CS-Rfk7S^ yTX) - «?^-o YT D

Department of Energy

Washington, DC 20585

May 29, 1998

PUBLIC WORKSHOP FOR CENTRAL AIR CONDITIONER

ENERGY EFFICIENCY STANDARDS RULEMAKING

On May 29, 1998, the Department of Energy gave notice of a public workshop regarding energy

conservation standards for central air conditioners. The workshop will be held on June 30, 1998,

at the U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC. 20585-

0121 in Room 1E-245 from 9:00 a.m. to 4:00 p.m. The Department is convening this workshop

to discuss the proposed analytical framework and tools for evaluating possible revisions to the

standards for central air conditioners. Background for this discussion is contained in the

Framework Document, which is enclosed.

In September 1995, the Department announced a formal effort to consider further improvements

to the process used to develop appliance efficiency standards. On July 15, 1996, the Department

published a Final Rule (61 FR 36974), known as the Process Rule, outlining the procedural

improvements identified by the interested parties. There was a previous Advance Notice of

Proposed Rulemaking (ANOPR) which included central air conditioners, but, following the

Process Rule, this rulemaking will start at the beginning of the process. The enclosed Framework

Document discusses the way the general steps given in the Process Rule will be tailored to this

specific rulemaking. Although the framework document reflects improvements and steps

contained in the Process Rule, the rulemaking process is a dynamic one. As new data, models or

tools become available, and if they enhance the development of standards, they will be

incorporated into the rulemaking.

The Framework Document covers the entire process, but since we are just beginning the

rulemaking, the pre-ANOPR steps, described below, will be the focus of the workshop. These

steps are shown in the pre-ANOPR section of Figure 1 of the Framework Document, which

graphically depicts the steps needed to conduct the rulemaking. The Framework Document is

organized such that the material inside the boxes is specific to central air conditioners - the rest is

generic material common to the framework documents of all appliances.

Issues to be discussed include:

Engineering analysis:

* Method to derive cost - efficiency relationship

* data that will be needed

* how and by whom it will be collected

* issues of validation and confidentiality;

Identification of Baseline and "Max Tech";

Life-Cycle Cost Analysis including method of determining retail prices; and

Preliminary Energy Savings and National Benefit Analyses.

Printed with soy ink on recycted paper

EE-RM-STD-98-440 COMMENT 01D

€"E-¥57j) -Cf~AILfo 

Department of Energy 

Washington, DC 20585 

May 29,1998 

PUBLIC WORKSHOP FOR CENTRAL AIR CONDITIONER 

ENERGY EFFICIENCY STANDARDS RULEMAKING 

]) 

On May 29, 1998, the Department of Energy gave notice ofa public workshop regarding energy 

conservation standards for central air conditioners. The workshop will be held on June 30, 1998, 

at the u.s. Department of Energy, 1000 Independence Avenue, SW., Washington, DC. 20585-

0121 in Room lE-245 from 9:00 a.m. to 4:00 p.m. The Department is convening this workshop 

to discuss the propos_ed analytical framework and tools for evaluating possible revisions to the 

standards for central. air conditioners. Background for this discussion" is contained in the 

Framework Document, which is enclosed. 

In September 1995, the Department announced a formal effort to consider further improvements 

to the process used to develop appliance efficiency standards. On July 15, 1996, the Department 

published a Final Rule (61 FR 36974), known as the Process Rule,"outiining the procedural 

improvements identified by the interested parties. There was a previous Advance Notice of 

Proposed Rulemaking (ANOPR) which included central air conditioners, but, following the 

Process Rule, this rulemaking will start at the beginning of the process. The enclosed Framework 

Document discusses the way the general steps given in the Process Rule will be tailored to this 

specific rulemaking. Although the framework document retlects improvements and steps 

contained in the Process Rule, the rulemaking process is a dynamic one. As new data, modeJs or 

tools become available, and if they enhance the development of standards, they will be 

incorporated into the rulemaking. " 

The Framework Document covers the entire process, but since we are just beginning the 

rulemaking, the pre-ANOPR steps, described below, will be the focus of the workshop. These' 

steps are shown in the pre-ANOPR section of Figure 1 of the Framework Document, which" 

graphically depicts the steps needed to conduct the rulemaking. The Framework Document is 

organized such that the material inside the boxes is specific to central air conditioners - the rest is 

generic material common to the framework" documents of all appliances. 

Issues to be discussed include: 

Engineering analysis: 

• Method to derive cost - efficiency relationship 

• data that will be needed 

• how and by whom it will be collected 

• issues of validation and confidentiality; 

Identification of Baseline and "Max Tech"; 

Life-Cycle Cost Analysis including method of determining retail prices; and 

Preliminary Energy Savings and National Benefit Analyses. 

"'"® Printed with soy ink on recycled paper 

€"E-¥57j) -Cf~AILfo 

Department of Energy 

Washington, DC 20585 

May 29,1998 

PUBLIC WORKSHOP FOR CENTRAL AIR CONDITIONER 

ENERGY EFFICIENCY STANDARDS RULEMAKING 

]) 

On May 29, 1998, the Department of Energy gave notice ofa public workshop regarding energy 

conservation standards for central air conditioners. The workshop will be held on June 30, 1998, 

at the u.s. Department of Energy, 1000 Independence Avenue, SW., Washington, DC. 20585-

0121 in Room lE-245 from 9:00 a.m. to 4:00 p.m. The Department is convening this workshop 

to discuss the propos_ed analytical framework and tools for evaluating possible revisions to the 

standards for central. air conditioners. Background for this discussion" is contained in the 

Framework Document, which is enclosed. 

In September 1995, the Department announced a formal effort to consider further improvements 

to the process used to develop appliance efficiency standards. On July 15, 1996, the Department 

published a Final Rule (61 FR 36974), known as the Process Rule,"outiining the procedural 

improvements identified by the interested parties. There was a previous Advance Notice of 

Proposed Rulemaking (ANOPR) which included central air conditioners, but, following the 

Process Rule, this rulemaking will start at the beginning of the process. The enclosed Framework 

Document discusses the way the general steps given in the Process Rule will be tailored to this 

specific rulemaking. Although the framework document retlects improvements and steps 

contained in the Process Rule, the rulemaking process is a dynamic one. As new data, modeJs or 

tools become available, and if they enhance the development of standards, they will be 

incorporated into the rulemaking. " 

The Framework Document covers the entire process, but since we are just beginning the 

rulemaking, the pre-ANOPR steps, described below, will be the focus of the workshop. These' 

steps are shown in the pre-ANOPR section of Figure 1 of the Framework Document, which" 

graphically depicts the steps needed to conduct the rulemaking. The Framework Document is 

organized such that the material inside the boxes is specific to central air conditioners - the rest is 

generic material common to the framework" documents of all appliances. 

Issues to be discussed include: 

Engineering analysis: 

• Method to derive cost - efficiency relationship 

• data that will be needed 

• how and by whom it will be collected 

• issues of validation and confidentiality; 

Identification of Baseline and "Max Tech"; 

Life-Cycle Cost Analysis including method of determining retail prices; and 

Preliminary Energy Savings and National Benefit Analyses. 

"'"® Printed with soy ink on recycled paper 
Copies of the draft Framework Document are also available on the Office of Codes and Standards

web site. The web site address is as follows:

http.//vww. eren. doegov/buildings/codes_ standards/index htm.

If you have any questions, please contact Edward Pollock at (202) 586-5778. If you plan to attend

the workshop, please notify Ms. Brenda Edwards-Jones, U.S. Department of Energy, Office of

Energy Efficiency and Renewable Energy, U.S. Department of Energy, Mail Station EE-43,

1000 Independence Avenue, SW, Washington, DC 20585-0121, (202) 586-2945, email

Brenda. Edwards-Jones@ee. doe. gov.

Sincerely,

Ci.t ** /

q/I \Michael J. McCabe, Director

Office of Codes and Standards

Building Technology, State and

Community Programs

Energy Efficiency and Renewable Energy

Enclosure

EE-RM-STD-98-440 COMMENT 01D

\ 

Copies of the draft Framework Document are also available on the Office of Codes and Standards 

web site. The web site address is as follows: 

http://www.eren.doe.gov/bui/dings/codes_standardslindex.htm. 

If you have any questions, please contact Edward Pollock at (202) 586-5778. If you plan to attend 

the workshop, please notify Ms. Brenda Edwards-Jones, U.S. Department of Energy, Office of 

Energy Efficiency and Renewable Energy, U.S. Department of Energy, Mail Station EE-43, 

1000 Independence Avenue, SW, Washington, DC 20585-0121, (202) 586-2945, email 

Brenda.Edwards-Jones@ee.doe.gov. 

Enclosure 

Michael 1. McCabe, Director 

Office of Codes and Standards 

Building Technology, State and 

Community Programs 

Energy Efficiency and Renewable Energy 

\ 

Copies of the draft Framework Document are also available on the Office of Codes and Standards 

web site. The web site address is as follows: 

http://www.eren.doe.gov/bui/dings/codes_standardslindex.htm. 

If you have any questions, please contact Edward Pollock at (202) 586-5778. If you plan to attend 

the workshop, please notify Ms. Brenda Edwards-Jones, U.S. Department of Energy, Office of 

Energy Efficiency and Renewable Energy, U.S. Department of Energy, Mail Station EE-43, 

1000 Independence Avenue, SW, Washington, DC 20585-0121, (202) 586-2945, email 

Brenda.Edwards-Jones@ee.doe.gov. 

Enclosure 

Michael 1. McCabe, Director 

Office of Codes and Standards 

Building Technology, State and 

Community Programs 

Energy Efficiency and Renewable Energy 
Central Air Conditioner

and Heat Pump

Rulemaking

Framework

U.S. Department of Energy

Office of Codes and Standards

1000 Independence Ave., SW

Washington, DC

Date: June 30, 1998

EE-RM-STD-98-440 COMMENT 01D

Central Air Conditioner 

and Heat Pump 

Rulemaking 

Framework 

u.s. Department of Energy 

Office of Codes and Standards 

1000 Independence Ave., SW 

Washington, DC 

Date: June 30, 1998 

Central Air Conditioner 

and Heat Pump 

Rulemaking 

Framework 

u.s. Department of Energy 

Office of Codes and Standards 

1000 Independence Ave., SW 

Washington, DC 

Date: June 30, 1998 
E-MA/.5TD-I 9- 4 X

Central Air Conditioner and Heat Pump Rulemaking Framework

Introduction ............................................................... 1

1.0 Preliminary Market and Technology Assessment .............................. 3

1.1 M arket Assessment ......... .... ........... ...... .............. 3

1.2 Technology Assessment ........... .. .................... ....... 3

1.3 Preliminary Baseline Shipments Forecast ................................. 4

2.0 Screening Analysis ..................................................... 5

2.1 Product Classes .................................................... 5

2.2 Baseline Units ..................................................... 5

2.3 Design Options .................................................... 6

3.0 Engineering Analysis .................................................... 7

3.1 Efficiency Level Approach .................................. 7

3.2 Design Option Approach ............. ............................... 8

3.3 Reverse Engineering Approach ...................................... 10

3.4 Outside Regulatory Changes affecting the Engineering Analysis .............. 11

4.0 M anufacturing Costs ................................................... 11

4.1 Characterizing Uncertainty .......................................... 12

4.2 Variability in Costs between Manufacturers ............................ 12

4.3 Costing Approach/ Engineering Analysis ............................ ..... 13

4.4 Proprietary Design ................................................ 13

5.0 Life-Cycle Cost and Payback Analysis .................................... 14

6.0 Prices ................................................................ 17

6.1 Retail Prices: Life-Cycle Cost Analysis ................................. 17

6.2 Manufacturer Prices: Industry Cashflow .......... ..... ...... ......... 18

7.0 Shipm ents ............................................................ 18

8.0 Preliminary National Benefits Analysis ..................................... 19

8.1 Inputs to Forecasts ..................... ......................... 19

8.2 Calculation of Energy Savings ..................................... . 20

8.3 Consumer Net Present Value and Payback .............................. 20

8.4 Employment Impacts ............................................... 21

9.0 Revised Pre-ANOPR Analysis ................. ........................ 21

10.0 Consumer Impacts .................................................... 21

i

EE-RM-STD-98-440 COMMENT 01D 

Central Air Conditioner and Heat Pump Rulemaking Framework 

Introduction ............................................................... 1 

1.0 Preliminary Market and Technology Assessment •••••••••••••••••••••••••••••• 3 

1.1 Market Assessment . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 3 

1.2 Technology Assessment ............................................. 3 

1.3 Preliminary Baseline Shipments Forecast ................................. 4 

2.0 Screening Analysis .......................................... ~ ........... 5 

2.1 Product Classes .................................................... 5 

2.2 Baseline Units ..................................................... 5 

2.3 Design Options .................................................... 6 

3.0 Engineering Analysis .................................................... 7 

3.1 Efficiency Level Approach ........................................... 7 

3.2 Design Option Approach ............. ; .......... ' ...... : .............. 8· 

3.3 Reverse Engineering Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

3.4 Outside Regulatory Changes affecting the Engineering Analysis .............. 11 

4.0 Manufacturing Costs .................................................. ~ 11 

4.1 Characterizing Uncertainty .......................................... 12 

4.2 Variability in Costs between Manufacturers .............................. 12 

4.3 Costing Approach! Engineering Analysis, ................................ 13 

4.4 Proprietary Design ............. , .................................. 13 

5.0 Life-Cycle Cost and Payback Analysis •.....•..••.••••..••..••.•••••••••••• 14 

6.0 Prices ................................................................ 17 

6.1 Retail Prices: Life-Cycle Cost Analysis ................................. 17 

6.2 Manufacturer Prices: Industry Cashflow ................ , ................ 18 

7.0 Shipments ............................................................ 18 

8.0 Preliminary National Benefits Analysis •••••••••....•.•••••.•...•••••••••••• 19 

8.1 Inputs to Forecasts ................................................ 19 

8.2 Calculation of Energy Savings ................. ; ...................... 20 

8.3 Consumer Net Present Value and Payback .............................. 20 

8.4 Employment Impacts ............................................... 21 

9.0 Revised Pre-ANOPR Analysis .................... ' ....................... . 21 

10.0 Consumer Impacts .................................... ' ................. 21 

Central Air Conditioner and Heat Pump Rulemaking Framework 

Introduction ............................................................... 1 

1.0 Preliminary Market and Technology Assessment •••••••••••••••••••••••••••••• 3 

1.1 Market Assessment . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 3 

1.2 Technology Assessment ............................................. 3 

1.3 Preliminary Baseline Shipments Forecast ................................. 4 

2.0 Screening Analysis .......................................... ~ ........... 5 

2.1 Product Classes .................................................... 5 

2.2 Baseline Units ..................................................... 5 

2.3 Design Options .................................................... 6 

3.0 Engineering Analysis .................................................... 7 

3.1 Efficiency Level Approach ........................................... 7 

3.2 Design Option Approach ............. ; .......... ' ...... : .............. 8· 

3.3 Reverse Engineering Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

3.4 Outside Regulatory Changes affecting the Engineering Analysis .............. 11 

4.0 Manufacturing Costs .................................................. ~ 11 

4.1 Characterizing Uncertainty .......................................... 12 

4.2 Variability in Costs between Manufacturers .............................. 12 

4.3 Costing Approach! Engineering Analysis, ................................ 13 

4.4 Proprietary Design ............. , .................................. 13 

5.0 Life-Cycle Cost and Payback Analysis •.....•..••.••••..••..••.•••••••••••• 14 

6.0 Prices ................................................................ 17 

6.1 Retail Prices: Life-Cycle Cost Analysis ................................. 17 

6.2 Manufacturer Prices: Industry Cashflow ................ , ................ 18 

7.0 Shipments ............................................................ 18 

8.0 Preliminary National Benefits Analysis •••••••••....•.•••••.•...•••••••••••• 19 

8.1 Inputs to Forecasts ................................................ 19 

8.2 Calculation of Energy Savings ................. ; ...................... 20 

8.3 Consumer Net Present Value and Payback .............................. 20 

8.4 Employment Impacts ............................................... 21 

9.0 Revised Pre-ANOPR Analysis .................... ' ....................... . 21 

10.0 Consumer Impacts .................................... ' ................. 21 
E*-gf/s n )-qgL-v Thl)

10.1 Consumer Sub-group Analysis ............ ................ 21

10.1.1 Variations in Energy Prices .............................. 22

10.1.2 Variations in Energy Use ................................. 22

10.1.3 First Cost Increase .............................. .............. 22

10.2 Consumer Participation ............... ............................ 23

11.0 Industry Cash Flow . ......................................... 24

12.0 Manufacturer sub-group analysis ........... ......................... 24

12.1 Manufacturer Sub-groups ........................................ 24

12.2 Competitive Impacts Assessment ..................................... 26

12.3 Cumulative Regulatory Burden ...................................... 26

13.0 Utility Impacts ...................................................... 27

14.0 Environmental Analysis ................................................ 27

*ii

EE-RM-STD-98-440 COMMENT 01D

D 

10.1 Consumer Sub-group Analysis ................... ; ................... 21 

1 0.1.1 Variations in Energy Prices ...................................... 22 

10.1.2 Variations in Energy Use ........................................ 22 

10.1.3 First Cost Increase ............................................. 22 

10.2 Consumer Participation ............................................ 23 

11.0 Industry Cash Flow ................................................... 24 

12.0 Manufacturer sub-group analysis •••••••••••.•••••••••••••••••.•••••••••••• 24 

12.1 Manufacturer Sub-groups ................ ; ......................... 24 

12.2 Competitive Impacts Assessment ...................................... 26 

12.3 Cumulative Regulatory Burden ...................................... 26 

13.0 Utility Impacts ' _~ ...................................... e .•••••••••••••• • 27 

14.0 Environmental Analysis ................................................ 27 

ii 

D 

10.1 Consumer Sub-group Analysis ................... ; ................... 21 

1 0.1.1 Variations in Energy Prices ...................................... 22 

10.1.2 Variations in Energy Use ........................................ 22 

10.1.3 First Cost Increase ............................................. 22 

10.2 Consumer Participation ............................................ 23 

11.0 Industry Cash Flow ................................................... 24 

12.0 Manufacturer sub-group analysis •••••••••••.•••••••••••••••••.•••••••••••• 24 

12.1 Manufacturer Sub-groups ................ ; ......................... 24 

12.2 Competitive Impacts Assessment ...................................... 26 

12.3 Cumulative Regulatory Burden ...................................... 26 

13.0 Utility Impacts ' _~ ...................................... e .•••••••••••••• • 27 

14.0 Environmental Analysis ................................................ 27 

ii 
Central Air Conditioner and Heat Pump Rulemaking

Framework

Introduction

This document describes the analytical framework for appliance standards rulemaking. The

emphasis is on describing the major components of the methodology and identifying the

relationships among the various sections. A diagram of the generic analytical framework, which

was derived for the clothes washer rulemaking, is shown in Figure 1. This document will

primarily emphasize those components of the methodology necessary for issuing an Advance

Notice of Proposed Rulemaking (ANOPR). Currently, the Advisory Committee on Appliance

Energy Efficiency Standards is considering cross-cutting issues which may affect the analysis

anticipated in upcoming rulemakings. The Department plans to consider any recommendation

from the Advisory Committee to the greatest extent possible in the ongoing rulemakings.

This document also describes the application of the analytical framework to the central air

conditioner and heat pump rule. Following a generic description of each component of a typical

rulemaking, a comment box has been added to discuss elements of the central air conditioner rule.

References to central air conditioners include a discussion of key issues, the Department of

Energy's (DOE) perspectives on these issues, and requests for additional stakeholder input.

As described in this document, manufacturers will be asked to provide performance and costing

information in order that an engineering analysis can be conducted. Data collection is dependent

on how the engineering analysis is conducted. The Department has yet to select the

engineering analysis method and is seeking input from stakeholders as to what approach

should be taken. The following three methods are currently under consideration by the

Department: 1) the efficiency level approach, 2) the design option approach, and 3) reverse

engineering. All three approaches are discussed in greater detail later in this document. One or

more of the above approaches could be used. Whatever analysis methods are used, the

Department will keep with its policies and ensure that provisions are made to maintain the

confidentiality of all submitted information. Upon completion of the engineering analysis, the

Department will use the data to perform consumer life-cycle cost analysis, select trial standards

levels, and calculate preliminary national benefits of these levels. These analyses will complete the

analytical steps that precede the Advance Notice of Proposed Rulemaking (ANOPR).

1

EE-RM-STD-98-440 COMMENT 01D 

Central Air Conditioner and Heat Pump Rulemaking 

Framework 

Introduction 

This document describes the analytical framework for appliance standards rulemaking. the 

emphasis is on describing the major components of the methodology and identifying the 

relationships among the various sections. A diagram of the generic analytical framework, which 

was derived for the clothes washer rulemaking, is shown in Figure 1. This document will 

primarily emphasize those components of the methodology necessary for issuing an Advance 

Notice of Proposed Rulemaking (ANOPR). Currently, the Advisory Committee on Appliance 

Energy Efficiency Standards is considering cross-cutting issues which may affect the analysis 

anticipated in upcoming rulemakings. The Department plans to consider any recommendation 

from the Advisory Committee to the greatest extent possible in the ongoing rulemakings. 

This document also describes the application of the analytical framework to the central air 

conditioner and heat pump rule. Following a generic description of each component of a typical 

rulemaking, a comment box has been added to discuss elements of the central air conditioner rule. 

References to central air conditioners include a discussion of key issues, the Department of 

Energy's (DOE) perspectives on these issues, and requests for additional stakeholder input. 

As described in this documerit, manufacturers will be asked to provide performance and costing 

information in order that an engineering analysis can be conducted. Data collection is dependent 

on how the engineering analysis is conducted. The Department has yet to select the 

engineering analysis method and is seeking input from stakeholders as to what approach 

should be taken. The following three methods are currently under consideration by the 

Department: I) the efficiency level approach, 2) the design option approach, and 3) reverse 

engineering. All three approaches are discussed in greater detail later in this document. One or 

more of the above approaches could be used. Whatever analysis methods are used, the 

Department will keep with its policies and ensure that provisions are made to maintain the 

confidentiality of all submitted information. Upon completion of the engineering analysis, the 

Department will use the data to perform consumer life-cycle cost analysis, select trial standards 

levels, and calculate preliminary national benefits of these levels. These analyses will complete the 

analytical steps that precede the Advance Notice of Proposed Rulemaking (ANOPR). 

1 

Central Air Conditioner and Heat Pump Rulemaking 

Framework 

Introduction 

This document describes the analytical framework for appliance standards rulemaking. the 

emphasis is on describing the major components of the methodology and identifying the 

relationships among the various sections. A diagram of the generic analytical framework, which 

was derived for the clothes washer rulemaking, is shown in Figure 1. This document will 

primarily emphasize those components of the methodology necessary for issuing an Advance 

Notice of Proposed Rulemaking (ANOPR). Currently, the Advisory Committee on Appliance 

Energy Efficiency Standards is considering cross-cutting issues which may affect the analysis 

anticipated in upcoming rulemakings. The Department plans to consider any recommendation 

from the Advisory Committee to the greatest extent possible in the ongoing rulemakings. 

This document also describes the application of the analytical framework to the central air 

conditioner and heat pump rule. Following a generic description of each component of a typical 

rulemaking, a comment box has been added to discuss elements of the central air conditioner rule. 

References to central air conditioners include a discussion of key issues, the Department of 

Energy's (DOE) perspectives on these issues, and requests for additional stakeholder input. 

As described in this documerit, manufacturers will be asked to provide perfonnance and costing 

infonnation in order that an engineering analysis can be conducted. Data collection is dependent 

on how the engineering analysis is conducted. The Department has yet to select the 

engineering analysis method and is seeking input from stakeholders as to what approach 

should be taken. The following three methods are currently under consideration by the 

Department: I) the efficiency level approach, 2) the design option approach, and 3) reverse 

engineering. All three approaches are discussed in greater detail later in this document. One or 

more of the above approaches could be used. Whatever analysis methods are used, the 

Department will keep with its policies and ensure that provisions are made to maintain the 

confidentiality of all submitted infonnation. Upon completion of the engineering analysis, the 

Department will use the data to perfonn consumer life-cycle cost analysis, select trial standards 

levels, and calculate preliminary national benefits of these levels. These analyses will complete the 

analytical steps that precede the Advance Notice of Proposed Rulemaking (ANOPR). 

1 
-EE- wm/srw^- c L ^g v 

Figure 1: Clothes Washers Rulemaking Framework

Approaches Key-Inputs Analysis Key-Outputs

Indutry Review Identiy Frlf Produolct I I Rfirinu y Basoc

~~~~" ' "~'-,-^ Preliminary Market s Sh.mtnt Forcacst

Quantitative Anrlsts I Historictl Infonmation P Technology -

t Exstig Technobogy _ &Options Tec

Identification &

Prototype Designsr Screening Analysis

Design-Option Approach I It . I

Cost Modeing Approach] t I. 

Eficiency-Levd(Approach EiecyRorlne Eftiercy/Petfod',nce E ^ -^ App,^ ^ 1 -- ^ - L ---- | Engineering ,I 3t: '_iAnalysis

Energy/Water rates

: Mainbnanco/Servic Cogs

1 t_______ ^ _______ |, *,, AvAer.age Paybac* with U.no.binty

Expert Forecasts || -l B3ae Ciue'

Hitoral·: s Other ty Product tin........ iienes an

*I* ' y~ * Payback

Expert Voluntarye Eneirgy swings

RealRetvised Pre-ANOPR

Exp ert Forecst sts ------- ph-i mentsl .

R

. ta

i

.t.. ic ....... l Preliminary National ' *t_.prfentv..uets 7 

tiModels-REtMv REEPS etc. 'B_ S pmet -.-- i Benefit Analysis

' Historical shipements O effnalysis SOth-er *Product ~saturation '; Efficiency

Voluntary iniativyes ution C' h- Undistry s

ANOPR,'--

FN AL · Revised Pre-ANOPRL |

:: :, :Analyses H ':

Fuel Type Payback Distribution

D: : nra Consumer Life-cyce Distribution t Dernogr phics 1 _ Sub-group Analysis md '*v 'cYManufacturer Prices . _,_ ' I s t · c- _ I ~~~~~~~- ~~~_n~ ~Industry Industry Cash-flowwith Uncertainty ........... .... .... ...... -. B ne Analysisn- Average . C _ Cash-flow m costs Base Case cr _

H@S~i~Standard Level Capses k n tswt 

·~ ~ I* Effici ncy Distribution ·P Ecfy tnym

= Veuntafor allt Cives ' I T C cplkimpudo

Interviews , _F Manufacturer mp.

~~~~GRIM .Analysis Impacts

cout (C). Price (P),

utility bad factors Dnyis Mp Emissions

NOPR ,

FINAL RULE Revise Analysis

:- -2 ......... 

EE-RM-STD-98-440 COMMENT 01D

Approaches 

Industly Review 

Ouantitlllive A.-lysis 

Design-Option Approach 

Cost Modeling Approach 

Elli::iency-L..,., Approach 

Marl<.et Survey Approach 

Expert Forecasts 

Expert Forecasts 

• Housing demand 

• Historical shipments 

• Product uturati~ 

• Volunlary in~iatives 

ANOPR 

Inte"'~ 

GRIM Ana sis 

NOPR 

FINAL RULE 

I' 

I' 

I' 

I' 

I: 

I' I: 

I; 

I, . I' . I" I: 

I: 

I: 

I: 

I: 

I 

I 

I: 

I: 

Figure 1: Clothes Washers Rulemaklng Framework 

Key-lnputs 

ldently FlrmII Products 

Historical Infolmation 

Marlcell Firm Segmentation 

Existing T IChnology Options 

I 

Elli::iencylP.tonhanoe 

Ene'llylWaler rat. 

effiOencies I 

I 

:R.tailPrasl 

.......... 1· .... 

1.-___ • Base Case I • Other eIIic:ienbes 

• EffICiency I 

· dis1ribution I 

Fuel Type 

Demographics 

: ManulaClllrer Prices I : 

Analysis 

Preliminary Market 

& Technology 

Characterization 

t 

II 

... ·C················ '1'" 'C3 IndUstr~ r" . . . 'C' ......... , , . , . , ,~ - - -C' Cash-flow 

Average , , , . , , - - , - ' , , . , , .. 1. , , -c m Costs • Base Case I, ~------------ • Standard Level Cases I 

• Elliciency Distribution I 

loran Cases 

Cost (Cl. Price (P), 

Ouantity (Ql, Financial (F) 

Key-Outputs 

• Pr.rm1l8lY Basecue 

• 511,,"*,1 Forecast 

• Average PIIybat* with UnC8f1ainty 

• Average Life.qe.le oMth Unoertainty 

• Payback 

• Energy .... ings 

• Net Present Values 

• Payback Distribution 

• Lila Ie Distribution 

Induslty Cash-liow with Unoer1ainty 

• 

.~ .. pa« • . c. ... , Imp_ 

• CcIft~ I ...... 

• CIIn_ Impodo 

Emission rates 

UtiI' load factors 

En~ronmen~I_~~_~~R~ev~e~~e~L~~==~~ 

Analysis Emissions 

'I 

y 

Revise Analysis 

2 

Approaches 

Industly Review 

Ouantitlllive A.-lysis 

Design-Option Approach 

Cost Modeling Approach 

Elli::iency-L..,., Approach 

Marl<.et Survey Approach 

Expert Forecasts 

Expert Forecasts 

• Housing demand 

• Historical shipments 

• Product uturati~ 

• Volunlary in~iatives 

ANOPR 

Inte"'~ 

GRIM Ana sis 

NOPR 

FINAL RULE 

I' 

I' 

I' 

I' 

I: 

I' I: 

I; 

I, . I' . I" I: 

I: 

I: 

I: 

I: 

I 

I 

I: 

I: 

Figure 1: Clothes Washers Rulemaklng Framework 

Key-lnputs 

ldently FlrmII Products 

Historical Infolmation 

Marlcell Firm Segmentation 

Existing T IChnology Options 

I 

Elli::iencylP.tonhanoe 

Ene'llylWaler rat. 

effiOencies I 

I 

:R.tailPrasl 

.......... 1· .... 

1.-___ • Base Case I • Other eIIic:ienbes 

• EffICiency I 

· dis1ribution I 

Fuel Type 

Demographics 

: ManulaClllrer Prices I : 

Analysis 

Preliminary Market 

& Technology 

Characterization 

t 

II 

... ·C················ '1'" 'C3 IndUstr~ r" . . . 'C' ......... , , . , . , ,~ - - -C' Cash-flow 

Average , , , . , , - - , - ' , , . , , .. 1. , , -c m Costs • Base Case I, ~------------ • Standard Level Cases I 

• Elliciency Distribution I 

loran Cases 

Cost (Cl. Price (P), 

Ouantity (Ql, Financial (F) 

Key-Outputs 

• Pr.rm1l8lY Basecue 

• 511,,"*,1 Forecast 

• Average PIIybat* with UnC8f1ainty 

• Average Life.qe.le oMth Unoertainty 

• Payback 

• Energy .... ings 

• Net Present Values 

• Payback Distribution 

• Lila Ie Distribution 

Induslty Cash-liow with Unoer1ainty 

• 

.~ .. pa« • . c. ... , Imp_ 

• CcIft~ I ...... 

• CIIn_ Impodo 

Emission rates 

UtiI' load factors 

En~ronmen~I_~~_~~R~ev~e~~e~L~~==~~ 

Analysis Emissions 

'I 

y 

Revise Analysis 

2 
1.0 Preliminary Market and Technology Assessment

1.1 Market Assessment

Prior to initiating a detailed impact analysis, the Department will develop information on the

present and past industry structure and market characteristics of the product(s) concerned. This

activity will consist of both quantitative and qualitative efforts to assess the industry and products

based on publicly available information. Issues to be addressed include the following:

manufacturer market share and characteristics; trends in the number of firms; the financial

situation of manufacturers; existing non-regulatory efficiency improvement initiatives; and trends

in product characteristics and retail markets.

The information collected will serve as resource material to be used throughout the rulemaking.

For instance, historical product shipments and prices will be used to help predict future prices and

shipments. Market structure data will be particularly useful to conducting the competitive

impacts analysis.

The Department has initiated a market assessment of the central air conditioner and heat pump

industry. Once completed, collected information will be distributed for comment.

The Department plans to conduct interviews with manufacturers following the June 30, 1998

framework workshop. These interviews will be useful in developing an industry profile by

providing insights and information to help structure future analysis. While this effort involves the

entire industry, the Department is interested in developing profiles of individual manufacturers to

gain a better understanding of the potential impacts of standards on both individual firms and

particular categories of firms.

Interview participants will be requested to identify all confidential information provided in writing

and orally. Approximately two weeks following the interview, an interview summary will be

provided to give participants the opportunity to confirm the accuracy and protect the

confidentiality of all collected information. All the information transmitted will be considered,

when appropriate, in the Department's decision-making process. However, confidential

information will not be made available for the public record.

Are there elements not mentioned in the above market characterization which should be

incorporated into this document? What are the relevant product markets? Which manufacturers

are subject to potential standards?

1.2 Technology Assessment

Information relative to existing and past technology options and prototype designs will typically

be used as input to determine what technologies manufacturers utilize to attain higher energy

efficiency levels. In consultation with interested parties, the Department intends to develop a list

3

EE-RM-STD-98-440 COMMENT 01D

1.0 Preliminary Market and Technology Assessment 

1.1 Market Assessment 

Prior to initiating a detailed impact analysis, the Department will develop information on the 

present and past industry structure and market characteristics of the product(s) concerned. This 

activity will consist of both quantitative and qualitative efforts to assess the industry and products 

based on publicly available information. Issues to be addressed include the following: 

manufacturer market share and characteristics~ trends in the number of firms~ the financial 

situation of manufacturers~ existing non-regulatory efficiency improvement initiatives~ and trends 

in product characteristics and retail markets. 

The information collected will serve as resource material to be used throughout the rulemaking. 

For instance, historical product shipments and prices will be used to help predict future prices and 

shipments. Market structure data will be particularly useful to conducting the competitive 

impacts analysis. 

The Department has initiated a market assessment of the central air conditioner and heat pump 

industry. Once completed, collected information will be distributed for comment. 

The Department plans to conduct interviews with manufacturers following the June 30, 1998 

framework workshop. These interviews will be useful in developing an industry profile by 

providing insights and information to help structure future analysis. While this effort involves the 

entire industry, the Department is interested in developing profiles of individual manufacturers to 

gain a better understanding of the potential impacts of standards on both individual firms and 

particular categories of firms. . 

Interview participants will be requested to identify all confidential information provided in writing 

and orally. Approximately two weeks following the interview, an interview summary will be 

provided to give participants the opportunity to confirm the accuracy and protect the 

confidentiality of all collected information. All the information transmitted will be considered, 

when appropriate, in the Department's decision-making process. However, confidential 

information will not be made available for the public record. 

Are there elements not mentioned in the above market characterization which should be 

incorporated into this document? What are the relevant product markets? Which manufacturers 

are subject to potential standards? 

1.2 Technology Assessment . 

Information relative to existing and past technology options and prototype designs will typically 

be used as input to determine what technologies manufacturers utilize to attain higher energy 

efficiency levels. In consultation with interested parties, the Department intends to develop a list 

3 

1.0 Preliminary Market and Technology Assessment 

1.1 Market Assessment 

Prior to initiating a detailed impact analysis, the Department will develop information on the 

present and past industry structure and market characteristics of the product(s) concerned. This 

activity will consist of both quantitative and qualitative efforts to assess the industry and products 

based on publicly available information. Issues to be addressed include the following: 

manufacturer market share and characteristics~ trends in the number of firms~ the financial 

situation of manufacturers~ existing non-regulatory efficiency improvement initiatives~ and trends 

in product characteristics and retail markets. 

The information collected will serve as resource material to be used throughout the rulemaking. 

For instance, historical product shipments and prices will be used to help predict future prices and 

shipments. Market structure data will be particularly useful to conducting the competitive 

impacts analysis. 

The Department has initiated a market assessment of the central air conditioner and heat pump 

industry. Once completed, collected information will be distributed for comment. 

The Department plans to conduct interviews with manufacturers following the June 30, 1998 

framework workshop. These interviews will be useful in developing an industry profile by 

providing insights and information to help structure future analysis. While this effort involves the 

entire industry, the Department is interested in developing profiles of individual manufacturers to 

gain a better understanding of the potential impacts of standards on both individual firms and 

particular categories of firms. . 

Interview participants will be requested to identify all confidential information provided in writing 

and orally. Approximately two weeks following the interview, an interview summary will be 

provided to give participants the opportunity to confirm the accuracy and protect the 

confidentiality of all collected information. All the information transmitted will be considered, 

when appropriate, in the Department's decision-making process. However, confidential 

information will not be made available for the public record. 

Are there elements not mentioned in the above market characterization which should be 

incorporated into this document? What are the relevant product markets? Which manufacturers 

are subject to potential standards? 

1.2 Technology Assessment . 

Information relative to existing and past technology options and prototype designs will typically 

be used as input to determine what technologies manufacturers utilize to attain higher energy 

efficiency levels. In consultation with interested parties, the Department intends to develop a list 

3 
&E fe/sr_/^ y?^ D

of technologies than can and should be considered. Initially, the technologies will encompass all

those considered to be technologically feasible and will serve to establish the maximum

technologically feasible design.

The Department has initiated a technology assessment for central air conditioners and heat pumps.

The initial list of technologies will be based upon the design options provided in a previous

ANOPR (September 8, 1993) for central air conditioners and heat pumps.

Are there specific technologies that should or should not be considered for central air

conditioners and heat pumps (e.g., microchannel heat exchangers or electrohydrodynamic

enhancement of heat exchangers)?

1.3 Preliminary Baseline Shipments Forecast

The Department intends to develop a base case forecast of product shipments in absence of new

standards. This forecast will require an assessment of the impacts of past and existing nonregulatory efforts by manufacturers, utilities and other interested parties. DOE intends to seek

information on the actual impacts of such initiatives to date, but may also consider information

presented regarding the possible impacts that any existing initiatives might have in the future.

Such information could include a demonstration of the steps manufacturers, distribution channels,

utilities or others will take to realize such voluntary efficiency improvements.

The baseline shipments forecast will be used as input to three subsequent analyses: the National

Benefits Analysis (Section 8.0); the Consumer Life-Cycle Analysis (Section 5.0); and the

Consumer Sub-Group Analysis (Section 10.0). To perform the National Benefits Analysis, a

forecast of shipment weighted product efficiency improvements of new products sold is needed to

the year 2030. To assess the average impact on the affected consumer population and the

distribution of these impacts on consumer sub-groups, a forecast of product shipments by

efficiency level is needed for the year a new standard would come into effect.

The Department will begin to prepare a strawman baseline shipment forecast for central air

conditioners and heat pumps. This forecast, to the extent possible, will include a distribution of

shipments by efficiency level. Historical product shipments and discussions with parties involved

in market-based initiatives for increasing the sales of high efficiency models will guide the

shipments forecast.

What existing market-based initiatives should DOE consider? What other approaches could be

used to establish the base-case shipmentforecast? What information sources show past shipment

data by efficiency level?

4

EE-RM-STD-98-440 COMMENT 01D

oftechriologies than can and should be considered. Initially, the technologies will encompass all 

those considered to be technologically feasible and will serve to establish the maximum 

technologically feasible design. 

The Department has initiated a technology assessment for central air conditioners and heat pumps. 

The initial list of technologies will be based upon the design options provided in a previous 

ANOPR (September 8, 1993) for central air conditioners and heat pumps. 

Are there specific technologies that should or should not be considered for central air 

conditioners and heat pumps (e.g., microchannel heat exchangers or electrohydrodynamic 

enhancement of heat exchangers)? 

1.3 Preliminary Baseline Shipments Forecast 

The Department intends to develop a base case forecast .of product shipments in absence of new 

standards. This forecast will require an assessment of the impacts of past and existing nonregulatory efforts by manufacturers, utilities and other interested parties. DOE intends to seek 

information on the actual impacts of such initiatives to date, but may also consider information 

presented regarding the possible impacts that any existing initiatives might have in the future. 

Such information could include a demonstration of the steps manufacturers, distribution channels, 

utilities or others will take to realize such voluntary efficiency improvements. 

The baseline shipments forecast will be used as input to three subsequent analyses: the National 

Benefits Analysis (Section 8.0); the Consumer Life-Cy~le Analysis (Section 5.0); and the 

Consumer Sub-Group Analysis (Section 10.0). To perform the National Benefits Analysis, a 

forecast of shipment weighted product efficiency improvements of new products sold is needed to 

the year 2030. To assess the average impact on the affected consumer population and the . 

distribution of these impacts on consumer sub-groups, a forecast of product shipments by 

efficiency level is needed for the year a new standard would come into effect. 

The Department will begin to prepare a strawman baseline shipment forecast for central air 

conditioners and heat pumps. This forecast, to the extent possible, will include a distribution of 

shipments by efficiency level. Historical product shipments and discussions with parties involved 

in market-based initiatives for increasing the sales of high efficiency models will guide the 

shipments forecast. 

What existing market-based initiatives should DOE consider? What other approaches could be 

used to establish the base-case shipmentforecast? What information sources show past shipment 

data by effiCiency level? 

4 

oftechriologies than can and should be considered. Initially, the technologies will encompass all 

those considered to be technologically feasible and will serve to establish the maximum 

technologically feasible design. 

The Department has initiated a technology assessment for central air conditioners and heat pumps. 

The initial list of technologies will be based upon the design options provided in a previous 

ANOPR (September 8, 1993) for central air conditioners and heat pumps. 

Are there specific technologies that should or should not be considered for central air 

conditioners and heat pumps (e.g., microchannel heat exchangers or electrohydrodynamic 

enhancement of heat exchangers)? 

1.3 Preliminary Baseline Shipments Forecast 

The Department intends to develop a base case forecast .of product shipments in absence of new 

standards. This forecast will require an assessment of the impacts of past and existing nonregulatory efforts by manufacturers, utilities and other interested parties. DOE intends to seek 

information on the actual impacts of such initiatives to date, but may also consider information 

presented regarding the possible impacts that any existing initiatives might have in the future. 

Such information could include a demonstration of the steps manufacturers, distribution channels, 

utilities or others will take to realize such voluntary efficiency improvements. 

The baseline shipments forecast will be used as input to three subsequent analyses: the National 

Benefits Analysis (Section 8.0); the Consumer Life-Cy~le Analysis (Section 5.0); and the 

Consumer Sub-Group Analysis (Section 10.0). To perform the National Benefits Analysis, a 

forecast of shipment weighted product efficiency improvements of new products sold is needed to 

the year 2030. To assess the average impact on the affected consumer population and the . 

distribution of these impacts on consumer sub-groups, a forecast of product shipments by 

efficiency level is needed for the year a new standard would come into effect. 

The Department will begin to prepare a strawman baseline shipment forecast for central air 

conditioners and heat pumps. This forecast, to the extent possible, will include a distribution of 

shipments by efficiency level. Historical product shipments and discussions with parties involved 

in market-based initiatives for increasing the sales of high efficiency models will guide the 

shipments forecast. 

What existing market-based initiatives should DOE consider? What other approaches could be 

used to establish the base-case shipmentforecast? What information sources show past shipment 

data by effiCiency level? 

4 
2.0 Screening Analysis

The screening analysis consists of three tasks: selecting product classes; selecting baseline units;

and reviewing and selecting design options for further analysis.

2.1 Product Classes

Product types are separated into classes based on the type of energy used, and capacity or

performance-related features that provide utility to the consumer and affect efficiency. Different

energy-efficiency standards will apply to different product classes. In general, classes are defined

using information obtained in discussions with manufacturers, trade associations, and other

interested parties.

As prescribed by the National Appliance Energy Conservation Act (NAECA), central air

conditioners and heat pumps are categorized into split and single package systems. Systems

incorporating some type of capacity or performance related feature are currently lumped into the

above classes.

There are some system types which might incorporate a capacity or performance relatedfeature

that warrants the creation of additional classes. For example, should the Department consider

creating additional classes based on the cooling or heating capacity of the system? With regard

to split systems, should ductless systems (i.e., "mini-split" high velocity systems) be broken out

into a separate class? Do the performance benefits offered by such unique systems as "throughthe-wall condensing units", "limited temperature range heat pumps", or "combination spaceconditioning/water-heating systems" warrant creating separate classes for them? Please

comment as to whether the Department should pursue establishing additional classes.

2.2 Baseline Units

Defining a baseline unit is the starting point for analyzing energy efficiency improvements. For

each product class, the baseline unit generally represents a model with the minimum allowable

energy efficiency specified by the National Energy Conservation Act (NAECA). Other than

efficiency, features incorporated in the baseline unit are representative of the "low-end" unit

within the class.

5

EE-RM-STD-98-440 COMMENT 01D

2.0 Screening Analysis 

The screening analysis consists of three tasks: selecting product classes~ selecting baseline units~ 

and reviewing and selecting design· options for further analysis. 

2.1 Product Classes 

Product types are separated into classes based on the type of energy used, and capacity or 

performance-related features that provide utility to the consumer and affect efficiency. Different 

energy-efficiency standards will apply to different product classes. In general, classes are defined 

using information obtained in discussions with manufacturers, trade associations, and other 

interested parties. 

As prescribed by the National Appliance Energy Conservation Act (NAECA), central air 

conditioners and heat pumps are categorized into split and single package systems. Systems 

incorporating some type of capacity or performance related feature are currently lumped into the 

above classes. 

There are some system types which might incorporate a capacity or performance relatedfeature 

that wa"ants the creation of additional classes. For example, should the Department consider 

creating additional classes based on the cooling or heating capacity of the system? With regard 

to sp!it systems, should ductless systems (i.e., "mini-split" high velocity systems) be broken out 

into a separate class? Do the performance benefits offered by such unique systems as "thraughthe-wall condensing units", "limited temperature range heat pumps", or "combination spaceconditioninglwater-heating systems" warrant creating separate classes for them? Please 

comment as to whether the Department should pursue establishing additional classes. 

2.2 Baseline Units 

Defining a baseline unit is the starting point for analyzing energy efficiency improvements. For 

each product class, the baseline unit generally represents a model with the minimum allowable 

energy efficiency specified by the National Energy Conservation Act (NAECA). Other than 

efficiency, features incorporated in the baseline unit are representative of the "low-end" unit 

within the class. 

5 

j). 

2.0 Screening Analysis 

The screening analysis consists of three tasks: selecting product classes~ selecting baseline units~ 

and reviewing and selecting design· options for further analysis. 

2.1 Product Classes 

Product types are separated into classes based on the type of energy used, and capacity or 

performance-related features that provide utility to the consumer and affect efficiency. Different 

energy-efficiency standards will apply to different product classes. In general, classes are defined 

using information obtained in discussions with manufacturers, trade associations, and other 

interested parties. 

As prescribed by the National Appliance Energy Conservation Act (NAECA), central air 

conditioners and heat pumps are categorized into split and single package systems. Systems 

incorporating some type of capacity or performance related feature are currently lumped into the 

above classes. 

There are some system types which might incorporate a capacity or performance relatedfeature 

that wa"ants the creation of additional classes. For example, should the Department consider 

creating additional classes based on the cooling or heating capacity of the system? With regard 

to sp!it systems, should ductless systems (i.e., "mini-split" high velocity systems) be broken out 

into a separate class? Do the performance benefits offered by such unique systems as "thraughthe-wall condensing units", "limited temperature range heat pumps", or "combination spaceconditioninglwater-heating systems" warrant creating separate classes for them? Please 

comment as to whether the Department should pursue establishing additional classes. 

2.2 Baseline Units 

Defining a baseline unit is the starting point for analyzing energy efficiency improvements. For 

each product class, the baseline unit generally represents a model with the minimum allowable 

energy efficiency specified by the National Energy Conservation Act (NAECA). Other than 

efficiency, features incorporated in the baseline unit are representative of the "low-end" unit 

within the class. 

5 

j). 
One of the most vital statistics required for establishing the baseline model is its efficiency. Current

minimum efficiency standards for split and single package system central air conditioners and

central air conditioning heat pumps are 10.0 and 9.7 SEER, respectively. The current minimums

for the heating performance of split and single package central air conditioning heat pump systems

are 6.8 and 6.6 HSPF, respectively. The Department will likely use the above minimum efficiency

standards as the baseline efficiency for each of the above classes. If additional classes are created,

the Department will apply the appropriate existing standard as the baseline efficiency for that class.

If more detailed approaches are selected for conducting the engineering analysis, such as the design

option or reverse engineering approaches, manufacturers will be requested to supply details on the

technologies they utilize in their baseline or minimum efficiency models. This information will

assist the Department in establishing what technologies can be employed to increase the efficiency

of the equipment.

Are the above approaches suitablefor establishing baseline models? If not, why not?

2.3 Design Options

An initial list of design options will be developed from the technologies identified in the

technology assessment. Following the development of this initial list of design options, the

Department, in consultation with interested parties, will review each design option to determine if

it is practicable to manufacture, install and service; would adversely impact product utility or

product availability; or would have adverse impacts on health and safety. Design options not

eliminated in the screening process will be considered further in the engineering analysis.

Compiling a list of design options will provide a better understanding as to what technologies can

be utilized by manufacturers to improve equipment efficiency. Knowing the technologies which

are available to manufacturers to increase efficiency will also help the Department determine

maximum technologically feasible efficiency levels.

The Department notes that fuel-driven technologies, such as gas-fired engine driven heat pumps,

absorption heat pumps, and Stirling refrigeration cycles, will not be considered as design options

for central air conditioners and heat pumps. As specified by NAECA, one of the criteria for

defining a central air conditioner and heat pump is that it be "powered by single phase electric

current". Thus, the above fuel-driven technologies are precluded from consideration.

3.0 Engineering Analysis

6

EE-RM-STD-98-440 COMMENT 01D

One of the most vital statistics required for establishing the baseline model is its efficiency. Current 

minimum efficiency standards for split and single package system central air conditioners and 

central air conditioning heat pumps are 10.0 and 9.7 SEER, respectively. The current minimums 

for the heating performance of split and single package central air conditioning heat pump systems 

are 6.8 and 6.6 HSPF, respectively. The Department will likely use the above minimum efficiency 

standards as the baseline efficiency for each of the above classes. Ifadditional classes are created, 

the Department will apply the appropriate existing standard as the baseline efficiency for that class. 

lfmore detailed approaches are selected for conducting the engineering analysis, such as the design 

option or reverse engineering approaches, manufacturers will be requested to supply details on the 

technologies they utilize in their baseline or minimum efficiency models. This information will 

assist the Department in establishing what technologies can be employed to increase the efficiency 

of the equipment. 

Are the above approaches suitable for establishing baseline models? If not, why not? 

2.3 Design Options 

An initial list of design options will be developed from the technologies identified in the 

technology assessment. Following the development of this initial list of design options, the 

Department, in consultation with interested parties, will review each design option to determine if 

it is practicable to manufacture, install and service; would adversely impact product utility or 

product availability; or would have adverse impacts on health and safety. Design options not 

eliminated in the screening process will be considered further in the engineering analysis. 

Compiling a list of design options will provide a better understanding as to what technologies can 

be utilized by manufacturers to improve equipment efficiency. Knowing the technologies which 

are available to manufacturers to increase efficiency will also help the Department determine 

maximum technologically feasible efficiency levels. 

The Department notes that fuel-driven technologies, such as gas-fired engine driven heat pumps, 

absorption heat pumps, and Stirling refrigeration cycles, will not be considered as design options 

for central air conditioners and heat pumps. As specified by NAECA, one of the criteria for 

defining a central air conditioner and heat pump is that it be "powered by single phase electric 

current". Thus, the above fuel-driven technologies are precluded from consideration. 

3.0 Engineering Analysis 

6 

j)' 

One of the most vital statistics required for establishing the baseline model is its efficiency. Current 

minimum efficiency standards for split and single package system central air conditioners and 

central air conditioning heat pumps are 10.0 and 9.7 SEER, respectively. The current minimums 

for the heating performance of split and single package central air conditioning heat pump systems 

are 6.8 and 6.6 HSPF, respectively. The Department will likely use the above minimum efficiency 

standards as the baseline efficiency for each of the above classes. Ifadditional classes are created, 

the Department will apply the appropriate existing standard as the baseline efficiency for that class. 

lfmore detailed approaches are selected for conducting the engineering analysis, such as the design 

option or reverse engineering approaches, manufacturers will be requested to supply details on the 

technologies they utilize in their baseline or minimum efficiency models. This information will 

assist the Department in establishing what technologies can be employed to increase the efficiency 

of the equipment. 

Are the above approaches suitable for establishing baseline models? If not, why not? 

2.3 Design Options 

An initial list of design options will be developed from the technologies identified in the 

technology assessment. Following the development of this initial list of design options, the 

Department, in consultation with interested parties, will review each design option to determine if 

it is practicable to manufacture, install and service; would adversely impact product utility or 

product availability; or would have adverse impacts on health and safety. Design options not 

eliminated in the screening process will be considered further in the engineering analysis. 

Compiling a list of design options will provide a better understanding as to what technologies can 

be utilized by manufacturers to improve equipment efficiency. Knowing the technologies which 

are available to manufacturers to increase efficiency will also help the Department determine 

maximum technologically feasible efficiency levels. 

The Department notes that fuel-driven technologies, such as gas-fired engine driven heat pumps, 

absorption heat pumps, and Stirling refrigeration cycles, will not be considered as design options 

for central air conditioners and heat pumps. As specified by NAECA, one of the criteria for 

defining a central air conditioner and heat pump is that it be "powered by single phase electric 

current". Thus, the above fuel-driven technologies are precluded from consideration. 

3.0 Engineering Analysis 

6 

j)' 
EF-e 7/s:- qf- , V

The purpose of the engineering analysis is to estimate the energy savings potential from increased

equipment efficiency levels. The design options not eliminated in the previous screening analysis

can be used to help establish the potential energy savings. The Department, in consultation with stakeholders, will use the most appropriate means available to determine energy consumption, including an overall system approach or possibly engineering modeling. Ranges and uncertainties

in performance will be established. The energy savings measures developed in the engineering analysis will be combined with end-user costs in the life-cycle cost analysis.

The engineering analysis involves estimating the efficiency increases possible based on the baseline

units described in Section 2.2. A representative baseline unit will be established for each product class that is identified. A cost-efficiency relationship will be developed to show the manufacturer

cost of achieving increased efficiency. The efficiency levels corresponding to various design option combinations will be determined from manufacturer data submittals and from DOE

engineering calculations. Cost estimates will be obtained from detailed incremental cost data

disaggregated into labor, purchased parts and material, shipping/packaging and investment. These

costs will be used both for the engineering analysis and the manufacturer impact analysis. Section 4.0 contains a more detailed discussion of approaches to estimating manufacturing costs.

As stated earlier, data collection is highly dependent on the type of approach selected for

conducting the engineering analysis. Currently, the Department is considering three approaches: 1) the efficiency level approach, 2) the design option approach, and 3) reverse engineering. Regardless of the approach used, strategies for analyzing uncertainty and variability in the cost and efficiency data will need to be developed. Each of the approaches are discussed in more

detail below.

The Department seeks inputfrom stakeholders as to what approach or approaches should be used

to conduct the engineering analysis. Although only three approaches are discussed here, it is not

meant to exclude any additional approaches stakeholders may suggest for conducting the

engineering analysis.

3.1 Efficiency Level Approach

The efficiency level approach establishes the relationship between manufacturer cost and

increased efficiency at predetermined efficiency levels. It has the distinct advantage of being simple and straight forward. Manufacturers typically provide incremental manufacturer cost data

for incremental increases in efficiency. Cost-efficiency curves can be easily constructed to clearly identify at what point manufacturers are incurring significant cost impacts to raise efficiency. Additionally, the efficiency level approach allows manufacturers the ability to supply detailed cost

data without revealing their unique and proprietary design strategies for achieving increased

efficiency levels.

7

EE-RM-STD-98-440 COMMENT 01D

The purpose of the engineering analysis is to estimate the energy savings potential from increased 

equipment efficiency levels. The design options not eliminated in the previous screening analysis 

can be used to help establish the potential energy savings. The Department, in consultation with 

stakeholders, will use the most appropriate means available to detennine energy consumption, 

including an overall system approach or possibly engineering modeling. Ranges and uncertainties 

in perfonnance will be established. The energy savings measures developed in the engineering 

analysis will be combined with end-user costs in the life-cycle cost analysis. 

The engineering analysis involves estimating the efficiency increases possible based on the baseline 

units described in Section 2.2. A representative baseline unit will be established for each product 

class that is identified. A cost-efficiency relationship will be developed to show the manufacturer 

cost of achieving increased efficiency. The efficiency levels corresponding to various design 

option combinations will be detennined from manufacturer data submittals and from DOE 

engineering calculations. Cost estimates will be obtained from detailed incremental cost data 

disaggregated into labor, purchased parts and material, shipping/packaging and investment. These 

costs will be used both for the engineering analysis and the manufacturer impact analysis. Section 

4.0 contains a more detailed discussion of approaches to estimating manufacturing costs. 

As stated earlier, data collection is highly dependent on the type of approach selected for 

conducting the engineering analysis. Currently, the Department is considering three approaches: 

I) the efficiency level approach, 2) the design option approach, and 3) reverse engineering. 

Regardless of the approach used, strategies for analyzing uncertainty and variability in the cost 

and efficiency data will need to be developed. Each of the approaches are discussed in more 

detail below. 

The Department seeks inputfrom stakeholders as to what approach or approaches should be used 

to conduct the engineering analysis. Although only three approaches are discussed here, it is not 

meant to exclude any additional approaches stakeholders may suggest jor conducting the 

engineering analysis. 

3.1 Efficiency Level Approach 

The efficiency level approach establishes the relationship between manufacturer cost and 

increased efficiency at predetennined efficiency levels. It has the distinct advantage of being 

simple and straight forward. Manufacturers typically provide incremental manufacturer cost data 

for incremental increases in efficiency. Cost-efficiency curves can be easily constructed to clearly 

identify at what point manufacturers are incurring significant cost impacts to raise efficiency. 

Additionally, the efficiency level approach allows manufacturers the ability to supply detailed cost 

data without revealing their unique and proprietary design strategies for achieving increased 

efficiency levels. 

7 

The purpose of the engineering analysis is to estimate the energy savings potential from increased 

equipment efficiency levels. The design options not eliminated in the previous screening analysis 

can be used to help establish the potential energy savings. The Department, in consultation with 

stakeholders, will use the most appropriate means available to detennine energy consumption, 

including an overall system approach or possibly engineering modeling. Ranges and uncertainties 

in perfonnance will be established. The energy savings measures developed in the engineering 

analysis will be combined with end-user costs in the life-cycle cost analysis. 

The engineering analysis involves estimating the efficiency increases possible based on the baseline 

units described in Section 2.2. A representative baseline unit will be established for each product 

class that is identified. A cost-efficiency relationship will be developed to show the manufacturer 

cost of achieving increased efficiency. The efficiency levels corresponding to various design 

option combinations will be detennined from manufacturer data submittals and from DOE 

engineering calculations. Cost estimates will be obtained from detailed incremental cost data 

disaggregated into labor, purchased parts and material, shipping/packaging and investment. These 

costs will be used both for the engineering analysis and the manufacturer impact analysis. Section 

4.0 contains a more detailed discussion of approaches to estimating manufacturing costs. 

As stated earlier, data collection is highly dependent on the type of approach selected for 

conducting the engineering analysis. Currently, the Department is considering three approaches: 

I) the efficiency level approach, 2) the design option approach, and 3) reverse engineering. 

Regardless of the approach used, strategies for analyzing uncertainty and variability in the cost 

and efficiency data will need to be developed. Each of the approaches are discussed in more 

detail below. 

The Department seeks inputfrom stakeholders as to what approach or approaches should be used 

to conduct the engineering analysis. Although only three approaches are discussed here, it is not 

meant to exclude any additional approaches stakeholders may suggest jor conducting the 

engineering analysis. 

3.1 Efficiency Level Approach 

The efficiency level approach establishes the relationship between manufacturer cost and 

increased efficiency at predetennined efficiency levels. It has the distinct advantage of being 

simple and straight forward. Manufacturers typically provide incremental manufacturer cost data 

for incremental increases in efficiency. Cost-efficiency curves can be easily constructed to clearly 

identify at what point manufacturers are incurring significant cost impacts to raise efficiency. 

Additionally, the efficiency level approach allows manufacturers the ability to supply detailed cost 

data without revealing their unique and proprietary design strategies for achieving increased 

efficiency levels. 

7 
But the simplicity of the efficiency level approach is also its primary drawback. Namely, since

technological details are not provided, it is extremely difficult to verify whether the costs being

provided are truly representative of the specific efficiency level. In addition, prototypical designs

become difficult to evaluate and maximum technologically feasible designs are then difficult to

ascertain. As a result, some other type of analysis would likely be needed in order to verify the

accuracy of the data supplied through the efficiency level approach.

If the efficiency level approach is selected for conducting the engineering analysis, predetermined

efficiency levels will be selected by the Department based on consultations with stakeholders. In

the case of central air conditioners, predetermined efficiency levels will be based upon the seasonal

energy efficiency ratio (SEER). Selection of predetermined levels for central air conditioning heat

pumps is more difficult as the equipment is rated with both cooling (SEER) and heating (HSPF)

efficiencies.

The Department seeks input from stakeholders as to how the efficiency level approach can be

applied to heat pumps to ensure that both cooling and heating performance are taken into

account.

As discussed above, the efficiency level approach requires verification ofthe data submitted. Other

approaches, such as the design option and reverse engineering methods, can be conducted in

parallel with the efficiency level approach to ensure the accuracy of its data.

The Department seeks input on what methods could be utilized to verify the data provided by

manufacturers using the efficiency level approach.

Based on the Department's past experiences using the efficiency level approach for other products,

submitted cost data may have a number of associated problems. For example, since manufacturers

may have proprietary approaches to meeting a particular efficiency level, there may be a wide range

of costs provided. Data may also exhibit various abnormalities. For example, in setting voluntary

efficiency levels for commercial air conditioning equipment as part of ASHRAE's review and

update of Standard 90.1 for new commercial buildings, submitted cost data had several

peculiarities. This may have been due to designs which manufacturers produced for a niche market

to gain a market advantage.

The Department has conducted the engineering analysis for clothes washers using the

efficiency level approach. The methods used for conducting the analysis and reporting

manufacturer costs will be presented at the Workshop as a means to solicit comments as to

whether this approach is appropriate for use in the central air conditioner and heat pump

analysis.

3.2 Design Option Approach

Under the design option approach, individual or combinations of design options are identified for

8

EE-RM-STD-98-440 COMMENT 01D

But the simplicity of the efficiency level approach is also its primary drawback. Namely, since 

technological details are not provided, it is extremely difficult to verify whether the costs being 

provided are truly representative of the specific efficiency level. In addition, prototypical designs 

become difficult to evaluate and maximum technologically feasible designs are then difficult to 

ascertain. As a result, some other type of analysis would likely be needed in order to verify the 

accuracy of the data supplied through the efficiency level approach. 

If the efficiency level approach is selected for conducting the engineering analysis, predetermined 

efficiency levels will be selected by the Department based on consultations with stakeholders. In 

the case of central air conditioners, predetennined efficiency levels will be based upon the seasonal 

energy efficiency ratio (SEER). Selection ofpredetennined levels for central air conditioning heat 

pumps is more difficult as the equipment is rated with both cooling (SEER) and heating (HSPF) 

efficiencies. 

The Department seeks input from stakeholders as to haw the efficiency level approach can be 

applied to heat pumps to ensure that both cooling and heating performance are taken into 

account. 

As discussed above, the efficiency level approach requires verification of the data submitted. Other 

approaches, such as the design option and reverse engineering methods, can be conducted in 

parallel with the efficiency level approach to ensure the accuracy of its data. 

The Department seeks input on what methods could be utilized to verify the data provided by 

manufacturers using the efficiency level approach. 

Based on the Department's past experiences using the efficiency level approach for other products, 

submitted cost data may have a number of associated problems. For example, since manufacturers 

may have proprietary approaches to meeting a particular efficiency level, there may be a wide range 

of costs provided. Data may also exhibit various abnonnalities. For example, in setting voluntary 

efficiency levels for commercial air conditioning equipment as part of ASHRAE's review and 

update of Standard 90.1 for new commercial buildings, submitted cost data had several 

peculiarities. This may have been due to designs which manufacturers produced for a niche market 

to gain a market advantage. 

The Department has conducted the engineering analys.is for clothes washers using the 

efficiency level approach. The methods used for conducting the analysis and reporting 

manufacturer costs will be presented at the Workshop as a means to solicit comments as to 

whether this approach is appropriate for use in the central air conditioner and heat pump 

analysis. 

3.2 Design Option Approach 

Under the design option approach, individual or combinations of design options are identified for 

8 

But the simplicity of the efficiency level approach is also its primary drawback. Namely, since 

technological details are not provided, it is extremely difficult to verify whether the costs being 

provided are truly representative of the specific efficiency level. In addition, prototypical designs 

become difficult to evaluate and maximum technologically feasible designs are then difficult to 

ascertain. As a result, some other type of analysis would likely be needed in order to verify the 

accuracy of the data supplied through the efficiency level approach. 

If the efficiency level approach is selected for conducting the engineering analysis, predetermined 

efficiency levels will be selected by the Department based on consultations with stakeholders. In 

the case of central air conditioners, predetennined efficiency levels will be based upon the seasonal 

energy efficiency ratio (SEER). Selection ofpredetennined levels for central air conditioning heat 

pumps is more difficult as the equipment is rated with both cooling (SEER) and heating (HSPF) 

efficiencies. 

The Department seeks input from stakeholders as to haw the efficiency level approach can be 

applied to heat pumps to ensure that both cooling and heating performance are taken into 

account. 

As discussed above, the efficiency level approach requires verification of the data submitted. Other 

approaches, such as the design option and reverse engineering methods, can be conducted in 

parallel with the efficiency level approach to ensure the accuracy of its data. 

The Department seeks input on what methods could be utilized to verify the data provided by 

manufacturers using the efficiency level approach. 

Based on the Department's past experiences using the efficiency level approach for other products, 

submitted cost data may have a number of associated problems. For example, since manufacturers 

may have proprietary approaches to meeting a particular efficiency level, there may be a wide range 

of costs provided. Data may also exhibit various abnonnalities. For example, in setting voluntary 

efficiency levels for commercial air conditioning equipment as part of ASHRAE's review and 

update of Standard 90.1 for new commercial buildings, submitted cost data had several 

peculiarities. This may have been due to designs which manufacturers produced for a niche market 

to gain a market advantage. 

The Department has conducted the engineering analys.is for clothes washers using the 

efficiency level approach. The methods used for conducting the analysis and reporting 

manufacturer costs will be presented at the Workshop as a means to solicit comments as to 

whether this approach is appropriate for use in the central air conditioner and heat pump 

analysis. 

3.2 Design Option Approach 

Under the design option approach, individual or combinations of design options are identified for 

8 
EK -77/1/sfT -_ 9 LD) ~ 

increasing efficiency. Design option efficiency increases can either be based on manufacturer or

component supplier estimates or through the use of engineering computer simulation models. The

incremental manufacturing costs of adding design options to a baseline model are then established.

Individual or combinations of design options are added to the baseline model in ascending order

of cost-effectiveness. Typically, the payback period is used to establish a design option's costeffectiveness and is determined by the ratio of the change in total consumer cost to the change in

operating cost.

The primary advantage of the design option approach is its ability to analyze individual

technologies. The approach is transparent in that the impact of any single technology on cost and

efficiency is explicit. An additional advantage is its ability to incorporate designs that have been

demonstrated to perform in prototypes but have yet to be utilized in equipment currently available

on the market. Thus, maximum technologically feasible designs are more easily established then

in the efficiency level approach.

Although individual technologies can be assessed, the design option approach can tend to be

complex. Individual technologies may be combined in ways not typically utilized by

manufacturers, especially if prototypical technologies are being analyzed, thus, making it difficult

to assess a design's impact on system cost and efficiency. In order to determine a technology's

impact on system efficiency, computer simulation models are typically employed. But since

computer simulation models exhibit at least some level of inaccuracy, a great deal of time and

effort must be expended to validate the model's results at a variety of operating conditions.

Simulation models demand detailed input that may require manufacturers and component

suppliers to reveal proprietary design strategies. Also, equipment performance data at specified

test conditions must be supplied in order to validate the model's performance.

Another drawback to the design option approach is its imperfect compatibility with the

manufacturing impact analysis. The Department recognizes that the manufacturer cost

information derived in a component-based analysis does not reflect the variability in baseline units,

design strategies and cost structures that can exist between manufacturers. Therefore, for the

manufacturing impact analysis, the Department may need to derive additional manufacturing cost

estimates, using other approaches developed in consultation with interested parties.

9

EE-RM-STD-98-440 COMMENT 01D

increasing efficiency. Design option efficiency increases can either be based on manufacturer or 

component supplier estimates or through the use of engineering computer simulation models. The 

incremental manufacturing costs of adding design options to a baseline model are then established. 

Individual or combinations of design options are added to the baseline model in ascending order 

of cost-effectiveness. Typically, the payback period is used to establish a design option's costeffectiveness and is detennined by the ratio of the change in total consumer cost to the change in 

operating cost. 

The primary advantage of the design option approach is its ability to analyze individual 

technologies. The approach is transparent in that the impact of any single technology on cost and 

efficiency is explicit. An additional advantage is its ability to incorporate designs that have been 

demonstrated to perform in prototypes but have yet to be utilized in equipment currently available 

on the market. Thus, maximum technologically feasible designs are more easily established then 

in the efficiency level approach. 

Although individual technologies can be assessed, the design option approach can tend to be 

complex. Individual technologies may be combined in ways not typically utilized by 

manufacturers, especially if prototypical technologies are being analyzed, thus, making it difficult 

to assess a design's impact on system cost and efficiency. In order to detennine a technology'S 

impact on system efficiency, computer simulatio~ models are typically employed. But since 

computer simulation models exhibit at least some level of inaccuracy, a great deal of time and 

effort must be expended to validate the model's results at a variety of operating conditions. 

Simulation models demand detailed input that may require manufacturers and component 

suppliers to reveal proprietary design strategies. Also, equipment performance data at specified 

test conditions must be supplied in order to validate the model's performance. 

Another drawback to the design option approach is its imperfect compatibility with the 

manufacturing impact analysis. The Department recognizes that the manufacturer cost 

information derived in a component-based analysis does not reflect the variability in baSeline units, 

design strategies and cost structures that can exist between manufacturers. Therefore, for the 

manufacturing impact analysis, the Department may need to derive additional manufacturing cost 

estimates, using other approaches developed in consultation with interested parties. 

9 

increasing efficiency. Design option efficiency increases can either be based on manufacturer or 

component supplier estimates or through the use of engineering computer simulation models. The 

incremental manufacturing costs of adding design options to a baseline model are then established. 

Individual or combinations of design options are added to the baseline model in ascending order 

of cost-effectiveness. Typically, the payback period is used to establish a design option's costeffectiveness and is detennined by the ratio of the change in total consumer cost to the change in 

operating cost. 

The primary advantage of the design option approach is its ability to analyze individual 

technologies. The approach is transparent in that the impact of any single technology on cost and 

efficiency is explicit. An additional advantage is its ability to incorporate designs that have been 

demonstrated to perform in prototypes but have yet to be utilized in equipment currently available 

on the market. Thus, maximum technologically feasible designs are more easily established then 

in the efficiency level approach. 

Although individual technologies can be assessed, the design option approach can tend to be 

complex. Individual technologies may be combined in ways not typically utilized by 

manufacturers, especially if prototypical technologies are being analyzed, thus, making it difficult 

to assess a design's impact on system cost and efficiency. In order to detennine a technology'S 

impact on system efficiency, computer simulatio~ models are typically employed. But since 

computer simulation models exhibit at least some level of inaccuracy, a great deal of time and 

effort must be expended to validate the model's results at a variety of operating conditions. 

Simulation models demand detailed input that may require manufacturers and component 

suppliers to reveal proprietary design strategies. Also, equipment performance data at specified 

test conditions must be supplied in order to validate the model's performance. 

Another drawback to the design option approach is its imperfect compatibility with the 

manufacturing impact analysis. The Department recognizes that the manufacturer cost 

information derived in a component-based analysis does not reflect the variability in baSeline units, 

design strategies and cost structures that can exist between manufacturers. Therefore, for the 

manufacturing impact analysis, the Department may need to derive additional manufacturing cost 

estimates, using other approaches developed in consultation with interested parties. 

9 
-a r /o - c- rev cow

If the design option approach is used for the engineering analysis, methods will have to be

established for determining efficiency increases. As stated above, this can be done either directly

through stakeholder input or through the use of computer simulation models. There are at least

two public domain computer models for central air conditioner and heat pumps, one from Oak

Ridge National Laboratory and the other from the National Institute of Standards and Technology,

which could be used to determine equipment efficiency.

The Department seeks inputfrom stakeholders as to how efficiency impacts could be determined

under the design option approach. Ifcomputer simulation models are to be used, is there a

specific model which should be used by the Department?

3.3 Reverse Engineering Approach

The use of a component-based engineering analysis or reverse engineering approach provides

useful information including the identification of potential technological paths manufacturers

could use to achieve increased product energy efficiency. Under this type of analysis, actual

equipment on the market are physically analyzed, i.e., dismantled, component-by-component to

determine what technologies and designs manufacturers employ to increase efficiency.

Independent costing methods or manufacturer and component supplier data can then be used to

estimate the costs of the components. This approach has the distinct advantage of using "real"

market equipment to establish the technologies in which manufacturers utilize to reach higher

efficiencies.

The primary disadvantage of reverse engineering is the time and effort required to analyze "real"

equipment. Several models from a diverse range of manufacturers may have to be assessed in

order to ensure that an accurate representation of technological paths for increasing efficiency are

identified. In addition, since only "real" equipment is being analyzed, prototypical designs may

not be captured by the analysis, thus, making it difficult to establish maximum technologically

feasible designs. Another potential problem is that proprietary manufacturer design strategies may

be revealed.

If the reverse engineering approach is used, several different central air conditioner and heat pump

models will need to be identified in order to ensure that all representative technologies for

increasing efficiency are identified.

The Department seeks input from stakeholders as to whether reverse engineering is a practical

approachfor conducting the engineering analysis. If so, how many different air conditioner and

heat pumps models will need to be analyzed?

10

EE-RM-STD-98-440 COMMENT 01D

If the design option approach is used for the engineering analysis, methods will have to be 

established for determining efficiency increases. As stated above, this can be done either directly 

through stakeholder input or through the use of computer simulation models. There are at least 

two public domain computer models for central air conditioner and heat pumps, one from Oak 

Ridge National Laboratory and the other from the National Institute of Standards and Technology, 

which could be used to determine equipment efficiency. 

The Department seeks input from stakeholders as to how efficiency impacts could be determined 

under the design option approach. If computer simulation models are to be used, is there a 

specific model which should be used by the Department? 

3.3 Reverse Engineering Approach 

The use of a component-based engineering analysis or reverse engineering approach provides 

useful infonnation including the identification of potential technological paths manufacturers 

could use to achieve increased product energy efficiency. Under this type of analysis, actual 

equipment on the market are physically analyzed, i.e., dismantled, component-by-component to 

determine what technologies and designs manufacturers employ to increase efficiency. 

Independent costing methods or manufacturer and component supplier data can then be used to 

estimate the costs of the components. This approach has the distinct advantage of using "real" 

market equipment to establish the technologies in which manufacturers utilize to reach higher 

efficiencies. 

The primary disadvantage of reverse engineering is.the time and effort required to analyze "real" 

equipment. Several models from a diverse range of manufacturers may have to be assessed in 

order to ensure that an accurate representation of technological paths for increasing efficiency are 

. identified. In addition, since only "real" equipment is being analy~ed, prototypical designs may 

not be captured by the analysis, thus, making it difficult to establish maximum technologically 

feasible designs. Another potential problem is that proprietary manufacturer design strategies may 

be revealed. 

If the reverse engineering approach is used, several different central air conditioner and heat pump 

models will need to be identified in order to ensure that all representative technologies for 

increasing efficiency are identified. 

The Department seeks input from stakeholders as to whether reverse engineering is a practical 

approach for conducting the engineering analysis. If so, how many different air conditioner and 

heat pumps models will need to be analyzed? 

10 

If the design option approach is used for the engineering analysis, methods will have to be 

established for determining efficiency increases. As stated above, this can be done either directly 

through stakeholder input or through the use of computer simulation models. There are at least 

two public domain computer models for central air conditioner and heat pumps, one from Oak 

Ridge National Laboratory and the other from the National Institute of Standards and Technology, 

which could be used to determine equipment efficiency. 

The Department seeks input from stakeholders as to how efficiency impacts could be determined 

under the design option approach. If computer simulation models are to be used, is there a 

specific model which should be used by the Department? 

3.3 Reverse Engineering Approach 

The use of a component-based engineering analysis or reverse engineering approach provides 

useful infonnation including the identification of potential technological paths manufacturers 

could use to achieve increased product energy efficiency. Under this type of analysis, actual 

equipment on the market are physically analyzed, i.e., dismantled, component-by-component to 

determine what technologies and designs manufacturers employ to increase efficiency. 

Independent costing methods or manufacturer and component supplier data can then be used to 

estimate the costs of the components. This approach has the distinct advantage of using "real" 

market equipment to establish the technologies in which manufacturers utilize to reach higher 

efficiencies. 

The primary disadvantage of reverse engineering is.the time and effort required to analyze "real" 

equipment. Several models from a diverse range of manufacturers may have to be assessed in 

order to ensure that an accurate representation of technological paths for increasing efficiency are 

. identified. In addition, since only "real" equipment is being analy~ed, prototypical designs may 

not be captured by the analysis, thus, making it difficult to establish maximum technologically 

feasible designs. Another potential problem is that proprietary manufacturer design strategies may 

be revealed. 

If the reverse engineering approach is used, several different central air conditioner and heat pump 

models will need to be identified in order to ensure that all representative technologies for 

increasing efficiency are identified. 

The Department seeks input from stakeholders as to whether reverse engineering is a practical 

approach for conducting the engineering analysis. If so, how many different air conditioner and 

heat pumps models will need to be analyzed? 

10 
3.4 Outside Regulatory Changes affecting the Engineering Analysis

In conducting an engineering analysis, there sometimes occur regulatory changes outside of the

NAECA efficiency standards process that can impact the manufacture of the product. Some of

these changes can also affect the efficiency of the product as well. The Department will attempt

to identify all "outside" issues that can impact the engineering analysis.

The central air conditioning and heat pump industry is currently facing the impending phase-out

ofHCFC-22, the refrigerant used in almost all the equipment currently being installed in the U.S.

The phase-out ofHCFC-22 begins in the year 2010 and the industry has responded by conducting

in-depth analyses of various HCFC-22 alternatives. The most notable effort to date has been the

Air-Conditioning & Refrigeration Institute's Alternative Refrigeration Evaluation Program

(AREP). Under AREP, several HCFC-22 alternatives were identified and their impact on

equipment capacity, efficiency, and longevity, to just name a few, were established.

As a result of all the analyses conducted to date, two primary candidates have emerged from the

field of alternatives; R-410A and R-407C. Both refrigerants have their advantages and

disadvantages. Although R-410A shows promise of being able to significantly raise equipment

efficiencies, its high volumetric capacity would require systems to be redesigned to handle the

significantly higher discharge pressures. R-407C is a virtual drop-in replacement, but exhibits an

efficiency degradation of 5-10% relative to HCFC-22. Thus, it is still uncertain as to what impact

the phase-out of HCFC-22 will have on the.industry. Namely, how will equipment manufacturer

costs be affected by the phase-out of HCFC-22.

The Department seeks input from stakeholders as to how the impending phase-out of HCFC-22

should be handled in the engineering analysis. Is HCFC-22's phase-out date stillfar enough in

the future to base the analysis on the continued use ofHCFC-22? Ifnot, how will its elimination

impact manufacturer costs and equipment efficiency?

Are there any additional "outside" issues that stakeholders are aware of that should be

considered by the Department in its analysis of central air conditioner and heat pump standards?

4.0 Manufacturing Costs

In addition to being used in conjunction with the engineering analysis, manufacturing costs are

needed for the manufacturer impact analysis and are used as one means of determining retail

prices.

11

EE-RM-STD-98-440 COMMENT 01D

3.4 Outside Regulatory Changes affecting the Engineering Analysis 

In conducting an engineering analysis, there sometime~ occur regulatory changes outside of the 

NAECA efficiency standards process that can impact the manufacture of the product. Some of 

these changes can also affect the efficiency of the product as well. The Department will attempt 

to identify all "outside" issues that can impact the engineering analysis. 

The central air conditioning and heat pump industry is currently facing the impending phase-out 

ofHCFC-22, the refrigerant used in almost all the equipment currently being installed in the U.S. 

The phase-out ofHCFC-22 begins in the year 2010 and the industry has responded by conducting 

in-depth analyses of various HCFC-22 alternatives. The most notable effort to date has been the 

Air-Conditioning & Refrigeration Institute's Alternative Refrigeration Evaluation Program 

(AREP). Under AREP, several HCFC-22 alternatives were identified and their impact on 

equipment capacity, efficiency, and longevity, to just name a few, were established .. 

As a result of all the analyses conducted to date, two primary candidates have emerged from the 

field of alternatives; R-410A and R-407C. Both refrigerants have their advantages and 

disadvantages. Although R-41 OA shows promise of being able to significantly raise equipment 

efficiencies, its high volumetric capacity would require systems to be redesigned to handle the 

significantly higher discharge pressures. R-407C is a virtual drop-in replacement, but exhibits an 

efficiency degradation of 5-1 0% relative to HCFC-22. Thus, it is still uncertain as to what impact 

the phase-out ofHCFC-22 will have on the.industry. Namely, how will equipment manufacturer 

costs be affected by the phase-out ofHCFC-22. 

The Department seeks input from stakeholders as to how the impending phase-out of HCFC-22 

should be handled in the engineering analysis. Is HCFC-22's phase-out date still far enough in 

the future to base the analysis on the continued use of HCFC-22? ljnot, how will its elimination 

impact manufacturer costs and equipment effiCiency? 

Are there any additional "outside" issues that stakeholders are aware of that should he 

considered by the Department in its analYSis of central air conditioner and heat pump standards? 

4.0 Manufacturing Costs 

In addition to being used in conjunction with the engineering analysis, manufacturing costs are 

needed for the manufacturer i~pact analysis and are used as one means of determining retail 

prices. 

11 

3.4 Outside Regulatory Changes affecting the Engineering Analysis 

In conducting an engineering analysis, there sometime~ occur regulatory changes outside of the 

NAECA efficiency standards process that can impact the manufacture of the product. Some of 

these changes can also affect the efficiency of the product as well. The Department will attempt 

to identify all "outside" issues that can impact the engineering analysis. 

The central air conditioning and heat pump industry is currently facing the impending phase-out 

ofHCFC-22, the refrigerant used in almost all the equipment currently being installed in the U.S. 

The phase-out ofHCFC-22 begins in the year 2010 and the industry has responded by conducting 

in-depth analyses of various HCFC-22 alternatives. The most notable effort to date has been the 

Air-Conditioning & Refrigeration Institute's Alternative Refrigeration Evaluation Program 

(AREP). Under AREP, several HCFC-22 alternatives were identified and their impact on 

equipment capacity, efficiency, and longevity, to just name a few, were established .. 

As a result of all the analyses conducted to date, two primary candidates have emerged from the 

field of alternatives; R-410A and R-407C. Both refrigerants have their advantages and 

disadvantages. Although R-41 OA shows promise of being able to significantly raise equipment 

efficiencies, its high volumetric capacity would require systems to be redesigned to handle the 

significantly higher discharge pressures. R-407C is a virtual drop-in replacement, but exhibits an 

efficiency degradation of 5-1 0% relative to HCFC-22. Thus, it is still uncertain as to what impact 

the phase-out ofHCFC-22 will have on the.industry. Namely, how will equipment manufacturer 

costs be affected by the phase-out ofHCFC-22. 

The Department seeks input from stakeholders as to how the impending phase-out of HCFC-22 

should be handled in the engineering analysis. Is HCFC-22's phase-out date still far enough in 

the future to base the analysis on the continued use of HCFC-22? ljnot, how will its elimination 

impact manufacturer costs and equipment effiCiency? 

Are there any additional "outside" issues that stakeholders are aware of that should he 

considered by the Department in its analYSis of central air conditioner and heat pump standards? 

4.0 Manufacturing Costs 

In addition to being used in conjunction with the engineering analysis, manufacturing costs are 

needed for the manufacturer i~pact analysis and are used as one means of determining retail 

prices. 

11 
The Department intends to collect cost information from manufacturers. The data collection

period is scheduled to occur after the June 30, 1998 framework workshop. The Department

prefers that individual manufacturer data sets be submitted to a third party for statistical treatment

and subsequent analysis. The Department recognizes that cost data collected using the design

option approach may need to be supplemented for the manufacturer impact analysis in order to

account for different design strategies.

Is the data collection time frame acceptable? Can individual manufacturers submit data?

4.1 Characterizing Uncertainty

Consistent with the process rule, DOE intends on placing a range around the average

manufacturing cost of incorporating various design options or achieving various efficiency levels.

This range of cost will be used both in the industry cashflow analysis and could be utilized to

generating retail prices for the consumer life-cycle cost analysis.

The Department is proposing that the data collection method incorporate cost estimates bound by

a range. For example, manufacturers could provide their best point estimate and a range describing

the lowest and highest values they consider likely (for each design option or efficiency level).

Similar approaches were used recently for the design-option approach (water heaters) and the

efficiency-level approach (clothes washers). The individual manufacturer submittals would be

aggregated using a spreadsheet tool and reported back to DOE as percentile values. The entire

cost distribution would then be used in the calculation of life-cycle costs.

The Department is seeking comment on this approach to collecting manufacturing costs.

4.2 Variability in Costs between Manufacturers

The Department is committed to assessing the differential impacts of standards on different

manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating

cashflows separately for each class of manufacturer defined. If appropriate, GRIM analysis will

be performed for each firm.

12

EE-RM-STD-98-440 COMMENT 01D

.:0 

The Department intends to collect cost infonnation from manufacturers. The data collection 

period is scheduled to occur after the June 30, 1998 framework workshop. The Department 

prefers that individual manufacturer data sets be submitted to a third party for statistical treatment 

and subsequent analysis. The Department recognizes that cost data collected using the design 

option approach may need to be supplemented for the manufacturer impact analysis in order to 

account for different design strategies. 

Is the data collection time frame acceptable? Can individual manufacturers submit data? 

4.1 Characterizing Uncertainty 

Consistent with the process rule, DOE intends on placing a range around the average 

manufacturing cost of incorporating various design options or achieving various efficiency levels. 

This range of cost will be used both in the industry cashflow analysis and could be utilized to 

generating retail prices for the consumer life-cycle cost analysis. 

The Department is proposing that the data collection method incorporate cost estimates bound by 

a range. For example, manufacturers could provide their best point estimate and a range describing 

the lowest and highest values they consider likely (for each design option or efficiency level). 

Similar approaches were used recently for the design-option approach (water heaters) and the 

efficiency-level approach (clothes washers). The individual manufacturer submittals would be 

aggregated using a spreadsheet tool and reported back to DOE as percentile values. The entire 

cost distribution would then be used in the calculation oflife-cycle costs. 

The Department is seeking comment on this approach to collecting manufacturing costs. 

4.2 Variability in Costs between Manufacturers 

The Department is committed to assessing the differential impacts of standards on different 

manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating 

cashflows separately for each class of manufacturer defined. If appropriate, GRIM analysis will 

be perfonned for each finn. 

12 

.:0 

The Department intends to collect cost infonnation from manufacturers. The data collection 

period is scheduled to occur after the June 30, 1998 framework workshop. The Department 

prefers that individual manufacturer data sets be submitted to a third party for statistical treatment 

and subsequent analysis. The Department recognizes that cost data collected using the design 

option approach may need to be supplemented for the manufacturer impact analysis in order to 

account for different design strategies. 

Is the data collection time frame acceptable? Can individual manufacturers submit data? 

4.1 Characterizing Uncertainty 

Consistent with the process rule, DOE intends on placing a range around the average 

manufacturing cost of incorporating various design options or achieving various efficiency levels. 

This range of cost will be used both in the industry cashflow analysis and could be utilized to 

generating retail prices for the consumer life-cycle cost analysis. 

The Department is proposing that the data collection method incorporate cost estimates bound by 

a range. For example, manufacturers could provide their best point estimate and a range describing 

the lowest and highest values they consider likely (for each design option or efficiency level). 

Similar approaches were used recently for the design-option approach (water heaters) and the 

efficiency-level approach (clothes washers). The individual manufacturer submittals would be 

aggregated using a spreadsheet tool and reported back to DOE as percentile values. The entire 

cost distribution would then be used in the calculation oflife-cycle costs. 

The Department is seeking comment on this approach to collecting manufacturing costs. 

4.2 Variability in Costs between Manufacturers 

The Department is committed to assessing the differential impacts of standards on different 

manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating 

cashflows separately for each class of manufacturer defined. If appropriate, GRIM analysis will 

be perfonned for each finn. 

12 
Manufacturing costs submitted to DOE for other appliance standard analyses have demonstrated

large variability. The Department prefers using'disaggregated cost data from all manufacturers.

If the efficiency-level approach is used the same disaggregated company specific cost information

developed for the engineering analysis can be used to perform GRIM analysis for each

manufacturer or manufacturer subgroup.

The method to be used in assessing manufacturer impacts will be the subject of an analysis

workshop to be help after publication of the ANOPR.

4.3 Costing Approach/ Engineering Analysis

Methodologies used to generate manufacturing costs depend on the type of engineering analysis

approach that is selected. As discussed in the Engineering Analysis (Section 3.0), three possible

methods include: the efficiency level approach, reporting relative costs of achieving energy

efficiency improvements; the design option approach, reporting the incremental costs of adding

design options to a baseline model; and the reverse engineering or cost-assessment approach

which requires a "bottoms-up" manufacturing cost assessment based on a detailed bill of

materials. The Department will select an approach based on public input on which of the

approaches should be used during a rulemaking.

The Department will base its costing approach on what approach or approaches are selected for

the engineering analysis.

The Department seeks input from stakeholders as to what approachfor determining costs should

be used

4.4 Proprietary Design

The Department will consider in its analysis all design options that are commercially available or

present in a working prototype, including proprietary designs. Proprietary designs will be fully

considered in the Department's engineering and economic analyses.

r

13

EE-RM-STD-98-440 COMMENT 01D

-~----------~-----------~ 

Manufacturing costs submitted to DOE for other appliance standard analyses have demonstrated 

large variability. The Department prefers using'disaggregated cost data from all manufacturers. 

If the efficiency-level approach is used the same disaggregated company specific cost information 

developed for the engineering analysis can be used to perform GRIM analysis for each 

manufacturer or manufacturer subgroup. 

The method' to be used in assessing manufacturer impacts will be the subject of an analysis 

workshop to be help after publication of the ANOPR. 

4.3 Costing Approach! Engineering Analysis 

Methodologies used to generate manufacturing costs depend on the type of engineering analysis 

approach that is selected. As discussed in the Engineering Analysis (Section 3.0), three possible 

methods include: the efficiency level approach, reporting relative costs of achieving energy 

efficiency improvements; the design option.approach, reporting the incremental costs of adding 

design options to a baseline model; and the reverse engineering or cost-assessment approach 

which requires a "bottoms-up" manufacturing cost assessment based on a detailed bill of 

materials. The Department will select an approach based on public input on which of the 

approaches should be used during a rulemaking. 

The Department will base its costing approach on what approach or approaches are selected for 

the engineering analysis. 

The Department seeks inputfrom stakeholders as to what approach for determining costs should 

be used 

4.4 Proprietary Design 

The Department will consider in its analysis all design options that are commercially available or 

present in a working prototype, including proprietary designs. Proprietary designs will be fully 

considered in the Department's engineering and economic analyses. 

r 

13 

-~----------~-----------~ 

Manufacturing costs submitted to DOE for other appliance standard analyses have demonstrated 

large variability. The Department prefers using'disaggregated cost data from all manufacturers. 

If the efficiency-level approach is used the same disaggregated company specific cost information 

developed for the engineering analysis can be used to perform GRIM analysis for each 

manufacturer or manufacturer subgroup. 

The method' to be used in assessing manufacturer impacts will be the subject of an analysis 

workshop to be help after publication of the ANOPR. 

4.3 Costing Approach! Engineering Analysis 

Methodologies used to generate manufacturing costs depend on the type of engineering analysis 

approach that is selected. As discussed in the Engineering Analysis (Section 3.0), three possible 

methods include: the efficiency level approach, reporting relative costs of achieving energy 

efficiency improvements; the design option.approach, reporting the incremental costs of adding 

design options to a baseline model; and the reverse engineering or cost-assessment approach 

which requires a "bottoms-up" manufacturing cost assessment based on a detailed bill of 

materials. The Department will select an approach based on public input on which of the 

approaches should be used during a rulemaking. 

The Department will base its costing approach on what approach or approaches are selected for 

the engineering analysis. 

The Department seeks inputfrom stakeholders as to what approach for determining costs should 

be used 

4.4 Proprietary Design 

The Department will consider in its analysis all design options that are commercially available or 

present in a working prototype, including proprietary designs. Proprietary designs will be fully 

considered in the Department's engineering and economic analyses. 

r 

13 
Because the Department is obliged to determine maximum technologically feasible designs, the

Department will need to estimate the costs of producing prototypical designs identified in the

Technology Assessment. However, only those prototypical designs which have passed the

screening process (as discussed in Section 2.3) will be considered. The Department is especially

sensitive to manufacturer concerns regarding proprietary designs and will ensure that provisions

are made to maintain the confidentiality of any proprietary data submitted by manufacturers. This

information will provide input to the competitive impacts assessment and other economic analyses.

Are there proprietary designs which the Department should considerfor central air conditioners

and heat pumps? If so, what type of approaches should be used to acquire the cost data

necessary for evaluating these designs?

5.0 Life-Cycle Cost and Payback Analysis

The effect of standards on individual consumers includes a change in operating expense (usually

decreased) and a change in purchase price (usually increased). The net effect is analyzed by

calculating the life-cycle cost using the engineering performance data for energy consumption and

equipment retail prices which can be derived in a number of ways (see Section 6.0). Inputs to the

LCC calculation include the installed consumer cost (purchase price plus installation cost),

operating expenses (energy and maintenance costs), lifetime of the appliance and a discount rate.

In the ANOPR stage, the consumer life-cycle cost analysis will be conducted using typical values

for appliance price and life, fuel costs, energy usage and discount rates. Design options which

have payback periods that exceed the average life of the product or which cause life-cycle cost

increases will not be considered further. The detailed impact calculation, conducted after the

ANOPR, will have a comprehensive assessment of impacts on subgroups of consumers as

described in Section 10.0.

14

EE-RM-STD-98-440 COMMENT 01D

££" -7?!Y1 / s-rJ) - q g - L!- '1'0 D 

Because the Department is obliged to determine maximum technologically feasible designs, the 

Department will need to estimate the costs of producing prototypical designs identified in the 

Technology Assessment. However, only those prototypical designs which have passed the 

screening process (as discussed in Section 2.3) will be considered. The Department is especially 

sensitive to manufacturer concerns regarding proprietary designs and will ensure that provisions 

are made to maintain the confidentiality of any proprietary data submitted by manufacturers. This 

information will provide input to the competitive impacts assessment and other economic analyses. 

Are there proprietary designs which the Department should consider for central air conditioners 

and heat pumps? If so, what type of approaches should be used to acquire the cost data 

necessary for evaluating these designs? 

5.0 Life-Cycle Cost and Payback Analysis 

The effect of standards on individual consumers includes a change in operating expense (usually 

decreased) and a change in purchase price (usually increased). The net effect is analyzed by 

calculating the life-cycle cost using the engineering performance data for energy consumption and 

equipment retail prices which can be derived in a number of ways (see Section 6.0). Inputs to the 

LCC calculation include the installed consumer cost (purchase price plus installation cost), 

operating expenses (energy and maintenance costs), lifetime of the appliance and a discount rate. 

In the ANOPR stage, the consumer life-cycle cost analysis will be conducted using typical values 

for appliance price and life, fuel costs, energy usage and discount rates. Design options' which 

have payback periods that exceed the average life of the product or which cause life-cycle cost 

increases will not be considered further. The detailed impact calculation, conducted after the 

ANOPR, will have a comprehensive assessment of impacts on subgroups of consumers as 

described in Section 10.0. 

14 

££" -7?!Y1 / s-rJ) - q g - L!- '1'0 D 

Because the Department is obliged to determine maximum technologically feasible designs, the 

Department will need to estimate the costs of producing prototypical designs identified in the 

Technology Assessment. However, only those prototypical designs which have passed the 

screening process (as discussed in Section 2.3) will be considered. The Department is especially 

sensitive to manufacturer concerns regarding proprietary designs and will ensure that provisions 

are made to maintain the confidentiality of any proprietary data submitted by manufacturers. This 

information will provide input to the competitive impacts assessment and other economic analyses. 

Are there proprietary designs which the Department should consider for central air conditioners 

and heat pumps? If so, what type of approaches should be used to acquire the cost data 

necessary for evaluating these designs? 

5.0 Life-Cycle Cost and Payback Analysis 

The effect of standards on individual consumers includes a change in operating expense (usually 

decreased) and a change in purchase price (usually increased). The net effect is analyzed by 

calculating the life-cycle cost using the engineering performance data for energy consumption and 

equipment retail prices which can be derived in a number of ways (see Section 6.0). Inputs to the 

LCC calculation include the installed consumer cost (purchase price plus installation cost), 

operating expenses (energy and maintenance costs), lifetime of the appliance and a discount rate. 

In the ANOPR stage, the consumer life-cycle cost analysis will be conducted using typical values 

for appliance price and life, fuel costs, energy usage and discount rates. Design options' which 

have payback periods that exceed the average life of the product or which cause life-cycle cost 

increases will not be considered further. The detailed impact calculation, conducted after the 

ANOPR, will have a comprehensive assessment of impacts on subgroups of consumers as 

described in Section 10.0. 

14 
During the ANOPR stage, the Department is considering analyzing the regional impacts of climate

and energy price on consumer life-cycle cost. Because central air conditioning and heat pump

operating cost is so dependent on climatic conditions and energy price, the Department believes

it is important to analyze their affect on LCC at this stage of the analysis.

Do stakeholders believe that regional variations in climate and energy price should be analyzed

at this stage (ANOPR) of the analysis or at a later stage (NOPR)?

In order to conduct such an analysis, the Department is considering using the Energy Information

Administration's (EIA) Residential Energy Consumption Survey (RECS). RECS provides a

representative sample of households from through out the U. S. For those RECS households using

either a central air conditioner or heat pump, RECS provides both the equipment's end-use energy

consumption and its age. (Climatic conditions in addition to consumer behavior are taken into

account because they are inherent to the equipment's energy consumption.) Knowing the age of

the equipment, an estimate of the equipment's efficiency can be made from historical shipmentweighted efficiency values. Reductions in energy consumption from new replacement equipment

can be approximated by multiplying the existing energy use by the ratio of the existing-to-new

equipment efficiency. RECS data also provides household energy prices allowing for the

calculation of the operating cost of the existing and new replacement equipment. With this

approach, regional comparisons can be made on the operating cost, and in turn life-cycle cost,

between different efficiency levels of new equipment.

The Department seeks inputfrom stakeholders as to whether the above approach based on the use

of RECS household data is reasonable for estimating the impacts of energy price and climate on

life-cycle cost.

In the ANOPR stage, uncertainty analysis will be conducted on several of the typical values

described. During the post-ANOPR consumer analysis (Section 10.0), the Department will

evaluate additional parameters including variations in installation costs.

Based on the results of the life-cycle cost analysis, DOE will select candidate standard levels for

analysis. The range of candidate standard levels will typically include: (a) the most energy

efficient combination of design options or most energy efficient level; (b) the combination of

design options or efficiency level with the lowest life-cycle cost; and © a combination of design

options or efficiency level with a payback period of not more than three years. Additionally,

candidate standard levels that incorporate noteworthy technologies or fill in large gaps between

efficiency levels of other candidate standards levels may be selected.

15

EE-RM-STD-98-440 COMMENT 01D

During the ANOPR stage, the Department is considering analyzing the regional impacts of climate 

and energy price on consumer life-cycle cost. Because central air conditioning and heat pump 

operating cost is so dependent on climatic conditions and energy price, the Department believes 

it is important to analyze their affect on LCC at this stage of the analysis. 

Do stakeholder:s believe that regional variations in climate and energy price should be analyzed 

at this stage (ANOPR) of the analysis or at a later stage-(NOPR)? 

In order to conduct such an analysis, the Department is considering using the Energy Infonnation 

Administration's (EIA) Residential Energy Consumption Survey (RECS). RECS provides a 

representative sample of households from through out the U. S. For those RECS households using 

either a central air conditioner or heat pump, RECS provides both the equipment's end-use energy 

consumption and its age. (Climatic conditions in addition to consumer behavior are taken into 

account because they are inherent to the equipment's energy consumption.) Knowing the age of 

the equipment, an estimate of the equipment's efficiency can be made from historical shipmentweighted efficiency values. Reductions in energy consumption from new replacement equipment 

can be approximated by multiplying the existing energy use by the ratio of the existing-to-new 

equipment efficiency. RECS data also provides household energy prices allowing for the 

calculation of the operating cost of the existing and ne~ replacement equipment. With this 

approach, regional comparisons can be made on the operating cost, and in tum life-cycle cost, 

between different efficiency levels of new equipment. 

The Department seeks input from stakeholders as to whether the above approach based on the use 

of RECS household data is reasonable for estimating the impacts of energy price and climate on 

life-cycle cost. 

In the ANOPR stage, uncertainty analysis will be conducted on several of the typical values 

described. During the post-ANOPR consumer analysis (Section 10.0), the Department will 

evaluate additional parameters including variations in installation costs. 

Based on the results of the life-cycle cost analysis, DOE will select candidate standard levels for 

analysis. The range of candidate standard levels will typically include: (a) the most energy 

efficient combination of design options or most energy efficient level; (b) the combination of 

design options or efficiency level with the lowest life-cycle cost; and (0 a combination of design 

options or efficiency level with a payback period of not more than three years. Additionally, 

candidate standard levels that incorporate noteworthy technologies or fill in large gaps between 

efficiency levels of other candidate standards levels may be selected. 

15 

During the ANOPR stage, the Department is considering analyzing the regional impacts of climate 

and energy price on consumer life-cycle cost. Because central air conditioning and heat pump 

operating cost is so dependent on climatic conditions and energy price, the Department believes 

it is important to analyze their affect on LCC at this stage of the analysis. 

Do stakeholder:s believe that regional variations in climate and energy price should be analyzed 

at this stage (ANOPR) of the analysis or at a later stage-(NOPR)? 

In order to conduct such an analysis, the Department is considering using the Energy Infonnation 

Administration's (EIA) Residential Energy Consumption Survey (RECS). RECS provides a 

representative sample of households from through out the U. S. For those RECS households using 

either a central air conditioner or heat pump, RECS provides both the equipment's end-use energy 

consumption and its age. (Climatic conditions in addition to consumer behavior are taken into 

account because they are inherent to the equipment's energy consumption.) Knowing the age of 

the equipment, an estimate of the equipment's efficiency can be made from historical shipmentweighted efficiency values. Reductions in energy consumption from new replacement equipment 

can be approximated by multiplying the existing energy use by the ratio of the existing-to-new 

equipment efficiency. RECS data also provides household energy prices allowing for the 

calculation of the operating cost of the existing and ne~ replacement equipment. With this 

approach, regional comparisons can be made on the operating cost, and in tum life-cycle cost, 

between different efficiency levels of new equipment. 

The Department seeks input from stakeholders as to whether the above approach based on the use 

of RECS household data is reasonable for estimating the impacts of energy price and climate on 

life-cycle cost. 

In the ANOPR stage, uncertainty analysis will be conducted on several of the typical values 

described. During the post-ANOPR consumer analysis (Section 10.0), the Department will 

evaluate additional parameters including variations in installation costs. 

Based on the results of the life-cycle cost analysis, DOE will select candidate standard levels for 

analysis. The range of candidate standard levels will typically include: (a) the most energy 

efficient combination of design options or most energy efficient level; (b) the combination of 

design options or efficiency level with the lowest life-cycle cost; and (0 a combination of design 

options or efficiency level with a payback period of not more than three years. Additionally, 

candidate standard levels that incorporate noteworthy technologies or fill in large gaps between 

efficiency levels of other candidate standards levels may be selected. 

15 
For central air conditioners and heat pumps it will be necessary to determine input values for

several variables. The following discusses some of the variables in turn.

Retail Prices: The determination of prices is described in Section 6.0.

Annual Energy Use: Currently, the DOE test procedure calculates cooling and heating energy

consumption based on' 1000 and 2080 hours of operation, respectively. Although this procedure

seems to be widely accepted for establishing energy consumption, compared to RECS estimates,

it seems to overestimate equipment energy use. If test-procedure-based energy use values are

indeed too high, the operating and life-cycle cost savings due to more efficient equipment would

be overstated. As described above, basing operating and life-cycle cost on RECS household data

would provide a more accurate measure of the savings possible from more efficient equipment in

addition to demonstrating the variability in life-cycle costs due to climatic conditions and energy

price.

Energy Prices: As discussed above, the Department is considering using RECS household data to

establish energy price. If RECS is used, projections of future energy prices for the life-cycle cost

analysis will use high and low projections of national average electricity prices to residential

customers. The present Energy Information Administration (EIA) Annual Energy Outlook will

be used as the default source of projections for this uncertainty analysis. The Appliance Standards

Advisory Committee (Advisory Committee) is currently investigating alternative methods of

forecasting future energy prices for recommendation to the Department including methods for

determining the marginal energy rates.

Lifetime: Several sources indicate that the approximate average life of central air conditioning and

heat pump equipment is 15 years. The Department will likely use this as a mean value with

uncertainty based on stakeholder input.

What is a reasonable range of valuesfor equipment lifetime? Should the same range be usedfor

allproduct classes?

Discount Rate: The calculation of consumer life-cycle costs requires the use of an appropriate

discount rate. The discount rate used in such calculations is intended to approximate the

time-value of money of those who would bear the additional product prices resulting from a

proposed standard and who would also, presumably, benefit from the resulting savings in energy

expenses. Consequently, the most appropriate discount rate depends on the characteristics of the

individual consumers, businesses, or other persons affected by a proposed standard. Currently the

Department anticipates performing separate analyses using discount rates of 2%, 6% and 15%.

The Department will consider any information that provides evidence of consumer actual financing

costs related to central air conditioners and heat pumps.

Maintenance. Service, and Installation Costs: The Department will consider expected changes to

maintenance, service, and installation costs for central air conditioners and heat pumps if

applicable.

16

EE-RM-STD-98-440 COMMENT 01D

]J 

For central air conditioners and heat pumps it will be necessary to determine input values for 

several variables. The following discusses some of the variables in tum. 

Retail Prices: The determination of prices is described in Section 6.0. 

Annual Energy Use: Currently, the DOE test procedure calculates cooling and heating energy 

consumption based on' 1000 and 2080 hours of operation, respectively. Although this procedure 

seems to be widely accepted for establishing energy consumption, compared to RECS estimates, 

it seems to overestimate equipment energy use. Iftest-procedure-based energy use values are 

indeed too high, the operating and life-cycle cost savings due to more efficient equipment would 

be overstated. As described above, basing operating and life-cycle cost on RECS household data 

would provide a more accurate measure of the savings possible from more efficient equipment in 

addition to demonstrating the variability in life-cycle costs due to climatic conditions and energy 

pnce. 

Energy Prices: As discussed above, the Department is considering using RECS household data to 

establish energy price. IfRECS is used, projections of future energy prices for the life-cycle cost 

analysis will use high and low projections of national average electricity prices to residential 

customers. The present Energy Information Administration (EIA) Annual Energy Outlook will 

be used as the default source of projections for this uncertainty analysis. The Appliance Standards 

Advisory Committee (Advisory Committee) is currently investigating alternative methods of 

forecasting future energy prices for recommendation to the Department including methods for 

determining the marginal energy rates. 

Lifetime: Several sources indicate that the approximate average life of central air conditioning and 

heat pump equipment is 15 years. The Department will likely use this as a mean value with 

uncertainty based on stakeholder input. 

What is a reasonable range of values for equipment lifetime? Should the same range be used for 

all product classes? 

Discount Rate: The calculation of consumer life-cycle costs requires the use of an appropriate 

discount rate. The discount rate used in such calculations is intended to approximate the 

time-value of money of those who would bear the additional product prices resulting from a 

proposed standard and who would also, presumably, benefit from the resulting savings in energy 

expenses. Consequently, the most appropriate discount rate depends on the characteristics of the 

individual consumers, businesses, or other persons affected by a proposed standard. Currently the 

Department anticipates performing separate analyses using discount rates of 2%, 6% an~ 15%. 

The Department will consider any information that provides evidence of consumer actual financing 

costs related to central air conditioners and heat pumps. 

Maintenance. Service. and Installation Costs: The Department will consider expected changes to 

maintenance, service, and installation costs for central air conditioners and heat pumps if 

a licable. 

16 

]J 

For central air conditioners and heat pumps it will be necessary to determine input values for 

several variables. The following discusses some of the variables in tum. 

Retail Prices: The determination of prices is described in Section 6.0. 

Annual Energy Use: Currently, the DOE test procedure calculates cooling and heating energy 

consumption based on' 1000 and 2080 hours of operation, respectively. Although this procedure 

seems to be widely accepted for establishing energy consumption, compared to RECS estimates, 

it seems to overestimate equipment energy use. Iftest-procedure-based energy use values are 

indeed too high, the operating and life-cycle cost savings due to more efficient equipment would 

be overstated. As described above, basing operating and life-cycle cost on RECS household data 

would provide a more accurate measure of the savings possible from more efficient equipment in 

addition to demonstrating the variability in life-cycle costs due to climatic conditions and energy 

pnce. 

Energy Prices: As discussed above, the Department is considering using RECS household data to 

establish energy price. IfRECS is used, projections of future energy prices for the life-cycle cost 

analysis will use high and low projections of national average electricity prices to residential 

customers. The present Energy Information Administration (EIA) Annual Energy Outlook will 

be used as the default source of projections for this uncertainty analysis. The Appliance Standards 

Advisory Committee (Advisory Committee) is currently investigating alternative methods of 

forecasting future energy prices for recommendation to the Department including methods for 

determining the marginal energy rates. 

Lifetime: Several sources indicate that the approximate average life of central air conditioning and 

heat pump equipment is 15 years. The Department will likely use this as a mean value with 

uncertainty based on stakeholder input. 

What is a reasonable range of values for equipment lifetime? Should the same range be used for 

all product classes? 

Discount Rate: The calculation of consumer life-cycle costs requires the use of an appropriate 

discount rate. The discount rate used in such calculations is intended to approximate the 

time-value of money of those who would bear the additional product prices resulting from a 

proposed standard and who would also, presumably, benefit from the resulting savings in energy 

expenses. Consequently, the most appropriate discount rate depends on the characteristics of the 

individual consumers, businesses, or other persons affected by a proposed standard. Currently the 

Department anticipates performing separate analyses using discount rates of 2%, 6% an~ 15%. 

The Department will consider any information that provides evidence of consumer actual financing 

costs related to central air conditioners and heat pumps. 

Maintenance. Service. and Installation Costs: The Department will consider expected changes to 

maintenance, service, and installation costs for central air conditioners and heat pumps if 

a licable. 

16 
The Department has prepared spreadsheet models for calculating LCC considering

uncertainty and ranges in input variables for other appliances (clothes washers and water

heaters). Although these models are specific to the appliance, its general structure can be

applied to central air conditioners and heat pumps. Thus, past models will be presented at

the Workshop to demonstrate basic concepts pertaining to the LCC analysis.

6.0 Prices

How manufacturing costs and associated margins, associated with standards, are passed-through

from manufacturers to consumers has an impact on both consumers and manufacturers.

Consumer and manufacturer economics are linked and inversely related. For this reason, retail

prices used for the life-cycle cost analysis need to be reconciled with manufacturer prices.

6.1 Retail Prices: Life-Cycle Cost Analysis

At the pre-ANOPR stage, a consumer life-cycle cost curve, based on average retail prices, is used

to perform an initial selection of potential standards levels. Retail prices are needed for a base

case, absent new standards, and for all efficiency levels to be considered. Several approaches are

possible to obtain these retail prices. Potential approaches include: 1) conducting a survey of

existing prices on the market; 2) surveying manufacturers and other market experts to predict

consumer willingness to pay higher prices; 3) applying various mark-ups over variable

manufacturing costs.

The Department believes that there is value in using various assumptions about cost pass-through

that will be reflected in price forecast approaches. The output of this analysis can be a table

describing retail prices for each possible efficiency level which assumes that each level represents

a new minimum efficiency standard. Consistent with the process rule, and building on the

estimates generated by the various approaches, new retail prices would be described within a

range of uncertainty.

The Department is considering using all the approaches described above to generate estimates of

future prices and conduct uncertainty analysis of the range generated. The market assessment

document described in Section 1.1 will include any market pricing information currently available.

The Department is considering utilizing mark-up approaches to price determination. If these

approaches are used, they will be submitted to stakeholders for review.

Is the proposedprocess for generating retail prices sound? Would interested parties be willing

to provide estimates of the future prices?

A presentation on estimating future prices will be made at the workshop.

17

EE-RM-STD-98-440 COMMENT 01D

The Department has prepared spreadsheet models for calculating LCC considering 

uncertainty and ranges in input variables for other appliances (clothes washers and water 

heaters). Although these models are specific to the appliance, its general structure can be 

applied to central air conditioners and heat pumps. Thus, past models will be presented at 

the Workshop to demonstrate basic concepts pertaining to the LCC analysis. 

6.0 Prices 

How manufacturing costs and associated margins, associated with standards, are passed-through . 

from manufacturers to consumers has an impact on both consumers and manufacturers. 

Consumer and manufacturer economics are linked and inversely related. For this reason, retail 

prices used for the life-cycle cost analysis need to be reconciled with manufacturer prices. 

6.1 Retail Prices: Life-Cycle Cost Analysis . 

At the pre-ANOPR stage, a consumer life-cycle cost curve, based on average retail prices, is used 

to perform an initial selection of potential standards levels. Retail prices are needed for a base 

case, absent new standards, and for all efficiency levels to be considered. Several approaches are 

possible to obtain these retail prices. Potential approaches include: 1) conducting a survey of 

existing prices on the market; 2) surveying manufacturers and other market experts to predict 

consumer willingness to pay higher prices; 3) applying various mark-ups over variable 

manufacturing costs. 

The Department believes that there is value in using various assumptions about cost pass-through 

that will be reflected in price forecast approaches. The output of this analysis can be a table 

describing retail prices for each possible efficiency level which assumes that each level represents 

a new minimum efficiency standard. Consistent with the process rule, and building on the 

estimates generated by the various approaches, new retail prices would be described within a 

range of uncertainty. 

The Department is considering using all the approaches described above to generate estimates of 

future prices and conduct uncertainty analysis of the range generated. The market assessment 

document described in Section 1.1 will include any market pricing information currently available. 

The Department is considering utilizing mark-up approaches to price determination. If these 

approaches are used, they will be submitted to stakeholders for review. 

Is the proposed process for generating retail prices sound? Would interested parties be willing 

to provide estimates of the future prices? 

A presentation on estimating future prices will be made at the workshop. 

17 

The Department has prepared spreadsheet models for calculating LCC considering 

uncertainty and ranges in input variables for other appliances (clothes washers and water 

heaters). Although these models are specific to the appliance, its general structure can be 

applied to central air conditioners and heat pumps. Thus, past models will be presented at 

the Workshop to demonstrate basic concepts pertaining to the LCC analysis. 

6.0 Prices 

How manufacturing costs and associated margins, associated with standards, are passed-through . 

from manufacturers to consumers has an impact on both consumers and manufacturers. 

Consumer and manufacturer economics are linked and inversely related. For this reason, retail 

prices used for the life-cycle cost analysis need to be reconciled with manufacturer prices. 

6.1 Retail Prices: Life-Cycle Cost Analysis . 

At the pre-ANOPR stage, a consumer life-cycle cost curve, based on average retail prices, is used 

to perform an initial selection of potential standards levels. Retail prices are needed for a base 

case, absent new standards, and for all efficiency levels to be considered. Several approaches are 

possible to obtain these retail prices. Potential approaches include: 1) conducting a survey of 

existing prices on the market; 2) surveying manufacturers and other market experts to predict 

consumer willingness to pay higher prices; 3) applying various mark-ups over variable 

manufacturing costs. 

The Department believes that there is value in using various assumptions about cost pass-through 

that will be reflected in price forecast approaches. The output of this analysis can be a table 

describing retail prices for each possible efficiency level which assumes that each level represents 

a new minimum efficiency standard. Consistent with the process rule, and building on the 

estimates generated by the various approaches, new retail prices would be described within a 

range of uncertainty. 

The Department is considering using all the approaches described above to generate estimates of 

future prices and conduct uncertainty analysis of the range generated. The market assessment 

document described in Section 1.1 will include any market pricing information currently available. 

The Department is considering utilizing mark-up approaches to price determination. If these 

approaches are used, they will be submitted to stakeholders for review. 

Is the proposed process for generating retail prices sound? Would interested parties be willing 

to provide estimates of the future prices? 

A presentation on estimating future prices will be made at the workshop. 

17 
6.2 Manufacturer Prices: Industry Cashflow

DOE can use an average distributor mark-up to relate the retail prices generated for the life-cycle

cost analysis and manufacturer prices required to conduct the industry cashflow analysis.

Distributor mark-ups are reported in the market assessment document from Section 1.1. The same

relative range of uncertainty generated for retail prices can be used for manufacturer prices since

the mark-up is assumed constant.

Are there alternate approaches? Would manufacturers be willing to provide estimates offuture

manufacturer prices?

A presentation on estimating future prices will be made at the workshop.

7.0 Shipments

As described in Section 1.3, the Department intends to develop a base case forecast of product

shipments in the absence of new standards. This initial forecast may incorporate the impacts of

past and existing non-regulatory efforts by manufacturers, utilities and others.

For all candidate standards levels, shipment forecasts are required in order to calculate the

national benefits.of standards (energy savings and consumer life-cycle costs) and to calculate the

future cashflows of manufacturers. DOE is considering the use of three approaches to conduct

these forecasts including: 1) an approach to derive shipments based on the key market drivers for

the particular product; 2) larger models to consider additional variables (i.e. retirement functions,

price elasticities, etc.), and, 3) applying the expert judgment of rulemaking participants, and

observing historical trends, new forecasts will be generated.

Because models cannot adequately simulate short-term effects, DOE will likely place considerable

weight on expert forecasts for short term shipments estimates. Shipment forecasts previously

developed will be combined through scenario analysis and a range of uncertainty will be carried

forward into both national benefits and cashflow analysis.

18

EE-RM-STD-98-440 COMMENT 01D

6.2 Manufacturer Prices: Industry Cashflow 

DOE can use an average distributor'mark-up to relate the retail prices generated for the life-cycle 

cost analysis and manufacturer prices required to conduct the industry cashflow analysis. 

Distributor mark-ups are reported in the market assessment document from Section 1.1. The same 

relative range of uncertainty generated for retail prices can be used for manufacturer prices since 

the mark-up is assumed constant. 

Are there altemate approaches? Would manufacturers be willing to provide estimates offuture 

manufacturer prices? 

A presentation on estimating future prices will be made at the workshop. 

7.0 Shipments 

As described in Section 1.3, the Department intends to develop a base case forecast of product 

shipments in the absence of new standards. This initial forecast may incorporate the impacts of 

past and existing non-regulatory efforts by manufacturers, utilities and others. 

, . For all candidate standards levels, shipment forecasts are required in order to calculate the 

national benefits. of standards (energy savings and consumer life-cycle costs) and to calculate the 

future cashflows of manufacturers. DOE is considering the use of three approaches to conduct 

these forecasts including: 1) an approach to derive shipments based on the key market drivers for 

the particular product~ 2) larger models to consider additional variables (i.e. retirement functions, 

price elasticities, etc.), and, 3) applying the expert judgment of rulemaking participants, and 

observing historical trends, new forecasts will be generated. 

Because models cannot adequately simulate short-term effects, DOE will likely place considerable 

weight on expert forecasts for short term shipments estimates. Shipment forecasts previously 

developed will be combined through scenario analysis and a range of uncertainty will be carried 

forward into both national benefits and cashflow analysis. 

18 

6.2 Manufacturer Prices: Industry Cashflow 

DOE can use an average distributor'mark-up to relate the retail prices generated for the life-cycle 

cost analysis and manufacturer prices required to conduct the industry cashflow analysis. 

Distributor mark-ups are reported in the market assessment document from Section 1.1. The same 

relative range of uncertainty generated for retail prices can be used for manufacturer prices since 

the mark-up is assumed constant. 

Are there altemate approaches? Would manufacturers be willing to provide estimates offuture 

manufacturer prices? 

A presentation on estimating future prices will be made at the workshop. 

7.0 Shipments 

As described in Section 1.3, the Department intends to develop a base case forecast of product 

shipments in the absence of new standards. This initial forecast may incorporate the impacts of 

past and existing non-regulatory efforts by manufacturers, utilities and others. 

, . For all candidate standards levels, shipment forecasts are required in order to calculate the 

national benefits. of standards (energy savings and consumer life-cycle costs) and to calculate the 

future cashflows of manufacturers. DOE is considering the use of three approaches to conduct 

these forecasts including: 1) an approach to derive shipments based on the key market drivers for 

the particular product~ 2) larger models to consider additional variables (i.e. retirement functions, 

price elasticities, etc.), and, 3) applying the expert judgment of rulemaking participants, and 

observing historical trends, new forecasts will be generated. 

Because models cannot adequately simulate short-term effects, DOE will likely place considerable 

weight on expert forecasts for short term shipments estimates. Shipment forecasts previously 

developed will be combined through scenario analysis and a range of uncertainty will be carried 

forward into both national benefits and cashflow analysis. 

18 
The appliance standards analysis currently being conducted for clothes washers serves as an

example of what methods can be employed to forecast base case shipments for central air

conditioners and heat pumps. Of the proposed forecasts for base case clothes washer shipments,

several are based on auto regressive fits to time series data. Although time series models tend to

give accurate estimates of historical shipments, they cannot explicitly account for changes in the

number of households, changes in the percent of households owning the appliance, fluctuations

in retail price, or changes in operating expense. Thus, forecasts are highly suspect.

A simpler method, termed the accounting model, based on the accounting of new housing starts

and historical appliance saturations, has also been proposed. Primary drawbacks of this method

include: 1) saturations of units in new and stock households must be forecasted, 2) housing starts

must also be forecasted, although theAnnualEnergy Outlook (AEO) does provide readily available

forecasts, and 3) retired units must be based upon assumptions regarding lifetimes. But this

simpler method has the distinct advantage of separately accounting for units installed in new

construction and existing households. More importantly, appliance saturations can be expressed

as a function of consumer price and operating cost to capture their impact on future shipments.

In expressing saturations in this manner, consumer price and operating cost elasticities can be

developed to calibrate appliance forecasts to historical shipments.

Since the accounting model can account for changes in consumer price and operating cost, the

Department is considering the use of this approach to conduct base case shipments forecasts for

central air conditioners and heat pumps.

Are there alternate approaches to forecasting shipments?

8.0 Preliminary National Benefits Analysis

In Section 6.0, the life-cycle cost and energy savings for individual consumers is estimated. In

this section, a preliminary assessment of the aggregate impacts at the national level is conducted.

Measures of impact to be reported include the average consumer payback, the net present value

of total consumer life-cycle costs, national energy savings and national employment.

8.1 Inputs to Forecasts

Analyzing impacts of Federal energy-efficiency standards requires a comparison of projected U.S.

residential energy consumption with and without standards. The cases without standards are

referred to as base case projections. The forecasts contain projections of unit energy consumption

of new appliances, annual appliance shipments and the price of purchased appliances. The

derivations of the base case forecast are described in Section 1.3 and standards case forecasts are

discussed in Section 7.0. Approaches to determining retail prices are described in Section 6.0.

The base case shipments forecast developed under Section 1.3 may incorporate the likely effects

19

EE-RM-STD-98-440 COMMENT 01D

EE-7?m)5Tb -9&,-'l-Lf-D 

The appliance standards analysis currently being conducted for clothes washers serves as an 

example of what methods can be employed to forecast base case shipments for central air 

conditioners and heat pumps. Of the proposed forecasts for base case clothes washer shipments, 

several are based on auto regressive fits to time series data. Although time series models tend to 

give accurate estimates of historical shipments, they cannot explicitly account for changes in the 

number of households, changes in the percent of households owning the appliance, fluctuations 

in retail price, or changes in operating expense. Thus, forecasts are highly suspect. 

A simpler method, tenned the accounting model, based on the accounting of new housing starts 

and historical appliance saturations, has also been proposed. Primary drawbacks of this method 

include: 1) saturations of units in new and stock households must be forecasted, 2) housing starts 

must also be forecasted, although the A nnual Energy Outlook (AEO) does provide readily available 

forecasts, and 3) retired units must be based upon assumptions regarding lifetimes. But this 

simpler method has the distinct advantage of separately accounting for units installed in new 

construction and existing households. More importantly, appliance saturations can be expressed 

as a function of consumer price and operating cost to capture their impact on future shipments. 

In expressing saturations in this manner, consumer price and operating cost elasticities can be 

developed to calibrate appliance forecasts to historical shipments. 

Since the accounting model can account for changes in consumer price and operating cost, the 

Department is considering the use of this approach to conduct base case shipments forecasts for 

central air conditioners and heat pumps. 

Are there alternate approaches to forecasting shipments? 

8.0 Preliminary National Benefits Analysis 

In Section 6.0, the life:'cycle cost and energy savings for individual consumers is estimated. In 

this section, a preliminary assessment of the aggregate impacts at the national level is conducted. 

Measures of impact to be reported include the average consumer payback, the net present value 

of total consumer life-cycle costs, national energy savings and national employment. 

8.1 Inputs to Forecasts 

Analyzing impacts of Federal energy-efficiency standards requires a comparison of projected U. S. 

residential energy consumption with and without standards. The cases without standards are 

referred to as base case projections. The forecasts contain projections of unit energy consumption 

of new appliances, annual appliance shipments and the price of purchased appliances. The 

derivations of the base case forecast are described in Section 1.3 and standards case forecasts are 

discussed in Section 7.0. Approaches to detennining retail prices are described in Section 6.0. 

The base case shipments forecast developed under Section 1.3 may incorporate the likely effects 

19 

EE-7?m)5Tb -9&,-'l-Lf-D 

The appliance standards analysis currently being conducted for clothes washers serves as an 

example of what methods can be employed to forecast base case shipments for central air 

conditioners and heat pumps. Of the proposed forecasts for base case clothes washer shipments, 

several are based on auto regressive fits to time series data. Although time series models tend to 

give accurate estimates of historical shipments, they cannot explicitly account for changes in the 

number of households, changes in the percent of households owning the appliance, fluctuations 

in retail price, or changes in operating expense. Thus, forecasts are highly suspect. 

A simpler method, tenned the accounting model, based on the accounting of new housing starts 

and historical appliance saturations, has also been proposed. Primary drawbacks of this method 

include: 1) saturations of units in new and stock households must be forecasted, 2) housing starts 

must also be forecasted, although the A nnual Energy Outlook (AEO) does provide readily available 

forecasts, and 3) retired units must be based upon assumptions regarding lifetimes. But this 

simpler method has the distinct advantage of separately accounting for units installed in new 

construction and existing households. More importantly, appliance saturations can be expressed 

as a function of consumer price and operating cost to capture their impact on future shipments. 

In expressing saturations in this manner, consumer price and operating cost elasticities can be 

developed to calibrate appliance forecasts to historical shipments. 

Since the accounting model can account for changes in consumer price and operating cost, the 

Department is considering the use of this approach to conduct base case shipments forecasts for 

central air conditioners and heat pumps. 

Are there alternate approaches to forecasting shipments? 

8.0 Preliminary National Benefits Analysis 

In Section 6.0, the life:'cycle cost and energy savings for individual consumers is estimated. In 

this section, a preliminary assessment of the aggregate impacts at the national level is conducted. 

Measures of impact to be reported include the average consumer payback, the net present value 

of total consumer life-cycle costs, national energy savings and national employment. 

8.1 Inputs to Forecasts 

Analyzing impacts of Federal energy-efficiency standards requires a comparison of projected U. S. 

residential energy consumption with and without standards. The cases without standards are 

referred to as base case projections. The forecasts contain projections of unit energy consumption 

of new appliances, annual appliance shipments and the price of purchased appliances. The 

derivations of the base case forecast are described in Section 1.3 and standards case forecasts are 

discussed in Section 7.0. Approaches to detennining retail prices are described in Section 6.0. 

The base case shipments forecast developed under Section 1.3 may incorporate the likely effects 

19 
of market forces and of any non-regulatory initiatives.

8.2 Calculation of Energy Savings

The Department intends to calculate national energy consumption for each year beginning with

the expected effective date of the standards. Aggregate energy consumption will be calculated for

the base case and each candidate standards level. This calculation may be done by one or more

alternative approaches, including: 1) the use of a simple spreadsheet; 2) the use of detailed enduse energy models such as the Lawrence Berkeley National Laboratory's Residential Energy

Model (REM) or the Energy Information Administration's National Energy Modeling System

(NEMS); and 3) by multiplying shipment forecasts by unit energy savings.

For residential products, forecasting of national impacts has traditionally been performed using the

LBNL Residential Energy Model (REM). In response to comments by some stakeholders who

asked for a simpler, more transparent model, LBNL has developed the National Energy Savings

(NES) spreadsheets. NES is expected to provide a credible stand-alone forecast of national energy

savings and net present value, without relying upon REM. REM will continue to be available as

an independent check on NES, to ensure that the results of both models are consistent. REM will

also be available to provide analysis of interactions, for example between central air conditioners

and room air conditioners. Accounting for these interactions will provide a refinement to the

energy savings and net present value results from NES. Unless this more comprehensive analysis

from REM provides significantly different results than NES analysis of a single end use, the NES

results will stand as the analytical basis for the rulemaking, and REM will remain in the

background. However, if interactions between end uses are important, then REM will quantify

the effects.

Do you agree with the use of these tools?

The Department has prepared spreadsheet models for other appliances to forecast energy

savings and to demonstrate how the growth in efficiency can be accounted for over time.

Although these models are specific to the appliance, its general structure can be applied to

central air conditioners and heat pumps. Thus, past spreadsheet models will be presented

at the Workshop to demonstrate basic concepts pertaining to the calculation of national

energy savings.

8.3 Consumer Net Present Value and Payback

The national net present value of the candidate standards levels is calculated as the difference in

LCC, base case minus standards case. The calculation is performed as in Section 5.0, except that

a shipment weighted LCC is calculated using the shipment and energy efficiency distribution

forecasts from Section 7.0.

20

EE-RM-STD-98-440 COMMENT 01D

of market forces and of any non-regulatory initiatives. 

8.2 Calculation of Energy Savings 

The Department intends to calculate national energy consumption for each year beginning with 

the expected effective date of the standards. Aggregate energy consumption will be calculated for 

the base case and each candidate standards level. This calculation may be done by one or more 

alternative approaches, including: 1) the use of a simple spreadsheet; 2) the use of detailed enduse energy models such as the Lawrence Berkeley National Laboratory's Residential Energy 

Model (REM) or the Energy Information Administration's National Energy Modeling System 

(NEMS); and 3) by multiplying shipment forecasts by unit energy savings. 

F or residential products, forecasting of national impacts has traditionally been performed using the 

LBNL Residential Energy Model (REM). In response to comments by some stakeholders who 

asked for a simpler, more transparent model, LBNL has developed the National Energy Savings 

(NBS) spreadsheets. NES is expected to provide a credible stand-alone forecast of national energy 

savings and net present value, without relying upon REM. REM will continue to be available as 

an independent check on NES, to ensure that the results of both models are consistent. REM will 

also be available to provide analysis of interactions, for example between central air conditioners 

and room air conditioners. Accounting for these interactions will provide a refinement to the 

energy savings and net present value results from NES. Unless this more comprehensive analysis 

from REM provides significantly different results than NES analysis of a single end use, the NES 

results will stand as the analytical basis for the rulemaking, and REM will remain in the 

background. However, if interactions between end uses are important, then REM will quantify 

the effects. 

Do you agree with the lise of these tools? 

The Department has prepared spreadsheet models for other appliances to forecast energy 

savings and to demonstrate how the growth in efficiency can be accounted for 'over time. 

Although these models are specific to the appliance, its general structure can be applied to 

central-air conditioners and heat pumps. Thus, past spreadsheet models will be presented 

at the Workshop to demonstrate basic concepts pertaining to the calculation of national 

energy savings. 

8.3 Consumer Net Present Value and Payback 

The national net present value of the candidate standards levels is calculated as the difference in 

Lee, base case minus standards case. The calculation is performed as in Section 5.0, except that 

a shipment weighted Lee is calculated using the shipm~nt and energy efficiency distribution 

forecasts from Section 7.0. 

20 

of market forces and of any non-regulatory initiatives. 

8.2 Calculation of Energy Savings 

The Department intends to calculate national energy consumption for each year beginning with 

the expected effective date of the standards. Aggregate energy consumption will be calculated for 

the base case and each candidate standards level. This calculation may be done by one or more 

alternative approaches, including: 1) the use of a simple spreadsheet; 2) the use of detailed enduse energy models such as the Lawrence Berkeley National Laboratory's Residential Energy 

Model (REM) or the Energy Information Administration's National Energy Modeling System 

(NEMS); and 3) by multiplying shipment forecasts by unit energy savings. 

F or residential products, forecasting of national impacts has traditionally been performed using the 

LBNL Residential Energy Model (REM). In response to comments by some stakeholders who 

asked for a simpler, more transparent model, LBNL has developed the National Energy Savings 

(NBS) spreadsheets. NES is expected to provide a credible stand-alone forecast of national energy 

savings and net present value, without relying upon REM. REM will continue to be available as 

an independent check on NES, to ensure that the results of both models are consistent. REM will 

also be available to provide analysis of interactions, for example between central air conditioners 

and room air conditioners. Accounting for these interactions will provide a refinement to the 

energy savings and net present value results from NES. Unless this more comprehensive analysis 

from REM provides significantly different results than NES analysis of a single end use, the NES 

results will stand as the analytical basis for the rulemaking, and REM will remain in the 

background. However, if interactions between end uses are important, then REM will quantify 

the effects. 

Do you agree with the lise of these tools? 

The Department has prepared spreadsheet models for other appliances to forecast energy 

savings and to demonstrate how the growth in efficiency can be accounted for 'over time. 

Although these models are specific to the appliance, its general structure can be applied to 

central-air conditioners and heat pumps. Thus, past spreadsheet models will be presented 

at the Workshop to demonstrate basic concepts pertaining to the calculation of national 

energy savings. 

8.3 Consumer Net Present Value and Payback 

The national net present value of the candidate standards levels is calculated as the difference in 

Lee, base case minus standards case. The calculation is performed as in Section 5.0, except that 

a shipment weighted Lee is calculated using the shipm~nt and energy efficiency distribution 

forecasts from Section 7.0. 

20 
8.4 Employment Impacts

Two impacts on employment are possible from standards, direct impacts and indirect impacts.

Direct employment impacts would result if standards lead to a change in the number of employees

at manufacturing plants and related supply and service firms. The July 1996 Process Rule

includes employment impacts among the factors to be considered in selecting a proposed

standard. The Department will estimate the direct and indirect impacts on employment for

appliance manufacturers, relevant service industries, energy suppliers, and the economy in general.

Additionally, the Process Rule states a presumption against any proposed standard level that

would cause significant plant closures or losses of domestic employment.

Direct impacts are estimated in the manufacturer sub-group analysis described in Section 12.0.

Indirect impacts may result from both expenditures shifting among goods (substitution effect),

and income changing, which will lead to a change in overall expenditure levels (income effect).

The Indirect Employment Impacts analysis the Department can conduct would estimate national

job creation or elimination from possible standards, resulting from reallocation of the associated

consumer expenditures for purchasing and operating appliances. The Department of Energy's

Office of Building Technologies and State Programs has developed a spreadsheet model

(IMBUILD) that could be used to analyze indirect employment impacts. It is an economic

analysis system that focuses on those sectors most relevant to buildings and characterizes the

interconnections among 35 sectors as national input-output structural matrices. The IMBUILD

output includes employment, industry output, and wage income. Changes in expenditures due to

appliance standards can be introduced to IMBUILD as perturbations on the existing economic

flows and the resulting net national impact on jobs by sector can be estimated.

Do the above methods seem adequate for estimating both direct and indirect employment

impacts? If not, are you aware of any other methods or models which can be used to assess

employment impacts?

9.0 Revised Pre-ANOPR Analysis

Based on consideration of the comments received for the ANOPR, any necessary changes to the

pre-ANOPR analysis or the candidate standards levels will be made. If major changes are

required at this stage, interested parties will be given an opportunity to review the revised

analysis.

10.0 Consumer Impacts

10.1 Consumer Sub-group Analysis

The Department can evaluate variations in regional energy prices, variations in energy use and

21

EE-RM-STD-98-440 COMMENT 01D

8.4 Employment Impacts 

Two impacts on employment are possible from standards, direct impacts and indirect impacts. 

Direct employment impacts would result if standards lead to a change in the number of employees 

at manufacturing plants and related supply and service finns. The July 1996 Process Rule 

includes employment impacts among the factors to be considered in selecting a proposed 

standard. The Department will estimate the direct and indirect impacts on employment for 

appliance manufacturers, relevant service industries, energy suppliers, and the economy in general .. 

Additionally, the Process Rule states a presumption against any proposed standard level that 

would cause significant plant closures or losses of domestic employment. 

Direct impacts are estimated in the manufacturer sub-group analysis described in Section 12.0. 

Indirect impacts may result from both expenditures shifting among goods (substitution effect), 

and income changing, which will lead to a change in overall expenditure levels (income effect). 

The Indirect Employment Impacts analysis the Department can conduct would estimate national 

job creation or elimination from possible standards, resulting from reallocation of the associated 

consumer expenditures for purchasing and operating appliances. The Department of Energy's 

Office of Building Technologies and State Programs has developed a spreadsheet model. 

(ThffiUILD) that could be used to analyze indirect employment impacts. It is an economic 

analysis system that focuses on those sectors most relevant to buildings and characterizes the 

interconnections among 35 sectors as national input-output structural matrices. The ThffiUILD 

output includes employment, industry output, and wage income. Changes in expenditures due to 

appliance standards can be introduced to ThffiUILD as perturbations on the existing economic 

flows and the resulting net national impact on jobs by sector can be estimated. 

Do the above methods seem adequate for estimating both direct and indirect employment 

impacts? If not, are you aware of any other methods or models which can be used to assess 

employment impacts?' . 

9.0 Revised Pre-ANOPR Analysis 

Based on consideration of the comments received for the ANOPR,any necessary changes to the 

pre-ANOPR analysis or the candidate standards levels will be made. If major changes are 

required at this stage, interested parties will be given an opportunity to review the revised 

analysis. 

10.0 Consumer Impacts 

10.1 Consumer Sub-group Analysis 

The Department can evaluate variations in regional energy prices, variations in energy use and 

21 

8.4 Employment Impacts 

Two impacts on employment are possible from standards, direct impacts and indirect impacts. 

Direct employment impacts would result if standards lead to a change in the number of employees 

at manufacturing plants and related supply and service finns. The July 1996 Process Rule 

includes employment impacts among the factors to be considered in selecting a proposed 

standard. The Department will estimate the direct and indirect impacts on employment for 

appliance manufacturers, relevant service industries, energy suppliers, and the economy in general .. 

Additionally, the Process Rule states a presumption against any proposed standard level that 

would cause significant plant closures or losses of domestic employment. 

Direct impacts are estimated in the manufacturer sub-group analysis described in Section 12.0. 

Indirect impacts may result from both expenditures shifting among goods (substitution effect), 

and income changing, which will lead to a change in overall expenditure levels (income effect). 

The Indirect Employment Impacts analysis the Department can conduct would estimate national 

job creation or elimination from possible standards, resulting from reallocation of the associated 

consumer expenditures for purchasing and operating appliances. The Department of Energy's 

Office of Building Technologies and State Programs has developed a spreadsheet model. 

(ThffiUILD) that could be used to analyze indirect employment impacts. It is an economic 

analysis system that focuses on those sectors most relevant to buildings and characterizes the 

interconnections among 35 sectors as national input-output structural matrices. The ThffiUILD 

output includes employment, industry output, and wage income. Changes in expenditures due to 

appliance standards can be introduced to ThffiUILD as perturbations on the existing economic 

flows and the resulting net national impact on jobs by sector can be estimated. 

Do the above methods seem adequate for estimating both direct and indirect employment 

impacts? If not, are you aware of any other methods or models which can be used to assess 

employment impacts?' . 

9.0 Revised Pre-ANOPR Analysis 

Based on consideration of the comments received for the ANOPR,any necessary changes to the 

pre-ANOPR analysis or the candidate standards levels will be made. If major changes are 

required at this stage, interested parties will be given an opportunity to review the revised 

analysis. 

10.0 Consumer Impacts 

10.1 Consumer Sub-group Analysis 

The Department can evaluate variations in regional energy prices, variations in energy use and 

21 
variations in installation costs that might affect the net present value of a standard to consumer

sub-populations. To the extent possible, DOE will obtain estimates of the variability in each input

variable and consider this variability in its calculation of consumer impacts. The variability in each

input variable and likely sources of information will be discussed with stakeholders.

10.1.1 Variations in Energy Prices

Energy prices vary regionally across the country. In the pre-ANOPR LCC analysis, the

Department is considering analyzing variations in energy price through the use ofEIA's RECS.

This analysis can consider the fraction of consumers facing a particular service price. The range

in values of change of life-cycle costs for the distribution of households also can be calculated.

The analysis can be structured to answer questions such as: How many households are better-off

with standards and by how much? How many households are not better off and by how much?

Should the Department consider additional analysesfor assessing the impact of energy price

variations? If so, are you aware of data sources other than RECS that the Department should

consider for. this analysis?

10.1.2 Variations in Energy Use

Variations in energy use for a particular appliance can depend on factors such as climate, type of

household, people in household, etc. Annual energy use can be estimated by a calculation based

on an accepted test procedure or it can be measured directly in the field. As described earlier, the

Department is considering analyzing variations in energy use in the pre-ANOPR LCC analysis by

analyzing EIA's RECS household energy data. Climatic and consumer behavior are inherent to

the energy use data. The Department can perform sensitivity analyses to consider how differences

in energy use will affect sub-groups of consumers.

Should the Department consider additional analyses for assessing the impact of energy use

variations? If so, are you aware of any data outside of RECS which reflect variations in

consumer usage habits.

10.1.3 First Cost Increases

For consumers, one measure of economic impact is the first cost of the product. Increased first

costs to consumers resulting from standards can affect different consumers in different ways. The

impact of standards on lower income persons is important because this group is the least able to

endure economic disadvantages. For lower income consumers, increases in first costs for a

particular product can have the effect of precluding the purchase of a new model of that product.

As a result, some consumers may retain products past their useful life or purchase older, used

appliances. These older products are generally less efficient to begin with, and over time, their

22

EE-RM-STD-98-440 COMMENT 01D

variations in installation costs that might affect the net present value of a standard to consumer 

sub-populations. To the extent possible, DOE will obtain estimates of the variability in each input 

variable and consider this variability in its calculation of consumer impacts. The variability in each 

input variable and likely sources of infonnation will be discussed with stakeholders. 

10.1.1 Variations in Energy Prices 

Energy prices vary regionally across the country. In the pre-ANOPR LeC analysis, the 

Department is considering analyzing variations in energy price through the use ofEIA's RECS. 

This analysis can consider the fraction of consumers facing a particular service price. The range 

in values of change oflife-cycle costs for the distribution of households also can be calculated. 

The analysis can be structured to answer questions such as: How many households are better-off 

with standards and by how much? How many households are not better off' and by how much? . 

Should the Department consider additional analyses for assessing the impact of energy price 

variations? If so, are you aware of data sources other than RECS that the Department should 

consider for. this analysiS? 

10.1.2 Variations in Energy Use 

Variations in energy use for a particular appliance can depend on factors such as climate, type of 

household, people in household, etc. Annual energy use can be estimated by a calculation based 

on an accepted test procedure or it can be measured directly in the field. As described earlier, the 

Department is considering analyzing variations in energy use in the pre-ANOPR LCC analysis by 

. analyzing EIA's RECS household energy data. Climatic and consumer behavior are inherent to 

the energy use data. The Department can perfonn sensitivity analyses to consider how differences 

in energy use will affect sub-groups of consumers. 

Should the Department consider additional analyses for assessing the impact of energy use 

variations? If so, are you aware of any data outside of RECS which reflect variations in 

consumer usage habits. 

10.1.3 First Cost Increases . . 

For consumers, one measure of economic impact is the first cost of the product. Increased first 

costs to consumers resulting from standards can affect different consumers in different ways. The 

impact of standards on lower income persons is important because this group is the least able to 

endure economic disadvantages. For lower income consumers, increases in first costs for a 

particular product can have the effect of precluding the purchase of a new model of that product. 

As a result, some consumers may retain products past their useful life or purchase older, used 

appliances. These older products are generally less efficient to begin with, and over time, their 

22 

variations in installation costs that might affect the net present value of a standard to consumer 

sub-populations. To the extent possible, DOE will obtain estimates of the variability in each input 

variable and consider this variability in its calculation of consumer impacts. The variability in each 

input variable and likely sources of infonnation will be discussed with stakeholders. 

10.1.1 Variations in Energy Prices 

Energy prices vary regionally across the country. In the pre-ANOPR LeC analysis, the 

Department is considering analyzing variations in energy price through the use ofEIA's RECS. 

This analysis can consider the fraction of consumers facing a particular service price. The range 

in values of change oflife-cycle costs for the distribution of households also can be calculated. 

The analysis can be structured to answer questions such as: How many households are better-off 

with standards and by how much? How many households are not better off' and by how much? . 

Should the Department consider additional analyses for assessing the impact of energy price 

variations? If so, are you aware of data sources other than RECS that the Department should 

consider for. this analysiS? 

10.1.2 Variations in Energy Use 

Variations in energy use for a particular appliance can depend on factors such as climate, type of 

household, people in household, etc. Annual energy use can be estimated by a calculation based 

on an accepted test procedure or it can be measured directly in the field. As described earlier, the 

Department is considering analyzing variations in energy use in the pre-ANOPR LCC analysis by 

. analyzing EIA's RECS household energy data. Climatic and consumer behavior are inherent to 

the energy use data. The Department can perfonn sensitivity analyses to consider how differences 

in energy use will affect sub-groups of consumers. 

Should the Department consider additional analyses for assessing the impact of energy use 

variations? If so, are you aware of any data outside of RECS which reflect variations in 

consumer usage habits. 

10.1.3 First Cost Increases . . 

For consumers, one measure of economic impact is the first cost of the product. Increased first 

costs to consumers resulting from standards can affect different consumers in different ways. The 

impact of standards on lower income persons is important because this group is the least able to 

endure economic disadvantages. For lower income consumers, increases in first costs for a 

particular product can have the effect of precluding the purchase of a new model of that product. 

As a result, some consumers may retain products past their useful life or purchase older, used 

appliances. These older products are generally less efficient to begin with, and over time, their 

22 
efficiency may deteriorate if they are retained beyond their useful life. Increases in first cost can

also have the effect of precluding the purchase and use of a product altogether - a potentially

large loss of utility.

The Department will be sensitive to first cost increases to avoid negative impacts to identifiable

population groups such as low-income households. Additionally, the Department will assess the

likely impacts of first cost increases on product sales and fuel switching.

What are the potential impacts of a large first cost increase on consumers (affordability,

financing, etc.). Can you suggest methods and data the Department could use in conducting its

analysis?

What methods might the Department use to assess the likely impacts offirst cost increases on

product sales and fuel switching?

10.2 Consumer Participation

For all products generally, consumer input is important for several related but separate analytical

tasks. First, consumer preferences should be understood prior to determining product classes in

order to preserve product utility. Second, assessing the impact of changes in first cost may

require direct consumer participation from affected consumer sub-groups (particularly

low-income). Finally, consumer input is useful to ensure that life-cycle costs are accurately

estimated for relevant subgroups of consumers. To assess consumer impacts the Department will

usually use a process consisting of a combination of life-cycle cost modeling and direct consumer

input.

The Department will seek to inform and involve consumers and consumer representatives in the

process of developing standards. This will include notification of consumer representatives during

the rulemaking process and where appropriate, seeking direct consumer input. The advisory

committee sub-group on consumer issues has provided suggestions concerning appropriate means

of obtaining consumer input. These include: 1) using focus groups, 2) conducting surveys, 3)

conducting demonstration projects, 4) conducting marketing analysis and, 5) researching existing

literature from voluntary programs. In seeking this information, the advisory committee

sub-group emphasized the need for DOE to obtain information from all relevant consumer

categories and in statistically significant sample sizes.

What level of direct customer input is appropriate for the this rulemaking? Which issues are of

most concern?

23

EE-RM-STD-98-440 COMMENT 01D

efficiency may deteriorate if they are retained beyond their useful life. Increases in first cost can 

also have the effect of precluding the purchase and use of a product altogether - a potentially 

large loss of utility. 

The Department will be sensitive to first cost increases to avoid negative impacts to identifiable 

population groups such as low-income households. Additionally, the Department will assess the 

likely impacts of first cost increases on product sales and fuel switching. 

What are the potential impacts of a large first cost increase on consumers (ajfordability, 

financing, etc.). Can you suggest methods and data the Department could use in conducting its 

analysis? 

What methods might the Department use to assess the likely impacts of first cost increases on 

product sales andfuel switching? 

10.2 Consumer Participation 

For all products generally, consumer input is important for several related but separate analytical 

tasks. First, consumer preferences should be understood prior to determining product classes in 

order to preserve product utility. Second, assessing the impact of changes in first cost may 

require direct consumer participation from affected consumer sub-groups (particularly 

low-income). Finally, consumer input is useful to ensure that life-cycle costs are accurately 

estimated for relevant subgroups of consumers. To assess consumer impacts the Department will 

usually use a process consisting of a combination of life-cycle cost modeling and direct consumer 

input. 

The Department will seek to inform and involve consumers and consumer representatives in the . 

process of developing standards. This will include notification of consumer representatives during 

the rulemaking process and where appropriate, seeking direct consumer input. The advisory 

committee sub-group on consumer issues has provided suggestions concerning appropriate means 

of obtaining consumer input. These include: 1) using focus groups, 2) conducting surveys, 3) 

conducting demo~stration projects, 4) conducting marketing analysis and, 5) researching existing 

literature from voluntary programs. In seeking this information, the advisory committee 

sub-group emphasized the need for DOE to obtain information from all relevant consumer 

categories and in statistically significant sample sizes. 

What level of direct customer input is appropriate for the this rulemaking? Which issues are of 

most concern? 

23 

efficiency may deteriorate if they are retained beyond their useful life. Increases in first cost can 

also have the effect of precluding the purchase and use of a product altogether - a potentially 

large loss of utility. 

The Department will be sensitive to first cost increases to avoid negative impacts to identifiable 

population groups such as low-income households. Additionally, the Department will assess the 

likely impacts of first cost increases on product sales and fuel switching. 

What are the potential impacts of a large first cost increase on consumers (ajfordability, 

financing, etc.). Can you suggest methods and data the Department could use in conducting its 

analysis? 

What methods might the Department use to assess the likely impacts of first cost increases on 

product sales andfuel switching? 

10.2 Consumer Participation 

For all products generally, consumer input is important for several related but separate analytical 

tasks. First, consumer preferences should be understood prior to determining product classes in 

order to preserve product utility. Second, assessing the impact of changes in first cost may 

require direct consumer participation from affected consumer sub-groups (particularly 

low-income). Finally, consumer input is useful to ensure that life-cycle costs are accurately 

estimated for relevant subgroups of consumers. To assess consumer impacts the Department will 

usually use a process consisting of a combination of life-cycle cost modeling and direct consumer 

input. 

The Department will seek to inform and involve consumers and consumer representatives in the . 

process of developing standards. This will include notification of consumer representatives during 

the rulemaking process and where appropriate, seeking direct consumer input. The advisory 

committee sub-group on consumer issues has provided suggestions concerning appropriate means 

of obtaining consumer input. These include: 1) using focus groups, 2) conducting surveys, 3) 

conducting demo~stration projects, 4) conducting marketing analysis and, 5) researching existing 

literature from voluntary programs. In seeking this information, the advisory committee 

sub-group emphasized the need for DOE to obtain information from all relevant consumer 

categories and in statistically significant sample sizes. 

What level of direct customer input is appropriate for the this rulemaking? Which issues are of 

most concern? 

23 
11.0 Industry Cash Flow

The policies outlined in the process rule required substantial revisions to the analytical framework

to be used in performing manufacturer impact analysis. The Department held a public workshop

on March 11 and 12, 1997, to describe and obtain comment on a new generic methodology to be

used in performing future manufacturing impact analyses. In the fiture, manufacturer impact

analyses will be conducted in three phases. Phase 1 consists of two activities, namely, preparation

of an Market Characterization as described section 1.1. The second phase has as its focus the

larger industry. In this phase, the Government Regulatory Impact Model (GRIM) will be used to

perform an industry cash flow analysis. Phase 3 involves repeating the process described in Phase

2--the industry cash-flow analysis--but on different sub-groups of manufacturers. Phase 3 also

entails calculating additional impacts on competition, employment, and manufacturing capacity.

While the general framework will serve as a guide, the Department intends to tailor the

methodology for each rule on the basis of stakeholder comments.

In phase 2 the Industry Cash-Flow analysis will use average manufacturing costs (with

uncertainty)as described under Section 4.0, shipments forecasts as derived under Section 7.0 and

price forecasts from Section 6.4. Financial information, also required as an input to GRIM, will

be developed based on publicly available data and confidentially submitted manufacturer

information.

The GRIM analysis uses a number of factors -- annual expected revenues; manufacturer costs

such as costs of sales, selling and general administration costs; taxes; and capital expenditures

related to depreciation, new standards, and maintenance -- to arrive at a series of annual cash

flows beginning from before implementation of standards and continuing explicitly for several

years after implementation. The measure of industry net present values are calculated by

discounting the annual cash flows from the period before implementation of standards to some

future point in time.

For discussion purposes, the Department will prepare a list of default financial values to be used

in the GRIM industry analysis. These will be calculated by studying publicly available financial

statements of central air conditioners and heat pump manufacturers.

12.0 Manufacturer sub-group analysis

12.1 Manufacturer Sub-groups

Using industry "average" cost values is not adequate for assessing the variation in impacts among

sub-groups of manufacturers. Smaller manufacturers, niche players or manufacturers exhibiting a

24

EE-RM-STD-98-440 COMMENT 01D

11.0 Industry Cash Flow 

The policies outlined in the process rule required substantial revisions to the analytical framework 

to be used in performing manufacturer impact analysis. The Department held a public workshop 

on March 11 and 12, 1997, to describe and obtain comment on a new generic methodology to be 

used in performing future manufacturing impact analyses. In the future, manufacturer impact 

analyses will be conducted in three phases. Phase 1 consists of two activities, namely, preparation 

of an Market Characterization as described section 1.1. The second phase has as its focus the 

larger industry. In this phase, the Government Regulatory Impact Model (GRIM) will be used to 

perfonn an industry cash flow analysis. Phase 3 involves repeating the process described in Phase 

2--the industry cash-flow analysis--but on different sub-groups of manufacturers. Phase 3 also 

entails calculating additional impacts on competition, employment, and manufacturing capacity. 

While the general framework will serve as a guide, the Department intends to tailor the 

methodology for each rule on the basis of stakeholder comments. 

In phase 2 the Industry Cash-Flow analysis will use average manufacturing costs (with 

uncertainty)as described under Section 4.0, shipments forecasts as derived under Section 7.0 and 

price forecasts from Section 6.4. Financial infonnation, also required as an input to GRIM, will 

be developed based on publicly available data and confidentially submitted manufacturer 

infonnation. 

The GRIM analysis uses a number offactors -- annual expected revenues; manufacturer costs 

such as costs of sales, selling and general administration costs; taxes; and capital expenditures 

related to depreciation, new standards, and maintenance -- to arrive at a series of annual cash 

flows beginning from before implementation of standards and continuing explicitly for several 

years after implementation. The measure of industry net present values are calculated by 

discounting the annual cash flows from the period before implementation of standards to some 

. future point in time. 

For discussion purposes, the Department will prepare a list of default financial values to be used 

in the GRIM industry analysis. These will be calculated by studying publicly available financial 

statements of central air conditioners and heat pump manufacturers. 

12.0 Manufacturer sub-group analysis 

12.1 Manufacturer Sub-groups 

Using industry "average" cost values is not adequate for assessing the variation in impacts among 

sub-groups of manufacturers. Smaller manufacturers, niche players or manufacturers exhibiting a 

24 

11.0 Industry Cash Flow 

The policies outlined in the process rule required substantial revisions to the analytical framework 

to be used in performing manufacturer impact analysis. The Department held a public workshop 

on March 11 and 12, 1997, to describe and obtain comment on a new generic methodology to be 

used in performing future manufacturing impact analyses. In the future, manufacturer impact 

analyses will be conducted in three phases. Phase 1 consists of two activities, namely, preparation 

of an Market Characterization as described section 1.1. The second phase has as its focus the 

larger industry. In this phase, the Government Regulatory Impact Model (GRIM) will be used to 

perfonn an industry cash flow analysis. Phase 3 involves repeating the process described in Phase 

2--the industry cash-flow analysis--but on different sub-groups of manufacturers. Phase 3 also 

entails calculating additional impacts on competition, employment, and manufacturing capacity. 

While the general framework will serve as a guide, the Department intends to tailor the 

methodology for each rule on the basis of stakeholder comments. 

In phase 2 the Industry Cash-Flow analysis will use average manufacturing costs (with 

uncertainty)as described under Section 4.0, shipments forecasts as derived under Section 7.0 and 

price forecasts from Section 6.4. Financial infonnation, also required as an input to GRIM, will 

be developed based on publicly available data and confidentially submitted manufacturer 

infonnation. 

The GRIM analysis uses a number offactors -- annual expected revenues; manufacturer costs 

such as costs of sales, selling and general administration costs; taxes; and capital expenditures 

related to depreciation, new standards, and maintenance -- to arrive at a series of annual cash 

flows beginning from before implementation of standards and continuing explicitly for several 

years after implementation. The measure of industry net present values are calculated by 

discounting the annual cash flows from the period before implementation of standards to some 

. future point in time. 

For discussion purposes, the Department will prepare a list of default financial values to be used 

in the GRIM industry analysis. These will be calculated by studying publicly available financial 

statements of central air conditioners and heat pump manufacturers. 

12.0 Manufacturer sub-group analysis 

12.1 Manufacturer Sub-groups 

Using industry "average" cost values is not adequate for assessing the variation in impacts among 

sub-groups of manufacturers. Smaller manufacturers, niche players or manufacturers exhibiting a 

24 
cost structure largely different from industry averages could be more negatively impacted. Ideally,

the Department would consider the impact on every firm individually. In highly concentrated

industries this may be possible. In industries having numerous participants, the Department will

use the results of the industry characterization to group manufacturers exhibiting similar

characteristics. The financial analysis of the "prototypical" firm performed in the Phase 2 Industry

Analysis can serve as a benchmark against which manufacturer sub-groups can be analyzed.

The manufacturing cost data collected for the engineering analysis will be used to the extent

practical in the sub-group impact analysis. To be useful, however, this data should be

disaggregated to reflect the variability in costs between relevant sub-groups of firms.

The Department will conduct detailed interviews with as many manufacturers as is possible to

gain insight into the potential impacts of standards. During these interviews, the Department will

solicit the information necessary to evaluate cashflows and to assess competitive, employment

and capacity impacts.

The interview process has a key role in the manufacturer impact analyses, since it provides an

opportunity for interested parties to privately express their views on important issues. A key

characteristic of the interview process is that it is designed to allow confidential information to be

considered in the rulemaking decision.

The initial industry characterization will collect information from relevant industry and market

publications, industry trade organizations, company financial reports, and product literature. This

information will aid in the development of detailed and focused questionnaires, as needed, to

perform all phases of the manufacturer impact analyses. It is the intention of the Department that

the contents of questionnaires and the list of interview participants be publicly vetted prior to

initiating the interview process.

The Phase 3 (sub-group analysis) questionnaire will solicit information on the possible impacts of

potential efficiency levels on manufacturing costs, product prices, and sales. Evaluation of the

possible impacts on direct employment, capital assets, and industry competitiveness will also draw

heavily on the information gathered during the interviews. The questionnaires will solicit both

qualitative and quantitative information. Supporting information will be requested whenever

applicable.

Interviews will be scheduled well in advance in order to provide every opportunity for key

individuals to be available for comment. Although a written response to the questionnaire is

acceptable, an interactive interview process is preferred because it helps clarify responses and

provides the opportunity for additional issues to be identified.

Interview participants will be requested to identify all confidential information provided in writing

or orally. Approximately two weeks following the interview, an interview summary will be

provided to give participants the opportunity to confirm the accuracy and protect the

confidentiality of all collected information. All the information transmitted will be considered,

25

EE-RM-STD-98-440 COMMENT 01D

cost structure largely different from industry averages could be more negatively impacted. Ideally, 

the Department would consider the impact on every finn individually. In highly concentrated 

industries this may be possible. In industries having numerous participants, the Department will 

use the results of the industry characterization to group manufacturers exhibiting similar 

characteristics. The financial analysis of the "prototypical" firm performed in the Phase 2 Industry 

Analysis can serve as a benchmark against which manufacturer sub-groups can be analyzed. 

The manufacturing cost data collected for the engineering analysis will be used to the extent 

practical in the sub-group impact analysis. To be useful, however, this data should be . 

disaggregated to reflect the variability in costs between relevant sub-groups of firms. 

The Department will conduct detailed interviews with as many manufacturers as is·possible to 

gain insight into the potential impacts of standards. During these interviews, the Department will 

solicit the information ·necessary to evaluate cashflows and to assess competitive, employment 

and capacity impacts. 

The interview process has a key role in the manufacturer impact analyses, since it provides an 

opportunity for interested parties to privately express their views on important issues. A key 

characteristic of the interview process is that ·ifis designed to allow confidential information to be 

considered in the rulemaking decision. 

The initial industry characterization will collect information from relevant industry and market 

publications, industry trade organizations, company financial reports, and product literature. This 

information will aid in the development of detailed and focused questionnaires, as needed, to 

perform all phases of the manufacturer impact analyses. It is the intention of the Department that 

the contents of questionnaires and the list of interview participants be publicly vetted prior to 

iriitiating the interview process. . 

Tl)e Phase 3 (sub-group analysis) questionnaire will solicit information on the possible impacts of 

potential efficiency levels on manufacturing costs, product prices, and sales. Evaluation of the 

possible impacts on direct employment, capital assets, and industry competitiveness will also draw 

heavily on the information gathered during the interviews. The questionnaires will solicit both 

qualitative and quantitative information. Supporting information will be requested whenever 

applicable. 

Interviews will be scheduled well in advance in order to provide every opportunity for key 

individuals to be available for comment. Although a written response to the questionnaire is 

acceptable, an interactive interview process is preferred because it helps clarify responses and 

provides the opportunity for additional issues to be identified. 

Interview participants will be requested to identify all confidential information provided in writing 

or orally. Approximately two weeks following the interview, an interview summary will be 

provided to give participants the opportunity to confirm the accuracy and protect the 

. confidentiality of all collected information. All the information transmitted will be considered, 

25 

cost structure largely different from industry averages could be more negatively impacted. Ideally, 

the Department would consider the impact on every finn individually. In highly concentrated 

industries this may be possible. In industries having numerous participants, the Department will 

use the results of the industry characterization to group manufacturers exhibiting similar 

characteristics. The financial analysis of the "prototypical" firm performed in the Phase 2 Industry 

Analysis can serve as a benchmark against which manufacturer sub-groups can be analyzed. 

The manufacturing cost data collected for the engineering analysis will be used to the extent 

practical in the sub-group impact analysis. To be useful, however, this data should be . 

disaggregated to reflect the variability in costs between relevant sub-groups of firms. 

The Department will conduct detailed interviews with as many manufacturers as is·possible to 

gain insight into the potential impacts of standards. During these interviews, the Department will 

solicit the information ·necessary to evaluate cashflows and to assess competitive, employment 

and capacity impacts. 

The interview process has a key role in the manufacturer impact analyses, since it provides an 

opportunity for interested parties to privately express their views on important issues. A key 

characteristic of the interview process is that ·ifis designed to allow confidential information to be 

considered in the rulemaking decision. 

The initial industry characterization will collect information from relevant industry and market 

publications, industry trade organizations, company financial reports, and product literature. This 

information will aid in the development of detailed and focused questionnaires, as needed, to 

perform all phases of the manufacturer impact analyses. It is the intention of the Department that 

the contents of questionnaires and the list of interview participants be publicly vetted prior to 

iriitiating the interview process. . 

Tl)e Phase 3 (sub-group analysis) questionnaire will solicit information on the possible impacts of 

potential efficiency levels on manufacturing costs, product prices, and sales. Evaluation of the 

possible impacts on direct employment, capital assets, and industry competitiveness will also draw 

heavily on the information gathered during the interviews. The questionnaires will solicit both 

qualitative and quantitative information. Supporting information will be requested whenever 

applicable. 

Interviews will be scheduled well in advance in order to provide every opportunity for key 

individuals to be available for comment. Although a written response to the questionnaire is 

acceptable, an interactive interview process is preferred because it helps clarify responses and 

provides the opportunity for additional issues to be identified. 

Interview participants will be requested to identify all confidential information provided in writing 

or orally. Approximately two weeks following the interview, an interview summary will be 

provided to give participants the opportunity to confirm the accuracy and protect the 

. confidentiality of all collected information. All the information transmitted will be considered, 

25 
when appropriate, in DOE's decision-making process. However, confidential information will not

be made available in the public record.

Participants will also be asked to identify all information they wish included in the public record

but that they do not want to have associated with their interview. This information will be

incorporated into the public record but reported without attribution.

DOE will collate the completed interview questionnaires and prepare a summary of the major

issues and outcomes. The Department will seek comment on the outcome of the interview process

Which manufacturers should be actively-solicited? Is there any value in grouping manufacturers

into sub-groups or should individual GRIM analysis be conductedfor each? More generally,

what would a well executed sub-group analysis entail?

12.2 Competitive Impacts Assessment

Legislation directs the Department to consider any lessening of competition that is likely to result

from standards. It further directs the Attorney General to gauge the impacts, if any, of any

lessening of competition. DOE will make a determined effort to gather and report firm-specific

financial information and impacts. The competitive analysis will focus on assessing the impacts to

smaller, yet significant, manufacturers. The assessment will be based on manufacturing cost data

and on information collected from interviews with manufacturers, consistent with Phase 3 of the

manufacturer impact analyses. DOJ has offered to help in drafting questions to be used in the

manufacturer interviews. These questions will pertain to the assessment of the likeliness of

increases in market concentration levels and other market conditions that could lead to anticompetitive pricing behavior. The manufacturer interviews will focus on gathering information

that would help in assessing asymmetrical cost increases to some manufacturers, increased

proportion of fixed costs potentially increasing business risks, and potential barriers to market

entry (proprietary technologies, etc.)

The Department will be consulting with the Department of Justice prior to initiating the detailed

manufacturer impact analysis.

12.3 Cumulative Regulatory Burden

The Department will recognize and seek to mitigate the overlapping effects on manufacturers of

new or revised DOE standards and other regulatory actions affecting the same products.

26

EE-RM-STD-98-440 COMMENT 01D

when appropriate, in DOE's decision~making process. However, confidential infonnation will not 

be made available in the public record. 

Participants will also be asked to identify all infonnation they wish included in the public record 

but that they do not want to have associated with their interview. This irifonnation will be 

incorporated into the public record but reported without attribution. 

DOE will collate the completed interview questionnaires and prepare a summary.ofthe major 

issues and outcomes. The Department will seek comment on the outcome of the interview process 

Which manufacturers should be actively-solicited? Is there any value in grouping manufacturers 

into sub-groups or should individual GRIM analysis be conductedfor each? More generally. 

what would a well executed sub-group analysis entail? 

12.2 Competitive Impacts Assessment . 

Legislation directs the Department to consider any lessening of competition that is likely to result 

from standards. It further directs the Attorney General to gauge the impacts, if any, of any 

lessening of competition. DOE will make a determined effort to gather and report finn-specific 

financial infonnation and impacts. The competitive analysis will focus on assessing the impacts to 

smaller, yet significant, manufacturers. The assessment will be based on manufacturing cost data 

and on infonnation collected from interviews with manufacturers, consistent with Phase 3 of the 

manufacturer impact analyses. DOJ has offered to help in drafting questions to be used in the 

manufacturer interviews. These questions will pertain to the assessment of the likeliness of 

increases in market concentration levels and other market conditions that could lead to anticompetitive pricing behavior. The manufacturer interviews will focus on gathering infonnation 

that would help in assessing asymmetrical cost increases to some manufacturers, increased 

proportion of fixed costs potentially increasing business risks, and potential barriers to market 

entry (proprietary technologies, etc.) 

The Department will be consulting with the Department of Justice prior to initiating the detailed 

manufacturer impact analysis. 

12.3 Cumulative Regllliatory Burden 

The Department will recognize and seek to mitigate the overlapping effects on manufacturers of 

new or revised DOE standards and other regulatory actions affecting the same products. 

26 

when appropriate, in DOE's decision~making process. However, confidential infonnation will not 

be made available in the public record. 

Participants will also be asked to identify all infonnation they wish included in the public record 

but that they do not want to have associated with their interview. This irifonnation will be 

incorporated into the public record but reported without attribution. 

DOE will collate the completed interview questionnaires and prepare a summary.ofthe major 

issues and outcomes. The Department will seek comment on the outcome of the interview process 

Which manufacturers should be actively-solicited? Is there any value in grouping manufacturers 

into sub-groups or should individual GRIM analysis be conductedfor each? More generally. 

what would a well executed sub-group analysis entail? 

12.2 Competitive Impacts Assessment . 

Legislation directs the Department to consider any lessening of competition that is likely to result 

from standards. It further directs the Attorney General to gauge the impacts, if any, of any 

lessening of competition. DOE will make a determined effort to gather and report finn-specific 

financial infonnation and impacts. The competitive analysis will focus on assessing the impacts to 

smaller, yet significant, manufacturers. The assessment will be based on manufacturing cost data 

and on infonnation collected from interviews with manufacturers, consistent with Phase 3 of the 

manufacturer impact analyses. DOJ has offered to help in drafting questions to be used in the 

manufacturer interviews. These questions will pertain to the assessment of the likeliness of 

increases in market concentration levels and other market conditions that could lead to anticompetitive pricing behavior. The manufacturer interviews will focus on gathering infonnation 

that would help in assessing asymmetrical cost increases to some manufacturers, increased 

proportion of fixed costs potentially increasing business risks, and potential barriers to market 

entry (proprietary technologies, etc.) 

The Department will be consulting with the Department of Justice prior to initiating the detailed 

manufacturer impact analysis. 

12.3 Cumulative Regllliatory Burden 

The Department will recognize and seek to mitigate the overlapping effects on manufacturers of 

new or revised DOE standards and other regulatory actions affecting the same products. 

26 
Are you aware of any regulations that would cause a cumulative burden with this rulemaking?

13.0 Utility Impacts

To perform the Utility Impacts Analysis, which would include an analysis of both the electric and

gas utility industries, the Department is considering using the Energy Information

Administration's (EIA) National Energy Modeling System (NEMS). NEMS is a large multisectoral partial equilibrium model of the U.S. energy sector that has been developed over several

years by the Energy Information Administration (EIA) primarily for the purpose of preparing the

Annual Energy Outlook (AEO). NEMS produces a widely recognized baseline forecast for the

U.S. through 2020 and is available in the public domain. Outputs of the utility analysis can

parallel results that appear in the latest AEO, with some additions. Typical output includes

forecasts of sales and price. The entire utility analysis can be conducted as a policy deviation

from the latest AEO, and the assumptions in place there can serve as the basic set of assumptions

applied. For example, the operating characteristics (energy conversion efficiency, emissions rates,

etc.) of future electricity generating plants can be exactly those used in the latest AEO. It should

be noted that forecasting for the electric utility industry is seriously complicated by the

implications of industry restructuring, which is only partially implemented in the latest AEO

version. Exploration of the consequences of a wider restructuring pattern can be explored through

an appropriate scenario.

Is NEMS appropriatefor conducting the Utility Impact Analysis? If not, are you aware of other

methodsfor conducting the analysis?

14.0 Environmental Analysis

The standards' analysis tracks three types of energy-related emissions: sulfur dioxide (SO2),

nitrous oxides (NOx) and carbon dioxide (CO2). To perform the Environmental Analysis, the

Department is considering using EIA's National Energy Modeling System (NEMS). As described

in the previous section, NEMS is also being considered for the Utility Impact Analysis. Outputs

of the environmental analysis will mostly parallel results that appear in the latest AEO, with some

additions. The entire environmental analysis can be conducted as a policy deviation from the

latest AEO, and the assumptions in place there can be the basic set of assumptions applied. For

example, the operating characteristics (energy conversion efficiency, emissions rates, etc.) of

future electricity generating plant can be exactly those used in the latest AEO.

Carbon emissions are tracked in NEMS by a quite detailed carbon module which should give

good results because of its broad coverage of all sectors and inclusion of interactive effects.

NEMS also includes a module for SO2 allowance trading and delivers a forecast of SO2 allowance

27

EE-RM-STD-98-440 COMMENT 01D

Are you aware of any regulations that would cause a cumulative burden with this rulemaking? 

13.0 Utility Impacts 

To perform the Utility Impacts Analysis, which would include an analysis of both the electric and 

gas utility industries, the Department is considering using the Energy Information 

Administration's (EIA) National Energy Modeling System (NEMS). NEMS is a large multisectoral partial equilibrium model of the U.S. energy sector that has been developed over several 

years by the Energy Information Administration (EIA) primarily for the purpose of preparing the 

Annual Energy Outlook (AEO). NEMS produces a widely recognized baseline forecast for the 

U.S. through 2020 and is available in the public domain. Outputs of the utility analysis can 

parallel results that appear in the latest AEO, with some additions. Typical output includes 

forecasts of sales and price. The entire utility analysis can be conducted as a policy deviation 

from the latest AEO, and the assumptions in place there can serve as the basic set of assumptions 

applied. For example, the operating characteristics (energy conversion efficiency, emissions rates, 

etc.) offuture electricity generating plants can be exactly those used in the latest AEO. It should 

be noted that forecasting for the electric utility industry is seriously complicated by the 

implications of industry restructuring, which is only partially implemented in the latest ABo . version. Exploration of the consequences ofa wider restructuring pattern can be explored through 

an appropriate scenario. 

Is NEMS appropriate for conducting the Utility Impact Analysis? lfnot, are you aware of other 

methods for conducting the analYSis? 

14.0 Environmental Analysis 

The standards' analysis tracks three types of energy-related emissions: sulfur dioxide (S02), 

nitrous oxides (NOx) and carbon dioxide (C02), To perform the Environmental Analysis, the 

Department is considering using EIA's National Energy Modeling System (NEMS). As described 

in the previous section, NEMS is also being considered for the Utility Impact Analysis. Outputs 

of the environmental analysis will mostly parallel results that appear in the latest AEO, with some 

additions. The entire environmental analysis can be conducted as a policy deviation from the 

latest AEO, and the assumptions in place there can be the basic set of assumptions applied. For 

example, the operating characteristics (energy conversion efficiency, emissions rates, etc.) of 

future electricity generating phmt can be exactly those used in the latest AEO. 

Carbon emissions are tracked in NEMS by a quite detailed carbon module which should give 

good results because of its broad coverage of all sectors and inclusion of interactive effects. 

NEMS also includes a module for S02 allowance trading and delivers a forecast of S02 allowance 

27 

Are you aware of any regulations that would cause a cumulative burden with this rulemaking? 

13.0 Utility Impacts 

To perform the Utility Impacts Analysis, which would include an analysis of both the electric and 

gas utility industries, the Department is considering using the Energy Information 

Administration's (EIA) National Energy Modeling System (NEMS). NEMS is a large multisectoral partial equilibrium model of the U.S. energy sector that has been developed over several 

years by the Energy Information Administration (EIA) primarily for the purpose of preparing the 

Annual Energy Outlook (AEO). NEMS produces a widely recognized baseline forecast for the 

U.S. through 2020 and is available in the public domain. Outputs of the utility analysis can 

parallel results that appear in the latest AEO, with some additions. Typical output includes 

forecasts of sales and price. The entire utility analysis can be conducted as a policy deviation 

from the latest AEO, and the assumptions in place there can serve as the basic set of assumptions 

applied. For example, the operating characteristics (energy conversion efficiency, emissions rates, 

etc.) offuture electricity generating plants can be exactly those used in the latest AEO. It should 

be noted that forecasting for the electric utility industry is seriously complicated by the 

implications of industry restructuring, which is only partially implemented in the latest ABo . version. Exploration of the consequences ofa wider restructuring pattern can be explored through 

an appropriate scenario. 

Is NEMS appropriate for conducting the Utility Impact Analysis? lfnot, are you aware of other 

methods for conducting the analYSis? 

14.0 Environmental Analysis 

The standards' analysis tracks three types of energy-related emissions: sulfur dioxide (S02), 

nitrous oxides (NOx) and carbon dioxide (C02), To perform the Environmental Analysis, the 

Department is considering using EIA's National Energy Modeling System (NEMS). As described 

in the previous section, NEMS is also being considered for the Utility Impact Analysis. Outputs 

of the environmental analysis will mostly parallel results that appear in the latest AEO, with some 

additions. The entire environmental analysis can be conducted as a policy deviation from the 

latest AEO, and the assumptions in place there can be the basic set of assumptions applied. For 

example, the operating characteristics (energy conversion efficiency, emissions rates, etc.) of 

future electricity generating phmt can be exactly those used in the latest AEO. 

Carbon emissions are tracked in NEMS by a quite detailed carbon module which should give 

good results because of its broad coverage of all sectors and inclusion of interactive effects. 

NEMS also includes a module for S02 allowance trading and delivers a forecast of S02 allowance 

27 
prices. It is important to note, however, that accurate simulation of SO2 trading tends to imply

that physical emissions effects will be zero. This fact has caused considerable confusion in the

past, and, in prior appliance standards analyses, a simple'emission reduction has been reported

with the caveat that emissions trading implies that this reduction will unlikely be realized.

However, there is an SO2 benefit from conservation in the form of a lower allowance price, and if

big enough to be calculable by NEMS, this value can be reported. NEMS also has an algorithm

for estimating NOx emissions from power generation, but alone this is somewhat inadequate

because it does not estimate in-house emissions. A separate in-home NOx emissions estimation

capability, based on simple emissions factors derived from general literature, may need to be

developed.

The results for the environmental analysis can be in the form of a complete NEMS run. In general,

NEMS outputs become the tables of an AEO, and these should provide a good idea of the range

of results available. Reported in a NEMS run are NOx and Carbon emissions in the power sector

and a resulting SO2 trading price.

Is NEMS appropriate for conducting the Environmental Analysis? If not, are you aware of other

methods for conducting the analysis? Are there any other environmentalfactors the Department

should consider? If so, how?

28

EE-RM-STD-98-440 COMMENT 01D

prices. It is important to note, however, that accurate simulation of SOz trading tends to imply 

that physical emissions effects will be zero. This fact has caused considerable confusion in the 

past, and, in prior appliance standards analyses, a simple' emission reduction has been reported 

with the caveat that emissions trading implies that this reduction will unlikely be realized. 

However, there is an SOz benefit from conservation in the form of a lower allowance price, and if 

big enough to be calculable by NEMS, this value can be reported. NEMS also has an algorithm 

for estimating NOx emissions from power generation, but alone this is somewhat inadequate 

because it does not estimate in-house emissions. A separate in-home NOx emissions estimation 

capability, based on simple emissions factors derived from general literature, may need to be 

developed. 

The results for the environmental analysis can be in the form of a complete NEMS run. In general, 

NEMS outputs become the tables ofan AEO" and these should provide a good idea of the range 

, of results available. Reported in a NEMS run are NOx and Carbon emissions in the power sector 

and a resulting SOz trading price. J 

Is NEMS appropriate/or conducting the Environmental Analysis? If not, are you aware 0/ other 

methods/or conducting the analysis? Are there any other environmental/actors the Department 

should consider? If so, how? 

28 

prices. It is important to note, however, that accurate simulation of SOz trading tends to imply 

that physical emissions effects will be zero. This fact has caused considerable confusion in the 

past, and, in prior appliance standards analyses, a simple' emission reduction has been reported 

with the caveat that emissions trading implies that this reduction will unlikely be realized. 

However, there is an SOz benefit from conservation in the form of a lower allowance price, and if 

big enough to be calculable by NEMS, this value can be reported. NEMS also has an algorithm 

for estimating NOx emissions from power generation, but alone this is somewhat inadequate 

because it does not estimate in-house emissions. A separate in-home NOx emissions estimation 

capability, based on simple emissions factors derived from general literature, may need to be 

developed. 

The results for the environmental analysis can be in the form of a complete NEMS run. In general, 

NEMS outputs become the tables ofan AEO" and these should provide a good idea of the range 

, of results available. Reported in a NEMS run are NOx and Carbon emissions in the power sector 

and a resulting SOz trading price. J 

Is NEMS appropriate/or conducting the Environmental Analysis? If not, are you aware 0/ other 

methods/or conducting the analysis? Are there any other environmental/actors the Department 

should consider? If so, how? 

28