CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUMENT

................................................................................. 1-1 1.2 OVERVIEW OF STANDARDS FOR RESIDENTIAL DI SHWASHERS, DEHUMIDIFIERS, AND COOKING PRODUCTS, AND COMMERCIAL CLOTHES WASHERS

................................................................................................... 1-1 1.3 PROCESS FOR SETTING ENERGY CONERVATION ST ANDARDS

...................... 1-2 1.4 STRUCTURE OF THE DOCUMENT

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LIST OF TABLES
Table 1.3.1 Analyses Under the Process Rule

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1-iCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT This technical support document (TSD) is a st and-alone report that provides the technical analyses and results in support of the inform ati on presented in the adva nce notice of proposed rulemaking (ANOPR) for residential dishwasher s, dehumidifiers, and cooking products, and commercial clothes washers (also referre d to as “the considered products”).

1.2 OVERVIEW OF STANDARDS FOR RESIDENTIAL DISHWASHERS, DEHUMIDIFIERS, AND COOKING PRODUCTS, AND COMMERCIAL CLOTHES WASHERS The Energy Policy and Conservation Act (EPCA) of 1975 (42 U.S.C. 6291–6309) established an energy conservation program fo r major household applia nces. The National Energy Conservation Policy Act of 1978 (NECPA) am ended EPCA to add Part C of Title III (42 U.S.C. 6311–6317), which established an energy conservation program for certain industrial equipm ent. Additional amendments to EPCA ha ve given the Department of Energy (DOE) the authority to regulate the energy efficiency of seve ral products, including residential dishwashers, dehumidifiers, and cooking products, and commercial clothes washers—the products that are the focus of this document. The amendments to EPCA in the National Appliance Energy Conservation Act of 1987 (NAECA) established pr escriptive energy conservation standards for dishwashers and cooking products, as well as requirements for determining whether these standards should be amended. (42 U.S.C. 6291–6309) The amendments to EPCA in the Energy Policy Act of 2005 (EPACT 2005), P.L. 109-58, in cluded provisions that expanded DOE’s energy conservation program to include certain re sidential products and commercial equipment, including dehumidifiers and co mmercial clothes washers.
NAECA established prescriptive standards for gas cooking products, requiring gas ranges and ovens with an electrical supply cord not to be equipped with cons tant burning pilots, and directed DOE to conduct two cycles of rulem akings to determine if more stringent standards are justified. a (42 U.S.C. 6295 (h)(1)-(2)) DOE initially analyzed standards for cooking products as part of an eight-product sta ndards rulemaking. It issued a notice of proposed rulemaking (NOPR) on March 4, 1994, proposing performance st andards for gas and electric residential cooking products, including microwave ovens. 59 FR 10464. In accordance with the July 15, 1996, Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products (the “Process Rule”), 61 FR 36974 (July 15, 1996), DOE refined its standards analysis of cooking products. With regard to gas cooking products, DOE focused on

a DOE is required to conduct two cycles of rulemakings for both gas and electric cooking products.

1-1the economic justification for eliminating standi ng pilots. Partially due to the difficulty of conclusively demonstrating that elimination of standing pilots was ec onomically justified, DOE issued a final rule on September 8, 1998, that co vered only electric cook ing products, including microwave ovens. 63 FR 48038. The final rule found that no standard s were justified for electric cooking products. DOE never comple ted its standards rulemaking for gas cooking products.
NAECA also established prescriptive standard s for dishwash ers, requ iring that they be equipped with an option to dry without heat, a nd further required that DOE conduct two cycles of rulemakings to determine if more stringent standards are justified. (42 U.S.C. 6295 (g)(1), (4), and (5)) On May 14, 1991, DOE issued a final rule establishing the first set of performance standards for dishwashers; the new standard s became effective on May 14, 1994. 56 FR 22250. DOE initiated a second standards rulemaking for dishwashers by issuing an ANOPR on November 14, 1994. 59 FR 56423. As a result of the priority-setting pr ocess outlined in the Process Rule, DOE suspended the sta ndards rulemaking for dishwashers.
Dehumidifiers are new products covered by EPACT 2005, which esta blished standards for these products with an effective date of October 1, 2007. (Section 135(c)(4)) EPACT 2005 also requires that DOE issu e a final rule by October 1, 2009, to determine whether these standards should be amended. If amended stan dards are justified, EPACT 2005 requires them to become effective by October 1, 2012. In the event that DOE fails to publish a final rule, EPACT 2005 specifies a new set of amended standards with an effective date of October 1, 2012.
Like dehumidifiers, commercial clothes wa shers are new products covered by EPACT 2005. EPACT 2005 established standards for commerci al clothes washers with an effective date of January 1, 2007. (Section 136(e)) EPACT 2005 also requires th at DOE issue a final rule by January 1, 2010, to determine whether these standards should be amended.

1.3 PROCESS FOR SETTING ENERGY CONERVATION STANDARDS Under EPCA, when DOE is studying new or am ended standards, it m ust consider, to the greatest extent practic able, the following seven factors (42 U.S.C. 6295 (o)(2)(B)(i)):
1) the econom ic impact of the standard on the ma nufacturers and consumers of the affected products;
2) the savings in operating costs throughout the estim ated average life of the product compared to any increases in the initial cost or maintenance expense;
3) the to tal projected amount of energy savings likely to result directly from the imposition of the standard;

1-24) any lessening of the utility or the performan ce of the products likely to result from the imposition of the standard;
5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
6) the need for national energy conservation; and
7) other factors the Secretary considers relevant.
Other statutory requirements are set forth in 42 U.S.C. 6295 (o)(1)–(2)(A), (2)(B)(ii)– (iii), and (3)–(4) and 42 U.S.C. 6316(e).
DOE considers stakeholder participation to be a very important part of the process for setting energy conservation standards. Thr ough formal public notifications (i.e., Federal Register notices), DOE actively en courages the participation and in teraction of all stakeholders during the comment period in each stage of th e rulemaking. Beginning with the Framework Document and during subsequent comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.
For this rulemaking, DOE will employ the procedures set forth in the Process Rule, to the extent they are appropriate for the developm ent of energy conservation standards for the considered products. The Process Rule greatly enhances opportunitie s for public input and improved analytic approaches, and encourages adoption of consensus-ba sed standards. The Process Rule provides policies and guidelines for early public review and consultation with interested parties with regard to identifying and screeni ng design options, selecting a proposed standard, and establishing the fi nal standard. The factors for screening design options include: (1) technological feasibility; (2) practicab ility to manufacture, in stall, and service; (3) adverse impacts on product utility or product availability; and (4) adverse impacts on health or safety (Process Rule at secti on 4(a)(4)). 61 FR 36982.
The Process Rule requires DOE to evaluate uncertainty and variabil ity through the use of
scenar io or probability analysis, and provides for review by experts and interested parties of the analyses used, including: (1) qualitative a nd quantitative analytical methods; (2) economic, engineering, and life-cycle cost (LCC) an alyses; and (3) impacts on manufacturers and consumers, national energy savings, the economy, and the environment. Although the Process Rule specifically applies only to the development of energy-effi ciency standards for consumer products, DOE has decided to apply its procedur es to the development of energy conservation standards for commercial and industrial equipment as well. See appendix A to subpart C of Title 10 of the Code of Federal Regulat ions Part 430 (10 CFR Part 430).

Before DOE determines whether or no t to adopt a proposed energy conservation standard, it must first solicit comm ents on the pr oposed standard. (42 U.S.C. 6313(a)(6)(B)(i)) Any new or amended standard must be designed to achieve significant additional conservation of energy and be technologically feasible and econo mically justified. (42 U.S.C. 6313(a)(6)(A))

1-3To determine whether economic justificati on exists, DOE must re view comments on the proposal and determine that the benefits of the proposed standa rd exceed its burdens to the greatest extent practic able, weighing the seven factor s listed above. (42 U.S.C. 6295 (o)(2)(B)(i))
After the publication of the Fram ework Document, the standards rulemaking process involves three additional formal , major public notices, which DOE publishes in the Federal Register. The first of the rulemaking notices is an ANOPR, which is designed to publicly vet the models and tools used in the rulemaking, and to facilitate public part icipation before the proposed rule stage. The second notice is a NOPR, which presents a discussion of comments received in response to the ANOP R; analysis of the impacts of standards on consumers, manufacturers, and the nation; DOE ’s weighting of these impacts; and the proposed standards. The third notice is the fi nal rule, which presents a discussion of comments received in response to the NOPR; the revised analysis of the imp acts of standards; DOE’s weighting of these impacts; the standards DOE is adopting; a nd the effective dates of the standards.
In April, 2006, DOE published a Rulemaking Framework for Commercial Clothes Washers and Residential Dishwashers, Dehumidifiers, and C ooking Products , describing the procedural and analytical approaches DOE anticipated using to evaluate the establishment of energy conservation standards for th ese products. This document is available at http://www.eere.energy.gov/build ings/appliance_standards/

. DOE held a public meeting on April 27, 2006, to discuss procedur al and analytical approaches to the rulem aking, and to inform a nd facilitate stakeholde rs’ involvement in the rulemaking process. The analytical framewor k presented at the public meeting described different analyses, such as th e engineering analysis and th e LCC and payback period (PBP) analysis, the methods proposed for conducting th em, and the relationships among the various analyses. Table 1.3.1 lists the analyses to be undertaken and reported in each of the formal public rulemaking documents.

1-4Table 1.3.1 Analyses Under the Process Rule NOPR Market and technology assessment ANOPR Final Rule Revi sed ANOPR analyses Revised analyses
Screening analysis Life-cycle cost sub-group analysis Engineering analysis Manufacturer impact analysis Energy and water use determination Utility impact analysis Markups for equipment price determination Environmental assessment
Life-cycle cost and payback period analysis Employment impact analysis
Shipments analysis Regulatory impact analysis National impact analysis Preliminary manufacturer impact analysis

During the April, 2006, public meeting, stak eholders commented about the following issues related to the rulemaking: the existing DOE test procedure for microwave ovens; baseline unit definitions for the considered products; number of product classes for the considered products; consideration of limiting standby power as a design option for all four considered products; technology options for improving efficiency for all four considered products; type of approach to employ for the engineering analysis; efficiency levels to consider for all of the considered products; inclusion of water factor for dishwashers; cons ideration of cleaning performance in setting dishwasher standards; implications of clot hes container volume on commercial clothes washer efficiency; proposed approaches for specifying typical annual energy and water consumption for all four considered pr oducts; potential data so urces for characterizing variability in annual energy and water consumpti on; typical distribution channels and markups for the considered products; data sources for reta il prices; type of approach to employ for the LCC and PBP analyses; variability of forecasted energy and water prices; repair, maintenance, and installation cost relations hip to product efficiency; product lifetimes; development of consumer discount rates; purchase price imp acts on product shipments; forecasted saturation rates of commercial clothes washers; consumer subgroups; water and wastewater utility impacts; and wastewater discharge impacts.
Stakeholder comments submitted during th e Fra mework Document comment period elaborated on the issues raised at the public meeting. DOE worked with its contractors to address these issues in the analyses.
As part of the information gathering a nd sharing process, DOE organized and held interviews with m anufacturers of the considered products. DOE selected companies that represented production of all types of equipment, ranging from small to large manufacturers, and

1-5included both Association of Home Appliance Manufacturers (AHAM) member companies and non-AHAM member companies. DOE had four obj ectives for these interviews: (1) Solicit feedback on the draft engineering analys is (including methodology, production costs, manufacturing processes, and findi ngs); (2) solicit feedback on topi cs related to the preliminary manufacturer impact analysis; (3) provide an opp ortunity, early in the rulemaking process, to express specific concerns to DOE; and (4) fo ster cooperation between the manufacturers and DOE.
There were six general topics related to th e p reliminary manufacturer impact analysis discussed during each of the in terviews: (1) general key issues; (2) shipment projections; (3) capital conversion costs; (4) pr oduct mix and profitabi lity; (5) market shares and industry consolidation; and (6) cu mulative regulatory burden.
DOE incorporated the information gathered at th e interviews into its engineering analysis (see Chapter 5) and the preliminary manufacturer impact analysis (see Chapter 12). Following the publication of the ANOPR and the ANOPR public meeting, DOE intends to hold additional meetings with manufacturers as part of the c onsultative process for the manufacturer impact analysis conducted during the NOPR phase of the rulemaking.
DOE developed spreadsheets for the LCC, PBP, and national impact analyses for each of the considered products in an effort to meet the objectives of the Process Rule. For each product, DOE developed an LCC spreadsheet that calc ulates the LCC and PBP at various energyefficiency levels. DOE also developed a national im pact analysis spreadsheet that calculates the national energy savings (NES) and national net present values (NPVs) at various energyefficiency levels. This spreadsheet includes a model that forecasts the impacts of energyefficiency standards at various levels on product shipments. A ll of these spreadsheets are available on the DOE website ( http://www.eere.energy.gov/buildings/appliance_standards ), within the specific pages for each of the considered products.

1.4 STRUCTURE OF THE DOCUMENT This ANOPR TSD outlines the analytical appr oaches used in this rulem aking. The TSD consists of fourteen chapters , an environmental assessment, a regulatory impact analysis, and appendices.
Chapter 1 Introduction: provides an overview of the appliance standards program and how it applies to th is rulem aking, and outlines the structure of the document.
Chapter 2 Analytical Framework: describes the rulemaking process.

1-6Chapter 3 Market and Technology Assessm ent: characterizes the m arket for the considered products and the technologies available for increasing equipment efficiency.
Chapter 4 Screening Analysis: identifies all the design options that improve efficiency of the considered products, and determines which technology design options are viable for consider ation in the engineering analysis.
Chapter 5 Engineering Analysis: discu sses the m ethods used for developing the relationship between increased ma nufacturer price and increased efficiency.
Chapter 6 Energy and Water Use Determin ation: discusses the process used for generating energy- and water-use estim ates for the considered products as a function of standard levels.
Chapter 7 Markups for Equipment Price Determ ination: discusses the methods used for establishing markups for converting manufacturer prices to customer equipment prices.
Chapter 8 Life-Cycle Cost and Payback Pe rio d Analysis: discusses the effects of standards on individual customer s and users of the equipm ent and compares the LCC and PBP of e qui pment with and without higher efficiency standards.
Chapter 9 Shipments Analysis: discusses the methods used for forecasting shipments with and without higher e fficiency standards, including how equipment purchase decisions are econom ically influenced and how DOE models this relationship with econometric equations.
Chapter 10 National Impact Analysis: di scu sses the methods used for forecasting national energy consumption and na tional econom ic impacts based on estimates of future equipment efficiency, new construction and building starts, and annual equipment sales in the absence and presence of higher efficiency standards.
Chapter 11 Life-Cycle Cost Subgroup Analys is: discusses the effects of standards on different subgroups of consumers and compares the LCC and PBP of equipment with and without higher efficiency standards for these
consumers. Chapter 12 Manufacturer Impact Analysis: discu sses the effects of standards on the finances and profitability of equipm ent manufacturers.

1-7Chapter 13 Utility Impact Analysis: discu sses the effects of standards on electric and gas utilities.
Chapter 14 Employment Impact Analysis : discusses the effects of standards on national employment.

Environmental Assessment for Residential Dishwashers, Dehum i difiers, and Cooking Products, and Commercial Clothes Washers: disc usses the effects of standards on three polluta nts—sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), and mercury—as well as carbon emissions.
Regulatory Impact Analysis for Residentia l Dishwashers, Dehum i difiers, and Cooking Products, and Commercial Clothes Washers: discusses the impact of non-regulatory alternatives to efficiency standards.
Appendix 5A AHAM Data Subm ittal: presen ts the data provided by AHAM to DOE for aggregated data collection of sh ipments, market share, incremental cost, and one-time manufacturer co st information as a function of efficiency level.
Appendix 5B Manufacturer Interview Guides: presents questionnaires used to guide DOE interviews with residential dishwasher and dehumidifier, and commercial clothes washer manufacturers.
Appendix 5C The Low-Volum e Manufacturer: discusses the method for estimating the revenue and product mix impact on a low-production-volume commercial clothes washer.
Appendix 6A Cooktops and Ovens: Determination of Energy-Using Components: discusses the method for determining the energy use by energy-using components of cooktops and ovens including cooking, ignition, selfcleaning, and clock energy.
Appendix 8A User Instructions for LCC a nd PBP Spreadsheets: briefly describes the LCC and PBP spreadsheets for each of the considered produ cts and provides brief user instructions on how to operate the spreadsheets.
Appendix 8B Uncertainty and Variability: discusses how DOE uses uncertainty and variability to characte rize the inputs to the LCC and PBP analysis.
Appendix 8C Household Discount Rate Di stributions: provides the probability distributions for various household debt classes and asset holdings used to develop discount rates for househol d appliances in the LCC analysis.

1-8Appendix 9A Relative Price Elasticity of De mand for A ppliances: describes the analysis that DOE conducted to determine the consumer sensitivity to appliance purchase price changes as well as operating cost changes and household income.
Appendix 10A User Instructions for Ship m ents and NIA Spreadsheets: briefly describes the shipments and national impact analysis (NIA) spreadsheets for each of the considered products a nd provides brief user in structions on how to operate the spreadsheets.
Appendix 10B National Equipment and Opera ting Costs: provides the com ponents to the NPV for each of the considered p roducts, namely, the present value of the equipment costs and the present value of the operating costs.

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