the test procedure 

rulemaking. Rather, DOE plans to 

continue to seek input about the 

development of a test procedure for 

combination appliances and may 

consider a separate rulemaking devoted 

specifically to those products in the 

future. 80 FR 12876. Without a Federal 

test procedure for combination 

appliances, DOE was not able to 

perform an AFUE standards analysis for 

such products. 

DOE did not include electric boilers 

in the analysis of amended AFUE 

standards. Electric boilers do not have 

an AFUE requirement under 10 CFR 

430.32(e)(2)(ii). Electric boilers typically 

use electric resistance coils as their 

heating elements, which are highly 

efficient. Furthermore, the current DOE 

test procedure for determining AFUE 

classifies boilers as indoor units and, 

thus, considers jacket losses to be usable 

heat, because those losses would go to 

the conditioned space. 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 has considered standby 

mode and off mode standards for 

electric boilers. 

The proposed scope used for the 

analysis for this NOPR is the same as 

the scope used for the NODA analysis. 

In response to the NODA analysis, AGA 

and AGPA filed a joint comment which 

stated that DOE should clarify that gasfired boilers that do not have an 

electrical supply requirement are not 

subject to this regulation. (AGA and 

AGPA, No. 21 at p. 2) DOE agrees that 

under EPCA, an exception already exists 

for boilers which are manufactured to 

operate without any need for electricity. 

(42 U.S.C. 6295(f)(3)(C); 10 CFR 

430.32(e)(2)(iv)) Thus, DOE did not 

consider such products in the course of 

this analysis, and such products would 

not be covered by amended standards 

resulting from this process. 

2. Product Classes 

When evaluating and establishing 

energy conservation standards, DOE 

divides covered products into product 

classes by the type of energy used or by 

capacity or other performance-related 

features that justify a different standard. 

In making a determination whether a 

performance-related feature justifies a 

different standard, DOE must consider 

such factors as the utility to the 

consumer of the feature and other 

factors DOE determines are appropriate. 

(42 U.S.C. 6295(q)) For this rulemaking, 

DOE proposes to maintain the scope of 

coverage as defined by its current 

regulations for this analysis of 

standards, which includes six product 

classes of boilers. Table IV.1 lists the six 

proposed product classes. 

TABLE IV.1—PROPOSED PRODUCT

CLASSES FOR RESIDENTIAL BOILERS

Boiler by fuel type Heat transfer medium 

Gas-fired Boiler ......... Steam. 

Hot Water. 

Oil-fired Boiler ........... Steam. 

Hot Water. 

Electric Boiler ............ Steam. 

Hot Water. 

Several interested parties suggested 

that the product classes should be 

further subdivided into condensing and 

non-condensing products for gas-fired 

hot water boilers. (Weil McLain No. 20 

at p. 2, AGA and APGA No.21 at p. 2, 

HTP No. 31 at p. 2) 

Weil McLain commented that 

condensing and noncondensing boilers 

should be in separate product classes 

because each presents significant 

options to have available for different 

applications. Weil McLain added that 

each type of boiler can provide a good 

solution to a residential boiler need, but 

the solution requires the correct 

application of the boiler to a particular 

home. In particular, Weil McLain 

commented that there are important 

differences between new installations 

and replacement installations for these 

products. (Weil McLain No. 20 at p. 2) 

Similarly, AGA and APGA suggested 

that the gas-fired hot water boiler 

product class should be subdivided into 

condensing and non-condensing 

subclasses, such that DOE may consider 

establishing separate standards for 

Category I and Category IV gas boilers 

based on their different venting and 

condensing characteristics. Category I 

gas boilers are those that operate with a 

non-positive vent static pressure and 

with a vent gas temperature that avoids 

excessive condensate production in the 

vent. Category IV gas boilers are those 

that operate with a positive vent static 

pressure with a vent gas temperature 

that is capable of causing excessive 

condensation.21 AGA and APGA 

commented that in the past, DOE has 

established separate standards for 

clothes dryers based on venting 

characteristics. (AGA and APGA No.21 

at p. 2–3) 

In response to these comments, DOE 

notes that, in evaluating and 

establishing energy conservation 

standards, EPCA directs DOE to divide 

covered products into classes based on 

differences including the type of energy 

used, capacity, or other performancerelated feature that justifies a different 

standard for products having such 

feature. (42 U.S.C. 6295(q)) In deciding 

whether a feature justifies a different 

standard, DOE must consider factors 

such as the utility of the features to 

users. In evaluating Weil McLain’s, 

AGA’s, and AGPA’s suggestion to 

consider separate product classes for 

non-condensing and condensing boilers 

(and specifically in AGA’s and APGA’s 

comments for boilers using Category I 

and Category IV venting), DOE 

considered the utility to consumers of 

condensing and non-condensing boilers, 

including the ability to use one venting 

type versus another. The utility derived 

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22Although DOE has identified vent dampers and 

electronic ignition as technologies that improve 

residential boiler efficiency, DOE did not consider 

these technologies further in the analysis as options 

for improving efficiency of baseline units, because 

they are already included in baseline residential 

boilers. 

by consumers from boilers is in the form 

of the space heating function that a 

boiler performs. Condensing and noncondensing boilers perform equally well 

in providing this function. Likewise, a 

boiler requiring Category I venting and 

a boiler requiring Category IV venting 

are capable of providing the same 

heating function to the consumer, and, 

thus, provide virtually the same utility 

with respect to their primary function. 

AGA and AGPA contend that the ability 

to vent a boiler with Category I venting 

provides boiler consumers with a 

special utility due to the cost-saving 

benefits compared to having to retrofit 

a venting system to accommodate a 

Category IV boiler. DOE does not agree 

with the characterization of reduced 

costs associated with Category I venting 

in certain installations as a special 

utility, but rather, it is an economic 

impact on consumers that must be 

considered in the rulemaking’s costbenefit analysis. Rather, the average 

installation cost by efficiency level for 

gas-fired hot water boilers ranges from 

$3,301 to $3,599; for gas-fired steam 

boilers, from $3,037 to $3,061; for oilfired hot water boilers, from $3,069 to 

$3,662; and for oil-fired steam boilers, 

from $3,074 to $3,081. Information 

related to installation costs can be found 

in section IV.F.1 of this NOPR and 

Chapter 8 of the NOPR TSD. DOE also 

recognizes the merit in Weil McLain’s 

comments regarding the important 

operational differences between 

condensing and non-condensing 

systems. However, DOE believes this 

issue is also analytical and best 

addressed in the analyses as DOE 

considers these operational differences. 

Accordingly, DOE is not proposing to 

establish separate product classes for 

condensing and non-condensing boilers, 

or for boilers utilizing Category I and 

Category IV venting systems. Rather, 

DOE considered the impacts of these 

characteristics in the relevant analyses 

performed for the NOPR. DOE requests 

comment on the installation costs cited 

above. 

HTP suggested that the Department 

should consider separate residential 

boiler standards for new construction 

and retrofits. (HTP, No. 31 at p.2) 

In response, as set forth in the 

statutory definition for ‘‘energy 

conservation standard,’’ DOE notes that 

EPCA directs the Department to 

establish performance standards that 

prescribe minimum levels of energy 

efficiency or maximum levels of energy 

use for covered products. (42 U.S.C. 

6291(6)(A)) EPCA does not authorize 

setting multiple levels of efficiency for 

a given covered product, depending on 

where the product is installed in terms 

of home type (i.e., new or existing). The 

Department does not have the authority 

to set separate standards for residential 

boilers for new homes and for existing 

homes and, therefore, must reject the 

suggestion that it consider separate 

standards for new construction and 

retrofits. 

3. Technology Options 

In the NODA analysis, DOE identified 

10 technology options that would be 

expected to improve the AFUE of 

residential boilers, as measured by the 

DOE test procedure: (1) Heat exchanger 

improvements; (2) modulating 

operation; (3) dampers; (4) direct vent; 

(5) pulse combustion; (6) premix 

burners; (7) burner derating; (8) lowpressure air-atomized oil burner; (9) 

delayed-action oil pump solenoid valve; 

and (10) electronic ignition.22 In 

addition, DOE identified three 

technologies that would reduce the 

standby mode and off mode energy 

consumption of residential boilers: (1) 

Transformer improvements; (2) control 

relay for models with brushless 

permanent magnet motors; and (3) 

switching mode power supply. 

DOE received no comments 

suggesting additional technology 

options in response to the NODA 

analysis, and thus, DOE has maintained 

the same list of technology options in 

the NOPR analysis. After identifying all 

potential technology options for 

improving the efficiency of residential 

boilers, DOE performed the screening 

analysis (see section IV.B of this NOPR 

or chapter 4 of the TSD) on these 

technologies to determine which could 

be considered further in the analysis 

and which should be eliminated. 

B. Screening Analysis 

DOE uses the following four screening 

criteria to determine which technology 

options are suitable for further 

consideration in an energy conservation 

standards rulemaking: 

1. Technological feasibility. Technologies 

that are not incorporated in commercial 

products or in working prototypes will not be 

considered further. 

2. Practicability to manufacture, install, 

and service. If it is determined that mass 

production and reliable installation and 

servicing of a technology in commercial 

products could not be achieved on the scale 

necessary to serve the relevant market at the 

time of the compliance date of the standard, 

then that technology will not be considered 

further. 

3. Impacts on product utility or product 

availability. If it is determined that a 

technology would have significant adverse 

impact on the utility of the product to 

significant subgroups of consumers or would 

result in the unavailability of any covered 

product type with performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes that 

are substantially the same as products 

generally available in the United States at the 

time, it will not be considered further. 

4. Adverse impacts on health or safety. If 

it is determined that a technology would 

have significant adverse impacts on health or 

safety, it will not be considered further. 

(10 CFR part 430, subpart C, appendix A, 

4(a)(4) and 5(b)) 

In sum, if DOE determines that a 

technology, or a combination of 

technologies, fails to meet one or more 

of the above four criteria, it will be 

excluded from further consideration in 

the engineering analysis. The reasons 

for eliminating any technology are 

discussed below. 

The subsequent sections include 

comments from interested parties 

pertinent to the screening criteria, 

DOE’s evaluation of each technology 

option against the screening analysis 

criteria, and whether DOE determined 

that a technology option should be 

excluded (‘‘screened out’’) based on the 

screening criteria. 

1. Screened-Out Technologies 

During the NODA phase, DOE 

screened out pulse combustion as a 

technology option for improving AFUE 

and screened out control relay for boiler 

models with brushless permanent 

magnet motors as a technology option 

for reducing standby electric losses. 

DOE decided to screen out pulse 

combustion based on manufacturer 

feedback during the Framework public 

meeting indicating that pulse 

combustion boilers have had reliability 

issues in the past, and therefore, 

manufacturers do not consider this a 

viable option to improve efficiency. 

Further, manufacturers indicated that 

similar or greater efficiencies than those 

of pulse combustion boilers can be 

achieved using alternative technologies. 

For this reason, DOE is not including 

pulse combustion as a technology 

option, as it could reduce consumer 

utility (reliability). DOE decided to 

screen out using a control relay to 

depower BPM motors due to feedback 

received during the residential furnace 

rulemaking (which was reconfirmed 

during manufacturer interviews for the 

residential boiler rulemaking), which 

indicated that using a control relay to 

depower brushless permanent magnet 

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motors could reduce the lifetime of the 

motors, which would lead to a 

reduction in utility of the product. For 

this reason, DOE is not including 

control relays for models with brushless 

permanent magnet motors as a 

technology option, as it could reduce 

consumer utility. DOE did not receive 

any comments relating to the screening 

out of these two technologies. 

AHRI stated that neither direct vent 

nor burner derating should be included 

in the analysis since they are not 

currently practical ways to achieve 

higher levels of efficiency. (AHRI, No. 

16 at p. 1) 

In response, DOE agrees that burner 

derating should be screened out, and 

has done so for the NOPR analysis. 

Burner derating reduces the burner 

firing rate while keeping heat exchanger 

geometry and surface area and the fuelair ratio the same, which increases the 

ratio of heat transfer surface area to 

energy input, and increases efficiency. 

However, the lower energy input means 

that less heat is provided to the user 

than with conventional burner firing 

rates. As a result of the decreased heat 

output of boilers with derated burners, 

DOE has screened out burner derating as 

a technology option, as it could reduce 

consumer utility. 

For direct vent, DOE has found that 

boilers using this technology can 

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. This reduces 

infiltration losses, and would improve 

AFUE. In addition, this technology has 

been demonstrated as technologically 

feasible and practicable to manufacture, 

install, and service, as it is currently 

offered in boiler models available on the 

market. In addition, DOE is not aware of 

any impacts on product utility or 

adverse impacts on safety that would 

result from the use of this technology. 

Thus, DOE has maintained direct vent 

as a technology option. However, it 

should be noted that this technology 

option was not considered to be a 

primary driver of increased efficiency in 

the engineering analysis (see section 

IV.C). 

2. Remaining Technologies 

Through a review of each technology, 

DOE found that all of the other 

identified technologies met all four 

screening criteria and consequently, are 

suitable for further examination in 

DOE’s analysis. In summary, DOE did 

not screen out the following technology 

options to improve AFUE: (1) Heat 

exchanger improvements; (2) 

modulating operation; (3) direct vent; 

(4) premix burners; (5) low-pressure airatomized oil burner; and (6) delayedaction oil pump solenoid valve. DOE 

also maintained the following 

technology options to improve standby 

mode and off mode energy 

consumption: (1) Transformer 

improvements; and (2) switching mode 

power supply. All of these technology 

options are technologically feasible, 

given that the evaluated technologies 

are being used (or have been used) in 

commercially-available products or 

working prototypes. Therefore, all of the 

trial standard levels evaluated in this 

notice are technologically feasible. DOE 

also finds that all of the remaining 

technology options also meet the other 

screening criteria (i.e., practicable to 

manufacture, install, and service, and 

do not result in adverse impacts on 

consumer utility, product availability, 

health, or safety). For additional details, 

please see chapter 4 of the NOPR TSD. 

DOE requests further comment from 

interested parties regarding whether 

there are any technologies which have 

passed the screening analysis that 

should be screened out based on the 

four screening criteria (i.e., 

technological feasibility; practicability 

to manufacture, install, and service; 

impacts on product utility or product 

availability; and adverse impacts on 

health or safety). 

C. Engineering Analysis 

In the engineering analysis 

(corresponding to chapter 5 of the NOPR 

TSD), DOE establishes the relationship 

between the manufacturer selling price 

(MSP) and improved residential boiler 

efficiency. This relationship serves as 

the basis for cost-benefit calculations for 

individual consumers, manufacturers, 

and the Nation. DOE typically structures 

the engineering analysis using one of 

three approaches: (1) Design option; (2) 

efficiency level; or (3) reverse 

engineering (or cost-assessment). The 

design-option approach involves adding 

the estimated cost and efficiency of 

various efficiency-improving design 

changes to the baseline to model 

different levels of efficiency. The 

efficiency-level approach uses estimates 

of cost and efficiency at distinct levels 

of efficiency from publicly-available 

information, and information gathered 

in manufacturer interviews that is 

supplemented and verified through 

technology reviews. The reverseengineering approach involves testing 

products for efficiency and determining 

cost from a detailed bill of materials 

(BOM) derived from reverse engineering 

representative products. The efficiency 

values range from that of a least-efficient 

boiler sold today (i.e., the baseline) to 

the maximum technologically feasible 

efficiency level. At each efficiency level 

examined, DOE determines the 

manufacture production cost (MPC) and 

MSP; this relationship is referred to as 

a cost-efficiency curve. 

As noted in section III.B, the active 

mode AFUE metric fully accounts for 

the fuel use consumption in active, 

standby and off modes whereas the 

standby and off mode metric (maximum 

wattage) only accounts for the electrical 

energy use in standby and off mode. In 

analyzing the technologies that would 

be likely to be employed to effect 

changes in these metrics, DOE found 

that the efficiency changes were mostly 

independent. For example, the primary 

means of improving AFUE is to improve 

the heat exchanger design, which would 

likely have little or no impact on 

standby and off mode electrical 

consumption. Similarly, the design 

options considered likely to be 

implemented for reducing standby 

mode and off mode electrical 

consumption are not expected to impact 

the AFUE. Therefore, DOE conducted 

separate engineering and cost-benefit 

analyses for each of these two metrics 

and their associated systems (fuel and 

electrical). In order to account for the 

total impacts of both proposed 

standards, DOE added the monetized 

impacts from these two separate 

analyses in the NIA, LCC, and MIA as 

a means of providing a cumulative 

impact on residential boilers. For the 

PBP, to estimate the cumulative impact 

for both standards, DOE determined the 

combined installed cost to the consumer 

and the first-year operating costs for 

each household. DOE requests comment 

on this approach and whether it is 

reasonable to assume that the design 

changes implemented by manufacturers 

in order to comply with the standby and 

off mode would be independent of those 

implemented to comply with AFUE 

standards. 

DOE also requests comment on 

employing an alternative methodology 

to inform the selection of the 

appropriate technologically feasible and 

economically justified standard level, 

which would occur as follows: (1) First 

the agency would first consider the 

technological feasibility and economic 

justification of one standard (e.g., 

standby and off mode) in the 

engineering cost model and downstream 

cost-benefit analysis to select a 

proposed level; and (2) DOE would then 

incorporate the estimated impacts of the 

proposed level into the baseline of the 

engineering cost model and downstream 

cost-benefit analysis prior to conducting 

the analysis for the second standard (e.g. 

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active mode). DOE recognizes that this 

methodology would yield the exact 

same incremental costs since the cost 

and savings are truly independent of 

one another—that is the cost to achieve 

the savings from the AFUE standard are 

not impacted by the compliance to the 

proposed sand-by and off mode 

standard. 

For the NODA analysis of AFUE 

efficiency levels, DOE conducted the 

engineering analysis for residential 

boilers using a combination of the 

efficiency level and cost-assessment 

approaches. More specifically, DOE 

identified the efficiency levels for 

analysis and then used the costassessment approach to determine the 

technologies used and the associated 

manufacturing costs at those levels. 

For the standby mode and off mode 

analyses, DOE adopted a design option 

approach, which allowed for the 

calculation of incremental costs through 

the addition of specific design options 

to a baseline model. DOE decided on 

this approach because it did not have 

sufficient data to execute an efficiencylevel analysis, as manufacturers 

typically do not rate or publish data on 

the standby mode and or off mode 

energy consumption of their products. 

DOE continued to use the same 

analytical approaches for the NOPR 

phase of this rulemaking as used in the 

NODA. In response to the NODA, DOE 

received specific comments from 

interested parties on certain aspects of 

the engineering analysis. A brief 

overview of the methodology, a 

discussion of the comments DOE 

received, DOE’s response to those 

comments, and any adjustments made 

to the engineering analysis methodology 

or assumptions as a result of those 

comments is presented in the sections 

below. See chapter 5 of the NOPR TSD 

for additional details about the 

engineering analysis. 

1. Efficiency Levels 

As noted above, for analysis of 

amended AFUE standards, DOE used an 

efficiency-level approach to identify 

incremental improvements in efficiency 

for each product class. An efficiencylevel approach enabled DOE to identify 

incremental improvements in efficiency 

for efficiency-improving technologies 

that boiler manufacturers already 

incorporate in commercially-available 

models. After identifying efficiency 

levels for analysis, DOE used a costassessment approach (section IV.C.2) to 

determine the MPC at each efficiency 

level identified for analysis. This 

method estimates the incremental cost 

of increasing product efficiency. For the 

analysis of amended standby mode and 

off mode energy conservation standards, 

DOE used a design-option approach and 

identified efficiency levels that would 

result from implementing certain design 

options for reducing power 

consumption in standby mode and off 

mode. 

a. Baseline Efficiency Level and Product 

Characteristics 

In the analysis presented in the 

NODA, DOE selected baseline units 

typical of the least-efficient 

commercially-available residential 

boilers. DOE selected baseline units as 

reference points for each product class, 

against which it measured changes 

resulting from potential amended 

energy conservation standards. The 

baseline efficiency level in each product 

class represents the basic characteristics 

of products in that class. A baseline unit 

is a unit that just meets current Federal 

energy conservation standards and 

provides basic consumer utility. 

DOE uses the baseline unit for 

comparison in several phases of the 

analyses, including the engineering 

analysis, LCC analysis, PBP analysis, 

and the NIA. To determine energy 

savings that will result from an 

amended energy conservation standard, 

DOE compares energy use at each of the 

higher energy efficiency levels to the 

energy consumption of the baseline 

unit. Similarly, to determine the 

changes in price to the consumer that 

will result from an amended energy 

conservation standard, DOE compares 

the price of a baseline unit to the price 

of a unit at each higher efficiency level. 

DOE received no comments regarding 

the baseline efficiency levels and 

characteristics chosen for the NODA 

analysis of amended AFUE standards. 

Thus, DOE has maintained these 

baseline efficiency levels, which are 

equal to the current federal minimum 

standards for each product class in the 

NOPR analysis. Table IV.2 presents the 

baseline AFUE levels identified for each 

product class. Additional details on the 

selection of baseline efficiency levels 

may be found in chapter 5 of the NOPR 

TSD. 

TABLE IV.2—TABLE BASELINE AFUE 

EFFICIENCY LEVELS

Product class AFUE 

(%) 

Gas-Fired Hot Water Boilers ........ 82 

Gas-Fired Steam Boilers .............. 80 

Oil-Fired Hot Water Boilers .......... 84 

Oil-Fired Steam Boilers ................ 82 

AHRI commented that the baseline 

efficiency levels shown in the 

engineering analysis are assumed to 

have dampers. AHRI asked for 

clarification as to the type of damper the 

baseline gas-fired hot water boilers are 

assumed to have in the analysis. (AHRI 

No. 22 at p. 3) In the engineering 

analysis, DOE assumed baseline gasfired hot water boilers to have stack 

dampers, as described in chapter 5 of 

the TSD. 

For the standby mode and off mode 

analysis, DOE identified baseline 

components as those that consume the 

most electricity during the operation of 

those modes. Since it would not be 

practical for DOE to test every boiler on 

the market to determine the baseline 

and since manufacturers do not 

currently report standby mode and off 

mode energy consumption, DOE 

‘‘assembled’’ the most consumptive 

baseline components from the models 

tested to model the electrical system of 

a boiler with the expected maximum 

system standby mode and off mode 

power consumption observed during 

testing of boilers and similar equipment. 

Additional boiler standby mode and off 

mode testing was performed for the 

NOPR analysis and has led DOE to 

lower the standby mode and off mode 

baseline consumption level for each 

product class as compared to the NODA 

analysis. The baseline standby mode 

and off mode consumption levels used 

in the NOPR analysis are presented in 

Table IV.3. 

TABLE IV.3—BASELINE STANDBY MODE AND OFF MODE POWER CONSUMPTION USED IN THE NOPR ANALYSES

Component 

Standby mode and off mode power consumption 

(watts) 

Gas-fired 

hot water 

Oil-fired hot 

water 

Gas-fired 

steam 

Oil-fired 

steam 

Electric hot 

water 

Electric 

steam 

Transformer ...................................................................... 4 4 4 4 4 4 

ECM Burner Motor ........................................................... 1 N/A N/A N/A N/A N/A 

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TABLE IV.3—BASELINE STANDBY MODE AND OFF MODE POWER CONSUMPTION USED IN THE NOPR ANALYSES— 

Continued 

Component 

Standby mode and off mode power consumption 

(watts) 

Gas-fired 

hot water 

Oil-fired hot 

water 

Gas-fired 

steam 

Oil-fired 

steam 

Electric hot 

water 

Electric 

steam 

Controls ............................................................................ 2 .5 2 .5 2 .5 2 .5 2 .5 2 .5 

Display ............................................................................. 4 4 4 4 4 4 

Oil Burner ......................................................................... N/A 3 N/A 3 N/A N/A 

Total (watts) .............................................................. 11 .5 13 .5 10 .5 13 .5 10 .5 10 .5 

b. Other Energy Efficiency Levels 

Table IV.4 through Table IV.7 shows 

the efficiency levels DOE selected for 

the NOPR analysis of amended AFUE 

standards, along with a description of 

the typical technological change at each 

level. DOE seeks comment from 

interested parties regarding the typical 

technological change associated with 

each efficiency level. 

HTP commented that it does not 

support an incremental increase in 

AFUE for gas hot water boilers. The 

commenter stated that appliances 

utilizing combustion technology that 

operates at efficiencies above 82 percent 

and below 90 percent AFUE will likely 

experience cyclic condensation within 

their venting and periods of high vent 

temperatures. HTP added that the safety 

and installation cost implications of 

operating within this range should be 

seriously considered. (HTP, No. 31 at 

p. 1) 

The Department recognizes that 

efficiency levels within the noncondensing to condensing range could 

pose health or safety concerns under 

certain conditions, but the concerns can 

be resolved with proper product 

installations and venting system design. 

This is evidenced by the high number 

of models of products that are currently 

commercially available at these 

efficiency levels, as well as the lack of 

restrictions on the installation of these 

units (in terms of location) in 

installation manuals. Therefore, due to 

the significant product availability, DOE 

considered efficiency levels above 82 

percent and below 90 percent in its 

analysis. However, DOE requests further 

comment from interested parties on 

non-condensing levels above 82 percent, 

as well as the appropriateness of 

considering such levels for amended 

energy conservation standards. 

TABLE IV.4—AFUE EFFICIENCY LEVELS FOR GAS-FIRED HOT WATER BOILERS

Efficiency level AFUE 

(%) Technology options 

0–Baseline ..................... 82 Baseline. 

1 ..................................... 83 EL0 + Increased Heat Exchanger (HX) Area, Baffles. 

2 ..................................... 84 EL1 + Increased HX Area. 

3 ..................................... 85 EL2 + Increased HX Area. 

4 ..................................... 90 Condensing HX. 

5 ..................................... 92 EL4 + Improved HX. 

6–Max-Tech ................... 96 EL5 + Improved HX. 

TABLE IV.5—AFUE EFFICIENCY LEVELS FOR GAS-FIRED STEAM BOILERS

Efficiency level AFUE 

(%) Technology options 

0–Baseline ..................... 80 Baseline. 

1 ..................................... 82 EL0 + Increased HX Area. 

2–Max-Tech ................... 83 EL1 + Increased HX Area. 

TABLE IV.6—AFUE EFFICIENCY LEVELS FOR OIL-FIRED HOT WATER BOILERS

Efficiency level AFUE 

(%) Technology options 

0–Baseline ..................... 84 Baseline. 

1 ..................................... 85 EL0 + Increased HX Area. 

2 ..................................... 86 EL1 + Increased HX Area. 

3–Max-Tech ................... 91 EL2 + Improved HX, baffles and Secondary Condensing HX. 

TABLE IV.7–AFUE EFFICIENCY LEVELS FOR OIL-FIRED STEAM BOILERS

Efficiency level AFUE 

(%) Technology options 

0–Baseline ..................... 82 Baseline. 

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TABLE IV.7–AFUE EFFICIENCY LEVELS FOR OIL-FIRED STEAM BOILERS—Continued 

Efficiency level AFUE 

(%) Technology options 

1 ..................................... 84 EL0 + Increased HX Area. 

2 ..................................... 85 EL1 + Increased HX Area. 

3–Max-Tech ................... 86 EL2 + Improved HX. 

In addition, DOE considered whether 

changes to the residential furnaces and 

boilers test procedure, as proposed by 

the March 2015 test procedure NOPR 

would necessitate changes to the AFUE 

levels being analyzed. The primary 

change proposed in the test procedure 

included updating the incorporation by 

reference to ASHRAE 103–2007. As 

discussed in the March 2015 test 

procedure NOPR, adopting ASHRAE 

103–2007 would not be expected to 

change the AFUE rating for single-stage 

products and would result in a de 

minimis increase in the AFUE ratings 

for two-stage and modulating noncondensing products. Adopting 

ASHRAE 103–2007 provisions was 

assessed to have no statistically 

significant impact on the AFUE for 

condensing products. 80 FR 12876. DOE 

has found that single-stage (rather than 

two-stage or modulating) cast iron 

products make up the majority of noncondensing residential boilers and, 

therefore, has tentatively determined 

that this amendment to the test 

procedure would not be substantial 

enough to merit a revision of the 

proposed AFUE efficiency levels for 

residential boilers. Consequently, DOE 

used the same AFUE efficiency levels in 

the NOPR analysis as were used in the 

NODA analysis. 

Table IV.8 through Table IV.13 show 

the efficiency levels DOE selected for 

the NOPR analysis of standby mode and 

off mode standards, along with a 

description of the typical technological 

change at each level. For the NOPR 

analysis, DOE has modified the baseline 

standby mode and off mode efficiency 

levels, as discussed in section IV.C.1.a. 

However, DOE has assumed the same 

impacts from the design options in the 

NOPR analysis, as was assumed for the 

NODA analysis. As a result, the change 

to the baseline standby mode and off 

mode power consumption have resulted 

in corresponding changes to the standby 

mode and off mode power consumption 

at each efficiency level. 

‘‘Standby mode’’ and ‘‘off mode’’ 

power consumption are defined in the 

DOE test procedure for residential 

furnaces and boilers. DOE defines 

‘‘standby mode’’ as ‘‘the condition 

during the heating season in which the 

furnace or boiler is connected to the 

power source, and neither the burner, 

electric resistance elements, nor any 

electrical auxiliaries such as blowers or 

pumps, are activated.’’ 10 CFR part 430, 

subpart B, appendix N, section 2.8. ‘‘Off 

mode’’ is defined as ‘‘the condition 

during the non-heating season in which 

the furnace or boiler is connected to the 

power source, and neither the burner, 

electric resistance elements, nor any 

electrical auxiliaries such as the blowers 

or pumps, are activated.’’ 10 CFR part 

430, subpart B, appendix N, section 2.6. 

A ‘‘seasonal off switch’’ is defined as 

‘‘the switch on the furnace or boiler 

that, when activated, results in a 

measurable change in energy 

consumption between the standby and 

off modes.’’ 10 CFR part 430, subpart B, 

appendix N, section 2.7. 

Through review of product literature 

and discussions with manufacturers, 

DOE has found that boilers generally do 

not have a seasonal off switch. 

Manufactures stated that if a switch is 

included with a product, it is primarily 

used as a service/repair switch, not for 

turning off the product during the off 

season. Therefore, DOE assumed that 

the standby mode and the off mode 

power consumption are equal. DOE 

requests comment on the efficiency 

levels analyzed for standby mode and 

off mode, and on the assumption that 

standby mode and off mode energy 

consumption (as defined by DOE) 

would be equal. 

TABLE IV.8—STANDBY MODE AND OFF MODE EFFICIENCY LEVELS FOR GAS-FIRED HOT WATER BOILERS

Efficiency level 

Standby mode 

and off mode 

power 

consumption 

(W) 

Technology Options 

0–Baseline ..................... 11.5 Linear Power Supply.* 

1 ..................................... 10.0 Linear Power Supply with Low-Loss Transformer (LLTX). 

2 ..................................... 9.7 Switching Mode Power Supply.** 

3–Max-Tech ................... 9.0 Switching Mode Power Supply with LLTX. 

* A linear power supply regulates voltage with a series element. 

** A switching mode power supply regulates voltage with power handling electronics. 

TABLE IV.9—STANDBY MODE AND OFF MODE EFFICIENCY LEVELS FOR GAS-FIRED STEAM BOILERS

Efficiency level 

Standby mode 

and off mode 

power 

consumption 

(W) 

Technology options 

0–Baseline ..................... 10.5 Linear Power Supply. 

1 ..................................... 9.0 Linear Power Supply with LLTX. 

2 ..................................... 8.7 Switching Mode Power Supply. 

3–Max-Tech ................... 8.0 Switching Mode Power Supply with LLTX. 

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TABLE IV.10—STANDBY MODE AND OFF MODE EFFICIENCY LEVELS FOR OIL-FIRED HOT WATER BOILERS

Efficiency level 

Standby mode 

and off mode 

power 

consumption 

(W) 

Technology options 

0–Baseline ..................... 13.5 Linear Power Supply. 

1 ..................................... 12.0 Linear Power Supply with LLTX. 

2 ..................................... 11.7 Switching Mode Power Supply. 

3–Max-Tech ................... 11.0 Switching Mode Power Supply with LLTX. 

TABLE IV.11—STANDBY MODE AND OFF MODE EFFICIENCY LEVELS FOR OIL-FIRED STEAM BOILERS

Efficiency level 

Standby mode 

and off mode 

power 

consumption 

(W) 

Technology options 

0–Baseline ..................... 13.5 Linear Power Supply. 

1 ..................................... 12.0 Linear Power Supply with LLTX. 

2 ..................................... 11.7 Switching Mode Power Supply. 

3–Max-Tech ................... 11.0 Switching Mode Power Supply with LLTX. 

TABLE IV.12—STANDBY MODE AND OFF MODE EFFICIENCY LEVELS FOR ELECTRIC HOT WATER BOILERS

Efficiency level 

Standby mode 

and off mode 

power 

consumption 

(W) 

Technology options 

0–Baseline ..................... 10.5 Linear Power Supply 

1 ..................................... 9.0 Linear Power Supply with LLTX. 

2 ..................................... 8.7 Switching Mode Power Supply. 

3–Max-Tech ................... 8.0 Switching Mode Power Supply with LLTX. 

TABLE IV.13—STANDBY MODE AND OFF MODE EFFICIENCY LEVELS FOR ELECTRIC STEAM BOILERS

Efficiency level 

Standby mode 

and off mode 

power 

consumption 

(W) 

Technology options 

0–Baseline ..................... 10.5 Linear Power Supply. 

1 ..................................... 9.0 Linear Power Supply with LLTX. 

2 ..................................... 8.7 Switching Mode Power Supply. 

3–Max-Tech ................... 8.0 Switching Mode Power Supply with LLTX. 

2. Cost-Assessment Methodology 

At the start of the engineering 

analysis, DOE identified the energy 

efficiency levels associated with 

residential boilers on the market using 

data gathered in the market assessment. 

DOE also identified the technologies 

and features that are typically 

incorporated into products at the 

baseline level and at the various energy 

efficiency levels analyzed above the 

baseline. Next, DOE selected products 

for the physical teardown analysis 

having characteristics of typical 

products on the market at the 

representative input capacity. DOE 

gathered information by performing a 

physical teardown analysis (see section 

IV.C.2.a) to create detailed BOMs, which 

included all components and processes 

used to manufacture the products. DOE 

used the BOMs from the teardowns as 

an input to a cost model, which was 

then used to calculate the 

manufacturing production cost (MPC) 

for products at various efficiency levels 

spanning the full range of efficiencies 

from the baseline to the maximum 

technology available (‘‘max-tech’’). DOE 

reexamined and revised its cost 

assessment performed for the NODA 

analysis based on additional teardowns 

and in response to comments received 

on the NODA analysis. 

During the development of the 

engineering analysis for the NOPR, DOE 

held interviews with manufacturers to 

gain insight into the residential boiler 

industry, and to request feedback on the 

engineering analysis and assumptions 

that DOE used. DOE used the 

information gathered from these 

interviews, along with the information 

obtained through the teardown analysis 

and public comments, to refine the 

assumptions and data in the cost model. 

Next, DOE derived manufacturer 

markups using publicly-available 

residential boiler industry financial data 

in conjunction with manufacturers’ 

feedback. The markups were used to 

convert the MPCs into MSPs. Further 

information on comments received and 

the analytical methodology is presented 

in the subsections below. For additional 

detail, see chapter 5 of the NOPR TSD. 

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23American Metals Market (Available at: http:// 

www.amm.com (Last accessed January, 2014). 

24U.S. Department of Labor, Bureau of Labor 

Statistics, Produce Price Indices (Available at: 

http://www.bls.gov/ppi/) (Last accessed January, 

2014). 

a. Teardown Analysis 

To assemble BOMs and to calculate 

the manufacturing costs for the different 

components in residential boilers, DOE 

disassembled multiple units into their 

base components and estimated the 

materials, processes, and labor required 

for the manufacture of each individual 

component, a process referred to as a 

‘‘physical teardown.’’ Using the data 

gathered from the physical teardowns, 

DOE characterized each component 

according to its weight, dimensions, 

material, quantity, and the 

manufacturing processes used to 

fabricate and assemble it. 

DOE also used a supplementary 

method, called a ‘‘virtual teardown,’’ 

which examines published 

manufacturer catalogs and 

supplementary component data to 

estimate the major physical differences 

between a product that was physically 

disassembled and a similar product that 

was not. For supplementary virtual 

teardowns, DOE gathered product data 

such as dimensions, weight, and design 

features from publicly-available 

information, such as manufacturer 

catalogs. The initial teardown analysis 

for the NODA included 6 physical and 

5 virtual teardowns of residential 

boilers. The NOPR teardown analysis 

included 16 physical and 4 virtual 

teardowns of residential boilers. The 

additional teardowns performed for the 

NOPR analysis allowed DOE to further 

refine the assumptions used to develop 

the MPCs. 

DOE selected the majority of the 

physical teardown units in the gas hot 

water product class because it has the 

largest number of shipments. DOE 

conducted physical teardowns of twelve 

gas hot water boilers, five of which were 

non-condensing cast iron boilers, two 

were non-condensing copper boilers, 

and the remaining five were condensing 

boilers. DOE performed an additional 

two virtual teardowns of gas hot water 

boilers. 

DOE also performed physical 

teardowns on two gas-fired steam 

boilers as well as two oil-fired hot water 

boilers. DOE conducted one virtual 

teardown of an oil steam boiler as well 

as a virtual teardown of an oil hot water 

boiler. 

The teardown analysis allowed DOE 

to identify the technologies that 

manufacturers typically incorporate into 

their products, along with the efficiency 

levels associated with each technology 

or combination of technologies. The end 

result of each teardown is a structured 

BOM, which DOE developed for each of 

the physical and virtual teardowns. The 

BOMs incorporate all materials, 

components, and fasteners (classified as 

either raw materials or purchased parts 

and assemblies), and characterize the 

materials and components by weight, 

manufacturing processes used, 

dimensions, material, and quantity. The 

BOMs from the teardown analysis were 

then used as inputs to the cost model to 

calculate the MPC for each product that 

was torn down. The MPCs resulting 

from the teardowns were then used to 

develop an industry average MPC for 

each product class analyzed. 

In response to the teardown analysis 

performed for the NODA, AHRI stated 

that it is not appropriate to perform a 

virtual teardown of a baseline 82- 

percent AFUE gas hot water boiler based 

on information developed by physically 

tearing down an 85-percent AFUE gas 

hot water boiler. (AHRI, No. 22 at p. 3) 

AHRI explained that the designs to 

achieve an 85-percent AFUE model are 

significantly different than that to build 

an 82-percent AFUE model, so it is not 

appropriate to do a virtual teardown of 

a baseline 82-percent AFUE model, as 

this approach assumes a commonality of 

design between an 85-percent AFUE 

model and an 82-percent AFUE model 

that is greater than it actually is. In 

response, DOE agrees that it is 

preferable to conduct a physical 

teardown at the baseline level as to not 

overstate the similarities between the 

baseline and higher efficiency levels. 

Accordingly, DOE has supplemented 

the virtual teardown conducted at the 

82-percent AFUE baseline level for the 

gas-fired hot water boiler product class 

during the initial analysis with two 

physical teardowns at the baseline level 

for the NOPR analysis. 

AHRI also stated that conducting a 

single teardown for the oil-fired hot 

water boiler product class is inadequate 

for this analysis. (AHRI, No. 22 at p. 3) 

In response to this comment, DOE has 

conducted an additional physical 

teardown for the oil-fired hot water 

boiler product class. 

More information regarding details on 

the teardown analysis can be found in 

chapter 5 of the NOPR TSD. 

b. Cost Model 

The cost model is a spreadsheet that 

converts the materials and components 

in the BOMs into dollar values based on 

the price of materials, average labor 

rates associated with manufacturing and 

assembling, and the cost of overhead 

and depreciation, as determined based 

on manufacturer interviews and DOE 

expertise. To convert the information in 

the BOMs to dollar values, DOE 

collected information on labor rates, 

tooling costs, raw material prices, and 

other factors. For purchased parts, the 

cost model estimates the purchase price 

based on volume-variable price 

quotations and detailed discussions 

with manufacturers and component 

suppliers. For fabricated parts, the 

prices of raw metal materials 23 (e.g., 

tube, sheet metal) are estimated on the 

basis of 5-year averages (from 2009 to 

2014). The cost of transforming the 

intermediate materials into finished 

parts is estimated based on current 

industry pricing.24

Burnham subsidiaries Crown Boiler, 

US Boiler, and New Yorker all 

commented that the material price for 

cast iron was not shown in chapter 5 of 

the TSD. (Crown Boiler, No. 24 at p. 1; 

US Boiler, No. 25 at p. 1; New Yorker, 

No. 26 at p. 1) DOE acknowledges that 

a large portion of the manufacturer 

production cost can typically be 

attributed to raw materials and the 

omission of the cost used for cast iron 

may make it difficult to review how 

DOE arrived at the MSPs. The omission 

of this value from chapter 5 of the 

NODA TSD was in error, and chapter 5 

of the NOPR TSD corrects this 

deficiency. 

c. Manufacturing Production Costs 

Once the cost estimates for all the 

components in each teardown unit were 

finalized, DOE totaled the cost of 

materials, labor, and direct overhead 

used to manufacture a product in order 

to calculate the manufacturer 

production cost. The total cost of the 

product was broken down into two 

main costs: (1) The full manufacturer 

production cost, referred to as MPC; and 

(2) the non-production cost, which 

includes selling, general, and 

administration (SG&A) expenses; the 

cost of research and development; and 

interest from borrowing for operations 

or capital expenditures. DOE estimated 

the MPC at each efficiency level 

considered for each product class, from 

the baseline through the max-tech. After 

incorporating all of the assumptions 

into the cost model, DOE calculated the 

percentages attributable to each element 

of total production cost (i.e., materials, 

labor, depreciation, and overhead). 

These percentages are used to validate 

the assumptions by comparing them to 

manufacturers’ actual financial data 

published in annual reports, along with 

feedback obtained from manufacturers 

during interviews. DOE uses these 

production cost percentages in the 

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manufacturer impact analysis (MIA) (see 

section IV.J). 

In developing the MPCs for the NODA 

analysis, DOE considered the draft type 

(i.e., natural draft or fan-assisted draft) 

and whether the model would have fanassisted draft at a given efficiency level. 

Some boilers utilize natural draft, in 

which the natural buoyancy of the 

combustion gases is sufficient to vent 

those gases. Other boilers employ fanassisted draft to help vent the products 

of combustion. As product efficiency 

increases, more heat is extracted from 

the flue gases, thereby resulting in less 

natural buoyancy that can be used to 

vent the flue gases. DOE surveyed the 

market to determine the percentage of 

models at each efficiency level that 

currently utilize fan-assisted draft, and 

DOE assumed that under an amended 

standard, that percentage would remain 

unchanged. DOE received various 

comments in response to the MPCs 

presented in its NODA analysis, as 

discussed below. 

AHRI stated that it disagrees with the 

assumption that if the minimum 

efficiency level were to change, the 

percentage of models using inducer fans 

(i.e., a fan-assisted boiler design) at each 

efficiency level would remain 

unchanged. AHRI stated that, at higher 

efficiency levels that are noncondensing (such as 84 percent and 85 

percent for gas-fired hot water boilers), 

the manufacturer would consider anew 

the question of whether to use a fanassisted design, if that higher level were 

to become the minimum standard. AHRI 

added that manufacturers face 

challenges in trying to address the wide 

range of venting systems that are 

connected to existing residential boiler 

installations. The commenter argued 

that models developed by 

manufacturers must be able to work 

safely and properly with existing 

venting systems that vary widely 

relative to an ideally-sized and 

configured vent system. AHRI stated 

that today, the models that are available 

at 84-percent AFUE or 85-percent AFUE 

are offered by the manufacturer with the 

knowledge that in cases where such 

models are not compatible with the 

existing vent system, lower efficiency 

models are available. Those lower 

efficiency models are more likely to be 

designed in a manner compatible with 

the existing vent system. If the 

minimum standard is raised to 84 

percent or 85 percent, this current 

market equilibrium would be 

eliminated, and manufacturers would 

need to reconsider the mix of models 

they offer. For these reasons, AHRI 

recommended that DOE should increase 

the percentage of fan-assisted models at 

these levels. (AHRI No. 22 at p. 3–4) 

In response to AHRI’s comment, DOE 

notes that AHRI did not provide any 

information as to how the mix of 

products with and without inducers 

might change in response to amended 

energy conservation standards. As 

mentioned above, for the NODA 

analysis, DOE used information 

gathered from a survey of models 

currently on the market to determine the 

percentages of units with and without 

inducer fans. DOE was unable to 

identify any better source of data or 

methodology for estimating the 

percentage of products which would 

have inducer fans under amended 

standards, so DOE maintained this 

methodology for the NOPR. DOE 

requests comments regarding how the 

mix of products with and without 

inducers would change under amended 

energy conservation standards, and how 

to best estimate and account for such 

changes in this analysis. 

Crown Boiler stated that the 

incremental MPCs for EL1 and EL2 for 

gas-fired hot water and gas-fired steam 

boilers are optimistic and cannot be 

analyzed for accuracy. In addition, 

Crown Boiler stated that the incremental 

costs for the gas-fired product classes 

imply that DOE is assuming simple 

changes to the heat pin size to increase 

heat exchanger area, but that in reality, 

this change would be more complicated. 

Crown Boiler added that this is 

contradicted by the assumption of heat 

exchanger cost increase in noncondensing oil-fired boilers. The 

commenter stated that the use of larger 

heat transfer pins would likely require 

a wider heat exchanger to avoid 

excessive flue gas pressure drop. In 

addition, atmospheric boilers would 

probably require a taller draft hood to 

overcome the increased pressure drop 

caused by larger heat transfer pins. 

Crown Boiler also stated that the cost of 

sheet metal is not accounted for in the 

analysis. (Crown Boiler, No. 24 at p. 1) 

As noted previously, DOE determined 

the incremental MPC at various 

efficiency levels for each product class 

by conducting physical and virtual 

teardowns. DOE determined the 

incremental cost between EL1 and EL2 

for gas-fired hot water boilers in the 

NODA analysis using virtual teardowns, 

which are based on physical teardowns 

of similar units and then supplemented 

with catalog data. For the NOPR, DOE 

acquired additional data by conducting 

physical teardowns, which confirmed 

its observations from catalog data at the 

NODA analysis stage. Based on the 

observations from physical teardowns 

and manufacturer product literature and 

parts list, DOE found that many 

manufactures are able to increase the 

efficiency of their baseline gas-fired hot 

water boilers through the addition of 

baffles and/or a modest increase in heat 

transfer surface. Through product 

literature review, DOE has found it is 

common for manufacturers of noncondensing oil-fired boilers to derate the 

burner input (thereby increasing the 

ratio of heat transfer area to input rating) 

rather than create new cast iron 

patterns. However, as discussed 

previously, derating was screened out as 

a design option because it reduces the 

heating capability of the boiler. 

Therefore, DOE estimated the cost of 

improving efficiency as an increase in 

heat exchanger size, using information 

observed to model the appropriate 

amount of heat exchanger increase that 

would be required to improve 

efficiency. Based upon the different 

observed methods for improving 

efficiency, DOE’s NODA and NOPR 

analyses reflect the different designs 

and different costs of achieving 

incremental AFUE increases in gas-fired 

and oil-fired boilers. The differential 

cost in efficiency improvement between 

gas-fired and oil-fired non-condensing 

boilers is also due in part to the larger 

representative input capacity of oil-fired 

boilers, as well as the larger heat 

exchanger design for oil-fired boilers 

(i.e., wet-based rather than dry-based). 

DOE has also accounted for the 

additional sheet metal cost of increasing 

the cabinet to accommodate an increase 

in heat exchanger size. Because DOE’s 

analysis is based upon observations 

from teardowns of actual products 

available on the market, DOE did not 

change its assumptions for how EL1 and 

EL2 are achieved in gas-fired or oil-fired 

boilers, as suggested by Crown Boiler. 

In the NOPR analysis, DOE revised 

the cost model assumptions it used for 

the NODA analysis based on additional 

teardown analysis, updated pricing 

information (for raw materials and 

purchased parts), and additional 

manufacturer feedback. These changes 

resulted in refined MPCs and 

production cost percentages. Table 

IV.14 through Table IV.17 present DOE’s 

estimates of the MPCs by AFUE 

efficiency level for this rulemaking. 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17247 

TABLE IV.14—MANUFACTURING COST FOR GAS-FIRED HOT WATER BOILERS

Efficiency level 

Efficiency level 

(AFUE) 

(%) 

MPC * 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 82 624 

EL1 ....................................................................................................................... 83 631 7 

EL2 ....................................................................................................................... 84 637 13 

EL3 ....................................................................................................................... 85 675 51 

EL4 ....................................................................................................................... 90 1,023 399 

EL5 ....................................................................................................................... 92 1,158 534 

EL6 ....................................................................................................................... 96 1,522 898 

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an 

inducer. 

TABLE IV.15—MANUFACTURING COST FOR GAS-FIRED STEAM BOILERS

Efficiency level 

Efficiency level 

(AFUE) 

(%) 

MPC * 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 80 798 

EL1 ....................................................................................................................... 82 812 13 

EL2 ....................................................................................................................... 83 952 154 

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an 

inducer. 

TABLE IV.16—MANUFACTURING COST FOR OIL-FIRED HOT WATER BOILERS

Efficiency level 

Efficiency level 

(AFUE) 

(%) 

MPC * 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 84 1,247

EL1 ....................................................................................................................... 85 1,319 73 

EL2 ....................................................................................................................... 86 1,392 146 

EL3 ....................................................................................................................... 91 2,204 957 

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an 

inducer. 

TABLE IV.17—MANUFACTURING COST FOR OIL-FIRED STEAM BOILERS

Efficiency level 

Efficiency level 

(AFUE) 

(%) 

MPC * 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 82 1,270

EL1 ....................................................................................................................... 84 1,416 146 

EL2 ....................................................................................................................... 85 1,489 218 

EL3 ....................................................................................................................... 86 1,634 364 

* Non-condensing boilers (<90 percent AFUE) are available with or without an inducer. The costs shown reflect the MPC for a boiler without an 

inducer. 

Table IV.18 through Table IV.23 

present’s DOE’s estimate estimates of 

the MPCs at each standby mode and off 

mode efficiency level for this 

rulemaking. 

TABLE IV.18—MANUFACTURING COST FOR GAS-FIRED HOT WATER BOILERS STANDBY MODE AND OFF MODE

Efficiency level 

Standby mode and 

off mode power 

consumption 

(W) 

MPC 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 11.5 9.56 

EL1 ....................................................................................................................... 10.0 10.56 1.00 

EL2 ....................................................................................................................... 9.7 20.03 10.47 

EL3 ....................................................................................................................... 9.0 20.68 11.12 

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TABLE IV.19—MANUFACTURING COST FOR GAS-FIRED STEAM BOILERS STANDBY MODE AND OFF MODE

Efficiency level 

Standby mode and 

off mode power 

consumption 

(W) 

MPC 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 10.5 9.56 

EL1 ....................................................................................................................... 9.0 10.56 1.00 

EL2 ....................................................................................................................... 8.7 20.03 10.47 

EL3 ....................................................................................................................... 8.0 20.68 11.12 

TABLE IV.20—MANUFACTURING COST FOR OIL-FIRED HOT WATER BOILERS STANDBY MODE AND OFF MODE

Efficiency level 

Standby mode and 

off mode power 

consumption 

(W) 

MPC 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 13.5 9.56 

EL1 ....................................................................................................................... 12.0 10.56 1.00 

EL2 ....................................................................................................................... 11.7 20.03 10.47 

EL3 ....................................................................................................................... 11.0 20.68 11.12 

TABLE IV.21—MANUFACTURING COST FOR OIL-FIRED STEAM BOILERS STANDBY MODE AND OFF MODE

Efficiency level 

Standby mode and 

off mode power 

consumption 

(W) 

MPC 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 13.5 9.56 

EL1 ....................................................................................................................... 12.0 10.56 1.00 

EL2 ....................................................................................................................... 11.7 20.03 10.47 

EL3 ....................................................................................................................... 11.0 20.68 11.12 

TABLE IV.22—MANUFACTURING COST FOR ELECTRIC HOT WATER BOILERS STANDBY MODE AND OFF MODE

Efficiency level 

Standby mode and 

off mode power 

consumption 

(W) 

MPC 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 10.5 9.56 

EL1 ....................................................................................................................... 9.0 10.56 1.00 

EL2 ....................................................................................................................... 8.7 20.03 10.47 

EL3 ....................................................................................................................... 8.0 20.68 11.12 

TABLE IV.23—MANUFACTURING COST FOR ELECTRIC STEAM BOILERS STANDBY MODE AND OFF MODE

Efficiency level 

Standby mode and 

off mode power 

consumption 

(W) 

MPC 

($) 

Incremental cost 

($) 

Baseline ............................................................................................................... 10.5 9.56 

EL1 ....................................................................................................................... 9.0 10.56 1.00 

EL2 ....................................................................................................................... 8.7 20.03 10.47 

EL3 ....................................................................................................................... 8.0 20.68 11.12 

Chapter 5 of the NOPR TSD presents 

more information regarding the 

development of DOE’s estimates of the 

MPCs for this rulemaking. 

d. Cost-Efficiency Relationship 

The result of the engineering analysis 

is a cost-efficiency relationship. DOE 

created cost-efficiency curves 

representing the cost-efficiency 

relationship for each product class that 

it examined. To develop the costefficiency relationships for residential 

boilers, DOE examined the cost 

differential to move from one efficiency 

level to the next for each manufacturer. 

DOE used the results of teardowns on a 

market-share-weighted average basis to 

determine the industry average cost 

increase to move from one efficiency 

level to the next. Additional details on 

how DOE developed the cost-efficiency 

relationships and related results are 

available in chapter 5 of the NOPR TSD, 

which also presents these costefficiency curves in the form of energy 

efficiency versus MPC. 

The results indicate that costefficiency relationships are nonlinear. In 

other words, as efficiency increases, 

manufacturing becomes more difficult 

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25U.S. Securities and Exchange Commission, 

Annual 10–K Reports (Various Years) (Available at: 

http://sec.gov). 

26The national accounts channel is an exception 

to the usual distribution channel that is only 

applicable to those residential boilers installed in 

the small to mid-size commercial buildings where 

the on-site contractor staff purchase equipment 

directly from the wholesalers at lower prices due 

to the large volume of equipment purchased, and 

perform the installation themselves. 

and more costly. A large cost increase is 

evident between non-condensing and 

condensing efficiency levels due to the 

requirement for a heat exchanger that 

can withstand corrosive condensate. 

e. Manufacturer Markup 

To account for manufacturers’ nonproduction costs and profit margin, DOE 

applies a non-production cost multiplier 

(the manufacturer markup) to the full 

MPC. The resulting MSP is the price at 

which the manufacturer can recover all 

production and non-production costs 

and earn a profit. To meet new or 

amended energy conservation 

standards, manufacturers typically 

introduce design changes to their 

product lines that increase manufacturer 

production costs. Depending on the 

competitive environment for these 

particular products, some or all of the 

increased production costs may be 

passed from manufacturers to retailers 

and eventually to consumers in the form 

of higher purchase prices. As 

production costs increase, 

manufacturers typically incur additional 

overhead. The MSP should be high 

enough to recover the full cost of the 

product (i.e., full production and nonproduction costs) and yield a profit. The 

manufacturer markup has an important 

bearing on profitability. A high markup 

under a standards scenario suggests 

manufacturers can readily pass along 

the increased variable costs and some of 

the capital and product conversion costs 

(the one-time expenditures) to 

consumers. A low markup suggests that 

manufacturers will not be able to 

recover as much of the necessary 

investment in plant and equipment. 

To calculate the manufacturer 

markups, DOE used 10–K reports 25

submitted to the U.S. Securities and 

Exchange Commission (SEC) by the 

three publicly-owned residential boiler 

companies. The financial figures 

necessary for calculating the 

manufacturer markup are net sales, 

costs of sales, and gross profit. For 

boilers, DOE averaged the financial 

figures spanning the years 2008 to 2012 

in order to calculate the markups. DOE 

used this approach because amended 

standards may transform high-efficiency 

products (which currently are 

considered premium products) into 

typical products. DOE acknowledges 

that there are numerous manufacturers 

of residential boilers that are privatelyheld companies, which do not file SEC 

10–K reports. In addition, while the 

publicly-owned companies file SEC 10– 

K reports, the financial information 

summarized may not be exclusively for 

the residential boiler portion of their 

business and can also include financial 

information from other product sectors, 

whose margins could be quite different 

from the residential boiler industries. 

DOE discussed the manufacturer 

markup with manufacturers during 

interviews, and used the feedback to 

validate the markup calculated through 

review of SEC 10–K reports. DOE 

received no comments regarding the 

manufacturer markup used in the 

NODA analysis. See chapter 5 of the 

NOPR TSD for more details about the 

manufacturer markup calculation. 

f. Shipping Costs 

In response to the NODA analysis, 

Crown Boiler, US Boiler, and New 

Yorker commented that the shipping 

costs were not discussed in chapter 5 of 

the TSD nor is it apparent that they 

were used to calculate MPC in the 

manufacturer markup. These 

commenters stated that depending on 

the situation, shipping costs may be 

borne by either the manufacturer or by 

the wholesaler, but either way, the 

shipping costs eventually become part 

of the installed cost of the boiler and, 

therefore, need to be taken into account. 

The commenters added that almost all 

condensing gas-fired boiler heat 

exchangers and burner systems are 

imported from Europe or Asia, and 

therefore, there are importation costs 

associated with condensing boilers. 

(Crown Boiler, No. 24 at p. 1; US Boiler, 

No. 25 at p. 1; New Yorker, No. 26 at 

p. 1) 

For residential boilers, the 

Department has included transportation 

costs in its calculation of manufacturer 

selling price in both the NODA and the 

NOPR. Outbound freight is normally 

considered a sales expense and not a 

production cost. As discussed in section 

IV.C.2.e, when translating MPCs to 

MSPs, DOE applies a manufacturer 

mark-up to the MPC. This mark-up, 

based on an analysis of manufacturer 

SEC 10–K reports, includes outbound 

freight costs. Inbound freight costs are 

included in MPCs as a component of 

costs for purchased parts and raw 

materials. Chapter 5 of the NOPR TSD 

contains additional details about DOE’s 

shipping cost assumptions. 

g. Manufacturer Interviews 

Throughout the rulemaking process, 

DOE has sought and continues to seek 

feedback and insight from interested 

parties that would improve the 

information used in its analyses. DOE 

interviewed manufacturers as a part of 

the NOPR manufacturer impact analysis 

(see section IV.J.3). During the 

interviews, DOE sought feedback on all 

aspects of its analyses for residential 

boilers. For the engineering analysis, 

DOE discussed the analytical 

assumptions and estimates, cost model, 

and cost-efficiency curves with 

residential boiler manufacturers. DOE 

considered all the information 

manufacturers provided when refining 

the cost model and assumptions. 

However, DOE incorporated equipment 

and manufacturing process figures into 

the analysis as averages in order to 

avoid disclosing sensitive information 

about individual manufacturers’ 

products or manufacturing processes. 

More details about the manufacturer 

interviews are contained in chapter 12 

of the NOPR TSD. 

D. Markups Analysis 

DOE uses appropriate markups (e.g., 

manufacturer markups, retailer 

markups, distributors markups, 

contractor markups), and sales taxes to 

convert the manufacturer selling price 

(MSP) estimates from the engineering 

analysis to consumer prices, which are 

then used in the LCC and PBP analysis 

and in the manufacturer impact 

analysis. DOE develops baseline and 

incremental markups based on the 

product markups at each step in the 

distribution chain. The markups are 

multipliers that represent increases 

above the MSP for residential boilers. 

The incremental markup relates the 

change in the manufacturer sales price 

of higher-efficiency models (the 

incremental cost increase) to the change 

in the consumer price. Before 

developing markups, DOE defines key 

market participants and identifies 

distribution channels. 

In the NODA, DOE characterized 

three distribution channels to describe 

how residential boiler products pass 

from the manufacturer to residential and 

commercial consumers: (1) Replacement 

market; (2) new construction, and (3) 

national accounts.26 79 FR 8122, 8124 

(Feb. 11, 2014). The replacement market 

distribution channel is characterized as 

follows: 

Manufacturer → Wholesaler → 

Mechanical contractor → Consumer 

The new construction distribution 

channel is characterized as follows: 

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17250 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

27Heating, Air Conditioning & Refrigeration 

Distributors International 2012 Profit Report 

(Available at: http://www.hardinet.org/ProfitReport) (Last accessed April 10, 2013). 

28Air Conditioning Contractors of America 

(ACCA), Financial Analysis for the HVACR 

Contracting Industry: 2005 (Available at: http://

www.acca.org/store/) (Last accessed April 10, 2013). 

29U.S. Census Bureau, 2007 Economic Census 

Data (2007) (Available at: http://www.census.gov/

econ/)(Last accessed April 10, 2013). 

30Sales Tax Clearinghouse Inc., State Sales Tax 

Rates Along with Combined Average City and 

County Rates, 2013 (Available at: http://thestc.com/ 

STrates.stm) (Last accessed Sept. 11, 2013). 

31U.S. Department of Energy: Energy Information 

Administration, Residential Energy Consumption 

Survey: 2009 RECS Survey Data (2013) (Available 

at: http://www.eia.gov/consumption/residential/

data/2009/) (Last accessed March, 2013). 

32U.S. Department of Energy: Energy Information 

Administration, Residential Energy Consumption 

Survey: 2009 RECS Survey Data (2013) (Available 

at: http://www.eia.gov/consumption/residential/

data/2009/) (Last accessed March, 2014). 

33U.S. Department of Energy: Energy Information 

Administration, Commercial Buildings Energy 

Consumption Survey (2003) (Available at: http://

www.eia.gov/consumption/commercial/data/2003/

index.cfm?view=microdata) (Last accessed 

November, 2013). 

34 42 U.S.C. 6291(23). 

35U.S. Department of Energy: Energy Information 

Administration, Commercial Buildings Energy 

Consumption Survey (2003) (Available at: http://

www.eia.gov/consumption/commercial/data/2003/

index.cfm?view=microdata) (Last accessed 

November, 2013). 

36National Oceanic and Atmospheric 

Administration, NNDC Climate Data Online 

(Available at: http://www7.ncdc.noaa.gov/CDO/

CDODivisionalSelect.jsp) (Last accessed March 15, 

2013). 

37U.S. Department of Energy—Energy 

Information Administration, Annual Energy 

Outlook 2013 with Projections to 2040 (Available at: 

http://www.eia.gov/forecasts/aeo/). 

Manufacturer → Wholesaler → 

Mechanical contractor → General 

contractor → Consumer 

In the third distribution channel, the 

manufacturer sells the product to a 

wholesaler and then to the commercial 

consumer through a national account: 

Manufacturer → Wholesaler → 

Consumer (National Account) 

To develop markups for the parties 

involved in the distribution of the 

product, DOE utilized several sources, 

including: (1) The Heating, AirConditioning & Refrigeration 

Distributors International (HARDI) 2012 

Profit Report 27 to develop wholesaler 

markups; (2) the 2005 Air Conditioning 

Contractors of America’s (ACCA) 

financial analysis for the heating, 

ventilation, air-conditioning, and 

refrigeration (HVACR) contracting 

industry 28 to develop mechanical 

contractor markups, and (3) U.S. Census 

Bureau’s 2007 Economic Census data 29

for the commercial and institutional 

building construction industry to 

develop general contractor markups. 

In addition to the markups, DOE 

derived State and local taxes from data 

provided by the Sales Tax 

Clearinghouse.30 These data represent 

weighted-average taxes that include 

county and city rates. DOE derived 

shipment-weighted-average tax values 

for each region considered in the 

analysis. 

DOE did not receive comments on the 

markups analysis, and consequently, it 

retained the same approach for today’s 

NOPR. Chapter 6 of the NOPR TSD 

provides further detail on the estimation 

of markups. 

E. Energy Use Analysis 

1. Energy Use Methodology 

The purpose of the energy use 

analysis is to determine the annual 

energy consumption of residential 

boilers at different efficiencies in 

representative U.S. single-family homes, 

multi-family residences, and 

commercial buildings, and to assess the 

energy savings potential of increased 

boiler efficiency. DOE estimated the 

annual energy consumption of 

residential boilers at specified energy 

efficiency levels across a range of 

climate zones, building characteristics, 

and heating applications. The annual 

energy consumption includes the 

natural gas, liquid petroleum gas (LPG), 

oil, and/or electricity use by the boiler 

for space and water heating. The annual 

energy consumption of residential 

boilers is used in subsequent analyses, 

including the LCC and PBP analysis and 

the national impacts analysis. 

For the residential sector, DOE 

consulted the Energy Information 

Administration’s (EIA) 2009 Residential 

Energy Consumption Survey (RECS 

2009) to establish a sample of 

households using residential boilers for 

each boiler product class.31 The RECS 

data provide information on the vintage 

of the home, as well as heating energy 

use in each household. The survey also 

included household characteristics such 

as the physical characteristics of 

housing units, household demographics, 

information about other heating and 

cooling products, fuels used, energy 

consumption and expenditures, and 

other relevant data. DOE used the 

household samples not only to 

determine boiler annual energy 

consumption, but also as the basis for 

conducting the LCC and PBP analysis. 

DOE used data from RECS 2009 32 and 

CBECS 2003 33 to project household 

weights and household characteristics 

in 2020, the expected compliance date 

of any amended energy conservation 

standards for residential boilers. 

DOE accounted for applications of 

residential boilers in commercial 

buildings because the intent of the 

analysis of consumer impacts is to 

capture the full range of usage 

conditions for these products. DOE 

considers the definition of ‘‘residential 

boiler’’ to be limited only by its 

capacity.34 DOE determined that these 

applications represent about 7 percent 

of the residential boiler market. 

For the commercial building sample, 

DOE used the EIA’s 2003 Commercial 

Building Energy Consumption Survey 35

(CBECS 2003) to establish a sample of 

commercial buildings using residential 

boilers for each boiler product class. 

Criteria were developed to help size 

these boilers using several variables, 

including building square footage and 

estimated supply water temperature. For 

boilers used in multi-family housing, 

DOE used the RECS 2009 sample 

discussed above, accounting for 

situations where more than one 

residential boiler is used to heat a 

building. 

To estimate the annual energy 

consumption of boilers meeting higher 

efficiency levels, DOE first calculated 

the heating load based on the RECS and 

CBECS estimates of the annual energy 

consumption of the boiler for each 

household. DOE estimated 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 was determined using 

the boiler vintage (the year of 

installation of the product) from RECS 

and historical data on the market share 

of boilers by AFUE. DOE then used the 

house heating load to determine the 

burner operating hours, which are 

needed to calculate the fossil fuel 

consumption and electricity 

consumption based on the DOE 

residential furnace and boiler test 

procedure. To calculate pump and other 

auxiliary components’ electricity 

consumption, DOE utilized data from 

manufacturer product literature. 

Additionally, DOE adjusted the 

energy use to normalize for weather by 

using long-term heating degree-day 

(HDD) data for each geographical 

region.36 DOE also accounted for change 

in building shell characteristics between 

2009 and 2020 by applying the building 

shell efficiency indexes in the National 

Energy Modeling System (NEMS) based 

on EIA’s Annual Energy Outlook 2013 

(AEO 2013).37 DOE also accounted for 

future climate trends based on AEO 

2013 HDD projections. 

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38 In the case of modulating condensing boilers, 

to accommodate lower firing rates, the inducer will 

provide lower combustion airflow to regulate the 

excess air in the combustion process. DOE assumed 

that modulating condensing boilers are equipped 

with inducer fans with PSC motors and two-stage 

controls. The inducers are assumed to run at a 70- 

percent airflow rate when the modulating unit 

operates at low-fire. 

39Appendix 7B includes a list of references used 

to derive the relationship. No information is 

available about the relationship between AFUE and 

RWT, while manufacturers publish data on the 

relationship between boiler thermal efficiency and 

the RWT. DOE assumed that AFUE scales according 

to the relationship reported for the thermal 

efficiency. 

DOE is aware that some residential 

boilers have the ability to provide both 

space heating and domestic water 

heating, and that these products are 

widely available and may vary greatly in 

design. For these applications, DOE 

accounted for the boiler energy used for 

domestic water heating, which is part of 

the total annual boiler energy use. To 

accomplish this, DOE used the RECS 

2009 and/or CBECS data to identify 

households or buildings with boilers 

that use the same fuel type for space and 

water heating, and then assumed that a 

fraction of these identified households/ 

buildings use the boiler for both 

applications. 

To calculate the annual water-heating 

energy use for each boiler efficiency 

level, DOE first calculated the waterheating load by multiplying the annual 

fuel consumption for water heating 

(derived from RECS or CBECS) by the 

AFUE of the existing boiler, adjusted for 

the difference between AFUE and 

recovery efficiency for water heating. 

DOE then calculated the boiler energy 

use for each efficiency level by 

multiplying the water-heating load by 

the AFUE of the selected efficiency 

level, adjusted for the difference 

between AFUE and recovery efficiency 

for water heating. 

The Department calculated boiler 

electricity consumption for the 

circulating pump, the draft inducer,38

and the ignition system. If a household 

required a condensate pump, which is 

sometimes installed with higherefficiency products, DOE assumed that 

the pump consumes 60 watts and 

operated at the same time as the burner. 

For single-stage boilers, the Department 

calculated the electricity consumption 

as the sum of the electrical energy used 

during boiler operation for space 

heating, water heating, and standby 

energy consumption. For two-stage and 

modulating products, this formula 

includes parameters for the operation at 

full, modulating, and reduced load. 

2. Standby Mode and Off Mode 

The Department calculated boiler 

standby mode and off mode electricity 

consumption for times when the boiler 

is not in use for each efficiency level 

identified in the engineering analysis. 

DOE calculated boiler standby mode 

and off mode electricity consumption by 

multiplying the power consumption at 

each efficiency level by the number of 

standby mode and off mode hours. To 

calculate the annual number of standby 

mode and off mode hours for each 

sample household, DOE subtracted the 

estimated total burner operating hours 

(both for space heating and water 

heating) from the total hours in a year 

(8,760). Details of the method are 

provided in chapter 7 of the NOPR TSD. 

AHRI disagreed with DOE’s 

assumption that a residential boiler is in 

standby mode throughout the year. 

AHRI stated that the time when the 

boiler is in standby should be limited to 

the heating season; the remainder of the 

year the boiler is ‘‘off.’’ (AHRI, No. 22 

at p. 5) DOE is not aware of any 

information on the extent to which 

consumers shut off the boiler when the 

heating season is over. For the NOPR, 

DOE estimated that 25 percent of 

consumers shut the boiler off. 

See chapter 7 in the NOPR TSD for 

additional detail on the energy analysis 

and results for standby mode and off 

mode operation. 

3. Comments on Boiler Energy Use 

Calculation 

Commenting on the NODA, AHRI 

stated that, in basing the estimated 

energy consumption on RECS 2009 and 

CBECS 2003 data, the estimated energy 

use must be recalculated to account for 

the benefit of the automatic temperature 

reset means both for the baseline unit 

and the higher efficiency levels. For 

residential applications, AHRI suggested 

that an average of 10 percent savings 

would be a reasonable estimate. AHRI 

predicted that this revised analysis will 

show a smaller incremental energy 

savings resulting from an increased 

AFUE rating. (AHRI, No. 22 at pp. 5–6) 

For the NOPR, DOE incorporated the 

impact of automatic temperature reset 

means on boiler energy use by adjusting 

AFUE based on a reduction in average 

return water temperature (RWT). DOE 

calculated the reduction in average 

RWT for single-stage boilers based on 

the duration of burner operating hours 

at reduced RWT. For modulating 

boilers, DOE used the average 

relationship 39 between RWT and 

thermal efficiency to establish the 

magnitude of the efficiency adjustment 

required for the high- and lowtemperature applications. See appendix 

7B for details on how DOE calculated 

the adjustment for automatic means. 

Energy Kinetics stated that the 

average oversizing factor of between 

three and four used in the NODA 

exceeds the 0.7 oversizing factor 

indicated in the AFUE standard. It 

argued that this oversizing has a clear 

and direct impact on annual efficiency 

due to idle losses, which are virtually 

ignored in AFUE. (Energy Kinetics, No. 

19 at p. 1) 

In the NODA analysis, DOE did not 

use an average oversizing factor of 

between three and four, but applied an 

oversize factor of 0.7 as specified in the 

existing DOE test procedure. The 

oversize factor was applied directly to 

the calculated input capacity of the 

boiler. DOE calculated the input 

capacity for the existing boiler of each 

housing/building unit based on 

information derived from the RECS and 

CBECs data. The equipment sizing 

approach determines the heating load of 

the sampled household/building by 

accounting for building characteristics 

impacting heat load. Following 

determination of the building heating 

load, equipment efficiency is applied to 

the heat load to calculate the boiler 

input capacity. Input capacity was then 

multiplied by an oversize factor of 0.7 

as specified in the existing DOE test 

procedure. Using the oversized input 

capacity, DOE then rounded the input 

capacity up to the nearest typical 

equipment size, which in some cases 

resulted in oversize factors slightly more 

or less than 1.7. See appendix 7B for 

additional details of the boiler sizing 

methodology. 

Energy Kinetics stated that 

temperature reset controls would be 

highly ineffective without accounting 

for idle loss. Energy Kinetics stated that 

idle loss or energy wasted at the end of 

the heating cycle (not during the burner 

operation), greatly impacts annual 

energy efficiency. (Energy Kinetics, No. 

19 at p. 2) 

Idle loss, as the term applies to 

residential heating boilers, is heat 

wasted when the burner is not firing. 

The idle losses are the heat from 

combustion that is not transferred to the 

heating water, including the products of 

combustion up the flue, the loss out of 

the heat exchanger walls and boiler’s 

jacket (in the form of radiant, 

conductive, or convective transfer), and 

the loss down the drain as a condensate. 

Since no fuel is being consumed in the 

off-cycle, off-cycle losses, therefore, are 

important only to the extent that they 

must be replaced during the on-cycle by 

the burning of extra fuel (i.e., longer 

burner on times or higher firing rates). 

The DOE test procedure accounts for 

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17252 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

40 DOE estimated that 75 percent of condensing 

boilers, and 25 percent of non-condensing boilers 

are low-mass. The remainder are high-mass. 

idle losses associated with space heating 

in the heating season efficiency value, 

but the idle losses during non-space 

heating operation (i.e., domestic water 

heating) are not captured in the existing 

DOE test procedure. For the NOPR 

analysis, DOE accounted for idle losses 

based on the installation location of the 

boiler (conditioned or unconditioned 

space) and whether or not the boiler 

served domestic hot water loads 

(summer hot water use only). For boilers 

that serve only space heating loads, the 

idle losses are accounted for in the 

heating season efficiency. For boilers 

that provided domestic hot water 

heating, idle losses occur in both 

heating and non-heating seasons. These 

idle losses were accounted for by 

applying heat loss values to the boiler 

and storage tank (when necessary) for a 

fraction of the off-cycle time. DOE also 

accounted for the losses for boilers that 

are installed with indirect tanks or 

tankless coils. See appendix 7B for 

additional details on the consideration 

of idle losses. 

Energy Kinetics also stated that AFUE 

assumes that the boiler is in the 

conditioned space and heat lost is 

gained in the conditioned space, but in 

practice, much of this heat energy is 

wasted in basements, up chimneys, and 

out draft hoods and draft regulators. 

(Energy Kinetics, No. 19 at p. 2) 

The AFUE metric incorporates 

sensible and latent heat lost up 

chimneys and out draft hoods and draft 

regulators. Regarding losses in 

basements, for the NOPR analysis, DOE 

accounted for boiler jacket losses based 

on the installation location. For boilers 

installed in unconditioned basements 

and garages, DOE adjusted AFUE using 

a jacket loss factor, which was derived 

from the values provided by the existing 

DOE test procedure. For high-mass 

boilers, DOE used a jacket loss factor of 

2.4 percent. For low-mass boilers, DOE 

assumed that the jacket losses were only 

10 percent of those of a high-mass boiler 

(i.e., 0.24 percent).40 See appendix 7B 

for details of the jacket loss factors 

applied. 

Energy Kinetics stated that if 

combined heat and hot water boilers are 

considered to be in the conditioned 

space, then heat lost in summertime 

while heating domestic water should 

have an impact on air conditioning 

cooling loads. (Energy Kinetics, No. 19 

at p. 2) For the NOPR, DOE estimated 

the share of combined heat and hot 

water boilers that are installed in the 

conditioned space, and estimated the 

impact of heat lost in summertime on 

air conditioning cooling loads. Details of 

the method are given in chapter 7 of the 

NOPR TSD. 

Fire & Ice and Weil McLain et al. 

stated that installing high-efficiency 

condensing boilers in older replacement 

applications may not actually achieve 

the expected energy savings because the 

homeowners may not be able to afford 

to make extensive and expensive 

changes to the heat distribution system 

in an older home that may be needed to 

achieve the rated efficiency. (Fire & Ice, 

No. 18 at pp. 1–2; Weil McLain et al., 

No. 20–2 at pp. 1–2) Weil McLain stated 

that if a condensing boiler is installed in 

a heat distribution system that is not 

appropriate for that product (i.e., the 

return water temperature is too high), 

then the condensing boiler will not be 

able to operate in the ‘‘condensing’’ 

mode, but will instead operate in the 

non-condensing mode, achieving much 

lower efficiencies. (Weil McLain, No. 

20–1 at p. 5) Crown Boiler, U.S. Boiler, 

and New Yorker Boiler agree with the 

AFUE adjustment for condensing boilers 

that recognizes 150 °F average return 

water temperature and resulting 

operation in a non-condensing mode 

during a significant portion of the 

heating season. (Crown Boiler, No. 24 at 

p. 2; U.S. Boiler, No. 25 at p. 2; New 

Yorker Boiler, No. 26 at p. 2) 

DOE accounts for boiler operational 

efficiency in specific installations by 

adjusting the AFUE of the sampled 

boiler based on an average system return 

water temperature. The criteria used to 

determine the return water temperature 

of the boiler system included 

consideration of building vintage, 

product type (condensing or noncondensing, single-stage or modulating), 

and whether the boiler employed an 

automatic means for adjusting water 

temperature. Using product type and 

system return water temperature, DOE 

developed and applied the AFUE 

adjustments based on average heating 

season return water temperatures. See 

appendix 7B for additional details. 

F. Life-Cycle Cost and Payback Period 

Analysis 

In determining whether an energy 

conservation standard is economically 

justified, DOE considers the economic 

impact of potential standards on 

consumers. The effect of new or 

amended energy conservation standards 

on individual consumers usually 

involves a reduction in operating cost 

and an increase in purchase cost. DOE 

used the following two metrics to 

measure consumer impacts: 

• LCC (life-cycle cost) is the total 

consumer cost of an appliance or 

product, generally over the life of the 

appliance or product. The LCC 

calculation includes total installed cost 

(equipment manufacturer selling price, 

distribution chain markups, sales tax, 

and installation costs), operating costs 

(energy, repair, and maintenance costs), 

product lifetime, and discount rate. 

Future operating costs are discounted to 

the time of purchase and summed over 

the lifetime of the appliance or product. 

• PBP (payback period) measures the 

amount of time it takes consumers to 

recover the assumed higher purchase 

price of a more energy-efficient product 

through reduced operating costs. Inputs 

to the payback period calculation 

include the installed cost to the 

consumer and first-year operating costs. 

For any given efficiency level, DOE 

measures the PBP and the change in 

LCC relative to an estimate of the basecase efficiency level. The base-case 

estimate reflects the market in the 

absence of amended energy 

conservation standards, including 

market trends for products that exceed 

the current energy conservation 

standards. 

DOE analyzed the net effect of 

potential amended residential boiler 

standards on consumers by calculating 

the LCC and PBP for each efficiency 

level of each sample household using 

the engineering performance data, the 

energy-use data, and the markups. DOE 

performed the LCC and PBP analyses 

using a spreadsheet model combined 

with Crystal Ball (a commerciallyavailable software program used to 

conduct stochastic analysis using Monte 

Carlo simulation and probability 

distributions) to account for uncertainty 

and variability among the input 

variables (e.g., energy prices, 

installation cost, and repair and 

maintenance costs). It uses weighting 

factors to account for distributions of 

shipments to different building types 

and States to generate LCC savings by 

efficiency level. Each Monte Carlo 

simulation consists of 10,000 LCC and 

PBP calculations using input values that 

are either sampled from probability 

distributions and household samples or 

characterized with single point values. 

The analytical results include a 

distribution of 10,000 data points 

showing the range of LCC savings and 

PBPs for a given efficiency level relative 

to the base-case efficiency forecast. In 

performing an iteration of the Monte 

Carlo simulation for a given consumer, 

product efficiency is 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 reveals that a consumer is 

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41Series ID PCU333414333414 (Available at: 

http://www.bls.gov/ppi/). 

42Cast iron heating boiler PPI series ID: PCU 

3334143334141; Steel heating boiler PPI series ID: 

PCU 3334143334145 (Available at: www.bls.gov/

ppi/). 

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. 

EPCA establishes a rebuttable 

presumption that a standard is 

economically justified if the Secretary 

finds that the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy (and, as 

applicable, water) savings during the 

first year that the consumer will receive 

as a result of the standard, as calculated 

under the test procedure in place for 

that standard. (42 U.S.C. 

6295(o)(2)(B)(iii)) For each considered 

efficiency level, DOE determines the 

value of the first year’s energy savings 

by calculating the quantity of those 

savings in accordance with the 

applicable DOE test procedure, and 

multiplying that amount by the average 

energy price forecast for the year in 

which compliance with the amended 

standards would be required. 

DOE calculated the LCC and PBP for 

all consumers of residential boilers as if 

each were to purchase new product in 

the year that compliance with amended 

standards is required. As discussed 

above, DOE is conducting this 

rulemaking pursuant to 42 U.S.C. 

6295(f)(4)(C), and consistent with that 

provision, DOE is applying a 5-year lead 

time for compliance with amended 

standards. (This rulemaking also 

satisfies DOE’s 6-year-lookback review 

requirement under 42 U.S.C. 6295(m), a 

provision which calls for the same 5- 

year lead time for residential boilers.) At 

the time of preparation of the NOPR 

analysis, the expected issuance date was 

spring 2014, leading to an anticipated 

final rule publication in 2015. 

Accordingly, the projected compliance 

date for amended standards is early 

2020. Therefore, for purposes of its 

analysis, DOE used January 1, 2020 as 

the beginning of compliance with 

potential amended standards for 

residential boilers. 

As noted above, DOE’s LCC and PBP 

analyses generate values that calculate 

the payback period for consumers of 

potential energy conservation standards, 

which includes, but is not limited to, 

the three-year payback period 

contemplated under the rebuttable 

presumption test. However, DOE 

routinely conducts a full economic 

analysis that considers the full range of 

impacts, including those to the 

consumer, manufacturer, Nation, and 

environment, as required under 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). 

1. Inputs to Installed Cost 

The primary inputs for establishing 

the total installed cost are the baseline 

consumer product price, standard-level 

consumer price increases, and 

installation costs (labor and material 

cost). Baseline consumer prices and 

standard-level consumer price increases 

were determined by applying markups 

to manufacturer price estimates, 

including sales tax where appropriate. 

The installation cost is added to the 

consumer price to arrive at a total 

installed cost. 

Weil McLain stated that lumping all 

condensing and non-condensing boilers 

together to determine the average or 

median cost of a type of boiler does not 

provide the correct basis for making a 

decision. (Weil McLain, No. 20–1 at p. 

3) In response, DOE’s product cost 

analysis considers condensing and noncondensing boilers as separate 

efficiency levels and accounts for the 

specific characteristics of these designs. 

Details of the method are provided in 

chapter 8 of the NOPR TSD. 

For the NODA, DOE projected future 

prices of residential boilers using 

inflation-adjusted producer price index 

(PPI) data for ‘‘heating equipment’’ from 

the Bureau of Labor Statistics.41 AHRI 

stated that the analysis conducted for 

the residential furnace rulemaking and 

the PPI data for heating equipment from 

the Bureau of Labor Statistics are not 

directly transferable to residential 

boilers. AHRI stated that the unique 

factors of the relatively small size of the 

residential boiler market and the 

relatively higher cost of residential 

boilers minimize the applicability of the 

general PPI data in this analysis. (AHRI, 

No. 22 at p. 5) 

DOE agrees that the broad category 

‘‘heating equipment’’ may not be the 

best measure to apply to residential 

boilers. For the NOPR, DOE examined 

the PPI for cast iron heating boilers from 

1987 to 2013 and for steel heating 

boilers from 1980 to 2013.42 The 

inflation-adjusted PPI shows a strongly 

rising trend over this period. DOE has 

concerns about using this trend, 

however. During much of the period, 

the inflation-adjusted PPI for iron and 

steel mills (which indicates the price of 

the primary materials that go into cast 

iron heating boilers) was also sharply 

rising. This rise mirrors the increase in 

prices of various industrial 

commodities, which resulted from rapid 

industrialization in China, India, and 

other emerging economies. Prior to 

2004, the inflation-adjusted PPI for iron 

and steel mills was in a long downtrend 

that began in the early 1980s. In the 

recent global economic environment of 

slower growth, iron ore prices have been 

declining since the beginning of 2011. 

Given the past trend and the current 

situation, DOE is not confident that 

extrapolating the trend in the PPI for 

cast iron heating boilers in 1999–2013 

would provide a sound projection. Nor 

is DOE confident that the recent 

downward trend in iron ore prices will 

continue in the future. Given the 

uncertainty in commodities pricing and 

other factors, DOE concluded that 

including a price trend in the main 

analysis cases would not be justified by 

the data, instead choosing to maintain a 

constant manufacturer selling price (in 

real dollars) for residential boilers. 

The Joint Commenters stated that it is 

expected that the installed cost of 

condensing boilers would decline 

between now and the compliance date 

of amended standards (2020). The Joint 

Commenters stated that the new 

ENERGY STAR specification, which 

requires condensing levels from gasfired boilers, are expected to increase 

the market share of condensing gas 

boilers, resulting in a decline in 

equipment costs. Furthermore, the Joint 

Commenters encouraged DOE to explore 

ways to estimate learning rates for 

condensing technology. The Joint 

Commenters stated that analyzing price 

trends of whole categories of equipment 

fails to capture the price trends of the 

actual technologies that are employed to 

improve efficiency. The Joint 

Commenters would expect the price of 

condensing boilers to decline much 

faster than the price of all boilers. The 

Joint Commenters stated that the use of 

historic price trends of heating 

equipment to estimate learning rates for 

boilers implicitly assumes that prices of 

non-condensing and condensing boilers 

will change at the same rate, and will 

likely significantly underestimate future 

declines in the incremental cost of 

condensing boilers. (Joint Commenters, 

No. 27 at pp. 2–3) 

DOE acknowledges that the product 

cost of condensing boilers may decline 

between now and the compliance date 

of amended standards as production 

increases and the technology matures. It 

also recognizes that experience in the 

manufacturing sector generally indicates 

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17254 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

43Taylor, M. and K. S. Fujita, Accounting for 

Technological Change in Regulatory Impact 

Analyses: The Learning Curve Technique, Lawrence 

Berkeley National Laboratory, Report No. LBNL– 

6195E (2013) (Available at: http://efficiency.lbl.gov/ 

sites/all/files/accounting_for_tech_change_in_rias_- 

_learning_curves_lbnl.pdf). 

that the price of new products declines 

in the early years of adoption. However, 

DOE could not find data that would 

allow a projection of the magnitude of 

likely decline for condensing boilers. 

Thus, for the NOPR, it used the same 

price trend projection for condensing 

and non-condensing boilers. Currently, 

information about price trends related to 

different boiler technologies is not 

available, but DOE is exploring ways to 

estimate learning rates for different 

technologies.43

DOE estimated the costs associated 

with installing a boiler in a new housing 

unit or as a replacement for an existing 

boiler. Installation costs account for 

labor and material costs and any 

additional costs, such as venting and 

piping modifications and condensate 

disposal that might be required when 

installing products at various efficiency 

levels. 

For replacement installations, DOE 

included a number of additional costs 

(‘‘adders’’) for a fraction of the sample 

households. For non-condensing 

boilers, these additional costs may 

account for updating of flue vent 

connectors, vent resizing, chimney 

relining, and, for a fraction of 

installations, the costs for a stainless 

steel vent. For condensing boilers, these 

additional costs included adding a new 

polyvinylchloride (PVC) flue vent, 

combustion air venting for direct vent 

installations (PVC), concealing vent 

pipes for indoor installations, 

addressing an orphaned water heater (by 

updating flue vent connectors, vent 

resizing, or chimney relining), and 

condensate removal. 

Weil McLain stated that changes to 

the heat distribution system in an older 

home can include: Installing new piping 

and venting; lining the existing 

chimney; installing a more powerful 

circulating pump; installing a different, 

larger electrical service; and/or 

installing a condensate neutralizer to 

prevent damage to a cast iron drain or 

installing a condensate pump. Weil 

McLain stated that quotations from 

qualified contractors for the complete 

installation of a condensing boiler in a 

replacement application are generally at 

least 30–60 percent higher than the 

installation cost of a non-condensing 

boiler in the same application. (Weil 

McLain, No. 20–1 at pp. 3–4) 

In response, DOE’s analysis does 

account for venting, condensate, and 

electrical related costs to determine the 

overall installation cost for condensing 

boilers. According to the available data, 

the total installed cost, which is the sum 

of the installation cost and the product 

price, is on average 23 percent higher 

for condensing boilers compared to 

baseline products. See appendix 8D of 

the NOPR TSD for details on how DOE 

calculated the installation costs. 

Crown Boiler, U.S. Boiler, and New 

Yorker Boiler stated that the LCC 

spreadsheet does not include the total 

cost of masonry chimneys, chimney 

relining, vent resizing, and orphaned 

water heaters (except for condensing 

boiler venting cost). They also suggested 

that DOE should consider vent system 

changes based on input from building 

inspectors and code officials. (Crown 

Boiler, No. 24 at p. 2; U.S. Boiler, No. 

25 at p. 2; New Yorker Boiler, No. 26 at 

p. 2) 

Gathering input from a representative 

sample of building inspectors and code 

officials was not possible in the time 

frame of the NOPR preparation. 

However, for the NOPR, DOE included 

disaggregated costs associated with 

different installation scenarios and 

requirements. These costs included the 

cost of chimney relining, vent resizing, 

orphaned water heaters, and condensate 

withdrawal. These costs can be found in 

appendix 8D of the NOPR TSD. 

Crown Boiler, U.S. Boiler, and New 

Yorker Boiler stated that a 100 Mbh gas 

boiler would use a 5′′ vent, not a 4′′ Type 

B vent as shown in the LCC spreadsheet. 

They also stated that a 140 Mbh oil 

boiler would use a 6′′ vent and cannot 

use a 4′′ Type B vent as shown in the 

LCC spreadsheet. (Crown Boiler, No. 24 

at p. 2; U.S. Boiler, No. 25 at p. 2; New 

Yorker Boiler, No. 26 at p. 2) DOE agrees 

that the vent size is correlated with 

boiler capacity. For the NOPR, DOE 

included a methodology that sized vent 

material based on the capacity of the 

boiler to be installed and accounted for 

the subsequent change in installation 

cost. Specifically, DOE modified the 

analysis to include the costs of 5′′ and 

6′′ vent material where appropriate. 

Appendix 8D of the NOPR TSD contains 

more details on the installation cost 

methodology. 

Crown Boiler, U.S. Boiler, and New 

Yorker Boiler stated that the National 

Fuel Gas Code (ANSI Z223.l/INFPA 54, 

2012 Edition, paragraph 12.6.4.3) 

suggests EL0 gas boilers can be installed 

without vent modification. (Crown 

Boiler, No. 24 at p. 2; U.S. Boiler, No. 

25 at p. 2; New Yorker Boiler, No. 26 at 

p. 2) DOE’s LCC analysis accounts for an 

estimated fraction of 81 percent of boiler 

replacement installations that do not 

require vent modifications for EL 0 

(baseline) for hot water gas boilers. The 

baseline may require chimney relining 

or vent resizing for boilers installed 

before 1995. See appendix 8D of the 

NOPR TSD for more details. 

The Joint Commenters stated that the 

installation costs for condensing boilers 

will decline as contractors gain more 

experience installing condensing 

boilers, competition increases, and new 

venting systems for retrofits (including 

flexible polypropylene) are introduced 

to the market. The Joint Commenters 

encouraged DOE to evaluate whether 

polypropylene venting systems, which 

are designed for easy retrofit 

installations, would represent the 

lowest-cost venting option for some 

portion of installations. (Joint 

Commenters, No. 27 at pp. 2–3) 

In response, DOE notes that 

condensing boilers already comprise 

more than one-third of boiler 

installations, so it is not clear that costs 

will decline due to experience and 

competition. DOE conducted a literature 

review to assess the polypropylene 

venting market in the U.S. For this 

rulemaking, DOE applied polypropylene 

venting as a venting option for the 

fraction of installations involving 

models or applications for which PVC 

piping is not recommended. 

DOE also included installation adders 

for new construction installations 

related to potential amended standards. 

For non-condensing boilers, the only 

adder is a new metal flue vent 

(including a fraction with stainless steel 

venting). For condensing gas boilers, the 

adders include a new flue vent, 

combustion air venting for direct vent 

installations, accounting for a 

commonly-vented water heater, and 

condensate removal. 

Crown Boiler, U.S. Boiler, and New 

Yorker Boiler stated that the only 

difference in residential boiler 

installation cost between retrofit and 

new construction applications in terms 

of placement and set-up should be the 

cost of removing the old boiler; trip 

charge, unit startup, check, and cleanup 

should apply equally to both types of 

installation. (Crown Boiler, No. 24 at p. 

2; U.S. Boiler, No. 25 at p. 2; New 

Yorker Boiler, No. 26 at 

p. 2) 

For the NOPR analysis, DOE assumes 

that boiler placement, set-up, start-up, 

check, trip charge, and cleanup costs are 

included in labor hours based on RS 

Means data for both new construction 

and replacements. The cost of removing 

the old boiler was only applied for 

replacement installations and not 

applied to new construction. 

With regards to near-condensing 

boiler installations, for the NODA, DOE 

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44 DOE did not consider any efficiency levels 

above 86-percent AFUE and below 90-percent 

AFUE. 

45Available at www.federalreserve.gov/

econresdata/scf/scfindex.htm. 

46S. Sorrell, J. D., and M. Sommerville, 

‘‘Empirical estimates of the direct rebound effect: a 

review,’’ Energy Policy (2009) 37: pp. 1356–71. 

47Steven Nadel, ‘‘The Rebound Effect: Large or 

Small?’’ ACEEE White Paper (August 2012) 

(Available at: http://www.aceee.org/white-paper/

rebound-effect-large-or-small). 

48Brinda Thomas and Ines Azevedo, ‘‘Estimating 

direct and indirect rebound effects for U.S. 

households with input–output analysis Part 1: 

Theoretical framework,’’ Ecological Economics Vol. 

86, pp. 199–201 (Feb. 2013) (Available at: http://

www.sciencedirect.com/science/article/pii/

S0921800912004764). 

49 Greening, L.A., Greene, D.L., Difiglio, C., 

Energy efficiency and consumption—the rebound 

effect—a survey, (2002) Energy Policy 28(6–7), 389– 

401. 

50U.S. Department of Energy—Energy 

Information Administration, Form EIA–826 

Database Monthly Electric Utility Sales and 

Revenue Data (2013) (Available at: http://

www.eia.doe.gov/cneaf/electricity/page/

eia826.html). 

51U.S. Department of Energy—Energy 

Information Administration, Natural Gas Navigator 

(2013) (Available at: http://tonto.eia.doe.gov/dnav/ 

ng/ng_pri_sum_dcu_nus_m.htm). 

52U.S. Department of Energy—Energy 

Information Administration, 2012 State Energy 

Consumption, Price, and Expenditure Estimates 

(SEDS) (2013) (Available at: http://

www.eia.doe.gov/emeu/states/_seds.html). 

accounted for the installation costs of 

the near-condensing products by 

considering the additional cost of using 

stainless steel venting. AHRI stated that 

boilers with AFUE ratings in the range 

of 83.5 percent to 87 percent should be 

considered near-condensing products 

from an installation perspective (in 

terms of vent requirements). AHRI 

stated that DOE has underestimated the 

increased installation cost for vent 

system rework or upgrade at the 84- 

percent and 85-percent AFUE levels for 

gas-fired hot water boiler models. 

(AHRI, No. 22 at pp. 1–2) HTP stated 

that the safety and installation cost 

implications of operating at efficiencies 

between 82-percent and 90-percent 

AFUE should be seriously considered. 

(HTP, No. 31 at p. 1) 

For the NOPR, DOE included 

additional venting cost associated with 

stainless steel venting for a fraction of 

installations between 82-percent AFUE 

and 86-percent AFUE that require such 

venting. Such inclusion addresses 

potential safety concerns by preventing 

the corrosive impacts of condensation in 

the venting system. Because use of an 

inducer or forced draft fan creates 

conditions under which stainless steel 

venting is necessary to avoid 

condensation in some cases, DOE based 

the fraction requiring stainless steel 

venting on the percentage of models 

with inducer or forced draft fans and 

manufacturer literature.44 The fraction 

of stainless steel venting installations 

ranged from 11 percent for the baseline 

efficiency models to 32 percent for the 

85-percent AFUE models. See appendix 

8D of the NOPR TSD for more details. 

2. Inputs to Operating Costs 

The primary inputs for calculating the 

operating costs are product energy 

consumption, product efficiency, energy 

prices and forecasts, maintenance and 

repair costs, product lifetime, and 

discount rates. DOE uses discount rates 

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. Much of the 

data used for determining consumer 

discount rates comes from the Federal 

Reserve Board’s triennial Survey of 

Consumer Finances.45

a. Energy Consumption 

The product energy consumption is 

the site energy use associated with 

providing space heating (and water 

heating in some cases) to the building. 

DOE utilized the methodology described 

in section IV.E to establish product 

energy use. 

DOE considered whether boiler 

energy use would likely be impacted by 

a direct rebound effect, which occurs 

when a product that is made more 

efficient is used more intensively, such 

that the expected energy savings from 

the efficiency improvement may not 

fully materialize. For the NODA, DOE 

conducted a review of information that 

included a 2009 study examining 

empirical estimates of the rebound 

effect for various energy-using 

products.46 Based on this review, DOE 

tentatively concluded that the inclusion 

of a rebound effect of 20 percent for 

residential boilers is warranted. 

The Joint Commenters stated that a 

20-percent rebound effect is too high. 

The Joint Commenters stated that a 2012 

ACEEE paper concluded that the most 

widely applicable estimates of rebound 

rates in the studies reviewed by Sorrell 

(referenced above) range from 1–12 

percent. The Joint Commenters stated 

that a similar range is provided in a 

2013 paper by Thomas and Azevedo 

which lists five space-heating studies 

with rebound rates ranging from 1–15 

percent. (Joint Commenters, No. 27 at 

p. 4) 

For the NOPR, DOE reviewed the 

2012 ACEEE paper 47 and the article by 

Thomas and Azevedo.48 Both of these 

publications examined the same studies 

that were reviewed by Sorrell, as well as 

by Greening et al,49 and identified 

methodological problems with some of 

the studies. The studies believed to be 

most reliable by Thomas and Azevedo 

show a direct rebound effect for heating 

products in the 1-percent to 15-percent 

range, while Nadel concludes that a 

more likely range is 1 to 12 percent, 

with rebound effects sometimes higher 

than this range for low-income 

households who could not afford to 

adequately heat their homes prior to 

weatherization. These assessments are 

described in further detail in chapter 10 

of the NOPR TSD. Based on DOE’s 

review of these recent assessments, DOE 

reduced the rebound effect for 

residential boilers to 15 percent for the 

NOPR. Although a lower value might be 

warranted, DOE prefers to be 

conservative and not risk understating 

the rebound effect. 

AHRI recommended that the LCC and 

PBP analysis should incorporate the 

energy savings reduction attributable to 

the rebound effect. AHRI stated that the 

TSD does not provide information to 

explain what the increase in the 

consumer’s utility is that offsets the 20- 

percent rebound effect identified in the 

analysis. Additionally, AHRI stated that 

the consumer’s utility is not a 

quantifiable, monetary value, and it 

does not affect the cost of operation of 

the boiler. (AHRI, No. 22 at p. 5) 

In response, the most likely reason for 

a direct rebound effect associated with 

higher-efficiency boilers is that the 

consumer would maintain a higher 

indoor temperature than before, or 

extend the heating season for longer 

periods. It is reasonable to presume that 

such a consumer receives greater indoor 

comfort than before. The increased 

comfort has a cost that is equal to the 

monetary value of the higher energy use. 

DOE could reduce the energy cost 

savings to account for the rebound 

effect, but then it would have to add the 

value of increased comfort in order to 

conduct a proper economic analysis. 

The approach that DOE uses—not 

reducing the energy cost savings to 

account for the rebound effect and not 

adding the value of increased comfort— 

assumes that the value of increased 

comfort is equal to the monetary value 

of the higher energy use. Although DOE 

cannot measure the actual value to the 

consumers of increased comfort, the 

monetary value of the higher energy use 

represents a lower bound for this 

quantity. 

b. Energy Prices 

Using the most current data from the 

Energy Information 

Administration 50 51 52 (described in 

chapter 8 of the NOPR TSD), DOE 

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53 DOE plans to use AEO 2014 when it becomes 

available. 

54 Decision Analysts, 2008 American Home 

Comfort Study: Online Database Tool (2009) 

(Available at: <http://www.decisionanalyst.com/

Syndicated/HomeComfort.dai>). 

55RS Means Company Inc., RS Means Facilities 

Maintenance & Repair Cost Data (2013) (Available 

at http://www.rsmeans.com/). 

56U.S. Census Bureau: Housing and Household 

Economic Statistics Division, American Housing 

Survey, Multiple Years (1974, 1975, 1976, 1977, 

1978, 1979, 1980, 1981, 1983, 1985, 1987, 1989, 

1991, 1993, 1995, 1997, 1999, 2001, 2003, 2005, 

2007, 2009, and 2011). (Available at: 

www.census.gov/programs-surveys/ahs/) (Last 

accessed January, 2014). 

57U.S. Department of Energy: Energy Information 

Administration, Residential Energy Consumption 

Survey: 2009 RECS Survey Data (2013) (Available 

at: <http://www.eia.gov/consumption/residential/

data/2009/>) (Last accessed March, 2013). 

58See: http://www.energystar.gov/products/

specs/sites/products/files/Stakeholder%20

Comment%20Response%20Summary%20Boilers

%20Draft%201%20Version%203%200_0.pdf. 

59Energy Efficiency Best Practice in Housing, 

Domestic Condensing Boilers—‘The Benefits and 

the Myths’ (2003) (Available at: http://www.westnorfolk.gov.uk/pdf/CE52.pdf) (Last accessed April 

16, 2014). 

assigned an appropriate energy price to 

each household or commercial building 

in the sample, depending on its 

location. For future prices, DOE used 

the projected annual changes in average 

residential and commercial natural gas, 

LPG, electricity, and fuel oil prices in 

the Reference case projection in AEO 

2013.53

AGA and APGA contended that the 

Department should use a marginal price 

analysis, which reflects the incremental 

gas costs most closely associated with 

changes in the amount of gas consumed 

by appliances of different efficiencies, 

when evaluating the impact of natural 

gas prices on the life-cycle-cost savings 

associated with standards. (AGA, 

APGA, No. 21 at p. 5) In response, in the 

analyses performed for the NODA and 

for the NOPR, average electricity and 

natural gas prices from the EIA data 

were adjusted using seasonal marginal 

price factors to derive monthly marginal 

electricity and natural gas prices. For a 

detailed discussion of the development 

of marginal energy price factors, see 

appendix 8C of the NOPR TSD. 

c. Maintenance and Repair Costs 

The maintenance cost is the routine 

annual cost to the consumer of general 

maintenance for product operation. The 

frequency with which the maintenance 

occurs was derived from a consumer 

survey 54 that provided the frequency 

with which owners of different types of 

boilers perform maintenance. For oilfired boilers, the high quantity of sulfur 

in the fuel in States without regulation 

of sulfur content results in frequent 

cleaning of the heat exchanger, which 

DOE included in its analysis. 

The repair cost is the cost to the 

consumer for replacing or repairing 

components in the boiler that have 

failed. DOE estimated repair costs at 

each considered efficiency level using a 

variety of sources, including 2013 RS 

Means Facility Repair and Maintenance 

Data,55 manufacturer literature, and 

information from expert consultants. 

Weil McLain, Crown Boiler, U.S. 

Boiler, and New Yorker Boiler stated 

that condensing boilers generally cost 

more to maintain and repair than noncondensing boilers because condensing 

boilers have more complex and costly 

component parts that need more 

frequent service, adjustment, and repair. 

(Weil McLain, No. 20–1 at p. 3; Crown 

Boiler, No. 24 at p. 2; U.S. Boiler, No. 

25 at p. 2; New Yorker Boiler, No. 26 at 

p. 2) In response, DOE’s analysis does 

account for additional maintenance and 

repair costs for condensing boilers. 

Maintenance costs include checking the 

condensate withdrawal system, 

replacing the neutralizer filter, and 

flushing the secondary heat exchanger 

for condensing oil boilers in high-sulfur 

oil-fuel regions. In addition, higher 

repair costs for ignition, controls, gas 

valve, and inducer fan are included. For 

more details on DOE’s methodology for 

calculating maintenance and repair 

costs, see appendix 8E of the NOPR 

TSD. 

d. Product Lifetime 

Product lifetime is the age at which an 

appliance is retired from service. DOE 

conducted an analysis of boiler lifetimes 

using a combination of historical boiler 

shipments (see section IV.G), American 

Housing Survey data on historical stock 

of boilers,56 and RECS data 57 on the age 

of the boilers in homes. The data 

allowed DOE to develop a Weibull 

lifetime distribution function, which 

results in a lifetime ranging from 2 to 55 

years. The resulting average and median 

lifetimes for the NOPR analysis are 25 

years for all boiler product classes. In 

addition, DOE reviewed a number of 

sources to validate the derived boiler 

lifetime, including research studies 

(from the U.S. and Europe) and field 

data reports (see appendix 8F of the 

NOPR TSD for details). 

A number of commenters stated that 

condensing boilers generally have a 

shorter lifespan than non-condensing 

boilers. Weil McLain stated that 

condensing boilers generally have a 

shorter lifespan than non-condensing 

boilers because the condensing boilers 

are exposed to the corrosive effects of 

condensation, and because there are 

many more component parts to wear 

out. (Weil McLain, No. 20–1 at p. 3) 

Crown Boiler, U.S. Boiler, and New 

Yorker Boiler believe that there is a 

significant difference between expected 

lifetimes for non-condensing and 

condensing boilers, with the latter 

typically lasting less than 15 years. 

(Crown Boiler, No. 24 at p. 2; U.S. 

Boiler, No. 25 at p. 2; New Yorker 

Boiler, No. 26 at p. 2) Weil McLain, 

Crown Boiler, U.S. Boiler, and New 

Yorker Boiler stated that manufacturers 

generally offer shorter warranties for 

condensing boilers than for noncondensing boilers, indicating that 

manufacturers have found that 

condensing boilers have a shorter life 

expectancy than non-condensing 

boilers. (Weil McLain, No. 20–1 at pp. 

4; Crown Boiler, No. 24 at p. 2; U.S. 

Boiler, No. 25 at p. 2; New Yorker 

Boiler, No. 26 at p. 2) AHRI stated that 

the 22-year median lifetime used for all 

boilers in the analysis is an invalid 

assumption for condensing gas boilers. 

AHRI stated that deriving lifetimes from 

a combination of shipment data, boiler 

stock, and RECS data assumes that there 

is an established population of units in 

the field that reflect the full range of 

lifetimes that apply to the product. 

AHRI stated that this is not the case, as 

condensing gas hot water boilers were 

just beginning to be introduced 22 years 

ago. AHRI stated that it is not possible 

to conclude from field data that 

condensing gas boilers have a median 

lifetime of 22 years when the number of 

such units installed 22 years ago likely 

accounts for 1 percent or less of all 

residential gas boilers currently in use. 

(AHRI, No. 22 at p. 2) 

In response, DOE notes that in 

developing Boilers Specification 

Version 3.0 for the ENERGY STAR 

program in 2013, the Environmental 

Protection Agency (EPA) held numerous 

discussions with manufacturers and 

technical experts to explore the concern 

that condensing boilers may have a 

shorter lifetime. In the absence of data 

showing otherwise, EPA concluded that 

if condensing boilers are properly 

installed and maintained, the life 

expectancy should be similar to noncondensing boilers.58 EPA also 

discussed boiler life expectancy with 

the Department for Environment, Food 

& Rural Affairs (DEFRA) in the UK, and 

stated that DEFRA has no data which 

contradict EPA’s conclusion that with 

proper maintenance, condensing and 

non-condensing modern boilers have 

similar life expectancy.59 The 

commenters provided no data to 

support their opinion regarding a lower 

condensing boiler lifetime vis-a`-vis nonmstockstill on DSK4VPTVN1PROD with PROPOSALS2

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60Air Conditioning, Heating, and Refrigeration 

Institute, Consumer’s Directory of Certified 

Efficiency Ratings for Heating and Water Heating 

Equipment (AHRI Directory) (September 2013) 

(Available at: http://www.ahridirectory.org/

ahridirectory/pages/home.aspx) (Last accessed 

September, 2013). 

61Energy Star, Boiler Specification Version 3.0 

(Last accessed September, 2013) (Available at: 

https://www.energystar.gov/products/specs/boilers_

specification_version_3_0_pd). 

62Air Conditioning, Heating, and Refrigeration 

Institute, Consumer’s Directory of Certified 

Efficiency Ratings for Heating and Water Heating 

Equipment (AHRI Directory) (September 2013) 

(Available at: http://www.ahridirectory.org/

ahridirectory/pages/home.aspx) (Last accessed 

September, 2013). 

63U.S. Appliance Industry Statistical Review, 

Appliance Magazine, various years. 

64Air-Conditioning, Heating, and Refrigeration 

Institute (AHRI), Confidential Shipment data for 

2003–2012. 

65Available at: http://www.census.gov/const/

www/charindex.html. 

66 Decision Analysts, 2008 American Home 

Comfort Study: Online Database Tool (2009) 

(Available at: http://www.decisionanalyst.com/

Syndicated/HomeComfort.dai>). 

condensing boilers. Therefore, for the 

NOPR, DOE did not apply different 

lifetimes for non-condensing and 

condensing boilers. However, DOE did 

conduct a sensitivity analysis to 

investigate the impact of different 

lifetime values on consumer impacts. 

For more details on how DOE derived 

the boiler lifetime and on the lifetime 

sensitivity analysis, see appendix 8F of 

the NOPR TSD. 

e. Base-Case Efficiency 

To estimate the share of consumers 

affected by a potential energy 

conservation 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 (i.e., the case 

without amended energy conservation 

standards). 

For residential boilers, DOE first 

developed data on the current share of 

models in each product class that are of 

the different efficiencies based on the 

latest AHRI certification directory.60 To 

estimate shares in 2020, DOE took into 

account the potential impacts of the 

ENERGY STAR program, which is 

working on new performance criteria: 

90-percent AFUE for gas-fired boilers 

and 87-percent AFUE for oil-fired 

boilers.61

For the boiler standby mode and off 

mode, DOE assumed that 50 percent of 

shipments would be at the baseline 

efficiency level and 50 percent would be 

at the max-tech efficiency level (EL 3) 

for all product classes, based on 

characteristics of available models.62

No comments were received on the 

base-case efficiency distributions, and 

DOE retained the same approach for the 

NOPR. 

G. Shipments Analysis 

DOE uses forecasts of product 

shipments to calculate the national 

impacts of potential amended energy 

conservation standards on energy use, 

NPV, and future manufacturer cash 

flows. DOE develops shipment 

projections based on historical data and 

an analysis of key market drivers for 

each product. DOE estimated boiler 

shipments by projecting shipments in 

three market segments: (1) 

Replacements; (2) new housing; and (3) 

new owners in buildings that did not 

previously have a boiler. DOE also 

considered whether standards that 

require more-efficient boilers would 

have an impact on boiler shipments. 

To project boiler replacement 

shipments, DOE developed retirement 

functions from the boiler lifetime 

estimates and applied them to the 

existing products in the housing stock. 

The existing stock of products is tracked 

by vintage and developed from 

historical shipments data.63 64 The 

shipments analysis uses a distribution 

of residential boiler lifetimes to estimate 

boiler replacement shipments. 

To project shipments to the new 

housing market, DOE utilized a forecast 

of new housing construction and 

historic saturation rates of various boiler 

product types in new housing. DOE 

used AEO 2013 for forecasts of new 

housing. Boiler saturation rates in new 

housing were estimated based on a 

weighted-average of values in 1990– 

2013 presented in the U.S. Census 

Bureau’s Characteristics of New 

Housing.65

To estimate future shipments to new 

owners, DOE determined the fraction of 

residential boiler shipments that are to 

new owners with no previous boiler, 

based on a proprietary consumer 

survey.66 The new owners primarily 

consist of households that during a 

major remodel add hydronic heating 

using a gas-fired hot water boiler and 

households that choose to install a 

boiler for a hydronic air handler to 

replace a gas furnace. New owners also 

include households switching between 

different boiler product classes (i.e., 

from the steam to hot water boiler 

product classes and from the oil-fired to 

gas-fired boiler product classes). 

Commenting on the NODA, AHRI 

stated that DOE’s estimate that 80 

percent of all gas-fired hot water boiler 

installations are replacements may be 

too low. (AHRI, No. 22 at p. 4) Based on 

this comment, DOE reexamined the 

available shipments data, and for the 

NOPR, DOE estimated that 93 percent of 

gas-fired hot water boiler installations 

are replacements or new owners, with 

the remaining 7 percent installed in new 

homes. 

To estimate the impact of the 

projected price increase for the 

considered efficiency levels, DOE used 

a relative price elasticity approach. This 

approach gives some weight to the 

operating cost savings from higherefficiency products. As is typical, the 

impact of higher boiler prices (at higher 

efficiency levels) is expressed as a 

percentage drop in market share for 

each year during the analysis period. 

Weil McLain stated that a typical 

homeowner facing the prospect of 

installing a condensing high-efficiency 

boiler at a much higher product and 

installation cost (plus the cost of 

upgrading the heat distribution system) 

may decide to repair an older system 

instead. (Weil McLain, No. 20–1 at p. 5) 

In response, DOE acknowledges that if 

the amended standard were to require 

purchase of a condensing boiler, some 

consumers would choose to repair and 

thereby extend the life of their existing 

system. Because the proposed standards 

would not require the use of a 

condensing boiler, DOE concludes that 

any incremental shift towards repair 

instead of replacement would be 

minimal. DOE applied a relative price 

elasticity in the shipments model to 

estimate the change in shipments under 

potential amended standards at different 

efficiency (and installed cost) levels. 

AGA and APGA stated that the 

Department should include a fuel 

switching analysis as part of the process 

of evaluating possible amended 

standards for residential boilers to help 

ensure that when evaluating different 

levels of efficiency for gas-fired hot 

water boilers, fuel switching to other 

energy sources that produce higher 

emissions and use more overall energy 

is not encouraged. (AGA, APGA, No. 21 

at p. 5) 

For the NOPR, DOE evaluated the 

potential for switching from gas-fired 

hot water boilers to other heating 

systems. Incentive for such switching 

would only exist if the amended 

standards were to require efficiency for 

gas-fired hot water boilers that would 

entail a significantly higher installed 

cost than the other heating options. 

Because DOE is not proposing an 

amended standard that would require 

condensing technology, DOE has 

tentatively concluded that consumer 

switching from gas-fired hot water 

boilers would be rare. Even if DOE were 

to adopt an amended standard that 

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67 DOE’s use of spreadsheet models provides 

interested parties with access to the models within 

a familiar context. In addition, the TSD and other 

documentation that DOE provides during the 

rulemaking help explain the models and how to use 

them, and interested parties can review DOE’s 

analyses by changing various input quantities 

within the spreadsheet. 

would require condensing technology 

for gas-fired hot water boilers, it is likely 

that switching would be minimal for the 

following reasons. First, although 

electric boilers may have a much lower 

product cost, they would be expected to 

have far higher operating costs 

(especially in the Northeast). Moreover, 

electric boiler installation would require 

upgrading the electrical system in the 

house. Finally, switching from a 

hydronic heating system using a gasfired boiler to an air-distribution heating 

system using a furnace would be 

expensive, and would likely only be 

done as part of a major renovation. 

The details and results of the 

shipments analysis can be found in 

chapter 9 of the NOPR TSD. 

H. National Impact Analysis 

The NIA assesses the national energy 

savings (NES) and the net present value 

(NPV) from a national perspective of 

total consumer costs and savings 

expected to result from new or amended 

energy conservation standards at 

specific efficiency levels. DOE 

determined the NPV and NES for the 

potential standard levels considered for 

the residential boiler product classes 

analyzed. 

To make the analysis more accessible 

and transparent to all interested parties, 

DOE used a computer spreadsheet 

model (as opposed to probability 

distributions) to calculate the energy 

savings and the national consumer costs 

and savings at each TSL.67 The NIA 

calculations are based on the annual 

energy consumption and total installed 

cost data from the energy use analysis 

and the LCC analysis. To assess the 

effect of input uncertainty on NES and 

NPV results, DOE developed its 

spreadsheet model to conduct 

sensitivity analyses by running 

scenarios on specific input variables. In 

the NIA, DOE forecasted the lifetime 

energy savings, energy cost savings, 

product costs, and NPV of consumer 

benefits for each product class over the 

lifetime of products sold from 2020 

through 2049. 

To develop the NES, DOE calculates 

annual energy consumption for the base 

case and the standards cases. DOE 

calculates the annual energy 

consumption using per-unit annual 

energy use data multiplied by projected 

shipments. As explained in section IV.E, 

DOE incorporated a rebound effect for 

residential boilers, which is 

implemented by reducing the NES in 

each year. 

To develop the national NPV of 

consumer benefits from potential energy 

conservation standards, DOE calculates 

annual energy expenditures and annual 

product expenditures for the base case 

and the standards cases. DOE calculates 

annual energy expenditures from annual 

energy consumption by incorporating 

forecasted energy prices, using 

shipment projections and average 

energy efficiency projections. DOE 

calculates annual product expenditures 

by multiplying the price per unit times 

the projected shipments. The aggregate 

difference each year between energy bill 

savings and increased product 

expenditures is the net savings or net 

costs. As discussed in section IV.F, DOE 

chose to not apply a trend to the 

manufacturer selling price (in real 

dollars) of residential boilers. For the 

NIA, DOE developed a sensitivity 

analysis that considered one scenario 

with a lower rate of price decline than 

the reference case and one scenario with 

a higher rate of price decline than the 

reference case. These scenarios are 

described in appendix 10C of the NOPR 

TSD. 

A key component of the NIA is the 

energy efficiency forecasted over time 

for the base case (without new 

standards) and each of the standards 

cases. As discussed in section IV.F, DOE 

developed a distribution of efficiencies 

in the base case for 2020 (the year of 

anticipated compliance with an 

amended standard) for each residential 

boiler product class. Regarding the 

efficiency trend in the years after 

compliance, for the base case, DOE 

estimated that the overall market share 

of condensing gas-fired hot water boilers 

would grow from 44 percent to 63 

percent by 2049, and the overall market 

share of condensing oil-fired hot water 

boilers would grow from 7 percent to 13 

percent. DOE estimated that the basecase market shares of condensing gasfired and oil-fired steam boilers will be 

negligible during the period of analysis. 

DOE assumed similar trends for the 

standards cases (albeit starting from a 

higher point). Details on how these 

efficiency trends were developed are 

provided in appendix 8H of the NOPR 

TSD. 

To estimate the impact that amended 

energy conservation standards may have 

in the year compliance becomes 

required, DOE uses ‘‘roll-up’’ or ‘‘shift’’ 

scenarios in its standards rulemakings. 

Under the ‘‘roll-up’’ scenario, DOE 

assumes: (1) Product efficiencies in the 

base case that do not meet the new or 

amended standard level under 

consideration would ‘‘roll up’’ to meet 

that standard level; and (2) products at 

efficiencies above the standard level 

under consideration would not be 

affected. Under the ‘‘shift’’ scenario, 

DOE retains the pattern of the base-case 

efficiency distribution but re-orients the 

distribution at and above the new or 

amended minimum energy conservation 

standard. Because there is no reason to 

expect a shift, DOE used the ‘‘roll-up’’ 

scenario for the standards cases. 

1. National Energy Savings Analysis 

The national energy savings analysis 

involves a comparison of national 

energy consumption of the considered 

products in each potential standards 

case (TSL) with consumption in the 

base case with no new or amended 

energy conservation standards. DOE 

calculated the national energy 

consumption by multiplying the 

number of units (stock) of each product 

(by vintage or age) by the unit energy 

consumption (also by vintage). Vintage 

represents the age of the product. DOE 

calculated annual NES based on the 

difference in national energy 

consumption for the base case (without 

amended efficiency standards) and for 

each higher efficiency standard. DOE 

estimated energy consumption and 

savings based on site energy and 

converted the electricity consumption 

and savings to primary energy using 

annual conversion factors derived from 

the AEO 2013 version of NEMS. 

Cumulative energy savings are the sum 

of the NES for each year over the 

timeframe of the analysis. 

a. Full-Fuel-Cycle Energy Savings 

DOE has historically presented NES 

in terms of primary energy savings. In 

the case of electricity use and savings, 

this quantity includes the energy 

consumed by power plants to generate 

delivered (site) electricity. 

In response to the recommendations 

of a committee on ‘‘Point-of-Use and 

Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency 

Standards’’ appointed by the National 

Academy of Sciences, DOE announced 

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 

(August 18, 2011). After evaluating the 

approaches discussed in the August 18, 

2011 notice, DOE published a statement 

of amended policy in the Federal 

Register in which DOE explained its 

determination that NEMS is the most 

appropriate tool for its FFC analysis and 

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68See http://www.eia.gov/oiaf/aeo/overview/. 

69OMB Circular A–4 (Sept. 17, 2003), section E, 

‘‘Identifying and Measuring Benefits and Costs.’’ 

70See comment submitted by NRDC to docket 

EE–RM/STD–01–350 on January 15, 2007, 

Comment 131, pp. 16–17. 

its intention to use NEMS for that 

purpose. 77 FR 49701 (August 17, 2012). 

AGA and APGA stated that it is not 

clear if the NEMS-based methodology 

provides the most complete and 

accurate methodology for incorporating 

the full-fuel-cycle analysis in energy 

conservation standards because all the 

assumptions used in the program are 

not fully disclosed. AGA and APGA 

urged the Department to hold a public 

workshop to provide all stakeholders 

the opportunity to review and discuss 

the assumptions and analyses included 

in the model, and to make the model 

publically available for anyone who 

wishes to run the analysis. (AGA, 

APGA, No. 21 at p. 4) 

In response, DOE notes that its Notice 

of Policy Amendment Regarding FullFuel-Cycle Analyses explains in some 

detail the reasoning for DOE’s 

determination that NEMS is the most 

appropriate tool to calculate FFC 

measures of energy use and greenhouse 

gas and other emissions. 77 FR 49701 

(August 17, 2012). The method and 

assumptions used to develop the FFC 

analysis are described in appendix 10B 

of the NOPR TSD, and are discussed in 

detail in the report referenced in that 

appendix. DOE does not have a separate 

FFC model, as it utilizes NEMS to 

derive multipliers that allow estimation 

of the FFC impacts of the energy savings 

identified for a given product. The 

methods and assumptions used in 

NEMS are fully described in the 

documentation provided by EIA.68 DOE 

has used the FFC measures in several 

recent rulemakings, thereby providing 

interested parties with opportunities to 

review the approach and the associated 

documentation. Furthermore, the 

August 17, 2012 notice stated that the 

public is free to send in comments on 

this policy amendment at any time. 77 

FR 49701, 49702 (August 17, 2012). 

In the case of natural gas, the FFC 

measure includes losses in transmission 

and distribution, as well as energy use 

and losses (including methane leakage) 

in natural gas production. 

AHRI stated that the FFC NES values 

do not seem to reflect the greater FFC 

consumption of electricity because the 

primary and FFC energy savings in 

standby mode, which only uses 

electricity, are nearly the same. (AHRI, 

No. 22 at p. 5) In response, the primary 

energy savings for site use of electricity 

include the primary energy 

consumption by the electric generation 

sector. The FFC measure adds in energy 

that is used ‘‘upstream’’ in the 

production and transport of the primary 

fuels. This quantity, expressed as a 

percentage of the primary energy 

consumption, is relatively small. Hence, 

the FFC energy savings are only slightly 

larger than the primary energy savings. 

2. Net Present Value Analysis 

The inputs for determining NPV are: 

(1) Total annual installed cost; (2) total 

annual savings in operating costs; (3) a 

discount factor to calculate the present 

value of costs and savings; (4) present 

value of costs; and (5) present value of 

savings. DOE calculated net savings 

each year as the difference between the 

base case and each standards case in 

terms of total savings in operating costs 

versus total increases in installed costs. 

DOE calculated savings over the lifetime 

of products shipped in the forecast 

period. DOE calculated NPV as the 

difference between the present value of 

operating cost savings and the present 

value of total installed costs. DOE used 

a discount factor based on real discount 

rates of 3 percent and 7 percent to 

discount future costs and savings to 

present values. 

For the NPV analysis, DOE calculates 

increases in total installed costs as the 

difference in total installed cost between 

the base case and standards case (i.e., 

once the new or amended standards 

take effect). 

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 efficiency 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. 

a. Discount Rates for Net Present Value 

DOE estimates the NPV of consumer 

benefits using both a 3-percent and a 7- 

percent real discount rate. DOE uses 

these discount rates in accordance with 

guidance provided by the Office of 

Management and Budget (OMB) to 

Federal agencies on the development of 

regulatory analysis.69

The Joint Commenters stated that in 

recent rulemakings for other products, it 

appears that DOE has placed significant 

emphasis on NPV at a 7-percent 

discount rate. They stated that DOE 

must consider NPV at both 3 percent 

and 7 percent as directed in OMB 

guidance, and it should weigh the NPV 

at a 3-percent discount rate more 

heavily. As noted in the Joint Comment, 

NRDC has explained why a 3-percent 

discount rate is more appropriate to use 

when considering national economic 

benefits in comments on previous 

rulemakings. NRDC stated in a previous 

comment that investments in energy 

efficiency reduce overall societal risk, 

and that the average rate of return on all 

investments is far below 7 percent.70

(Joint Commenters, No. 27 at pp. 3–4) 

OMB Circular A–4 states that the 7- 

percent discount rate is an estimate of 

the average before-tax rate of return to 

private capital in the U.S. economy. It 

approximates the opportunity cost of 

capital, and it is the appropriate 

discount rate whenever the main effect 

of a regulation is to displace or alter the 

use of capital in the private sector. 

Circular A–4 also states that when 

regulation primarily and directly affects 

private consumption, a lower discount 

rate is appropriate. The alternative most 

often used is sometimes called the 

‘‘social rate of time preference,’’ which 

means the rate at which ‘‘society’’ 

discounts future consumption flows to 

their present value. If one takes the rate 

that the average saver uses to discount 

future consumption as a measure of the 

social rate of time preference, then the 

real rate of return on long-term 

government debt may provide a fair 

approximation. Over the last thirty 

years, this rate has averaged around 3 

percent in real terms on a pre-tax basis. 

Energy conservation standards for 

appliances and equipment affect both 

the use of capital and private 

consumption. Accordingly, DOE 

believes that it would be inappropriate 

to weight the NPV at either discount 

rate more heavily than the other. 

I. Consumer Subgroup Analysis 

In the NOPR stage of a rulemaking, 

DOE conducts a consumer subgroup 

analysis. A consumer subgroup 

comprises a subset of the population 

that may be affected disproportionately 

by new or revised energy conservation 

standards (e.g., low-income consumers, 

seniors). The purpose of a subgroup 

analysis is to determine the extent of 

any such disproportional impacts. 

For today’s NOPR, DOE evaluated 

impacts of potential standards on two 

subgroups: (1) Senior-only households 

and (2) low-income households. DOE 

identified these households in the RECS 

sample and used the LCC and PBP 

spreadsheet model to estimate the 

impacts of the considered efficiency 

levels on these subgroups. To the extent 

possible, it utilized inputs appropriate 

for these subgroups. The consumer 

subgroup results for the residential 

boilers TSLs are presented in section 

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71U.S. Securities and Exchange Commission, 

Annual 10–K Reports (Various Years) (Available at: 

http://www.sec.gov/edgar/searchedgar/

companysearch.html). 72U.S. Census Bureau, Annual Survey of 

Manufacturers: General Statistics: Statistics for 

Industry Groups and Industries (2011) (Available at: 

http://factfinder2.census.gov/faces/nav/jsf/pages/

searchresults.xhtml?refresh=t). 

73Hoovers Inc. Company Profiles, Various 

Companies (Available at: http://www.hoovers.com). 

V.B.1.b of this notice and chapter 11 of 

the NOPR TSD. 

J. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to determine 

the financial impact of amended energy 

conservation standards on 

manufacturers of residential boilers and 

to estimate the potential impact of such 

standards on employment and 

manufacturing capacity. The MIA has 

both quantitative and qualitative 

aspects. The quantitative part of the 

MIA primarily relies on the Government 

Regulatory Impact Model (GRIM), an 

industry cash-flow model with inputs 

specific to this rulemaking. The key 

GRIM inputs are industry cost structure 

data, shipment data, product costs, and 

assumptions about markups and 

conversion costs. The key output is the 

industry net present value (INPV). DOE 

used the GRIM to calculate cash flows 

using standard accounting principles 

and to compare changes in INPV 

between a base case and various TSLs 

(the standards case). The difference in 

INPV between the base case and 

standards cases represents the financial 

impact of amended energy conservation 

standards on residential boiler 

manufacturers. DOE used different sets 

of assumptions (markup scenarios) to 

represent the uncertainty surrounding 

potential impacts on prices and 

manufacturer profitability as a result of 

amended standards. These different 

assumptions produce a range of INPV 

results. The qualitative part of the MIA 

addresses the proposed standard’s 

potential impacts on manufacturing 

capacity and industry competition, as 

well as any differential impacts the 

proposed standard may have on any 

particular sub-group of manufacturers. 

The qualitative aspect of the analysis 

also addresses product characteristics, 

as well as any significant market or 

product trends. The complete MIA is 

outlined in chapter 12 of the NOPR 

TSD. 

DOE conducted the MIA for this 

rulemaking in three phases. In the first 

phase of the MIA, DOE prepared an 

industry characterization based on the 

market and technology assessment, 

preliminary manufacturer interviews, 

and publicly available information. As 

part of its profile of the residential 

boilers industry, DOE also conducted a 

top-down cost analysis of manufacturers 

in order to derive preliminary financial 

inputs for the GRIM (e.g., sales, general, 

and administration (SG&A) expenses; 

research and development (R&D) 

expenses; and tax rates). DOE used 

public sources of information, including 

company SEC 10–K filings,71 corporate 

annual reports, the U.S. Census 

Bureau’s Economic Census,72 and 

Hoover’s reports 73 to conduct this 

analysis. 

In the second phase of the MIA, DOE 

prepared an industry cash-flow analysis 

to quantify the potential impacts of 

amended energy conservation 

standards. In general, energy 

conservation standards can affect 

manufacturer cash flow in three distinct 

ways. These include: (1) Creating a need 

for increased investment; (2) raising 

production costs per unit; and (3) 

altering revenue due to higher per-unit 

prices and possible changes in sales 

volumes. DOE estimated industry cash 

flows in the GRIM at various potential 

standard levels using industry financial 

parameters derived in the first phase 

and the shipment scenario used in the 

NIA. The GRIM modeled both impacts 

from the AFUE energy conservation 

standards and impacts from standby 

mode and off mode energy conservation 

standards (i.e., standards based on 

standby mode and off mode wattage). 

The GRIM results from the two 

standards were evaluated independent 

of one another. 

In the third phase of the MIA, DOE 

conducted structured, detailed 

interviews with a variety of 

manufacturers that represent 

approximately 46 percent of domestic 

residential boiler sales covered by this 

rulemaking. During these interviews, 

DOE discussed engineering, 

manufacturing, procurement, and 

financial topics to validate assumptions 

used in the GRIM. DOE also solicited 

information about manufacturers’ views 

of the industry as a whole and their key 

concerns regarding this rulemaking. See 

section IV.J.3 for a description of the key 

issues manufacturers raised during the 

interviews. 

Additionally, in the third phase, DOE 

also evaluated subgroups of 

manufacturers that may be 

disproportionately impacted by 

amended standards or that may not be 

accurately represented by the average 

cost assumptions used to develop the 

industry cash-flow analysis. For 

example, small manufacturers, niche 

players, or manufacturers exhibiting a 

cost structure that largely differs from 

the industry average could be more 

negatively affected by amended energy 

conservation standards. DOE identified 

one subgroup (small manufacturers) for 

a separate impact analysis. 

To identify small businesses for this 

analysis, DOE applied the small 

business size standards published by 

the Small Business Administration 

(SBA) to determine whether a company 

is considered a small business. 65 FR 

30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 (Sept. 

5, 2000) and codified at 13 CFR part 

121. To be categorized as a small 

business under North American 

Industry Classification System (NAICS) 

code 333414, ‘‘Heating Equipment 

(except Warm Air Furnaces) 

Manufacturing,’’ a residential boiler 

manufacturer and its affiliates may 

employ a maximum of 500 employees. 

The 500-employee threshold includes 

all employees in a business’s parent 

company and any other subsidiaries. 

Based on this classification, DOE 

identified at least 13 residential boiler 

companies that qualify as small 

businesses. The residential boiler small 

manufacturer subgroup is discussed in 

section VI.B of this notice and in 

chapter 12 of the NOPR TSD. 

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the 

potential changes in cash flow due to 

amended standards that result in a 

higher or lower industry value. The 

GRIM was designed to conduct an 

annual cash-flow analysis using 

standard accounting principles that 

incorporates manufacturer costs, 

markups, shipments, and industry 

financial information as inputs. DOE 

thereby calculated a series of annual 

cash flows, beginning in 2014 (the base 

year of the analysis) and continuing to 

2049. DOE summed the stream of 

annual discounted cash flows during 

this period to calculate INPVs at each 

TSL. For residential boiler 

manufacturers, DOE used a real 

discount rate of 8.0 percent, which was 

derived from industry financial 

information and then modified 

according to feedback received during 

manufacturer interviews. DOE also used 

the GRIM to model changes in costs, 

shipments, investments, and 

manufacturer margins that could result 

from amended energy conservation 

standards. 

After calculating industry cash flows 

and INPV, DOE compared changes in 

INPV between the base case and each 

standards case. The difference in INPV 

between the base case and a standards 

case represents the financial impact of 

the amended energy conservation 

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standard on manufacturers at a 

particular TSL. As discussed previously, 

DOE collected this information on GRIM 

inputs from a number of sources, 

including publicly-available data and 

confidential interviews with a number 

of manufacturers. GRIM inputs are 

discussed in more detail in the next 

section. The GRIM results are discussed 

in section V.B.2. Additional details 

about the GRIM, the discount rate, and 

other financial parameters can be found 

in chapter 12 of the NOPR TSD. 

For consideration of standby mode 

and off mode regulations, DOE modeled 

the impacts of the technology options 

for reducing electricity usage discussed 

in the engineering analysis (chapter 5 of 

the TSD). The GRIM analysis 

incorporates the incremental additions 

to the MPC of standby mode and off 

mode features and the resulting impacts 

on markups. 

Due to the small cost of standby mode 

and off mode components relative to the 

overall cost of a residential boiler, DOE 

assumes that standards regarding 

standby mode and off mode features 

alone would not impact product 

shipment numbers. Additionally, DOE 

has tentatively concluded that the 

incremental cost of standby mode and 

off mode features would not have a 

differentiated impact on manufacturers 

of different product classes. 

Consequently, DOE models the impact 

of standby mode and off mode for the 

industry as a whole. 

The electric boiler product classes 

were not analyzed in the GRIM for 

AFUE energy conservation standards. 

As a result, quantitative numbers for 

those product classes are not available 

in the GRIM analyzing standby mode 

and off mode standards. However, the 

standby mode and off mode technology 

options considered for electric boilers 

are identical to the technology options 

for all other residential boiler product 

classes. As a result, DOE expects the 

standby mode and off mode impacts on 

electric boilers to be of the same order 

of magnitude as the impacts on all other 

residential boiler product classes. 

a. Government Regulatory Impact Model 

Key Inputs 

Manufacturer Production Costs 

Manufacturing a higher-efficiency 

product is typically more expensive 

than manufacturing a baseline product 

due to the use of more complex 

components, which are typically more 

costly than baseline components. The 

changes in the MPCs of the analyzed 

products can affect the revenues, gross 

margins, and cash flow of the industry, 

making these product cost data key 

GRIM inputs for DOE’s analysis. 

In the MIA, DOE used the MPCs for 

each considered efficiency level 

calculated in the engineering analysis, 

as described in section IV.C and further 

detailed in chapter 5 of the NOPR TSD. 

In addition, DOE used information from 

its teardown analysis (described in 

chapter 5 of the TSD) to disaggregate the 

MPCs into material, labor, and overhead 

costs. To calculate the MPCs for 

products at and above the baseline, DOE 

performed teardowns and cost modeling 

that allowed DOE to estimate the 

incremental material, labor, and 

overhead costs for products above the 

baseline. These cost breakdowns and 

product markups were validated and 

revised with input from manufacturers 

during manufacturer interviews. 

Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by efficiency level. Changes in 

sales volumes and efficiency mix over 

time can significantly affect 

manufacturer finances. For this analysis, 

the GRIM uses the NIA’s annual 

shipment forecasts derived from the 

shipments analysis from 2014 (the base 

year) to 2049 (the end year of the 

analysis period). The shipments model 

divides the shipments of residential 

boilers into specific market segments. 

The model starts from a historical base 

year and calculates retirements and 

shipments by market segment for each 

year of the analysis period. This 

approach produces an estimate of the 

total product stock, broken down by age 

or vintage, in each year of the analysis 

period. In addition, the product stock 

efficiency distribution is calculated for 

the base case and for each standards 

case for each product class. The NIA 

shipments forecasts are, in part, based 

on a roll-up scenario. The forecast 

assumes that a product in the base case 

that does not meet the standard under 

consideration would ‘‘roll up’’ to meet 

the amended standard beginning in the 

compliance year of 2020. See section 

IV.G and chapter 9 of the NOPR TSD for 

additional details. 

Product and Capital Conversion Costs 

Amended energy conservation 

standards would cause manufacturers to 

incur one-time conversion costs to bring 

their production facilities and product 

designs into compliance. DOE evaluated 

the level of conversion-related 

expenditures that would be needed to 

comply with each considered efficiency 

level in each product class. For the MIA, 

DOE classified these conversion costs 

into two major groups: (1) Capital 

conversion costs; and (2) product 

conversion costs. Capital conversion 

costs are one-time investments in 

property, plant, and equipment 

necessary to adapt or change existing 

production facilities such that new 

compliant product designs can be 

fabricated and assembled. Product 

conversion costs are one-time 

investments in research, development, 

testing, marketing, and other noncapitalized costs necessary to make 

product designs comply with amended 

energy conservation standards. 

To evaluate the level of capital 

conversion expenditures manufacturers 

would likely incur to comply with 

amended energy conservation 

standards, DOE used manufacturer 

interviews to gather data on the 

anticipated level of capital investment 

that would be required at each 

efficiency level. Based on manufacturer 

feedback, DOE developed a marketshare-weighted manufacturer average 

capital expenditure which it then 

applied to the entire industry. DOE also 

made assumptions about which 

manufacturers would develop their own 

condensing heat exchanger production 

lines, in the event that efficiency levels 

using condensing technology were 

proposed. DOE supplemented 

manufacturer comments and tailored its 

analyses with estimates of capital 

expenditure requirements derived from 

the product teardown analysis and 

engineering analysis described in 

chapter 5 of the TSD. 

DOE assessed the product conversion 

costs at each considered efficiency level 

by integrating data from quantitative 

and qualitative sources. DOE considered 

market-share-weighted feedback 

regarding the potential costs of each 

efficiency level from multiple 

manufacturers to estimate product 

conversion costs (e.g., R&D 

expenditures, certification costs) and 

validated those numbers against 

engineering estimates of redesign 

efforts. DOE combined this information 

with product listings to estimate how 

much manufacturers would have to 

spend on product development and 

product testing at each efficiency level. 

Manufacturer data were aggregated to 

better reflect the industry as a whole 

and to protect confidential information. 

In general, DOE assumes that all 

conversion-related investments occur 

between the year of publication of the 

final rule and the year by which 

manufacturers must comply with the 

amended standards. The conversion 

cost figures used in the GRIM can be 

found in section V.B.2.a of this notice. 

For additional information on the 

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estimated product and capital 

conversion costs, see chapter 12 of the 

NOPR TSD. 

b. Government Regulatory Impact Model 

Scenarios 

Markup Scenarios 

As discussed in the previous section, 

MSPs include direct manufacturing 

production costs (i.e., labor, materials, 

and overhead estimated in DOE’s MPCs) 

and all non-production costs (i.e., 

SG&A, R&D, and interest), along with 

profit. To calculate the MSPs in the 

GRIM, DOE applied non-production 

cost markups to the MPCs estimated in 

the engineering analysis for each 

product class and efficiency level. 

Modifying these markups in the 

standards case yields different sets of 

impacts on manufacturers. For the MIA, 

DOE modeled two standards-case 

markup scenarios to represent the 

uncertainty regarding the potential 

impacts on prices and profitability for 

manufacturers following the 

implementation of amended energy 

conservation standards: (1) A 

preservation of gross margin percentage 

markup scenario; and (2) a preservation 

of per-unit operating profit markup 

scenario. These scenarios lead to 

different markup values that, when 

applied to the inputted MPCs, result in 

varying revenue and cash-flow impacts. 

Under the preservation of gross 

margin percentage markup scenario, 

DOE applied a single uniform ‘‘gross 

margin percentage’’ markup across all 

efficiency levels, which assumes that 

following amended standards, 

manufacturers would be able to 

maintain the same amount of profit as 

a percentage of revenue at all efficiency 

levels within a product class. As 

production costs increase with 

efficiency, this scenario implies that the 

absolute dollar markup will increase as 

well. Based on publicly-available 

financial information for manufacturers 

of residential boilers, as well as 

comments from manufacturer 

interviews, DOE assumed the average 

non-production cost markup—which 

includes SG&A expenses, R&D 

expenses, interest, and profit—to be 

1.41 for all product classes. This 

markup scenario represents the upper 

bound of the residential boiler 

industry’s profitability in the standards 

case because manufacturers are able to 

fully pass through additional costs due 

to standards to consumers. 

DOE decided to include the 

preservation of per-unit operating profit 

scenario in its analysis because 

manufacturers stated that they do not 

expect to be able to mark up the full cost 

of production in the standards case, 

given the highly competitive nature of 

the residential boiler market. In this 

scenario, manufacturer markups are set 

so that operating profit one year after 

the compliance date of amended energy 

conservation standards is the same as in 

the base case on a per-unit basis. In 

other words, manufacturers are not able 

to garner additional operating profit 

from the higher production costs and 

the investments that are required to 

comply with the amended standards; 

however, they are able to maintain the 

same operating profit in the standards 

case that was earned in the base case. 

Therefore, operating margin in 

percentage terms is reduced between the 

base case and standards case. DOE 

adjusted the manufacturer markups in 

the GRIM at each TSL to yield 

approximately the same earnings before 

interest and taxes in the standards case 

as in the base case. The preservation of 

per-unit operating profit markup 

scenario represents the lower bound of 

industry profitability in the standards 

case. This is because manufacturers are 

not able to fully pass through to 

consumers the additional costs 

necessitated by residential boiler 

standards, as they are able to do in the 

preservation of gross margin percentage 

markup scenario. 

3. Manufacturer Interviews 

DOE interviewed manufacturers 

representing approximately 55 percent 

of the residential boiler market by 

revenue. DOE contractors endeavor to 

conduct interviews with a 

representative cross section of 

manufacturers (including large and 

small manufacturers, covering all 

equipment classes and product 

offerings). DOE contractors reached out 

to all the small business manufacturers 

that were identified as part of the 

analysis, as well as larger manufacturers 

that have significant market share in the 

residential boilers market. These 

interviews were in addition to those 

DOE conducted as part of the 

engineering analysis. The information 

gathered during these interviews 

enabled DOE to tailor the GRIM to 

reflect the unique financial 

characteristics of the residential boiler 

industry. The information gathered 

during these interviews enabled DOE to 

tailor the GRIM to reflect the unique 

financial characteristics of the 

residential boiler industry. All 

interviews provided information that 

DOE used to evaluate the impacts of 

potential amended energy conservation 

standards on manufacturer cash flows, 

manufacturing capacities, and 

employment levels. 

In interviews, DOE asked 

manufacturers to describe their major 

concerns with potential standards 

arising from a rulemaking involving 

residential boilers. Manufacturer 

interviews are conducted under nondisclosure agreements (NDAs), so DOE 

does not document these discussions in 

the same way that it does public 

comments in the comment summaries 

and DOE’s responses throughout the rest 

of this notice. The following sections 

highlight the most significant of 

manufacturers’ statements that helped 

shape DOE’s understanding of potential 

impacts of an amended standard on the 

industry. Manufacturers raised a range 

of general issues for DOE to consider, 

including a diminished ability to serve 

the replacement market, concerns that 

condensing boilers may not perform as 

rated without heating system 

modifications, and concerns about 

reduced product durability. (DOE also 

considered all other concerns expressed 

by manufacturers in this analysis.) 

Below, DOE summarizes these issues, 

which were raised in manufacturer 

interviews, in order to obtain public 

comment and related data. 

Diminished Ability To Serve the 

Replacement Market 

In interviews, several manufacturers 

pointed out that over 90 percent of 

residential boiler sales are transacted in 

the replacement channel, rather than the 

new construction channel. They stated 

that the current residential boiler market 

is structured around the legacy venting 

infrastructures that exist in the vast 

majority of homes and that any 

regulation that eliminated 82 to 83- 

percent efficient products would be very 

disruptive to the market. Manufacturers 

argued that under this scenario, 

consumers would face much higher 

installation costs, as well as complex 

challenges in changing the layout of the 

boiler room and upgrading their venting 

and heat distribution systems. 

Manufacturers argued that these 

considerations may induce consumers 

to explore other HVAC options and may 

cause them to leave the boiler market 

entirely. Manufacturers also asserted 

that the elimination of 82 to 83-percent 

efficient products could be disruptive to 

the market because several 

manufacturers would have to eliminate 

commodity products that generate a 

majority of their sales and be forced to 

sell products for which they are less 

vertically integrated, which may cause 

them to exit the market entirely. Some 

manufacturers speculated that if this 

scenario were to play out, it could result 

in the loss of a substantial number of 

American manufacturing jobs. 

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74Note that in these cases, the reduction in site 

emissions of CO2, NOX, and SO2 is larger than the 

increase in power sector emissions. 

75See http://www.epa.gov/climateleadership/

inventory/ghg-emissions.html. 

76U.S. Environmental Protection Agency, 

Compilation of Air Pollutant Emission Factors, AP– 

42, Fifth Edition, Volume I: Stationary Point and 

Area Sources (1998) (Available at: http://

www.epa.gov/ttn/chief/ap42/index.html). 

77 IPCC, 2013: Climate Change 2013: The Physical 

Science Basis. Contribution of Working Group I to 

the Fifth Assessment Report of the 

Intergovernmental Panel on Climate Change 

[Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, 

S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex 

and P.M. Midgley (eds.)]. Cambridge University 

Press, Cambridge, United Kingdom and New York, 

NY, USA. Chapter 8. 

78See North Carolina v. EPA, 550 F.3d 1176 (D.C. 

Cir. 2008); North Carolina v. EPA, 531 F.3d 896 

(D.C. Cir. 2008). 

Accordingly, DOE has considered this 

feedback when developing its analysis 

of installation costs (see section IV.F.1), 

shipments analysis (see section IV.G), 

and employment impacts analysis (see 

section (V.B.2.b). 

Condensing Boilers May Not Perform As 

Rated Without System Improvements 

Several manufacturers argued out that 

condensing boilers may have overstated 

efficiencies in terms of actual results in 

the field if they are installed as 

replacements in legacy distribution 

systems that were designed to maintain 

hot water supply temperatures of 180– 

200 °F. Manufacturers stated that in 

these systems, return water 

temperatures will often be too high for 

condensing boilers to operate in 

condensing mode, thereby causing the 

boiler to be less efficient than its express 

rating. Manufacturers also stated that 

because condensing boilers are designed 

for lower maximum supply water 

temperatures, the heat distribution 

output of the heating system as a whole 

is often reduced, and the boiler may not 

be able to meet heat distribution 

requirements. This may require the 

implementation of additional heat 

distribution equipment within a 

particular system. Some manufacturers 

pointed out that reducing the supply 

water temperature also reduces the 

radiation component of some heat 

distribution units, which is essential for 

comfort and allows consumers to 

maintain a lower thermostat setting. 

Reducing the radiation component may 

require a higher thermostat setting to 

maintain comfort, thereby reducing 

overall system efficiency. 

DOE recognizes this issue and 

considered it in the energy use analysis 

for residential boilers. See chapter 7 of 

the NOPR TSD for additional details. 

Reduced Product Durability and 

Reliability 

Several manufacturers commented 

that higher-efficiency condensing 

boilers on the market have not 

demonstrated the same level of 

durability and reliability as lowerefficiency products. Manufacturers 

stated that condensing products require 

more upkeep and maintenance and 

generally do not last as long as noncondensing products. Several 

manufacturers pointed out that they 

generally incur large after-sale costs 

with their condensing products because 

of additional warranty claims. 

Maintenance calls for these boilers 

require more skilled technicians and 

occur more frequently than they do with 

non-condensing boilers. 

DOE considered these comments 

when developing its estimates of repair 

and maintenance costs for residential 

boilers (see section IV.F.2.c) and 

product lifetime (IV.F.2.d). 

K. Emissions Analysis 

In the emissions analysis, DOE 

estimated 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 boilers. In addition to 

estimating impacts of standards on 

power sector emissions, DOE estimated 

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 (FFC). In accordance 

with DOE’s FFC Statement of Policy (76 

FR 51281 (Aug. 18, 2011) as amended at 

77 FR 49701 (August 17, 2012)), the FFC 

analysis also includes impacts on 

emissions of methane (CH4) and nitrous 

oxide (N2O), both of which are 

recognized as greenhouse gases. The 

combustion emissions factors and the 

method that DOE used to derive 

upstream emissions factors are 

described in chapter 13 of the NOPR 

TSD. The cumulative emissions 

reduction estimated for residential 

boilers is presented in section V.B.6. 

Today’s proposed standards would 

reduce use of fuel at the site and slightly 

reduce electricity use, thereby reducing 

power sector emissions. However, the 

highest efficiency levels (i.e., the maxtech levels) considered for residential 

boilers would increase the use of 

electricity by the furnace. For the 

considered TSLs, DOE estimated the 

change in power sector and upstream 

emissions of CO2, NOX, SO2, and Hg.74

DOE primarily conducted the 

emissions analysis using emissions 

factors for CO2 and most of the other 

gases derived from data in AEO 2013. 

Combustion emissions of CH4 and N2O 

were estimated using emissions 

intensity factors published by the 

Environmental Protection Agency (EPA) 

in its GHG Emissions Factors Hub.75

Site emissions of CO2 and NOX were 

estimated using emissions intensity 

factors from a separate EPA 

publication.76 DOE developed separate 

emissions factors for power sector 

emissions and upstream emissions. The 

method that DOE used to derive 

emissions factors is described in chapter 

13 of the NOPR TSD. 

For CH4 and N2O, DOE calculated 

emissions reduction in tons and also in 

terms of units of carbon dioxide 

equivalent (CO2eq). Gases are converted 

to CO2eq by multiplying each ton of the 

greenhouse gas by the gas’s global 

warming potential (GWP) over a 100- 

year time horizon. Based on the Fifth 

Assessment Report of the 

Intergovernmental Panel on Climate 

Change,77 DOE used GWP values of 28 

for CH4 and 265 for N2O. 

EIA prepares the Annual Energy 

Outlook using the National Energy 

Modeling System (NEMS). Each annual 

version of NEMS incorporates the 

projected impacts of existing air quality 

regulations on emissions. AEO 2013 

generally represents current legislation 

and environmental regulations, 

including recent government actions, for 

which implementing regulations were 

available as of December 31, 2012. 

Because the on-site operation of 

residential boilers requires use of fossil 

fuels and results in emissions of CO2, 

NOX, and SO2 at the sites where these 

appliances are used, DOE also 

accounted for the reduction in these site 

emissions and the associated upstream 

emissions due to potential standards. 

SO2 emissions from affected electric 

generating units (EGUs) are subject to 

nationwide and regional emissions capand-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 (DC). (42 U.S.C. 7651 et seq.) 

SO2 emissions from 28 eastern States 

and DC 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, but it 

remained in effect.78 In 2011, EPA 

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79See EME Homer City Generation, LP v. EPA, 

696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 

U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 

(U.S. June 24, 2013) (No. 12–1182). 

80On April 29, 2014, the U.S. Supreme Court 

reversed the judgment of the D.C. Circuit and 

remanded the case for further proceedings 

consistent with the Supreme Court’s opinion. The 

Supreme Court held in part that EPA’s methodology 

for quantifying emissions that must be eliminated 

in certain States due to their impacts in other 

downwind States was based on a permissible, 

workable, and equitable interpretation of the Clean 

Air Act provision that provides statutory authority 

for CSAPR. See EPA v. EME Homer City Generation, 

No 12–1182, slip op. at 32 (U.S. April 29, 2014). 

Because DOE is using emissions factors based on 

AEO 2013 for today’s NOPR, the NOPR assumes 

that CAIR, not CSAPR, is the regulation in force. 

The difference between CAIR and CSAPR is not 

relevant for the purpose of DOE’s analysis of SO2

emissions. 

81CSAPR also applies to NOX, and it would 

supersede the regulation of NOX under CAIR. As 

stated previously, the current analysis assumes that 

CAIR, not CSAPR, is the regulation in force. The 

difference between CAIR and CSAPR with regard to 

DOE’s analysis of NOX is slight. 

82National Research Council. Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use. National Academies Press: 

Washington, DC (2009). 

issued a replacement for CAIR, the 

Cross-State Air Pollution Rule (CSAPR). 

76 FR 48208 (August 8, 2011). On 

August 21, 2012, the D.C. Circuit issued 

a decision to vacate CSAPR.79 The court 

ordered EPA to continue administering 

CAIR. The emissions factors used for 

today’s NOPR, which are based on AEO 

2013, assume that CAIR remains a 

binding regulation through 2040.80

The attainment of emissions caps is 

typically flexible among EGUs and is 

enforced through the use of emissions 

allowances and tradable permits. 

Beginning in 2016, however, SO2

emissions will decline significantly as a 

result of the Mercury and Air Toxics 

Standards (MATS) for power plants. 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 2013 assumes that, in 

order to continue operating, coal plants 

must have either flue gas 

desulfurization or dry sorbent injection 

systems installed by 2016. Both 

technologies, which are used to reduce 

acid gas emissions, also reduce SO2

emissions. Under the MATS, emissions 

will be far below the cap established by 

CAIR, so it is likely that the increase in 

electricity demand associated with the 

highest residential boiler efficiency 

levels would increase SO2 emissions. 

CAIR established a cap on NOX

emissions in 28 eastern States and the 

District of Columbia.81 Thus, it is 

unlikely that the increase in electricity 

demand associated with the highest 

residential boiler efficiency levels 

would increase NOX emissions in those 

States covered by CAIR. However, these 

levels would be expected to increase 

NOX emissions in the States not affected 

by the caps, so DOE estimated NOX

emissions increases for these States. 

The MATS limit mercury emissions 

from power plants, but they do not 

include emissions caps and, as such, the 

increase in electricity demand 

associated with the highest residential 

boiler efficiency levels would be 

expected to increase Hg emissions. DOE 

estimated mercury emissions using 

emissions factors based on AEO 2013, 

which incorporates the MATS. 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

As part of the development of this 

proposed rule, DOE considered the 

estimated monetary benefits from the 

reduced emissions of CO2 and NOX that 

are expected to result from each of the 

TSLs considered. In order to make this 

calculation similar to the calculation of 

the NPV of consumer benefit, DOE 

considered the reduced emissions 

expected to result over the lifetime of 

products shipped in the forecast period 

for each TSL. This section summarizes 

the basis for the monetary values used 

for each of these emissions and presents 

the values considered in this 

rulemaking. 

For today’s NOPR, DOE is relying on 

a set of values for the social cost of 

carbon (SCC) that was developed by a 

Federal interagency process. A summary 

of the basis for these values is provided 

below, and a more detailed description 

of the methodologies used is provided 

as an appendix to chapter 14 of the 

NOPR TSD. 

1. Social Cost of Carbon 

The SCC is an estimate of the 

monetized damages associated with an 

incremental increase in carbon 

emissions in a given year. It is intended 

to include (but is not limited to) changes 

in net agricultural productivity, human 

health, property damages from 

increased flood risk, and the value of 

ecosystem services. Estimates of the 

SCC are provided in dollars per metric 

ton of carbon dioxide. A domestic SCC 

value is meant to reflect the value of 

damages in the United States resulting 

from a unit change in carbon dioxide 

emissions, while a global SCC value is 

meant to reflect the value of damages 

worldwide. 

Under section 1(b)(6) of Executive 

Order 12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

agencies must, to the extent permitted 

by law, ‘‘assess both the costs and the 

benefits of the intended regulation and, 

recognizing that some costs and benefits 

are difficult to quantify, propose or 

adopt a regulation only upon a reasoned 

determination that the benefits of the 

intended regulation justify its costs.’’ 

The purpose of the SCC estimates 

presented here is to allow agencies to 

incorporate the monetized social 

benefits of reducing CO2 emissions into 

cost-benefit analyses of regulatory 

actions. The estimates are presented 

with an acknowledgement of the many 

uncertainties involved and with a clear 

understanding that they should be 

updated over time to reflect increasing 

knowledge of the science and 

economics of climate impacts. 

As part of the interagency process that 

developed the SCC estimates, technical 

experts from numerous agencies met on 

a regular basis to consider public 

comments, explore the technical 

literature in relevant fields, and discuss 

key model inputs and assumptions. The 

main objective of this process was to 

develop a range of SCC values using a 

defensible set of input assumptions 

grounded in the existing scientific and 

economic literatures. In this way, key 

uncertainties and model differences 

transparently and consistently inform 

the range of SCC estimates used in the 

rulemaking process. 

a. Monetizing Carbon Dioxide Emissions 

When attempting to assess the 

incremental economic impacts of carbon 

dioxide emissions, the analyst faces a 

number of challenges. A recent report 

from the National Research Council 82

points out that any assessment will 

suffer from uncertainty, speculation, 

and lack of information about: (1) 

Future emissions of greenhouse gases; 

(2) the effects of past and future 

emissions on the climate system; (3) the 

impact of changes in climate on the 

physical and biological environment; 

and (4) the translation of these 

environmental impacts into economic 

damages. As a result, any effort to 

quantify and monetize the harms 

associated with climate change will 

raise questions of science, economics, 

and ethics and should be viewed as 

provisional. 

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83 It is recognized that this calculation for 

domestic values is approximate, provisional, and 

highly speculative. There is no a priori reason why 

domestic benefits should be a constant fraction of 

net global damages over time. 

84Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866. Interagency 

Working Group on Social Cost of Carbon, United 

States Government (February 2010) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf). 

Despite the limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing carbon 

dioxide emissions. The agency can 

estimate the benefits from reduced (or 

costs from increased) emissions in any 

future year by multiplying the change in 

emissions in that year by the SCC value 

appropriate for that year. The net 

present value of the benefits can then be 

calculated by multiplying each of these 

future benefits by an appropriate 

discount factor and summing across all 

affected years. 

It is important to emphasize that the 

interagency process is committed to 

updating these estimates as the science 

and economic understanding of climate 

change and its impacts on society 

improves over time. In the meantime, 

the interagency group will continue to 

explore the issues raised by this analysis 

and consider public comments as part of 

the ongoing interagency process. 

b. Development of Social Cost of Carbon 

Values 

In 2009, an interagency process was 

initiated to offer a preliminary 

assessment of how best to quantify the 

benefits from reducing carbon dioxide 

emissions. To ensure consistency in 

how benefits are evaluated across 

agencies, the Administration sought to 

develop a transparent and defensible 

method, specifically designed for the 

rulemaking process, to quantify avoided 

climate change damages from reduced 

CO2 emissions. The interagency group 

did not undertake any original analysis. 

Instead, it combined SCC estimates from 

the existing literature to use as interim 

values until a more comprehensive 

analysis could be conducted. The 

outcome of the preliminary assessment 

by the interagency group was a set of 

five interim values: global SCC 

estimates for 2007 (in 2006$) of $55, 

$33, $19, $10, and $5 per metric ton of 

CO2. These interim values represented 

the first sustained interagency effort 

within the U.S. government to develop 

an SCC for use in regulatory analysis. 

The results of this preliminary effort 

were presented in several proposed and 

final rules. 

c. Current Approach and Key 

Assumptions 

After the release of the interim values, 

the interagency group reconvened on a 

regular basis to generate improved SCC 

estimates. Specifically, the group 

considered public comments and 

further explored the technical literature 

in relevant fields. The interagency group 

relied on three integrated assessment 

models commonly used to estimate the 

SCC: the FUND, DICE, and PAGE 

models. These models are frequently 

cited in the peer-reviewed literature and 

were used in the last assessment of the 

Intergovernmental Panel on Climate 

Change (IPCC). Each model was given 

equal weight in the SCC values that 

were developed. 

Each model takes a slightly different 

approach to model how changes in 

emissions result in changes in economic 

damages. A key objective of the 

interagency process was to enable a 

consistent exploration of the three 

models, while respecting the different 

approaches to quantifying damages 

taken by the key modelers in the field. 

An extensive review of the literature 

was conducted to select three sets of 

input parameters for these models: 

Climate sensitivity, socio-economic and 

emissions trajectories, and discount 

rates. A probability distribution for 

climate sensitivity was specified as an 

input into all three models. In addition, 

the interagency group used a range of 

scenarios for the socio-economic 

parameters and a range of values for the 

discount rate. All other model features 

were left unchanged, relying on the 

model developers’ best estimates and 

judgments. 

In 2010, the interagency group 

selected four sets of SCC values for use 

in regulatory analyses. Three sets of 

values are based on the average SCC 

from three integrated assessment 

models, at discount rates of 2.5 percent, 

3 percent, and 5 percent. The fourth set, 

which represents the 95th-percentile 

SCC estimate across all three models at 

a 3-percent discount rate, is included to 

represent higher-than-expected impacts 

from climate change further out in the 

tails of the SCC distribution. The 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 preference is 

given to consideration of the global 

benefits of reducing CO2 emissions.83

Table IV.24 presents the values in the 

2010 interagency group report,84 which 

is reproduced in appendix 14A of the 

NOPR TSD. 

TABLE IV.24—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ....................................................................................................................... 4.7 21.4 35.1 64.9 

2015 ....................................................................................................................... 5.7 23.8 38.4 72.8 

2020 ....................................................................................................................... 6.8 26.3 41.7 80.7 

2025 ....................................................................................................................... 8.2 29.6 45.9 90.4 

2030 ....................................................................................................................... 9.7 32.8 50.0 100.0 

2035 ....................................................................................................................... 11.2 36.0 54.2 109.7 

2040 ....................................................................................................................... 12.7 39.2 58.4 119.3 

2045 ....................................................................................................................... 14.2 42.1 61.7 127.8 

2050 ....................................................................................................................... 15.7 44.9 65.0 136.2 

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85Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866. Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: http:// 

www.whitehouse.gov/sites/default/files/omb/assets/

inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf). 86U.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 (2006) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

assets/omb/inforeg/2006_cb/2006_cb_final_

report.pdf). 

87For 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). 

88 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 ‘‘NEMS–BT’’ (‘‘BT’’ is DOE’s 

Building Technologies Program, under whose aegis 

this work has been performed). 

The SCC values used for today’s 

notice were generated using the most 

recent versions of the three integrated 

assessment models that have been 

published in the peer-reviewed 

literature. Table IV.25 shows the 

updated sets of SCC estimates from the 

2013 interagency update 85 in five-year 

increments from 2010 to 2050. 

Appendix 14B of the NOPR TSD 

provides the full set of values. The 

central value that emerges is the average 

SCC across models at a 3-percent 

discount rate. However, for purposes of 

capturing the uncertainties involved in 

regulatory impact analysis, the 

interagency group emphasizes the 

importance of including all four sets of 

SCC values. 

TABLE IV.25—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE, 2010–2050 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ....................................................................................................................... 11 32 51 89 

2015 ....................................................................................................................... 11 37 57 109 

2020 ....................................................................................................................... 12 43 64 128 

2025 ....................................................................................................................... 14 47 69 143 

2030 ....................................................................................................................... 16 52 75 159 

2035 ....................................................................................................................... 19 56 80 175 

2040 ....................................................................................................................... 21 61 86 191 

2045 ....................................................................................................................... 24 66 92 206 

2050 ....................................................................................................................... 26 71 97 220 

It is important to recognize that a 

number of key uncertainties remain, and 

that current SCC estimates should be 

treated as provisional and revisable 

since they will evolve with improved 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The National Research 

Council report mentioned above points 

out that there is tension between the 

goal of producing quantified estimates 

of the economic damages from an 

incremental ton of carbon and the limits 

of existing efforts to model these effects. 

There are a number of analytical 

challenges that are being addressed by 

the research community, including 

research programs housed in many of 

the Federal agencies participating in the 

interagency process to estimate the SCC. 

The interagency group intends to 

periodically review and reconsider 

those estimates to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions, DOE used the 

values from the 2013 interagency report, 

adjusted to 2013$ using the Gross 

Domestic Product price deflator. For 

each of the four SCC cases specified, the 

values used for emissions in 2015 were 

$12.0, $40.5, $62.4, and $119 per metric 

ton avoided (values expressed in 

2013$). DOE derived values after 2050 

using the relevant growth rates for the 

2040–2050 period in the interagency 

update. 

DOE multiplied the CO2 emissions 

reduction estimated for each year by the 

SCC value for that year in each of the 

four cases. To calculate a present value 

of the stream of monetary values, DOE 

discounted the values in each of the 

four cases using the specific discount 

rate that had been used to obtain the 

SCC values in each case. 

2. Valuation of Other Emissions 

Reductions 

As noted above, DOE has taken into 

account how amended energy 

conservation standards would reduce 

site NOX emissions nationwide and 

increase power sector NOX emissions in 

those 22 States not affected by the CAIR. 

DOE estimated the monetized value of 

net NOX emissions reductions resulting 

from each of the TSLs considered for 

today’s NOPR based on estimates found 

in the relevant scientific literature. 

Estimates of monetary value for 

reducing NOX from stationary sources 

range from $476 to $4,893 per ton in 

2013$.86 DOE calculated monetary 

benefits using a medium value for NOX

emissions of $2,684 per short ton (in 

2013$), and real discount rates of 3 

percent and 7 percent. 

DOE is evaluating appropriate 

monetization of avoided SO2 and Hg 

emissions in energy conservation 

standards rulemakings. DOE has not 

included monetization of those 

emissions in the current analysis. 

M. Utility Impact Analysis 

The utility impact analysis estimates 

several effects on the power generation 

industry that would result from the 

adoption of new or amended energy 

conservation standards. In the utility 

impact analysis, DOE analyzes the 

changes in installed electrical capacity 

and generation that would result for 

each trial standard level. The utility 

impact analysis uses a variant of 

NEMS,87 which is a public domain, 

multi-sectored, partial equilibrium 

model of the U.S. energy sector. DOE 

uses a variant of this model, referred to 

as NEMS–BT,88 to account for selected 

utility impacts of new or amended 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17267 

89See Bureau of Economic Analysis, ‘‘Regional 

Multipliers: A Handbook for the Regional InputOutput Modeling System (RIMS II),’’ U.S. 

Department of Commerce (1992). 

90M.J. Scott, O.V. Livingston, P.J. Balducci, J.M. 

Roop, 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). 

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. 

The energy savings inputs associated 

with each TSL come from the NIA. 

Chapter 15 of the NOPR TSD describes 

the utility impact analysis in further 

detail. 

N. Employment Impact Analysis 

Employment impacts from new or 

amended energy conservation standards 

include direct and indirect impacts. 

Direct employment impacts are any 

changes in the number of employees of 

manufacturers of the products subject to 

standards; the MIA addresses those 

impacts. Indirect employment impacts 

are changes in national employment 

that occur due to the shift in 

expenditures and capital investment 

caused by the purchase and operation of 

more-efficient appliances. Indirect 

employment impacts from standards 

consist of the jobs created or eliminated 

in the national economy, other than in 

the manufacturing sector being 

regulated, due to: (1) Reduced spending 

by end users on energy; (2) reduced 

spending on new energy supply by the 

utility industry; (3) increased consumer 

spending on the purchase of new 

products; 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). 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 indirectly) than 

expenditures in other sectors of the 

economy.89 There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital-intensive and less 

labor-intensive than other sectors. 

Energy conservation standards have the 

effect of 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). Thus, based on the 

BLS data alone, DOE believes net 

national employment may increase 

because of shifts in economic activity 

resulting from amended standards for 

residential boilers. 

For the amended standard levels 

considered in this NOPR, DOE 

estimated 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).90 ImSET is a specialpurpose 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 the 187 sectors. 

ImSET’s national economic I–O 

structure is based on a 2002 U.S. 

benchmark table, specially aggregated to 

the 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. For the NOPR, DOE 

used ImSET only to estimate short-term 

(through 2023) employment impacts. 

For more details on the employment 

impact analysis, see chapter 16 of the 

NOPR TSD. 

O. General Comments on Residential 

Boiler Standards 

Fire & Ice, Weil McLain, and Weil 

McLain et al. stated that amended 

energy conservation standards for 

residential boilers would not achieve 

significant additional conservation of 

energy, would not be technologically 

feasible, and would not be economically 

justified. (Fire & Ice, No. 18 at p. 1; Weil 

McLain, No. 20–1 at pp. 1–2; Weil 

McLain et al., No. 20–2 at p. 1) Crown 

Boiler, U.S. Boiler, and New Yorker 

Boiler do not believe that DOE can 

economically justify a minimum 

efficiency level for gas-fired hot water 

boilers any higher than the current 82- 

percent AFUE level. (Crown Boiler, No. 

24 at p. 3; U.S. Boiler, No. 25 at p. 2; 

New Yorker Boiler, No. 26 at p. 2) Fire 

& Ice and Weil McLain et al. stated that 

amending the standards would reduce 

the choices available to consumers that 

will properly operate in the field. (Fire 

& Ice, No. 18 at pp. 1–2; Weil McLain 

et al., No. 20–2 at pp. 1–2) Weil McLain 

stated that for replacement installations 

where a condensing boiler would not 

present an economically and 

technologically feasible method of 

actually achieving greater energy 

conservation, the non-condensing 

boilers allowed under the current 

standards can achieve significant energy 

savings when older, low-efficiency 

boilers are replaced. (Weil McLain, No. 

20–1 at p. 5) 

HTP stated that it does not support an 

incremental increase in the allowable 

minimum efficiency of residential 

boilers, because appliances which 

operate at efficiencies between 82- 

percent and 90-percent AFUE are very 

likely to experience cyclic condensation 

within their venting and periods of high 

vent temperatures. (HTP, No. 31 at p. 1) 

Condensation in the venting system 

causes corrosion that may lead to safety 

concerns. 

The Joint Commenters urged DOE to 

strongly consider condensing-level 

standards for both gas-fired and oil-fired 

hot water boilers, as the analysis found 

that such standards would yield 

positive average LCC savings for 

consumers. The Joint Commenters 

stated that the LCC savings for 

consumers at condensing levels may be 

higher than indicated in the analysis for 

the NODA, in part because of lower 

installation costs due to the 

introduction of advanced venting 

systems and declining equipment costs. 

(Joint Commenters, No. 27 at p. 1) 

Belyea Bros. stated that all furnaces sold 

and installed in Canada must have an 

AFUE of 90 or above, and it is illogical 

to not treat boilers the same as furnaces. 

(Belyea Bros., No. 17 at p. 1) 

DOE examined the impacts of 

condensing-level standards for both gasfired and oil-fired hot water boilers. Its 

analysis accounted for applicable 

venting system technology and expected 

product costs for condensing boilers. 

Although condensing-level standards 

would save a substantial amount of 

energy, DOE concluded that such 

standards are likely not economically 

justified. DOE has tentatively concluded 

that, at the TSLs that include 

condensing efficiency levels (TSL 4 and 

TSL 5), the benefits would be 

outweighed by the large reduction in 

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industry value and the high number of 

consumers experiencing a net LCC cost 

for gas-fired hot water boilers and oilfired hot water boilers, as well as the 

negative NPV at a 7-percent discount 

rate (TSL 5 only). See section V.C for 

further details. 

A number of parties stated that much 

greater savings than indicated with 

AFUE or combustion efficiency tests are 

seen when replacing conventional 

heating equipment with integrated heat 

and hot water systems. (Breda, No. 29 at 

p. 1; Hlavaty Plumb Heat Cool, No. 29 

at p. 1; Maritime Energy, No. 29 at p. 1; 

OSI Comfort Specialists, No. 29 at p. 1; 

Petro Heating & Air Conditioning 

Services, No. 29 at p. 1; Sunshine Fuels 

& Energy Services, No. 29 at p. 1; Aiello 

Home Services, No. 29 at p. 1; Lombardi 

Oil, No. 29 at p. 1; Soundview Heating 

and Air Conditioning, No. 29 at p. 1; 

Stocker Home Energy Services, No. 29 at 

p. 1) DOE agrees that integrated heat 

and hot water systems can provide 

significant overall energy savings 

compared to use of separate heat and 

hot water systems, but DOE does not 

have authority to adopt standards that 

would require the use of integrated heat 

and hot water systems. 

V. Analytical Results and Conclusions 

A. Trial Standard Levels 

DOE developed trial standard levels 

(TSLs) that combine efficiency levels for 

each product class of residential boilers. 

The following section addresses the trial 

standard levels examined by DOE, the 

projected impacts of each of these levels 

if adopted as energy conservation 

standards for residential boilers, and the 

standards levels that DOE is proposing 

in today’s NOPR. Additional details 

regarding the analyses conducted by 

DOE are contained in the publiclyavailable NOPR TSD supporting this 

notice. 

1. TSLs for Energy Efficiency 

Table V.1 presents the efficiency 

levels for each product class in each 

TSL that DOE has identified for 

residential boilers. TSL 5 consists of the 

max-tech efficiency levels. TSL 4 

consists of those efficiency levels that 

provide the maximum NES with an NPV 

greater than zero at a 7-percent discount 

rate (see section V.B.3 for NPV results). 

TSL 3 consists of the efficiency levels 

that provide the highest NPV using a 7- 

percent discount rate, and that also 

result in a higher percentage of 

consumers that receive an LCC benefit 

than experience an LCC loss (see section 

V.B.1 for LCC results). TSL 2 consists of 

the intermediate efficiency levels. TSL 1 

consists of the most common efficiency 

levels in the current market. Table V.1 

and Table V.2 present the TSLs and the 

corresponding product class efficiency 

levels and AFUE levels that DOE 

considered for residential boilers. 

TABLE V.1—TRIAL STANDARD LEVELS FOR RESIDENTIAL BOILERS BY EFFICIENCY LEVEL

Product class * 

Trial standard levels 

1 2 3 4 5 

Gas-Fired Hot Water Boiler ..................................................................... 1 2 3 5 6 

Gas-Fired Steam Boiler ........................................................................... 1 1 1 1 2 

Oil-Fired Hot Water Boiler ....................................................................... 1 2 2 3 3 

Oil-Fired Steam Boiler ............................................................................. 1 3 3 3 3 

* As discussed in section IV.A.1, although electric hot water and electric steam boilers are in the scope of this rulemaking, these products were 

not analyzed for AFUE energy conservation standards and accordingly are not shown in this table. 

TABLE V.2—TRIAL STANDARD LEVELS FOR RESIDENTIAL BOILERS BY AFUE 

Product class * 

Trial standard levels 

1 

(%) 

2 

(%) 

3 

(%) 

4 

(%) 

5 

(%) 

Gas-Fired Hot Water Boiler ..................................................................... 83 84 85 92 96 

Gas-Fired Steam Boiler ........................................................................... 82 82 82 82 83 

Oil-Fired Hot Water Boiler ....................................................................... 85 86 86 91 91 

Oil-Fired Steam Boiler ............................................................................. 84 86 86 86 86 

* As discussed in section IV.A.1, electric hot water and electric steam boilers were not analyzed for AFUE energy conservation standards and 

accordingly are not shown in this table. 

2. TSLs for Standby Mode and Off Mode 

Table V.3 presents the TSLs and the 

corresponding product class efficiency 

levels (by efficiency level) that DOE 

considered for boiler standby mode and 

off mode power consumption. Table V.4 

presents the TSLs and the 

corresponding product class efficiency 

levels (expressed in watts) that DOE 

considered for boiler standby mode and 

off mode power consumption. For boiler 

product classes, DOE considered three 

efficiency levels. 

TABLE V.3—STANDBY MODE AND OFF

MODE TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS BY EFFICIENCY LEVEL

Product class 

Trial standard 

levels 

1 2 3 

Gas-Fired Hot Water Boiler 1 2 3 

Gas-Fired Steam Boiler ...... 1 2 3 

Oil-Fired Hot Water Boiler .. 1 2 3 

Oil-Fired Steam Boiler ........ 1 2 3 

Electric Hot Water Boiler .... 1 2 3 

Electric Steam Boiler .......... 1 2 3 

TABLE V.4—STANDBY MODE AND OFF

MODE TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS BY WATTS

Product class 

Trial standard levels 

1 2 3 

Gas-Fired Hot 

Water Boiler ........ 10.0 9.7 9.0 

Gas-Fired Steam 

Boiler ................... 9.0 8.7 8.0 

Oil-Fired Hot Water 

Boiler ................... 12.0 11.7 11.0 

Oil-Fired Steam 

Boiler ................... 12.0 11.7 11.0 

Electric Hot Water 

Boiler ................... 9.0 8.7 8.0 

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TABLE V.4—STANDBY MODE AND OFF

MODE TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS BY WATTS— 

Continued 

Product class 

Trial standard levels 

1 2 3 

Electric Steam Boiler ......................... 9.0 8.7 8.0 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Individual 

Consumers 

DOE analyzed the economic impacts 

on residential boilers consumers by 

looking at the effects potential amended 

standards would have on the LCC and 

PBP. DOE also examined the impacts of 

potential standards on consumer 

subgroups. These analyses are discussed 

below. 

a. Life-Cycle Cost and Payback Period 

To evaluate the net economic impact 

of potential amended energy 

conservation standards on consumers of 

residential boilers, DOE conducted LCC 

and PBP analyses for each TSL. In 

general, higher-efficiency products 

would affect consumers in two ways: (1) 

annual operating expense would 

decrease, and (2) purchase price would 

increase. Inputs used for calculating the 

LCC and PBP include total installed 

costs (i.e., product price plus 

installation costs), operating costs (i.e., 

annual energy use, energy prices, energy 

price trends, repair costs, and 

maintenance costs), product lifetime, 

and discount rates. 

The key outputs of the LCC analysis 

are a mean LCC savings (or cost) and a 

median PBP relative to the base-case 

efficiency distribution for each product 

class of residential boilers, as well as the 

percentage of consumers for whom the 

LCC under an amended standard would 

decrease (net benefit), increase (net 

cost), or exhibit no change (no impact). 

No impacts occur when the base-case 

efficiency of the boiler of a particular 

household equals or exceeds the 

efficiency at a given TSL. 

DOE also performed a PBP analysis as 

part of the consumer impact analysis. 

The PBP is the number of years it would 

take for the consumer to recover the 

increased costs of higher-efficiency 

product as a result of energy savings 

based on the operating cost savings. The 

PBP is an economic benefit-cost 

measure that uses benefits and costs 

without discounting. Chapter 8 of the 

NOPR TSD provides detailed 

information on the LCC and PBP 

analyses. 

DOE’s LCC and PBP analyses provide 

five key outputs for each efficiency level 

above the baseline, as reported in Table 

V.5 through Table V.8 for the 

considered AFUE TSLs. (Results for all 

efficiency levels are reported in chapter 

8 of the NOPR TSD.) These outputs 

include the proportion of residential 

boiler purchases in which the purchase 

of a boiler compliant with the amended 

energy conservation standard creates a 

net LCC increase, no impact, or a net 

LCC savings for the consumer. Another 

output is the average LCC savings from 

standard-compliant products, as well as 

the median PBP for the consumer 

investment in standards-compliant 

products. Savings are measured relative 

to the base-case efficiency distribution 

(see section IV.F.2), not the baseline 

efficiency level. 

TABLE V.5—SUMMARY AFUE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR GAS-FIRED HOT WATER

RESIDENTIAL BOILERS

Trial 

standard 

level 

AFUE 

(%) 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median Net cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 83 $5,447 $21,837 $27,284 $35 4 79 18 1.6 

2 .................. 84 5,461 21,616 27,077 100 3 68 29 1.6 

3 .................. 85 5,585 21,431 27,016 123 13 57 30 7.7 

4 .................. 92 6,768 20,022 26,790 201 38 29 33 18.8 

5 .................. 96 7,523 19,338 26,860 134 57 7 36 22.1 

* Rounding may cause some items to not total 100 percent. 

TABLE V.6—SUMMARY AFUE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR GAS-FIRED STEAM RESIDENTIAL

BOILERS

Trial 

standard 

level 

AFUE 

(%) 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median Net cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 82 $5,621 $21,472 $27,093 $61 1 86 14 1.3 

2 .................. 82 5,621 21,472 27,093 61 1 86 14 1.3 

3 .................. 82 5,621 21,472 27,093 61 1 86 14 1.3 

4 .................. 82 5,621 21,472 27,093 61 1 86 14 1.3 

5 .................. 83 5,928 21,287 27,215 250 28 11 61 11.6 

* Rounding may cause some items to not total 100 percent. 

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TABLE V.7—SUMMARY AFUE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR OIL-FIRED HOT WATER

RESIDENTIAL BOILERS

Trial 

standard 

level 

AFUE 

(%) 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median Net cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 85 $7,332 $49,200 $56,532 $72 4 81 15 8.3 

2 .................. 86 7,527 48,648 56,175 257 9 49 42 7.6 

3 .................. 86 7,527 48,648 56,175 257 9 49 42 7.6 

4 .................. 91 9,555 46,600 56,155 273 54 8 38 21.4 

5 .................. 91 9,555 46,600 56,155 273 54 8 38 21.4 

* Rounding may cause some items to not total 100 percent. 

TABLE V.8—SUMMARY AFUE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR OIL-FIRED STEAM RESIDENTIAL

BOILERS

Trial 

standard 

level 

AFUE 

(%) 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median Net cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 84 $7,422 $48,429 $55,850 $259 3 71 27 6.3 

2 .................. 86 7,873 47,345 55,218 723 23 10 67 10.5 

3 .................. 86 7,873 47,345 55,218 723 23 10 67 10.5 

4 .................. 86 7,873 47,345 55,218 723 23 10 67 10.5 

5 .................. 86 7,873 47,345 55,218 723 23 10 67 10.5 

* Rounding may cause some items to not total 100 percent. 

Table V.9 through Table V.14 show 

the key LCC and PBP results for each 

product class for standby mode and off 

mode. 

TABLE V.9—SUMMARY STANDBY MODE AND OFF MODE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR GASFIRED HOT WATER RESIDENTIAL BOILERS

Trial standard 

level 

Efficiency 

level 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median 

Net 

cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 1 $2 $196 $198 $14 0 51 49 1.1 

2 .................. 2 22 190 212 7 11 51 38 10.4 

3 .................. 3 23 176 199 14 6 51 44 7.8 

* Rounding may cause some items to not total 100 percent. 

TABLE V.10—SUMMARY STANDBY MODE AND OFF MODE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR GASFIRED STEAM RESIDENTIAL BOILERS

Trial standard 

level 

Efficiency 

level 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median 

Net 

cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 1 $2 $187 $189 $15 0 51 49 1.1 

2 .................. 2 21 181 202 9 9 51 41 10.3 

3 .................. 3 23 166 188 15 4 51 45 7.4 

* Rounding may cause some items to not total 100 percent. 

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TABLE V.11—SUMMARY STANDBY MODE AND OFF MODE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR OILFIRED HOT WATER RESIDENTIAL BOILERS

Trial standard 

level 

Efficiency 

level 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median 

Net 

cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 1 $2 $253 $255 $15 0 51 49 1.0 

2 .................. 2 21 247 268 9 9 51 41 10.2 

3 .................. 3 22 232 254 15 4 51 45 7.4 

* Rounding may cause some items to not total 100 percent. 

TABLE V.12—SUMMARY STANDBY MODE AND OFF MODE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR OILFIRED STEAM RESIDENTIAL BOILERS

Trial standard 

level 

Efficiency 

level 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median 

Net 

cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 1 $2 $247 $249 $14 0 51 49 1.3 

2 .................. 2 21 241 262 8 9 51 41 10.7 

3 .................. 3 22 226 249 15 4 51 45 8.4 

* Rounding may cause some items to not total 100 percent. 

TABLE V.13—SUMMARY STANDBY MODE AND OFF MODE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR

ELECTRIC HOT WATER RESIDENTIAL BOILERS

Trial standard 

level 

Efficiency 

level 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median 

Net 

cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 1 $2 $141 $143 $11 0 51 49 2.0 

2 .................. 2 21 136 158 3 19 51 30 17.7 

3 .................. 3 23 126 148 8 11 51 38 11.0 

* Rounding may cause some items to not total 100 percent. 

TABLE V.14—SUMMARY STANDBY MODE AND OFF MODE LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR

ELECTRIC STEAM RESIDENTIAL BOILERS

Trial standard 

level 

Efficiency 

level 

Life-cycle cost 

(2013$) 

Life-cycle cost savings Payback 

period 

(years) 

Total 

installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

(2013$) 

% of consumers that experience * 

Median Net cost 

(%) 

No impact 

(%) 

Net benefit 

(%) 

1 .................. 1 $2 $144 $146 $11 0 51 49 2.0 

2 .................. 2 21 139 161 4 19 51 31 10.5 

3 .................. 3 23 128 151 9 11 51 38 10.9 

* Rounding may cause some items to not total 100 percent. 

b. Consumer Subgroup Analysis 

In the consumer subgroup analysis, 

DOE estimated the impacts of the 

considered AFUE TSLs on low-income 

and senior-only households. The 

average LCC savings and median 

payback periods for low-income and 

senior-only households are shown in 

Table V.15. Chapter 11 of the NOPR 

TSD presents detailed results of the 

consumer subgroup analysis. 

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TABLE V.15—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, GAS-FIRED HOT WATER

BOILERS

[AFUE TSLs] 

TSL AFUE 

(%) 

Average life-cycle cost savings 

(2013$) 

Median payback period 

(years) 

Senior-only Low-income All consumers Senior-only Low-income All consumers 

1 .................. 83 $27 $24 $35 1.8 1.5 1.6 

2 .................. 84 76 79 100 1.9 1.5 1.6 

3 .................. 85 73 82 123 9.9 9.1 7.7 

4 .................. 92 (34) (128) 201 20.6 22.3 18.8 

5 .................. 96 (202) (294) 134 24.5 23.7 22.1 

Note: Parentheses indicate negative values. 

TABLE V.16—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, GAS-FIRED STEAM

BOILERS

[AFUE TSLs] 

TSL AFUE 

(%) 

Average life-cycle cost savings 

(2013$) 

Median payback period 

(years) 

Senior-only Low-income All consumers Senior-only Low-income All consumers 

1 .................. 82 $50 $53 $61 1.7 1.3 1.3 

2 .................. 82 50 53 61 1.7 1.3 1.3 

3 .................. 82 50 53 61 1.7 1.3 1.3 

4 .................. 82 50 53 61 1.7 1.3 1.3 

5 .................. 83 160 180 250 13.0 11.1 11.6 

TABLE V.17—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, OIL-FIRED HOT WATER

BOILERS

[AFUE TSLs] 

TSL AFUE 

(%) 

Average life-cycle cost savings 

(2013$) 

Median payback period 

(years) 

Senior-only Low-income All consumers Senior-only Low-income All consumers 

1 .................. 85 $58 $25 $72 7.9 9.8 8.3 

2 .................. 86 234 103 257 6.3 10.9 7.6 

3 .................. 86 234 103 257 6.3 10.9 7.6 

4 .................. 91 75 (1,019) 273 19.8 47.5 21.4 

5 .................. 91 75 (1,019) 273 19.8 47.5 21.4 

Note: Parentheses indicate negative values. 

TABLE V.18—COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS WITH ALL CONSUMERS, OIL-FIRED STEAM BOILERS

[AFUE TSLs] 

TSL AFUE 

(%) 

Average life-cycle cost savings 

(2013$) 

Median payback period 

(years) 

Senior-only Low-income All consumers Senior-only Low-income All consumers 

1 .................. 84 $8 $120 $259 1.0 9.5 6.3 

2 .................. 86 13 247 723 1.0 15.7 10.5 

3 .................. 86 13 247 723 1.0 15.7 10.5 

4 .................. 86 13 247 723 1.0 15.7 10.5 

5 .................. 86 13 247 723 1.0 15.7 10.5 

c. Rebuttable Presumption Payback 

Period 

As discussed in section III.E.2, EPCA 

establishes a rebuttable presumption 

that an energy conservation standard is 

economically justified if the increased 

purchase cost for a product that meets 

the standard is less than three times the 

value of the first-year energy savings 

resulting from the standard. 

Accordingly, DOE calculated a 

rebuttable-presumption PBP for each 

TSL for residential boilers based on 

average usage profiles. As a result, DOE 

calculated a single rebuttablepresumption payback value, and not a 

distribution of PBPs, for each TSL. 

However, DOE routinely conducts an 

economic analysis that considers the 

full range of impacts to the consumer, 

manufacturer, Nation, and environment, 

as required by EPCA under 42 U.S.C. 

6295(o)(2)(B)(i). The results of that 

analysis serve as the basis for DOE to 

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definitively evaluate the economic 

justification for a potential standard 

level, thereby supporting or rebutting 

the results of any preliminary 

determination of economic justification. 

Table V.19 shows the rebuttablepresumption PBPs for the considered 

AFUE TSLs for the residential boilers 

product classes. Table V.20 shows the 

rebuttable-presumption PBPs for the 

considered TSLs for standby mode and 

off mode for the residential boilers 

product classes. 

TABLE V.19—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR RESIDENTIAL BOILERS FOR ANALYSIS OF

AFUE STANDARDS

Product class 

Rebuttable 

presumption payback 

(years) 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Gas-fired hot water boilers .................................................. 6.1 3.4 6.1 10.6 12.5 

Gas-fired steam boilers ........................................................ 1.8 1.8 1.8 1.8 8.4 

Oil-fired hot water boilers ..................................................... 7.3 5.9 5.9 9.4 9.4 

Oil-fired steam boilers .......................................................... 3.4 4.8 4.8 4.8 4.8 

TABLE V.20—STANDBY MODE AND

OFF MODE REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) 

FOR RESIDENTIAL BOILERS

Product class 

Rebuttable presumption payback 

(years) 

TSL 1 TSL 2 TSL 3 

Gas-fired hot water 

boilers .................. 1.7 15.0 11.4 

Gas-fired steam 

boilers .................. 1.5 12.9 9.9 

Oil-fired hot water 

boilers .................. 1.5 12.7 9.7 

Oil-fired steam boilers ....................... 1.5 12.8 9.8 

Electric hot water 

boilers .................. 1.3 11.7 8.9 

Electric steam boilers ....................... 1.3 11.7 8.9 

2. Economic Impacts on Manufacturers 

As noted previously, DOE performed 

an MIA to estimate the impact of 

amended energy conservation standards 

on manufacturers of residential boilers. 

The following section describes the 

expected impacts on manufacturers at 

each considered TSL. DOE first 

discusses the impacts of potential AFUE 

standards and then turns to the impacts 

of potential standby mode and off mode 

standards. Chapter 12 of the NOPR TSD 

explains the analysis in further detail. 

a. Industry Cash-Flow Analysis Results 

Cash-Flow Analysis Results for 

Residential Boilers AFUE Standards 

Table V.21 and Table V.22 depict the 

estimated financial impacts (represented 

by changes in INPV) of amended energy 

conservation standards on 

manufacturers of residential boilers, as 

well as the conversion costs that DOE 

expects manufacturers would incur for 

all product classes at each TSL. To 

evaluate the range of cash-flow impacts 

on the residential boiler industry, DOE 

modeled two different markup scenarios 

using different assumptions that 

correspond to the range of anticipated 

market responses to amended energy 

conservation standards: (1) The 

preservation of gross margin percentage 

scenario; and (2) the preservation of perunit operating profit scenario. Each of 

these scenarios is discussed 

immediately below. 

To assess the lower (less severe) end 

of the range of potential impacts, DOE 

modeled a preservation of gross margin 

percentage markup scenario, in which a 

uniform ‘‘gross margin percentage’’ 

markup is applied across all potential 

efficiency levels. In this scenario, DOE 

assumed that a manufacturer’s absolute 

dollar markup would increase as 

production costs increase in the 

standards case. 

To assess the higher (more severe) end 

of the range of potential impacts, DOE 

modeled the preservation of per-unit 

operating profit markup scenario, which 

assumes that manufacturers would not 

be able to generate greater operating 

profit on a per-unit basis in the 

standards case as compared to the base 

case. Rather, as manufacturers make the 

necessary investments required to 

convert their facilities to produce new 

standards-compliant products and incur 

higher costs of goods sold, their 

percentage markup decreases. Operating 

profit does not change in absolute 

dollars and decreases as a percentage of 

revenue. 

As noted in the MIA methodology 

discussion (see IV.J.2), in addition to 

markup scenarios, the MPC, shipments, 

and conversion cost assumptions also 

affect INPV results. 

The results in Table V.21 and Table 

V.22 show potential INPV impacts for 

residential boiler manufacturers; Table 

V.21 reflects the lower bound of 

impacts, and Table V.22 represents the 

upper bound. 

Each of the modeled scenarios in the 

AFUE standards analysis results in a 

unique set of cash flows and 

corresponding industry values at each 

TSL. In the following discussion, the 

INPV results refer to the difference in 

industry value between the base case 

and each standards case that results 

from the sum of discounted cash flows 

from the base year 2014 through 2049, 

the end of the analysis period. 

To provide perspective on the shortrun cash flow impact, DOE discusses 

the change in free cash flow between the 

base case and the standards case at each 

TSL in the year before new standards 

would take effect. These figures provide 

an understanding of the magnitude of 

the required conversion costs at each 

TSL relative to the cash flow generated 

by the industry in the base case. 

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TABLE V.21—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL BOILERS FOR AFUE STANDARDS—PRESERVATION OF

GROSS MARGIN PERCENTAGE MARKUP SCENARIO * 

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................................... 2013$ millions .. 380.96 380 .91 383 .35 381 .73 369 .87 380 .46 

Change in INPV .................................. 2013$ millions .. .................. (0 .04) 2 .39 0 .77 (11 .08) (0 .50) 

% ...................... .................. (0 .01) 0 .63 0 .20 (2 .91) (0 .13) 

Product Conversion Costs .................. 2013$ millions .. .................. 1 .32 1 .69 3 .38 25 .04 36 .59 

Capital Conversion Costs ................... 2013$ millions .. .................. .................... 0 .90 0 .90 60 .13 68 .41 

Total Conversion Costs ...................... 2013$ millions .. .................. 1 .32 2 .59 4 .28 85 .16 105 .00 

Free Cash Flow (base case = 2019) .. 2013$ millions .. 25.83 25 .44 24 .92 24 .41 (8 .73) (15 .92) 

Change in Free Cash Flow (change 

from base case).

2013$ millions .. .................. (0 .40) (0 .90) (1 .40) (34 .60) (41 .80) 

% ...................... .................. (1 .53) (3 .54) (5 .49) (133 .80) (161 .64) 

* Parentheses indicate negative values. 

TABLE V.22—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL BOILERS FOR AFUE STANDARDS—PRESERVATION OF

PER-UNIT OPERATING PROFIT MARKUP SCENARIO * 

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................................... 2013$ millions .. 380.96 379 .17 378 .31 372 .97 284 .75 241 .69 

Change in INPV .................................. 2013$ millions .. .................. (1 .79) (2 .65) (7 .99) (96 .21) (139 .26) 

% ...................... .................. (0 .47) (0 .70) (2 .10) (25 .25) (36 .56) 

Product Conversion Costs .................. 2013$ millions .. .................. 1 .32 1 .69 3 .38 25 .04 36 .59 

Capital Conversion Costs ................... 2013$ millions .. .................. .................... 0 .90 0 .90 60 .13 68 .41 

Total Conversion Costs ...................... 2013$ millions .. .................. 1 .32 2 .59 4 .28 85 .16 105 .00 

Free Cash Flow (base case = 2019) .. 2013$ millions .. 25.83 25 .44 24 .92 24 .41 (8 .73) (15 .92) 

Change in Free Cash Flow (change 

from the base case).

2013$ millions .. .................. (0 .40) (0 .90) (1 .40) (34 .60) (41 .80) 

% ...................... .................. (1 .53) (3 .54) (5 .49) (133 .80) (161 .64) 

* Parentheses indicate negative values. 

TSL 1 represents EL 1 for all product 

classes. At TSL 1, DOE estimates 

impacts on INPV for residential boiler 

manufacturers to range from -0.47 

percent to -0.01 percent, or a change in 

INPV of -$1.79 million to -$0.04 million. 

At this potential standard level, 

industry free cash flow would be 

estimated to decrease by approximately 

1.53 percent to $25.44 million, 

compared to the base-case value of 

$25.83 million in 2019, the year before 

the compliance date. 

At TSL 1, DOE does not anticipate 

manufacturers would lose a significant 

portion of their INPV. This is largely 

due to the fact that the vast majority of 

shipments would already meet or 

exceed the efficiency levels prescribed 

at TSL 1. DOE projects that in 2020, the 

expected year of compliance, 

approximately 80 percent of residential 

boiler shipments would meet or exceed 

the efficiency levels at TSL 1. As a 

result, only a small percentage of 

residential boiler shipments would need 

to be converted at TSL 1, so DOE 

expects low conversion costs at this 

TSL. DOE expects residential boiler 

manufacturers to incur $1.32 million in 

product conversion costs for boiler 

redesign and testing. DOE does not 

expect the modest efficiency gains at 

this TSL to require any major product 

upgrades or capital investments. 

At TSL 1, under the preservation of 

gross margin percentage scenario, the 

shipment-weighted average MPC 

increases by approximately 1 percent 

relative to the base-case MPC. 

Manufacturers are able to fully pass on 

this cost increase to consumers by 

design in this markup scenario. This 

slight price increase would not mitigate 

the $1.32 million in conversion costs 

estimated at TSL 1, resulting in slightly 

negative INPV impacts at TSL 1 under 

the this scenario. 

Under the preservation of per-unit 

operating profit markup scenario, 

manufacturers earn the same operating 

profit as would be earned in the base 

case, but do not earn additional profit 

from their investments. The 1-percent 

MPC increase is outweighed by a 

slightly lower average markup and $1.32 

million in conversion costs, resulting in 

small negative impacts at TSL 1. 

TSL 2 sets the efficiency level at EL 

1 for one product class (gas-fired steam 

boilers), EL 2 for two product classes 

(gas-fired hot water boilers and oil-fired 

hot water boilers) and EL 3 for one 

product class (oil-fired steam boilers). 

At TSL 2, DOE estimates impacts on 

INPV for residential boilers 

manufacturers to range from -0.70 

percent to 0.63 percent, or a change in 

INPV of -$2.65 million to $2.39 million. 

At this potential standard level, 

industry free cash flow would be 

estimated to decrease by approximately 

3.54 percent to $24.92 million, 

compared to the base-case value of 

$25.83 million in 2019, the year before 

the compliance date. 

DOE does not anticipate 

manufacturers would lose a substantial 

portion of their INPV, because a large 

percentage of shipments would still 

meet or exceed the efficiency levels 

prescribed at this TSL. At TSL 2, DOE 

estimates that in 2020, 63 percent of 

residential boiler shipments would meet 

or exceed the efficiency levels analyzed. 

The drop in the percentage of compliant 

products is largely due to the fact that 

the oil-fired hot water product class 

would move to EL 2 and the oil-fired 

steam product class would move to EL 

3. At these efficiency levels, DOE 

projects only 41 percent and 10 percent 

of shipments of hot water and steam oilfired boilers, respectively, would meet 

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91At these efficiency levels, manufacturers would 

also use a condensing heat exchanger for oil-fired 

hot water boiler products; however, these models 

are much less common, and DOE believes that the 

majority of the conversion costs at this TSL would 

be driven by gas-fired hot water boiler products. 

or exceed the levels at TSL 2 in 2020, 

the year of compliance. These figures do 

not have a large impact on INPV, 

however, because oil-fired boilers 

would only comprise approximately 30 

percent of residential boiler shipments 

in 2020 according to DOE projections, 

while gas-fired boilers would comprise 

over 70 percent of shipments. 

DOE expects conversion costs would 

increase, but would still remain small 

compared to total industry value, as 

most manufacturers have gas-fired 

boilers at the prescribed efficiency 

levels on the market and would only 

have to make minor changes to their 

production processes. While the 

percentage of oil-fired boilers at these 

efficiency levels on the market is lower, 

manufacturers did not cite any major 

investments that would have to be made 

to reach the efficiency levels at EL 2 for 

hot water products and EL 3 for steam 

products. Manufacturers also pointed 

out that gas-fired boiler shipments 

vastly out-pace oil-fired boiler 

shipments and that the market is 

continuing to trend towards gas-fired 

products. Overall, DOE estimates 

manufacturers would incur $1.69 

million in product conversion costs for 

product redesign and testing and $0.90 

million in capital conversion costs to 

make minor changes to their production 

lines. 

At TSL 2, under the preservation of 

gross margin percentage scenario, the 

shipment-weighted average MPC 

increases by 2 percent relative to the 

base-case MPC. In this scenario, INPV 

impacts are slightly positive because of 

manufacturers’ ability to pass the higher 

production costs to consumers 

outweighs the $2.59 million in 

conversion costs. Under the 

preservation of per-unit operating profit 

markup scenario, the 2-percent MPC 

increase is outweighed by a slightly 

lower average markup and $2.59 million 

in total conversion costs, resulting in 

minimally negative impacts at TSL 2. 

TSL 3 represents EL 1 for one product 

class (gas-fired steam boilers), EL 2 for 

one product class (oil-fired hot water 

boilers), and EL 3 for two product 

classes (gas-fired hot water boilers and 

oil-fired steam boilers). At TSL 3, DOE 

estimates impacts on INPV for 

residential boiler manufacturers to range 

from -2.10 percent to 0.20 percent, or a 

change in INPV of -$7.99 million to 

$0.77 million. At this potential standard 

level, industry free cash flow would be 

estimated to decrease by approximately 

5.49 percent in 2019, the year before 

compliance, to $24.41 million compared 

to the base-case value of $25.83 million. 

While more significant than the 

impacts at TSL 2, the impacts on INPV 

at TSL 3 would still be relatively minor 

compared to the total industry value. 

Percentage impacts on INPV would be 

slightly positive to slightly negative at 

TSL 3. DOE does not anticipate that 

manufacturers would lose a significant 

portion of their INPV at this TSL. While 

less than the previous TSLs, DOE 

projects that in 2020, over half of total 

shipments would already meet or 

exceed the efficiency levels prescribed 

at TSL 3. DOE expects conversion costs 

to remain small at TSL 3 compared to 

the total industry value. DOE estimates 

that product conversion costs would 

increase as manufacturers would have 

to redesign a larger percentage of their 

offerings and may have to design new 

products to replace lower-efficiency 

commodity products. At this TSL, DOE 

estimates that residential boiler 

manufacturers would incur $3.38 

million in product conversion costs. 

Manufacturers, however, did not cite 

any major changes that would need to 

be made to production equipment to 

achieve the efficiency levels at this TSL. 

DOE, therefore, estimates that capital 

conversion costs would remain at $0.90 

million for the industry. 

At TSL 3, under the preservation of 

gross margin percentage markup 

scenario, the shipment-weighted 

average MPC increases by 4 percent 

relative to the base-case MPC. In this 

scenario, INPV impacts are slightly 

positive because manufacturers’ ability 

to pass the higher production costs to 

consumers outweighs the $4.28 million 

in total conversion costs. Under the 

preservation of per-unit operating profit 

markup scenario, the 4 percent MPC 

increase is slightly outweighed by a 

slightly lower average markup and $4.28 

million in total conversion costs, 

resulting in minimally negative impacts 

at TSL 3. 

TSL 4 represents EL 1 for one product 

class (gas-fired steam boilers), EL 3 for 

two product classes (oil-fired hot water 

boilers and oil-fired steam boilers), and 

EL 5 for one product class (gas-fired hot 

water boilers). At TSL 4, DOE estimates 

impacts on INPV for residential boiler 

manufacturers to range from ¥25.25 

percent to ¥2.91 percent, or a change in 

INPV of ¥$96.21 million to ¥$11.08 

million. At this potential standard level, 

industry free cash flow would be 

estimated to decrease by approximately 

133.8 percent in the year before 

compliance (2019) to ¥$8.73 million 

relative to the base-case value of $25.83 

million. 

Percentage impacts on INPV are 

moderately to significantly negative at 

TSL 4. DOE projects that in 2020, only 

28 percent of residential boiler 

shipments would meet or exceed the 

efficacy levels at TSL 4. DOE expects 

that conversion costs would increase 

significantly at this TSL due to the fact 

that manufacturers would meet these 

efficiency levels by using condensing 

heat exchangers in their gas-fired and 

oil-fired hot water boiler products.91

Currently, the majority of gas-fired hot 

water boilers on the market is made 

from cast iron, carbon steel, or copper 

and contains noncondensing heat 

exchangers, because if these boilers 

were designed to condense, the acidic 

condensate from the flue gas would 

corrode these metals and cause the 

boiler to fail prematurely. If standards 

were set where manufacturers of gasfired hot water boiler products could 

only meet the efficiency levels with 

condensing technology, companies that 

produce their own cast iron sections or 

their own carbon steel or copper heat 

exchangers would have to eliminate 

many of their commodity products, 

close foundries and casting facilities, 

and restructure their businesses. 

Domestic manufacturers who currently 

offer condensing products import their 

condensing heat exchangers 

(constructed from either stainless steel 

or aluminum) from Europe. DOE 

believes that if standards were set where 

manufacturers of gas-fired hot water 

boiler products could only meet the 

efficiency levels with condensing 

technology, some manufacturers may 

choose to develop their own condensing 

heat exchanger production capacity in 

order to gain a cost advantage and 

remain vertically integrated. This would 

require large capital investments in 

higher-tech, more-automated production 

lines and new equipment to handle the 

different metals that are required. 

Companies that are currently heavily 

invested in lower-efficiency products 

may not be able to make these 

investments and may choose to exit the 

market. As noted above, these 

companies also may choose to source 

condensing heat exchangers and 

assemble a product designed around the 

sourced part, rather than invest in their 

own heat exchanger production 

capacity. This strategy would remove a 

significant piece of the value chain for 

these companies. 

While condensing products and 

condensing technology are not entirely 

unfamiliar to the companies that already 

make condensing products 

domestically, most manufacturers in the 

residential boiler industry have 

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relatively little experience in 

manufacturing the heat exchanger itself. 

If manufacturers choose to develop their 

own heat exchanger production 

capacity, a great deal of testing, 

prototyping, design, and manufacturing 

engineering resources will be required 

to design the heat exchanger and the 

more advanced control systems found in 

more-efficient products. 

These capital and production 

conversion expenses lead to the large 

reduction in cash flow in the years 

preceding the standard. DOE believes 

that only a few domestic manufacturers 

have the resources for this undertaking 

and believes that some large 

manufacturers and many smaller 

manufacturers would continue to source 

their heat exchangers. Ultimately, DOE 

estimates that manufacturers would 

incur $25.04 million in product 

conversion costs, as some manufacturers 

would be expected to attempt to add 

production capacity for condensing heat 

exchangers and others would have to 

design baseline products around a 

sourced condensing heat exchanger. In 

addition, DOE estimates that 

manufacturers would incur $60.13 

million in capital conversion costs, 

which would be driven by capital 

investments in heat exchanger 

production lines. 

At TSL 4, under the preservation of 

gross margin percentage markup 

scenario, the shipment-weighted 

average MPC increases by 37 percent 

relative to the base-case MPC. In this 

scenario, INPV impacts are slightly 

negative because manufacturers’ ability 

to pass the higher production costs to 

consumers is slightly outweighed the 

$85.16 million in total conversion costs. 

Under the preservation of per-unit 

operating profit markup scenario, the 

37-percent MPC increase is outweighed 

by a lower average markup of 1.37 

(compared to 1.41 in the preservation of 

gross margin percentage markup 

scenario) and $85.16 million in total 

conversion costs, resulting in 

significantly negative impacts at TSL 4. 

TSL 5 represents EL 2 for one product 

class (gas-fired steam boilers), EL 3 for 

two product classes (oil-fired hot water 

boilers and oil-fired steam boilers), and 

EL 6 for one product class (gas-fired hot 

water boilers). TSL 5 represents maxtech for all product classes. At TSL 5, 

DOE estimates impacts on INPV for 

residential boiler manufacturers to range 

from ¥36.59 percent to ¥0.13 percent, 

or a change in INPV of ¥$139.26 

million to ¥$0.50 million. At this 

potential standard level, industry free 

cash flow would be estimated to 

decrease by approximately 161.64 

percent in the year before compliance 

(2019) to ¥$15.92 million relative to the 

base-case value of $25.83 million. 

At TSL 5, percentage impacts on INPV 

range from slightly negative to 

significantly negative. DOE estimates 

that in 2020, only 7 percent of 

residential boiler shipments would 

already meet or exceed the efficiency 

levels prescribed at TSL 5. DOE expects 

conversion costs to continue to increase 

at TSL 5, as almost all products on the 

market would have to be redesigned and 

new products would have to be 

developed. As with TSL 4, DOE believes 

that at these efficiency levels, some 

manufacturers would choose to develop 

their own condensing heat exchanger 

production, rather than continuing to 

source these components. DOE 

estimates that product conversion costs 

would increase to $36.59 million as 

manufacturers would have to redesign a 

larger percentage of their offerings, 

implement complex control systems, 

and meet max-tech for all product 

classes. DOE estimates that 

manufacturers would incur $68.41 

million in capital conversion costs due 

to some manufacturers choosing to 

develop their own heat exchanger 

production and others having to 

increase the throughput of their existing 

condensing boiler production lines. 

At TSL 5, under the preservation of 

gross margin percentage markup 

scenario, the shipment-weighted 

average MPC increases by 58 percent 

relative to the base-case MPC. In this 

scenario, INPV impacts are negative 

because manufacturers’ ability to pass 

the higher production costs to 

consumers is outweighed by the $105.0 

million in total conversion costs. Under 

the preservation of per-unit operating 

profit markup scenario, the 58-percent 

MPC increase is outweighed by a lower 

average markup of 1.36 and $105.0 

million in total conversion costs, 

resulting in significantly negative 

impacts at TSL 5. 

Cash-Flow Analysis Results for 

Residential Boilers in Standby Mode 

and Off Mode 

Standby mode and off mode standards 

results are presented in Table V.23 and 

Table V.24. The impacts of standby 

mode and off mode features were 

analyzed for the same product classes as 

the amended AFUE standards, but at 

different efficiency levels, which 

correspond to a different set of 

technology options for reducing standby 

mode and off mode energy 

consumption. Therefore, the TSLs in the 

standby mode and off mode analysis do 

not correspond to the TSLs in the AFUE 

analysis. Also, the electric boiler 

product classes were not analyzed in the 

GRIM for AFUE standards. As a result, 

quantitative numbers are also not 

available for the GRIM analyzing 

standby mode and off mode standards. 

However, the standby mode and off 

mode technology options considered for 

electric boilers are identical to the 

technology options for all other 

residential boiler product classes. 

Consequently, DOE expects the standby 

mode and off mode impacts on electric 

boilers to be of the same order of 

magnitude as the impacts on all other 

boiler product classes. 

The impacts of standby mode and off 

mode features were analyzed for the 

same two markup scenarios to represent 

the upper and lower bounds of industry 

impacts for residential boilers that were 

used in the AFUE analysis: (1) A 

preservation of gross margin percentage 

scenario; and (2) a preservation of perunit operating profit scenario. As with 

the AFUE analysis, the preservation of 

gross margin percentage represents the 

lower bound of impacts, while the 

preservation of per-unit operating profit 

scenario represents the upper bound of 

impacts. 

Each of the modeled scenarios in the 

standby mode and off mode analyses 

results in a unique set of cash flows and 

corresponding industry values at each 

TSL. In the following discussion, the 

INPV results refer to the difference in 

industry value between the base case 

and each standards case that results 

from the sum of discounted cash flows 

from the base year 2014 through 2049, 

the end of the analysis period. 

To provide perspective on the shortrun cash flow impact, DOE discusses 

the change in free cash flow between the 

base case and the standards case at each 

TSL in the year before new standards 

would take effect. These figures provide 

an understanding of the magnitude of 

the required conversion costs at each 

TSL relative to the cash flow generated 

by the industry in the base case. 

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TABLE V.23—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL BOILERS FOR STANDBY MODE AND OFF MODE

STANDARDS—PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO * 

Units Base case 

Trial standard level 

1 2 3 

INPV ................................................................................. 2013$ millions ..................... 380.96 380 .88 381 .16 381 .17 

Change in INPV ............................................................... 2013$ millions ..................... .................. (0 .07) 0 .20 0 .22 

% ......................................... .................. (0 .02) 0 .05 0 .06 

Product Conversion Costs ............................................... 2013$ millions ..................... .................. 0 .21 0 .21 0 .21 

Capital Conversion Costs ................................................. 2013$ millions ..................... .................. .................... .................... ....................

Total Conversion Costs .................................................... 2013$ millions ..................... .................. 0 .21 0 .21 0 .21 

Free Cash Flow (base case = 2019) ............................... 2013$ millions ..................... 25.83 25 .77 25 .77 25 .77 

Change in Free Cash Flow (change from base case) ..... 2013$ millions ..................... .................. (0 .06) (0 .06) (0 .06) 

% ......................................... .................. (0 .24) (0 .24) (0 .24) 

* Parentheses indicate negative values. 

TABLE V.24—MANUFACTURER IMPACT ANALYSIS FOR RESIDENTIAL BOILERS FOR STANDBY MODE AND OFF MODE

STANDARDS—PRESERVATION OF PER-UNIT OPERATING PROFIT MARKUP SCENARIO * 

Units Base case 

Trial standard level 

1 2 3 

INPV ................................................................................. 2013$ millions ..................... 380.96 380 .77 379 .94 379 .88 

Change in INPV ............................................................... 2013$ millions ..................... .................. (0 .19) (1 .02) (1 .08) 

% ......................................... .................. (0 .05) (0 .27) (0 .28) 

Product Conversion Costs ............................................... 2013$ millions ..................... .................. 0 .21 0 .21 0 .21 

Capital Conversion Costs ................................................. 2013$ millions ..................... .................. .................... .................... ....................

Total Conversion Costs .................................................... 2013$ millions ..................... .................. 0 .21 0 .21 0 .21 

Free Cash Flow (base case = 2019) ............................... 2013$ millions ..................... 25.83 25 .77 25 .77 25 .77 

Decrease in Free Cash Flow (change from base case) .. 2013$ millions ..................... .................. (0 .06) (0 .06) (0 .06) 

% ......................................... .................. (0 .24) (0 .24) (0 .24) 

* Parentheses indicate negative values. 

TSL 1 represents EL 1 for all product 

classes. At TSL 1, DOE estimates 

impacts on INPV for residential boiler 

manufacturers to decrease by less than 

one tenth of a percent in both markup 

scenarios, which corresponds to a 

change in INPV of ¥$0.19 million to 

¥$0.07 million. At this potential 

standard level, industry free cash flow 

is estimated to decrease by 

approximately 0.24 percent to $25.77 

million, compared to the base-case 

value of $25.83 million in 2019, the year 

before the compliance date. 

At TSL 1, DOE does not anticipate 

that manufacturers would lose a 

significant portion of their INPV. This is 

largely due to the small incremental 

costs of standby mode and off mode 

components relative to the overall costs 

of residential boiler products. DOE 

expects residential boiler manufacturers 

to incur $0.21 million in product 

conversion costs at TSL 1, primarily for 

testing. DOE does not expect that 

manufacturers would incur any capital 

conversion costs, as the product 

upgrades will only involve integrating a 

purchase-part. 

TSL 2 sets the efficiency level at EL 

2 for all product classes. At TSL 2, DOE 

estimates impacts on INPV for 

residential boilers manufacturers to 

range from ¥0.27 percent to 0.05 

percent, or a change in INPV of ¥$1.02 

million to $0.20 million. At this 

potential standard level, industry free 

cash flow is estimated to decrease by 

approximately 0.24 percent to $25.77 

million, compared to the base-case 

value of $25.83 million in 2019, the year 

before the compliance date. 

At TSL 2, DOE does not anticipate 

that manufacturers would lose a 

significant portion of their INPV. This is 

largely due to the small incremental 

costs of standby mode and off mode 

components relative to the overall costs 

of residential boiler products. DOE 

expects residential boiler manufacturers 

to incur $0.21 million in product 

conversion costs at TSL 2, primarily for 

testing. DOE does not expect that 

manufacturers would incur any capital 

conversion costs, as the product 

upgrades will only involve integrating a 

purchase-part. 

TSL 3 represents EL 3 for all product 

classes. At TSL 3, DOE estimates 

impacts on INPV for residential boiler 

manufacturers to range from ¥0.28 

percent to 0.06 percent, or a change in 

INPV of ¥$1.08 million to $0.22 

million. At this potential standard level, 

industry free cash flow is estimated to 

decrease by approximately 0.24 percent 

in the year before compliance to $25.77 

million compared to the base case value 

of $25.83 million. 

At TSL 3, DOE does not anticipate 

that manufacturers would lose a 

significant portion of their INPV. As 

with TSLs 1 and 2, this is largely due 

to the small incremental costs of 

standby mode and off mode components 

relative to the overall costs of residential 

boiler products. DOE expects residential 

boiler manufacturers to incur $0.21 

million in product conversion costs at 

TSL 3, primarily for testing. DOE does 

not expect that manufacturers would 

incur any capital conversion costs, as 

the product upgrades will only involve 

integrating a purchase-part. 

Combining Cash-Flow Analysis Results 

for Residential Boilers (AFUE Standard 

and in Standby Mode and Off Mode 

Standard) 

As noted in section III.B, DOE 

analyzed the AFUE standard and the 

standby and off mode standard 

independently. The AFUE metric 

accounts for the fuel use consumption 

whereas the standby and off mode 

metric accounts for the electrical energy 

use in standby and off mode. There are 

five trial standard levels under 

consideration for the AFUE standard 

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92U.S. Census Bureau, Annual Survey of 

Manufacturers: General Statistics: Statistics for 

Industry Groups and Industries (2011) (Available at: http://factfinder2.census.gov/faces/nav/jsf/pages/

searchresults.xhtml?refresh=t). 

and three trial stand levels under 

consideration for the standby and off 

mode standard. 

Both the AFUE standard and the 

standby and off mode standard could 

necessitate changes in manufacturer 

production costs, as well as conversion 

cost investments. The assumed design 

changes for the two standards in the 

engineering analysis are independent, 

therefore changes in manufacturing 

production costs and the conversion 

costs are additive. DOE expects that the 

costs to manufacturers would be 

mathematically the same regardless of 

whether or not the stand-by and off 

mode standards were combined or 

analyzed separately. However, DOE 

requests comment on whether an 

analysis that considers the cumulative 

costs of both standards when making 

technology choices would be more 

reflective of manufacturer decision 

making. 

Using the current approach that 

considers AFUE and standby and off 

mode standards separately, the range of 

potential impacts of combined 

standards on INPV is determined by 

summing the range of potential changes 

in INPV from the AFUE standard and 

from the standby and off mode standard. 

Similarly, to estimate the combined 

conversion costs, DOE sums the 

estimated conversion costs from the two 

standards. DOE does not present the 

combined impacts of all possible 

combinations of AFUE and standby and 

off mode TSLs in this notice. However, 

DOE expects the combined impact of 

the TSLs proposed for AFUE and 

standby and off mode electrical 

consumption in this NOPR to range 

from ¥2.38 to 0.26 percent, which is 

approximately equivalent to a reduction 

of $9.07 million to an increase of $0.99 

million. 

b. Impacts on Direct Employment 

To quantitatively assess the impacts 

of energy conservation standards on 

direct employment in the residential 

boiler industry, DOE used the GRIM to 

estimate the domestic labor 

expenditures and number of employees 

in the base case and at each TSL in 

2020. DOE used statistical data from the 

U.S. Census Bureau’s 2011 Annual 

Survey of Manufacturers (ASM),92 the 

results of the engineering analysis, and 

interviews with manufacturers to 

determine the inputs necessary to 

calculate industry-wide labor 

expenditures and domestic employment 

levels. Labor expenditures related to 

manufacturing of the product are a 

function of the labor intensity of the 

product, the sales volume, and an 

assumption that wages remain fixed in 

real terms over time. The total labor 

expenditures in each year are calculated 

by multiplying the MPCs by the labor 

percentage of MPCs. 

The total labor expenditures in the 

GRIM are converted to domestic 

production employment levels by 

dividing production labor expenditures 

by the annual payment per production 

worker (production worker hours times 

the labor rate found in the U.S. Census 

Bureau’s 2011 ASM). The estimates of 

production workers in this section cover 

workers, including line-supervisors who 

are directly involved in fabricating and 

assembling a product within the 

manufacturing facility. Workers 

performing services that are closely 

associated with production operations, 

such as materials handling tasks using 

forklifts, are also included as production 

labor. DOE’s estimates only account for 

production workers who manufacture 

the specific products covered by this 

rulemaking. The total direct 

employment impacts calculated in the 

GRIM are the sum of the changes in the 

number of production workers resulting 

from the amended energy conservation 

standards for residential boilers, as 

compared to the base case. In general, 

more-efficient boilers are more complex 

and more labor intensive and require 

specialized knowledge about control 

systems, electronics, and the different 

metals needed for the heat exchanger. 

Per-unit labor requirements and 

production time requirements increase 

with higher energy conservation 

standards. As a result, the total labor 

calculations described in this paragraph 

(which are generated by the GRIM) are 

considered an upper bound to direct 

employment forecasts. 

On the other hand, some 

manufacturers may choose not to make 

the necessary investments to meet the 

amended standards for all product 

classes. Alternatively, they may choose 

to relocate production facilities where 

conversion costs and production costs 

are lower. To establish a lower bound to 

negative employment impacts, DOE 

estimated the maximum potential job 

loss due to manufacturers either leaving 

the industry or moving production to 

foreign locations as a result of amended 

standards. In the case of residential 

boilers, most manufacturers agreed that 

higher standards would probably not 

push their production overseas due to 

shipping considerations. Rather, high 

enough standards could force 

manufacturers to rethink their business 

models. Instead of vertically integrated 

manufacturers, they would become 

assemblers and would source most of 

their components from overseas. This 

would mean any workers involved in 

casting metals that would be corroded 

in a condensing product would likely 

lose their jobs. These lower bound 

estimates were based on GRIM results, 

conversion cost estimates, and content 

from manufacturers interviews. The 

lower bound of employment is 

presented in Table V.25 below. 

DOE estimates that in the absence of 

amended energy conservation 

standards, there would be 785 domestic 

production workers in the residential 

boiler industry in 2020, the year of 

compliance. DOE estimates that 90 

percent of residential boilers sold in the 

United States are manufactured 

domestically. Table V.25 shows the 

range of the impacts of potential 

amended energy conservation standards 

on U.S. production workers of 

residential boilers. 

TABLE V.25—POTENTIAL CHANGES IN THE TOTAL NUMBER OF RESIDENTIAL BOILERS PRODUCTION WORKERS IN 2020 

Trial standard level * 

Base case 1 2 3 4 5 

Total Number of Domestic Production Workers in 2020 (without changes in production locations).785 ................... 785 to 793 ....... 777 to 801 ....... 769 to 821 ....... 393 to 1,024 .... 196 to 1,035. 

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TABLE V.25—POTENTIAL CHANGES IN THE TOTAL NUMBER OF RESIDENTIAL BOILERS PRODUCTION WORKERS IN 2020— 

Continued 

Trial standard level * 

Base case 1 2 3 4 5 

Potential Changes in Domestic 

Production Workers in 2020*.

.......................... 0 to 8 ............... (8) to 16 ........... (16) to 36 ......... (392) to 239 ..... (589) to 250. 

* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers. 

At the upper end of the range, all 

examined TSLs show positive impacts 

on domestic employment levels. 

Producing more-efficient boilers tends 

to require more labor, and DOE 

estimates that if residential boiler 

manufacturers chose to keep their 

current production in the U.S., domestic 

employment could increase at each TSL. 

In interviews, several manufacturers 

who produce high-efficiency boiler 

products stated that a standard that 

went to condensing levels could cause 

them to hire more employees to increase 

their production capacity. Others stated 

that a condensing standard would 

require additional engineers to redesign 

production processes, as well as 

metallurgy experts and other workers 

with experience working with higherefficiency products. DOE, however, 

acknowledges that particularly at higher 

standard levels, manufacturers may not 

keep their production in the U.S. and 

also may choose to restructure their 

businesses or exit the market entirely. 

DOE does not expect any significant 

changes in domestic employment at TSL 

1 or TSL 2. Most manufactures agreed 

that these efficiency levels would 

require minimal changes to their 

production processes and most 

employees would be retained. DOE 

estimates that there could be a small 

loss of domestic employment at TSL 3 

due to the fact that some manufacturers 

would have to drop their 82 to 83- 

percent-efficient products, which 

several commented were their 

commodity products and drove a high 

percentage of their sales. Several 

manufacturers expressed that they could 

lose a significant number of employees 

at TSL 4 and TSL 5, due to the fact that 

these TSLs contain condensing 

efficiency levels for the gas-fired hot 

water boiler product class. These 

manufacturers have employees who 

work on production lines that produce 

cast iron sections and carbon steel or 

copper heat exchangers for lower to 

mid-efficiency products. If amended 

energy conservation standards were to 

require condensing efficiency levels, 

these employees would no longer be 

needed for that function, and 

manufacturers would have to decide 

whether to develop their own 

condensing heat exchanger production, 

source heat exchangers from Asia or 

Europe and assemble higher-efficiency 

products, or leave the market entirely. 

DOE notes that its estimates of the 

impacts on direct employment are based 

on the analysis of amended AFUE 

energy efficiency standards only. 

Standby mode and off mode technology 

options considered in the engineering 

analysis would result in component 

swaps, which would not make the 

product significantly more complex and 

would not be difficult to implement. 

While some product development effort 

would be required, DOE does not expect 

the standby mode and off mode 

standard to meaningfully affect the 

amount of labor required in production. 

Consequently, DOE does not anticipate 

that the proposed standby mode and off 

mode standards will have a significant 

impact on direct employment. 

DOE notes that the employment 

impacts discussed here are independent 

of the indirect employment impacts to 

the broader U.S. economy, which are 

documented in chapter 15 of the NOPR 

TSD. 

c. Impacts on Manufacturing Capacity 

Most residential boiler manufacturers 

stated that their current production is 

only running at 50-percent to 70-percent 

capacity and that any standard that does 

not propose efficiency levels where 

manufacturers would use condensing 

technology for hot water boilers would 

not have a large effect on capacity. The 

impacts of a potential condensing 

standard on manufacturer capacity are 

difficult to quantify. Some 

manufacturers who are already making 

condensing products with a sourced 

heat exchanger said they would likely 

be able to increase production using the 

equipment they already have by 

utilizing a second shift. Others said a 

condensing standard would idle a large 

portion of their business, causing 

stranded assets and decreased capacity. 

These manufactures would have to 

determine how to best increase their 

condensing boiler production capacity. 

DOE believes that some larger domestic 

manufacturers may choose to add 

production capacity for a condensing 

heat exchanger production line. 

Manufacturers stated that in a 

scenario where a potential standard 

would require efficiency levels at which 

manufacturers would use condensing 

technology, there is concern about the 

level of technical resources required to 

redesign and test all products. The 

engineering analysis shows that 

increasingly complex components and 

control strategies are required as 

standard levels increase. Manufacturers 

commented in interviews that the 

industry would need to add electrical 

engineering and control systems 

engineering talent beyond current 

staffing to meet the redesign 

requirements of higher TSLs. Additional 

training might be needed for 

manufacturing engineers, laboratory 

technicians, and service personnel if 

condensing products were broadly 

adopted. However, because TSL 3 (the 

proposed level) would not require 

condensing standards, DOE does not 

expect manufacturers to face long-term 

capacity constraints due to the standard 

levels proposed in this notice. 

d. Impacts on Subgroups of 

Manufacturers 

Small manufacturers, niche 

equipment manufacturers, and 

manufacturers exhibiting a cost 

structure substantially different from the 

industry average could be affected 

disproportionately. Using average cost 

assumptions developed for an industry 

cash-flow estimate is inadequate to 

assess differential impacts among 

manufacturer subgroups. 

For the residential boiler industry, 

DOE identified and evaluated the 

impact of amended energy conservation 

standards on one subgroup—small 

manufacturers. The SBA defines a 

‘‘small business’’ as having 500 

employees or less for NAICS 333414, 

‘‘Heating Equipment (except Warm Air 

Furnaces) Manufacturing.’’ Based on 

this definition, DOE identified 13 

manufacturers in the residential boiler 

industry that qualify as small 

businesses. For a discussion of the 

impacts on the small manufacturer 

subgroup, see the regulatory flexibility 

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analysis in section VI.B of this notice 

and chapter 12 of the NOPR TSD. 

e. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

recent or impending regulations may 

have serious consequences for some 

manufacturers, groups of manufacturers, 

or an entire industry. Assessing the 

impact of a single regulation may 

overlook this cumulative regulatory 

burden. In addition to energy 

conservation standards, other 

regulations can significantly affect 

manufacturers’ financial operations. 

Multiple regulations affecting the same 

manufacturer can strain profits and lead 

companies to abandon product lines or 

markets with lower expected future 

returns than competing products. For 

these reasons, DOE conducts an analysis 

of cumulative regulatory burden as part 

of its rulemakings pertaining to 

appliance efficiency. 

For the cumulative regulatory burden 

analysis, DOE looks at other regulations 

that could affect residential boiler 

manufacturers that will take effect 

approximately three years before or after 

the 2020 compliance date of amended 

energy conservation standards for these 

products. In interviews, manufacturers 

cited Federal regulations on equipment 

other than residential boilers that 

contribute to their cumulative 

regulatory burden. The compliance 

years and expected industry conversion 

costs of relevant amended energy 

conservation standards are indicated in 

the Table V.26. DOE has included 

certain Federal regulations in the Table 

V.26 that have compliance dates beyond 

the three-year range of DOE’s analysis, 

because those regulations were cited 

multiple times by manufacturers in 

interviews and written comments; they 

are included here for reference. 

TABLE V.26—COMPLIANCE DATES AND EXPECTED CONVERSION EXPENSES OF FEDERAL ENERGY CONSERVATION

STANDARDS AFFECTING RESIDENTIAL BOILERS MANUFACTURERS

Federal energy conservation standards Approximate 

compliance date 

Estimated total 

industry conversion 

expense 

2007 Residential Furnaces & Boilers, 72 FR 65136 (Nov. 19, 2007) ............................................ 2015 * $88M (2006$) 

2011 Residential Furnaces, 76 FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011) ........... 2015 ** $2.5M (2009$) 

Commercial Refrigeration Equipment .............................................................................................. 2017 $184.0M (2012$) 

Dishwashers *** ................................................................................................................................ 2018 TBD 

Commercial Packaged Air Conditioners and Heat Pumps *** ........................................................ 2018 TBD 

Commercial Warm-Air Furnaces *** ................................................................................................ 2018 TBD 

Furnace Fans ................................................................................................................................... 2019 $40.6M (2013$) 

Miscellaneous Residential Refrigeration *** ..................................................................................... 2019 TBD 

Single Package Vertical Air Conditioners and Heat Pumps *** ...................................................... 2019 TBD 

Commercial Water Heaters *** ........................................................................................................ 2019 TBD 

Packaged Terminal Air Conditioners and Heat Pumps *** .............................................................. 2019 TBD 

Kitchen Ranges and Ovens *** ........................................................................................................ 2020 TBD 

Commercial Packaged Boilers *** .................................................................................................... 2020 TBD 

Non-weatherized Gas-fired Furnaces and Mobile Home Furnaces *** ........................................... 2021 TBD 

Direct Heating Equipment/Pool Heaters *** ..................................................................................... 2021 TBD 

Residential Water Heaters *** .......................................................................................................... 2021 TBD 

Clothes Dryers *** ............................................................................................................................ 2022 TBD 

Central Air Conditioners *** .............................................................................................................. 2022 TBD 

Residential Refrigerators and Freezers *** ...................................................................................... 2022 TBD 

Room Air Conditioners *** ................................................................................................................ 2022 TBD 

Commercial Packaged Air Conditioning and Heating Equipment (Evaporatively and Water 

Cooled) *** .................................................................................................................................... 2023 TBD 

Residential Clothes Washers *** ...................................................................................................... 2023 TBD 

* Conversion expenses for manufacturers of oil-fired furnaces and gas-fired and oil-fired boilers associated with the November 2007 final rule 

for residential furnaces and boilers are excluded from this figure. The 2011 direct final rule for residential furnaces sets a higher standard and 

earlier compliance date for oil furnaces than the 2007 final rule. As a result, manufacturers will be required design to the 2011 direct final rule 

standard. The conversion costs associated with the 2011 direct final rule are listed separately in this table. EISA 2007 legislated higher standards 

and earlier compliance dates for residential boilers than were in the November 2007 final rule. As a result, gas-fired and oil-fired boiler manufacturers were required to design to the EISA 2007 standard beginning in 2012. The conversion costs listed for residential gas-fired and oil-fired 

boilers in the November 2007 residential furnaces and boilers final rule analysis are not included in this figure. 

** Estimated industry conversion expenses and approximate compliance date reflect a court-ordered April 24, 2014 remand of the residential 

non-weatherized and mobile home gas furnaces standards set in the 2011 Energy Conservation Standards for Residential Furnaces and Residential Central Air Conditioners and Heat Pumps. The costs associated with this rule reflect implementation of the amended standards for the remaining furnace product classes (i.e., oil-fired furnaces). 

*** The NOPR and final rule for this energy conservation standard have not been published. The compliance date and analysis of conversion 

costs are estimates and have not been finalized at this time. 

In addition to Federal energy 

conservation standards, DOE identified 

other regulatory burdens that would 

affect manufacturers of residential 

boilers: 

Revised DOE Test Procedure for 

Residential Boilers 

DOE is currently considering 

revisions to its test procedure for 

residential furnaces and boilers, and it 

is expected that a revised test procedure 

would increase testing burden for 

manufacturers. On July 28, 2008, DOE 

published a technical amendment to the 

2007 furnaces and boilers final rule, 

whose purpose was to add design 

requirements established in the Energy 

Independence and Security Act of 2007 

(EISA 2007). 73 FR 43611. These 

requirements prohibit constant-burning 

pilot lights for gas-fired hot water 

boilers and gas-fired steam boilers, and 

require an automatic means for 

adjusting the water temperature for gasfired hot water boilers, oil-fired hot 

water boilers, and electric hot water 

boilers. The test procedure is expected 

to be revised to include two test 

methods to verify the functionality of 

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the automatic means of adjusting the 

water temperature, which would 

increase the testing burden for 

residential boiler manufacturers and 

thereby the cumulative regulatory 

burden. 

3. National Impact Analysis 

a. Significance of Energy Savings 

For each TSL, DOE projected energy 

savings for residential boilers purchased 

in the 30-year period that begins in the 

year of anticipated compliance with 

amended standards (2020–2049). The 

savings are measured over the entire 

lifetime of product purchased in the 30- 

year period. DOE quantified the energy 

savings attributable to each TSL as the 

difference in energy consumption 

between each standards case and the 

base case. Table V.27 presents the 

estimated primary energy savings for 

each considered TSL for AFUE 

standards, and Table V.28 presents the 

estimated FFC energy savings for each 

TSL for AFUE standards. Table V.29 

presents the estimated primary energy 

savings for each considered TSL for 

standby mode and off mode, and Table 

V.30 presents the estimated FFC energy 

savings for each TSL for standby mode 

and off mode. The approach for 

estimating national energy savings is 

further described in section IV.H. 

TABLE V.27—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR RESIDENTIAL BOILER AFUE TRIAL STANDARD

LEVELS FOR UNITS SOLD IN 2020–2049 

Product class 

Trial standard level 

(quads) 

1 2 3 4 5 

Gas-fired hot water boilers .................................................. 0 .030 0 .076 0 .134 0 .735 1 .231 

Gas-fired steam boilers ........................................................ 0 .006 0 .006 0 .006 0 .006 0 .023 

Oil-fired hot water boilers ..................................................... 0 .012 0 .043 0 .043 0 .274 0 .274 

Oil-fired steam boilers .......................................................... 0 .003 0 .009 0 .009 0 .009 0 .009 

Total—All Classes * ...................................................... 0 .05 0 .13 0 .19 1 .02 1 .54 

* Note: Components may not sum due to rounding. 

TABLE V.28—CUMULATIVE NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR RESIDENTIAL BOILER AFUE TRIAL

STANDARD LEVELS FOR UNITS SOLD IN 2020–2049 

Product class 

Trial standard level 

(quads) 

1 2 3 4 5 

Gas-fired hot water boilers .................................................. 0 .033 0 .084 0 .148 0 .812 1 .357 

Gas-fired steam boilers ........................................................ 0 .006 0 .006 0 .006 0 .006 0 .025 

Oil-fired hot water boilers ..................................................... 0 .014 0 .050 0 .050 0 .321 0 .321 

Oil-fired steam boilers .......................................................... 0 .003 0 .011 0 .011 0 .011 0 .011 

Total—All Classes * ...................................................... 0 .06 0 .15 0 .21 1 .15 1 .71 

* Note: Components may not sum due to rounding. 

TABLE V.29—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR RESIDENTIAL BOILER STANDBY MODE AND OFF

MODE TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2020–2049 

Product class 

Trial standard level 

(quads) 

1 2 3 

Gas-Fired Hot Water Boilers ....................................................................................................... 0 .020 0 .024 0 .033 

Gas-Fired Steam Boilers ............................................................................................................. 0 .0023 0 .0027 0 .0027 

Oil-Fired Hot Water Boilers ......................................................................................................... 0 .0071 0 .0071 0 .0071 

Oil-Fired Steam Boilers ............................................................................................................... 0 .0005 0 .0005 0 .0005 

Electric Hot Water Boilers ........................................................................................................... 0 .0006 0 .0006 0 .0006 

Electric Steam Boilers ................................................................................................................. 0 .0001 0 .0001 0 .0001 

Total—All Classes * .............................................................................................................. 0 .020 0 .024 0 .033 

* Note: Components may not sum due to rounding. 

TABLE V.30—CUMULATIVE NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR RESIDENTIAL BOILER STANDBY MODE AND

OFF MODE TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2020–2049 

Product class 

Trial standard level 

(quads) 

1 2 3 

Gas-Fired Hot Water Boilers ....................................................................................................... 0 .020 0 .024 0 .034 

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93U.S. Office of Management and Budget, 

‘‘Circular A–4: Regulatory Analysis’’ (Sept. 17, 

2003) (Available at: http://www.whitehouse.gov/

omb/circulars_a004_a-4/) 

94Section 325(m) of EPCA requires DOE to review 

its standards at least once every 6 years, and 

requires, for certain products, a 3-year period after 

any new standard is promulgated before 

compliance is required, except that in no case may 

any new standards be required within 6 years of the 

compliance date of the previous standards. While 

adding a 6-year review to the 3-year compliance 

period adds up to 9 years, DOE notes that it may 

undertake reviews at any time within the 6 year 

period and that the 3-year compliance date may 

yield to the 6-year backstop. A 9-year analysis 

period may not be appropriate given the variability 

that occurs in the timing of standards reviews and 

the fact that for some consumer products, the 

compliance period is 5 years rather than 3 years. 

95 DOE presents results based on a nine-year 

analytical period only for the AFUE TSLs, because 

the corresponding impacts for the standby mode 

and off mode TSLs are very small. 

96OMB Circular A–4, section E (Sept. 17, 2003) 

(Available at: http://www.whitehouse.gov/omb/

circulars_a004_a-4). 

TABLE V.30—CUMULATIVE NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR RESIDENTIAL BOILER STANDBY MODE AND

OFF MODE TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2020–2049—Continued 

Product class 

Trial standard level 

(quads) 

1 2 3 

Gas-Fired Steam Boilers ............................................................................................................. 0 .0023 0 .0028 0 .0028 

Oil-Fired Hot Water Boilers ......................................................................................................... 0 .0072 0 .0072 0 .0072 

Oil-Fired Steam Boilers ............................................................................................................... 0 .0005 0 .0005 0 .0005 

Electric Hot Water Boilers ........................................................................................................... 0 .0006 0 .0006 0 .0006 

Electric Steam Boilers ................................................................................................................. 0 .0001 0 .0001 0 .0001 

Total—All Classes * .............................................................................................................. 0 .031 0 .035 0 .045 

* Note: Components may not sum due to rounding. 

OMB Circular A–4 93 requires 

agencies to present analytical results, 

including separate schedules of the 

monetized benefits and costs that show 

the type and timing of benefits and 

costs. Circular A–4 also directs agencies 

to consider the variability of key 

elements underlying the estimates of 

benefits and costs. For this rulemaking, 

DOE undertook a sensitivity analysis 

using nine, rather than 30, years of 

product shipments. The choice of a 

nine-year period is a proxy for the 

timeline in EPCA for the review of 

certain energy conservation standards 

and potential revision of and 

compliance with such revised 

standards.94 The review timeframe 

established in EPCA is generally not 

synchronized with the product lifetime, 

product manufacturing cycles, or other 

factors specific to residential boilers. 

Thus, such results are presented for 

informational purposes only and are not 

indicative of any change in DOE’s 

analytical methodology. The NES 

results based on a nine-year analytical 

period are presented for the AFUE TSLs 

in Table V.31.95 The impacts are 

counted over the lifetime of residential 

boilers purchased in 2020–2028. 

TABLE V.31—CUMULATIVE NATIONAL FFC ENERGY SAVINGS FOR TRIAL STANDARD LEVELS FOR RESIDENTIAL BOILERS

SOLD IN 2020–2028, AFUE STANDARDS

Product class 

Trial standard level 

(quads) 

1 2 3 4 5 

Gas-fired hot water boilers .................................................. 0 .012 0 .030 0 .054 0 .301 0 .381 

Gas-fired steam boilers ........................................................ 0 .002 0 .002 0 .002 0 .002 0 .008 

Oil-fired hot water boilers ..................................................... 0 .006 0 .021 0 .021 0 .146 0 .123 

Oil-fired steam boilers .......................................................... 0 .001 0 .005 0 .005 0 .005 0 .004 

Total—All Classes * ...................................................... 0 .02 0 .06 0 .08 0 .45 0 .52 

* Note: Components may not sum due to rounding. 

b. Net Present Value of Consumer Costs 

and Benefits 

DOE estimated the cumulative NPV of 

the total costs and savings for 

consumers that would result from the 

TSLs considered for residential boilers. 

In accordance with OMB’s guidelines on 

regulatory analysis,96 DOE calculated 

the NPV using both a 7-percent and a 3- 

percent real discount rate. 

Table V.32 shows the consumer NPV 

results for each AFUE TSL considered 

for residential boilers. In each case, the 

impacts cover the lifetime of products 

purchased in 2020–2049. 

TABLE V.32—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS SOLD IN 2020–2049, AFUE STANDARDS

Product class 

Discount 

rate 

(%) 

Trial standard level 

(billion 2013$ **) 

1 2 3 4 5 

Gas-fired hot water boiler .............................................. 0.17 0.48 0.65 1.86 2.33 

Gas-fired steam boiler ................................................... 0.03 0.03 0.03 0.03 0.01 

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TABLE V.32—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS SOLD IN 2020–2049, AFUE STANDARDS—Continued 

Product class 

Discount 

rate 

(%) 

Trial standard level 

(billion 2013$ **) 

1 2 3 4 5 

Oil-fired hot water boiler ................................................ 3 0.13 0.49 0.49 1.42 1.42 

Oil-fired steam boiler ...................................................... 0.03 0.11 0.11 0.11 0.11 

Total—All Classes * ................................................ .................... 0.37 1.12 1.28 3.42 3.87 

Gas-fired hot water boiler .............................................. 0.05 0.16 0.18 0.12 (0.24 ) 

Gas-fired steam boiler ................................................... 0.01 0.01 0.01 0.01 (0.02 ) 

Oil-fired hot water boiler ................................................ 7 0.04 0.14 0.14 0.02 0.02 

Oil-fired steam boiler ...................................................... 0.01 0.03 0.03 0.03 0.03 

Total—All Classes * ................................................ .................... 0.11 0.34 0.36 0.19 (0.20 ) 

* Note: Components may not sum due to rounding. 

** Parentheses indicate negative values. 

The NPV results based on the 

aforementioned nine-year analytical 

period are presented in Table V.33 for 

AFUE standards. The impacts are 

counted over the lifetime of products 

purchased in 2020–2028. As mentioned 

previously, such results are presented 

for informational purposes only and is 

not indicative of any change in DOE’s 

analytical methodology or decision 

criteria. 

TABLE V.33—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS SOLD IN 2020–2028, AFUE STANDARDS

Product class 

Discount 

rate 

(%) 

Trial standard level 

(billion 2013$ **) 

1 2 3 4 5 

Gas-fired hot water boiler ................................................ 0.07 0.19 0.26 0.84 1.11 

Gas-fired steam boiler ..................................................... 0.01 0.01 0.01 0.01 0.01 

Oil-fired hot water boiler .................................................. 3 0.06 0.24 0.24 1.00 1.00 

Oil-fired steam boiler ........................................................ 0.02 0.06 0.06 0.06 0.06 

Total—All Classes * .................................................. .................... 0.16 0.50 0.57 1.90 2.18 

Gas-fired hot water boiler ................................................ 0.03 0.08 0.09 0.12 0.00 

Gas-fired steam boiler ..................................................... 0.01 0.01 0.01 0.01 (0.01 ) 

Oil-fired hot water boiler .................................................. 7 0.02 0.09 0.09 0.18 0.18 

Oil-fired steam boiler ........................................................ 0.01 0.02 0.02 0.02 0.02 

Total—All Classes * .................................................. .................... 0.06 0.20 0.21 0.33 0.20 

* Note: Components may not sum due to rounding. 

** Parentheses indicate negative values. 

The above results reflect the use of a 

flat trend to estimate the change in price 

for residential boilers over the analysis 

period (see section IV.H). DOE also 

conducted a sensitivity analysis that 

considered one scenario with a lower 

rate of price decline than the reference 

case and one scenario with a higher rate 

of price decline than the reference case. 

The results of these alternative cases are 

presented in appendix 10C of the NOPR 

TSD. 

Table V.34 shows the consumer NPV 

results for each standby mode and off 

mode TSL considered for residential 

boilers. In each case, the impacts cover 

the lifetime of products purchased in 

2020–2049. 

TABLE V.34—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS SOLD IN 2020–2049, STANDBY MODE AND OFF MODE STANDARDS

Product class Discount rate 

% 

Trial standard level (billion 2013$) 

1 2 3 

Gas-Fired Hot Water Boiler ............................................................................. 0 .25 0 .21 0 .33 

Gas-Fired Steam Boiler ................................................................................... 0 .031 0 .027 0 .027 

Oil-Fired Hot Water Boiler ............................................................................... 0 .104 0 .073 0 .071 

Oil-Fired Steam Boiler ..................................................................................... 3 0 .008 0 .006 0 .006 

Electric Hot Water Boiler ................................................................................. 0 .006 0 .003 0 .003 

Electric Steam Boiler ....................................................................................... 0 .0006 0 .0005 0 .0005 

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TABLE V.34—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR TRIAL STANDARD LEVELS FOR

RESIDENTIAL BOILERS SOLD IN 2020–2049, STANDBY MODE AND OFF MODE STANDARDS—Continued 

Product class Discount rate 

% 

Trial standard level (billion 2013$) 

1 2 3 

Total—All Classes * .................................................................................. 0 .401 0 .325 0 .437 

Gas-Fired Hot Water Boiler ............................................................................. 0 .10 0 .08 0 .13 

Gas-Fired Steam Boiler ................................................................................... 0 .013 0 .010 0 .010 

Oil-Fired Hot Water Boiler ............................................................................... 0 .044 0 .027 0 .026 

Oil-Fired Steam Boiler ..................................................................................... 7 0 .003 0 .002 0 .002 

Electric Hot Water Boiler ................................................................................. 0 .002 0 .001 0 .001 

Electric Steam Boiler ....................................................................................... 0 .0003 0 .0002 0 .0002 

Total—All classes * ................................................................................... 0 .167 0 .121 0 .167 

* Note: Components may not sum due to rounding. 

c. Indirect Impacts on Employment 

DOE expects that amended energy 

conservation standards for residential 

boilers would reduce energy costs for 

consumers, with the resulting net 

savings being redirected to other forms 

of economic activity. Those shifts in 

spending and economic activity could 

affect the demand for labor. As 

described in section IV.N, DOE used an 

input/output model of the U.S. economy 

to estimate indirect employment 

impacts of the TSLs that DOE 

considered in this rulemaking. DOE 

understands that there are uncertainties 

involved in projecting employment 

impacts, especially changes in the later 

years of the analysis. Therefore, DOE 

generated results for near-term time 

frames (2020 to 2025), where these 

uncertainties are reduced. 

The results suggest that the proposed 

standards would be likely to have a 

negligible impact on the net demand for 

labor in the economy. The net change in 

jobs is so small that it would be 

imperceptible in national labor statistics 

and might be offset by other, 

unanticipated effects on employment. 

Chapter 16 of the NOPR TSD presents 

detailed results regarding anticipated 

indirect employment impacts. 

4. Impact on Product Utility or 

Performance 

DOE has tentatively concluded that 

the amended standards it is proposing 

in this NOPR would not lessen the 

utility or performance of residential 

boilers. 

5. Impact of Any Lessening of 

Competition 

DOE considered any lessening of 

competition that is likely to result from 

new or amended standards. The 

Attorney General determines the 

impact, if any, of any lessening of 

competition likely to result from a 

proposed standard, and transmits such 

determination in writing to the 

Secretary, together with an analysis of 

the nature and extent of such impact. 

To assist the Attorney General in 

making such determination, DOE has 

provided DOJ with copies of this NOPR 

and the TSD for review. DOE will 

consider DOJ’s comments on the 

proposed rule in preparing the final 

rule, and DOE will publish and respond 

to DOJ’s comments in that document. 

6. Need of the Nation To Conserve 

Energy 

Enhanced energy efficiency, where 

economically justified, improves the 

Nation’s energy security, strengthens the 

economy, and reduces the 

environmental impacts (costs) of energy 

production. Energy savings from 

amended standards for the residential 

boilers covered in this NOPR could also 

produce environmental benefits in the 

form of reduced emissions of air 

pollutants and greenhouse gases 

associated with electricity production. 

Table V.35 provides DOE’s estimate of 

cumulative emissions reductions 

projected to result from the AFUE TSLs 

considered. Table V.36 provides DOE’s 

estimate of cumulative emissions 

reductions projected to result from the 

TSLs considered in this rulemaking for 

standby mode and off mode boiler 

efficiency. The tables include both 

power sector emissions and upstream 

emissions. The emissions were 

calculated using the multipliers 

discussed in section IV.K. DOE reports 

annual emissions reductions for each 

TSL in chapter 13 of the NOPR TSD. 

TABLE V.35—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR RESIDENTIAL BOILER TRIAL STANDARD LEVELS FOR

AFUE STANDARDS

Trial standard level 

1 2 3 4 5 

Site and Power Sector Emissions * 

CO2 (million metric tons) ...................................................... 3 .04 8 .31 11 .4 61 .8 88 .8 

SO2 (thousand tons) ............................................................ 0 .088 0 .600 0 .165 (0 .297) 0 .193 

NOX (thousand tons) ........................................................... 2 .73 7 .35 10 .3 57 .2 80 .5 

Hg (tons) .............................................................................. 0 .000 0 .000 (0 .001) (0 .006) (0 .005) 

CH4 (thousand tons) ............................................................ 0 .069 0 .224 0 .243 1 .18 1 .79 

N2O (thousand tons) ............................................................ 0 .026 0 .093 0 .090 0 .488 0 .555 

Upstream Emissions 

CO2 (million metric tons) ...................................................... 0 .404 1 .12 1 .52 8 .34 11 .6 

SO2 (thousand tons) ............................................................ 0 .042 0 .151 0 .147 0 .852 0 .873 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17285 

TABLE V.35—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR RESIDENTIAL BOILER TRIAL STANDARD LEVELS FOR

AFUE STANDARDS—Continued 

Trial standard level 

1 2 3 4 5 

NOX (thousand tons) ........................................................... 5 .77 15 .6 21 .7 119 169 

Hg (tons) .............................................................................. 0 .000 0 .000 0 .000 0 .000 0 .000 

CH4 (thousand tons) ............................................................ 28 .5 66 .3 110 584 938 

N2O (thousand tons) ............................................................ 0 .002 0 .007 0 .007 0 .041 0 .047 

Total FFC Emissions 

CO2 (million metric tons) ...................................................... 3 .45 9 .43 12 .9 70 .2 100 

SO2 (thousand tons) ............................................................ 0 .130 0 .751 0 .312 0 .555 1 .07 

NOX (thousand tons) ........................................................... 8 .50 23 .0 32 .1 176 250 

Hg (tons) .............................................................................. 0 .000 0 .000 (0 .001) (0 .005) (0 .004) 

CH4 (thousand tons) ............................................................ 28 .6 66 .5 110 585 940 

CH4 (thousand tons CO2eq) ** ............................................. 800 1,863 3,084 16,381 26,325 

N2O (thousand tons) ............................................................ 0 .028 0 .100 0 .097 0 .529 0 .602 

N2O (thousand tons CO2eq) ** ............................................. 7 .35 26 .4 25 .7 140 160 

* Primarily site emissions. Values include the increase in power sector emissions from higher electricity use at TSLs 4 and 5. 

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

Note: Parentheses indicate negative values. 

TABLE V.36—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR RESIDENTIAL BOILER TRIAL STANDARD LEVELS FOR

STANDBY MODE AND OFF MODE STANDARDS

Trial standard level 

1 2 3 

Power Sector Emissions 

CO2 (million metric tons) ................................................................................................. 1 .32 1 .51 1 .92 

SO2 (thousand tons) ........................................................................................................ 1 .49 1 .71 2 .16 

NOX (thousand tons) ....................................................................................................... 0 .016 0 .018 0 .021 

Hg (tons) .......................................................................................................................... 0 .002 0 .003 0 .003 

CH4 (thousand tons) ........................................................................................................ 0 .203 0 .232 0 .294 

N2O (thousand tons) ........................................................................................................ 0 .040 0 .046 0 .059 

Upstream Emissions 

CO2 (million metric tons) ................................................................................................. 0 .09 0 .11 0 .14 

SO2 (thousand tons) ........................................................................................................ 0 .020 0 .023 0 .029 

NOX (thousand tons) ....................................................................................................... 1 .300 1 .490 1 .886 

Hg (tons) .......................................................................................................................... 0 .0001 0 .0001 0 .0001 

CH4 (thousand tons) ........................................................................................................ 7 .91 9 .06 11 .47 

N2O (thousand tons) ........................................................................................................ 0 .001 0 .001 0 .001 

Total FFC Emissions 

CO2 (million metric tons) ................................................................................................. 1 .42 1 .62 2 .05 

SO2 (thousand tons) ........................................................................................................ 1 .51 1 .73 2 .19 

NOX (thousand tons) ....................................................................................................... 1 .32 1 .51 1 .91 

Hg (tons) .......................................................................................................................... 0 .002 0 .003 0 .004 

CH4 (thousand tons) ........................................................................................................ 8 .1 9 .3 11 .8 

CH4 (thousand tons CO2eq) * .......................................................................................... 227 .1 260 .2 329 .4 

N2O (thousand tons) ........................................................................................................ 0 .041 0 .047 0 .060 

N2O (thousand tons CO2eq) * .......................................................................................... 11 .0 12 .6 15 .9 

* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

As part of the analysis for this 

proposed rule, DOE estimated monetary 

benefits likely to result from the 

reduced emissions of CO2 and NOX that 

DOE estimated for each of the TSLs 

considered for residential boilers. As 

discussed in section IV.L, for CO2, DOE 

used the most recent values for the SCC 

developed by an interagency process. 

The four sets of SCC values for CO2

emissions reductions in 2015 resulting 

from that process (expressed in 2013$) 

are represented by $12.0/metric ton (the 

average value from a distribution that 

uses a 5-percent discount rate), $40.5/

metric ton (the average value from a 

distribution that uses a 3-percent 

discount rate), $62.4/metric ton (the 

average value from a distribution that 

uses a 2.5-percent discount rate), and 

$119/metric ton (the 95th-percentile 

value from a distribution that uses a 3- 

percent discount rate). The values for 

later years are higher due to increasing 

damages (emissions-related costs) as the 

projected magnitude of climate change 

increases. 

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17286 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

Table V.37 presents the global value 

of CO2 emissions reductions at each TSL 

for AFUE standards. Table V.38 presents 

the global value of CO2 emissions 

reductions at each TSL for standby and 

off mode. For each of the four cases, 

DOE calculated a present value of the 

stream of annual values using the same 

discount rate as was used in the studies 

upon which the dollar-per-ton values 

are based. DOE calculated domestic 

values as a range from 7 percent to 23 

percent of the global values, and these 

results are presented in chapter 14 of 

the NOPR TSD. 

TABLE V.37—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER RESIDENTIAL BOILER

AFUE TRIAL STANDARD LEVELS

TSL 

SCC Case* 

(million 2013$) 

5% Discount 

rate, average 

3% Discount 

rate, average 

2.5% Discount 

rate, average 

3% Discount 

rate, 95th 

percentile 

Site and Power Sector Emissions** 

1 ............................................................................................................... 17 .4 86 .9 140 269 

2 ............................................................................................................... 47 .8 238 384 736 

3 ............................................................................................................... 65 .4 326 525 1,008 

4 ............................................................................................................... 356 1,770 2,853 5,477 

5 ............................................................................................................... 507 2,530 4,082 7,831 

Upstream Emissions 

1 ............................................................................................................... 2 .32 11 .5 18 .6 35 .8 

2 ............................................................................................................... 6 .44 32 .1 51 .7 99 .3 

3 ............................................................................................................... 8 .69 43 .3 69 .9 134 

4 ............................................................................................................... 48 .0 239 385 739 

5 ............................................................................................................... 66 .3 331 534 1,024 

Total FFC Emissions 

1 ............................................................................................................... 19 .7 98 .4 159 305 

2 ............................................................................................................... 54 .3 270 435 836 

3 ............................................................................................................... 74 .1 369 595 1,142 

4 ............................................................................................................... 404 2,009 3,238 6,216 

5 ............................................................................................................... 573 2,861 4,616 8,855 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$). The 

values are for CO2 only (i.e., not CO2eq of other greenhouse gases). 

** Includes the increase in power sector emissions from higher electricity use at TSLs 4 and 5. 

TABLE V.38—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER RESIDENTIAL BOILER

STANDBY MODE AND OFF MODE TRIAL STANDARD LEVELS

TSL 

SCC Case* 

(million 2013$) 

5% Discount 

rate, average 

3% Discount 

rate, average 

2.5% Discount 

rate, average 

3% Discount 

rate, 95th 

percentile 

Power Sector Emissions 

1 ............................................................................................................... 7 .5 37 .6 60 .7 116 .3 

2 ............................................................................................................... 8 .6 43 .0 69 .5 133 .2 

3 ............................................................................................................... 10 .9 54 .4 87 .7 168 .1 

Upstream Emissions 

1 ............................................................................................................... 0 .52 2 .6 4 .3 8 .1 

2 ............................................................................................................... 0 .59 3 .0 4 .9 9 .3 

3 ............................................................................................................... 0 .75 3 .8 6 .2 11 .8 

Total FFC Emissions 

1 ............................................................................................................... 8 .1 40 .2 64 .9 124 .5 

2 ............................................................................................................... 9 .2 46 .1 74 .3 142 .5 

3 ............................................................................................................... 11 .6 58 .2 93 .9 179 .9 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$). The 

values are for CO2 only (i.e., not CO2eq of other greenhouse gases). 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17287 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other 

greenhouse gas (GHG) emissions to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed on 

reducing CO2 emissions in this 

rulemaking is subject to change. DOE, 

together with other Federal agencies, 

will continue to review various 

methodologies for estimating the 

monetary value of reductions in CO2

and other GHG emissions. This ongoing 

review will consider the comments on 

this subject that are part of the public 

record for this and other rulemakings, as 

well as other methodological 

assumptions and issues. However, 

consistent with DOE’s legal obligations, 

and taking into account the uncertainty 

involved with this particular issue, DOE 

has included in this proposed rule the 

most recent values and analyses 

resulting from the interagency review 

process. 

DOE also estimated a range for the 

cumulative monetary value of the 

economic benefits associated with NOX

emissions reductions anticipated to 

result from amended standards for the 

residential boiler products that are the 

subject of this NOPR. The dollar-per-ton 

values that DOE used are discussed in 

section IV.L. Table V.39 presents the 

cumulative present values for NOX

emissions reductions for each AFUE 

TSL calculated using the average dollarper-ton values and seven-percent and 

three-percent discount rates. Table V.40 

presents the cumulative present values 

for NOX emissions reductions for each 

standby mode and off mode TSL 

calculated using the average dollar-perton values and seven-percent and threepercent discount rates. 

TABLE V.39—ESTIMATES OF PRESENT

VALUE OF NOX EMISSIONS REDUCTION UNDER RESIDENTIAL BOILER

AFUE TRIAL STANDARD LEVELS

TSL 

Million 2013$ 

3% Discount 

rate 

7% Discount 

rate 

Site and Power Sector Emissions* 

1 ............ 3 .03 1 .15 

2 ............ 8 .17 3 .13 

3 ............ 11 .4 4 .36 

4 ............ 63 .7 24 .5 

5 ............ 88 .8 33 .8 

Upstream Emissions 

1 ............ 6 .38 2 .42 

2 ............ 17 .3 6 .60 

3 ............ 24 .0 9 .15 

4 ............ 132 51 .0 

5 ............ 186 71 .0 

Total FFC Emissions** 

1 ............ 9 .40 3 .58 

2 ............ 25 .5 9 .73 

3 ............ 35 .5 13 .5 

4 ............ 196 75 .6 

5 ............ 275 105 

* Includes the increase in power sector 

emissions from higher electricity use at TSLs 

4 and 5. 

** Components may not sum to total due to 

rounding. 

TABLE V.40—ESTIMATES OF PRESENT

VALUE OF NOX EMISSIONS REDUCTION UNDER RESIDENTIAL BOILER

STANDBY MODE AND OFF MODE

TRIAL STANDARD LEVELS

TSL 

Million 2013$ 

3% Discount 

rate 

7% Discount 

rate 

Power Sector Emissions 

1 ............ 0 .08 0 .07 

2 ............ 0 .09 0 .08 

3 ............ 0 .11 0 .10 

Upstream Emissions 

1 ............ 1 .37 0 .49 

2 ............ 1 .56 0 .56 

3 ............ 1 .97 0 .70 

TABLE V.40—ESTIMATES OF PRESENT

VALUE OF NOX EMISSIONS REDUCTION UNDER RESIDENTIAL BOILER

STANDBY MODE AND OFF MODE

TRIAL STANDARD LEVELS—Continued 

TSL 

Million 2013$ 

3% Discount 

rate 

7% Discount 

rate 

Total FFC Emissions** 

1 ............ 1 .44 0 .56 

2 ............ 1 .65 0 .64 

3 ............ 2 .08 0 .80 

** Components may not sum to total due to 

rounding. 

7. Other Factors 

The Secretary of Energy, in 

determining whether a standard is 

economically justified, may consider 

any other factors that the Secretary 

deems to be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VI)) No other factors 

were considered in this analysis. 

8. Summary of National Economic 

Impacts 

The NPV of the monetized benefits 

associated with emissions reductions 

can be viewed as a complement to the 

NPV of the consumer savings calculated 

for each TSL considered in this 

rulemaking. Table V.41 presents the 

NPV values that result from adding the 

estimates of the potential economic 

benefits resulting from reduced CO2 and 

NOX emissions in each of four valuation 

scenarios to the NPV of consumer 

savings calculated for each AFUE TSL 

for residential boilers considered in this 

rulemaking, at both a seven-percent and 

three-percent discount rate. Table V.42 

presents the NPV values that result from 

adding the estimates of the potential 

economic benefits resulting from 

reduced CO2 and NOX emissions in each 

of four valuation scenarios to the NPV 

of consumer savings calculated for each 

standby mode and off mode TSL for 

residential boilers considered in this 

rulemaking, at both a seven-percent and 

three-percent discount rate. The CO2

values used in the columns of each table 

correspond to the four sets of SCC 

values discussed above. 

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17288 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

TABLE V.41—RESIDENTIAL BOILER TSLS (AFUE): NET PRESENT VALUE OF CONSUMER SAVINGS COMBINED WITH

PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

TSL 

Consumer NPV at 3% discount rate added with: 

SCC Case 

$12.0/metric 

ton CO2* and 

medium value 

for NOX

SCC Case 

$40.5/metric 

ton CO2* and 

medium value 

for NOX

SCC Case 

$62.4/metric 

ton CO2* and 

medium value 

for NOX

SCC Case 

$119/metric 

ton CO2* and 

medium value 

for NOX

Billion 2013$ 

1 ....................................................................................................................... 0.4 0.5 0.5 0.7 

2 ....................................................................................................................... 1.2 1.4 1.6 2.0 

3 ....................................................................................................................... 1.4 1.7 1.9 2.5 

4 ....................................................................................................................... 4.0 5.6 6.9 9.8 

5 ....................................................................................................................... 4.7 7.0 8.8 13.0 

Consumer NPV at 7% discount rate added with: 

TSL SCC Case 

$12.0/metric 

ton CO2* 

SCC Case 

$40.5/metric 

ton CO2* 

SCC Case 

$62.4/metric 

ton CO2* 

SCC Case 

$119/metric 

ton CO2* 

Billion 2013$ 

1 ....................................................................................................................... 0.1 0.2 0.3 0.4 

2 ....................................................................................................................... 0.4 0.6 0.8 1.2 

3 ....................................................................................................................... 0.4 0.7 1.0 1.5 

4 ....................................................................................................................... 0.7 2.3 3.5 6.5 

5 ....................................................................................................................... 0.5 2.8 4.5 8.8 

* These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium value, which corresponds 

to $2,684 per ton. 

TABLE V.42—TABLE RESIDENTIAL BOILER TSLS (STANDBY MODE AND OFF MODE): NET PRESENT VALUE OF CONSUMER

SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

TSL 

Consumer NPV at 3% discount rate added with: 

SCC Case 

$12.0/metric 

ton CO2* and 

medium value 

for NOX

SCC Case 

$40.5/metric 

ton CO2* and 

medium value 

for NOX

SCC Case 

$62.4/metric 

ton CO2* and 

medium value 

for NOX

SCC Case 

$119/metric 

ton CO2* and 

medium value 

for NOX

Billion 2013$ 

1 ....................................................................................................................... 0.41 0.44 0.47 0.53 

2 ....................................................................................................................... 0.34 0.37 0.40 0.47 

3 ....................................................................................................................... 0.45 0.50 0.53 0.62 

Consumer NPV at 7% discount rate added with: 

TSL SCC Case 

$12.0/metric 

ton CO2* 

SCC Case 

$40.5/metric 

ton CO2* 

SCC Case 

$62.4/metric 

ton CO2* 

SCC Case 

$119/metric 

ton CO2* 

Billion 2013$ 

1 ....................................................................................................................... 0.18 0.21 0.23 0.29 

2 ....................................................................................................................... 0.13 0.17 0.20 0.26 

3 ....................................................................................................................... 0.18 0.23 0.26 0.35 

* These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium value, which corresponds 

to $2,684 per ton. 

Although adding the value of 

consumer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

cost savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and the SCC are 

performed with different methods that 

use different time frames for analysis. 

The national operating cost savings is 

measured for the lifetime of products 

shipped in 2020–2049. The SCC values, 

on the other hand, reflect the present 

value of future climate-related impacts 

resulting from the emission of one 

metric ton of CO2 in each year; these 

impacts continue well beyond 2100. 

C. Proposed Standards 

When considering proposed 

standards, the new or amended energy 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17289 

97P.C. Reiss and M.W. White, Household 

Electricity Demand, Revisited, Review of Economic 

Studies (2005) 72, 853–883. 

98Alan Sanstad, Notes on the Economics of 

Household Energy Consumption and Technology 

Choice. Lawrence Berkeley National Laboratory 

(2010) (Available at: http://www1.eere.energy.gov/

buildings/appliance_standards/pdfs/consumer_ee_

theory.pdf (Last accessed May 3, 2013). 

conservation standards that DOE adopts 

for any type (or class) of covered 

product, including residential boilers, 

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)) As discussed 

previously, in determining whether a 

standard is economically justified, the 

Secretary must determine whether the 

benefits of the standard exceed its 

burdens by, to the greatest extent 

practicable, considering the seven 

statutory factors discussed previously. 

(42 U.S.C. 6295(o)(2)(B)(i)) The new or 

amended standard must also ‘‘result in 

significant conservation of energy.’’ (42 

U.S.C. 6295(o)(3)(B)) 

For this NOPR, DOE considered the 

impacts of amended standards for 

residential boilers at each TSL, 

beginning with the maximum 

technologically feasible level, to 

determine whether that level was 

economically justified. Where the maxtech level was not justified, DOE then 

considered the next most efficient level 

and undertook the same evaluation until 

it reached the highest efficiency level 

that is both technologically feasible and 

economically justified and saves a 

significant amount of energy. 

To aid the reader in understanding 

the benefits and/or burdens of each TSL, 

tables in this section summarize the 

quantitative analytical results for each 

TSL, based on the assumptions and 

methodology discussed herein. The 

efficiency levels contained in each TSL 

are described in section V.A. In addition 

to the quantitative results presented in 

the tables, DOE also considers other 

burdens and benefits that affect 

economic justification. These include 

the impacts on identifiable subgroups of 

consumer who may be 

disproportionately affected by a national 

standard (see section V.B.1.b), and 

impacts on employment. DOE discusses 

the impacts on direct employment in 

residential boiler manufacturing in 

section V.B.2.b, and discusses the 

indirect employment impacts in section 

V.B.3.c. 

DOE also notes that the economics 

literature provides a wide-ranging 

discussion of how consumers trade off 

upfront costs and energy savings in the 

absence of government intervention. 

Much of this literature attempts to 

explain why consumers appear to 

undervalue energy efficiency 

improvements. There is evidence that 

consumers undervalue future energy 

savings as a result of: (1) A lack of 

information; (2) a lack of sufficient 

salience of the long-term or aggregate 

benefits; (3) a lack of sufficient savings 

to warrant delaying or altering 

purchases; (4) excessive focus on the 

short term, in the form of inconsistent 

weighting of future energy cost savings 

relative to available returns on other 

investments; (5) computational or other 

difficulties associated with the 

evaluation of relevant tradeoffs; and (6) 

a divergence in incentives (for example, 

renter versus owner or builder versus 

purchaser). Other literature indicates 

that with less than perfect foresight and 

a high degree of uncertainty about the 

future, consumers may trade off at a 

higher than expected rate between 

current consumption and uncertain 

future energy cost savings. This 

undervaluation suggests that regulation 

that promotes energy efficiency can 

produce significant net private gains (as 

well as producing social gains by, for 

example, reducing pollution). 

In DOE’s current regulatory analysis, 

potential changes in the benefits and 

costs of a regulation due to changes in 

consumer purchase decisions are 

included in two ways. First, if 

consumers forego a purchase of a 

product in the standards case, this 

decreases sales for product 

manufacturers and the cost to 

manufacturers is included in the MIA. 

Second, DOE accounts for energy 

savings attributable only to products 

actually used by consumers in the 

standards case; if a standard decreases 

the number of products purchased by 

consumers, this decreases the potential 

energy savings from an energy 

conservation standard. DOE provides 

estimates of changes in the volume of 

product purchases in chapter 9 of the 

NOPR TSD. DOE’s current analysis does 

not explicitly control for heterogeneity 

in consumer preferences, preferences 

across subcategories of products or 

specific features, or consumer price 

sensitivity variation according to 

household income.97

While DOE is not prepared at present 

to provide a fuller quantifiable 

framework for estimating the benefits 

and costs of changes in consumer 

purchase decisions due to an energy 

conservation standard, DOE is 

committed to developing a framework 

that can support empirical quantitative 

tools for improved assessment of the 

consumer welfare impacts of appliance 

standards. DOE has posted a paper that 

discusses the issue of consumer welfare 

impacts of appliance standards, and 

potential enhancements to the 

methodology by which these impacts 

are defined and estimated in the 

regulatory process.98 DOE welcomes 

comments on how to more fully assess 

the potential impact of energy 

conservation standards on consumer 

choice and how to quantify this impact 

in its regulatory analysis. 

1. Benefits and Burdens of Trial 

Standard Levels Considered for 

Residential Boilers for AFUE Standards 

Table V.43 and Table V.44 summarize 

the quantitative impacts estimated for 

each AFUE TSL for residential boilers. 

The national impacts are measured over 

the lifetime of residential boilers 

purchased in the 30-year period that 

begins in the year of compliance with 

amended standards (2020–2049). The 

energy savings, emissions reductions, 

and value of emissions reductions refer 

to full-fuel-cycle results. The efficiency 

levels contained in each TSL are 

described in section IV.A. 

TABLE V.43—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL BOILERS AFUE TSLS: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

National FFC Energy Savings (quads) 

0.06 0.15 0.21 1.15 1.71 

NPV of Consumer Benefits (2013$ billion) 

3% discount rate .......................................... 0.37 .................... 1.12 .................... 1.28 .................... 3.42 .................... 3.87 

7% discount rate .......................................... 0.11 .................... 0.34 .................... 0.36 .................... 0.19 .................... (0.20) 

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TABLE V.43—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL BOILERS AFUE TSLS: NATIONAL IMPACTS— 

Continued 

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

0.06 0.15 0.21 1.15 1.71 

Cumulative Emissions Reduction (Total FFC Emissions) * 

CO2 (million metric tons) .............................. 3.45 .................... 9.43 .................... 12.9 .................... 70.2 .................... 100 

SO2 (thousand tons) .................................... 0.130 .................. 0.751 .................. 0.312 .................. 0.555 .................. 1.07 

NOX (thousand tons) ................................... 8.50 .................... 23.0 .................... 32.1 .................... 176 ..................... 250 

Hg (tons) ...................................................... 0.000 .................. 0.000 .................. (0.001) ................ (0.005) ................ (0.004) 

N2O (thousand tons) .................................... 0.028 .................. 0.100 .................. 0.097 .................. 0.529 .................. 0.602 

N2O (thousand tons CO2eq) ........................ 7.35 .................... 26.4 .................... 25.7 .................... 140 ..................... 160 

CH4 (thousand tons) .................................... 28.6 .................... 66.5 .................... 110 ..................... 585 ..................... 940 

CH4 (thousand tons CO2eq) ** ..................... 800 ..................... 1,863 .................. 3,084 .................. 16,381 ................ 26,325 

Value of Emissions Reduction (Total FFC Emissions) 

CO2 (2013$ billion) † .................................... 0.020 to 0.30 ...... 0.054 to 0.84 ...... 0.074 to 1.14 ...... 0.404 to 6.22 ...... 0.573 to 8.86

NOX—3% discount rate (2013$ million) ...... 9.4 ...................... 25.5 .................... 35.5 .................... 196 ..................... 275 

NOX—7% discount rate (2013$ million) ...... 3.58 .................... 9.73 .................... 13.5 .................... 75.6 .................... 105 

* Includes the increase in power sector emissions from higher electricity use at TSLs 4 and 5. 

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). 

† Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

Note: Parentheses indicate negative values. 

TABLE V.44—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL BOILERS AFUE TSLS: MANUFACTURER AND

CONSUMER IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Manufacturer Impacts 

Industry NPV (2013$ million) .......................

Base Case = 380.96 ....................................

379.17 to 380.91 378.31 to 383.35 372.97 to 381.73 284.75 to 369.87 241.69 to 380.46 

Change in Industry NPV (2013$ million) ..... (1.79) to (0.04) ... (2.65) to 2.39 ...... (7.99) to 0.77 ...... (96.21) to (11.08) (139.26) to (0.50) 

Change in Industry NPV (%) † ..................... (0.47) to (0.01) ... (0.70) to 0.63 ...... (2.1) to 0.20 ....... (25.25) to (2.91) (36.56) to (0.13) 

Consumer Mean LCC Savings (2013$) 

Gas-fired hot water boilers .......................... 35 ....................... 100 ..................... 123 ..................... 201 ..................... 134 

Gas-fired steam boilers ................................ 61 ....................... 61 ....................... 61 ....................... 61 ....................... 250 

Oil-fired hot water boilers ............................. 72 ....................... 257 ..................... 257 ..................... 273 ..................... 273 

Oil-fired steam boilers .................................. 259 ..................... 723 ..................... 723 ..................... 723 ..................... 723 

Shipment-Weighted Average ** .................... 52 ....................... 155 ..................... 169 ..................... 221 ..................... 195 

Consumer Median PBP (years) 

Gas-fired hot water boilers .......................... 1.58 .................... 1.58 .................... 7.72 .................... 18.77 .................. 22.13 

Gas-fired steam boilers ................................ 1.32 .................... 1.32 .................... 1.32 .................... 1.32 .................... 11.58 

Oil-fired hot water boilers ............................. 8.34 .................... 7.59 .................... 7.59 .................... 21.36 .................. 21.36 

Oil-fired steam boilers .................................. 6.31 .................... 10.51 .................. 10.51 .................. 10.51 .................. 10.51 

Shipment-Weighted Average ** .................... 3.54 .................... 3.43 .................... 7.23 .................... 17.88 .................. 20.79 

Distribution of Consumer LCC Impacts 

Gas-fired hot water boilers * 

Consumers with Net Cost (%) .............. 4 ......................... 3 ......................... 13 ....................... 38 ....................... 57 

Consumers with Net Benefit (%) .......... 18 ....................... 29 ....................... 30 ....................... 33 ....................... 36 

Consumers with No Impact (%) ........... 79 ....................... 68 ....................... 57 ....................... 29 ....................... 7 

Gas-fired steam boilers * 

Consumers with Net Cost (%) .............. 1 ......................... 1 ......................... 1 ......................... 1 ......................... 28 

Consumers with Net Benefit (%) .......... 14 ....................... 14 ....................... 14 ....................... 14 ....................... 61 

Consumers with No Impact (%) ........... 86 ....................... 86 ....................... 86 ....................... 86 ....................... 11 

Oil-fired hot water boilers * 

Consumers with Net Cost (%) .............. 4 ......................... 9 ......................... 9 ......................... 54 ....................... 54 

Consumers with Net Benefit (%) .......... 15 ....................... 42 ....................... 42 ....................... 38 ....................... 38 

Consumers with No Impact (%) ........... 81 ....................... 49 ....................... 49 ....................... 8 ......................... 8 

Oil-fired steam boilers * 

Consumers with Net Cost (%) .............. 3 ......................... 23 ....................... 23 ....................... 23 ....................... 23 

Consumers with Net Benefit (%) .......... 27 ....................... 67 ....................... 67 ....................... 67 ....................... 67 

Consumers with No Impact (%) ........... 71 ....................... 10 ....................... 10 ....................... 10 ....................... 10 

* Rounding may cause some items to not total 100 percent. 

† Note: Parentheses indicate negative values. 

** Weighted by shares of each product class in total projected shipments in 2020. 

† Note: Parentheses indicate negative values. 

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99TSL 5 is estimated to cause a very slight 

increase in mercury emissions due to associated 

increase in boiler electricity use. 

100TSL 4 is estimated to cause a very slight 

increase in mercury emissions due to associated 

increase in boiler electricity use. 

101TSL 3 is estimated to cause a very slight 

increase in mercury emissions due to the associated 

increase in boiler electricity use. 

First, DOE considered TSL 5, the most 

efficient level (max-tech), which would 

save an estimated total of 1.71 quads of 

energy, an amount DOE considers 

significant. TSL 5 has an estimated NPV 

of consumer benefit of -$0.2 billion 

using a 7-percent discount rate, and 

$3.87 billion using a 3-percent discount 

rate. 

The cumulative emissions reductions 

at TSL 5 are 100 million metric tons of 

CO2, 250 thousand tons of NOX, 1.07 

thousand tons of SO2, 0.602 thousand 

tons of N2O, 940 thousand tons of CH4, 

and ¥0.004 tons of Hg.99 The estimated 

monetary value of the CO2 emissions 

reductions at TSL 5 ranges from $0.57 

billion to $8.86 billion. 

At TSL 5, the average LCC savings are 

$134 for gas-fired hot water boilers, 

$250 for gas-fired steam boilers, $273 for 

oil-fired hot water boilers, and $723 for 

oil-fired steam boilers. The median PBP 

is 22.1 years for gas-fired hot water 

boilers, 11.6 years gas-fired steam 

boilers, 21.4 years for oil-fired hot water 

boilers, and 10.5 years for oil-fired 

steam boilers. The share of consumers 

experiencing a net LCC benefit is 36 

percent for gas-fired hot water boilers, 

61 percent for gas-fired steam boilers, 38 

percent for oil-fired hot water boilers, 

and 67 percent for oil-fired steam 

boilers, while the share of consumers 

experiencing a net LCC cost is 57 

percent for gas-fired hot water boilers, 

28 percent for gas-fired steam boilers, 54 

percent for oil-fired hot water boilers, 

and 23 percent for oil-fired steam 

boilers. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $139.26 

million to a decrease of $0.5 million. If 

the decrease of $139.26 million were to 

occur, TSL 5 could result in a net loss 

of 36.56 percent in INPV to 

manufacturers of covered residential 

boilers. 

The Secretary tentatively concludes 

that, at TSL 5 for residential boilers, the 

benefits of energy savings, positive NPV 

of total consumer benefits at a 3-percent 

discount rate, average consumer LCC 

savings, emission reductions, and the 

estimated monetary value of the 

emissions reductions would be 

outweighed by the large reduction in 

industry value at TSL 5, the negative 

NPV of total consumer benefits at a 7- 

percent discount rate, and the high 

number of consumers experiencing a net 

LCC cost for gas-fired hot water boilers 

and oil-fired hot water boilers. 

Consequently, DOE has concluded that 

TSL 5 is not economically justified. 

Next, DOE considered TSL 4, which 

would save an estimated total of 1.15 

quads of energy, an amount DOE 

considers significant. TSL 4 has an 

estimated NPV of consumer benefit of 

$0.19 billion using a 7-percent discount 

rate, and $3.42 billion using a 3-percent 

discount rate. 

The cumulative emissions reductions 

at TSL 4 are 70.2 million metric tons of 

CO2, 176.12 thousand tons of NOX, 0.55 

thousand tons of SO2, 0.529 thousand 

tons of N2O, 585 thousand tons of CH4, 

and ¥0.005 tons of Hg.100 The 

estimated monetary value of the CO2

emissions reductions at TSL 4 ranges 

from $0.40 billion to $6.22 billion. 

At TSL 4, the average LCC savings are 

$201 for gas-fired hot water boilers, $61 

for gas-fired steam boilers, $273 for oilfired hot water boilers, and $723 for oilfired steam boilers. The median PBP is 

18.8 years for gas-fired hot water boilers, 

1.3 years gas-fired steam boilers, 21.4 

years for oil-fired hot water boilers, and 

10.5 years for oil-fired steam boilers. 

The share of consumers experiencing a 

net LCC benefit is 33 percent for gasfired hot water boilers, 14 percent for 

gas-fired steam boilers, 38 percent for 

oil-fired hot water boilers, and 67 

percent for oil-fired steam boilers, while 

the share of consumers experiencing a 

net LCC cost is 38 percent for gas-fired 

hot water boilers, 1 percent for gas-fired 

steam boilers, 54 percent for oil-fired 

hot water boilers, and 23 percent for oilfired steam boilers. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $96.21 

million to a decrease of $11.08 million. 

If the decrease of $96.21 million were to 

occur, TSL 4 could result in a net loss 

of 25.25 percent in INPV to 

manufacturers of covered residential 

boilers. 

DOE strongly considered TSL 4, but 

based on the information available, the 

Secretary tentatively concludes that, at 

TSL 4 for residential boilers, the 

benefits of energy savings, positive NPV 

of total consumer benefits, average 

consumer LCC savings, emission 

reductions, and the estimated monetary 

value of the emissions reductions would 

be outweighed by the large reduction in 

industry value at TSL 4 and the high 

number of consumers experiencing a net 

LCC cost for gas-fired hot water boilers 

and oil-fired hot water boilers. 

Consequently, DOE has tentatively 

concluded that TSL 4 is not 

economically justified. However, DOE 

requests comments and data from 

interested parties that would assist DOE 

in making a final decision on the 

weighting of benefits and burdens for 

TSL 4, and DOE intends to reconsider 

adoption of TSL 4 in the final rule in 

light of any comments received. 

Next, DOE considered TSL 3, which 

would save an estimated total of 0.21 

quads of energy, an amount DOE 

considers significant. TSL 3 has an 

estimated NPV of consumer benefit of 

$0.36 billion using a 7-percent discount 

rate, and $1.28 billion using a 3-percent 

discount rate. 

The cumulative emissions reductions 

at TSL 3 are 12.9 million metric tons of 

CO2, 32.1 thousand tons of NOX, 0.31 

thousand tons of SO2, 0.097 thousand 

tons of N2O, 110 thousand tons of CH4, 

and ¥0.001 tons of Hg.101 The 

estimated monetary value of the CO2

emissions reductions at TSL 3 ranges 

from $0.07 billion to $1.14 billion. 

At TSL 3, the average LCC savings are 

$123 for gas-fired hot water boilers, $61 

for gas-fired steam boilers, $257 for oilfired hot water boilers, and $723 for oilfired steam boilers. The median PBP is 

7.7 years for gas-fired hot water boilers, 

1.3 years gas-fired steam boilers, 7.6 

years for oil-fired hot water boilers, and 

10.5 years for oil-fired steam boilers. 

The share of consumers experiencing a 

net LCC benefit is 30 percent for gasfired hot water boilers, 14 percent for 

gas-fired steam boilers, 42 percent for 

oil-fired hot water boilers, and 67 

percent for oil-fired steam boilers, while 

the share of consumers experiencing a 

net LCC cost is 13 percent for gas-fired 

hot water boilers, 1 percent for gas-fired 

steam boilers, 9 percent for oil-fired hot 

water boilers, and 23 percent for oilfired steam boilers. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $7.99 

million to an increase of $0.77 million. 

If the decrease of $7.99 million were to 

occur, TSL 3 could result in a net loss 

of 2.1 percent in INPV to manufacturers 

of covered residential boilers. 

After considering the analysis and 

weighing the benefits and the burdens, 

DOE has tentatively concluded that at 

TSL 3 for residential boilers, the 

benefits of energy savings, positive NPV 

of consumer benefit, positive impacts on 

consumers (as indicated by positive 

average LCC savings, favorable PBPs, 

and a higher percentage of consumers 

who would experience LCC benefits as 

opposed to costs), emission reductions, 

and the estimated monetary value of the 

emissions reductions would outweigh 

the potential reductions in INPV for 

manufacturers. Accordingly, the 

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17292 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

Secretary of Energy has tentatively 

concluded that TSL 3 would save a 

significant amount of energy and is 

technologically feasible and 

economically justified. However, as 

noted above, based on comments 

received, DOE plans to reconsider TSL 

4 in the final rule. Because DOE has not 

yet reached a final conclusion regarding 

the weighting of benefits and burdens at 

TSL 4, it seeks a more complete 

understanding of the benefits and 

burdens of moving forward at both TSL 

3 and 4, as well as any implementation 

problems that might be reasonably 

foreseen. 

Based on the above considerations, 

DOE today proposes to adopt the AFUE 

energy conservation standards for 

residential boilers at TSL 3. Table V.45 

presents the proposed energy 

conservation standards for residential 

boilers. 

TABLE V.45—PROPOSED AMENDED AFUE ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS

Product class Proposed standard: 

AFUE % Design requirement 

Gas-fired hot water boiler.85 Constant-burning pilot not permitted. Automatic means for adjusting water temperature required (except for boilers equipped with tankless domestic water heating coils). 

Gas-fired steam boiler .. 82 Constant-burning pilot not permitted. 

Oil-fired hot water boiler 86 Automatic means for adjusting temperature required (except for boilers equipped with 

tankless domestic water heating coils). 

Oil-fired steam boiler .... 86 None. 

Electric hot water boiler None Automatic means for adjusting temperature required (except for boilers equipped with 

tankless domestic water heating coils). 

Electric steam boiler ..... None None. 

2. Benefits and Burdens of Trial 

Standard Levels Considered for 

Residential Boilers for Standby Mode 

and Off Mode 

Table V.46 through Table V.47 

summarize the quantitative impacts 

estimated for each TSL considered for 

residential boiler standby mode and off 

mode power. The national impacts are 

measured over the lifetime of residential 

boilers purchased in the 30-year period 

that begins in the year of compliance 

with amended standards (2020–2049). 

The energy savings, emissions 

reductions, and value of emissions 

reductions refer to full-fuel-cycle 

results. The efficiency levels contained 

in each TSL are described in section 

V.A. 

TABLE V.46—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL BOILER STANDBY MODE AND OFF MODE TSLS: 

NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 

National FFC Energy Savings (quads) 

0.031 .............................. 0.035 .............................. 0.045. 

NPV of Consumer Benefits (2013$ billion) 

3% discount rate ........................................................................ 0.401 .............................. 0.325 .............................. 0.437. 

7% discount rate ........................................................................ 0.167 .............................. 0.121 .............................. 0.167. 

Cumulative Emissions Reduction (Total FFC Emissions) * 

CO2 (million metric tons) ............................................................ 1.42 ................................ 1.62 ................................ 2.05. 

SO2 (thousand tons) ................................................................... 1.51 ................................ 1.73 ................................ 2.19. 

NOX (thousand tons) .................................................................. 1.32 ................................ 1.51 ................................ 1.91. 

Hg (tons) ..................................................................................... 0.002 .............................. 0.003 .............................. 0.004. 

CH4 (thousand tons) ................................................................... 8.1 .................................. 9.3 .................................. 11.8. 

CH4 (thousand tons CO2eq) ....................................................... 227.1 .............................. 260.2 .............................. 329.4. 

N2O (thousand tons) .................................................................. 0.041 .............................. 0.047 .............................. 0.060. 

N2O (thousand tons CO2eq) ...................................................... 11.0 ................................ 12.6 ................................ 15.9. 

Value of Emissions Reduction (Total FFC Emissions) 

CO2 (2013$ billion) * ................................................................... 0.008 to 0.124 ................ 0.009 to 0.142 ................ 0.012 to 0.180. 

NOX—3% discount rate (2013$ million) .................................... 1.44 ................................ 1.65 ................................ 2.08. 

NOX—7% discount rate (2013$ million) .................................... 0.56 ................................ 0.64 ................................ 0.80. 

* Range of the value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

TABLE V.47—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL BOILER STANDBY MODE AND OFF MODE TSLS: 

MANUFACTURER AND CONSUMER IMPACTS

Category TSL 1 TSL 2 TSL 3 

Manufacturer Impacts 

Industry NPV (2013$ million) Base Case = 380.96 ................... 380.77 to 380.88 ............ 379.94 to 381.16 ............ 379.88 to 381.17. 

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TABLE V.47—SUMMARY OF ANALYTICAL RESULTS FOR RESIDENTIAL BOILER STANDBY MODE AND OFF MODE TSLS: 

MANUFACTURER AND CONSUMER IMPACTS—Continued 

Category TSL 1 TSL 2 TSL 3 

Change in Industry NPV (2013$ million) † ................................. (0.19) to (0.07) ............... (1.02) to 0.20 ................. (1.08) to 0.22. 

Changes in Industry NPV (%) † ................................................. (0.05) to (0.02) ............... (0.27) to 0.05 ................. (0.28) to 0.06. 

Consumer Mean LCC Savings (2013$) 

Gas-Fired Hot Water Boilers ...................................................... 14 ................................... 7 ..................................... 14. 

Gas-Fired Steam Boilers ............................................................ 15 ................................... 9 ..................................... 15. 

Oil-Fired Hot Water Boilers ........................................................ 15 ................................... 9 ..................................... 15. 

Oil-Fired Steam Boilers .............................................................. 14 ................................... 8 ..................................... 15. 

Electric Hot Water Boilers .......................................................... 11 ................................... 3 ..................................... 8. 

Electric Steam Boilers ................................................................ 11 ................................... 4 ..................................... 9. 

Shipment-Weighted Average ** .................................................. 14 ................................... 8 ..................................... 14. 

Consumer Median PBP (years) 

Gas-Fired Hot Water Boilers ...................................................... 1.06 ................................ 10.43 .............................. 7.83. 

Gas-Fired Steam Boilers ............................................................ 1.06 ................................ 10.30 .............................. 7.39. 

Oil-Fired Hot Water Boilers ........................................................ 1.04 ................................ 10.24 .............................. 7.39. 

Oil-Fired Steam Boilers .............................................................. 1.31 ................................ 10.71 .............................. 8.35. 

Electric Hot Water Boilers .......................................................... 1.97 ................................ 17.65 .............................. 10.98. 

Electric Steam Boilers ................................................................ 1.96 ................................ 10.54 .............................. 10.88. 

Shipment-Weighted Average ** .................................................. 1.08 ................................ 10.52 .............................. 7.74. 

Distribution of Consumer LCC Impacts 

Gas-fired hot water boilers * 

Consumers with Net Cost (%) ............................................ 0 ..................................... 11 ................................... 6. 

Consumers with Net Benefit (%) ........................................ 49 ................................... 38 ................................... 44. 

Consumers with No Impact (%) .......................................... 51 ................................... 51 ................................... 51. 

Gas-fired steam boilers * 

Consumers with Net Cost (%) ............................................ 0 ..................................... 9 ..................................... 4. 

Consumers with Net Benefit (%) ........................................ 49 ................................... 41 ................................... 45. 

Consumers with No Impact (%) .......................................... 51 ................................... 51 ................................... 51. 

Oil-fired hot water boilers* 

Consumers with Net Cost (%) ............................................ 0 ..................................... 9 ..................................... 4. 

Consumers with Net Benefit (%) ........................................ 49 ................................... 41 ................................... 45. 

Consumers with No Impact (%) .......................................... 51 ................................... 51 ................................... 51. 

Oil-fired steam boilers * 

Consumers with Net Cost (%) ............................................ 0 ..................................... 9 ..................................... 4. 

Consumers with Net Benefit (%) ........................................ 49 ................................... 41 ................................... 45. 

Consumers with No Impact (%) .......................................... 51 ................................... 51 ................................... 51. 

Electric hot water boilers * 

Consumers with Net Cost (%) ............................................ 0 ..................................... 19 ................................... 11. 

Consumers with Net Benefit (%) ........................................ 49 ................................... 30 ................................... 38. 

Consumers with No Impact (%) .......................................... 51 ................................... 51 ................................... 51. 

Electric steam boilers * 

Consumers with Net Cost (%) ............................................ 0 ..................................... 19 ................................... 11. 

Consumers with Net Benefit (%) ........................................ 49 ................................... 31 ................................... 38. 

Consumers with No Impact (%) .......................................... 51 ................................... 51 ................................... 51. 

* Rounding may cause some items not to total 100 percent. 

** Weighted by shares of each product class in total projected shipments in 2020. 

† Parentheses indicate negative (¥) values. 

First, DOE considered TSL 3, the most 

efficient level (max-tech), which would 

save an estimated total of 0.045 quads 

of energy, an amount DOE considers 

significant. TSL 3 has an estimated NPV 

of consumer benefit of $0.167 billion 

using a 7-percent discount rate, and 

$0.437 billion using a 3-percent 

discount rate. 

The cumulative emissions reductions 

at TSL 3 are 2.05 million metric tons of 

CO2, 1.91 thousand tons of NOX, 2.19 

thousand tons of SO2, and 0.004 tons of 

Hg, 0.060 thousand tons of N2O, and 

11.8 thousand tons of CH4. The 

estimated monetary value of the CO2

emissions reductions at TSL 3 ranges 

from $0.012 billion to $0.180 billion. 

At TSL 3, the average LCC savings are 

$14 for gas-fired hot water boilers, $15 

for gas-fired steam boilers, $15 for oilfired hot water boilers, $15 for oil-fired 

steam boilers, $8 for electric hot water 

boilers, and $9 for electric steam boilers. 

The median PBP is 7.83 years for gasfired hot water boilers, 7.39 years gasfired steam boilers, 7.39 years for oilfired hot water boilers, 8.35 years for 

oil-fired steam boilers, 10.98 years for 

electric hot water boilers, and 10.88 

years for electric steam boilers. The 

share of consumers experiencing a net 

LCC benefit is 44 percent for gas-fired 

hot water boilers, 45 percent for gasfired steam boilers, 38 percent for oilfired hot water boilers, 45 percent for 

oil-fired steam boilers, 45 percent for 

electric hot water boilers, and 38 

percent for electric steam boilers, while 

the share of consumers experiencing a 

net LCC cost is 6 percent for gas-fired 

hot water boilers, 4 percent for gas-fired 

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102 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2013, the year used for discounting the 

NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

the latter, DOE used a range of discount rates. From 

the present value, DOE then calculated the fixed 

annual payment over a 30-year period (2018 

through 2047) that yields the same present value. 

The fixed annual payment is the annualized value. 

Although DOE calculated annualized values, this 

does not imply that the time-series of costs and 

benefits from which the annualized values were 

determined is a steady stream of payments. 

steam boilers, 4 percent for oil-fired hot 

water boilers, 4 percent for oil-fired 

steam boilers, 11 percent for electric hot 

water boilers, and 11 percent for electric 

steam boilers. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $1.08 

million to an increase of $0.22 million, 

depending on the manufacturer markup 

scenario. If the larger decrease is 

realized, TSL 3 could result in a net loss 

of 0.28 percent in INPV to 

manufacturers of covered residential 

boilers. 

Accordingly, the Secretary tentatively 

concludes that at TSL 3 for residential 

boiler standby mode and off mode 

power, the benefits of energy savings, 

positive NPV of consumer benefits at 

both 7-percent and 3-percent discount 

rates, positive impacts on consumers (as 

indicated by positive average LCC 

savings, favorable PBPs, and a higher 

percentage of consumers who would 

experience LCC benefits as opposed to 

costs), emission reductions, and the 

estimated monetary value of the CO2

emissions reductions would outweigh 

the economic burden on a small fraction 

of consumers due to the increases in 

product cost. After considering the 

analysis and the benefits and burdens of 

TSL 3, the Secretary has tentatively 

concluded that this trial standard level 

offers the maximum improvement in 

energy efficiency that is technologically 

feasible and economically justified, and 

will result in the significant 

conservation of energy. Therefore, DOE 

proposes to adopt TSL 3 for residential 

boiler standby mode and off mode. The 

proposed energy conservation standards 

for standby mode and off mode, 

expressed as maximum power in watts, 

are shown in Table V.48. 

TABLE V.48—PROPOSED ENERGY

CONSERVATION STANDARDS FOR

RESIDENTIAL BOILER STANDBY

MODE AND OFF MODE

Product class PW,SB

(watts) 

PW,OFF

(watts) 

Gas-fired hot water ... 9 9 

Gas-fired steam ........ 8 8 

Oil-fired hot water ..... 11 11 

Oil-fired steam .......... 11 11 

Electric hot water ...... 8 8 

Electric steam ........... 8 8 

3. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

The benefits and costs of today’s 

proposed standards can also be 

expressed in terms of annualized values. 

The annualized monetary values are the 

sum of: (1) The annualized national 

economic value (expressed in 2013$) of 

the benefits from operating products 

that meet the proposed standards 

(consisting primarily of operating cost 

savings from using less energy, minus 

increases in product purchase costs, 

which is another way of representing 

consumer NPV), and (2) the annualized 

monetary value of the benefits of 

emission reductions, including CO2

emission reductions.102 The value of 

CO2 reductions, otherwise known as the 

Social Cost of Carbon (SCC), is 

calculated using a range of values per 

metric ton of CO2 developed by a recent 

interagency process. 

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

residential boiler products shipped in 

2020–2049. The SCC values, on the 

other hand, reflect the present value of 

some future climate-related impacts 

resulting from the emission of one 

metric ton of carbon dioxide in each 

year; these impacts continue well 

beyond 2100. 

Estimates of annualized benefits and 

costs of the proposed standards for 

residential boilers are shown in Table 

V.49. The results under the primary 

estimate are as follows. Using a 7- 

percent discount rate for benefits and 

costs other than CO2 reduction (for 

which DOE used a 3-percent discount 

rate along with the average SCC series 

that uses a 3-percent discount rate), the 

estimated cost of the residential boiler 

standards proposed in today’s rule is 

$32 million per year in increased 

equipment costs, while the estimated 

benefits are $73 million per year in 

reduced equipment operating costs, $22 

million per year in CO2 reductions, and 

$1.53 million per year in reduced NOX

emissions. In this case, the net benefit 

would amount to $64 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series, the estimated cost of the 

residential boiler standards proposed in 

today’s rule is $32 million per year in 

increased equipment costs, while the 

estimated benefits are $108 million per 

year in reduced equipment operating 

costs, $22 million per year in CO2

reductions, and $2.10 million per year 

in reduced NOX emissions. In this case, 

the net benefit would amount to $100 

million per year. 

TABLE V.49—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AFUE STANDARDS (TSL 3) FOR RESIDENTIAL BOILERS * 

Discount rate 

(%) 

(Million 2013$/year) 

Primary estimate Low net benefits 

estimate 

High net benefits 

estimate 

Benefits 

Consumer Operating Cost Savings 7 .....................................

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

73 ...................................

108 .................................

71 ...................................

105 .................................

75. 

112. 

CO2 Reduction Monetized Value 

($12.0/t case) **.

5 ..................................... 6.1 .................................. 6.1 .................................. 6.2. 

CO2 Reduction Monetized Value 

($40.5/t case) **.

3 ..................................... 21.8 ................................ 21.6 ................................ 22.0. 

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TABLE V.49—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AFUE STANDARDS (TSL 3) FOR RESIDENTIAL

BOILERS *—Continued 

Discount rate 

(%) 

(Million 2013$/year) 

Primary estimate Low net benefits 

estimate 

High net benefits 

estimate 

CO2 Reduction Monetized Value 

($62.4/t case) **.

2.5 .................................. 32.2 ................................ 31.9 ................................ 32.5. 

CO2 Reduction Monetized Value 

($119/t case) **.

3 ..................................... 67.6 ................................ 66.9 ................................ 68.2. 

NOX Reduction Monetized Value 

(at $2,684/ton) **.

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

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

1.53. ...............................

2.10 ................................

1.52 ................................

2.08 ................................

1.53 

2.12. 

Total Benefits † ....................... 7 plus CO2 range ........... 80 to 142 ........................ 79 to 140 ........................ 83 to 145. 

7 ..................................... 96 ................................... 94 ................................... 99. 

3 plus CO2 range ........... 116 to 177 ...................... 113 to 174 ...................... 121 to 183. 

3 ..................................... 132 ................................. 128 ................................. 136. 

Costs 

Consumer Incremental Equipment 

Costs.

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

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

32.3 ................................

31.7 ................................

38.7 ................................

38.9 ................................

26.8. 

25.6. 

Net Benefits/Costs 

Total † ..................................... 7 plus CO2 range ........... 48 to 110 ........................ 40 to 101 ........................ 56 to 118. 

7 ..................................... 64 ................................... 56 ................................... 72. 

3 plus CO2 range ........... 84 to 146 ........................ 74 to 135 ........................ 95 to 157. 

3 ..................................... 100 ................................. 89 ................................... 111. 

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020–2049. These results include benefits 

to consumers which accrue after 2049 from the products purchased in 2020–2049. The results account for the incremental variable and fixed 

costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a medium decline rate for projected product price trends in the 

Primary Estimate, a low decline rate for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product 

price trends in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.1. 

** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC 

from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile 

SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature 

change further out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time series incorporate 

an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. 

Estimates of annualized benefits and 

costs of the proposed standards for 

residential boiler standby mode and off 

mode power are shown in Table V.50. 

The results under the primary estimate 

are as follows. Using a 7-percent 

discount rate for benefits and costs other 

than CO2 reduction (for which DOE 

used a 3-percent discount rate along 

with the average SCC series that uses a 

3-percent discount rate), the estimated 

cost of the residential boiler standards 

proposed in today’s rule is $9.31 million 

per year in increased equipment costs, 

while the estimated benefits are $28 

million per year in reduced equipment 

operating costs, $3 million per year in 

CO2 reductions, and $0.09 million per 

year in reduced NOX emissions. In this 

case, the net benefit would amount to 

$22 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series, the estimated cost of the 

residential boiler standards proposed in 

today’s rule is $9.35 million per year in 

increased equipment costs, while the 

estimated benefits are $35 million per 

year in reduced equipment operating 

costs, $3 million per year in CO2

reductions, and $0.12 million per year 

in reduced NOX emissions. In this case, 

the net benefit would amount to $29 

million per year. 

TABLE V.50—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDBY MODE AND OFF MODE STANDARDS (TSL 3) 

FOR RESIDENTIAL BOILERS * 

Discount rate 

(%) 

(Million 2013$/year) 

Primary estimate Low net benefits 

estimate 

High net benefits 

estimate 

Benefits 

Consumer Operating Cost Savings 7 .....................................

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

28 ...................................

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

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

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

29 

36 

CO2 Reduction Monetized Value 

($12.0/t case) **.

5 ..................................... 1 ..................................... 1 ..................................... 1. 

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17296 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 

TABLE V.50—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDBY MODE AND OFF MODE STANDARDS (TSL 3) 

FOR RESIDENTIAL BOILERS *—Continued 

Discount rate 

(%) 

(Million 2013$/year) 

Primary estimate Low net benefits 

estimate 

High net benefits 

estimate 

CO2 Reduction Monetized Value 

($40.5/t case) **.

3 ..................................... 3 ..................................... 3 ..................................... 4. 

CO2 Reduction Monetized Value 

($62.4/t case) **.

2.5 .................................. 5 ..................................... 5 ..................................... 5. 

CO2 Reduction Monetized Value 

($119/t case) **.

3 ..................................... 11 ................................... 10 ................................... 11. 

NOX Reduction Monetized Value 

(at $2,684/ton) **.

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

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

0.09 ................................

0.12 ................................

0.09 ................................

0.12 ................................

0.09. 

0.13. 

Total Benefits † ....................... 7 plus CO2 range ........... 29 to 39 .......................... 28 to 38 .......................... 30 to 40. 

7 ..................................... 32 ................................... 30 ................................... 33. 

3 plus CO2 range ........... 36 to 46 .......................... 35 to 44 .......................... 38 to 47. 

3 ..................................... 39 ................................... 37 ................................... 40. 

Costs 

Consumer Incremental Equipment 

Costs.

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

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

9.31 ................................

9.35 ................................

9.48 ................................

9.55 ................................

9.13. 

9.15. 

Net Benefits/Costs 

Total † ..................................... 7 plus CO2 range ........... 20 to 30 .......................... 19 to 28 .......................... 21 to 31. 

7 ..................................... 22 ................................... 21 ................................... 24. 

3 plus CO2 range ........... 27 to 37 .......................... 25 to 35 .......................... 28 to 38. 

3 ..................................... 29 ................................... 28 ................................... 31. 

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020¥2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020¥2049. The results account for the incremental variable and 

fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, 

and High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. 

** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC 

from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile 

SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature 

change further out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time series incorporate 

an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. 

Estimates of the combined annualized 

benefits and costs of the proposed AFUE 

and standby mode and off mode 

standards are shown in Table V.51. The 

results under the primary estimate are 

as follows. Using a 7-percent discount 

rate for benefits and costs other than 

CO2 reduction, for which DOE used a 

3-percent discount rate along with the 

average SCC series that uses a 3-percent 

discount rate ($40.5/t in 2015), the 

estimated cost of the residential boilers 

AFUE and standby mode and off mode 

standards proposed in this rule is $41.7 

million per year in increased equipment 

costs, while the estimated benefits are 

$101 million per year in reduced 

equipment operating costs, $25.3 

million per year in CO2 reductions, and 

$1.62 million per year in reduced NOX

emissions. In this case, the net benefit 

would amount to $86.3 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series that uses a 3-percent discount rate 

($40.5/t in 2015), the estimated cost of 

the residential boilers AFUE and 

standby mode and off mode standards 

proposed in this rule is $41.0 million 

per year in increased equipment costs, 

while the estimated benefits are $143 

million per year in reduced equipment 

operating costs, $25.3 million per year 

in CO2 reductions, and $2.22 million 

per year in reduced NOX emissions. In 

this case, the net benefit would amount 

to $129 million per year. 

TABLE V.51—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AFUE AND STANDBY MODE AND OFF MODE ENERGY

CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS (TSL 3) 

Discount rate 

(%) 

(Million 2013$/year) 

Primary estimate * Low net benefits 

estimate * 

High net benefits 

estimate * 

Benefits 

Consumer Operating Cost Savings 7 .....................................

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

101 .................................

143 .................................

98 ...................................

138 .................................

104. 

149. 

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TABLE V.51—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AFUE AND STANDBY MODE AND OFF MODE ENERGY

CONSERVATION STANDARDS FOR RESIDENTIAL BOILERS (TSL 3)—Continued 

Discount rate 

(%) 

(Million 2013$/year) 

Primary estimate * Low net benefits 

estimate * 

High net benefits 

estimate * 

CO2 Reduction Monetized Value 

($12.0/t case) *.

5 ..................................... 7.11 ................................ 7.04 ................................ 7.18. 

CO2 Reduction Monetized Value 

($40.5/t case) *.

3 ..................................... 25.3 ................................ 25.0 ................................ 25.6. 

CO2 Reduction Monetized Value 

($62.4/t case) *.

2.5 .................................. 37.3 ................................ 36.8 ................................ 37.7. 

CO2 Reduction Monetized Value 

($119/t case) *.

3 ..................................... 78.2 ................................ 77.3 ................................ 79.1. 

NOX Reduction Monetized Value 

(at $2,684/ton) **.

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

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

1.62 ................................

2.22 ................................

1.61 ................................

2.20 ................................

1.63. 

2.24. 

Total Benefits † ....................... 7 plus CO2 range ........... 110 to 181 ...................... 107 to 177 ...................... 113 to 185. 

7 ..................................... 128 ................................. 125 ................................. 131. 

3 plus CO2 range ........... 152 to 223 ...................... 148 to 218 ...................... 158 to 230. 

3 ..................................... 170 ................................. 165 ................................. 177. 

Costs 

Consumer Incremental Installed 

Costs.

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

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

41.7 ................................

41.0 ................................

48.2 ................................

48.5 ................................

35.9. 

34.8. 

Net Benefits 

Total † ..................................... 7 plus CO2 range ........... 68.1 to 139 ..................... 58.8 to 129 ..................... 77.0 to 149. 

7 ..................................... 86.3 ................................ 76.7 ................................ 95.4. 

3 plus CO2 range ........... 111 to 182 ...................... 99 to 169 ........................ 123 to 195. 

3 ..................................... 129 ................................. 117 ................................. 142. 

* This table presents the annualized costs and benefits associated with residential boilers shipped in 2020¥2049. These results include benefits to consumers which accrue after 2049 from the products purchased in 2020¥2049. The results account for the incremental variable and 

fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, 

and High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Estimate, and High Estimate, respectively. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate 

($40.5/t in 2015). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using 

the labeled discount rate, and those values are added to the full range of CO2 values. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Orders 

12866 and 13563 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

requires each agency to identify the 

problem that it intends to address, 

including, where applicable, the failures 

of private markets or public institutions 

that warrant new agency action, as well 

as to assess the significance of that 

problem. The problems these proposed 

standards address are as follows: 

(1) There is a lack of consumer 

information and/or information 

processing capability about energy 

efficiency opportunities in the home 

appliance market. 

(2) There is asymmetric information 

(one party to a transaction has more and 

better information than the other) and/ 

or high transactions costs (costs of 

gathering information and effecting 

exchanges of goods and services). 

(3) There are external benefits 

resulting from improved energy 

efficiency of residential boilers that are 

not captured by the users of such 

equipment. These benefits include 

externalities related to environmental 

protection and energy security that are 

not reflected in energy prices, such as 

reduced emissions of greenhouse gases. 

In addition, this regulatory action is 

an ‘‘economically significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

section 6(a)(3) of the Executive Order 

requires that DOE prepare a regulatory 

impact analysis (RIA) on this rule and 

that the Office of Information and 

Regulatory Affairs (OIRA) in the Office 

of Management and Budget (OMB) 

review this rule. DOE presented to OIRA 

for review the draft rule and other 

documents prepared for this 

rulemaking, including the RIA, and has 

included these documents in the 

rulemaking record. The assessments 

prepared pursuant to Executive Order 

12866 can be found in the technical 

support document for this rulemaking. 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011 (76 FR 3281 

(Jan. 21, 2011)). Executive Order 13563 

is supplemental to and explicitly 

reaffirms the principles, structures, and 

definitions governing regulatory review 

established in Executive Order 12866. 

To the extent permitted by law, agencies 

are required by Executive Order 13563 

to: (1) Propose or adopt a regulation 

only upon a reasoned determination 

that its benefits justify its costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

regulations to impose the least burden 

on society, consistent with obtaining 

regulatory objectives, taking into 

account, among other things, and to the 

extent practicable, the costs of 

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103See www.ahridirectory.org/ahriDirectory/

pages/home.aspx. 

104See http://www.energy.ca.gov/appliances/. 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that 

Executive Order 13563 requires agencies 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible. In its guidance, the Office of 

Information and Regulatory Affairs has 

emphasized that such techniques may 

include identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes. For the reasons 

stated in the preamble, DOE believes 

that this NOPR is consistent with these 

principles, including the requirement 

that, to the extent permitted by law, 

benefits justify costs and that net 

benefits are maximized. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

unless the agency certifies that the rule, 

if promulgated, will not have a 

significant economic impact on a 

substantial number of small entities. As 

required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking,’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of the General 

Counsel’s Web site (http://energy.gov/

gc/office-general-counsel). DOE has 

prepared the following IRFA for the 

products that are the subject of this 

rulemaking. 

For manufacturers of residential 

boilers, the Small Business 

Administration (SBA) has set a size 

threshold, which defines those entities 

classified as ‘‘small businesses’’ for the 

purposes of the statute. DOE used the 

SBA’s small business size standards to 

determine whether any small entities 

would be subject to the requirements of 

the rule. 65 FR 30836, 30848 (May 15, 

2000), as amended at 65 FR 53533, 

53544 (Sept. 5, 2000) and codified at 13 

CFR part 121. The size standards are 

listed by North American Industry 

Classification System (NAICS) code and 

industry description and are available at 

http://www.sba.gov/category/

navigation-structure/contracting/

contracting-officials/small-businesssize-standards. Manufacturing of 

residential boilers is classified under 

NAICS 333414, ‘‘Heating Equipment 

(except Warm Air Furnaces) 

Manufacturing.’’ The SBA sets a 

threshold of 500 employees or less for 

an entity to be considered as a small 

business for this category. 

1. Description and Estimated Number of 

Small Entities Regulated 

To estimate the number of companies 

that could be small business 

manufacturers of products covered by 

this rulemaking, DOE conducted a 

market survey using publically-available 

information to identify potential small 

manufacturers. DOE’s research involved 

industry trade association membership 

directories (including AHRI), public 

databases (e.g., AHRI Directory,103 the 

California Energy Commission 

Appliance Efficiency Database 104), 

individual company Web sites, and 

market research tools (e.g., Hoovers 

reports) to create a list of companies that 

manufacture or sell products covered by 

this rulemaking. DOE also asked 

stakeholders and industry 

representatives if they were aware of 

any other small manufacturers during 

manufacturer interviews and at DOE 

public meetings. DOE reviewed 

publicly-available data and contacted 

select companies on its list, as 

necessary, to determine whether they 

met the SBA’s definition of a small 

business manufacturer of covered 

residential boilers. DOE screened out 

companies that do not offer products 

covered by this rulemaking, do not meet 

the definition of a ‘‘small business,’’ or 

are foreign owned and operated. 

DOE initially identified 36 potential 

manufacturers of residential boilers sold 

in the U.S. DOE then determined that 23 

are large manufacturers, manufacturers 

that are foreign owned and operated, or 

manufacturers that do not produce 

products covered by this rulemaking. 

DOE was able to determine that 13 

manufacturers meet the SBA’s 

definition of a ‘‘small business.’’ Of 

these 13 small businesses, nine 

manufacture boilers covered by this 

rulemaking, while the other four 

rebrand imported products or products 

manufactured by other small 

companies. 

Before issuing this NOPR, DOE 

attempted to contact all the small 

business manufacturers of residential 

boilers it had identified. Two of the 

small businesses agreed to take part in 

an MIA interview. DOE also obtained 

information about small business 

impacts while interviewing large 

manufacturers. 

DOE estimates that small 

manufacturers control approximately 17 

percent of the residential boiler market. 

Based on DOE’s research, three small 

businesses manufacture all four product 

classes of boilers domestically; four 

small businesses primarily produce 

condensing boiler products (most of 

which source heat exchangers from 

Europe or Asia); and two manufacturers 

primarily produce oil-fired hot water 

boiler products. The remaining four 

small businesses wholesale or rebrand 

products that are imported from Europe 

or Asia, or design products and source 

manufacturing to a domestic firm. 

2. Description and Estimate of 

Compliance Requirements 

The proposed standards for 

residential boilers could cause small 

manufacturers to be at a disadvantage 

relative to large manufacturers. For 

example, small manufacturers may be 

disproportionately affected by product 

conversion costs. Product redesign, 

testing, and certification costs tend to be 

fixed and do not scale with sales 

volume. When confronted with new or 

amended energy conservation 

standards, small businesses must make 

investments in research and 

development to redesign their products, 

but because they have lower sales 

volumes, they must spread these costs 

across fewer units. Moreover, smaller 

manufacturers may experience higher 

testing costs relative to larger 

manufacturers, as they may not possess 

their own test facilities and, therefore, 

must outsource all testing at a higher 

per-unit cost. In general, the three small 

manufacturers that offer all four product 

classes have product lines that are 

similar to those of larger competitors 

with similar market share. However, 

because these small manufacturers have 

fewer engineers and product 

development resources, they may have 

greater difficulty bringing their portfolio 

of products into compliance with 

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amended energy conservation standards 

within the allotted timeframe. They also 

may have to divert engineering 

resources from customer and new 

product initiatives for a longer period of 

time. These considerations would also 

apply to the four manufacturers that 

only produce one or two product classes 

and small businesses that rebrand 

boilers that do their own design work. 

Smaller manufacturers also may lack 

the purchasing power of larger 

manufacturers. For example, suppliers 

of bulk purchase parts and components 

(such as gas valves) give boiler 

manufacturers discounts based on the 

quantities purchased. Therefore, larger 

manufacturers may have a pricing 

advantage because they have higher 

volume purchases. This purchasing 

power differential between high-volume 

and low-volume orders applies to other 

residential boiler components as well, 

such as ignition systems and inducer 

fan assemblies. 

In order to meet the proposed 

standard, manufacturers may have to 

seek outside capital to cover expenses 

related to testing and product design 

equipment. Smaller firms typically have 

a higher cost of borrowing due to higher 

perceived risk on the part of investors, 

largely attributed to lower cash flows 

and lower per-unit profitability. In these 

cases, small manufacturers may observe 

higher costs of debt than larger 

manufacturers. 

While DOE does not expect high 

capital conversion costs at TSL 3, DOE 

does expect smaller businesses would 

have to make significant product 

conversion investments relative to larger 

manufacturers. As previously noted, 

some of these smaller manufacturers are 

heavily weighted toward baseline 

products and other products below the 

efficiency levels proposed in today’s 

notice. As Table VI.1 illustrates, smaller 

manufacturers would have to increase 

their R&D spending to bring products 

into compliance and to develop new 

products at TSL 3, the proposed level. 

TABLE VI.1—IMPACTS OF CONVERSION COSTS ON A SMALL MANUFACTURER

Capital conversion cost 

as a percentage of 

annual capital 

expenditures 

Product conversion cost 

as a percentage of 

annual R&D expense 

Total conversion cost as 

a percentage of annual 

revenue 

Total conversion cost as 

a percentage of annual 

EBIT * 

Average Large Manufacturer ........... 5 21 0 6 

Average Small Manufacturer ........... 23 145 3 38 

* EBIT means earnings before interest and taxes. 

At TSL 3, the level proposed in this 

notice, DOE estimates capital 

conversion costs of $0.02 million and 

product conversion costs of $0.09 

million for an average small 

manufacturer. DOE estimates that an 

average large manufacturer will incur 

capital conversion costs of $0.03 million 

and product conversion costs of $0.09 

million. Based on the results in Table 

VI.1, DOE recognizes that small 

manufacturers will generally face a 

relatively higher conversion cost burden 

than larger competitors. 

Manufacturers that have the majority 

of their products and sales at efficiency 

levels above today’s standard may have 

lower conversion costs than those listed 

in Table VI.1. In particular, the four 

small manufacturers that primarily sell 

condensing products are unlikely to be 

affected by the efficiency levels at TSL 

3, as all of their products are already 

above the efficiency levels proposed. 

Furthermore, DOE recognizes that 

small manufacturers that primarily sell 

low-efficiency products today will face 

a greater burden relative to the small 

manufacturers that primarily sell highefficiency products. At TSL 3, the level 

proposed in this notice, DOE believes 

that the three manufacturers that 

manufacture across all four product 

classes would have higher conversion 

costs because the majority of their 

products do not meet the standard 

proposed in today’s notice and would 

require redesign. DOE estimates that 63 

percent of these companies’ product 

offerings do not meet the standard levels 

at TSL 3. Consequently, these 

manufacturers would have to expend 

funds to redesign their commodity 

products, or develop a new, higherefficiency baseline product. 

The two companies that primarily 

produce oil-fired hot water boilers could 

also be impacted, as they are generally 

much smaller than the small businesses 

that produce all product classes, have 

fewer shipments and smaller revenues, 

and are likely to have limited R&D 

resources. Both of these companies, 

however, do have oil-fired hot water 

boiler product listings that meet the 

proposed efficiency standards in this 

notice. 

DOE estimates that one of the four 

companies that rebrands imported or 

sourced products does its own design 

work, while the other three import highefficiency products from Europe or Asia. 

It is possible that the company that 

designs its own products could be 

affected by product conversion costs at 

TSL 3, while it is unlikely that the other 

three would be greatly impacted. 

Based on this analysis, DOE notes that 

on average, small businesses will 

experience total conversion costs on the 

order of $0.11 million. However, some 

companies will fall below the average. 

In particular, DOE has identified 6 small 

manufacturers that could experience 

greater conversion costs burdens than 

indicated by the average. 

DOE seeks further information and 

data regarding the sales volume and 

annual revenues for small businesses so 

the agency can be better informed 

concerning the potential impacts to 

small business manufacturers of the 

proposed energy conservation 

standards, and would consider any such 

additional information when 

formulating and selecting standard 

levels for the final rule. 

3. Duplication, Overlap, and Conflict 

With Other Rules and Regulations 

DOE is not aware of any rules or 

regulations that duplicate, overlap, or 

conflict with the rule being proposed 

today. 

4. Significant Alternatives to the Rule 

The discussion above analyzes 

impacts on small businesses that would 

result from DOE’s proposed rule. In 

addition to the other TSLs being 

considered, the proposed rulemaking 

TSD includes a regulatory impact 

analysis (RIA) in chapter 17. For 

residential boilers, the RIA discusses the 

following policy alternatives: (1) No 

change in standard; (2) consumer 

rebates; (3) consumer tax credits; (4) 

manufacturer tax credits; (5) voluntary 

energy efficiency targets; and (6) bulk 

government purchases. While these 

alternatives may mitigate to some 

varying extent the economic impacts on 

small entities compared to the proposed 

standards, DOE does not intend to 

consider these alternatives further 

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because in several cases, they would not 

be feasible to implement without 

authority and funding from Congress, 

and in all cases, DOE has determined 

that the primary energy savings of these 

alternatives are significantly smaller 

than those that would be expected to 

result from adoption of the proposed 

standard levels (ranging from 

approximately 0.5 percent to 30.5 

percent of the primary energy savings 

from the proposed standards). 

Accordingly, DOE is declining to adopt 

any of these alternatives and is 

proposing the standards set forth in this 

rulemaking. (See chapter 17 of the 

NOPR TSD for further detail on the 

policy alternatives DOE considered.) 

Additional compliance flexibilities 

may be available through other means. 

For example, individual manufacturers 

may petition for a waiver of the 

applicable test procedure. (See 10 CFR 

431.401.) Further, EPCA provides that a 

manufacturer whose annual gross 

revenue from all of its operations does 

not exceed $8,000,000 may apply for an 

exemption from all or part of an energy 

conservation standard for a period not 

longer than 24 months after the effective 

date of a final rule establishing the 

standard. Additionally, Section 504 of 

the Department of Energy Organization 

Act, 42 U.S.C. 7194, provides authority 

for the Secretary to adjust a rule issued 

under EPCA in order to prevent ‘‘special 

hardship, inequity, or unfair 

distribution of burdens’’ that may be 

imposed on that manufacturer as a 

result of such rule. Manufacturers 

should refer to 10 CFR part 430, subpart 

E, and part 1003 for additional details. 

C. Review Under the Paperwork 

Reduction Act of 1995 

Manufacturers of residential boilers 

must certify to DOE that their products 

comply with any applicable energy 

conservation standards. In certifying 

compliance, manufacturers must test 

their products according to the DOE test 

procedures for residential boilers, 

including any amendments adopted for 

those test procedures. DOE has 

established regulations for the 

certification and recordkeeping 

requirements for all covered consumer 

products and commercial equipment, 

including residential boilers. 76 FR 

12422 (March 7, 2011). The collectionof-information requirement for the 

certification and recordkeeping is 

subject to review and approval by OMB 

under the Paperwork Reduction Act 

(PRA). This requirement has been 

approved by OMB under OMB control 

number 1910–1400. Public reporting 

burden for the certification is estimated 

to average 20 hours per response, 

including the time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collection of information. 

Notwithstanding any other provision 

of the law, no person is required to 

respond to, nor shall any person be 

subject to a penalty for failure to comply 

with, a collection of information subject 

to the requirements of the PRA, unless 

that collection of information displays a 

currently valid OMB Control Number. 

D. Review Under the National 

Environmental Policy Act of 1969 

Pursuant to the National 

Environmental Policy Act (NEPA) of 

1969, DOE has determined that the 

proposed rule fits within the category of 

actions included in Categorical 

Exclusion (CX) B5.1 and otherwise 

meets the requirements for application 

of a CX. See 10 CFR part 1021, App. B, 

B5.1(b); 1021.410(b) and Appendix B, 

B(1)–(5). The proposed rule fits within 

the category of actions because it is a 

rulemaking that establishes energy 

conservation standards for consumer 

products or industrial equipment, and 

for which none of the exceptions 

identified in CX B5.1(b) apply. 

Therefore, DOE has made a CX 

determination for this rulemaking, and 

DOE does not need to prepare an 

Environmental Assessment or 

Environmental Impact Statement for 

this proposed rule. DOE’s CX 

determination for this proposed rule is 

available at http://cxnepa.energy.gov/. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

64 FR 43255 (Aug. 10, 1999), imposes 

certain requirements on Federal 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have Federalism 

implications. The Executive Order 

requires agencies to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have Federalism implications. On 

March 14, 2000, DOE published a 

statement of policy describing the 

intergovernmental consultation process 

it will follow in the development of 

such regulations. 65 FR 13735. DOE has 

examined this proposed rule and has 

tentatively determined that it would not 

have a substantial direct effect on the 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. EPCA governs and 

prescribes Federal preemption of State 

regulations as to energy conservation for 

the products that are the subject of this 

proposed rule. States can petition DOE 

for exemption from such preemption to 

the extent, and based on criteria, set 

forth in EPCA. (42 U.S.C. 6297) 

Therefore, no further action is required 

by Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform,’’ imposes on Federal agencies 

the general duty to adhere to the 

following requirements: (1) Eliminate 

drafting errors and ambiguity; (2) write 

regulations to minimize litigation; (3) 

provide a clear legal standard for 

affected conduct rather than a general 

standard; and (4) promote simplification 

and burden reduction. 61 FR 4729 (Feb. 

7, 1996). Regarding the review required 

by section 3(a), section 3(b) of Executive 

Order 12988 specifically requires that 

Executive agencies make every 

reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this 

proposed rule meets the relevant 

standards of Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) requires 

each Federal agency to assess the effects 

of Federal regulatory actions on State, 

local, and Tribal governments and the 

private sector. Public Law 104–4, sec. 

201 (codified at 2 U.S.C. 1531). For a 

proposed regulatory action likely to 

result in a rule that may cause the 

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expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

in any one year (adjusted annually for 

inflation), section 202 of UMRA requires 

a Federal agency to publish a written 

statement that estimates the resulting 

costs, benefits, and other effects on the 

national economy. (2 U.S.C. 1532(a), (b)) 

The UMRA also requires a Federal 

agency to develop an effective process 

to permit timely input by elected 

officers of State, local, and Tribal 

governments on a proposed ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity for timely input to 

potentially affected small governments 

before establishing any requirements 

that might significantly or uniquely 

affect them. On March 18, 1997, DOE 

published a statement of policy on its 

process for intergovernmental 

consultation under UMRA. 62 FR 

12820. DOE’s policy statement is also 

available at http://energy.gov/gc/officegeneral-counsel. 

This proposed rule, which proposes 

amended energy conservation standards 

for residential boilers, does not contain 

a Federal intergovernmental mandate, 

and it does not require expenditures of 

$100 million or more by the private 

sector. Specifically, the proposed rule 

would likely result in a final rule that 

could require expenditures estimated to 

range from $$26 to $39 million per year 

(See Table I.7). Including: (1) 

Investment in research and 

development and in capital 

expenditures by residential boilers 

manufacturers in the years between the 

final rule and the compliance date for 

the new standards, and (2) incremental 

additional expenditures by consumers 

to purchase higher-efficiency residential 

boilers, starting at the compliance date 

for the applicable standard. 

Section 202 of UMRA authorizes a 

Federal agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. (2 U.S.C. 1532(c)) 

The content requirements of section 

202(b) of UMRA relevant to a private 

sector mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

the NOPR and the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for this 

proposed rule respond to those 

requirements. 

Under section 205 of UMRA, the 

Department is obligated to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule for which a written 

statement under section 202 is required. 

(2 U.S.C. 1535(a)) DOE is required to 

select from those alternatives the most 

cost-effective and least burdensome 

alternative that achieves the objectives 

of the proposed rule unless DOE 

publishes an explanation for doing 

otherwise, or the selection of such an 

alternative is inconsistent with law. As 

required by 42 U.S.C. 6295(f) and (o), 

this proposed rule would establish 

amended energy conservation standards 

for residential boilers that are designed 

to achieve the maximum improvement 

in energy efficiency that DOE has 

determined to be both technologically 

feasible and economically justified. A 

full discussion of the alternatives 

considered by DOE is presented in the 

‘‘Regulatory Impact Analysis’’ section of 

the TSD for this proposed rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. This 

rule would not have any impact on the 

autonomy or integrity of the family as 

an institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

Pursuant to Executive Order 12630, 

‘‘Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights,’’ 53 FR 8859 (March 15, 1988), 

DOE has determined that this proposed 

rule would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516 note) provides 

for Federal agencies to review most 

disseminations of information to the 

public under information quality 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. OMB’s guidelines were published 

at 67 FR 8452 (Feb. 22, 2002), and 

DOE’s guidelines were published at 67 

FR 62446 (Oct. 7, 2002). DOE has 

reviewed this NOPR under the OMB 

and DOE guidelines and has concluded 

that it is consistent with applicable 

policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use,’’ 66 FR 28355 (May 

22, 2001), requires Federal agencies to 

prepare and submit to OIRA at OMB, a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgates or is expected to lead to 

promulgation of a final rule, and that: 

(1) Is a significant regulatory action 

under Executive Order 12866, or any 

successor order; and (2) is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy, or 

(3) is designated by the Administrator of 

OIRA as a significant energy action. For 

any proposed significant energy action, 

the agency must give a detailed 

statement of any adverse effects on 

energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

DOE has tentatively concluded that 

this regulatory action, which sets forth 

amended energy conservation standards 

for residential boilers, is not a 

significant energy action because the 

proposed standards are not likely to 

have a significant adverse effect on the 

supply, distribution, or use of energy, 

nor has it been designated as such by 

the Administrator at OIRA. Accordingly, 

DOE has not prepared a Statement of 

Energy Effects on this proposed rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology Policy (OSTP), issued 

its Final Information Quality Bulletin 

for Peer Review (the Bulletin). 70 FR 

2664 (Jan. 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information,’’ 

which the Bulletin defines as ‘‘scientific 

information the agency reasonably can 

determine will have or does have a clear 

and substantial impact on important 

public policies or private sector 

decisions.’’ Id. at 2667. 

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In response to OMB’s Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. Generation of this report 

involved a rigorous, formal, and 

documented evaluation using objective 

criteria and qualified and independent 

reviewers to make a judgment as to the 

technical/scientific/business merit, the 

actual or anticipated results, and the 

productivity and management 

effectiveness of programs and/or 

projects. The ‘‘Energy Conservation 

Standards Rulemaking Peer Review 

Report,’’ dated February 2007, has been 

disseminated and is available at the 

following Web site: 

www1.eere.energy.gov/buildings/

appliance_standards/peer_review.html. 

VII. Public Participation 

A. Attendance at the Public Meeting 

The time, date, and location of the 

public meeting are listed in the DATES

and ADDRESSES sections at the beginning 

of this notice. If you plan to attend the 

public meeting, please notify Ms. 

Brenda Edwards at (202) 586–2945 or 

Brenda.Edwards@ee.doe.gov. As 

explained in the ADDRESSES section, 

foreign nationals visiting DOE 

Headquarters are subject to advance 

security screening procedures. Any 

foreign national wishing to participate 

in the meeting should advise DOE of 

this fact as soon as possible by 

contacting Ms. Brenda Edwards to 

initiate the necessary procedures. 

In addition, you can attend the public 

meeting via webinar. Webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants will be published on DOE’s 

Web site at: http://

www1.eere.energy.gov/buildings/

appliance_standards/

rulemaking.aspx?ruleid=112. 

Participants are responsible for ensuring 

their systems are compatible with the 

webinar software. 

B. Procedure for Submitting Requests To 

Speak and Prepared General Statements 

for Distribution 

Any person who has an interest in the 

topics addressed in this notice, or who 

is representative of a group or class of 

persons that has an interest in these 

issues, may request an opportunity to 

make an oral presentation at the public 

meeting. Such persons may handdeliver requests to speak to the address 

shown in the ADDRESSES section at the 

beginning of this NOPR between 9:00 

a.m. and 4:00 p.m., Monday through 

Friday, except Federal holidays. 

Requests may also be sent by mail or 

email to: Ms. Brenda Edwards, U.S. 

Department of Energy, Building 

Technologies Office, Mailstop EE–5B, 

1000 Independence Avenue SW., 

Washington, DC 20585–0121, or 

Brenda.Edwards@ee.doe.gov. Persons 

who wish to speak should include with 

their request a computer diskette or CD– 

ROM in WordPerfect, Microsoft Word, 

PDF, or text (ASCII) file format that 

briefly describes the nature of their 

interest in this rulemaking and the 

topics they wish to discuss. Such 

persons should also provide a daytime 

telephone number where they can be 

reached. 

DOE requests persons scheduled to 

make an oral presentation to submit an 

advance copy of their statements at least 

one week before the public meeting. 

DOE may permit persons who cannot 

supply an advance copy of their 

statement to participate, if those persons 

have made advance alternative 

arrangements with the Building 

Technologies Program. As necessary, 

requests to give an oral presentation 

should ask for such alternative 

arrangements. 

C. Conduct of the Public Meeting 

DOE will designate a DOE official to 

preside at the public meeting and may 

also use a professional facilitator to aid 

discussion. The meeting will not be a 

judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with section 336 of EPCA 

(42 U.S.C. 6306). A court reporter will 

be present to record the proceedings and 

prepare a transcript. DOE reserves the 

right to schedule the order of 

presentations and to establish the 

procedures governing the conduct of the 

public meeting. There shall not be 

discussion of proprietary information, 

costs or prices, market share, or other 

commercial matters regulated by U.S. 

anti-trust laws. After the public meeting, 

interested parties may submit further 

comments on the proceedings, as well 

as on any aspect of the rulemaking, until 

the end of the comment period. 

The public meeting will be conducted 

in an informal, conference style. DOE 

will present summaries of comments 

received before the public meeting, 

allow time for prepared general 

statements by participants, and 

encourage all interested parties to share 

their views on issues affecting this 

rulemaking. Each participant will be 

allowed to make a general statement 

(within time limits determined by DOE), 

before the discussion of specific topics. 

DOE will allow, as time permits, other 

participants to comment briefly on any 

general statements. 

At the end of all prepared statements 

on a topic, DOE will permit participants 

to clarify their statements briefly and 

comment on statements made by others. 

Participants should be prepared to 

answer questions by DOE and by other 

participants concerning these issues. 

DOE representatives may also ask 

questions of participants concerning 

other matters relevant to this 

rulemaking. The official conducting the 

public meeting will accept additional 

comments or questions from those 

attending, as time permits. The 

presiding official will announce any 

further procedural rules or modification 

of the above procedures that may be 

needed for the proper conduct of the 

public meeting. 

A transcript of the public meeting will 

be included in the docket, which can be 

viewed as described in the Docket 

section at the beginning of this notice 

and will be accessible on the DOE Web 

site. In addition, any person may buy a 

copy of the transcript from the 

transcribing reporter. 

D. Submission of Comments 

DOE will accept comments, data, and 

information regarding this proposed 

rule before or after the public meeting, 

but no later than the date provided in 

the DATES section at the beginning of 

this proposed rule. Interested parties 

may submit comments, data, and other 

information using any of the methods 

described in the ADDRESSES section at 

the beginning of this proposed rule. 

Submitting comments via 

www.regulations.gov. The 

www.regulations.gov Web page will 

require you to provide your name and 

contact information. Your contact 

information will be viewable to DOE 

Building Technologies staff only. Your 

contact information will not be publicly 

viewable except for your first and last 

names, organization name (if any), and 

submitter representative name (if any). 

If your comment is not processed 

properly because of technical 

difficulties, DOE will use this 

information to contact you. If DOE 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, DOE may not be 

able to consider your comment. 

However, your contact information 

will be publicly viewable if you include 

it in the comment itself or in any 

documents attached to your comment. 

Any information that you do not want 

to be publicly viewable should not be 

included in your comment, nor in any 

document attached to your comment. 

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Otherwise, persons viewing comments 

will see only first and last names, 

organization names, correspondence 

containing comments, and any 

documents submitted with the 

comments. 

Do not submit to www.regulations.gov 

information for which disclosure is 

restricted by statute, such as trade 

secrets and commercial or financial 

information (hereinafter referred to as 

Confidential Business Information 

(CBI)). Comments submitted through 

www.regulations.gov cannot be claimed 

as CBI. Comments received through the 

Web site will waive any CBI claims for 

the information submitted. For 

information on submitting CBI, see the 

Confidential Business Information 

section below. 

DOE processes submissions made 

through www.regulations.gov before 

posting. Normally, comments will be 

posted within a few days of being 

submitted. However, if large volumes of 

comments are being processed 

simultaneously, your comment may not 

be viewable for up to several weeks. 

Please keep the comment tracking 

number that www.regulations.gov 

provides after you have successfully 

uploaded your comment. 

Submitting comments via email, hand 

delivery/courier, or mail. Comments and 

documents submitted via email, hand 

delivery, or mail also will be posted to 

www.regulations.gov. If you do not want 

your personal contact information to be 

publicly viewable, do not include it in 

your comment or any accompanying 

documents. Instead, provide your 

contact information in a cover letter. 

Include your first and last names, email 

address, telephone number, and 

optional mailing address. The cover 

letter will not be publicly viewable as 

long as it does not include any 

comments. 

Include contact information each time 

you submit comments, data, documents, 

and other information to DOE. If you 

submit via mail or hand delivery/

courier, please provide all items on a 

CD, if feasible, in which case, it is not 

necessary to submit printed copies. No 

facsimiles (faxes) will be accepted. 

Comments, data, and other 

information submitted to DOE 

electronically should be provided in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format. Provide documents that are not 

secured, that are written in English, and 

that are free of any defects or viruses. 

Documents should not contain special 

characters or any form of encryption 

and, if possible, they should carry the 

electronic signature of the author. 

Campaign form letters. Please submit 

campaign form letters by the originating 

organization in batches of between 50 to 

500 form letters per PDF or as one form 

letter with a list of supporters’ names 

compiled into one or more PDFs. This 

reduces comment processing and 

posting time. 

Confidential Business Information. 

Pursuant to 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 via email, postal mail, or hand 

delivery/courier two well-marked 

copies: One copy of the document 

marked ‘‘confidential’’ including all the 

information believed to be confidential, 

and one copy of the document marked 

‘‘non-confidential’’ with the information 

believed to be confidential deleted. 

Submit these documents via email or on 

a CD, if feasible. DOE will make its own 

determination about the confidential 

status of the information and treat it 

according to its determination. 

Factors of interest to DOE 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 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) when 

such information might lose its 

confidential character due to the 

passage of time; and (7) why disclosure 

of the information would be contrary to 

the public interest. 

It is DOE’s policy that all comments 

may be included in the public docket, 

without change and as received, 

including any personal information 

provided in the comments (except 

information deemed to be exempt from 

public disclosure). 

E. Issues on Which DOE Seeks Comment 

Although DOE welcomes comments 

on any aspect of this proposal, DOE is 

particularly interested in receiving 

comments and views of interested 

parties concerning the following issues: 

1. DOE requests further comment 

from interested parties regarding 

whether there are any technologies 

which have passed the screening 

analysis that should be screened out 

based on the four screening criteria. (i.e., 

technological feasibility; practicability 

to manufacture, install, and service; 

impacts on product utility or product 

availability; and adverse impacts on 

health or safety). (See section IV.B.2 and 

chapter 3 of the NOPR TSD.) 

2. DOE seeks comment from 

interested parties regarding the typical 

technological change associated with 

each efficiency level. (See section 

IV.C.1.b and chapter 5 in the NOPR 

TSD.) 

3. DOE does not expect manufacturers 

will need to use condensing technology 

in order to meet the proposed standard. 

However, DOE requests further 

comment from interested parties 

regarding AFUE levels above 82 percent 

whether non-condensing boilers can 

exceed that level and to what extent and 

for which applications. DOE requests 

information on any additional costs (e.g. 

repair, maintenance, installation) ad 

information on other potential impacts 

to product performance or features (e.g. 

lifetime) associated with any noncondensing boiliers achieving AFUE 

levels above 82 percent. DOE requests 

comment on the the appropriateness of 

considering AFUE levels above 82 

percent for non-condensing boilers for 

amended energy conservation standards 

for residential boilers and any potential 

trade-offs that should be considered 

when compared to employing 

condensing boilers at these efficiency 

levels(. (See section IV.C.1.b.) 

4. DOE requests comment on the 

efficiency levels analyzed for standby 

mode and off mode, and on the 

assumption that standby mode and off 

mode energy consumption (as defined 

by DOE) would be equal. (See section 

IV.C.1.b.) 

5. DOE requests comments regarding 

how the mix of residential boilers with 

and without inducers would change 

under amended energy conservation 

standards, and how to best estimate and 

account for such changes in this 

analysis. (See section IV.C.1.b.) 

6. DOE’s approach seeks to account 

for the energy performance of 

residential boilers installed in the field 

by considering automatic means, jacket 

losses, and return water temperatures. 

DOE requests comments on the 

reasonableness of its assumptions 

regarding these factors. (See section 

IV.E.1.) 

7. DOE makes the assumption that 

most consumers are unlikely to set their 

boilers to the off mode during the nonheating season. Specifically, DOE 

requests comments on its estimate that 

25 percent of consumers shut the boiler 

off during the non-heating season, as 

well as any information that might 

support a different estimate. (See 

section IV.E.2 and chapter 7 in the 

NOPR TSD.) 

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8. DOE requests comment on 

residential boiler lifetimes, particularly 

the lifetime of condensing boilers, 

whether the lifetimes assumed in the 

analysis are reflective of residential 

boiler equipment covered by this rule. 

In addition, the agency is seeking 

comment on whether the energy 

efficiency standards would be expected 

to affect the lifetime of the products 

covered by the proposed standards and 

any information supporting this affect. 

(See section IV.F.2.d and appendix 8–F 

of the NOPR TSD.) 

9. DOE requests comment on the 

fraction of residential boilers: 

a. That are used for domestic water 

heating (see section IV.E); 

b. that are used in commercial 

applications (see section IV.E); 

c. that are used in low-temperature vs. 

high-temperature applications (see 

section IV.E); 

d. at each standby efficiency level (see 

section IV.E); 

e. that use polypropylene, PVC, or 

chlorinated polyvinyl chloride (CPVC) 

venting (see section IV.F.1); 

f. that require stainless steel venting 

(by efficiency level) (see section IV.F.1); 

and 

g. that require a draft inducer (by 

efficiency level) (see section IV.F.1). 

10. DOE requests comment on 

installation costs for condensing boilers. 

(See section IV.F.1 and chapter 8 of the 

NOPR TSD.) 

11. DOE requests comment on the 

fraction of oil-fired hot water boiler 

shipments that would be expected to 

switch to gas-fired hot water boiler 

shipments due to the proposed 

standards. (See section IV.G and chapter 

9 of the NOPR TSD.) 

12. DOE requests comment on its 

projections of the market share of highefficiency (condensing) boilers in 2020 

in the absence of amended energy 

conservation standards, as well as the 

long-term market penetration of higherefficiency residential boilers. (See 

section IV.H and appendix 8–H of the 

NOPR TSD.) 

13. DOE requests comment on the 

reasonableness of its assumption to not 

apply a trend to the manufacturer 

selling price (in real dollars) of 

residential boilers, as well as any 

information that would support the use 

of alternative assumptions. (See section 

IV.H and appendix 10–C of the NOPR 

TSD.) 

14. DOE requests data that would 

allow for use of different price trend 

projections for condensing and noncondensing boilers. (See section IV.F.1.) 

15. DOE requests comment on DOE’s 

methodology and data sources used for 

projecting the future shipments of 

residential boilers in the absence of 

amended energy conservation 

standards. (See section IV.G.) 

16. To estimate the impact on 

shipments of the price increase for the 

considered efficiency levels, DOE used 

a relative price elasticity approach. DOE 

welcomes stakeholder input on the 

effect of amended standards on future 

residential boiler shipments. (See 

section IV.G.) 

17. DOE requests comment on the 

potential impacts on product shipments 

related to fuel and equipment switching. 

(See section IV.G.) 

18. DOE requests comment on the 

reasonableness of the revised values that 

DOE used to characterize the rebound 

effect with higher-efficiency residential 

boilers. Specifically, the agency lowered 

the assumed rebound affect in this 

proposed rule to 15 percent compared to 

the NODA in which the agency assumed 

a 20 percent rebound effect. (See section 

IV.F.2.a.) 

19. DOE requests comment on the 

approach for conducting the emissions 

analysis for residential boilers. (See 

section IV.K.) 

20. DOE requests comment on DOE’s 

approach for estimating monetary 

benefits associated with emissions 

reductions. (See section IV.L.) 

21. DOE requests comment on the 

technical feasibility of the proposed 

standards and whether any proprietary 

technology that would be a unique 

pathway to achieving any of these 

efficiency levels would be required. (See 

section IV.B.) 

22. DOE seeks comment regarding any 

potential impacts on small business 

manufacturers from the proposed 

standards. In particular, DOE seeks 

further information and data regarding 

the sales volume and annual revenues 

for small businesses so the agency can 

be better informed concerning the 

potential impacts to small business 

manufacturers of the proposed energy 

conservation standards, and would 

consider any such additional 

information when formulating and 

selecting AFUE and standby/off-mode 

electrical energy conservation standards 

for the final rule and whether any 

feasible compliance flexibilities that the 

agency may consider. (See section IV.J.) 

23. DOE seeks further information in 

order to balance the benefits and 

burdens of adopting TSL4 rather than 

TSL3 in the final rule. (See section 

V.C.1.) 

24. DOE requests comment on 

whether manufacturers make their 

engineering design decisions for the two 

standards (i.e. standby and active mode) 

independently, therefore changes in 

manufacturing production costs and the 

conversion costs are additive. DOE 

requests comment on whether their 

engineering design decisions are 

integrated for the two standards and if 

an incremental analysis that 

simultaneously considers the 

manufacturing production costs and 

conversion costs would be more 

reflective of manufacturer decision 

making. 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of today’s notice of 

proposed rulemaking. 

List of Subjects in 10 CFR Part 430 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Household appliances, Imports, 

Intergovernmental relations, Small 

businesses. 

Issued in Washington, DC, on March 13, 

2015. 

David T. Danielson, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend part 

430 of chapter II, subchapter D, of title 

10 of the Code of Federal Regulations, 

as set forth below: 

PART 430—ENERGY CONSERVATION 

PROGRAM FOR CONSUMER 

PRODUCTS 

■ 1. The authority citation for part 430 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 

2461 note. 

■ 2. Appendix N to subpart B of part 

430 is amended by revising the note 

after the heading to read as follows: 

Appendix N to Subpart B of Part 430— 

Uniform Test Method for Measuring the 

Energy Consumption of Furnaces and 

Boilers 

Note: The procedures and calculations that 

refer to standby mode and off mode energy 

consumption (i.e., sections 8.6 and 10.11 of 

this appendix N) need not be performed to 

determine compliance with energy 

conservation standards for furnaces and 

boilers until required as specified below. 

However, any representation related to 

standby mode and off mode energy 

consumption of these products made after 

July 1, 2013 must be based upon results 

generated under this test procedure, 

consistent with the requirements of 42 U.S.C. 

6293(c)(2). For furnaces, the statute requires 

that after July 1, 2010, any adopted energy 

conservation standard shall address standby 

mode and off mode energy consumption for 

these products, and upon the compliance 

date for such standards, compliance with the 

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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Proposed Rules 17305 

applicable provisions of this test procedure 

will be required. For boilers manufactured on 

and after (compliance date of final rule), 

compliance with the applicable provisions of 

this test procedure is required in order to 

determine compliance with energy 

conservation standards. 

* * * * * 

■ 3. Section 430.32 is amended by: 

■ a. Adding in paragraph (e)(2)(ii), the 

words ‘‘and before (compliance date of 

final rule),’’ after ‘‘2012,’’; 

■ b. Redesignating paragraphs (e)(2)(iii) 

and (e)(2)(iv) as paragraphs (e)(2)(iv) 

and (e)(2)(v), respectively; 

■ c. Adding a new paragraph (e)(2)(iii) 

to read as follows: 

§ 430.32 Energy and water conservation 

standards and their compliance dates. 

* * * * * 

(e) * * * 

(2) * * * 

(iii)(A) Except as provided in 

paragraph (e)(2)(v) of this section, the 

AFUE of residential boilers, 

manufactured on and after (compliance 

date of final rule), shall not be less than 

the following and must comply with the 

design requirements as follows: 

Product class AFUE1

(percent) Design requirements 

(1) Gas-fired hot water 

boiler.

85 Constant-burning pilot not permitted. Automatic means for adjusting water temperature required (except for boilers equipped with tankless domestic water heating coils). 

(2) Gas-fired steam boiler 82 Constant-burning pilot not permitted. 

(3) Oil-fired hot water boiler.86 Automatic means for adjusting temperature required (except for boilers equipped with tankless domestic water heating coils). 

(4) Oil-fired steam boiler .. 86 None. 

(5) Electric hot water boiler.None Automatic means for adjusting temperature required (except for boilers equipped with tankless domestic water heating coils). 

(6) Electric steam boiler ... None None. 

1Annual Fuel Utilization Efficiency, as determined in § 430.23(n)(2) of this part. 

(B) Except as provided in paragraph 

(e)(2)(v) of this section, the standby 

mode power consumption (PW,SB) and 

off mode power consumption (PW,OFF) of 

residential boilers, manufactured on and 

after (compliance date of final rule), 

shall not be more than the following: 

Product class PW,SB

(watts) 

PW,OFF

(watts) 

(1) Gas-fired hot 

water boiler ........... 9 9 

(2) Gas-fired steam 

boiler ..................... 8 8 

(3) Oil-fired hot water 

boiler ..................... 11 11 

(4) Oil-fired steam 

boiler ..................... 11 11 

Product class PW,SB

(watts) 

PW,OFF

(watts) 

(5) Electric hot water 

boiler ..................... 8 8 

(6) Electric steam 

boiler ..................... 8 8 

* * * * * 

[FR Doc. 2015–06813 Filed 3–30–15; 8:45 am] 

BILLING CODE 6450–01–P 

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