Energy Conservation Standards forResidential Furnaces and BoilersWebcast PresentationBuilding Technologies ProgramOffice ofEnergy Efficiency and Renewable EnergyU.S. Department of EnergyAugust 17, 20042Purpose: Prepare Stakeholders for the Public MeetingThe Department wants to assiststakeholders in understandingand interpreting the material developed for the Advance Notice ofProposed Rulemaking (ANOPR)ANOPR Federal Register notice published July 29, 2004Focus on the spreadsheet tools developed for the ANOPRExplain how to use and apply the spreadsheet tools before themeeting3Webcast Protocol: Education & Familiarization OnlyFamiliarize stakeholders with ANOPR spreadsheet toolsOpportunity to ask clarification questions at the end of eachsection discussed today relating to the material presentedThe webcast is notpart of the formal process and has noprovision for capturing comments for the recordThis is not a forum tocritique the ANOPR analysisThe Department requests commentsat the public meeting or inwriting41Rulemaking Overview2Engineering Analysis3Life-Cycle Cost Analysis4National Impact Analysis5Stages of the Rulemaking ProcessStakeholder Participation9Federal Register Notices9Written Comments9Meetingsand OralComments9Web-posting DraftAnalysis9Consultative Meetings9WebcastsFrameworkDocumentANOPRNOPRFinalRuleTodayEffectiveDate6ANOPR Analyses Flow DiagramStandards RulemakingMarket &TechnologyScreeningAnalysisEngineeringAnalysisEnergyConsumptionShipmentsAnalysisNationalImpactAnalysisMarkups forEquipmentPriceDeterminationLife-CycleCost andPaybackPeriod Analyses123456787ANOPR Documents and Material Publishedwww.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.htmlFederal Register NoticeTechnical Support Document(ANOPR version)Engineering Analysis(1 spreadsheet)Installation Model(2 spreadsheets)Life-Cycle Costand Payback Period(6 spreadsheets)National Impact Analysis(2 spreadsheets)RECS Database & Reduced FurnaceModel Database8How to Submit Comments...Public Meeting on September 29, 2004–oral comments will be capturedin the transcript and become part of the public record.Written comments–comment period open until November 10, 2004.Reference docket #: EE–RM/STD–01–350 and/or RIN #: 1904–AA78.Email: ResidentialFBANOPRComments@ee.doe.govMail:Ms. Brenda Edwards-JonesU.S. Department of EnergyBuildingTechnologiesProgram, MailstopEE–2JANOPR forResidential Furnaces and BoilersDocket numberEE–RM/STD–01–350and/orRIN number1904–AA781000 Independence Avenue, SW.Washington, DC 20585–0121Courier:Ms. Brenda Edwards-JonesU.S. Department of EnergyBuilding TechnologiesProgram, Room 1J–0181000 Independence Avenue, SWWashington, DC 2058591Rulemaking Overview2Engineering Analysis3Life-Cycle Cost Analysis4National Impact Analysis10The purpose of the Engineering Analysis is to estimate theincremental energy savings potential and costs fromincreased equipment efficiency levels.Select efficiency increases (design options) relative to the baseline unitsDevelop cost-efficiency relationships to show the equipment andinstallation costs of achieving increased efficiencyAccount for ranges and uncertainties in data and generate LCC inputdistributionsDetermine the simple payback for eachefficiency level (design option) bycalculating energy consumption based on the DOE test procedure (tosatisfy NAECA rebuttable payback requirements)11BaselineUnitsEngineering Analysis OverviewEquipmentMarkupEquipmentCostEfficiencyRelationshipFirst CostOperatingCostRebuttablePaybackEnergyPrice(Life-Cycle First CostDistributions)DesignOptionsInstallationCostEnergyUsageMaintenanceCost12Engineering Analysis OverviewBaselineUnitsEquipmentMarkupRebuttablePaybackEnergyPriceFirst Cost(Life-Cycle First CostDistributions)OperatingCostEquipmentCostEfficiencyRelationshipDesignOptionsInstallationCostEnergyUsageMaintenanceCost13Baseline units are the lowest efficiency productsavailable that meet current NAECA standards.

Equi pment Ty peMobile HomesGas-Fired FurnacesGas-FiredHot Water Boilers

F u rnaces BoilersOil-Fired FurnacesOil-FiredHot Water BoilersWeatherizedGas-Fired FurnacesSources:1Stakeholders’ Input2NAECA Minimum Standards3Manufacturer Interviews, Market AssessmentInputCapacity1(Btu/hr)Efficiency2(AFUE)Conf.3HeatExchanger3Ignition3Draft3NonWeatherizedGas-Fired Furnaces75,00070,000105,000140,000105,0007875788080UpflowN/ADownflowUpflowN/AClam Shell orTubularHotSurfaceHotSurfaceInducedDrumDrumSectional, Drybase, Cast IronSectional, Wetbase, Cast IronStandingPilotIntermittentIgnitionIntermittentIgnitionStandingPilotInducedClam Shell orTubular75,00075HorizontalNaturalNaturalNaturalInduced14Equipment Cost-Efficiency Process1) Define Baseline Units2) Perform Physical Teardowns•Select Teardown Units•Develop Bill ofMaterials•Cost Model Assumptions Cost ($)3) Design Option Simulations•Identify Design Options•Performance Model AFUE•Cost Design OptionsAFUE4) Stakeholder Review, Finalize= Physical Teardown= Design Option Simulation15Engineering Spreadsheet File StructureAll inputsInputsDataWorksheet instructionsOverviewIntroductionContentsTypeSheetInstallation data switchesScenario SelectorInstallationCostScenariosTP-TwoStageCtrlBurner operating hours (BOH) andfurnace/boiler averageannual electricalenergy consumption (Eae) for eachproduct class at eachefficiency level.Energy CalculationsTP-SingleStageCtrlFor energy calculationsLookup TablesTable-LookupTP-StepModCtrlOil BoilerGas BoilerOil FurnaceMH Gas FurnaceWeathGas FurnaceContains first costs (equipment +installation), andoperating costs(repair/maintenance + energy), andsimple first yearpaybacks in 2012 foreach product class ateach efficiencylevel.Class CalculationsNonWeathGas Furnace16The incremental manufacturing cost results areon the class calculation sheets.17Engineering Analysis OverviewBaselineUnitsEquipmentCostEfficiencyRelationshipEquipmentMarkupRebuttablePaybackEnergyPriceFirst Cost(Life-Cycle First CostDistributions)OperatingCostDesignOptionsInstallationCostEnergyUsageMaintenanceCost18Installation Cost ComponentsInstallation costs are usually higher than the equipment cost, and vary withefficiency, installation configuration, and installation size.VentVent ModificationsRemoval/ReplacementCondensate DrainageElectrical HookupNominal Ducting/Piping19Installation Cost Sources Initially ConsideredNarrowWisconsin121996 WisconsinEnergy Center>1634SampleSize4 CanadiancitiesUSAGeographicSpreadApplicable to new constructioncondensing furnacesNarrow1999 NR CanadastudyNew = replacement markets; nodetailed dataWide1994 GRI ReportInflation indexupdated in 2002CommentSourceBreadthData Source>1500USAWidelyusedby contractorsforbiddingWideBill of MaterialCost ModelThe Department created its own installation cost model, based onthe widelyused RS Means construction-cost estimation method, and this model agreeswith the above sources when equivalent assumptions are used.20Installation Model File StructureList of allassumptions and sourcesAssumptionsAssumption OverviewSummary for all classes;data and assumptions in“SSE-AFUE Analysis.xls”SSE-AFUECalculationsSSEAFUE SummaryModel input and output sheetModelCalculationsControlsBOM w/ activated linesMaster BOMAbsolute cost breakdowns for each candidatestandard level; weighting applied here.Sub-ResultsTop-level results foreach Candidate StandardLevelOverall ResultsInstallation Cost Efficiency TablesResultsResults for Most ClassesList of Venting Terms and DefinitionsVenting TermsGlossarySheet Description and Contents, with hyperlinksOverviewModel OverviewContentsTypeInstallation Model,Selected Sheets21Installation Model Cost Calculation StepsConfigurationVent Configuration–Nationally weight averagedaccording to prevalence in thefield.1Bill ofMaterialBill of Material (BOM)–Single venting configurationBOMsare determined frominstallation manuals.2QuantityLine Item Quantity–“Installation size”-relatedparameters (vent length &diameter, etc.) are calculatedusing a Monte Carlo simulation.3Material+ LaborMaterial & Labor–Material quotations and RSMeans labor cost estimates.422Step 1: Vent Configuration -Common ConfigurationsConfigurationBill ofMaterialQuantityMaterial+ LaborFurnaceCategoryWaterHeaterVentingMarketExistingVent TypeChimneyLinerExisting VentConnectorVentOrientation23Step 1: Vent Configuration -WeightingConfigurationBill ofMaterialQuantityMaterial+ Labor24Step 1: Vent Configuration -Vent Category(Non-weatherized Gas Furnaces)ConfigurationBill ofMaterialQuantityMaterial+ LaborCategory I (steel)80%AFUECategory I (steel)78%AFUE92%CategoryI (steel)8%CategoryIII (stainless steel)81%1-stageCategory IV (plastic)Category III (stainless steel)65%CategoryI (steel)35%CategoryIII (stainless steel)Category I (steel),Type B vent connector requiredVent Assumption83%90%Condensing82%81%2-stage ModulatingEfficiency Level25Step 2: Bill of Material (BOM)ConfigurationBill ofMaterialQuantityMaterial+ Labor26Step 3: Line Item Quantity-Installation Size-related ParametersConfigurationBill ofMaterialQuantityMaterial+ Labor27Step 4: Material & Labor -Line Item CostsConfigurationBill ofMaterialQuantityMaterial+ Labor28Sensitivity Analysis29Class Dropdown Switch301Rulemaking Overview2Engineering Analysis (Rebuttable Payback)3Life-Cycle Cost Analysis4National Impact Analysis31Rebuttable PaybackEPCA requires DOE to recalculate a “rebuttable payback.”*“(iii) If the Secretary finds that the additional cost to theconsumer of purchasing a productcomplying with an energy conservation standard level will be less than three times the value of theenergy savings during the first yearthat the consumer will receiveas a result of the standard, ascalculated under the applicable test procedure, thereshall be arebuttable presumption thatstandard is economically justified;”Calculations shall be performedusing the DOE test procedure.Rebuttable payback differs from theLCC payback, which reflects fieldconditions.*per (42 U.S.C. 6295 (l)(2)(B)(i)(V)(iii) Part B of Title III ofthe EnergyPolicy and Conservation Act (EPCA),PublicLaw 94–163—asamended bythe National Appliance Energy Conservation Act(NAECA)of198732Rebuttable PaybackPaybackConsumerFirst CostChangeOperating CostChange33Rebuttable Payback OverviewMarkupEquipmentCostEfficiencyRelationshipFirst CostOperatingCostRebuttablePaybackEnergyPriceInstallationCostEnergyUsageMaintenanceCost34The markup results are on the class calculation sheets.35Energy Usage Calculations36Maintenance Costs and Energy PricesSources: Maintenance cost is based on information fromGRI, MHI and PNNL.The residential energy prices are based on EIA Annual Energy Outlook (AEO)2003 data.37Rebuttable Payback381Rulemaking Overview2Engineering Analysis3Life-Cycle Cost Analysis4National Impact Analysis39Furnace/Boiler ANOPR Analysis OutlineThis presentation is focused on the Life-Cycle Cost (LCC) Analysisof the Furnace/Boiler ANOPR.Market &TechnologyScreeningAnalysisEngineeringAnalysisEnergy Use &House LoadCalculationShipmentsAnalysisNationalImpactAnalysisMarkups forEquipmentPriceDeterminationLife-CycleCost Analysis40Market&TechnologyScreeningAnalysisEngineeringAnalysisLife-CycleCostAnalysisNationalImpactsAnalysisStatutory RequirementsLCC Analysis satisfies a statutory requirement:“(i) In determining whether a standard is economically justified,theSecretary shall ... determine whetherthe benefits of standard exceedits burden by ... considering(ii) the savings in operating costs throughout the estimated average life ofthe covered product in the type compared to any increase in the priceof, or in the initial chargesfor,or maintenance expenses of, thecovered products which are likelytoresult from the imposition of thestandard;”**per (42 U.S.C.6295 (l)(2)(B)(i)(II))PartB ofTitleIII ofthe EnergyPolicy andConservationAct(EPCA), PublicLaw94–163—asamendedby the National ApplianceEnergyConservation Act (NAECA)of198741Market&TechnologyScreeningAnalysisEngineeringAnalysisLife-CycleCostAnalysisNationalImpactsAnalysisBasic LCC ProcessEconomic evaluation from the customer perspectiveChange in First CostCombine Changesin CostsChange in Operating CostsLCC Results42Market&TechnologyScreeningAnalysisEngineeringAnalysisLife-CycleCostAnalysisNationalImpactsAnalysisBasic LCC ProcessLCC equals first cost plus the sum of operating costsdiscounted to a particular base yearImplemented in an Excel®spreadsheetKey sensitivities can be testedResults are expressed as LCCdifference (baseline minuscandidate standard)One LCC spreadsheet for each product class43Market&TechnologyScreeningAnalysisEngineeringAnalysisLife-CycleCostAnalysisNationalImpactsAnalysisLCC FormulaLife-Cycle Cost is expressed as the First Cost plus the sum of thediscounted Operating Cost.Life-Cycle Cost =First Cost+ sum of discounted Operating Cost( )∑++=lifetimeyearyearteDiscountRaostOperatingCFirstCostLCC144Market&TechnologyScreeningAnalysisEngineeringAnalysisLife-CycleCostAnalysisNationalImpactsAnalysisUncertainty and VariabilityLCC calculation done for arepresentativesample of housesMonte Carlo analysis to capture uncertainty and variability•Inputs sampled from probability distributions of values•10,000 iterations•Range of LCC resultsIdentify the percentage of consumers with LCC savings dueto possible standard levels45First CostFirst Costconsists of:1) EquipmentPrice2) InstallationCostOperatingCostOperating Costisderived from:1) EnergyConsumption2) EnergyPrices3) MaintenanceCostDiscountRateDiscount RateIs the interestconsumers payfor purchasingafurnaceLifetimeLifetimeishowlong a furnacewill be usedbefore it isreplacedLife-CycleCostResultsLife-CycleCostto consumersof purchasingand operatinganewfurnacefor its lifetimeComponents of the LCC AnalysisMarket&TechnologyScreeningAnalysisEngineeringAnalysisLife-CycleCostAnalysisNationalImpactsAnalysis46AllMarkupsEquipment PriceManufacturerCostFirst CostElements of First CostFirstCostOperatingCostDiscountRateLifetimeLife-CycleCostResultsInstallationCost47InstallationCostManufacturerCostMarkupFirstCostManufacturer CostsCost of Virtual Models varies by Input Capacity and Airflow Capacity ($)$14.82$5.79$0.00-$9.97BlowerCostAdders1.191.131.151.121.041.041.0110.990.960.940.93CostScalarsInput Capacity (kBTUH)4224074023973813722000 CFM(5 tons)3983933883733623523483441600 CFM(4 tons)3673573463413383293213171200 CFM(3 tons)320311307800 CFM(2 tons)14012512011510090807570605045

Max. Airflow (at 0.5 in.w.g. ESP)48Manufacturer MarkupSales TaxNew orRetrofitNewRetrofitContractor Markup -New ConstructionContractor Markup -RetrofitBuilderMarkupManufacturer CostsEquipment PriceWholesalerMarkupInstallationCostManufacturerCostMarkupFirstCostMarkupMarkups acrossthe distributionchain.49InstallationCostManufacturerCostMarkupFirstCostBaseline and Incremental Markups for WholesalersandContractorsBaseline markups arethe ratio of price tocost prior to standards.The price covers allof aWholesaler’s orContractor’sexpenses plus profit, direct labor and overhead costsIncremental markups arethe ratio of the additionalprice afterstandards to the additionalcost due to standards.For baseline conditionsPer Dollar Cost of Goods Sold$1.00Labor Expenses$0.25Other Expenses$0.11Baseline Markup =1.36Markups for WholesalersBASELINEFor an incremental changein CGSPer Dollar Cost of Goods Sold$1.00Labor Expenses$0.25Other Expenses$0.11Incremental Markup =1.11INCREMENTAL50InstallationCostManufacturerCostMarkupFirstCostInstallation CostCategory IVCategory IIICategory I +Vent connectorCategory I51OperatingCostEnergyConsumptionEnergyPriceElements of Operating CostFirstCostOperatingCostDiscountRateLifetimeLife-CycleCostResultsMaintenanceCost52AssignFurnaceCalculateHouseLoadSelect HouseCalculateEnergyUseSelectBaselineEnergyConsumptionEnergy ConsumptionMaintenanceCostOperatingCostEnergyConsumptionEnergyPrice53Selection of HousesA sample of 1,986 households is extracted from RECS 1997.This sample represents 37.3 million households, bothreplacement and new construction.54Assign FurnaceInput capacitycorrelated tosize of houseAirflow capacitycorrelated tosize of houseAFUE for existing furnace iscorrelated toclimate of house55Calculate Heating LoadBurner OperatingHours(existing furnace)Annual HouseHeating LoadElectric Use Rate(heat from BlowerMotor)Fuel Use Rate56Calculate Energy Use57Select BaselineBaseline furnace efficiency varies from house to house.Assign AFUE as a function of climate of sample house•Use same approach asforexisting furnace•Except that:–AFUE distributions are fromcurrent GAMA shipment data–AFUE assignment is done according census division58MaintenanceCostOperatingCostEnergyConsumptionEnergyPriceEnergy PriceAverage residential price of natural gas is expected to increase(AEO 2003).$6.50$7.00$7.50$8.00$8.50$9.00$9.50$10.0019952000200520102015202020252030203520402045Year

$ / MMB t u59MaintenanceCostOperatingCostEnergyConsumptionEnergyPriceMaintenance CostMaintenance costis the annual cost of maintaining a furnace in properworking condition.$102 (±15%)96%$61 (±15%)90% and 92%$58 (±15%)82-83%$35 (±15%)81% and lessMeanAFUE60FirstCostOperatingCostDiscountRateLifetimeLife-CycleCostResultsDiscount RateRates for Household Debt and Equity Types6.7100Total/Weighted-average discount rate7100New construction7.619.8Mutual funds9.630.2Stocks (S&P500)4.48.3Bonds (Corporate AAA)3.71.6Savings bonds (Treasury)2.87.9CD (6-month)220Transaction (checking) accounts129.1Credit card and installment5.93Second mortgageRate Mean (%)Average Share ofHousehold Debt plusEquity (%)Type61FirstCostOperatingCostDiscountRateLifetimeLife-CycleCostResultsFurnace Lifetimes0%2%4%6%8%10%12%010 20 30 40Lifetime(years)

P r oba b ilit ySource: Appliance Magazine, Sept. 2001.626364656667GASFURNACE(NON-WEATHERIZED)SimulationResults# Samples=10000numberDesign Option:AFUE/ElectricityAverageAverageSavingsNet CostNo ImpactNet BenefitMedianAverage% noimpact%undefined078%AFUE-NAECA Min.$9,966180%AFUE-Incr. HXArea$9,795$00%99%1%2.137.899%0%280%AFUE-PSC+$9,784$717%27%56%5.45.327%14%380%AFUE-ECM$9,873-$5960%27%14%23.033.727%1%480%AFUE-BC/ECM+$9,822-$2151%27%23%17.226.327%1%580%2-stage Mod$9,718$4133%27%40%8.613.527%9%680%2-stage Mod ECM$9,795-$1348%27%26%15.421.127%0%780%2-stage Mod BC/ECM+$9,782$145%27%28%14.320.927%0%881%AFUE-Incr. HXArea$9,789-$332%27%41%8.827.827%1%981%AFUE-PSC+$9,779$530%26%44%8.121.326%0%1081% AFUE- ECM$9,868-$6251%26%23%17.826.226%0%1181% AFUE- BC/ECM+$9,816-$2445%26%29%14.822.926%0%1281%2-stage Mod$9,680$6329%26%45%7.617.026%2%1381%2-stage Mod ECM$9,796-$2044%26%29%14.421.126%0%1481%2-stage Mod BC/ECM+$9,782-$543%26%31%13.720.526%0%1582% AFUE- Incr. HXArea$10,170-$29270%26%4%28.784.626%67%1682%AFUE-PSC+$10,159-$28469%26%5%29.280.626%66%1782%AFUE-ECM$10,249-$35171%26%3%48.4102.426%47%1882%AFUE-BC/ECM+$10,197-$31268%26%6%34.880.326%36%1982%2-stage Mod$10,103-$25665%26%9%18.560.226%53%2082%2-stage Mod ECM$10,179-$31067%26%7%34.682.126%33%2182%2-stage Mod BC/ECM+$10,164-$29565%26%9%30.970.426%28%2283% AFUE- Incr. HXArea$10,400-$46873%26%1%63.3121.326%56%2390% AFUE$9,917-$15456%26%18%17.942.526%21%2490% AFUE- PSC+$9,907-$14557%15%27%14.337.915%21%2690% AFUE- BC/ECM+$9,957-$18063%15%22%19.142.015%11%2791% 2-stageModECM$9,898-$14158%15%26%16.540.615%11%2891% 2-stageBC/ECM+$9,878-$11858%15%27%16.237.815%9%2991% StepModECM$10,119-$32867%15%18%22.254.215%10%3091% StepModBC/ECM+$10,110-$31566%15%18%21.649.215%8%3192%AFUE-Incr. HXArea$9,924-$16660%15%25%16.141.715%17%3292%AFUE-PSC+$9,914-$15663%2%35%13.235.82%18%3392%AFUE-ECM$10,015-$25576%2%22%21.345.02%11%3492%AFUE-BC/ECM+$9,965-$20573%2%25%19.239.72%9%3593%2-stage Mod ECM$9,912-$15467%2%32%15.739.12%9%3693%2-stage Mod BC/ECM+$9,891-$13366%2%32%15.735.72%7%3793%StepMod ECM$10,134-$37378%2%21%21.650.42%8%3893%StepMod BC/ECM+$10,124-$36277%2%21%21.445.12%7%3996% AFUEStepMod ECM$10,724-$95489%2%9%32.388.92%40%4096% AFUEStepMod BC/ECM+$10,738-$96791%0%9%32.883.60%39%LCCPayback681Rulemaking Overview2Engineering Analysis3Life-Cycle Cost Analysis4National Impact Analysis69ANOPR Analyses Flow DiagramMarket &TechnologyScreeningAnalysisEngineeringAnalysisEnergy Use &House LoadCalculationShipmentsAnalysisNationalImpactAnalysisMarkups forEquipmentPriceDeterminationLife-CycleCost Analysis70The Need for National Impact AnalysisQ.Why isn’tthe LCC the end of the economic analysis for the nation?A.Specifically,1.LCC is performed from the perspective ofhouseholds with furnacesand is not the sole expression of national impacts2.Total National Energy Savingsis not estimated by LCC3.Manufacturers impacts are notestimated by LCC71The Need for National Impact AnalysisQ.How does national impact analysis differ from the LCC analysis?A.Specifically,1.Utilizes a shipments model to estimate the total stock offurnaces in service in any year.2.Aggregates the costs and energy use, by vintage, for all yearsthat the proposed standard is in effect.3.The energy consumed at the site is not the energy consumedat the power plant or wellhead.72PurposeEstimate the National Energy Savings (NES)(Quads)by calculating annual andcumulative energy savings for the forecast period 2012-2035.Estimate the Net Present Value (nationalNPV) by calculating theimpacts forequipment shipped during the period 2012-2035.MethodSpreadsheet-based analysisUtilizes energy use and installed cost from LCC analysisImpacts totaled forall US households with projections to thefuture•Purchases to 2035•Energy Impact to 2035 (source)Annual time series73Process ChartKeyInputsShipmentsyConstructionForecastyProduct LifetimeyMarket ShareModelKeyInputsNational EnergySavings(Quads)yAnnualEnergyUseySite-to-SourceConversionKeyInputsNational NetPresent Value(NPV)yTotal InstalledCostyEnergyPriceyDiscount Rate74Shipments ModelGenerates base case shipments, which is the case without new equipmentstandards, and a standard case shipments, which is the case assuming newequipment standards have taken effect(for the years 2012-2035)Accounts for equipment installed in new housing, conversions andreplacements todevelop the total shipmentsProvides retirements forecast according to age distribution of furnaces ineach year.Incorporates marketshare model toaccount for fuel switching75Shipments FlowchartTotal ShipmentsNewConstructionShipmentsConversionsReplacements•Replace withsame equipmenttype and same fuel•Install heatingsystems into newconstruction•Replace withequipment utilizinga different fuel76Standards CaseAnnual EnergyUse2035Standards CaseAnnual EnergyUse2014Standards CaseAnnual EnergyUse2013Standards CaseAnnual EnergyUse2012Base Case AnnualEnergyCost2035Base Case AnnualEnergyCost2014Base Case AnnualEnergyCost2013BaseCaseAnnualEnergyCost2012NES FlowchartHistoricalShipmentsBase CaseProjectedShipmentsStandards CaseProjectedShipmentsBase CaseCumulativeEnergyConsumptionStandards CaseCumulativeEnergyConsumptionCumulativeEnergySavings(BaseCase –StandardsCase)Site-to-SourceEnergyConversionNationalEnergySangsvi77National Energy Savings Key InputsAnnual Energy UseWeighted average per unit values as a function of efficiencylevel taken from LCC analysisWeighted average calculated according to efficiency marketshare78National Energy Savings Key InputsSite-to-Source ConversionElectricity consumed at the site does not equal energy at the powerplant•Conversion losses•Transmission and distribution losses•Generation fuel mix and plantefficiency•Generation plant mix change over timeNatural Gas fuel consumed at the site does not equal fuel at thepoint of extraction•Production losses•Transmission and distribution lossesConversion done with DOE’s National Energy Modeling System(NEMS)79National NPVFlowchartBase CaseCumulativeTotalEquipCost2012 -2035Base CaseCumulativeEnergyCost2012 -2035Base CaseProjectedShipmentsStandards CaseProjectedShipmentsStandards CaseCumulativeEnergyCost2012 -2035Standards CaseCumulativeTotalEquipCost2012 -2035ShipmentForecastCumulativeOperatingCostSavings(Base Case –Standards Case)CumulativeTotal EquipmentCost Increase(Standards Case –Base Case)NetPresentVauel80National Net Present Value Key InputsDiscount RateNational averageOffice of Management and Budget (OMB) mandated 7%and 3% real81Annual Energy CostBase Case AnnualEnergyCost2035Base Case AnnualEnergyCost2014Base Case AnnualEnergyCost2013Base CaseAnnualEnergyCost2012Base CaseAnnualEnergyCost2012=DiscountFactorxDiscountFactor2012MarginalEnergyPrice2012xBase CaseAnnualEnergyCost(Non-discounted)2012Base CaseCumulativeEnergyCost2012 -203582National NPVFlowchartBase CaseCumulativeTotalEquipCost2012 -2035Base CaseCumulativeEnergyCost2012 -2035Base CaseProjectedShipmentsStandards CaseProjectedShipmentsStandards CaseCumulativeEnergyCost2012 -2035Standards CaseCumulativeTotalEquipCost2012 -2035ShipmentForecastCumulativeOperatingCostSavings(Base Case –Standards Case)CumulativeTotal EquipmentCost Increase(Standards Case –Base Case)NetPresentVauel83848586878889-10-8-6-4-2024681080%81% (a)8%Cat. III81% 2-stageMod (b)noCat. III82%90% BaselineCond.92%Incr. HXArea

Qu ad s-5.0-4.0-3.0-2.0-1.00.01.02.03.04.05.0SourceEnergy Savings(Quads)Net PresentValue (Billions)9091Thank you and for more information...U.S. Department of Energy Appliance Rulemaking Websitewww.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.htmlU.S. Department of EnergyMohammed Khan tel: 202 5867892, mohammed.khan@ee.doe.govLawrence Berkeley National LaboratoryAlex Lekovtel: 510 486 6849, ablekov@lbl.govJames Lutz tel: 510486 7302, jdlutz@lbl.govNavigant ConsultingGraham Stevens tel: 202 973 8405,gstevens@navigantconsulting.com