CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUM ENT ................................................................................. 1-1

1.2 OVERVIEW OF STANDARDS FOR RESIDENTIAL DEHUMIDIFIERS ................. 1-1

1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS ................... 1-2

1.4 STRUCTURE OF THE DOCUMENT ............................................................................ 1-5

LIST OF TABLES

Table 1.3.1 Analyses Under the Process Rule ........................................................................ 1-4

1-iCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUM ENT

This preliminary technical support document ( preliminary TSD) is a stand

- alone report that provides the technical analyses and results supporting the information presented in the preliminary notice of public meeting (NOPM) and executive summary for residential dehumidifiers. This preliminary TSD reports on the p reliminary activities and analyses conducted in the period preceding the notice of proposed rulemaking (NOPR) of this rulemaking.

1.2 OVERVIEW OF STANDARDS FOR RESIDENTIAL DEHUMIDIFIERS

The Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94-163 (42 United States Code (U.S.C.) 6291–6309), established an energy conservation program for major household appliances. The National Energy Conservation Policy Act of 1978 (NECPA), Pub. L. 95-619, amended EPCA to add Part C a of Title III (42 U.S.C. 6311–6317), which established an energy conservation program for certain industrial equipment. Additional amendments to EPCA give DOE the authority to regulate the energy efficiency of several products, including

residential dehumidifiers

— the products that are the fo cus of this document. The amendments to

EPCA in the Energy Policy Act of 2005 (EPACT 2005) (P.L. 109-58) , established energy conservation standards for residential dehumidifiers b manufactured as of October 1, 2007. (Section 135(c)(4)) EPACT 2005 also required that DOE issue a final rule by October 1, 2009, to determine whether these standards should be amended. ( Id

. ) Compliance with any amended standards would be required for dehumidifiers manufactured as of October 1, 2012. ( Id

. ) In the

event that DOE did not publish a final rule, EPACT 2005 specified a new set of amended standards with a compliance date of October 1, 2012. ( Id

. )

DOE issued an advance notice of proposed rulemaking (ANOPR) to consider energy conservation standards for dehumidifiers and other products. 72 FR 64432 (Nov. 15, 2007). The Energy Independence and Security Act of 2007 (EISA 2007), Pub. L 110-140 subsequently amended EPCA to prescribe new energy conservation standards for dehumidifiers manufactured on or after October 1, 2012. DOE codified the EISA 2007 standards at 10 CFR 430.32(v)(2). 74 FR 12058 (Mar. 23, 2009).

a Part C has been redesignated Part A -1 in the United States Code for editorial reasons.

b Dehumidifiers are defined as self

- contained, electrically operated, and mechanically encased assemblies consisting of: (1) a refrigerated surface (evaporator) that condenses moisture from the atmosphere; (2) a refrigerating system,

inc luding an electric motor; (3) an air

- circulating fan; and (4) a means for collecting or disposing of the condensate. (42 U.S.C. 6291(34))

1-1EPCA also requires that, not later than 6 years after the issuance of a final rule establishing or amending a standard, DOE publish a NOPR proposing new standards or a notice of determination that the existing standards do not need to be amended. (42 U.S.C. 6295(m)(1))

1.3 PROCESS FOR SETTING ENERGY CON S ERVATION STANDARDS

Under EPCA, when DOE is studying new or amended standards, it must consider, to the

greatest extent pra cticable, the following seven factors (42 U.S.C. 6295 (o)(2)(B)(i)):

1) the economic impact of the standard on the manufacturers and consumers of the affected products;

2) the savings in operating costs throughout the estimated average life of the product compared to any increases in the initial cost or maintenance expense;

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 products likely to result from the imposition of the standard;

5) the impact of any lessening of competition, as 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.

Other statutory requirements are set forth in 42 U.S.C. 6295(o)(1)– (2)(A), (2)(B)(ii)

– (iii), and (3)– (4).

DOE considers stak eholder participation to be a very important part of the process for setting energy conservation standards. Through formal public notifications ( i.e.

, Federal Register notices) , DOE actively encourages the participation and interaction of all stakeholders during the comment period in each stage of the rulemaking. Beginning with the framework document and during subsequent comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.

B efore DOE determines whether or not to adopt a proposed energy conservation standard, it must first solicit comments on the proposed standard. (42 U.S.C. 6295(m )( 2 )(B)) Any new or amended standard must be designed to achieve significant additional conservation of energy and be technologically feasible and economically justified. (42 U.S.C. 6295(o )( 2 )(A)) To

1-2determine whether economic justification exists, DOE must review comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing the seven factors listed above. (42 U.S.C. 6295 (o)(2)(B)(i))

After the publication of the fram ework document, the energy conservation standards rulemaking process involves three additional, formal public notices, which DOE publishes in the Federal Register . The first of the rulemaking notices is a NOPM, which is designed to publicly vet the models and tools used in the preliminary rulemaking and to facilitate public participation before the NOPR stage. The second notice is the NOPR, which presents a discussion of

c omments received in response to the NOPM and the preliminary analyses and analytical t ools; analyses of the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these impacts of amended energy conservation standards; and the proposed energy conservation standards for the product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s weighting of these impacts; the amended energy conservation standards DOE is adopting for the product; an d the compliance dates of the amended energy conservation standards.

In August 2012, DOE published a notice of public meeting and availability of the framework document. 77 FR 49739 ( Aug . 17, 2009) The framework document, Energy

Conservation Standards Ru lemaking Framework Document for Residential Dehumidifiers

, describes the procedural and analytical approaches DOE anticipated using to evaluate the establishment of amended energy conservation standards for these products. This document is

available at: http://www.regulations.gov/#!documentDetail;D=EERE-2012- BT

- STD -0027-0003

.

Subsequently, DOE held a public meeting on September 24, 2012, (“ September 2012 public meeting”) to discuss procedural and analytical approaches to the rulemaking. In addition, DOE used the public meeting to inform and facilitate involvement of interested parties in the rulemaking process. The analytical framework presented at the pub lic meeting described the different analyses, such as the engineering analysis and the consumer economic analyses ( i.e.

, the life -cycle cost (LCC) and payback period (PBB) analyses), the methods proposed for conducting them, and the relationships among the various analyses.

1-3Table 1.3.1 Analyses Under the Process Rule

Preliminary Analyses NOPR Final Rule

Market and technology assessment Revised preliminary analyses Revised NOPR analyses

Screening analysis Life

- cycle cost sub

- group analysis

Engineering analysis Manufacturer impact analysis

Energy use determination Utility impact analysis

Markups for equipment price

determination Environmental assessment

Life

- cycle cost and payback period analysis Employment impact analysis

Shipments analysis Regulatory impact analysis

National impact analysis

Preliminary manufacturer impact analysis

During the September2012 public meeting, interested parties commented about numerous issues relating to each one of the analyses listed in Table 1. 3.1. Comments from interested parties submitted during the framework document comment period elaborated on the issues raised during the public meeting. DOE attempted to address these issues during its preliminary analyses and summarized the comments and DOE’s r esponses in chapter 2 of the preliminary TSD.

As part of the information gathering and sharing process, DOE organized and held

interviews with manufacturers of the residential dehumidifiers considered in this rulemaking as part of the engineering analysi s. DOE selected companies that represented production of all types of products, ranging from small to large manufacturers, and included the Association of Home Appliance Manufacturers (AHAM) member companies. DOE had four objectives for these interviews: ( 1) solicit manufacturer feedback on the draft inputs to the engineering analysis; (2) solicit feedback on topics related to the preliminary manufacturer impact analysis; (3) provide an opportunity, early in the rulemaking process, to express manufacturers’ concerns to DOE; and (4) foster cooperation between manufacturers and DOE.

DOE incorporated the information gathered during the engineering interviews with manufacturers into its engineering analysis ( chapter 5) and the preliminary manufacturer impact analysis (chapter 12). Following the publication of the preliminary analyses and the NOPM public meeting, DOE intends to hold additional meetings with manufacturers as part of the consultative process for the manufacturer impact analysis conducted during t he NOPR phase of the rulemaking.

1-4DOE developed spreadsheets for the engineering, LCC, PBP, and national impact analyses for each product. For each product, DOE developed an LCC spreadsheet that calculates the LCC and PBP at various energy efficiency levels. DOE also developed a national i mpact analysis spreadsheet that calculates the national energy savings (NES) and national net present values (NPVs) at various energy efficiency levels. This spreadsheet includes a model that forecasts the impacts of amended energy conservation standards a t various levels on product shipments. All of these spreadsheets are available on the DOE website for residential

dehumidifiers at : http://www1.eere.energy.gov/buildings/appliance_standards/residential/dehumidifiers.html

. .

1.4 STRUCTURE OF THE DOCUMENT

This preliminary TSD outlines the analytical approaches used in this rulemaking. The TSD consists of fourteen chapters, an environmental assessment, a regula tory impact analysis, and appendices.

Chapter 1 Introduction: provides an overview of the appliance standards program and how it applies to this rulemaking, and outlines the structure of the

document.

Chapter 2 Analytical Framework: describes the rulem aking process.

Chapter 3 Market and Technology Assessment: characterizes the market for the considered products and the technologies available for increasing product efficiency.

Chapter 4 Screening Analysis: identifies all the design options that impro ve efficiency of the considered products, and determines which technology options are viable for consideration in the engineering analysis.

Chapter 5 Engineering Analysis: discusses the methods used for developing the relationship between increased manufacturer price and increased efficiency.

Chapter 6 Markups to Determine Product Cost : discusses the methods used for establishing markups for converting manufacturer prices to customer product cost s.

Chapter 7 Energy Use Determin ation: discusses the process used for generating

energy- use estimates for the considered products as a function of

standard levels.

1-5Chapter 8 Life

- Cycle Cost and Payback Period Analysis: discusses the effects of standards on individual customers and users of the products and compares the LCC and PBP of products with and without higher efficiency standards.

Chapter 9 Shipments Analysis: discusses the methods used for forecasting shipments with and without higher efficiency standards, including how product purchase decisions are economically influenced and how DOE

model s this relationship with econometric equations.

Chapter 10 National Impact Analysis: Discusses the methods used for forecasting national energy consumption and national economic impacts based on annual product shipments and estimates of future product energy efficiency distributions in the absence and presence of amended energy

conservation standards.

Chapter 11 Life

- Cycle Cost Subgroup Analysis: discusses the effects of standards on different subgroups of con sumers and compares the LCC and PBP of products with and without higher efficiency standards for these

consumers.

Chapter 12 Manufacturer Impact Analysis: discusses the effects of standards on the finances and profitability of product manufacturers.

Cha pter 13 Utility Impact Analysis: discusses the effects of standards on electric and gas utilities.

Chapter 14 Employment Impact Analysis: discusses the effects of standards on national employment.

Environmental Assessment for Residential Dehumidifiers : discusses the effects of

standards on three pollutants

— sulfur dioxide (SO 2 ), nitrogen oxides (NO

x ), and mercury

— as well as carbon emissions.

Regulatory Impact Analysis for Residential Dehumidifiers : discusses the impact of non

regulatory alternatives to efficiency standards.

Appendix 3A AHAM Data Submittal

Appendix 5A AHAM Engineering Analysis Questionnaire

Appendix 6A Detailed Data for Equipment Price Markups

Appendix 7A Housing Variables

1-6Appendix 7B Weather Station Data Mapping to RECS Households

Appendix 8A User Instructions for Life

- Cycle Cost and Payback Period Spreadsheets

Appendix 8B Uncertainty and Variability in LCC Analysis for Dehumidifiers

Appendix 8C Lifetime Distributions

Appendix 8D Distributions Used for Discount Rates

Appendix 9A Relative Price Elasticity of Demand for Appliances

Appendix 10A User Instructions for National Impact Analysis Spreadsheet s

Appendix 10B Full Fuel Cycle Multipliers

Appendix 10C National Net Present Value of Consumer Benefits Using Alternative

Product Price Forecasts

Appendix 10D National Energy Savings and Net Present Value Using Alternative

Growth Scenarios

Appendix 12A M anufacturer Impact Analysis Interview Guide

1-7