8-i

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION ........................................................................................................... 8-1

8.1.1 General Approach for Life-Cycle Cost and Payback Period Analyses ........................... 8-1

8.1.2 Overview of Life-Cycle Cost and Payback Period Analyses Inputs ............................... 8-2

8.1.3 Use of Residential Energy Consumption Survey in Life-Cycle Cost and Payback 

Period Analysis................................................................................................................ 8-5

8.2 LIFE-CYCLE COST ANALYSIS INPUTS.................................................................... 8-6

8.2.1 Total Installed Cost Inputs............................................................................................... 8-7

8.2.1.1 Manufacturer Costs........................................................................................ 8-7

8.2.1.2 Markups ......................................................................................................... 8-8

8.2.1.3 Total Consumer Price .................................................................................. 8-10

8.2.1.4 Future Product Prices................................................................................... 8-11

8.2.1.5 Installation Cost ........................................................................................... 8-13

8.2.1.6 Total Installed Cost...................................................................................... 8-13

8.2.2 Operating Cost Inputs.................................................................................................... 8-14

8.2.2.1 Annual Energy Use Savings ........................................................................ 8-15

8.2.2.2 Energy Prices............................................................................................... 8-16

8.2.2.3 Energy Price Trends..................................................................................... 8-21

8.2.2.4 Repair Cost................................................................................................... 8-21

8.2.2.5 Maintenance Cost......................................................................................... 8-23

8.2.2.6 Lifetime........................................................................................................ 8-23

8.2.2.7 Discount Rate............................................................................................... 8-24

8.2.2.8 Compliance Date of Standard ...................................................................... 8-28

8.2.2.9 Base Case Distribution of Efficiency Levels............................................... 8-28

8.2.2.10 Avoiding Double-Counting Savings Accounted for in Air Conditioner 

Standards Rulemaking ................................................................................. 8-29

8.3 PAYBACK PERIOD INPUTS...................................................................................... 8-30

8.4 LCC AND PBP RESULTS............................................................................................ 8-31

8.4.1 Non-Weatherized, Non-Condensing Gas Furnace Fans................................................ 8-31

8.4.2 Non-Weatherized, Condensing Gas Furnace Fans ........................................................ 8-34

8.4.3 Weatherized Gas Furnace Fans...................................................................................... 8-36

8.4.4 Oil Furnace Fans............................................................................................................ 8-38

8.4.5 Electric Furnace Fans..................................................................................................... 8-40

8.4.6 Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fans.............. 8-42

8.4.7 Manufactured Home Non-Weatherized, Condensing Gas Furnace Fans...................... 8-44

8.4.8 Manufactured Home Electric Furnace/Modular Blower Fans....................................... 8-46

8.4.9 Hydronic Air Handler Fans............................................................................................ 8-49
8-ii

LIST OF TABLES

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP 

Analysis................................................................................................................ 8-4

Table 8.2.1 Manufacturer Production Cost for Non-Hydronic Furnace Fans by 

Efficiency Level................................................................................................... 8-8

Table 8.2.2 Manufacturer Production Cost for Hydronic Furnace Fans by Efficiency 

Level .................................................................................................................... 8-8

Table 8.2.3 National Average Baseline Markups................................................................... 8-9

Table 8.2.4 National Average Incremental Markups.............................................................. 8-9

Table 8.2.5 Overall Markup for Furnace Fans by Product Class.......................................... 8-10

Table 8.2.6 Total Consumer Price for Furnace Fans Used in HVAC Products Other 

than Hydronic Air Handlers (2011$)................................................................. 8-11

Table 8.2.7 Total Consumer Price for Furnace Fans Used in Hydronic Air Handlers 

(2011$)............................................................................................................... 8-11

Table 8.2.8 Total Installed Cost for Furnace Fans Used in HVAC Products Other than 

Hydronic Air Handlers (2011$)......................................................................... 8-14

Table 8.2.9 Total Installed Cost for Furnace Fans Used in Hydronic Air Handlers 

(2011$)............................................................................................................... 8-14

Table 8.2.10 Average Residential Electricity Prices in 2010 ................................................. 8-17

Table 8.2.11 Average Residential Natural Gas Prices in 2010............................................... 8-18

Table 8.2.12 Average Residential LPG Prices in 2010........................................................... 8-19

Table 8.2.13 Average Residential Fuel Oil Prices in 2010..................................................... 8-20

Table 8.2.14 Annualized Repair Cost for Furnace Fans Used in HVAC Products Other 

than Hydronic Air Handlers (2011$)................................................................. 8-22

Table 8.2.15 Annualized Repair Cost for Furnace Fans Used in Hydronic Air Handlers 

(2011$)............................................................................................................... 8-22

Table 8.2.16 Lifetime Parameters for Furnace Fans............................................................... 8-23

Table 8.2.17 Types of Household Debt and Equity by Percentage Shares............................. 8-25

Table 8.2.18 Average Nominal Interest Rates for Household Debt ....................................... 8-25

Table 8.2.19 Average Real Effective Interest Rates for Household Debt .............................. 8-26

Table 8.2.20 Average Nominal and Real Interest Rates for Household Equity ..................... 8-26

Table 8.2.21 Average Interest on Household Debt and Equity .............................................. 8-27

Table 8.2.22 Data Used to Calculate Real Effective Mortgage Rates.................................... 8-28

Table 8.2.23 Base Case Market Shares (2018) by Efficiency Level for Fans in NonWeatherized Gas Furnaces................................................................................. 8-29

Table 8.4.1 Non-Weatherized, Non-Condensing Gas Furnace Fans: LCC and PBP 

Results................................................................................................................ 8-32

Table 8.4.2 Rebuttable Payback Period for Non-Weatherized, Non-Condensing Gas 

Furnace Fans...................................................................................................... 8-34

Table 8.4.3 Non-Weatherized, Condensing Gas Furnace Fan: LCC and PBP Results ........ 8-34

Table 8.4.4 Rebuttable Payback Period for Non-Weatherized, Condensing Gas 

Furnace Fans...................................................................................................... 8-36

Table 8.4.5 Weatherized Gas Furnace Fan: LCC and PBP Results...................................... 8-36

Table 8.4.6 Rebuttable Payback Period for Weatherized Gas Furnace Fans........................ 8-38
8-iii

Table 8.4.7 Oil Furnace Fan: LCC and PBP Results............................................................ 8-38

Table 8.4.8 Rebuttable Payback Period for Oil Furnace Fan................................................ 8-40

Table 8.4.9 Electric Furnace/Modular Blower Fan: LCC and PBP Results......................... 8-40

Table 8.4.10 Rebuttable Payback Period for Electric Furnace/Modular Blower Fan............. 8-42

Table 8.4.11 Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fans: LCC and PBP Results .............................................................................. 8-42

Table 8.4.12 Rebuttable Payback Period for Manufactured Home Non-Weatherized, 

Non-Condensing Gas Furnace Fans................................................................... 8-44

Table 8.4.13 Manufactured Home Non-Weatherized, Condensing Gas Furnace Fans: 

LCC and PBP Results........................................................................................ 8-44

Table 8.4.14 Rebuttable Payback Period for Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fans........................................................................... 8-46

Table 8.4.15 Manufactured Home Electric Furnace/Module Blower Fans: LCC and 

PBP Results........................................................................................................ 8-47

Table 8.4.16 Rebuttable Payback Period for Manufactured Home Electric 

Furnace/Modular Blower Fans .......................................................................... 8-49

Table 8.4.17 Hydronic Air Handler Fan (Heat/Cool): LCC and PBP Results........................ 8-49

Table 8.4.18 Rebuttable Payback Period for Hydronic Air Handler Fan (Heat/Cool)........... 8-51

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ....................... 8-4

Figure 8.2.1 Historical Nominal and Deflated Producer Price Indexes for Integral 

Horsepower Motors and Generators Manufacturing ......................................... 8-12

Figure 8.2.2 Electricity Price Forecast ................................................................................... 8-21

Figure 8.4.1 Distribution of LCC Savings for Non-Weatherized, Non-Condensing Gas 

Furnace Fans...................................................................................................... 8-33

Figure 8.4.2 Distributions of PBP for Non-Weatherized, Non-Condensing Gas Furnace 

Fans.................................................................................................................... 8-33

Figure 8.4.3 Distribution of LCC Savings for Non-Weatherized, Condensing Gas 

Furnace Fans...................................................................................................... 8-35

Figure 8.4.4 Distributions of PBP for Non-Weatherized, Condensing Gas Furnace Fans .... 8-35

Figure 8.4.5 Distribution of LCC Savings for Weatherized Gas Furnace Fans..................... 8-37

Figure 8.4.6 Distributions of PBP for Weatherized Gas Furnace Fans.................................. 8-37

Figure 8.4.7 Distribution of LCC Savings for Oil Furnace Fans........................................... 8-39

Figure 8.4.8 Distributions of PBP for Oil Furnace Fans........................................................ 8-39

Figure 8.4.9 Distribution of LCC Savings for Electric Furnace Fans.................................... 8-41

Figure 8.4.10 Distributions of PBP for Electric Furnace Fans................................................. 8-41

Figure 8.4.11 Distribution of LCC Savings for Manufactured Home Non-Weatherized, 

Non-Condensing Gas Furnace Fans................................................................... 8-43

Figure 8.4.12 Distributions of PBP for Manufactured Home, Non-Weatherized, NonCondensing Gas Furnace Fans........................................................................... 8-43

Figure 8.4.13 Distribution of LCC Savings for Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fans........................................................................... 8-45
8-iv

Figure 8.4.14 Distributions of PBP for Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fans........................................................................... 8-46

Figure 8.4.15 Distribution of LCC Savings for Manufactured Home Electric 

Furnace/Modular Blower Fans .......................................................................... 8-48

Figure 8.4.16 Distributions of PBP for Manufactured Home Electric Furnace/Modular 

Blower Fans....................................................................................................... 8-48

Figure 8.4.17 Distribution of LCC Savings for Hydronic Air Handler Fans........................... 8-50

Figure 8.4.18 Distributions of PBP for Hydronic Air Handler Fans........................................ 8-50
8-1

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

8.1 INTRODUCTION

The effect of amended standards on individual customers usually includes a reduction in 

operating cost and an increase in purchase cost. This chapter describes two metrics used in the 

analysis to determine the economic impact of standards on individual residential consumers.

• Life-cycle cost (LCC) is the total customer cost over the life of an appliance or product, 

including purchase costs and operating costs (which in turn include maintenance, repair, 

and energy costs). Future operating costs are discounted to the time of purchase and 

summed over the lifetime of the appliance or product.

• Payback period (PBP) measures the amount of time it takes customers to recover the 

assumed higher purchase price of more energy-efficient products through reduced 

operating costs.

The U.S. Department of Energy (DOE) conducted the LCC and PBP analysis using a 

spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a 

commercially available software program), the LCC and PBP model generates a Monte Carlo 

simulation to perform the analysis by incorporating uncertainty and variability considerations in 

certain of the key parameters as discussed below.

Inputs to the LCC and PBP analysis of furnace fan products are discussed in sections 8.2

and 8.3 respectively. Results for each metric are presented in section 8.4. Key variables and 

calculations are presented for each metric. The calculations discussed here were performed with 

a series of Microsoft Excelspreadsheets that are accessible over the Internet 

(http://www1.eere.energy.gov/buildings/appliance_standards/residential/furnace_fans.html).

Details of the spreadsheets and instructions for using them are discussed in appendix 8-A.

8.1.1 General Approach for Life-Cycle Cost and Payback Period Analyses

In recognition of the fact that each building using furnace fans is unique, variability and 

uncertainty are analyzed by performing the LCC and PBP calculations detailed here for a 

representative sample of individual households and commercial buildings. The results are 

expressed as the number of buildings experiencing economic impacts of different magnitudes. 

The LCC and PBP model was developed using Microsoft Excel spreadsheets combined with 

Crystal Ball. The LCC and PBP analysis explicitly model both the uncertainty and the variability 

in the model’s inputs using Monte Carlo simulation and probability distributions.

The LCC analysis used the estimated energy use for each furnace fan unit as described in 

the energy use characterization analysis in chapter 7 of the preliminary technical support 

document (TSD). Energy use of furnace fans is sensitive to climate and therefore varies by 

location within the United States. An important feature of the LCC and PBP analysis is that it has 

been conducted at both the regional and national level. Aside from energy use, other important 
8-2

factors influencing the LCC and PBP analysis include energy prices, installation costs, product

distribution markups, and sales taxes. At both the national and the regional level, the LCC 

spreadsheets explicitly modeled both the uncertainty and the variability in the model’s inputs, 

using probability distributions based on the shipment of products to different regions of the 

country. 

As mentioned above, DOE generated LCC and PBP results as probability distributions 

using a simulation based on Monte Carlo analysis methods, in which certain key inputs to the 

analysis consist of probability distributions rather than single-point values. Therefore, the 

outcomes of the Monte Carlo analysis can also be expressed as probability distributions. As a 

result, the Monte Carlo analysis produces a range of LCC and PBP results. A distinct advantage 

of this type of approach is that DOE can identify the percentage of customers achieving LCC 

savings or attaining certain PBP values due to an increased efficiency level, in addition to the 

average LCC savings or average PBP for that efficiency level.

The LCC and PBP results are displayed as distributions of impacts compared to a market 

baseline. As described in chapter 7, the market baseline efficiency level is for 2018 and is 

defined as a mix of furnace fan efficiency levels reflecting the current distribution of efficiency 

levels purchased by product class. Results are presented at the end of this chapter. A variety of 

graphic displays can be created to illustrate the implications of the analysis. Examples of graphic 

displays are (1) a cumulative probability distribution showing the percentage of furnace fan 

product in U.S. residential and commercial buildings that would experience a net LCC savings, 

and (2) a cumulative frequency chart depicting variation in PBP for each furnace fan efficiency 

level considered.

8.1.2 Overview of Life-Cycle Cost and Payback Period Analyses Inputs

The LCC is the total customer cost over the life of the product, including purchase price 

(including retail markups, sales taxes, and installation costs), and operating cost (including repair 

costs, maintenance costs, and energy cost). Future operating costs are discounted to the time of 

purchase and summed over the lifetime of the product. The PBP is the increase in purchase cost 

of a higher efficiency product divided by the change in annual operating cost (as a result of lower 

energy consumption) of the product. It represents the number of years that it will take the 

customer to recover the increased purchase cost through decreased operating costs. In the 

calculation of PBP, future costs are not discounted.

Inputs to the LCC and PBP analysis are categorized as follows: (1) inputs for establishing 

the purchase cost, otherwise known as the total installed cost; and (2) inputs for calculating the 

operating cost (i.e., energy, maintenance, and repair costs).

The primary inputs for establishing the total installed cost are:

• Baseline manufacturer selling price: The baseline manufacturer selling price (MSP) is 

the price charged by the manufacturer to either a wholesaler or customer for product 

meeting existing minimum efficiency (or baseline) standards. The MSP includes a 

markup that converts the cost of production (i.e., the manufacturer cost) to a MSP.
8-3

• Standard-level manufacturer selling price increase: The standard-level MSP is the 

incremental change in MSP associated with producing product at each of the higher 

standard levels. 

• Markups and sales tax: Markups and sales tax are the wholesaler and contractor margins 

and state and local retail sales taxes associated with converting the MSP to a customer 

price. 

• Installation cost: Installation cost is the cost to the customer of installing the product. The 

installation cost represents all costs required to install the product but does not include the 

marked-up customer product price. The installation cost includes labor, overhead, and 

any miscellaneous materials and parts. Thus, the total installed cost equals the customer 

product price plus the installation price.

The primary inputs for calculating the operating cost are:

• Product energy consumption: The product energy consumption is the site energy use 

associated with the use of the furnace fan units to provide space conditioning to the 

building.

• Energy Prices: Electricity, natural gas, liquid petroleum gas (LPG), and fuel oil prices are 

determined using average monthly energy prices.

• Electricity, natural gas, and fuel oil price trends: The Energy Information 

Administration’s (EIA’s) Annual Energy Outlook 2012 (AEO 2012) is used to forecast 

electricity prices into the future.1 For the results presented in this chapter, DOE used the 

AEO 2012 reference case to forecast future energy prices.

• Maintenance costs: The labor and material costs associated with maintaining the 

operation of the product (e.g., cleaning heat exchanger coils and drain pans, changing air 

filters).

• Repair costs: The labor and material costs associated with repairing or replacing 

components that have failed.

• Lifetime: The age at which the central air conditioner and furnace product is retired from 

service.

• Discount rate: The rate at which future costs are discounted to establish their present 

value. Figure 8.1.1 graphically depicts the relationships between the installed cost and 

operating cost inputs for the calculation of the LCC and PBP. 
8-4

Figure 8.1.1 Flow Diagram of Inputs for the Determination of 

LCC and PBP

Table 8.1.1 provides descriptions of the various inputs to the calculation of the LCC and 

PBP. As noted earlier, most of the inputs are characterized by probability distributions that 

capture variability in the input variables. 

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP 

Analysis

Inputs Description

Affecting Installed Costs

Product Price

Derived MSP for furnace fan units at different heating and air conditioning 

input capacities (from the engineering analysis) and multiplied by wholesaler 

markups and contractor markups plus sales tax (from markups analysis). Used 

the probability distribution for the different markups to describe their 

variability. 

Installation Cost

Includes installation labor derived from RS Means CostWorks 2012 and RS 

Means Residential Cost Data 2012. Overhead and materials costs and profits 

are assumed to be included in the contractor’s markup. Thus, the total installed 

cost equals the consumer product price (manufacturer cost multiplied by the 

various markups plus sales tax) plus the installation cost. 

Affecting Operating Costs

Annual Energy Use See chapter 7. 

Energy Efficiency

The fan efficiency ratio (FER) is the efficiency descriptor for furnaces fan. 

Furnace and air conditioning test procedure algorithms as well as furnace fan 

performance characteristics are used to determine the annual energy 

consumption associated with a particular standard level.

Energy Prices For residential furnace fan equipment customers, costs were calculated for 

Manufacturer Sales 

Price Standard i= 1...n

Manufacturer Sales 

Price Standard i= 1...n

Installation Costs Installation Costs

Repair Costs Repair Costs Lifetimes Lifetimes

Annual Maintenance

Electricity 

Consumption Electricity 

Consumption

Manufacturer Base 

Price

Total Installed Cost 

(Std i –Base)

Manufacturer Base 

Price

Contractor Markups

Wholesaler/ 

Distributor Markup

Electricity Prices

Equipment Prices

Sales Tax

Manufacturer Selling 

Price (Base)

Installation Costs

Manufacturer Selling 

Price Standard i= 1...n

Electricity 

Consumption Annual Energy Costs

Annual Maintenance

Repair Costs

Annual Operating 

Cost (Std i - Base)

Payback 

Period

Discount Rate

Lifetimes

Lifetime 

Operating 

Cost (Std 

i – Base)

Lifecycle 

Cost

Annual Maintenance 

Costs

Manufacturer Sales 

Price Standard i= 1...n

Manufacturer Sales 

Price Standard i= 1...n

Installation Costs Installation Costs

Repair Costs Repair Costs Lifetimes Lifetimes

Annual Maintenance

Electricity 

Consumption Electricity 

Consumption

Manufacturer Base 

Price

Total Installed Cost 

(Std i –Base)

Manufacturer Base 

Price

Contractor Markups

Wholesaler/ 

Distributor Markup

Electricity Prices

Equipment Prices

Sales Tax

Manufacturer Selling 

Price (Base)

Installation Costs

Manufacturer Selling 

Price Standard i= 1...n

Electricity 

Consumption Annual Energy Costs

Annual Maintenance

Repair Costs

Annual Operating 

Cost (Std i - Base)

Payback 

Period

Discount Rate

Lifetimes

Lifetime 

Operating 

Cost (Std 

i – Base)

Lifecycle 

Cost

Annual Maintenance 

Costs
8-5

RECS 2005 households from monthly marginal average electricity and natural 

gas, LPG, or fuel oil prices in each 27 states and groups of states in RECS 2009. 

Residential prices were escalated by the AEO 2012 forecasts to estimate the 

future electricity prices. Escalation was performed at the census division level 

and aggregated to the regions used in the study.

Maintenance Cost

The cost associated with maintaining the operation of the product (e.g., 

checking blower). Annual maintenance cost does not change as a function of 

MSP.

Repair Cost

Estimated the annualized repair cost for baseline efficiency furnace product, 

based on costs of major repair (motor replacement), from a variety of published 

sources. It is assumed that repair costs would vary in direct proportion with the 

MSP at higher efficiency levels, because it generally costs more to replace 

components that are more efficient.

Affecting Present Value of Annual Operating Cost Savings

Product Lifetime Used the probability distribution of lifetimes developed for furnaces. 

Discount Rate

Mean real discount rates ranging from 0 percent to 10.7 percent for various 

classes of residential customers based on Federal Reserve Board’s Survey of 

Consumer Finances. Probability distributions are assumed for the discount 

rates.

Date Standards 

Become Effective 2018 (5 years after expected publication of the final rule)

All of the inputs depicted in Figure 8.1.1 and summarized in Table 8.1.1 are discussed in 

sections 8.2 and 8.3.

8.1.3 Use of Residential Energy Consumption Survey in Life-Cycle Cost and Payback 

Period Analysis

The LCC and PBP calculations detailed here are for a representative sample of individual 

households and commercial buildings. All furnace equipment is assumed to be for residential 

buildings.

The 2005 RECS2 serves as the basis for determining the representative sample. The 2005 

RECS is based on a sample of 4,382 households that were surveyed for information on their 

housing units, energy consumption and expenditures, stock of energy-consuming appliances, and 

energy-related behavior. Information was also collected on certain demographic and economic 

characteristics of household members. The information collected represents all households 

nationwide—approximately 111 million. RECS is conducted every 3 years with data collected 

directly from energy end users. The RECS consists of three parts:

• Personal interviews with households for information about energy used, how it is used, 

energy-using appliances, structural features, energy efficiency measures, and 

demographic characteristics of the household.

• Telephone interviews with rental agents for households that have any of their energy use 

included in their rent. This information augments information collected from those 
8-6

households that may not be knowledgeable about the fuels used for space heating or 

water heating.

• Mail questionnaires sent to energy suppliers (after obtaining permission from households) 

to collect the actual billing data on energy consumption and expenditures.

Of the 4,382 households surveyed in the 2005 RECS, 1,726 households representing 

41.0% of the housing population have a gas furnace (non-weatherized or weatherized), 576 

representing 16.1% of the housing population have an electric furnace, 109 representing 2.3% of 

the housing population have a manufactured home gas furnace, 150 representing 2.5% of the 

housing population have an oil-fired furnace, and 68 representing 1.9% of the housing 

population have a manufactured home electric furnacea

Of the inputs necessary for the LCC and PBP analysis, there are three inputs that are 

based on data from the 2005 RECS: (1) space-conditioning annual energy consumption (RECSbased), (2) product efficiency, and (3) average electricity price. All of these inputs are used in 

determining the operating cost. With the exception of product efficiency, each household in 

RECS with a furnace has a unique value for the space-conditioning annual energy consumption, 

the average electricity price, and the marginal electricity price. In other words, the annual energy 

consumption and average electricity price associated with a particular RECS household are not 

uncertain and are, therefore, not expressed with probability distributions. Although those three 

input variables are not uncertain, they are extremely variable. Due to the large number of 

households considered in the LCC and PBP analysis (almost 2,000 for furnaces), the range of 

annual energy use, average electricity price, and marginal electricity price is quite large. Thus, 

although the above three input variables are not uncertain for any particular household, their 

variability across all households contributes significantly to the range of LCCs and PBPs 

calculated for any particular standard level.

. Using the households in RECS that 

utilize each type of furnace, LCC and PBP analysis are performed on a household-by-household 

basis to determine whether an increase in the minimum efficiency standard is economically 

justified. Each RECS household has an associated household weight representing the number of 

similar households in the nation. 

8.2 LIFE-CYCLE COST ANALYSIS INPUTS

Life-cycle cost is the total customer cost over the life of a product, including purchase 

cost and operating costs (which are composed of energy costs, maintenance costs, and repair 

costs). Future operating costs are discounted to the time of purchase and summed over the 

lifetime of the product. Life-cycle cost is defined by the following equation:

Eq. 8.2.1

Where:

 a RECS does not provide a direct way of determining which households are using hydronic air handlers. 

∑=

= + +

N

t

t

t LCC IC OC r

1

/(1 )
8-7

LCC = life-cycle cost ($),

IC = total installed cost ($),

∑ = sum over the lifetime, from year 1 to year N, 

where N = lifetime of product (years),

OC = operating cost ($),

r = discount rate, and

t = year for which operating cost is being determined.

DOE expresses all the costs in 2011$. Total installed cost, operating cost, lifetime, and 

discount rate are discussed in the following sections. In the LCC analysis, the year of product 

purchase is assumed to be 2018, the effective date of the energy conservation standards for 

furnace fans.

8.2.1 Total Installed Cost Inputs

The total installed cost to the customer is defined by the following equation:

Eq. 8.2.2

Where:

EQP = product price ($) (i.e., customer price for the product only), and

INST = installation cost or the customer price to install product ($) (i.e., the cost for 

labor and materials).

The product price is based on the distribution channel through which the customer 

purchases the product. As discussed in chapter 6, Markups for Product Price Determination, 

DOE defined one major distribution channel for new units to describe how the product passes 

from the manufacturer to the customer: the manufacturer sells the product to a wholesaler or 

distributor, who sells to a mechanical contractor hired by a general contractor. The general 

contractor purchases and installs the product on behalf of the customer and adds its markup to 

the mechanical contractor’s price. Replacement products follow the same distribution channel, 

except that there is no general contractor. Instead, the mechanical contractor takes on the general 

contractor’s function.

The remainder of this section provides information about the variables DOE used to 

calculate the total installed cost for furnace fan products.

8.2.1.1 Manufacturer Costs

DOE developed the manufacturer costs for furnace fans as described in chapter 5, 

Engineering Analysis. The manufacturer costs at each efficiency level are shown in Table 8.2.1

and Table 8.2.2.

IC = EQP + INST
8-8

Table 8.2.1 Manufacturer Production Cost for Non-Hydronic Furnace Fans by 

Efficiency Level 

Efficiency Level Total Cost

(2011$)

Incremental Cost

(2011$)

0 Baseline PSC $69 N/A

1 Improved PSC $71 $3

2 PSC w/controls $80 $16

3 X13 $92 $31

4 Electronically 

commutated motor 

(ECM) + Multi-Stage $161 $124

5 ECM w/ backwardcurved (BC) Impeller $176 $144

Table 8.2.2 Manufacturer Production Cost for Hydronic Furnace Fans by Efficiency 

Level 

Efficiency Level Total Cost

(2011$)

Incremental Cost

(2011$)

0 Baseline PSC $84 N/A

1 Improved PSC $91 $9

2 PSC w/controls $101 $22

3 X13 $122 $50

4 ECM + Multi-Stage $191 $144

5 ECM w/BC Impeller $206 $165

6 Switching mode power 

supply

$213 $175

7 Toroidal Transformer $225 $189

8.2.1.2 Markups

For a given distribution channel, the overall markup is the value determined by 

multiplying all the associated markups and the applicable sales tax together to arrive at a single 

overall distribution chain markup value. The overall markup is multiplied times the baseline or 

standard-compliant MSP (including transportation) to arrive at the price paid by the customer. 

Because there are baseline and incremental markups associated with the wholesaler and 

mechanical contractor, the overall markup is also divided into a baseline markup (i.e., a markup 

used to convert the baseline manufacturer price into a customer price) and an incremental 

markup (i.e., a markup used to convert a standard-compliant MSP increase due to an efficiency 

increase into an incremental customer price). Markups can differ depending on whether the 

product is being purchased for a new construction installation or is being purchased to replace an 

existing product. DOE developed the overall baseline markups and incremental markups for both 

new construction and replacement applications as a part of the markups analysis (chapter 6 of the 

TSD).

Based on the percentages of the market attributed to each distribution channel, Table 

8.2.3 and Table 8.2.4 display the weighted-average overall markups and their associated 

components for the baseline and incremental markups, respectively.
8-9

Table 8.2.3 National Average Baseline Markups

Factor New 

Construction 

Application

Replacement 

Application

Wholesale Markup 1.362 1.362

Mechanical 

Contractor Markup 1.280 1.380

General Contractor 

Markup 1.480 N/A*

Sales Tax 1.073 1.073

Total Markup 2.767 2.016

* General contractors do not appear in the replacements 

distribution channel 

Table 8.2.4 National Average Incremental Markups

Factor New 

Construction 

Application

Replacement 

Application

Wholesale Markup 1.091 1.091

Mechanical 

Contractor Markup 1.024 1.104

General Contractor 

Markup 1.347 N/A*

Sales Tax 1.073 1.073

Total Markup 1.614 1.292

* General contractors do not appear in the replacements 

distribution channel 

Because the relative importance of new construction and replacements in total shipments 

varies among the product classes, the total markup varies as well (Table 8.2.5).
8-10

Table 8.2.5 Overall Markup for Furnace Fans by Product Class 

Product Class Baseline Markup Incremental Markup

Non-Weatherized, Non-Condensing Gas 

Furnaces

2.49 1.59

Non-Weatherized, Condensing Gas 

Furnaces

2.45 1.54

Weatherized Gas Furnace 2.46 1.57

Oil Furnace 2.30 1.46

Electric Furnace / Modular Blower 2.41 1.54

Manufactured Home Non-Weatherized, 

Non-Condensing Gas Furnaces

3.04 2.35

Manufactured Home Non-Weatherized, 

Condensing Gas Furnaces

2.96 2.29

Manufactured Home Electric Furnace 

/Modular Blower

2.95 2.28

Hydronic Air Handler (Heat/Cool) 2.62 1.65

8.2.1.3 Total Consumer Price

DOE derived the consumer product price for the efficiency levels above the baseline by 

taking the product of the baseline manufacturer cost and the baseline markup index (including 

the sales tax) and adding to it the product of the incremental manufacturer cost and the 

incremental markup index (including the sales tax). Markups and the sales tax all can take on a 

variety of values, depending on location, so the resulting total installed cost for a particular 

efficiency level will not be a single-point value, but rather a distribution of values.

Table 8.2.6 and Table 8.2.7 present the consumer product price for each furnace product 

class at each efficiency level examined. 
8-11

Table 8.2.6 Total Consumer Price for Furnace Fans Used in HVAC Products Other 

than Hydronic Air Handlers (2011$)

Efficiency Level

Key Product Class 0 1 2 3 4 5

Baseline 

PSC

Improved 

PSC

PSC w/ 

Controls

X13 ECM + 

MultiStage

ECM + 

Backward

-curved 

Impeller

Non-weatherized, Noncondensing Gas Furnace 

Fan

$236 $240 $261 $290 $437 $470

Non-weatherized, 

Condensing Gas Furnace 

Fan

$241 $246 $265 $303 $447 $478

Weatherized Gas Furnace 

Fan

$237 $241 $261 $295 $441 $473

Oil Furnace Fan $313 $327 $345 $433 $560 $590

Electric Furnace / Modular 

Blower Fan

$207 $211 $231 $232 $379 $411

Manufactured Home Nonweatherized, Noncondensing Gas Furnace 

Fan

$218 $224 $278 $313 $524 $554

Manufactured Home Nonweatherized, Condensing 

Gas Furnace Fan

$237 $243 $284 $317 $523 $564

Manufactured Home 

Electric Furnace / Modular 

Blower Fan

$177 $183 $253 $286 $491 $495

Table 8.2.7 Total Consumer Price for Furnace Fans Used in Hydronic Air Handlers

(2011$)

Efficiency Level

Key Product 

Class

0 1 2 3 4 5 6 7

Baseline 

PSC

Improved 

PSC

PSC w/ 

Controls

X13 ECM

+ 

Multi

-

Stage

ECM + 

Backward

-curved 

Impeller

Switching 

Mode 

Power 

Supply

Toroidal

Transformer

Hydronic Air 

Handler Fan 

(Heat/Cool)

$230 $246 $291 $338 $492 $513 $518 $543

8.2.1.4 Future Product Prices

In DOE’s 2011 heating, ventilating, and air conditioning (HVAC) standards rulemaking, it 

derived a forecast of future furnace prices based on an analysis of the historic trend in the 
8-12

producer price index (PPI) for furnaces. DOE believes that using the same trend for furnace fans 

would not be appropriate, however, as the fan does not make up a major part of the total cost of a 

furnace. Because the fan motor is the most important component of the furnace fan, DOE 

believes that historic prices of electric motors provide a more reasonable basis for considering 

trends in the price of furnace fans.

DOE developed data on historic prices of electric motors in its preliminary analysis of 

standards for electric motors. DOE obtained historical PPI data for integral horsepower motors 

and generators manufacturing spanning the time period 1969-2010 from the Bureau of Labor 

Statistics’ (BLS).b

Figure 8.2.1

The PPI data reflect nominal prices, adjusted for product quality changes. An 

inflation-adjusted (deflated) price index for integral horsepower motors and generators 

manufacturing was calculated by dividing the PPI series by the Gross Domestic Product Chained 

Price Index (see ).

Figure 8.2.1 Historical Nominal and Deflated Producer Price 

Indexes for Integral Horsepower Motors and 

Generators Manufacturing 

From the mid-1970s to 2005, the deflated price index for electric motors was roughly 

flat. Since then, the index has risen sharply, primarily due to rising prices of copper and steel 

products that are used in motors. The rising prices for copper and steel products were primarily a 

result of strong demand from China and other emerging economies. Given the slowdown in 

 b

 Series ID PCU3353123353123; http://www.bls.gov/ppi/
8-13

global economic activity in 2011, DOE believes that the extent to which the trends of the past 

five years will continue is very uncertain. DOE performed an exponential fit on the deflated price 

index for electric motors, but the R2 was relatively low (0.5). DOE also considered the 

experience curve approach, in which an experience rate parameter is derived using two historical 

data series on price and cumulative production, but the time series for historical shipments was 

not long enough for a robust analysis. 

Given the above considerations, DOE decided to use constant prices as the default price 

assumption to project future motor prices. DOE used the same assumption in its preliminary 

analysis for furnace fans. Thus, prices forecast for the LCC and PBP analysis are equal to the 

2011 values for each efficiency level in each product class.

8.2.1.5 Installation Cost

Because the furnace fan is installed in the furnace in the factory, there is generally no 

additional installation cost at the home. However, ECM furnace fan design may require 

additional installation costs. DOE assumed that a fraction of the ECM furnace fan installations 

will require up to an hour of extra labor at startup to check and adjust airflow. 

DOE’s analysis of installation costs accounts for regional differences in labor costs. DOE 

estimated the installation costs using a variety of sources, including RS Means CostWorks 2012, 

manufacturer literature, and information from expert consultants. For a detailed discussion of the 

development of installation costs, see appendix 8-D, Installation, Repair, and Maintenance Cost

Calculations.

8.2.1.6 Total Installed Cost

The total installed cost is the sum of the product price and the installation cost. DOE 

derived the consumer product price for any given efficiency level by taking the product of the 

baseline MSP and the baseline markup index (including the sales tax) and adding to it the 

product of the incremental MSP and the incremental markup index (including the sales tax). 

MSPs, markups, and the sales tax all can take on a variety of values, depending on location, so 

the resulting total installed cost for a particular efficiency level will not be a single-point value, 

but rather a distribution of values

Table 8.2.8 and Table 8.2.9 present the consumer product price for each furnace product 

class at each efficiency level examined. 
8-14

Table 8.2.8 Total Installed Cost for Furnace Fans Used in HVAC Products Other 

than Hydronic Air Handlers (2011$)

Efficiency Level

Key Product Class 0 1 2 3 4 5

Baseline 

PSC

Improved 

PSC

PSC w/ 

Controls

X13 ECM + 

MultiStage

ECM + 

Backward

-curved 

Impeller

Non-weatherized, Noncondensing Gas Furnace 

Fan

$236 $240 $261 $293 $448 $480

Non-weatherized, 

Condensing Gas Furnace 

Fan

$241 $246 $265 $306 $459 $491

Weatherized Gas Furnace 

Fan

$237 $241 $261 $297 $451 $483

Oil Furnace Fan $313 $327 $345 $437 $577 $607

Electric Furnace / Modular 

Blower Fan

$207 $211 $231 $235 $388 $420

Manufactured Home Nonweatherized, Noncondensing Gas Furnace 

Fan

$218 $224 $278 $314 $531 $561

Manufactured Home Nonweatherized, Condensing 

Gas Furnace Fan

$237 $243 $284 $319 $531 $572

Manufactured Home 

Electric Furnace / Modular 

Blower Fan

$177 $183 $253 $287 $497 $501

Table 8.2.9 Total Installed Cost for Furnace Fans Used in Hydronic Air Handlers

(2011$)

Efficiency Level

Key Product 

Class

0 1 2 3 4 5 6 7

Baseline 

PSC

Improved 

PSC

PSC w/ 

Controls

X13 ECM

+ 

Multi

-

Stage

ECM + 

Backwar

d-curved 

Impeller

Switching 

Mode 

Power 

Supply

Toroidal 

Transformer

Hydronic Air 

Handler Fan 

(Heat/Cool)

$230 $246 $291 $341 $504 $525 $531 $555

8.2.2 Operating Cost Inputs

DOE defined the operating cost by the following equation:
8-15

OC = EC+ RC+ MC Eq. 8.2.3

Where:

OC = operating cost ($), 

EC = energy cost associated with operating the product ($),

RC = repair cost associated with component failure ($), and

MC = annual maintenance cost for maintaining product operation ($).

The remainder of this section provides information about the variables that DOE used to 

calculate the operating cost for furnace products. The annual energy costs of the product are 

computed from energy consumption per unit for the baseline and standard-compliant cases 

(efficiency level 2, 3, etc.), combined with the energy prices. Product lifetime, discount rate, and 

compliance date of the standard are required for determining the operating cost and for 

establishing the operating cost present value. 

8.2.2.1 Annual Energy Use Savings

For each key product class, DOE calculated the annual energy use savings for each 

sample household at each efficiency level as described in chapter 7. DOE accounted for 

additional energy use required for space heating due to more-efficient furnace fans, as well as 

reduction in energy use required for air conditioning.

DOE considered the possibility that some consumers may use a higher-efficiency furnace 

fan more than a baseline furnace fan, thereby negating some or all of the energy savings from the 

more-efficient fan. Such change in behavior when operating costs decline is known as a rebound 

effect.

DOE reviewed an evaluation report from Wisconsinc that indicates that a considerable 

number of homeowners who purchase ECM furnaces significantly increase the frequency with 

which they operate their furnace fan subsequent to the installation of the ECM furnace. To 

estimate a rebound effect that would apply to the national household sample, DOE calculated a 

separate rebound effect for the north and for the south regions based on the expected increase of 

constant circulation fan use that can be expected for ECM furnaces.

The take-back in energy consumption associated with the rebound effect provides 

consumers with increased value (e.g., enhanced comfort associated with use of constant 

circulation). DOE believes that, if it were able to monetize the increased value to consumers of 

the rebound effect, this value would be similar in value to the foregone energy savings. 

Therefore, the economic impacts on consumers with or without the rebound effect, as measured 

in the LCC analysis, are the same.

 c State of Wisconsin, Public Service Commission of Wisconsin, Focus on Energy Evaluation Semiannual Report, 

Final: April 8, 2009. 

http://www.focusonenergy.com/files/Document_Management_System/Evaluation/semiannualreport18monthcontrac

tperiodfinalrevisedoctober192009_evaluationreport.pdf
8-16

8.2.2.2 Energy Prices

DOE derived average monthly energy prices for a number of geographic areas in the 

United States using the latest data from EIA and monthly energy price factors that it developed. 

DOE assigned an appropriate price to each household in the sample, depending on its location.

EIA Data. DOE derived 2010 annual electricity prices from EIA Form 826 data.

3 The 

EIA Form 826 data include energy prices by State. DOE calculated annual electricity prices for 

each geographical area by averaging monthly energy prices by State to get State electricity 

prices. For areas with more than one State, DOE weighted each State’s average price by its

number of households. Table 8.2.10 shows the average prices for each geographic area.

DOE obtained the data for natural gas prices from EIA’s Natural Gas Navigator,

4 which

includes monthly natural gas prices by State for residential, commercial, and industrial 

customers. For areas with more than one State, DOE weighted each State’s average price by its

number of households. Table 8.2.11 displays the 2010 annual natural gas prices.
8-17

Table 8.2.10 Average Residential Electricity Prices in 2010

Geographic Area 2011$/kWh

Connecticut, Maine, New Hampshire, Rhode 

Island, Vermont

$0.178

Massachusetts $0.151

New York $0.193

New Jersey $0.170

Pennsylvania $0.131

Illinois $0.119

Indiana, Ohio $0.111

Michigan $0.128

Wisconsin $0.131

Iowa, Minnesota, North Dakota, South Dakota $0.106

Kansas, Nebraska $0.099

Missouri $0.094

Virginia $0.108

Delaware, District of Columbia, Maryland, 

West Virginia

$0.135

Georgia $0.103

North Carolina, South Carolina $0.106

Florida $0.118

Alabama, Kentucky, Mississippi $0.101

Tennessee $0.096

Arkansas, Louisiana, Oklahoma $0.093

Texas $0.120

Colorado $0.114

Idaho, Montana, Utah, Wyoming $0.089

Arizona $0.111

Nevada, New Mexico $0.120

California $0.152

Oregon, Washington $0.086

Alaska $0.168

Hawaii $0.290
8-18

Table 8.2.11 Average Residential Natural Gas Prices in 2010

Geographic Area 2011$/MMBtu

Connecticut, Maine, New Hampshire, Rhode 

Island, Vermont

$16.94

Massachusetts $14.96

New York $15.94

New Jersey $13.71

Pennsylvania $15.11

Illinois $11.68

Indiana, Ohio $13.42

Michigan $12.58

Wisconsin $11.28

Iowa, Minnesota, North Dakota, South 

Dakota

$10.24

Kansas, Nebraska $12.66

Missouri $16.78

Virginia $15.96

Delaware, District of Columbia, Maryland, 

West Virginia

$15.57

Georgia $19.63

North Carolina, South Carolina $18.14

Florida $19.67

Alabama, Kentucky, Mississippi $14.93

Tennessee $13.69

Arkansas, Louisiana, Oklahoma $15.07

Texas $13.16

Colorado $9.07

Idaho, Montana, Utah, Wyoming $9.12

Arizona $18.03

Nevada, New Mexico $12.37

California $10.06

Oregon, Washington $13.09

Alaska $9.27

Hawaii $44.90

DOE collected 2010 average LPG prices from EIA’s 2010 State Energy Consumption, 

Price, and Expenditures Estimates (SEDS).5 SEDS includes annual LPG prices for residential, 

commercial, industrial, and transportation consumers by state. For areas with more than one 

State, DOE weighted each State’s average price by its number of households. See Table 8.2.12. 
8-19

Table 8.2.12 Average Residential LPG Prices in 2010

Geographic Area 2011$/MMBtu

Connecticut, Maine, New Hampshire, Rhode 

Island, Vermont

$32.51

Massachusetts $35.63

New York $31.92

New Jersey $35.37

Pennsylvania $31.09

Illinois $21.42

Indiana, Ohio $24.96

Michigan $23.66

Wisconsin $20.47

Iowa, Minnesota, North Dakota, South Dakota $20.28

Kansas, Nebraska $20.14

Missouri $21.04

Virginia $31.30

Delaware, District of Columbia, Maryland, 

West Virginia

$32.38

Georgia $26.71

North Carolina, South Carolina $30.42

Florida $37.29

Alabama, Kentucky, Mississippi $26.86

Tennessee $28.03

Arkansas, Louisiana, Oklahoma $26.38

Texas $28.75

Colorado $23.16

Idaho, Montana, Utah, Wyoming $23.92

Arizona $32.40

Nevada, New Mexico $29.65

California $31.42

Oregon, Washington $26.77

Alaska $35.37

Hawaii $58.88

DOE collected 2010 average fuel oil prices from EIA’s SEDS.5 SEDS includes annual 

fuel oil prices for residential, commercial, industrial, and transportation consumers by state. For 

areas with more than one State, DOE weighted each State’s average price by its number of 

households. See Table 8.2.13. 
8-20

Table 8.2.13 Average Residential Fuel Oil Prices in 2010

Geographic Area 2011$/MMBtu

Connecticut, Maine, New Hampshire, Rhode 

Island, Vermont

$21.67

Massachusetts $22.52

New York $23.00

New Jersey $23.66

Pennsylvania $21.92

Illinois $21.72

Indiana, Ohio $20.97

Michigan $20.95

Wisconsin $20.38

Iowa, Minnesota, North Dakota, South Dakota $19.79

Kansas, Nebraska $20.09

Missouri $19.75

Virginia $20.47

Delaware, District of Columbia, Maryland, 

West Virginia

$22.59

Georgia $20.55

North Carolina, South Carolina $20.91

Florida $20.94

Alabama, Kentucky, Mississippi $18.67

Tennessee $20.28

Arkansas, Louisiana, Oklahoma $18.46

Texas $18.06

Colorado $19.89

Idaho, Montana, Utah, Wyoming $20.50

Arizona $23.42

Nevada, New Mexico $20.90

California $23.78

Oregon, Washington $22.81

Alaska $21.95

Hawaii $22.85

Monthly Prices. To determine monthly prices for use in the analysis, DOE developed 

monthly energy price factors for each fuel based on long-term price data. See appendix 8-B, 

Monthly Energy Price Factor Calculations for description of the method. DOE multiplied the 

annual prices shown in the above tables by the monthly price factors for each fuel to derive 

prices for each month.

Electricity and Natural Gas Marginal Prices. Electricity and natural gas prices were 

adjusted using seasonal marginal price factors to come up with monthly marginal electricity and 
8-21

natural gas prices. For a detailed discussion of the development of marginal energy price factors, 

see appendix 8-C, Seasonal Marginal Energy Price Factor Calculations.

8.2.2.3 Energy Price Trends

DOE used price forecasts by the EIA to estimate future trends in energy prices. To arrive 

at prices in future years, it multiplied the prices described in the preceding section by the forecast 

of annual average price changes in EIA’s AEO 2012 Early Release.

6 Figure 8.2.2 shows the 

national residential electricity price trend. To estimate the trend after 2035, DOE followed past 

guidelines provided to the Federal Energy Management Program (FEMP) by EIA and used the 

average rate of change during 2020–2035 for electricity, natural gas, and LPG. 

DOE used AEO 2012 Reference Case scenarios for the nine census divisions. DOE

applied the applied the energy price forecast for each of the nine census divisions to each 

household in the sample based on the household’s location.

Figure 8.2.2 Electricity Price Forecast

8.2.2.4 Repair Cost

The repair cost is the cost to the consumer for replacing or repairing components in the

furnace fan that have failed. DOE included motor replacement as a repair cost for a fraction of 

furnace fans. To estimate rates of motor failure, DOE developed a distribution of fan motor 

lifetime (expressed in operating hours) by motor size using data from DOE’s analysis for small 

electric motors.

d

 d http://www1.eere.energy.gov/buildings/appliance_standards/commercial/sem_finalrule_tsd.html

DOE then paired these data with the calculated number of annual operating 

hours for each sample furnace. Motor costs were based on costs developed in the engineering 

10.6

10.7

10.8

10.9

11.0

11.1

11.2

11.3

11.4

11.5

11.6

2010 2015 2020 2025 2030 2035

2010¢/kWh

Year

Reference
8-22

analysis and the replacement markups developed in the markup analysis. DOE assumed that the 

motor cost does not apply if motor failure occurs during the furnace warranty period.

The repair costs at each considered efficiency level were based on 2010 RS Means

Facility Repair and Maintenance Data. DOE accounts for regional differences in labor costs. For 

a detailed discussion of the development of repair costs, see appendix 8-D, Installation, Repair, 

and Maintenance Cost Calculations.

Table 8.2.14 and Table 8.2.15 show the annualized repair cost estimates for each product 

class.

Table 8.2.14 Annualized Repair Cost for Furnace Fans Used in HVAC Products Other 

than Hydronic Air Handlers (2011$)

Key Product Class Efficiency Level

0 1 2 3 4 5

Baseline 

PSC

Improved 

PSC

PSC w/ 

Controls

X13 ECM + 

MultiStage

ECM + 

Backward

-curved 

Impeller

Non-weatherized, Noncondensing Gas Furnace Fan$13 $13 $14 $15 $20 $21

Non-weatherized, Condensing 

Gas Furnace Fan

$13 $13 $14 $15 $20 $20

Weatherized Gas Furnace Fan $15 $16 $16 $18 $23 $25

Oil Furnace Fan $15 $16 $16 $18 $23 $24

Electric Furnace / Modular 

Blower Fan

$14 $14 $15 $15 $21 $22

Manufactured Home Nonweatherized, Non-condensing 

Gas Furnace Fan

$12 $12 $13 $14 $19 $20

Manufactured Home Nonweatherized, Condensing Gas 

Furnace Fan

$13 $13 $14 $15 $20 $20

Manufactured Home Electric 

Furnace / Modular Blower Fan

$12 $12 $14 $15 $21 $21

Table 8.2.15 Annualized Repair Cost for Furnace Fans Used in Hydronic Air 

Handlers (2011$)

Efficiency Level

Key Product 

Class

0 1 2 3 4 5 6 7

Baseline 

PSC

Improved 

PSC

PSC w/ 

Controls

X13 ECM

+ 

Multi

-

Stage

ECM + 

Backward

-curved 

Impeller

Switching 

Mode Power 

Supply

Toroidal 

Transformer

Hydronic Air 

Handler Fan 

(Heat/Cool)

$17 $17 $19 $20 $26 $27 $27 $28
8-23

8.2.2.5 Maintenance Cost

The maintenance cost is the routine cost to the consumer of maintaining equipment 

operation. The regular furnace maintenance generally includes checking the furnace fan. DOE 

assumes that this maintenance cost is the same at all efficiency levels.

Labor hours and costs for annual maintenance was estimated using RS Means data. The 

frequency with which the maintenance occurs was derived from a consumer survey7 on the 

frequency with which owners of different types of furnaces perform maintenance. For a detailed 

discussion of the development of maintenance costs, see appendix 8-D.

8.2.2.6 Lifetime

DOE defines lifetime as the age when a product is retired from service. Furnace fan 

lifetimes are considered to be equivalent to furnace lifetimes, so DOE modeled furnace fan 

lifetime based on estimated furnace lifetimes, which were developed for the recent furnace 

standards rulemaking.e

Table 8.2.16

In that analysis, DOE used national survey data, along with manufacturer 

shipment data, to calculate the distribution of furnace lifetimes. For a detailed discussion of the 

development of furnace fan lifetime, see appendix 8-E, Furnace Fan Lifetime Determination.

shows the minimum, median, and average lifetime, as well as the Weibull 

distribution parameters alpha and beta for each product class. DOE assumed that the lifetime of a 

fan is the same at different efficiency levels.

Table 8.2.16 Lifetime Parameters for Furnace Fans

Product Class Weibull Parameters

Minimum

years

Median

years

Average

years

Alpha 

(scale)

Beta 

(shape)

Non-Weatherized Gas Furnace Fans 

(Condensing and Non-Condensing) 1 22.6 23.6 26.7 2.218

Manufactured Home Gas Furnace Fans 

(Condensing and Non-Condensing) 1 16.9 18.7 21.0 1.682

Oil-Fired Furnace Fans 1 26.3 26.5 29.7 3.019

Weatherized Gas Furnace Fans; 

Electric Furnace/Modular Blower Fans; 

Manufactured Home Electric

Furnace/Modular Blower Fans; 

Hydronic Air Handlers

1 17.3 18.0 20.3 2.255

 e

http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_cac_hp_direct_final_ru

le.html
8-24

8.2.2.7 Discount Rate

The discount rate is the rate at which future expenditures are discounted to establish their 

present value. DOE derived the discount rates for the LCC analysis by estimating the cost of 

capital for individuals and companies that purchase furnace fan products.

In the case of individual households, the financing of purchasing products installed in 

new homes is different from the financing of appliances bought directly by consumers (i.e., as a 

replacement for a failed unit or as a new purchase for an existing household that does not already 

own the appliance). Thus, DOE used different discount rates for these residential purchases. 

Discount Rates for Replacement Products Purchased by Existing Households

Households use various methods to finance the purchase of major appliances. In 

principle, one could estimate the interest rates on the actual financing vehicles used to purchase 

appliances. However, the frequency with which each financing vehicle is used to purchase an 

appliance is unknown. 

DOE’s approach involved identifying all possible debt or asset classes that might be used 

to purchase the considered appliances, including household assets that might be affected 

indirectly.f

8

DOE excluded debt from primary mortgages and the equity of assets considered nonliquid (such as retirement accounts), because those financing methods are unlikely to be used by 

households in existing housing to purchase appliances. DOE estimated the average percentage 

shares of the various types of debt and equity in the average U.S. household using data from the 

Federal Reserve Board’s Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 

2004, and 2007. Table 8.2.17 shows the average percentages of each considered type of debt or 

equity. DOE derived the mean percentages of each source of financing for the 7 years surveyed.

 f An indirect effect would arise if a household sold assets in order to pay off a loan or credit card debt that might 

have been used to finance the appliance purchase.
8-25

Table 8.2.17 Types of Household Debt and Equity by Percentage Shares

Type of Debt or Equity Distribution 

%

1989 1992 1995 1998 2001 2004 2007 Mean

Home equity loan 4.3 4.5 2.7 2.8 2.8 4.4 4.6 3.7

Credit card 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1

Other installment loan 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.6

Other residential loan 4.4 6.9 5.2 4.3 3.1 5.8 7.1 5.3

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.5

Checking account 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.4

Savings or money market 

account 19.2 18.8 14.0 12.8 14.2 15.1 13.0 15.3

Certificate of deposit 14.5 11.7 9.4 7.0 5.4 5.9 6.5 8.6

Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 0.7 1.4

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 6.7 9.5

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 29.0

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 18.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

DOE also estimated interest or return rates associated with each type of equity and debt. 

The source for interest rates for loans, credit cards, and lines of credit was the Federal Reserve 

Board’s Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. 

Table 8.2.18 shows the average nominal rates in each year and the inflation factors used to 

calculate real rates. DOE calculated effective interest rates for home equity loans in a similar 

manner as for mortgage rates, because interest on both such loans is tax deductible. Table 8.2.19

shows the average effective real rates in each year and the mean rate across years. Because the 

interest rates for each type of household debt reflect economic conditions throughout numerous 

years, they are expected to be representative of rates that may be in effect in 2018.

Table 8.2.18 Average Nominal Interest Rates for Household Debt

Type of Debt Average Nominal Interest Rate 

%

1989 1992 1995 1998 2001 2004 2007 Mean

Home equity loan 11.5 9.6 9.6 9.8 8.7 5.7 6.3 7.9

Credit card* - - 14.2 14.5 14.2 11.7 7.9 9.0

Other installment loan 9.0 7.8 9.3 7.8 8.7 7.4 12.6 13.4

Other residential loan 8.8 7.6 7.7 7.7 7.5 6.0 10.4 8.6

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 6.3 7.4

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85 --

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007.

* No data on interest rates available for credit cards in 1989 or 1992.
8-26

Table 8.2.19 Average Real Effective Interest Rates for Household Debt

Type of Debt Average Real Effective Interest Rate 

%

1989 1992 1995 1998 2001 2004 2007 Mean

Home equity loan 3.8 4.3 4.4 5.8 3.8 1.9 2.1 3.0

Credit card* - - 11.0 12.7 11.1 9.1 3.3 3.9

Other installment loan 4.9 5.8 7.0 6.6 6.1 5.4 9.7 10.7

Other residential loan 4.0 4.7 4.8 6.0 4.6 3.3 5.8 6.0

Other line of credit 9.6 9.4 9.3 10.2 7.3 6.0 3.4 4.4

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 

2001, 2004, and 2007.

* No data on interest rates available for credit cards in 1989 or 1992.

No similar rate data are available from the SCF for classes of assets, so the Department 

derived that information from national historical data. The interest rates associated with 

certificates of deposit,9 savings bonds,10 and bonds (AAA corporate bonds)11 were collected 

from Federal Reserve Board time-series data for 1977–2011. DOE assumed rates on checking 

accounts to be zero. Rates on savings and money market accounts came from Cost of Savings 

Index data covering 1984–2011.

12 The rates for stocks are the annual returns on the Standard and 

Poor’s 500 for 1977–20011.

13 Rates for mutual funds are a weighted average of the stock rates 

(two-thirds weight) and the bond rates (one-third weight) in each year for 1977–2011. DOE 

adjusted the nominal rates to real rates using the annual inflation rate for each year. Average 

nominal and real interest rates for the classes of household assets are listed in Table 8.2.20. 

Because the interest and return rates for each type of asset reflect economic conditions 

throughout numerous years, they are expected to be representative of rates that may be in effect 

in 2018.

Table 8.2.20 Average Nominal and Real Interest Rates for Household Equity

Type of Equity Average 

Nominal Rate 

%

Average Real 

Rate 

%

Checking account - 0.0

Savings and money market accounts 5.1 2.1

Certificate of deposit 6.1 2.0

Savings bond 7.4 3.3 

Bonds 8.2 4.0

Stocks 11.8 7.6

Mutual funds 10.4 6.1

Table 8.2.21 summarizes the mean real effective rates of each type of equity or debt. 

DOE determined the average percentage of each type of debt and asset using SCF data for 1989, 

1992, 1995, 1998, 2001, 2004, and 2007. Each year of SCF data provides the percentages of 

debts and assets for U.S. households. DOE averaged those percentages for the 7 years of survey 
8-27

data to arrive at the percentages shown in Table 8.2.21. The average rate across all types of 

household debt and equity, weighted by the percentages of each type, is 5.0 percent.

Table 8.2.21 Average Interest on Household Debt and Equity

Type of Debt or Equity Average Percentage of 

Household Debt plus Equity

%*

Mean Effective Real Rate 

%**

Home equity loan 3.7 3.9 

Credit card 2.1 10.7 

Other installment loan 1.6 6.0 

Other residential loan 5.3 4.4 

Other line of credit 0.5 8.8 

Checking account 4.4 0.0 

Savings and money market account 15.3 2.1

Certificate of deposit 8.6 2.0

Savings bond 1.4 3.3 

Bonds 9.5 4.0

Stocks 29.0 7.6

Mutual funds 18.6 6.1

Total/weighted-average discount rate 100.0 5.0

* Not including primary mortgage or retirement accounts.

** Adjusted for inflation and, for home equity loans, tax deduction of interest.

DOE developed a normal probability distribution of interest rates for each asset type by 

using the mean value and standard deviation from the distribution. To account for variation 

among households, DOE sampled a rate for each household from the distributions for the 

appropriate asset class. Appendix 8-F presents the probability distributions for each class that 

DOE used in the LCC and PBP analysis.

Discount Rates for Products Installed in New Housing 

Appliances installed in new homes (“new-housing appliances”) are purchased as part of 

the home, which is almost always financed with a mortgage loan. DOE estimated discount rates 

for new-housing appliances using the effective real (after-inflation) mortgage rate for 

homebuyers. This rate corresponds to the interest rate after deduction of mortgage interest for 

income tax purposes and after adjusting for inflation (using the Fisher formula).g

The data sources DOE used for mortgage interest rates were the SCF in 1989, 1992, 

1995, 1998, 2001, 2004, and 2007. Using the appropriate SCF data for each year, DOE adjusted 

For example, a 

6% nominal mortgage rate has an effective nominal rate of 4.5% for a household at the 25% 

marginal tax rate. When adjusted for an inflation rate of 2%, the effective real rate becomes 

2.45%.

 g Fisher formula is given by: Real Interest Rate = [(1 + Nominal Interest Rate) / (1 + Inflation Rate)] – 1.
8-28

the mortgage interest rate for each relevant household in the SCF for mortgage tax deduction and 

inflation (see Table 8.2.22). In cases where the effective interest rate is equal to or below the 

inflation rate (resulting in a negative real interest rate), DOE set the real effective interest rate to 

zero.

The average nominal mortgage rate carried by homeowners in these 6 years was 7.9%. 

As the mortgage rates carried by households in these years were established over a range of time, 

DOE believes they are representative of rates that may apply when amended standards take 

effect. After adjusting for inflation and interest tax deduction, effective real interest rates on 

mortgages across the six surveys averaged 3.0%.

Table 8.2.22 Data Used to Calculate Real Effective Mortgage Rates

Year Mortgage Interest Rates in Selected Years 

%

Average Nominal 

Interest Rate

Inflation Rate14 Marginal Tax Rate 

Applicable to Mortgage 

Interest15

Average Real 

Effective Interest Rate

1989 9.7 4.82 24.3 2.4

1992 9.1 3.01 23.4 3.8

1995 8.2 2.83 24.1 3.3

1998 7.9 1.56 23.9 4.4

2001 7.6 2.85 22.9 2.9

2004 6.2 2.66 20.6 2.2

2007 6.3 2.85 21.6 2.1

Average 7.9 3.0

To account for variation among households, DOE sampled a rate for each household in 

the RECS samples from a distribution of mortgage rates. DOE developed the distribution based 

on the SCF data. Appendix 8-F presents the probability distribution that DOE used in the LCC 

and PBP analysis.

8.2.2.8 Compliance Date of Standard

Pursuant to 42 U.S.C. 6295(m), the compliance date of any new energy efficiency 

standard for furnace fans is 5 years after the final rule is published. Consistent with its published 

regulatory agenda, DOE assumed that the final rule would be issued in 2013 and that, therefore, 

the new standards would require compliance in 2018. DOE calculated the LCC and PBP for all 

consumers as if they each would purchase a new furnace fan in 2018.

8.2.2.9 Base Case Distribution of Efficiency Levels

DOE did not have access to sales data describing the actual distribution of efficiencies in 

current sales of furnaces, nor was specific information provided by industry for this analysis. 

DOE found very limited historical data upon which to estimate either current shares or recent 

trends. To start, DOE used Rheem’s comment, stating that the market share for ECM motors has 

increased from 10 percent to 30 percent within the last five years.

16 To estimate the market share 
8-29

for ECM motors in 2018, DOE developed data on the share of models in each product class that 

are ECM design.h

The market shares of each of the three ECM fan efficiency levels were derived from data 

on number of models. No such data were available for the PSC fan efficiency levels, so DOE 

assumed that half of shipments are at the baseline level and half are improved PSC fans. There 

are currently no models of PSC with controls design, so DOE assumed zero market share.

DOE believes that the current number of models is a reasonable indication of 

where the market may be in several years. The resulting estimate for 2018 is a 45 percent share 

for ECM fans out of the overall market for furnace fans. This level is consistent with the 

historical trend.

DOE made separate estimates of the ECM fan market shares in replacements and new 

homes using data from a Canadian survey in 2003.

17 The survey indicated that the market share 

of ECM fans in replacement applications was 3.7 times higher than the share in new homes.

Table 8.2.23 shows the market shares that were used in the LCC and PBP analysis for 

non-weatherized gas furnaces. The market shares used for the other key product classes may be 

found in the sheet “Base Case Fan Efficiency” in the furnace fan LCC spreadsheet posted on the 

DOE web site.

Table 8.2.23 Base Case Market Shares (2018) by Efficiency Level for Fans in NonWeatherized Gas Furnaces

Efficiency Level

Non-Condensing Condensing

Replacements

(%)

New Homes (%) Replacements

(%)

New Homes

(%)

Baseline PSC 34 46 18 41

Improved PSC 34 46 18 41

PSC w/controls 0 0 0 0

X13 14 4 26 7

ECM, variable speed 18 5 39 11

ECM w/BC impeller 0 0 0 0

8.2.2.10 Avoiding Double-Counting Savings Accounted for in Air Conditioner 

Standards Rulemaking

The fan electricity used for cooling operation or heat pump heating operation is part of 

the SEER and HSPF ratings for air conditioners and heat pumps. In the recent HVAC 

rulemaking,i

 h DOE used the AHRI Directory of Certified Furnace Equipment as well as manufacturer product literature.

the standard adopted by DOE accounted for savings from higher-efficiency central 

i

http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp_direct_f

inal_rule_tsd.html
8-30

air conditioners (CAC) and heat pumps (HP) (above SEER 14) that incorporate an ECM fan. 

DOE has taken steps to avoid also counting those energy savings in this rulemaking for furnace 

fans.

DOE used the same base case efficiency distribution of CAC and HP efficiencies in this 

analysis as it used in the HVAC rulemaking. In the household sample, those households assigned

a CAC or HP at 15 SEER or above would already have an ECM fan. This situation is reflected in 

the base case efficiency distribution used for furnace fans. Since the energy savings from the 

considered fan efficiency levels are measured relative to the base case efficiencies, any savings 

reported here are over and above those counted in the CAC and HP rulemaking.

8.3 PAYBACK PERIOD INPUTS

The PBP is the amount of time it takes the customer to recover the assumed higher 

purchase cost of more energy-efficient equipment as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase cost (i.e., from a less efficient 

design to a more efficient design) to the decrease in annual operating expenditures. This type of 

calculation is known as a “simple” payback period, because it does not take into account changes 

in the operating cost value of money.

The equation for PBP is:

PBP =∆IC/∆OC Eq. 8.3.1

Where:

PBP = payback period in years,

∆ IC = difference in the total installed cost between the more efficient standard-level 

equipment (efficiency levels 2, 3, etc.) and the baseline efficiency equipment, 

and

∆OC = difference in first year annual operating costs.

Payback periods are expressed in years. Payback periods greater than the life of the 

equipment mean that the increased total installed cost of the more efficient equipment is not 

recovered fast enough in reduced operating costs.

DOE also calculates a rebuttable PBP, which is the time it takes the consumer to recover 

the assumed higher purchase cost of more energy-efficient equipment as a result of lower energy 

costs. Numerically, the rebuttable PBP is the ratio of the increase in purchase cost (i.e., from a 

less efficient design to a more efficient design) to the decrease in annual energy expenditures; 

that is, the difference in first year annual energy cost as calculated from the DOE test procedure. 

The calculation excludes repair costs and maintenance costs. 

The data inputs to PBP are the total installed cost of the equipment to the customer for 

each efficiency level and the annual (first year) operating costs for each efficiency level. The 

inputs to the total installed cost are the equipment price and the installation cost. The inputs to 

the operating costs are the annual energy cost, the annual repair cost, and the annual maintenance 
8-31

cost (or, in the case of rebuttable PBP, only the annual energy cost). The PBP uses the same 

inputs as the LCC analysis, except that electricity price trends and discount rates are not 

required. Since the PBP is a “simple” (undiscounted) payback, the required electricity cost is 

only for the year in which a new efficient standard is to take effect—in this case, 2018. The 

electricity price used in the PBP calculation was the price projected for 2018. Discount rates are 

not used in the PBP calculation.

8.4 LCC AND PBP RESULTS 

As discussed previously, DOE’s approach for conducting the LCC and PBP analysis 

relied on developing samples of households that use each of the products. DOE also 

characterized the uncertainty of many of the inputs to the analysis with probability distributions. 

DOE used a Monte Carlo simulation technique to perform the LCC and PBP calculations on the 

households in the sample. For each set of sample households using the equipment in each 

product class, DOE calculated the average LCC and LCC savings and the median and average 

PBP for each of the efficiency levels. These efficiency levels are also referred to as candidate 

standard levels (CSLs).

DOE calculated LCC savings and PBPs relative to the base case equipment that it 

assigned to the households. In some cases, DOE assigned base case equipment that is more 

efficient than the baseline and some of the CSLs. For that reason, in those cases the average LCC 

impacts are not

LCC and PBP calculations were performed 10,000 times on the sample of households 

established for each residential product. Each LCC and PBP calculation was performed on a 

single household that was selected from the sample of the residential users. The selection of a 

household was based on its sample weight (i.e., how representative a particular household is of 

other households in the distribution—either regionally or nationally) in the 2005 RECS Public 

Use Sample, as described in chapter 7 of the TSD. Each LCC and PBP calculation also sampled 

from the probability distributions that DOE developed to characterize many of the inputs to the 

analysis.

equal to the difference between the LCC of a specific CSL and the LCC of the 

baseline product. DOE calculated the average LCC savings and the median PBP values by 

excluding the households that are not impacted by a standard at a given efficiency level. 

Based on the Monte Carlo simulations that DOE performed, for each standard level, DOE 

calculated the share of households receiving a net LCC benefit, a net LCC cost, and no impact. 

DOE considered a household to receive no impact at a given standard level if DOE assigned it 

base case equipment whose efficiency is the same as, or is more than, the CSL. 

8.4.1 Non-Weatherized, Non-Condensing Gas Furnace Fans 

Table 8.4.1 shows the LCC and PBP results for non-weatherized, non-condensing gas 

furnace fans. 
8-32

Table 8.4.1 Non-Weatherized, Non-Condensing Gas Furnace Fans: LCC and PBP 

Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

236 1,354 1,590 N/A 0 100 0 N/A

1 Improved 

PSC

240 1,333 1,573 6 33 63 4 1.2 

2 PSC w/ 

Controls

261 1,312 1,573 7 61 26 13 8.8 

3 X13 293 967 1,260 240 24 26 50 3.7 

4 ECM + 

Multi-Stage

448 1,056 1,503 31 64 15 21 20.5 

5

ECM + 

BackwardCurved 

Impeller

480 984 1,463 71 67 0 33 15.9 

Figure 8.4.1 shows the range of LCC savings for the efficiency levels considered for nonweatherized, non-condensing gas furnace fans. For each standard level, the top and the bottom of 

the box indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box 

indicates the median; 50 percent of the households have lifecycle cost savings above this value. 

The ‘whiskers’ at the bottom and the top of the box indicate the 5th and 95th percentiles. The 

small box shows the average LCC savings for each standard level. 
8-33

Figure 8.4.1 Distribution of LCC Savings for Non-Weatherized, 

Non-Condensing Gas Furnace Fans

Figure 8.4.2 show the range of PBPs for all efficiency levels considered for nonweatherized, non-condensing gas furnace fans.

Figure 8.4.2 Distributions of PBP for Non-Weatherized, NonCondensing Gas Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.2.

-600

-400

-200

0

200

400

600

800

1000

1200

1400

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

NWGF (Non-condensing) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

20

40

60

80

100

120

140

160

180

200

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

NWGF (Non-condensing) Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-34

Table 8.4.2 Rebuttable Payback Period for Non-Weatherized, Non-Condensing Gas 

Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 2.2

2 PSC w/ Controls 3.2

3 X13 1.3

4 ECM (Variable Speed) 4.8

5 ECM + Backward-curved Impeller 5.1

8.4.2 Non-Weatherized, Condensing Gas Furnace Fans

Table 8.4.3 shows the LCC and PBP results for non-weatherized, condensing gas furnace 

fans. 

Table 8.4.3 Non-Weatherized, Condensing Gas Furnace Fan: LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

241 1,292 1,533 N/A 0 100 0 N/A

1 Improved 

PSC

246 1,242 1,488 10 20 76 4 0.8 

2 PSC w/ 

Controls

265 1,095 1,361 65 35 53 12 5.3 

3 X13 306 840 1,146 169 13 53 33 5.2 

4 ECM + 

Multi-Stage

459 884 1,344 34 54 33 13 22.8 

5

ECM + 

BackwardCurved 

Impeller

491 836 1,327 51 71 0 29 17.3 

Figure 8.4.3 shows the range of LCC savings for the efficiency levels considered for nonweatherized, condensing gas furnace fans. For each standard level, the top and the bottom of the 

box indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates 

the median; 50 percent of the households have life-cycle cost savings above this value. The 

‘whiskers’ at the bottom and the top of the box indicate the 5th and 95th percentiles. The small 

box shows the average LCC savings for each standard level. 
8-35

Figure 8.4.3 Distribution of LCC Savings for Non-Weatherized, 

Condensing Gas Furnace Fans

Figure 8.4.4 show the range of PBPs for all efficiency levels considered for nonweatherized, condensing gas furnace fans.

Figure 8.4.4 Distributions of PBP for Non-Weatherized, 

Condensing Gas Furnace Fans

-600

-400

-200

0

200

400

600

800

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

NWGF (Condensing) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

20

40

60

80

100

120

140

160

180

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

NWGF (Condensing) Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-36

The rebuttable PBP for each efficiency level is shown in Table 8.4.4.

Table 8.4.4 Rebuttable Payback Period for Non-Weatherized, Condensing Gas Furnace 

Fans

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 2.1

2 PSC w/ Controls 3.0

3 X13 1.2

4 ECM (Variable Speed) 4.5

5 ECM + Backward-curved Impeller 4.7

8.4.3 Weatherized Gas Furnace Fans

Table 8.4.5 shows the LCC and PBP results for weatherized gas furnace fans.

Table 8.4.5 Weatherized Gas Furnace Fan: LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

237 1,243 1,480 N/A 0 100 0 N/A

1 Improved 

PSC

241 1,233 1,474 1 25 72 3 1.9 

2 PSC w/ 

Controls

261 1,180 1,441 18 37 44 19 4.0 

3 X13 297 820 1,117 203 7 44 49 2.6 

4 ECM + 

Multi-Stage

451 814 1,264 102 37 32 30 10.1 

5

ECM + 

BackwardCurved 

Impeller

483 751 1,234 133 48 0 51 9.4 

Figure 8.4.5 shows the range of LCC savings for the efficiency levels considered for 

weatherized gas furnace fans. For each standard level, the top and the bottom of the box indicate 

the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 

50 percent of the households have life-cycle cost savings above this value. The ‘whiskers’ at the 
8-37

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each standard level. 

Figure 8.4.5 Distribution of LCC Savings for Weatherized Gas 

Furnace Fans

Figure 8.4.6 shows the range of PBPs for all efficiency levels considered for weatherized 

gas furnace fans.

Figure 8.4.6 Distributions of PBP for Weatherized Gas Furnace 

Fans

-400

-200

0

200

400

600

800

1000

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

WGF Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

10

20

30

40

50

60

70

80

90

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

WGF Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-38

The rebuttable PBP for each efficiency level is shown in Table 8.4.6.

Table 8.4.6 Rebuttable Payback Period for Weatherized Gas Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 2.8

2 PSC w/ Controls 3.5

3 X13 1.5

4 ECM (Variable Speed) 5.4

5 ECM + Backward-curved Impeller 5.7

8.4.4 Oil Furnace Fans

Table 8.4.7 shows the LCC and PBP results for oil furnace fans. 

Table 8.4.7 Oil Furnace Fan: LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

313 1,327 1,640 N/A 0 100 0 N/A

1 Improved 

PSC

327 1,261 1,588 19 30 65 5 1.5 

2 PSC w/ 

Controls

345 1,037 1,382 156 59 29 11 2.5 

3 X13 437 1,005 1,442 111 56 29 15 9.6 

4 ECM + 

Multi-Stage

577 1,059 1,636 -29 63 29 8 19.1 

5

ECM + 

BackwardCurved 

Impeller

607 1,040 1,647 -40 85 0 15 15.4 

Figure 8.4.7 show the range of LCC savings for the efficiency levels considered for oil 

furnace fans. For each standard level, the top and the bottom of the box indicate the 75th and 25th

percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the 

households have life-cycle cost savings above this value. The ‘whiskers’ at the bottom and the 
8-39

top of the box indicate the 5th and 95th percentiles. The small box shows the average LCC 

savings for each standard level. 

Figure 8.4.7 Distribution of LCC Savings for Oil Furnace Fans

Figure 8.4.8 show the range of PBPs for all efficiency levels considered for oil furnace 

fans.

Figure 8.4.8 Distributions of PBP for Oil Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.8.

-1000

-800

-600

-400

-200

0

200

400

600

800

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

OF Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

50

100

150

200

250

300

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

OF Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-40

Table 8.4.8 Rebuttable Payback Period for Oil Furnace Fan

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 9.1

2 PSC w/ Controls 4.6

3 X13 2.3

4 ECM (Variable Speed) 5.8

5 ECM + Backward-curved Impeller 6.0

8.4.5 Electric Furnace Fans

Table 8.4.9 shows the LCC and PBP results for electric furnace/modular blower fans. 

Table 8.4.9 Electric Furnace/Modular Blower Fan: LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

207 827 1,034 N/A 0 100 0 N/A

1 Improved 

PSC

211 817 1,028 1 23 74 3 3.8 

2 PSC w/ 

Controls

231 829 1,060 -17 44 48 7 4.5 

3 X13 235 629 864 88 16 48 35 1.9 

4 ECM + 

Multi-Stage

388 680 1,069 -53 56 33 11 18.5 

5

ECM + 

BackwardCurved 

Impeller

420 635 1,054 -38 71 0 29 14.3 

Figure 8.4.9 show the range of LCC savings for the efficiency levels considered for 

electric furnace fans. For each standard level, the top and the bottom of the box indicate the 75th

and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 50 

percent of the households have lifecycle cost savings above this value. The ‘whiskers’ at the 

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each standard level. 
8-41

Figure 8.4.9 Distribution of LCC Savings for Electric Furnace 

Fans

Figure 8.4.10 shows the range of PBPs for all efficiency levels considered for electric 

furnace fans.

Figure 8.4.10 Distributions of PBP for Electric Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.10.

-400

-300

-200

-100

0

100

200

300

400

500

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

EF Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

20

40

60

80

100

120

140

160

180

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

EF Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-42

Table 8.4.10 Rebuttable Payback Period for Electric Furnace/Modular Blower Fan

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 2.8

2 PSC w/ Controls 3.7

3 X13 1.6

4 ECM (Variable Speed) 5.6

5 ECM + Backward-curved Impeller 6.0

8.4.6 Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fans

Table 8.4.11 shows the LCC and PBP results for manufactured home non-weatherized, 

non-condensing gas furnace fans. 

Table 8.4.11 Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fans: LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

218 742 961 N/A 0 100 0 N/A

1 Improved 

PSC

224 724 948 6 44 50 5 1.6 

2 PSC w/ 

Controls

278 637 915 39 71 0 28 13.5 

3 X13 314 567 881 74 60 0 39 9.3 

4 ECM + 

Multi-Stage

531 536 1,067 -112 85 0 15 24.4 

5

ECM + 

BackwardCurved 

Impeller

561 518 1,079 -124 84 0 16 23.7 

Figure 8.4.11 shows the range of LCC savings for the efficiency levels considered for 

manufactured home non-weatherized, non-condensing gas furnace fans. For each standard level, 

the top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The bar at 

the middle of the box indicates the median; 50 percent of the households have life-cycle cost 

savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5th and 

95th percentiles. The small box shows the average LCC savings for each standard level. 
8-43

Figure 8.4.11 Distribution of LCC Savings for Manufactured 

Home Non-Weatherized, Non-Condensing Gas 

Furnace Fans

Figure 8.4.12 shows the range of PBPs for all efficiency levels considered for 

manufactured home non-weatherized, non-condensing gas furnace fans.

Figure 8.4.12 Distributions of PBP for Manufactured Home, NonWeatherized, Non-Condensing Gas Furnace Fans

-800

-600

-400

-200

0

200

400

600

800

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

MHGF (Non-condensing) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

20

40

60

80

100

120

140

160

180

200

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

MHGF (Non-condensing) Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-44

The rebuttable PBP for each efficiency level is shown in Table 8.4.12.

Table 8.4.12 Rebuttable Payback Period for Manufactured Home Non-Weatherized, NonCondensing Gas Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 4.1

2 PSC w/ Controls 5.8

3 X13 2.4

4 ECM (Variable Speed) 8.7

5 ECM + Backward-curved Impeller 9.3

8.4.7 Manufactured Home Non-Weatherized, Condensing Gas Furnace Fans

Table 8.4.13 shows the LCC and PBP results for manufactured home non-weatherized, 

condensing gas furnace fans. 

Table 8.4.13 Manufactured Home Non-Weatherized, Condensing Gas Furnace Fans: 

LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

237 778 1,015 N/A 0 100 0 N/A

1 Improved 

PSC

243 743 985 10 28 67 5 1.0 

2 PSC w/ 

Controls

284 616 900 66 43 34 24 10.2 

3 X13 319 554 873 85 38 34 28 8.3 

4 ECM + 

Multi-Stage

531 537 1,068 -110 89 0 11 35.0 

5

ECM + 

BackwardCurved 

Impeller

572 525 1,098 -140 89 0 11 36.3 

Figure 8.4.13 shows the range of LCC savings for the efficiency levels considered for 

manufactured home non-weatherized, condensing gas furnace fans. For each standard level, the 

top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The bar at the 
8-45

middle of the box indicates the median; 50 percent of the households have life-cycle cost savings 

above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5th and 95th

percentiles. The small box shows the average LCC savings for each standard level. 

Figure 8.4.13 Distribution of LCC Savings for Manufactured 

Home Non-Weatherized, Condensing Gas Furnace 

Fans

Figure 8.4.14 shows the range of PBPs for all efficiency levels considered for 

manufactured home non-weatherized, condensing gas furnace fans.

-500

-400

-300

-200

-100

0

100

200

300

400

500

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

MHGF (Condensing) Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-46

Figure 8.4.14 Distributions of PBP for Manufactured Home NonWeatherized, Condensing Gas Furnace Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.14.

Table 8.4.14 Rebuttable Payback Period for Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fans

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 4.0

2 PSC w/ Controls 5.3

3 X13 2.2

4 ECM (Variable Speed) 7.9

5 ECM + Backward-curved Impeller 8.4

8.4.8 Manufactured Home Electric Furnace/Modular Blower Fans

Table 8.4.15 shows the LCC and PBP results for manufactured home electric 

furnace/modular blower fans. 

0

50

100

150

200

250

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

MHGF (Condensing) Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-47

Table 8.4.15 Manufactured Home Electric Furnace/Module Blower Fans: LCC and 

PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

177 733 910 N/A 0 100 0 N/A

1 Improved 

PSC

183 731 914 -2 29 69 2 5.1 

2 PSC w/ 

Controls

253 643 896 8 39 37 24 9.7 

3 X13 287 541 829 53 27 37 35 7.4 

4 ECM + 

Multi-Stage

497 489 986 -66 57 25 17 17.1 

5

ECM + 

BackwardCurved 

Impeller

501 454 956 -36 59 0 40 11.3 

Figure 8.4.15 shows the range of LCC savings for the efficiency levels considered for

manufactured home electric furnace/modular blower fans. For each standard level, the top and 

the bottom of the box indicate the 75th and 25th percentiles, respectively. The bar at the middle of 

the box indicates the median; 50 percent of the households have life-cycle cost savings above 

this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5th and 95th

percentiles. The small box shows the average LCC savings for each standard level. 
8-48

Figure 8.4.15 Distribution of LCC Savings for Manufactured 

Home Electric Furnace/Modular Blower Fans

Figure 8.4.16 shows the range of PBPs for all efficiency levels considered for 

manufactured home electric furnace/modular blower fans.

Figure 8.4.16 Distributions of PBP for Manufactured Home 

Electric Furnace/Modular Blower Fans

The rebuttable PBP for each efficiency level is shown in Table 8.4.16.

-500

-400

-300

-200

-100

0

100

200

300

400

500

Level 1 Level 2 Level 3 Level 4 Level 5

Average LCC Savings (2011$)

Efficiency Level

MHEF Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

20

40

60

80

100

120

Level 1 Level 2 Level 3 Level 4 Level 5

Average PBB (years)

Efficiency Level

MHEF Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-49

Table 8.4.16 Rebuttable Payback Period for Manufactured Home Electric 

Furnace/Modular Blower Fans

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 5.5

2 PSC w/ Controls 6.9

3 X13 2.8

4 ECM (Variable Speed) 10.3

5 ECM + Backward-curved Impeller 10.9

8.4.9 Hydronic Air Handler Fans 

Table 8.4.17 shows the LCC and PBP results for hydronic air handler fans.

Table 8.4.17 Hydronic Air Handler Fan (Heat/Cool): LCC and PBP Results

CSL

Technology

Option

Life-Cycle Cost (2011$) Life-Cycle Cost Savings

Payback 

Period 

(years)

Average 

Installed 

Cost

Average 

Lifetime 

Operating 

Cost

Average 

LCC

Average 

Savings

(2011$)

% Households with

Median

Net

Cost

No 

Impact

Net 

Benefit

0 Baseline 

(PSC)

230 1,284 1,515 N/A 0 100 0 N/A

1 Improved 

PSC

246 1,268 1,514 0 28 69 3 14.7 

2 PSC w/ 

Controls

291 1,288 1,579 -39 53 38 8 11.4 

3 X13 341 897 1,237 176 21 38 40 5.2 

4 ECM + 

Multi-Stage

504 704 1,208 200 37 22 40 9.1 

5

ECM + 

BackwardCurved 

Impeller

525 658 1,183 225 47 0 53 8.1 

6

Switching 

mode Power 

Supply

531 629 1,160 249 35 0 65 6.8 

7 Toroidal 

Transformer

555 613 1,168 240 39 0 61 7.8 

Figure 8.4.17 shows the range of LCC savings for the efficiency levels considered for 

hydronic air handler fans. For each standard level, the top and the bottom of the box indicate the 

75th and 25th percentiles, respectively. The bar at the middle of the box indicates the median; 50 
8-50

percent of the households have life-cycle cost savings above this value. The ‘whiskers’ at the 

bottom and the top of the box indicate the 5th and 95th percentiles. The small box shows the 

average LCC savings for each standard level. 

Figure 8.4.17 Distribution of LCC Savings for Hydronic Air 

Handler Fans

Figure 8.4.18 shows the range of PBPs for all efficiency levels considered for hydronic 

air handler fans.

Figure 8.4.18 Distributions of PBP for Hydronic Air Handler Fans

-600

-400

-200

0

200

400

600

800

1000

1200

1400

1600

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7

Average LCC Savings (2011$)

Efficiency Level

HF Average LCC Savings

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average

0

10

20

30

40

50

60

70

80

90

100

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7

Average PBB (years)

Efficiency Level

HF Average Payback Period

Average; Median; Box 25%-75%; Whisker 5%-95%

median

average
8-51

The rebuttable PBP for each efficiency level is shown in Table 8.4.18.

Table 8.4.18 Rebuttable Payback Period for Hydronic Air Handler Fan (Heat/Cool)

Efficiency Level Technology Option Rebuttable Payback Period years

1 Improved PSC 7.7

2 PSC w/ Controls 3.6

3 X13 1.7

4 ECM (Variable Speed) 3.5

5 ECM + Backward-curved Impeller 3.8

6 Switching Mode Power Supply 4.0

7 Toroidal Transformer 4.3
8-52

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