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CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION ........................................................................................................... 2-1

2.2 MARKET AND TECHNOLOGY ASSESSMENT........................................................ 2-4

2.2.1 Market Assessment .......................................................................................................... 2-5

2.2.2 Technology Assessment................................................................................................... 2-5

2.3 SCREENING ANALYSIS .............................................................................................. 2-5

2.4 ENGINEERING ANALYSIS.......................................................................................... 2-6

2.4.1 Manufacturing Cost Assessment...................................................................................... 2-6

2.5 ENERGY USE ANALYSIS............................................................................................ 2-6

2.6 MARKUPS ANALYSIS ................................................................................................. 2-7

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ..................................... 2-7

2.8 SHIPMENTS ANALYSIS .............................................................................................. 2-8

2.9 NATIONAL IMPACT ANALYSIS................................................................................ 2-8

2.9.1 National Energy Savings.................................................................................................. 2-9

2.9.2 Net Present Value ............................................................................................................ 2-9

2.9.3 Forecasted Efficiencies.................................................................................................. 2-10

2.10 CONSUMER SUBGROUP ANALYSIS ...................................................................... 2-10

2.11 MANUFACTURER IMPACT ANALYSIS.................................................................. 2-10

2.12 EMPLOYMENT IMPACT ANALYSIS....................................................................... 2-11

2.13 UTILITY IMPACT ANALYSIS................................................................................... 2-11

2.14 ENVIRONMENTAL ASSESSMENT .......................................................................... 2-12

2.14.1 Carbon Dioxide.............................................................................................................. 2-12

2.14.2 Sulfur Dioxide................................................................................................................ 2-12

2.14.3 Nitrogen Oxides............................................................................................................. 2-13

2.14.4 Mercury.......................................................................................................................... 2-13

2.14.5 Particulate Matter........................................................................................................... 2-14

2.15 MONETIZING CARBON DIOXIDE AND OTHER EMISSIONS

REDUCTIONS .............................................................................................................. 2-14

2.16 REGULATORY IMPACT ANALYSIS ....................................................................... 2-15

LIST OF FIGURES

Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process..................................... 2-2
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CHAPTER 2. ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

Section 6295(o)(2)(A) of 42 U.S.C. requires the U.S. Department of Energy (DOE) to set 

forth energy conservation standards that are technologically feasible and economically justified 

and would result in significant additional energy conservation. This chapter provides a 

description of the general analytical framework that DOE uses in developing such standards, as 

well as aspects specific to the analysis of microwave oven standby power. The analytical 

framework is a description of the methodology, the analytical tools, and relationships among the 

various analyses that are part of this rulemaking. 

Figure 2.1.1 summarizes the analytical components of the standards-setting process. The 

focus of this figure is the center column, identified as “Analyses.” The columns labeled “Key 

Inputs” and “Key Outputs” show how the analyses fit into the rulemaking process, and how the 

analyses relate to each other. Key inputs are the types of data and information that the analyses 

require. Some key inputs exist in public databases; DOE collects other inputs from interested 

parties or persons with special knowledge. Key outputs are analytical results that feed directly 

into the standards-setting process. Dotted lines connecting analyses show types of information 

that feed from one analysis to another.
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Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Approaches Key Inputs Analyses Key Outputs

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Markups for

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analysis

National Impact

Analysis

Energy Use

Revise ANOPR

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Cost-Efficiency Relationship

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Characterize Industry

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Efficiency-Level Approach

• Design Option Approach

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Accounting Approach

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Manufacturer Interviews

• GRIM Analysis

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

• Define Distribution Channels

• Economic Census Data

Analysis

• Retail Price Collection and

Analysis

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail Prices

Design Energy/ Use

Advance Notice of Proposed Rulemaking (ANOPR)

• Efficiency/Performance

• Manufacturing Cost

Candidate

Standard 

Levels

• Analysis of Energy Use 

Data

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• NEMS-BT

• ImSET

• NEMS-BT

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Analysis of Market Data

• Analysis of Product Data

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy Prices

• Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Approaches Key Inputs Analyses Key Outputs

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Markups for

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analysis

National Impact

Analysis

Energy Use

Revise ANOPR

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Cost-Efficiency Relationship

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Characterize Industry

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Efficiency-Level Approach

• Design Option Approach

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Accounting Approach

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Manufacturer Interviews

• GRIM Analysis

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

• Define Distribution Channels

• Economic Census Data

Analysis

• Retail Price Collection and

Analysis

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail Prices

Design Energy/ Use

Advance Notice of Proposed Rulemaking (ANOPR)

• Efficiency/Performance

• Manufacturing Cost

Candidate

Standard 

Levels

• Analysis of Energy Use 

Data

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• NEMS-BT

• ImSET

• NEMS-BT

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Analysis of Market Data

• Analysis of Product Data

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy Prices

• Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review
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The analyses performed in the advance notice of proposed rulemaking stage, and updated 

for the SNOPR, include:

• A market and technology assessment to characterize the relevant equipment markets and 

existing technology options, including prototype designs.

• A screening analysis to review each technology option and determine if it is 

technologically feasible; is practical to manufacture, install, and service; would adversely 

affect equipment utility or equipment availability; or would have adverse impacts on 

health and safety.

• An engineering analysis to develop cost-efficiency relationships, which indicate the 

manufacturer’s production cost (material, labor, and factory overhead) of achieving 

increased efficiency.

• A markups analysis to convert the manufacturer costs estimates from the engineering 

analysis to customer prices, which are then used in the LCC and payback period (PBP) 

analyses and the manufacturer impact analysis. 

• An energy use analysis to determine the annual energy use of the considered products at 

specific efficiency levels.

• An LCC and PBP analysis to calculate, at the consumer level, the discounted savings in 

operating costs (less maintenance and repair costs) throughout the estimated average life 

of the covered products, compared to any increase in the installed cost for the equipment 

likely to result directly from the imposition of the standard.

• A shipments analysis to forecast product shipments, which are then used to calculate the 

national impacts of standards on energy consumption and costs, net present value (NPV), 

and future manufacturer cash flows.

• A national impact analysis to assess the aggregate impacts at the national level of the 

NPV of total consumer LCC and national energy savings (NES).

The analyses DOE performed in the subsequent notice of proposed rulemaking (NOPR) 

stage and updated for the SNOPR include those listed below. Because the Energy Independence 

and Security Act of 2007 (Pub. L. No. 110-140) amended the Energy Policy and Conservation 

Act (EPCA) of 1975 (42 U.S.C. 6291–6309) to establish revised energy conservation standards 

for residential dishwashers and dehumidifiers (42 U.S.C. 6295(g)(9) and (cc)), DOE did not 

propose standards for these products in the NOPR and instead codified these statutory standards 

in a subsequent final rule. 74 FR 12058 (March 23, 2009). Therefore, DOE did not re-analyze 

dishwashers and dehumidifiers for the NOPR.
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• A consumer subgroup analysis to evaluate variations in customer characteristics that 

might cause a standard to impact particular customer sub-populations differently than the 

overall population.

• A manufacturer impact analysis to estimate the financial impact of standards on 

manufacturers and to calculate impacts on competition, employment, and manufacturing 

capacity.

• A utility impact analysis to estimate effects of proposed standards on electric and gas 

utilities.

• An employment impact analysis to assess the aggregate impacts of standards on national 

employment.

• An environmental assessment to provide estimates of the effects of standards on three 

pollutants—sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury—as well as carbon 

emissions.

• A regulatory impact analysis to present major alternatives to proposed standards that 

could achieve energy savings at a lower cost.

After the publication of the NOPR, DOE reviewed comments from interested parties and 

revised its analyses as appropriate before issuing a final rule. In addition, information DOE received 

from interested parties regarding the NOPR indicated that further analyses were warranted for CCWs 

and microwave ovens as to standby power. As a result, DOE continued the rulemaking for these 

products, and a final rule for conventional cooking products (i.e., cooktops and ovens) and 

microwave oven energy factor (EF) was published on April 8, 2009. 74 FR 16040. DOE also 

published a final rule on January 8, 2010 (75 FR 1122; the “January 2010 Final Rule”) amending the 

energy conservation standards for commercial clothes washers.

Discussion of the analyses that were conducted at the NOPR stage for the covered products 

can be found in the NOPR technical support document (TSD) for this rulemaking, and updated 

analyses for the final rule for conventional cooking products and microwave oven energy factor (EF) 

are presented in the final rule TSD for those products. Details of the revised analyses for commercial 

clothes washers are presented in the final rule TSD for that product. This SNOPR TSD contains 

details of the revised NOPR analyses conducted for microwave oven standby power consumption.

2.2 MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment characterizes the relevant product markets and 

existing technology options, including prototype designs, for the considered products.
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2.2.1 Market Assessment

When initiating a standards rulemaking, DOE develops information on the present and 

past industry structure and market characteristics for the equipment concerned. This activity 

assesses the industry and equipment, both quantitatively and qualitatively, based on publicly 

available information. As such, for the considered products, DOE addressed the following: (1) 

manufacturer market share and characteristics; (2) existing regulatory and non-regulatory 

equipment efficiency improvement initiatives; and (3) trends in product characteristics and retail 

markets. This information serves as resource material throughout the rulemaking.

DOE reviewed existing literature and interviewed manufacturers to get an overall picture 

of the markets for the considered products in the United States. Industry publications and trade 

journals, government agencies, and trade organizations provided the bulk of the information, 

including information on: (1) manufacturers and their market share; (2) shipments by capacity; 

and (3) market saturation. The appropriate sections of this TSD describe the resulting 

information as DOE used it in the analysis.

DOE has used and will use the most reliable and accurate data available at the time of 

each analysis in this rulemaking. All data will be available for public review. 

2.2.2 Technology Assessment

DOE typically uses information relating to existing and past technology options and 

prototype designs as inputs to determine what technologies manufacturers use to attain higher 

performance levels. In consultation with interested parties, DOE develops a list of technologies 

for consideration. Initially, these technologies encompass all those it believes are technologically 

feasible. DOE developed its list of technologically feasible design options for the considered 

products through consultation with manufacturers of components and systems, and from trade 

publications and technical papers. 

2.3 SCREENING ANALYSIS

The screening analysis examines various technologies as to whether they: (1) are 

technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an 

adverse impact on equipment utility or availability; and (4) have adverse impacts on health and 

safety. As described in section 2.2.2 above, DOE develops an initial list of efficiencyenhancement options from the technologies identified as technologically feasible in the 

technology assessment. Then DOE, in consultation with interested parties, reviews the list to 

determine if these options are practicable to manufacture, install, and service, would adversely 

affect equipment utility or availability, or would have adverse impacts on health and safety. In 

addition, DOE removed from the list technology options that lack energy consumption data as 

well as technology options whose energy consumption could not be adequately measured by 
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existing DOE test procedures. In the engineering analysis, DOE further considers efficiency 

enhancement options that it did not screen out in the screening analysis.

2.4 ENGINEERING ANALYSIS

As presented in chapter 5, the engineering analysis establishes the relationship between 

the cost and efficiency of the considered products. This relationship serves as the basis for 

cost/benefit calculations in terms of individual consumers, manufacturers, and the nation. 

Chapter 5 discusses the product classes DOE analyzed, the representative baseline units, the 

incremental efficiency levels, the methodology DOE used to develop manufacturing costs, the 

methodology it used to develop the energy consumption model, the cost-efficiency consumption 

curves, the impact of efficiency improvements on the considered products, and the methodology 

DOE used to extend the analysis to low-shipment-volume product classes.

In the engineering analysis, DOE evaluates a range of product efficiency levels and their 

associated manufacturing costs. The purpose of the analysis is to estimate the incremental MPCs 

for a product that would result from increasing efficiency levels above the level of the baseline 

model in each product class. The engineering analysis considers technologies not eliminated in 

the screening analysis, although certain technologies were not analyzed due to negligible 

incremental efficiency improvements or the inability of the existing DOE test procedures to 

measure any reduction in energy use. DOE considers the remaining technologies, designated as 

design options, in developing the cost-efficiency curves, which are subsequently used for the 

LCC and PBP analyses.

For each of the product classes presented in chapter 5, DOE selected efficiency levels and 

obtained incremental cost data at each of these levels. 

2.4.1 Manufacturing Cost Assessment 

The manufacturing cost assessment estimated the manufacturing costs associated with an 

increase in energy efficiency for the considered products. This approach involved the 

disassembly of specific units, analysis of the materials and manufacturing processes, and 

development of a spreadsheet cost model, using a clear and consistent manufacturing cost 

assessment methodology. DOE built a detailed manufacturing cost assessment model that 

accurately predicts manufacturing cost, and reports the manufacturing costs in aggregated form 

to maintain confidentiality of the data. DOE obtained input from interested parties on the 

manufacturing cost estimates and assumptions to confirm their accuracy.

2.5 ENERGY USE ANALYSIS

The energy use analysis assesses the energy-savings potential of various efficiencies for 

the considered products. As part of the energy use analysis, DOE makes certain engineering 
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assumptions regarding product application, including how the product is operated and under 

what conditions. DOE also developed a test procedure to measure the efficiencies of covered 

products. On March 9, 2011, DOE published in the Federal Register a test procedure interim 

final rule for microwave ovens that incorporates a measurement of standby power. 76 FR 12825. 

2.6 MARKUPS ANALYSIS

Retail prices are required for the baseline efficiency level and all other efficiency levels 

under consideration in the LCC and PBP analysis and the manufacturer impact analysis. DOE

derived retail prices by applying manufacturer-to-consumer markups to the estimated 

manufacturer selling price. To develop markups, DOE identified distribution channels (i.e., how 

the products are distributed from the manufacturer to the consumer). After identifying

appropriate distribution channels, DOE relied on economic census data from the U.S. Census 

Bureau and input from the industry to define how products are marked up from the manufacturer 

to the consumer.

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

New or amended energy conservation standards for products result in changes in 

operating expenses—usually a decrease—and changes in consumer price—usually an increase. 

DOE analyzed the net effect of new standards on consumers by evaluating the net LCC using the 

cost-efficiency relationship derived in the engineering analysis, as well as the energy costs 

derived from the energy use determination. Inputs to the LCC calculation include the installed 

cost to the consumer (consumer price plus installation cost); operating expenses (energy 

expenses and maintenance costs); the lifetime of the appliance; and a discount rate.

Given that installed cost typically increases while operating cost typically decreases, 

there comes a time in the life of a product that operates at higher-than-baseline efficiency when 

the net operating cost benefit (in dollars) from the time of purchase is equal to the incremental 

first cost of purchasing the higher-efficiency product. The length of time required for a product

to reach this cost-equivalence point is known as the payback period.

To estimate the LCC for microwave oven standby power, DOE had to determine several 

input values, including retail prices; electricity prices; discount rates; maintenance, service, and 

installation costs; and product lifetimes. DOE used typical values to reflect the conditions in the 

field for product life, product retail price, and energy consumption. DOE reviewed the Energy 

Information Administration (EIA)’s energy price data to establish electricity prices for 

residential consumers. DOE used EIA’s Annual Energy Outlook (AEO) as the default source of 

projections of future energy prices for its LCC and PBP analysis.

To forecast product costs, DOE developed price factors based on learning rates calculated 

for electric cooking equipment, including microwave ovens. The learning rates were calculated 
2-8

using the historic Producer Price Index for electric cooking equipment along with historic 

shipments data, which indicate cumulative production of this equipment.

DOE developed discount rates for residential consumers based on estimates of the 

interest or finance cost to purchase residential appliances. Following financial theory, the finance 

cost of raising funds can be interpreted as: (1) the financial cost of any debt incurred to purchase 

products, principally interest charges on debt; or (2) the opportunity cost of any equity used to 

purchase products, principally interest earnings on household equity. 

DOE considered expected changes to maintenance, repair, and installation costs for the 

product covered in this rulemaking. Typically, small incremental changes in product efficiency 

incur no, or only very small, changes in repair and maintenance costs over baseline efficiency 

products. There is a greater probability that products having efficiencies that are significantly 

greater than the baseline will incur increased repair and maintenance costs because such products 

are more likely to incorporate technologies that are new to the industry and not widely available. 

DOE used information from various literature sources (e.g., Appliance magazine) and 

input from manufacturers and other stakeholders to establish average product lifetimes for use in 

the LCC and subsequent analyses.

2.8 SHIPMENTS ANALYSIS

Shipment forecasts are required to calculate the national impacts of standards on energy 

consumption, NPV, and future manufacturer cash flows. DOE developed shipment forecasts 

using historical data as a basis for projecting future shipments of microwave ovens. In projecting 

shipments, DOE accounted for two market segments: (1) new construction; (2) existing 

residential buildings (i.e., replacing failed products). To estimate the impacts of prospective 

standards on product shipments (i.e., forecasting standards-case shipments), DOE accounted for 

the combined effects of changes in purchase price, annual operating cost, and household income 

on the consumer purchase decision.

2.9 NATIONAL IMPACT ANALYSIS

The national impact analysis assesses the NPV of total consumer costs and benefits. DOE 

determined both the NPV and the national energy savings (NES) for the efficiency levels 

considered for both product classes of microwave ovens. To make the analysis more accessible 

and transparent to all stakeholders, DOE prepared an NES spreadsheet model in Microsoft Excel 

to forecast energy savings and the national economic costs and savings resulting from new 

standards. The NES spreadsheet model does not use probability distributions for inputs or 

outputs. To assess the impact of input uncertainty on the NES and NPV results, DOE can 

conduct sensitivity analyses by running scenarios on input variables that are of interest to 

stakeholders. 
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2.9.1 National Energy Savings 

The inputs for determining NES are: (1) annual energy consumption per unit; (2) 

shipments; (3) product stock; (4) national energy consumption; and (5) site-to-source conversion 

factors. DOE calculated the national energy consumption by multiplying the number of units, or 

stock, of products (by vintage) by the unit energy consumption (also by vintage).a DOE 

calculated national annual energy savings as the difference between national energy consumption 

in the base case (without new efficiency standards) and in each higher-efficiency standards case. 

The analysis included estimated energy savings by fuel type used for generating electricity. DOE 

estimates energy consumption and savings based on site energy, and then converts the electricity 

consumption and savings to source energy. Cumulative energy savings are the sum of the annual 

NES over the forecast period.

The stock of products depends on annual shipments and the lifetime of the product. DOE

projected shipments under the base-case efficiency and for various standards-case efficiency 

scenarios and product efficiency trends. DOE determined that shipment projections under the 

higher standard efficiency cases were lower than those under the base-case efficiency projection. 

The projections indicated that higher installed costs would cause some consumers to forego 

product purchases. As a result, DOE used the higher efficiency standards-case shipments 

projection and, in turn, the resulting stock of product under that case, to determine the NES. 

Calculating the NES in this way avoids including savings that result from displaced shipments.

2.9.2 Net Present Value 

The inputs for determining NPV are: (1) total annual installed cost; (2) total annual 

operating cost savings; (3) discount factor; (4) present value of costs; and (5) present value of 

savings. DOE calculated NPV as the difference between the present value of operating cost 

savings and the present value of increased total installed costs. It calculated net savings each year 

as the difference between total operating cost savings (including electricity, repair, and 

maintenance cost savings) and increases in total installed costs (product price). DOE calculated 

savings over the life of the product, accounting for differences in yearly energy rates, and used a 

discount factor to discount future costs and savings to the present.

DOE calculated increases in total installed costs as the product of the difference in the 

total installed cost between the base case and standards case and the annual shipments in the 

standards case. Because costs of the more efficient products bought in the standards case are 

higher than those of products bought in the base case, price increases appear as negative values 

in the NPV analysis.

DOE expressed operating cost savings as decreases in operating costs associated with the 

lower energy consumption of products bought in the standards case compared to the base

 

a Vintage represents the age of the equipment.
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efficiency case. Total operating cost savings are the product of savings per unit and the number 

of units of each vintage surviving in a particular year.

2.9.3 Forecasted Efficiencies

Several of the inputs for determining NES (e.g., annual energy consumption per unit) and 

NPV (e.g., total annual installed cost and total annual operating cost savings) depend on the 

efficiency of the product. Thus, DOE forecasted efficiencies for the base case and standards 

cases. The forecasted efficiencies specify the annual average shipment-weighted product 

efficiencies for future years.

DOE based the development of product efficiencies in the base case on the assignment of 

product efficiencies in 2014. In other words, DOE determined the distribution of product 

efficiencies currently in the marketplace to develop a shipment-weighted efficiency for 2014. As 

described in chapter 10, DOE assumed that forecasted efficiencies remain frozen at the 

efficiency level in 2014 until the end of the forecast period (2043). 

DOE developed standards-case forecasts (i.e., forecasts of efficiency trends after 

standards take effect) based on a roll-up efficiency scenario. Under a roll-up scenario, all 

products that operate at performance levels below a prospective standard are moved, or rolled up, 

to the minimum performance level allowed under the new standard. The distribution of products

at efficiency levels above the new minimum standard levels is unaffected (i.e., those products 

remain at their pre-standard performance levels.) The roll-up efficiency scenario dictates how 

DOE determines efficiency distributions in the first year a new standard takes effect. As it did for

the base case, DOE assumed that forecasted efficiencies under the standards cases remain frozen 

at the efficiency level in 2014 until the end of the forecast period.

2.10 CONSUMER SUBGROUP ANALYSIS

The consumer subgroup analysis evaluates economic impacts of standards on identifiable 

groups of consumers who might be disproportionately affected by new or amended energy 

efficiency standards. DOE evaluated the impacts of particular subgroups of consumers in part by 

using the LCC spreadsheet model to analyze the LCC and PBP for those particular consumers.

In the case of microwave ovens, DOE analyzed two subgroups: (1) low-income 

households and (2) households occupied by senior citizens. 

2.11 MANUFACTURER IMPACT ANALYSIS

The manufacturer impact analysis (MIA) assesses the impacts of new energy efficiency 

standards on manufacturers of the considered products. Potential impacts include financial

effects, both quantitative and qualitative, that might lead to changes in the manufacturing 
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practices for these products. DOE identified these potential impacts through interviews with 

manufacturers and other interested parties.

DOE conducted the MIA in three phases, and further tailored the analytical framework 

based on stakeholder comments. In Phase I, an industry profile was created to characterize the 

industry, and a preliminary MIA was conducted to identify important issues that required

consideration. In Phase II, an industry cash flow model and an interview questionnaire were

prepared to guide subsequent discussions. In Phase III, manufacturers were interviewed, and the 

impacts of standards were assessed both quantitatively and qualitatively. Industry and sub-group 

cash flow and NPV were assessed through use of the Government Regulatory Impact Model 

(GRIM). Then impacts on competition, manufacturing capacity, employment, and cumulative 

regulatory burden were assessed based on manufacturer interview feedback and discussions.

2.12 EMPLOYMENT IMPACT ANALYSIS

Energy conservation standards can affect employment both directly and indirectly. Direct 

employment impacts are changes in the number of employees at the plants that produce the 

covered products, and at the affiliated distribution and service companies, resulting from the 

imposition of new standards. DOE evaluates direct employment impacts in the manufacturer 

impact analysis. Indirect employment impacts may result from expenditures shifting between 

goods (the substitution effect) and changes in income and overall expenditure levels (the income 

effect) that occur because of the imposition of standards. 

DOE investigated indirect employment impacts for microwave oven standby power 

standards using the Pacific Northwest National Laboratory (PNNL)’s “Impact of Sector Energy 

Technologies” (ImSET) model. PNNL developed the ImSET model for DOE’s Office of 

Planning, Budget, and Analysis. The model estimates the employment and income effects of 

energy-saving technologies in buildings, industry, and transportation. In comparison with simple 

economic multiplier approaches, ImSET allows for more complete and automated analysis of the 

economic impacts of energy conservation investments.

2.13 UTILITY IMPACT ANALYSIS

The utility impact analysis assesses the effect of higher efficiency standards on the 

electric utility industries. To carry out this analysis, DOE uses a variant of the EIA’s National 

Energy Modeling System (NEMS). NEMS is a large, multi-sectoral, partial-equilibrium model of 

the U.S. energy sector that EIA has developed over the past decade, primarily for the purpose of 

preparing the AEO. DOE uses a variant known as NEMS-BT to provide key inputs to the 

analysis.b

 a For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information 

Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000, 
2-12

NEMS, which is available in the public domain, produces a widely recognized baseline 

energy forecast for the United States through 2035. Typical NEMS outputs include forecasts of 

electricity sales, price, and avoided electric generating capacity. DOE conducted the utility 

impact analysis as a scenario departing from the latest AEO reference case. In other words, DOE 

modeled the energy savings impacts from amended energy conservation standards using NEMSBT to generate forecasts that deviate from the AEO reference case.

2.14 ENVIRONMENTAL ASSESSMENT

Pursuant to the National Environmental Policy Act and the requirements of 42 U.S.C. 

6295(o)(2)(B)(i)(VI) and 6316(a), DOE prepared an environmental assessment of the impacts of 

amended energy conservation standards for microwave oven standby power on the human 

environment. The primary environmental effects of these standards would be reduced power 

plant emissions resulting from reduced consumption of electricity. DOE assessed these 

environmental effects by using NEMS-BT to provide key inputs to its analysis. The portion of 

the environmental assessment produced by NEMS-BT considers carbon dioxide (CO2), nitrogen 

oxides (NOx), and mercury (Hg). The environmental assessment also considers impacts on SO2

emissions and discusses particulate matter (PM) emissions. After a brief discussion of general 

methodology, this section will address each of the relevant emissions. The following section 

explains how DOE plans to monetize the benefits associated with emissions reductions.

2.14.1 Carbon Dioxide

In the absence of any Federal emissions control regulation of power plant emissions of 

CO2, a DOE standard is likely to result in reductions of these emissions. The CO2 emission 

reductions likely to result from a standard were estimated using NEMS-BT and national energy 

savings estimates drawn from the NIA spreadsheet model. The net benefit of the standard is the 

difference between emissions estimated by NEMS-BT at each standard level considered and the 

AEO Reference Case. NEMS-BT tracks CO2 emissions using a detailed module that provides 

results with broad coverage of all sectors and inclusion of interactive effects.

2.14.2 Sulfur Dioxide

SO2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide 

and regional emissions cap and trading programs, and DOE has preliminarily determined that 

these programs create uncertainty about the standards’ impact on SO2 emissions. Title IV of the 

Clean Air Act sets an annual emissions cap on SO2 for affected EGUs in all 50 states and the 

 

DOE/EIA-0581(2000), March 2000. EIA approves use of the name NEMS to describe only an official version of the 

model without any modification to code or data. Because this analysis entails some minor code modifications and 

the model is run under various policy scenarios that are variations on EIA assumptions, DOE refers to the model as 

NEMS-BT (BT is DOE’s Building Technologies Program, under whose aegis this work has been performed). 

NEMS-BT previously was called NEMS-BRS.
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District of Columbia (D.C.). SO2 emissions from 28 eastern states and D.C. are also limited 

under the Clean Air Interstate Rule (CAIR, 70 Fed. Reg. 25162 (May 12, 2005)), which created 

an allowance-based trading program. Although CAIR has been remanded to EPA by the U.S. 

Court of Appeals for the District of Columbia Circuit (D.C. Circuit), see North Carolina v. EPA, 

550 F.3d 1176 (D.C. Cir. 2008), it remains in effect temporarily, consistent with the D.C. 

Circuit’s earlier opinion in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 

2010, EPA proposed the Transport Rule, a replacement for CAIR, which would limit emissions 

from EGUs in 32 states, potentially through the interstate trading of allowances, among other 

options. 75 FR 45210 (Aug. 2, 2010). 

The attainment of emissions caps is typically flexible among EGUs and is enforced 

through the use of emissions allowances and tradable permits. Under existing EPA regulations, 

and under the Transport Rule if it is finalized, any excess SO2 emissions allowances resulting 

from the lower electricity demand caused by the imposition of an efficiency standard could be 

used to permit offsetting increases in SO2 emissions by any regulated EGU. However, if the 

standard resulted in a permanent increase in the quantity of unused emissions allowances, there 

would be an overall reduction in SO2 emissions from the standards. While there remains some 

uncertainty about the ultimate effects of efficiency standards on SO2 emissions covered by the 

existing cap and trade system, the NEMS-BT modeling system that DOE uses to forecast 

emissions reductions currently indicates that no physical reductions in power sector emissions 

would occur for SO2. 

2.14.3 Nitrogen Oxides

A cap on NOx emissions, affecting electric generating units in the CAIR region, would 

mean that energy conservation standards may have little or no physical effect on these emissions 

in the 28 eastern states and the D.C. covered by CAIR or any states covered by the proposed 

Transport Rule if it is finalized. The standards would, however, reduce NOx emissions in those 

22 states not affected by the CAIR. As a result, DOE used NEMS-BT to estimate the emissions 

reductions from possible standards in the states where emissions are not capped.

2.14.4 Mercury

Similar to emissions of SO2 and NOx, future emissions of Hg would have been subject to 

emissions caps. In May 2005, EPA issued the Clean Air Mercury Rule (CAMR). 70 Fed. Reg. 

28606 (May 18, 2005). CAMR would have permanently capped emissions of mercury for new 

and existing coal-fired power plants in all states by 2010. However, on February 8, 2008, the 

D.C. Circuit issued a decision in New Jersey v. Environmental Protection Agency, in which it 

vacated CAMR. 517 F.3d 574 (D.C. Cir. 2008). EPA has decided to develop emissions standards 

for power plants under the Clean Air Act (Section 112), consistent with the D.C. Circuit’s 

opinion on CAMR. See http://www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf. 

Pending EPA's forthcoming revisions to the rule, DOE is excluding CAMR from its 

Environmental Analysis. In the absence of CAMR, a DOE standard would likely reduce Hg 

emissions and DOE used NEMS-BT to estimate these emission reductions. However, DOE 
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continues to review the impact of rules that reduce energy consumption on Hg emissions, and 

may revise its assessment of Hg emission reductions in future rulemakings.

2.14.5 Particulate Matter

DOE acknowledges that particulate matter (PM) exposure can impact human health. 

Power plant emissions can have either direct or indirect impacts on PM. A portion of the 

pollutants emitted by a power plant are in the form of particulates as they leave the smoke stack. 

These are direct, or primary, PM emissions. However, the great majority of PM emissions 

associated with power plants are in the form of secondary sulfates, which are produced at a 

significant distance from power plants by complex atmospheric chemical reactions that often 

involve the gaseous (non-particulate) emissions of power plants, mainly SO2 and NOx. The 

quantity of the secondary sulfates produced is determined by a very complex set of factors 

including the atmospheric quantities of SO2 and NOx, and other atmospheric constituents and 

conditions. Because these highly complex chemical reactions produce PM comprised of different 

constituents from different sources, EPA does not distinguish direct PM emissions from power 

plants from the secondary sulfate particulates in its ambient air quality requirements, PM 

monitoring of ambient air quality, or PM emissions inventories. For these reasons, it is not 

currently possible to determine how the amended standard impacts either direct or indirect PM 

emissions. Therefore, DOE is not planning to assess the impact of these standards on PM 

emissions. Further, as described previously, it is uncertain whether efficiency standards will 

result in a net decrease in power plant emissions of SO2 and NOx, since those pollutants are now 

largely regulated by cap and trade systems. 

2.15 MONETIZING CARBON DIOXIDE AND OTHER EMISSIONS

REDUCTIONS

DOE considered the estimated monetary benefits likely to result from the reduced 

emissions of CO2 and NOX that are expected to result from each of the standard levels 

considered. 

In order to estimate the monetary value of benefits resulting from reduced emissions of 

CO2 emissions, it is DOE’s intent to use in its analysis the most current Social Cost of Carbon 

(SCC) values developed and/or agreed to by interagency reviews. The SCC is intended to be a 

monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, 

including, but not limited to, net agricultural productivity loss, human health effects, property 

damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to 

monetize the harms associated with climate change will raise serious questions of science, 

economics, and ethics. But with full regard for the limits of both quantification and monetization, 

the SCC can be used to provide estimates of the social benefits of reductions in GHG emissions.

At the time of this analysis, the most recent interagency estimates of the potential global 

benefits resulting from reduced CO2 emissions in 2010, expressed in 2010$, were $4.9, $22.3, 
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$36.5, and $67.6 per metric ton. For emissions that occur in later years, these values grow in real 

terms over time. Additionally, the interagency group determined that a range of values from 7 

percent to 23 percent should be used to adjust the global SCC to calculate domestic effects, 

although DOE will give preference to consideration of the global benefits of reducing CO2

emissions. To calculate a present value of the stream of monetary values, DOE discounted the 

values in each of the four cases using the discount rates that had been used to obtain the SCC 

values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change.

DOE also estimated the potential monetary benefit of reduced NOX emissions resulting 

from the standard levels it considered. For NOx emissions, available estimates suggest a very 

wide range of monetary values for NOX emissions, ranging from $450 to $4,623 per ton in 

2010$).c In accordance with U.S. Office of Management and Budget (OMB) guidance, DOE 

will conduct two calculations of the monetary benefits derived using each of the economic values 

used for NOx, one using a real discount rate of 3 percent and another using a real discount rate of 

7 percent.

d

DOE does not plan to monetize estimates of Hg in this rulemaking. DOE is aware of 

multiple agency efforts to determine the appropriate range of values used in evaluating the 

potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance 

regarding consistent valuation and reporting of Hg emissions before it once again monetizes Hg 

in its rulemakings.

2.16 REGULATORY IMPACT ANALYSIS

Pursuant to Executive Order 12866 (“Regulatory Planning and Review,” 58 FR 51735, 

October 4, 1993), DOE prepared a regulatory impact analysis (RIA), which was subject to 

review under the Executive Order by the Office of Information and Regulatory Affairs at the 

Office of Management and Budget. The RIA evaluated non-regulatory alternatives to standards 

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

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

DOE recognizes that voluntary or other non-regulatory efforts by manufacturers, utilities, 

and other interested parties can result in substantial improvements to energy efficiency or 

reductions in energy consumption. DOE considered the likely effects of non-regulatory 

 

c For additional information, refer to U.S. Office of Management and Budget, Office of Information and Regulatory 

Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on 

State, Local, and Tribal Entities, Washington, DC. d OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
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initiatives on product energy use, consumer utility, and LCC. DOE based its assessment on the 

actual impacts of any such initiatives to date, but also considered information presented 

regarding the impacts that any existing initiative might have in the future.