CHAPTER 11: NATIONAL IMPACT ANALYSIS

TABLE OF CONTENTS
11.1 INTRODUCTION

......................................................................................................... 11-1 11.2 BASE CASE AND STANDARDS CASE FORECASTED EFFICIENCIES

.............. 11-2 11.2.1 Cooktops and Ovens

...................................................................................................... 11-3 11.2.2 Microwave Ovens

......................................................................................................... . 11-7 11.3 NATIONAL ENERGY SAVINGS

............................................................................... 11-8 11.3.1 NES Definition

.......................................................................................................... ..... 11-8 11.3.2 NES Inputs

.............................................................................................................. ....... 11-9 11.3.2.1 Annual Energy Consumption per Unit

...................................................... 11-10 11.3.2.2 Shipments

................................................................................................... 11-13 11.3.2.3 Equipment Stock

........................................................................................ 11-13 11.3.2.4 National Annual Energy Consumption

...................................................... 11-13 11.3.2.5 Energy Site-to-Source Conversion Factors

................................................ 11-13 11.4 NET PRESENT VALUE

............................................................................................. 11-14 11.4.1 NPV Definition

.......................................................................................................... .. 11-14 11.4.2 NPV Inputs

.............................................................................................................. ..... 11-16 11.4.2.1 Total Installed Cost per Unit

...................................................................... 11-16 11.4.2.2 Annual Operating Cost Savings per Unit

................................................... 11-20 11.4.2.3 Total Annual Installed Cost Increases

....................................................... 11-21 11.4.2.4 Total Annual Operating Cost Savings

....................................................... 11-21 11.4.2.5 Discount Factors

........................................................................................ 11-21 11.4.2.6 Present Value of Costs

............................................................................... 11-22 11.4.2.7 Present Value of Savings

........................................................................... 11-22 11.4.3 Fuel Switching

.......................................................................................................... ... 11-22 11.5 NES AND NPV RESULTS

......................................................................................... 11-25 11.5.1 NES and NPV Input Summary

.................................................................................... 11-25 11.5.2 NES Results

............................................................................................................. .... 11-26 11.5.2.1 Cooktops and Ovens

.................................................................................. 11-26 11.5.2.2 Microwave Ovens

...................................................................................... 11-27 11.5.3 Annual Costs and Savings

........................................................................................... 11-28 11.5.4 NPV Results

............................................................................................................. .... 11-29 11.5.4.1 Cooktops and Ovens

.................................................................................. 11-30 11.5.4.2 Microwave Ovens

...................................................................................... 11-31 11.6 IMPACT OF STANDARDS ON NATURAL GAS AND ELECTRICITY PRICES AND ASSOCI ATED CONSUMER BENEFITS

......................................... 11-31 11.6.1 Impact on Natural Gas Prices

...................................................................................... 11-31 11.6.2 Impact on Electricity Prices

......................................................................................... 11- 35

11-iLIST OF TABLES Table 11.2.1 Electric Coil Cooktops: Base Case and Standards Case Efficiency Distributions in 2012

.......................................................................................... 11-4 Table 11.2.2 Electric Smooth Cooktops: Base Case and Standards Case Efficiency Distributions in 2012

.......................................................................................... 11-4 Table 11.2.3 Gas Cooktops: Base Case and Standards Case Efficiency Distributions in 2012

.................................................................................................................... 11-4 Table 11.2.4 Electric Standard Ovens: Base Case and Standards Case Efficiency Distributions in 2012

.......................................................................................... 11-5 Table 11.2.5 Electric Self-Cleaning Ovens: Ba se Case and Standards Case Efficiency Distributions in 2012

.......................................................................................... 11-5 Table 11.2.6 Gas Standard Ovens: Base Case and Standards Case Efficiency Distributions in 2012

.......................................................................................... 11-6 Table 11.2.7 Gas Self-Cleaning Ovens: Base Case and Standards Case Efficiency Distributions in 2012

.......................................................................................... 11-6 Table 11.2.8 Microwave Ovens: Base Ca se and Standards Case Efficiency Distributions by Energy Factor Level in 2012

................................................... 11-8 Table 11.3.1 National Ener gy Saving Inputs

........................................................................ 11-10 Table 11.3.2 Cooktops: Base Case and Sta ndards Case Shipment-Weighted Average Per-Unit Annual Energy Consumption in 2012

............................................... 11-10 Table 11.3.3 Ovens: Base Case and Standa rds Case Shipment-Weighted Average PerUnit Annual Energy Consum ption in 2012

..................................................... 11-11 Table 11.3.4 Microwave Ovens: Base Case and Standards Case Shipment-Weighted Average Per-Unit Annual Energy Consumption in 2012

................................ 11-12 Table 11.3.5 Site-to-Source Conversion Factor s for Electricity and Natural Gas

................ 11-14 Table 11.4.1 Net Present Value Inputs

................................................................................. 11-16 Table 11.4.2 Cooktops: Base Case and Sta ndards Case Shipment-Weighted Average Per-Unit Total Installed Costs in 2012

............................................................. 11-17 Table 11.4.3 Ovens: Base Case and Standa rds Case Shipment-Weighted Average PerUnit Total Installed Costs in 2012

................................................................... 11-18 Table 11.4.4 Microwave Ovens: Base Case and Standards Case Shipment-Weighted Average Per-Unit Total Installed Costs in 2012

.............................................. 11-20 Table 11.4.5 Installation Cost for an Elect rical Outlet to acco mmodate an Electric Cooking Product

.............................................................................................. 11-23 Table 11.4.6 Installation Cost for a Branch Ci rcuit to accommodate an Electric Cooking Product

............................................................................................................. 11-24 Table 11.5.1 NES and NPV Inputs

....................................................................................... 11-25 Table 11.5.2 Cooktops: Cumu lative NES Results

............................................................... 11-26 Table 11.5.3 Ovens: Cumulative NES Results

.................................................................... 11-26 Table 11.5.4 Cooktops: Cumulative NES Resu lts Discounted at Seven Percent and Three Percent

................................................................................................... 11-27 Table 11.5.5 Ovens: Cumulative NES Results Discounted at Seven Percent and Three Percent

.............................................................................................................. 11-27
11-iiTable 11.5.6 Microwave Ovens: Cumulative NES Results

................................................. 11-27 Table 11.5.7 Microwave Ovens: Cumulative NES Results Discounted at Seven Percent and Three P ercent

............................................................................................ 11-28 Table 11.5.8 Cooktops: Cumulative NPV Resu lts based on Seven-Percent and ThreePercent Discount Rates

.................................................................................... 11-30 Table 11.5.9 Ovens: Cumulative NPV Resu lts based on Seven-Percent and ThreePercent Discount Rates

.................................................................................... 11-30 Table 11.5.10 Microwave Ovens: Cumulative NPV Results based on Seven-Percent and Three-Percent Discount Rates

.......................................................................... 11-31 Table 11.6.1 Impact of Max Tech Standard Levels on Natural Gas Consumption and Average W ellhead Price in 2030

..................................................................... 11-33 Table 11.6.2 Implicit Natural Gas Inverse Price Elasticity from Seven Energy Models

..... 11-34 Table 11.6.3 Impact of Max Tech StandardLevels on Electricity Consumption and Price in 2030

.................................................................................................... 11-36
LIST OF FIGURES Figure 11.2.1 Gas Cooking Products: Forecast of Products with Standing Pilots

.................. 11-7 Figure 11.3.1 Gas Cooktops and Gas Standard Ovens: Forecasted Base Case Annual Energy Consumption

....................................................................................... 11-12 Figure 11.4.1 Gas Cooktops and Gas Standard Ovens: Forecasted Base Case Total Installed Costs

.................................................................................................. 11-19 Figure 11.5.1 Non-Discounted Annual Installe d Cost Increases and Annual Operating Cost Savings for Microwave Ovens, TSL 3

.................................................... 11-29 Figure 11.6.1 Wellhead Natural Gas Price Change in 2030 Resulting from Reduced Natural Gas Consumption Associated w ith Max Tech Standard Levels

......... 11-32 Figure 11.6.2 Inverse Natural Gas Price Elas ticity from NEMS Analysis for Cooking Product Max Tech Standard Levels

................................................................. 11-33 Figure 11.6.3 Electricity Price Change in 2030 Resulting from Reduced Electricity Consumption Associated with Max Tech Standard Levels

............................. 11-36 Figure 11.6.4 Inverse Electricity Price Elas ticity from NEMS Analysis for Cooking Product Max Tech Standard Levels

................................................................. 11-37

11-iiiCHAPTER 11. NATIONAL IMPACT ANALYSIS

11.1 INTRODUCTION This chapter describes the method for estim ating national impacts for cooking products, i.e., the quantity and net value to consumers of future national energy savings (NES) from possible trial standard levels (TSL). Chapter 9 provides identifies and describes the TSLs for cooking products. Results describe d here include: (1) national energy consumption and savings, (2) monetary value of energy savings to the Na tion due to TSLs, (3) increased total installed costs to the Nation due to TSLs, and (4) th e net present value (NPV) of energy savings (difference between value of energy savings and increased total installed costs).
DOE determined both the NES and NPV for all of the TSLs considered for cooking products. It performed all calc ulations for each of the consid ered products using a Microsoft Excel spreadsheet model, which is accessible on the Internet ( http://www.eere.energy.gov/buildings/appliance_standards/ ). Each product’s spreadsheet model, referred to as the National Impact Analys is (NIA) Model, combined the calculations for determining the NES and NPV as well as input fromthe relevant Shipments Model. Details and instructions for using each of the NIA Models are provided in Appendix 10A. The important facets of national energy consum ption of the considered products include: (1) shipments of the equipment, (2) customer re sponse to changes in tota l installed cost (i.e., purchase price plus installation costs), opera ting expense, and household income, and (3) voluntary programs promoting higher energy efficiency of equipment. Chapter 10 provides a detailed description of the Shipments Models that DOE used to forecast future purchases of the considered produ cts. Included in the discussion are detailed descriptions of consumers’ sensitivities to tota l installed cost, operating expense, and income (otherwise known as elasticities), and how DOE captured them within the model. Concerning voluntary programs, although they may increase the share of energy efficient equipment prior to the implementation date of any new TSLs, DOE was not able to obtain information that quantified how such programs affect equipment efficiencies on a national basis. Consequently, DOE did not explicitly incorporate th e impact of market-basedinitiatives into the shipments forecasts detailed in Chapter 10. The technical support document (TSD) for DOE’s notice of proposed rulemaking (NOPR) covered conventional cooking products (i.e., cooktops and ovens), microwave oven energy factor (EF), microwave oven standby power consumption, and commercial clothes washers (CCW). 1 This chapter presents information and results pertaining solely to conventional cooking products and microwave oven EF. Th e impact of more-efficient equipment on microwave oven standby power and CCWs w ill be addressed in subsequent TSDs.

11-111.2 BASE CASE AND STANDARDS CASE FORECASTED EFFICIENCIES A key component of DOE’s estimates of NES and NPV is the energy efficiencies forecasted over time for the base case (without ne w standards) and each of the standards cases (with new standards). The forecasted efficien cies represent the annual shipment-weighted energy efficiency of the products under consid eration over the forecast period (i.e., from the assumed effective date of a new standard to 30 years after the standard becomes effective). Because key inputs to the calculation of th e NES and NPV are dependent on the estimated efficiencies, these efficiencies are of great importance to the analysis . In the case of the NES, the per-unit annual energy consumption is a direct function of product efficiency. Chapter 6, Energy Use Determination, describes how the per-unit energy consumption vary as a function of efficiency for each of the considered products. W ith regard to the NPV, two inputs, the per-unit total installed cost and the per-unit annual operati ng cost, are dependent on efficiency. The perunit total installed cost is a di rect function of efficiency whil e the per-unit annual operating cost, because it is a function of the per-unit annual energy consumption, is indirectly dependent on product efficiency. Section 8.2.1 of Chapter 8, Life-Cycle Cost (LCC) and Payback Period (PBP) Analysis, describes how per- unit total installed costs vary as a function of efficiency for each of the considered products. The above NES and NPV inputs, as well as all other inputs to the calculation of the NES and NPV, are also discussed below in sections 10.3.1 and 10.4.1. For each of the products considered, DOE based the development of the product efficiencies in the base case on the assignment of equipment efficiencies in the base case for the year 2005. In other words, DOE determined the di stribution of product effi ciencies currently in the marketplace to develop a shipment-weighted e fficiency for the year 2005. For a complete discussion of the assignment of efficiencies in the base case for each of the considered products, refer to section 8.2.6 of Chapter 8, LCC and PBP Analysis. Using the shipment-weight efficiency for the year 2005 as a starting point, DOE developed base case forecasted efficiencies base d on assumptions regarding future efficiency growth. For the period spanning 2005–2012 (2012 be ing the assumed effective date of a new standard), DOE assumed that ther e would be no growth in the ship ment-weighted efficiency (i.e., no change in the distribution of product efficiencies ). Because there are no historical data to indicate how product efficiencies have cha nged over time, DOE estimated that forecasted efficiencies remained frozen at the 2012 efficien cy level until the end of the forecast period (30 years after the assumed effective date—t he year 2042). Alth ough DOE recognizes the possibility that product efficiencies may change over time, DOE does not want to speculate as to how these product efficiencies may change withou t historical informati on. As described below in Section 11.2.1, DOE did forecast the market sh are of gas standard ranges equipped with standing pilots to estimate the impact of elimin ating standing pilots for gas cooktops and gas standard ovens.
For its determination of standards-case for ecasted efficiencies, DOE assumed a “roll-up” scenario to establish the shipment-weighted effici ency for the year that standards are assumed to become effective (i.e., 2012). DOE assumed that product efficiencies in th e base case that did not meet the standard under consid eration would “roll up” to meet the new standard level. Also,

11-2DOE assumed that all product effi ciencies in the base case thatwere above the standard under consideration would not be affected. Using the shipment-weighted efficiency in the year 2012 as a starting point, DOE developed standards-case forecasted efficiencies based on assumptions regarding future efficiency growth. For all of the considered products, DOE made the same assumptions regarding standards-case efficiency gr owth rates as for the base case— namely, that forecasted efficiencies remain frozen at the 201 2 efficiency level until the end of the forecast period. By maintaining the same growth rate for forecasted efficiencies in the standards case as in the base case (i.e., zero growth), DOE retained a constant efficiency difference or gap between the two cases over the length of the forecast period. Although frozen trends may not reflect what happens to base case and standards case product efficiencies in the future, DOE believes that maintaining a frozen efficiency difference betw een the base case and standards case provides a reasonable estimate of the impact that standards have on product efficiency. With the exception of cooktops and ovens, the NIA spreadsheet models for each of the considered products also incorpor ated user options of one percen t and two percent for the growth rates of the base-case an d standards-case forecasted efficiencies. The following sections detail the base-case and standards-case forecasted effici encies that DOE developed for each of the four sets of products.

11.2.1 Cooktops and Ovens DOE first presented the market share of effi ciencies in the base case for cooktops and ovens in sections 8.2.6.1 and 8.2.6.2, respectively, of Chapter 8, LCC and PBP Analysis. As noted in Chapter 8, DOE did not have the data to develop efficiency distributions for any of the electric cooktop and oven product classes or th e gas self-cleaning oven product class. Thus, DOE assumed that 100 percent of the current market was at the baseline level for these product classes. Because DOE assumed a roll-up scenario for forecasting product efficiency distributions once a standard became effective, th e effect of any standard level was to move 100 percent of the market to that standard level. In the case of gas cooktops and gas standard ovens, data were availa ble to allow DOE to identify the percentage of the market in the ba se case that was alrea dy equipped with pilotless ignition. As described in Chapter 8, DOE allocated that percentage of the market that already had pilotless ignition. Therefore, knowing the ma rket share of gas cooktops and standard ovens already equipped with pilotless ignition allowed DOE to accurately estimate the national impacts of requiring a standard that no longer allowed standing pilots. For the year 2012, Tables 11.2.1, 11.2.2, and 11.2.3 show the base case and standards case product efficiency distributions that DOE used in its national impact analysis for electric coil, electric smooth, and gas cooktops. Th e standards cases correspond to the candidate standard levels analyzed in the LCC and PBP An alysis. The TSLs for each product class are also shown in the following tables. Note that the TSLs do not consider all of the candidate standard levels that DOE analyzed in the LCC and PBP anal ysis. Also included in th e tables below are the shipment-weighted efficiencies (SWEF) associat ed with the base case and each standards case (candidate standard level).

11-3Table 11.2.1 Electric Coil Cooktops: Base Case and Standards Case Efficiency Distributions in 2012 Candidate Market Shares Standard

Level TSL EF Base Case Candidate Standard Level 1 Baseline 1 0.737 100%

- 1 2, 3, 4 0.769 0% 100% SWEF (EF) 0.737 0.769 Table 11.2.2 Electric Smooth Cooktops: Base Case and Standards Case Efficiency Distributions in 2012 Candidate Market Shares Standard

Level TSL EF Base Case Candidate Standard Level 1 Baseline 1, 2, 3 0.742 100%

- 1 4 0.753 0% 100% SWEF (EF) 0.742 0.753 Table 11.2.3 Gas Cooktops: Base Case and Standard s Case Efficiency Distributions in 2012
Candidate Standard Level TSL EF Market Shares
Base Case Standard Case 1 2 Baseline

- 0.156 6.8%

- - 1 1, 2, 3 0.399 93.2% 100%

- 2 4 0.420 0% 0% 100% SWEF (EF) 0.379 0.399 0.420 Tables 11.2.4, 11.2.5, 11.2.6, and 11.2.7 show the ba se case and standards case product efficiency distributions in 2012 that DOE used fo r electric standard, electric self-cleaning, gas standard, and gas self-cleaning ovens. As with the cooktop produc t classes, the standards cases for the oven product classes correspond to the candida te standard levels an alyzed in the LCC and PBP Analysis. The TSLs for each product class ar e also shown in the following tables. Note that the TSLs do not consider all of the candidate standard levels that DOE analyzed in the LCC and PBP analysis. Also included in each of the tabl es is the SWEF associated with the base case and each standards case. In the case of gas standard ovens (Table 11.2.6), DOE analyzed standard levels 1 and 1a in a similar manner. That is, because both are non-standing pilot ignition options, DOE allocated the market share at the baseline level (standi ng pilot) to the candidate standard level under consideration without affecting the market share allocated to the other standing pilot option. Therefore, when DOE analyzed candidate standa rd level 1 (glo-bar ignition system), the 17.6 percent of the market at the baseline level was ro lled-up into candidate sta ndard level 1 (to arrive

11-4at a market share of 91.8 percent) without affectin g the market share at candidate standard level 1a (spark ignition). When DOE analyzed candi date standard level 1a, the 17.6 percent of the market at the baseline level was rolled-up into ca ndidate standard level 1a (to arrive at a market share of 25.8 percent) without affecting the mark et share at candidate standard level 1. For candidate standard levels 2 through 6, becau se they included design options beyond a nonstanding pilot ignition system, the market shares at the baseline level and candidate standard levels 1 and 1a (for a total of 100 percent) were allocated to the candidate standard level under consideration.
Table 11.2.4 Electric Standard Ovens: Base Case and Standards Case Efficiency Distributions in 2012 Candidate Market Shares Standard

Level TSL EF Base Case Candidate Standard Level 1 2 3 4 5 Baseline 1 0.1066 100%

- - - - - 1

- 0.1113 0% 100%

- - - - 2 2, 3 0.1163 0% 0% 100% - - - 3

- 0.1181 0% 0% 0% 100% - - 4

- 0.1206 0% 0% 0% 0% 100% - 5 4 0.1209 0% 0% 0% 0% 0% 100% SWEF (EF) 0.1066 0.1113 0.1163 0.1181 0.1206 0.1209
Table 11.2.5 Electric Self-Cleaning Ovens: Base Case and Standards Case Efficiency Distributions in 2012 Candidate Market Shares Standard

Level TSL EF Base Case Candidate Standard Level 1 2 Baseline 1, 2, 3 0.1099 100%

- - 1

- 0.1102 0% 100%

- 2 4 0.1123 0% 0% 100% SWEF (EF) 0.1099 0.1102 0.1123

11-5Table 11.2.6 Gas Standard Ovens: Base Case and Standards Case Efficiency Distributions in 2012 Candidate Market Shares Standard

Level TSL EF Base Case Candidate Standard Level 1 2 3 4 5 6 1a Baseline

- 0.0298 17.6%

- - - - - - - 1*

- 0.0536 74.2% 91.8%

- - - - - 74.2% 2

- 0.0566 0% 0% 100%

- - - - 0% 3

- 0.0572 0% 0% 0% 100%

- - - 0% 4

- 0.0593 0% 0% 0% 0% 100% - - 0% 5

- 0.0596 0% 0% 0% 0% 0% 100% - 0% 6 4 0.0600 0% 0% 0% 0% 0% 0% 100% 0% 1a* 1, 2, 3 0.0583 8.2% 8.2% 0% 0% 0% 0% 0% 25.8% SWEF (EF) 0.0498 0.0540 0.0566 0.0572 0.0593 0.0596 0.0600 0.0548 * Candidate Standard Levels 1 and 1a correspond to designs that are utilized for the same purpose—eliminate the

need for a standing pilo t. Level 1 is a glo-bar hot surface ignition de vice while level 1a is a spark ignition device. Table 11.2.7 Gas Self-Cleaning Ovens: Base Case and Standards Case Efficiency Distributions in 2012 Candidate Market Shares Standard

Level TSL EF Base Case Candidate Standard Level 1 2 3 Baseline 1, 2 0.0540 100%

- - - 1 3 0.0625 0% 100%

- - 2

- 0.0627 0% 0% 100%

- 3 4 0.0632 0% 0% 0% 100% SWEF (EF) 0.0540 0.0625 0.0627 0.0632 For gas cooktops and gas standard ovens, DOE developed base case efficiency trends to estimate the future market share of products withpilotless ignition. As described in Chapter 8, only gas standard ranges (which are a combinati on of a gas cooktop and a gas standard oven) are still shipped with standing pilots. Based on the data first presented in sections 8.2.6.1 and 8.2.6.2 of Chapter 8, Figure 11.2.2 shows the historical market share of gas cooking products with standing pilots. The figure belo w also provides trend lines to the historical data. Note that the market share of gas built-in ovens with standing pilots zeroed out in 1991 while the market share of gas built-in cooktops with standing pilots is zero out by the year 2000. That leaves standard ranges as the only gas cooking products shipped with standing pilots. By the end of the forecast period in the year 2042, DOE estimated that less than five percent of gas st andard ranges in the market would still be shipped w ith standing pilots. DOE used the trend line for gas standard ranges presented below in Figure 11.2.2 to forecast the percentage of gas range shipments with standing pilots. Refer back to section 10.3.1.1 of Chapter 10, Shipments Analysis, for a description of how DOE allocate d the gas standard range ship ments into gas cooktop and gas standard oven product classes.

11-60.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

1985 1995 2005 2015 2025 2035 2045 YearPercent with Pilot Gas Standard Range Gas Built-In Cooktop Gas Built-In Oven

Figure 11.2.1 Gas Cooking Products: Forecast of Products with Standing Pilots With regard to the base case and standards case forecasted efficiencies, as noted previously, DOE assumed th at equipment efficiencies remain fr ozen at the levels in the year 2012 for all standard levels and fo r all product classes, with th e exception of gas cooktops and gas standard ovens. For gas cooktops and gas standard ovens, as noted above, DOE used the forecasted trend in gas ranges with standing pilots in the base case (as shown in Figure 11.2.2) to estimate the impacts from moving to a candidate st andard level that eliminated standing pilots (i.e., candidate standard levels 1 and 1a). For all gas cooktop and gas standard oven candidate standard levels, DOE assumed that equipment efficien cies remain frozen at the levels in the year 2012.

11.2.2 Microwave Ovens DOE first presented the market share of effi ciencies in the base case for microwave ovens in section 8.2.6.3 of Chapter 8, LCC and PBP An alysis. Table 11.2.8 shows the base case and standards case product efficiency distributions in the year 2012 that DOE used in its national impact analysis for microwave ovens. The stan dards cases correspond to the candidate standard levels analyzed in the LCC and PBP Analysis. The TSLs are also shown in Table 11.2.8. Note that DOE considered all the candidate standard levels in the TSLs that it developed for microwave ovens.

11-7Table 11.2.8 shows the resulting shipment-weight ed efficiency for the energy factor for each standard level considered.
Table 11.2.8 Microwave Ovens: Base Case and Standards Case Efficiency Distributions by Energy Factor Level in 2012 Candidate Standard Level / Market Shares Candidate Standard Level TSL EF Base Case 1 2 3 4 Baseline 0.557 100%

- - - - 1 0.586 0% 100%

- - - 2 0.588 0% 0% 100%

- - 3 0.597 0% 0% 0% 100%

- 4 0.602 0% 0% 0% 0% 100% SWEF (EF) 0.557 0.586 0.588 0.597 0.602 Based on the assumption of a zero-percent growth rate in the forecasted efficiencies for the base case and all standard s cases, DOE maintained the SW EFs shown above in Table 11.2.8 throughout the entire forecast period, i.e., from 2012 to 2042.

11.3 NATIONAL ENERGY SAVINGS

11.3.1 NES Definition As shown in the following equation, DOE cal culates annual national energy savings as the difference between two projections: a base case (without new standards) and a standards case (with new standards). Positi ve values of NES correspond to energy savings (i.e., national energy consumption with standards is less than national energy consumption in the base case).

_ NES y = AEC BASE AEC STD Cumulative energy savings are the sum over the forecast period, extending from the assumed effective date, i.e., 2012, to 30 years afte r the effective date, i. e., 2042, of the annual national energy savings. This calculation is represented by the following equation:
NES cum = 

# ∑ NES y DOE calculated the national annual energy consumption by multiplying the number or stock of the given product (by vintage) by its unit energy consum ption (also by vintage). The calculation of the national annual energy consumption is represente d by the following equation:

11-8AEC = 

# ∑ STOCK V × UEC V For the above expressions, DOE defined the various quantities as follows:
AEC = Annual national energy consumption each year in quadrillion British thermal units (Btus) – or quads, summed over vintages of the product stock, STOCK V, NES = Annual national energy savings (quads), STOCK V

= Stock of product (millions of units) of vintage V surviving in the year for which DOE calculated annual energy co nsumption (vintages range from five to approximately 28 years, depending on the retirement function of the product), UEC V = Annual energy consumption per product in either kilowatt-hours (kWh) or million Btus (MMBtu) (electricity and gas consumption are converted from site energy to source energy (q uads) by applying a time-dependent conversion factor), V

= Year in which the product was purchased as a new unit, and y = Year in the forecast (i.e., 2012 to 2042). The stock of equipm ent is dependent on annual shipments and the lifetime of the equipment. As described in Chapter 10, DOE conducted shipments projections under the base case and standards cases. DOE determined that the shipments projections under the standards cases were slightly lower than those in the base case projection, due to the higher purchase prices of the more-efficient equipment. In other words, DOE believes that the higher purchase prices would cause some consumers to forego new equipment purchases. Due to the drop in shipments caused by st andards, for microwave ovens, DOE used the standards case shipments projecti on and, in turn, the st andards case stock, to calculate the annual energy consumption in the base case to avoi d the inclusion of savings due to displaced shipments. In the case of electric and gas cooki ng products, because the housing market is fully saturated (i.e., all households have cooking ap pliances), DOE assumed that standards would neither impact shipments nor cause shifts in electric and gas cooking product market shares. Therefore, DOE’s projected standards case ship ments for electric and gas cooking products were identical to its base case shipments.

11.3.2 NES Inputs Table 11.3.1 lists the inputs for the determination of NES.

11-9Table 11.3.1 National Energy Saving Inputs Annual Energy Consumption per Unit ( UEC ) Shipments Equipment Stock ( STOCK V

) National Annual Energy Consumption ( AEC ) Site-to-Source Conversion Factor ( src_conv )

11.3.2.1 Annual Energy Consumption per Unit For each of the considered products, DOE presented the per-unit annual energy consumption as a function of product efficiency in both Chapter 6, Energy Use Determination, and section 8.2.2.1 of Chapter 8, LCC and PBP Analysis. Because the per-unit annual energy consumption is directly dependent on efficiency , DOE used the base case and standards case SWEFs presented above in section 10.2, in combin ation with the annual energy data presented in Chapters 6 and 8, to estimate the shipme nt-weighted average annual per-unit energy consumption under the base case and standards cases. The following sections describe the shipment-weighted average annual per-unit ener gy consumption for each of the considered products. Cooktops and Ovens DOE based its per-unit annual energy consumption of cooktops and ovens on data presented in section 8.2.2.1 of Chapter 8. Us ing the relationship between cooktop and oven EF and annual energy consumption described in Chap ter 8, Tables 11.3.2 and 11.3.3 present the perunit annual energy consumption based on the SWEFs corresponding to the base case and each candidate standard level for each of the three pr oduct classes of cooktops and the four product classes of ovens.
Table 11.3.2 Cooktops: Base Case and Standard s Case Shipment-Weighted Average PerUnit Annual Energy Consumption in 2012
Product Class Base Case Candidate Standard Level 1 2 Electric Coil SWEF (EF) 0.737 0.769 Electric (kWh/yr) 128.2 122.9
Electric Smooth SWEF (EF) 0.742 0.753 Electric (kWh/yr) 128.2 126.3
Gas SWEF (EF) 0.379 0.399 0.420 Gas (MMBtu/yr) 0.83 0.72 0.68

11-10Table 11.3.3 Ovens: Base Case and Standards Case Shipment-Weighted Average PerUnit Annual Energy Consumption in 2012
Product Class Base Case Candidate Standard Level 1* 2 3 4 5 6 1a* Electric Standard SWEF (EF) 0.1066 0.1113 0.1163 0.1181 0.1206 0.1209 Electric (kWh/yr) 166.5 160.1 153.9 151.8 149.0 148.6Electric SelfClean SWEF (EF) 0.1099 0.1102 0.1123 Electric (kWh/yr) 171.0 170.6 167.9 SWEF (EF) 0.0498 0.0540 0.0566 0.0572 0.0593 0.0596 0.0600 0.0548 Gas Standard Electric (kWh/yr) 15.7 19.4 21.1 21.1 22.9 22.9 22.9 15.7 Gas (MMBtu/yr) 1.02 0.84 0.80 0.79 0.75 0.75 0.74 0.84

Gas Self-Clean SWEF (EF) 0.0540 0.0625 0.0627 0.0632 Electric (kWh/yr) 53.33 55.13 55.13 55.13 Gas (MMBtu/yr) 0.86 0.73 0.73 0.72 * For gas standard ovens, levels 1 and 1a correspond to designs that are utilized for the same purpose—eliminate

the need for a standing pilot—but the te chnologies for each design are differen t. Level 1 is a hot surface ignition device while level 1a is a spark ignition device. For all classes except gas cooktops and standard ovens, as noted above in section 11.2, DOE assumed that forecasted effi ciencies in the base case and st andards cases remain frozen at the efficiency levels in 2012. Therefore, b ecause the per-unit annual energy consumption is a function of efficiency, DOE held the values s hown above in Tables 11.3.2 and 11.3.3 constant over the forecast period (2012–2042). For gas cooktops and standard ovens, DOE track ed the percentage of gas standard ranges (which are composed of a cooktop and standard oven) with standing pilots. Because the percentage of ranges with standing pilots chan ges over time (as shown above in section 11.2, Figure 11.2.1), the base case annua l energy consumption will change over time as well. Figure 11.3.1 shows how the annual gas energy use for both base case gas cooktops and gas standard ovens decreases over time as more gas standard ranges are forecasted to be shipped with pilotless ignition. Also note in Figure 11.3.1 that, becau se standard ovens without standing pilots are assumed to use globar ignition devices that use a non-significant amount of electricity, the amount of electricity use for stan dard ovens increases over time.

11-111.00

0.85

2010 2015 2020 2025 2030 2035 2040 2045 Year(MMBtu) Cooktop - Gas Use Standard Oven - Gas Use Standard Oven - Elec Use 19.0Base Case Gas Cooktop and GasStandard Oven Annual Energy Use 0.95 18.5

0.90 18.0

17.5

0.80 17.0

0.75 16.5

0.70 16.0Base Case Gas Standard OvenElectrical Annual Energy Use (kWh)

Figure 11.3.1 Gas Cooktops and Gas Standard Ovens: Forecasted Base Case Annual Energy Consumption
DOE assumed that forecasted efficiencies for gas cooktops and standard ovens in the standards cases remain frozen at the efficiency levels in 2012. Theref ore, because the per-unit annual energy consumption is a function of effi ciency, DOE held the gas cooktop and standard oven values shown above in Tables 11.3.2 and 11.3.3 constant over the forecast period (2012– 2042) for all standards cases. Microwave Ovens DOE based its per-unit annual energy consumption of microwave ovens on data presented in section 8.2.2.1 of Chapter 8. Using the relationship between microwave oven EF and annual energy consumption described in Chap ter 8, Table 11.3.4 presents the per-unit annual energy consumption based on the SWEFs corres ponding to the base case and each TSL.
Table 11.3.4 Microwave Ovens: Base Case and Standards Case Shipment-Weighted Average Per-Unit Annual Energy Consumption in 2012 Base Trial Standard Level Case 1 2 3 4 SWEF (EF) 0.557 0.586 0.588 0.597 0.602 Annual Energy Use (kWh/yr) 155.6 149.1 148.7 146.8 145.8 As noted above in section 11.2, DOE assumed that forecasted efficiencies in the base case and standards cases remain frozen at the effi ciency levels in 2012. Therefore, because the

11-12per-unit annual energy consumption is a function of efficiency, DOE held the values shown above in Table 11.3.4 constant over the forecast period (2012–2042).

11.3.2.2 Shipments DOE forecasted shipments for the base case and all standards cases. Several factors, including total installed costs (purchase price plus installation costs), operating cost, household income, and equipment lifetime, all impact forecasted shipments. Of the above factors, total installed cost was the primary driver in forecas ting the impact of standards on shipments. As noted earlier, the increased total installed co st of more-efficient equipment causes some customers to forego equipment purchases. Consequently, shipments forecasted under the standards cases are lower than un der the base case. An extensiv e description of the methodology for conducting and generating the shipments forecasts for each of the considered products can be found in Chapter 10, Shipments Analysis.

11.3.2.3 Equipment Stock The equipment stock in a given year is the number of products shipped from earlier years that survive in the given year. The NIA Models keep track of the numbe r of units shipped each year. DOE assumes that the products have an incr easing probability of retiring as they age. The probability of survival as a function of years-sin ce-purchase is the survival function. See the specific product sections in Chapter 10, Shipment s Analysis, for further details on the survival functions that DOE used in its analysis.

11.3.2.4 National Annual Energy Consumption The national annual energy consumption is the product of the annual energy consumption per unit and the number of units of each vintage. This approach accounts for differences in unit energy consumption from year to year. Th e equation for determining the annual energy consumption was shown above in section 11.3.1 and is repeated below.
AEC = 

# ∑ STOCK V × UEC V In determining national annual energy consum ption, DOE initially calculated the annual energy consumption at the site, and then applied a conversion factor to calculate primary energy consumption (see section 11.3.2.5).

11.3.2.5 Energy Site-to-Source Conversion Factors In determining national annual energy consum ption, DOE initially calculated the annual energy consumption at the site (e.g., for elect ricity, the energy in kWh consumed at the household or establishment). It then calculate d primary (source) energy consumption from site energy consumption by applying a conversion fact or to account for losses associated with the generation, transmission, and distribution of elec tricity and gas. The site-to-source conversion

11-13factor is the multiplicative factor used for conv erting site energy consumption into primary or source energy consumption, expressed in quads . DOE used annual site-to-source conversion factors based on the version of the National En ergy Modeling System (NEMS) that corresponds to EIA’s Annual Energy Outlook 2008 ( AEO2008 ). The factors used are marginal values, which represent the response of the system to an incremental decrease in consumption. Natural gas losses include pipeline leakage, pumpi ng energy, and transportation fuel. The AEO2008 forecasts losses of about seven percent for the na tural gas used on site, with only slight variation from year to year. For electricity, the conv ersion factors vary over time, due to projected changes in generation sources (i.e., the power plan t types projected to provi de electricity to the country). DOE assumed that conversion factors remain constant at 2030 values throughout the remainder of the forecast. Table 11.3.5 shows the site-to-source conversion factors from 2005 to the end of the forecast period (2042).
Table 11.3.5 Site-to-Source Conversion Factors for Electricity and Natural Gas

Year Electricity Btu/kWh Natural Gas Btu/Btu Year Electricity Btu/kWh Natural Gas Btu/Btu 2005 11500 1.097 2019 8300 1.087 2006 11500 1.066 2020 8088 1.091 2007 11200 1.086 2021 8088 1.093 2008 10250 1.082 2022 7949 1.094 2009 10000 1.084 2023 7200 1.094 2010 10000 1.086 2024 6966 1.094 2011 10000 1.086 2025 6500 1.095 2012 10000 1.086 2026 6309 1.095 2013 10000 1.086 2027 6309 1.095 2014 10000 1.086 2028 6309 1.096 2015 10000 1.086 2029 6309 1.096 2016 10000 1.086 2030 6309 1.096 2017 9700 1.086 2031–2042 6309 1.096 2018 9000 1.087 Source: NEMS, 2006.

11.4 NET PRESENT VALUE

11.4.1 NPV Definition The NPV is the value in the present of a tim e series of costs and savings. The NPV is described by the equation:

_ NPV = PVS PVC

11-14where:
PVS = Present value of opera ting cost savings (includi ng energy, repair, and maintenance costs), and PVC = Present value of increased total in stalled costs (including equipment and installation). DOE determined the PVS and PVC according to the following expressions:
PVS = 

# ∑ OCS y × DF y
PVC = 

# ∑ TIC y × DF y DOE calculated the total annual operating cost savings by multiplying the number or stock of the given product (by vi ntage) by its per-unit operating co st savings (also by vintage). DOE calculated the total annual installed cost increases by multiplying the number or stock of the given product (by vintage) by its per-unit total installed cost increase (also by vintage). The calculation of the annual operating costs savings and total an nual installed cost increases is represented with the following equations:
OCS y = 

# ∑ STOCK V × UOCS V
TIC y = 

# ∑ STOCK V × UTIC V For the above expressions, DOE define d the various quantities as follows:
OCS = Total annual operating cost savings each year summed over vintages of the product stock, STOCK V, TIC = Total annual installed cost increases each year summed over vintages of the product stock, STOCK V, DF = Discount factor in each year, STOCK V

= Stock of product (millions of units) of vintage V surviving in the year for which DOE calculated annual energy cons umption (vintages range from five to approximately 28 years, depending on the retirement function of the product), UOCS V = Annual operating cost savings per unit, UTIC V = Annual total installe d cost increase per unit, V

= Year in which the product was purchased as a new unit, and y = Year in the forecast (i.e., 2012 to 2042).
D OE determined the PVC for each year, from the effectiv e date of the standard to the year 2042. It determined the PVS for each year, from the effectiv e date of the standard to the

11-15year when units purchased in 2042 retire. DOE calculated costs and savings as the difference between a standards case and a base case (i.e., without new standards).
DOE calculated a discount factor from the di scount rate and the num ber of years between the “present” (i.e., year to whic h the sum is being discounted) and the year in which the costs and savings occur. The NPV is the sum ove r time of the discounted net savings.

11.4.2 NPV Inputs Table 11.4.1 summarizes the inputs to the NPV calculation. Table 11.4.1 Net Present Value Inputs Total Installed Cost per Unit Annual Operating Cost Savings per Unit Total Annual Installed Cost Increases Total Annual Operating Costs Discount Factor Present Value of Costs Present Value of Savings
The increase in the total annual installed cost is equal to the annual change in the per-unit total installed cost (difference between base case and standards case) multiplied by the shipments forecasted in the standards case. As with the ca lculation of the NES, DOE did not calculate total annual installed costs for all of the products usin g base case shipments. Rather, in the case of dehumidifiers and microwave ovens, DOE used th e standards case shipments projection and, in turn, the standards case stock, to calculate the costs to avoid the inclusion of savings due to displaced shipments. Electric and gas cooking products are the notable exception. For these products, because the market is fully saturated, DOE assumed that standards would neither impact shipments nor cause shifts in electric and gas cooking product market shares. Therefore, for electric and gas cooking products, DOE used the base case shipments to determine costs for all standards cases.
The total annual operating cost savings are equal to the change in the annual operating costs (difference between base case and standards case) per unit multiplied by the shipments forecasted in the standards case. As noted above for the calculation of total annual installed costs, DOE did not necessarily ca lculate operating cost savings using the base case shipments. The annual operating cost includes ener gy, repair, and maintenance costs.

11.4.2.1 Total Installed Cost per Unit For each of the considered products, DOE firs t presented the per-unit total installed cost as a function of product efficiency in section 8.2.1 of Chapter 8, LCC and PBP Analysis. Because the per-unit total annual installed cost is directly de pendent on efficiency, DOE used the

11-16base case and standards case SWEF s presented above in section 11.2, in combination with the total installed costs presented in Chapter 8, to estimate the shipment-weighted average annual per-unit total installed cost under the base case and standards cases. The following sections describe the shipment-weighted average annual per-unit total installed cost for each of the considered products. Cooktops and Ovens DOE based its per-unit total in stalled cost of cooktops and ovens on data presented in sections 8.2.1.1 and 8.2.1.2 of Chapter 8. Th e total installed cost includes both the equipment price and the installation cost. For gas cooktops and standard ovens, the installation cost for standard levels beyond the baseline level accounts for consumers that need to install an electrical outlet to accommodate a cooking product that now requires electricity to operate. Details on the determination of this added installation costs and the percentage of consumers that are estimated to need an outlet are provided in sections 8.2. 1.1 for gas cooktops and 8.2.1.2 for gas standard ovens. DOE based average equipment prices on average manufacturer costs multiplied by average overall markup values. Using the rela tionship between cooktop and oven EF and total installed cost presented in Chap ter 8, Tables 11.4.2 and 11.4.3 s how the per-unit total installed cost for cooktops and ovens, respectively, ba sed on the SWEFs correspo nding to the base case and each candidate standard level.
Table 11.4.2 Cooktops: Base Case and Standard s Case Shipment-Weighted Average PerUnit Total Installed Costs in 2012 Product Candidate Standard Level Class Base Case 1 2 Electric Coil SWEF (EF) 0.737 0.769 Total Installed Cost (2006$) $272 $276 Electric Smooth SWEF (EF) 0.742 0.753 Total Installed Cost (2006$) $309 $550
Gas SWEF (EF) 0.379 0.399 0.420 Total Installed Cost (2006$) $385 $391 $420

11-17Table 11.4.3 Ovens: Base Case and Standards Case Shipment-Weighted Average PerUnit Total Installed Costs in 2012 Product Class Base Case Candidate Standard Level 1* 2 3 4 5 6 1a* Electric Standard

Electric Self-Clean SWEF (EF) Total Installed Cost (2006$) SWEF (EF) 0.1066 $414
0.1099 0.1113 $416
0.1102 0.1163 $421
0.1123 0.1181 $426 0.1206 $484 0.1209 $489

Total Installed Cost (2006$) $485 $491 $548

Gas Standard SWEF (EF) 0.0498 0.0540 0.0566 0.0572 0.0593 0.0596 0.0600 0.0548 Total Installed Cost (2006$) $500 $515 $520 $522 $554 $556 $562 $516

Gas SelfClean SWEF (EF) 0.0540 0.0625 0.0627 0.0632 (2006$) Total Installed Cost $550 $566 $573 $574
* For gas standard ovens, levels 1 and 1a correspond to designs that are utilized for the same purpose—eliminate

the need for a standing pilot— but the technologies for each design are di fferent. Level 1 is a hot surface ignition device while level 1a is a spark ignition device. For all classes except gas cooktops and standa rd ovens, as noted above in section 11.2, DOE assumed that forecasted effi ciencies in the base case and ca ndidate standard levels remain frozen at the efficiency levels in 2012. Theref ore, because the per-unit to tal installed cost is a function of efficiency, DOE held the values s hown above in Tables 11.4.4 and 11.4.5 constant over the forecast period (2012–2042). For gas cooktops and standard ovens, DOE track ed the percentage of gas standard ranges (which are composed of a cooktop and standardoven) with standing pilots. Because the percentage of ranges with sta nding pilots changes over time (a s shown above in section 11.2, Figure 11.2.1), the base case total installed cost will change over time as well. Figure 11.4.1 shows how the total installed cost for both base case gas c ooktops and gas standard ovens increases over time as more gas standard rang es are forecasted to be shipped with pilotless ignition.

11-18$326.0 $326.5 $327.0 $327.5 $328.0 $328.5

2010 2015 2020 2025 2030 2035 2040 2045 YearBase Case Gas CooktopTotal Installed Cost (2006$)

$445.5 $446.0 $446.5 $447.0 $447.5 $448.0Base Case Gas Standard OvenTotal Installed Cost (2006$) Cooktop Standard Oven

Figure 11.4.1 Gas Cooktops and Gas Standard Ovens: Forecasted Base Case Total Installed Costs DOE assumed that forecasted efficiencies for gas cooktops and standard ovens in the standards cases remain frozen at the efficiency levels in 2012. Therefor e, because the per-unit total installed cost is a func tion of efficiency, DOE held th e gas cooktop and standard oven values shown above in Tables 11.4.2 and 11.4. 3 constant over the forecast period (2012–2042) for all candidate standard levels. Microwave Ovens DOE based its per-unit total installed cost of microwave ovens on data presented in section 8.2.1.3 of Chapter 8. For microwave ove ns, the total installed cost includes only the equipment price, since the inst allation cost for thes e products is zero. DOE based average equipment prices on average manufacturer costs multiplied by average overall markup values. Using the relationship between microwave oven EF and total installed cost presented in Chapter 8, Table 11.4.4 shows the per-un it total installed cost for micr owave ovens based on the SWEFs corresponding to the base case and each TSL.

11-19Table 11.4.4 Microwave Ovens: Base Case and Standards Case Shipment-Weighted Average Per-Unit Total Installed Costs in 2012 Base Case Trial Standard Level 1 2 3 4 SWEF (EF) 0.557 0.586 0.588 0.597 0.602 Total Installed Cost (2006$) $220 $232 $246 $26 $294 As noted above in section 11.2, DOE assumed that forecasted efficiencies in the base case and TSLs remain frozen at the efficiency levels in 2012. Therefore, because the per-unit total installed costs are a function of efficien cy, DOE held the values shown above in Table 11.4.4 constant over the forecast period (2012–2042).

11.4.2.2 Annual Operating Cost Savings per Unit The per-unit annual operating co st includes the energy, repair , and maintenance costs. Annual Energy Costs DOE determined the per-unit annual energy cost savings by taking the per-unit annual energy consumption savings developed for each product and multiplying it by the appropriate energy price.
For all of the considered products, estimates of the per-u nit annual energy consumption for the base case and each standards case were presented earlier in section 11.3.2.1. As described previously, DOE forecasted the per-un it annual energy consumption for the base case and each standards case for all products by freezing the consumption at levels estimated for the year 2012. a Energy prices are described in section 8. 2.2.2 of Chapter 8. DOE forecasted energy prices based on EIA’s AEO2009 Early Release

. 2 The energy price trends are described in section 8.2.2.3 of Chapter 8. Annual Repair and Maintenance Costs As described in section 8.2.2.4 of Chap ter 8, DOE estimated increased repair and maintenance costs for gas cooktops and gas standard ovens. DOE assumed no increase in repair and maintenance costs due to standards for all electric cooking products (including microwave ovens), and gas self-cleaning ovens. For gas cooktops and gas standard ovens, DOE determined the repair and maintenance costs for the three types of ignition systems considered fo r these products: standing pilot (baseline level), electric glo-bar ignition (candidate standard leve l 1 for standard gas ovens), and electronic spark ignition (candidate standard level 1 for ga s cooktops and candidate standard

aThe one exception pertains to the base case per-unit annual energy consumption of gas cooktops and gas standard ovens.
11-20level 1a for gas standard ovens). For standing pi lot ignition systems, DOE determined that repair and maintenance are needed once every 10 years to clean valves. For electric glo-bar/hot surface ignition systems, the glo-bar requi res replacement approximately ever y five years. In the case of electronic ignition systems, contro l modules tend to last 10 years. The electrodes/igniters can fail due to hard contact from pots or pans, although failures are rare. As defined in section 11.4.1, for the calculation of annual operating cost savings, DOE kept tr ack of the vintage of products entering the stock. Th erefore, DOE was able to properly account for when gas cooktops and gas standard ovens incurred costs for the repair and maintenance of ignition systems. As noted above in section 11.2, DOE assumed that forecasted efficiencies in the base case and TSLs remain frozen at the efficiency levels in 2012. Therefore, because the per-unit total installed costs are a function of efficiency , DOE held the values shown above in Tables 11.4.7 and 11.4.8 constant over the forecast period (2012–2042).

11.4.2.3 Total Annual Installed Cost Increases The total annual installed cost increase for any given standa rds case is the product of the total installed cost increa se per unit due to the standard and th e number of units of each vintage. This approach accounts for differences in total installed cost from year to year. The equation for determining the total annual installed cost incr ease for a given standards case was shown in section 11.4.1 and is repeated below.
TIC = 

# ∑ STOCK V × UTIC V
11.4.2.4 Total Annual Operating Cost Savings The total annual operating cost savings for a ny given standards case is the product of the annual operating cost savings per unit due to th e standard and the number of units of each vintage. This approach account s for differences in annual operati ng cost savings from year to year. The equation for determining the total annu al operating cost savings for a given standards case was shown above and is repeated below.
OCS = 

# ∑ STOCK V × UOCS V
11.4.2.5 Discount Factors DOE multiplies monetary values in future years by a discount factor to determine the present value. The discount factor (DF) is described by the equation:
1 DF =

_ ( 1+ r ) ( y yp )

11-21where:

r = discount rate, y = year of the monetary value, and y P = year in which the present value is being determined.
DOE estim ated national impacts with both a three-percent and a seven-percent real discount rate as the average real rate of return on pr ivate investment in the U.S. economy. It used these discount rates in accordance with the Office of Management and Budget (OMB)’s guidance to Federal agencies on the developmen t of regulatory analysis (OMB Circular A-4, September 17, 2003), and section E., “Identifying a nd Measuring Benefits and Costs,” therein. DOE defines the present year as 2007.

11.4.2.6 Present Value of Costs The present value of increased installed costs is the annual installed cost increase in each year (i.e., the difference between the standards ca se and base case), discounted to the present, and summed for the time period over which DOE is considering the installation of equipment (i.e., from the effective date of standards, 2012, to the year 2042).
The increase in total installed cost refers to both equipment cost and installation cost associated with the higher energy efficiency of equipment purchased in the standards case compared to the base case. DOE calculated annua l increases in installed costs as the difference in total installed cost for new equipment purchas ed each year, multiplied by the shipments in the standards case.

11.4.2.7 Present Value of Savings The present value of operating cost savings is the annual ope rating cost savings (i.e., the difference between the base case and standards case) discounted to the present, and summed over the period from the effective date, 2012, to the time when the last unit installed in 2042 is retired from service. Savings are decreases in opera ting costs (including electric ity, repair, and maintenance costs) associated with the highe r energy efficiency of equipment purchased in the standards case compared to the base case. Total annual operating cost savings are the savings per unit multiplied by the number of units of each vintag e surviving in a partic ular year. Equipment consumes energy over its entire lifetime, and for units purchased in 2042, the consumption includes energy consumed until the unit is retired from service.

11.4.3 Fuel Switching Fuel switching describes the occurrence of consumers switching from a product that consumes one type of fuel to another product that provides the same utility and service but

11-22consumes a different fuel. Fuel switching is caused when the purchase price or operating cost of a product is so high that it causes the consumer to alter their pur chase decision and buy the like product that operates off the alternative fuel. As described in Chapter 8, sections 8.2. 1.1 and 8.2.1.2, some gas cooktop and gas standard oven consumers that use products with standing pilot ignition devices would need to install an electrical outl et to accommodate a product that would require electricity to operate. As detailed in Chapter 8, DOE estimated an installati on cost of $235 to install an electrical outlet for a gas cooking product that needed electricity to operate. Becaus e the added installation cost is high, DOE needed to assess whether those gas pr oduct consumers that would need to install an outlet would change their purchase decision and acquire an electric cooking product. If a consumer were to switch from a gas cooki ng product to an electr ical appliance due to the prospect of this installa tion cost, an outlet would still be needed to accommodate the electrical appliance. Based on the RS Means Mechanical Cost Data, 2008 , 3 the cost of installing only an outlet suitable for an electrical cooki ng appliance, which requires a 50-amp, 240-volt receptacle, is $305 (see Table 11.4.5).
Table 11.4.5 Installation Cost for an Electrical Outlet to accommodate an Electric Cooking Product
Indiv. Line # Description Crew Daily Output PersonHours Unit Mat. Labor Equip. Total Total incl. O&P 2008 Mechanical Cost Data: 2008 Base Costs

4730 Range Outlet, 50 amp240 volt recpt. 30' of #8/3, EMT & wire 1 Elect 2.96 2.703 Ea. $111 $123 $0 $234 $305 Average (2006$)* $305 Total Installation Cost (2006$) $305.00 * Cost in 2008$ assumed to be representative of 2006$. Sources: Bare Costs: RS Means, Mechanical Cost Data, 2008. Due to the amperage and voltage requirements of the receptacle as well as the age of the household in which the outlet would be installed (p re-1960), a separate br anch circuit coming off the fuse box or circuit breaker panel would be necessary to accommodate the electrical cooking appliance. Also, because of the additional amperage required by the electrical cooking appliance, it is highly likely that the fuse box or circuit breaker panel woul d need to be upgraded. Based on material costs from the Craftsman 2008 National Home Improvement Estimator 4 and 2008 National Repair & Remodeling Estimator 5 and labor costs from the RS Means, Mechanical Cost Data, 2008 , 2 DOE estimated an installation cost of $1247 for installing a branch circuit and upgrading a breaker panel from 50 amps to 100 am ps (see Table 11.4.6). Combined with the $305 installation cost of the recept acle, the total installation cost to accommodate an electrical cooking appliance is estimated to be $1562 or over six times the cost of installing a standard 120-volt outlet for a gas cooking pr oduct. Therefore, there is no financial incentive for a consumer to switch from gas cooking to electric cooking. Thus, DOE believes the probability of

11-23fuel switching is so low that DOE is not cons idering it in the national impact analysis of cooktops and ovens. Fuel switching wa s not considered for microwave ovens.
Table 11.4.6 Installation Cost for a Branch Circuitto accommodate an Electric Cooking Product

Description 2008 Bare Costs Calculated Values

Qty Crew Labor Hours Unit Mat. Labor (given) Equip. Total (given) Labor Hours (Calc.) Mat. (incl. 10% Profit) Labor (incl O&P) Equip Total incl. O&P Fishing electrical cable through a stud wall (assume 2 foot wired per stud walls) * Job Setup 1 1 Elec 0.270 Ea. $0 $12 $0 $12 0.270 $0 $18 $0 $18.32 per foot of cable fished 20 1 Elec 0.050 LF $0 $2 $0 $2 1.000 $0 $68 $0 $67.87 per electrical box set 1 1 Elec. 0.761 Ea. $0 $35 $0 $35 0.761 $0 $52 $0 $51.65 per stud notched and hole patched 10 1 Elec 0.400 Per Stud $0 $18 $0 $18 4.000 $0 $271 $0 $271.48 Branch Circuit Installation Panel (100 AMP service - 12-circuit, Installation) ** 1 1 Elec 1.600 Ea. $160 $73 $0 $233 1.600 $176 $109 $0 $284.59
Disconnect and remove distribution panel (50-100 Amps, Frame Wall) *** 1 1 Elec. 0.220 Ea. $0 $10 $0 $10 0.220 $0 $15 $0 $14.93

Per Circuit Disconnect *** 10 1 Elec. 0.063 Per Circuit $0 $3 $0 $3 0.630 $0 $43 $0 $42.76 Ground-fault interrupter plug-oncircuit breaker, QOGFI Qwik-Gard®, Square D® (50 AMP, 2 Pole) *** 1 1 Elec. 0.150 $163 $7 $0 $170 0.150 $179 $10 $0 $189.48

Grounding rod with clamp (100 AMP Service Installation) ** 1 1 Elec 2.670 Ea. $16.50 $122 0 $138 2.670 $18 $181 $0 $199.36
Ground Cable (typcical Allowance is 10 LF) ** 10 1 Elec. 0.080 LF $0.18 $4 $0 $4 0.800 $2 $54 $0 $56.28
Electrical Permit Charge ** 1 1 Elec 0.000 CLF $0.00 $0 0 $0 0.000 $0 $0 $0 $50.00 Total Installation Cost (2006$) † $1246.72 * Sources – Labor Hours and Material Costs: Craftsman, National Home Improvement Estimator , 2008; Labor Costs and Overhead & Profit (O&P) Multiplier: RS Means, Mechanical Cost Data, 2008. ** Sources – Labor Hours and Material Costs: Craftsman, Repair and Remodel Estimator , 2008; Labor Costs and Overhead & Profit (O&P) Multipli er: RS Means, Mechanical Cost Data, 2008. *** Sources – Labor Hours and Material Costs: Craftsman, Home Improvement , 2008; Labor Costs and Overhead & Profit (O&P) Multipli er: RS Means, Mechanical Cost Data, 2008. † Cost in 2008$ assumed to be representative of 2006$.

11-2411.5 NES AND NPV RESULTS The NIA Model provides estimates of th e NES and NPV due to various candidate standards levels. The inputs to the NIA Model have been discu ssed earlier in sections 11.3.2 (NES Inputs) and 11.4.2 (NPV Inputs). DOE generated the NES and NPV results using a Microsoft Excel ® spreadsheet, which is accessible on the Internet ( http://www.eere.en ergy.gov/buildings/ appliance_standards/). Detail s and instructions for using the spreadsheet are prov ided in Appendix 11A.

11.5.1 NES and NPV Input Summary Table 11.5.1 summarizes the inputs to the NI A Model. For each input a brief description of the data source is given.
Table 11.5.1 NES and NPV Inputs Input Data Description Shipments Annual shipments from Shipments Model. (See Chapter 10.) Effective Date of Standard 2012. Base Case Forecasted Efficiencies SWEF determinedin the year 2005 for each of the considered products. SWEF held constant ov er forecast periodof 2005–2042. (See Section 11.2.) Standards Case Efficiencies Roll-up scenario assu med for determining SWEF in the year 2012 for each standards case and for each of the considered products. SWEF held constant over forecast period of 2012–2042. (S ee Section 11.2.) Annual Energy Consumption per Unit Annual weighted-average values are a function of SWEF. (See Section 11.3.2.1.) Total Installed Cost per Unit Annual weighted-average values are a function of SWEF. (See Section 11.4.2.1.) Energy Cost per Unit Annual weighted-average values are a function of the annual energy consumption per unit and energy pr ices. (See Section 8.2.2.3 of Chapter 8 for en ergy prices.) Repair Cost and Maintenance Cost per Unit For gas cooktops and gas standard ovens, repair and maintenance costs specified for different types of ignition systems. For all electric cooking products, including microwave ovens, and gas self-cleaning ovens, no changes in repair and maintenance cost assumed due to standards. (See Section 8.2.2. 4 of Chapter 8 for repair and maintenance costs.) Escalation of Energy Pri ces Energy Prices: EIA AEO2008forecasts (to 2030) and extrapolation to 2042. (See Section 8.2.2.3 of Chapter 8.) Energy Site-to-Source Conversion Conversion varies yearly and is generated by DOE/EIA’s NEMS* program (a time series conversion factor; includes electric generation, transmission, and distribution losses). Discount Rate 3 percent and 7 percent real. Present Year Future expenses are discounted to year 2007. * Chapter 14 on the Utility Impact Analysis and the Envi ronmental Assessment Report provide more detail on NEMS.

11-2511.5.2 NES Results The following sections provide NES results for the TSLs analyzed for the considered products. NES results are cumulative to 2042 and are shown as primary energy savings. NWS results are expressed in bill ions of gallons. DOE based the inputs to the NIA Model on weighted-average values, yielding re sults that are discrete point va lues, rather than a distribution of values as in the LCC and PBP Analysis.

11.5.2.1 Cooktops and Ovens This section provides NES results for the e fficiency levels considered for the three product classes of cooktops and the four product classes of ovens. Tables 11.5.2 and 11.5.3 show the NES results for the candidate standardlevels and TSLs analyzed for cooktops and ovens, respectively.
Table 11.5.2 Cooktops: Cumulative NES Results

CSL Electric Coil Electric Smooth Gas
TSL EF NES quads TSL EF NES quads TSL EF NES Quads Baseline 1 0.737

- 1, 2, 3 0.742

- - 0.156

- 1 2, 3, 4 0.769 0.04 4 0.753 0.02 1, 2, 3 0.399 0.10 2 4 0.420 0.15
Table 11.5.3 Ovens: Cumulative NES Results

CSL Electric Standard Electric Self-Cle an Gas Standard Gas Self-Clean
TSL EF NES quads TSL EF NES quads TSL EF NES quads TSL EF NES quads Base 1 0.1066

- 1, 2, 3 0.1099

- - 0.0298

- 1, 2 0.0540

-

1*

- 0.1113 0.03

- 0.1102 0.01

- 0.0536 0.04 3 0.0625 0.09 2 2, 3 0.1163 0.05 4 0.1123 0.04

- 0.0566 0.06

- 0.0627 0.09 3

- 0.1181 0.06

- 0.0572 0.07 4 0.0632 0.10 4

- 0.1206 0.07

- 0.0593 0.08 5 4 0.1209 0.07

- 0.0596 0.09 6 4 0.0600 0.09 1a* 1, 2, 3 0.0583 0.05 * For gas standard ovens, candidate standard levels 1 and 1a correspond to designs that are utilized for the same purpose—eliminate the need for a standi ng pilot—but the technologies for each design are different. Candidate standard level 1 is a hot surface ignition device while level 1a is a spark ignition device. Candidate standard level 1a is presented at the end of the table because levels 2 through 6 are derived from level 1. Tables 11.5.4 and 11.5.5 show the magnitude of the NES if the savings are discounted at rates of seven percent and three percent for cooktops a nd ovens, respectively.

11-26Table 11.5.4 Cooktops: Cumulative NES Results Di scounted at Seven Percent and Three Percent Electric Coil Electric Smooth Gas NES ( quads ) NES ( quads ) NES ( quads )
CSL TSL EF 7% disc. 3% disc. TSL EF 7% disc. 3% disc. TSL EF 7% disc. 3% disc. Base 1 0.737 - - 1, 2, 3 0.742 - - - 0.156 - -

1 2, 3, 4 0.769 0.01 0.02 4 0.753 0.00 0.01 1, 2, 3 0.399 0.03 0.05 2 4 0.420 0.04 0.08
Table 11.5.5 Ovens: Cumulative NES Results Discounted at Seven Percent and Three Percent Electric Standard Electric Self-Cle an Gas Standard Gas Self-Clean NES ( quads ) NES ( quads ) NES ( quads ) NES ( quads )
CSL TSL EF 7% disc. 3% disc. TSL EF 7% disc. 3% disc. TSL EF 7% disc. 3% disc. TSL EF 7% disc. 3% disc. Base 1 0.1066 - - 1,2,3 0.1099 - - - 0.0298 - - 1,2 0.0540 - -

1* - 0.1113 0.01 0.01 - 0.1102 0.00 0.00 - 0.0536 0.01 0.02 3 0.0625 0.02 0.04 2 2, 3 0.1163 0.01 0.03 4 0.1123 0.01 0.02 - 0.0566 0.02 0.03 - 0.0627 0.02 0.05 3 - 0.1181 0.01 0.03 - 0.0572 0.02 0.04 4 0.0632 0.02 0.05 4 - 0.1206 0.02 0.04 - 0.0593 0.02 0.04 5 4 0.1209 0.02 0.04 - 0.0596 0.02 0.04 6 4 0.0600 0.02 0.05 1a* 1,2,3 0.0583 0.01 0.03 * For gas standard ovens, candidate standard levels 1 and 1a correspond to designs that are utilized for the same purpose—eliminate the need for a standi ng pilot—but the technologies for each design are different. Candidate standard level 1 is a hot surface ignition device while level 1a is a spark ignition device. Candidate standard level 1a is presented at the end of the table because levels 2 through 6 are derived from level 1.
11.5.2.2 Microwave Ovens This section provides NES results for the e fficiency levels considered for microwave ovens. Table 11.5.6 shows the NES results fo r the TSLs analyzed for microwave ovens.
Table 11.5.6 Microwave Ovens: Cumulative NES Results

TSL EF NES Quads 1 0.586 0.08 2 0.588 0.09 3 0.597 0.11 4 0.602 0.12

11-27Table 11.5.7 shows the magnitude of the NES if the savings are discounted at rates of seven percent and three percent.
Table 11.5.7 Microwave Ovens: Cumulative NES Results Discounted at Seven Percent and Three Percent
TSL EF NES ( quads ) 7% discounted 3% discounted 1 0.586 0.02 0.05 2 0.588 0.02 0.05 3 0.597 0.03 0.06 4 0.602 0.03 0.07

11.5.3 Annual Costs and Savings To illustrate the basic inputs to the NP V calculations, Figure 11.5.1 presents the nondiscounted annual installed cost in creases and annual operating cost savings at the national level for TSL 3b for microwave ovens. The figure also shows the net savings, which is the difference between the savings and costs for each year. Th e annual equipment cost is the increase in the total installed cost for products purchased each year over the period 2012–2042. The annual operating cost savings is the savi ngs in operating costs for products operating in each year. The NPV is the difference between the cumulative annual discounted savings and the cumulative annual discounted costs. DOE could create fi gures like the one shown below for each of the considered products’ standard cases.

11-28-1.50 -1.30 -1.10 -0.90 -0.70 -0.50 -0.30 -0.10 0.10 0.30

2012 2017 2022 2027 2032 2037 2042 2047 2052

YearBillion of 2006 Dollars

Equipment Cost Operating Cost Savings Net Savings Figure 11.5.1 Non-Discounted Annual Installe d Cost Increases and Annual Operating Cost Savings for Micro wave Ovens, TSL 3

11.5.4 NPV Results The following sections provide NPV results fo r the candidate standards levels considered for the product classes of each considered product . Results are cumulative and are shown as the discounted value of these savings in dollar te rms. DOE based the inputs to the NIA Model on weighted-average values, yielding re sults that are discrete point va lues, rather than a distribution of values as in the LCC and PBP Analysis. The present value of increasedtotal installed costs is th e total annual installed cost increase (i.e., the difference between the standard s case and base case), discounted to the present, and summed over the time period in which DOE evaluates the impact of standards (i.e., from the effective date of standards, 2012, to the year 2042). Savings are decreases in ope rating costs (including energy) associated with the higher energy efficiency of equipment purchased in the st andards case compared to the base case. Total operating cost savings are the savings per unit multiplied by the number of units of each vintage (i.e., the year of manufacture) su rviving in a particular year. Equipment consumes energy and must be maintained over its entire lifetime. For units purchased up through 2042, the operating cost includes energy consumed until the la st unit is retired from service.

11-2911.5.4.1 Cooktops and Ovens This section provides NPV results based on discount rates of seven percent and three percent for the standard levels considered for cooktops and ovens. Tables 11.5.8 and 11.5.9 show the NPV results for the candidate standa rd levels analyzed for cooktops and ovens, respectively. Under the base case (i.e., without standards), th e cumulative national equipment and operating costs of cooking pr oducts based on a seven-per cent discount rate equal $61.7 billion and $56.6 billion, respec tively. Based on a three-percent discount rate, the cumulative national equipment and operating costs equal $118. 0 billion and $122.3 bill ion, respectively. Detailed results showing the breakdown of the NPV into national equipment costs and national operating costs are provided in Appendix 11B.
Table 11.5.8 Cooktops: Cumulative NPV Result s based on Seven-Percent and ThreePercent Discount Rates Electric Coil Electric Smooth Gas NPV NPV NPV NPV NPV NPV

CSL TSL EF @ 7% billion 2006$ @ 3% billion 2006$ TSL EF @ 7% billion 2006$ @ 3% billion 2006$ TSL EF @ 7% billion 2006$ @ 3% billion 2006$ Base 1 0.737

- - 1, 2, 3 0.742

- - - 0.156

- -

1 2, 3, 4 0.769 0.07 0.23 4 0.753 -7.26 -13.89 1, 2, 3 0.399 0.19 0.50 2 4 0.420 -0.73 -1.11
Table 11.5.9 Ovens: Cumulative NPV Results based on Seven-Percent and Three-Percent Discount Rates

CSL Electric Standard Electric Self-Cle an Gas Standard Gas Self-Clean

TSL EF NPV @ 7% billion 2006$ NPV @ 3% billion 2006$ TSL EF NPV @ 7% billion 2006$ NPV @ 3% billion 2006$ TSL EF NPV @ 7% billion 2006$ NPV @ 3% billion 2006$ TSL EF NPV @ 7% billion 2006$ NPV @ 3% billion 2006$ Base 1 0.1066

- - 1,2,3 0.1099

- - - 0.0298

- - 1,2 0.0540

- -

1*

- 0.1113 0.07 0.21

- 0.1102 -0.27 -0.50

- 0.0536 -0.18 -0.34 3 0.0625 -0.01 0.19 2 2, 3 0.1163 0.11 0.34 4 0.1123 -2.77 -5.21

- 0.0566 -0.38 -0.81

- 0.0627 -0.12 -0.01 3

- 0.1181 0.06 0.28

­ 0.0572 -0.38 -0.81 4 0.0632 -0.14 -0.04 4

- 0.1206 -0.74 -1.24

­ 0.0593 -0.82 -1.60 5 4 0.1209 -0.81 -1.37

­ 0.0596 -0.84 -1.64 6 4 0.0600 -0.91 -1.76 1a* 1,2,3 0.0583 0.02 0.11 * For gas standard ovens, candidate standard levels 1 and 1a correspond to designs that are utilized for the same

purpose—eliminate the need for a standi ng pilot—but the technologies for each design are different. Candidate standard level 1 is a hot surface ignition device while level 1a is a spark ignition device. Candidate standard level 1a is presented at the end of the table because levels 2 through 6 are derived from level 1.

11-3011.5.4.2 Microwave Ovens This section provides NPV results based on discount rates of seven percent and three percent for the standard levels considered fo r microwave ovens. Table 11.5.10 shows the NPV results for the trial standard levels analyzed for microwave ovens. Under the base case (i.e., without standards), the cumula tive national equipment and opera ting costs of microwave ovens based on a seven-percent discount ra te equal $36.4 billion and $22.9 billion, respectively. Based on a three-percent discount rate, the cumulativ e national equipment and operating costs equal $69.6 billion and $46.4 billion, respectively. Detailed results showi ng the breakdown of the NPV into national equipment costs and nationa l operating costs are pr ovided in Appendix 11B.
Table 11.5.10 Microwave Ovens: Cumulative NPV Results based on Seven-Percent and Three-Percent Discount Rates

TSL EF NPV 7% Discount Rate billion 2006$ 3% Discount Rate billion 2006$ 1 0.586 -0.61 -1.07 2 0.588 -1.60 -2.96 3 0.597 -3.06 -5.72 4 0.602 -4.94 -9.28

11.6 IMPACT OF STANDARDS ON NA TURAL GAS AND ELECTRICITY PRICES AND ASSOCIATED CONSUMER BENEFITS

11.6.1 Impact on Natural Gas Prices DOE conducted an analysis on the potential impact on natural gas prices resulting from the promulgation of new standards on cooking products at maximum technologically feasible (i.e., “Max Tech”) standard levels. “Max T ech” standard levels correspond to TSL 4 for cooktops and ovens and TSL 4 for microwave oven s. The analysis used a version of NEMS called NEM-BT, modified to account for energy savi ngs associated with th e proposed standards. As described in Chapter 14 on the utility impact analysis, using NEMS-BT for such an analysis typically involves using higher-d ecrement runs to isolate the impacts of the standards from numerical noise. DOE derived the price effect results associ ated with the energy savings resulting from the Max Tech standards using a regressed interpolati on toward the origin.
DOE examined the Max Tech scenario cons isting of TSL 4 for c ooktops and ovens and TSL 4 for microwave ovens. Figure 11.6.1 shows the change in total natural gas consum ption for the year 2030 (on the x-axis) resulting from Max Tech standard levels and the corresponding change in U.S. average wellhead natural gas price (on the y-axis). The points in Figure 11.6.1 that are labeled with

11-31“50x”, “60x” or “75x” represent the results for a series of higher decrement runs assuming various multiples of the savings resulting from the Max Tech scenarios. Each scenario has multiple points that represent the results using the Annual Energy Outlook (AEO) 2008 Reference Case. 6 The interpolated results for the Max Tech standard levels are shown in the upper right hand corner of Figure 11.6.1. For the Max Tech standard levels, NEMS predicts that the 2030 average wellhead natural gas price will remain unchanged fo r the cooking product standards. As shown in Table 11.6.1, re lative to AEO 2008 Refere nce Case values, the forecasted wellhead price decline in 2030 is zero pe rcent. Other outputs from NEMS show that the predicted reduction in the average-customer natural gas price in 2030 is also unchanged. b
Because the results shown in Table 11.6.1 show that cooking product energy efficiency standards at the Max Tech level have no impact on average well head prices, efficiency standards for cooking products, even at the Max Tech level, will have no effect on natural gas consumer prices.

50xCook Cook MaxTech Mar13

75xCook 60xCook

-1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 Change in Total Natural Gas Consumption (Quads) 0.02 0.00 -0.02 -0.04 -0.06 -0.08 -0.10 -0.12 -0.14 -0.16 -0.18Change in Wellhead Natural Gas Price (2006$/MBtu)

Figure 11.6.1 Wellhead Natural Gas Price Ch ange in 2030 Resulting from Reduced Natural Gas Consumption Associated with Max Tech Standard Levels

b The main customer sectors are electric po wer, industry, residential and commercial.
11-32Table 11.6.1 Impact of Max Tech Standard Leve ls on Natural Gas Consumption and Average Wellhead Price in 2030 No-Standard Case Max Tech Scenario Result Nat Gas Consumption Nat Gas Price Nat Gas Consumption Change in Consumption Nat Gas Price Change in Price Quads 2006$/ MMBtu Quads Quads % 2006$/ MMBtu 2006$/ MMBtu % Cooking Product Max Tech 21.4 6.63 21.4 -0.01 -0.1 6.63 0.00 0.0
The inverse price elasticity seen in NEMS to estimate the effect of consumption on price varies over the forecast period due to the dynami cs of natural gas supply and demand in NEMS (Figure 11.6.2). c The average value over the forecast period is 0.61 and 0.02 for cooking product standards (labeled as “Cook” in Figure 11.6.2).

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80Inverse Price Elasticity

Cook MaxTech CSL2015201620172018201920202021202220232024202520262027202820292030 Year Figure 11.6.2 Inverse Natural Gas Price Elasticity from NEMS Analysis for Cooking Product Max Tech Standard Levels The average inverse price elasticity (0.61 and 0.02) reported above is generally consistent with other studies that used various versions of NEMS to examine the impacts to natural gas prices resulting from reductions in natural gas demand. In a revi ew of a number of such studies, Wiser and Bollinger 7 examined analyses that reported the reduction in na tional natural gas

c Since the demand reduction in the early years after the st andard takes effect is small, the model results for those years may be less accurate than in later years.
11-33demand from certain energy policies and the resu lting decline in the wellhead gas price. Examining the average values of the inverse pr ice elasticity over the forecast period in each study, they found the average values to range from 0. 7 to 4.7. It is important to note that the average inverse price elasticities in 13 of 19 analyses were betw een 0.8 and 2.0, and the average value from DOE's current an alysis (0.90) falls in the lower end of this range. Although NEMS provides a detailed charac terization of natural gas supply, it is understandable that NEMS may not accurately repres ent the long-run supply of natural gas of the country since all aspects of the future are not certain. Howeve r, other widely used complex energy demand/supply models produ ce results that are similar to NEMS results, and NEMS is recognized as a reliable analyti cal tool. Table 11.6.2 compares th e results of modeling studies of the response of natural gas price to change in gas consumption. These results are summarized in a 2003 study by Stanford's Energy Modeling Forum. 8 While the magnitude of the price response (as summarized by the inverse pr ice elasticity) varies considerab ly among the models reviewed, in general, they confirm that a sizable price im pact is associated with changes in natural gas consumption. d It is worth noting that the NEMS long-run (2020) response is smaller than that of most of the other models.
Table 11.6.2 Implicit Natural Gas Inverse Price El asticity from Seven Energy Models 2005 2010 2015 2020 Average NEMS 1.8 2.2 0.53 0.11 1.2 POEMS 2.4 1.8 2.5 1.8 2.1 CRA 3.5 2.5 1.1 0.9 2.0 NANGAS 5.4 7.0 7.6 5.1 6.3 E2020 1.5 1.0 1.0 0.7 1.1 MARKAL N/A 2.0 N/A 2.1 2.1 NARG 8.7 12.4 5.6 2.4 7.3 NEMS (National Energy Modeling System, 2002); POEM S (Policy Office Electricity Modeling System), CRA (Charles River Associates), NANGAS (North American Natural Gas Analysis System), E2020 (Energy 2020), MARKAL (MARKet ALlocation), NARG (North American Regional Gas model) Source: Based on EMF, 2003
In addition to the models listed in Table 11.6.2, there exist studies conducted by the National Petroleum Council 9 and the National Commission on Energy Policy 10 that are based on the EEA model. The EEA model shows higher inverse price elasti cities (between 4.0 and 16.8), leading to larger natural gas price reductions for a given demand decrease, than those predicted by NEMS and most of the other national energy models.

d The EMF scenarios actually modeled the impact of increased gas demand on price. Assuming a smooth supply curve over the long term, however, the elasticities implied by an increase in demand should be essentially equivalent to those implied by a decrease in demand. Two of th e models (NANGAS and NARG) report somewhat anomalous inverse elasticities for undetermined reasons.
11-3411.6.2 Impact on Electricity Prices DOE also conducted an analysis on the potenti al impact on electric ity prices resulting from the promulgation of new standards on cooking products at maximum technologically feasible (i.e., “Max Tech”) standard levels. “Max Tech” standard leve ls correspond to TSL 4 for cooktops and ovens and TSL 4 for microwave oven s. The analysis used a version of NEMS called NEMS-BT, modified to account for en ergy savings associated with the proposed standards. Again, using NEMS-BT for such an analysis typically involves using higherdecrement runs to isolate the impacts of the st andards from numerical noise. DOE derived the price effect results associated with the energy savings resultin g from the Max Tech standards using a regressed interpol ation toward the origin.
DOE examined the Max Tech scenario cons isting of TSL 4 for c ooktops and ovens and TSL 4 for microwave ovens. Figure 11.6.3 shows the change in total electric power cons umption for the year 2030 (on the x-axis) resulting from Max Tech standard levels and the corresponding change in U.S. average electricity price (on the y- axis). The points in Figure 11. 6.3 that are labeled with “50x”, “60x” or “75x” represent the re sults for a series of higher de crement runs assuming various multiples of the savings resulting from the Max Tech scenarios. Each scenario has multiple points that represent the results using the Annual Energy Outlook (AEO) 2008 Reference Case. 5 The interpolated results for the Max Tech sta ndard levels are shown in the upper right hand corner of Figure 11.6.3. For the Max Tech standa rd levels, NEMS predicts that the 2030 average electricity price will remain unchanged for the cooking product standards. As shown in Table 11.6.3, relative to AEO 2008 Reference Case values , the forecasted electricity price decline in 2030 is zero percent. Other outputs from NEMS show that the predicted reduction in the average-customer electricity price in 2030 is also unchanged. e
Because the results shown in Table 11.6.3 show that cooking product energy efficiency standards at the Max Tech level have no imp act on average electricity prices, efficiency standards for cooking products, even at the Max T ech level, will have no effect on the average electricity price to end users.

e The main customer sectors are electric po wer, industry, residential and commercial.
11-35Cook MaxTech

50xCook Mar13 75xCook 60xCook 0.00
-0.01
-0.02
-0.03
-0.04
-0.05
-0.06
-0.07 -0.7 -0 .6 -0.5 -0.4 -0.3 -0.2 -0.1 0.0 C hange in Total Electricity Consumption (Quads)

Figure 11.6.3 Electricity Price Change in 2030 Resulting from Reduced Electricity Consumption Associat ed with Max Tech Standard Levels
Table 11.6.3 Impact of Max Tech Standard Levels on Electricity Consumption and Price in 2030Change in Electricity Price (2006-$/MBtu)

No-Standard Case Max Tech Scenario Result Electricity Consumption Electricity Price Electricity Consumption Change in Consumption Electricity Price Change in Price Quads 2006$/ MMBtu Quads Quads % 2006$/ MMBtu 2006$/ MMBtu % Cooking Product Max Tech 49.21 25.93 49.20 -0.01 -0.02% 25.93 0.00 0.0
The inverse price elasticity seen in NEMS is used to estimate the effect of consumption on price varies over the forecast period due to the dynamics of energy supply and demand in NEMS (Figure 11.6.4). f The average value over the forecast period is 0.67 and 0.30 for cooking product standards (labeled as “Cook” in Figure 11.6.4).

f Since the demand reduction in the early years after the st andard takes effect is small, the model results for those years may be less accurate than in later years.
11-36Inverse Price Elasticity 1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00 Cook MaxTech CSL2015201620172018201920202021202220232024202520262027202820292030 Year Figure 11.6.4 Inverse Electricity Price Elasti city from NEMS Analysis for Cooking Product Max Tech Standard Levels

11-37REFERENCES

1 U.S. Department of Energy-Office of Energy Efficiency and Renewable Energy. Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Residential Dishwa shers, Dehumidifiers, Cooking Products, and Commercial Clothes Washers , September, 2008. Washington, DC. < http://www1.eere.energy.gov/buildings/appliance_ standards/residential/home_appl_tsd.html >
2 U.S. Department of Energy-En ergy Information Administration. Annual Energy Outlook 2009 Early Release , December, 2008. Washington, DC. < http://www.eia.doe.gov/oiaf/aeo/ >

3 RS Means. Mechanical Cost Data, 31 st Annual Edition , 2008. Kingston, MA.

4 Craftsman Book Company, 2008 National Home Improvement Estimator . 2008. Carlsbad, CA. < http://craftsman-book.com/products/index.php?main_page=cbc_product_book_info&products_id=396 >
5 Craftsman Book Company, 2008 National Repair & Remodeling Estimator . 2008. Carlsbad, CA. < http://craftsman-book.com/products/index.php?main_page=cbc_product_book_info&products_id=400 >

6 U.S. Department of Energy - En ergy Information Administration, Annual Energy Outlook 2008 (Revised Early Release) with Projections to 2030 . 2008: Washington, DC. < http://www.eia.doe.gov/oiaf/aeo/ >

7 Ryan Wiser, Mark Bolinger, and Matt St. Clair, Easing the Natural Gas Crisis: Reducing Natural Gas Prices through Increased Depl oyment of Renewable Energy and Energy Efficiency . 2005, Lawrence Berkeley National Laboratory.

8 Natural Gas, Fuel Diversity and North American Energy markets , Energy Modeling Forum, Stanford University.

9 Balancing Natural Gas Policy - Fueling th e Demands of a Growing Economy, Vol. I Summary of Findings and Recommendations , National Petroleum Council.

10 National Commission on Energy Policy, Increasing U.S. Natural Gas Supplies: A Discussion Paper and Recommendations from the National Commission on Energy Policy . 2003.

11-38