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CHAPTER 16. REGULATORY IMPACT ANALYSIS 

TABLE OF CONTENTS

16.1 INTRODUCTION ......................................................................................................... 16-1

16.2 METHODOLOGY ........................................................................................................ 16-1

LIST OF TABLES

Table 16.1.1 Non-Regulatory Alternatives to Standards ........................................................... 16-1
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CHAPTER 16. REGULATORY IMPACT ANALYSIS 

16.1 INTRODUCTION

Under the Process Rule (Procedures for Consideration of New or Revised Energy 

Conservation Standards for Consumer Products, 61 FR 36974 (July 15, 1996)), the U.S. 

Department of Energy (DOE) is committed to continually explore non-regulatory alternatives to 

standards. DOE will prepare a draft regulatory impact analysis pursuant to Executive Order

12866, “Regulatory Planning and Review,” which will be subject to review under the Executive 

Order by the Office of Management and Budget’s Office of Information and Regulatory Affairs. 

58 FR 51735. DOE has identified six major alternatives to standards as representing feasible 

policy options to reduce commercial equipment energy consumption. It 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 one to the effectiveness of the proposed standards rule. 

The non-regulatory means of achieving energy savings that DOE proposes to analyze are 

listed in Table 16.1.1. The technical support document (TSD) in support of DOE’s notice of 

proposed rulemaking will include a complete quantitative analysis of each alternative, the 

methodology for which is discussed briefly below. 

Table 16.1.1 Non-Regulatory Alternatives to Standards 

No new regulatory action

Business tax credits

Manufacturer tax credits

Performance Standards

Rebates

Voluntary energy efficiency targets

Early replacement

16.2 METHODOLOGY

DOE will use the national impact analysis (NIA) spreadsheet models to calculate the 

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

proposed standards. The NIA model is discussed in chapter 10 of the TSD. To compare each 

alternative quantitatively to the proposed energy conservation standards, DOE will need to 

quantify the effect of each alternative on the purchase and use of energy efficient commercial 

refrigeration equipment. Once it has quantified each alternative, DOE will make the appropriate 

revisions to the inputs in the NIA models. Key inputs that DOE may revise in these models are: 

• Energy prices and escalation factors;

• Implicit market discount rates for trading off purchase price against operating expense 

when choosing product efficiency; 

• Business purchase prices, operating costs, and income elasticities;

• Purchase price-versus-efficiency relationships; and 

• Product stock data (purchase of new products or turnover rates for inventories).
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The key measures of the impact of each alternative will be:

• Energy use: Cumulative energy use of the product from the effective date of the new 

standard to the year 2045. DOE will report energy. 

• National energy savings: Cumulative national energy use from the base case projection 

minus the alternative policy case projection.

• Net present value: The value of future operating cost savings from products bought in the 

period from the effective date of the new standard 2015to the year 2045. DOE will 

calculate the NPV as the difference between the present value of product and operating 

expenditures (including energy) in the base case, and the present value of expenditures in 

each alternative policy case. DOE will discount future operating and product 

expenditures to 2010 using a 7-percent and 3-percent real discount rate. It will calculate 

operating expenses (including energy costs) for the life of the products.