[6450- 01

- P]

DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EE

– 2007

– BT

– STD

– 0016]

RIN: 1904

– AB50

Energy Conservation Program: Energy Conservation Standards for Fluorescent Lamp

Ballasts

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION: Final rule.

SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes

energy conservation standards for various consumer products and certain commercial and

industrial equipment, including fluorescent lamp ballasts. EPCA also requires the U.S.

Department of Energy (DOE) to determine whether any new or amended standards would be

technologically feasible and economically justified, and would save a significant amount of

energy. In this final rule, DOE adopts new and amended federal energy conservation standards

for fluorescent lamp ballasts. It has determined that the new and amended energy conservation

standards for these products would result in significant conservation of energy, and are

technologically feasible and economically justified.

1DATES: The effective date of this rule is [INSERT DATE 60 DAYS AFTER DATE OF

PUBLICATION IN THE FEDERAL REGISTER] . Compliance with the new and amended

standards established for fluorescent lamp ballasts in today’s final rule is required as of

[INSERT DATE 3 YEARS AFTER DATE OF PUBLICATION IN THE FEDERAL

REGISTER].

ADDRESSES: The docket for this rulemaking is available for review at www.regulations.gov,

including Federal Register notices, framework documents, public meeting attendee lists and

transcripts, comments, and other supporting documents/materials. All documents in the docket

are listed in the www.regulations.gov index. However, not all documents listed in the index may

be publicly available, such as information that is exempt from public disclosure.

A link to the docket web page can be found at:

www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts.html

. The regulations.gov page contains instructions on how to access all documents, including

public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards at

(202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov

.

FOR FURTHER INFORMATION CONTACT:

Dr. Tina Kaarsberg, U.S. Department of Energy, Office of Energy Efficiency and

Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW.,

2Washington, DC, 20585-0121. Telephone: (202) 287 -1393. E-mail:

Tina.Kaarsberg@ee.doe.gov

.

Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC-71,

1000 Independence Avenue, SW., Washington, DC, 20585-0121. Telephone: (202) 586-7796.

E-mail: Elizabeth.Kohl@hq.doe.gov

.

SUPPLEMENTARY INFORMATION:

I. Summary of the Final Rule A. Benefits and Costs to Consumers B. Impact on Manufacturers C. National Benefits D. Conclusion II. Introduction A. Authority B. Background 1. Ballast Efficacy Factor Standards 2. History of Standards Rulemaking for Fluorescent Lamp Ballasts III. Issues Affecting the Scope of This Rulemaking A. Additional Fluorescent Lamp Ballasts for Which DOE is Adopting Standards 1. Scope of EPCA Requirement that DOE Consider Standards for Additional Ballasts 2. Identification of the Additional Ballasts for Which DOE Establishes Standards 3. Summary of Fluorescent Lamp Ballasts to Which DOE Extends Coverage B. Off Mode and Standby Mode Energy Consumption Standards IV. General Discussion A. Test Procedures 1. Background 2. Transfer Function 3. Reference Lamp 4. Total Lamp Arc Power B. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels C. Energy Savings 1. Determination of Savings 2. Significance of Savings D. Economic Justification 1. Specific Criteria

32. Rebuttable Presumption V. Methodology and Discussion A. Product Classes 1. Residential Ballasts 2. Sign Ballasts 3. Starting Method 4. 8-foot HO 5. Summary B. Engineering Analysis 1. NOPR Approach 2. Available Test Data 3. NEMA-Provided and DOE BLE Data Comparison 4. Accounting for Variation and Compliance Certification Requirements 5. Efficiency Levels 6. Representative Units 7. Scaling to Product Classes Not Analyzed 8. Manufacturer Selling Prices 9. Results C. Markups to Determine Product Price 1. Distribution Channels 2. Estimation of Markups 3. Summary of Markups D. Energy Use Analysis E. Life-Cycle Cost and Payback Period Analyses 1. Product Cost 2. Installation Cost 3. Annual Energy Use 4. Energy Prices 5. Energy Price Projections 6. Replacement and Disposal Costs 7. Product Lifetime 8. Discount Rates 9. Compliance Date of Standards 10. Ballast Purchasing Events F. National Impact Analysis

– National Energy Savings and Net Present Value Analysis 1. Shipments 2. Site- to -Source Energy Conversion G. Consumer Sub-Group Analysis H. Manufacturer Impact Analysis 1. Product and Capital Conversion Costs 2. Markup Scenarios 3. Other Key GRIM Inputs 4. Other Comments from Interested Parties 5. Manufacturer Interviews 6. Sub-Group Impact Analysis I. Employment Impact Analysis

4J. Utility Impact Analysis K. Environmental Assessment L. Monetizing Carbon Dioxide and Other Emissions Impacts 1. Social Cost of Carbon 2. Valuation of Other Emissions Reductions VI. Other Issues for Discussion A. Proposed Standard Levels in April 2011 NOPR B. Universal versus Dedicated Input Voltage C. Implementation of Adopted Standard Levels VII. Analytical Results and Conclusions A. Trial Standard Levels B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers 2. Economic Impacts on Manufacturers 3. National Impact Analysis 4. Impact on Utility or Performance of Products 5. Impact of Any Lessening of Competition 6. Need of the Nation to Conserve Energy C. Conclusions 1. Trial Standard Level 3B 2. Trial Standard Level 3A D. Backsliding VIII. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866 and 13563 B. Review Under the Regulatory Flexibility Act 1. Statement of the need for, and objectives of, the rule 2. Summary of and responses to the significant issues raised by the public comments, and a statement of any changes made as a result of such comments 3. Description and Estimated Number of Small Entities Regulated 4. Description and Estimate of Compliance Requirements 5. Steps taken to minimize impacts on small entities and reasons why other significant alternatives to today’s final rule were rejected. C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under the Information Quality Bulletin for Peer Review M. Congressional Notification IX. Approval of the Office of the Secretary

5I. Summary of the Final Rule

1 Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act),

Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation

Program for Consumer Products Other Than Automobiles. Pursuant to EPCA, any new or

amended energy conservation standard that DOE prescribes for certain products, such as

fluorescent lamp ballasts (ballasts), shall be designed to achieve the maximum improvement in

energy efficiency that is technologically feasible and economically justified. (42 U.S.C.

6295(o)(2)(A)) Furthermore, the new or amended standard must result in a significant

conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with these and other statutory

provisions discussed in this notice, DOE adopts new and amended energy conservation standards

for ballasts. The new and amended standards, which are based on ballast luminous efficiency

(BLE), the ratio of total lamp arc power to ballast input power as defined in Appendix Q1 of title

10 of the Code of Federal Regulations (CFR), part 430, are shown in Table I.1. These new and

amended standards apply to all products listed in Table I.1 and manufactured in, or imported

into, the United States on or after the compliance date specified in the DATES section.

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

6 1Table I.1

. New and Amended Energy Conservation Standards for Fluorescent Lamp Ballasts Fluorescent lamp ballasts * shall have a ballast luminous efficiency no less than A/(1+B*total lamp arc power^

- C ) where A, B, and C are as follows: Percent Improvement Over Current Standard or Baseline * * Product Class A B C

Instant start and rapid start ballasts (not classified as residential) that are designed to operate: 4

- foot medium bipin lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 0.993 0.2 7 0.25 5.7

Programmed start ballasts (not classified as residential) that are designed to operate: 4

- foot medium bipin lamps 2

- foot U

- shaped lamps 4

- foot miniature bipin standard output lamps 4

- foot miniature bipin high output lamps 0.993 0.5 1 0.37 10.8

Instant start and rapid start ballasts ( not classified as sign ballasts) that are designed to operate : 8

- foot high output lamps 0.993 0. 38 0.25 26.5

Programmed start ballasts ( not classified

as sign ballasts) that are designed to operate : 8

- foot high output lamps 0.9 73 0.7 0 0.37 26.2

S ign b allasts that operate : 8

- foot high output lamps 0.993 0. 47 0.25 15.1
Instant start and rapid start residential ballasts that operate:

4

- foot medium bipin lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 0.993 0. 41 0.25 7.2

Programmed start residential ballasts that are designed to operate : 4

- foot medium bipin lamps 2

- foot U

- shaped lamps 0.9 73 0. 71 0.37 5.8

*Fluorescent ballasts that are exempt from these standards are listed in section III.A.3

. * * Percent improvement is applicable to the average of ballasts directly analyzed.

7A. Benefits and Costs to Consumers

Table I.2 presents DOE’s evaluation of the economic impacts of today’s standards on

consumers of ballasts for the product classes analyzed as representative (see section V.B.6), as

measured by the average life-cycle cost (LCC) savings and the median payback period (PBP)

.
The average LCC savings are positive for all product classes. For example, the estimated averag e
LCC savings are $ 37 -$ 40 for 2-lamp instant start (IS) and rapid start (RS) ballasts that operate 4

-

2 foot T8 lamps in the commercial sector. When there was more than one baseline for a

representative ballast type, DOE performed separate LCC analyses comparing replacement

lamp-and-ballast systems to each baseline. Because T8 systems are generally more efficient and

have lower overall LCCs than T12 systems, the LCC savings relative to the T8 baseline are

lower than when comparing the same efficiency levels to a T12 baseline. At the adopted standard

levels, however, LCC savings are positive for all replacement events and baselines analyzed.

2 A lamp description in the form “T8” refers to a lamp that (1) is tubular (linear) and (2) has a diameter of 8 eighths of an inch (1 inch).

8Table I.2 Impacts of Today’s Standards on Consumers of Ballasts

Product Class * Average LCC Savings ( 2010$ ) Median Payback Period ( years ) * IS and RS ballasts (not classified as residential) that operate : 4

- foot MBP lamps (T12 baseline) 4

- foot MBP lamps (T8 baseline) 8

- foot slimline lamps (T12 baseline) 8

- fo ot slimline lamps (T8 baseline) $ 37 to $40 $3 to $8 $22 to $33 $5 to $7 - 1.2 to

- 1.3 2.7 to 4.4 0.1 0.5 to 0.6

PS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 4

- foot MiniBP SO lamps 4

- foot MiniBP HO lamps $ 6 to $35 $10 to $19 $26 to $28 1.3 to 6.0 2.4 to 3.8 2.0 to 2.1

IS and RS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps (T12 baseline) $ 134 to $230

- 0.7 to

- 1.3

Sign b allasts that operate : 8

- foot HO lamps $ 251 to $403

- 0.2 to

- 0.3 IS and RS residential ballasts that operate : 4

- foot MBP lamps $ 15 to $21

- 5.5 to

- 9.5

* IS = instant start; RS = rapid start; MBP = medium bipin; MiniBP = miniature bipin; PS = programmed start; SO = standard output; HO = high output.

** Negative PBP values indicate standards that reduce operating costs and installed costs.

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the

industry from the base year through the end of the analysis period (2014 to 2043). Using a real

discount rate of 7.4 3 percent, DOE estimates that the INPV for manufacturers of ballasts in the Comment [bk1]: Footnote recommended by OIRA. base case ranges from $733 million to $1.22 billion in 2010 dollars (2010$) . Under today’s

standards , DOE expects that ballast manufacturers may lose up to 36.7 percent of their INPV,

which is approximately $268.6 million. Based on DOE’s interviews with the manufacturers of

3 For ballasts, DOE uses a real discount rate of 7.4 percent. DOE’s discount rate estimate was derived from industry financials then modified according to feedback during manufacturer interviews.

9ballasts, however, DOE does not expect any plant closings or significant employment lo ss. See

section VII.B.2.b and VIII.B.3.b for additional discussion on this topic.

C. National Benefits

DOE’s analyses indicate that today’s ballast standards would save a significant amount of

energy over 30 years (2014 –2043)―an estimated 2.7

– 5.6 quadrillion British thermal units

(quads) of cumulative energy. This amount is equivalent to the annual energy use of

to 28 million U.S. homes. 4 14 million

The cumulative national net present value (NPV) of total consumer costs and savings of

today’s ballast standards in 2010$ ranges from $6.7 billion (at a 7-percent discount rate) to $21.6

billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future

operating-cost savings les s the estimated increased product costs for products purchased in

2014

– 2043, discounted to 2011.

In addition, today’s ballast standards would have significant environmental benefits. The

energy savings would result in cumulative greenhouse gas emission reductions of 27

– 106 million

metric tons (Mt) of carbon dioxide (CO 2 ) from 2014 through 2043. During this period, the

4 This estimate is based on the energy use of homes in 2008, which is the most recent data available. See Rosenfeld, Arthur H. and Satish Kumar. Tables to Convert Energy or CO2 (saved or used) to Familiar Equivalents - Cars, Homes, or Power Plants (US Average Data for 2005). May 2008. http://www.energy.ca.gov/commissioners/rosenfeld_docs/EquivalenceMatrix2008.doc Deleted: 9

Deleted: 19 Comment [bk2]: Footnote and deletion recommended by OIRA.

Deleted: In addition, DOE expects the energy savings from today’s standards to eliminate the need for 3.0

– 6.3 gigawatts (GW) of generating capacity by 2043.

105 standards would also result in emissions reductions o f 22

– 39 thousand tons of nitrogen oxides

6 ( NO x ) and 0.40

– 1.47 to ns of mercury (Hg).

The value of the CO 2 reductions is calculated using a range of values per metric ton of

CO 2 (otherwise known as the Social Cost of Carbon, or SCC) developed by a recent interagency

process. The derivation of the SCC values is discussed in section V.L

. DO E estimates that the

net present monetary value of the CO 2 emissions reductions is between $0.26 and $3.94 billion

,
expressed in 2010$ and discounted to 2011. DOE also estimates that the net present monetary

value of the NO x emissions reductions, expressed in 2010$ and discounted to 2011, is $3.91 to

$40.2 million at a 7-percent discount rate, and $7.67 to $78.8 million at a 3-percent discount

7 rate.

Table I.3 summarizes the national economic costs and benefits expected to result from

today’s standards for fluorescent lamp ballasts.

5 DOE calculates emissions reductions relative to the most recent version of the Annual Energy Outlook ( AEO ) Reference case forecast. As noted in TSD chapter 16 , this forecast accounts for regulatory emissions reductions through 2008, including the Clean Air Interstate Rule (CAIR, 70 FR 25162 (May 12, 2005)), but not the Clean Air Mercury Rule (CAMR, 70 FR 28606 (May 18, 2005)). Subsequent regulations, including the currently proposed CAIR replacement rule, the Clean Air Transport Rule (75 FR 45210 (Aug. 2, 2010)), do not appear in the forecast.

6 Results for NO x and Hg are presented in short tons. One short ton equals 2000 lbs.

7 DOE is aware of multiple agency efforts to determine the appropriate range of values used in evaluating the potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance regarding consistent valuation and reporting of Hg emissions before it once again monetizes Hg emissions reductions in its rulemakings.

11Table I.3 Summary of National Economic Benefits and Costs of Fluorescent Lamp Ballast Energy Conservation Standards

Category Present Value Billion 2010 $ Discount Rate

Benefits
Operating Cost Savings 12.0 7%
24.1 3% CO 2 Reduction Monetized Value (at $4.9/t)* 0.26 5%

CO 2 Reduction Monetized Value (at $22.3/t)* 1.29 3%

CO 2 Reduction Monetized Value (at $36.5/t)* 2.16 2.5%

CO 2 Reduction Monetized Value (at $67.6/t)* 3.94 3%

NO x Reduction Monetized Value (at $450/ton)* 0.004 7%
0.01 3%

NO x Reduction Monetized Value (at $4,623/ton)* 0.04 7%
0.08 3%

Total Benefits† 13.3 7%
25.4 3%
Costs

Incremental Installed Costs 3.68 7% 6.91 3%

Net Benefits

Including CO 2 and NO x † 9.62 7% 18.5 3%

* The CO 2 values represent global monetized values of the SCC in 2010 under several scenarios. The values of $4.9, $ 22.3 , and $ 36.5 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $ 67.6 /t represents the 95 th percentile of the SCC distribution calculated using a 3% dis count rate. † Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, and the average of the low and high NO
x values used in DOE’s analysis.

The benefits and costs of today’s standards, for products sold in 20 14

- 2043 , can also be

expressed in terms of annualized values. The annualized monetary values are the sum of (1) the

12annualized national economic value, expressed in 2010$ , of the benefits from operating the

product (consisting primarily of operating cost savings from using less energy, minus increases

in equipment purchase and installation costs, which is another way of representing consumer

NPV, plus (2) the annualized monetary value of the benefits of emission reductions, including

CO 2 emission reductions. 8

Although adding the value of consumer savings to the values of emission reductions

provides a valuable perspective, two issues should be considered. First, the national operating

cost savings are domestic U.S. consumer monetary savings that occur as a result of market

transactions, while the value of CO 2 emissions reductions is based on a global value. Second, the

assessments of operating cost savings and CO 2 savings are performed with different methods that

use different time frames for analysis. The national operating cost savings are measured for the

lifetime of ballasts shipped in 2014

– 2043 . The SCC values, alternatively, reflect the present

value of all future climate-related impacts resulting from the emission of one metric ton of CO 2
in each year, with impacts continuing well beyond 2100.

Estimates of annualized benefits and costs of today’s standards are shown in Table I.4

.
(The following monetary values are expressed in 2010$ .) The results under the primary estimate

8 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2011, the year used for discounting the NPV of total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and seven percent for all costs and benefits except for the value of CO 2 reductions. For the latter, DOE used a range of discount rates, as shown in Table I.3. From the present value, DOE then calculated the fixed annual payment over a 30-year period (2014 through 2043) that yields the same present value. This payment includes benefits to consumers which accrue after 2043 from the ballasts purchased from 2014 to 2043. Costs incurred by manufacturers, some of which may be incurred prior to 2014 in preparation for the rule, are not directly included, but are indirectly included as part of incremental product costs. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments.

13are as follows. Using a 7-percent discount rate for benefits and costs other than CO 2 reduction,

for which DOE used a 3-percent discount rate along with the SCC series corresponding to a

value of $22.3/ton in 2010, the cost of the standards in today’s rule is $ 363 million per year in

increased equipment costs, while the benefits are $1.2 billion per year in reduced equipment

operating costs, $ 92 million in CO 2 reductions, and $2.2 mi llion in reduced NO x emissions. In

this case, the net benefit amounts to $ 920 million per year. Using a 3-percent discount rate for all

benefits and costs and the SCC series corresponding to a value of $22.3/ton in 2010, the cost of

the standards in today’s rule is $ 385 million per year in increased equipment costs, while the

benefits are $1.3 billion per year in reduced operating costs, $ 92 million in CO 2 reductions, and

$2.4 million in reduced NO x emissions. In this case, the net benefit amounts to $1.1 billion per

year.

14Table I.4 Annualized Benefits and Costs of New and Amended Standards for Ballasts Sold in 2014- 2043 *

Discount Rate Primary Estimate Low Estimate (Emerging Technologies, Roll

- up Scenario) High Estimate (Existing Technologies, Shift Scenario)

Monetized million 2010$ /year

Benefits
Operating Cost Savings 7% 1,189 886 1,492

3% 1,344 934 1,754

CO 2 Reduction at $4.9/t** 5% 20 9 30

CO 2 Reduction at $22.3/t** 3% 92 41 143

CO 2 Reduction at $36.5/t** 2.5% 151 66 237

CO 2 Reduction at $67.6/t** 3% 280 124 435

NO x Reduction at $2,537/t** 7% 2.2 1.3 3.0

3% 2.4 1.6 3.2

Total (Operating Cost Savings, CO 2 Reduction and NO x Reduction)† 7% plus CO 2 range 1,211 to 1,471 896 to 1,011 1,525 to 1,930

7% 1,283 928 1,637

3% 1,438 976 1,900 3% plus CO 2 range 1,366 to 1,626 945 to 1,059 1,788 to 2,193

Costs

Incremental Product Costs 7% 363 227 498

3% 385 218 553

Net Benefits/Costs Total (Operating Cost Savings, CO 2 Reduction and NO x Reduction, Minus Incremental Product Costs)† 7% plus CO 2 range 848 to 1,108 669 to 784 1,027 to 1,432

7% 920 700 1,139

3% 1,053 758 1,347

3% plus CO 2 range 981 to 1,241 727 to 842 1,235 to 1,640

15* This table presents the annualized costs and benefits associated with fluorescent lamp ballasts shipped between 2014 and 2043. These results include benefits to consumers which accrue after 2043 from the ballast s purchased from 2014 to 2043. Costs incurred by manufacturers, some of which may be incurred prior to 2014 in preparation for the rule, are not directly included, but are indirectly included as part of incremental product costs. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from the AEO201 0 Reference case, with the Low and High Estimates based on forecasted ballast shipments in the Emerging Technologies, Roll

- up and Existing Technologies, Shift scenarios, respectively. In addition, all estimates use incremental product costs that reflect constant prices (no learning rate) for product prices. The different tec hniques used to evaluate projected price trends for each estimate are discussed in section V.E.1

. ** The CO 2 values represent global monetized values (in 2010$ ) of the social cost of CO 2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and $36.5 per metric ton are the averages of SCC distributions calculated using 5

- percent, 3

- percent, and 2.5

- percent discount rates, respectively. The value of $ 67.6/t represents the 95 th percentile of the SCC distribution calculated using a 3

- percent discount rate. The value for NO x (in 2010$ ) is the average of the low and high values used in DOE’s analysis. † Total Benefits for both the 3

- percent and 7

- percent cases are derived using the SCC value calculated at a 3

- percent discount rate, which is $22.3/t in 2010 (in 2010$ ). In the rows labeled as “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO x benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values.

D. Conclusion

Based on the analyses culminating in this final rule, DOE found the benefits to the nation

of the standards (energy savings, consumer LCC savings, positive NPV of consumer benefit, and

emission reductions) outweigh the costs (loss of INPV). DOE has concluded that the standards in

today’s final rule represent the maximum improvement in energy efficiency that is

technologically feasible and economically justified, and would result in significant conservation

of energy. DOE further notes that in all product classes, ballasts achieving the standard levels are

already commercially available.

II. Introduction

The follow ing section briefly discusses the statutory authority underlying today’s final

rule, as well as some of the historical background related to the establishment of standards for

ballasts.

16A. Authority

Title III, Part B of the Energy Policy and Conservation Act of 1975, Pub. L. 94-163 (42

U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer

9 Products Other Than Automobiles, a program covering most major household appliances

(collectively referred to as “covered products”), whi ch includes the types of ballasts that are the

subject of this final rule. (42 U.S.C. 6292(a)(13)) EPCA prescribed energy conservation

standards for these products (42 U.S.C. 6295(g)(5), (6), and (8)), and directed DOE to conduct

two cycles of rulemakings to determine whether to amend these standards. (42 U.S.C.

6295(g)(7))

Pursuant to EPCA, DOE’s energy conservation program for covered products consists

essentially of four parts: (1) testing; (2) labeling; (3) the establishment of Federal energy

conservation standards; and (4) certification and enforcement procedures. The Federal Trade

Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of

the program. Subject to certain criteria and conditions, DOE is required to develop test

procedures to measure the energy efficiency, energy use, or estimated annual operating cost of

each covered product. (42 U.S.C. 6293) Manufacturers of covered products must use the

prescribed DOE test procedure as the basis for certifying to DOE that their products comply with

the applicable energy conservation standards adopted under EPCA and when making

representations to the public regarding the energy use or efficiency of those products. (42 U.S.C.

6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the

products comply with standards adopted pursuant to EPCA. Id . The DOE test procedures for

9 For editorial reasons, upon codification in the U.S. Code (U.S.C.), Part B was redesignated Part A.

17ballasts currently appear at 10 CFR part 430, subpart B, appendices Q and Q1. Compliance with

the ballast efficacy factor energy conservation standards, required until the compliance date

specified in the DATES section, is determined according to appendix Q. Compliance with the

BLE standards adopted in this rule must be determined according to appendix Q1. The

procedures in appendix Q1 were established by the ballast active mode test procedure final rule.

76 FR 25211 (May 4, 2011).

DOE must follow specific statutory criteria for prescribing new or amended standards for

covered products. As indicated in the beginning of section I, any new or amended standard for a

covered product must be designed to achieve the maximum improvement in energy efficiency

that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A))

Furthermore, DOE may not adopt any standard that would not result in the significant

conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard:

(1) for certain products, including ballasts, if no test procedure has been established for the

product, or (2) if DOE determines by rule that the new or amended standard is not

technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding

whether a new or amended standard is economically justified, DOE must determine whether the

benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this

determination after receiving comments on the proposed standard, and by considering, to the

greatest extent practicable, the following seven factors:

1. The economic impact of the standard on manufacturers and consumers of the products

subject to the standard;

182. The savings in operating costs throughout the estimated average life of the covered

products in the type (or class) compared to any increase in the price, initial charges, or

maintenance expenses for the covered products that are likely to result from the imposition of the

standard;

3. The total projected amount of energy, or as applicable, water, savings likely to result

directly from the imposition of the standard;

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

from the imposition of the standard;

5. The impact of any lessening of competition, as determined in writing by the Attorney

General, that is likely to result from the imposition of the standard;

6. The need for national energy and water conservation; and

7. Other factors the Secretary of Energy (the Secretary) considers relevant.

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

– (VII))

EPCA, as codified, also contains what is known as an “anti

- backsliding” provision,

which prevents the Secretary from prescribing any new or amended standard that either increases

the maximum allowable energy use or decreases the minimum required energy efficiency of a

covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe a new or

amended standard if interested partie s have established by a preponderance of the evidence that

the standard is likely to result in the unavailability in the United States in any covered product

type (or class) of performance characteristics (including reliability), features, sizes, capacities,

and volumes that are substantially the same as those generally available in the United States. (42

U.S.C. 6295(o)(4))

19Further, EPCA, as codified, establishes a rebuttable presumption that a standard is

economically justified if the Secretary finds that the additional cost to the consumer of

purchasing a product complying with an energy conservation standard level will be less than

three times the value of the energy savings during the first year that the consumer will receive as

a result of the standard, as calculated under the applicable test procedure. See 42 U.S.C.

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

Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating a standar d

for a type or class of covered product that has two or more subcategories. DOE must specify a

different standard level than that which applies generally to such type or class of products for any

group of covered products which have the same function or intended use if products within such

group

– (A) consume a different kind of energy from that consumed by other covered products

within such type (or class); or (B) have a capacity or other performance-related feature which

other products within such type (or class) do not have and such feature justifies a higher or lower

standard. Id . In determining whether a performance-related feature justifies a different standard

for a group of products, DOE must consider such factors as the utility to the consumer of such a

feature and other factors DOE deems appropriate. Id . Any rule prescribing such a standard must

include an explanation of the basis on which such higher or lower level was established. (42

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

Federal energy conservation requirements generally supersede State laws or regulations

concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)

– (c)) DOE

20may, however, grant waivers of Federal preemption for particular State laws or regulations, in

accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d).

Pursuant to the amendments contained in section 310(3) of the Energy Independence and

Security Act of 2007 (EISA 2007), any final rule for new or amended energy conservation

standards promulgated after July 1, 2010, is required to address standby mode and off mode

energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered

product after that date, it must, if justified by the criteria for adoption of standards under EPCA

(42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into the standard or, if

that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C.

6295(gg)(3)(A)-(B)) DOE has determined that ballast s do not operate in an “off mode” as

defined by EPCA (42 U.S.C. 6291(gg)(1)(A)(ii)), and that the only ballasts that consume power

in a “standby mode” as defined by EPCA (42 U.S.C. 6291(gg)(1)(A)(iii)) are those that

incorporate an electronic circuit enabling the ballast to communicate with and be part of a

lighting control system. DOE’s test procedures for ballasts address such standby mode energy

use. 74 FR 54455 (October 22, 2009) and 76 FR 25211 (May 4, 2011); 10 CFR part 430, subpart

B, appendix Q, section 3.2 and appendix Q1, section 3. DOE did not adopt standards for standby

mode energy use, however, because DOE did not find any covered ballasts capable of operating

in this mode in its search of the marketplace. Therefore, this final rule does not include energy

conservation standards for standby mode energy use. See section III.B for more detail.

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on

January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563 is supplemental to and explicitly

21reaffirms the principles, structures, and definitions governing regulatory review established in

Executive Order 12866. To the extent permitted by law, agencies are required by Executive

Order 13563 to: (1) propose or adopt a regulation only upon a reasoned determination that its

benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2)

tailor regulations to impose the least burden on society, consistent with obtaining regulatory

objectives, taking into account, among other things, and to the extent practicable, the costs of

cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those

approaches that maximize net benefits (including potential economic, environmental, public

health and safety, and other advantages; distributive impacts; and equity); (4) to the extent

feasible, specify performance objectives, rather than specifying the behavior or manner of

compliance that regulated entities must adopt; and (5) identify and assess available alternatives

to direct regulation, including providing economic incentives to encourage the desired behavior,

such as user fees or marketable permits, or providing information upon which choices can be

made by the public.

DOE emphasizes as well that Executive Order 13563 requires agencies “to use the best

available techniques to quantify anticipated present and future benefits and costs as accurately as

possible.” In its guidance, the Office of Information and Regulatory Affairs has emphasized that

such techniques may include “identifying changing future compliance costs that might result

from technological innovation or anticipated behavior al changes.” For the reasons stated in the

preamble, DOE concludes that today’s final rule is consistent with these principles, including the

requirement that, to the extent permitted by law, benefits justify costs and that net benefits are

22maximized. Consistent with EO 13563, and the range of impacts analyzed in this final rule, the

energy efficiency standards adopted herein by DOE achieve maximum net benefits.

B. Background

1. Ballast Efficacy Factor Standards

The Federal energy conservation standards for ballasts expressed in terms of ballast

efficacy factor are set forth in Table II .1 and Table II .2. The standards in Table II .1 were adopted

in a final rule published on September 19, 2000, which completed the first of the two

rulemakings required under 42 U.S.C. 6295(g)(7) to consider amending the standards for ballasts

(hereafter referred to as the 2000 Ballast Rule). 65 FR 56739

. The standards in Table II .2 were

established by amendments to EPCA in the Energy Policy Act of 2005 (EPAct 2005), Pub. L.

109 -58.

Table II .1 Energy Conservation Standards from the 2000 Ballast Rule Application for operation of * Ballast input voltage Total nominal lamp watts Ballast efficacy factor
One F40T12 lamp 120 277 40 40 2.29 2.29
Two F40T12 lamps 120 277 80 80 1.17 1.17
Two F96T12 lamps 120 277 150 150 0.63 0.63
Two F96T12HO lamps 120 277 220 220 0.39 0.39

* F40T12, F96T12, and F96T12HO are defined in Appendix Q to Subpart B of Part 430

.

10 CFR section 430.32(m)(3).

23Table II .2 Energy Conservation Standards from EPAct 2005 Application for operation of * Ballast input voltage Total nominal lamp watts Ballast efficacy factor One F34T12 lamp 120/277 34 2.61 Two F34T12 lamps 120/277 68 1.35 Two F96T12/ES lamps 120/277 120 0.77 Two F96T12HO/ES lamps 120/277 190 0.42 *F34T12, F96T12/ES, and F96T12HO/ES are defined in Appendix Q to Subpart B of Part 430

.

(42 U.S.C. 6295(g)(8)(A); 10 CFR 430.32(m)(5))

In summary, as reflected in the previous two tables, the ballasts currently regulated under

EPCA consist of ballasts that are designed to operate:

• One and two nominally 40-watt (W) and 34W 4-foot T12 medium bipin (MBP)

10 lamps (F40T12 and F34T12);

• Two nominally 75W and 60W 8-foot T12 single-pin (SP) slimline lamps (F96T12

and F96T12/ES); and

• Two nominally 110W and 95W 8-foot T12 recessed double contact high output

lamps (F96T12 HO and F96T12 HO /ES) at nominal input voltages of 120 or 277

volts (V) with an input current frequency of 60 hertz (Hz).

In addition, several ballasts are exempt from standards. These exemptions consist of

ballasts designed to operate those lamps listed in Table II .1 that:

• are designed for dimming to 50 percent or less of its maximum output;

10 A notation in the form “F40T12” identifies a lamp type. This particular notation refers to a lamp that: (1) is fluorescent; (2) has a nominal wattage of 40 W; (3) is linear (tubular); and (4) has a diameter of 12 eighths of an inch.

24• are designed for use with two F96T12 high output (HO) lamps at ambient

temperatures of −20 degrees Fahrenheit (F) or less and for use in an outdoor sign;

or

• have a power factor of less than 0.90 and are designed and labeled for use only in

residential building applications.

2. History of Standards Rulemaking for Fluorescent Lamp Ballasts

EPCA establishes energy conservation standards for certain ballasts and requires that

DOE conduct two cycles of rulemaking to determine whether to amend the standards for these

ballasts, including whether to adopt standards for additional ballasts. (42 U.S.C. 6295(g)(5)-(8))

As indicated in section II.B.1

, DOE completed the first of these rulemaking cycles by publishing

the 2000 Ballast Rule

. 65 FR 56 740 (Sept. 19, 2000)

. In this rulemaking, the second rulemaking

cycle required by 42 U.S.C. 6295(g)(7), DOE is amending the existing standards for ballasts and

adopting standards for additional ballasts.

DOE initiated this rulemaking on January 14, 2008 by publishing in the Federal Register

a notice announcing the availability of the “Energy Conservation Standards Rulemaking

Framework Document for Fluorescent Lamp Ballasts.” (A PDF of the framework documen t is

available at

www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ballast_framework_01140

8.pdf .) In th at notice, DOE also announced a public meeting on the framework document and

requested public comment on the matters raised in the document. 73 FR 3653 (Jan. 22, 2008).

The framework document described the procedural and analytical approaches that DOE

25anticipated using to evaluate energy conservation standards for the ballasts, and identified

various issues to be resolved in conducting this rulemaking.

DOE held the public meeting on February 6, 2008, where it: presented the contents of the

framework document; described the analyses it planned to conduct during the rulemaking;

sought comments from interested parties on these subjects; and in general, sought to inform

interested parties about, and facilitate their involvement in, the rulemaking. Interested parties at

th e public meeting discussed the active mode test procedure and several major analyses related to

this rulemaking. At the meeting and during the period for commenting on the framework

document, DOE received feedback that helped identify and resolve issues involved in this

rulemaking.

DOE then gathered additional information and performed preliminary analyses to help

develop potential energy conservation standards for ballasts. DOE published in the Federal

Register an announcement of the availability of the preliminary technical support document

(TSD) and of another public meeting to discuss and receive comments on the following matters:

product classes; the analytical framework, models, and tools that DOE was using to evaluate

standards; the results of the preliminary analyses performed by DOE; and potential standard

levels that DOE could consider. 75 FR 14319 (March 24, 2010) (hereafter referred to as the

March 2010 notice). DOE also invited written comments on these subjects. Id . The preliminary

TSD is available at

www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts_ecs

_prelim_tsd.html . In the notice, DOE also requested comment on other relevant issues that would

26affect energy conservation standards for fluorescent lamp ballasts or that DOE should address in

the notice of proposed rulemaking (NOPR). Id . at 14322.

The public meeting announced in the March 2010 notice took place on April 26, 2010. At

th at meeting, DOE presented the methodologies and results of the analyses set forth in the

preliminary TSD. Interested parties discussed the following major issues at the public meeting:

the efficiency metric; how test procedure variation might affect efficiency measurements;

requirements for ballasts in environments that are sensitive to electromagnetic interference

(EMI); product classes; manufacturer selling prices (MSPs) and overall pricing methodology;

markups; the maximum technologically feasible ballast efficiency; cumulative regulatory

burden; and shipments. DOE considered the comments received since publication of the March

2010 notice, including those received at the April 2010 public meeting, in the development of the

NOPR.

In April 2011, DOE proposed new and amended energy conservation standards for

fluorescent lamp ballasts. In conjunction with the NOPR, DOE also published on its website the

complete TSD for the proposed rule, which incorporated the analyses DOE conducted and

technical documentation for each analysis. The TSD included the engineering analysis

spreadsheets, the LCC spreadsheet, the national impact analysis spreadsheet, and the

manufacturer impact analysis (MIA) spreadsheet —all of which are available on DOE’s

2711 website. The proposed standards were as shown in Table II .3. 76 FR 20090, 20091 (April 11,

2011).

Table II .3 Energy Conservation Standards Proposed in the April 2011 NOPR Product Class Proposed BLE Stan dard IS and RS ballasts that operate : 4

- foot MBP lamps 8

- foot slimline lamps 1.32 * ln(total lamp arc power) + 86.1 1

PS ballasts that operate : 4

- foot MBP lamps 4

- foot MiniBP SO lamps 4

- foot MiniBP HO lamps 1.79 * ln(total lamp arc power) + 83.3 3

IS and RS ballasts that operate : 8

- foot HO lamps 1.49 * ln(total lamp arc power) + 84.3 2
PS ballasts that operate : 8

- foot HO lamps 1.46 * ln(total lamp arc power) + 82.6 3
Ballasts that operate : 8

- foot HO lamps designed for cold temperature outdoor signs 1.49 * ln(total lamp arc power) + 81.3 4

In the NOPR, DOE invited comment in particular on the following issues: (1) the

12 exemption for T8 magnetic ballasts in EMI-sensitive environments; (2) the appropriateness of

establishing efficiency standards using an equation dependent on lamp-arc power; (3) the

inclusion of several different ballast types in the same product class; (4) the methodology used to

calculate manufacturer selling prices; (5) the efficiency levels considered; (6) the maximum

technologically feasible level; (7) markups; (8) the inclusion T12 ballasts in the baseline analysis

for life cycle costs; (9) the magnitude and timing of forecasted shipments; (10) the methodology

and inputs DOE used for the manufacturer impact analysis —specifically, DOE’s assumptions

11 The Web site address for all the spreadsheets developed for this rulemaking proceeding are available at: www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_ballasts_nopr_analytical_tools.html

. 12 When DOE refers to a magnetic ballast throughout this document, it is referring to a low frequency ballast as defined by as defined in ANSI C82.13-2002. Similarly, when DOE refers to an electronic ballast, it is referring to a high frequency ballast as defined by the same ANSI standard.

28regarding markups, capital costs, and conversion costs; (12) the potential impacts of amended

standards on small fluorescent lamp ballast manufacturers; (13) the trial standard levels (TSLs)

considered; (14) the proposed standard level; and (15) potential approaches to maximize energy

savings while mitigating impacts to certain fluorescent ballast consumer subgroups. 76 FR

20090, 20177 (April 11, 2011).

DOE held a public meeting on May 10, 2011, to hear oral comments on and solicit

information relevant to the proposed rule (hereafter the May 2011 public meeting)

. At this

meeting, the National Electrical Manufacturers Association (NEMA) presented test data that they

found inconsistent with the data collected by DOE and that could affect the standards established

in the final rule. In general, NEMA’s ballast luminous efficiency values appeared to be lower

than those obtained by DOE. NEMA and other stakeholders agreed that there were discrepancies

between the two data sets and emphasized the importance of identifying the source of the

differences. In addition, DOE received comments on the methodology used to account for

compliance certification requirements, design variation, and lab- to -lab variation and on the

appropriate shape of DOE’s proposed efficiency level curves

.

In light of these discrepancies

, DOE published a notice of data availability (NODA) on

August 24, 2011 to : (1) announce the availability of additional test data collected by DOE and

the data submitted by NEMA; (2) address the differences between test data obtained by DOE and

test data submitted by NEMA; (3) describe the methodological changes DOE was considering

for the final rule based on the additional data; (4) present efficiency levels developed using the

29revised methodology and all available test data; and (5) request public comment on these

13 analyses.

DOE considered the comments received in response to both the April 2011 NOPR and

the August 2011 NODA when developing this final rule, and responds to these comments in the

following sections.

III. Issues Affecting the Scope of This Rulemaking

A. Additional Fluorescent Lamp Ballasts for Which DOE is Adopting Standards

1. Scope of EPCA Requirement that DOE Consider Standards for Additional Ballasts

As discussed in section II.A, amendments to EPCA established energy conservation

standards for certain fluorescent lamp ballasts and directed DOE to conduct two rulemakings to

consider amending the standards. The first amendment was completed with the publication of the

2000 Ballast Rule. This rulemaking fulfills the statutory requirement to determine whether to

amend standards a second time. EPCA specifically directs DOE, in this second amendment, to

determine whether to amend the standards in effect for fluorescent lamp ballasts and whether

such standards should be amended so that they would be applicable to additional fluorescent

lamp ballasts. (42 U.S.C. 6295(g)(7)(B))

The April 2011 NOPR notes that a wide variety of fluorescent lamp ballasts are not

currently covered by energy conservation standards, and th us are potential candidates for

coverage under 42 U.S.C. 6295(g)(7). DOE encountered similar circumstances in a recent

13 The August 2011 NODA and accompanying data are available here: www1.eere.energy.gov/buildings/appliance_standards/residential/notice_of_data_availability.html.

30rulemaking that amended standards for general service fluorescent and incandescent reflector

14 lamps (hereafter referred to as the 2009 Lamps Rule). 74 FR 34080, 34087-8 (July 14, 2009).

In that rule, DOE was directed by EPCA to consider expanding its scope of coverage to include

additional general service fluorescent lamps (GSFL). EPCA defines GSFLs as fluorescent lamps

that can satisfy the majority of fluorescent lamp applications and that are not designed and

marketed for certain specified, non-general lighting applications. (42 U.S.C. 6291(30)(B)) As

such, the term “general service fluorescent lamp” is defined by reference to the term “fluorescent

lamp,” which EPCA defines as “a low pressure mercury electric -discharge source in which a

fluorescing coating transforms some of the ultraviolet energy generated by the mercury discharge

into light,” and as including the four enumerated types of fluorescent lamps for which EPCA

already prescribes standards. (42 U.S.C. 6291(30)(A); 42 U.S.C. 6295(i)(1)(B)) To construe

“general service fluorescent lamp” in 42 U.S.C. 6295(i)(5) as limited to those types of

fluorescent lamps would mean there are no GSFLs that are not already subject to standards, and

hence, there would be no “additional” GSFL s for which DOE could consider standards. Such an

interpretation would conflict with the directive in 42 U.S.C. 6295(i)(5) that DOE consider

standards for “additional” GSFL s, thereby nullifying that provision.

Therefore, DOE concluded that the term “additional general service fluorescent lamps” in

42 U.S.C. 6295(i)(5) allows DOE to set standards for GSFLs other than the four enumerated

lamp types specified in the EPCA definition of “fluorescent lamp.” As a result, the 2009 Lamps

Rule defined “fluorescent lamp” to include:

14 Documents for the 2009 Lamps Rule are available at: www1.eere.energy.gov/buildings/appliance_standards/residential/incandescent_lamps.html

. 31(1) Any straight-shaped lamp (commonly referred to as 4-foot medium bipin lamps) with

medium bipin bases, a nominal overall length of 48 inches, and rated wattage of 25 or

more;

(2) Any U-shaped lamp (commonly referred to as 2-foot U-shaped lamps) with medium

bipin bases, a nominal overall length between 22 and 25 inches, and rated wattage of 25

or more;

(3) Any rapid start lamp (commonly referred to as 8-foot high output lamps) with

recessed double contact bases and a nominal overall length of 96 inches;

(4) Any instant start lamp (commonly referred to as 8-foot slimline lamps) with single pin

bases, a nominal overall length of 96 inches, and rated wattage of 52 or more;

(5) Any straight-shaped lamp (commonly referred to as 4-foot miniature bipin standard

output lamps) with miniature bipin bases, a nominal overall length between 45 and 48

inches, and rated wattage of 26 or more; and

(6) Any straight-shaped lamp (commonly referred to 4-foot miniature bipin high output

lamps) with miniature bipin bases, a nominal overall length between 45 and 48 inches,

and rated wattage of 49 or more.

10 CFR 430.2

In this rulemaking, DOE is directed to consider whether any amended standard should be

applicable to additional fluorescent lamp ballasts. (42 U.S.C. 6295(g)(7)(B)) EPCA defines a

“fluorescent lamp ballast” as “a device which is used to start and operate fluorescent lamps by

providing a starting voltage and current and limiting the current during normal operation.” (42

32U.S.C. 6291(29)(A)) For this rule, DOE referenced the definition of fluorescent lamp adopted by

the 2009 Lamps Rule. This definition allows DOE to consider expanding coverage to include

additional fluorescent lamp ballasts while not eliminating coverage of any ballasts for which

standards already exist.

2. Identification of the Additional Ballasts for Which DOE Establishes Standards

In considering whether to amend the standards in effect for fluorescent lamp ballasts so

that they apply to “additional” fluorescent lamp ballasts as specified in section 325(g)(7)(B) of

EPCA, DOE considered all fluorescent lamp ballasts (for which standards are not already

prescribed) that operate fluorescent lamps, as defined in 10 CFR 430.2. For each additional

fluorescent lamp ballast, DOE considered potential energy savings, technological feasibility and

economic justification when determining whether to include them in the scope of coverage. In its

analyses, DOE assessed the potential energy savings from market share estimates, potential

ballast designs that improve efficiency, and other relevant factors. For market share estimates,

DOE used both quantitative shipment data and information obtained during manufacturer

interviews. DOE also assessed the potential to achieve energy savings in certain ballasts by

considering whether those ballasts could serve as potential substitutes for other regulated

ballasts.

In the April 2011 NOPR, DOE proposed extending coverage to several additional ballast

types including those that operate: additional numbers and diameters of 4-foot MBP lamps, 8

-
foot HO lamps, and 8-foot slimline lamps; 4-foot miniature bipin (MiniBP) standard output (SO)

lamps; 4-foot MiniBP HO lamps; and 8-foot HO cold temperature lamps commonly used in

33outdoor signs

. DOE did not propose to extend coverage to additional dimming ballasts or T8

magnetic ballasts that operate in EMI-sensitive environments, provided that these magnetic

ballasts were designed and labeled for use in EMI-sensitive environments only and shipped by

the manufacturer in packages of 10 or fewer ballasts.

The Northwest Energy Efficiency Alliance (NEEA) and the Northwest Power and

Cons ervation Council (NPCC), the Northeast Energy Efficiency Partnerships (NEEP), the

Appliance Standards Awareness Project (ASAP), and in a joint comment, ASAP, the Alliance to

Save Energy, the American Council for an Energy-Efficient Economy, the National Consumer

Law Center, and the National Resources Defense Council (hereafter the “Joint Comment”)

supported the proposed scope of coverage. ASAP and the Joint Comment stated that the

expanded scope contributes significantly to the forecasted energy savings for this rulemaking.

15 (NEEA and NPCC, No. 44 at p. 2 ; NEEP, No. 49 at p. 2; ASAP, Public Meeting Transcript,

No. 43 at pp. 80-2; Joint Comment, No. 46 at p. 2) DOE also received several comments

regarding the proposed exemption for T8 magnetic ballasts that operate in EMI-sensitive

environments, coverage of residential ballasts, and additional comments recommending further

exemptions. These comments are discussed in further detail in the following sections.

a. Ballasts That Operate in Environments Sensitive to Electromagnetic Interference

DOE received comments at the April 2010 public meeting that standards could eliminate

magnetic ballasts that are currently used in certain EMI-sensitive environments. DOE conducted

15 A notation in the form “ NEEA and NPCC, No. 44 at p. 2 ” identifies a written comment that DOE has received and has included in the docket of this rulemaking. This particular notation refers to a comment: (1) submitted by NEEA and NPCC; (2) in document number 44 of the docket; and (3) on page 2 of that document.

34research and interviews with fluorescent lamp ballast and fixture manufacturers to identify the

following applications as potentially sensitive to EMI: medical operating room telemetry or life

support systems; airport control systems; electronic test equipment; radio communication

devices; radio recording studios; correctional facilities; clean rooms; facilities with low signal- to

16 noise ratios; and aircraft hangars or other buildings with predominantly metal construction.

DOE learned from manufacturer interviews that magnetic ballasts are typically recommended for

situations in which EMI has been or is expected to be a concern.

Although there are several methods to reduce electromagnetic interference, available data

do not indicate that EMI-related issues with electronic ballasts can be eliminated such that there

are no longer safety concerns. For this reason, in the April 2011 NOPR DOE proposed an

exemption for T8 magnetic ballasts designed and labeled for use in EMI-sensitive environments

only and shipped by the manufacturer in packages containing 1 0 or fewer ballasts. DOE believed

the exemption was necessary because in some environments, EMI could pose a serious safety

concern that is best mitigated with magnetic ballast technology. DOE did not believe magnetic

ballasts would likely be used as substitutes in current electronic ballast applications due to their

higher cost and weight. 76 FR 20090, 20100-1 (April 11, 2011).

NEEA and NPCC, NEMA, and ASAP supported the exemption for magnetic ballasts in

EMI-sensitive locations. (NEEA and NPCC, No. 44 at p. 2; NEMA, Public Meeting Transcript,

No. 43 at p. 70; NEMA, No. 47 at pp. 2-3; ASAP, Public Meeting Transcript, No. 43 at pp. 80-2)

ASAP and NEEA and NPCC suggested requiri ng the description “designed, labeled, and

16 This list is not all inclusive.

35marketed for use in EMI-sensitive app lications” to limit the possibility of exempted ballasts

being sold in other applications. Philips commented that they are unsure how manufacturers

would be able to control the marketing through distributors to the proper market. ASAP and

NEEA and NPCC ack nowledged that although manufacturers cannot control distribution, they

can control how they market their products. (ASAP, Public Meeting Transcript, No. 43 at pp. 80

-
82; Philips, Public Meeting Transcript, No. 43 at p. 82; NEEA and NPCC, No. 44 at p. 2)

DOE did not receive any adverse comment regarding the exemption for T8 magnetic

ballasts in EMI-sensitive applications and therefore, for the reasons discussed above, maintains

this exemption in the final rule. DOE agrees with ASAP and NEEA and NPCC that this

exemption should be designed such that, to the greatest extent possible, it does not become a

pathway to circumvent compliance with standards adopted by this rulemaking. Therefore, DOE

has modified the description of the exemption to cover ballasts “de signed, labeled, and marketed

for use in EMI-sensitive applications .” See appendix 5E of the TSD for more details on EMIsensitive applications.

b. Ballasts That Operate in the Residential Sector

Radionic disagreed with DOE’s decision to cover residential ballasts and stated that new

residential models developed to meet standards are likely to have a high initial cost. Because

residential consumers are sensitive to first cost, Radionic stated that consumers will choose less

expensive and less efficient technologies, thereby potentially decreasing energy savings.

(Radionic, No. 36 at p. 1)

36As discussed in the April 2011 NOPR, DOE believes that residential ballasts represent a

sizeable portion of the overall ballast market and represent significant potential energy savings.

DOE agrees with comments received in response to the preliminary TSD, stating that demand for

residential fluorescent ballasts will likely grow substantially as residential building codes

become more stringent. For example, California, Oregon, and Washington have codes that

require fluorescent or higher-efficacy systems in homes. Similarly, the 2009 International Energy

Conservation Code requires that 50 percent of all permanently installed lighting in residences

have a minimum efficacy of 45 lumens per watt. 76 FR 20090, 20099 (April 11, 2011). DOE

projects that increased lighting efficacy requirements will drive consumers to continue to

purchase fluorescent systems despite incremental increases in first cost. Furthermore, DOE notes

that consumers are already purchasing higher efficiency fluorescent ballasts despite their higher

initial first cost relative to other lighting technologies. As discussed in section V.A.1 and section

V.B.5.g, standards for residential ballasts save significant amounts of energy, and are

technologically feasible and economically justified. Therefore, DOE includes residential ballasts

in the scope of coverage for this final rule.

c. Ballasts That Operate Below Minimum ANSI Current Levels

At the May 2011 public meeting, the General Electric Company ( GE ) commented that

DOE’s efficiency levels for programmed start (PS) ballasts assumed high efficiency filament cut

out at all arc powers. GE stated, however, that some low ballast factor (BF) PS ballasts operate at

currents below minimum American National Standards Institute (ANSI) levels for T8 and T12

lamps and thus require filament heating to maintain lamp life. GE and NEMA noted that these

ballasts would be unable to meet BLE requirements proposed in the April 2011 NOPR due to

37cathode heating, but would offer energy savings due to their relatively low power levels and use

in conjunction with occupancy sensors. Thus, GE requested that these low BF ballasts be exempt

from standards. (GE, Public Meeting Transcript, No. 43 at pp. 236, 238; NEMA, No. 47 at p. 6)

NEEA and NPCC recognized the operating limitations presented by the se ballasts, but

expressed concern over the lack of information about their fraction of shipments, the markets

where they are most commonly sold, and their cost relative to other, more common ballast types

designed to operate the same type and number of lamps. Specifically, NEEA and NPCC

commented that these ballasts might be the kind of currently exempted product provided to the

residential market, and that their continuing exemption could result in an increase in sales and

accompanying loss in energy savings. (NEEA and NPCC, No. 44 at p. 4) The Joint Comment

also highlighted the possibility of an increase in the use of these low BF ballasts in all

applications if they were exempt from standards. They stated that the current small market share

did not mean that shipments would not increase substantially in response to an exemption,

thereby decreasing the potential energy savings due to the standards adopted by the rulemaking

.
(Joint Comment, No. 46 at pp. 2, 3)

17 DOE reviewed ANSI C78.81- 2010 and determined that ballasts designed to operate 4

-
foot MBP T8 lamps are required to use some level of cathode heating when operating lamps at

currents less than 155 milliampere s (mA). Through testing, DOE learned the BF of the se ballasts

was similar to or less than 0.7. This low BF (which affects light output) is a unique utility that

might be removed from the market if the se ballasts were held to the established standard level.

17 American National Standard for Electric Lamps

– Double-Capped Fluorescent Lamps

– Dimensional and Electrical Characteristics, Approved January 14, 2010.

38DOE analyzed test data for 4-foot MBP T8 programmed start ballasts with average currents less

than 155 mA to determine if there was a trend between low current and low efficiency. DOE

determined that as current decreased, the BLE also decreased. DOE concluded that none of the

PS ballasts tested with an average current of less than 1 40 mA were able to meet the max tech

efficiency levels analyzed in the PS product class

. Therefore, DOE is exempting these PS lowcurrent ballasts from the standards adopted in this final rule.

DOE does not believe that an exemption for these ballasts will lead to an increase in their

use because when current is reduced, light output is also reduced. Consumers have light output

requirements and would not consider a ballast that does not meet such a requirement to be an

adequate substitute. Reduced light output could also require additional lighting fixtures to be

purchased in order to meet expected lighting levels. It is unlikely, however, that consumers

would purchase additional fixtures due to high first cost. As a result, DOE establishes an

exemption for these PS , low-current ballasts. DOE has determined that the threshold for the

exemption will be set at the current levels indicated in its testing , 1 40 mA for 4-foot MBP

ballasts.

d. Other Exemptions

Radionic commented that DOE should consider exempting outdoor ballasts, cold weather

18 ballasts, “all ballasts for less than 30 watts”, ballasts that have a normal power factor (a power

18 As defined by ANSI C82.13-2002, the power factor is calculated by determining the ratio of the input power to the apparent power. The input power is measured with a wattmeter, and the apparent power is the ballast input voltage multiplied by the ballast input current. For more information, see chapter 3 of the TSD.

39factor equal to or greater than 0.6 and less than 0.9), and ballasts that are produced in small

quantities for special applications. (Radionic, No. 36 at p. 1)

DOE notes that several of the ballasts mentioned by Radionic are already subject to

standards. For example, because outdoor and cold weather ballasts, apart from sign ballasts, are

already covered by current standards, DOE cannot exempt them from standards in this

rulemaking due to anti-backsliding statutory provisions (discussed in section II.A). Similarly,

DOE interpreted “all ballasts for less than 30 watts” as ballasts that operate total lamp arc powers

less than 30 W. Some of these ballasts (such as ballasts that operate F34T12 lamps) are covered

by current standards and cannot be exempted in this rulemaking. In general, DOE specifies

efficiency levels using a power law equation that assigns BLE values as a function of total lamp

arc power. In other words, the equation takes lower lamp arc power into account when assigning

appropriate standard levels. Even though they operate lower wattage lamps, these ballasts still

demonstrate significant potential energy savings and DOE test data shows they are capable of

meeting the standard levels adopted by this final rule. Therefore, DOE will not exempt ballasts

that operate total lamp arc powers less than 30 W in this final rule.

Ballasts with a normal power factor are classified as residential ballasts. DOE continues

to cover residential ballasts as discussed in section III.A.2.b

. For residential ballasts, as well as

all other types listed above, Radionic did not provide DOE with any specific information

regarding ballasts produced in small quantities for special applications, or specific data

indicating that these ballasts would be unable to meet any standards. DOE has looked at the

market and has not identified any applications, other than those already defined, in which ballasts

40are unable to meet standards and would require an exemption. For all of the ballast types

Radionic listed, DOE has determined that the adopted standard levels are technologically

feasible and economically justified.

3. Summary of Fluorescent Lamp Ballasts to Which DOE Extends Coverage

With the exception of the comments discussed previously in this section

, DOE received

no other input related to coverage of fluorescent lamp ballasts. In addition, DOE’s revised

analyses indicate that energy conservation standards for the ballasts for whic h DOE proposed

coverage in the April 2011 NOPR are still technologically feasible, economically justified, and

would result in significant energy savings. Therefore, in summary, this final rule extends

coverage to the following fluorescent lamp ballasts:

19 (1) ballasts that operate 4-foot medium bipin lamps with a rated wattage of 25W or

more, and an input voltage at or between 120V and 277V;

(2) ballasts that operate 2-foot medium bipin U-shaped lamps with a rated wattage of

25W or more, and an input voltage at or between 120V and 277V;

(3) ballasts that operate 8-foot high output lamps with an input voltage at or between

120V and 277V;

(4) ballasts that operate 8-foot slimline lamps with a rated wattage of 52W or more, and

an input voltage at or between 120V and 277V;

(5) ballasts that operate 4-foot miniature bipin standard output lamps with a rated wattage

of 26W or more, and an input voltage at or between 120V and 277V;

19 The 2009 Lamps Rule adopted a new definition for rated wattage that can be found in 10 CFR 430.2.

41(6) ballasts that operate 4-foot miniature bipin high output lamps with a rated wattage of

49W or more, and an input voltage at or between 120V and 277V;

(7) ballasts that operate 4-foot medium bipin lamps with a rated wattage of 25W or more,

an input voltage at or between 120V and 277V, a power factor of less than 0.90, and

are designed and labeled for use in residential applications; and

(8) ballasts that operate 8-foot high output lamps with an input voltage at or between

120V and 277V, have an enclosure with an Underwriters Laboratories (UL) Type 2

20 rating, and are designed, labeled, and marketed for use in outdoor signs.

The following ballasts are exempt from coverage:

(1) Additional dimming ballasts

(2) Low frequency T8 ballasts that are designed, labeled, and marketed for use in EMIsensitive environments and sold in packages of 10 or fewer

(3) PS ballasts that operate 4-foot MBP T8 lamps and deliver on average less than

140mA to each lamp.

B. Off Mode and Standby Mode Energy Consumption Standards

EPCA requires energy conservation standards adopted for a covered product after July 1,

2010 to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Because DOE

is required by consent decree to publish a final rule establishing any amended standards for

In the April 2011 NOPR, these ballasts were described as “ballasts that operate 8 -foot high output lamps with an input voltage at or between 120V and 277V, and operate at ambient temperatures of -20 degrees F or less and are used in outdoor signs.” For the reasons st ated in section V.A.2, DOE uses this revised description for the final rule.

42 2021 fluorescent lamp ballasts by October 28, 2011, this rulemaking is required to consider standby

mode and off mode energy use. DOE determined that it is not possible for the ballasts at issue in

this final rule to meet the off-mode criteria because there is no condition in which a ballast is

connected to the main power source and is not already in a mode accounted for in either active or

standby mode. In the test procedure addressing standby mode energy consumption, DOE

determined that the only ballasts that consume energy in standby mode are those that incorporate

an electronic circuit that enables the ballast to communicate with and be part of a lighting control

interface ( e.g. , digitally addressable lighting interface (DALI ) enabled ballasts). 74 FR 54445,

54447 -8 (October 22, 2009). DOE believes that the only commercially available ballasts that

incorporate an electronic circuit to communicate with a lighting control interface are dimming

ballasts.

As discussed in the April 2011 NOPR, DOE did not expand the scope of coverage to

include additional dimming ballasts. Therefore, the only covered dimming ballasts are the four

products specified in 10 CFR 430.32(m)(5) that operate reduced-wattage lamps. DOE research

has not identified any dimming ballasts currently on the market that operate these lamps because

the fill gas composition of reduced-wattage lamps makes them undesirable for use in dimming

applications. Because DOE is not aware of any other dimming products that are covered by

existing standards, DOE was un able to characterize standby mode energy consumption.

Therefore, DOE does not adopt provisions to address ballast operation in standby mode as part of

the energy conservation standards that are the subject of this rulemaking.

21 Under the consolidated Consent Decree in New York v. Bodman, No. 05 Civ. 7807 (S.D.N.Y. filed Sept. 7, 2005) and Natural Resources Defense Council v. Bodman, No. 05 Civ. 7808 (S.D.N.Y. filed Sept. 7, 2005), as amended, the U.S. Department of Energy is required to publish, as that term is defined in the consent decree, a final rule amending energy conservation standards for fluorescent lamp ballasts no later than October 28, 2011.

43IV. General Discussion

A. Test Procedures

1. Background

As noted previously, manufacturers must use the test procedures for ballasts at 10 CFR

part 430, subpart B, appendix Q to determine compliance with the currently applicable ballast

efficacy factor standards. On March 24, 2010, DOE issued a NOPR in which it proposed

revisions to these test procedures. 75 FR 14288. The principal change DOE proposed to the

existing test methods was, in an effort to reduce measurement variation, to eliminate photometric

measurements used to determine ballast efficacy factor (BEF). Instead, DOE proposed to use

el ectrical measurements to determine ballast efficiency (BE), which could then be converted to

BEF using empirically derived transfer equations. The proposed changes specified that the

ballast operate a resistive load rather than a lamp load during performance testing. For

consistency with previous methods, no changes were proposed for the measurement of BF

(which required photometric measurements). The preliminary TSD for this rulemaking

considered standards in terms of BEF, as determined by the methods proposed in the active mode

test procedure NOPR.

After reviewing comments submitted in response to the active mode test procedure

NOPR (75 FR 14287, March 24, 2010) and conducting additional research, DOE issued a

supplemental NOPR (SNOPR) proposing a lamp-based ballast efficiency metric instead of the

resistor-based metric proposed in the NOPR. 75 FR 71570 (November 24, 2010). The new

metric, BLE, was equal to the total lamp arc power divided by ballast input power. DOE

44believed this lamp-based metric more accurately assessed the real-life performance of a ballast

and also reduced measurement variation relative to the existing test procedure for BEF. DOE

also proposed a method for calculating the BF of a ballast by dividing the measured lamp arc

power on the test ballast by the measured lamp arc power on a reference ballast. In cases where

reference ballast operating conditions were unavailable, the SNOPR provided a reference lamp

power (specific to the ballast type) from an ANSI standard or from empirical results. The April

2011 NOPR for the standards rulemaking used the BLE procedures specified in the test

procedure SNOPR to propose energy conservation standards.

The final rule for the active mode test procedure, which was published in the Federal

Register on May 4, 2011, adopted the BLE metric proposed in the SNOPR with a few

modifications. 76 FR 25211. To account for the increase in lamp efficacy associated with highfrequency lamp operation versus low-frequency, DOE had proposed an adjustment to the BLE of

low-frequency systems. DOE had proposed that low-frequency BLE be multiplied by 0.9 to

account for the approximately 10 percent increase in lighting efficacy associated with highfrequency lamp operation. For the final rule, DOE assigned specific lamp operating frequency

adjustment factors for each ballast type considered. The adjustment factors more accurately

approximated the increase in lighting efficacy associated with high-frequency lamp operation. In

addition, in the final rule, DOE did not adopt a BF measurement procedure because BF wa s no

longer used to define product classes for energy conservation standards.

This final rule for energy conservation standards evaluates standards for ballasts in terms

of the BLE metric adopted in the active mode test procedure. Appendix Q1 of 10 CFR part 430

45Subpart B will be used to evaluate compliance with the standards adopted in this final rule. 76

FR 25211, 25213 (May 4, 2011)

DOE received comments in response to the April 2011 NOPR regarding the new

fluorescent ballast testing procedure and BLE metric. Several stakeholders expressed support for

the BLE metric. The Pacific Gas and Electric Company, Southern California Edison, the

Southern California Gas Company, and San Diego Gas and Electric (hereafter the “ C A

Utilities ”) commented that the new BLE metric is an improvement over the existing BEF metric

because it allows for efficiency comparison across a wider range of ballasts. (CA Utilities, No.

45 at p. 1) NEEP and CA Utilities stated that the new BLE metric successfully simplifies testing

requirements and enables the vast consolidation of product classes, which will make the

compliance and enforcement processes easier. (NEEP, No. 92 at p. 3; CA Utilities, No. 45 at pp.

1-2) CA Utilities also approved of the new test procedure, commenting that they support the use

of lamps to measure lamp arc power instead of sets of resistor banks designed to simulate lamps.

CA Utilities stated that actual lamps, which have varying impedance based on power, more

accurately represent real world loads on ballasts. They added that maintaining different sets of

resistor banks at every ballast factor would have increased the testing burden for manufacturers.

(CA Utilities, No. 45 at p. 2)

DOE also received several comments requesting clarification on the new test procedure.

These comments are discussed in the following sections.

462. Transfer Function

GE asked if DOE would be creating transfer functions, similar to those proposed in the

active mode test procedure NOPR, to convert BLE to BEF for marketing purposes. GE noted

that as BEF will continue to be more relevant for consumers using lumens and system watts,

manufacturers will continue to publish those numbers even though they will not test the ballasts

with that metric. (GE, Public Meeting Transcript, No. 43 at p. 237) As discussed in section

VII.D

, to verify that no backsliding had occurred, DOE developed a method to convert BEF to

BLE in order to compare current and newly adopted standards. However, DOE requires

manufacturers to certify compliance in terms of the BLE metric only and therefore does not

provide a transfer function for converting BLE to BEF for marketing purposes.

3. Reference Lamp

GE noted that it is not always clear what lamp should be used when testing a ballast and

requested clarification on this matter. (GE, Public Meeting Transcript, No. 43 at pp. 236-7) DOE

notes that Table A in the ballast test procedure, Appendix Q1 of 10 CFR part 430 Subpart B,

provides the appropriate lamp wattage, diameter and base to use in testing for each covered

ballast type. For example, the first row of Table A shows that ballasts “that operate straight

shaped lamps (commonly referred to as 4-foot medium bipin lamps) with medium bipin bases

and a nominal overall length of 48 inches” should b e tested with 32W T8 MBP lamps

.

4. Total Lamp Arc Power

The People’s Republic of China ( P.R. China) noted that in the April 2011 NOPR, the

term “total lamp arc power” was not well -defined. They noted that ANSI C78.81-2010 specifies

47“arc wattage” for various fluorescent tube lamps but does not define “total lamp arc power.”

Furthermore, while the test procedure SNOPR included a definition for “total lamp arc power,” it

also included a table that listed a low and/or high frequency “reference lamp arc power” fo r each

covered ballast type. 75 FR 71570

, 71592 (November 24, 2010). P.R. China indicated that these

terms caused confusion regarding the appropriate value to be used when calculating the

efficiency standard. Therefore, they suggested DOE clarify the speci fic value of “total lamp arc

power” and use consistent terminology to avoid confusion. (P.R. China, No. 51 at p. 3 -4)

CA Utilities and NEEA and NPCC agreed that it was unclear which arc power should be

used to calculate the applicable BLE standard. CA Utilities recommended that DOE require

manufacturers to use the average lamp arc power of the tested sample to determine the BLE for a

given model. (CA Utilities, No. 58 at p. 4; NEEA and NPCC, No. 59 at p. 3)

DOE notes that reference lamp arc power refers to the arc wattage listed in ANSI C78.81

-
2010 and, as shown in that standard, can vary depending on whether the reference ballast

22 operates at low or high frequency settings. These values were provided in the test procedure

SNOPR for the purposes of calculating ballast factor. However, because the test procedure final

rule did not adopt a procedure for calculating ballast factor, reference lamp arc powers are no

longer relevant

. Total lamp arc power is a measured, not listed, value and is evaluated according

to the recently adopted test procedure.

22 The test procedure defines a low frequency ballast as a fluorescent lamp ballast that operates at a supply frequency of 50 to 60 Hz and operates the lamp at the same frequency as the supply. The test procedure incorporates the ANSI C82.13 definition of high frequency ballast as a device which operates at a supply frequency of 50 or 60 Hz and operates the lamp at frequencies greater than 10 kHz.

48DOE also notes that 10 CFR 429.26 does not currently reflect the new ballast luminous

efficiency metric. DOE plans to consider certification procedures in upcoming rulemakings

23 related to compliance certification and enforcement. For this final rule, DOE computed the

reported ballast luminous efficiency and total lamp arc power assuming the ballast basic models

would be certified in the following manner. To certify compliance, manufacturers would

calculate the total lamp arc power and BLE for each sample tested according to 10 CFR 430,

Subpart B, Appendix Q1. They would then average the total lamp arc power of each sample and

input that average into the appropriate energy conservation standard efficiency level. The output

of that equation dictates the minimum BLE that the reported BLE for each basic model must

meet or exceed. To calculate the reported BLE for each basic model, manufacturers would

follow the provisions laid out in 10 CFR 429.26(a)(2)(ii).

B. Technological Feasibility

1. General

In each standards rulemaking, DOE conducts a screening analysis based on information it

has gathered on all current technology options and prototype designs that could improve the

efficiency of the products that are the subject of the rulemaking. As the first step in such

analysis, DOE develops a list of technology options for consideration in consultation with

manufacturers, design engineers, and other interested parties. DOE then determines which of

these means for improving efficiency are technologically feasible. DOE considers technologies

incorporated in commercially available products or in working prototypes to be technologically

feasible. 10 CFR 430, subpart C, appendix A, section 4(a)(4)(i).

23 Details on certification and enforcement procedures can be found at: www1.eere.energy.gov/buildings/appliance_standards/certification_enforcement.html

. 49Once DOE has determined that particular technology options are technologically feasible,

it further evaluates each of them in light of the following additional screening criteria: (1)

practicability to manufacture, install, or service; (2) adverse impacts on product utility or

availability; and (3) adverse impacts on health or safety. For further details on the screening

analysis for this rulemaking, see chapter 4 of the final rule TSD.

2. Maximum Technologically Feasible Levels

When DOE considers an amended standard for a type or class of covered product, it must

determine the maximum improvement in energy efficiency or maximum reduction in energy use

that is technologically feasible for that product. (42 U.S.C. 6295(p)(1)) Accordingly, DOE

determined the maximum technologically feasible (“max tech”) ballast efficiency in the

engineering analysis, using the design options identified in the screening analysis (see chapter 5

of the final rule TSD).

As a first step to identifying the max tech efficiency level, DOE conducted testing of

commercially available ballasts. DOE was un able to identify working prototypes that had a

higher efficiency than the tested products. Therefore, DOE has determined that TSL 3B, which is

based on the most efficient commercially available ballasts tested, represents the highest

efficiency level that is technologically feasible for a sufficient diversity of commercially

available products (spanning several ballast factors, number of lamps per ballast, and types of

lamps operated) within each product class. The max tech efficiency levels require the use of

electronic ballasts with improved components (such as high efficiency transformers, diodes,

50capacitors, and transistors). The max tech levels also require IS instead of RS ballasts, or some

form of cathode cut-out technology for PS ballasts. Table IV .1 presents the max tech levels for

each product class.

Table IV .1 Max Tech Levels
BLE = A/(1+B *total lamp arc power ^

- C ) where A, B, and C are as follows:

Product Class A B C IS and RS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 0.993 0.2 7 0.25

PS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 4

- foot MiniBP SO lamps 4

- foot MiniBP HO lamps 0.993 0. 51 0.37

IS and RS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps 0.993 0. 28 0.25

PS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps 0.9 73 0.5 2 0.37

Sign b allasts that operate : 8

- foot HO lamps 0.993 0. 47 0.25

IS and RS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 0.993 0. 29 0.25

PS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 0.9 73 0.5 0 0.37

51C. Energy Savings

1. Determination of Savings

DOE used its national impact analysis (NIA) spreadsheet to estimate energy savings from

new or amended standards for the ballasts that are the subject of this final rule

. (The NIA

spreadsheet model is described in section V.F of this final rule and in chapter 11 of the final rule

TSD.) DOE forecasted energy savings for each TSL, beginning in 2014, the year that compliance

with the new and amended standards is required, and ending in 2043. DOE quantified the energy

savings attributable to each TSL as the difference in energy consumption between the standards

case and the base case. The base case represents the forecast of energy consumption in the

absence of new and amended mandatory efficiency standards, and considers market demand for

higher-efficiency products. For example, DOE models a shift in the base case from covered

fluorescent lamp ballasts toward emerging technologies such as light emitting diodes (LEDs).

The NIA spreadsheet mo del calculates the electricity savings in “site energy” expressed

in kilowatt-hours (kWh). Site energy is the energy directly consumed by ballasts at the locations

where they are used. DOE reports national energy savings on an annual basis in terms of the

aggregated source (primary) energy savings, which is the savings in energy used to generate and

transmit the site energy. (See final rule TSD chapter 11.) To convert site energy to source (also

known as primary) energy, DOE derived time-dependent conversion factors from the model used

to prepare the Energy Information Administration’s (EIA’s) Annual Energy Outlook 2010

( AEO2010 ).

522. Significance of Savings

As noted in section I, under 42 U.S.C. 6295(o)(3)(B) DOE is prohibit ed from adopting a

standard for a covered product if such standard would not result in “significant” energy savings.

While the term “significant” is not defined in the Act, the U.S. Court of Appeals, in Natural

Resources Defense Council v. Herrington , 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that

Congress intended “significant” energy savings in this context to be savings that were not

“genuinely trivial.” The energy savings for all of the TSLs considered in this final rule are

nontrivial, and therefore DOE considers them “significant” within the meaning of section 325 of

EPCA.

D. Economic Justification

1. Specific Criteria

As noted in section II.A, EPCA provides seven factors to be evaluated in determining

whether a potential energy conservation standard is economically justified. (42 U.S.C

.
6295(o)(2)(B)(i)) The following sections discuss how DOE addresses each of those seven factors

in this rulemaking.

a. Economic Impact on Manufacturers and Consumers

In determining the impacts of a new or amended standard on manufacturers, DOE first

determines the quantitative impacts using an annual cash-flow approach. This includes both a

short-term assessment

—

based on the cost and capital requirements during the period between the

announcement of a regulation and when the regulation requires compliance

— and a long-term

assessment over the 30-year analysis period. The impacts analyzed include INPV (which values

53the industry based on expected future cash flows), cash flows by year, changes in revenue and

income, and other measures of impact, as appropriate. Second, DOE analyzes and reports the

impacts on different types of manufacturers, including an analysis of impacts on small

manufacturers. Third, DOE considers the impact of standards on domestic manufacturer

employment and manufacturing capacity, as well as the potential for standards to result in plant

closures and loss of capital investment. DOE also takes into account cumulative impacts of

different related DOE regulations and other regulatory requirements on manufacturers.

For individual consumers, measures of economic impact include the changes in LCC and

the payback period associated with new or amended standards. The LCC, which is separately

specified as one of the seven factors to consider when determining the economic justification for

a new or amended standard, (42 U.S.C. 6295(o)(2)(B)(i)(II)), is discussed in the following

section. For consumers in the aggregate, DOE calculates the NPV from a national perspective of

the economic impacts on consumers over the forecast period used in a particular rulemaking.

b. Life-Cycle Costs

The LCC is the sum of the purchase price of a product (including its installation) and the

operating expense (including energy, maintenance, and repair expenditures) discounted over the

lifetime of the product. The LCC savings for the considered efficiency levels are calculated

relative to a base case that reflects likely trends in the absence of new or amended standards. The

LCC analysis requires a variety of inputs, such as product prices, product energy consumption,

energy prices, maintenance and repair costs, product lifetime, and consumer discount rates. DOE

assumes in its analysis that consumers purchase the product in 2014.

54To account for uncertainty and variability in specific inputs, such as product lifetime and

discount rate, DOE uses a distribution of values with probabilities attached to each value. A

distinct advantage of this approach is that DOE can identify the percentage of consumers

estimated to achieve LCC savings or experiencing an LCC increase, in addition to the average

LCC savings associated with a particular standard level. In addition to identifying ranges of

impacts, DOE evaluates the LCC impacts of potential standards on identifiable sub-groups of

consumers that may be disproportionately affected by a national standard.

c. Energy Savings

While significant conservation of energy is a separate statutory requirement for imposing

an energy conservation standard, EPCA requires DOE, in determining the economic justification

of a standard, to consider the total projected energy savings that are expected to result directly

from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE uses the NIA spreadsheet results in its

consideration of total projected savings.

d. Lessening of Utility or Performance of Products

In establishing classes of products, and in evaluating design options and the impact of

potential standard levels, DOE seeks to develop standards that would not lessen the utility or

performance of the products under consideration. The efficiency levels considered in this final

rule will not affect any features valued by consumers, such as starting method, ballast factor, or

cold temperature operation. Therefore, none of the TSLs presented in section VII.A would

55reduce the utility or performance of the ballasts that are the subject of this final rule. (42 U.S.C.

6295(o)(2)(B)(i)(IV))

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition likely to result from

standards. It directs the Attorney General to determine the impact, if any, of any lessening of

competition likely to result from standards and to transmit this determination to the Secretary,

not later than 60 days after the publication of a proposed rule, together with an analysis of the

nature and extent of this impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) To assist the

Attorney General in making this determination, DOE transmitted a copy of the April 2011

NOPR and TSD to the Attorney General for review. The Attorney General’s response is

discussed in section VII.B.5, and is repri nt ed at the end of this rule.

f. Need of the Nation to Conserve Energy

The non-monetary benefits of the standards in this final rule are likely to be reflected in

improvements to the security and reliability of the nation’s energy system. Reduced demand for

electricity may also result in reduced costs for maintaining the reliability of the nation’s

electricity system. DOE conducts a utility impact analysis to estimate how standards may affect

the nation’s needed power generation capacity

.

Energy savings from the standards in this final rule are also likely to result in

environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases

(GHG) associated with energy production. DOE reports the environmental effects from the new

56and amended standards

— and from each TSL it considered for ballasts

— in the environmental

assessment contained in chapter 16 of the final rule TSD. DOE also reports estimates of the

economic value of reduced emissions reductions resulting from the considered TSLs.

g. Other Factors

The Act allows the Secretary of Energy to consider any other factors he or she deems

relevant in determining whether a standard is economically justified. (42 U.S.C.

6295(o)(2)(B)(i)(VII)) Under this provision, DOE considers subgroups of consumers that may be

adversely affected by the standards established in this rule. DOE specifically assesses the impact

of standards on low-income consumers, institutions of religious worship, and institutions that

serve low-income populations. In considering these subgroups, DOE analyzes variations on

electricity prices, operating hours, discount rates, and baseline ballasts. See section V.G for

further detail.

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA provides for a rebuttable presumption

that an energy conservation standard is economically justified if the additional cost to the

consumer of a product that meets the standard is less than three times the value of the first-year

energy (and, as applicable, water) savings resulting from the standard, as calculated under the

applicable DOE test procedure. DOE’s LCC and PBP analyses generate values that calculate the

payback period for consumers of potential new and amended energy conservation standards.

These analyses include, but are not limited to, the 3-year payback period contemplated under the

rebuttable presumption test. However, DOE routinely conducts an economic analysis that

57considers the full range of impacts to the consumer, manufacturer, nation, and environment, as

required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE

to evaluate the economic justification for a potential standard level (thereby supporting or

rebutting the results of any preliminary determination of economic justification). The rebuttable

presumption payback calculation is discussed in section VII.B.1.c.

V. Methodology and Discussion

DOE used three spreadsheets to estimate the impact of the adopted standards. The first

spreadsheet calculates LCCs and payback periods of potential new energy conservation

standards. The second provides shipments forecasts and then calculates national energy savings

and NPV impacts of new energy conservation standards. Through the third, the Government

Regulatory Impact Model (GRIM)

, DOE assesses manufacturer impacts.

Additionally, DOE uses a version of EIA’s National Energy Modeling System (NEMS)

to estimate the impacts of energy efficiency standards on electric utilities and the environment.

The NEMS model simulates the energy sector of the U.S. economy. The version of NEMS used

for appliance standards analysis is called NEMS-BT, and is based on the AEO2010 version of

NEMS with minor modifications. The NEMS-BT accounts for the interactions between the

24 various energy supply and demand sectors and the economy as a whole.

24 The EIA approves the use of the name “NEMS” to describe only an AEO version of the model without any modification to code or data. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from AEO assumptions, the name “NEMS

- BT” refers to the model a s used here. (BT stands for DOE’s Building Technologies Program.) For more information on NEMS, refer
to The National Energy Modeling System: An Overview , DOE/EIA

– 0581 (98) (Feb.1998), available at: tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf

. 58As a basis for this final rule, DOE has continued to use the spreadsheets and approaches

explained in the April 2011 NOPR. DOE used the same general methodology as applied in the

NOPR, but revised some of the assumptions and inputs for the final rule in response to public

comments. The following sections discuss these revisions.

A. Product Classes

In evaluating and establishing energy conservation standards, DOE divides covered

products into classes by the type of energy used, or by capacity or other performance-related

feature that justifies a different standard for products having such feature. (See 42 U.S.C.

6295(q)) In deciding whether a feature justifies a different standard, DOE must consider factors

such as the utility of the feature to users. Id . DOE establishes energy conservation standards for

different product classes based on the criteria set forth in 42 U.S.C. 6295(o).

For the April 2011 NOPR, DOE undertook extensive testing of fluorescent lamp ballasts

to evaluate the impact of numerous ballast characteristics on BLE. Using this test data, DOE

empirically found a relationship between the BLE metric and lamp arc power. In general, as

lamp arc power increases, BLE increases as well. DOE believes this association is due to the

fixed losses of a ballast becoming proportionally less significant at higher lamp arc powers. This

relationship allowed DOE to set efficiency levels as a function of total lamp arc power across a

wide range of power levels, which simplified the product class structure and the amount of

scaling required among product classes. In addition, setting efficiency levels with an equation

allows for easier adaption of standards to future innovations. For example, an equation could

account for the introduction of new ballast factors. It would also not necessarily have to be

59revised if the test procedure were modified to require testing with reduced-wattage lamps, toward

which manufacturers have commented the market is moving. NEMA agreed that an efficiency

standard using pure electrical measurements on a ballast operating a lamp load is appropriate

provided the equation accounts for different operating characteristics of the various ballast types

that are grouped into each product class. (NEMA, No. 47 at p. 3) NEMA’s specific comments

regarding the appropriate grouping of various ballast types are discussed later in this section.

After considering several potential class-setting factors, DOE proposed in the April 2011

NOPR to separate product classes based on starting method (instant start and rapid start versus

programmed start), ballasts that operate 8-foot HO lamps, and ballasts that operate 8-foot HO

lamps in cold-temperature outdoor signs. DOE noted that for each of those three ballast types, a

difference in utility was accompanied by a difference in the BLE predicted by the powerefficiency relationship. These three distinctions resulted in five product classes for: IS/RS

ballasts that operate 4-foot MBP and 8-foot slimline lamps; PS ballasts that operate 4-foot MBP,

T5 SO, and T5 HO lamps, IS/RS ballasts that operate 8-foot HO lamps, PS ballast that operate 8

-
foot HO lamps, and ballasts that operate 8-foot HO lamps in cold temperature outdoor signs.

ASAP and CA Utilities commented that the reduction from the 70 product classes

considered in the preliminary analysis to the five product classes proposed in the NOPR provides

a simpler standard and thus facilitates compliance and enforcement. (ASAP, Public Meeting

Transcript, No. 43 at p. 80; CA Utilities, No. 45 at pp. 1-2) In addition, DOE received several

comments related to the inclusion of residential and commercial ballasts in a single product

class, the definition of the sign ballast product class

, the grouping of ballasts with different

60starting methods, and the potential for additional subclasses within the 8-foot HO product class

.
These comments are discussed in the following sections.

1. Residential Ballasts

Separate minimum power factor and electromagnetic interference requirements exist for

residential and commercial ballasts

. Specifically, residential ballasts have more stringent (or

lower maximum allowable) EMI requirements than commercial ballasts; they also have less

25 stringent (or lower minimum allowable) power factor requirements. Based on these differing

requirements, in the April 2011 NOPR, DOE concluded that residential ballasts offer a unique

utility in that they serve distinct market sectors and applications. However, because the April

2011 NOPR test data indicated residential ballasts could achieve similar levels of efficiency as

commercial ballasts at the highest standard levels analyzed, DOE did not propose a separate

product class for residential ballasts. In response to the April 2011 NOPR, DOE received several

comments regarding this conclusion.

CA Utilities agreed with DOE’s proposal that a separate product class is not necessary for

residential ballasts because no specific characteristic affects efficiency. They stated that

residential ballasts are not subject to more stringent FCC standards for EMI because the se

standards only apply to devices operating at frequencies greater than 30 megahertz (MHz). Thus,

CA Utilities emphasized that starting method is more relevant to the efficiency of the ballast than

the distinction of residential or commercial. (CA Utilities, No. 58 at p. 4; CA Utilities, No. 45 at

p. 7) NEMA disagreed, commenting that not only are residential ballasts subject to more

25 ANSI C82.77-2002 requires residential ballasts to have a minimum power factor of 0.5 and commercial ballasts to have a minimum power factor of 0.9.

61stringent standards for EMI, but that this requirement decreases ballast efficiency. NEMA and

Universal added that while they support the inclusion of residential ballasts in this rulemaking,

they oppose the inclusion of residential ballasts in the same product class as commercial ballasts,

given their different efficiencies and application requirements. (NEMA, No. 47 at p. 4 ;

Universal, Public Meeting Transcript, No. 43 at pp. 76- 7)

Current regulatory requirements subject residential ballasts to more stringent conducted

EMI requirements than commercial ballasts. In particular, DOE notes that separate FCC

standards exist for both radiated and conducted EMI emissions. The 30 MHz standards cited by

CA Utilities correspond to radiated EMI emissions frequencies, not to ballast operating

frequencies. Devices that operate at frequencies less than 1.705 MHz, such as fluorescent lamp

ballasts, are not required to measure radiated emissions that exist at frequencies above 30 MHz;

therefore, radiated EMI standards do not apply to fluorescent lamp ballasts. Ballasts with

conducted EMI emissions in the frequency range of 0.45 to 30 MHz, however, must comply with

FCC standards for conducted EMI. The conducted EMI requirements are applicable to all fluorescent

lamp ballasts, but are more stringent for residential ballasts, necessitating added interference

filtration in order to comply.

CA Utilities also commented that although residential ballasts are subject to a lower

minimum power factor requirement, they do not necessarily have low power factors; in fact

,
ballasts with either high or low power factors can be installed in the residential sector. CA

Utilities concluded that therefore, many high-efficiency commercial ballasts available on the

market today can be used in the residential sector without issue. (CA Utilities, No. 45 at pp. 6- 7)

Philips agreed that ballasts with high power factors can be installed in the residential sector,

62noting that the ENERGY STAR program for residential fixtures may soon require some level of

power factor correction. Philips commented that increased power factor correction actually

reduces the efficiency of residential ballasts because the losses associated with meeting FCC

Class B requirements become more significant when including power factor correction. (Philips,

Public Meeting Transcript, No. 43 at pp. 77-9)

Acuity Brands added that a residential ballast that achieves the same efficiency as the

most efficient commercial product would be 50 percent more expensive because of the FCC EMI

requirements. (Acuity Brands, Public Meeting Transcript, No. 43 at p. 79) NEMA pointed out

that that a higher price could influence consumers to migrate from fluorescent luminaires to

lower efficiency incandescent or halogen fixtures. (NEMA, No. 47 at p. 4) Edison Electric

Institute ( EEI ) also expressed concern regarding the prices of residential ballasts, stating that a

separate product class for residential ballasts is needed to improve economics for residential and

low-income consumers. (EEI, No. 48 at p. 2)

DOE agrees that high power factor ballasts, similar to the power factors possessed by

commercial products, can be installed in the residential sector

. However, the addition of a power

factor correction stage to a ballast circuit substantially increases the amount of electromagnetic

interference due to the presence of high speed switches. Therefore, to meet the FCC

requirements for residential products, commercial ballasts would require a more significant EMI

filter and thus incur additional power losses

.

63As stated previously, DOE determined in the April 2011 NOPR that despite the

differences in power factor and EMI requirements between residential and commercial 2-lamp 4

-
foot MBP IS/RS ballasts, both ballast types could reach achieve similar levels of efficiency at the

highest levels analyzed. Based on the similarity in efficiency, DOE included both ballast types in

the same product class. Since publication of th e April 2011 NOPR, however, DOE has obtained

additional test data for residential ballasts that indicate a separate product class for residential

ballasts is warranted. Specifically, DOE tested 4-lamp residential ballasts and was unable to

confirm that it was technologically feasible for 4-lamp residential ballasts to meet the

commercial ballast efficiency levels. Thus, in the August 2011 NODA, DOE considered

establishing a separate product class for residential ballasts. Because DOE proposed extending

coverage to residential ballasts with both IS/RS and PS starting methods, DOE considered two

new product classes: (1) IS/RS ballasts that operate 4-foot MBP lamps in the residential sector

and (2) PS ballasts that operate 4-foot MBP lamps in the residential sector. A separate product

class for residential ballasts would allow DOE to adopt separate standard levels for these

products based on their associated consumer economics.

In response to the August 2011 NODA, the CA Utilities, NEEA and NPCC, and ASAP,

the American Council for an Energy-Efficient Economy, and the Natural Resources Defense

Council, in a second Joint Comment, disagreed with the establishment of a separate product class

for residential ballasts because residential ballasts can meet the same efficiency levels as

commercial ballasts. The second Joint Comment added that although the data indicates that 4

-
lamp residential ballasts cannot achieve the same efficiency as their commercial counterparts,

DOE should not establish a separate product class for this reason. They argued that 2-lamp

64ballasts are far more common in the residential sector than 4-lamp ballasts, which are often

installed in commercial buildings. (CA Utilities, No. 58 at p. 4; NEEA and NPCC, No. 59 at p. 3;

Second Joint Comment, No. 57 at p. 1-2)

In addition, the second Joint Comment, CA Utilities, and NEEA and NPCC stated that

even if there were a difference in efficiency, DOE has not demonstrated that residential ballasts

provide a unique consumer utility. (Second Joint Comment, No. 57 at pp. 1-2; CA Utilities, No.

58 at p. 4; NEEA and NPCC, No. 59 at p. 3 ) The se interested parties stated that residential

ballasts are not subject to more stringent FCC requirements for electromagnetic interference. CA

Utilities added that even if they were, EMI filters are available and they do not believe these

components affect efficiency. These interested parties also reiterated previous comments that,

while residential ballasts have lower minimum power factor requirements, this did not prevent

high power factor ballasts from being installed in this market sector. The second Joint Comment,

CA Utilities, and NEEA and NPCC concluded that commercial ballasts could be used in the

residential sector without issue.

DOE notes that both 2-lamp ballasts and 4-lamp ballasts are used in the residential sector.

In addition, while 2-lamp ballasts may be more popular in the residential sector, ballasts that

operate different numbers of lamps, such as the 4-lamp ballasts described by the second Joint

Comment above, provide a unique utility, as explained in the following paragraph. EPCA

requires DOE to consider any lessening of the utility or the performance of the covered products

likely to result from the imposition of a standard. 42 U.S.C. 6295(o)(2)(B)(i)(IV). EPCA also

prohibits DOE from establishing standards that are likely to result in the unavailability of

65performance characteristics, features, sizes, capacities and volumes that are substantially the

same as those generally available in the United States when the standard is established. 42

U.S.C. 6295(o)(4). EPCA further requires DOE to prescribe a lower energy efficiency level for

product classes in which the products have a performance-related feature, considering the utility

of that feature to consumers and other factors, that justifies a lower efficiency level. 42 U.S.C.

6295(q). Available data indicates that these products cannot achieve the same efficiencies as

their commercial counterparts and that, therefore, a separate product class and efficiency

standard is warranted

.

DOE disagrees with the assertion that commercial ballasts can be used as substitutes for

residential products. Although both ballasts can have high power factors, residential ballasts are

subject to more stringent FCC standards for conducted EMI emissions. DOE agrees that EMI can

be mitigated by the addition of a filter, but disputes the CA Uti lities’ claim that the filter does not

affect efficiency. If a residential ballast were designed to have a high power factor, the addition

of a power factor correction stage would increase the amount of conducted emissions. Thus, the

residential ballast must possess a stronger EMI filter to comply with FCC requirements. DOE

notes that only one T8 residential ballast in the data set had a power factor greater than 0.9, and

this model did not meet the most efficient EL considered for the residential product class

. For

these reasons, DOE concludes that residential ballasts are less efficient than commercial ballasts

and also offer unique consumer utility. Therefore, as stated above, DOE has established a

separate product class for these products in this final rule.

66DOE also received comments regarding the types of ballasts that should be included in

the residential product class. NEMA suggested that the residential ballast product class include

ballasts that operate 8-foot slimline lamps in addition to ballasts that operate 4-foot MBP lamps

.
(NEMA, No. 47 at p. 6) In its search of the market, DOE discovered a small number of 8-foot

slimline ballasts in product catalogs that are intended for use in the residential sector. DOE also

noted that residential ballasts that are designed to operate 4-foot MBP lamps can also operate 2

-
foot U-shaped lamps. As described above, DOE finds that residential ballasts cannot achieve the

same efficiency levels as commercial ballasts and that they offer the consumer unique utility.

Therefore, DOE has modified the description of the residential product class to include: (1)

IS/RS ballasts that operate 4-foot MBP, 2-foot U-shaped, and 8-foot slimline lamps in the

residential sector and (2) PS ballasts that operate 4-foot MBP and 2-foot U-shaped lamps in the

residential sector. 26

2. Sign Ballasts

In the April 2011 NOPR, DOE proposed establishing a separate product class for ballasts

that operate 8-foot HO lamps in cold temperature outdoor signs. This proposal was based on

their unique utility and associated decrease in efficiency relative to standard 8-foot HO ballasts.

Sign ballasts operate outdoors in wet and cold temperature environments and have highly

flexible lamp pairing possibilities, both in terms of varied individual lamp lengths and different

total lamp length (sum of the length of all lamps operated by the ballast). In response to the April

2011 NOPR, DOE received comments that the proposed sign ballast product class description

was not sufficient.

26 PS ballasts are not used in combination with 8-foot slimline lamps because the base of these lamps only has a single pin rather than the two required for electrode heating.

67ASAP encouraged DOE to ensure that the definition of the sign ballast product class is

sufficiently narrow. (ASAP, No. 46 at p. 2) CA Utilities commented that DOE should reevaluate

the defining characteristics of sign ballasts because it does not seem to accurately capture the

products for which it was intended. In particular, CA Utilities and ASAP cited the description

“ballasts that operate 8

- foot HO lamps” as problematic because it could leave out sign ballasts

that are designed for other lamp lengths. (CA Utilities, No. 45 at p. 7; ASAP, No. 46 at p. 2)

DOE agrees that sign ballasts capable of operating other lamp lengths, in addition to 8

-
foot lamps, should be included in the sign ballast product class. However, DOE does not agree

that ballasts designed to operate solely these alternate lamps, other than 8-foot HO lamps, should

be considered in the sign ballast product class or scope of coverage. In determining the scope of

fluorescent ballasts covered by this rulemaking, DOE’s research indicated that the vast majority

of sign ballasts are capable of operating 8-foot HO lamps, in addition to other lamp lengths.

Because sign ballasts that cannot operate 8-foot HO lamps were so rare, there was insufficient

available data to analyze the efficiency potential of these ballasts. DOE does not include those

ballasts that cannot operate 8-foot HO lamps in the sign ballast product class

. DOE defined the

added scope of sign ballasts based on their operation of 8-foot HO lamps and assess ed the BLE

of sign ballasts based on their performance when operating 8-foot HO lamps. Therefore , i f the

sign ballast cannot operate an 8-foot HO lamp, DOE did not include it in the scope of coverage

27 of this rulemaking.

27 For these same reasons, the test procedure in Subpart B of 10 CFR Part 430 Appendix Q1 specifies that a sign ballast must be tested with the maximum number of 8-foot HO (either T8 or T12) lamps it is designed to operate.

68CA Utilities also commented that it is not clear in the NOPR whether the usage of the

phrase “cold temperature” in the product class description is a key factor in the definition of sign

ballasts. They pointed out that some standard commercial ballasts and NEMA Premium products

are rated for negative 20 degree F temperatures. (CA Utilities, Public Meeting Transcript, No. 43

at pp. 83-5) ASAP and the CA Utilities encouraged DOE to define the sign ballast product class

in a way that does not reference cold temperature operation because it is not unique to these

products. If the definition does not include better identifying characteristics, the CA Utilities

expressed concern that sign ballasts that are not designed for cold temperature environments

might be exempt from standards (ASAP, Public Meeting Transcript, No. 43 at p. 87; CA

Utilities, Public Meeting Transcript, No. 43 at pp. 89-90) CA Utilities concluded that DOE must

ensure that products not intended to provide the specific utility of outdoor sign ballasts cannot be

construed as outdoor sign ballasts, and that products which are intended to provide this utility are

covered by the standards. (CA Utilities, No. 45 at p. 7) Universal explained that cold

temperature does have an effect on efficiency and is one of several characteristics that would

separate a sign ballast application from another application. GE also noted that more energy is

required to strike at a cold temperature with a longer lamp and it becomes more difficult for a

system to start as lamp length increases and as temperature decreases. (Universal, Public

Meeting Transcript, No. 43 at pp. 84-5; GE, Public Meeting Transcript, No. 43 at pp. 86-7, 89)

Available data support the CA Utilities assertion that cold temperature is not a key factor

in the description of sign ballasts. Although sign ballasts are rated to operate in cold temperature

environments, often down to -20 degrees Fahrenheit, DOE surveyed the market and found that

all ballast types covered by this rulemaking have product offerings that include cold temperature

69ratings, including 8-foot HO ballasts designed and marketed for traditional non-outdoor sign

applications

. While a cold-temperature rating may affect efficiency, DOE found that these cold

temperature rated non-sign ballasts were among the most efficient ballasts of their respective

types. Therefore, DOE agrees that the cold-temperature rating is not a descriptor specific to

ballasts intended to be used in outdoor signs.

Several manufacturers described alternative characteristics for defining the sign ballast

product class. Universal and Osram Sylvania (OSI) commented that a sign ballast has a much

longer striking distance, which requires a much higher open circuit voltage. GE added that

striking distance and open circuit voltage add to efficiency losses. (Universal, Public Meeting

Transcript, No. 43 at pp. 84-5; OSI, Public Meeting Transcript, No. 43 at p. 87 ; GE, Public

Meeting Transcript, No. 43 at pp. 86-7, 89) However, Philips pointed out that IS ballasts are not

as affected by wiring distances. (Philips, Public Meeting Transcript, No. 43 at pp. 88-9) Philips

also stated that outdoor sign ballasts have a different weather rating than traditional ballasts

.
(Philips, Public Meeting Transcript, No. 43 at pp. 88-9) GE added that many manufacturers

design to higher transient ratings for protection of the ballast in its outdoor application. (GE,

Public Meeting Transcript, No. 43 at pp. 86-7, 89)

In DOE’s asses sment of the market, electronic sign ballasts use the IS starting method

and therefore may not be as affected by wiring distances and increased open circuit voltage as

RS ballasts

. DOE also examined the available product literature to see if the increased wiring

distances led to a significant difference in open circuit voltage. Higher open circuit voltages can

require different components capable of withstanding those high voltages. These components

may have decreased losses due to their more rugged build. If open circuit voltage were

70significantly different for sign ballasts, DOE could use that voltage to define the sign ballast

product class. However, because open circuit voltage information is not readily available in

product specification sheets, DOE could not further specify the sign ballast product class using

open circuit voltage. DOE agrees with GE that higher transient ratings might lead to increased

ballast losses, but was unable to determine a typical transient rating specific to sign ballasts fro m

product literature.

Through a review of product datasheets, DOE did find that sign ballasts have a UL Type

2 rating for the enclosure whereas regular 8-foot HO ballasts are rated for UL Type 1. Type 2

enclosures are moisture resistant and have a rust resistant coating so that the ballast can be used

28 in plastic sign applications without a separate metal enclosure. Because the UL Type 2

enclosure rating distinguishes currently commercially available sign ballasts from regular

ballasts that operate 8-foot HO lamps, DOE will use this enclosure rating as a distinction in

defining the sign ballast product class.

ASAP suggested that the phrase “designed and marketed” should be added to the product

class description for sign ballasts. ASAP also commented that sign ballasts should be labeled

with the designation “for use only in outdoor signs.” (ASAP, No. 46 at pp. 2-3) DOE agrees with

ASAP that these types of descriptors should be added to strengthen the product class description.

Therefore, DOE has modified the description of these products to include “ designed, labeled, and

marketed for use in outdoor signs .”

28 Universal Lighting Technologies Inc. The Sign Ballast Today . 2010.

< www.signasign.com/news/signindustry.html >

71In summary, in this final rule, DOE adopted the description “ ballasts with a UL Type 2

rating designed, labeled, and marketed for use in outdoor signs that operate 8-foot HO lamps ” to

define the sign ballast product class. DOE finds that this description is the most specific

definition that can be accurately applied to all sign ballasts. While redesign of traditional 8-foot

HO ballasts to meet the definition of the sign ballast product class is possible, DOE believes this

to be an unlikely scenario due to the added cost of manufacturing the UL Type 2 enclosure and

resulting increased price to the end-user. Customers currently purchasing traditional 8-foot HO

systems would likely not tolerate a price increase resulting from added features that are not

necessary for traditional applications.

3. Starting Method

In the April 2011 NOPR, based on DOE’s determination that IS and RS ballasts provide

the same utility to the consumer, DOE proposed to include both of these starting methods in one

product class. DOE proposed a separate product class for PS ballasts because these ballasts were

less efficient yet increased lamp lifetime in frequent on/off cycling applications. NEMA

commented that lower performance RS ballasts should be grouped with PS ballasts instead of IS,

citing the ir similarity in applications and operating characteristics. (NEMA, No. 47 at p. 3, 6)

DOE acknowledges that ballasts have different operating characteristics based on starting

method. For example, IS ballasts are more efficient than RS and PS ballasts because the latter

contain extra components and use extra power to provide filament heating to the lamp, thereby

increasing the lamp’s lifetim e. In the BLE metric, such cathode heating is counted as a loss because

it does not directly contribute to the creation of light. Therefore, RS and PS ballasts will have lower

BLEs than comparable IS ballasts. DOE confirmed that RS and IS ballasts were commonly used

72as substitutes for each other, indicating consumers find no added benefit or utility associated

with RS relative to IS. Both RS and PS ballasts use cathode heating; however, only PS ballasts

limit the voltage across the lamp tube to prevent glow discharge during the initial cathode

heating. This prevention of glow discharge also increases lamp lifetime in frequent on/off

cycling applications. DOE found PS ballasts were commonly used in conjunction with

occupancy sensors (a frequent on/off cycling application). DOE determined that because of their

ability to limit voltage, PS ballasts offer the user a distinct utility. As a result of th is unique

utility and the difference in efficiency associated with these ballasts, DOE decided to establish

se parate product classes for programmed start ballasts.

4. 8-foot HO

In the April 2011 NOPR, DOE included ballasts that operate all types of 8-foot HO lamps

in one product class. NEMA commented that separate product classes should be established for

ballasts that operate 8-foot HO T8 lamps and those that operate 8-foot HO T12 lamps. NEMA

indicated that 8-foot T8 HO ballasts are typically electronic. (NEMA, No. 47 at p. 5) Though T8

electronic ballasts are more efficient than T12 magnetic and electronic ballasts, DOE found the

two ballast types were commonly used as replacements and identified no added utility associated

with 8-foot T8 electronic or 8-foot T12 ballasts. Therefore, neither lamp diameter nor electronic

versus magnetic ballast type justifies the creation of different product classes for 8-foot HO

ballasts.

735. Summary

After evaluating potential class-setting factors, DOE has established separate product

classes for programmed start ballasts, residential ballasts, ballasts that operate 8-foot HO lamps

,
and sign ballasts

. Table V.1 summarizes the seven product classes.

Table V.1 Fluorescent Lamp Ballast Product Classes Description Product Class Number IS and RS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 1

PS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 4

- foot MiniBP SO lamps 4

- foot MiniBP HO lamps 2

IS and RS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps 3

PS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps 4

Sign b allasts that operate : 8

- foot HO lamps 5

IS and RS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 6

PS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 7

74B. Engineering Analysis

1. NOPR Approach

The engineering analysis develops cost-efficiency relationships to show the

manufacturing costs of achieving increased efficiency. In the April 2011 NOPR, DOE used the

following methodology to conduct its engineering analysis.

Determine Representative Product Classes and Representative Ballast Types

. When

multiple product classes exist, DOE selects certain classes as “representative” to concentrate

analytical effort. The representative product classes represent the most commonly sold ballasts

and the majority of the ballast shipment volume. In the April 2011 NOPR, DOE analyzed four of

the then five total product classes as representative. These included, 1) IS/RS ballasts that

operate 4-foot MBP and 8-foot slimline lamps; 2) PS ballasts that operate 4-foot MBP lamps, 4

-
foot MiniBP SO lamps, and 4-foot MiniBP HO lamps; 3) IS/RS ballasts that operate 8-foot HO

lamps; 4) and ballasts that operate 8-foot HO lamps in cold temperature outdoor signs. DOE did

not directly analyze PS ballasts that operate 8-foot HO lamps due to their relatively low market

share.

Within each representative product class, DOE selected at least one representative ballast

type for each lamp type. For the IS/RS product class, DOE analyzed ballasts that operate: two 4

-
foot MBP lamps; (2) four 4-foot MBP lamps; two 8-foot slimline lamps; and two 4-foot MBP

lamps in the residential sector. For the PS product class, DOE analyzed ballasts that operate: (1)

two 4-foot T5 SO lamps; two 4-foot T5 HO; two 4-foot MBP lamps; and four 4-foot MBP

lamps. For the 8-foot HO IS/RS product class, DOE analyzed 2-lamp ballasts as the

75representative ballast type, whereas for the sign ballast product class DOE analyzed 4-lamp

ballasts as representative. DOE limited its representative ballast types to include only those

ballasts that exhibit a normal ballast factor 29 , as this BF is most common.

Collecting and Analyzing Test Data. DOE then tested a range of ballasts from multiple

manufacturers including extensive testing of the representative ballast types. DOE attempted to

30 test five samples for ballasts included in the representative ballast type categories (purchased

over two years) and three samples for non-representative ballast types. DOE conducted testing at

two laboratories or “ labs, ” one primary lab where the majority of testing occurred and another

lab to analyze possible lab- to -lab variation. DOE conducted this testing in accordance with the

lamp-based ballast luminous efficiency procedure in Appendix Q1 of 10 CFR 430.

Determine Efficiency Levels. Next, using the test data, DOE empirically found a

relationship between BLE and the natural logarithm or “log” of total lamp arc power. In general,

as total lamp arc power increased, BLE increased as well. DOE’s hypothesis was that this

behavior was due to the fixed losses of a ballast becoming proportionally less significant at

higher arc powers. DOE established efficiency levels as a natural logarithmic function of total

lamp arc power based on this power-efficiency relationship.

After compiling the test data, DOE plotted BLE versus total lamp arc power for both

standard and high efficiency product lines from multiple manufacturers. Based on analysis of test

29 DOE defines low ballast factor as being less than or equal to 0.78, normal ballast factor as being greater than 0.78 but less than 1.10, and high ballast factor as being greater than or equal to 1.10.
30 Because certain models were placed on backorder due to limited supply/production, only about 60 percent of representative ballast types in the April 2011 NOPR were tested with five or more samples.

76data for representative ballast types, DOE identified certain natural divisions in BLE. DOE then

adjusted the coefficient and constant of the logarithmic power-efficiency equation to create

efficiency levels that corresponded to these divisions. DOE found that the more efficient ballast

product lines generally had a reduced (flatter) slope than the standard-efficiency products. To

reflect this observation, DOE decreased the coefficient of the more efficient EL equations and

increased the coefficient of the less efficient EL equations. In the April 2011 NOPR, DOE

established three efficiency levels for each product class except for sign ballasts, for which it

developed one efficiency level above the baseline level.

In developing the max tech level, DOE found that no working prototypes existed that had

a distinguishably higher BLE than currently available ballasts. Therefore, DOE established TSL3

as the highest level at which a sufficient diversity of products (spanning several ballast factors,

number of lamps per ballast, and types of lamps operated) was commercially available.

In the April 2011 NOPR, DOE noted that compliance certification requirements could

affect the reported efficiency. The active mode test procedure requires manufacturers to report

the lower of either the sample average or the value calculated by an equation intended to account

for small sample sizes. DOE’s analysis of its own test data showed that it was more likely that

manufacturers would be reporting the compliance equation result, as it would be the lower of the

two values. Thus, DOE calculated the average difference between the output of the compliance

equation and the sample mean to be 0.2 percent and reduced the efficiency levels, based on

average BLEs, by this value.

77DOE also considered lab- to -lab variation when determining efficiency levels in the April

2011 NOPR. While DOE tested a large number of ballasts at one primary lab, DOE also tested a

subset of those ballasts at a second lab to determine the magnitude of any variation. DOE found

that tested efficiencies for the ballast models sent to the second lab were slightly lower (by 0.6

percent on average) than the values measured at the main test facility. DOE then applied this

additional 0.6 reduction to the efficiency levels, which were based on the primary lab’s test data.

Select Baseline and More Efficient Ballasts. For each representative ballast type, DOE

established baseline ballasts to serve as reference points against which DOE measures changes

from potential amended energy conservation standards. Generally, a baseline ballast is a

commercially available ballast that just meets existing Federal energy conservation standards and

provides basic consumer utility. If no standard exists for that specific ballast, the baseline ballast

represents the most common ballast sold within a representative ballast type with the lowest

ballast luminous efficiency. DOE select ed specific characteristics such as starting method, BF,

and input voltage to characterize the most common ballast. DOE also select ed multiple baseline

ballasts for some representative ballast types to ensure consideration of varied consumer

economics. Because fluorescent lamp ballasts are designed to operate fluorescent lamps, DOE also

consider ed properties of the entire lamp-and-ballast system. Though ballasts are capable of operating

several different lamp wattages, in the April 2011 NOPR, DOE chose the fluorescent lamp most

commonly used with each ballast for analysis.

DOE selected commercially available ballasts with higher BLEs as replacements for each

baseline ballast by considering the design options identified in the technology assessment and

screening analysis (see chapter 4 of the NOPR TSD). DOE also included two substitution cases

78in the engineering analysis. In the first substitution case, the consumer is not able to change the

spacing of the fixture and therefore replaces one baseline ballast with a more efficient ballast.

This generally represents the lighting retrofit scenario where fixture spacing is predetermined by

the existing installation. In this case, light output is generally maintained to within 10 percent of

31 the baseline system lumen output. In the second substitution case, the consumer is able to

change the spacing of the fixture and purchases either more or fewer ballasts to maintain light

output. This represents a new construction scenario in which the consumer has the flexibility to

assign fixture spacing based on the light output of the new system. In this case, DOE normalizes

the light output relative to the baseline ballast.

Conduct Price Analysis . In the April 2011 NOPR, DOE developed ballast manufacturer

selling prices using three main inputs: (1) teardown data; (2) manufacturer price lists (blue

books); and (3) confidential manufacturer-supplied MSPs and incremental MPC values. In

general, DOE used a combination of information from teardowns and manufacturer price lists

throughout the analysis and used the aggregated manufacturer-supplied MSPs for comparison

purposes. DOE used ratios of online supplier retail prices to scale to ELs where data from both

teardowns and manufacturer price lists were unavailable.

Scaling to Non-Representative Product Classes. DOE scales ELs from representative

product classes to those product classes it d id not analyze directly. In the NOPR analysis, DOE

applied a two percent reduction to the efficiency levels for the 8-foot HO IS/RS representative

product class to determine efficiency levels for the 8-foot HO PS product class.

31 In some instances ( e.g. , when switching from T12 to T8 ballasts), light output exceeds these limits.

79Comments Received

. In response to the April 2011 NOPR and subsequent NODA, DOE

received comments on the available data, methodology, engineering results, and efficiency

levels. All of these comments are discussed in further detail in the following sections.

2. Available Test Data

For the April 2011 NOPR, DOE tested more than 450 ballasts to develop proposed

energy conservation standards. At the time the NOPR was published, DOE posted test data to its

public website as Appendix 5C of the TSD. Appendix 5C contained a listing of all ballast models

tested at DOE’s primary lab for the April 2011 NOPR, including identifying characteristics suc h

as lamp type operated, number of lamps operated, starting method, ballast factor, input voltage,

32 and catalog performance value. For each ballast model, DOE also reported average tested

33 values for input power, total lamp arc power, and BLE.

At the May 2011 public meeting, NEMA presented data collected from several

34 manufacturers. NEMA’s data included average BLE test results from three manufacturers that

were subsequently reduced by 0.8 percent to account for compliance certification requirements.

Attendees of the public meeting noted that the BLE values of the most efficient ballast models

tested by NEMA appeared to be less than the most efficient ballast models tested by DOE.

NEMA also noted that about 60 percent of DOE’s test data represented ballast models with less

32 The average across several samples for each model number.
33 DOE obtained these values in accordance with the active mode test procedure in Appendix Q1 of 10 CFR 430.
34 These test results were contained in a Power Point presentation that was subsequently posted to the public meeting website at: www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_ballasts_nopr_public_meeting.html

. 80than four tested samples, which is not consistent with the minimum number of samples required

to demonstrate compliance with DOE’s standards . The CA Utilities stated that if possible, DOE

should conduct testing of four or more samples to more accurately reflect the testing process that

must be completed by manufacturers for certification purposes. (NEMA, No. 52 at p. 9 ; CA

Utilities, No. 45 at p. 3)

Following the May 2011 public meeting, DOE posted to the public meeting website a

more comprehensive set of test data used to develop the April 2011 NOPR, which specified

ballasts by serial numbers, added round robin test results, and included results for each sample

tested, rather than the average across several samples for each model number. DOE also

purchased and tested more than 120 additional ballasts to increase tested models’ sample size to

a minimum of four samples consistent with compliance certification requirements in 10 CFR

429.26. Furthermore, DOE tested additional ballast models, particularly for sign ballasts and

residential ballasts, to gain more market information about these products

. All available test data

– the NEMA-provided data, the data utilized for the April 2011 NOPR, and the results of

additional testing conducted after publication of the April 2011 NOPR

– were posted on DOE’s

35 website in conjunction with the publication of the August 2011 NODA.

3. NEMA-Provided and DOE BLE Data Comparison

As described in the previous section , a t the May 2011 public meeting, NEMA members

presented test results for the highest efficiency NEMA Premium products. NEMA emphasized

that its results represent ed only high efficiency products, which generally exceed ed NEMA

35 The August 2011 NODA and accompanying data are available here: www1.eere.energy.gov/buildings/appliance_standards/residential/notice_of_data_availability.html.

81Premium efficiency requirements. Therefore the comparisons d id not include hundreds of

products in lower-efficiency product lines that would be eliminated at the proposed standard

level. NEMA compared its results to TSL3, the proposed standard level in the April 2011 NOPR.

Based on its data and analysis, NEMA determined that 88 percent of its highest efficiency

products failed to meet the proposed standard level. NEMA added that these IS and PS ballasts

are likely 80 to 85 percent of the total market. NEMA concluded that the implementation of the

proposed standards would cause a catastrophic ballast shortage in the market. (NEMA, Public

Meeting Transcript, No. 43 at pp. 25-7; NEMA, No. 98 at pp. 2, 6)

A comparison of DOE and NEMA data sets showed that BLE values reported by NEMA

were consistently lower than those reported by DOE. For example, NEMA noted that its data

showed no ballast with a BLE higher than 91 percent at 50 watts, while DOE’s data showed a

BLE as high as 94 percent at the same wattage. NEMA also found that the variation between

samples of each ballast model was much smaller within manufacturer-provided data than within

DOE’s data. NEMA underscored the significance of its data, stating that it would submit data

derived using these same methods to demonstrate compliance with new standards. (NEMA,

Public Meeting Transcript, No. 43 at pp. 47-8, 50, 99; NEMA, No. 98 at p. 6)

Earthjustice, Northwest Energy Efficiency Alliance (NEEA), ASAP, NEEP, and the CA

Utilities emphasized the importance of determining the cause of the differences between DOE

and NEMA test data. (Earthjustice, Public Meeting Transcript, No. 43 at p. 66; NEEA, Public

Meeting Transcript, No. 43 at pp. 120-1; ASAP, Public Meeting Transcript, No. 43 at pp. 46-7;

NEEP, No. 49 at pp

. 1, 2; CA Utilities, Public Meeting Transcript, No. 43 at p. 62; CA Utilities,

82No. 45 at p. 2) NEEA noted that the source of the discrepancy between DOE and NEMA data

should be determined before any efficiency levels are fit to either data set. (NEEA, Public

Meeting Transcript, No. 43 at pp. 138- 9) Acuity Brands suggested DOE divide its test data

according to manufacturer and compare it with the test data from the individual manufacturers

obtained under non-disclosure agreements. (Acuity Brands, Public Meeting Transcript, No. 43 at

p. 149)

ASAP suggested DOE continue to use its own data for the final rule analysis and any

supplemental data provided by manufacturers should be assessed in its raw form to ensure

comparability with DOE data. (ASAP, No. 46 at p. 1) CA Utilities also advised DOE to continue

to use its own test results for the final rule unless it determined a specific fault with the testing

process of the labs used by DOE. (CA Utilities, No. 45 at p. 4)

Following the May 2011 public meeting, under non-disclosure agreements, several

manufacturers provided the model numbers and efficiencies for the ballasts included in NEMA’s

data set. Upon receiving this information, DOE conducted a comparative analysis between

NEMA data and DOE’s independently tested data. DOE published the results of its analysis in

the August 2011 NODA. DOE concluded that its data collection methods were consistent with

Appendix Q1 of 10 CFR 430 and that, after removing NEMA’s reduction factor as discussed in

section V.B.3.a, the remaining differences between the two data sets arise primarily from normal

measurement variation. Subsequent comments received on the NODA reaffirmed DOE’s

conclusions

. Therefore, for this final rule, DOE continued to use its own data and utilized

NEMA- provided data for comparison. The sections below detail DOE’s comparative analysis

83and discuss several comments by interested parties suggesting possible sources of differences

between the two datasets.

a. NEMA Reduction Factor

As described above, the data contained in NEMA’s presentation at the May 2011 public

meeting represented the mean of four or five samples decreased by 0.8 percent to account for

compliance certification requirements. To calculate this 0.8 reduction factor, NEMA referred

DOE to an analysis NEMA submitted in a comment in response to the preliminary TSD. I n that

analysis, NEMA calculated the 0.8 percent reduction factor based on application of the

certification equation described in 10 CFR 429.26. NEMA assumed that each sample set’s three

standard deviation spread was equal to five percent of the mean efficiency (2.5 percent for design

variation and 2.5 percent for measurement variation). NEMA then calculated a mean efficiency

adjustment factor (from sample sizes of four and five) by inserting this standard deviation into

the certification equation. This adjustment factor represented NEMA’s estimate of the percent

difference between the sample mean and the value NEMA anticipated reporting to DOE for

certification

. CA Utilities commented that NEMA’s reduction of its test results by 0.8 percent

may have been a misinterpretation of the test procedure and could have caused the discrepancy

betwee n DOE’s and NEMA’s BLEs. (CA Utilities, No. 45 at p. 2) ASAP agreed that DOE

sh ould not directly compare its data to NEMA’s reduced points. (ASAP, No. 46 at p. 1)

In the August 2011 NODA, DOE stated that to understand potential discrepancies

between NEMA and DOE’s test data, it wa s necessary to ensure that similar calculation

methodologies had been undertaken for the two data sets. Therefore, for the purpose of

84comparing the efficiency data, DOE removed the 0.8 percent reduction factor from NEMA’s

presented ballast efficiencies, resulting in values that represent ed mean tested efficiencies. DOE

compared these efficiency values to DOE’s mean tested efficiencies presented in the April 2011

NOPR.

b. Arc Power versus Rated Power

Due to the relationship between total lamp arc power and ballast efficiency, in the April

2011 NOPR, DOE proposed establishing efficiency levels as logarithmic equations dependent on

total lamp arc power. When NEMA plotted their test data against the DOE proposed efficiency

levels, however, NEMA paired their ballast efficiency test data with approximated arc powers

rather than measured arc powers. CA Utilities and NEEA and NPCC noted that NEMA appeared

to list a batch of products all at the same “rated power,” and compared the performance of all of

those products against the same BLE standard. They stated that their understanding was that

standards are to be calculated based on the measured lamp arc power specific to each ballast, not

the rated lamp power. (NEEA and NPCC, No. 44 at p. 5; CA Utilities, No. 45 at pp. 2- 3)

DOE agrees that total lamp arc power, measured in accordance with the active mode test

procedure, should be used when comparing manufacturer-provided data to DOE’s efficiency

levels. In the August 2011 NODA, DOE noted that the lamp arc power associated with a

particular ballast in NEMA’s data was an approximation rather than a test result. DOE found

NEMA’s approximation to be higher than typical test results in DOE’s data set , with differences

as high as 27.6 percent. As this discrepancy could potentially cause NEMA’s test data to appear

to have artificially lower efficiencies relative to DOE’s efficiency levels, DOE revised NEMA’s

85approximate lamp arc powers using ANSI reference lamp arc powers to calculate total expected

lamp arc power. 76 FR 52892, 52895-6 (August 24, 2011). These lamp arc powers better aligned

with expected total lamp arc powers for similar ballast types. DOE used these calculated powers

when comparing the efficiency levels to the manufacturer-provided data as discussed in section

V.B.5.

c. Test Procedure and Lab Accreditation

NEMA commented that t he difference between the data it collected and DOE’s results

may be due to DOE’s labs not having proper accreditation. NEMA stated that all of the labs used

for its testing were certified according to ANSI C82.11-2002 and DOE should only test in

similarly certified labs. NEMA specifically noted that it did not believe the Lighting Research

Center (LRC) was ANSI C82.11-2002 certified. (NEMA, Public Meeting Transcript, No. 43 at

pp. 30, 116) GE emphasized that labs should be accredited in accordance with ISO 17025, which

is a definition of laboratory performance and accreditation for test equipment and test engineers

using that equipment. (GE, Public Meeting Transcript, No. 43 at p. 116) Similarly, CA Utilities

suggested that the difference between NEMA ’s and DOE ’s test results could be because the BLE

test procedure is new and may require clarification. (CA Utilities, No. 45 at p. 2)

DOE notes that 10 CFR 430.25 requires testing of fluorescent lamp ballasts to be

performed in accordance with Appendix Q1 of 10 CFR part 430 Subpart B by test laboratories

accredit ed by National Volunteer Laboratory Accreditation Program (NVLAP) or a NVLAPrecognized organization, Underwriter Laboratories, or Council of Canada in accordance with

ISO 17025. 76 FR 25211, 25219 (May 4, 2011). ISO 17025 is an international standard that

86outlines general requirements for the competence of testing and calibration laboratories. NVLAP

operates an accreditation system that requires applicant laboratories to be assessed against all

ISO 17025 requirements.

As described in the August 2011 NODA, DOE contacted both test laboratories utilized

for DOE testing and verified each is properly accredited and that all testing was conducted in

accordance with the active mode test procedure in Appendix Q1. CA Utilities stated that this

action greatly improved the overall credibility of DOE’s dataset. (CA Utilities, No. 58 at pp. 1- 2)

Given the verification of data collection methods, DOE continues to use its own data in this final

rule.

d. Sample Size

NEMA also commented that the number of samples tested for several ballast models was

too small, potentially resulting in test data unrepresentative of the mean efficiencies of the ballast

model’s population. They pointed out that about 60 percent of DOE’s test data represented an

average efficiency calculated with fewer than four samples, which is less than the minimum

number of samples required to demonstrate compliance with DOE’s standards . (NEMA, No. 52

at p. 9) CA Utilities also stated that if possible, DOE should conduct testing of four or more

samples to more accurately reflect the testing process that must be completed by manufacturers

for compliance. (CA Utilities, No. 45 at p. 3)

Since the publication of the April 2011 NOPR, DOE has conducted additional testing to

increase the sample size of selected ballast models. More than 90 percent of tested ballast models

87now have a minimum of four samples. Only in those cases where models have been discontinued

or were unavailable for purchase was DOE unable to test a minimum of four samples. DOE

posted a complete set of test data on its website at the time the August 2011 NODA was

published.

CA Utilities and NEEA and NPCC commended DOE for conducting additional testing to

increase the sample size to a minimum of four ballast samples, consistent with the certification

requirements in 10 CFR 429.26. NEEA and NPCC stated that the additional testing conducted

improved the dataset’s accuracy and credibility, which contributed to the development of

appropriate standard levels. (CA Utilities, No. 58 at p. 2; NEEA and NPCC, No. 59 at p. 2) DOE

discusses how it utilized all available data in sections V.B.4 and V.B.5

.

e. Measured Versus Calculated BLE

In response to the April 2011 NOPR, NEMA commented that it found several samples of DOE

test data in which the measured BLE re ported in appendix 5C of the NOPR TSD was not

consistent with the BLE calculated by NEMA. Though some of the differences were small,

NEMA provided examples of four ballast models with differences up to 8 percent. (NEMA,

Public Meeting Transcript, No. 43 at pp. 28-9) DOE addressed these discrepancies in the August

2011 NODA

.

For the small discrepancies identified by NEMA, DOE noted that the information

provided by NEMA was consistent with calculating the BLE values by dividing the average arc

power of all samples by the average input power of all samples . This method is not consistent

88with the active mode test procedure. In contrast, DOE’s average BLE reported in appendix 5C of

the TSD was determined, as required in the test procedure, by averaging the BLE of each

individual sample . Based on DOE’s analysis, this difference in methodology accounts for the

small discrepancies observed between the values reported in appendix 5C and those calculated

by NEMA.

DOE also worked to resolve the large differences cited by NEMA. DOE identified six

samples with measured-versus-calculated BLE differences ranging from 7.8 to 8.0 percentage

points, which included the specific examples cited by NEMA. These six samples were all

magnetic ballasts; in accordance with the act ive mode test procedure (see Table A, Appendix Q1

of 10 CFR part 430 Subpart B), DOE calculated BLE for these samples by reducing the

measured ballast efficiency (total lamp arc power divided by ballast input power) by a frequency

adjustment factor (1.00 for high-frequency ballasts and values ranging from 0.93 to 0.95 for lowfrequency ballasts). These larger discrepancies are consistent with NEMA not including this

adjustment factor in its calculation of BLE. Thus, given the above explanation and the absence of

any additional comments regarding this subject, DOE ’s measured BLE values are correctly

calculated and consistent with the active mode test procedure.

f. Ballast Factor

NEMA also identified differences in appendix 5C of the NOPR TSD between catalog and

tested values for ballast factor, in some cases as large as 10 or 15 percent. NEMA reported that

based on its own tests, it would expect the average difference between catalog BF and tested BF

to be 1.5 percent. (NEMA, Public Meeting Transcript, No. 43 at pp. 27-8) DOE acknowledges

89that there might be differences between ballast factor values reported in catalogs and DOE’s test

data. Catalogs generally report ballast factor using the procedure in Appendix Q of 10 CFR part

430 subpart B, which requires photometric measurements. DOE calculated ballast factor in the

April 2011 NOPR using electrical measurements by measuring the lamp arc power for the test

ballast and dividing it by the reference lamp arc power as specified by ANSI standards.

Available information suggests that manufacturing variation, coupled with application of a

different test procedure to determine BF, accounts for the difference between catalog BF and

DOE measured BF. Because DOE did not establish product classes or standards using BF and

the active mode test procedure final rule did not adopt a new method for its calculation, however,

ballast factor is not relevant to this rulemaking.

g. Variation Within DOE’s Data

Stakeholders also questioned the variation present within DOE’s data and offered several

suggestions on how to measure variation within the test results. Lutron and NEMA suggested

DOE perform a gauge repeatability and reproducibility (R&R) analysis, a recognized technique

to reconcile differences among measurements. (Lutron, Public Meeting Transcript, No. 43 at pp.

118 -9 ; NEMA, Public Meeting Transcript, No. 43 at p. 121) Philips suggested that DOE look at

the variation among each unit and among each lab, and then use the total variation to conduct a

36 3-sigma analysis. Philips noted, however, that three samples is not a very statistically large

sample size in examining this kind of variation. (Philips, Public Meeting Transcript, No. 43 at p.

113)

36 3-sigma is a statistical calculation that refers to data within three standard deviations from a mean. It is based on the rule that for a normal distribution, nearly all values lie within three standard deviations of the mean.

90As described in the previous sections, DOE evaluated several factors to verify the

integrity of its data. DOE has confirmed that testing was conducted in accordance with the active

mode test procedure and that its calculations of BLE are accurate. Furthermore, additional testing

has increased sample size such that it is consistent with compliance certification requirements.

After accounting for the above items, DOE believes that variation in its data reflects expected

measurement, design, and lab- to -lab variation. DOE addresses these sources of variation in the

following sections.

4. Accounting for Variation and Compliance Certification Requirements

In the April 2011 NOPR, DOE accounted for lab- to -lab variation and compliance

certification requirements by calculating reduction factors for each and adjusting the efficiency

levels accordingly. DOE calculated a 0.6 percent reduction factor for lab- to -lab variation by

comparing the data from the primary laboratory , which conducted the majority of DOE’s testing,

with data from its secondary laboratory, which tested a limited number of identical samples

.
DOE applied the 0.6 percent lab- to -lab variation reduction to the efficiency curves so that the

standard level could, on average, be met by ballasts tested at the less efficient lab. To account for

certification requirements, DOE calculated the difference between the output of the compliance

certification equation in 10 CFR 429.26 and the sample mean of DOE’s test data to be 0.2

percent. As DOE’s certification requirements at 10 CFR 429.26 require manufacturers to report

the lower of these two values, DOE reduced the efficiency levels, based on average BLEs, by

this value.

91OSI and Lutron Electronics Co., Inc. (Lutron) commented that in addition to lab- to -lab

variation, both design and measurement variation need to be taken into account when setting a

standard to make sure that the average of different tested samples will meet the minimum BLE

requirements. OSI commented that design tolerances exist because different components are

used in different production runs. OSI estimated this variation to be about two percent. (OSI,

Public Meeting Transcript, No. 43 at pp. 137-8, 152 ; Lutron, Public Meeting Transcript, No. 43

at pp. 151- 2)

NEMA submitted analyses in response to the NOPR recommending modifications to

DOE’s methodology of accounting for certification requirements and variation

. NEMA ’s first

analysis used an assumed design variation and measurement variation (each 2.5 percent) in the

compliance certification equation to adjust each ballast efficiency data point. After analyzing the

more detailed set of data posted after the May 2011 public meeting, NEMA submitted a similar

analysis but used an assumed design variation and a calculated measurement variation. NEMA

then suggested that DOE base its efficiency levels on the adjusted data points rather than mean

BLE values. Specifically, NEMA determined the mean BLE for each ballast model by averaging

all tested values of that particular model. NEMA then calculated the maximum measurement

variation across labs for each category of fluorescent lamp ballast ( e.g. , 4 -foot MBP, 4-foot

MiniBP, or 8-foot high output). NEMA added this highest calculated measurement variation for

each ballast type to a 2.5 percent assumed design tolerance to characterize the total variation.

NEMA then entered these variations into the compliance equation to calculate a reduction factor

based on sample size of each tested model

. NEMA commented that DOE should make similar

92allowances in the standard levels to account for the variation present in DOE’ s own data

.
(NEMA, No. 52 at pp. 8-10)

The CA Utilities also conducted an analysis using the data DOE provided following the

May 2011 public meeting. They agreed with NEMA that compliance certification requirements

should be considered when assessing whether products will meet each standard level. However,

they pointed out that NEMA had employed methods to characterize the certification procedures

that were not consistent with the requirements specified in 10 CFR 429.26. Instead, the CA

Utilities used individual sa mples of DOE’s efficiency data to calculate both the sample mean and

the value determined by the compliance certification equation in 10 CFR 429.26. Then, as

directed by the compliance certification regulations, they represented the reported efficiency as

the lower of the two values. They suggested that DOE base its efficiency levels on these reported

values. (CA Utilities, No. 45 at pp. 3, 4- 5)

Consistent with the April 2011 NOPR, DOE recognizes the importance of considering

the variation present in the test data when developing efficiency levels. DOE acknowledges that

due to design and measurement variation, the reported value for compliance certification may

deviate from the sample mean and this difference must be accounted for

. As described in the

following sections, DOE has modified its approach to account for variation and compliance

certification procedures based on the comments provided.

93a. Design Variation and Compliance Certification Requirements

As stated earlier, 10 CFR 429.26 requires manufacturers to test a minimum of four

fluorescent lamp ballasts and report the l ow er of either the mean efficiency of the samples or the

output of a compliance certification equation based on the lower 99 percent confidence limit of

the sample. The lower 99 percent confidence limit equation requires a calculation of the

standard deviation of the sample set to account for measurement variation. Because over 90

percent of ballast models tested by DOE include samples obtained during two different years, the

standard deviation for these models also incorporates design variation that is present in the

sample set.

Both NEMA and the CA Utilities had previously commented that, in order to develop

efficiency levels, DOE should adjust its mean efficiency data points to represent values similar to

those manufacturers would report to DOE for compliance certification. However, their

approaches differed in how they computed the standard deviation input for the compliance

certification equation. The CA Utilities calculated the standard deviation among all samples of a

particular ballast model tested at a single lab. NEMA, however, calculated the standard deviation

by assuming a 2.5 percent design variation and then adding an additional factor based on DOE’s

lab- to -lab test data for each ballast category.

In the August 2011 NODA, DOE disagreed with NEMA’s method of applying the

compliance certification requirements

. First, the compliance requirements direct manufacturers

to calculate the standard deviation of the tested sample, rather than an assumed population

standard deviation

. Second, in practice, this calculation would likely not include data from more

94than one lab unless manufacturers chose to test their samples of a single ballast model at more

than one location. DOE agreed that lab- to -lab variation was important

, but considered accounting

for it as a separate adjustment to efficiency levels as discussed below in section V.B.4.b.

The CA Utilities evaluated both the sample mean and compliance equation for each

ballast model and compared the lower of the two, the reported value, to the standard level. DOE

believed the CA Utilities ’ approach for accounting for compliance certification requirements wa s

consistent with the procedures laid out in 10 CFR 429.26 and therefore, in the August 2011

NODA, considered using this methodology for the final rule

. To facilitate this approach, as

discussed earlier, DOE conducted additional testing after publication of the NOPR to increase

the sample size of several ballast models in accordance with compliance certification

requirements. To account for these requirements, DOE calculated a new data se t that represented

the reported value for all ballast models. DOE used these reported values to develop the

efficiency levels described in the August 2011 NODA.

CA Utilities and NEEA and NPCC support ed DOE’s methodology of accounting for

certification requirements when setting standard levels. They stated that the use of reported

values accounts for design variation within a product line and measurement variation among

multiple test runs within a single lab. These organizations also commented that this approach is

more accurate than DOE’s previous proposal to apply a 0.2 percent reduction to all efficiency

levels. (CA Utilities, No. 58 at p. 2; NEEA and NPCC, No. 59 at p. 2)

95NEMA, however, disagreed with the methodology presented in the August 2011 NODA.

Specifically, NEMA claimed that the correction factor they calculated is essential to account for

manufacturing and component variance. NEMA commented that because DOE’s samples were

acquired when market demand was low, the manufacturing variation present in DOE’s test data

was not representative of typical variation. They reasoned that manufacturers could be more

selective when purchasing components for products manufactured during that time period. Under

normal market conditions, manufacturers compete for the same component supply and often

obtain parts that vary in quality and cost. NEMA commented that DOE should have tested a

statistically representative sample set for each model ( i.e. , a larger sampling from multiple

productions lots, assembled over time) and that, absent this, DOE should have used a statistically

derived method for determining an appropriate reduction rather than empirical data. (NEMA,

No. 56 at pp. 2, 4)

As described previously

, DOE believes that NEMA’s recommended 0.8 percent

reduction does not reflect appropriate certification procedures. As stated in 10 CFR 429.26

,
manufacturers are required to evaluate the certification equation using the standard deviation of

the samples tested, not the expected variation in the population. Furthermore, NEMA included

lab- to -lab variation when calculating its reduction factor. T hi s calculation would likely not

include data from more than one lab, however, unless manufacturers chose to test their samples

of a single ballast model at more than one location

. In addition, NEMA utilized a normal

96distribution critical value for the 99th percentile rather than the specified t-statistic for the 99th

37 percentile in evaluating the compliance equation.

As explained in the preceding paragraphs, DOE consider ed both design variation and

certification requirements when developing efficiency levels using the methodology presented in

the August 2011 NODA

. DOE purchased samples over several years, encompassing more than

one production lot. While NEMA states that DOE purchased samples at a time when

manufacturers could easily obtain the most efficient components, DOE also purchased ballasts

(for the purpose of increasing sample size) during years in which interviewed manufacturers

stated that they faced component shortages. Furthermore, consistent with 10 CFR 429.26, over

90 percent of models tested had a sample size of 4 or more. For these reasons, DOE continues to

use the methodology described in the August 2011 NODA in this final rule.

NEMA commented that half of all borderline but compliant products will fail to meet the

standard if an adjustment factor is calculated using average empirical data, such as DOE’s

method described above. (NEMA, No. 56 at p. 2) DOE notes that the certification requirements

do not mandate that every sample tested must meet or exceed the standard level, rather they

require that the average of the tested samples meet or exceed the standard. A compliant product

may still have samples that test below the standard, provided that the average BLE meets or

exceeds the level adopted in this final rule. NEMA’s concern may be regarding a situation where

all ballast samples are selected from a production run in which lower-quality components cause

37 The compliance equation found in 10 CFR 429.26 requires the use of a t-statistic, to calculate the reported value. NEMA used a different statistical distribution, the standard normal distribution, in the calculation of its reduction factor.

97all samples to test at the lower end of the expected range attributable to design variation.

However, there is no requirement that all samples be selected from the same production run. In

fact, 10 CFR 429.26 states that samples should be randomly chosen. Manufacturers can also

choose to test more than the minimum number of samples to address concerns about a borderline

product.

b. Lab- to -Lab Variation

As described in section V.B.1

, DOE accounted for lab- to -l ab variation in the April 2011

NOPR by comparing data from two different labs and calculating a 0.6 percent reduction factor

to apply to efficiency levels. NEMA noted that DOE’s data showed significant varia tion between

labs and stressed the importance of accurately quantifying this variation. (NEMA, Public

Meeting Transcript, No. 43 at pp. 140-1) NEMA pointed out that DOE typically only used one

lab to make measurements rather than validating varia tion using multiple labs. (NEMA, No. 52

at p. 7) Philips suggested that, after evaluating data among multiple labs, DOE should apply a

reduction representative of the maximum variation present in the data rather than average

variation

. (Philips, Public Meeting Transcript, No. 43 at p. 113-5)

In the August 2011 NODA, DOE considered revising its methodology to account for labto -lab variation. DOE received test data from NEMA following the May 2011 public meeting

and also received test data from NEMA-member manufacturers. The information from

manufacturers allowed DOE to match NEMA test data with the same ballast models tested at

DOE’s primary and secondary labs. Using the model-specific test data supplied by

manufacturers (representative of three different manufacturer l abs) and DOE’s BLE data

98(representative of the two labs used by DOE), DOE determined that on average, the BLE test

data from DOE’s primary lab was 0.7 percent more efficient than the average test lab. DOE

attributed this offset to systematic lab- to -lab variation and therefore considered reducing the

efficiency levels by 0.7 percent so that they are representative of ballasts tested at the average

test lab. This approach was slightly different than that taken in the April 2011 NOPR, which

applied a 0.6 percent reduction to efficiency levels, representing the average offset between

DOE’s primary lab and the least efficient lab (in that case, DOE’s secondary lab). DOE believe d

that adjusting efficiency levels so that they represent the average test lab better characterized the

mean performance of products currently being sold.

CA Utilities, NEEA, and NPCC commented that DOE should not use NEMA’s data to

calculate lab- to -lab variation. CA Utilities stated that because NEMA provided an approximation

for arc power instead of measured arc power, their data is not useful for assessing lab- to -lab

variation. They suggested DOE use its own data from the primary and secondary test labs to

quantify this type of variation. (CA Utilities, No. 58 at p. 2; NEEA and NPCC, No. 59 at p. 2)

DOE believes that NEMA’s data reflects correct application of the active mode test

procedure , given confidential data received from individual manufacturers and NEMA’s

description of testing provided during the public meeting

. (NEMA, Public Meeting Transcript,

No. 43 at p. 51) Although interested parties expressed concern that NEMA did not provide the

measured lamp arc power for each model, DOE notes that its approach for calculating lab- to -lab

variation does not incorporate measured lamp arc power. Rather, DOE directly compares the

BLE for a given ballast model to the BLE provided by NEMA for the same model. Although

99some stakeholders suggested that DOE only utilize its own results, DOE believes it should

incorporate all available data. By doing so, the number of labs included in the calculation

increases from two to five and the number of models available for comparison between labs

increases as well. Therefore, DOE maintains the methodology described in the August 2011

NODA for this final rule.

5. Efficiency Levels

a. Curve Shape

As described in section V.B.1, DOE concluded in the April 2011 NOPR that a

logarithmic relationship best modeled the observed trend between total lamp arc power and BLE

and therefore proposed efficiency levels using this equation form

. Several manufacturers

commented that, based on the test data they collected, the shape of the proposed efficiency levels

was not a good fit for all commercially available products. GE commented that it found larger

discrepancies between its test data and minimum BLE requirements for ballasts with lower input

power than higher input power. GE reported that none of its ballasts met the proposed standard

efficiency in the low power range. (GE, Public Meeting Transcript, No. 43 at p. 58) NEMA also

noted that at approximately 80 W and below, very few manufacturers had products meeting the

programmed start minimum BLE requirements. (NEMA, Public Meeting Transcript, No. 43 at

pp. 66-7; NEMA, No. 47 at p. 6) NEMA suggested an alternative equation in which they

increased the natural log constant and decreased the additive constant to increase the curvature of

the proposed standard and better fit the dataset. (NEMA, Public Meeting Transcript, No. 43 at p.

59) NEMA also recommended breaking up the power ranges into separate product classes to

100have the formulas fit the test data better and suggested a breaking point somewhere in the 50 to

100W range. (NEMA, Public Meeting Transcript, No. 43 at pp. 75- 6)

Acuity Brands expressed concern that DOE was not considering can size when

determining what types of ballasts met proposed standards. NEMA reported that consumer

demand has moved the ballast market into smaller can sizes, specifically to A- and N-cans, from

F-cans. NEMA stated that three representative ballast types in A-cans currently make up 80

percent of the total U.S. market, and the market is in the process of migrating to even smaller Ncans. NEMA explained that smaller ballasts enable reduced fixture size and plenum height in

buildings. Not only is this convention in accordance with green building practices, but smaller

can sizes allow for a reduction of gas and waste, and a 10 to 15 percent reduction of steel in the

manufacturing process. NEMA and Acuity Brands added that the smaller can sizes also increase

the photometric efficiency of the fixture by two to six percent (for fixtures housing an A-can

compared to an F-can). The small can allows better optical control and fuller use of the reflector

as the thinner ballast housing blocks less light than larger cans. The smaller ballasts are also

easier to access in the event that the ballast needs replacing. The limited space constrains the

technology and components used, however, limiting possible efficiency gains. NEMA argued

that, given the size of A- and N-cans, industry is currently developing the highest practical

efficiency with NEMA Premium products. NEMA emphasized that while ballasts in the larger Fcan can have higher efficiencies, consumer demand and fixture design makes moving to larger

cans unsustainable. Acuity Brands asserted that if standard levels eliminate the smaller can sizes,

DOE must, in its analysis, account for the additional costs of fixture redesign, engineering time,

101and incremental transportation costs. (NEMA, Public Meeting Transcript, No. 43 at pp. 32-3, 35

-
7; Acuity Brands, Public Meeting Transcript, No. 43 at pp. 99-100, 107-9, 171- 2)

CA Utilities and NEEA and NPCC commented that lower standards are not needed to

accommodate ballasts of the smallest can size, and CA Utilities noted that they were not aware

of any unique utility provided by N-cans. CA Utilities also stated that NEMA had not presented

data demonstrating that N-cans are less efficient than A-cans or that smaller can size can reduce

the use of steel. (CA Utilities, No. 45 at p. 6) NEEA and NPCC strongly urged the Department to

proceed with the proposed standards unless conclusive data is presented on these issues that

would suggest a different standard is warranted. (NEEA and NPCC, No. 44 at p. 8- 9)

Upon analysis, NEMA’s te st data showed a larger efficiency decrease at lower wattages

than DOE ’s data indicated

. Although DOE and NEMA generally tested the same types of

ballasts, NEMA tested more permutations of ballast factor and number of lamps for each product

line, particularly at lower wattages. For example, NEMA’s data contained BLE values for 1

-
lamp 4- foot MBP ballasts with both low and high ballast factors, whereas DOE’s data included

1-lamp 4-foot MBP ballasts with only normal ballast factors. For these reasons, in the August

2011 NODA, DOE considered changing the contour of the efficiency levels to better fit all of the

available data. DOE acknowledges that industry is migrating to smaller can sizes, and the

methodology described below allows ballasts with small can sizes to remain on the market.

Stakeholders had provided comments on a potential new equation form during the May

2011 public meeting, when DOE presented a power law equation fit to the data provided by

102NEMA. Several manufacturers commented that upon initial review, the new power law equation

appear ed to be a better fit to the NEMA data. (Philips, Public Meeting Transcript, No. 43 at pp.

136 -7

, NEMA, No. 47 at p. 3 OSI, Public Meeting Transcript, No. 43 at pp. 137-8) NEMA

further stat ed that the logarithmic equation in the April 2011 NOPR was more stringent at lower

wattages relative to higher wattages. A lower wattage ballast’s efficiency is more affected by

fixed losses than a higher wattage ballast. The new power law equation seemed to accommodate

this difference in efficiency (NEMA, No. 47 at p. 11)

NEEA and NPCC supported the use of a logarithmic equation dependent on lamp arc

power and based on the data presented by DOE in the April 2011 NOPR. However, NEEA and

NPCC noted that the NEMA data does have a different shape and could be better fit by th e

power law equation presented during the May 2011 NOPR public meeting. The CA Utilities

agreed, stating that the data supported the new curve shape. (NEEA and NPCC, No. 44 at p. 4-6 ;

CA Utilities, No. 45 at p. 5- 6)

Based on an application of several equation forms for efficiency levels, DOE concluded

in the August 2011 NODA that a power law equation fit both the NEMA data and DOE data

better than the logarithmic relationship proposed in the April 2011 NOPR. A power law equation

takes the form:

Where: power = average total lamp arc power.

103The exponent “C” determines the shape of the equation. Because NEMA ’s test data

included a greater number of low wattage ballasts, DOE determined the exponent “ C ” by fitting

a power law regression to NEMA ’s data. For the IS/RS product class (product class 1 in Table

V.1 ) , DOE found the exponent “ C ” to be 0.25. The exponent 0.25 is also a quantity used in

relating power to relative losses (analog of efficiency) for distribution transformers, and

fluorescent lamp ballasts similarly employ transformers and inductors. The PS NEMA data,

however, yielded a different exponent for ballasts that use the PS starting method. PS ballasts

have proportionately higher fixed losses due to internal control circuitry and heating of lamp

electrodes (cathode heating). As such losses are a larger proportion of total losses at lower

powers, the PS product classes have a steeper slope across the range of wattages corresponding

to a larger exponent “ C ” of 0.37.

Once the exponents were established for the two starting method categories, DOE fit the

power law equation to the reported value data (calculated in accordance with 10 CFR 429.26 as

discussed in section V.B.4 ) by adjusting the coefficient “ B ” to delineate among criteria such as

different product lines, lines, ballasts that operate different lamp types, and other clusters in

efficiency data. The most efficient (maximum technologically feasible) ELs approximate the

April 2011 NOPR proposals for the highest wattages, but better follow product line efficiency

trends at lower wattages. DOE confirmed the impacts of efficiency levels considered in the

August 2011 NODA by comparing the levels to both DOE’s and NEMA’s data.

104In subsequent comments, NEMA supported the use of a power law equation to develop

efficiency levels. (NEMA, No. 56 at p. 3) DOE received no adverse comment regarding this

approach, and therefore maintains the use of this equation form for the final rule.

b. Max Tech Ballast Efficiency

As described in the April 2011 NOPR and appendix 5D of the NOPR TSD, DOE was not

able to identify any working prototypes with efficiencies higher than those of commerciallyavailable ballasts. DOE therefore established the maximum technologically feasible efficiency

level as the highest level that is technologically feasible for a sufficient diversity of commercially

available products (spanning several ballast factors, number of lamps per ballast, and types of

lamps operated) within each product class.

NEEA and NPCC agreed that no additional information suggests that higher efficiency

levels exist above the most efficient levels analyzed for each product class in the April 2011

NOPR. (NEEA and NPCC, No. 44 at p. 6) NEMA reiterated this point by commenting that there

were no improvements possible over the level of efficiency proposed by DOE in the April 2011

NOPR. NEMA stated that electronic ballasts perform functions that require some fixed level of

power consumption including: switching losses related to power conversion from AC to DC and

back to AC, cathode preheating, striation control, and end of life protection. NEMA commented

that using lower loss switches would increase cost dramatically, and that lower loss magnetic

components would necessitate an overall increase in ballast size, which the market would not

accept. (NEMA, No. 47 at pp. 6-7)

105The CA Utilities, NEEA and NPCC, and the second Joint Comment commented that the

max tech levels could be more stringent for higher wattage ballasts such as those that operate

four 4-foot MBP lamps. They noted that among the 4-lamp 4-foot MBP IS/RS ballasts tested by

DOE, a high percentage met the max tech level, and there was typically a greater range of

efficiency among those ballasts that met the standard. (CA Utilities, No. 45 at p. 5-6 ; Second

Joint Comment, No. 57 at p. 1; CA Utilities, No. 58 at p. 3 ; NEEA and NPCC, No. 59 at p. 2)

DOE determined the max tech level for today’s final rule to be the highest level that is

technologically feasible for a sufficient diversity of lamp types, ballast factors, and numbers of

lamps, regardless of manufacturer. DOE developed EL3 for the IS/RS product class in

accordance with this criteria. For some ballast types in this class, there is only one product

available at the max tech level and therefore raising this level would remove these products from

the marketplace. Therefore, DOE has concluded that EL3 represents the highest level for the

IS/RS product class that is technologically feasible for a sufficient diversity of products and

maintains this level for the final rule. The following sections describe the impact of each

efficiency level in more detail.

c. IS and RS Ballasts

DOE developed three efficiency levels for the IS/RS product class. The least efficient

level (EL1) was designed to eliminate 4-foot MBP T12 ballasts while allowing 4-foot MBP T8

and 8-foot slimline ballasts to comply with energy conservation standards. EL2 corresponds to a

level which allows the highest-efficiency product lines from each of the four major ballast

manufacturers to comply. DOE defines a full product line as spanning a sufficient diversity of

106products (spanning several ballast factors, numbers of lamps per ballast, and types of lamps

operated). EL3 is the maximum technologically feasible level and allows nearly two

manufacturer product lines comply.

d. PS Ballasts

DOE developed three efficiency levels for the PS product class (product class number 2

in Table V.1). The least efficient level (EL1) was designed to eliminate the least efficient 4-foot

MBP, 4-foot T5 standard output, and 4-foot T5 high output PS ballasts. This also corresponds to

a level at which each of the four major fluorescent lamp ballast manufacturers maintain a

diversity of products. EL2 allows full product lines from two major manufacturers. Finally, EL3

,
the maximum technologically feasible level, was designed to represent the most efficient PS

ballasts tested by DOE. EL3 is the highest level that allows one full line of products to meet

standards, regardless of manufacturer.

e. Eight-foot HO Ballasts

For the 8-foot HO IS/RS product class (product class 3 in Table V.1), DOE developed

three efficiency levels. For this product class, DOE tested ballasts that operate two lamps, the

most common lamp-and-ballast combination. EL1 was designed to just allow the least efficient

T12 electronic ballasts, eliminating magnetic ballasts. EL2 allows the least efficient T8 ballast

tested and eliminates the vast majority of T12 electronic ballasts. Finally, EL3 was designed t o

just allow the most efficient T8 ballast tested by DOE.

107f. Sign Ballasts

The sign ballast market is primarily comprised of magnetic and electronic ballasts that

operate T12 HO lamps. DOE tested sign ballasts that operate up to one, two, three, four, or six 8

-
foot T12 HO lamps. The test data showed that sign ballasts exist at two levels of efficiency.

Therefore, DOE analyzed a baseline and one efficiency level above that baseline. EL1 was

designed to allow a full line of electronic sign ballasts, including ballasts that operate up to six 8

-
foot HO lamps.

g. Residential Ballasts

In the April 2011 NOPR, DOE had proposed that both residential and commercial

ballasts could achieve similar levels of efficiency at the highest levels analyzed. Based on the

similarity in efficiency, DOE included both ballast types in the same product class. However, for

the final rule, DOE conducted additional testing which indicates that 4-lamp residential ballasts

are not able to achieve the same levels as commercial ballasts. Therefore, DOE has established a

separate product class for residential ballasts and adjusted the efficiency levels for these ballasts

to reflect the new data. EL1 was designed to just allow the least efficient T8 MBP ballasts,

eliminating T12 residential ballasts. EL2, the maximum technologically feasible level, is the

highest level that allows a full range of T8 products (including both two- and four-lamp ballasts)

to comply.

1086. Representative Units

a. Baseline Ballasts

For each ballast type analyzed, DOE selected a baseline ballast from which to measure

improvements in efficiency. Baseline ballasts are what DOE believes to be the most common,

least efficacious ballasts for each representative ballast type. For ballasts subject to existing

Federal energy conservation standards, a baseline ballast is a commercially available ballast that

just meets existing standards and provides basic consumer utility. If no standard exists for that

specific ballast type, the baseline ballast represents the most common ballast sold within a

representative ballast type with the lowest tested ballast luminous efficiency. In cases where two

types of ballasts (each operating a different lamp diameter) are included in the same

representative ballast type, DOE chose multiple baseline ballasts.

NEMA commented that magnetic ballasts should not be used as baselines. (NEMA,

Public Meeting Transcript, No. 43 at pp. 38-9). DOE notes that while magnetic ballasts are not

appropriate baselines for the majority of ballast types, for certain ballast types they represent the

most common, least efficient ballasts that meet existing energy conservation standards. For

example, as most magnetic 4-foot MBP and 8-foot slimline ballasts do not meet the BEF

standards set forth by the 2000 Ballast Rule and EPACT 2005, DOE chose electronic baselines

for these ballast types. DOE used a magnetic ballast as a baseline for 8-foot HO ballasts,

however, because a T12 magnetic ballast represents the least efficient ballast that meets existing

energy conservation standards.

109Consistent with projections that a significant portion of 8-foot HO ballasts sold in 2014

(the compliance year of the new and amended standards in this final rule) will be electronic

T8HO ballasts, DOE analyzes a T8 electronic ballast as a second baseline for this ballast type.

DOE also used a magnetic ballast as a baseline for sign ballasts, which is typical of the least

efficient products that are commercially available. In addition, according to DOE’s shipment

estimates, magnetic ballasts constitute a significant portion of the sign ballast market. For these

reasons, DOE continues to analyze both electronic and magnetic baselines for the 8-foot HO and

sign representative ballast types in this final rule.

While NEAA and NPCC supported the use of T12 ballasts as an analytical baseline, EEI

reasoned that du e to the 2009 Lamps Rule, only T8 lamps will be able to comply with the new

lamp efficacy standards. Therefore, T8 lamp-and-ballast systems will be the baseline (in terms of

product availability) for all consumers as of July 2012. (NEEA and NPCC, No. 44 at p. 6 ; EEI,

No. 48 at p. 2)

DOE has concluded that both T8 and T12 ballasts are appropriate baselines

. Although

many T12 lamps will not meet the standards adopted in the 2009 Lamps Rule, several

manufacturers have already introduced T12 lamp models that are not covered by these standards

.
Therefore, DOE projects that T12 products will be offered in 2014, the compliance year for this

rulemaking. For example, DOE projects that in 2014 shipments (in the base case with existing

technologies), while T8 ballasts will have a 78 percent market share, T12 ballasts will still have a

11038 market share of 4 percent of covered shipments, or about 5.3 million ballasts. Thus, DOE

continues to use T12 ballasts as baselines in this final rule.

b. Representative Units

DOE then selected representative units at each efficiency level with higher BLEs as

replacements for each baseline ballast. Representative units are typically ballasts that just meet

the EL requirements based on the representative units ’ la mp arc power. Because DOE revised

the shape of the efficiency levels, it also reevaluated its selection of representative units. DOE

selected three new representative units based on the revised EL requirements. The revised

representative units included the EL3 units for 2-lamp 4-foot MBP and 2-lamp 8-foot slimline

ballasts in the IS/RS product class, and the EL2 unit for 2-lamp 4-foot MBP ballasts in the

residential IS/RS product class. See chapter 5 of the TSD for more details.

c. Reduced Wattage Lamps

In the April 2011 NOPR, DOE paired each ballast with a representative lamp type to

develop system input power and lumen output characteristics for use in the LCC and NIA. Based

on the active mode test procedure for fluorescent lamp ballasts, DOE used full wattage lamps for

T8 and T5 ballasts and reduced wattage lamps for T12 ballasts. For example, for ballasts that

operate 4-foot MBP lamps, DOE paired an F32T8 lamp with T8 ballasts and an F34T12 lamp

with T12 ballasts. NEMA commented that due to the prevalence of energy-saving lamps in the

market today, the standard 32 watt lamp is not an appropriate selection for the 4-foot MBP T8

system. (NEMA, Public Meeting Transcript, No. 43 at pp. 38-9)

38 T5 ballasts comprise the remaining market share.

111DOE agrees that all ballasts do not operate full-wattage lamps and thus revised the

engineering analysis to incorporate the distribution of full- and reduced-wattage lamps on the

market. In the 2009 Lamps Rule, DOE estimated the distribution of lamps by wattage that would

be compliant with the 2012 energy conservation standards. For this final rule, DOE used those

distributions to develop weighted-average lamp wattages ( e.g. , a rated wattage of 30.8 W for 4

-
foot MBP T8 lamps) to pair with T8 and T5 ballasts. In addition, DOE also updated the ballast

luminous efficiency, system input power, system lumen output, lamp lifetime, and lamp price to

reflect the distribution of lamp wattages. See chapter 5 of the final rule TSD for additional

details.

7. Scaling to Product Classes Not Analyzed

In the April 2011 NOPR, DOE did not analyze 8-foot HO PS ballasts directly. Thus, it

develop ed a scaling relationship for this starting method. To do so, DOE compared 4-foot MBP

IS ballasts to their PS counterparts. DOE found the average reduction in BLE from IS to PS to be

2 percent and therefore applied this reduction to the efficiency levels for the 8-foot HO IS/RS

product class

.

P.R. China found this approach potentially lacking scientific basis and suggested DOE

provide a more detailed explanation of its methodology. (P.R. China, No. 51 at p. 4) As

discussed in section V.B.6, DOE identified and selected certain product classes as

“representative” product classes where DOE would concentrate its analytical effort. DOE chose

these representative product classes and the representative units within them primarily because of

112their high market volumes. DOE then scaled from these representative classes to those not

directly analyzed. In the NOPR, DOE calculated a 2 percent reduction factor to scale between

IS/RS and PS product classes. This factor was determined by comparing pairs of ballasts in

which the only characteristic that differed was starting method. Absent new information, DOE

continues to use the 2 percent reduction factor. However, because DOE has establish ed different

efficiency level shapes for the IS/RS versus PS product classes

, DOE has revised its

methodology for scaling an IS/RS efficiency level to a PS efficiency level in this final rule.

To establish residential PS and 8-foot HO PS efficiency levels, DOE input the arc power

of the representative unit at each EL into the IS/RS efficiency level equation to calculate the

minimum required BLE. DOE then fit an efficiency level with a PS exponent ( the exponent “C”

is 0.37 for PS ballasts ) such that it passed through the minimum required BLE by adjusting the

coefficient “B” . Then, DOE applied the 2 percent reduction factor to the overall equation to

account for the expected difference in efficiency between IS and PS ballasts. Because multiple

representative ballast types existed in the same product class, DOE sought to match the

stringency of the PS curve to the IS curve at the highest arc power within that product class.

8. Manufacturer Selling Prices

DOE received comments on the process used to develop manufacturer selling prices

(MSPs). NEMA commented that published blue book values account for only a small fraction of

market prices and are skewed to be high er relative to the rest of the market. (NEMA, No. 47 at p.

7) DOE recognizes that blue book values are often significantly higher than MSPs and therefore

used teardown data and confidential manufacturer-supplied MSPs in combination with blue book

113values to determine more accurate MSPs. DOE determined these MSP values by applying

manufacturer-specific ratios between blue book prices and teardown- or aggregated

manufacturer-sourced MSPs to blue book prices. By applying the manufacturer-specific ratios,

the blue book price was reduced to reflect more realistic MSPs.

NEMA also commented that they do not think the price analysis method employed by

DOE in the April 2011 NOPR accurately accounts for manufacturing variances among

companies and circuit topology. In particular, NEMA disagreed with DOE ’s determination that

higher efficiency ballasts were less expensive to manufacture than normal efficiency ballasts.

(NEMA, No. 47 at p. 5) Based on DOE’s assessment, certain higher efficiency ballasts are less

expensive than lower efficiency ballasts. DOE notes that these trends are consistent with

confidential manufacturer cost data received during interviews. Several low efficiency ballasts

are magnetic ballasts, which are comprised of materials different from electronic ballasts. The

difference in materials, such as the use of larger amounts of electrical steel and copper or

aluminum windings in magnetic ballasts, would account for the higher cost. Similarly, DOE

found some electronic T12 ballasts to carry a higher MSP than a more efficient T8 electronic

ballast. Though these electronic ballasts utilize similar components, the low demand for T12

ballasts reduces the potential for high-volume discounts leading to a higher MSP relative to the

T8 ballast.

NEMA questioned DOE’s statement in the April 2011 NOPR that teardown prices are

independent of long term commodity prices. (NEMA, No. 47 at p. 7) DOE acknowledges that a

teardown analysis may be sensitive to the dynamic nature of the electrical component market

,

114but continues to use the teardown results given that limited pricing information is publicly

available. In the April 2011 NOPR, DOE amended its teardown approach such that incremental

differences between two efficiency levels were based on pricing differences between single

manufacturers’ ballasts rather than basing prices directly from teardowns of different

manufacturers. DOE notes that the industry did not provide average incremental MPC values.

Instead, some manufacturers provided confidential data on an individual basis. DOE has not

identified any new information that would affect its conclusion in the April 2011 NOPR, and

therefore maintains this approach for the final rule.

9. Results

In this final rule, DOE establishes efficiency levels in terms of a power law equation that

relates total lamp arc power to BLE. When developing efficiency level equations, DOE plotted

the reported value for each ballast model to account for certification requirements. DOE then

applied a reduction factor to the efficiency level equations based on an analysis of lab- to -lab

variation. Table V.2 summarizes the efficiency levels developed by DOE for each product class.

Costs associated with ballasts that meet these efficiency levels are presented in chapter 5 of the

TSD.

115Table V.2 Efficiency Levels for Representative Product Classes BLE = A/(1+B*total lamp arc power^

- C) where A, B, and C are as follows : Representative Product Class Efficiency Level A B C

IS and RS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps EL 1

0.993 0.4 6

0.25 EL 2 0.3 1

EL 3 0.2 7

PS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 4

- foot MiniBP SO lamps 4

- foot MiniBP HO lamps EL 1

0.993 0.6 0

0.37 EL 2 0.5 5

EL 3 0.5 1

IS and RS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps EL 1

0.993 1.01

0.25 EL 2 0. 38

EL 3 0. 28

Sign b allasts that operate : 8

- foot HO lamps EL 1 0.993 0. 47 0.25

IS and RS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps EL 1

0.993 0. 41

0.25

EL 2 0. 29

116Table V.3 Efficiency Levels for Scaled Product Classes BLE = A/(1+B*total lamp arc power^

- C) where A, B, and C are as follows : Scaled Product Class Efficiency Level A B C

PS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps EL 1

0.973 1. 86

0.37 EL 2 0.7 0

EL 3 0.5 2

PS residential ballast that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps EL 1 0.973 0.71 0.37 EL 2 0.5 0

C. Markups to Determine Product Price

By applying markups to the MSPs estimated in the engineering analysis, DOE estimated

the amounts consumers would pay for baseline and more efficient products. At each step in the

distribution channel, companies mark up the price of the product to cover business costs and

maintain a profit margin. Identifying the appropriate markups and ultimately determining

consumer product price depend on the type of distribution channels through which the product

moves from manufacturer to consumer.

In response to the April 2011 NOPR, DOE received no comments regarding its markups

analysis, and therefore retained this approach for this final rule. DOE’s markups analysis method

and results are discussed in the following sections.

1. Distribution Channels

Before it could develop markups, DOE needed to identify distribution channels ( i.e.

, how

the products are distributed from the manufacturer to the end user) for the ballast designs

117addressed in this final rule. Most ballasts used in commercial and industrial applications pass

through one of two types of distribution channels

— an original equipment manufacturer (OEM)

channel and a wholesaler channel. The OEM distribution channel applies to ballasts shipped in

fixtures. In this distribution channel, the ballast passes from the manufacturer to a fixture OEM

which in turn sells it to an electrical wholesaler ( i.e. , distributor); from the wholesaler it passes to

a contractor, and finally to the end user. The wholesaler distribution channel applies to ballasts

not shipped in fixtures ( e.g. , replacement ballasts). In this distribution channel, the ballast passes

from the manufacturer to an electrical wholesaler, then to a contractor, and finally to the end

user.

DOE assumed a separate home improvement retailer distribution channel for residential

ballasts

, because DOE could not obtain retail sales data detailing the breakdown between fixture

ballasts and replacement ballasts, DOE assumed for the markups analysis that the manufacturer

sells the residential ballast to a fixture OEM who in turn sells it in a fixture to a home

improvement retailer, where it is purchased by the end user.

2. Estimation of Markups

Publicly-owned companies must disclose financial information regularly through filings

with the U.S. Securities and Exchange Commission (SEC). Filed annually, SEC form 10- K

provides a comprehensive overview of the company’s business and financial conditions. To

estimate OEM, wholesaler, and retailer markups, DOE used financial data from 10-K reports

from publicly owned lighting fixture manufacturers, electrical wholesalers, and home

improvement retailers.

118DOE’s markup analysis developed both baseline and incremental markups to transform

the ballast MSP into an end user product price. DOE used the baseline markups to determine the

price of baseline designs. Incremental markups are coefficients that relate the change in the MSP

of higher-efficiency designs to the change in the OEM, wholesaler, and retailer sales prices.

These markups refer to higher-efficiency designs sold under market conditions with new and

amended energy conservation standards. The calculated average baseline markups for fixture

OEM companies, electrical wholesalers, and home improvement retailers were 1.50, 1.23, and

1.51, respectively. The average incremental markups for OEMs, wholesalers, and home

improvement retailers were 1.17, 1.05, and 1.15, respectively.

While recognizing that SEC form 10-K data is not product-specific, actual product

markups are generally business-sensitive. For this rule, DOE contacted the National Association

of Electrical Distributors (NAED) and received feedback from two NAED member companies,

both confirming that DOE’s calculated wholesaler markups were con sistent with their actual

markups for commercial and industrial ballast designs. DOE also contacted Home Depot and

Lowe’s regarding price markups for residential fluorescent lighting products, but both

organizations declined to comment, citing competition concerns. Consequently, DOE based its

estimated markups for commercial, industrial and residential ballast designs on financial data

from 10-K reports.

For ballasts used in commercial and industrial applications, DOE adjusted the calculated

average baseline and incremental markups to reflect estimated proportions of ballasts sold

119through the OEM and wholesaler distribution channels. DOE assumed ballasts in the fixture

OEM channel represent 63 percent of the market and ballasts in the wholesaler channel represent

37 percent. These percentages are from chapter 3 (engineering analysis) of the final TSD for the

2000 Ballast Rule and were based on a comment submitted by NEMA for that rulemaking. For

the current ballast rulemaking, neither NEMA nor other interested parties provided updated

estimates of distribution channel proportions, or offered adverse comment regarding DOE’s

assumed proportions.

DOE then multiplied the resulting weighted average markups by a contractor markup of

1.13 (also from the 2000 Ballast Rule, and used in the 2009 Lamps Rule) and sales tax to

develop total weighted baseline and incremental markups, which reflect all individual markups

incurred in the ballast distribution channels. DOE has not identified a more recent estimate for

contractor markups, and did not receive related data or estimates from interested parties in

response to the ballasts preliminary TSD or April 2011 NOPR. For residential ballasts, DOE

assumed that end users purchased ballasts

— already installed in fixtures

— directly from home

improvement retailers with no contractor involvement or markup. DOE used OEM and retailer

markups and sales tax to calculate total baseline and incremental markups for residential ballasts.

The sales tax represents state and local sales taxes applied to the end user equipment

39 price. DOE derived state and local taxes from data provided by the Sales Tax Clearinghouse.

These data represent weighted averages that include state, county and city rates. DOE then

derived population-weighted average tax values for each census division and large state, and then

39 The Sales Tax Clearinghouse. Available at https://thestc.com/STRates.stm . ( Last accessed May 16

, 2011.)

120derived U.S. average tax values using a population-weighted average of the census division and

large state values. This approach provided a national average tax rate of 7.25 percent.

3. Summary of Markups

Table V.4. Summary of Ballast Distribution Channel Markups

Commercial / Industrial Ballasts Residential Ballasts

OEM Distribution (Ballasts Shipped in Fixtures) Wholesaler Distribution ( Individual Ballasts Only) Retailer Distribution (Ballasts Shipped in Fixtures)

Baseline Incremental Baseline Incremental Baseline Incremental

Fixture OEM 1.50 1.17

- - 1.50 1.17

Electrical Wholesaler (Distributor) 1.23 1.05 1.23 1.05

- -

Home Improvement Retailer - - - - 1.51 1.15

Contractor or Installer 1.13 1.13 1.13 1.13

- -

Sales Tax 1.07 1.07 1.07

Overall 2.24 1.48 1.49 1.27 2.43 1.43

Assumed Market Percentage 63 37 100

Overall (Weighted) 1.96 (Baseline) 1.41 (Incremental) 2.43 1.43

In response to the April 2011 NOPR, NEMA said it disagreed with DOE’s incremental

markups for OEMs, contractors and home improvement retailers, citing current economic

conditions, price compression and commodity fluctuations. NEMA did not provide details about

or suggested revisions to incremental markups. (NEMA, No. 47 at p. 7) DOE was not able to

obtain confidential pricing and markups data from OEMs and home improvement retailers to

validate its estimated baseline and incremental markups. Absent representative markups data,

DOE retained its previously-vetted approach using SEC form 10-K financial reports to estimate

121markups for OEMs and home improvement retailers. Similarly, no new data to support different

contractor markups were available

, so DOE retained its NOPR markups for this final rule.

Using these markups, DOE generated ballast end user prices for each efficiency level it

considered. Chapter 7 of the final rule TSD provides additional detail on the markups analysis.

D. Energy Use Analysis

For the energy use analysis, DOE estimated the energy use of ballasts in the field ( i.e. , as

they are actually used by consumers in commercial, industrial and residential applications). The

energy use analysis provided the basis for other DOE analyses, particularly assessments of the

energy savings and the savings in consumer operating costs that could result from DOE’s

adoption of new and amended standard levels.

To develop annual energy use estimates, DOE multiplied annual usage (in hours per year)

by the lamp-and-ballast system input power (in watts). DOE characterized representative lamp

and-ballast systems in the engineering analysis, which provided measured and normalized

system input power ratings (the latter used to compare baseline- and standards-case systems on

an equal light- output basis). To characterize the country’s average use of lamp -and-ballast

systems for a typical year, DOE developed annual operating hour distributions by sector, using

40 data published in the U.S. Lighting Market Characterization: Volume I (LMC), the

40 U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. U.S. Lighting Market Characterization. Volume I: National Lighting Inventory and Energy Consumption Estimate. 20 02. Available at http://apps1.eere.energy.gov/buildings/publications/pdfs/corporate/lmc_vol1.pdf

. 12241 Commercial Building Energy Consumption Survey (CBECS), the Manufacturer Energy

42 43 Consumption Survey (MECS), and the Residential Energy Consumption Survey (RECS).

DOE assumed, based on its market and technology assessment, that PS ballasts operating 4-foot

MBP T8 lamps in the commercial sector were operated on occupancy sensors. Based on its

survey of available literature, DOE assumed that occupancy sensors would result, on average, in

a 30-percent reduction in annual operating hour s.

DOE received no comments on the April 2011 NOPR regarding the energy use analysis

for ballasts and retains this approach for today’s final rule

. Chapter 6 of the final rule TSD

provides a more detailed description of DOE’s energy use analysis.

E. Life-Cycle Cost and Payback Period Analyses

DOE conducted LCC and PBP analyses to evaluate the economic impacts of potential

energy conservation standards for ballasts on individual consumers. For any given efficiency

level, DOE measures the PBP and the change in LCC relative to an estimated baseline product

efficiency level. The LCC is the total consumer expense over the life of a product, consisting of

purchase, installation, and operating costs (expenses for energy use, maintenance, and repair). To

compute the operating costs, DOE discounted future operating costs to the time of purchase and

summed them over the lifetime of the product. The PBP is the estimated amount of time (in

41 U.S. Department of Energy, Energy Information Administration

. Commercial Building Energy Consumption Survey: Micro-Level Data, File 2 Building Activities, Special Measures of Size, and Multi-building Facilities . 2003. Available at www.eia.doe.gov/emeu/cbecs/public_use.html

. 42 U.S. Department of Energy, Energy Information Administration

. Manufacturing Energy Consumption Survey, Table 1.4: Number of Establishments Using Energy Consumed for All Purpose. 2006. Available at www.eia.doe.gov/emeu/mecs/mecs2006/2006tables.html

. 43 U.S. Department of Energy, Energy Information Administration

. Residential Energy Consumption Survey: File 1: Housing Unit Characteristics . 2005. Available at www.eia.doe.gov/emeu/recs/recspubuse05/pubuse05.html

. 123years) it takes consumers to recover the increased purchase cost (including installation) of a more

efficient product through lower operating costs. DOE calculates the PBP by dividing the change

in purchase cost (normally higher) by the change in average annual operating cost (normally

lower) that results from the more efficient standard.

Inputs to the calculation of total installed costs include the cost of the product

— which

includes MSPs, distribution channel markups, and sales taxes

— and installation costs. Inputs to

the calculation of operating expenses include annual energy consumption, energy prices and

price projections, repair and maintenance costs, product lifetimes, discount rates, and the year

that compliance with new and amended standards is required. To account for uncertainty and

variability, DOE created probability distributions for inputs such as operating hours, electricity

prices, discount rates and sales tax rates, and disposal costs. For example, DOE created a

probability distribution of annual energy consumption in its energy use analysis, based in part on

a range of annual operating hours. The operating hour distributions capture variation across

census divisions and large states, building types, and lamp-and-ballast systems for three sectors

(commercial, industrial, and residential ). Because ballast MSPs were specific to the

representative ballast designs evaluated in DOE’s engineering analysis and price markups were

based on limited publicly-available financial data, DOE used discrete values instead of

distributions for these inputs.

The computer model DOE uses to calculate the LCC and PBP, which incorporates

Crystal Ball (a commercially available software program), relies on a Monte Carlo simulation to

incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly

124sample input values from probability distributions of these values, performing more than 10,000

iterations per simulation run. The final rule TSD chapter 8 and its appendices provide details on

the spreadsheet model and all inputs to the LCC and PBP analyses.

Table V.5 summarizes the approach and data DOE used to derive inputs to the LCC and

PBP calculations for the April 2011 NOPR as well as the changes made for this final rule. The

subsections that follow discuss the model inputs and DOE’s changes to them.

Table V.5 Summary of Inputs and Key Assumptions in the LCC and PBP Analyses* Inputs NOPR Changes for the Final Rule Product Cost Derived by multiplying ballast MSPs by distribution channel markups and sales tax No change

Installation Cost Derived costs using estimated labor times, and applicable labor rates from RS Means Electrical Cost Data (2007) and U.S. Bureau of Labor Statistics Updated labor rates from 2009$ to 2010$

Annual Energy Use Determined operating hours by associating building type

- specific operating hours with regional distributions of various building types using lighting mar ket and building energy consumption survey data: LMC (2002), CBECS (2003), MECS (2006), and RECS (2005) 44 (see section V.D ) No change (newer data unavailable)

Energy Prices Electricity: Based on EIA’s Form 826 data for 2010. Variability: Energy prices determined at state level No change

Energy Price Forecasted using Annual Energy No change 45

44 RECS was updated in 2009, but these updates did not address lighting usage; therefore, DOE used RECS 2005 data for this final rule.
45 DOE continues to use AEO2010 in its final rule analyses. The comment period on DOE’s NODA, discussed previously, closed on September 14, 2011, and DOE is required by consent decree to publish the final amended

125Projections Outlook 2010 ( AEO2010) Replacement and Disposal Costs Commercial/Industrial: Included labor and materials costs for lamp replacement, and disposal costs for failed lamps Residential: Included only materials cost for lamps, with no lamp disposal costs Variability: Assumed commerc ial and industrial consumers pay recycling costs in approximately 30 percent of lamp failures and 5 percent of ballast failures Updated labor rates from 2009$ to 2010$

Product Lifetime Ballasts: Lifetime based on average lifetimes from the 2000 Ballast Rule (and used in the 2009 Lamps Rule) Lamps: assumed as 91 percent

– 94 percent of rated life, to account for lamp type and relamping practices No change

Discount Rates Commercial/Industrial: Estimated cost of capital to affected firms and industries; developed weighted average of the cost to the company of equity and debt financing. Residential: Estimated by examining all possible debt or asset classes that might be used to purchase ballasts Variability: Developed a distribution of discount rates for each end

- use sector No change

Compliance Date of Standards 2014 No change

Ballast Purchasing Assessed two events: ballast No change

standards for fluorescent lamp ballasts by October 28, 2011. ( State of New York, et al. v. Bodman et al. , 05 Civ. 7807 (LAP) and Natural Resources Defense Council, et al. v. Bodman, et al. , 05 Civ. 7808 (LAP)(Nov. 3, 2006), as amended on June 20, 2011. ) The additional time required for DOE to consider the comments and information submitted by interested parties did not allow sufficient time for DOE to update the final rule analyses using AEO2011 . DOE has determined, however, that the AEO2011 30 -year annual growth rates for energy consumption (electric power) and electricity generating capacity are almost identical to those in AEO2010 . The forecasted nearterm electricity prices in AEO2010 are slightly higher than in AEO2011 , and would produce slightly shorter payback periods. However, these payback periods and other LCC and NIA results are not expected to vary significantly using AEO2010 and AEO2011

. 126Events failure and new construction/renovation * References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the final rule TSD.

1. Product Cost

To calculate consumer product costs, DOE multiplied the MSPs developed in the

engineering analysis by the distribution channel markups described in section V.C.1 (along with

sales taxes). DOE used different markups for baseline products and higher-efficiency products,

because the markups estimated for incremental costs differ from those estimated for baseline

models.

DOE received comments on the April 2011 NOPR questioning its product cost

assumptions for residential ballasts. NEEA and NPCC noted that residential consumers would

more likely replace an entire fluorescent lamp fixture upon ballast failure, and that these fixtures

would be less expensive than DOE’s estimated ballast prices. (NEEA, Public Meeting

Transcript, No. 43 at pp. 169-170; NPCC, Public Meeting Transcript, No. 43 at pp. 163-164;

NEEA and NPCC, No. 44 at p. 6) DOE notes that fluorescent fixture and ballast price are highly

variable, but maintains that its estimated residential ballast prices (approx. $10-12) are

comparable with those for inexpensive fixtures ( e.g. , shop lights) that residential consumers

might replace upon ballast failure. DOE also notes that fixture price data that correspond with

individual ballast efficiency levels are not readily available. Therefore, DOE retained its

residential ballast product cost approach for this final rule.

On February 22, 2011, DOE published a Notice of Data Availability (NODA, 76 FR

9696) stating that DOE may consider improving regulatory analysis by addressing product and

127equipment price trends. DOE notes that learning curve analysis characterizes the reduction in

production cost mainly associated with labor-based performance improvement and higher

investment in new capital equipment at the microeconomic level. Experience curve analysis

tends to focus more on entire industries and aggregates over various casual factors at the

macroeconomi c level: “Experience curve” and “progress function” typically represent

generalizations of the learning concept to encompass behavior of all inputs to production and

cost (i.e., labor, capital, and materials).” The economic literature often uses these two terms

interchangeably. The term “learning” is used here to broadly cover these general macroeconomic

concepts.

Consistent with the February 2011 NODA , DOE examined historical producer price

indices (PPI) for fluorescent ballasts and found both positive and negative real price trends

depending on the specific time period examined. Therefore, in the absence of a definitive trend,

DOE assumed in its price forecasts for the NOPR that the real prices of fluorescent ballasts are

constant in time and that fluorescent ballast prices will trend the same way as prices in the

economy as a whole. DOE is aware that there have been significant changes in both the

regulatory environment and mix of fluorescent ballast and controls technologies that create

analytical challenges for estimating longer-term product price trends from the product-specific

PPI data. DOE performed price trends sensitivity calculations to examine the dependence of the

analysis results on different analytical assumptions.

DOE received no comments on the April 2011 NOPR regarding its ballast price trend

basis. For this final rule, DOE also considered adjusting ballast prices using forecasted price Comment [bk3]: Change recommended by OIRA.

128indices (called deflators) used by EIA to develop the AEO . When adjusted for inflation, the

deflator-based price indices decline from 100 in 2010 to approximately 54 in 2043. The effect is

diminished significantly when discounting is taken into account. Deflator-based net present value

(NPV) results from the national impacts analysis (NIA) were approximately 9 percent higher

than NPV values based on constant real prices for ballasts. Given this minor difference in

estimated NPV, and that DOE did not receive negative comments on its constant real price basis

in the NOPR, DOE retained its constant real price approach for this final rule. A more detailed

discussion of price trend modeling and calculations is provided in Appendix 8B of the final rule

TSD.

2. Installation Cost

The installation cost is the total cost to the consumer to install the equipment, excluding

the marked-up consumer product price. Installation costs include labor, overhead, and any

miscellaneous materials and parts. As detailed in the final rule TSD, DOE considered the total

installed cost of a lamp-and-ballast system to be the consumer product price (including sales

taxes) plus the installation cost. DOE applied installation costs to lamp-and-ballast systems

installed in the commercial and industrial sectors, treating an installation cost as the product of

the average labor rate and the time needed for installation. Using the same approach, DOE

assumed that residential consumers must pay for the installation of a fixture containing a lamp

and-ballast system, and calculated installation price in the same manner. DOE received no

comments on the April 2011 NOPR concerning its installation costs for the LCC analysis, and

retained this approach for this final rule.

129 Deleted: 503. Annual Energy Use

As discussed in section V.D , DOE estimated the annual energy use of representative

lamp-and-ballast systems using system input power ratings and sector operating hours. The

annual energy use inputs to the LCC and PBP analyses are based on weighted average annual

operating hours, whereas the Monte Carlo simulation draws on a distribution of annual operating

hours to determine annual energy use.

4. Energy Prices

For the LCC and PBP, DOE derived average energy prices for 13 U.S. geographic areas

consisting of the nine census divisions, with four large states (New York, Florida, Texas, and

California) treated separately. For census divisions containing one of these large states, DO E

calculated the regional average excluding the data for the large state. The derivation of prices

was based on data from 2010 EIA Form 826, “Monthly Electric Utility Sales and Revenue

Data.” DOE received no comments on the April 2011 NOPR concerning its d erivation of energy

prices for the LCC analysis and retained this approach for this final rule.

5. Energy Price Projections

To estimate the trends in energy prices, DOE used the price forecasts in AEO2010 . To

arrive at prices in future years, DOE multiplied current average prices by the forecast of annual

average price changes in AEO2010 . Because AEO2010 forecasts prices to 2035, DOE followed

past EIA guidelines and used the average rate of change from 2020 to 2035 to estimate the price

trend for electricity from 2035 to 2043. In addition, the spreadsheets that DOE used to conduct

the LCC and PBP analyses allow users to select price forecasts from AEO ’s low -growth, high

130growth, and reference case scenarios to estimate the sensitivity of the LCC and PBP to different

energy price forecasts. DOE received no specific comments on the April 2011 NOPR concerning

its energy price forecasting method for the LCC analysis and retained this approach for this final

rule.

6. Replacement and Disposal Costs

In the April 2011 NOPR, DOE addressed lamp replacements occurring within the

analysis period as part of operating costs for considered lamp-and-ballast system designs.

Replacement costs in the commercial and industrial sectors included the labor and materials

costs associated with replacing a lamp at the end of its lifetime, discounted to 2011. For the

residential sector, DOE projected that consumers would install their own replacement lamps and

incur no related labor costs.

Some consumers recycle failed lamps and ballasts, thus incurring a disposal cost. For the

2009 Lamps Rule, DOE found average recycling costs of 10 cents per linear foot for GSFL and

$3.50 for each ballast. DOE surveyed current online recycling cost data for this rulemaking, and

determined that its 2009 recycling cost estimates were still valid. A 2004 report by the

Association of Lighting and Mercury Recyclers noted that approximately 30 percent of lamps

46 used by businesses and 2 percent of lamps in the residential sector are recycled nationwide.

Consistent with the 2009 Lamps Rule, DOE considered the 30-percent lamp-recycling rate to be

significant and incorporated lamp recycling costs into the LCC analysis for commercial and

industrial consumers. DOE was unable to obtain reliable ballast recycling rate data, but projected

46 Association of Lighting and Mercury Recyclers, “National Mercury -Lamp Recycling Rate and Availability of Lamp Recyc ling Services in the U.S.” Nov. 2004.

131that the likely higher ballast recycling costs would largely discourage voluntary ballast recycling

by commercial and industrial consumers. DOE therefore did not include ballast recycling costs in

the LCC analysis. Given the low (2 percent) estimated lamp recycling rate in the residential

sector, DOE assumed that residential consumers would be even less likely to voluntarily incur

the higher recycling costs for ballasts. Therefore, DOE excluded the recycling costs for lamps or

ballasts from the LCC analysis for residential ballast designs.

DOE received no comments on the April 2011 NOPR concerning these assumed

recycling rates and costs, and retained this approach in the final rule LCC analysis. The Monte

Carlo simulation for the final rule allowed DOE to examine variability in recycling practices;

consequently, DOE assumed that commercial and industrial consumers pay recycling costs in 5

pe rcent of ballast failures

— as well as the 30 percent of lamp failures assumed in the LCC

analysis. As in the LCC analysis, DOE assumed that residential lamp and ballast disposal rates

were insignificant, and excluded the related disposal costs from the Monte Carlo simulation for

residential ballast designs.

7. Product Lifetime

Chapter 8 of the final rule TSD details DOE’s basis for its calculation of average ballast

lifetimes. DOE used assumptions from the 2000 Ballast Rule and the 2009 Lamps Rule. DOE

explicitly sought comment on these assumptions but received no additional information upon

which to base changes to them in today’s final rule. For ballasts in the commercial and industrial

sectors, DOE used an average ballast lifetime of 49,054 hours that, when combined the

respective average annual operating hours, yielded average ballast lifetimes of approximately 13

132and 10 years in the commercial and industrial sectors, respectively. Consistent with the 2000

Ballast Rule and the 2009 Lamps Rule, DOE assumed an average ballast lifetime of

approximately 15 years in the residential sector, which corresponds with 11,835 hours total on an

assumed 789 hours per year operating schedule. To account for a range of relamping practices

( e.g. , group and spot relamping, where lamps are replaced preemptively or after failure,

respectively), DOE assumed that lamps operated, on average, for 91

– 94 percent of rated life,

depending on lamp type.

DOE also assumed that ballast lifetimes can vary due to both physical failure and

economic factors ( e.g. , early replacements due to retrofits). DOE accounted for variability in

lifetime in LCC and PBP via the Monte Carlo simulation (using repeated random sampling), and

in the shipments and NIA analyses by assuming a Weibull distribution for lifetimes that

represents failures and replacements

. DOE received no adverse comments on the April 2011

NOPR concerning its product lifetime assumptions and retained this approach for this final rule.

8. Discount Rates

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

present value. In the April 2011 NOPR, DOE estimated separate discount rates for commercial,

industrial, and residential consumers. For both the proposed and final rules, DOE also developed

a distribution of discount rates for each end-use sector from which the Monte Carlo simulation

samples.

133For the industrial and commercial sectors, DOE assembled data on debt interest rates and

the cost of equity capital for representative firms that use ballasts. DOE determined a distribution

of the weighted-average cost of capital for each class of potential owners using data from the

Damodaran online financial database. 47 DOE used the same distribution of discount rates for the

commercial and industrial sectors. The average discount rates, weighted by the shares of each

rate value in the sectoral distributions, are 6.9 percent for commercial end users and 7.2 percent

for industrial end users.

For the residential sector, DOE assembled a distribution of interest or return rates from

sources including the Federal Reserve Board’s “Survey of Consumer Finances” ( SCF) in 1989,

1992, 1995, 1998, 2001, 2004 and 2007. DOE assigned weights in the distribution based on the

shares of each financial instrument in household financial holdings according to SCF data. The

weighted-average discount rate for residential product owners is estimated to be 5.6 percent.

DOE received no comments on the April 2011 NOPR concerning its estimated discount

rates for the LCC analysis and retained this approach for this final rule.

9. Compliance Date of Standards

The compliance date is when a covered product is required to meet a new or amended

standard. EPCA requires that any new or amended standards established in this rule apply to

products manufactured after a date that is five years after

– (i) the effective date of the previous

amendment; or (ii) if the previous final rule did not amend the standards, the earliest date by

47 The data are available at http://pages.stern.nyu.edu/~adamodar

. 134which a previous amendment could have been effective; except that in no case may any amended

standard apply to products manufactured within three years after publication of the final rule

establishing such amended standard. (42 U.S.C. 6295(g)(7)(C)). DOE is required by a 2006

consent decree, as amended, to publish any amended standards for ballasts by October 28

,

48 2011. I n accordance with 42 U.S.C. 6295(g)(7)(C), the compliance date is three years after the

publication of any final new and amended standards. DOE calculated the LCC for all end users

as if each one would purchase a new ballast in the year compliance with the standard is required.

10. Ballast Purchasing Events

DOE based the LCC and PBP analyses for this rulemaking on scenarios where consumers

must purchase a ballast. Each of these purchasing events may involve a different set of ballast or

lamp-and-ballast designs and, therefore, a different set of LCC savings for a certain efficiency

level. The two scenarios are (1) ballast failure and (2) new construction/renovation. In the ballast

failure scenario, DOE assumed that the consumer of the failed ballast would replace it with a

standards-compliant lamp-and-ballast combination such that the system light output never drops

more than 10 percent below that of the baseline system. For the ballast failure scenario, DOE

used rated system input power to calculate annual energy use. For new construction/renovation,

DOE assumed that consumers may design a new installation that matches the overall light output

of the base-case system. DOE used normalized system input power, adjusted to yield equivalent

light output from both the baseline and substitute new construction/renovation systems.

48 State of New York, et al. v. Bodman et al. , 05 Civ. 7807 (LAP) and Natural Resources Defense Council, et al. v. Bodman, et al. , 05 Civ. 7808 (LAP)(Nov. 3, 2006), as amended on June 20, 2011.

135DOE received no comments on the April 2011 NOPR concerning its assumed ballast

purchasing events for the LCC analysis and retained this approach for this final rule.

F. National Impact Analysis

– National Energy Savings and Net Present Value Analysis

DOE’s NIA assessed the national energy savings (NES) and the NPV of total consumer

costs and savings that they would be expect from new or amended standards at specific

efficiency levels. (“Consumer” in this context refers to users of the regulated product.)

DOE used a spreadsheet model to calculate the energy savings and the national consumer

costs and savings for each TSL. The TSD and other documentation for the rulemaking explain

the models and how to use them, allowing interested parties to review DOE’s analyses by

changing various input quantities within the spreadsheet.

DOE used the NIA spreadsheet to calculate the NES and NPV, based on the annual

energy consumption and total installed cost data from the energy use and LCC analyses. DOE

forecasted the energy savings, energy cost savings, product costs, and NPV of consumer benefits

for each product class for products sold from 2014 through 2043. The forecasts provided annual

and cumulative values for these four output parameters. DOE examines sensitivities in the NIA

by analyzing different efficiency scenarios, such as Roll-up and Shift.

DOE evaluated the national impacts of new and amended standards for ballasts by

comparing base-case projections with standards-case projections. The base-case projections

characterize energy use and consumer costs for each product class in the absence of new or

136amended energy conservation standards. DOE compared these projections with projections

characterizing the market for each product class if DOE adopted new or amended standards at

specific energy efficiency levels ( i.e. , the TSLs or standards cases) for that class. In

characterizing the base and standards cases, DOE considered historical shipments, the mix of

efficiencies sold in the absence of new standards, and how that mix may change over time.

Additional information about the NIA spreadsheet is in final rule TSD chapter 11.

Table V.6 summarizes the approach and data DOE used to derive the inputs to the NES

and NPV analyses for the April 2011 NOPR, as well as the changes to the analyses for the final

rule. A discussion of selected inputs and changes follows. See chapter 11 of the final rule TSD

for further details.

Table V.6. Approach and Data Used for National Energy Savings and Consumer Net Present Value Analyses Inputs NOPR Changes for the Final Rule Shipments Derived annual shipments from shipments model See Table V

. 7

Compliance Date of Standard 2014 No change

Annual Energy Consumption per Unit Established in the energy use analysis (NOPR TSD chapter 6) Energy use analysis updated using most recent available inputs Rebound Effect 1 % in commercial and industrial sectors, 8.5 % in residential sector No change

Electri city Price Forecast AEO2010 No change

Energy Site

- to

- Source Conversion Factor Used marginal conversion factors generated by NEMS

- BT; factors held constant after 2035 No change

Discount Rate 3% and 7% real No change Present Year 2011 No change

1371. Shipments

Product shipments are an important input to any estimate of the future impact of a

standard. To develop the shipments portion of the NIA spreadsheet, DOE used a three-step

process to: 1) estimate historical shipments; 2) calculate installed ballast stock; and 3) develop

annual shipment projections for the analysis period 2014

– 2043, Table V.7 summarizes the

approach and data DOE used to derive the inputs to the shipments analysis for the April 2011

NOPR and the changes DOE made for today’s final rule. A discussion of these inputs and

changes follows. For details on the shipments analysis, see chapter 10 of the final rule TSD.

Table V.7. Approach and Data Used for the Shipments Analysis Inputs NOPR Changes for the Final Rule

Historical Shipments Used historical shipments for 1990

– 2005 to develop shipments and stock projections for the analysis period; changed lifetime distribution and growth assumptions, mitigating oscillations in shipment projections No change

Ballast Stock Based projections on the shipments that survive up to a given date; assumed Weibull lifetime distribution No change

Gro wth Used 2010 AEO projections for floorspace growth Revised growth rate for residential
sector Base Case Scenarios Analyzed both existing technology and emerging technology scenarios Added dimming ballast penetration rate to the emerging technology scenario; revised efficiency apportionments for commercial sector ballasts operating 4

- foot MBP lamps Standards Case Scenarios Analyzed Shift and Roll

- up scenarios based on both existing and emerging technology cases No change

138a. Historical Shipments

For the April 2011 NOPR, DOE used U.S. Census Bureau Current Industrial Reports

(CIR) to estimate historical (1990

– 2005) shipments for each representative ballast type. The

census CIR data cover NEMA shipments for individual ballast designs ( e.g. , 2 -lamp F96T8), as

well as aggregated shipments for multiple designs to prevent disclosing data for individual

companies. For lower-volume ballast designs, the CIR withheld shipments data to avoid

disclosing individual company data.

For CIR reporting years for which specific shipments data are too aggregated or

unavailable, DOE estimated historical shipments using trends within the available data and/or

market trends identified in ballast manufacturer interviews, the 2009 Lamps Rule, and the 2000

Ballast Rule. DOE then adjusted these estimates to account for the volume of ballasts that nonNEMA companies import or manufacture. DOE received no comments on the April 2011 NOPR

regarding historical ballast shipments data and estimates. DOE also found no historical ballast

shipment data to validate its NOPR shipments analysis because neither NEMA nor its member

companies typically retain data of the vintage in question (1990

– 2005). DOE therefore

concluded that census data remain the best available data for estimating historical ballast

shipments and retained its approach for this final rule.

b. Ballast Stock Projections

In its shipments analysis for the April 2011 NOPR, DOE calculated the installed ballast

stock using historical shipments estimated from U.S. Census Bureau CIR data (1990

– 2005) and

projected shipments for future years. DOE estimated the installed stock during the analysis

139period by calculating how many ballasts will survive up to a given year based on a Weibull

lifetime distribution for each ballast type. DOE received no comments on the April 2011 NOPR

regarding its ballast stock projection method and retained this approach for this final rule.

c. Projected Shipments

By modeling ballast market segments ( i.e. , purchasing events) and applying lifetime

distribution, growth and emerging technologies penetration rate assumptions, and efficiency

scenarios, DOE developed annual shipment projections for the analysis period (2014

– 2043). The

following subsections address the lifetime, base-case market share apportionment, emerging

technology, market trend, and efficiency scenario issues that DOE considered in its shipments

analysis for the final rule.

i. Ballast Lifetime Assumptions

In its shipments analysis for the April 2011 NOPR, DOE retained the average ballast

physical lifetimes used in its preliminary analysis, and combined them with Weibull distributions

for lifetimes to model ballast failures and retrofits. DOE received no comments on the April

2011 NOPR regarding its assumed average ballast lifetimes and lifetime distributions and

retained this approach for this final rule.

ii. Base-Case Market Share Apportionments

When choosing lighting systems, consumers consider attributes such as lifetime,

efficiency, price, lumen output, rated wattage, and total system power. Therefore, within each

product class, DOE developed efficiency level market share apportionments to account for the

140mix of system attributes that consumers select in the base case. These market share

apportionments were used to estimate base case historical shipments and installed stock for each

ballast design.

DOE was not able to obtain detailed historical ballast shipment data to develop

percentage market shares for the analyzed ballast designs. Based on initial manufacturer

interviews, however, DOE was able to develop a general assumed market-share apportionment

using shipments of electronic ballasts for 4-foot T8 MBP systems. DOE then applied this general

apportionment to each product class in the base case, assigning 69 percent of shipments to the

baseline ballast design, and dividing the remaining 31 percent of shipments among the higher

efficiency designs

.

For the April 2011 NOPR, DOE received several comments regarding base case market

share apportionments and their effects on estimated energy savings and economic benefits

.
Universal questioned DOE assigning a majority market share to baseline ballast designs, noting

at least 80 percent of NEMA manufacturers’ current ballast shipments are classified as NEMA

Premium. (Universal, Public Meeting Transcript, No. 43 at p. 38 ; NEMA, No. 56 at p. 4 ) Philips

and Universal further contended that DOE’s baseline apportionments— including magnetic

ballast designs

— effectively underestimated the efficiency of the installed ballast stock and

overestimated the resulting energy savings and economic benefits of the proposed efficiency

standards. (Philips, Public Meeting Transcript, No. 43 at p. 64; Universal, Public Meeting

Transcript, No. 43 at p. 38)

141DOE agrees that the ballast market is shifting to higher efficiency designs, but notes that

its baseline representative ballasts (excluding ballasts operating two 8-foot T12 lamps, and fourlamp sign ballasts) are electronic designs. Therefore, less-efficient magnetic baseline designs did

not have a significant effect on DOE’s NIA results. However, DOE reviewed th e prevalence of

NEMA Premium products in its tested ballasts (including baseline products), and adjusted the

market share apportionments of higher efficiency level ballasts in the IS and RS, and PS product

classes accordingly. DOE could not verify NEMA ’s estimated 80 percent market share for higher

efficiency designs. Based on its review, however, DOE assigned a 64 percent market share to the

higher efficiency level designs and a 36 percent market share to baseline ballast designs in these

product classes in the base case for the final rule shipments analysis.

iii. Emerging Technologies Shipment Forecasts

In its previous analyses, DOE modeled separate existing and emerging technologies

shipment scenarios to characterize the uncertainty in ballast market penetration by emerging

solid-state lighting (SSL) technologies. The existing technologies scenario generally considers

only the market penetration of technologies that are mature in terms of price and efficiency,

largely excluding SSL. In the emerging technologies scenario, the shipments and installed stock

of ballasts ( e.g. , ballasts operating 4-foot MBP T8 lamps) decrease due to significant

replacement by SSL. This scenario effectively lowers the energy savings of new fluorescent

lamp ballast standards. DOE acknowledges both scenarios and the likelihood that actual results

will fall between them by presenting the two scenarios’ energy savings and economic effects as a

range.

142Consistent with the 2009 Lamps Rule and its current research, DOE assumed no SSL

penetration for residential linear fluorescent applications. DOE stated in the April 2011 NOPR

that residential energy codes will drive the market toward higher efficacy lighting systems, but

that the related market growth will be greater for compact fluorescent lamp (CFL)-based fixtures

than for 4-foot MBP fluorescent systems. As discussed in DOE’s SSL Multi Year Program Plan

(updated May 2011), the vast majority of residential sockets are dedicated to incandescent lamps,

49 for which screw-base compact fluorescent and SSL lamps are direct replacements. DOE’s

review of available residential fixture surveys confirms that linear fluorescent fixtures are

typically relegated to utility room, laundry, and some kitchen applications. A comparison of

recent California residential lighting data for 2005 and 2009 shows no significantly increased

installation of linear fluorescent systems, and DOE believes that residential consumers will

continue to opt for lower-first-cost fluorescent systems rather than installing more expensive SSL

replacements for linear fluorescent lamps and fixtures. DOE received no adverse comments to

the April 2011 NOPR for not including SSL penetration in its residential ballast shipments.

Given the limited residential applications for linear fluorescent systems, DOE retained this

approach for this final rule. Comment [bk4]: Change recommended by OIRA.

For the April 2011 NOPR, DOE received comments regarding how regulations requiring

use of dimming ballasts could affect future shipments of fixed-output ballasts. Commenters

referenced proposed regulations in California that would require controllable ballasts in non

residential applications. (ASAP, Public Meeting Transcript, No. 43 at p. 209; Lutron, Public

49 U.S. Department of Energy

– Office of Energy Efficiency and Renewable Energy. Solid-State Lighting Research and Development: Multi Year Program Plan. March 2011 (Updated May 2011). Washington, D.C. Available at http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/ssl_mypp2011_web.pdf.

143Meeting Transcript, No. 43 at pp. 207-208; Philips, Public Meeting Transcript, No. 43 at p. 179)

Philips further suggested that SSL and dimming ballasts in combination could largely eliminate

the fixed-output ballast market by 2040. (Philips, Public Meeting Transcript, No. 43 at p. 187)

As part of its 2013 Title 24 updates (effective in 2014), the state of California is

considering mandatory requirements for controllable light sources that could require dimming

50 ballasts for non-residential linear fluorescent systems. These proposed changes to Title 24

would build upon existing requirements for stepped lighting controls, requiring significantly

increased granularity of control at the individual fixture level. It is uncertain, however

, whether

these proposed changes to Title 24 will be enacted

. It is also not certain that other building

standards, such as the American Society of Heating, Refrigerating and Air-Conditioning

Engineers standard 90.1 (ASHRAE 90.1), would adopt the ballast controllability requirements

being considered in California. DOE projects that a significant number of fluorescent lighting

installations where dimming is not practical or possible (such as spaces without daylighting, or

where occupancy/vacancy sensing can extinguish lighting) will remain, thus maintaining demand

for fixed-output ballasts.

In its comments to the April 2011 NOPR, NEMA generally affirmed DOE’s shipment

projections, but asserted that DOE underestimated the current and future penetration of SSL in

the emerging technologies scenario. (NEMA, No. 47 at pp. 8-9) NEEA stated that the emerging

technologies forecast is the more likely of DOE’s two shipment scenarios, and that DOE should

50 California Energy Commission’s 2013 Building Energy Efficiency Standards Rulemaking Web page. Available at www.energy.ca.gov/title24/2013standards/prerulemaking/ . (Last accessed May 27, 2011.)

144increase the penetration of SSL and controllable lighting to lower the projected shipments of

fixed-output ballasts. (NEEA and NPCC, No. 44 at p. 7)

As described previously in this section, DOE developed existing and emerging

technologies shipment scenarios to investigate uncertainties in ballast market penetration by

other technologies. Although dimming ballasts are an existing technology, DOE considered them

an “emerging application” for fluorescent lighting applications and included dimming ballasts

with SSL products in its emerging technologies shipments scenar io for this final rule. As

discussed in chapter 10 of the final rule TSD, because SSL penetration has increased since the

inception of this rulemaking, DOE increased its estimated penetration rate earlier in the

shipments analysis period. DOE also increased the maximum penetration of 40.6 percent (for

SSL in the April 2011 NOPR) to a maximum penetration of 75 percent (for SSL and dimming

ballasts combined). This increased penetration resulted in decreased shipments for affected

ballast types for the lower boundary, base case shipments scenario.

iv. Anticipated Market Trends

DOE received comments on the April 2011 NOPR regarding its shipment projections for

residential ballasts. NEEA and NPCC questioned whether DOE overestimated residential ballast

shipments, based on the commenters’ understanding of ballast lifetimes and new construction

growth rates. (NEEA, Public Meeting Transcript, No. 43 at pp. 194-195; NPCC, Public Meeting

Transcript, No. 43 at p. 195) DOE calculates shipments of ballasts due to new construction,

retrofits and replacements for failed ballasts. After reviewing its assumptions for these three

purchasing events, DOE adjusted its estimated shipments downward by approximately 30

145percent for the final rule shipments analysis. See chapter 10 of the final rule TSD for additional

details

.

v. Efficiency Scenarios

Several of the inputs for determining NES ( e.g. , the annual energy consumption per unit)

and NPV ( e.g. , the total annual installed cost and the total annual operating cost savings) depend

on product efficiency.

For the April 2011 NOPR, DOE used two shipm ent efficiency scenarios: “Roll

- up” and

“Shift.” The Roll -up scenario is a standards case in which all product efficiencies in the base

case that do not meet the standard would roll up to meet the new standard level. Consumers in

the base case who purchase ballasts above the standard level are not affected as they are assumed

to continue to purchase the same base-case ballast or lamp-and-ballast system. The Roll-up

scenario characterizes consumers primarily driven by the first-cost of the analyzed products. In

contrast, the Shift scenario models a standards case in which the standard affects all base-case

consumer purchases (regardless of whether their base-case efficiency is below the standard). In

this scenario, any consumer may purchase a more efficient ballast, preserving the same

relationship to the baseline ballast efficiency. For example, if a consumer purchased a ballast one

efficiency level above the baseline, that consumer would do the same after a standard is imposed.

In this scenario, DOE assumed product efficiencies in the base case that do not meet the standard

would roll up to meet the new standard level, as in a roll-up scenario. However, product

efficiencies at or above the new standard level would shift to higher efficiency levels. As the

standard level increases, market share incrementally accumulates at the highest standard level

146because it represents max tech ( i.e. , moving beyond this efficiency level is not achievable with

today’s technology).

DOE received no comments on the April 2011 NOPR regarding its Roll-up and Shift

efficiency scenarios and retained this approach for the final rule shipments analysis.

2. Site- to -Source Energy Conversion

To estimate the national energy savings expected from appliance standards, DOE uses a

multiplicative factor to convert site energy consumption (at the home or commercial building)

into primary or source energy consumption (the energy required to convert and deliver the site

energy). These conversion factors account for the energy used at power plants to generate

electricity and losses in transmission and distribution. For electricity, the conversion factors vary

over time due to projected changes in generation sources ( i.e. , the power plant types projected to

provide electricity to the country). The factors that DOE developed are marginal values, which

represent the response of the system to an incremental decrease in consumption associated with

appliance standards.

For the April 2011 NOPR, DOE used annual site- to -source conversion factors based on

the version of NEMS that corresponds to AEO2010 , which provides energy forecasts through

2035. For 2036-2043, DOE used conversion factors that remain constant at the 2035 values.

Section 1802 of EPAct 2005 directed DOE to contract a study with the National

Academy of Science (NAS) to examine whether the goals of energy efficiency standards are best

147served by measurement of energy consumed, and efficiency improvements, at the actual pointof

-use or through the use of the full-fuel-cycle, beginning at the source of energy production

(Pub. L. No. 109- 58 (August 8, 2005)). NAS appointed a committee on “Point

- of -Use and Full

Fuel- Cycle Measurement Approaches to Energy Efficiency Standards” to conduct the stu dy,

which was completed in May 2009. The NAS committee defined full-fuel-cycle energy

consumption as including, in addition to site energy use, the following: energy consumed in the

extraction, processing, and transport of primary fuels such as coal, oil, and natural gas; energy

losses in thermal combustion in power generation plants; and energy losses in transmission and

51 distribution to homes and commercial buildings.

In evaluating the merits of using point- of -use and full-fuel-cycle measures, the NAS

c ommittee noted that DOE uses what the committee referred to as “extended site” energy

consumption to assess the impact of energy use on the economy, energy security, and

environmental quality. The extended site measure of energy consumption includes the energy

consumed during the generation, transmission, and distribution of electricity but, unlike the full

fuel-cycle measure, does not include the energy consumed in extracting, processing, and

transporting primary fuels. A majority of the NAS committee concluded that extended site

energy consumption understates the total energy consumed to make an appliance operational at

the site. As a result, the NAS committee recommended that DOE consider shifting its analytical

approach over time to use a full-fuel-cycle measure of energy consumption when assessing

national and environmental impacts, especially with respect to the calculation of greenhouse gas

51 The National Academies, Board on Energy and Environmental Systems, Letter to Dr. John Mizroch, Acting Assistant Secretary, U.S. DOE, Office of Energy Efficiency and Renewable Energy from James W. Dally, Chair, Committee on Point- of -Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards, May 15, 2009.

148emissions. The NAS committee also recommended that DOE provide more comprehensive

information to the public through labels and other means, such as an enhanced website. For those

appliances that use multiple fuels ( e.g. , water heaters), the NAS committee indicated that

measuring full-fuel-cycle energy consumption would provide a more complete picture of energy

consumed and permit comparisons across many different appliances, as well as an improved

assessment of impacts.

In response to the NAS recommendations, DOE issued, on August 20, 2010, a Notice of

Proposed Policy proposing to incorporate a full-fuel cycle analysis into the methods it uses to

estimate the likely impacts of energy conservation standards on energy use and emissions.

Specifically, DOE proposed to use full-fuel-cycle (FFC) measures of energy and GHG

emissions, rather than the primary (extended site) energy measures it currently uses.

Additionally, DOE proposed to work collaboratively with the FTC to make FFC energy and

GHG emissions data available to the public to enable consumers to make cross-class

comparisons. On October 7, 2010, DOE held an informal public meeting to discuss and receive

comments on its planned approach. The Notice, a transcript of the public meeting and all public

comments received by DOE are available at:

www.regulations.gov/search/Regs/home.html#docketDetail?R=EERE-2010- BT

- NOA -0028

.
Following the close of the public comment period, DOE issued a final policy statement on these

subjects and will take steps to begin implementing that policy in future rulemakings and other

activities. 76 FR 51281 (August 18 , 2011). The Statement of Policy is available at:

www.gpo.gov/fdsys/pkg/FR-2011- 08 -18/pdf/2011-21078.pdf

.

149G. Consumer Sub-Group Analysis

In analyzing the potential impact of new or amended standards on consumers, DOE

evaluates the impact on identifiable sub-groups of consumers ( e.g. , low-income households) that

a national standard may disproportionately affect. DOE received no comments regarding specific

sub -groups and, therefore, evaluated the same sub-groups addressed in the 2009 Lamps Rule,

assuming that consumers using GSFL would share similar characteristics with ballast consumers.

Specifically, DOE evaluated the following consumer sub-groups for the April 2011 NOPR: lowincome households; institutions of religious worship; and institutions that serve low-income

populations ( e.g. , small nonprofits). DOE received no comments on the April 2011 NOPR

regarding its choice of consumer sub-groups, and retained this approach for this final rule. The

final rule TSD chapter 12 presents the consumer subgroup analysis.

H. Manufacturer Impact Analysis

DOE performed an MIA to estimate the financial impact of new and amended energy

conservation standards on manufacturers of ballasts, and to calculate the impact of such

standards on employment and manufacturing capacity. The MIA has both quantitative and

qualitative aspects. The quantitative part of the MIA primarily relies on the GRIM, an industry

cash-flow model using inputs specific to this rulemaking. The key GRIM inputs are data on the

industry cost structure, product costs, shipments, and assumptions about markups and conversion

expenditures. The key output is the INPV. DOE used the GRIM to calculate cash flows using

standard accounting principles and to compare changes in INPV between a base case and various

TSLs (the standards cases). The difference in INPV between the base and standards cases

represents the financial impact of the new and amended standards on manufacturers. Different

150sets of shipment and markup assumptions (scenarios) will produce different results. The

qualitative part of the MIA addresses factors such as product characteristics, characteristics of

and impacts on particular sub-groups of firms, and important market and product trends. DOE

outlined its complete methodology for the MIA in the NOPR. 76 FR 20090, 20134 (April 11,

2011). Chapter 13 of the TSD outlines the complete MIA.

1. Product and Capital Conversion Costs

New and amended energy conservation standards will cause manufacturers to incur

conversion costs to bring their production facilities and product designs into compliance. For the

MIA, DOE classified these conversion costs into two major groups: (1) product conversion costs

an d (2) capital conversion costs. For the final rule, DOE converted the NOPR product and capital

conversion costs to 2010$ from 2009$ using the producer price index (PPI) for the relevant

industry. The PPI is disaggregated into each North American Industry Classification System

(NAICS) code. For fluorescent lamp ballasts, DOE updated the conversion costs using the

specific PPI index under NAICS code 335311

– “Electric power and spec ialty transformer

manufacturin g” and series ID PCU3353113353115

– “Fluorescent lamp ballasts.” DOE’s

estimates of the product and capital conversion costs for fluorescent lamp ballasts can be found

in section VII.B.2.a , of today’s final rule and in chapter 13 of the TSD.

a. Product Conversion Costs

Product conversion costs are investments in research, development, testing, marketing,

and other non-capitalized costs necessary to make product designs comply with the new or

amended energy conservation standard.DOE based its estimates of the product conversion costs

151that would be required to meet each TSL on information obtained from manufacturer interviews,

the engineering analysis, the NIA shipment analysis, and market information about the number

of models and stock-keeping units (SKUs) each major manufacturer supports. This methodology,

described in full in the April 2011 NOPR (76 FR 20090, 20136 (April 11, 2011)), centers on an

assessment of the number of models and SKUs manufacturers will need to upgrade to meet new

and amended standards. DOE applied a per-model and per-SKU cost to every product currently

offered by manufacturers that does not meet the analyzed standard levels.

Several stakeholders questioned this methodology, arguing that DOE’s assumption that

manufacturers would upgrade all models that do not currently meet existing standards leads to

overstated conversion cost estimates. In reality, manufacturers would not upgrade non-compliant

models in product categories where they already offer similar compliant models. (NEEA and

NPCC, No. 44 at pp. 7-8; CA Utilities, No. 45 at pp. 7-8) Similarly, NEEA and NPCC stated

that manufacturers may not upgrade all non-compliant product lines as they shift resources away

from fluorescent lighting toward emerging technologies such as solid-state lighting. (NEEA and

NPCC, No. 44 at p. 8)

In contrast, manufacturers argued that full product line upgrades would be necessary to

compete. GE explained that manufacturers must upgrade non-compliant models even in

categories in which compliant models currently exist because today’s high efficiency products

generally bundle additional premium features at a higher cost

. These premium features, such as

Type CC protection, cold temperature rating, case size, and lamp striation control, are detailed in

the April 2011 NOPR. 76 FR 20090, 20108-9 (April 11, 2011). To remain competitive,

152 Comment [bk5]: Change recommended by OIRA.manufacturers would need to offer compliant products stripped of these premium features to the

cost-conscious OEM channels. (GE, Public Meeting Transcript, No. 43 at p. 217) Philips

emphasized that manufacturers cannot simply ignore the ballast market by choosing not to make

the necessary investments to meet today’s standards because it represents an important part of

the lighting business. (Philips, Public Meeting Transcript, No. 43 at pp. 213-4)

Although DOE’s max tech efficiency levels do not preclude ballasts with premium

features, DOE agrees that competition in the OEM channel would force manufacturers to offer a

low-cost product at the new baseline standard level. The large fixture manufacturers that

co mpose the OEM channel are price-sensitive, and their large orders afford them substantial

buying power. Their business is valuable to the ballast industry because the manufacturers rely

on these high-volume orders to improve plant utilization and lower fixed costs per unit for all

models. As such, DOE do es not predict that large ballast manufacturers can afford to ignore the

52 demand for these commoditized products. DOE also finds it unreasonable to assume that

manufacturers would forego investment in the ballast market due to a shifting focus on emerging

technologies because ballast sales currently generate significant revenue for these companies.

For these reasons, DOE has not adjusted its methodology for determining the number of models

that would need to be upgraded in response to standards.

b. Capital Conversion Costs

Capital conversion costs are investments in property, plant, and equipment necessary to

adapt or change existing production facilities such that new product designs can be fabricated

52 In this final rule, we define ‘ commoditized ’ to mean that a large number of products are produced by many manufacturers, such that the products are differentiated only by price. Comment [bk6]: Change recommended by OIRA.

153and assembled. Estimates for capital conversion costs varied greatly from manufacturer to

manufacturer, as manufacturers anticipated different paths to compliance based on the

modernity, flexibility, and level of automation of the equipment already existing in their

factories. However, all manufacturers DOE interviewed indicated that capital costs would be

relatively moderate compared to the required engineering costs

. 76 FR 20090, 20136 (April 11,

2011).

2. Markup Scenarios

For the MIA, DOE modeled two standards-case markup scenarios to represent the

uncertainty regarding the potential impacts on prices and profitability for manufacturers

following the implementation of amended energy conservation standards: (1) a preservation of

operating profit markup scenario, and (2) a two-tier markup scenario. These scenarios lead to

different markups values, which, when applied to the inputted MPCs, result in varying revenue

and cash flow impacts.

The preservation of operating profit markup scenario assumes that manufacturers are able

to maintain the base-case total operating profit in absolute dollars in the standards case, despite

higher product costs and investment. DOE adjusted the manufacturer markups in the GRIM at

each TSL to yield approximately the same earnings before interest and taxes in the standards

case in the year after the compliance date of the new and amended standards as in the base case.

The preservation of operating profit markup scenario represents the upper bound of industry

profitability following amended energy conservation standards. Under this scenario, while

manufacturers are not able to yield additional operating profit from higher production costs and

154the investments required to comply with the new and amended energy conservation standard,

they are able to maintain the same operating profit in the standards case as in the base case.

DOE also modeled a lower bound profitability scenario with the two-tier markup

scenario. In this scenario, DOE assumed that the markup on fluorescent lamp ballasts varies

according to two efficiency tiers in both the base case and the standards case. DOE used

information from MIA interviews to estimate markups for fluorescent lamp ballasts under a twotier pricing strategy in the base case. In the standards case, DOE modeled the situation in which

portfolio reduction squeezes the margin of higher-efficiency products as they become the new

baseline, presumably high-volume products. 76 FR 20090, 20137 (April 11, 2011).

3. Other Key GRIM Inputs

Key inputs to the GRIM characterize the fluorescent lamp ballast industry cost structure,

investments, shipments, and markups. For today’s final rule, DOE made several updates to the

GRIM to reflect changes in these inputs. These updates do not represent changes in methodology

from the April 2011 NOPR. Specifically, DOE incorporated changes made in the engineering

analysis and NIA, including updates to the MPCs, shipment forecasts, and shipment efficiency

distributions. These updated inputs affected the values calculated for the conversion costs and

markups described above, as well as the INPV results presented in section VII.B.2.

4. Other Comments from Interested Parties

The following section discusses a number of other comments DOE received on the April

2011 NOPR MIA methodology.

155a. Fixture Redesigns for Ballast Can Size Changes

Several interested parties commented that new and amended standards could drive larger

ballast designs, which would result in product redesign and tooling costs for fixture

manufacturers because fixtures are built for a particular ballast can size. NEMA stated that

increasing efficiency by employing additional circuitry to reduce variation would drive larger

case sizes. (NEMA, No 47 at p. 9) At the same time, the market has trended over time toward the

use of smaller can sizes (from the standard can to the A-can and, most recently, from the A-can

to the N-can). Larger can sizes would reverse this trend and cost fixture manufacturers tens of

millions of dollars each, according to NEMA and Acuity Brands. Accordingly, these fixture

redesign costs should be included in DOE’s analysis. (NEMA, Public Meeting Transcript, No. 43

at pp. 33-4, 36-7; Acuity Brands, Public Meeting Transcript, No. 43 at pp. 171-2)

DOE recognizes that the fluorescent lamp ballast market has trended over time toward

the use of smaller can sizes. For today’s final rule, as discussed in section V.B.5.a, DOE is not

analyzing any efficiency levels that would eliminate manufacturers’ ability to meet standard

levels with the smaller N-cans. DOE has accounted for sources of variation and compliance

certification requirements, as described in section V.B.4, and does not project that ballasts will

grow in size in response to standards. As such, fixture manufacturers will not incur product

redesign and tooling costs to accommodate larger ballasts.

156b. Potential Benefits to Ballast Manufacturers

ASAP noted that energy conservation standards for fluorescent lamp ballasts could

accelerate the adoption of emerging technologies. Because ballast manufacturers often also offer

these emerging technologies and can typically command higher margins on these emerging

technology products, ballast manufacturers could be less affected by standards than estimated by

DOE. (ASAP, Public Meeting Transcript, No. 43 at pp. 209- 11)

As addressed in response to comments in the April 2011 NOPR (76 FR 20090, 20138

(April 11, 2011)), the potential exists for the market to increasingly migrate from traditional

fixed light output fluorescent lamp ballasts to alternate technologies such as LEDs and dimming

ballasts. DOE therefore models the emerging technologies shipment scenario as described in

section V.F.1.c and in chapter 10 of the TSD. This market shift to emerging technologies occurs

in the base case. That is, the shift is not standards-induced. DOE excludes the revenue from

substitute technologies earned by manufacturers who produce ballasts in the GRIM because the

revenue stream would be present in both the base case and the standards case, resulting in no

impact on the change in INPV.

c. Opportunity Cost of Investments

NEMA and Philips stated that the TSL proposed in the April 2011 NOPR (76 FR 20090,

20166 -9 (April 11, 2011)) would have a high opportunity cost due to the limited capital for

investment and R&D. Any investments incurred to meet amended ballast standards would reflect

foregone investments in emerging technologies such as solid state lighting and controls, and

reduced wattage lamp and ballast systems, which the industry believes offer both better prospects

157for market growth and greater potential for energy savings than traditional fixed-light-output

fluorescent lamp ballasts. (Philips, Public Meeting Transcript, No. 43 at pp. 212-3; NEMA,

Public Meeting Transcript, No. 43 at pp. 40-1; NEMA, No. 47 at pp. 9, 11) Specifically, NEMA

argued that the investments necessary to meet new and amended ballast standards would be

better spent developing new technologies that can save far more energy than the 2 to 3 percent

additional energy savings this standard would generate. (NEMA, No. 52 at p. 10) NEMA also

stated that the proposed rule provided no clear incentive for manufacturers to comply with

standards by making already highly efficient products even more efficient. (NEMA, No. 47 at p.

9)

DOE recognizes that there is an opportunity cost associated with any investment, and

agrees that manufacturers would need to spend capital to meet today ’s standard that they would

not have to spend in the base case. As a result, manufacturers must determine the extent to which

they will balance investment in the traditional ballast market with that in emerging technologies

or other ventures. DOE includes the product and capital conversion costs necessary to meet

today’s standard in its analysis.

d. Component Availability

OSI stated that there are currently long lead times for many electronic components. As

DOE standards push the fluorescent lamp ballast industry to higher efficiency components,

manufacturers will have limited choices in what components they are able to receive from

suppliers, causing longer product lead times and decreased product availability. (OSI, Public

Meeting Transcript, No. 43 at p. 6 5)

158DOE recognized this component shortage in the April 2011 NOPR (76 FR 20090, 20139

(April 11, 2011)), but DOE projects limited component availability to be a relatively short term

phenomenon arising from the capacity reduction that occurred in the recent recession and that

component suppliers will ultimately adjust. DOE addresses this issue again in full in section

VII.B.2.c of today’s notice.

e. Impact on Competition

NEMA stated that manufacturers may lose their ability to differentiate their products

because they will need to remove premium features to meet price pressure and proposed standard

levels. This would force all manufacturers to offer the same basic product. NEMA states that

DOE should ensure that manufacturers are able to offer products above the standard in order to

differentiate themselves. (NEMA, No. 47 at p. 9) NEEP, while agreeing that high efficiency

ballasts may be commoditized by this standard

, stat es that manufacturers will retain

opportunities for differentiation by focusing on dimming ballasts and controls. (NEEP, No. 49 at

pp. 3- 4)

DOE agrees that ballast manufacturers may not be able to maintain today’s margins after

standards become effective, particularly in the short run, as demonstrated by the markup

scenarios described in section V.H.2. DOE disagrees, however, that manufacturers will no longer

be able to differentiate themselves. For some minimally compliant products, DOE agrees with

manufacturers that price competition will play a large role in the market, as is currently the case.

Manufacturers may continue to differentiate in domains other than price

, including premium

159features such as Type CC protection, cold temperature rating, case size, and lamp striation

control . Because of this effort to differentiate, as discussed in the section V.H.1, DOE included Comment [bk7]: Change recommended by OIRA. costs associated with upgrading non-compliant products, even when a compliant product already

exists in the category. Therefore, DOE believes NEMA’s concerns are accounted for i n DOE’s

analysis.

NEMA stated that manufacturers may not be able to complete the redesigns needed to

meet the max tech levels proposed in the April 2011 NOPR (76 FR 20090 (April 11, 2011)).

(NEMA, No. 47 at p. 9) NEEP, however, believes that by setting ef ficiency levels such that a

select subset of existing NEMA Premium ballasts qualify at today’s standard levels , the market

would not be faced with a shortage of qualifying products and major shift in R&D resources.

(NEEP, No. 49 at p. 2)

At TSL 3A, the level promulgated in today’s final rule, DOE projects that 38 percent of

shipments already meet the standard. The reconciliation of the DOE and NEMA test data and

the substantial share of shipments at the proposed level indicate that the industry will be able to

meet market demand by the compliance date.

5. Manufacturer Interviews

DOE interviewed manufacturers representing more than 90 percent of fluorescent lamp

ballast sales. These interviews were in addition to those DOE conducted as part of the

engineering analysis. DOE outlined the key issues for the rulemaking for manufacturers in the

160NOPR. 76 FR 20090, 20139-40 (April 11, 2011). DOE considered the information received

during these interviews in the development of the NOPR and this final rule.

6. Sub-Group Impact Analysis

During the NOPR phase, DOE identified two sub -groups for a separate impact analysis

–
small manufacturers and sign ballast manufacturers. DOE describes the impacts on small

manufacturers in section VIII.B and the impacts on sign ballast manufacturers in section

VII.B.2.d.

I. Employment Impact Analysis

DOE considers employment impacts in the domestic economy as one factor in selecting a

standard. Employment impacts consist of direct and indirect impacts. Direct employment

impacts are any changes in the number of employees working for manufacturers of the appliance

products that are the subject of this rulemaking, their suppliers, and related service firms. The

MIA addresses the direct employment impacts that concern ballast manufacturers in section

VII.B.2.b. Indirect employment impacts are changes in employment within the larger economy

that occur due to the shift in expenditures and capital investment caused by the purchase and

operation of more efficient products, and are addressed in this section.

The indirect employment impacts of standards consist of the net jobs created or

eliminated in the national economy, outside of the manufacturing sector being regulated, due to:

(1) reduced spending on energy by end users; (2) reduced spending on new energy supplies by

the utility industry; (3) increased spending on new products to which the new standards apply;

161and (4) the effects of those three factors throughout the economy. DOE expects the net monetary

savings from standards to be redirected to other forms of economic activity, and expects these

shifts in spending and economic activity to affect the demand for labor in the short term.

One method for assessing the possible effects of such shifts in economic activity on the

demand for labor is to compare sector employment statistics developed by the Labor

Department’s Bureau of Labor Statistics (BLS). (Data on industry employment, hours, labor

compensation, value of production, and the implicit price deflator for output for these industries

are available upon request by calling the Division of Industry Productivity Studies (202- 691

-
5618) or by sending a request by e-mail to dipsweb@bls.gov . These data are also available at

www.bls.gov/news.release/prin1.nr0.htm .) The BLS regularly publishes its estimates of the

number of jobs per million dollars of economic activity in different sectors of the economy, as

well as the jobs created elsewhere in the economy by this same economic activity. Data from

BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly a nd

indirectly) than expenditures in other sectors of the economy. There are many reasons for these

differences, including wage differences and the fact that the utility sector is more capital

intensive and less labor intensive than other sectors. See Bureau of Economic Analysis, Regional

Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II),

Washington, DC., U.S. Department of Commerce, 1992.

Energy conservation standards have the effect of reducing consumer utility bills. Because

reduced consumer expenditures for energy likely lead to increased expenditures in other sectors

of the economy, the general effect of efficiency standards is to shift economic activity from a

162less labor-intensive sector ( i.e. , the utility sector) to more labor-intensive sectors ( e.g. , the retail

and manufacturing sectors). Thus, based on the BLS data alone, DOE’s analysis shows that net

national employment will increase due to shifts in economic activity resulting from new and

amended standards for ballasts.

In developing today’s adopted standards, DOE estimated indirect national employment

impacts using an input-output (I

– O) model of the U.S. economy called Impact of Sector Energy

Technologies (ImSET), version 3.1.1. ImSET is a spreadsheet model of the U.S. economy that

focuses on 187 sectors most relevant to industrial, commercial, and residential building energy

use. (Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy

Technologies (PNNL-18412 Pacific Northwest National Laboratory) (2009). Available at

www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf .) ImSET is a

special purpose version of the “U.S. Benchmark National Input

- Output” model, designed to

estimate the national employment and income effects of energy-saving technologies. The ImSET

software includes a computer-based I

– O model with structural coefficients to characterize

economic flows among the 187 sectors. ImSET’s national economic I– O structure is based on a

2002 U.S. benchmark table (Stewart, R.L., J.B. Stone, and M.L. Streitwieser , “ U.S. Benchmark

Input-Output Accounts, 2002 ,” Survey of Current Business (Oct. 20 07 )), specially aggregated to

the 187 sectors. DOE estimated changes in expenditures using the NIA spreadsheet. Using

ImSET, DOE estimated the net national, indirect-employment impacts on employment by sector

of the trial standard levels fo r ballasts.

163DOE notes that ImSET is not a general equilibrium forecasting model, and understands

the uncertainties involved in projecting employment impacts, especially changes in the later

4 years of the analysis. Because ImSET does not incorporate price changes, the employment

effects predicted by ImSET may over-estimate actual job impacts over the long run for this rule.

Because ImSET predicts small job impacts resulting from this rule

, regardless of these

uncertainties, the actual job impacts are likely to be negligible in the overall economy. DOE may

consider the use of other modeling approaches for examining long run employment impacts.

DOE also notes that the employment impacts estimated with ImSET for the entire

economy differ from the employment impacts in the lighting manufacturing sector estimated in

Chapter 13 using the Government Regulatory Impact Model (GRIM). The methodologies used

and the sectors analyzed in the ImSET and GRIM models are different.

DOE received two comments on the April 2011 NOPR, inquiring whether DOE’s

employment analysis accounted for effects on ballast manufacturer employment, and if sectorspecific results could be extracted from the ImSET model output. (Acuity Brands, Public

Meeting Transcript, No. 43 at p. 229; Philips, Public Meeting Transcript, No. 43 at p. 227) As

discussed previously in this section

, DOE’s employment analysis models national effects on

indirect employment (excluding ballast manufacturers) due to shifts in expenditures and capital

investment caused by the purchase and operation of more efficient appliances

. As previously

noted, the MIA addresses direct employment impacts on ballast manufacturers in section

VII.B.2.b. Comment [bk8]: Change re commended by OIRA.

164DOE notes that the indirect employment numbers generated by ImSET are an estimate of

the job impacts of the projected national energy and cost savings resulting from new or amended

standards. These calculated impacts assume that the 187 sectors in the ImSET model are

unchanged from the time that the I

– O parameters were estimated (last updated in 2008 using

year 2002 Economic Census data). As noted in the ImSET documentation, actual job creation

will depend on future labor market supply conditions and macroeconomic policy.

DOE reviewed current ImSET sectoral details and identified one economic sector that

corresponds with lighting product manufacturers, excluding lamp bulb and related parts (sector

S111, Lighting Fixture Manufacturing). While this sector could encompass some ballast

manufacturers, DOE notes that it is not exclusively representative of ballasts. Further, while

ImSET can produce gross product impacts (in dollars) by sector, it does not produce sectorspecific employment figures. Rather, ImSET characterizes economic flows among and

interactions between 187 sectors in the model. Producing sector-specific employment figures

would require DOE to artificially constrain its ImSET input data, which could reduce the

meaningfulness of the results. DOE therefore did not calculate sector S111 employment figures,

and retained its NOPR employment analysis approach for this final rule.

For more details on the employment impact analysis, see chapter 15 of the final rule

TSD.

165J. Utility Impact Analysis

The utility impact analysis includes estimates of the effects of the adopting new or

amended standards on the utility industry. For this analysis, DOE used the NEMS-BT model to

generate forecasts of electricity consumption, electricity generation by plant type, and electricity

generating capacity by plant type that would result from each TSL. The estimated impacts of a

standard are estimated to be the differences between values forecasted by NEMS-BT and the

values in the AEO2010 reference case.

In response to the April 2011 NOPR, NEEA, NPCC and NEEP commented that DOE did

not consider the avoided costs of power plant construction corresponding to the avoided

generation capacity from new or amended standards. By NEEA and NPCC’s estimates, the

present value cost of new generation capacity to supply the cumulative energy savings at TSL 3

would nearly equal DOE’s cumulative NPV at TSL 3 (which excludes avoided power plant and

infrastructure construction). NEEA and NPCC further suggested that DOE examine the

difference in the value of total electricity sales between the NEMS-BT reference case and

standards level cases, which could serve as a proxy for the economic value of the standard level

to all electricity consumers. (NPCC, Public Meeting Transcript, No. 43 at p. 223; NEEA and

NPCC, No. 44 at pp. 9-10) NEEP also commented that decreased demand is shown to drive

energy prices down, benefiting consumers in general. (NEEP, No. 49 at p. 4)

DOE acknowledges that the aggregate economic benefits from avoided construction of

new generating capacity and infrastructure are potentially large. However, there may be negative

effects on some of the actors involved in electricity supply, particularly power plant providers

166and fuel suppliers. There is also uncertainty about the extent to which the benefits for electricity

users from reduced electricity prices would be a transfer from actors involved in electricity

supply to electricity consumers. DOE also takes under advisement the guidance provided by the

Office of Management and Budget (OMB) to Federal agencies on identifying and measuring

benefits and costs in its regulatory analyses (OMB Circular A-4, section E, September 17, 2003).

Specifically, at page 38, Circular A-4 instructs that transfers should be excluded from the

estimates of the benefits and costs of a regulation. DOE applied this approach for the utility

impact analysis in the April 2011 NOPR, as well as in this final rule.

DOE is continuing to investigate the extent to which projected changes in electricity

prices that result from standards represent a net economic gain to the nation. In response to the

comments discussed in this section, DOE included the estimated effects of adopted standards on

electricity prices and the cumulative NPV of resulting savings in electricity expenditures in the

TSD. DOE also included in the TSD representative costs of avoided electricity generation

capacity by fuel type, although these costs are provided for illustrative purposes only. For more

details on the utility impact analysis, see chapter 14 of the final rule TSD.

K. Environmental Assessment

Pursuant to the National Environmental Policy Act of 1969 and the requirements of DOE

Order 451.1B: NEPA Compliance Program, DOE has prepared an environmental assessment

(EA) of the impacts of the new and amended standards for ballasts in this final rule, which it has

included as chapter 16 of the final rule TSD. DOE found that the environmental effects

associated with the standards for ballasts were not significant. Therefore, DOE is issuing a

167Finding of No Significant Impact (FONSI), pursuant to NEPA, the regulations of the Council on

Environmental Quality (40 CFR parts 1500 –1508), and DOE’s regulations for compliance with

NEPA (10 CFR part 1021). The FONSI is available in the docket for this rulemaking.

In the EA, DOE estimated the reduction in power sector emissions of CO 2 , NO x , and Hg

using the NEMS-BT computer model. In the EA, NEMS-BT is run similarly to the AEO NEMS,

except that ballast energy use is reduced by the amount of energy saved (by fuel type) due to

each TSL. The inputs of national energy savings come from the NIA spreadsheet model, while

the output is the forecasted physical emissions. The net benefit of each TSL in today’s final r ule

is the difference between the forecasted emissions estimated by NEMS-BT at each TSL and the

AEO2010 Reference Case. NEMS-BT tracks CO 2 emissions using a detailed module that

provides results with broad coverage of all sectors and inclusion of interactive effects.

Sulfur dioxide (SO 2 ) emissions from affected electricity generating units (EGUs) are

subject to nationwide and regional emissions cap-and-trade programs, and DOE has

preliminarily determined that these programs create uncertainty about the potential amended

standards’ impact on SO 2 emissions. Title IV of the Clean Air Act sets an annual emissions cap

on SO 2 for affected EGUs in the 48 contiguous States and the District of Columbia (D.C.). SO 2

emissions from 28 eastern states and D.C. are also limited under the Clean Air Interstate Rule

(CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based trading program.

Although CAIR was remanded to the Environmental Protection Agency (EPA) by the U.S. Court

of Appeals for the District of Columbia Circuit (D.C. Circuit) (see North Carolina v. EPA , 550

F.3d 1176 (D.C. Cir. 2008)), it remain ed in effect temporarily, consistent with the D.C. Circuit’s

168earlier opinion in North Carolina v. EPA , 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2010, EPA

issu ed the Transport Rule proposal, a replacement for CAIR (75 FR 45210 (Aug. 2, 2010)), and

on July 6, 2011 EPA issued the final Transport Rule, entitled the Cross-State Air Pollution Rule.

76 FR 48208 (August 8, 2011). ( www.epa.gov/crossstaterule/ ). Because the AEO2010 NEMS

used for today’s final rule assumes the implementation of CAIR, DOE has not been able to take

53 into account the effects of the Transport Rule for this rulemaking.

The attainment of emissions caps is typically flexible among EGUs and is enforced

through the use of emissions allowances and tradable permits. Under existing EPA regulations,

any excess SO 2 emissions allowances resulting from the lower electricity demand caused by the

imposition of an efficiency standard could be used to permit offsetting increases in SO 2
emissions by any regulated EGU. However, if the new and amended standards resulted in a

permanent increase in the quantity of unused emissions allowances, there would be an overall

reduction in SO 2 emissions from the standards. While there remains some uncertainty about the

ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap-and-trade

system, the NEMS-BT modeling system that DOE uses to forecast emissions reductions

currently indicates that no physical reductions in power sector emissions would occur for SO 2
.

As discussed above, the AEO2010 NEMS used for today’s final rule assumes the

implementation of CAIR, which established a cap on NO x emissions in 28 eastern states and the

District of Columbia. With CAIR in effect, the energy conservation standards for ballasts are

expected to have little or no physical effect on NO x emissions in those states covered by CAIR,

53 DOE notes that future iterations of the NEMS-BT model will incorporate any changes necessitated by issuance of the Transport Rule.

169for the same reasons that they may have little effect on SO 2 emissions. However, the adopted

standards would be expected to reduce NO x emissions in the 22 states not affected by CAIR. For

these 22 states, DOE used the NEMS-BT to estimate NO x emissions reductions from the

standards considered in today’s final rule.

Similar to emissions of SO 2 and NO x , future emissions of Hg would have been subject to

emissions caps. In May 2005, EPA issued the Clean Air Mercury Rule (CAMR). 70 FR 28606

(May 18, 2005). CAMR would have permanently capped emissions of Hg for new and existing

coal-fired power plants in all states by 2010. However, on February 8, 2008, the D.C. Circuit

issued a decision in New Jersey v. Environmental Protection Agency , 517 F.3d 574 (D.C. Cir.

2008), in which it vacated CAMR. EPA has decided to develop emissions standards for power

plants under Section 112 of the Clean Air Act, consistent with the DC Circuit’s opinion on

CAMR. See www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf . Pending EPA’s

forthcoming revisions to the rule, DOE is excluding CAMR from its environmental assessment.

In the absence of CAMR, a DOE standard would likely reduce Hg emissions and DOE used

NEMS-BT to estimate these reductions. However, DOE continues to review the impact of rules

that reduce energy consumption on Hg emissions, and may revise its assessment of Hg emission

reductions in future rulemakings.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

As part of the development of this final rule, DOE considered the estimated monetary

benefits likely to result from the reduced emissions of CO 2 and NO x that are expected to result

from each of the TSLs considered. In order to make this calculation similar to the calculation of

170the NPV of consumer benefit, DOE considered the reduced emissions expected to result over the

lifetime of products shipped in the forecast period for each TSL. This section summarizes the

basis for the monetary values used for each of these emissions and presents the values considered

in this rulemaking.

For today’s final rule, DOE is relying on a set of values for the SCC t hat was developed

by an interagency process. A summary of the basis for these values is provided in the following

sections, and a more detailed description of the methodologies used is provided as an appendix to

chapter 17 of the final rule TSD.

1. Social Cost of Carbon

Under section 1(b) of Executive Order 12866, agencies must, to the extent permitted by

law, “assess both the costs and the benefits of the intended regulation and, recognizing that some

costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned

determination that the benefits of the intended regulation justify its costs.” The purpose of the

SCC estimates presented here is to allow agencies to incorporate the monetized social benefits of

reducing CO 2 emissions into cost-benefit analyses of regulatory actions that have small, or

“marginal,” impacts on cumulative global emissions. The estimates are presented with an

acknowledgement of the many uncertainties involved and with a clear understanding that they

should be updated over time to reflect increasing knowledge of the science and economics of

climate impacts.

171As part of the interagency process that developed these SCC estimates, technical experts

from numerous agencies met on a regular basis to consider public comments, explore the

technical literature in relevant fields, and discuss key model inputs and assumptions. The main

objective of this process was to develop a range of SCC values using a defensible set of input

assumptions grounded in the existing scientific and economic literatures. In this way, key

uncertainties and model differences transparently and consistently inform the range of SCC

estimates used in the rulemaking process.

a. Monetizing Carbon Dioxide Emissions

The SCC is an estimate of the monetized damages associated with an incremental

increase in carbon emissions in a given year. It is intended to include (but is not limited to)

changes in net agricultural productivity, human health, property damages from increased flood

risk, and the value of ecosystem services. Estimates of the SCC are provided in dollars per metric

ton of CO 2
.

When attempting to assess the incremental economic impacts of CO 2 emissions, the

analyst faces a number of serious challenges. A recent report from the National Research

54 Council points out that any assessment will suffer from uncertainty, speculation, and lack of

information about (1) future emissions of greenhouse gases, (2) the effects of past and future

emissions on the climate system, (3) the impact of changes in climate on the physical and

biological environment, and (4) the translation of these environmental impacts into economic

damages. As a result, any effort to quantify and monetize the harms associated with climate

54 National Research Council. Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use

. National Academies Press: Washington, DC (2009).

172change will raise serious questions of science, economics, and ethics and should be viewed as

provisional.

Despite the serious limits of both quantification and monetization, SCC estimates can be

useful in estimating the social benefits of reducing CO 2 emissions. Consistent with the directive

in Executive Order 12866 quoted previously in this section, the purpose of the SCC estimates

presented here is to make it possible for Federal agencies to incorporate the social benefits from

reducing CO 2 emissions into cost-benefit analyses of regulatory actions that have small, or

“marginal,” impacts on cumulative global emissions. Most Federal regulatory actions can be

expected to have marginal impacts on global emissions.

For such policies, the agency can estimate the benefits from reduced (or costs from

increased) emissions in any future year by multiplying the change in emissions in that year by

the SCC value appropriate for that year. The net present value of the benefits can then be

calculated by multiplying each of these future benefits by an appropriate discount factor and

summing across all affected years. This approach assumes that the marginal damages from

increased emissions are constant for small departures from the baseline emissions path, an

approximation that is reasonable for policies that have effects on emissions that are small relative

to cumulative global CO 2 emissions. For policies that have a large (non-marginal) impact on

global cumulative emissions, there is a separate question of whether the SCC is an appropriate

to ol for calculating the benefits of reduced emissions. This concern is not applicable to this

notice, and DOE does not attempt to answer that question here.

173At the time of the preparation of this notice, the most recent interagency estimates of the

potential global benefits resulting from reduced CO 2 emissions in 2010, expressed in 2010$

, were $4.9, $22.3, $36.5, and $67.6 per metric ton avoided. For emissions reductions that occur

in later years, these values grow in real terms over time. Additionally, the interagency group

determined that a range of values from 7 percent to 23 percent should be used to adjust the global

55 SCC to calculate domestic effects, although preference is given to consideration of the global

benefits of reducing CO 2 emissions.

It is important to emphasize that the interagency process is committed to updating these

estimates as the science and economic understanding of climate change and its impacts on

society improves over time. Specifically, the interagency group has set a preliminary goal of

revisiting the SCC values within 2 years or at such time as substantially updated models become

available, and to continue to support research in this area. In the meantime, the interagency group

will continue to explore the issues raised by this analysis and consider public comments as part

of the ongoing interagency process.

b. Social Cost of Carbon Values Used in Past Regulatory Analyses

To date, economic analyses for Federal regulations have used a wide range of values to

estimate the benefits associated with reducing CO 2 emissions. In the final model year 2011

CAFE rule, the U.S. Department of Transportation (DOT) used both a “domestic” SCC value of

55 It is recognized that this calculation for domestic values is approximate, provisional, and highly speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global damages over time.

174$2 per ton of CO 2 and a “global” SCC value of $33 per ton of CO 2 for 2007 emission reductions

56 (in 2007$), increasing both values at 2.4 percent per year. DOT also included a sensitivity

analysis at $80 per ton of CO 2 . See Average Fuel Economy Standards Passenger Cars and Light

Trucks Model Year 2011 , 74 FR 14196 (March 30, 2009) (Final Rule); Final Environmental

Impact Statement Corporate Average Fuel Economy Standards, Passenger Cars and Light

Trucks, Model Years 2011-2015 at 3-90 (Oct. 2008) (Available at: www.nhtsa.gov/fuel

economy ). A domestic SCC value is meant to reflect the value of damages in the United States

resulting from a unit change in CO 2 emissions, while a global SCC value is meant to reflect the

value of damages worldwide.

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton of CO 2
(in 2006$) for 2011 emission reductions (with a range of $0 $14 for sensitivity analysis), also

increasing at 2.4 percent per year. See Average Fuel Economy Standards, Passenger Cars and

Light Trucks, Model Years 2011-2015 , 73 FR 24352 (May 2, 2008) (Proposed Rule); Draft

Environmental Impact Statement Corporate Average Fuel Economy Standards, Passenger Cars

and Light Trucks, Model Years 2011-2015 at 3-58 (June 2008) (Available at:

www.nhtsa.gov/fuel-economy ). A regulation for packaged terminal air conditioners and

packaged terminal heat pumps finalized by DOE in October of 2008 used a domestic SCC range

of $0 to $20 per ton CO 2 for 2007 emission reductions (in 2007$). 73 FR 58772, 58814 (Oct. 7,

2008) In addition, EPA’s 2008 Advance Notice of Proposed Rulemaking on Regulating

Greenhouse Gas Emissions Under the Clean Air Act identified what it described as “very

preliminary” SCC estimates subject to revision. 73 FR 44354 (July 30, 2008). EPA’s global

56 Throughout this section, references to tons of CO 2 refer to metric tons.

175mean values were $68 and $40 per ton CO 2 for discount rates of approximately 2 percent and 3

percent, respectively (in 2006$ for 2007 emissions).

In 2009, an interagency process was initiated to offer a preliminary assessment of how

best to quantify the benefits from reducing CO 2 emissions. To ensure consistency in how

benefits are evaluated across agencies, the Administration sought to develop a transparent and

defensible method, specifically designed for the rulemaking process, to quantify avoided climate

change damages from reduced CO 2 emissions. The interagency group did not undertake any

original analysis. Instead, it combined SCC estimates from the existing literature to use as

interim values until a more comprehensive analysis could be conducted. The outcome of the

preliminary assessment by the interagency group was a set of five interim values: global SCC

estimates for 2007 (in 2006$) of $55, $33, $19, $10, and $5 per ton of CO 2 . These interim values

represent the first sustained interagency effort within the U.S. government to develop an SCC for

use in regulatory analysis. The results of this preliminary effort were presented in several

proposed and final rules and were offered for public comment in connection with proposed rules,

including the joint EPA-DOT fuel economy and CO 2 tailpipe emission proposed rules.

c. Current Approach and Key Assumptions

Since the release of the interim values, the interagency group reconvened on a regular

basis to generate improved SCC estimates, which were considered for this final rule.

Specifically, the group considered public comments and further explored the technical literature

in relevant fields. The interagency group relied on three integrated assessment models commonly

17657 used to estimate the SCC: the FUND, DICE, and PAGE models. These models are frequently

cited in the peer-reviewed literature and were used in the last assessment of the

Intergovernmental Panel on Climate Change. Each model was given equal weight in the SCC

values that were developed.

Each model takes a slightly different approach to model how changes in emissions result

in changes in economic damages. A key objective of the interagency process was to enable a

consistent exploration of the three models while respecting the different approaches to

quantifying damages taken by the key modelers in the field. An extensive review of the literature

was conducted to select three sets of input parameters for these models: climate sensitivity,

socio-economic and emissions trajectories, and discount rates. A probability distribution for

climate sensitivity was specified as an input into all three models. In addition, the interagency

group used a range of scenarios for the socio-economic parameters and a range of values for the

disco unt rate. All other model features were left unchanged, relying on the model developers’

best estimates and judgments.

The interagency group selected four SCC values for use in regulatory analyses. Three

values are based on the average SCC from three integrated assessment models, at discount rates

th of 2.5, 3, and 5 percent. The fourth value, which represents the 95 percentile SCC estimate

across all three models at a 3-percent discount rate, is included to represent higher-than-expected

impacts from temperature change further out in the tails of the SCC distribution. For emissions

57 The models are described in appendix 16-A of the final rule TSD.

177(or emission reductions) that occur in later years, these values grow in real terms over time, as

depicted in Table V.8.

Table V.8 Social Cost of CO2, 2010

– 2050 (in 2007 dollars per metric ton) Discount Rate
5% 3% 2.5% 3% Avg Avg Avg 95th
2010 4.7 21.4 35.1 64.9
2015 5.7 23.8 38.4 72.8
2020 6.8 26.3 41.7 80.7
2025 8.2 29.6 45.9 90.4
2030 9.7 32.8 50.0 100.0
2035 11.2 36.0 54.2 109.7
2040 12.7 39.2 58.4 119.3
2045 14.2 42.1 61.7 127.8
2050 15.7 44.9 65.0 136.2

It is important to recognize that a number of key uncertainties remain, and that current

SCC estimates should be treated as provisional and revisable since they will evolve with

improved scientific and economic understanding. The interagency group also recognizes that the

existing models are imperfect and incomplete. As the National Research Council report

mentioned in section V.L.1.a points out, there is tension between the goal of producing

quantified estimates of the economic damages from an incremental ton of carbon and the limits

of existing efforts to model these effects. There are a number of concerns and problems that

should be addressed by the research community, including research programs housed in many of

the Federal agencies participating in the interagency process to estimate the SCC.

DOE recognizes the uncertainties embedded in the estimates of the SCC used for costbenefit analyses. As such, DOE and others in the U.S. Government intend to periodically review

178and reconsider those estimates to reflect increasing knowledge of the science and economics of

climate impacts, as well as improvements in modeling. In this context, statements recognizing

the limitations of the analysis and calling for further research take on exceptional significance.

In summary, in considering the potential global benefits resulting from reduced CO 2
emissions, DOE used the most recent values identified by the interagency process, adjusted to

2010$ using the GDP price deflator. For each of the four cases specified, the values used for

emissions 2010 were $4.9, $22.3, $36.5, and $67.6 per metric ton avoided (values expressed in

58 2010$ ). To monetize the CO 2 emissions reductions expected to result from new and amended

standards for ballast s, DOE used the values identified in Table A1 of the “Social Cost of Carbon

for Regulatory Impact Analysis Under Executive Order 12866,” which is reprinted in appendix

17A of the final rule TSD, appropriately adjusted to 2010$

. To calculate a present value of the

stream of monetary values, DOE discounted the values in each of the four cases using the

specific discount rate that had been used to obtain the SCC values in each case.

2. Valuation of Other Emissions Reductions

DOE investigated the potential monetary benefit of reduced NO x emissions from the

TSLs it considered. As noted in the previous section, DOE has taken into account how new or

amended energy conservation standards would reduce NO x emissions in those 22 states that are

not affected by the CAIR. DOE estimated the monetized value of NO x emissions reductions

resulting from the standard levels considered for today’s final rule based on environmental

damage estimates found in the relevant scientific literature. Available estimates suggest a very

58 Table A1 presents SCC values through 2050. For DOE’s calculation, it derived values after 2050 using the 3

- percent per year escalation rate used by the interagency group.

179wide range of monetary values, ranging from $370 per ton to $3,800 per ton of NO x from

stationary sources, measured in 2001$ (equivalent to a range of $450 to $4,623 per ton in

59 2010$ ). In accordance with guidance from the U.S. Office of Management and Budget (OMB),

DOE conducted two calculations of the monetary benefits derived using each of the economic

values used for NO x , one using a real discount rate of 3 percent and another using a real discount

60 rate of 7 percent.

DOE is aware of multiple agency efforts to determine the appropriate range of values

used in evaluating the potential economic benefits of reduced Hg emissions. DOE has decided to

await further guidance regarding consistent valuation and reporting of Hg emissions before it

once again monetizes Hg emissions in its rulemakings.

VI. Other Issues for Discussion

A. Proposed Standard Levels in April 2011 NOPR

In the April 2011 NOPR, DOE proposed to adopt the max tech level, which represented

the highest level that was technologically feasible for a sufficient diversity of products (spanning

several ballast factors, numbers of lamps per ballast, and types of lamps operated)

. DOE received

several comments supporting the proposed standard levels. NEEP commented that assuming the

test data discrepancy between DOE’s and NEMA’s data is resolved, the proposed standards

would greatly benefit the Northeast region of the United States where energy prices are typically

59 For additional information, refer to U.S. Office of Management and Budget, Office of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities , Washington, DC.
60 OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).

180higher than the rest of the country, increasing the magnitude of life cycle cost savings for those

consumers. They also observed that locking in strong efficiency levels for ballasts would

complement the strong fluorescent lamp standards that are set to take effect on July 14, 2012.

NEEP added that the NOPR proposal would help the Northeast region meet its energy savings

and emission reduction goals including those set forward in Massachusetts’ Global Warming

Solutions Act of 2008. (NEEP, No. 49 at pp. 2- 4)

EEI also supported the proposed standards and agreed they would be cost effective for

the vast majority of commercial consumers based on the analysis and data put forward in the

April 2011 NOPR. (EEI, No. 48 at p. 1)

In addition to the above feedback, DOE also received several comments that disagreed

with the proposed standard levels. These comments are discussed in more detail in the following

paragraphs

.

NEMA disagreed with DOE’s proposal to adopt the max tech efficiency lev el s. NEMA

stated that, even when using DOE data, very few products met the proposed minimum BLE

requirements. For example, only one residential, T5SO, and T5HO ballast met DOE’s proposed

standard levels. NEMA commented that the DOE is therefore using only one product to develop

a rule. (NEMA, Public Meeting Transcript, No. 43 at p. 29- 32) NEMA analyzed its own dataset

and suggested an alternative level that allowed the majority of manufacturers’ NEMA Premium

products, which represent their most efficient product offerings. NEMA noted that although it is

not shown in the submitted data, several products they manufacture are not NEMA Premium

181products and therefore would not meet their proposal. At a minimum, NEMA requested that two

manufacturers’ complete prod uct lines be able to meet the standard levels. NEMA also added

that they would support a proposal that does not create limited availability, disruption in the

market, or extreme R&D redesign costs. (NEMA, Public Meeting Transcript, No. 43 at p. 41-5;

NEMA, No. 47 at p. 6)

ASAP disagreed with NEMA’s recommendation that all manufacturers’ high efficiency

products should meet the highest level. ASAP noted that based on the DOE data, there were two

products that were compliant in each class. ASAP therefore approved of DOE’s decision to

adopt the max tech level. (ASAP, Public Meeting Transcript, No. 43 at p. 50-1; ASAP, No. 46 at

p. 1) NEEP agreed and supported the result that only a subset of NEMA Premium products met

the proposed standard. (NEEP, No. 49 at p. 1-2) CA Utilities also agreed that all products with a

NEMA Premium designation should not meet the proposed standard because NEMA Premium

covers a range of efficiency with some ballasts only meeting TSL1 or TSL2 as analyzed in the

April 2011 NOPR. They noted that they reviewed the data and found that there is at least one

product for each specific utility that meets the standard, though all manufacturers may not have

an offering for each utility. (CA Utilities, Public Meeting Transcript, No. 43 at p. 62-3; CA

Utilities, No. 45 at p. 4 ; CA Utilities, No. 58 at p. 3)

In response to the August 2011 NODA, NEMA recommended adopting lower efficiency

levels for several of the product classes. NEMA recommended adopting EL2 instead of EL3 for

the IS/RS and PS product classes because the incremental cost of product redesign at EL3 is not

outweighed by the incremental energy savings between EL2 and EL3. NEMA added that at EL2,

182manufacturers would focus on retiring non-compliant products and improving existing product

lines rather than redesigning a large number of models. (NEMA, No. 56 at p. 3)

For the same reasons, NEMA recommended adopting EL2 for the 8-foot HO IS/RS

product class. They noted that the energy savings at EL2 are similar to those achieved at EL3

(the level proposed in the April 2011 NOPR), but EL3 imposes much greater costs on

manufacturers. (NEMA, No. 56 at p. 3)

Finally, NEMA recommend ed EL1 as the standard level for residential ballasts because

linear fluorescent technology is more efficient and cost-effective than other traditional

technologies and therefore it does not make sense to increase the cost burden on this pricesensitive market . ( NEMA, No. 47 at p. 4 ; NEMA, No. 56 at p. 3) EEI also commented on

residential ballasts, stating that although they generally agreed with the proposed standard levels

,
they were concern ed about the impacts of the standards on some residential consumers. EEI

noted that according to the NOPR proposal, relative to the T8 baseline, 100 percent of consumers

have increased life-cycle costs. 76 FR 20090, 20146 (April 11, 2011). (EEI, No. 48 at p. 2)

DOE determines efficiency levels as described in section V.B.5, and then assesses the

impacts, including those on manufacturers and industry competition. DOE acknowledges that

conversion costs increase at higher efficiency levels, but also notes that higher levels result in

increased energy savings and NPV for the nation and increased LCC savings for consumers.

Although each efficiency level may not allow a full product line from every manufacturer, DOE

183has concluded that, for the levels it is adopting in this final rule, the benefits outweigh the

burdens. See section VII.C.2 for more details.

B. Universal versus Dedicated Input Voltage

NEMA also expressed concern that the proposed standards may eliminate universal

voltage ballasts f ro m the market. NEMA commented that although dedicated voltage ballasts are

more efficient, consumers demand universal voltage instead of dedicated voltage products.

NEMA stated that manufacturers may need to shift back to the more efficient dedicated voltage

products to meet the proposed standards. This shift away from universal voltage would go

against industry and consumer demand. (NEMA, Public Meeting Transcript, No. 43 at p. 36)

NEEA and NPCC commented that their data assessment strongly suggested ballast efficiency

does not vary consistently by input voltage, and that universal voltage ballasts can be as efficient

as, or more efficient than, fixed input voltage ballasts in any individual product class and utility

category. (NEEA and NPCC, No. 44 at p. 3) CA Utilities also stated that based on experience

and review of DOE’s test data , they found no indication that universal voltage ballasts are

consistently less efficient than dedicated voltage ballasts and that therefore universal and

dedicated voltage ballasts should be held to the same standard levels. (NEMA, No. 56 at p. 3;

CA Utilities, No. 45 at p. 6)

DOE agrees with the CA Utilities that test data shows universal voltage ballasts to be as

efficient or more efficient than dedicated input voltage ballasts. DOE also recognizes that there is

significant market demand for universal voltage fluorescent lamp ballasts. In both the April 2011

NOPR and this final rule, DOE’s max tech efficiency levels are met by universal voltage

184ballasts. For the IS/RS product class, 80 percent (37 out of 46) of ballasts that meet the proposed

standard are universal voltage ballasts; for the PS product class, over 95 percent (20 out of 21)

are universal voltage ballasts. Therefore, DOE does not believe the final rule prohibits the

manufacture and sale of universal voltage products.

C. Implementation of Adopted Standard Levels

In the April 2011 NOPR, DOE proposed that standards for all covered ballasts require

compliance three years following publication of the final rule in the Federal Register . P. R. China

noted that, for several product classes, DOE proposed increasing efficiency requirements by a

large percentage and that adapting to the proposed standards could create a large burden on

manufacturers. P.R. China suggested that DOE gradually phase in standards, transitioning from

the lowest considered efficiency level through the higher efficiency levels to reach the proposed

standard. P.R. China stated that this approach is internationally accepted and would ease the

initial burden placed on manufacturers. (P.R. China, No. 51 at p. 3)

DOE acknowledges that for certain ballast types the standards adopted represent a large

increase in efficiency relative to existing standards or the analyzed baseline. However, as

described in section VII.C.2 , DOE analyzed the burden on manufacturers pursuant to 42 U.S.C.

6295(o) and determined that it was outweighed by the benefits of the rule to consumers and the

nation.

185VII. Analytical Results and Conclusions

A. Trial Standard Levels

DOE analyzed the benefits and burdens of the TSLs developed for today’s final rule.

Table VII.1 presents the trial standard levels and the corresponding product class efficiency

levels for all product classes. See the engineering analysis in section V.B.5 of this final rule for a

more detailed discussion of the efficiency levels.

Table VII.1 Trial Standard Levels Product Class TSL 1 TSL 2 TSL 3A TSL 3B IS and RS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps EL1 EL2 EL3 EL3

PS ballasts (not classified as residential) that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 4

- foot MiniBP SO lamps 4

- foot MiniBP HO lamps EL1 EL2 EL3 EL3

IS and RS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps EL1 EL2 EL2 EL3

PS ballasts ( not classified as sign ballasts) that operate : 8

- foot HO lamps EL1 EL2 EL2 EL3

Sign b allasts that operate : 8

- foot HO lamps EL1 EL1 EL1 EL1
IS and RS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps EL1 EL1 EL1 EL2

PS residential ballasts that operate : 4

- foot MBP lamps 2

- foot U

- shaped lamps EL1 EL1 EL1 EL2

186In this section, DOE presents the analytical results for the TSLs of the product classes

that DOE analyzed directly (the “representative product classes”). DOE scaled the standards for

these representative product classes to create standards for other product classes that were not

directly analyzed (the 8-foot HO PS and residential PS product classes), as set forth in chapter 5

of the final rule TSD.

TSL 1, which would set energy conservation standards at EL1 for all product classes,

would eliminate the majority of currently available 4-foot MBP T12 RS (commercial and

residential), low-efficiency 4-foot MBP T8 PS, magnetic 8-foot HO, and magnetic sign ballasts.

Based on these impacts, TSL 1 would likely cause a migration from 4-foot MBP T12 RS ballasts

(both commercial and residential) to 4-foot MBP T8 IS ballasts. TSL 1 also prevents inefficient

T5 standard output and high output ballasts from becoming prevalent in future years. DOE

would not anticipate any impact of TSL 1 on consumers of 8-foot slimline ballasts.

TSL 2 would establish energy conservation standards at EL2 for the IS/RS, PS, and 8

-
foot HO IS/RS product classes. This level would likely eliminate low efficiency two-lamp 4-foot

MBP T8 IS commercial ballasts and the least efficient T12 8-foot slimline ballasts, causing a

migration toward high efficiency two lamp 4-foot MBP T8 IS ballasts and 8-foot T8 slimline

ballasts. DOE does not anticipate any impact of TSL 2 on four-lamp 4-foot MBP T8 IS ballast

consumers. For PS ballasts, high-efficiency 4-foot MBP T8 ballasts and high-efficiency T5

standard output and high output ballasts are required at TSL 2. For the 8-foot HO IS/RS product

class, this level would likely result in the elimination of the majority of current T12 electronic

ballasts, but can be met with T8 electronic ballasts. As with TSL 1, TSL 2 would continue to use

187EL1 for the residential IS/RS product class, eliminating currently available 4-foot MBP T12 RS

ballasts, but allowing higher efficiency T8 residential ballasts. In addition, the sign ballast

efficiency level remains unchanged from TSL1.

TSL 3A would establish energy conservation standards at the maximum technologically

feasible level for all product classes except for residential and 8-foot HO IS/RS product classes.

As with TSL 2, the 8-foot HO IS/RS product class at TSL 3A results in the elimination of current

T12 electronic ballasts, but can be met with T8 electronic ballasts. Consistent with TSLs 1 and 2,

TSL 3A also requires EL1 for the residential IS/RS product class. This TSL represents the most

stringent efficiency requirements where a positive LCC savings for each representative product

class is maintained.

TSL 3B represents the maximum technologically feasible level for all product classes.

This level would establish energy conservation standards at EL1 for sign ballasts, EL2 for

residential IS/RS product classes, and EL3 for the commercial IS/RS and PS, and 8-foot HO

IS/RS product classes. TSL 3B represents the highest EL analyzed in all representative product

classes and is the max tech TSL. Ballasts that meet TSL 3B represent the most efficient models

tested by DOE in their respective representative product classes.

188B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consume rs

a. Life-Cycle Cost and Payback Period

Consumers affected by new or amended standards usually experience higher purchase

prices and lower operating costs. Generally, these effects on individual consumers are best

summarized by changes in LCCs and by the payback period. DOE calculated the LCC and PBP

values for the potential standard levels considered in this rulemaking to provide key inputs for

each TSL. These values are reported by product class in Table VII. 12 through Table VII. 15

.
Each table includes the average total LCC and the average LCC savings, as well as the fraction

of product consumers for which the LCC will either decrease (net benefit), or increase (net cost)

relative to the baseline case. In limited cases, a more efficient ( i.e. , higher BLE) ballast will have

a higher total LCC and lower LCC savings than a less efficient ballast ( e.g. , EL3 versus EL2 in

Table VII.9). This is because the higher-EL ballast has a higher BF and system input power,

resulting in higher operating costs than for the lower-EL ballast. The last column in each table

contains the median PBPs for the consumer purchasing a design compliant with the TSL.

Negative PBP values indicate a reduction of both operating costs and installed costs ( i.e. , there is

no purchase price increment for the consumer to recover). Entries of “N/A” indicate standard

levels that do not reduce operating costs, which prevents the consumer from recovering the

increased purchase cost. This scenario did not occur at any of the standard levels adopted by

DOE in today’s final rule.

The results for each TSL are presented relative to the energy use distribution in the base

case (no amended standards), based on energy consumption under conditions of actual product

189use. The rebuttable presumption PBP is based on test values under conditions prescribed by the

DOE test procedure, as required by EPCA. (42 U.S.C. 6295(o)(2)(B)(iii))

Table VII.2 Product Class 1

— IS and RS Ballasts That Operate Two 4-Foot MBP Lamps (Commercial, T12 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period*
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

Baseline 64 247 311

- - - - - - - - 1 1 57 225 282 29 0 100

- 3.35

2 2 59 218 277 34 0 100

- 1.66
3A, 3B 3 60 214 274 37 0 100

- 1.30

Event II: New Construction / Renovation

Baseline 67 247 314

- - - - - - - - 1 1 59 222 281 32 0 100

- 2.97

2 2 62 213 275 39 0 100

- 1.43
3A, 3B 3 62 211 273 40 0 100

- 1.19

* Negative PBP values indicate standards that reduce operating costs and installed costs.

190Table VII.3

. Product Class 1

— ISand RS Ballasts That Operate Two 4-Foot MBP Lamps (Commercial, T8 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

1 Baseline / 1 56 225 281

- - - - - - - - 2 2 59 218 277 5 0 100 3.62
3A, 3B 3 59 214 273 8 0 100 2.86

Event II: New Construction / Renovation

1 Baseline / 1 58 225 283

- - - - - - - - 2 2 61 216 277 7 0 100 2.76
3A, 3B 3 62 214 275 8 0 100 2.74

191Table VII.4 Product Class 1

— IS and RS Ballasts That Operate Four 4-Foot MBP Lamps: LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement
1, 2 Baseline / 2 78 412 490

- - - - - - - - 3A, 3B 3 81 403 484 7 0 100 2.65

Event II: New Construction / Renovation
1, 2 Baseline / 2 81 412 493

- - - - - - - - 3A, 3B 3 83 406 490 3 0 100 4.43

Table VII.5

. Product Class 1

— IS and RS Ballasts That Operate Two 8-Foot Slimline Lamps (T12 Baseline): LCC and PBP Results

Trial Standar d Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period* Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

1 Baseline / 1 90 457 547

- - - - - - - - 2 2 90 432 521 26 0 100

- 0.12
3A, 3B 3 90 425 514 33 0 100 0.01

Event II: New Construction / Renovation

1 Baseline / 1 92 457 549

- - - - - - - - 2 2 92 440 532 17 0 100

- 0.17
3A, 3B 3 92 435 527 22 0 100 0.01
* Negative PBP values indicate standards that reduce operating costs and installed costs.

192Table VII.6

. Product Class 1

— IS and RS Ballasts That Operate Two 8-Foot Slimline Lamps (T8 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement
1, 2 Baseline /2 90 432 522

- - - - - - - - 3A, 3B 3 91 425 515 7 0 100 0.46

Event II: New Construction / Renovation
1, 2 Baseline /2 93 432 524

- - - - - - - - 3A, 3B 3 93 426 519 5 0 100 0.61

Table VII.7

. Product Class 2

— PS Ballasts That Operate Two 4-Foot MBP Lamps: LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Event I: Replacement

Baseline 59 205 263

- - - - - - - - 1, 2 2 60 191 251 12 0 100 1.09
3A, 3B 3 60 188 249 15 0 100 1.25

Event II: New Construction / Renovation

Baseline 61 205 266

- - - - - - - - 1, 2 2 62 191 253 13 0 100 1.09
3A, 3B 3 63 189 252 14 0 100 1.26

193Table VII.8

. Product Class 2

— PSBallasts That Operate Four 4-Foot MBP Lamps: LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

Baseline 77 375 452

- - - - - - - - 1 1 81 373 454

- 2 100 0 20.52
2, 3A,

3B 3 83 363 446 6 1 99 6.00

Event II: New Construction / Renovation

Baseline 79 375 454

- - - - - - - - 1 1 83 342 425 29 0 100 1.43
2, 3A,

3B 3 85 334 419 35 0 100 1.76

194Table VII.9

. Product Class 2

— PSBallasts That Operate Two 4-Foot MiniBP SO Lamps: LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

Baseline 64 268 332

- - - - - - - - 1 1 64 251 315 18 0 100 0.05

2 2 66 240 306 27 0 100 0.55
3A, 3B 3 70 252 322 10 0 100 3.82

Event II: New Construction / Renovation

Baseline 66 268 335

- - - - - - - - 1 1 67 251 317 18 0 100 0.05

2 2 68 248 316 18 0 100 0.78
3A, 3B 3 73 242 315 19 0 100 2.41

195Table VII. 10

. Product Class 2

— PSBallasts That Operate Two 4-Foot MiniBP HO Lamps: LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

Baseline 64 357 421

- - - - - - - - 1 1 68 326 395 26 0 100 1.05

2 2 71 318 389 32 0 100 1.40
3A, 3B 3 74 319 393 28 0 100 2.03

Event II: New Construction / Renovation

Baseline 67 357 423

- - - - - - - - 1 1 71 326 397 26 0 100 1.05

2 2 74 323 397 26 0 100 1.63
3A, 3B 3 77 321 397 26 0 100 2.13

196Table VII. 11

. Product Class 3

— ISand RS Ballasts That Operate Two 8-Foot HO Lamps (T12 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period* Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

Baseline 116 631 747

- - - - - - - - 1 1 111 571 682 65 0 100

- 0.66
2, 3A 2 97 420 517 230 0 100

- 0.69

3B 3 101 413 514 233 0 100

- 0.53

Event II: New Construction / Renovation

Baseline 119 631 750

- - - - - - - - 1 1 114 590 704 46 0 100

- 0.98
2, 3A 2 99 517 616 134 0 100

- 1.26

3B 3 103 513 616 134 0 100

- 0.97

* Negative PBP values indicate standards that reduce operating costs and installed costs.

197Table VII. 12

. Product Class 3

— IS and RS Ballasts That Operate Two 8-Foot HO Lamps (T8 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement
1, 2, 3A Baseline / 2 94 420 514

- - - - - - - -

3B 3 98 413 511 3 3 97 4.57

Event II: New Construction / Renovation
1, 2, 3A Baseline / 2 96 420 517

- - - - - - - -

3B 3 100 417 517

- 1 84 16 9.50

Table VII. 13

. Product Class 5

— Sign Ballasts That Operate Four 8-Foot HO Lamps: LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period* Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit
Event I: Replacement

Baseline 164 1,483 1,646

- - - - - - - - 1, 2, 3A,

3B 1 157 1,086 1,244 403 0 100

- 0.16

Event II: New Construction / Renovation

Baseline 166 1,483 1,649

- - - - - - - - 1, 2, 3A,

3B 1 160 1,239 1,398 251 0 100

- 0.26

* Negative PBP values indicate standards that reduce operating costs and installed costs.

198Table VII. 14

. Product Class 6

— ISand RS Ballasts That Operate Two 4-Foot MBP Lamps (Residential, T12 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period*
years Installed

Cost Discounted Operating Cost LCC * Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement

Baseline 53 71 124

- - - - - - - - 1, 2, 3A 1 46 56 102 21 0 100

- 5.46

3B 2 47 58 105 19 0 100

- 4.92

Event II: New Construction / Renovation

Baseline 55 71 126

- - - - - - - - 1, 2, 3A 1 48 63 111 15 0 100

- 9.45

3B 2 49 61 110 16 0 100

- 6.35

* Negative PBP values indicate standards that reduce operating costs and installed costs.

199Table VII. 15 Product Class 6

— IS and RS Ballasts That Operate Two 4-Foot MBP Lamps (Residential, T8 Baseline): LCC and PBP Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings

Median Payback Period*
years Installed

Cost Discounted Operating Cost LCC * Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit Event I: Replacement
1, 2, 3A Baseline / 1 45 56 101

- - - - - - - -

3B 2 46 58 104

- 2 100 0 N/A

Event II: New Construction / Renovation
1, 2, 3A Baseline / 1 47 56 104

- - - - - - - -

3B 2 49 55 103 1 27 73 8.18

* Entries of “N/A” indicate standard levels that do not reduce operating costs.

b. Consumer Sub-Group Analysis

Using the LCC spreadsheet model, DOE determined the impact of the trial standard

levels on the following consumer sub-groups: low-income consumers, institutions of religious

worship, and institutions that serve low-income populations. Representative ballast designs used

in the industrial sector ( e.g. , ballasts operating HO lamps) are not typically used by the identified

sub -groups, and were not included in the sub-group analysis. Similarly, DOE assumed that lowincome consumers use residential ballasts only, and did not include commercial ballast designs

in the LCC analysis for this sub-group. DOE assumed that institutions of religious worship and

institutions that serve low-income populations use commercial ballasts only, and did not include

residential ballast designs in the sub-group analysis.

200DOE adjusted inputs to the LCC model to reflect conditions faced by the identified

subgroups. For low-income consumers, DOE adjusted electricity prices to represent rates

typically paid by consumers living below the poverty line. DOE assumed that institutions of

religious worship have lower annual operating hours than the commercial sector average used in

the main LCC analysis. For institutions serving low-income populations, DOE assumed that the

majority of these institutions are small nonprofits, and used a higher discount rate of 10.7 percent

(versus 6.9 percent for the main commercial sector analysis).

Table VII. 16 through Table VII. 25 shows the LCC impacts and payback periods for

identified sub-groups that purchase ballasts. Negative PBP values indicate standards that reduce

operating costs and installed costs. Ent ries of “N/A” indicate standard levels that do not reduce

operating costs. In general, the average LCC savings for the identified sub-groups at the

considered efficiency levels exhibited the same trends and relationships as the averages for all

consumers.

201Table VII. 16 Product Class 1

— IS and RS Ballasts That Operate Two 4-Foot MBP Lamps (Commercial, T12 Baseline): LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period**
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship

Event I: Replacement

Baseline 64 195 260

- - - - - - - - 1 1 57 178 235 25 0 100

- 5.81

2 2 59 173 232 28 0 100

- 2.89
3A, 3B 3 60 170 230 30 0 100

- 2.26

Event II: New Construction / Renovation

Baseline 67 195 262

- - - - - - - - 1 1 59 176 235 27 0 100

- 5.16

2 2 62 169 231 32 0 100

- 2.48
3A, 3B 3 62 167 229 33 0 100

- 2.06

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement

Baseline 64 209 273

- - - - - - - - 1 1 57 191 247 26 0 100

- 3.35

2 2 59 185 244 29 0 100

- 1.66
3A, 3B 3 60 181 241 32 0 100

- 1.30

Event II: New Construction / Renovation

Baseline 67 209 276

- - - - - - - - 1 1 59 188 247 28 0 100

- 2.97

2 2 62 180 242 34 0 100

- 1.43
3A, 3B 3 62 179 241 35 0 100

- 1.19

* See Table VII

. 2 for average LCC savings for all consumers. ** Negative PBP values indicate standards that reduce operating costs and installed costs.

202Table VII. 17 Product Class 1

— IS and RS Ballasts That Operate Two 4-Foot MBP Lamps (Commercial, T8 Baseline): LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement

1 Baseline / 1 56 178 234

- - - - - - - - 2 2 59 173 231 3 1 99 6.28
3A, 3B 3 59 170 229 6 0 100 4.96

Event II: New Construction / Renovation

1 Baseline / 1 58 178 237

- - - - - - - - 2 2 61 171 232 5 0 100 4.79
3A, 3B 3 62 169 231 6 0 100 4.75

Sub

- Group: Institutions Serving Low

- Income Populations

Event I: Replacement

1 Baseline / 1 56 191 246

- - - - - - - - 2 2 59 185 243 3 1 99 3.62
3A, 3B 3 59 181 240 6 0 100 2.86

Event II: New Construction / Renovation

1 Baseline / 1 58 191 249

- - - - - - - - 2 2 61 183 244 5 0 100 2.76
3A, 3B 3 62 181 242 7 0 100 2.74

* See Table VII

. 3 for average LCC savings for all consumers.

203Table VII. 18 Product Class 1

— IS and RS Ballasts That Operate Four 4-Foot MBP Lamps: LCC and PBP Results: LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement
1, 2 Baseline / 2 78 326 405

- - - - - - - - 3A, 3B 3 81 319 400 5 0 100 4.61

Event II: New Construction / Renovation
1, 2 Baseline / 2 81 326 407

- - - - - - - - 3A, 3B 3 83 322 405 2 10 90 7.69

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement
1, 2 Baseline / 2 78 349 427

- - - - - - - - 3A, 3B 3 81 341 422 5 0 100 2.65

Event II: New Construction / Renovation
1, 2 Baseline / 2 81 349 429

- - - - - - - - 3A, 3B 3 83 344 427 2 4 96 4.43

* See Table VII

. 4 for average LCC savings for all consumers.

2 04Table VII. 19 Product Class 1

— IS and RS Ballasts That Operate Two 8-Foot Slimline Lamps (T12 Baseline): LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period**
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement

1 Baseline / 1 90 362 452

- - - - - - - - 2 2 90 342 431 20 0 100

- 0.20
3A, 3B 3 90 336 426 26 0 100

- 0.01

Event II: New Construction / Renovation

1 Baseline / 1 92 362 454

- - - - - - - - 2 2 92 348 441 14 0 100

- 0.30
3A, 3B 3 92 344 436 18 0 100

- 0.02

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement

1 Baseline / 1 90 387 477

- - - - - - - - 2 2 90 365 455 22 0 100

- 0.12
3A, 3B 3 90 359 449 28 0 100 0.01

Event II: New Construction / Renovation

1 Baseline / 1 92 387 479

- - - - - - - - 2 2 92 372 465 15 0 100

- 0.17
3A, 3B 3 92 368 460 19 0 100 0.01

* See Table VII

. 5 for average LCC savings for all consumers. ** Negative PBP values indicate standards that reduce operating costs and installed costs.

205Table VII. 20 Product Class 1

— IS and RS Ballasts That Operate Two 8-Foot Slimline Lamps (T8 Baseline): LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement
1, 2 Baseline / 2 90 342 432

- - - - - - - - 3A, 3B 3 91 336 427 5 0 100 0.80

Event II: New Construction / Renovation
1, 2 Baseline / 2 93 342 434

- - - - - - - - 3A, 3B 3 93 337 430 4 0 100 1.05

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement
1, 2 Baseline / 2 90 365 456

- - - - - - - - 3A, 3B 3 91 359 450 6 0 100 0.46

Event II: New Construction / Renovation
1, 2 Baseline / 2 93 365 458

- - - - - - - - 3A, 3B 3 93 361 454 4 0 100 0.61

* See Table VII

. 6 for average LCC savings for all consumers.

206Table VII. 21 Product Class 2

— PS Ballasts That Operate Two 4-Foot MBP Lamps: LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement

Baseline 59 149 208

- - - - - - - - 1, 2 2 60 139 199 9 0 100 1.90
3A, 3B 3 60 137 198 10 0 100 2.16

Event II: New Construction / Renovation

Baseline 61 149 210

- - - - - - - - 1, 2 2 62 139 201 9 0 100 1.89
3A, 3B 3 63 137 200 10 0 100 2.19

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement

Baseline 59 163 222

- - - - - - - - 1, 2 2 60 152 212 10 0 100 1.09
3A, 3B 3 60 150 211 11 0 100 1.25

Event II: New Construction / Renovation

Baseline 61 163 225

- - - - - - - - 1, 2 2 62 152 215 10 0 100 1.09
3A, 3B 3 63 151 213 11 0 100 1.26

* See Table VII

. 7 for average LCC savings for all consumers.

207Table VII. 22 Product Class 2

— PS Ballasts That Operate Four 4-Foot MBP Lamps: LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement

Baseline 77 273 350

- - - - - - - - 1 1 81 272 352

- 2 100 0 35.63
2, 3A,

3B 3 83 265 347 3 80 20 10.41

Event II: New Construction / Renovation

Baseline 79 273 353

- - - - - - - - 1 1 83 249 332 20 0 100 2.48
2, 3A,

3B 3 85 243 329 24 0 100 3.06

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement

Baseline 77 299 376

- - - - - - - - 1 1 81 298 378

- 2 100 0 20.52
2, 3A,

3B 3 83 290 373 4 19 81 6.00

Event II: New Construction / Renovation

Baseline 79 299 379

- - - - - - - - 1 1 83 273 356 22 0 100 1.43
2, 3A,

3B 3 85 267 352 27 0 100 1.76

* See Table VII

. 8 for average LCC savings for all consumers.

208Table VII. 23 Product Class 2

— PS Ballasts That Operate Two 4-Foot MiniBP SO Lamps: LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period Y ears Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Institutions of Religious Worship Event I: Replacement

Baseline 64 212 276

- - - - - - - - 1 1 64 198 263 14 0 100 0.09

2 2 66 190 256 21 0 100 0.95
3A, 3B 3 70 199 270 7 1 99 6.63

Event II: New Construction / Renovation

Baseline 66 212 279

- - - - - - - - 1 1 67 198 265 14 0 100 0.09

2 2 68 197 265 14 0 100 1.35
3A, 3B 3 73 192 265 14 0 100 4.19

Sub

- Group: Institutions Serving Low

- Income Populations Event I: Replacement

Baseline 64 227 291

- - - - - - - - 1 1 64 212 276 15 0 100 0.05

2 2 66 203 269 22 0 100 0.55
3A, 3B 3 70 213 284 7 2 98 3.82

Event II: New Construction / Renovation

Baseline 66 227 294

- - - - - - - - 1 1 67 212 279 15 0 100 0.05

2 2 68 210 278 15 0 100 0.78
3A, 3B 3 73 205 278 15 0 100 2.41

* See Table VII

. 9 for average LCC savings for all consumers.

209Table VII. 24 Product Class 6

— IS and RS Ballasts That Operate Two 4-Foot MBP Lamps (Residential, T12 Baseline): LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period**
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Low

- Income Consumers Event I: Replacement

Baseline 53 71 124

- - - - - - - - 1, 2, 3A 1 46 57 102 21 0 100

- 5.46

3B 2 47 58 105 19 0 100

- 4.92

Event II: New Construction / Renovation

Baseline 55 71 126

- - - - - - - - 1, 2, 3A 1 48 63 111 15 0 100

- 9.45

3B 2 49 61 110 16 0 100

- 6.35

* See Table VII

. 14 for average LCC savings for all consumers. ** Negative PBP values indicate standards that reduce operating costs and installed costs.

210Table VII. 25 Product Class 6

— IS and RS Ballasts That Operate Two 4-Foot MBP Lamps (Residential, T8 Baseline): LCC and PBP Sub-Group Results

Trial Standard

Level Efficiency Level Life

- Cycle Cost 2010$ Life

- Cycle Cost Savings*

Median Payback Period**
years Installed

Cost Discounted Operating Cost LCC Average Savings 2010$ Percent of Consumers that Experience

Net Cost Net Benefit

Sub

- Group: Low

- Income Consumers Event I: Replacement
1, 2, 3A Baseline/1 45 57 101

- - - - - - - -

3B 2 46 58 104

- 2 100 0 N/A

Event II: New Construction / Renovation
1, 2, 3A Baseline/1 47 57 104

- - - - - - - -

3B 2 49 55 103 1 27 73 8.18

* See Table VII

. 15 for average LCC savings for all consumers. ** Entries of “N/A” indicate standard levels that do not reduce operating costs.

c. Rebuttable Presumption Payback

As discussed in section IV.D.2, EPCA provides a rebuttable presumption that an energy

conservation standard is economically justified if the increased purchase cost for a product that

meets the standard is less than three times the value of the first-year energy savings resulting

from the standard. DOE’s LCC and PBP analyses generate values for calculating the payback

period for consumers affected by potential energy conservation standards. This includes, but is

not limited to, the 3-year payback period contemplated under the rebuttable presumption test

discussed in section IV.D.2

. DOE , however, routinely conducts an economic analysis that

considers the full range of impacts

— including those on consumers, manufacturers, the nation,

and the environment

— as required under 42 U.S.C. 6295(o)(2)(B)(i).

211For this final rule, DOE calculated a rebuttable presumption payback period for each

TSL. DOE used discrete values rather than distributions for inputs and, as required by EPCA,

made the calculations using the applicable DOE test procedures for ballasts. DOE then calculated

a single rebuttable presumption payback value, rather than a distribution of payback periods, for

each TSL. Table VII. 26 shows the rebuttable presumption payback periods that are less than 3

years. Negative PBP values indicate standards that reduce operating costs and installed costs.

While DOE examined the rebuttable-presumption criterion, it also considered a more

comprehensive analysis of the economic impacts of these levels to determine whether the

standard levels considered for today’s rule are economically justified pursuant to 42 U.S.C.

6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to evaluate the economic

justification for a potential standard level (thereby supporting or rebutting the results of any

preliminary determination of economic justification).

212Table VII. 26 Ballast Efficiency Levels With Rebuttable Payback Period Less Than Three Years

Product Class Efficiency Level Mean Payback Period*
years

Event I: Replacement Event II: New Construction / Renovation IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps (T12 baseline) 1

- 3. 19

- 2.8 2 2

- 1. 57

- 1.3 4 3

- 1. 22

- 1.1 1 Two 4

- foot MBP lamps (T8 baseline) 2 2.5 5

3 2.6 4 2.5 3 Four 4

- foot MBP lamps 3 2.46 Two 8

- foot slimline lamps (T12 baseline) 2

- 0.1 1

- 0.1 6

3 0.01 0.01 Two 8

- foot slimline lamps (T8 baseline) 3 0.43 0.56

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 1, 2 1.0 1 1.01 3 1.1 5 1.17 Four 4

- foot MBP lamps 1 1.32 3 1.63 Two 4

- foot MiniBP SO lamps 1 0.05 0.05 2 0.5 0 0.72 3 2.2 3 Two 4

- foot MiniBP HO lamps 1 1.07 1.07 2 1. 42 1.66 3 2.0 6 2.1 7 IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps (T12 baseline) 1

- 0. 67

- 1.00 2

- 0. 72

- 1.32 3

- 0. 55

- 1.01 Sign Ballasts that operate: Four 8

- foot HO lamps 1, 2, 3

- 0.1 5

- 0. 24 IS and RS residential ballasts that operate: Two 4

- foot MBP lamps (T12 baseline) 1

- 5. 14

- 8. 9 8 2

- 4.6 3

- 6.0 1 * Negative PBP values indicate standards that reduce operating costs and installed costs.

2132. Economic Impacts on Manufacturers

For the MIA in the April 2011 NOPR, DOE used changes in INPV to compare the direct

financial impacts of different TSLs on manufacturers. 76 FR 20090, 20156-61 (April 11, 2011).

DOE used the GRIM to compare the INPV of the base case (no new or amended energ y

conservation standards) to that of each TSL. The INPV is the sum of all net cash flows

discounted by the industry’s cost of capital (discount rate) to the base year. The difference in

INPV between the base case and the standards case is an estimate of the economic impacts that

implementing that standard level would have on the entire fluorescent ballast industry. For

today’s final rule, DOE continues to use the methodology presented in the NOPR (76 FR 20090,

20134 -5 (April 11, 2011)) and in section V.H

.

a. Industry Cash-Flow Analysis Results

Table VII. 27 and Table VII. 28 depict the financial impacts on manufacturers (represented

by changes in INPV) and the conversion costs DOE estimates manufacturers would incur at each

TSL. The two tables show two sets of INPV impacts : Table VII. 27 reflects the lower (less

severe) bound of impacts and Table VII. 28 represents the upper bound. To evaluate this range of

cash-flow impacts on the fluorescent lamp ballast industry, DOE modeled two different

scenarios using different markup assumptions. These assumptions correspond to the bounds of a

range of market responses that DOE anticipates could occur in the standards case ( i.e. , where

new and amended energy conservation standards apply). Each of the two scenarios results in a

unique set of cash flows and corresponding industry value at each TSL. The April 2011 NOPR

(76 FR 20090, 20156 (April 11, 2011)) discusses each of these scenarios in full, and they are also

presented in chapter 13 of the TSD.

214Table VII. 27 Manufacturer Impact Analysis for Fluorescent Lamp Ballasts

— Preservation of Operating Profit Markup, Existing Technologies, and Shift Shipment Scenario Units Base Case Trial Standard Level 1 2 3A 3B

INPV ( 2010$ millions) 1,219 1,199 1,176 1,144 1,141

Change in INPV ( 2010$ millions) - (19.6) (42.4) (74.5) (77.6)

(%)

- - 1.6%

- 3.5%

- 6.1%

- 6.4% Product Conversion Costs ( 2010$ millions) - 5 18 46 48

Capital Conversion Costs ( 2010$ millions) - 11 20 28 29

Total Conversion Costs ( 2010$ millions) - 17 38 74 78

Table VII. 28 Manufacturer Impact Analysis for Fluorescent Lamp Ballasts

— Two-Tier Markup, Emerging Technologies, and Roll-up Shipment Scenario Units Base Case Trial Standard Level 1 2 3A 3B

INPV ( 2010$ millions) 733 616 545 464 431

Change in INPV ( 2010$ millions) - (116.4) (188.0) (268.6) (301.2)

(%)

- - 15.9%

- 25.7%

- 36.7%

- 41.1%
Product Conversion Costs ( 2010$ millions) - 5 18 46 48

Capital Conversion Costs ( 2010$ millions) - 11 20 28 29

Total Conversion Costs ( 2010$ millions) - 17 38 74 78

TSL 1 represents EL1 for all five representative product classes. At TSL 1, DOE

estimates impacts on INPV to range from -$19.6 million to -$116.4 million, or a change in INPV

21561 of -1.6 percent to -15.9 percent. At this level, industry free cash flow is estimated to decrease

by approximately 12 percent to $43.4 million, compared to the base-case value of $49.3 million

in the year leading up to the energy conservation standards.

The INPV impacts at TSL 1 are relatively minor, in part because the vast majority of

shipments already meet EL1. DOE estimates that in 2014, the year in which compliance with the

new and amended standards will be required, over 99 percent of the IS/RS product class

shipments, 73 percent of the PS product class shipments, 98 percent of the 8-foot HO IS/RS

product class shipments, 64 percent of the sign ballast product class shipments, and 96 percent of

the residential IS/RS product class shipments would meet EL1 or higher in the base case. The

majority of shipments at baseline efficiency levels that would need to be converted at TSL 1 are

2-lamp and 4-lamp 4ft MBP PS ballasts, 4-lamp sign ballasts, and 2-lamp 4-foot MBP IS/RS

residential ballasts.

Because most fluorescent lamp ballast shipments already meet the efficiency levels

analyzed at TSL 1, DOE expects conversion costs to be small compared to the industry value

. DOE estimates product conversion costs of $5 million due to the research, development, testing,

and certification costs needed to upgrade product lines that do not meet TSL 1. For capital

conversion costs, DOE estimates $11 million for the industry, largely driven by the cost of

converting all magnetic sign ballast production lines to electronic sign ballast production lines.

61 Industry free cash flow is the operating cash flow minus capital expenditures.

216Under the preservation of operating profit markup scenario, impacts on manufacturers are

marginally negative because, while manufacturers earn the same operating profit as is earned in

the base case for 2015 (the year following the compliance date of amended standards), they face

$17 million in conversion costs. INPV impacts on manufacturers are not as significant under this

scenario as in other scenarios because most shipments already meet TSL 1 and the shift shipment

scenario moves products beyond the eliminated baseline to higher-price (and higher gross profit)

levels. This results in a shipment-weighted average MPC increase of 6 percent applied to a

growing market over the analysis period.

Shipments under the existing technologies scenario are nearly three and a half times

greater than shipments under the emerging technologies scenario by the end of the analysis

period. At TSL 1, the moderate price increase applied to a large quantity of shipments lessens the

impact of the minor conversion costs estimated at TSL 1, resulting in slightly negative impacts at

TSL 1 under the preservation of operating profit markup scenario.

Under the t wo -tier markup scenario, manufacturers are not able to fully pass on

additional costs to consumers and are not guaranteed base-case operating profit levels. Rather,

products that once earned a higher-than-average markup at EL1 become commoditized once

baseline products are eliminated at TSL 1. Thus, the average markup drops below the base- case

average markup (which is equal to the flat manufacturer markup of 1.4). Because shipments

above the baseline do not shift to higher efficiencies with greater costs under the roll-up scenario,

the shipment-weighted average MPC does not significantly increase. A lower average markup of

1.38 and $17 million in conversion costs results in more negative impacts at TSL 1 under the

217t wo -tier markup scenario. These impacts increase on a percentage basis under the emerging

technologies scenario relative to the existing technologies scenario because the base-case INPV

against which changes are compared is nearly 40 percent lower.

TSL 2 represents EL1 for the sign ballast and residential IS/RS product classes. For the

IS/RS, PS, and 8-foot HO IS/RS product classes, TSL 2 represents EL2. At TSL 2, DOE

estimates impacts on INPV to range from -$42.4 million to - $18 8.0 million, or a change in INPV

of -3.5 percent to -25.7 percent. At this level, industry free cash flow is estimated to decrease by

approximately 26 percent to $36.6 million, compared to the base-case value of $49.3 million in

the year leading up to the energy conservation standards.

Because the sign ballast and residential IS/RS product classes remain at EL1 at TSL 2,

the additional impacts at TSL 2 relative to TSL 1 result only from increasing the IS/RS, PS, and

8-foot HO IS/RS product classes to EL2. At TSL 2, DOE estimates that 63 percent of the IS/RS

product class shipments, 19 percent of the PS product class shipments, and 89 percent of the 8

-
foot HO IS/RS product class shipments would meet EL2 or higher in the base case. Since the 8

-
foot HO IS/RS product class represents only 0.1 percent of the fluorescent lamp ballast market,

the vast majority of impacts at TSL 2 relative to TSL 1 result from changes in the IS/RS and PS

product classes.

At TSL 2, conversion costs remain small compared to the industry value. Product

conversion costs increase to $18 million due to the increase in the number of product lines within

the IS/RS and PS product classes that would need to be redesigned at TSL 2. Capital conversion

218costs grow to $20 million at TSL 2 because manufacturers would need to invest in additional

testing equipment and convert some production lines.

Under the preservation of operating profit markup scenario, INPV impacts are negative

because manufacturers are not able to fully pass on higher product costs to consumers. The

shipment-weighted average MPC increases by 9 percent compared to the baseline MPC, but this

increase does not generate enough cash flow to outweigh the $38 million in conversion costs at

TSL 2, resulting in a -3.5 percent change in INPV at TSL 2 compared to the base case.

Under the t wo -tier markup scenario, more products are commoditized to a lower markup

at TSL 2. The impact of this lower average markup of 1.36 outweighs the impact of a 6 percent

increase in shipment-weighted average MPC, resulting in a negative change in INPV at TSL 2.

The $38 million in conversion costs further erodes profitability, and the lower base case INPV

against which the change in INPV is compared under the emerging technologies scenario

increases INPV impacts on a percentage basis.

TSL 3A represents EL1 for the sign ballasts and residential IS/RS product classes, EL2

for the 8-foot HO IS/RS product class, and EL3 for the IS/RS and PS product classes. At TSL

3A, DOE estimates impacts on INPV to range from -$74.5 million to - $26 8.6 million, or a

change in INPV of -6.1 percent to -36.7 percent. At this level, industry free cash flow is

estimated to decrease by approximately 48 percent to $25.8 million, compared to the base-case

value of $49.3 million in the year leading up to the energy conservation standards.

219Because the sign ballast and residential IS/RS product classes remain at EL1 and the 8

-
foot HO IS/RS product class remains at EL2 for TSL 3A, the additional impacts at TSL 3A

relative to TSL 2 result only from increasing the IS/RS and PS product classes to EL3. At TSL

3A, DOE estimates that 21 percent of the IS/RS product class shipments and 7 percent of the PS

product class shipments would meet the efficiency levels contained in TSL 3A or higher in the

base case.

At TSL 3A, product conversion costs increase to $46 million because far more product

lines within the IS/RS, and PS product classes would need to be redesigned at TSL 3A than TSL

2. Capital conversion costs rise to $28 million at TSL 3A because manufacturers would need to

invest in equipment such as surface-mount device placement machinery and solder machines to

convert production lines for the manufacturing of more efficient ballasts.

Under the preservation of operating profit markup scenario, INPV decreases by 6.1

percent at TSL 3A compared to the base case. The shipment-weighted average MPC increases by

17 percent, but manufacturers are not able to pass on the full amount of these higher costs to

consumers. This MPC increase is outweighed by the $74 million in conversion costs at TSL 3A.

Under the t wo -tier markup scenario, at TSL 3A, products are commoditized to a lower

markup to an even greater extent than under the preservation of operating profit markup

scenario. The impact of this lower average markup of 1.33 outweighs the impact of a 15 percent

increase in shipment-weighted average MPC, resulting in a negative change in INPV at TSL 3A

compared to TSL 2. Profitability is further reduced by the $74 million in conversion costs and

220the lower base-case INPV over which change in INPV is compared under the emerging

technologies scenario.

TSL 3B represents EL1 for the sign ballast product class, EL2 for the residential IS/RS

product class, and EL3 for the IS/RS, PS, and 8-foot HO IS/RS product classes. At TSL 3B,

DOE estimates impacts on INPV to range from -$77.6 million to - $30 1.2 million, or a change in

INPV of -6.4 percent to -41.1 percent. At this level, industry free cash flow is estimated to

decrease by approximately 50 percent to $24.7 million, compared to the base-case value of $49.3

million in the year leading up to the energy conservation standards.

Because the sign ballast product class remains at EL1 and the IS/RS and PS product

classes remain at EL3 for TSL 3B, the additional impacts at TSL 3B relative to TSL 3A result

only from increasing the 8-foot HO IS/RS product class to EL3 and the residential IS/RS product

class to EL2. At TSL 3B, DOE estimates that 2 percent of the 8-foot HO IS/RS product class

shipments and 23 percent of the residential IS/RS product class shipments would meet the

efficiency levels contained in TSL 3B in the base case.

At TSL 3B, conversion costs are slightly greater compared to TSL 3A. Product and

capital conversion costs increase to $ 48 million and $29 million, respectively, because more

product lines would need to be redesigned and upgraded at TSL 3B.

Under the preservation of operating profit markup scenario, INPV decreases by 6.4

percent at TSL 3B compared to the base case, which is slightly greater than the percentage

221impact at TSL 3A. The shipment-weighted average MPC increases by over 17 percent, but

manufacturers are not able to pass on the full amount of these higher costs to consumers. This

slight MPC increase is outweighed by the $78 million in conversion costs at TSL 3B.

Under the two-tier markup scenario, at TSL 3B, products are commoditized to a lower

markup to the greatest extent of any TSL analyzed. The impact of this lower average markup of

1.33 outweighs the impact of a 17 percent increase in shipment-weighted average MPC, resulting

in a negative change in INPV at TSL 3B compared to TSL 3A. Profitability is further reduced by

the $78 million in conversion costs and the lower base-case INPV over which change in INPV is

compared under the emerging technologies scenario.

b. Impacts on Employment

DOE typically presents modeled quantitative estimates of the potential changes in

production employment that could result from new and amended energy conservation standards.

However, for this rulemaking, DOE determined that none of the major manufacturers, which

comprise more than 90 percent of the market, have domestic fluorescent lamp ballast production.

Although a few niche manufacturers have relatively limited domestic production, based on

interviews, DOE has identified very few domestic production employees in the United States

Because many niche manufacturers did not respond to interview requests or submit comments on

domestic employment impacts, DOE is unable to fully quantify domestic production

employment impacts

. Therefore, while DOE qualitatively discusses potential employment

impacts below, DOE did not model direct employment impacts explicitly because the results

would not be meaningful given the very low number of domestic production employees.

222Based on interviews, DOE projects that significant direct employment impacts would

occur only in the event that one or more businesses exit the market due to new standards.

Discussions with manufacturers indicated that, at the highest efficiency levels (TSL 3A and TSL

3B), some small manufacturers will be faced with the decision of whether or not to make the

investments necessary to remain in the market based on their current technical capabilities. In

general, however, DOE projects that TSL 3A, the level adopted in tod ay’s final rule, will not

have significant adverse impacts on domestic employment because achieving these levels is

within the expertise of most manufacturers, including small manufacturers, due to the lack of

intellectual property restrictions and similarity of products among manufacturers.

In summary, given the low number of production employees and the low likelihood that

manufacturers would exit the market at the efficiency levels adopted in today’s final rule, DOE

does not expect a significant impact on direct employment following new and amended energy

conservation standards.

DOE notes that the direct employment impacts discussed here are independent of the

indirect employment impacts from the broader U.S. economy, which are documented in chapter

15 , Employment Impact Analysis, of the TSD.

c. Impacts on Manufacturing Capacity

Manufacturers stated that new and amended energy conservation standards could harm

manufacturing capacity due to the current component shortage discussed in the April 2011

223NO PR (76 FR 20090, 20139 (April 11, 2011)). At present

, manufacturers are struggling to

produce enough fluorescent lamp ballasts to meet demand because of a worldwide shortage of

electrical components. The components most affected by this shortage are premiu m highefficiency parts, for which demand would increase even more following new and amended

energy conservation standards. In the near term th is increased demand might exacerbate the

component shortage, thereby impacting manufacturing capacity. While DOE recognizes that the

component shortage is currently a significant issue for manufacturers, DOE projects it to be a

relatively short-term phenomenon to which component suppliers will ultimately adjust.

According to manufacturers, suppliers have the ability to ramp up production to meet ballast

component demand by the compliance date of new and amended standards, but those suppliers

have hesitated to invest in additional capacity due to economic uncertainty and skepticism about

the sustainability of demand. The state of the macroeconomic environment through 2014 will

likely affect the duration of the component shortage. Mandatory standards, however, could create

more certainty for suppliers about the eventual demand for these components. Additionally, the

co mponents at issue are not new technologies; rather, they have simply not historically been

demanded in large quantities by ballast manufacturers. DOE received no comments or additional

information indicating that its conclusions related to the component shortage issue were incorrect

and therefore reiterates these conclusions for today’s final rule.

d. Impacts on Sub-Groups of Manufacturers

As discussed in the April 2011 NOPR (76 FR 20090, 20135 (April 11, 2011)), using

average cost assumptions to develop an industry cash-flow estimate may be inadequate to assess

differential impacts among manufacturer sub-groups. DOE used the results of the industry

224characterization to group ballast manufacturers exhibiting similar characteristics. DOE identified

two sub-groups that would experience differential impacts: small manufacturers and sign ballast

manufacturers, many of whom are also small manufacturers. For a discussion of the impacts on

the small manufacturer sub-group, see the Regulatory Flexibility Analysis in section VIII.B and

chapter 13 of the TSD.

DOE is not presenting results under the t wo -tier markup scenario for sign ballasts

because it did not observe a t wo -tier effect in the sign ballast market. Electronic ballasts at EL1

command neither a higher price nor a higher markup in the base case. Additionally, roll-up and

shift scenarios do not have separate impacts for sign ballasts because there are no higher ELs

above the new baseline to which products could potentially shift in the standards case. As such,

Table VII. 29 and Table VII. 30 present the cash-flow analysis results under the preservation of

operating profit markup and roll-up shipment scenarios with existing or emerging technologies

for sign ballast manufacturers.

225Table VII. 29 Manufacturer Impact Analysis for Sign Ballasts

— Preservation of Operating Profit Markup, Existing Technologies, and Roll-up Shipment Scenario Units Base Case Trial Standard Level 1 2 3A 3B

INPV ( 2010$ millions) 142 138 138 138 138

Change in INPV ( 2010$ millions) - (4.2) (4.2) (4.2) (4.2)

(%)

- - 2.9%

- 2.9%

- 2.9%

- 2.9% Product Conversion Costs ( 2010$ millions) - 2 2 2 2

Capital Conversion Costs ( 2010$ millions) - 6 6 6 6

Total Conversion Costs ( 2010$ millions) - 8 8 8 8

Table VII. 30 Manufacturer Impact Analysis for Sign Ballasts

— Preservation of Operating Profit Markup, Emerging Technologies, and Roll-up Shipment Scenario Units Base Case Trial Standard Level 1 2 3A 3B

INPV ( 2010$ millions) 116 111 111 111 111

Change in INPV ( 2010$ millions) - (5.1) (5.1) (5.1) (5.1)

(%)

- - 4.4%

- 4.4%

- 4.4%

- 4.4% Product Conversion Costs ( 2010$ millions) - 2 2 2 2

Capital Conversion Costs ( 2010$ millions) - 6 6 6 6

Total Conversion Costs ( 2010$ millions) - 8 8 8 8

For the sign ballast product class, DOE analyzed only one efficiency level; thus, the

results are the same at each TSL. TSLs 1 through 3B represent EL1 for the sign ballast product

class. At TSLs 1 through 3B, DOE estimates impacts on INPV to range from -$4.2 million to

-

226$5.1 million, or a change in INPV of -2.9 percent to - 4. 4 percent. At these levels, industry free

cash flow is estimated to decrease by approximately 38 percent to $4.9 million, compared to the

base-case value of $7.9 million in the year leading up to the energy conservation standards.

As shown by the results, DOE expects sign ballast manufacturers overall to face small

negative impacts under TSLs 1 through 3B. DOE estimates that 64 percent of the sign ballast

product class shipments would meet EL1 in the base case. Many manufacturers already produce

electronic sign ballasts, which is the design option represented by EL1. Many other

manufacturers, however, produce only magnetic T12 sign ballasts and therefore would face

significant capital exposure in moving from magnetic to electronic ba llasts to meet TSLs 1

through 3B. For that reason, DOE estimates relatively high capital conversion costs of $6 million

for sign ballast manufacturers. Product redesign and testing costs are expected to total $2 million

for sign ballasts. DOE notes that small sign ballast manufacturers, particularly those who would

be required to move from magnetic to electronic sign ballasts as a result of today’s standards,

may apply to DOE for an exemption from the standard pursuant to 42 U.S.C. 6295(t). The

process ap plicants must follow to request an exemption and DOE’s process for making a

decision on a particular request are set forth in DOE’s regulations at 10 CFR 430 Subpart E. Comment [bk9]: Change recommended by OIRA.

Unlike most product classes, sign ballasts are expected to decrease rather than increase in

price moving from baseline to EL1 by a shipment-weighted average decrease in MPC of over 4

percent. This is because electronic ballasts are a cheaper alternative to magnetic ballasts, even

though the industry has not yet fully moved toward electronic production. During interviews,

manufacturers stated that consumers were reluctant to convert to electronic ballasts even though

227there were no technical barriers to doing so. Under the preservation of operating profit markup

scenario, however, manufacturers are able to maintain the base-case operating profit for the year

following the compliance date of new and amended standards despite lower production costs, so

the average markup increases slightly to 1.41 to account for the decrease in MPC. Despite this

markup increase, revenue is lower at TSLs 1 through 3B than in the base case because of the

lower average unit price and the $8 million in conversion costs. When the preservation of

operating profit markup is combined with the existing technologies scenario rather than the

emerging technologies scenario, the impact of this maximized revenue per unit is greatest

because it is applied to a larger total quantity of shipments.

e. Cumulative Regulatory Burden

While any one regulation may not impose a significant burden on manufacturers, the

combined effects of recent or impending regulations may have serious consequences for some

manufacturers, groups of manufacturers, or an entire industry. Assessing the impact of a single

regulation may overlook this cumulative regulatory burden. In addition to energy conservation

standards, other regulations can significantly affect manufacturers’ financial operations. Multiple

regulations affecting the same manufacturer can strain profits and lead companies to abandon

product lines or markets with lower expected future returns than competing products. For these

reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings

pertaining to appliance efficiency.

During previous stages of this rulemaking, DOE identified a number of requirements, in

addition to new and amended energy conservation standards for ballasts, that manufacturers of

228these products will face for products and equipment they manufacture within approximately 3

years prior to and 3 years after the anticipated compliance date of the new and amended

standards. DOE discusses these and other requirements, including the energy conservation

standards for lamps that take effect beginning in 2012 (74 FR 34080 (July 14, 2009) and U.S.C.

6295 (i)(1)(A)), in its full cumulative regulatory burden analysis in chapter 13 of the TSD.

In written comments on the NOPR, NEMA expressed concern that DOE has not

accounted for other legislation that would increase costs

. (NEMA, No. 47 at p. 9) While it is not

clear to which other legislation NEMA is referring, DOE does take into account the cost of

compliance with other published Federal energy conservation standards, such as the 2009 lamps

rule. DOE does not include the impacts of standards that have not yet been finalized, however,

because any impacts of such standards would be speculative. The cumulative regulatory impact

analysis is discussed in more detail in chapter 13 of the TSD. In response to the September 2011

NODA, NEMA also noted that President Obama stated an objective in a September 8, 2011

speech of reducing regulatory burden on manufacturers. (NEMA, No. 56 at p. 3) DOE

acknowledges the President’s objectiv e of reducing regulatory burden and, as required by EPCA

,
ensures that each of its energy conservation standards is economically justified. DOE has

analyzed the various TSLs considered in this rulemaking and believes that the burdens of today’s

rulemaking are outweighed and justified by the benefits of the rule, as described in section

VII.C.2.

2293. National Impact Analysis

a. Significance of Energy Savings

To estimate the energy savings through 2043 attributable to potential energy conservation

standards for ballasts, DOE compared the energy consumption of these products under the base

case to their anticipated energy use under each TSL. Table VII. 31 presents DOE’s forecast s of

the national energy savings for each TSL, for the existing and emerging technologies shipment

scenarios that represent the maximum and minimum energy savings resulting from all the

scenarios analyzed. Chapter 11 of the final rule TSD describes these estimates in more detail.

Table VII. 31 . Summary of Cumulative National Energy Savings for Ballasts (2014

– 2043)

Trial Standard

Level Product Class National Energy Savings Q uads Existing Technologies, Shift Emerging Technologies, Roll

- up

1 IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 1.19 0.001 Four 4

- foot MBP lamps 0 0 Two 8

- foot slimline lamps 0 0

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.27 0.13 Four 4

- foot MBP lamps 0.27 0.10 Two 4

- foot MiniBP SO lamps 0.43 0.16 Two 4

- foot MiniBP HO lamps 0.25 0.23

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.04 0.04

Sign b allasts that operate: Four 8

- foot HO lamps 0.92 0.69

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.1 3 0.01

230Total (TSL1) 3.50 1.36

2 IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 1. 19 0.42 Four 4

- foot MBP lamps 0 0 Two 8

- foot slimline lamps 0.02 0.001

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.27 0.13 Four 4

- foot MBP lamps 0.3 3 0.13 Two 4

- foot MiniBP SO lamps 0.78 0.2 5 Two 4

- foot MiniBP HO lamps 0.4 3 0. 39

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.04 0.04

Sign b allasts that operate: Four 8

- foot HO lamps 0.92 0. 69

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.1 3 0.01

Total (TSL2) 4.10 2. 05

3A IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 1.4 4 0.5 5 Four 4

- foot MBP lamps 0.31 0.1 2 Two 8

- foot slimline lamps 0.02 0.02

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.30 0.14 Four 4

- foot MBP lamps 0.3 3 0.13 Two 4

- foot MiniBP SO lamps 1.5 1 0.5 1 Two 4

- foot MiniBP HO lamps 0.56 0.52

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.04 0.04

231Sign b allasts that operate: Four 8

- foot HO lamps 0.92 0. 69

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.1 3 0.01

Total (TSL3A) 5.55 2.74

3B IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 1.4 4 0.5 5 Four 4

- foot MBP lamps 0.31 0.1 2 Two 8

- foot slimline lamps 0.02 0.02

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.30 0.14 Four 4

- foot MBP lamps 0.3 3 0.13 Two 4

- foot MiniBP SO lamps 1.5 1 0.5 1 Two 4

- foot MiniBP HO lamps 0.56 0.52

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.04 0.04

Sign b allasts that operate: Four 8

- foot HO lamps 0.92 0. 69

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.1 3 0.12

Total (TSL3B) 5. 56 2.86

b. Net Present Value of Consumer Costs and Benefits

DOE estimated the cumulative NPV to the nation of the total costs and savings for

consumers that would result from particular standard levels for ballasts. In accordance with the

OMB’s guidelines on regulatory analysis (OMB Circular A -4, section E, September 17, 2003),

DOE calculated NPV using both a 7-percent and a 3-percent real discount rate. The 7-percent

232rate is an estimate of the average before-tax rate of return to private capital in the U.S. economy,

and reflects the returns to real estate and small business capital as well as corporate capital. DOE

used this discount rate to approximate the opportunity cost of capital in the private sector,

because recent OMB analysis has found the average rate of return to capital to be near this rate.

In addition, DOE used the 3-percent rate to capture the potential effects of standards on private

consumption ( e.g. , through higher prices for products and the purchase of reduced amounts of

energy). This rate represents the rate at which society discounts future consumption flows to

their present value. This rate can be approximated by the real rate of return on long-term

government debt ( i.e.

, yield on Treasury notes minus annual rate of change in the Consumer

Price Index), which has averaged about 3 percent on a pre-tax basis for the last 30 years.

.

Table VII. 32 shows the consumer NPV results for each TSL DOE considered for ballasts,

using both a 7-percent and a 3-percent discount rate. This table presents the results of the two

shipment scenarios that represent the maximum and minimum NPV resulting from all the

scenarios analyzed. Zero values indicate product types with zero energy savings at a particular

TSL, i.e. , the corresponding efficiency level is a baseline design. See chapter 11 of the final rule

TSD for more detailed NPV results.

Table VII. 32 . Summary of Cumulative Net Present Value for Ballasts (2014

– 2043)

Trial Standard

Level Product Class Net Present Value billion 2010$ Existing Technologies, Shift Emerging Technologies, Roll

- up 7 Percent Discount

Rate 3 Percent Discount

Rate 7 Percent Discount

Rate 3 Percent Discount

Rate

1 IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 2.33 5.20 0.01 0.01

233Four 4

- foot MBP lamps 0 0 0 0 Two 8

- foot slimline lamps 0 0 0 0

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.77 1.40 0.51 0.78 Four 4

- foot MBP lamps 0.6 1 1.3 5 0.30 0.5 8 Two 4

- foot MiniBP SO lamps 1.11 2.4 5 0.57 1.0 2 Two 4

- foot MiniBP HO lamps 0.4 2 0.88 0.4 2 0.88

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.11 0.1 2 0.10 0.12

Sign b allasts that operate: Four 8

- foot HO lamps 2.94 5.55 2.52 4.62

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.22 0.49 0.16 0.27

Total (TSL1) 8.52 17.43 4.59 8.28

2 IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 2.3 3 5.2 0 1.0 8 2.1 5 Four 4

- foot MBP lamps 0 0 0 0 Two 8

- foot slimline lamps 0.05 0.10 0.01 0.01

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.7 7 1.4 0 0.5 1 0.7 8 Four 4

- foot MBP lamps 0.7 3 1.6 1 0.37 0.7 2 Two 4

- foot MiniBP SO lamps 1.3 3 3. 09 0.68 1.3 1 Two 4

- foot MiniBP HO lamps 0.4 2 0.9 4 0.4 3 0.9 4

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.11 0.13 0.11 0.13

Sign b allasts that operate: Four 8

- foot HO lamps 2.94 5.55 2.52 4.62

IS and R S residential ballasts that operate:

234Two 4

- foot MBP lamps 0.22 0.49 0.16 0.27

Total (TSL2) 8.91 18.50 5.85 10.92

3A IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 2.83 6.3 1 1.4 4 2.8 6 Four 4

- foot MBP lamps 0.46 1.06 0.25 0.5 2 Two 8

- foot slimline lamps 0.05 0.1 0 0.05 0.1 0

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.84 1.5 4 0.5 6 0.8 7 Four 4

- foot MBP lamps 0.7 3 1.6 1 0.37 0.7 2 Two 4

- foot MiniBP SO lamps 1.5 2 3. 89 0.85 1.8 7 Two 4

- foot MiniBP HO lamps 0.36 0.87 0.36 0.87

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.11 0.13 0.11 0.13

Sign b allasts that operate: Four 8

- foot HO lamps 2.94 5.55 2.52 4.62

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.22 0.4 9 0.16 0.27

Total (TSL3A) 10.06 21.55 6.67 12.84

3B IS and RS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 2.8 3 6.3 1 1.4 4 2.8 6 Four 4

- foot MBP lamps 0.46 1.06 0.25 0.5 2 Two 8

- foot slimline lamps 0.05 0.1 0 0.05 0.1 0

PS ballasts (not classified as residential) that operate: Two 4

- foot MBP lamps 0.84 1.5 4 0.5 6 0.8 7 Four 4

- foot MBP lamps 0.7 3 1.6 1 0.37 0.7 2 Two 4

- foot MiniBP SO lamps 1.5 2 3. 89 0.85 1.8 7 Two 4

- foot MiniBP HO lamps 0.36 0.87 0.36 0.87

IS and RS ballasts ( not classified as sign ballasts) that operate: Two 8

- foot HO lamps 0.11 0.13 0.11 0.13

235Sign b allasts that operate: Four 8

- foot HO lamps 2.94 5.55 2.52 4.62

IS and R S residential ballasts that operate: Two 4

- foot MBP lamps 0.2 3 0. 50 0.2 3 0. 50

Total (TSL3B) 10.06 21.56 6.73 13.07

c. Impacts on Employment

DOE estimated the indirect employment impacts of potential standards on the economy

in general, assuming that energy conservation standards for ballasts would reduce energy bills

for ballast users and the resulting net savings would be redirected to other forms of economic

activity. DOE used an I

– O model of the U.S. economy to estimate these effects including the

demand for labor as described in section V.I

.

The I

– O model results suggest that today’s adopted standards are likely to increase the

net labor demand. The gains, however, would most likely be small relative to total national

employment, and neither the BLS data nor the input/output model DOE uses includes the quality

or wage level of the jobs. As discussed in section VII.B.2.b, the major manufacturers interviewed

for this rulemaking indicate they have no domestic ballast production. New and amended

standards for ballasts therefore will not have a significant impact on the limited number of

production workers directly employed by ballast manufacturers in the U.S.

236Table VII. 33 presents the estimated net indirect employment impacts from the TSLs that

DOE considered in this rulemaking. See chapter 15 of the final rule TSD for more detailed

results.

Table VII. 33 Net Change in Jobs from Indirect Employment Effects Under Ballast TSLs

Analysis Period Year Trial Standard

Level Net national change in jobs thousands
Existing Technologies, Shift Emerging Technologies, Roll

up 2020 1 2.5 1.9 2 2.3 2.1 3A 2.2 2.1 3B 2.2 2.2 2043 1 52.2 17.2 2 57.1 24.2 3A 73.8 30.7 3B 73.9 34.3

4. Impact on Utility or Performance of Products

As presented in section IV.D.1.d of this final rule, DOE concluded that none of the TSLs

considered in this final rule would reduce the utility or performance of the products under

consideration in this rulemaking. Furthermore, manufacturers of these products currently offer

ballasts that meet or exceed the adopted standards. (42 U.S.C. 6295(o)(2)(B)(i)(IV))

5. Impact of Any Lessening of Competition

As discussed in the April 2011 NOPR, and in section IV.D.1.e of this final rule, DOE

considers any lessening of competition likely to result from standards; the Attorney General

determines the impact, if any, of any such lessening of competition.

237DOJ concluded that the standards contained in the proposed rule could possibly impact

competition. Depending on the investment required and the opportunity for business expansion,

DOJ found it is not clear how quickly current manufacturers could comply with new standards

.

DOE considered these comments and notes that TSL 3A, the level adopted in today’s rule, would

impact manufacturers to a lesser extent than the TSL 3 proposed in the April 2011 NOPR

.
Specifically, TSL 3A contains lower standards for residential and 8-foot HO product classes than

the previously proposed TSL 3. Therefore, DOE does not expect that TSL 3A will raise

competitive issues. For all product classes analyzed, DOE found that multiple manufacturers

offered products at TSL 3A and any product modifications needed to reach TSL 3A do not

require proprietary technology.

6. Need of the Nation to Conserve Energy

An improvement in the energy efficiency of the products subject to this final rule is likely

to improve the security of the nation’s energy system by reducing overall demand for energy.

Reduced electricity demand may also improve the reliability of the electricity system. As a

measure of this reduced demand, Table VII. 34 presents the estimated reduction in generating

capacity in 2043 for the TSLs that DOE considered in this rulemaking.

Table VII. 34 Estimated Reduction in Electricity Generating Capacity in 2043 Under Ballast TSLs

Trial Standard

Level Reduction in electric generating capacity Gigawatts Existing Technologies, Shift Emerging Technologies, Roll

- up 1 3.8 1.4 2 4.6 2.2 3A 6.4 3.0 3B 6.4 3.1

238Energy savings from new and amended standards for ballasts could also produce

environmental benefits in the form of reduced emissions of air pollutants and GHGs associated

with electricity production. Table VII. 35 provides DOE’s estimate of cumulative CO 2 , NO x , and

Hg emissions reductions projected to result from the TSLs considered in this rulemaking. DOE

reports annual CO 2 , NO x , and Hg emissions reductions for each TSL in the environmental

assessment of in chapter 16 the final rule TSD.

Table VII. 35 Summary of Emissions Reduction Estimated for Ballast TSLs (cumulative for 2014 through 2043)

Trial Standard

Level Cumulative r eduction in emissions (2014 through 2043)
Existing Technologies, Shift Emerging Technologies, Roll

- up

CO 2 Mt NO x kt Hg t CO 2 Mt NO x kt Hg t 1 64 23 0.88 13 10 0.18 2 76 28 1.05 20 16 0.29 3A 106 39 1.47 27 22 0.40 3B 106 39 1.47 29 23 0.42

As discussed in section V.K

, DOE did not report SO 2 emissions reductions from power

plants because there is uncertainty about the effect of energy conservation standards on the

overall level of SO 2 emissions in the United States due to SO 2 emissions caps. DOE also did not

include NO x emissions reduction from power plants in States subject to CAIR because an energy

conservation standard would not affect the overall level of NO x emissions in those States due to

the emissions caps mandated by CAIR.

As part of the analysis for this final rule, DOE estimated monetary benefits likely to

result from the reduced emissions of CO 2 and NO x that DOE estimated for each of the TSLs

239considered. As discussed in section V.L.1, DOE used values for the SCC developed by an

interagency process. The four values for CO 2 emissions reductions resulting from that process

(for emissions in 2010, expressed in 2010$ ) are $4.9/ton (the average value from a distribution

that uses a 5-percent discount rate), $22.3/ton (the average value from a distribution that uses a

3-percent discount rate), $36.5/ton (the average value from a distribution that uses a 2.5-percent

th discount rate), and $67.6/ton (the 95 -percentile value from a distribution that uses a 3-percent

discount rate). These values correspond to the value of emission reductions in 2010; the values

for later years are higher due to increasing damages as the magnitude of climate change

increases. For each TSL, DOE calculated the global present values of CO 2 emissions reductions,

using the same discount rate as was used in the studies upon which the dollar-per-ton values are

based. DOE calculated domestic values as a range from 7 percent to 23 percent of the global

values.

DOE is well aware that scientific and economic knowledge about the contribution of CO 2
and other GHG emissions to changes in the future global climate and the potential resulting

damages to the world economy continues to evolve rapidly. Thus, any value placed in this

rulemaking on reducing CO 2 emissions is subject to change. DOE, together with other Federal

agencies, will continue to review various methodologies for estimating the monetary value of

reductions in CO 2 and other GHG emissions. This ongoing review will consider the comments

on this subject that are part of the public record for this and other rulemakings, as well as other

methodological assumptions and issues. However, consistent with DOE’s legal obligations, and

taking into account the uncertainty involved with this particular issue, DOE has included in this

240final rule the most recent values and analyses resulting from the ongoing interagency review

process.

DOE also estimated a range for the cumulative monetary value of the economic benefits

associated with NO x and Hg emissions reductions anticipated to result from amended ballast

standards. Estimated monetary benefits for CO 2 , NO x and Hg emission reductions are detailed in

chapter 17 of the final rule TSD.

The NPV of the monetized benefits associated with emissions reductions can be viewed

as a complement to the NPV of the consumer savings calculated for each TSL considered in this

rulemaking. Table VII. 36 shows an example of the calculation of the combined NPV including

benefits from emissions reductions for the case of TSL 3A for ballasts. The CO 2 values used in

the table correspond to the four scenarios for the valuation of CO 2 emission reductions presented

in section V.L.1.

241Table VII. 36 Adding Net Present Value of Consumer Savings to Present Value of Monetized Benefits from CO 2 and NO x Emissions Reductions at TSL 3A for Ballasts (Existing Technologies, Shift)

Category Present Value billion 2010$ Discount Rate

Benefits

Operating Cost Savings 15.1 7%
31.5 3% CO 2 Reduction Monetized Value (at $4.9/Metric Ton)* 0.40 5%

CO 2 Reduction Monetized Value (at $22.3/Metric Ton)* 2.01 3%

CO 2 Reduction Monetized Value (at $36.5/Metric Ton)* 3.38 2.5%

CO 2 Reduction Monetized Value (at $67.6/Metric Ton)* 6.12 3%

NO
x Reduction Monetized Value (at $2,537/Ton)* 0.03 7%

0.06 3%

Total Monetary Benefits ** 17.1 7%

33.5 3%
Costs

Total Incremental Installed Costs 5.05 7% 9.91 3%

Net Benefits/Costs

Including CO 2 and NO
x ** 12.1 7%
23.6 3%

* The CO 2 values represent global monetized values (in 2010$ ) of the social cost of CO 2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and $36.5 per metric ton are the averages of SCC distributions calculated using 5

- percent, 3

- percent, and 2. 5

- percent discount rates, respectively. The value of $67.6/t represents the 95 th percentile of the SCC distribution calculated using a 3

- percent discount rate. The value for NO
x (in 2010$ ) is the average of the low and high values used in DOE’s analysis. S ee section V.L.2 for details. ** Total Benefits for both the 3

- percent and 7

- percent cases are derived using the SCC value calculated at a 3

- percent discount rate, which is $22.3/t in 2010 (in 2010$ ).

Although adding the value of consumer savings to the values of emission reductions

wo uld provide a valuable perspective, the following should be considered: (1) the national

consumer savings are domestic U.S. consumer monetary savings found in market transactions,

242while the values of emissions reductions are based on estimates of marginal social costs, which,

in the case of CO 2 , are based on a global value; and (2) the assessments of consumer savings and

emission-related benefits are performed with different computer models, leading to different

timeframes for analysis. For ballasts, the present value of national consumer savings is measured

for the period in which units shipped (2014

– 2043) continue to operate. However, the time frames

of the benefits associated with the emission reductions differ. For example, the value of CO 2

emissions reductions reflects the present value of all future climate-related impacts due to

emitting a ton of CO 2 in that year, out to 2300. Chapter 17 of the final rule TSD presents

calculations of the combined NPV including benefits from emissions reductions for each TSL.

C. Conclusions

EPCA requires that any new or amended energy conservation standard for any type (or

class) of covered product be designed to achieve the maximum improvement in energy

efficiency that the Secretary determines is technologically feasible and economically justified.

(42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, the

Secretary must determine whether the benefits of the standard exceed its burdens after

considering, to the greatest extent practicable, the seven statutory factors discussed previously.

(42 U.S.C. 6295(o)(2)(B)(i)) The new or amended standard must also result in a significant

conservation of energy. (42 U.S.C. 6295(o)(3)(B))

DOE considered the impacts of standards at each trial standard level, beginning with the

maximum technologically feasible level, to determine whether that level met the evaluation

criteria. If the max tech level was not justified, DOE then considered the next most efficient level

243and undertook the same evaluation until it reached the highest efficiency level that is both

technologically feasible and economically justified and saves a significant amount of energy.

DOE discusses the benefits and/or burdens of each trial standard level in the following

sections. DOE bases its discussion on quantitative analytical results for each trial standard level

(presented in section VII.A) such as national energy savings, net present value (discounted at 7

and 3 percent), emissions reductions, industry net present value, life- cycle cost, and consumers’

installed price increases. Beyond the quantitative results, DOE also considers other burdens and

benefits that affect economic justification, including how technological feasibility, manufacturer

costs, and impacts on competition may affect the economic results presented.

To aid the reader as DOE discusses the benefits and burdens of each trial standard level,

DOE has included the following tables that present a summary of the results of DOE’s

quantitative analysis for each TSL

. These include the impacts on identifiable subgroups of

consumers, specifically low-income households, in stitutions of religious worship, and

in stitutions that serve low-income populations, who may be disproportionately affected by an

amended national standard. Section VII.B.1 presents the estimated impacts of each TSL for these

subgroups.

244Table VII. 37 Summary of Results for Ballasts (Existing Technologies, Shift) Category TSL 1 TSL 2 TSL 3A TSL 3B National Energy Savings (quads) 3.50 4.10 5.55 5.56

NPV of Consumer Benefits ( 2010$ billion) 3% discount rate 17.43 18.50 21.55 21.56 7% discount rate 8.52 8.91 10.06 10.06 Industry Impacts Industry NPV ( 2010$ million) 1,199 1,176 1,144 1,1 41
Industry NPV (% change) - 1.6%

- 3.5%

- 6.1%

- 6. 4 %

Cumulative Emissions Reduction CO 2 ( Mt ) 64 76 106 106
NO x (kt) 23 28 39 39 Hg (t) 0.88 1.05 1.47 1.47 Value of Cumulative Emissions Reduction

CO 2 ( 2010$ billion)* 0.24 to 3.68 0.29 to 4.40 0.40 to 6.12 0.40 to 6.13

NO X – 3% discount rate ( 2010$ million) 35 41 58 58

NO X – 7% discount rate ( 2010$ million) 18 22 31 31
Mean LCC Savings (replacement event , per ballast )** ( 2010$ ) IS and RS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 8

- foot slimline lamps 29 5 to 34 7 to 37 7 to 37

PS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 4

- foot MiniBP SO lamps Two 4

- foot MiniBP HO lamps - 2 to 26 6 to 32 6 to 28 6 to 28

IS and RS b allasts (not classified as sign ballasts) that operate : Two 8

- foot HO lamps 65 230 230 3 to 233

Sign b allasts that operate : 403 403 403 403

245Category TSL 1 TSL 2 TSL 3A TSL 3B
Four 8

- foot HO lamps
IS and RS residential ballasts that operate : Two 4

- foot MBP lamps 21 21 21

- 2 to 19

Median PBP (replacement event)*** (years) IS and RS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 8

- foot slimline lamps - 3.35 - 1.66 to 3.62 - 1.30 to 2.86

- 1.30 to 2.86

PS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 4

- foot MiniBP SO lamps Two 4

- foot MiniBP HO lamps 0.05 to 20.52 0.55 to 6.00 1.25 to 6.00 1.25 to 6.00

IS and RS b allasts ( not classified as sign ballasts) that operate : Two 8

- foot HO lamps - 0.66

- 0.69

- 0.69

- 0.53 to 4.57

Sign b allasts that operate : Four 8

- foot HO lamps - 0.16

- 0.16

- 0.16

- 0.16

IS and RS residential ballasts that operate : Two 4

- foot MBP lamps - 5.46

- 5.46

- 5.46

- 4.92

Distribution of Consumer LCC Impacts (see Table VII

. 16 through Table VII

. 23 ) Generation Capacity Reduction ( GW ) † 3.82 4.56 6.35 6.35
Employment Impacts Indirect Domestic Jobs (thousands) † 52 57 74 74

* Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2 emissions. ** For LCCs, a negative value means an increase in LCC by the amount indicated.

*** For PBPs, negative values indicate standards that reduce operating costs and installed costs; “N/A” indicates standard levels that do not reduce operating costs. † Changes in 2043.

246Table VII. 38 Summary of Results for Ballasts (Emerging Technologies, Roll-up) Category TSL 1 TSL 2 TSL 3A TSL 3B National Energy Savings (quads) 1.36 2.05 2.74 2.86

NPV of Consumer Benefits ( 2010$ billion) 3% discount rate 8.28 10.92 12.84 13.07
7% discount rate 4.59 5.85 6.67 6.73 Industry Impacts Industry NPV ( 2010$ million) 616 545 464 4 31
Industry NPV (% change) - 15.9%

- 25.7%

- 36. 7 %

- 41. 1 %

Cumulative Emissions Reduction CO 2 ( Mt ) 13 20 27 29
NO x (kt) 10 16 22 23 Hg (t) 0.18 0.29 0.40 0.42 Value of Cumulative Emissions Reduction

CO 2 ( 2010$ billion)* 0.06 to 0.80 0.09 to 1.27 0.12 to 1.75 0.13 to 1.84

NO X – 3% discount rate ( 2010$ million) 13 21 29 30

NO X – 7% discount rate ( 2010$ million) 6 10 13 14
Mean LCC Savings (replacement event , per ballast )** ( 2010$ ) IS and RS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 8

- foot slimline lamps 29 5 to 34 7 to 37 7 to 37

PS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 4

- foot MiniBP SO lamps Two 4

- foot MiniBP HO lamps - 2 to 26 6 to 32 6 to 28 6 to 28

IS and RS b allasts (not classified as sign ballasts) that operate : Two 8

- foot HO lamps 65 230 230 3 to 233

Sign b allasts that operate : 403 403 403 403

247Category TSL 1 TSL 2 TSL 3A TSL 3B
Four 8

- foot HO lamps
IS and RS residential ballasts that operate :

Two 4

- foot MBP lamps 21 21 21

- 2 to 19

Median PBP (replacement event)*** (years) IS and RS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 8

- foot slimline lamps - 3.35 - 1.66 to 3.62 - 1.30 to 2.86

- 1.30 to 2.86

PS ballasts (not classified as residential) that operate : Two 4

- foot MBP lamps Four 4

- foot MBP lamps Two 4

- foot MiniBP SO lamps Two 4

- foot MiniBP HO lamps 0.05 to 20.52 0.55 to 6.00 1.25 to 6.00 1.25 to 6.00

IS and RS b allasts ( not classified as sign ballasts) that operate : Two 8

- foot HO lamps - 0.66

- 0.69

- 0.69

- 0.53 to 4.57

Sign b allasts that operate : Four 8

- foot HO lamps - 0.16

- 0.16

- 0.16

- 0.16

IS and RS residential ballasts that operate : Two 4

- foot MBP lamps - 5.46

- 5.46

- 5.46

- 4.92

Distribution of Consumer LCC Impacts (see Table VII

. 16 through Table VII

. 23 ) Generation Capacity Reduction ( GW ) † 1.37 2.18 2.99 3.14
Employment Impacts Indirect Domestic Jobs (thousands) † 17 24 31 34

* Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2 emissions. ** For LCCs, a negative value means an increase in LCC by the amount indicated. *** For PBPs, negative values indicate standards that reduce operating costs and installed cos ts; “N/A” indicates standard levels that do not reduce operating costs. † Changes in 2043.

248DOE also notes that the economics literature provides a wide-ranging discussion of how

consumers trade off upfront costs and energy savings in the absence of government intervention.

Much of this literature attempts to explain why consumers undervalue energy efficiency

improvements. This undervaluation suggests that regulation that promotes energy efficiency can

produce significant net private gains (as well as producing social gains by, for example, reducing

pollution). There is evidence that consumers undervalue future energy savings as a result of: (1)

a lack of information, (2) a lack of sufficient salience of the long-term or aggregate benefits, (3)

a lack of sufficient savings to warrant delaying or altering purchases ( e.g. , an inefficient

ventilation fan in a new building or the delayed replacement of a water pump), (4) excessive

focus on the short term, in the form of inconsistent weighting of future energy cost savings

relative to available returns on other investments, (5) computational or other difficulties

associated with the evaluation of relevant tradeoffs, and (6) a divergence in incentives ( e.g. ,
renter versus owner; builder versus purchaser). Other literature indicates that with less than

perfect foresight and a high degree of uncertainty about the future, consumers may trade off

investments in efficiency at a higher than expected rate between current consumption and

uncertain future energy cost savings.

In its current regulatory analysis, DOE includes potential changes in the benefits and

costs of a regulation due to changes in consumer purchase decisions in two ways. First, if

consumers forego a purchase of a product in the standards case, it decreases sales for product

manufacturers and the cost to manufacturers is included in the MIA. Second, DOE accounts for

energy savings attributable only to products used by consumers in the standards case; if a

regulatory option decreases the number of products used by consumers, this decreases the

249potential energy savings from an energy conservation standard. DOE provides detailed estimates

of shipments and changes in the volume of product purchases under standards in chapter 10 of

the TSD. However, DOE’s current analysis does not explicitly control for differen ces in

consumer preferences, preferences across subcategories of products or specific features, or

consumer price sensitivity varying with household income (Reiss and White 2004).

While DOE is not prepared at present to provide a fuller quantifiable framework for

estimating the benefits and costs of changes in consumer purchase decisions due to an energy

conservation standard, DOE has posted a paper that discusses the issue of consumer welfare

impacts of appliance energy efficiency standards, and potential enhancements to the

62 methodology by which these impacts are defined and estimated in the regulatory process. DOE

is committed to developing a framework that can support empirical quantitative tools for

improved assessment of the consumer welfare impacts of appliance standards. DOE welcomes

comments on how to more fully assess the potential impact of energy conservation standards on

consumer choice and how to quantify this impact in its regulatory analysis in future rulemakings.

1. Trial Standard Level 3B

DOE first considered the most efficient level, TSL 3B, which would save an estimated

2.9 to 5.6 quads of energy through 2043. For the nation as a whole, TSL 3B would have a net

savings of $6.7 billion

– $10.1 billion at a 7-percent discount rate, and $13.1 bi llion

– $21.6 billion

at a 3-percent discount rate. The emissions reductions at TSL 3B are estimated at 29

– 106 million

62 Alan Sanstad, Notes on the Economics of Household Energy Consumption and Technology Choice. Lawrence Berkeley National Laboratory. 2010. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf

. 250metric tons ( Mt ) of CO 2 , 23

– 39 kilotons (kt) of NO x , and 0.42

– 1.47 tons of Hg. Total generating

capacity in 2043 is estimated to decrease compared to the reference case by 3.14

– 6.35 gigawatts

under TSL 3B. As seen in section VII.B.1, while consumers of most representative ballast types

have available ballast designs which result in positive LCC savings, ranging from $2.77

–
$402.86, some consumers experience negative LCC savings at TSL 3B. Consumers that

experience negative LCC savings, ranging from -$1 to -$2, are those that currently have a 2-lamp

8-foot HO T8 ballast (for the new construction / renovation event) or a 2-lamp 4-foot MBP T8

ballast in the residential sector (for the replacement event). The projected change in industry

value would range from a decrease of $77.6 million to a decrease of $301.2 million, or a net loss

of 6.4 percent to a net loss of 41.1 percent in INPV.

DOE based TSL 3B on the most efficient commercially available products for each

representative ballast type analyzed. This TSL represents the highest efficiency level that is

technologically feasible for a diversity of products (spanning several ballast factors, number of

lamps per ballast, and types of lamps operated) within each product class.

After carefully considering the analysis and weighing the benefits and burdens of TSL

3B, the Secretary has reached the following conclusion: At TSL 3B, the benefits of energy

savings, emissions reductions (both in physical reductions and the monetized value of those

reductions), and the positive net economic savings to the nation would be outweighed by the

economic burden on consumers (of residential T8 ballasts and 8-foot HO T8 ballasts) and the

large product and capital conversion costs that could result in a large reduction in INPV for

251manufacturers. Consequently, the Secretary has concluded that trial standard level 3B is not

economically justified.

2. Trial Standard Level 3A

DOE next considered TSL 3A, which would save an estimated 2.7 to 5.6 quads of energy

through 2043

— a significant amount of energy. For the nation as a whole, TSL 3A would have a

net savings of $6.7 billion

– $10.1 billion at a 7-percent discount rate, and $12.8 billion

– $21.6

billion at a 3-percent discount rate. The emissions reductions at TSL 3A are estimated at 27

– 106

Mt of CO 2 , 22

– 39 kt of NO x , and 0.40

– 1.47 tons of Hg. Total generating capacity in 2043 is

estimated to decrease compared to the reference case by 2.99

– 6.35 gigawatts under TSL 3A. As

seen in section VII.B.1, TSL 3A results in positive LCC savings for all representative ballast

types, ranging from $6

– $ 403 . The projected change in industry value would range from a

decrease of $74.5 million to a decrease of $268.6 million, or a net loss of 6.1 percent to a net loss

of 36.7 percent in INPV.

DOE based TSL 3A on the most efficient commercially available products for each

representative ballast type analyzed except for IS/RS ballasts in the residential sector and 8-foot

HO ballasts. This TSL represents the highest efficiency level for a diversity of products

(spanning several ballast factors, number of lamps per ballast, and types of lamps operated) at

which consumers of all ballasts types, including those consumers with T8 residential or 8-foot

HO systems, experience positive LCC savings.

252After considering the analysis, comments on the analysis, and the benefits and burdens of

TSL 3A, the Secretary has reached the following conclusion: TSL 3A offers the maximum

improvement in efficiency that is technologically feasible and economically justified, and will

result in significant conservation of energy. The Secretary has reached the conclusion that the

benefits of energy savings, emissions reductions (both in physical reductions and the monetized

value of those reductions), the positive net economic savings to the nation, and positive life-cycle

cost savings would outweigh the reduction in INPV for manufacturers. Therefore, DOE adopts

the energy conservation standards for ballasts at TSL 3A.

D. Backsliding

As discussed in section II.A, EPCA conta ins what is commonly known as an “anti

backsliding” provision, which mandates that the Secretary not prescribe any amended standard

that either increases the maximum allowable energy use or decreases the minimum required

energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Because DOE is evaluating

amended standards in terms of ballast luminous efficiency, DOE converted the existing BEF

standards to BLE to verify that the adopted standards did not constitute backsliding. The

following describes how DOE completed this comparison.

Ballast efficacy factor is defined as ballast factor divided by input power times 100.

Ballast factor, in turn, is currently defined as the test system light output divided by a reference

system light output. As mentioned in section IV.A, the active mode test procedure SNOPR

proposed a new method for calculating ballast factor. 75 FR 71570, 71577-8 (November 24,

2010 ). The new methodology entails measuring the lamp arc power of the test system and

253dividing it by the lamp arc power of the reference system. Because this new method calculates a

ballast factor equivalent to the existing method, DOE finds that this definition can be

incorporated into the equation for BEF. After this substitution, BEF can be converted to BLE by

dividing by 100 and multiplying by the appropriate reference arc power. Table VII. 39 contains

the existing standard in terms of BEF, the existing standard in terms of BLE, and the adopted

standard in terms of BLE.

Table VII. 39 Existing Federal BEF Standards and the Corresponding BLE
Application for operation of BEF Standard Equivalent BLE Adopted BLE Standard* Low Freq High Freq One F40T12 lamp 2.29 0. 831 0. 832 0. 87 5 Two F40T12 lamps 1.17 0. 849 0. 850 0. 899 Two F96T12 lamps 0.63 0. 888 0. 897 0. 91 8 Two F96T12/HO lamps 0.39 0. 777 0. 780 0. 88 6

One F34T12 lamp 2.61 0. 777 0. 778 0. 80 9 Two F34T12 lamps 1.35 0. 804 0. 805 0. 8 41 Two F96T12/ES lamps 0.77 0. 876 0. 884 0. 913 Two F96T12/HO/ES lamps 0.42 0. 711 0. 713 0. 88 1 *For ballast types that could be in more than one product class, this table presents the lowest standard the ballast would be required to meet. For example, 8

- foot HO ballasts can have a PS starting method in addition to IS or RS. Therefore, DOE presents the standard for the PS product cl ass as it is the lowest.

As seen in Table VII. 39 , the standards adopted in this final rule are higher than the

existing standards, regardless of low or high frequency operation. As such, the adopted standards

do not decrease the minimum required energy efficiency of the covered products and therefore

do not violate the anti-backsliding provision in EPCA.

254VIII. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

Section 1(b)(1) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR

51735 (Oct. 4, 1993), requires each agency to identify the problem that it intends to address,

including, where applicable, the failures of private markets or public institutions that warrant

new agency action, as well as to assess the significance of that problem. The problems that

today’s standards address are as follows:

(1) There is a lack of consumer information and/or information processing capability about

energy efficiency opportunities in lighting market.

(2) There is asymmetric information (one party to a transaction has more and better

information than the other) and/or high transactions costs (costs of gathering information

and effecting exchanges of goods and services).

(3) There are external benefits resulting from improved energy efficiency of fluorescent

lamp ballasts that are not captured by the users of such equipment. These benefits include

externalities related to environmental protection and energy security that are not reflected

in energy prices, such as reduced emissions of greenhouse gases.

In addition, DOE has determined that today’s regulatory action is an “economically

significant regulatory action” under section 3(f)(1) of Executive Order 12866. Accordingly,

section 6(a)(3) of the Executive Order requires that DOE prepare a regulatory impact analysis

(RIA) on today’s rule and that the Office of Information and Regulatory Affairs (OIRA) in the

OMB review this rule. DOE presented to OIRA for review the draft rule and other documents

255prepared for this rulemaking, including the RIA, and has included these documents in the

rulemaking record. The assessments prepared pursuant to Executive Order 12866 can be found

in the technical support document for this rulemaking.

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on

January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563 is supplemental to and explicitly

reaffirms the principles, structures, and definitions governing regulatory review established in

Executive Order 12866. To the extent permitted by law, agencies are required by Executive

Order 13563 to: (1) propose or adopt a regulation only upon a reasoned determination that its

benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2)

tailor regulations to impose the least burden on society, consistent with obtaining regulatory

objectives, taking into account, among other things, and to the extent practicable, the costs of

cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those

approaches that maximize net benefits (including potential economic, environmental, public

health and safety, and other advantages; distributive impacts; and equity); (4) to the extent

feasible, specify performance objectives, rather than specifying the behavior or manner of

compliance that regulated entities must adopt; and (5) identify and assess available alternatives

to direct regulation, including providing economic incentives to encourage the desired behavior,

such as user fees or marketable permits, or providing information upon which choices can be

made by the public.

DOE emphasizes as well that Executive Order 13563 requires agencies “to use the best

available techniques to quantify anticipated present and future benefits and costs as accurately as

256possible.” In its guidance, the Office of Information and Regulatory Affairs has emphasized that

such techniques may include “identifying changing future compliance costs that might resu lt

from technological innovation or anticipated behavioral changes.” For the reasons stated in the

preamble, DOE finds that t oday’s final rule is consistent with these principles, including the

requirement that, to the extent permitted by law, agencies adopt a regulation only upon a

reasoned determination that its benefits justify its costs and select, in choosing among alternative

regulatory approaches, those approaches that maximize net benefits.

B. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an initial

regulatory flexibility analysis (IRFA) for any rule that by law must be proposed for public

comment, and a final regulatory flexibility analysis (FRFA) for any such rule that an agency

adopts as a final rule, unless the agency certifies that the rule, if promulgated, will not have a

significant economic impact on a substantial number of small entities. As required by Executive

Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461

(August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that

the potential impacts of its rules on small entities are properly considered during the rulemaking

process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the

General Counsel’s website ( www.gc.doe.gov ). DOE reviewed the April 2011 NOPR and

today’s final rule u nder the provisions of the Regulatory Flexibility Act and the procedures and

policies published on February 19, 2003.

257As presented and discussed in the following sections, the FRFA describes potential

impacts on small manufacturers associated with the required product and capital conversion cost s

at each TSL and discusses alternatives that could minimize these impacts. Chapter 13 of the

TSD contains more information about the impact of this rulemaking on manufacturers.

1. Statement of the need for, and objectives of, the rule

The reasons why DOE i s establishing the standards in today’s final rule and the

objectives of these standards are provided elsewhere in the preamble and not repeated here.

2. Summary of and responses to the significant issues raised by the public comments, and a statement of any changes made as a result of such comments

This FRFA incorporates the IRFA and public comments received on the IRFA and the

economic impacts of the rule. DOE provides responses to these comments in the discussion

below on the compliance impacts of the rule and elsewhere in the preamble. DOE modified the

standards adopted in today’s final rule in response to comments received, including those from

small businesses, as described in the preamble.

3. Description and Estimated Number of Small Entities Regulated

a. Methodology for Estimating the Number of Small Entities

For manufacturers of fluorescent lamp ballasts, the Small Business Administration (SBA)

has set a size threshold, which defines those entities classified as “small businesses” for the

purpos es of the statute. DOE used the SBA’s small business size standards to determine whether

any small entities would be subject to the requirements of the rule. 65 FR 30836, 30848 (May 15,

2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The

258size standards are listed by NAICS code and industry description and are available at

www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf . Fluorescent

lamp ballast manufacturing is classified under NAICS 335311, “Power, Distribution and

Specialty Transformer Manufacturing .” The SBA sets a threshold of 750 employees or less for

an entity to be considered as a small business for this category.

In the April 2011 NOPR, DOE identified approximately 10 small businesses that produce

covered products and can be considered small business manufacturers. 76 FR 20090, 20171

(April 11, 2011). Radionic disagreed with this estimate, stating that they are the only domestic

ballast manufacturer, and noted that they were not contacted by DOE. (Radionic, No. 36 at p. 1)

During its analysis for the NOPR, DOE identified Radionic as a small business manufacturer that

could potentially be affected by new or amended standards. Radionic was included in DOE’s

estimate of ten small manufacturers, which also includes U.S. manufacturers with foreign

production. DOE contacted Radionic and received a survey response during the NOPR analysis

period. Two other small businesses consented to being interviewed during the MIA interviews.

DOE also obtained information about small business impacts while interviewing large

manufacturers.

b. Fluorescent Lamp Ballast Industry Structure

Four major manufacturers with non-domestic production supply the vast majority of the

marketplace. None of the four major manufacturers is considered a small business. The

remaining market share is held by foreign manufacturers and several smaller domestic

companies with very small market shares. Even for these U.S.-operated firms, most production

259is outsourced to overseas vendors or captive overseas manufacturing facilities. Some very

limited production takes place in the United States

– mostly magnetic ballasts for specialty

applications. DOE is unaware of any fluorescent lamp ballast companies, small or large, that

produce only domestically. See chapter 3 of the final rule TSD for further details on the

fluorescent lamp ballast market.

c. Comparison between Large and Small Entities

The four large manufacturers typically offer a much wider range of designs of covered

ballasts than small manufacturers. Ballasts can be designed, or optimized, to operate different

lamp lengths and numbers of lamps under various start methods, often in combination with

various additional features. Large manufacturers typically offer many SKUs per product line to

meet this wide range of potential specifications. Generally, one product family shares some

fu ndamental characteristic ( i.e. , lamp diameter, number of lamps, etc.) and hosts a large number

of SKUs that are manufactured with minor variations on the same product line. Some product

lines, such as the 4-foot MBP IS ballast, are manufactured in high volumes, while other products

may be produced in much lower volumes but can help manufacturers meet their customers’

specific needs and provide higher margin opportunities. For their part, small manufacturers

generally do not have the volume to support as wide a range of products.

Beyond variations in ballast types and features, the large manufacturers also offer

multiple tiers of efficiency, typically including a baseline efficiency product and a highefficiency product within the same family. On the other hand, some small manufacturers

frequently only offer one efficiency level in a given product class to reduce the number of SKUs

260and parts they must maintain. This strategy is important to small-scale manufacturers because

many product development costs ( e.g. , testing, certification, and marketing) are relatively fixed

per product line.

Small manufacturers are able to compete in the fluorescent lamp ballast industry despite

the dominance of the four major manufacturers due, in large part, to the fragmented nature of the

fixture industry. The largest four fixture manufacturers comprise about 60 percent of the

industry, while as many as 200 smaller fixture manufacturers have the remaining share. Many

small ballast manufacturers have developed relationships with these small fixture manufacturers,

whose production volumes may not be attractive to the larger players. The same structure

applies to the electrical distributor market

– while small ballast manufacturers often cannot

compete for the business of the largest distributors, they are able to successfully target small

distributors, often on a regional basis.

Lastly, like the major manufacturers, small manufacturers usually offer products in

addition to those fluorescent lamp ballasts covered by this rulemaking, such as dimming ballasts,

LED drivers, and compact fluorescent ballasts.

4. Description and Estimate of Compliance Requirements

Several manufacturers commented on the potential impacts of energy conservation

standards on small fluorescent lamp ballast manufacturers. Radionic noted that small

manufacturers would be burdened because they have fewer engineering resources and less

capital to deploy toward redesign and UL testing compared to large manufacturers and suggested

261that consideration for exemption be given to small manufacturers. (Radionic, No. 36 at p. 1) In

contrast, Lutron stated that they believe that the impacts of new and amended standards for

fluorescent lamp ballasts would be negligible for small manufacturers because small

manufacturers would concentrate in areas such as emerging technologies

— where there is

potential for growth and high margins

— rather than try to compete with large manufacturers in a

high-volume, traditional ballast market. (Lutron, Public Meeting Transcript, No. 43 at p. 207)

Philips agreed that small manufacturers do not have a significant presence in the traditional

ballast market. Philips noted, however, that many sign ballast manufacturers, who are also small

manufacturers, may be adversely affected by the switch from magnetic to electronic sign ballasts

driven by proposed standards, which may force sign ballast manufacturers to source their

ballasts. (Philips, Public Meeting Transcript, No. 43 at pp. 208- 9)

Small manufacturers have the potential to be significantly affected by this rule for the

reasons suggested by Radionic . M ost small ballast manufacturers, however, would be able to

remain viable by focusing on niche markets or emerging technologies. DOE details its

conclusions on the impacts on and expected responses of small manufacturers below.

Additionally, because sign ballast manufacturers may be differentially impacted by

today’s standards , DOE analyzed sign ballasts as a manufacturer subgroup in section VII.B.2.d

.
DOE made several attempts to contact sign ballast manufacturers for interviews but was unable

to speak directly to any of the manufacturers who specialize in sign ballasts. As such, DOE’s

subgroup analysis was developed based on information obtained from interviews with large

manufacturers and from manufacturer websites.

262At TSL3A, the level adopted in today’s final rule, DOE estimates capital conversion

costs of $0.3 million and product conversion costs of $1.0 million for a typical small

manufacturer, compared to capital and product conversion costs of $6.3 million and $9.7 million,

respectively, for a typical large manufacturer. These costs and their impacts are described in

detail in the following sections.

a. Capital Conversion Costs

Those small manufacturers DOE interviewed did not expect increased capital conversion

costs to be a major concern because most of them source all or the majority of their products

from Asia. Those that source their products would likely not make the direct capital investments

themselves. Small manufacturers experience the impact of sourcing their products through a

higher cost of goods sold, and thus a lower operating margin, as compared to large

manufacturers. The capital costs estimated are largely associated with those small manufacturers

pr oducing magnetic ballasts. DOE estimates capital costs of approximately $0.3 million for a

typical small manufacturer at TSL 3A, based on the cost of converting magnetic production

lines, such as sign ballasts, to electronic production lines.

Another challenge facing the industry is the component shortage discussed in the section

V.H .4.d

. As with large manufacturers, the component shortage is a significant issue for small

manufacturers, but some small manufacturers stated that the shortage does not differentially

impact them. At times, they actually can obtain components more easily than large

manufacturers. Because their volumes are lower, they generally pay higher prices for parts than

263their larger competitors, which incentivizes suppliers to fill small manufacturers’ orders

relatively quickly. The lower-volume orders also allow small manufacturers to piggyback off the

orders for certain components that are used throughout the consumer electronics industry.

b. Product Conversion Costs

While capital conversion costs were not a large concern to the small manufacturers DOE

interviewed, product conversion costs could adversely impact small manufacturers at TSL 3A,

the level adopted in today’s final rule. To estimate the differential impacts of the adopted

standard on small manufacturers, DOE compared their cost of compliance with that of the major

manufacturers. First, DOE examined the number of basic models and SKUs available from each

manufacturer to determine an estimate for overall compliance costs. The number of basic models

and SKUs attributed to each manufacturer is based on information obtained during manufacturer

interviews and an examination of the different models advertised by each on company websites.

DOE assumed that the product conversion costs required to redesign basic models and test and

certify all SKUs to meet the standard levels presented in today’s final rule would be lowe r per

model and per SKU for small manufacturers, as detailed below. (A full description of DOE’s

methodology for developing product conversion costs is found in section V.H.1.a and in chapter

13 of the final rule TSD.) Table VIII.1 compares the estimated product conversion costs of a

typical small manufacturer as a percentage of their annual R&D expense to those of a typical

large manufacturer.

264Table VIII.1 Comparison of a Typical Small and Large Manufacturer’s Product Conversion Costs to Annual R&D Expense Large Manufacturer Small Manufacturer Product Conversion Costs for a Typical Large Manufacturer ( 2010$ millions) Product Conversion Costs as a Percentage of Annual R&D

Expense Product Conversion Costs for a Typical Small Manufacturer ( 2010$ millions) Product Conversion Costs as a Percentage of Annual R&D

Expense Baseline $0.00 0% $0.00 0% TSL 1 $1.41 16% $0.14 38% TSL 2 $6.15 71% $0.63 163% TSL 3A $9.68 111% $0.99 257% TSL 3B $12.53 144% $1.28 333%

Based on discussions with manufacturers, DOE estimated that the cost to fully redesign

every ballast model for large manufacturers is approximately $120,000 per model and the cost to

test and certify every SKU is approximately $20,000 per SKU. A typical major manufacturer

offers approximately 80 basic covered models and 300 SKUs. Based on DOE’s GRIM analysis,

a typical major manufacturer has an annual R&D expense of $8.7 million. Because not all

products would need to be redesigned at TSL 3A, DOE estimates $9.7 million in product

conversion costs for a typical major manufacturer at TSL 3A (compared to $15.6 million if all

products had to be fully redesigned), which represents 111 percent of its annual R&D expense.

This means that a typical major manufacturer could redesign its products in just over a year if it

were to devote its entire R&D budget for fluorescent lamp ballasts to product redesign and could

retain the engineering resources.

DOE’s research indicated that a typical small manufacturer offers approximately 50 basic

covered models and 100 SKUs. However, based on manufacturer interviews, DOE does not

believe that small manufacturers would incur the same level of costs per model and SKU as large

265manufacturers. Small manufacturers would not be as likely to redesign models in-house as larg e

manufacturers. Instead, they would source and rebrand products from overseas manufacturers

who supply their ballasts. As a result, DOE assumed a lower R&D investment, in absolute

dollars, per model. Because their products are effectively sourced, DOE projects smaller

manufacturers would face a higher level of cost of goods sold ( i.e. , a higher MPC). Therefore, in

a competitive environment, small manufacturers would earn a lower markup than their larger

peers and consequently operate at lower margins. Small manufacturers would also have to test

and certify every SKU they offer, but they would not conduct the same extent of pilot runs and

internal testing as large manufacturers because less production takes place in internal factories.

As such, DOE estimate s that small manufacturers’ testing and certification costs are expected to

be $10,000 per SKU for UL and other certifications. Thus, the product conversion costs for a

typical small manufacturer could total $1.6 million. Because not all products would need to be

fully redesigned at TSL 3A, however, DOE estimates product conversion costs of $1.0 million at

TSL 3A. Based on scaling GRIM results to an average small-manufacturer market share of 1.0

percent, DOE assumed that a small manufacturer has an annual R&D expense of $0.4 million, so

the estimated product conversion costs at TSL 3A would represent 257 percent of its annual

R&D expense. This means that a typical small manufacturer could redesign its products within

the three year compliance period if it were to devote its entire R&D budget for fluorescent lamp

ballasts to product redesign and could retain the engineering resources.

c. Summary of Compliance Impacts

Although the conversion costs required can be considered substantial for all companies,

the impacts could be relatively greater for a typical small manufacturer because of much lower

266production volumes and the relatively fixed nature of the R&D resources required per model.

Table VIII.2 compares the total conversion costs of a typical small manufacturer as a percentage

of annual revenue and earnings before interest and taxes (EBIT) to those of a typical large

manufacturer.

Table VIII.2 Comparison of a Typical Small and Large Manufacturer’s Total Conversion Costs to Annual Revenue and EBIT Large Manufacturer Small Manufacturer Total Conversion Costs for a

Typical Large Mfr.

( 2010$ millions) Total Conversion Costs as a Percentage of Annual Revenue Total Conversion Costs as a Percentage of Annual

EBIT Total Conversion Costs for a

Typical Small Mfr.

( 2010$ millions) Total Conversion Costs as a Percentage of Annual Revenue Total Conversion Costs as a Percentage of Annual

EBIT Baseline $0.00 0% 0% $0.00 0% 0% TSL 1 $3.99 2% 21% $0.26 2% 37% TSL 2 $10.68 5% 55% $0.83 8% 119% TSL 3A $16.02 7% 82% $1.27 12% 182% TSL 3B $19.14 8% 99% $1.58 15% 226%

As seen in Table VIII.2, the impacts for a typical small manufacturer are relatively

greater than for a large manufacturer at TSL 3A. Total conversion costs represent 182 percent of

annual EBIT for a typical small manufacturer compared to 82 percent of annual EBIT for a

typical large manufacturer. DOE believes these estimates reflect a worst-case scenario because

they assume small manufacturers would redesign all proprietary models immediately, and not

take advantag e of the industry’s supply chain dynamics or take other steps to mitigate the

impacts. DOE anticipates, however, that small manufacturers would take several steps to

mitigate the costs required to meet new and amended energy conservation standards.

267At TSL 3A, it is more likely that ballast manufacturers would temporarily reduce the

number of SKUs they offer as in-house designs to keep their product conversion costs at

manageable levels in the years preceding the compliance date. As noted previously

, the typical

small manufacturer business model is not predicated on the supply of a wide range of models and

specifications. Small manufacturers frequently either focus on a few niche markets or on

customers seeking only basic, low-cost solutions. They therefore can satisfy the needs of their

customers with a smaller product portfolio than large manufacturers who often compete on brand

reputation and the ability to offer a full product offering. As such, DOE believes that under the

adopted standards small businesses would likely selectively upgrade existing product lines to

offer products that are in high demand or offer strategic advantage. Small manufacturers could

then spread out further investments over a longer time period by upgrading some product lines

prior to the compliance date while sourcing others until resources allow

— and the market

supports

— in -house design. Furthermore, while the initial redesign costs are relatively large, the

estimates assume small manufacturers would bring compliant ballasts to market in concert with

large manufacturers. There is a possibility some small manufacturers would conserve resources

by waiting to upgrade certain products until new compliant baseline designs become available or

their in-house development is less resource-intensive. The commonality of many consumer

electronics components, designs, and products fosters considerable sharing of experience

throughout the electronics supply chain, particularly when unrestricted by proprietary

technologies. DOE did not find any intellectual property restrictions that would prevent small

manufacturers from making the technologies necessary to meet today’s adopted levels.

2685. Steps taken to minimize impacts on small entities and reasons why other significant alternatives to to day’s final rule were rejected.

DOE modified the standards established in today’s final rule from those proposed in the

April 2011 NOPR as discussed previously and based on comments and additional test data

received from interested parties. These modifications include a separate product class for

residential ballasts, which establishes less stringent standards for these ballasts than the NOPR,

and new standard equations for all product classes.

The previous discussion also analyzes impacts on small businesses that would result from

the other TSLs DOE considered. Though TSLs lower than the adopted TSL are expected to

reduce the impacts on small entities, DOE is required by EPCA to establish standards that

achieve the maximum improvement in energy efficiency that are technically feasible and

economically justified, and result in a significant conservation of energy. Thus DOE rejected the

lower TSLs.

In addition to the other TSLs being considered, the TSD includes a regulatory impact

analysis in chapter 18 . For fluorescent lamp ballasts, this report discusses the following policy

alternatives: (1) no standard, (2) consumer rebates, (3) consumer tax credits, (4) manufacturer tax

credits, and (5) early replacement. DOE does not intend to consider these alternatives further

because they are either not feasible to implement, or not expected to result in energy savings as

large as those that would be achieved by the standard levels under consideration. Thus, DOE

rejected these alternatives and is adopting the standards set forth in this rulemaking.

269DOE notes that small manufacturers, particularly those small sign ballast manufacturers

who would be required to move from magnetic to electronic sign ballasts as a result of today’s

standards, may apply to DOE for an exemption from the standard pursuant to 42 U.S.C. 6295(t).

The process applicants must follow to request an exemption and DOE’s process for making a

decision on a particular request are set forth in DOE’s regulations at 10 CFR 430 Subpart E. Comment [bk10]: Change recommended by OIRA.

C. Review Under the Paperwork Reduction Act

Manufacturers of fluorescent lamp ballasts must certify to DOE that their products

comply with any applicable energy conservation standards. In certifying compliance,

manufacturers must test their products according to the DOE test procedures for fluorescent lamp

ballasts, including any amendments adopted for those test procedures. DOE has established

regulations for the certification and recordkeeping requirements for all covered consumer

products and commercial equipment, including fluorescent lamp ballasts. (76 FR 12422 (March

7, 2011). The collection- of -information requirement for the certification and recordkeeping is

subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This

requirement has been approved by OMB under OMB control number 1910-1400. Public

reporting burden for the certification is estimated to average 20 hours per response, including the

time for reviewing instructions, searching existing data sources, gathering and maintaining the

data needed, and completing and reviewing the collection of information.

Notwithstanding any other provision of the law, no person is required to respond to, nor

shall any person be subject to a penalty for failure to comply with, a collection of information

270subject to the requirements of the PRA, unless that collection of information displays a currently

valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

DOE prepared an EA of the impacts of the new and amended rule pursuant to the

National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq .), the regulations of the

Council on Environmental Quality (40 CFR parts 1500 –1508), and DOE’s regulations for

compliance with the National Environmental Policy Act of 1969 (10 CFR part 1021). This

assessment includes an examination of the potential effects of emission reductions likely to result

from the rule in the context of global climate change, as well as other types of environmental

impacts. The EA has been incorporated into the final rule TSD as chapter 16. Before issuing this

final rule for fluorescent lamp ballasts, DOE considered public comments and issued a FONSI as

part of a final EA.

E. Review Under Executive Order 13132

Executive Order 13132, “Federalism.” 64 FR 43255 (Aug. 10, 1999) imposes certain

requirements on Federal agencies formulating and implementing policies or regulations that

preempt State law or that have Federalism implications. The Executive Order requires agencies

to examine the constitutional and statutory authority supporting any action that would limit the

policymaking discretion of the States and to carefully assess the necessity for such actions. The

Executive Order also requires agencies to have an accountable process to ensure meaningful and

timely input by State and local officials in the development of regulatory policies that have

Federalism implications. On March 14, 2000, DOE published a statement of policy describing

the intergovernmental consultation process it will follow in the development of such regulations.

27165 FR 13735. EPCA governs and prescribes Federal preemption of State regulations as to energy

conservation for the products that are the subject of today’s final rule. States can petition DOE

for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42

U.S.C. 6297) No further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

With respect to the review of existing regulations and the promulgation of new

regula tions, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on Federal

agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors

and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard

for affected conduct rather than a general standard and promote simplification and burden

reduction. 61 FR 4729 (Feb. 7, 1996). Section 3(b) of Executive Order 12988 specifically

requires that Executive agencies make every reasonable effort to ensure that the regulation: (1)

clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal

law or regulation; (3) provides a clear legal standard for affected conduct while promoting

simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately

defines key terms; and (6) addresses other important issues affecting clarity and general

draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive

Order 12988 requires Executive agencies to review regulations in light of applicable standards in

section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one

or more of them. DOE has completed the required review and determined that, to the extent

permitted by law, this final rule meets the relevant standards of Executive Order 12988.

272G. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal

agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments

and the private sector. Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a new or

amended regulatory action likely to result in a rule that may cause the expenditure by State,

local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more

in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal

agency to publish a written statement that estimates the resulting costs, benefits, and other effects

on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to

develop an effective process to permit timely input by elected officers of State, local, and Tribal

governments on a “significant intergovernmental mandate,” and requires an agency plan for

giving notice and opportunity for timely input to potentially affected small governments before

establishing any requirements that might significantly or uniquely affect small governments. On

March 18, 1997, DOE published a statement of policy on its process for intergovernmental

consultation under UMRA. 62 FR 12820. DOE’s policy statement is also available at

www.gc.doe.gov

.

DOE has concluded that this final rule would likely require expenditures of $100 million

or more on the private sector. Such expenditures may include: (1) investment in research and

development and in capital expenditures by fluorescent lamp ballasts manufacturers in the years

between the final rule and the compliance date for the new standards, and (2) incremental

additional expenditures by consumers to purchase higher-efficiency fluorescent lamp ballasts,

starting at the compliance date for the applicable standard.

273Section 202 of UMRA authorizes a Federal agency to respond to the content

requirements of UMRA in any other statement or analysis that accompanies the final rule. 2

U.S.C. 1532(c). The content requirements of section 202(b) of UMRA relevant to a private

sector mandate substantially overlap the economic analysis requirements that apply under section

325(o) of EPCA and Executive Order 12866. The SUPPLEMENTARY INFORMATION

section of the notice of final rulemaking and the “Regulatory Impact Analysis” section of the

TSD for this final rule respond to those requirements.

Under section 205 of UMRA, DOE is obligated to identify and consider a reasonable

number of regulatory alternatives before promulgating a rule for which a written statement under

section 202 is required. 2 U.S.C. 1535(a). DOE is required to select from those alternatives the

most cost-effective and least burdensome alternative that achieves the objectives of the rule

unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative

is inconsistent with law. As required by 42 U.S.C. 6295(g), today’s fina l rule would establish

energy conservation standards for fluorescent lamp ballasts that are designed to achieve the

maximum improvement in energy efficiency that DOE has determined to be both technologically

feasible and economically justified. A full discussion of the alternatives considered by DOE is

presented in the “Regulatory Impact Analysis” section of the TSD for today’s final rule.

H. Review Under the Treasury and General Government Appropriations Act, 1999

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L.

105 -277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that

274may affect family well-being. This rule would not have any impact on the autonomy or integrity

of the family as an institution. Accordingly, DOE has concluded that it is not necessary to

prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

DOE has determined, under Executive Order 12630, “Governmental Actions and

Interference with Constitutiona lly Protected Property Rights” 53 FR 8859 (March 18, 1988), that

this regulation would not result in any takings that might require compensation under the Fifth

Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 2001

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44

U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information

to the public under guidelines established by each agency pursuant to general guidelines issued

by OMB. OMB’s guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE’s

guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed today’s final rule

under the OMB and DOE guidelines and has concluded that it is consistent with applicable

policies in those guidelines.

K. Review Under Executive Order 13211

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect

Energy Supply, Distribution, or Use” 66 FR 28355 (May 22, 2001), requi res Federal agencies to

prepare and submit to OIRA at OMB, a Statement of Energy Effects for any significant energy

275action. A “significant energy action” is defined as any action by an agency that promulgates or is

expected to lead to promulgation of a final rule, and that: (1) is a significant regulatory action

under Executive Order 12866, or any successor order; and (2) is likely to have a significant

adverse effect on the supply, distribution, or use of energy, or (3) is designated by the

Administrator of OIRA as a significant energy action. For any significant energy action, the

agency must give a detailed statement of any adverse effects on energy supply, distribution, or

use should the proposal be implemented, and of reasonable alternatives to the action and their

expected benefits on energy supply, distribution, and use.

DOE has concluded that today’s regulatory action, which sets forth energy conservation

standards for fluorescent lamp ballasts, is not a significant energy action because the new and

amended standards are not likely to have a significant adverse effect on the supply, distribution,

or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly,

DOE has not prepared a Statement of Energy Effects on the final rule.

L. Review Under the Information Quality Bulletin for Peer Review

On December 16, 2004, OMB, in consultation with the Office of Science and Technology

Policy, issued its Final Information Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664

(Jan. 14, 2005). The Bulletin establishes that certain scientific information shall be peer

reviewed by qualified specialists before it is disseminated by the Federal Government, including

influential scientific information related to agency regulatory actions. The purpose of the bulletin

is to enhance the quality and credibility of the Government’s scientific information. Under the

Bulletin, the energy conservation standards rulemaking analyses are “influential scientific

276information,” which the Bulletin defines as “scientific information the agency reasonably can

determine will have or does have a clear and substantial impact on important public policies or

private sector decisions.” 70 FR 2667.

In response to OMB’s Bulletin, DOE conducted formal in -progress peer reviews of the

energy conservation standards development process and analyses and has prepared a Peer

Review Report pertaining to the energy conservation standards rulemaking analyses. Generation

of this report involved a rigorous, formal, and documented evaluation using objective criteria and

qualified and independent reviewers to make a judgment as to the technical/scientific/business

merit, the actual or anticipated results, and the productivity and management effectiveness of

programs and /or projects. The “Energy Conservation Standards Rulemaking Peer Review

Report” dated February 2007 has been disseminated and is available at the following Web site:

www1.eere.energy.gov/buildings/appliance_standards/peer_review.html

.

M. Congressional Notification

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this

rule prior to its effective date. The report will state that it has been determined that the rule is a

“major rule” as defined by 5 U.S.C. 804(2).

IX. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today’s final rule.

277List of Subjects in 10 CFR Part 430

278________________________________ Administrative practice and procedure, Confidential business information, Energy

conservation, Household appliances, Imports, Intergovernmental relations, Reporting and

recordkeeping requirements, and Small businesses.

Issued in Washington, DC, on

Henry Kelly Acting Assistant Secretary of Energy Energy Efficiency and Renewable EnergyFor the reasons set forth in the preamble, DOE amends part 430 of chapter II, subchapter

D, of title 10 of the Code of Federal Regulations, to read as set forth below:

PART 430 - ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

1. The authority citation for Part 430 continues to read as follows:

Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

2. Section 430.2 is amended by adding the definition of “ballast luminous efficiency” in

alphabetical order to read as follows:

§430.2 Definitions.

* * * * *

Ballast luminous efficiency means the total fluorescent lamp arc power divided by the

fluorescent lamp ballast input power multiplied by the appropriate frequency adjustment factor,

as defined in Appendix Q1 of subpart B of this part.

* * * * *

3. Appendix Q to subpart B of part 430 is amended by adding introductory text after the

heading to read as follows:

277Appendix Q to Subpart B of Part 430

— Uniform Test Method for Measuring the Energy

Consumption of Fluorescent Lamp Ballasts

Appendix Q is effective until [ INSERT DATE 3 YEARS AFTER DATE OF

PUBLICATION IN THE FEDERAL REGISTER ]. After this date, all fluorescent lamp

ballasts shall be tested using the provisions of Appendix Q1.

* * * * *

4. Appendix Q1 to subpart B of part 430 is amended by adding introductory text after the

heading to read as follows:

Appendix Q1 to Subpart B of Part 430

— Uniform Test Method for Measuring the Energy

Consumption of Fluorescent Lamp Ballasts

Appendix Q1 is effective on [INSERT DATE 3 YEARS AFTER DATE OF PUBLICATION

IN THE FEDERAL REGISTER ]. Prior to this date, all fluorescent lamp ballasts shall be tested

using the provisions of Appendix Q.

* * * * *

5. Section 430.32 is amended by:

a. Revising paragraph (m)(1) introductory text.

b. Adding paragraphs (m)(8), (m)(9), and m(10).

The revision and additions read as follows:

§ 430.32 Energy and water conservation standards and their effective dates.

278* * * * *

(m)(1) Fluorescent lamp ballasts (other than specialty application mercury vapor lamp ballasts)

.
Except as provided in paragraphs (m)(2), (m)(3), (m)(4), (m)(5), (m)(6), (m)(7), (m)(8), (m)(9),

and (m)(10) of this section, each fluorescent lamp ballast

-

* * * * *

(8) Except as provided in paragraph (m)(9) of this section, each fluorescent lamp ballast

–

(i ) Manufactured on or after [INSERT DATE 3 YEARS AFTER DATE OF PUBLICATION

IN THE FEDERAL REGISTER ] ;

(ii) Designed

–

(A) To operate at nominal input voltages at or between 120 and 277 volts;

(B) To operate with an input current frequency of 60 Hertz; and

(C) For use in connection with fluorescent lamps (as defined in §430.2)

(iii) Shall have

–

(A) A power factor of 0.9 or greater except for those ballasts defined in paragraph (m)(8)(iii)(B)

of this section;

(B) A power factor of 0.5 or greater for residential ballasts, which are defined in (m)(8)(vi) of

this section ;

(C) A ballast luminous efficiency not less than the following:

BLE=A/(1+B* average total lamp arc power^

- C ) Where A, B, and C a re as f ollows: Description A B C Instant start and rapid start ballasts (not classified as residential) that are designed to operate: 4

- foot medium bipin lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 0.993 0.2 7 0.25

Programmed start ballasts (not classified as residential) that are designed to operate: 4

- foot medium bipin lamps 0.993 0.5 1 0.37

2792

- foot U

- shaped lamps 4

- foot miniature bipin standard output lamps 4

- foot miniature bipin high output lamps Instant start and rapid start ballasts (not classified as sign ballasts) that are designed to operate 8

- foot high output lamps 0.993 0.38 0.25

Programmed start ballasts (not classified as sign ballasts) that are designed to operate 8

- foot high output lamp s 0.973 0.70 0.37

Sign b allasts that operate 8

- foot high output lamps 0.993 0. 47 0.25
Instant start and rapid start residential ballasts that operate: 4

- foot medium bipin lamps 2

- foot U

- shaped lamps 8

- foot slimline lamps 0.993 0.41 0.25

Programmed start residential ballasts that are designed to operate:
4

- foot medium bipin lamps
2

- foot U

- shaped lamps 0.973 0.71 0.37

(iv) Instant start, rapid start, and programmed start are defined in Appendix Q1 of subpart B of

this part. Average total lamp arc power is as defined and measured in accordance with Appendix

Q1 of subpart B of this part.

(v) Sign ballasts have an Underwriters Laboratories Inc. Type 2 rating and are designed, labeled,

and marketed for use in outdoor signs.

(vi) Residential ballasts meet FCC consumer limits as set forth in 47 CFR part 18 and are

designed and labeled for use in residential applications.

(9) The standards described in paragraph (m)(8) of this section do not apply to:

(i) A ballast that is designed for dimming to 50 percent or less of the maximum output of the

ballast except for those specified in m(10); and

(ii) A low frequency ballast (as defined Appendix Q1 to subpart of this part) that:

280(A) Is designed to operate T8 diameter lamps;

(B) Is designed, labeled, and marketed for use in EMI-sensitive environments only;

(C) Is shipped by the manufacturer in packages containing 10 or fewer ballasts; and

(iii) A programmed start ballast that operates 4-foot medium bipin T8 lamps and delivers on

average less than 1 40 milliamperes to each lamp.

(10) Each fluorescent lamp ballast

–

(i) Manufactured on or after [INSERT DATE 3 YEARS AFTER DATE OF PUBLICATION

IN THE FEDERAL REGISTER ];

(ii) Designed

–

(A) To operate at nominal input voltages of 120 or 277 volts;

(B) To operate with an input current frequency of 60 Hertz; and

(C) For use in connection with fluorescent lamps (as defined in §430.2);

(D) For dimming to 50 percent or less of the maximum output of the ballast

(iii) Shall have

–

(A) A power factor of 0.9 or greater except for those ballasts defined in paragraph (m)(8)(iii)(B)

of this section;

(B) A power factor of 0.5 or greater for residential ballasts, which meet FCC Part B consumer

limits and are designed and labeled for use only in residential applications;

(C) A ballast luminous efficiency of not less than the following:

Designed for the Balla st Total Ballast Luminous Efficiency operation of Input Voltage Nominal Lamp Watts Low Frequency Ballasts High Frequency Ballasts One F34T12 lamp 120/277 34 0. 777 0. 778 Two F34T12 lamps 120/277 68 0. 804 0. 805 Two F96T12/ES lamps 120/277 120 0. 876 0. 884 Two F96T12HO/ES lamps 120/277 190 0. 7 11 0. 713

281* * * * *

282[6450- 01

- P]

DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE- 2007

- BT -STD-0016]

RIN 1904-AB50

Energy Conservation Program: Energy Conservation Standards for Fluorescent Lamp

Ballasts

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION: Finding of No Significant Impact: Energy Conservation Program.

SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes

energy conservation standards for various consumer products and certain commercial and

industrial equipment, including fluorescent lamp ballasts (hereafter referred to as ballasts)

.
EPCA also requires the U.S. Department of Energy (DOE) to determine whether more-stringent

standards would be technologically feasible and economically justified, and would save a

significant amount of energy. Based on an environmental assessment (EA), chapter 16 of the

final rule technical support document (TSD) for ballasts, DOE has determined that the adoption

of energy conservation standards for ballasts, as set forth in the final rule titled the “ Energy

Conservation Program: Energy Conservation Standards for Fluorescent Lamp Ballasts ,” would

283not be a major Federal action significantly affecting the quality of the human environment within

the meaning of the National Environmental Policy Act of 1969 (NEPA). Therefore, an

environmental impact statement (EIS) is not required, and DOE is issuing this Finding of No

Significant Impact (FONSI).

ADDRESSES: The docket for this rulemaking is available for review at www.regulations.gov,

including Federal Register notices, framework documents, public meeting attendee lists and

transcripts, comments, and other supporting documents/materials. All documents in the docket

are listed in the www.regulations.gov index. However, not all documents listed in the index may

be publicly available, such as information that is exempt from public disclosure.

A link to the docket web page can be found at:

www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts.html

. The regulations.gov web page will contain instructions on how to access all documents,

including public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards at

(202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov

.

FOR FURTHER INFORMATION CONTACT:

284Dr. Tina Kaarsberg, U.S. Department of Energy, Office of Energy Efficiency and

Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW.,

Washington, DC, 20585-0121. Telephone: (202) 287-1393. E-mail: Tina.Kaarsberg@ee.doe.gov

.

Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC-71,

1000 Independence Avenue, SW., Washington, DC, 20585-0121. Telephone: (202) 586-7796. Email: Elizabeth.Kohl@hq.doe.gov

.

For further information regarding the DOE NEPA process, contact Carol M. Borgstrom,

Director, Office of NEPA Policy and Compliance (GC-20), U.S. Department of Energy, 1000

Independence Avenue, SW., Washington, DC 20585, (202) 586-4600, or leave a message at

(800) 472-2756. Additional information regarding DOE NEPA activities and access to many

DOE NEPA documents are available on the Internet through the DOE NEPA website at:

www.gc.energy.gov/nepa/

.

SUPPLEMENTARY INFORMATION:

Description of the Proposed Action : The proposed action is the establishment of new and

amended energy conservation standards for ballasts, for which DOE is adopting trial standard

level (TSL) 3A.

285Environmental Impacts: The EA evaluates the environmental impacts of a range of

energy conservation standards for ballasts. The results are presented for each TSL that DOE

considered for ballasts. Each TSL is an alternative action and the environmental impact of each

alternative is compared to what would be expected to happen if no new standard were adopted,

i.e. , the “no action” alternative.

The primary environmental impact is decreased emissions from fossil fuel use and from

fossil-fueled electricity generation. All of the TSLs considered for ballasts covered under this

regulation would result in decreased fossil fuel use and in a reduction in emissions. The energy

conservation standards adopted in the final rule would generally decrease air pollution by

decreasing future energy demand. The EA addresses emissions of carbon dioxide (CO 2 ) and

three criteria pollutants: nitrogen oxides (NO x ), sulfur dioxide (SO 2 ), and mercury (Hg). The

energy savings from new energy conservation standards for ballasts are expected to result in

reduced power sector emissions of CO 2 , NO x , and Hg. Reduced NO x emissions could also

p rovide an economic benefit in the form of emission allowance credits. The results of DOE’s

analysis show that the cumulative emissions reductions resulting from the ballasts final rule are

projected to be 27

– 106 million metric tons of CO 2 , 22

– 39 thousand tons of NO x , and 0.40

– 1.47

tons of Hg. These emissions reductions and those from the other TSLs are not substantial enough

to significantly affect the quality of the human environment. For more information on the

emissions reductions at all TSLs, see chapter 16 of the ballasts final rule TSD, available at:

www1.eere.energy.gov/buildings/appliance_standards/residential/fluorescent_lamp_ballasts_fina

l_rule_tsd.html

.

286__________________________________ Determination

Based on the EA, DOE has determined that the adoption of the energy conservation

standards for ballasts would not constitute a major Federal action significantly affecting the

quality of the human environment, within the meaning of NEPA. Therefore, an EIS is not

required, and DOE is issuing this FONSI.

Issued in Washington, DC, on

Henry Kelly Acting Assistant Secretary of Energy Energy Efficiency and Renewable Energy