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CHAPTER 17. REGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

17.1 INTRODUCTION ......................................................................................................... 17-1

17.2 METHODOLOGY ........................................................................................................ 17-1

LIST OF TABLES

Table 17.1.1 Non-Regulatory Alternatives to Standards........................................................ 17-1
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CHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

For “economically significant regulatory actions,” Executive Order 12866 requires 

Federal agencies to provide “an assessment, including the underlying analysis, of costs and 

benefits of potentially effective and reasonably feasible alternatives to the planned regulation, 

identified by the agencies or the public (including improving the current regulation and 

reasonably viable non-regulatory actions), and an explanation why the planned regulatory action 

is preferable to the identified potential alternatives.” 58 FR 51735, 51741 (October 4, 1993). 

Accordingly, in the notice of proposed rulemaking (NOPR) stage, the U.S. Department of 

Energy (DOE) plans to analyze feasible alternatives that possibly could provide incentives for 

the same energy efficiency levels as the proposed standards for the equipment that are subject of 

the commercial packaged boilers rulemaking. In addition, DOE proposes to analyze five feasible 

policy alternatives to energy conservation standards for the equipment considered in this 

rulemaking. The policy alternatives are listed below in Table 17.1.1. DOE will evaluate each 

alternative in terms of its ability to achieve significant energy savings at a reasonable cost, and 

will compare the effectiveness of each alternative to the effectiveness of each candidate standard.

The technical support document (TSD) is prepared in support of DOE’s notice of 

proposed rulemaking and includes a complete quantitative analysis of each alternative, the 

methodology for which is briefly addressed below.

Table 17.1.1 Alternatives to Standards

No New Regulatory Action

Consumer Rebates

Consumer Tax Credits

Manufacturer Tax Credits

Voluntary Energy Efficiency Targets

Bulk Government Purchases

17.2 METHODOLOGY

DOE uses the national impact analysis (NIA) spreadsheet model to calculate the national 

energy savings and the net present value (NPV) corresponding to each alternative to proposed 

energy conservation standards. The NIA model is discussed in chapter 10 of the TSD. To 

compare each alternative quantitatively to the proposed energy conservation standards, DOE 

quantifies the effect of each alternative on the purchase and use of energy efficient equipment, 

such as commercial packaged boilers. DOE then creates an integrated model, built on the NIA 

model, in order to make the appropriate revisions to the inputs in the NIA models. Key inputs 

that DOE may revise are the market shares of equipment meeting the target efficiency levels, 

which correspond to the efficiency levels set for the mandatory standards at each trial standard 

level.
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The following are the key measures of the impact of each alternative:

• National Energy Savings (NES), given in quadrillion Btus (quads), will describe the 

potential cumulative national primary energy to be saved over the lifetime of equipment 

purchased during the 30-year analysis period starting in the effective date of the policy.

a

• Net Present Value (NPV), will represent the value of net monetary savings from 

equipment purchased during the 30-year analysis period starting in the compliance date

of the policy. DOE calculates NPV as the difference between the present values of 

installed equipment cost and operating expenditures in the base case and the present 

values of those costs in each policy case. DOE then calculates operating expenses 

(including energy costs) for the life of equipment. 

 a The British thermal unit (Btu) is the amount of energy needed to cool or heat one pound of liquid water by one 

degree Fahrenheit at a constant pressure of one atmosphere.