CHAPTER 17. REGULATORY IMPACT ANALYSIS 

TABLE OF CONTENTS 

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

17.2 NON-REGULATORY POLICIES................................................................................ 17-2
 

17.2.1 Methodology.................................................................................................................. 17-2
 

17.2.2 Policy Assumptions ....................................................................................................... 17-3
 

17.2.3 Policy Interactions ......................................................................................................... 17-4
 

17.3 NON-REGULATORY POLICY ASSUMPTIONS ...................................................... 17-4
 

17.3.1 No New Regulatory Action ........................................................................................... 17-4
 

17.3.2 Financial Incentives Policies.......................................................................................... 17-4
 

17.3.2.1 Consumer Rebates ....................................................................................... 17-6
 

17.3.2.2 Consumer Tax Credits ............................................................................... 17-16
 

17.3.2.3 Manufacturer Tax Credits.......................................................................... 17-21
 

17.3.3 Voluntary Energy Efficiency Targets .......................................................................... 17-22
 

17.3.4 Early Replacement....................................................................................................... 17-25
 

17.3.5 Bulk Government Purchases........................................................................................ 17-29
 

17.4 NON-REGULATORY POLICY IMPACTS............................................................... 17-31
 

17.5 RESULTS SUMMARY FOR NON-REGULATORY ALTERNATIVES................. 17-34
 

LIST OF TABLES 

Table 17.1.1 Policy Alternatives to National Standards ......................................................... 17-1
 

Table 17.2.1 Trial Standard Levels for Conventional Cooking Products............................... 17-3
 

Table 17.2.2 Trial Standard Levels for Microwave Ovens..................................................... 17-4
 

Table 17.2.3 Trial Standard Levels for Commercial Clothes Washers .................................. 17-4
 

Table 17.3.1 Benefit/Cost Ratios for Gas Cooktop and Gas Standard Oven Proposed
 

Standards and Rebate Policy Cases ................................................................... 17-7
 

Table 17.3.2 Benefit/Cost Ratios for Microwave Oven Proposed Standard and Rebate
 

Policy Case....................................................................................................... 17-12
 

Table 17.3.3 Benefit/Cost Ratios for Commercial Clothes Washer Proposed Standard
 

and Rebate Policy Case.................................................................................... 17-14
 

Table 17.3.4 Oregon Tax Credits Claimed for Residential Clothes Washers from 1998
 

to 2006 and their Attribution for 2006............................................................. 17-19
 

Table 17.3.5 Annual Increased Market Shares of Commercial Clothes Washers at
 

Target Efficiency Level from Consumer Tax Credits ..................................... 17-19
 

Table 17.3.6 Oregon Tax Credits Claimed for Residential Dishwashers from 1998
 

to2006 and their Attribution for 2006.............................................................. 17-20
 

Table 17.3.7 Annual Increased Market Shares of Conventional Cooking Products and
 

Microwave Ovens at Target Efficiency Levels from Consumer Tax 

Credits.............................................................................................................. 17-21
 

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Table 17.3.8 Annual Increased Market Shares of Microwave Ovens at Target 

Efficiency Level from Voluntary Efficiency Targets ...................................... 17-23
 

Table 17.3.9 Annual Increased Market Shares of Top-Loading Commercial Clothes
 

Washers at Target Efficiency Level from Voluntary Efficiency Targets ........ 17-24
 

Table 17.5.1 Non-Regulatory Alternatives for Conventional Cooking Products with
 

Target Levels at TSL 1 .................................................................................... 17-35
 

Table 17.5.2 Non-Regulatory Alternatives for Microwave Ovens with Target Levels at
 

TSL 3b ............................................................................................................. 17-35
 

Table 17.5.3 Non-Regulatory Alternatives for Commercial Clothes Washers with
 

Target Levels at TSL 3 .................................................................................... 17-36
 

LIST OF FIGURES 

Figure 17.3.1 Market Penetration Curve for Gas Cooktops Not Needing Electric Outlets ..... 17-8
 

Figure 17.3.2 Market Penetration Curve for Gas Cooktops Needing Electric Outlets ............ 17-9
 

Figure 17.3.3 Market Penetration Curve for Gas Standard Ovens Not Needing Electric
 

Outlets.............................................................................................................. 17-10
 

Figure 17.3.4 Market Penetration Curve for Gas Standard Ovens Needing Electric
 

Outlets.............................................................................................................. 17-11
 

Figure 17.3.5 Market Penetration Curve for Microwave Ovens............................................ 17-13
 

Figure 17.3.6 Market Penetration Curve for Top-Loading Commercial Clothes Washers ... 17-15
 

Figure 17.3.7 Market Penetration Curve for Front-Loading Commercial Clothes
 

Washers............................................................................................................ 17-16
 

Figure 17.3.8 Early Replacement Shipments Projections for Conventional Cooking
 

Products............................................................................................................ 17-27
 

Figure 17.3.9 Early Replacement Shipments Projections for Microwave Ovens .................. 17-28
 

Figure 17.3.10 Early Replacement Shipments Projections for Commercial Clothes
 

Washers............................................................................................................ 17-28
 

Figure 17.4.1 Penetration Rate of Units Meeting the Target Level for Conventional
 

Cooking Products............................................................................................. 17-32
 

Figure 17.4.2 Penetration Rates of Units Meeting the Target Level for Microwave Ovens.. 17-33
 

Figure 17.4.3 Penetration Rates of Units Meeting the Target Level for Commercial
 

Clothes Washers............................................................................................... 17-34
 

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CHAPTER 17. REGULATORY IMPACT ANALYSIS
 

17.1 INTRODUCTION
 

The Department of Energy (DOE) has determined that energy conservation standards for 

conventional cooking products, microwave ovens, and commercial clothes washers constitute an 

“economically significant regulatory action” under Executive Order (E.O.) 12866 “Regulatory 

Planning and Review.” 58 FR 51735 (October 4, 1993). Therefore, DOE’s proposed energy 

conservation standards require a regulatory impact analysis (RIA), which involves an evaluation 

of non-regulatory alternatives to the standards. This document evaluates several possible 

alternatives to the proposed standards, and compares the costs and benefits of each to the 

proposed standards. As described in section 17.2.2 of this report, the proposed standards for 

conventional cooking products are those in trial standard level (TSL) 1. Since TSL 1 affects 

only gas cooktops and gas standard ovens, this regulatory impact analysis covers only these 

product classes. For microwave ovens the proposed standards are those in TSL 3b. For 

commercial clothes washers the proposed standards are those in TSL 6. 

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

Conservation Standards for Consumer Products, 61 FR 36974 (July 15, 1996); 10 CFR Part 430, 

Subpart C, Appendix A), DOE is committed to continually explore non-regulatory alternatives to 

standards. This RIA, which DOE has prepared pursuant to E.O. 12866, is subject to review 

under the Executive Order by the Office of Management and Budget (OMB)’s Office of 

Information and Regulatory Affairs (OIRA). 58 FR 51735. 

DOE identified six major non-regulatory alternatives to standards as representing feasible 

policy options to achieve consumer product energy efficiency for the appliance products that are 

the subject of this rulemaking. These are listed in Table 17.1.1. DOE evaluated each alternative 

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

the effectiveness of each one to the effectiveness of the proposed standards. 

Table 17.1.1 Policy Alternatives to National Standards 

No New Regulatory Action 

Consumer Rebates 

Consumer Tax Credits 

Manufacturer Tax Credits 

Voluntary Energy Efficiency Targets 

Early Replacement 

Bulk Government Purchases 

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17.2 NON-REGULATORY POLICIES 

17.2.1 Methodology 

This section describes the approach DOE used to analyze non-regulatory policies for 

conventional cooking products, microwave ovens, and residential-style commercial clothes 

washers. 

To calculate the national energy savings and the net present value (NPV) corresponding 

to each policy alternative, DOE used its national impact analysis (NIA) spreadsheet models. 

(See Chapter 11 of the technical support document (TSD) for a description of the NIA 

spreadsheet models.) To compare each alternative to the proposed standards, DOE quantified 

the effect of each alternative on the purchase of conventional cooking products, microwave 

ovens, or commercial clothes washers meeting the target levels, which are defined as the 

efficiency levels in the proposed standards. Once it had made the quantitative assumptions for 

each alternative policy, DOE made the appropriate revisions to the inputs in the NIA spreadsheet 

models. The main model inputs that DOE revised were market shares of equipment at target 

efficiencies, shipment-weighted average annual energy consumption (and shipment-weighted 

average annual water consumption for commercial clothes washers), and equipment replacement 

rates. The shipments for any given year are comprised of a distribution of efficiency levels. 

DOE assumed that standards would affect 100 percent of the shipments, while the non-regulatory 

policies would affect a smaller percentage of the shipments. In each policy case, DOE made 

particular assumptions about the percentage of shipments impacted by the policy under analysis. 

DOE then calculated the shipment-weighted average energy consumption and costs using these 

market shares. 

A shift in the market share of higher efficiency units may increase the average installed 

cost of energy-consuming equipment. Operating costs will generally decrease due to a decline in 

energy consumption. Therefore, DOE calculated an NPV for non-regulatory alternatives in the 

same way as it did for the proposed standards. In some scenarios, total installed cost increases 

are partially mitigated by government rebates or tax credits. However, DOE assumed that credits 

and rebates would be paid for by consumers in another form (such as additional taxes), and 

therefore did not include them as a consumer benefit for the purposes of calculating the national 

NPV. DOE did not consider administrative costs for any of the non-regulatory policies in its 

analysis. Inclusion of such costs would decrease their NPVs by a small amount. 

The key measures of the impact of each alternative are: 

•	 National energy savings in quadrillion Btus (quads): Cumulative national primary energy 

savings for equipment bought in the period from the effective date of the policy case 

(2012) to the year 2042. 

•	 Net present value: The value of net monetary savings from equipment bought in the 

period from the effective date of the policy case (2012) to the year 2042. DOE calculated 

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the NPV as the difference between the present value of equipment and operating 

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

each alternative policy case. DOE calculated operating expenses (including energy) for 

the life of the equipment. 

17.2.2 Policy Assumptions 

The impacts of non-regulatory policies are by nature uncertain, since they depend on 

program implementation and marketing efforts and the subsequent consumer behavior response. 

The projected impacts depend on the assumptions regarding the consumer participation rate, and 

are therefore subject to more uncertainty than the impacts of mandatory standards, which DOE 

assumes will have full compliance. To increase the robustness of the analysis, DOE conducted a 

literature review on each non-regulatory policy and consulted with key experts to gather 

information on similar incentive programs that have already been implemented in the U.S. By 

studying field experience with sample programs of each type, DOE sought to make credible 

assumptions of their potential market impacts. Section 17.3 below reports the conclusions from 

this research as they apply to the policy modeling assumptions and includes the corresponding 

literature citations. 

Each of the policy alternatives that DOE considered to the proposed standards would 

improve the average efficiency of new conventional cooking products, microwave ovens, and 

commercial clothes washer equipment relative to their base cases (no new regulatory action). 

The analysis considered that each alternative policy would induce residential or commercial 

consumers to purchase units at the same efficiency levels as required by the proposed standards, 

or the target levels. In contrast to the proposed standards, however, their market penetration rate 

in the alternative policy cases may not be 100 percent. 

The proposed standards for conventional cooking products are those in TSL 1, as shown 

in Table 17.2.1. The proposed standards for microwave ovens are those in TSL 3b, as shown in 

Table 17.2.2. The proposed standards for commercial clothes washers are those in TSL 6, as 

shown in Table 17.2.3. 

Table 17.2.1 Trial Standard Levels for Conventional Cooking Products 

Product Class 

Proposed Energy Conservation 

Standards 

Gas cooktop/conventional burners No constant burning pilot lights 

Electric cooktop/low or high wattage open (coil) elements No standard 

Electric cooktop/smooth elements No standard 

Gas oven/standard oven with or without a catalytic line No constant burning pilot lights 

Gas oven/self-clean oven No change to existing standard 

Electric oven/standard oven with or without a catalytic line No standard 

Electric oven/self-clean oven No standard 

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Table 17.2.2 Trial Standard Levels for Microwave Ovens
 

Product Class 

Proposed Energy Conservation 

Standards 

Microwave oven with or without thermal elements Maximum standby power = 1.0 Watt 

Table 17.2.3 Trial Standard Levels for Commercial Clothes Washers
 

Product Class Proposed Energy Conservation Standards 

Top-Loading Washers Minimum 1.76 Modified Energy Factor / Maximum 8.30 Water Factor 

Front-Loading Washers Minimum 2.00 Modified Energy Factor / Maximum 5.00 Water Factor 

DOE assumed that the non-regulatory policy impacts would last from the effective date 

for proposed standards for conventional cooking products, microwave ovens, and commercial 

clothes washers—2012—through the end of the analysis period, 2042. 

17.2.3 Policy Interactions 

DOE calculated the impacts of each regulatory policy separately from those of the other 

policies. In actual practice, certain policies are often most effective when implemented in 

combination to provide incentives, such as early replacement with consumer rebates, or early 

replacement with bulk government purchases. DOE attempted to make conservative 

assumptions to avoid double-counting policy impacts. Therefore, the policy impacts reported 

below are not additive; the combined impact of several or all of the policies may not be inferred 

from adding the results together. 

Section 17.3 presents graphs showing market penetration or shipment-weighted 

efficiency parameters for each of the non-regulatory policy cases for conventional cooking 

products, microwave ovens, and commercial clothes washers. 

17.3 NON-REGULATORY POLICY ASSUMPTIONS 

17.3.1 No New Regulatory Action 

The case in which no new regulatory action is taken with regard to conventional cooking 

products, microwave ovens, and commercial clothes washer efficiency constitutes the base case 

scenario described in Chapter 11 on the national impact analysis. This case defines the basis of 

comparison for all other scenarios. By definition, no new regulatory action yields zero energy 

savings and an NPV of zero dollars. 

17.3.2 Financial Incentives Policies 

DOE considered scenarios in which the Federal government would provide two types of 

financial incentives: rebates and tax credits. The government could provide consumers with a 

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rebate for purchasing an energy efficient appliance meeting the target level for each product. 

Tax credits could be offered to consumers who purchased target-level conventional cooking 

products, microwave ovens, and commercial clothes washers. The government could also 

provide tax credits to manufacturers to offset costs associated with producing such equipment. 

DOE’s evaluation of consumer rebates used a comprehensive study of the potential for 

energy efficiency in California performed by Xenergy, Inc., which summarized experience with 

various utility rebate programs.1 This analysis method is based on curves that estimate the 

market penetration of a technology based on its benefit/cost (B/C) ratio. DOE consulted with 

experts and reviewed several other methods of estimating market penetration of efficient 

technologies due to consumer rebate programs that were developed since the referenced Xenergy 

, , , report was published.2 3 4 5 However, these methods were based either on other economic 

parameters (payback period) or on expert surveys predicting penetration of a new technology 

over time. Therefore, DOE decided to use the penetration curve method based on B/C ratio, 

which incorporates lifetime operating cost savings, and was calibrated with utility rebate 

program participation results. 

Xenergy’s information diffusion model estimates market impacts induced by financial 

incentives for energy efficient appliances. The basic premise of this model is that information 

diffusion drives technology adoption. The model is formulated to characterize the influences of 

both internal and external sources of information on consumer behavior by superimposing two 

components in the equation, each capturing the effect of one of two different types of 

information source. The effects of these two types of information diffusion mechanisms are 

different. Internal sources of information influence consumers to purchase new products due 

mainly to word-of-mouth from early adopters, while external information sources influence 

consumers to change their adoption decisions as a result of marketing efforts and information 

coming from outside the consumer group. (Appendix 17A of the TSD contains further details on 

modeling these influences.) 

Xenergy’s model combined these two information diffusion mechanisms and generated a 

set of measure “implementation curves” or penetration curves, which Xenergy calibrated using 

evaluation data from utility rebate programs. Consumer response to rebate incentives appears to 

be a combination of the two information source types. The penetration curves illustrate the 

increased penetration (i.e., increased market share) of efficient equipment as a result of consumer 

response to B/C ratio changes induced by a specific rebate program. The penetration curves are 

used to depict various diffusion patterns based on perceived barriers to consumer purchase of 

high-efficiency equipment. There are penetration curves for varying levels of market barriers, 

from “no barriers” to “extremely high barriers.” These curves provide a means to study the 

impact of changing the B/C ratio, by reducing the initial equipment cost through financial 

incentives, on the consumer participation rate. 

DOE based its estimates of the impacts of consumer tax credits on actual program 

experience with State tax credits in Oregon. DOE studied State tax credits in Montana as well. 

DOE also attempted to determine residential consumer participation due to the Federal appliance 

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tax credits, which were mandated by the Energy Policy Act of 2005 (EPACT 2005). For the 

manufacturer tax credits policy, DOE attempted to investigate manufacturer participation due to 

the efficient equipment tax credits from EPACT 2005. Both the Federal consumer and 

manufacturer credits were in effect in 2006 and 2007. Unfortunately, the Internal Revenue 

Service (IRS) had not yet published data on taxpayer response to either of these tax credits. 

DOE also incorporated previous research that had differentiated the impact of tax credits 

into the “direct price effect,” which arises from the incremental equipment cost savings, and the 

, “announcement effect,” which is independent of the credit amount.6 7 The announcement effect 

derives from the credibility that a particular technology receives from its inclusion in an 

incentive program, as well as changes in product marketing strategy, and the resulting 

modifications in markups and pricing. DOE assumed that the direct price effect and the 

announcement effect would apply to the consumer tax credit policy as well as the consumer 

rebate policy, and that half of the increases in market penetration associated with either policy 

would be due to the direct price effect and half to the announcement effect. 

17.3.2.1 Consumer Rebates 

DOE modeled the impact of the consumer rebate policy by determining the increase in 

market penetration of target-level equipment relative to its market penetration in the base case. 

Conventional Cooking Products 

For conventional cooking products, DOE estimated the impact of increasing the B/C ratio 

via a rebate that paid a portion of the incremental installed cost between a unit meeting the 

baseline efficiency levela and a unit meeting the target efficiency level. DOE based the rebate 

amount on a large sample of utility rebate programs for another residential product, dishwashers, 

throughout the nation. Since there have been no rebate programs for conventional cooking 

products, DOE chose dishwashers as an analogous product whose market has some similarities 

to the cooking product market. Both are kitchen appliances, and for both products the 

incremental costs from a baseline efficiency unit to a unit meeting a higher efficiency level are 

small. DOE gathered data on rebate programs for residential dishwashers offered by 88 agencies 

throughout the country. (See Appendix 17A for a listing of these rebate programs.) The simple 

average of the rebate amounts in these programs, $37, was higher than the incremental installed 

cost between dishwashers that just met current energy efficiency standards and dishwashers that 

met the efficiency criteriab for the rebate levels. (DOE estimated the dishwasher incremental 

cost as $22.8) Therefore, DOE assumed that a rebate program for conventional cooking products 

would provide a rebate amounting to 100 percent of the incremental equipment cost between the 

baseline unit and the target level unit for new gas cooktops and gas standard ovens not needing 

an electric outlet installed to use electronic ignition. For units used in a household where an 

electric outlet would need to be installed, DOE assumed that the rebate amount would be 50 

percent of the total incremental cost, including equipment and outlet installation costs. DOE 

a The base case is a market-weighted average of units at several efficiency levels. 

b ENERGY STAR/ Consortium for Energy Efficiency (CEE) specifications 

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assumed the rebates would remain in effect until they had transformed the markets so that the 

shift in market share of efficient units seen in the first year of the programs would be maintained 

throughout the forecast period (2012–2042). 

For conventional cooking products, DOE first calculated the B/C ratio for the baseline 

unit without a rebate. It then calculated another B/C ratio for the unit meeting the target level, 

with a rebate, relative to the baseline unit. Because of the incremental cost reductions due to the 

rebates, the B/C ratios for the rebate policy unit were larger. Table 17.3.1 shows the benefits as 

lifetime operating cost savings, incremental installed costs without rebates and with rebates, and 

B/C ratios without rebates and with rebates. 

Table 17.3.1	 Benefit/Cost Ratios for Gas Cooktop and Gas Standard Oven Proposed 

Standards and Rebate Policy Cases 

Gas 

Cooktops, 

No Outlet 

Gas 

Cooktops, 

With Outlet 

Gas Standard 

Ovens, 

No Outlet 

Gas Standard 

Ovens, 

With Outlet 

Benefit 

(Lifetime Operating Cost Savings) $ 261 $261 $101 $101 

Incremental Installed Cost (Increased 

Installed Cost) $18 $135 $22 $139 

B/C Ratio with No Rebate 14.8 1.9 4.6 0.7 

Rebate Amount $18 $68 $22 $70 

Adjusted Incremental Installed Cost 

(Increased Installed Cost after Rebate) $0 $68 $0 $70 

B/C Ratio for Rebate Policy Case Inf. 3.9 Inf. 1.5 

Inf. means that B/C ratio is infinite because the incremental cost is zero. 

DOE then used the B/C ratios with the penetration curves shown in Figures 17.3.1, 

17.3.2, 17.3.3, and 17.3.4 to estimate the increased percentage of consumers who would 

purchase the units that meet the policy target levels if given a rebate incentive. For conventional 

cooking products, DOE chose different curves depending on whether the appliance would need 

an electric outlet installed. For gas cooktops or gas standard ovens purchased for households 

where an electric outlet would be needed to use a unit meeting the target level, DOE selected the 

“high barriers” curve due to the high cost of the outlet installation. For these households DOE 

assumed that the electric utility would rebate half of the incremental cost, including the appliance 

incremental purchase price and the electric outlet installation. For gas cooktops or gas standard 

ovens in households where an electric outlet would already be available, DOE selected the "no 

barriers" curve, since the incremental cost between the baseline and the TSL is small, and there 

are few product utility issues for consumers. For these households DOE assumed that the 

electric utility would rebate the entire incremental installed equipment cost. 

Figures 17.3.1, 17.3.2, 17.3.3, and 17.3.4 show the increase in penetration rates of targetlevel units as a function of their higher B/C ratios. Using the method discussed above, DOE 

estimated that, for conventional cooking products, the market share of equipment meeting the 

policy target due to a rebate policy would increase by 6.4 percent above the base case market 

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share for gas cooktops not needing outlets, by 8.9 percent for gas cooktops needing outlets, by 

18.1 percent for gas standard ovens not needing outlets, and by 0.9 percent for gas standard 

ovens needing outlets. The weighted-average market share increase for all gas cooktops and 

ovens would be 7.8 percent. 

To calculate the impacts of this policy, DOE adjusted the market shares of conventional 

cooking products at the target efficiencies in its NIA model to represent the policy case 

scenarios. 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit-Cost Ratio 

Maximum Penetration Rate

No Barriers 

Curve 

Penetration Rate = 93.6% 

at B/C ratio of 14.8 

Penetration Rate = 100% 

Change of at infinite B/C ratio 

Penetration 

Rate = 6.4% 

Figure 17.3.1 Market Penetration Curve for Gas Cooktops Not Needing Electric Outlets 

Note that the portion of the penetration curve displayed on the graph does not display the 

100 percent penetration that would result from an “infinite” B/C ratio where the rebate covers the 

entire incremental measure cost. 

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Figure 17.3.2 Market Penetration Curve for Gas Cooktops Needing Electric Outlets 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit-Cost Ratio 

Maximum Penetration Rate

High Barriers 

Curve 

Penetration Rate = 2.2% 

at B/C ratio of 1.9 

Penetration Rate = 11% 

at B/C ratio of 3.9 Change of 

Penetration 

Rate = 8.9% 

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0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit-Cost Ratio 

Maximum Penetration Rate

No Barriers 

Curve 

Penetration Rate = 81.9% 

at B/C ratio of 4.6 

Penetration Rate = 100% 

at infinite B/C ratio 

Change of 

Penetration 

Rate =18.1% 

Figure 17.3.3	 Market Penetration Curve for Gas Standard Ovens Not Needing Electric 

Outlets 

Note that the portion of the penetration curve displayed on the graph does not display the 

100 percent penetration that would result from an “infinite” B/C ratio where the rebate covers the 

entire incremental measure cost. 

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0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit-Cost Ratio 

Maximum Penetration Rate

High Barriers 

Curve 

Penetration Rate = 0.2% 

at B/C ratio of 0.7 

Penetration Rate = 1% 

at B/C ratio of 1.4 

Change of Penetration 

Rate = 0.9% 

Figure 17.3.4	 Market Penetration Curve for Gas Standard Ovens Needing Electric 

Outlets 

Microwave Ovens 

For microwave ovens, DOE assumed that the rebate would cover 100 percent of the 

incremental installed cost between a microwave meeting the baseline efficiency level and a unit 

meeting the target efficiency. It chose this amount because the microwave oven incremental cost 

is very low ($2). DOE assumed the rebates would remain in effect until they had transformed 

the markets so that the shift in market share of efficient units seen in the first year of the 

programs would be maintained throughout the forecast period (2012–2042). 

DOE first calculated the B/C ratio for the baseline unit without a rebate. It then 

calculated another B/C ratio for the unit meeting the target level, with a rebate, relative to the 

baseline unit. Because of the incremental cost reductions due to the rebates, the B/C ratios for 

the rebate policy unit were larger. Table 17.3.2 shows the benefits as lifetime operating cost 

savings, incremental installed costs without rebates and with rebates, and B/C ratios without 

rebates and with rebates. 

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Table 17.3.2 Benefit/Cost Ratios for Microwave Oven Proposed Standard and Rebate 

Policy Case 

Benefit (Lifetime Operating Cost Savings) $21 

Incremental Installed Cost (Increased Installed Cost) $2 

B/C Ratio with No Rebate 9.2 

Rebate Amount $2 

Adjusted Incremental Installed Cost (Increased Installed Cost after Rebate) $0 

B/C Ratio for Rebate Policy Case Inf. 

DOE then used the B/C ratios with the penetration curves shown in Figure 17.3.5 to 

estimate the increased percentage of consumers who would purchase the units that meet the 

policy target levels if given a rebate incentive. For microwave ovens, DOE chose the “no 

barriers” curve. The incremental cost between the baseline and the TSL is minimal, and there are 

no product utility issues that would cause barriers to consumer acceptance. Figure 17.3.5 shows 

the increase in penetration rates of target-level units as a function of their higher B/C ratios. 

Using the method discussed above, DOE estimated that the market share of equipment meeting 

the policy target due to a rebate policy would increase by 9.9 percent. 

To calculate the impacts of this policy, DOE adjusted the market shares of microwave 

ovens at the target efficiencies in its NIA model to represent the policy case scenarios. 

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0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit-Cost Ratio 

Maximum Penetration Rate 

No Barriers 

Curve 

Penetration Rate = 90.1 % 

at B/C ratio of 9.2 

Penetration Rate = 100% 

at infinite B/C ratio 

Change of Penetration 

Rate = 9.9% 

Figure 17.3.5 Market Penetration Curve for Microwave Ovens 

Note that the portion of the penetration curve displayed on the graph does not display the 

100 percent penetration that would result from an “infinite” B/C ratio where the rebate covers the 

entire incremental measure cost. 

Commercial Clothes Washers 

For commercial clothes washers, DOE assumed that the rebate would cover a portion of 

the incremental cost between a washer meeting the baseline efficiency level and a unit meeting 

the target efficiency level. It based this amount on the simple average of the rebate levels for 

efficient commercial clothes washers offered by 24 agencies across the country.c (See Appendix 

17A for a listing of these rebate programs.) The average of these rebate levels was $174, which 

was about 31 percent of the incremental installed cost between efficient and inefficient models of 

$551. [That number now needs to be documented as it’s no longer in the table. DOE assumed 

the rebates would remain in effect until they had transformed the markets so that the shift in 

Some rebates for commercial clothes washers are offered by electric and/or gas utilities, some by water utilities, 

and in some service territories by both energy and water utilities. DOE calculated the average rebate amount from 

the total (combined) rebate amount available to the consumer. 

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market share of efficient units seen in the first year of the programs would be maintained 

throughout the forecast period (2012–2042). 

For each type of commercial clothes washers (top-loading and front-loading), DOE first 

calculated the B/C ratio for the baseline unit without a rebate. It then calculated another B/C 

ratio for the unit meeting the target level, with a rebate, relative to the baseline unit. Because of 

the incremental cost reductions due to the rebates, the B/C ratios for the rebate policy unit were 

larger. Table 17.3.3 shows the benefits as lifetime operating cost savings, incremental installed 

costs without rebates and with rebates, and B/C ratios without rebates and with rebates. Note 

that in the case of front-loading washers, the rebate completely covers the price differential 

between the baseline and more-efficient unit. As a result, the B/C ratio is infinite. 

Table 17.3.3	 Benefit/Cost Ratios for Commercial Clothes Washer Proposed Standard and 

Rebate Policy Case 

Top-Loading Front-Loading 

Benefit (Lifetime Operating Cost Savings) $470 $517 

Incremental Installed Cost (Increased Installed Cost) $230 $22 

B/C Ratio with No Rebate 2.0 23.8 

Rebate Amount $174 $22 

Adjusted Incremental Installed Cost 

(Increased Installed Cost after Rebate) $56 $0 

B/C Ratio for Rebate Policy Case 8.5 Infinite 

DOE then used the B/C ratios with the penetration curves shown in Figures 17.3.6 and 

17.3.7 to estimate the increased percentage of consumers who would purchase the units that meet 

the policy target levels if given a rebate incentive. For top-loading commercial clothes washers, 

DOE chose the “moderate barriers” curve. In the case of top-loading washers, the incremental 

cost between the baseline and the TSL is substantial, yet the savings are also substantial and the 

target-level units have significant market share. Figure 17.3.6 shows the increase in penetration 

rates of target-level top-loading units as a function of their higher B/C ratios. Using the method 

discussed above, DOE estimated that the market share of equipment meeting the policy target 

due to a rebate policy would increase by 40.2 percent. For front-loading commercial clothes 

washers, DOE chose the “no barriers” curve, because the incremental cost between the baseline 

and the TSL is small and the savings are substantial. Figure 17.3.7 shows the increase in 

penetration rates of target-level front-loading units as a function of their higher B/C ratios. 

Using the method discussed above, DOE estimated that the market share of equipment meeting 

the policy target due to a rebate policy would increase by 4.0 percent. 

To calculate the impacts of this policy, DOE adjusted the market shares of commercial 

clothes washers at the target efficiencies in its NIA model to represent the policy case scenarios. 

17-14 

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17-15 

Figure 17.3.6 Market Penetration Curve for Top-Loading Commercial Clothes Washers 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit-Cost Ratio 

Maximum Penetration Rate

Moderate 

Barriers Curve 

Penetration Rate = 10.8% 

at B/C ratio of 2.0 

Penetration Rate = 

51% at B/C ratio of 8.5 

Change of 

Penetration 

Rate = 40.2% 

EE-2006-STD-0127 COMMENT 41.2
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

0 2 4 6 8 10 12 14 

Participant Benefit Cost Ratio 

Maximum Participation Rate 

No Barriers 

Curve Penetration Rate = 96% at 

B/C ratio of 23.8 

Penetration Rate = 100% 

Change of Penetration at infinite B/C ratio 

Rate = 4% 

Figure 17.3.7	 Market Penetration Curve for Front-Loading Commercial Clothes 

Washers 

17.3.2.2 Consumer Tax Credits 

To analyze this policy, DOE studied taxpayer participation in tax credit programs for 

energy efficient appliances, which were available at both the Federal and the State levels. DOE 

analyzed a consumer tax credit program whose credit amounts would be similar to the 

percentage of equipment costs covered by existing State tax credits. For conventional cooking 

products, DOE assumed that, for customers needing an electric outlet installed to use the targetlevel unit, the tax credit would also cover a portion of the installation costs. 

EPACT 2005 included Federal tax credits for consumers who installed efficient air 

conditioners or heat pumps, gas or oil furnaces, furnace fans, and gas, oil, or electric heat pump 

water heaters in new or existing homes.9 While these credits were available during tax years 

2006 and 2007, as mentioned above, the IRS had not published data on the numbers of taxpayers 

taking these credits. Appendix 17A gives details of the equipment covered and the Federal tax 

credit amounts for residential appliances. 

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The States of Oregon and Montana have had consumer tax credits for efficient appliances 

for several years.d DOE based most of its estimates on Oregon's experience with this policy. 

Oregon’s Residential Energy Tax Credit (RETC) was created in 1977. The Oregon legislature 

expanded the RETC program in 1997 to include home appliances and participation in the 

program increased significantly after they became eligible.e In response to changes in the 

appliance market, the RETC program updates its lists of eligible model numbers monthly, and 

makes occasional adjustments to the maximum tax credit dollar amount for each appliance. 

Oregon offers tax credits on residential refrigerators, clothes washers, and dishwashers.10 The 

tax credit is either an amount noted on the list of qualifying appliancesf or 25 percent of the 

purchase price of the appliance, whichever is less. 

Montana has had an Energy Conservation Installation Credit for residential energy 

conservation measures since 1998.11 The tax credit covers a variety of residential energy and 

water efficiency installations, including Energy Star heating/cooling equipment, water heaters, 

low-flow showerheads and faucets, and light fixtures and controls. The amount of the credit 

increased in 2002 from 5 percent of equipment costs (up to $150) to 25 percent (up to $500). 

DOE obtained data from the Montana Department of Revenue (DER) on the numbers of tax 

credits claimed from 1998 through 2006.12 However the DER did not have data disaggregated 

by appliance, so the number of tax credits claimed for large household appliances could not be 

distinguished from those for plumbing products. DOE analyzed the available data and noted that 

the number of tax credits claimed increased steadily from 1998 through 2006, which contributed 

to its assumptions for this policy scenario. 

Because tax credits have not been available for conventional cooking products and 

microwave ovens, DOE analyzed Oregon residential tax credit data for an analogous product— 

dishwashers—to inform the tax credit analysis for cooking products. DOE analyzed the Oregon 

residential tax credit data for residential clothes washers to inform the analysis of the tax credit 

policy for commercial clothes washers. 

Commercial Clothes Washers 

DOE obtained data from the Oregon Department of Energy (ODOE) on the number of 

efficient appliance tax credits claimed by Oregon residential taxpayers for the years 1998 

through 2006, as well as the credits claimed by appliance type for the years 2000 to 2006.13 

DOE also obtained Oregon appliance shipments data for clothes washers and dishwashers for 

, 2006.14 15 The number of credits claimed generally increased each year, although there were 

some fluctuations that ODOE attributed to changes in qualifying models. DOE assumed that a 

tax credit program would be designed to provide consistent consumer information and slightly 

adjusted the ODOE data for the years 2003 and 2004 to provide a steady trend line. DOE 

d The District of Columbia (Washington D.C.) passed legislation entitled the “Residential Energy Conservation Tax 

Credit Act Of 2005” for consumer tax credits, but did not appropriate the necessary funding and so the credits did 

not go into effect. e The program added fuel cells in 1999 and high-efficiency heat pump systems, furnaces, and boilers in 2002. f These lists change frequently, and generally require units that exceed ENERGY STAR specifications -- for 

example units that meet Consortium for Energy Efficiency (CEE) specifications. 

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calculated that the number of clothes washer tax credits claimed comprised 24 percent of the 

total number of Oregon clothes washer shipments in 2006. However, not all of these highefficiency clothes washers were likely purchased due to the tax credit program alone. Some 

taxpayers would have been motivated by utility rebate incentives, and others would be "free 

riders" who would have purchased efficient appliances without a tax credit or rebate incentive 

but still claimed the tax credit. To better understand this interaction between tax credits, rebates, 

and free riders/market impacts, DOE reviewed a report prepared by KEMA on efficient clothes 

washers in the Northwest. KEMA compared the penetration of “ultra high efficiency” (UHE)g 

clothes washers in Oregon and Washington, two neighboring States that have similar utility 

rebate programs for residential clothes washers. 16 The study attributed the difference in market 

share of these UHE units (50 percent for Oregon versus 15 percent for Washington) to the 

Oregon tax credits. DOE estimated that 38 percent of the tax credits claimed (9 percent of total 

shipments) were actually due to rebates. To estimate the free riders, DOE used the market 

penetration of the baseline commercial clothes washer units on the penetration curve presented 

above (Figure 17.3.6), which was 9.2 percent of total shipments (38 percent of the number of tax 

credit claims). DOE then estimated that the remaining 24 percent of the Oregon clothes washer 

tax credits claimed for the years 1998–2005 (or 5.8 percent of total shipments) were attributable 

to tax credits alone. 

DOE also reviewed Oregon’s business energy tax credit (BETC) for commercial clothes 

washers. Oregon’s BETC is 35–50 percent of the incremental cost of the efficient equipment.h 

The majority of these credits were claimed for laundries and rental dwellings, and included 

commercial clothes washers as well as other appliances. However, ODOE did not track the 

types of appliances involved nor the number of machines per project; the annual counts are the 

total number of projects, with each project involving one or more appliances. DOE was 

therefore unable to use the data to estimate market percentages for specific appliances, i.e. 

commercial clothes washers. However, DOE did note the trend of increasing numbers of credits 

claimed from 1998 through 2006, which contributed to its assumptions regarding the trend line 

for this policy scenario. 

Table 17.3.4 shows the number of Oregon residential tax credits claimed for clothes 

washers as percentages of total annual shipments these claims represent for the years 1998–2006. 

It also shows the percentages of total shipments attributed to the tax credits themselves, to utility 

rebates, and to other market influences/free riders for 2006. The table also shows the percentage 

attributed to tax credits for the prior years of 1998–2005. 

g	 Units meeting specifications of minimum modified energy factor (MEF) of 2.20 and maximum water factor (WF) 

of 6.5. h	 The business tax credit is taken over five years: 10 percent in the first and second years and 5 percent each year 

thereafter; the taxpayer may carry the unused credit forward up to eight years. Those with eligible project costs of 

$20,000 or less may take the tax credit in one year. 

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Table 17.3.4 Oregon Tax Credits Claimed for Residential Clothes Washers from 1998 to 

2006 and their Attribution for 2006 

1998 1999 2000 2001 2002 2003 2004 2005 2006 

Tax Credits Claimed 5.5% 11% 13% 15% 19% 21% 18% 22% 24% 

Tax Credits Claimed, Adjusted 5.5% 11% 13% 15% 19% 20% 21% 22% 24% 

Due to Tax Credits 1.3% 2.7% 3.1% 3.6% 4.6% 4.8% 5.1% 5.3% 5.8% 

Due to Rebates NA NA NA NA NA NA NA NA 9.0% 

Due to Market NA NA NA NA NA NA NA NA 9.2% 

DOE estimated that the market share of both top-loading and front-loading commercial 

clothes washers at the target efficiency level would increase by the percentages experienced by 

residential clothes washers in the first nine years of the tax credit program. As shown in Table 

17.3.5, their market share would increase from 2012 to 2020 and would remain constant at the 

2020 level of 5.8 percent for the remainder of the forecast period. 

Table 17.3.5	 Annual Increased Market Shares of Commercial Clothes Washers at Target 

Efficiency Level from Consumer Tax Credits 

Year of Program Commercial Clothes Washers 

2012 1.3% 

2013 2.7% 

2014 3.1% 

2015 3.6% 

2016 4.6% 

2017 4.8% 

2018 5.1% 

2019 5.3% 

2020–2042 5.8% 

Conventional Cooking Products and Microwave Ovens 

Because tax credits have not been available for conventional cooking products and 

microwave ovens, DOE analyzed Oregon's residential tax credit data for an analogous product— 

dishwashers. The percentage of total annual dishwasher shipments comprised by tax credit 

claims declined in 2005 and 2006, which ODOE attributed to changes in the listings of eligible 

models. Observing that clothes washer tax credits claimed generally rose each year between 

1998 and 2006, and also that Montana's tax credit claims increased annually during the same 

period (see below), DOE assumed that the tax credit program for this policy would be designed 

for increasing annual participation and adjusted the dishwasher percentages for the years 2004 

through 2006 to provide a steady trend line. For 2006, the estimated percentage of total 

shipments comprised by tax credit claims was 14 percent. DOE did not find data comparing 

Oregon and Washington’s efficient dishwasher sales. To estimate the portions of these tax credit 

claims that were likely due to utility rebates and to market impacts, DOE reviewed a report by 

Itron on utility rebate programs in California, which compared the percentage of free riders in 

residential clothes washer and dishwasher rebate programs in 2005.17 Itron found that the market 

penetration rate of Energy Star dishwashers was much higher than that of Energy Star clothes 

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washers and the percentage of free riders was greater for dishwasher programs than for clothes 

washer programs. Also, DOE estimated that the incremental cost from the baseline was much 

smaller for dishwashers than for clothes washers.i Thus DOE estimated that market impacts 

(part of which are due to free riders) were responsible for a higher percentage of dishwasher tax 

credit claims than for residential clothes washer credit claims. DOE estimated that 49 percent of 

Oregon's dishwasher tax credits claimed, or 6.9 percent of total dishwasher shipments, were due 

to market impacts. It estimated that utility rebates were responsible for 32 percent of tax credits 

claimed, or 4.5 percent of total shipments. DOE attributed the remaining 20 percent of tax 

credits claimed, or 2.8 percent of total shipments, to tax credits. DOE then took 20 percent of the 

number of Oregon dishwasher tax credits claimed for the years 1998–2005 to estimate the impact 

attributable to tax credits for those years. 

Table 17.3.6 shows the number of Oregon residential tax credits claimed for dishwashers 

as percentages of total annual shipments these claims represent for the years 1998–2006. It also 

shows the percentages of total shipments attributed to the tax credits themselves, to utility 

rebates, and to other market influences/free riders for 2006, and the percentage attributed to tax 

credits for 1998–2005. 

Table 17.3.6	 Oregon Tax Credits Claimed for Residential Dishwashers from 1998 to2006 

and their Attribution for 2006 

1998 1999 2000 2001 2002 2003 2004 2005 2006 

Tax Credits Claimed 4% 7% 9% 10% 12% 14% 12% 7.5% 7.6% 

Tax Credits Claimed, Adjusted 4% 7% 9% 10% 12% 14% 14% 14% 14% 

Due to Tax Credits 0.7% 1.4% 1.8% 2.0% 2.4% 2.8% 2.8% 2.8% 2.8% 

Due to Rebates NA NA NA NA NA NA NA NA 4.5% 

Due to Market NA NA NA NA NA NA NA NA 6.9% 

DOE estimated that, due to consumer tax credits, the market share of target-efficiency 

conventional cooking products would increase over the base case level by the percentages 

experienced by dishwashers for the first nine years of the tax credit program. As shown in Table 

17.3.7, their market share would increase from 2012 to 2017j and would remain at the 2017 

level, 2.8 percent, for the remainder of the forecast period. For microwave ovens, the market 

share would also increase by the same percentages shown for dishwashers for the first nine years 

and remain constant at 2.8 percent thereafter. 

Similarly, conventional cooking product models meeting the target level have a high market share and a small 

incremental cost for those units not needing electric outlets. 

j The market share attributable to tax credits from the Oregon dishwasher data analysis was constant from the sixth 

through the ninth year of the tax credit program. 

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Table 17.3.7 Annual Increased Market Shares of Conventional Cooking Products and 

Microwave Ovens at Target Efficiency Levels from Consumer Tax Credits 

Year of Program 

Conventional Cooking Products and 

Microwave Ovens 

2012 0.7% 

2013 1.4% 

2014 1.8% 

2015 2.0% 

2016 2.4% 

2017 2.8% 

2018 2.8% 

2019 2.8% 

2020 2.8% 

2021–2042 2.8% 

17.3.2.3 Manufacturer Tax Credits 

EPACT 2005 provides Energy Efficient Appliance Credits to manufacturers for 

production of high-efficiency refrigerators, clothes washers, and dishwashers at the Federal level 

through the IRS.18 Manufacturers receive these credits only for the increase in production of 

qualifying appliances over a three-year rolling baseline. Each manufacturer is limited to a 

certain amount for all credits under this provision. The credits were available for models 

produced in 2006 and 2007. Legislation pending in Congress would extend the manufacturer tax 

credits in modified form through 2010.19 Appendix 17A gives details of the equipment covered 

and the Federal tax credit amounts for appliance manufacturers. 

DOE assumed that a manufacturer tax credit program would effectively result in a lower 

price to the consumer by an amount equivalent to that provided by consumer tax credits as 

described above. Because these tax credits would go directly to manufacturers, DOE assumed 

that manufacturers would pass on the reduced costs to consumers, causing the direct price effect. 

However, DOE assumed that the announcement effect would not occur because the program 

would not be visible to consumers. Since the direct price effect is approximately equivalent to 

the announcement effect,6 DOE estimated that half of the consumers assumed to take advantage 

of consumer tax credits would purchase more-efficient products due to a manufacturer tax credit 

program. DOE thus applied 50 percent to the market penetrations attributed to Oregon’s 

consumer tax credits in the year 2006 for dishwashers and clothes washers and used the resulting 

market penetrations to represent the impact of manufacturer tax credits for all years of the 

analysis period. DOE assumed the impact of this policy would be to permanently transform the 

market so that the market share increase seen in the first year of the program would be 

maintained throughout the forecast period. For conventional cooking products, DOE assumed 

that the manufacturer tax credit would only affect the equipment price and therefore would not 

provide enough of an incentive to consumers needing an electric outlet, due to the high price of 

its installation. Thus, DOE applied the market share percentage increase to only the 44.5 percent 

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of conventional cooking product shipments going to households that would not need to install an 

electric outlet. 

DOE estimated that the market share of efficient conventional cooking products would 

annually increase due to manufacturer tax credits by 0.6 percent over the base case at the TSL. 

DOE estimated that this policy could increase the market share of efficient microwave ovens by 

1.4 percent annually over the base case at the TSL. Because of the small incremental cost 

between the baseline and TSL for this product, a manufacturer tax credit might be easier to 

implement than a consumer tax credit for microwave ovens. DOE estimated that, due to this 

policy, the market share of efficient commercial clothes washers for both top-loading and frontloading units would annually increase by 2.9 percent over the base case at the TSL. 

17.3.3 Voluntary Energy Efficiency Targets 

For microwave ovens and commercial clothes washers, DOE assumed that voluntary 

targets would be achieved through manufacturer participation in a gradual phaseout of 

production of units below their respective TSLs. DOE assumed that this would be achieved by a 

program similar to the Energy Star endorsement labeling program conducted by the 

Environmental Protection Agency (EPA) and DOE. The Energy Star program sets minimum 

energy efficiency specifications for various products, including commercial clothes washers. 

Energy Star encourages consumer adoption of these products through marketing to promote 

consumer label recognition, adoption of the specifications by various efficiency incentive 

programs, and manufacturer production and promotion of Energy Star-compliant appliances. 

Energy Star prepares projections of market penetration of compliant appliances, and estimates 

the percentage of the sales of those compliant appliances that are attributed to the Energy Star 

program. 

Several reports have analyzed the impacts of Energy Star programs for specific products, 

which are generally based on a combination of information dissemination and utility or agency 

rebates. These studies base their analysis on the Energy Star statewide data on percentages of 

shipments by appliance that meet the Energy Star specifications. These analyses have generally 

concluded that the market penetration of Energy Star-qualifying appliances is higher in regions 

20 21 22 , , or States where such promotional programs have been active.16,17,

Conventional Cooking Products 

DOE did not analyze the potential impacts of voluntary energy efficiency targets for 

conventional cooking products because over 85 percent of the gas range market in the base case 

already meets TSL 1. The Energy Star program typically targets products where a maximum of 

approximately 25 percent of the existing market meets the target efficiency level.23 Since the 

market for gas ranges is well above the 25 percent threshold, DOE did not consider this policy 

for conventional cooking products. 

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Microwave Ovens 

There has been no Energy Star program for microwave ovens. Because of the low 

incremental costs and the small overall operating cost savings opportunity at the TSL, DOE 

assumed that an Energy Star effort for this product would focus on an information program. 

DOE assumed that such a voluntary program would induce similar market penetration behavior 

as that of televisions with cathode ray tube (CRT) screens, for which there was an Energy Star 

specification, since energy savings for both products are achieved by reducing standby power. 

DOE used estimates of the increased market penetration due to the Energy Star program for CRT 

televisions during its first six years (1998–2003), applying those percentage increases to 

microwaves for the first six years of the analysis period, from 2012 through 2017. Beginning in 

2004, televisions with liquid crystal display (LCD) screens dominated the market, so DOE did 

not use the Energy Star forecast for televisions from 2004 on. Instead, it calculated the average 

market penetration of all consumer electronics products in 2003—58 percent—and assumed this 

level could eventually be achieved by a voluntary program for microwave ovens.24 Thus DOE 

estimated that, from 2017 through 2021, the market penetration of microwave ovens meeting the 

TSL would increase an additional 1.7 percentage points per year, reaching 58 percent by 2021. 

After 2021 DOE assumed that market penetration would remain at that level through the 

remainder of the forecast. Table 17.3.8 shows the annual projected market share increases of the 

targeted units due to the programs resulting from this voluntary efficiency targets policy. 

Table 17.3.8	 Annual Increased Market Shares of Microwave Ovens at Target Efficiency 

Level from Voluntary Efficiency Targets 

Year of Program Microwave Ovens* 

2012 15% 

2013 37% 

2014 44% 

2015 43% 

2016 42% 

2017 47% 

2018 49% 

2019 52% 

2020 55% 

2021–2042 58% 

* Percentages in each column refer to shares of the eligible market. 

Commercial Clothes Washers 

For top-loading commercial clothes washers, DOE modeled the voluntary efficiency 

targets policy assuming an expansion of existing Energy Star program efforts for this product. In 

the absence of Energy Star forecast data on commercial clothes washer shipments, DOE based 

its assumptions for increased market penetration on EPA experience with residential clothes 

washers. While there are more incentive programs using the Energy Star specification for 

residential clothes washers than there are for commercial clothes washers, the savings from 

commercial clothes washers are higher related to the costs, so DOE assumed that the market 

impacts for the two programs would be similar. The most recent specification change for which 

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Energy Star had available projections was 2007. (Its next scheduled specification change occurs 

in 2009.) Hence, DOE based its estimates for commercial clothes washers on the Energy Star 

program’s projections for increased residential clothes washer market penetration due to the 

Energy Star program from 2007 through 2025.24 DOE estimated that an enhanced Energy Star 

program would provide an additional 50 percent market share increase beyond that caused by the 

existing Energy Star program, whose impacts are implicit in the base case. It assumed that the 

same pattern of annual market penetration increases would apply to top-loading commercial 

clothes washer markets beginning in 2012. DOE assumed the programs resulting from this 

expanded voluntary efficiency targets policy would increase projected market share of the 

targeted units by the percentages shown in Table 17.3.9. The Energy Star projections run for 19 

years, through 2025; DOE assumed that the increased market penetration achieved after 19 

years, by 2030, would remain constant through 2042. 

Table 17.3.9	 Annual Increased Market Shares of Top-Loading Commercial Clothes 

Washers at Target Efficiency Level from Voluntary Efficiency Targets 

Year of Program Top-Loading Commercial Clothes Washers* 

2012 0% 

2013 5% 

2014 8% 

2015 10% 

2016 10% 

2017 11% 

2018 11% 

2019 11% 

2020 12% 

2021 12% 

2022 12% 

2023 12% 

2024 13% 

2025 13% 

2026 13% 

2027 14% 

2028 14% 

2029 14% 

2030 14% 

2031-2042 14% 

* Percentages in each column refer to shares of the eligible market. 

DOE did not analyze the potential impacts of voluntary energy efficiency targets for 

front-loading commercial clothes washers because over 88 percent of the front-loading washer 

market in the base case already meets TSL 3. The Energy Star program typically targets 

products where a maximum of approximately 25 percent of the existing market meets the target 

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efficiency level.23 Since the market for front-loading washers is well above the 25 percent 

threshold, DOE did not consider this policy for front-loading commercial clothes washers 

17.3.4 Early Replacement 

Early replacement refers to the replacement of conventional cooking products, 

microwave ovens, and commercial clothes washers before the ends of their useful lives. The 

purpose of this policy is to replace old, inefficient equipment with higher-efficiency units. The 

economic feasibility of early replacement depends on the vintage of the unit being replaced, the 

cost for the new equipment, and the energy cost savings. 

There has been limited experience with early replacement programs for appliances in the 

U.S. However, DOE studied several reports to inform its analysis of this policy. One report 

detailed the Connecticut Appliance Retirement Program (ARP) conducted in 2004.25 Another 

was an electric energy efficiency potentials study performed for the State of Vermont in 2006.26 

DOE had also performed an earlier study on Federal potential for early retirement of appliances 

under EPACT 1992. 

The Connecticut ARP was conducted from June through December 2004 by Nexus 

Market Research, Inc. and RLW Analytics, Inc. for Northeast Utilities–Connecticut Light and 

Power and the United Illuminating Company’s State programs. The ARP intended to assist 

utility customers in Connecticut to overcome barriers to recycling room air conditioners (RACs), 

secondary refrigerators, and freezers. The program picked up used appliances at customers’ 

homes or at turn-in events, paid participants to retire their units, and educated customers about 

the costs of running older appliances. In addition, the program paid incentives to consumers to 

replace their RACs with Energy Star-qualified units. DOE considered the RAC program to most 

closely resemble the early replacement policy scenario, since these consumers were replacing 

primary units rather than retiring second units. Nexus’ report on ARP results estimated the 

number of RACs retired by program participants, the percentage of those replaced with an 

Energy Star model, and the number of RACs replaced by non-participants during the program 

duration, using program data and surveys. According to their analysis, about seven percent of all 

RACs retired during the program were retired through the ARP, and 63 percent of those were 

replaced with an Energy Star model. This meant that the program directly resulted in early 

replacement with a more efficient unit of about four percent of the total eligible RAC population. 

DOE assumed that this type of program most likely eliminates second ownership of the RAC, 

thus shortening its useful service life. 

In 2006, GDS Associates, Inc. conducted an electricity and peak demand potentials study 

for energy efficiency and fuel conversion measures for the State of Vermont. GDS developed a 

special “early retirement” scenario with all residential appliances replaced during the four-year 

period from 2006 to 2009, and analyzed similar early replacements in the commercial sector. 

They estimated achievable market penetrations assuming that consumers would receive a 

financial incentive equal to 50 percent of the incremental cost of the measure in most programs. 

GDS assumed an 80 percent penetration limit for the program. It estimated a maximum 

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achievable annual program participant level of two percent of applicable single-family or 

multifamily homes in 2005. 

DOE also reviewed a study it conducted in the 1990s, under EPACT 1992, which 

analyzed the feasibility of a Federal program to promote early replacement of appliances.27 This 

study identified policy options for early replacement that included a direct national early 

replacement program, replacement of Federally owned appliances, promotion through equipment 

manufacturers, consumer incentives, incentives to utilities, and building regulations.k 

For this analysis, DOE considered a program that targets the units in the stock that have 

efficiency levels lower than the policy target efficiency level and encourages their early 

replacement with products at the target level. The program affects a portion of units in the stock 

in 2012 that would be replaced at the end of their useful or service life (at the “natural” 

replacement rate) without the effects of this policy, under which they would be replaced sooner. 

Shipments in 2012 and beyond are not affected by this program and remain at base case 

efficiency levels. 

Based on their average service lives, 5 percent of conventional cooking products, 11 

percent of microwaves, 9 percent of commercial clothes washers in multifamily buildings, and 

14 percent of commercial clothes washers in laundromats are replaced annually; these are their 

natural replacement rates. For this policy study, DOE assumed that an additional percentage of 

conventional cooking products, microwave ovens, and commercial clothes washers in the 

existing stock in 2012, the first year of the analysis period, would be replaced by models meeting 

the target levels. For each product, DOE modeled this policy by replacing four percent per year 

of the units in the stock in addition to those being replaced at the end of their service lives (using 

the estimated percentage from the Connecticut study since it was based on actual program 

experience). DOE assumed that these early replacement programs would last as long as it took 

to completely replace all of the eligible conventional cooking products, microwave ovens, and 

commercial clothes washers that were in the stock in the year that the program began (2012). 

After the 2012 stock had been completely replaced, there would be no additional impacts from 

this policy. 

The policy would create a jump in shipments of equipment meeting target efficiency 

levels relative to the base case in the early years of the program as shown in Figures 17.3.8, 

17.3.9, and 17.3.10. As a result, more high efficiency units meeting the policy targets would be 

quickly brought into the equipment stock, leading to an immediate gain in the market share of 

efficient units compared to the base case. However, unlike the other policy cases discussed, the 

k The analysis concluded that, while cost-effective opportunities for early replacement exist, a widespread Federal 

early replacement program was not economically justified. Because premature retirement means that a unit may be 

replaced by an appliance less efficient than the eventual replacement would probably have been, energy savings 

would be smaller than anticipated. Early replacement programs could increase sales volatility in the long run by 

encouraging a temporary increase in production followed by a lull in demand. Early replacement could be 

economical in localities with high energy cost conditions or environmental constraints, when replacement appliances 

are much more efficient than existing stock, or when a major technology breakthrough has recently occurred, 

creating the need for a ready market. 

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efficient unit market share would drop back down to the levels in the base case as the eligible 

market is depleted. 

Note that in the case of commercial clothes washers, Figure 17.3.10 indicates the increase 

in shipments for the entire clothes washer market including both top-loading and front-loading 

units. As described in Chapter 8, section 8.2.6.4, DOE estimated that 79.7 percent of the market 

is comprised of top-loading washers and 20.3 percent is comprised of front-loading washers. 

DOE estimated that the market share of top-loading and front-loading washers would remain 

fixed at 79.7 percent and 20.3 percent, respectively, through the forecast period. Therefore, the 

increase in shipments due to the early replacement program is distributed based on the existing 

market shares of top-loading and front-loading washers. 

0.0 

0.4 

0.8 

1.2 

1.6 

2.0 

2005 2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Shipments (millions) 

Early Replacement Scenario 

Base Case Shipments 

Figure 17.3.8 Early Replacement Shipments Projections for Conventional 

Cooking Products 

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EE-2006-STD-0127 COMMENT 41.2
 

 

 

 

0 

5 

10 

15 

20 

25 

2005 2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Shipments (million) 

Early Replacement Scenario 

Base Case Shipments 

Figure 17.3.9 Early Replacement Shipments Projections for Microwave Ovens
 

0.00 

0.05 

0.10 

0.15 

0.20 

0.25 

0.30 

2005 2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Shipments (million) 

Early Replacement Secnario 

Base Case Shipments 

Figure 17.3.10 Early Replacement Shipments Projections for Commercial Clothes 

Washers 

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17.3.5 Bulk Government Purchases 

DOE assumed that a bulk government purchase policy would encourage Federal, State, 

and local governments to purchase equipment meeting the target efficiency levels. Aggregating 

public sector demand could provide a market signal to manufacturers and vendors that some of 

their largest customers sought suppliers with products that met an efficiency target at favorable 

prices. This program also could induce “market pull” impacts through manufacturers and 

vendors achieving economies of scale for high-efficiency products. 

While there have been several bulk government purchasing initiatives at the Federal, 

State, and municipal levels, most of these programs have not tracked data on number of 

purchases or degree of compliance with procurement specifications. In many cases, procurement 

programs are decentralized, being part of larger State or regional initiatives. At the Federal level, 

the Federal Energy Management Program (FEMP) has performed studies of savings potential for 

its procurement specifications for appliances and other equipment on which DOE based its 

assumptions for this policy. Yet FEMP does not track purchasing data, due to the complexity of 

the purchasing systems, number of vendors, etc. There is evidence of increasing interest and 

activity in “green purchasing" on the State, county, and municipal levels. While many of these 

programs target office equipment, the existence of a growing infrastructure for efficient 

purchasing specifications indicates that such impacts that DOE attributed to bulk government 

, purchasing programs are feasible.28 29 

Conventional Cooking Products 

DOE did not analyze the potential impacts of bulk government purchases for 

conventional cooking products because over 85 percent of the gas range market already meets 

TSL 1. FEMP procurement specifications typically promote products in the top 25 percent of the 

existing market in terms of efficiency. Since most of the gas ranges sold in the base case would 

already comply with such specifications, DOE did not consider this program for conventional 

cooking products.30 

Microwave Ovens 

For microwave ovens, DOE assumed that government agencies, such as the Department 

of Housing and Urban Development (HUD), would administer such a program. At the Federal 

level, this program could be incorporated into the existing FEMP program. FEMP has 

procurement guidelines for Federal government equipment purchasing and Federal construction 

requirements include these guidelines for installing or replacing equipment.30 There are currently 

no FEMP procurement guidelines for microwave ovens. 

DOE assumed that this policy would impact a subset of housing units for which 

government agencies purchase or influence the purchase of microwave ovens. This subset would 

consist mainly of public housing and housing on military bases. To represent this subset, DOE 

considered publicly owned housing identified in the American Housing Survey (AHS) for 2005, 

which was 2.0 million households, or about 1.6 percent of all U.S. households.31 (Based on the 

AHS, there 124.4 million U.S. households.32) According to the 2001 Residential Energy 

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Consumption Survey (RECS 2001), 76 percent of publicly owned households used microwave 

ovens. 33 DOE assumed that the same percentage of publicly owned housing units would operate 

microwave ovens. Hence, DOE estimated that 1.2 percent of US households are publicly owned 

households using microwave ovens, and thus constitute the eligible population to which this 

policy would apply. Of government-owned residential buildings, DOE’s life-cycle cost and 

payback period analysis estimated that, by the start year of 2012, none had microwave ovens at 

efficiency levels meeting the amended energy conservation standards. 

Based on the above percentages, at the end of the first year of the policy case (2012), 

DOE estimated that eight percent of shipments of government-purchased microwave ovens 

would be equipment meeting the target levels due to existing bulk government purchase 

programs. By 2022, DOE estimated that bulk government purchase programs would increase 

their market share to 80 percent. Thus, DOE modeled the enhanced bulk government purchase 

program assuming that an annual eight-percent market share increase would be maintained over 

10 years starting in 2012. Section 17.4 below presents the resulting efficiency trends for the bulk 

government purchase policy case for microwave ovens. 

Commercial Clothes Washers 

For top-loading commercial clothes washers, DOE assumed that government agencies, 

such as the U.S. General Services Administration (GSA), would administer such a program. At 

the Federal level, this program could modify the current FEMP procurement guidelines for 

“family-sized” commercial clothes washers. At FEMP’s required level, the current 

specifications (which are identical to those for residential clothes washers) are minimum MEF of 

1.42 and maximum water factor of 10.5. 

To estimate the impact of a bulk government purchase program for this product, DOE 

first determined the shipments of commercial clothes washers that go to government-owned 

housing. A technology review prepared for FEMP by Pacific Northwest National Laboratory 

(PNNL) in 2000 estimated that 6000–7000 commercial clothes washers were purchased annually 

for Federal buildings.34 DOE assumed that, by 2012, this policy would apply to the upper end of 

this shipments range, or about 3.3 percent of the market. Although a portion (15 percent) of the 

commercial clothes washer market consists of laundromats, since it is not likely that the 

government owns laundromats, DOE assumed that this policy would affect only commercial 

clothes washers in multifamily buildings. Hence the eligible population of commercial clothes 

washers to which this policy would apply is 3.3 percent of total shipments. 

DOE also reviewed its own research on the potential for market transformation through 

bulk government purchasing.35 This study analyzed several scenarios that started from the 

assumption that 20 percent of Federal equipment purchasing in the year 2000 already 

incorporated energy efficiency, following the FEMP guidelines. One scenario in the DOE report 

showed energy efficient Federal purchasing ramping up from 20 percent to 80 percent of all 

Federal purchases over 10 years. Of government-owned residential buildings, DOE’s life-cycle 

cost and payback period analysis estimated that, by the start year of 2012, none had top-loading 

commercial clothes washers at efficiency levels meeting the amended energy conservation 

standards. DOE estimated that a bulk government purchasing program instituted over a 10-year 

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time period would eventually result in an 80-percentage-point increase (from 0 percent to 80 

percent) in the number of government-purchased commercial clothes washers meeting the target 

efficiency levels. 

Based on the above percentages, DOE estimated that, by the end of the first year of the 

policy case (2012), eight percent of shipments of government-purchased top-loading commercial 

clothes washers would be equipment meeting the target levels for these products due to existing 

bulk government purchase programs. By 2022, DOE estimated that bulk government purchase 

programs would increase their market share to 80 percent. Thus, DOE modeled the enhanced 

bulk government purchase program assuming that an annual eight percent market share increase 

would be maintained over 10 years starting in 2012. Section 17.4 below presents the resulting 

efficiency trends for the bulk government purchase policy case for top-loading commercial 

clothes washers. 

DOE did not analyze the potential impacts of bulk government purchases for frontloading commercial clothes washers because over 88 percent of the front-loading washer market 

already meets TSL 3. FEMP procurement specifications typically promote products in the top 

25 percent of the existing market in terms of efficiency. Since most of the front-loading washers 

sold in the base case would already comply with such specifications, DOE did not consider this 

program for front-loading commercial clothes washers.30 

17.4 NON-REGULATORY POLICY IMPACTS 

Figures 17.4.1, 17.4.2, and 17.4.3 show the market share (penetration rate) impacts for 

each of the non-regulatory policy cases for conventional cooking products, microwave ovens, 

and commercial clothes washers, respectively. 

Figure 17.4.1 shows the market share impacts for each of the non-regulatory policy cases 

for conventional cooking products. Note that in Figure 17.4.1, the market share of products 

meeting the target level is forecasted to increase over time in the base case (i.e., the case without 

standards or non-regulatory programs). Relative to the base case, each of the policy cases 

increases the market share of products meeting the target level. Consumer rebates is the most 

effective policy case to increase the market share of products meeting the target level while early 

replacements are the least effective. As a reminder, the proposed standards (not shown in Figure 

17.4.1) would result in a 100 percent penetration of products meeting the target level. 

17-31 

EE-2006-STD-0127 COMMENT 41.2
 

 

 

 

 

 

 

 

 

 

 

82% 

84% 

86% 

88% 

90% 

92% 

94% 

96% 

98% 

100% 

2005 2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Percent Units Meeting Target Level

Rebate 

Consumer Tax Credit 

Manfr Tax Credit 

Early Replace 

Base Case 

Figure 17.4.1	 Penetration Rate of Units Meeting the Target Level for
 

Conventional Cooking Products
 

Figure 17.4.2 shows the market share impacts for microwave ovens for each policy case. 

In the base case (i.e., the case without standards or non-regulatory programs), no products are 

forecasted to meet the target level. All policy cases increase the market share of products 

meeting the target level, with voluntary energy efficiency targets being the most effective. As a 

reminder, the proposed standards (not shown in Figure 17.4.2) would result in a 100 percent 

penetration of products meeting the target level. 

17-32 

EE-2006-STD-0127 COMMENT 41.2
 

 

 

 

 

 

 

 

 

 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Percent Units Meeting Target Level 

Voluntary Effic'y Target 

Rebate 

Consumer Tax Credit 

Manufacturer Tax Credit 

Bulk Gov't Purchase 

Early Replacement 

Figure 17.4.2	 Penetration Rates of Units Meeting the Target Level for Microwave 

Ovens 

Figure 17.4.3 shows the market share impacts for commercial clothes washers for the 

policy cases. All policy cases increase the market share of products meeting the target level, 

with voluntary energy efficiency targets being the most effective over the entire forecast period. 

As a reminder, the proposed standards (not shown in Figure 17.4.3) would result in a 100 percent 

penetration of products meeting the target level. 

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EE-2006-STD-0127 COMMENT 41.2
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0% 

5% 

10% 

15% 

20% 

25% 

30% 

35% 

40% 

2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Percent Units Meeting Target Level 

Rebate (Top-Loading) 

Voluntary Effic'y Target (Top-Loading only) 

Rebate (Front-Loading) 

Consumer Tax Credit 

Manufacturer Tax Credit 

Bulk Gov't Purchase (Top-Loading only) 

Early Replacement 

Figure 17.4.3	 Penetration Rates of Units Meeting the Target Level for Commercial 

Clothes Washers 

17.5 RESULTS SUMMARY FOR NON-REGULATORY ALTERNATIVES 

Tables 17.5.1, 17.5.2, and 17.5.3 show the national energy savings and NPV resulting 

from the various non-regulatory alternative policy cases, when the efficiency target levels are 

equal to the proposed standard levels for each product. The cases in which no regulatory action 

is taken with regard to conventional cooking products, microwave ovens, and commercial 

clothes washers constitute the base case (or "No Action") scenarios, in which energy savings and 

NPV are zero by definition. For comparison, the tables include the impacts of the proposed 

energy conservation standards. The NPV amounts shown in Tables 17.5.1, 17.5.2, and 17.5.3 

are based on two discount rates (seven percent and three percent real). 

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Table 17.5.1 Non-Regulatory Alternatives for Conventional Cooking Products with 

Target Levels at TSL 1 

Policy Alternatives 

Primary 

Energy 

Savings 

(quads) 

Net Present Value* 

(billion 2006$) 

7% discount rate 3% discount rate 

No New Regulatory Action 0.0 0.0 0.0 

Consumer Rebates 0.12 0.17 0.52 

Consumer Tax Credits 0.05 0.07 0.23 

Manufacturer Tax Credits 0.01 0.02 0.06 

Early Replacement 0.01 0.07 0.12 

Proposed Standards At TSL 1 0.15 0.21 0.61 

* Net present value (NPV) is the value of a time series of costs and savings.	 DOE determined the NPV from 2012 

to 2042 in billions of 2006$. 

Table 17.5.2	 Non-Regulatory Alternatives for Microwave Ovens with Target Levels at 

TSL 3b 

Policy Alternatives 

Primary 

Energy 

Savings 

(quads) 

Net Present Value* 

(billion 2006$) 

7% discount rate 3% discount rate 

No New Regulatory Action 0.0 0.0 0.0 

Consumer Rebates 0.07 0.27 0.60 

Consumer Tax Credits 0.02 0.07 0.16 

Manufacturer Tax Credits 0.01 0.04 0.09 

Voluntary Energy Efficiency Targets 0.35 1.22 2.82 

Early Replacement 0.02 0.10 0.15 

Bulk Government Purchases 0.01 0.02 0.05 

Proposed Standards At TSL 3b 0.45 1.56 3.52 

* Net present value (NPV) is the value of a time series of costs and savings. DOE determined the NPV from 

2012 to 2042 in billions of 2006$. 

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Table 17.5.3 Non-Regulatory Alternatives for Commercial Clothes Washers with Target 

Levels at TSL 3 

Policy Alternatives 

Primary 

Energy 

Savings 

(quads) 

Water 

savings 

(trillion 

gallons) 

Net Present Value* 

(billion 2006$) 

7% discount rate 3% discount rate 

No New Regulatory Action 0.0 0.0 0.0 0.0 

Consumer Rebates 0.08 0.08 0.20 0.53 

Consumer Tax Credits 0.01 0.02 0.04 0.09 

Manufacturer Tax Credits 0.01 0.01 0.03 0.07 

Voluntary Energy Efficiency Targets** 0.03 0.03 0.08 0.21 

Early Replacement 0.01 0.01 0.14 0.22 

Bulk Government Purchases** 0.01 0.01 0.03 0.08 

Proposed Standards at TSL 3 0.15 0.19 0.46 1.16 

*	 Net present value (NPV) is the value of a time series of costs and savings. DOE determined the NPV from 

2012 to 2042 in billions of 2006$. 

** Voluntary energy efficiency target and bulk government purchase alternatives are not considered for frontloading washers because the percentage of the market at TSL 3 is well over the market adoption target level that 

each alternative strives to attain. 

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