17712 Federal Register / Vol. 53, No. 96 / Wednesday, May 18, 1988 / Proposed Rules

DEPARTMENT OF ENERGY

Office of Conservation and

Renewable Energy

10 CFR Part 430

[Docket No. CE-RM-88-1011

Energy Conservation Program for

Consumer Products; Advance Notice

of Proposed Rulemaking and Request

for Public Comments Regarding

Energy Conservation Standards for

Dishwashers, Clothes Washers, and

Clothes Dryers

AGENCY: Department of Energy.

ACTION: Advance Notice of Proposed

rulemaking.

SUMMARY: The Energy Policy and

Conservation Act (EPCA), as amended

by the National Energy Conservation

Policy Act (NECPA) and the National

Appliance Energy Conservation Act

(NAECA), requires the Department or

Energy to administer a program of

energy conservation standards for 12

types of household appliances. This

advance notice of proposed rulemaking

addresses the requirement of EPCA: to

consider amending the energy

conservation standards for dishwashers,

clothes washers, and clothes dryers.

The purpose of this advance notice of

proposed rulemaking is to: (1) Present

for comment the product classes that

DOE is planning to analyze; (2) present

a detailed discussion of the expected

analytical methodology and analytical

models that the Department expects to

use in performing the analysis to support

this rulemaking; and (3) facilitate the

gathering of information prior to

publishing the notice of proposed

rulemaking.

DATES: Written comments in response to

this advance notice of proposed

rulemaking must be received by the

Department by July 18, 1988.

ADDRESSES: Written comments are to be

submitted to: U.S. Departmen of Energy,

Office of Conservation and Renewable

Energy, Office of Hearings and Dockets,

Energy Efficiency Standards for

Consumer Products, Docket No. CERM-88-1o1, Room 6B-025, Forrestal

Building, 1000 Independence Avenue,

SW., Washington, DC 20585, (202) 586-

9320.

FOR FURTHER INFORMATION CONTACT:

Dr. Barry P. Berlin, U.S. Department of

Energy, Office of Conservation and

Renewable Energy, Mail Station CE132, Forrestal Building, 1000

Independence Avenue, SW.,

Washington, DC 20585, (202) 586-9127

Eugene Margolis, Esq., U.S. Department

of Energy, Office of General Counsel,

Mail Station GC-12, Forrestal

Building, 1000 Independence Avenue,

SW., Washington, DC 20585, (202)

586-9507

SUPPLEMENTARY INFORMATION:

1. Introduction

a. Authority

b. Background

11. Methodology

III. Models, Data and Assumption

a. Engineering Performance Models and

Costing Analysis

1. Appliance Classes

2. Baseline units

3. Design options

4. Maximum technologically feasible designs

5. Performance models

6, Costing analysis

7. Price-efficiency relationships

8. Data sources

9. Outputs from the Engineering Analysis

b. LBL Residential Energy Model (LBU-REM)

1. Structure

2. Housing stock submodel

3. Efficiency choice algorithm

4. Thermal integrity

5. Modeling efficiency standards

6. Turnover of appliance stocks

7. Calculation of market shares

8. Usage behavior

9. Energy consumption calculations

10. Model outputs

11. Other consumer impacts

c, Manufacturer Impact Models

1. Conceptual approach

a Measures of impact

3. LBL Manufacturer Impact Model (LBLMIM)

4. Data sources

d. Utility Impact Model

e. Sensitivity Analyses

IV. Comments

a. Questions for Public Comment

b. Comment Procedures

1. Introduction

a. Authority

Part B of Title III of the Energy Policy

and Conservation Act (EPCA), Pub. L.

94-163, as amended by the National

Energy Conservation Policy Act

(NECPA), Pub. L. 95-619, and by the

National Appliance Energy

Conservation Act (NAECA), Pub. L.100-

12,' created the Energy Conservation

Program for Consumer Products other

than Automobiles. The consumer

products subject to this program (often

referred to hereafter as "covered

products") are: refrigerators

-refrigerator-freezers and freezers; room

air conditioners; central air conditioners

and central air conditioning heat pumps;

I Part B of Title III of EPCA as amended by

NECPA and NAECA, is referred to in this notice as

the "Act." Part B of Title III is codified at 42 U.S.C.

6291 at seq. Part B of Title III of EPCA, as amended

by NECPA only, is referred to in this notice as

NECPA.

water heaters; furnaces; dishwashers;

clothes washers; clothes dryers; direct

heating equipment; kitchen ranges and

ovens; pool heaters; and television sets;

as well as any other consumer product

classified by the Secretary of Energy.

See section 322. To date, the Secretary

has not so classified any additional

products.

Under the Act, the program consists

essentially of three parts: testing,

labeling, and Federal energy

conservation standards. The

Department of Energy (DOE or

Department), in consultation with the .

National Bureau of Standards (NBS), is

required to amend or establish new test

procedures as appropriate for each of

the covered products. Section 323. The

purpose of the test procedures is to

provide for test results that reflect the

energy efficiency, energy use, or

estimated annual operating costs of

each of the covered products. Section

323(b)(3). A test procedure is not

required if DOE determines by rule that

one cannot be developed. Section

323(d)(1). Beginning one hundred and

eighty days after a test procedure for a

product is adopted, no manufacturer

may represent the energy consumption

of, or the cost of energy consumed by

the product except as reflected in tests

conducted according to the DOE

procedure. Section 323(c)(2).

The Federal Trade Commission (FTC)

is required by the Act to prescribe rules

governing the labeling of covered

products for which test procedures have

been prescribed by DOE. Section 324(a).

These rules are to require that each

particular model of a covered product

bears a label that indicates its annual

operating cost and the range of

estimated annual operating costs for

other models of that product. Section

324(c)(1). Disclosure of estimated

operating cost is not required under

section 324 if the FTC determines that

such disclosure is not likely to assist

consumers in making purchasing

decisions or is not economically

feasible. In such a case, FTC must

require a different useful measure of

energy consumption. Section 324(c). At

the present time there are FTC rules

requiring labels under the Act for the

following products: room air

conditioners, furnaces, clothes washers,

dishwashers, water heaters, freezers,

refrigerators, refrigerator-freezers and

central air conditioners. 44 FR 66475,

November 19, 1979, and 52 FR 46888,

December 10, 1987.

For each of 11 of the covered

products, the Act prescribes an initial

Federal energy conservation standard.

Section 325(b)-(h). The Act establishes

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effective dates for the standards in 1988,

1990, 1992 or 1993, depending on the

product, and specifies that the standards

are to be reviewed by the Department

within three to ten years, also depending

on the product, Section 325 (b) through

(h). After the specified three- to ten-year

period, DOE may promulgate new

standards for each product; however,

such standards may not be less stringent

than those initially established by the

Act. Section 325(1)(1).

The Act also directs DOE to review,

for possible amendment, the energy

conservation standards on dishwashers,

clothes washers, and clothes dryers, and

to issue a final rule no later than

January 1, X990, for units manufactured

after January 1, 1993. Section

325(g)(4)(A).

The Act also permits the Department

to prescribe standards for any other

type of consumer product that, using

certain criteria, DOE may classify as a

covered product. Section.325 (1), (1) and

(m). Any new or amended standard is

required to be designed so as to achieve

the maximum improvement in energy

efficiency that is technologically

feasible and economically justified.

Section 325(i)(2)(A).

Section 325(1)(2)(B)(i) provides that

before DOE determines whether a

standard is economically justified, it

must first solicit comments on a

proposed standard. After reviewing

comments on the proposal, DOE must

then determine that the benefits of the

standard exceed its burdens, based, to

the greatest extent practicable, on a

weighing of the following seven factors:

(1) The economic impact of the

standard on the manufacturers and on

the consumers of the products subject to

such standard;

(2) The savings in operating costs

throughout the estimated average life of

the covered product in this type (or

class) compared to any increase in the

price of, or in the initial charges for, or

maintenance expenses of, the covered

products which are likely to result from

the imposition of the standard;

(3) The total projected amount of

energy savings likely to result directly

from the imposition of the standard;

(4) Any lessening of the utility or the

performance of the covered products

likely to result from the imposition of the

standard;

(5) The impact of any lessening of

competition, determined in writing by

the Attorney General, that is likely to

result from the imposition of the

standard;

(6) The need for national energy

conservation; and

(7) Other factors the Secretary

considers relevant. In addition, the Act

specifies criteria for petitions to DOE in

regard to amendments to standards.

Section 325(k). Under the Act, any

person may petition the Department to

amend a Federal energy conservation

standard for any covered product.

Section 325(k)(1).

•b. Background

NECPA required the Secretary, by

rule, to prescribe energy efficiency

standards for each of 13 covered

products.2 These standards were to be

designed to achieve the maximum

improvement in energy efficiency that

was technologically feasible and

economically justified.

NECPA provided, however, that no

standard for a product was to be

established if there were no test

procedure for the product, or if DOE

determined by rule either that a

standard would not result in significant

conservation of energy, or that a

standard was not technologically

feasible or economically justified. In

determining whether a standard was

economically justified, the Department

was directed to determine whether the

benefits of the standard exceeded its

burdens by weighing the seven factors

set forth above.

NECPA specified the priorities and

procedures to be followed in adopting

efficiency standards. Nine of the 13

covered products were given priority.

These nine products were: refrigerators

and refrigerator-freezers, freezers,

clothes dryers, water heaters, room air

conditioners, home heating equipment

not including furnaces, kitchen ranges

and ovens, and central air conditioners.

The DOE published an advance notice

of proposed rulemaking for the nine first

priority products on January 2, 1979. 44

FR 20. On December 13, 1979, the DOE

published an advance notice of

proposed rulemaking for dishwashers,

television sets, clothes washers, and

humidifiers and dehumidifiers. 44 FR

72276. An advance notice for central air

conditioners (heat pumps) was

published on January 23, 1980. 45 FR

5602.

After receiving comments on the

advance notices, on June 30, 1980, DOE

published its first proposed rulemaking

for the nine products. 45 FR 43976.

(Hereafter referred to as the June 1980

proposal.) The June 1980 proposal set

forth DOE's proposed energy efficiency

2 The consumer products covered by NECPA

included: refrigerators and refrigerator-freezers;

freezers; dishwashers; clothes dryers; water heaters;

room air conditioners; home heating equipment not

including furnaces; television sets; kitchen ranges

and ovens; clothes washers: humidifiers and

dehumidifiers; central air conditioners; and

furnaces.

17713

standards for these covered products. It

also proposed comprehensive

requirements for certification and

enforcement of the standards and

procedures for processing petitions by

States that sought exemption for

regulations subject to the general

preemption requirements of NECPA.

On April 2,1982, DOE issued a further

notice of proposed rulemaking with

respect to the nine priority products. 47

FR 14424. (Hereafter referred to as the

April 1982 proposal). With respect to

eight of the products, DOE proposed to

make a determination that a standard

would not result in significant

conservation of energy and would not

be economically justified.3 The April

1982 proposal also proposed rules

governing petitions to DOE both by

States to obtain exemption from

preemption of State or local energy

efficiency standards, as well as by

manufacturers to obtain preemption of

State or local standards.

On December 22, 1982, DOE published

a final rule in which DOE determined

that efficiency standards were not

warranted for clothes dryers and

kitchen ranges and ovens. 47 FR 57198.

(Hereafter referred to as the December

1982 final rule.) At that time, DOE also

adopted final procedures by which

States might obtain exemption for State

or local efficiency standards from

Federal preemption, and by which

manufacturers might obtain preemption

of a State or local standard not

otherwise preempted.

On August 30,1983 , DOE published a

final rule with respect to the remaining

six covered products; refrigerators and

refrigerator-freezers, freezers, water

heaters, furnaces, room air conditioners

and central air conditioners. 48 FR

39376. (Hereafter referred to as the

August 1983 final rule). For each of the

six products covered by the August 1983

final rule, except central air

conditioners, DOE determined that an

energy efficiency standard would not

result in significant conservation of

energy and would not be economically

justified. With respect to central air

conditioners, DOE found that an energy

efficiency standard would result in

significant conservation of energy, but

would not be economically justified.

On April 1, 1985, DOE published a

proposed rule with respect to four

covered products: dishwashers,

8 The April 1982 proposal did not propose any

rule with respect to the product type "home heating

equipment, not including furnaces" or with respect

to that class of the product water heaters made up

of heat pump water heaters or with respect to those

classes of the product central air conditioners that

are heat pumps.

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television sets, clothes washers and

humidifiers and dehumidifiers. 50 FR

12966. (Hereafter referred to as the April

1985 proposal). For each of the four

products covered by the 1985 proposal,

DOE proposed that an energy efficiency

standard would not be economically

justified and would not result in a

significant conservation of energy.

During 1983, DOE's December 1982

and August 1983 final rules were

challenged in a lawsuit brought by the

Natural Resources Defense Council

(NRDC) and others against the

Department. On July 16,1985, the U.S.

Court of Appeals set aside DOE's

December 1982 and August 1983 final

rules. NRDC v. Herrington, 768 F.2d 1355

(D.C. Cir. 1985).

Consequently, on March 5, 1986, DOE

published notices in theFederal Register

removing the December 1982 and August

1983 final rules and withdrawing the

April 1985 proposal. 51 FR 7549 and 51

FR 7582.

The National Appliance Energy

Conservation Act (NAECA), which

became law on March 17,1987, amended

EPCA in part by: redefining "covered

products" (specifically, refrigerators/

refrigerator-freezers, and freezers were

combined into one product type from

two; humidifiers and dehumidifiers were

deleted; and pool heaters were added);

establishing Federal energy

conservation standards for 11 of the 12

covered products (with television sets

being the exception); and creating a

schedule for which these standard levels

are to be reviewed to determine if they

should be amended. The effective date

of NAECA's standards for the three

products being addressed in this

ANOPR was January 1, 1988.

The Act directs DOE to publish an

advance notice of proposed rulemaking

(ANOPR), with a 60-day comment

period, in advance of the Department's

consideration of prescribing a new or

amended standard. Section 325(m)(1).

On December 7,1987, DOE published

such an ANOPR with respect to

consideration of amending the NAECAimposed standard levels on '

refrigerators, refrigerator-freezers, and

freezers, of establishing a small gas

furnace standard between 71 percent

and 78 percent efficiency, and of

considering energy conservation

standards for television sets.

Publication of the final rule in the

Federal Register for which this

document is an advance notice is

scheduled'by January 1, 1990. The

purpose of this rulemaking is to review,

for possible amendment, the energy

conservation standards for dishwashers,

clothes washers, and clothes dryers, that

have been established by the Act.

II. Methodology

This section provides a brief

description of the analysis of the

impacts of standards. It offers an

overview of the analytic methodology,

and discusses the major components of

the analysis: the Engineering Analysis,

the Manufacturer Analysis, and the

Impact Analysis which includes the

Consumer Analysis. The section also

discusses the interrelationships among

the components which ensure

consistency throughout the analysis.

A later discussion, Impact Models,

Data and Assumptions, describes the

computer models used in the analysis.

The models predict the response of

consumers, manufacturers, and utilities

to future changes in the economy,

including the imposition of energy

conservation standards. Quantitative

estimates of the impacts of standards

will be calculated from the outputs from

the models. The models that will be

utilized in the analysis are:

• Engineering Performance Models.

Consumer Impact Models.

• Manufacturer Impact Models.

• Utility Impact Model.

The function, data sources,

assumptions and validity of the results

for each model are discussed below.

The impact of appliance conservation

standards will be determined by -

comparing projections under the base

case,4 with the projections under

potential standards. These projections

will first be made for a base case by use

of the analytic models described below.

The calculations will then be repeated

imposing the potential standard levels.

The differences between the

projections of the energy consumption

and economic variables in the base and

standards cases provide quantitative

estimates of the impacts of the

standards. To evaluate the significance

of the differences, 'a sensitivity analysis

will be performed on the key parameters

and assumptions.

The economic analysis will be

performed in the following areas:

• An Engineering Analysis, which

establishes the technical feasibility and

product attributes including costs of

design options to improve appliance'

efficiency.

• A Manufacturer Analysis, which

provides an estimate of manufacturers'

response to the proposed standards.

Their response is quantified by changes

in several financial performance

measures.

* The base case assumes implementation of the

conservation standards that were set by the Act.

• A Consumer Analysis, which

forecasts appliance sales, efficiencies,

energy use, and consumer expenditures.

• A separate Life-Cycle Cost Analysis

to evaluate the savings in operating

expenses relative to increases in

purchase price.

• A Utility Analysis that measures

the impacts of the altered energyconsumption patterns on electric

utilities.

• An Industry Impact Analysis that

provides the financial and competitive

impacts on the appliance industry.

• A Cost-Benefit Analysis that

collects the results of all the analyses

into the net benefits and costs from a

national perspective.

Each analysis area will be performed

for each of the three products under

consideration. The results of the

Engineering Analysis will be reviewed

by DOE to determine whether standards

for each product could yield measurable

energy savings. If standards would not

yield energy savings, for example, if

there is no combination of design

options that would result in improved

product efficiency, the analysis will be

terminated. If energy savings are

possible, then a detailed analysis is

performed. For dishwashers, clothes

washers and clothes dryers, the analysis

will be performed for a base case plus

three levels of standards. The levels to

be analyzed will be selected after the

Engineering Analysis is completed and

reviewed.

There is interaction among the

Engineering, Consumer, Utility and

Manufacturer Analyses. The

Engineering Analysis establishes

appliance designs and related attributes

such as efficiency and costs. Based on

the relationships between the prices and

efficiencies of design options, the

Consumer Analysis forecasts sales and

efficiencies of new and replacement

appliances. These data are used as

inputs to the Manufacturer Analysis,

which uses them to determine the

financial impacts on prototypical firms

within the industry. The Consumer

Analysis also forecasts energy savings

and consumer expenditures on the

purchase and operation of the

appliances. Consumer expenditures

(both purchase and operation) are

employed in the Life-Cycle Cost

Analysis to determine consumer

impacts. Changes in sales, revenues,

investments, and marginal costs of

utilities are calculated from the energy

savings in the Utility Analysis.

Three periods of time are considered

by the analysis. First, the analysis

extends over a time period that is

consistent with the lifetimes of each of

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the products. Second, the Manufacturer

Analysis is performed for a typical year

after the standards have been imposed.

The typical year selected is the fifth, by

which time all major impacts of a

standard would have occurred. Third,

the Engineering Analysis examines the

technical feasibility of improving the

efficiency of the covered products

before the standards are effectivewithin the next three to five years.

III. Models, Data and Assumptions

a. Engineering Performance Models and

Costing Analysis

The Engineering Analysis addresses

two statutory requirements. The first

requirement is the Department's

evaluation of the maximum

improvements in energy efficiency that

are technologically feasible. The second

relates to the lessening of utility to the

consumer of any of the covered products

due to the imposition of standards. In

addition, the Engineering Analysis

provides information on efficiencies,

manufacturing costs, and appliance

prices to other components of the

overall analysis.

The features of appliances that

provide utility to the consumer are

incorporated into the analysis through

the creation of appliance classes.

Classes are a subset of appliance types.

For example, clothes washers comprise

an appliance type, while front-loading

washers comprise an appliance class.

The Engineering Analysis develops cost

and efficiency data for a set of design

options within each appliance class.

These data are the output of the

engineering performance models and

costing analysis discussed in

subsections 5-9, below.

1. Appliance Classes

The first step in the Engineering

Analysis is to segregate product types

into separate classes to which different

energy conservation standards apply.

Classes are differentiated by the type of

energy use ( oil, natural gas or

electricity), or capacity or performancerelated features that provide utility to

the consumer and affect efficiency.

Classes are differentiated in order to

ensure that consumer products having

different capacities or other

performance-related features affecting

efficiency and utility remain available to

consumers.

For each of the three appliances, the

following are the classes that the

Department plans to review. DOE

welcomes comments, in response to

today's notice, on whether additional

classes are needed.

(i) Dishwashers. The following are the

classes of dishwashers that the

Department is proposing to examine:

Compact Dishwasher

Standard Dishwasher

Water Heating Dishwasher, Compact (115V)

Water Heating Dishwasher, Standard (115V)

Water Heating Dishwasher, Compact (230V)

Water Heating Dishwasher, Standard (230V)

Compact dishwashers use less water

and energy than standard size

dishwashers. While standard size

dishwashers have an exterior width

greater than or equal to 22 inches,

compacts have an exterior width less

than 22 inches.4A

Water-heating dishwashers have the

ability to heat incoming hot water.

Water-heating dishwashers allow for a

lower inlet water temperature since they

can operate at that temperature by

providing internal water heating in at

least one wash phase.

(ii) Clothes Washers. Six classes of

clothes washers are specified in this

notice. These are:

Front Loading

Suds Savers

Top Loading, Compact

Top Loading, Standard

Top Loading, Large

Top Loading, Semi Automatic

Front loading washing machines use

less water than top loaders; since most

of the energy used by a clothes washer

is for heating water, front loaders, by

using less water, consume less energy.

On the other hand, top loaders spin the

clothes dryer. Suds savers can reuse

suds and warm water from an earlier

wash by pumping them back into the

washer; therefore, less energy is used

since less water is heated.

The Department is planning to divide

top loading washers into three classes

by capacity: compact (1.6 cubic feet, or

less), standard capacity (1.6 to 2.59 cubic

feet), and large capacity (2.6 cubic feet,

or greater) since the size of the unit

affects the amount of water used and, in

turn, the amount of energy used. In

addition, a separate class for semiautomatic clothes washers is specified,

since the Department has estimated

higher hot and warm water usage for

semi-automatic than for fully automatic

clothes washers.

(iii) Clothes Dryers. Five classes of

clothes dryers are specified in this

notice. These are:

'" These definitions of "standard" and "compact"

differ from the definitions in the Federal Trade

Commission's Appliance Labeling Regulations,

where a "standard" size dishwasher is defined as

one capable of cleaning 8 place-settings at a time.

Therefore, some dishwashers that the FTC classifies

as "standard" would be classified as "compact" by

these proposed classes. -

Electric, Standard

Electric, Compact (120V)

Electric, Compact (240V)

Gas, Standard

Gas, Compact

These classes are distinguished by

different energy sources and by

performance-related features. Gas and

electricity are the energy sources. The

performance-related features include

drum capacity and application voltage.

Class distinctions were considered

based on the type of control used to end

the drying cycle but are not being

proposed. The three types of control

systems are: (1) a present time control,

(2) an automatic temperature-sensing

control, and (3) an automatic moisturesensing control. The energy efficiency

for a dryer is related to these controls.

However, product classes based on

these controls were not established

because: (1) the test procedure accounts

for effects of controls with a field use

factor, which gives efficiency "credits"

for automatic controls; and, (2) the

Department does not believe that

automatic controls provide utility to the

consumer,

Product classes were established for

electric dryers based on drum capacity

and application voltage. The test

procedures specify two sizes of drum

capacity. These are: (1) compact, electric

dryers with a drum capacity of less than

4.4 cubic feet and (2) standard -electric

dryers with a drum capacity of 4.4 cubic

feet or more. The compact dryers tend to

be less energy-efficient than the

standard dryers. Also, since compact

dryers provide utility-they are suitable

for small spaces-a separate class was

established for them.

Separate product classes were

established for compact electric dryers,

based on appliance voltage. The 120-volt

dryer tends to dry clothes at lower

temperatures and for longer time periods

than the 240-volt dryer. In general, the

240-volt dryer is less energy-efficient,

because, by operating at higher

temperatures (even for shorter time

periods), it consumes more energy per

load. Many consumers feel that the 120-

volt dryer has utility because it can be

installed anywhere, while the 240-volt

dryer must be near a 240-volt outlet.

Since the 240-volt compact electric dryer

is less energy-efficient and provides

utility to consumers, a separate product

class was established for it.

A clothes dryer's efficiency is related

to its drum capacity. Larger drums have

a higher thermal capacity and, therefore,

require more energy to reach a desired

temperature than do smaller drums.

Since the test procedure uses a fixed

load size, independent of drum size.

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larger capacity dryers use more energy

per pound of clothes, as measured by

the test procedure. In addition, the air

flow through the tumbling clothes is

affected by the ratio of the load size to

the drum size. If small loads are used in

large drums, the air tends to bypass the

clothes, increasing the energy required

to dry the test loads. Using the same test

load for all sizes of standard dryers

means smaller capacity standard dryers

have higher energy efficiency (as

measured by the test procedure) than

large capacity standard dryers.

Relationships between efficiency and

capacity were derived from data

submitted by individual manufacturers.

Testimony submitted by industry on the

June 1980 proposal indicated that gas

units would have the same relationship

between efficiency and capacity as

electric ones do. Data from these

sources all indicated a distinct negative

relationship between capacity and

efficiency for standard size electric

units; that is, the larger the drum size,

the lower the efficiency. The same

relationship was assumed for electric

and gas units. For compact units, the

available data were inconclusive about

the relationship between efficiency and

capacity. In some cases, as capacity

increased, efficiency increased; in other

cases, the opposite relationship existed.

In any case, the extent of the

relationship was small. Therefore, the

standard for compact dryers was

assumed to be independent of capacity.

2. Baseline Units

For the purpose of generating a cost/

efficiency relationship the Engineering

Analysis needs to define a starting point

or baseline. The Engineering Analysis

uses information gathered from trade

organizations, manufacturers, and

consultants with expertise in specific

product types to select a baseline unit.

In past analyses a baseline unit

represents a typical model within an

appliance class sold during the base

year of the analysis. For this analysis,

DOE intends to use the same baseline

units as in the April 1982 (for clothes

dryers) and April 1985 (for dishwashers

and clothes washers) proposals.5 Once

identified, each baseline unit is

characterized by its efficiency-related

design options.

3. Design Options

The Engineering Analysis will identify

individual or combinations of design

6 See Consumer Products Efficiency Standards

Engineering Analysis Document, March 1982, DOE/

CE-0030 and Technical Support Document Energy

Use Projections for Four Consumer Products, DOE/

CS/20315-1, March 1985.

options with a potential for improving

energy efficiency. Design options that

are currently on the market or that are

likely to be on the market by the time

standards are effective January 1, 1993,

will be considered.

The following is a list of design

options that will be examined:

(i) Dishwashers

(A) Improved Food Filters

(B) Improved Spray Arm Geometry

(C) Improved Fill Control

(D) Modified Sump Geometry

(E) Optional Power Dry

(F) Reduced Inlet Water Temperature

(G) Improved Motor Efficiency

(H) Increased Insulation

(ii) Clothes Washers

(A) Eliminate Warm Rinse

(B) Improved Fill Control

(C) Water Use Reduction From Changed

Configuration

(D) Reduced Thermal Mass

(E) Saved Suds

(F) Added Insulation

(G) Improved Motor Efficiency

(H) Thermostatically-Controlled Mixing

Valves

(I) Electrolytic Dissociation of Water

(J) Ultrasonic Vibration

(iii) Clothes Dryers

(A) Automatic Termination by Moisture

Sensing

(B) Automatic Termination by Temperature

Sensing

(C) Added Insulation

(D) Condenser Use

(E) Recycle Heat Exchanger Use

(F) Inlet Air Preheat

(G) Modified Operating Conditions

(H) Heat Pump Use

(I) Microwave Dryer Use

4. Maximum Technologically Feasible

Designs

The analysis also will identify the

combination of design options in each

class that DOE believes would yield the

highest efficiency and could be

commercially produced by the time

standards are effective. This represents

the maximum technologically feasible

efficiency level.

5. Performance Models

Computer simulation models will be

used to determine efficiency levels for

various design options for dishwashers,

clothes washers, and clothes dryers. The

energy consumption of these appliances

is based on data collected by DOE,

including measured performance data

obtained from manufacturer testing.

6. Costing Analysis

The manufacturer cost data are being

obtained through a process that includes

meetings and evaluation of

manufacturing facilities, manufacturers'

costing data, and review of the data

received. The cost data that will be

presented for each product class will

represent the average of figures

obtained from at least two different

sources. It will be in the form of

incremental cost data disaggregated into

labor, purchased parts, materials,

shipping/packaging and tooling.

7. Price-Efficiency Relationships

The results of the Engineering

Analysis are summarized in the priceefficiency relationships that show the

efficiency, unit energy consumption, and

cost of each design option, and

combination of design options, for each

appliance class. Manufacturer and

dealer markups are applied to the

manufacturing costs to determine the

purchase price of the appliance. The

price-efficiency relationships are a

fundamental input to the Consumer

Analysis,

8. Data Sources

Shipments, data will be based on

information from industry sources and

published data from industry trade

associations. Cost of purchased -

materials and parts will be based on

quotations from the suppliers of these

items. Data on engineering and labor

costs are to be taken from on-site visits

to manufacturing plants and published

sources.

.9. Outputs From the Engineering

Analysis

For each combination of design

options considered, the models and data

provide:

• Energy efficiency (expressed as the

DOE energy factor); 6

• Increased material, purchased parts,

labor, and investment costs for

medium 7 and large manufacturers by

product class;

• Annual energy consumption per unit

(based on DOE test procedures);

• The relationship between price and

efficiency level by product class; and

• Other information on product

characteristics, such as maintenance

costs.

b. LBL Residential Energy Model (LBLREM)

Early energy demand modeling

focused on engineering estimates or on

The energy factor is a measurement of energy

efficiency derived from the DOE test procedure for

that product.

7 As was the case with the April 1982 proposal,

small manufacturers will not be analyzed

separately. No general manufacturing approach

could be identified for these firms because of the

wide variability in their approach to manufacturing.

Therefore, small manufacturers costs have been

assumed to equal those of medium manufacturers.

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the relationship between energy

consumption and economic growth. In

the 1970's, Oak Ridge National

Laboratory (ORNL) developed the first

model to integrate these two important

aspects, the Engineering-Economic

Model of Residential Energy Use (ORNL

Model). That model was brought to

Lawrence Berkeley Laboratory (LBL) in

1979, and adapted to the analysis of

Federal appliance efficiency standards.

The ORNL Model used in the earlier

rulemakings has been documented in the

Consumer Products Efficiency

Standards Economic Analysis

Document, DOE/CE-029, March 1982.

The ORNL Model has been updated by

LBL, resulting in the LBL Residential

Energy Model (LBL-REM) which is

summarized below.

The LBL-REM forecasts the appliance

purchase choices that households make,

as well as their subsequent appliance

usage behavior and energy consumption.

The model uses engineering estimates of

the characteristics of particular designs

of appliances, and calculates the

national impacts of a technologyspecific policy on the populations of

appliances used in the households. The

engineering data provide alternative

designs, characterized by purchase price

and efficiency, that are available for

purchase. The output from the LBL-REM

satisfies the legislative requirements

regarding energy savings and consumer

economic impacts (operating expenses

and life-cycle costs).

Engineering, economic, and

demographic data are used in the LBLREM. The engineering data for

appliances are described above.

Additional data include engineering

data regarding alternative building shell

construction measures and costs, unit

energy consumption and efficiency of

existing appliances, age distribution of

existing appliance stock, and retirement

functions. Economic data includes

projected energy price 8 and household

income, and models of energy

investment, appliance purchase and

usage behavior, including fuel and

technology choice for each end-use. -

Demographic data includes number of

households by type, projected housing

starts and demolitions, and initial

appliance holdings.

1. Structure

The LBL-REM segments annual

energy consumption into house types,

end-uses, and fuel types. The house

types are single; family, multifamily, and

mobile homes. Calculations are

performed separately for existing and

new housing construction each year

over the period, 1980-2015. The end-uses

are space heating (including room and

central), air conditioning, water heating,

refrigeration, freezing, cooking, clothes

drying, lighting, and miscellaneous. Up

to four fuels are considered, as

appropriate to each end-use: electricity,

natural gas, heating oil, and LPG. The

model exists in two versions: national

(one region), and regional (10 Federal

regions). Since usage of these appliances

is not likely to differ by geographic

location, the national version will be

utilized in this analysis.

The model projects five types of

activities: technology/fuel choice;

building shell thermal integrity choice;

appliance efficiency choice; usage

behavior; and turnover of buildings and

appliances.

2. Housing Stock Submodel

This submodel prepares data about

housing stock projections for the LBLREM. The number of occupied

households, by type, is taken from the

1980 Censuses of Population and

Housing. An exogenous projection of

housing starts is obtained and estimates

of projected demolition rates by house

type are calculated, assuming an

exponential function. The housing

submodel determines the projected

housing stock each year, 1981-2015, by

subtracting demolitions from existing

stock, then adding starts. The annual

demolition rates by house type will be

calculated for single family, multifamily,

and mobile homes, respectively.

3. Efficiency Choice Algorithm

For dishwashers, clothes washers,

and clothes dryers, historical efficiency

data are available for selected years for

eaclt.class of appliance through 1985.

The Federal energy conservation

standards for new units of these

appliances were met in 1988. After 1988,

future efficiency improvements are

assumed to be a function of designs

available (according to the engineering

analysis) and of relevant energy prices.

DOE believes the forecasting algorithm

is designed to allow annual shipmentweighted efficiency factors (SWEFs) to

increase if either more efficient designs

become available at lower prices, or

energy prices increase. Conversely, if

energy prices decrease, the SWEF may

decline, but would have a• lower bound

at the 1988 Federal standard level.

4. Thermal Integrity

"The projections of energy prices will be taken The projection of she level of from the most regent AnmtglEnergy 0utlooA, a ....

publication of the Department's Energy ;Information . investment in thermal integrity

Administration.. measuresin new houses is based on a

17717

life-cycle cost calculation, analogous to

that done for equipment efficiencies.9

Estimates of the incremental costs of

thermal integrity measures are used in

conjunction with current fuel prices and

a discount rate.

5. Modeling Efficiency Standards

The LBL-REM projects the average

efficiency of new products, for example,

dishwashers, purchased each year, in

the absence of additional Federal

regulations. A distribution of efficiencies

is constructed around the average,

based on efficiency distributions

observed in the marketplace. This

information includes information from

industry sources, published data from

the industry trade associations and

industry-wide data obtained from Form

CS-179.10 A new Federal standard level

would eliminate part of the distribution;

therefore, a new distribution is

constructed. The new shipmentweighted average efficiency then

characterizes the efficiency of new units

in that year. The same process is

applied to all years after implementation

of the standard. The model is then run

again, for the standards case, with the

adjusted average efficiencies, to

calculate any changes in market shares,

usage behavior, or investment in

building shell thermal improvements

that may occur due to standards, and to

calculate the net energy savings.

6. Turnover of Appliance Stocks

The initial age distribution of

appliances in stock is characterized

based- on industry data about historical

annual shipments. The- fraction of each

product that retires each year is based

on the number of years since purchase

of the product. For each year's purchase

the model associates an average

efficiency, so that when older

appliances are retired, they are also

recognized as less efficient.""

The number of potential purchasers of

an appliance in new homes is equal to

the number of new homes constructed

each year. The number of potential

purchasers of appliances in existing

houses is equal to the number of retiring

appliances, plus some fraction of those

households that did not previously own

the product.

11 The equipment efficiency and thermal integrity

decisions are not solved simultaneously, but

recursively. The previous year+s thermal integrity is

assumed in projecting. this year's equipment :

efficiency; then this year's equipment efficiency is

used to calculate this year's thermal integrity.

10 Survey of Consumer Product Manufacturers

through Trade Associations in 1979, .

11 See ConsumerProducts Efficiency Standards

Economic Analysis Document, DoE/CE-0Q29,

March 1982, pp. 412-13. -

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7. Calculation of Market Shares

Potential purchasers may purchase

any competing technology within an

end-use, or none. For example, for

dishwashers, the decision to purchase or

not is modeled, and the fraction of the

total that chooses each class, e.g.,

compact, is specified exogenously. For

dishwashers, long-term market share

elasticities have been estimated with

respect to equipment price, operating

expense, and income respectively. The

effect of standards is expected to be

lower operating expense and increased

equipment price. The percentage

changes in these quantities are used,

together with market share elasticities,

to determine changes in market share

resulting from standards. The model

assumes that higher equipment cost will

decrease market shares, while lower

operating expense will increase market

shares. The net result (predicted market

share) depends on the standard level

selected, and associated equipment

price and operating expense.

8. Usage Behavior

For some products, changing the

operating expense results in changes in

usage behavior. These changes are

modeled using usage elasticities in

operating expense and income. For

dishwashers, clothes washers, and

clothes dryers, we expect these

elasticities to be at or near zero; usage

behavior is not influenced by the cost of

operating the appliance. The

Department will appreciate any

comments on this assumption.

9. Energy Consumption Calculations

The total energy consumption per

house for each end-use and fuel by

house type and vintage (existing or new)

is the product of the unit energy

consumption (accounting for efficiency

and capacity changes), and usage factor,

e.g., relative hours of full-load use for

dishwashing. The corresponding energy

consumption for all households is the

consumption per house times the

number of households of that type and

vintage, times the fraction of those

households owning that appliance..

Aggregate energy consumption is

obtained by summing intermediate

results. For example, national electricity

consumption for residential dishwashing

in a particular year is the sum of house

types and vintages of standard electric

dishwashers, compact ones, and the

various classes of water-heating

dishwashers. National residential

electricity consumption in that year is

the sum of all end-uses of electricity

consumption in the residential sector.

10. Model Outputs

The principal outputs from the LBLREM for each year are:

• Energy consumption by end-use and

fuel.

• Per unit equipment price and

operating expense by product.

• Total residential energy

consumption by fuel.

• Projected annual shipments of

residential appliances.

• Differences in these quantities

between a base and a standards case.

These outputs are provided annually

(or for selected years) and cumulatively

over a period of time, e.g., 1990-2015.

Energy savings are provided annually

from implementation of standards to the

end of the period. Net present value of

standards is evaluated for each

regulated product, and for the end-use(s)

comprising the regulated and competing

products.

Energy savings are calculated as the

difference in energy consumption

between the base case and standards

case. Energy consumption in both the

base case and standards case includes

building shell improvements, changes in

fuel choice, or changes in usage

behavior. Therefore, the energy savings

capture the net energy savings due to

regulation, including the effects induced

by shifts in market share or changes in

usage behavior.

Net present value, on the other hand,

excludes these types of effects,12 Net

present value is calculated from per unit

changes in equipment and operating

costs, multiplied by base case

shipments. If the net present value were

calculated without normalizing to base

case shipments, erroneous results would

be obtained: if standards caused

decreased purchases of a product, this

would appear an economic benefit,

namely less money spent on purchasing

and using appliances; 18 and if

12 Present value is the discounted total value of

energy consumption during the appliances'

lifetimes, plus the discounted equipment costs for

those appliances that are purchased during those

periods, at alternative standards levels. The

difference between each of the two cases is the net

present value (NPV) attributable to standards (or

amended standards). A positive NPV for an

appliance at a given standard level indicates that, If

that standard were adopted, consumers of that

appliance as a whole would save that much more

money in fuel costs, discounted to the present, than

they would pay in increased first cost for a more

efficient appliance , discounted to the present,

compared to the base case.

Without normalization, the greatest economic

benefit would be obtained by a standard level that

resulted in no future purchases of the product. Then

no money would be spent on purchasing the

product, or on operating expenses, and the value of

the savings would equal the amount of money that

would have been spent without the standard. This

would clearly be a misrepresentation of the net

present value of standards.

standards resulted in increased

purchases, this would be incorrectly

counted as a cost, when it reflects

consumers' preference for the poststandards product.

Base case usage is assumed in

calculating the net present value, since

any "rebound effect" 14 reflects the

consumer's judgment that increased

usage is worth more than the direct

energy savings associated with keeping

usage constant. Therefore, deduction of

any foregone energy savings resulting

from a possible "rebound effect" prior to

calculating the net present value, would

result in an underestimate of the true- net

present value associated with a given

efficiency improvement.

11. Other Consumer Impacts

One measure of the effect of

standards on consumers is the change in

operating cost as compared to the

change in purchase price, This is

quantified by the difference in life-cycle

cost between the base and standards

case for the appliance classes analyzed.

The LCC is the sum of the purchase

price and the operating cost discounted

over the lifetime of the appliance. It will

be calculated at the average efficiency

for each class in the year standards are

imposed using consumer discount rates

of five, seven, and ten percent. The

purchase cost is based on the factory

costs in the Engineering Analysis and

includes a factory markup plus a

distributor and retailer markup. The

operating cost is calculated from the

unit energy consumption derived in the

Engineering Analysis adjusted for

differences in usage, i.e., operating load

hours, between the test procedure and

the LBL Residential Energy Model.

Projected energy efficiencies and usages

are taken from the results of LBL-REM.

Two other measures of economic

impact are useful in evaluating the

impacts on consumers. The payback

period measures the amount of time it

takes to recover, through lower

operating costs, the additional

expenditure on increased efficiency.

Numerically, it is the ratio of the

increase in first cost between the base

and standards cases to the decrease in

annual operating costs. Both the

14 The "rebound effect" is the projected energy

savings (from an efficiency improvement) that does

not occur. This results when purchasers of more

energy efficient appliances use them more

intensively, thereby saving less energy than the

engineering estimates would have indicated.

Empirical studies indicate that approximately 15

percent of the potential energy savings is thus not

achieved. Therefore, in calculating energy savings,

the LBL-REM assumes that only 85 percent of the

savings that are indicated by engineering estimates

will actually be achieved.

CE-RM-88-101 COMMENT 01
Federal Register / Vol. 53, No. 96 / Wednesday, May 18, 1988 / Proposed Rules 17719

numerator and denominator of this

expression are evaluated at the average

efficiency in the year standards come.

into effect and at the energy prices in

that year. The cost of conserved energy

is the increase in first cost amortized

over the lifetime of the appliance at the

consumer discount rate divided by the

annual energy savings. The consumer

will benefit whenever the cost of

conserved energy is less than the price

of energy for that end use.

c. Manufacturer Impact Models

1. Conceptual Approach

The Manufacturer Impact Analysis

estimates both the overall impact of new

or amended standards on manufacturers

as well as the distribution of effects

among different manufacturers.

2. Measures of Impact

The analysis examines three types' of

long-run impact: profitability; growth;

and, competitiveness. To do this, three

measures of impact are tracked for the

industry as a whole and for any

segments that may exist. The three

impact variables are: return-on-equity

(ROE); assets; and labor.

ROE provides the primary measure of

profitability,-although gross margin,

return-on-assets (ROA), and return-onsales (ROS) are also reported. Assets

and labor provide the measures of

growth (positive or negative). The

impact on competitiveness is analyzed

by looking at the relative changes in

growth and profitability for large and

small firm segments:

Two short-run impacts are also

analyzed. First, the ability for the

industry as a whole and for specific

segments of the industry to provide the

one-time investments required to meet

the new standard is examined. These

expenditures are compared to available

cash and to their historical variation.

Second, if standards result in decreased

sales for the particular industry being

analyzed, the possibility of a price war

in the time period when the industry is

adjusting to a lower sales volume is

examined.

3. LBL Manufacturer Impact Model

(LBL-MIM)

In order to estimate the impacts of

energy efficiency standards a computer

spreadsheet model, the Lawrence

Berkeley Laboratory Manufacturer

Impact Model (LBIrMIM), was

developed.

The LBL-MIM uses a "typical year"

approach rather than a dynamic

approach. This approach models a

"typical year" for the.industry both in

the modified standards case and in the

existing-standards case. The typical

year chosen for the model is the fifth

year after the imposition of standards.

Five years is considered long enough to

capture any major impacts from the

standard, such as profitability changes

or firm entry into or exit from the

industry.

Ideally, a manufacturer analysis

should look at the impact of a proposed

regulation on every firm that does

business in the industry under question.

However, because the industries being

analyzed have many manufacturers

making a particular product, a firm-byfirm analysis would be a very expensive

undertaking. In addition, the engineering

and financial data for most

manufacturing firms are proprietary and

are not routinely available for public

analysis. Because of these limitations on

data and resources, the analysis.

estimates the impact of the standards by

using prototypical firms.

A prototypical firm is a hypothetical

firm representative of a particular

portion of an industry. The goal of

defining the prototypical firms is to

characterize 'firm-to-firm variations in

the industry as best as possible.

Prototypical firms are defined. in terms

of parameters that have importance in

determining the level of impact and are

consistent with industry data for that

particular portion of the industry.

Important parameters used in the model

include the cost and marketing

strategies.

An important simplifying assumption

of the LBL-MIM is that each

prototypical firm offers products to

several different markets. The product

offerings are generally differentiated by

using the product classes established by

the. Act. -Different markets are defined in

terms of the technological

characteristics of the products, e.g.;

standard size or compact dishwashers.

At times, this market segmentation

plays an important role in determining a

firm's profits. Generally, appliance

manufacturers are thought to be able to

charge different markups for different

products. Firms are able to charge

higher markups on products that have

desirable characteristics. Products on

the low end of this spectrum are

generally bought in larger quantities at

lower prices by consumers who are

more highly price conscious, and thus

the markups for these products are

lower. The per unit profits made by

manufacturers for these different

products may differ significantly. The

model incorporates this market reality

by allowing firms to charge different

markups on different'products.

The model sets product prices:inthe

modified standards case in two stages.

In the first stage the price is computed

by assuming that the industry's gross

margin remains unchanged under the

new standards. This is the pricing rule

most often referred to by the industry.

Stage two drops the assumption of a

constant gross margin, and instead

assumes that firms face a downward

sloping demand curve and set price to

maximize profit. Economic theory states

that this is done by setting price equal to

the long-run marginal cost (LMC) times

a markup that depends only on the

elasticity of the demand curve. Stage

two begins by dividing costs into longrun fixed costs and LMC, and then

estimating the firm's markup. Before

using the markup, a new LMC is

computed which includes any additional

unit variable costs and the variable part

of levelize.d capital and engineering

coats. Once the new LMC is computed,

this figure is multiplied by the markup

factor to determine the new price.

A change in standard level affects the

analysis in three distinct ways.

Increased levels of standards will

require additional investment, will raise

production costs, and will affect revenue

both through price and demand.

The most obvious investment induced

by standards is the purchase of new

plant and equipment. This cost first is

evaluated from engineering data, and

then averaged by taking into account the

life of the investment, the date on which

it is made, tax laws, and the appropriate

cost of funds. An additional and

sometimes larger investment takes place

as the old inventory is replaced with

more expensive new units. The model

assumes previous inventory ratios. are

maintained. A third form of investment

tracked by the model is the change in

the transactions demand for cash that

accompanies'a change in revenues.

Increased costs of production are

modeled by coupling engineering data

on changes in unit costs caused by

standards with data from LBL-REM on

the marketplace demand of the product.

Revenue is affected by both price and

shipments. Price is computed from costs

in two stages. First, a constant gross

margin pricing rule is used. Then a

markup over long-term marginal costs is

computed and used to determine an

optimal price. Demand is determined by

measured price and operating cost

elasticities, coupled with the changes in

price and operating costs resulting from

the standards.

The LBL-MIM produces several

outputs used in analyzing the impact of

standards on manufacturers. A

simplified.pro forma income statement

is prepared for each' prototypical firm. In

addition to the-income statement, the

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outputs present four measures of

performance: gross margin, return on

sales, return on total assets, and return

on equity. The results are presented for

the without-standards case and the

with-standards case, and the relative

difference between the two is also

given. Another output table analyzes the

source of changes in income, expenses,

and assets from an economic point of

view, while a third output table

analyzes price and profitability changes

under the two pricing scenarios

mentioned above.

4. Data Sources

The LBL-MIM needs data that

characterize both a particular industry

and prototypical firms within that

industry. Estimates of data are based on

information from five general sources:

LBL business consultation groups; the

Engineering Analysis; the Consumer

Analysis, public financial data; and

industry profiles.

d. Utility Impact Model

The Utility Analysis serves several

purposes within the overall assessment

of the impact of the proposed standards.

It contributes to quantifying the energy

savings by determining the reduction in

fossil fuels used for electricity

generation. The reduction in fossil fuel

consumption is also an input to the

Environmental Assessment. By

calculating utility avoided costs, this

area of the analysis provides marginal

electricity costs to be used in evaluating

the societal benefits of standards.

Finally, it examines the impacts on the

electric utility industry in terms of

changes in investment, revenue

requirements, the need for new

generating capacity, and residential load

factors.

The Utility Analysis adopts the

standard convention that the value of

electricity savings can be broken down

into energy (or marginal cost) savings

and capacity (or reliability) savings. The

energy impact measures the production

costs avoided by reduced electrical

demands, valued at the marginal energy

costs of the utility. The capacity impact

measures the reliability value of reduced

loads during system peak periods, which

is, by convention, valued at the cost of a

combustion turbine that would have

been needed to meet the load. The

analysis characterizes these avoided

costs per kWh of heating, cooling, and

baseload energy saved.15 These values

16 For the purposes of calculating utility avoided

costs, electric heating appliances are defined as

electric heat pumps and electric resistance heat.

cooling appliances. are defined as room and central

air conditioners plus heat pumps, and baseload

appliances are defined as all other appliances.

are used to calculate societal benefits

from reduced electricity consumption.

The utility impact model calculates

avoided energy costs based on a

disaggregation of the generation fuel mix

to the National Electric Reliability

Council (NERC) regions and a simplified

load duration curve for each region.

First, the model allocates national

electricity savings that are forecasted by

the LBL-REM to NERC regions in

proportion to their current consumption

of heating, cooling, and baseload energy.

The regional proportions are derived

from data on regional appliance

saturations, efficiencies, and hours of

use. The fraction of the electricity that

would have to be generated at the

margin from oil and gas is calculated

from the total regional oil and gas

fraction and the simplified load duration

curve. Projected utility natural gas and

coal prices, weighted by the oil and gas

fraction and the non-oil and gas fraction

respectively, are used to calculate utility

marginal costs over the forecast period.

The marginal costs are adjusted to

account for seasonal differences.

The avoided capacity cost calculation

in the model is based on conservation

load factors (CLFs) for the energy

savings attributable to the standards, as

well as the capacity value of a

combustion turbine. A conservation load

factor is defined as the average hourly

energy savings of a conservation

measure divided by its peak load

savings. The CLFs are a way of

characterizing the peak demand savings

of a conservation measure. They are

used to convert the capacity value of the

standards into the per kWh values

described above. The NERC forecasts of

capacity requirements for each region

are used to account for regional

variations in reserve margin. If NERC

forecasts an adequate reserve margin in

a region for a given year, no reliability

value is given to the capacity savings in

the region.

The inputs needed for the utility

impact model are conservation load

factors, state-level utility fuel prices,

appliance saturations, efficiencies, and

hours of use, as well as electricity

generation by fuel type and capacity

need by NERC region. The outputs of the

analysis are the fuel savings, the

reduction in the need for new generating

capacity, and the avoided energy and

capacity costs for heating, cooling, and

baseload appliances per million Btu of

resource energy. These marginal costs

are used to calculate societal costs and

benefits of standards,

e. Sensitivity Analyses

Sensitivity studies are performed to

determine how changes in technical and

operational parameters affect key

engineering and economic indicators

used in evaluation of appliance

standards. This makes it possible to

place limits on the overall results of the

analysis and to gain an understanding of

which variables are most important in

producing these results. Sensitivity

analyses are developed in a series of

distinct steps. For each component

analysis in the overall analysis, critical

input parameters are identified and

reasonable ranges of variation

determined. The sensitivity of the model

to changes in the value of each

important parameter is then estimated

by running the model for both the base

case and the standards cases. The

results of the sensitivity analyses are

examined to determine the sensitivity of

the forecasts to exogenous variables

and assumptions and the sensitivity of

the differences between the base and

standards cases (impacts of alternative

standards).

IV. Comments

a. Questionsfor Public Comment

DOE is interested in receiving

comments and data concerning the

accuracy and workability of this

methodology.! Also, DOE welcomes

discussion on improvements or

alternatives to this approach. In

particular, DOE is interested in

gathering data on the incremental costs

of improving the energy efficiency of

dishwashers, clothes washers, and

clothes dryers. The design options listed

above can be used as a startingpoint;

however, data for additional design

options would be welcome.

While the Department has been

unable to identify any small

manufacturers, nevertheless, for

purposes of this analysis, small

manufacturers' costs are assumed to

equal those of medium manufacturers.

The Department is especially interested

in learning of the existence of such

manufacturers, and in obtaining costing

data from small manufacturers of the

products under consideration.

For the LBL Residential Energy Model,

DOL requests interested parties to

provide historical data on shipments

and average efficiencies by class for the

products subject to the proposed

rulemaking. Data on consumer prices.,

and on the installation and maintenance

costs of these appliances are also

requested.

The manufacturer analysis needs the

financial data from the product division

level, i.e., dishwashers, clothes washers,,

and clothes dryers. All of these data are

available at the firm level, but firms are

CE-RM-88-101 COMMENT 01
Federal Register / Vol. 53, No. 96 / Wednesday, May 18, 1988 / Proposed Rules

typically much larger than the relevant

division, and thus firm data may give a

misleading indication of the division's

finances.

An income statement and balance

sheet at the division level would be

most.helpful. If this is not available, then

data on the following variables are

considered most essential: net income,

revenue, selling and general and

administrative expenses, engineering

expenses, cost of goods sold, interest,

taxes, debt-to-equity ratio, net

depreciable assets, net assets, capital

investment, and long-term debt.

The Department also would welcome

current data on unit sales and revenue

for the industries as a whole.

b. Comment Procedure

Interested persons are invited to

submit written comments to DOE.

Comments should be identified on the

outside of the envelope and on the

documents submitted to DOE with the

designation CE-RM-88-10. Ten copies

are requested to be submitted. All

comments received by the date specified

at the beginning of this notice and all

other relevant information will be

considered by DOE before the

Department continues this rulemaking

proceeding. Pursuant to 10 CFR 1004.11,

any person submitting information

which he or she believes to be

confidential and exempt by law from

public disclosure should submit one

complete copy of the document and five

copies, if possible, from which the

information believed to be confidential

has been deleted. DOE will make its

own determination with regard to the

confidential status of the information

and treat it according to its

determination.

Factors of interest to DOE when

evaluating requests to treat as

confidential information that has been

submitted include: (1) A description of

the item; (2) an indication as to whether

and why such items of information have

been treated by the submitting party as

confidential, and whether and why such

items are customarily treated as

confidential within the industry; (3)

whether the information is generally

known or available from other sources;

(4) whether the information has

previously been made available to

others without obligation concerning its

confidentiality; (5) an explanation of the

competitive injury to the submitting

person which would result from public

disclosure ; (6) an indication as to when

such information might lose its

confidential character due to the

passage of time; and (7) whether

disclosure of the information would be

in the public interest.

Issued in Washington, DC, May 5,1988.

Donna R. Fitzpatrick,

Assistant Secretary, Conservation and

Renewable Energy.

[FR Doc. 88-10976 Filed 5-17-88; 8:45 am]

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