## Tuesday May 14, 1991

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# Part III



# Department of Energy

Office of Conservation and Renewable Energy

10 CFR Part 430 Energy Conservation Program for Consumer Products: Energy Conservation
Standards for Three Types of Consumer Products; Final Rule

### 22250 Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

DEPARTMENT OF ENERGY



### Office of Conservation and Renewable Energy

10 CFR Part 430

[Docket No

. CE-RM

- 88-101}

Energy Conservation Program for Consumer Products : Final Rule Regarding Energy Conservation Standards for Three Types of Consumer Products

AGENCY : Office of Conservation and Renewable Energy, DOE.

ACTION : Final rule.

SUMMARY : The Energy Policy and Conservation Act (EPCA), as amended by the National Energy Conservation Policy Act (NECPA), the National Appliance Energy Conservation Act (NAECA), and the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), prescribes energy conservation standards for certain major household appliances, and requires the Department of Energy (DOE or Department) to administer an energy conservation program for these products. Among other things, the NAECA amendments to EPCA require DOE to consider amending the energy conservation standards for dishwashers, clothes washers, and clothes dryers. DOE has determined that revised energy conservation standards for clothes washers, clothes dryers and dishwashers would result in a significant conservation of energy and would be economically justified. Therefore, the Department is today amending Title 10, part 430 of the Code of Federal Regulations to add new standards for these products. More stringent standards, including the maximum technologically feasible levels, were considered by the Department, but rejected based upon consideration of the economic analyses. These standard levels are to take effect May 14, 1994.

EFFECTIVE DATE : May 14, 1994.

ADDRESSES : A copy of the Technical Support Document may be read at the DOE Freedom of Information Reading Room, U.S. Department of Energy, Forrestal Building, room 1E-190, 1000 Independence Avenue, SW., Washington, DC, 20585, (202) 586-6020, between the hours of 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Copies of the Technical Support Document may be obtained from: U.S. Department of Energy, Office of Conservation and Renewable Energy, Forrestal Building, Mail Station CE-43, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-9127.

FOR FURTHER INFORMATION CONTACT: Michael J. McCabe, U.S. Department of Energy, Office of Conservation and Renewable Energy, Forrestal Building, Mail Station CE-43, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-9127. Eugene Margolis, Esq., U.S. Department of Energy, Office of General Counsel,Forrestal Building, Mail Station GC41, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-9507-
U.S. Department of Energy, CE-43.1, Docket No. CE-RM-88-101, Forrestal Building, room 6B-025, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-9320.

SUPPLEMENTARY INFORMATION:

1. Introduction a. Authority b. Background II. General Discussion - a. Maximum Technologically Feasible Levels b. Energy Savings 1. Determination of Savings 2. Significance of Savings c. Rebuttable Presumption d. Economic justification 1. Economic Impact on Manufacturers and Consumers 2. Life-cycle Costs 3. Energy Savings 4. Lessening of Utility of Performance of Products 5. Impact of Lessening of Competition 6. Need of the Nation to Conserve Energy 7. Other Factors III. Discussion of Comments a. General Analytical Comments b. Product Specific Comments 1. Clothes Washers 2. Clothes Dryers 3. Dishwashers IV. Product-Specific Discussion a. Clothes Washers 1. Efficiency Levels Analyzed 2. Payback Periods 3. Significance of Energy Savings 4. Economic Justification A. Economic Impact on Manufacturers and Consumers B. Life-cycle Cost and Net Present ValueC. Energy SavingsD. Lessening of Utility or Performance of Products E. Impact of Lessening of Competition F. Need of the Nation to Save Energy G. Other Factors 5. Conclusion b. Clothes Dryers 1. Efficiency Levels Analyzed 2. Payback Periods 3. Significance of Energy Savings 4. Economic Justification A. Economic Impact on Manufacturers and Consumers B. Life-cycle Cost and Net Present Value C. Energy Savings D. Lessening of Utility or Performance of Products E. Impact of Lessening of Competition F. Need of the Nation to Save Energy G. Other Factors 5. Conclusion c. Dishwashers 1. Efficiency Levels Analyzed 2. Payback Periods 3. Significance of Energy Savings 4. Economic justification A. Economic Impact on Manufacturers and Consumers B. Life-cycle Cost and Net Present Value C. Energy Savings D. Lessening of Utility or Performance of Products E. Impact of Lessening of Competition F. Need of the Nation to Save Energy G. Other Factors 5. Conclusion V. Environmental, Regulatory Impact, Federalism and Regulatory Flexibility Reviews a. Environmental Review b. Regulatory Impact Review c. Federalism Review d. Regulatory Flexibility Review

L Introduction
a. Authority

Part B of Title III of the EPCA, Public Law 94-163, as amended by NECPA, Public Law 95-619, by NAECA, Public Law 100-12, and by NAECA 1988, Public 'Law 100-357,' 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; dishwashers; clothes dryers; water heaters; central air conditioners and central air conditioning heat pumps; furnaces; direct heating equipment; 'elevision sets; kitchen ranges and evens; clothes washers; room air conditioners; fluorescent lamp ballasts; and pool heaters; as well as any other :;onsumer product classified by the Secretary of Energy. 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. DOE, in consultation with the National Institute of Standards and Technology (NIST), 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 produce test results that measure the energy efficiency, energy use, or

'Part B of Title III of SPCA, as amended by NECPA. NAECA, and NAECA 1988, is referred to in this notice as the Act. Part B of Title III is codified at 42 U.S.C. 6291 et seq. Part B of Title III of EPCA. as amended by NTECPA only, is referred to in this
notice as NECPA.

### Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations 2=51

estimated annual operating cost of a covered product during a representative average use cycle or period of use and shall not be unduly burdensome to conduct. Section 323(b)(3). A test procedure is not required if DOE determines by rule that one cannot be developed. Section 323(d)(1). Test procedures appear at 10 CFR part 430, subpart B. 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 for the following products: Room air conditioners, furnaces, clothes washers, dishwashers, water heaters

, freezers, refrigerators and refrigerator-freezers, central air conditioners and central air conditioning heat pumps, and fluorescent lamp ballasts. 44 FR 66475, November 19, 1979, 52 FR 46888

, December 10, 1987, and 54 FR 28031, July-5, 1989.

For each of 12 of the covered products, the Act prescribes an initial Federal energy conservation standard. Section 325(b)-(h). The Act establishes dates of applicability 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 3 to 10 years, also depending on the product. Section 325(b)-(h). After the specified period, DOE may promulgate new standards for each product; however, the Secretary may not prescribe any amended
standard which increases the maximum allowable energy use, or decreases the minimum required energy efficiency of a covered product. Section 325(1)(1). The Department's current review of standards is for dishwashers, clothes washers, and clothes dryers. Section 325(g)(4)(A)• 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 the 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 directly 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, section 325(1)(2)(B)(iii) establishes a rebuttable presumption of economic justification in instances where the Secretary determines that
"the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will
be less than three times the value of the energy savings during the first year that
the consumer will receive as a result of the standard, as calculated under the applicable test procedure * * ". "
Section 327 of the Act addresses the effect of Federal rules concerning testing, labeling, and standards on State laws or regulations concerning such

matters . Generally, all such State laws or regulations are superseded by the Act. Section 327(a)-(c). Exemptions to this general rule include: (1) State standards prescribed or enacted before January 8, 1987, and applicable to appliances produced before January 3, 1988 (section 327(b)(1)); (2) State procurement standards which are more stringent than the applicable Federal standard (section 327(b)(3) and (0(1)- (4)); (3) State regulations banning constant burning pilot lights in pool heaters (section 327(b)(4)); and (4) State standards for television sets effective on or after January 1, 1992, may remain in effect in the absence of a Federal standard for such product (section 327(b)(6) and 327(c)). 

### b. Background
The purpose of this rulemaking is -to review the energy conservation standards for clothes washers, clothes dryers and dishwashers. As directed by the Act, DOE published an advance notice of proposed rulemaking

, with a 60-day comment period that ended July 18, 1988. 53 FR 17712

, May 18

, 198a. (Hereafter referred to as the advance notice). The advance notice presented the product classes that DOE planned to analyze and provided a detailed discussion of the analytical methodology and analytical models that the Department expected to use in performing the analysis to support this rulemaking. The Department invited comments and data on the accuracy and feasibility of the planned methodology and encouraged interested persons to recommend improvements or alternatives to DOE's approach. On August 9, 1989, DOE published a notice of proposed rulemaking concerning clothes washers, clothes dryers, and dishwashers. (Hereafter referred to as the proposed rule.) 54 FR 32744, August 9, 1989. For clothes washers, the Department did not propose a specific standard level; rather. DOE solicited comments and information within a range of standard levels. This range of standard levels considered is shown in Table 1-1, below. For clothes dryers, the Department proposed a prescriptive standard that would require clothes dryers to be equipped with an automatic termination device, either a moisture termination or temperature termination device. For dishwashers, the Department proposed a minimum energy efficiency standard. These proposed standards are shown in Table 1-1 below.

### 2:252 Federal Register j Vol. 56, No. 93 / Tuesday, May 14 1991 / Rules andRegulat'ions

TABLE 1-1.-PROPOSED STANDARD LEVELS FOR CLOTHES WASHERS, CLOTHES DRYERS, AND DISHWASHERS

[Clothes washers]

Product class

1. Top Loading, Compact (1.6 ft.3 capacity or less) ......................................................................................... 2. Top Loading, Standard 1.61 to 2.74 ft.3 capacity or greater) ............................................. _...................... 3. Top Loading, Large (2.75 ft.3 capacity or greater) _ ..................................................................................... 4. Top Loading, Semi-Automatic .......................................................................................................................... 5. Front Leading .......................................................................................................................................... _........ 6. Suds Saver .................................... _...................................

Product Class [Clothes dryers] Energy factor (cu. ft./kWh/cycle)-January 1, 1993

Must have an unheated rinse option to 1.02 cu. ft./kWh/cycle. Must have an unheated rinse option to 1.32 cu. ft./kWh/cycle. Must have an unheated rinse option to 1.21 cu. ft./kWh/cycle. Must have an unheated rinse option. Must have an unheated rinse option. Must have an unheated rinse option.

1. Electric, Standard

........................................................................................................................................................................ 2. Electric, Compact (120V) ...................................................................... 3. Electric, Compact (240V) ............................................................................................................................................................ 4. Electric Heat Pump

. ............................. . ............................................................... ................................ ..................................
... 5. Gas, Standard

........................................................................................................................................................_.................... 6. Gas Compact

..............................................................................................................................................................................

[Dishwashers]

. Product Class

1. Compact Dishwasher (115V) .................................................................................................................................................. 2. Standard Dishwasher (115V) ................ _......................................................................... .............................................. ......... 3. Water Heating Dishwasher, Compact (115V) ....................................................................................................................... 4. Water Heating Dishwasher, Standard (115V) ....................................................................................................................... 5. Water Heating Dishwasher, Compact (220V) ....................................................................................................................... 6. Water Heating Dishwasher, Standard (220V) .......................................................................................................................

During the 60-day comment period ending October 10, 1989, DOE received 40 written comments, and testimony from 12 participants at the public hearing held in Washington, DC, on September 20, 1989. The issues raised are addressed in Section III of this notice. On September 28, 1990, DOE published an Advance Notice of Proposed Rulemaking in the Federal Register regarding energy conservation standards for nine types of consumer products, including clothes washers. (55 FR 39624). Clothes washers were included in this advance notice because subsequent to the close of the comment period in this rulemaking, DOE became aware of a clothes washer design option currently in use in Europe which was not included in the proposed rule and upon which no comment was received. This design option (horizontal wash tub axis in top-loading washers) appears to have the potential for saving significant amounts of energy. Due to the absence of any comment, the horizontal axis design option was not considered for inclusion in this Final Rule as discussed below. II. General Discussion
a. Maximum Technologically Feasible Levels
The Act requires that in considering any new or amended standards, the Department must consider those that "shall be designed to achieve the maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified." (Section 325 (1)(2)(A)). Accordingly, for each class of product under consideration in this rulemaking, a maximum technologically feasible (max tech) design option was identified. The max tech level is one that can be carried out by the addition of design options, both commercially feasible and prototypes, to the baseline units. DOE believes that the max tech feasible level must be capable of being assembled, but not necessarily manufactured, by the effective date of the amended standards. The max tech levels were derived by adding energy-conserving engineering design options to the respective classes in order of decreasing consumer paybacks. For example, the max tech level for clothes dryers includes heat pumps, an expensive design that pays back the slowest of all designs. A complete discussion of each max tech Requirement-January 1, 1993

Shall have moisture or temperature termination. Shall have moisture or temperature termination. Shall have moisture or temperature termination. [Reserved]. Shall have moisture or temperature termination. Shall have moisture or temperature termination.

Energy Factor (loads/kWh)-January 1, 1993

0.58. 0.41. Must be equipped with option to dry without heat. 0.44. Must be equipped with option to dry without heat Must be equipped with option to dry without heat.

level, and the design options included in each, is found in the Engineering Analysis. See Technical Support Document,. chapter 3. Table 2-1 presents the Department's max tech levels for clothes washer, clothes dryer, and dishwasher classes:

TABLE 2 -1.-MAXIMUM
TECHNOLOGICALLY FEASIBLE LEVELS

Products & product classes

Clothes Washers: Top Loading, Compact r ................Top Loading, Standard Capacity 2• Clothes Dryers: Compact, Electric, 120V 3......... Compact, Electric, 240V a ............. Standard, Electric

. ......................... Standard Gas 4 ..................

............. Dishwashers: Compact. 115V ........................... ... Standard, 115V ............................... Unit energy consumption

189 kWh/yr. 339 kWh/yr.

140 kWh/yr. 151 kWh/yr. 238 kWh/yr. 3.5/MBtu/yr.

510 kWh/yr. 688 kWh/yr.

kWh/yr. = kilowatt hours per year MBtu/yr. = thousand British thermal units per year. ' Capacity equals 1.45 ft .3 2 Capacity equals 2.4 ft.3 0 Capacity equals 3.45 ft.3 * Capacity equals 5.9 tts

The Department believes that these are the max tech levels from an engineering analysis standpoint. Each of the levels was evaluated in accordance

### F;edt gal (Register ;/, Vol..56, No. 93,/ Tuesday, May 14, 1991 : f: Rul s. artd, Regulations

with the economic justification factors specified in the Act to determine economic justification. The Department evaluated each max tech level to determine if it would be economically. justified at the time the standards would become effective. DOE rejected energy conservation standards that had unacceptable impacts on consumers or manufacturers, e.g., unusually long payback periods and substantially adverse impacts on - manufacturers' returns on equity (ROE), or that could result in a lessening of the utility of the product.
b. Energy Savings
1. Determination of Savings. The Department forecasted energy consumption through the use of the Lawrence Berkeley Laboratory Residential Energy Model (LBL-REM), which forecasted energy consumption over the period of analysis for candidate standards and the base case.2 The Department quantified the energy savings that would be attributable to a standard as the difference in energy consumption between the candidate standard's case and the base case. The LBL-REM is an improvement of the Oak Ridge National Laboratory Residential Energy End Use Model (ORNL Model), which was used by DOE in previous standards rulemakings. The LBL-REM is explained in the TSD. Appendix B to that document addresses the LBL-REM in detail. The LBL-REM contains algorithms to project average efficiencies, usage behavior, and market shares for each product. The market share calculations for the dishwasher, clothes washer, and clothes dryer analyses contain the following steps: Potential purchasers may purchase any competing technology within an end-use, or none. For dishwashers, the decision to purchase or not is modeled, and the fraction of the total that chooses each class, e.g., standard 115V, is specified exogenously. Lon ;-term market share elasticities have been assumed with respect to equipment price, operating expense, and income. The effects of standards are expected to be lower operating expense and increased equipment price. The percentage changes in these quantities are used, together with the elasticities, to determine changes in sales volumes resulting from standards. Higher equipment prices will decrease sales volumes, while lower operating expenses will increase them. The net result depends on the standard level

The base case for these three products represents NAECA's 1988 standards. wnich are design standards only. selected, and associated equipment prices and operating expenses. The LBL-REM is used to project residential energy use over the relevant time periods for these three products with and without amended standards. By comparing the energy consumption projection at alternative standard levels with NAECA's 1988 standards, the Department estimated the amount of energy projected to be saved during the period 1993-2015.$ The energy saved is expressed in Quads, i.e., quadrillions of Btu's. With respect to electricity the savings are quads of source or primary energy, which is the energy necessary to generate and transmit electricity. The Act defines "energy use" as the quantity of energy directly consumed by a consumer product at point of use. This is generally called "site" energy, as opposed to "source" energy. There are major differences between these types of energy. in 1987, the amount of electrical energy consumed at the site was less than one-third of the amount of source energy that was required to generate and transmit the site electrical energy.4 Therefore, it is important to identify whether the electricity involved is site or source energy. The LBL-REM projections are dependent on many assumptions. Among the most important are responsiveness of household appliance purchases to changes in energy prices and consumer income, future energy prices, future levels of housing construction, and options that exist for improving the energy efficiency of appliances. As is the case with any complicated computer model simulation, the validity of the outputs is critically dependent on the inputs. 2. Significance of Savings. Under section 325(1){3)(B) of the Act, the Department is prohibited from adopting a standard for a product if that standard would not result in "significant" energy savings. While the term "signifi cant" has never been defined in the Act, the U.S. Court of Appeals, in NRDC v. Herrington, 768 F.2d 1355 (DC Cir.1985), concluded that Congressional intent in using the word "significant" was to

LBL-REM was programmed to analyze a single
standard level or alternate standard levels over the entire period

. That is

, the fact that a standard might be revised during subsequent ruiemakings was not considered by the model. The Department believes that it is not possible to predict what result such reviews may have, and therefore it would be speculative to model any particular result.
Therefore

, for purposes of this rulemaking. each standard level that was analyzed was projected to have been in place from the time of implementation to the year 2015. + Energy Information Administration, Electric
Power Annual 1987. Tables 25 and 84 DOE/EtA0348t87),1987 

### .22253

mean "non-trivial." Id. at 1373. Thus, for the rulemaking, DOE believes that each standard level considered results in significant energy savings. 

### c. Rebuttable Presumption

NAECA established new criteria for determining whether a standard level is economically justified. Section 325(l)(2)(B)(iii) states:

"If the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure, there shall be a rebuttable presumption that such standard level is economically justified. A determination by the Secretary that such criterion is not met shall not be taken into consideration in the Secretary's determination of whether a standard is economically justified." If the increase in initial price of an appliance due to a conservation standard would repay itself to the consumer of energy savings in less than three years, then it is presumed that such standard is economically justified.5 This presumption of economic justification can be rebutted upon a proper showing.
d Economic justification As noted earlier, section 325(l)(2)(B)(i) of the Act provides seven factors to be evaluated in determining whether a conservation standard is economically justified. 1. Economic Impact on Alanufacturers and Consumers. The engineering analysis identified improvements in efficiency along with the associated costs to manufacturers for each class of product. For each design option, these costs constitute the increased per unit cost to manufacturers to achieve the indicated energy efficiency levels. Manufacturer, wholesaler, and retailer markups will result in a consumer purchase price higher than the manufacturer cost. To assess the likely impacts of standards on manufacturers, and to determine the effects of standards on different-sized firms, the Department used a computer model that simulated hypothetical firms in the three industries under consideration. This model, the

6 For this calculation , the Department calculated cost-of-operation based on the DOE test procedures. Therefore

, the consumer is assumed to be an "average " consumer as defined by the DOE test procedures

. Consumers that use the products less than the test procedure assumes will experience a longer payback while those that use them more than the test procedure assumes will have a shorter payback.

### 222:if Federal Regi ster / Vol. 56( No. 93 /Tuesday, May 14, -1991 / Rules and Regulations

Lawrence Berkeley Laboratory Manufacturer Impact Model (LBL-MIM), is explained in the TSD. See Technicalsupport Document, appendix C. LBLMIM provides a broad array of outputs, including shipments, price , revenue, net income, and ROE. An "Output Table" lists values for all these outputs in the base case and in each of the standards cases under consideration. It also gives a range for each of these estimates. A "Sensitivity Chart" shows how ROE would be affected by a change in any one of the model's nine control variables. For consumers, measures of economic impact are the charges in purchase price and annual energy expense. The purchase price and annual energy

expense, i.e., life-cycle cost (LCC), of each standard level are presented in chapter 6 of the TSD. Under section 325 of the Act, LCC analysis is a separate factor to be considered in determining economic justification. 2. Life-cycle Costs. One measure of the effect of proposed standards on consumers is the change in operating expense as compared to the change in purchase price, both resulting from standards. This is quantified by the difference in LCC between the base and standards cases for the appliance classes analyzed. The LCC is the sum of the purchase price and the operating expense, including maintenance expenditures, discounted over the lifetime of the appliance. The LCC was calculated for the range of efficiencies in the Engineering Analysis for each class in the year standards are imposed using consumer
discount rates of 2, 7, and 15 percent. The purchase price is based on the factory costs in the Engineering Analysis and includes a factory markup plus a distributor and retailer markup. Energy price forecasts are inputs that
are taken from the 1989 Annual Energy
Outlook of the Energy Information Administration (DOE/EIA--0383(89)). Appliance usage inputs are taken from
the relevant test procedures and recent Procter and Gamble data. (Procter and Gamble (P&G) No. 27, at 2-3.8 The differences in LCC between the base case and various levels of standards for dishwashers, clothes washers, and clothes dryers are presented in chapter 6 of the TSD. These LCC's are calculated at a 7 percent discount rate; a higher rate, e.g., 15 percent, gives a smaller difference,

6 Comments on the proposed rule have been assigned docket numbers and have been numbered consecutively

. Statements that were presented at the September 20,1989, public hearing are identified as Testimony. while a lower rate, e.g., 2 percent; produces a greater difference. This results because the consumer benefits," i.e., reduced operating expenses, accrue over the life of the appliance, and are discounted back to some base year. Therefore, the lower the discount rate, the greater the resulting consumer benefits after discounting. In addition,

as can be seen in the various LCC curves, the use of a higher discount rate results in a flatter curve. When the LCC numbers are plotted graphically (on the Y axis) against unit energy consumption (on the X axis), the data generally produce a curve that is concave from above in shape. This means that at first the LCC curve will decline as efficiency improvements are made, will reach a minimum (which may or may not be discrete), and then rise. This indicates that the first efficiency improvements will produce energy savings , the value of which will more than pay for the design change. As additional efficiency improvements are made, it becomes increasingly costly to

save more energy, and, eventually, the value of the energy savings will not cover the expenditures for the design improvements. The minimum of the LCC curve was of particular interest in the analysis. The minimum of the curve represents that level of efficiency improvements that maximizes the difference between the value of energy saved and the additional consumer expenditures for the relevant efficiency improvements. Therefore, design options that corresponded to the minimum point were considered as standard levels for each class. The Department conducted a net present value (NPV) analysis to assess the differential economic impacts on

consumers that would occur from the adoption of amended standards for these three products compared to a base

case with no change in the NAECAimposed 1988 standards. See TechnicalSupport Document, chapter 5. The LBLREM calculates the total expenditure for each product (discounted total value of energy consumption from 1993 through the last year of use for those products purchased through the year 2015), plus the total discounted expenses for equipment purchased from 1993 through 2015, with more stringent standards and
with NAECA 1988 standards. The NPV analysis is similar to the LCC analysis, in that the greatest NPV should occur at the standard level that corresponds to the LCC minimum for the_product.7 The

The NPV of a standard, per appliance, is calculated for all affected appliances that are purchased in the projection period, while the LCC is calculated only for the lifetime of an appliance that NPV for each product at the different standard levels is identified in section IV of this notice. 3. Energy Savings. While the significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, the Act requires DOE, in determining the economic justification of a standard, to consider the total projected savings that are expected to result directly from revised standards. DOE used the LBL-REM results, discussed earlier, in its consideration of total projected savings. The savings for the three products are provided in section IV of this notice. 4. Lessening of Utility or Per formance of Products. This factor cannot be quantified. In establishing classes of products and design options, the Department tried to eliminate any degradation of utility or performance in the three products under consideration in this rulemaking. That is, to the extent that comments, or DOE's own research, indicated that a product included a utility or performance-related feature that affected energy efficiency, a separate class with a different efficiency standard was created for that product. In this way, the Department attempted to minimize the impact of this factor as a result of the standards that were analyzed. 5. Impact of Lessening of Competition. The determination of this factor is to be made by the Attorney General. This determination is presented for each product in section IV of today's notice. In addition, a copy of the Attorney General's letter containing the findings is published below.
Dear Mr. Davis: By letter dated October 24, 1989, the Department of Energy ("DOE") transmitted to the Attorney General a notice of proposed rulemaking (54 FR 32744) addressing energy standards for three classes of household appliances. Section 325 of the Energy Policy and Conservation Act, as amended in 1987 (42 U.S.C. 6295), requires the Attorney General to determine the impact, if any, of any lessening of competition likely to result from the proposed standards. Competitive impact is one of seven criteria to be considered by DOE in evaluating proposed standards. This letter contains the competitive impact determination of the Department of justice ("Department").

Summary

The evidence available to the Department does not indicate that any significant lessening of competition is likely to result from the imposition of the proposed standards for dishwashers and clothes dryers

is purchased in the first year of the relevant' standard. Therefore, NPV and LCC estimates, per appliance, may not correlate exactly.

### Fedetd1' 1t'egistea / Vol . 56,'No.'63 '/ ` Tue'sday, - May'14 ,i 2991 / Rules ahd ' Regiilatiolis

contained in DOE's Notice of Proposed The possibility that concentration might Rulemaking. For dishwashers, it is the increase depends primarily on whether Department's judgment based on the compliance with the standards both (1) available evidence, that no significant increases costs significantly and (2) results in adverse competitive Impact is likely; but, such increased costs being felt more severely under certain limited conditions described by some firms than others. Although below, an unquantifiable adverse competitive increased costs may reduce demand, that impact would be possible. For clothes dryers, alone would not necessarily affect market the evidence affirmatively suggests that no structure. However, concentration could adverse competitive impact is likely. The increase if the cost increases are both evidence available to the Department significant and affect smaller firms more indicates that a significant lessening of severely than large ones; costs that vary with competition may result from the imposition of output (e.g., adding an automatic termination the proposed standards for clothes washers device) should not disadvantage smaller under certain conditions. firms while fixed costs or costs independent The Notice of Proposed Rulemaking of output (e.g., redesign of a dishwasher) discusses some standard levels higher than might disadvantage a smaller firm with a the levels proposed but states that DOE lesser number of units across which to spread concluded that these higher standards are not the same fixed costs. economically justified. Accordingly, the Nevertheless, before such asymmetrical Department's competitive impact cost increases could affect competition determination considers only the standards adversely, the increases would have to be actually proposed and does not cover higher sufficiently severe and asymmetrical that standards discussed but not proposed in the they would force from the market one or Notice of Proposed Rulemaking. more of the smaller significant competitors or substantially decrease their market share. In Discussion addition, levels of concentration would have In appraising the competitive effect of the to rise substantially because of this effect. proposed standards in the context of this Unlike a merger, where the acquiring firm is statute, the Department has examined the likely to become substantially larger and the relevant markets within which the standards other firms would remain the same size, the will operate. The Department has then common result of a firm exiting the market considered whether adoption of the would be that each of the remaining standards would be likely to contribute to significant competitors is likely to increase its increased concentration levels and other market share to a limited extent. Finally, relevant market conditions that would other market conditions (e.g., entry barriers) facilitate either oligopolistic pricing or actual would have to be conducive to oligopolistic price fixing. The Department has also pricing or price fixing. considered whether, independent of or in The available evidence in this instance conjunction with any increase in does not demonstrate that such a lessening of concentration, the standards would be likely competition would be likely to occur if DOE to facilitate oligopolistic pricing or price adopts the proposed standards for fixing by increasing product homogeneity. dishwashers. This evaluation is based on In this instance, the Department has information concerning the identity and size utilized the HI-II computations, commonly of the principal competitors and other market employed in market analysis and described conditions. However, for this class of in the Department's Merger Guidelines products, the evidence does not wholly ("Guidelines"), as an initial "screen." At foreclose the possibility of an anticompetitive levels of concentration below 1,000, the impact. For example, some evidence number of competitors ordinarily is sufficient indicates that increases In fixed costs may to make competitive pricing likely and to defeat oligopolistic pricing. Even if the standards resulted in increased costs and
reduced the number of competitors, or increased product homogeneity in some measure, the Department generally would expect that markets with that level of concentration would continue to enjoy a substantial measure of competition. however, indicates that the market share of The analysis of dishwashers, clothes the largest competitor also may be washers, and clothes dryers Is not completed significantly decreased, thus decreasing by applying this screen because the risk of an market concentration. If DOE concludes that adverse competitive impact is not diminished its standards for dishwashers will after by the existing market structure as reflected significantly the structure of the market by in the I-thil figures. Based on data contained substantially decreasing the relative size of in the technical support document, dishwashers, clothes washers, and clothes dryers have HHI figures of about 3,000, 3,100, and 3,300, respectively. These figures reflect high levels of concentration (according to the Guidelines, markets with HM levels above 1,800 are highly concentrated). It is thus prudent to examine more closely the possibility that the standards could increase concentration within a market, increase product homogeneity, or both. occur and affect some smaller competitors much more severely than some larger ones. If the smaller firms thereby lose market share to their larger rivals, then the HI-II for dishwashers could increase significantly (according to the Guidelines, a 50 point increase in the HHI in a highly concentrated market Is significant ). Other evidence,

the smallest significant competitors without a sufficiently large, compensating decrease in the largest firm's size , then a further review of the competitive impact would be warranted. For clothes dryers, the evidence affirmatively suggests that no adverse competitive impact is likely. The evidence indicates that adding automatic termination devices will achieve the desired result and that the fixed costs associated with the addition will be minimal and will not disproportionately affect smaller competitors. For clothes washers, the available evidence indicates that a significant lessening of competition may occur under
certain conditions

. The Notice of Proposed Rulemaking indicates that proposed standard levels I and 2 can be met by eliminating the warm rinse option and adding thermostatic mixing valves. The available evidence Indicates that some manufacturers may not be able to comply with the proposed standards by making just these design changes and may need to undertake more substantial redesign or retooling that would impose substantial fixed costs. If all competitors can meet the proposed standards by making the suggested design changes, then a significant lessening of competition is not likely. If, however

, as the available evidence
indicates

, some competitors, such as Speed _ Queen

. will have to engage in more substantial redesign or retooling to meet the proposed standards, then substantial increases in fixed costs will occur. These increased fixed costs are likely to affect smaller competitors much more severely than larger ones. If DOE concludes that its standards for clothes washers will drive the smallest significant competitor

, Speed Queen, out of the market or significantly decrease its
market share

, then a further review of the competitive impact would be warranted. The available evidence does not indicate a substantial threat that the standards for
dishwashers

, clothes washers

, and clothes dryers would threaten competition by increasing product homogeneity. The dishwasher and clothes washer standards are performance rather than design standards

, so that they can be met by different combinations of features. The clothes dryer standard is a prescriptive standard requiring all dryers to have an automatic termination device. The standard,
however

, allows manufacturers to choose between a moisture or temperature
termination device

. In addition. the energyusing characteristics of dishwashers and clothes washers

, as well as the automatic termination device required for clothes dryers

, represent only one aspect of these products, and existing variation in many other features would be expected to continue. In making its determination, the Department has relied on the facts set forth in DOE's technical support document ; as well as other information that could be collected by the Department in the time allowed and without the benefit of compulsory process. Sincerely, James F. Rill,

Assistant Attorney General. 6. Need of the Nation to Conserve Energy. The results of the environmental effects from each standard level for each product will be reported under this factor in the product specific discussion (section IV) of this notice.
7. Other Factors. This provision allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any

### 222 Federal; Register /i;.Vol. 53,E N4. 93 / TuesdgY, Maya 14, 299 ^>l^ules; arld.Regulations

other factors that the Secretary deems to be relevant. One such factor is the estimated water savings from more efficient dishwashers and clothes washers.

IIL Discussion of Comments.
The Department received 40 written comments in response to the August 1989, proposed rule, and received testimony from 12 persons at the September 20, 1989, public hearing. These comments addressed all aspects of the analysis. In this section, the Department will present discussions of the general analytical issues raised by the comments, followed by discussions of the product-specific issues.
a. General Analytical Comments
Markup

The Natural Resources Defense Council (NRDC), the Ohio Office of Consumers' Counsel (Ohio) and General Electric Appliances (GEA) commented on manufacturer markups used in the analysis. (NRDC, No. 5 at 20 and No. 16 at 51; Ohio, No. 22 at 8; and GEA, No. 21 at 26). NRDC commented that the record does not support the markup assumption between factory and retail of approximately 1.5. (NRDC, No. 16 at 51). The markups used in the analysis have been derived from manufacturer data over the history of this program, including the earlier 1980 rulemaking. Moreover, NRDC is mistaken regarding the markup used in the analysis. The total markup from manufacturer cost to retail price used is approximately 2.00, with the actual amount positively related to the unit's efficiency. The markup from manufacturer cost to manufacturer selling price, and from manufacturer selling price to retail price were considered separately. The markup to manufacturing selling price is approximately 1.37, while that to retail price is approximately 1.48. A complete discussion of the markup is found in the TSD. See Technical Support Document, appendix C. DOE has reviewed NRDC's comment and finds no basis for changing the markup. In the analysis for the proposed rule, marginal variable costs to manufacturers were assumed to be passed on with a markup. The NRDC took exception to this, claiming that marginal variable costs cannot be marked up, only passed on. (NRDC, No. 16 at 51). In response, the Department notes that the NRDC's contention is valid only in instances of perfect competition. Perfect competition is an economic model of a market with the following characteristics: Each economic agent, i.e., buyer and seller, is so small relative to the market that it cannot influence price; the products of each seller are homogeneous, i.e., perfect substitutes; there is free mobility of all resources, including free and easy business entry into, and exit out of an industry; and all economic agents in the market have complete and perfect knowledge of the future. Obviously, with these restricting requirements, no market has been or can be perfectly competitive. One identifying characteristic of a perfectly competitive market is that firms are all producing at their optimal levels and thus no firm wishes to increase sales. Clearly, perfect or pure competition is not present here. Under conditions of imperfect competition, i.e., all forms of market structure except for perfect competition, marginal costs, i.e., the variable costs associated with the last unit of output, are passed on with a markup, and it is the ability to do so which is evidence of market power. Therefore, based on the consideration of the above, the Department has included a markup for all variable costs in the final rule. In commenting on the impact of design options' costs and efficiencies on manufacturers' ROE, the Association of Home Appliance Manufacturers (AHAM) stated that the DOE analysis underestimated the negative impact of standards on manufacturers' profitabilities, or ROE's. In some cases, the analysis even suggested that return on equity would be increased by the imposition of standards. AI-LAM stated further that it appeared to be the relatively high cost/low efficiency design options that were the likely prospects for increasing ROE for the manufacturers. ARAM stated, "These conclusions not only defy common sense, but they contradict real world experience documented in the TSD." (AHAM, No. 29 at 2). In response, the Department notes that AHAM is incorrect in believing that the TSD shows relatively high cost/low (incremental) efficiency design options are the likely prospects for higher ROE. In fact, there is no such correlation. In the case of standards, ROE may increase because of the manufacturers' ability to mark up marginal costs to buyers. It depends little on the energy efficiency nature of a design option. Therefore, this unsupported assertion that DOE's economic analysis selects high cost and less appropriate energy efficiency standards is wrong. In the manufacturer analysis for the proposed rule, the Department noted that appliance prices had risen more slowly than consumer and producer price indexes, despite increased energy and component prices during the last two decades. From its statements, AHAM concluded that the Department "recognized that even though appliance manufacturers experienced increasing costs for components, manufacturers were unable to completely push these costs through to the consumer in the form of higher prices." (AHAM, No. 29 at 6).
The Department believes that ARAM's conclusion is incorrectly drawn. Saying that appliance prices have risen more slowly than standard inflation indices and that energy and component prices for appliance manufacturers have also risen implies nothing about whether or not manufacturers can completely pass costs through to the consumer. If energy and component prices have not risen as fast as inflation indices, manufacturers could pass through costs and the overall rise in the level of appliance prices would still be less than that of the Consumer Price Index. What's relevant is how appliance prices have risen relative to the increased costs of manufacturer inputs, not relative to inflation indices. ARAM and Whirlpool suggested that the modeling of manufacturers' impacts was simplistic in that it assumed manufacturers' customers are individual end-users of the product purchased and, as such, have little power to control the prices they pay. These comments suggested that manufacturers face large retailers and buying groups who have monopsony power, i.e., who can put pressure on the manufacturers' selling prices. (ARAM, Testimony at 6 and No. 29 at 3-4; Whirlpool, No. 20 at 2). On this point, both AHAM and Whirlpool are mistaken; the LBL-MIM does account for monopsony power, i.e., powerful purchasing groups, in the market for these products. The model does not simply assume that manufacturers face "individual end users." In fact, the LBL-IvI M projects results of 32, 33, and 24 firms for the dishwasher, clothes washer, and clothes dryer industries, respectively. This is clearly higher than observed industrial concentration, since the four largest firms in each industry control over 90 percent of market share. The number of firms is estimated from data on revenues, costs, and ROE. The Department attributes this result of "greater than observed" competition to the monopsony power of these large buyers in the market, and it is part of the model. A "simplistic model" where profitability was estimated from the

### Fedbial Register' / VoL 5$,' Nd..93 ',/ Tuesdays Nkay' 14, 1991

observed number of firms would result in a much higher degree of profitability. In its comment, Whirlpool appears to try to point out that the retailers are gaining even more power. This may well be true, but Whirlpool does not suggest that appliance standards will in any way contribute to this increase in monopsony power. DOE's task is to analyze how the position of manufacturers will differ from what it would have been without standards, not from what it is today. In the manufacturer impact analysis, the Department concluded that there would be real increases in the pricing of appliances in the future. Whirlpool took exception to this conclusion:

"As we look to the future, sales of appliances will decline into 1990 and then grow for the next several years, however, this growth will be markedly slower than recent years. In fact growth in sales of the core products should average about 1.2 percent for the 1989 to 1994 time frame versus 1.9 percent for the previous ten years, which included a deep recession. During the strong growth years, prices of appliances have risen only 1.4 percent (since 1982) while inflation as measured by the Consumer Price Index has risen almost 29 percent. To remain profitable in this scenario, the industry has continued to improve costs and productivity, however,
costs have risen more rapidly than productivity improvements in recent years. Therefore, most manufacturers were forced to raise prices in late 1988 and mid-1989. But, as industry volumes are declining, many manufacturers are searching for ways to increase their own sales levels to support plant fixed costs and capacity. The easy answer has been price discounting. With this approach, profit margins fall and smaller companies are likely to be impacted more significantly since they do not have the economies of scale. The DOE assumes real gains in pricing in future years which would not seem appropriate based on these facts." (Whirlpool, No. 20 at 1-2) Whirlpool's assertion is that DOE assumes "real gains in pricing in future years which would not seem appropriate based on these facts." Whirlpool, however, provided only two comments about industry price setting, and both supported DOE's analysis. Whirlpool's first point is that "costs have risen more rapidly than productivity improvements in recent years. Therefore most manufacturers were forced to raise prices * * *." This is exactly the situation described by the long run part of MIM; standards will cause cost increases much greater than productivity improvements, which will force most manufacturers to raise prices. Whirlpool's second point is that "as industry volumes are declining, many manufacturers are searching for ways to increase their own sales levels. * * * The easy answer has been price discounting." Whirlpool is saying that volumes are declining despite what wa4 just said about volumes increasing at the rate of 1.9 percent over the last ten years. Whirlpool must therefore be referring to a short run phenomenon. The Department recognizes this shortrun phenomenon which occurs regularly during downturns in the business cycle. DOE has run regressions to estimate the amount of price decline that is caused by the shortfall in sales during a slump, and then assumed that a shortfall in
sales due to standards would cause the same short-run response in price. This analysis has been incorporated in the LBL-MIM's short-run analysis and the results are reported in chapter 7 of the
TSD. ARAM and Whirlpool were critical of the Department's conclusion that standards-induced, higher-priced appliances will lead to increased sales, profits, ROE, and competitiveness for the appliance industry. (Whirlpool, No. 20 at 3 ; ARAM, No. 29 at 6). These comments are essentially critical of the LBL-MIM' s operating expense elasticity. It is the operating expense elasticity that results in greater sales under standards. Whirlpool commented that the analysis uses too large an operating expense elasticity, and ARAM argues that a smaller operating expense elasticity would prevent the estimated price increases. AHAM stated that consumers' appliance purchase decisions are not usually influenced by energy efficiency factors, but, rather, by quality, price, and brand. The Department' s estimates of operating expense elasticity come from econometric work done by Oak Ridge National Laboratory (ORNL), which is cited in the TSD. Unfortunately, the comments do not provide an adequate basis for improving or replacing those estimates. DOE agrees that energy efficiency is probably not as important as the three factors cited by ARAM. It is not clear, however, that the comments contradict ORNL's estimated elasticities of -0.125, -0.055, and -0.257 for dishwashers, clothes washers, and clothes dryers, respectively. The Department agrees that operating expense elasticities may warrant further research. However, the commentators supply no quantitative information to justify any revisions. The LBL-MIM is capable of predicting either an increase or decrease in ROE in the short run. While there may be a positive increase in shipments at some standard levels, an examination of the other standard levels illustrates the case of decreased shipments. In the short run, the model often.predicts price will decline, with a loss in profit. In the long 

### -Rules `arid 1 egulatioris 22257

run, however, (in the Department's analysis, about eight years) the change in shipments will be compensated for by changes in the industry's capacity which will eliminate the short-run decreases in firms' ROE's. 

### Whirlpool stated that a long-run result of energy conservation standards would be to lower profit margins. As a consequence, this could force remaining smaller manufacturers out of business or into consolidation with-larger firms, thereby hurting competition. (Whirlpool, No. 20 at 3). In response, the Department notes that because of the increasing industry fixed costs from investments in automation and productivity improvements, there has been an historic trend to increasing industrial concentration in the industries involved. Energy conservation standards have played no role in this trend and, given the size and direction of the predicted changes in ROE, they are unlikely to influence concentration to an appreciable degree.
LBL Residential Energy Model

The Environmental Defense Fund (EDF) commented that there is no basis for the LBL-REM's assumption that consumers respond to LCC when purchasing appliances, and that the opposite appears true. (EDF, No. 19, at 4).The LBL-REM is used to project residential energy use during the relevant time periods. The model's projections are dependent on many assumptions; among the most important are responsiveness of household appliance purchases to changes in energy prices and consumer income, future energy prices, future levels of housing construction, and options that exist for improving the energy efficiency of appliances. As is the case with any complicated computer model simulation, the validity of the outputs is dependent on the inputs. While it may be argued that there is or is not a direct link between appliance purchase decisions and LCC, the Department's appliance standards analyses have shown that appliance efficiency, in general, has improved over the last 20 years. There may be certain appliance types or classes whose efficiencies have not increased or increased very little, but overall appliance efficiency has increased. This is supported by numerous filings to the Department on the appliance standards rulemakings and other information available to the Department, including submittals to the FTC for the appliance labeling program. See Technical Support Document:

### 2,2258 Federal Register /* Vol. 56, No. 93 / Tuesday, May 14, 1991 /, Rules and Regulations

Energy Conservation Standards for Consumer Products: Refrigerators, and Furnaces, DOE/CE-0277, (November, 1989) and Supplement to March 1982 Consumer Products Efficiency Standards Engineering Analysis and Economic Analysis Documents, DOE/ CE-0045 (July, 1983). The Department utilizes all available information on appliance choice to calibrate the energy use forecasts of the LBL-REM; and while there may be questions concerning a particular algorithm, the Department believes that the LBL-REM provides reasonable forecasts. DOE does not believe that most consumers actually calculate LCC; rather, that purchase decisions can be characterized as if an implicit tradeoff is being made between equipment price and operating expense. LBL-REM characterizes that implicit tradeoff in an LCC framework by using observed purchase behavior in order to project future efficiency choices that are a function of both equipment price and operating expense. To calculate energy savings that can result from standards, EDF proposed an alternative methodology, which consisted of freezing efficiencies at current levels for the base case, and calculating energy savings against the fixed levels. DOE believes that if energyprices became sufficiently different fromcurrent values, appliance consumers would make a different choice of efficiency from what they are doing now. Thus, there is no basis for freezing the efficiency. Therefore, DOE rejects EDF's proposal.
Energy Prices

The Environmental Protection Agency (EPA), State of Oregon Department of Energy (ODOE) and the New York State Energy Office (NYSEO) commented on the appropriate values of energy prices for use in the analysis. (EPA, No. 36 at 3; ODOE, No. 15 at 3; and NYSEO, No. 32 at 11). EPA and ODOE argued that DOE should use marginal costs of energy and that by not using marginal costs, DOE underestimated the savings to society. NYSEO, on the other hand, agreed with the Department that it is "most appropriate for DOE to use national average energy prices and usage rates." DOE has reviewed EPA's and ODOE's comments and disagrees. The purpose of the analysis is to estimate the impacts of standards on the Nation, including consumers and manufacturers. In analyzing the impacts of the standards on consumers, DOE performs LCC analysis as required by section 325(1) of the Act. Furthermore, DOE analyzes the payback of each standard level as required by section 325(l)(2)(B)(iii) of the Act. In each analysis, the Department is required to consider the expense to the

consumer . The consumer, as EPA recognized in its comment, pays the average cost

, not the marginal cost. Similarly, in evaluating the effect of the standard on the Nation, DOE uses the LBI -REM to forecast energy savings and NPV. DOE believes that this calculation captures the effect of the standard on the Nation, whereas the marginal cost would overestimate the impacts, since not all energy used is at the marginal rate, and the marginal rate is typically the highest cost energy to produce. Therefore, after considering the above, DOE rejects the proposal to use marginal energy prices.
Payback

In accordance with section 325(i)(2)(B)(iii) of the Act, DOE is required to calculate the payback of each standard in the first year of the standard. In order to calculate this payback, DOE uses the forecast of efficiency from the LBL-REM and compares the increase in price of the appliance at each standard level to this level and the energy savings during the first year. AHAM commented that DOE should consider incremental payback, i.e., the individual payback of each design option, rather than the combined payback as presented in the August 1989 proposal. (Gants. Testimony at 7; AHAM, No. 29 at 4-6). The EDF, however, urged DOE to use the cumulative payback. (EDF, No. 3 at 3-4). DOE has reviewed AI:AM's proposal and disagrees; the Act clearly requires the Department to consider the cumulative impact of the standard in calculating payback in accordance with section 325(l)(2)(B)(iii). The Department, however, does consider individual paybacks when ordering the design options in the engineering analysis, and it considers incremental paybacks when evaluating the economic impact of standards. Therefore, in consideration of the above, the Department continues to calculate cumulative paybacks. Whirlpool raised the issue of the difference in savings that exists for dishwashers and clothes washers, depending on whether the unit is connected to an electric or gas water heater. (Whirlpool, No. 20, at 8). In reporting the paybacks and LCC results in the proposed rule, DOE presented only those for units connected to electric water heaters . DOE did not report the values for products connected to either gas or oil water heaters, products which represent over 50 percent of the market. The energy use analysis and NPV calculation in the LBL-REM, however, did include a consideration of electric, gas and oil water heaters. After considering the issue, the Department decided to present payback and LCC results for dishwashers and clothes washers connected to either electric water heaters or gas water heaters. DOE is not presenting results for oil water heaters because the annual cost-of-operation of oil water heaters is nearly equal to that of gas water heaters; therefore the results for dishwashers and clothes washers connected to gas water heaters is representative of those connected to oil water heaters.
Rebuttable Presumption
Congresswoman Claudine Schneider (Schneider), ODOE, NTRDC, NYSEO, EPA, Congressman John Dingell (Dingell), and Public Citizen argued that DOE has failed to prove why level 3 for dishwashers and clothes dryers and level 4 for clothes washers are not economically justified. (Schneider, No. 10 at 2 and Schneider et al., No. 31 at 2; ODOE, No. 15 at 2; NRDC, No. 16 at 22- 25; NYSEO, No. 32 at 4; EPA, No. 36 at 1; Dingell, No. 35 at 1-3 ; and Public Citizen, No. 34 at 1). ODOE argued that DOE had not adequately rebutted standards with paybacks less than three years, and that DOE should accept all measures with paybacks less than three

years. DOE has reviewed these comments. Today's Final Rule reflects the Department's consideration of these comments and includes more detailed discussion of the basis of the final rule.
Life-cycle Cost
NRDC claimed that higher standard levels were rejected in the proposed rule because the Department had suggested that "usage of an appliance, and therefore savings, may be a function of utility costs ." NRDC stated that the Department made this assertion despite any empirical information to support it. Furthermore, NRDC charged that the proposed rule then stated, again without any empirical information to support the assertion, that consumers in areas with higher utility rates may already be purchasing the higher levels of efficiency in existing products. NRDC noted that the Department claimed that, if this were true, average savings could be lower than those that had been reported in the TSD (DOE/CE-0267, July 1389) that had been prepared for the proposed rule.
NRDC then stated that the Department' s assertion is not only unsupported, "it is actually contradicted by the only regional data that has ever been submitted to DOE records

### Federal Register Vol. 56, No

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concerning appliance efficiency as a function of utility costs." NRDC cited the 1963 appliance proceedings, wherein the Carrier Corporation had submitted data showing that the areas of the country with the highest air conditioning expenses, i.e., New York (high rates) and Florida (high usage), had air conditioner efficiencies that were the same as the national average air conditioner efficiencies. Therefore, NRDC concluded: "Unless theassumptions of regional price- or usageinduced variation in appliance efficiency for these products are valid, DOE's whole rationale for reducing the level of proposed standards vanishes." (NRDC, No. 16 at 16-17). NRDC is correct in stating that the Department did not present any empirical information to support its assertion that consumers in areas that have high energy expenses would tend to purchase appliances with efficiencies higher than the national, average; NRDC is not correct, however, in concluding that if the assertion is invalid, the rationale for reducing the level of proposed standards vanishes. That is because there are seven factors of economic justification that the Department considered in arriving at its conclusions. NYSEO charged that the Department was incorrect in raising. the issue of regional impacts solely from the viewpoint of consumers who live in high energy price areas buying more efficient appliances than the national average, thereby leading to an overestimation of energy savings from standards. There is just as much reason to assert, according to NYSEO, that consumers who live in low energy price areas buy less efficient appliances than the national average, thereby leading to an underestimation of energy savings from standards. Without empirical information on the foregoing
and to the extent to which either of these effects might be greater, the Department's use of national average energy prices and usage rates is no more likely to overstate the energy savings from standards than it is likely to understate the energy savings. (NYSEO, No. 32 at 10-11). The Department is unaware of any data source that provides regional variation in usage, e.g., cycles per year by region, for dishwashers, clothes washers, and clothes dryers. However, because differences in regional energy prices are available, the Department conducted a sensitivity analysis of the life-cycle cost by design option for each class, utilizing regional residential energy prices for the lowest and highest priced census regions. The results of these sensitivities are reported in chapter 6 of the TSD accompanying this rulemaking. The Northwest Power Planning Council (NPPC), ODOE, NRDC, EDF, and NYSEO argued that DOE should adopt standards beyond the LCC minima and suggested that DOE should not place undue weight on the LCC component of the analysis. (NPPC, No. 13 at 2; ODOE, No. 15 at 1; NRDC, No. 16 at 9-14; EDF, No. 19 at 9; and NYSEO, No. 32 at 17 and 21). NRDC maintained further that DOE is violating the requirement of the Act by comparing one standard level with another standard level of lower efficiency. NRDC argued that "if Congress had intended DOE to set standards at the level that maximizes economic benefits, or at a conservatively low level that minimizes risk considering economic benefits, it would have said so." (NRDC, No. 16 at 11). Additionally, NRDC stated that "coincidence with minimum life cycle cost point is not a criterion set forth in the statute. If [a trial standards level] is 'technologically feasible' * • * and had economic benefits * * * it must at least be considered for the final rule as being the level achieving the maximum improvement in energy efficiency that is technologically feasible and economically justified." (NRDC, No. 16 at 12). Additionally, NYSEO stated that DOE cannot, consistent with the Act, reject a standard level as not economically justified just because it is not the optimum standard from an LCC perspective. DOE agrees. No standard is rejected because it is not the optimum standard from an LCC perspective. However, DOE disagrees with the contention that the Department cannot consider that a standard level beyond the minimum LCC point is a burden, since it could preclude consumers from being able to buy the most cost-units. The Department believes that factor is consistent with the Act and can be considered under either section 325(i)(2)(B)(i) (I) or (ii).
Need of the Nation To Save Energy

Several comments took issue with the Department's failure to consider a number of societal benefits in the proposed rule, including environmental impacts and reduced dependence on foreign oil. (Schneider, Nos. 10 and 31, at 2; ODOE, No. 15 at 3; NRDC, No. 16 at 3- 8; Ohio, No. 22 at 3; Washington State Energy Office (Washington), No. 33 at 2; and Public Citizen, No. 34 at 2). Public Citizen pointed out that in the proposed rule the Department limited consideration of "the need for national energy conservation" to the need for the U.S. to reduce consumption of imported oil. Public Citizen argued that the Department failed to consider global warming; acid rain, and radioactive waste, In addition, Public Citizen pointed. out that imports, of oil. reached 7.712 million barrels per day in 1988, the highest level since 1979, and that this poses an increased risk to national security and worsens the U.S. trade imbalance. Also, NRDC argued that standards improve electric utilities` demand projections and reduce the uncertainty over the need to construct electrical generating plants. The Department agrees with these comments, and to the extent DOE had data, included these factors in the consideration of the Need of the Nation To Conserve Energy. Currently, the Department is not able to project the impact standards will have on radioactive waste ; therefore, this concern was not, considered. Michael Shepard of the Rocky Mountain Institute (RVII ) suggested that. the Department should attempt toestimate the effects of standards on lowincome people, who, it was stated, would be most affected by the price increases caused by standards. In particular, RMI urged the Department to consider the impacts of standards on the prices of used appliances. (RMI, No. 12 at 2). The Department notes that insufficient data were provided in comments to analyze this issue . LBL-REM does not presently distinguish among income levels. Nevertheless, because the Department is sensitive to this issue;. it is a valid area for future research. Citing several. studies, Paul Centolelia of the Ohio Office of the Consumers' Counsel (OOCC) stated that energy conservation can create social benefits: "By redirecting consumer purchases from energy to appliances and personnel (sic) consumption, aggressive conservation can significantly increase employment and economic growth," (OOCC, No. 2 at 5). The Department agrees that appliance standards can produce social benefits beyond the benefits that accrue to thepurchasers of the more energyconserving appliances. In fact, the environmental effects that are expected from each standard are examples of such social benefits; these have not only been quantified, but have also been considered in the development of the selected standard levels.
Utility Analysis

The NRDC raised several issues regarding the Department's analysis of the impact of standards on utilities.

### ' 7 '22260 Fdecal Register "/ 'Vol. 58, No. 93: / Tuesday, : May 14, 199

First, NRDC pointed to a risk factor not considered by the Department that argues in favor of more stringent standards. Specifically, NRDC suggested that more stringent standards reduce the risk of utilities ' overbuilding or underbuilding capacity. NRDC charged that in the utility analysis, the Department assumed that utilities will not consider the impact of appliance conservation standards in their energy demand forecasts. NRDC commented that this premise formed a basis for the analysis that showed reduced utility revenue from standards, and it is unfounded. (NRDC No. 16 at 16 and 58). The Department agrees that standards reduce the uncertainty in forecasting electricity or gas sales faced by utilities, and that this is a benefit. However, the Department believes that quantifying this effect is not feasible. Uncertainty in utilities' forecasts for residential electricity or gas sales is caused by several factors, including projections of population, household formations and locations, and the ages and efficiencies of the household appliances. By establishing minimum efficiency standards on new appliances, the range of efficiencies in the marketplace is narrowed, and this should enable utilities to reduce somewhat the uncertainty in their forecasts. Given the number of variables on which such forecasts depend, the extent to which - the forecast uncertainty is reduced by minimum appliance efficiency standards would likely be quite small. In addition, it would be extraordinarily difficult to estimate. This effect is discussed in the TSD, but not quantified. NRDC also commented that the Department's model of utility ratemaking seems flawed. The Department performed calculations of the economic impacts of standards in terms of real dollars; in addition, DOE evaluated future power costs for electrical supply in real dollars. Public utility commissions, however, compute electric utility rates in terms of nominal dollars. As a result, NRDC suggested that there would be no revenue loss as a result of appliance standards; instead, there would be rate decreases. (NRDC, No. 16 at 60-61). In response, the Department does not believe that the use of real dollars to evaluate utility impacts is misleading. The reader can convert to nominal dollars by assuming an inflation rate, and applying it to the annual impacts reported in the TSD. Secondly, there is no easy translation of the impacts of standards into rate changes. Rates are determined as a function of the specific financial circumstances of each utility. The Department believes that the effects on utility rates of the energy savings in this rulemaking are so small as not to justify the enormous effort required to quantify them. As a result, the Department is not changing its utility analysis.
Environmental Analysis
Environmental Impact Statement. A large number of comments discussed the environmental effects of appliance standards. Virtually all of the comments on this subject stated that the proposed rule would have a significant environmental impact on air pollution, including significant effects on acid rain and global warming. As a result, the comments concluded that the Department's Environmental Assessment was insufficient, and that the Department should have prepared a complete Environmental Impact Statement (EIS). (Schneider, Testimony at 2; Goldstein, Testimony at 23 ; Miller, Testimony at 6-7 ; Osann, Testimony at 2; Schneider, No. 10 at 2; Alexander, No. 14 at 3; NRDC, No. 16 at 62; EDF, No. 19 at 9; OOCC, No. 22 at 6; Schneider et al, No. 31 at 2; and Public Citizen, No. 34 at 3).In addition, the EDF argued that DOE underestimated the economic benefit of the potential reductions in SO2 emissions due to standards. (EDF, No. 19 at 3-4). EDF argued that the correct approach to estimating potential benefits is to multiply the average cost of emission reductions by the total emissions reductions over the entire period, rather than the marginal cost by the annual savings in a particular year. DOE agrees with EDF and added that calculation to the Final Rule. The results of this calculation are shown under the Need of the Nation To Conserve Energy and in the environmental analysis as presented in section V of today's final rule. The National Wildlife Federation (NWF), NRDC, and Public Citizen argued that if DOE had performed a complete EIS, the Department would have been able to calculate more of the impacts of the standards, including the impacts of more stringent standards such as those requiring heat pump clothes dryers and the impact of standards on the water consumption of clothes washers and dishwashers. (Osann, Testimony at 2; NRDC, No. 16 at 67-68 ; Public Citizen, No. 34 at 3-4). Alexander argued that by failing to recognize the full potential that strong appliance efficiency standards can achieve, the rule will allow more pollution of the environment. (Alexander, No. 14 at 3). DOE disagrees with the comments that a full EIS should have been 

### /' Rule§ arid' Regu atibns

performed. None of the comments took issue with the Department's calculation of SO2, CO2, or NO2 reductions; rather, they argued that more stringent standards would have saved more energy and resulted in fewer emissions. DOE agrees with this claim and notes that the proposed rule's EA presented the reductions in emissions at each standard level; these reductions were found not to be significant. With respect to comments that more stringent standards, e.g., requiring heat pump clothes dryers, would have beneficial environmental impacts, the Department has added this design option to the analysis, and the results are presented below. Furthermore, the Department has added to the consideration of the Need of the Nation to Conserve Energy the environmental impacts of the standards, both for the total period analyzed and for a representative year. By so doing, the Department is ensuring that those environmental effects resulting from the different standard levels were considered in the economic justification criteria. The Department continues to present the results for the year 2015 because by that time nearly the full impact of the standards would have occurred. In earlier years, e.g., 1995, which is two years after the standards go into effect, the standards would have had only limited effect on the marketplace. In later years, when more of the products in the marketplace have been subject to standards, the standards will have a greater impact on energy consumption and the environment. Finally, NRDC argued that the courts require the Agency to consider:

"(I) whether the agency took a hard look at the problem; (2) whether the agency
identified the relevant areas of environmental concern; ( 3) as to the problems studied and identified, whether the agency made a convincing case that the impact was insignificant; and (4) if there was an impact of true significance, whether the agency convincingly established that changes in the project sufficiently reduced it to a minimum." (NRDC, No. 16 at 63). -
The Department has analyzed the environmental impacts of the standards as shown in the EA accompanying today's final rule. The EA considers the impacts of all the candidate standards, including the maximum technologically feasible levels and other levels rejected for economic considerations. In addition, as noted above, the environmental impacts were considered as part of the Department's economic analysis for each candidate stam..ard

### fie a*_al;Register J iVol. 56, Na..93 / Tue ^iqy, May 1!I; 19911 ( Ring ;and Re la fls :; 22261

level as shown in section IV of today's final rule. In analyzing the. environmental impact of standards

, the Department considers the impacts to be in three areas : Energy consumption

, power plarrt emissions and water consumption. These considerations are discussed elsewhere in this rule

. Additional areas of potential impact are power plant construction and nuclear waste disposal. The Department is unable to measure if standards will have any effect on nuclear- waste. However, the Department generally believes that the standards will not have any effect on nuclear waste because no new nuclear power plants that are not currently under construction or already scheduled for construction will come on line during the period of analysis. The Department believes that today's final rule will not affect utilities' decisions with respect to nuclear power plant construction

. While it is possible to estimate the number of potential power plant savings, as if there were one national electric utility determining U.B. power plant construction, each individual utility makes its own decisions as to the. number

, size and type of generating units, subject to governmental review- Such decisions are usually made at a "local" level. The standards

, however, are national standards and thus it is impossible to estimate to what extent, if any, standards would affect power plant construction. The NINrF commented that the EA for the proposed rule did not discuss the effects of the various options on water consumption. (NWF, No. 11 at 2).

In the analysis for the final rule, the Department did make specific calculations of the impacts on water consumption of the different candidate standard levels. See Technical Support Document, sections 5.1.6. and 5.2.6. As
noted above

, these water savings
estimates were considered in the
standards' selection decisions under
Other Factors.

Discount Rate

Eleven comments addressed the discount rate used in the analysis. (Schneider, No. 10, at 2 and No. 31 at 3: RMI, No. 12 at 2; N-PPC, No. 13 at. 1; NRDC, No. 16 at 44-51; Whirlpool, No. 20 at 3; Ohio, No. 22 at 8; AHAM,. No. 29 at 7; New York,. No. 32 at 7;. Washington, No. 33 at 1; and Public Citizen, No. 34 at 2).The proposed rule used a discount rate of seven percent both for the calculation of LCC and, in the LBL-REM, for calculating

.. energy use and NPV. The use of the discount rate in the projection of energy use is significant because the LBL-REM projects marketplace demand for more efficient appliances based on the LC'. The LBL-REM assumes that as the price of energy increases

, the LCC will increase

. This results because the value of the energy savings resulting from more efficient equipment is greater, which

, in turn

, causes the marketplace to demand more efficient appliances. Whirlpool, AHAM, and NYSEO commented that the use of a seven percent discount rate was reasonable. NYSEO commented that the use of the seven percent rate was the "most reasonable ," while Whirlpool stated that the seven percent value is plausible and provides a calculation, with market assumptions, that results in 6.5 percent as an "average" consumer discount rate. (NTYSEO, No. 32 at 7; and Whirlpool, No. 20 at 3). The Whirlpool calculation provided values for the fraction of appliance purchases being financed. by various means; however, Whirlp, of did not provide any basis for the values, nor did Whirlpool state frown. when or how these values were derived. The approach Whirlpool proposed is similar to that put forward by the Department in the November 1989 Final Rule for refrigerators ; refrigeratorfreezer

, freezers

, and small gas furnaces. (54 FR 47916; November 17,19891. In that Final Rule, DOE selected a seven percent discount rate based on a methodology derived from the Court
decision

. NRDC v. Herrington, supra at

110. As DOE discussed in the November .17, 1989,. Final Rule, the applicability of the Court decision changed somewhat with the passage of the Tax Reform Act of 1986 (Pub. L. 99-514). The Tax Reform Act will have phased out the tax deductibility of interest paid on consumer loans by the time amended standards will be applicable. Based on the revised methodology, DOE calculated a range of real, after-tax,.
finance rates that consumers could incur; this range is from less than 1 percent to slightly more than 15 percent. As explained in the November 17,1989, final rule, DOE selected seven percent for the analysis because it was near the. mid-point of the potential consumer finance rates. in addition, DOE found that this approach has another advantage : It has a reasoned theoretical
basis in that it is related to the opportunity cost of money for purchasing consumer durables; as such, it is justified in terms of the alternate consumer investment opportunities that are foregone in order to finance the purchases of appliances. Some comments urged a discount rate of less the seven percent

, based on the rates associated with appliance purchases. These included Schneider,.. The American Council for an EnergyEfficient Economy ACEEE).. and Public Citizen . ( Schneider

,. No_ 10 at 2, and Schneider

,, et. aL

,. No.. 31 at 3;. ACEEE. Testimony at 4-5; and Public Citizen. No. 34 at 2). None of these comments urging a. lower consumer rate, . based on. real, after-tax rates associated with consumer purchases of appliances offered any empirical basis for the recommendation of a. rate below seven percent

. Ideally

, if DOE could obtain empirical data. on the methods that. consumers use to pay for their appliance purchases, the Department could use a weighted average, real, after-tax, finance rate for a consumer discount rate in the analysis .' Therefore

, unless and until any broad

-based empirical. data can be developed on the methods consumers use to finance purchases of appliances

, the Department will - continue to use seven percent

, for the reasons mentioned above.
Nevertheless

, because therange of real, after

- tax rates of finance is so
broad

, the Department has expanded its ' sensitivity runs from. using 5 and 10' percent rates to using 2 and 15 percent rates. It. is believed that this broader range of sensitivities will . better reflect the wide variation in actual consumer financing rates, and

, therefore

, better capture the significance of any differences resulting from the range of
rates.
Water Savings

EPA commented that the'Department should calculate the value of water savings based on the marginal costs, not the average cost, and that the savingsshould be considered In. the decisionmaking

. process . (EPA, No. 36 at 5). The Department disagrees with EPA regarding the cost of water used in the analysis

. As discussed above; the analysis is intended to provide an estimate of the impact of standards on consumers and the Nation

. Individual consumers do not pay the marginal cost of water, as they do not pay the marginal cost of energy. Therefore, the analysis continues to use the average cost of water. However, the Department agrees with EPA regarding the consideration of water savings in the decision

-making process,

. and, as noted above, included water savings in the economic analysis under Other Factors,

Test Procedures
NRDC commented that the existing test procedures should be used to the extent practical , and that the Department should propose modification wherever the analysis

### 22262 Federal Resister / - Vol. 56 ; No. 9T /' Tuesday

, May 14,1991 / Rules and' Regulations

suggests that changes are warranted. In those cases where the existing test procedure does not evaluate the performance of a design , DOE should evaluate the energy savings using an assumed test procedure . (NRDC, No. 16, at 24-25). DOE interprets NRDC' s comment to endorse setting standards based on a prospective test procedure rulemaking. This option, in DOE' s opinion

, is not an alternative in setting standards. For most products

, moreover, the Act requires only that the test procedure be in place before a standard can be prescribed

. Section 321 ( a)(6). Furthermore

, as DOE's test procedure rulemaking history shows, most test procedures that have been adopted, including amendments to existing test procedures

, include numerous changes from what was published in the proposed rule. These changes often affect the measure of a product ' s energy use. Therefore, if a standard could be adopted based on a prospective test procedure

, DOE would question such a process because, in all likelihood the final test procedure will be different from that proposed. -
A number of other comments were raised regarding this issue

, particularly with respect to automatic termination for clothes dryers and higher spin speeds for clothes washers. These comments will be addressed in detail in the product

- specific discussion of today' s final rule. However, with respect to the general issue of how the Department is to analyze the impacts of standards

, section 325 (l)(2)(13)(iii) of the Act requires the Department to base the payback calculation on the applicable DOE test procedure . Therefore, for the purpose of determining whether a standard level meets the rebuttable presumption test under section 325(l)(2)(B)( iii), the Department used the existing test procedure

, inclu ding the test procedure's annual cycles of operation. Based on information provided in comments on the proposed rile, and discussed below , the Department believes that the usage information in the test procedure for certain appliances, e.g. dishwashers

, clothes washers and clothes dryers, does not

reflect current usage practices. Additionally

, the Department believes that use of the test procedure usage information in the LBL-REM and the LCC will result in incorrect estimates on the impact of standards on the Nation and consumers

, since current usages are generally lower than test procedure assumption s. Therefore

, for the purpose of calculating LCC, energy savings and NPV, DOE used usage values which it considers to be reflective of current consumer usage patterns of the particular appliances. This approach is similar to what was done in the November 17,1989, Final Rule for refrigerators

, refrigerator

-freezers, and freezers and small gas furnaces

. Also, in the LCC analysis, the Department performed a sensitivity analysis which included the calculation of LCC using the test procedure values

. The results of that analysis are shown in the TSD. See Technical Support Document, chapter 6.

Baseline Unit
Whirlpool, GEA, Nyle Corporation (Nyle), AHAM, and NRDC provided comments about the baseline unit used in the analysis for the proposed rule. (Whirlpool, No. 20 at 12, 13, and 32; GEA, No. 21 at 1, 10, and 20; Nyle, No. 24 at 4; AHAM, No. 29 at I and 2; and NRDC, No.16 at 40-42). NRDC commented that the baseline unit should be the average efficiency, i.e., the shipment weighted energy factor (SWEF). Conversely , Whirlpool, GEA and AHAM each commented that the baseline unit was not representative of typical clothes washers, clothes dryers, and dishwashers. The baseline unit is not the SWEF, but is a construction of the engineering analysis. It is used to estimate the costand efficiency of a range of energyconserving design options, including those in the max tech level. This information is used in the economicanalysis, both in the LBL-REM and LBLMth,4. The Department did use the SWEF, however, for the purpose of projecting energy consumption, NPV, paybacks under the rebuttable presumption test, and impacts on manufacturers. In that way, the impacts on manufacturers

, consumers and the Nation are calculated by comparing what would happen under different standard levels to what is expected to occur without any changes to the extant standards. In the November 17,1989, final rule for refrigerators, refrigerator-freezers, and freezers, and small gas furnaces, the Department used the maximum allowable energy use set by the Act as the baseline for refrigerators, refrigerator

-freezers

, and freezers for 1990. However, for the purposes of this analysis, the Department did not have similar guidance from the Act: The Act prescribes only design standards for clothes washers, clothes dryers, and dishwashers; products meeting this standard have a range of efficiencies. Therefore, for the Final Rule, the Department reviewed available data, including comments on the proposed rule and manufacturers ' submittals to the FTC for the appliance labeling program, to identify the range of efficiencies available in each class for each product type. A model with an efficiency slightly higher than the least efficient unit was then used as the baseline unit for the engineering analysis. Data and information from comments submitted in response to the August 9

, 1989, proposed rule were then used as input to the economic analysis for the purpose of calculating impacts of standards. Finally, Nyle commented that the baseline energy factor for clothes dryers was unrealistic. (Nyle, No

. 24 at 4). Nyle went further to say that it had never seen a residential clothes dryer near this efficiency.
DOE does not understand this
comment

, since the efficiency estimates used in the engineering analysis included the results of testing reported to DOE. Furthermore

, Nyle's comment is the only one that takes i ssue with the measure of efficiency

. Therefore, DOE believes that Nyle must have misinterpreted the test procedure. The Department has not made any changes to the analysis in response to this
comment.
Appliance Usage Data
P&G and AHAM provided information in their comments regarding clothes washer and dishwasher annual cycles of operation and clothes washer temperature use factors. (P&G, No. 27 at 2, and ARAM. No. 29 at 10-12). The P&G data show that the number of clothes washer cycles per year is declining; based on 1989

- 89 survey data, it is now 380 cycles per year, down from the test procedure value of 416. Similarly, the. P&G data show that the number of dishwasher cycles per year is lower than the test procedure value, 286 cycles per year versus 322 ; however

, the P&G data show that 1988-89 usage was higher than 1986-87, 286 versus 260. These new data are used in the economic analysis in the calculation of LCC, energy savings and NPV, as described above. AHAM also argued that if the new usage data are not used,'the energy savings potential will be overestimated and the payback period understated for each standard level. (AHAM. No. 29 at 10). Al-JAM is correct with respect to the payback period, however, as explained above in the discussion of payback period, the Department is required by section 325(l)(2)(B)(iii ) of the Act to use the "applicable test procedure ," which the Department interprets as the extant

### Federal Register /;Vol. 56i No. 93; / Tuesday, May 14, 1991/ Rules and Regtldatiorts

test procedure. Therefore, DOE rejects AHAM's comment with respect to payback period. With respect to energy savings, as discussed above, DOE used the new usage data in the LBL-REM to calculate energy savings. 

### Maintenance Expenses
AHAM proposed that maintenance expenditures should be included in the analysis and that they should equal 5- 10% of the price of the appliance. (Gants, Testimony at 7). This estimate was based on what typically is charged to consumers for extended warranties. ACEEE and the EDF disagreed with an arbitrary maintenance expense figure. Maintenance expenditures should be included to the extent that increases (or decreases) in them can be documented; to add an arbitrary "fudge-factor" Is not appropriate. DOE agrees with ACEEE and EDF and has not adopted AHAM's recommendation. The only maintenance expenses to be used in the analysis are the incremental changes, positive or negative, from the baseline unit.
Maximum Technological Feasibility

DOE received six comments that it did not consider all commercially available technologies. (Schneider, No. 10 at 1; Schneider et. aL, No. 31 at 1, NWF, No. 11 at 2, NRDC, No. 18 at 9, EDF, No. 19 at 1, and EPA, No. 36 at 4). Schneider and EDF argued that DOE had not evaluated all commercially feasible options identified in the proposed rule's TSD. NWF and EPA went beyond these comments to identify specific technologies for each product type for the Department to consider in the final rule. NRDC made the general argument that the Department had failed to propose standards that were at the max tech level and economically justified. The Department has considered these design options and others, where data are available, in the Final Rule. The design options considered are discussed in more detail in the product specific discussion below and in the TSD. See Technical Support Document, chapter 3 and appendix A.
b. Product-Specific Comments

1. Clothes Washers.

Classes The Department had proposed six classes of clothes washers; top loading compact, standard, and large; top loading semi-automatic; front loading; and suds saving. Speed Queen commented that it was opposed to the creation of a large capacity, top-loading clothes washer class. It recommended .that the classes be compact and standard sizes. (Speed Queen, No. 28 at 1, 2). The company further commented that the standards as proposed, i.e. having a lower standard for large capacity machines than for standard capacity ones, would encourage manufacturers to build large units. Since the DOE test procedure rates capacity by measuring the total volume of the tub, companies could be subject to the lower energy factor by increasing the volume of the washer that is above the water fill and not need to incorporate design options which affect energy use. In response to Speed Queen's comment, EDF and ACEEE stated that DOE should evaluate the relationship between energy use and volume. (EDF, No. 19 at 8, and ACEEE, No. 18 at 2). Whirlpool commented that the energy factor for clothes washers could be redefined to be equal to maximum basket volume divided by energy consumption. (Whirlpool, No. 20 at 22). DOE has reviewed these comments and agrees that separate classes for standard and large size top loading clothes washers may result in manufacturers' redesigning products in order to meet the lower standard, as Speed Queen suggested, and that this could result in reduced energy savings. In addition, DOE investigated the relationship between energy use and capacity and found very poor statistical correlation (of R 2=0.65) between energy use and volume. This analysis was based on 1989 manufacturers' data supplied to the FTC as part of the appliance labeling program. In consideration of the above, DOE established three classes of top loading clothes washers for the final rule, standard (greater than 1.6 It 8 capacity), compact (1.6 ft 8 capacity or less), and semi-automatic. NWF commented that front-loading clothes washers should not have been placed into a separate class as DOE proposed. (Osann, Testimony at 3). NWF suggested, however, that if front loaders are a separate product class, then design options should be considered to make them more efficient. AHAM commented that front loaders can use less water, but because of configuration and size, they do not represent a large consumer market, and as a result, DOE had rightfully designated them as a separate product class. (AHAM, No. 29 at 21). DOE reviewed the comments of NWF and AHAM and found they both have some merit. DOE agrees with ARAM that each type of machine, top- and front-loading, has a distinct consumer utility, and that typically there is a difference in energy efficiency between the two. However, DOE has found that 

### 22263

there are now horizontal-axis, toploading clothes washers manufactured in Europe; this indicates that the difference in efficiency is not dependent on door placement, i.e., the utility related feature does not necessarily determine the product's performance. DOE believes that the horizontal rotation design of front loaders, which uses less water and therefore energy, can now be incorporated into top loaders as well. The Department has therefore added the horizontal axis design option to the top loading clothes washer engineering analysis, while retaining front loading as a separate class. See Technical Support Document, chapter 3, and appendix A.

Elimination of Warm Water Rinses
AHAM, Whirlpool and Maytag commented that the elimination of warm water rinses should not be considered as a design option because It would reduce consumer utility. (Whirlpool, No. 20 at 14, AHAM, No. 29 at 18 and 19, and Maytag, No. 17 at 2, and No. 40 at 6). Each commented that warm rinse has utility for arthritic people and those living in cold regions of the U.S. Also, Whirlpool testified that some woolen articles call for warm wash and rinse to prevent shrinkage. (Whirlpool, Testimony at 5). Furthermore, AHAMand Maytag commented that in order toavoid reaction to laundry chemicals, some consumers find it necessary to use

a warm rinse . (AHAM,'No. 29 at 19, and Maytag, No. 40 at 6). In addition, AHAMM and Maytag commented that dryer energy would be increased three percent with a cold rinse. NRDC, on the other hand, argued that
there is no evidence that warm rinse provides significant utility to consumers. (NRDC, No.16 at 42-44). NRDC further stated that not having a warm rinse has become acceptable to the market since 45 percent of Whirlpool's clothes washers do not have this option. Also, P&G commented that it "supports the use of cold water rinsing in clothes washers in general, and finds no performance reasons negating this move." (P&G, No. 27 at 4). The Department notes that there are presently clothes washer models being sold that do not provide warm rinse choices. The energy savings from elimination of warm rinse are substantial (26 percent with 1975 P&G data used in the DOE test procedure and 19 percent with 1986-87 P&G data). It is a low cost, high energy savings option. The Department reviewed the comments and determined there is no evidence that a warm rinse is necessary in the washing process, especially in light of

### 1, 22`A Federal Rd ter /.: ,Vol. 56, ' No. 93 /;' Tuesday; May' 14; 1991 % : Rues iand : Regu1at#ons

the large number of clothes washers sold without it. Therefore, DOE included he elimination of warm rinse as a lesign option in the engineering analysis. Whirlpool proposed that if the Department were to adopt a standard based on the elimination of warm rinse, the standard should be a prescriptive standard allowing the use of a warm water rinse that would have to be selected each time it was desired, i.e., a cold rinse default setting. (Whirlpool, No. 20 at 14,). The standard considered was based on the elimination of warm water rinse. However, being a performance standard, it could also be met by a machine with a warm water rinse if other design options to improve efficiency were included. The Department notes that there are already models on the market with warm water rinse that could meet this standard.
Higher Spin Speeds
RMI, Public Citizen, NRDC, and EDF commented that the removal of water by increased clothes washer drum spin speeds could significantly reduce clothes dryer energy consumption and should be considered as a design option in the clothes washer analysis. (RMI, No. 12 at 6. Public Citizen, No. 34 at 1, NRDC, No. 16 at 35-36, and EDF, No. 19 at I and 3). NRDC and EDF recognized that the present DOE test procedure cannot evaluate this option, but that the TSD gives a feasible method of evaluating such a change, and that DOE should evaluate this option based on a revised test procedure. (N13DC, No. 16 at 35, and EDF, No. 19 at 1). DOE rejects this proposal. As discussed above, the Act requires standards to be based on the applicable test procedure. Since the test procedure does not provide for this design, it cannot be included as a candidate for standards.
Thermostatically Controlled Mixing Valves

In the proposed rule, the Department calculated energy savings for this design option based on the assumption that the
valves would control the hot water wash temperature to 120 'F. In testimony at the public hearing, Whirlpool and Speed Queen contended
that 120 'F is too low a wash temperature for washing clothes stained with grease and oil. (Schornhorst, Testimony at 6-8; Coates, Testimony at 4-5). These views were supported in comments offered by P&G and ARAM. (P&G, No. 27 at 3; AHAM No. 29 at 19- 20). These companies believe that clothes washers' performance would 

### decrease at the lower temperature of 120 F. On the other hand, ACEEE stated that only a small segment of the population requires a hot wash temperature for clothes washing; for them, ACEEE argued that manufacturers could provide washing machines that would use 130° water for their hot water washes, while achieving the necessary energy savings elsewhere. P&G, however, contended that virtually all purchasers of washing machines would have need of an
occasional 130 'F hot water wash. Therefore, P&G strongly supported an 130 'F or better inlet water temperature be considered for all clothes washers in order to remove greasy soils.
Given P&G's extensive work in researching the solubility and the effectiveness of different laundering agents, the Department puts great credibility in its comments. As a result, for the Final Rule, the Department calculated energy savings for the thermostatically controlled mixing valves based on the assumption that the valves would control the hot water wash temperature to 130 °F. This 

### ie:t ed the estimated energy saving pet tial '

6f that design option from that propsed.

Plastic Tub

Maytag

, Whirlpool and AHA.M all commented on the plastic tub design option. (Maytag, No. 17 at 2, Whirlpool, No. 20 at 19

, and AHAM

, No. 29 at 21). AI -'1!I said that the design was technically feasible

, but that inco V orating it would require a major capifial investment since plastic is not a direct substitute for steel

. Whirlpool agreed that the effect of reducing thermal mass would be to improve efficiency

, but stated that the savings are not achievable without sophisticated and expensive temperature controls. Maytag stated

, however

, that one of the means it used to reach proposed level 1, a 1.13 energy factor, was plastic tubs. Maytag did support AHAM' s comment that the materials are not interchangeable

. Maytag stated that when a plastic tub is used

, greater clearances must be allowed to prevent any contact with the spinning wash basket. After reviewing these comments, DOE believes that reduced thermal mass bythe use of a plastic tub has energyconserving potential and is, therefore, a viable design option

. Accordingly, the Department included this design in the analysis for this rulemaking. 

### Motor Efficiency

Maytag

, Whirlpool, and ARAM discussed the feasibility of increasing motor efficiency . (Maytag, No. 17 at 13- 14., Whirlpool

, No. 20 at 16 and 17, and ARAM, No. 29 at 20). Maytag stated that its motor suppliers were not capable of manufacturing a permanent split capacitor (P.S.C.) motor that would meet its torque requirements. Similarly, AHA3,4 commented that motor efficiency can be increased

, but that such motors do not provide adequate starting torque.
On the other hand

, Whirlpool commented that its motor efficiency could be increased to the level calculated in the TSD but that the additional motor price would be $14.60 instead of $4.00, as estimated in the TSD. Additionally

, Whirlpool stated that the improved motor would weigh more, requiring a change to the washer suspension system which would add an additional $. 50 to $ 1.00 to each machine and cost 5 million dollars for retooling. In Whirlpool' s opinion

, this would not be economically justified. In light of the comments received, DOE re-evaluated the motor cost data discussed in the TSD, including Whirlpool ' s, and has revised the estimated cost increase for the improved motor from $4.00 to $7.50. DOE recognizes that in some instances a heavier motor could exceed the capacity of the suspension system

, requiring redesign and retooling, but DOE did not consider any retooling cost for this design option. The entire $7.50 incremental cost for this design was treated as a variable cost.
Other Design Options

Comments were received concerning the possibility of including the additional design options of manual fill control

, partial fill control and adjustable speed drives . (NRDC, No. 16 at 17

, EPA, No

. 36 at 4

, RMI, No

. 12 at 3, NWF, No

. 11 at 3, and Public Citizen, No. 34 at 1).
With respect to improved fill control, AHAM commented that in 1987, 98.5 percent of clothes washers were equipped with manual water level switches. (AHAM, No. 29 at 22). Based on the comments submitted by ARAM, DOE concluded that the design options of manual fill control and partial fill control were adequately considered by the proposed baseline which incorporated manual water level controls. With respect to adjustable speed
motors

, the Department notes they ha .,e the potential to save energy in space

### Federal Register / Vol. 56, No. 93, / Tuesday, May 14 -1991 / Rules and Regulations 22265

heating and cooling equipment, as mentioned in the RMI comment when the load varies over time. (RMI, No. 12 at 3). However

, in the case of clothes washing where the load is more
constant

, DOE does not believe that adjustable speed motors are applicable for energy saving purposes.
2. Clothes Dryers.
Heat Pumps
RMI, NPPC

, NRDC

, Maytag, Whirlpool

, Ohio, Nyle Corporation (Nyle), AHAM

, Washington State Energy Office (WSEO ), and Public Citizen all discussed whether heat pump clothes dryers were technologically feasible, and/ or whether they should be a separate class or design option for electric clothes dryers . (RMI, No. 12 at 7,
NPPC

, No. 13 at 2

, NRDC

, No. 16 at 28- 33, Maytag, No. 17 at 9 and No

. 40 at 3, Whirlpool, No. 20 at 58, Ohio, No. 22, at 7, Nyle, No. 24

, at I and 2

, ARAM, No. 29 at 28, WSEO

, No. 33 at 2

, Public Citizen

, No. 34, at 1). RMI, NPPC

, NRDC

, Ohio, Nyle, WSEO

, and Public Citizen all argued that heat pump clothes dryers are technologically feasible and should be considered as a design option, not a separate class. Nyle reported its success in manufacturing commercial heat pump dryers or closed cycle dehumidification dryers, Nyle has manufactured and installed hundreds of systems in commercial applications utilizing heat pumps for drying leather, wood, food, paper, and pharmaceuticals . (Nyle, No. 24 at 3 ). Nyle argued that this technology can be applied to clothes drying, and stated that the company is working with a commercial dryer manufacturer to offer a commercial line of heat pump clothes dryers. Nyle believes that this technology can also be extended to residential clothes dryers. Maytag and Whirlpool both commented that two problem with heat pump clothes dryers are lint and water build

-up, which would affect the performance and, possibly

, the safety of the unit. (Maytag, No. 17 at 9 and No. 40 at 3, and Whirlpool

, No. 20 at 58). Maytag cited its experiences with closed cycle condenser dryers and combination washer/ dryers in which lint accumulation was a major problem, which contributed to Maytag's eliminating them from the marketplace. Whirlpool also commented that a heat pump clothes dryer would require at least eight inches additional depth compared to a conventional electric dryer. (Whirlpool, No

. 20 at 57). This was based on its assumption that the dryer would require a heat pump with a capacity of 10,000 Btu/hour and would have a volume of more than 8,000 cubic inches. Whirlpool contended that in order to add the heat pump system to a dryer and maintain the same width (29") and height (35"), the additional depth for the system would be at least 8". Nyle, on the other hand, argued that the system fits into cabinets that are the same size as, and similar in appearance to, conventional dryers. (Nyle, No. 24 at 1). Based primarily on Nyle's comments and experience, DOE is convinced that heat pump clothes dryers are technicallyfeasible. DOE recognizes that lint buildup may be a problem, but also notes.that Whirlpool implies that lint is a continuing problem in all clothes dryers, While Nyle did not address lint per se, DOE presumes that it is coping with the lint problem in its commercial models. DOE is not convinced that lint build-up is such a large problem as to preclude the technology. DOE is also convinced, based on Nyle's experience, that heat pump clothes dryers can be made to fit the same size space as conventional dryers by extending the back of the cabinet as far as the vent pipe extends in a conventional dryer and moving the control panel forward. Based on the comments, DOE has concluded that heat pump clothes dryers do not provide distinct utility to the consumer, and has included heat pumps (or closed cycle dehumidification systems) as a design option in the analysis for today's final rule.
Microwave Clothes Dryers
RMI, Rudy Pesci (Pesci), and NRDC supported the incorporation of microwave drying in clothes dryers, while Maytag and Whirlpool opposed the adoption of this technology as a design option in the analysis. (RMI, No. 12 at 7, Pesci, No. 30 at 1, NTRDC, No 37 at 2, Maytag, No. 40 at 3, and Whirlpool, No. 39 at 3, 5, and 6). RMI suggested that such a technology be considered in future proceedings, while Pesci and NRDC supported its consideration in this rulemaking. Pesci provided copies of patents issued for microwave clothes dryers, and technical and cost information concerning the technology, including limited test data on an operating prototype. NTRDC commented that the only drawback is its inability to dry fabrics with metal threads. On the other hand, Maytag and Whirlpool stated that safety problems exist with the unit, with Whirlpool even putting sample garments in a microwave oven set to full power to demonstrate some of the potential safety problems. (Maytag, No. 40 at 3, and Whirlpool, No. 39 at 3, 5, and 6). DOE reviewed Whirlpool' s comments and concluded that its experience of putting clothing in a microwave oven Is not applicable to the prototype microwave dryer experience. DOE
believes

, based on the Pesci and the
NRDC statements , that although some limitations exist with microwave clothes dryers, microwave clothes drying is a technically feasible design option. The Department

, therefore

, included it as a design option in the analysis for today's final rule. Finally, NRDC provided information with respect to the cost and efficiency of microwave ovens and magnetrons. (NRDC, No. 37 at 2).NTRDC stated that the prototype microwave clothes dryer made by Mahan Micro

, Ltd., has a magnetron ( the microwave generator) with an efficiency of 55 percent and that more efficient magnetrons are available, units with efficiencies as high as 75 percent . As part of an upcoming rulemaking on kitchen ranges and ovens, DOE has been gathering data regarding microwave ovens and magnetrons

. Based on those data, DOE is unaware of magnetrons with efficiencies less than 75 percent. Apparently, the industry standard is a 75 percent efficient magnetron; the efficiency of the device is reduced when installed

. The installed efficiency is generally in the 55 to 60 percent range. Based on the information available to the Department

, DOE believes that the microwave clothes dryer that Mahan Micro, Ltd. manufactured actually has a magnetron of 75 percent efficiency. Therefore, the analysis is based on a 75 percent efficient magnetron

, and DOE knows of no higher magnetron efficiencies at this time

. With respect to the retail price of microwave clothes dryers, NRDC suggested a retail price of $325 to $625, or a $25 to $325 increase over thp baseline unit

. DOE used a price increase of $395 and believes that the higher figure is more reasonable, particularly in light of the added features required

, including humidity sensing and the magnetron.

Exhaust Heat Recovery

Public Citizen commented that DOE
did not adequately examine the recycle exhaust heat design option . (Public Citizen

, No. 34 at 1). DOE disagrees ; this design option was included in the proposed rule as standard level 4

. In addition, it was included in the analysis for today's Final Rule. See Technical Support Document, appendix A. EDF commented that DOE did not give a basis for not considering inlet air preheat. (EDF, No

. 19 at 3). DOE did

### 22266 Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991

consider inlet air preheat, as discussed in the TSD, but did not explain why it was not chosen as a standard level. DOE identified three methods of recovering heat that is generally lost from clothes dryers; they are recycled exhaust heat, non-condensing inlet air preheat, and condensing inlet air preheat. DOE believes the three methods of exhaust beat recovery are mutually exclusive. That is, only one can be used on a dryer. After examining the three different approaches, DOE found that the methods are approximately equal in their contribution to clothes dryer energy consumption, but that the option of recycle exhaust heat had a lower manufacturer cost and, therefore, was chosen as the design option for exhaust heat recovery.
In addition, Whirlpool and AHAM commented that each design has technical problems. (Whirlpool, No. 20 at 52; and AHAM, No. 29 at 25 and 26). Recycle exhaust heat has safety problems due to the potential of larger pieces of lint breaking off and being ignited by the electric resistance element or by the flame in a gas clothes dryer. Both inlet air preheat options have performance problems caused by the buildup of lint in the heat exchanger. DOE agrees with AHAM's and Whirlpool's comments concerning the technical problems with each design; however, as stated previously, the Department believes that lint is a problem in all dryers. These technologies may exacerbate the problem, but the Department is not convinced that the problem is so large as to render the technologies infeasible. Therefore, the Department has included exhaust heat recovery as a design option based on recycle exhaust heat
because of its lower cost. NRDC, EDF, Nyle, and Whirlpqol each questioned the Department's estimate of the energy savings potential of this design option of this in clothes dryers. (NRDC, No. 16 at 37-39; EDF, No. 19 at 3; Whirlpool, No. 20 at 34; and Nyle, No. 24 at 4 and 5). NRDC, EDF, and Nyle argued that DOE had underestimated the savings. EDF estimated that 80 percent of the heat is exhausted, not 20 percent as estimated by DOE. NRDC cited a report by D. Hekmat and W.J. Fisk, Improving the Energy Efficiency of Residential Clothes Dryers, to support its argument that the energy savings potential was underestimated. Whirlpool, however, referred to an analysis submitted to the Federal Energy Administration in 1976 which claimed that "about 92% of the theoretical maximum energy utilization in the dryer drum is already being attained." (Whirlpool, No. 20 at 34) DOE reviewed these conflicting comments, but was not convinced that any changes should be made to the analysis regarding the heat loss, i.e., energy conservation potential, of clothes dryers.

Automatic Termination

DOE received a number of comments regarding the method of automatic termination, moisture or temperature, and the energy savings for each. ODOE recommended that moisture sensors should be the required option, while Dingell urged that DOE resolve the question of whether moisture sensing devices really save more energy than temperature sensing devices. (ODOE, No. 15 at 5; and Dingell, No. 35 at 3). .NYSEO and NRDC both argued that the rationale used in the proposed rule (the test procedure gives both forms of automatic termination the same energy savings credit) is not sufficient to support a standard that would allow either option since the standard is a design standard, not an efficiency standard. (NRDC, No. 16 at 33; and NYSEO, No. 32 at 28). AHAM commented that manufacturers have found little difference between the two technologies. (AHAM, No. 29 at 25). Whirlpool provided results from a three year field test that measured a 13.0 percent savings for temperature sensors and a 13.6 percent savings for moisture sensors. (Whirlpool, No. 20 at 33). Based on the Whirlpool data, DOE concluded that the credit given by the test procedure is justified and therefore based consideration of today's Final Rule on the credit given by the test procedure.
Timed Dry

Maytag, ACEEE, EDF, Whirlpool, GEA, and Al-JA.M all commented that timed dry was required in certain instances. For example, Maytag
commented that automatic termination is not effective when drying items on a stationary rack inside the dryer. In addition, Maytag commented that timed dry is necessary for those occasional loads that are not sensed properly by automatic controls or for partial drying prior to ironing. (Maytag, No. 17 at 7 and 8). Whirlpool agreed with Maytag and provided an extensive discussion of the situations where timed dry would be necessary. (Whirlpool, No. 20, at 37-47).
ACEEE and EDF commented that the elimination of timed dry would decrease utility, and that it should be allowed, if the maximum setting were no longer than 30 minutes. (ACEEE, No. 18 at 2; and EDF. No. 19 at 7). 

### Rules` and Regulations

Maytag, Whirlpool and GEA stated that they would support a standard that would allow timers in conjunction with, but not overridden by, automatic controls. (Maytag, No. 17 at 10; Whirlpool, No. 20 at 47; and GEA; No. 21 at 22). GEA further stated that there should not be a limit on the setting for timed dry. After reviewing the comments, DOE concluded that this feature, timed dry, is of benefit to consumers and should remain as a manually selected option. DOE is not able to determine if there is a basis for a limit on the timed dry; therefore, one is not specified.

Reduced Air Flow

RMl commented that reduced air flow could save energy, but that it would reduce consumer utility. (RMI, No. 12 at 7). DOE agrees, and therefore did not include it in the Final Rule.

3. Dishwashers.

General
Whirlpool commented that the proposed standard level 1 is technically feasible and cost justified, while Maytag commented that an energy factor of 0.37 for standard sized dishwashers is achievable. (Whirlpool, No. 20 at 6; and Maytag, No. 17 at 6). DOE determined that standard levels more stringent than these are technically feasible and cost justified, as discussed below.

Water Temperature

P&G stated that its studies show that 130 `F water is needed for satisfactory fatty an d greasy soil removal in dishwashers . (P&G, No. 27 at 3). P&G states that the wash temperature may not reach 130 'F until the third water fill. P&G's data indicate that the average tap temperature is 132.5 ' F. P&G said that the water heater temperature should stay at 140 °F and that the dishwasher inlet temperature should be left unchanged

. In addition, ARAM referenced a P&G report that shows "the need for 130-140 'F water in dishwaters ." (AHAM, No. 29 at 17). Also, GEA stated that reduced inlet water temperature can be accomplished only through use of water heating dishwashers . ( GEA, No. 21 at 4). On the other hand

, ACEEE and NRDC both commented that the Department had not presented evidence that loads containing animal fats would be insufficiently cleaned by lower water temperatures . (ACEEE

, No. 10 at 6; and NRDC, No. 18 at 34). DOE reviewed the P&G study and
found that P&G studied four kinds of fat at three temperatures (90 'F, 120 °F, and

### Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

140 °F). 120 °F water appeared to remove most of the fats after one use and wash. However, on a seventh use and wash, the removal of one of the fats (pork) was inadequate. The Department notes that there was no discussion of what took place between the first and seventh uses and washes to cause the problem. Additionally, there was no discussion of the use of alternative detergents. Furthermore, the comments do not address dishwashers with booster heaters such as water heating dishwashers. NRDC, Portland General Electric (PGE), and ACEEE commented that booster heaters should be considered as a design option, not as a separate class. (NRDC, No. 16 at 34-35; PGE, No. 23 at 2; and ACEEE, No. 18 at 4). After reviewing the comments, the Department has concluded that a water heating dishwasher, which is essentially the same as a standard dishwasher with a booster heater, does not offer a distinct utility to the consumer. Accordingly, the Department dropped from consideration water heating dishwashers, both 115 and 220 volts, as separate classes , and added, as a design option for standard dishwashers, booster heaters, which allow a 120 °F water heater set point while providing for the use of higher wash water temperature when necessary.
Improved Food Filter

GEA commented that reduced water consumption with an improved food filter would result in units with unacceptable washing performance. GEA further commented that its experience indicates that the addition of food filters saves 0.67 gallons of water per cycle, not the 2.2-2.3 gallons used in the proposed rule. (GEA, No. 21 at 3, 4, and 8). Whirlpool stated that an improved food filter allows the reduction of water use by 20 percent (5 to 4 fills). (^Nhirlpool, No. 20 at 6). After consideration of the above, DOE has retained the improved food filter as a possible design option to reduce hot water usage, as was done in the proposed rule. The intent of this design option is to reduce water usage from the 12 gallons used by the baseline model to 9.5 gallons used by two of the top rated dishwashers in the Consumer Report test submitted by NWF. The magnitude of this water reduction is compatible with Whirlpool's experience of improving the food filter. While there are other ways to reduce water usage, DOE used the improved food filter as being representative of this concept.

Three Fill
NWF, NRDC and ACEEE commented that a three-fill option for dishwashers should be fully analyzed. (NWF, No. 11 at 3; NRDC, No. 16 at 34; and ACEEE, No. 18 at 4). NRDC stated that DOE must analyze whether these modelsprovide utility comparable to the fourfill models. AHAM commented that three-fill units have been manufactured but have shown poor performance. (ARAM, No. 29 at 16). Whirlpool stated that it is the manufacturer that produced the three-fill model referred to in the TSD, and that it no longer manufactures the model because of consumer complaints about performance. (Whirlpool, No. 20 at 13). Maytag commented that it had made a three-fill dishwasher that Consumer Reports criticized for poor washability; it could clean "prerinsed" dishes but not those that were not rinsed. Maytag discontinued the model because it couldnot provide comparable utility to fourfill models. (Maytag, No. 40 at 5 and 6). DOE reviewed the comments and concluded that three-fill models do not provide the performance required of dishwashers. The Department, therefore, did not include this option in the analysis for today's final rule.



### Fill Control

NRDC commented that the Department should have considered an improved fill control as a design option. (NRDC, No. 16 at 34). AI-IAM and 

### 22267

Maytag commented that improved fill controls do not work properly if the unit is not level, and that tolerances are manufactured into the unit to allow for this. (Maytag, No. 17 at 5; and AHAM, No. 29 at 15). DOE agrees with Maytag and AHAM that out-of-level installation can affect dishwasher performance. DOE finds, however, that an improved fill control is technologically feasible in that dishwashers can be installed level; therefore, DOE included it as a design option.

IV. Product-Specific Discussion

a. Clothes Washers

1. Efficiency Levels Analyzed. DOE examined a range of standard levels, including the 1988 NAECA standards for
two classes of clothes washers. As discussed in the proposed rule, the Department did not consider standards for top loading semi-automatic, front loading and suds saving clothes washers. Today's final rule retains the 1988 NAECA standard for these three
classes . The impacts of any revised
standards for the two classes considered were compared to the 1988 NAECA standards. The impacts of the base case are generally not presented because they are calculated to be zero. Table 4-1 presents the efficiency
levels that had been selected for analysis. Alternate levels were selected to generate a range of impacts for analysis. These efficiency estimates arefor standard and compact capacity, toploading clothes washers. Standard level 1 corresponds to efficiencies achieved by elimination of all warm rinses; level 2 corresponds to efficiencies achieved by adding a more efficient motor; level 3 adds thermostatic mixing valves and a plastic tub; level 4 adds, to level 1. a horizontal-axis tub rotation; and level 5 adds, to level 4, thermostatic mixing valves and a plastic tub.

TABLE 4-1.-STANDARD LEVELS ANALYZED FOR TOP-LOADING CLOTHES WASHERS

Size

Compact •.......... __. _._...^_._ .._.. _ . _..........__..._ ..__..._. ......._.......... _..... Standard • .._. ... ..._.._.._._ _._.....__.......... ............................... _......... .... .............. ....... _.-.__.

Capacity less than 1.6.fts Capacity equal to or greater than 1.6 fts Base the

0.67 0.88 1 Energy factor (cu. tL/kWh)

2

0.90 1.18 0.92

1.19 91

0.96

1.24 4

3.07

3.07 5

3.19

3.19

2. Payback Period. Table 4-2 presents class of product (standard clothes electric water heater, standard level I the payback period for the efficiency washers). For standard capacity, top- satisfies the rebuttable presumption test, levels analyzed for the most prevalent loading clothes washers connected to an i.e., the additional price of purchasing a

### 22268 Federal Register / Vol. 56, No. 93 / Tuesday, May 14 , 1991 / Rules and Regulations

product will be less than three times the value of the energy savings that the consumer will receive during the first year. In addition, for standard capacity, top-loading clothes washers connected to a gas water heater, standard levels 1 and 2 satisfy the rebuttable presumption

test.

TABLE 4-2.-PAYBACK PERIODS OF DESIGN OPTIONS (YEARS) FOR STANDARD SIZE, Top-LOADING CLOTHES WASHERS

Payback Period

Standard level With gas water heater With

electric water heater

I ..................... _....................... 0 0
2 .............................................. 2.2 0.8 3 ..... _.... ........ ........................ 7.2 2.7 

### 4 ............................................. 5.6 2.6 5 ...................... _...................... 6.8 3.2

3. Significance of Energy Savings. To estimate the base case energy savings by the year 2015 due to revised standards, the energy consumption of new clothes washers sold under the NAECA standards, i.e., the base case, is compared to the energy consumption of those sold under the candidate standard levels. For the candidate energy conservation standards, the LBL-REM projects that cover the period 1993-2015, the following energy savings could result for each: Level 1--0.57 Quad. Level 2-0.68 Quad. Level 3-0.81 Quad. Level 4-5.69 Quads. Level 5-5.92 Quads.
4. Economic justification
A. Economic Impact on Manufacturers and Consumers. The per unit increased cost to manufacturers to meet the level I efficiency is $1; to meet levels 2-5, the manufacturers' incremental cost increases are $7.50, $19, $83.50, and $19, respectively, for a standard, top-loading clothes washer. See Technical Support Document, table 3.18. At those levels of efficiency, the incremental consumer price increases are $0, $11.50, $30.30, $129.10, and $30.20 for standard levels 1-5, respectively. See Technical Support Document, table 6.7. The per unit reduction in annual cost of operation (energy expense) at level 1 is $25.70 and $11.40 for a top-loading
standard-sized clothes washer
connected to an electric water beater and a gas water heater, respectively; standard level 2 would reduce energy expenses by an additional $1.10 and $1.10; standard level 3 by $0.60 and $0.20; standard level 4 by $43.80 and $23.80; and standard level 5 by $0.20 and $0.10, respectively. See Technical Support Document, Table 6.7.
The LBL-M

. DA results for clothes washers show that standard level I would cause manufacturers to have a decrease in ROE from 6.05 percent in the base case to 5.86 percent (a decline of 3.1 percent). Standard levels 2, 4, and 5, are projected to reduce a prototypical manufacturer's ROE by 0.1 percent, 77.2 percent, and 80.8 percent, respectively, while standard level 3 is projected to raise it by 4.30 percent. See Technical Support Document, Table 7.17. This industry has displayed continuing consolidation for several decades, especially during periods of low earrings. By decreasing profitability, especially as DOE projects at standard levels 4 and 5, standards could lead to an increase in the financial burden on the industry, thereby possibly contributing to greater consolidation and less competitiveness than is likely in the base case. See Technical Support Document, Section 7.4. The Department assumed for the Engineering Analysis that manufacturers would elect to eliminate the warm/warm setting and warm water rinse option before adding other design options, because these actions would result in minimal increases in manufacturer costs, i.e., $0.50 per design option. All of the other design options considered in the analysis, e.g., improved motor, plastic tub, would cause a significant increase in manufacturer costs in comparison to the first two options. Unlike all other design options considered in this analysis (for clothes washers, clothes dryers, and dishwashers alike) the elimination of the warm/warm setting and warm water rinse option is perceivable by the consumer. Other design options, improved motors for example, are design features that would not be apparent to the consumer. In the event some consumers demand that the warm/warm setting and warm water rinse option be retained, manufacturers may retain these features and use design options which would have additional greater fixed and variable costs than estimated in order to meet the standard. This was given great weight in today's final rule as discussed below. Furthermore, since financial data of the type needed to characterize the prototypical manufacturer are generally not available, DOE had to make a number of assumptions based on the limited data publicly available, e.g., Securities and Exchange Commission 10K reports and company annual reports. This approach was originally discussed in the Advance Notice of Proposed Rulemaking (53 FR 17712, May 18, 1988), and the Department did not receive any comments that indicated a change in approach was warranted. B. Life-cycle Cost and Net Present Value. Compared to the base case, the LCC analysis indicates that at each possible standard level, the increase in purchase price would be offset by savings in operating expenses. See Technical Support Document, Figure 6.7. The lower life-cycle costs indicate that no standard level would cause any economic burden on the average consumer. Of the five candidate standard levels, level 4 had the lowest consumer life-cycle cost. Of the levels considered without horizontal axis, level 1 had the lowest consumer life-cycle

cost. Compared to the base case, standardlevel 1 would cause reductions in lifecycle costs of $106.30 and $43.00 for a top loading standard-sized clothes washer connected to an electric water heater and a gas water heater, respectively; standard level 2 would reduce life-cycle costs by $89.10 and $34.80; standard level 3, by $52.80 and $2.30; standard level 4 would reduce life cycle costs by $287.10 and $81.50; while standard level 5 would result in decreases of $225.60 and $42.60, respectively, compared to the base case. See Technical Support Document, Table 6.2. Compared to the minimum LCC point (standard level 1), standard level 2 would cause an increase in life-cyclecosts of $2.00 for a top-loading standardsized clothes washer connected to either an electric or gas water heater; standard level 3 would increase life-cycle costs by an additional $25.00 and $28.00; while
standard level 4 would cause reductions in life-cycle costs of $228.00 and $136.00 compared to level 1; and standard level5 would result in an increase in lifecycle cost, compared to level 4, of $28.00 and $30.00, respectively. See Technical Support Document, Section 6.1.3. While DOE examined the effect of different discount rates (2, 7, and 15 percent) on the LCC curves and generally found little impact, the Department did not consider higher discount rates, since such rates would be beyond the range of real, after-tax rates that consumers would likely face in financing the purchase of clothes washers. Similarly, DOE did not consider different energy prices, including regional prices, in the LCC analysis. Since any standard is to be a national standard, DOE believed that national average energy prices were

### Federal Register / Vol. 58, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations 22269

appropriate. However, DOE did examine the effect of a usage rate different from the 416 cycles per year set by the DOE test procedure. Recent Procter and Gamble data appear to indicate that the national average clothes washer annual usage rate is 406 cycles per year, more than 2 percent less than the test procedure representative average use cycle. The slightly lowerusage numbers result in the lower lifecycle cost estimates that were presented above. See Technical Support Document, Section 6.1.1. The NPV analysis, a measure of the net savings to society, indicates that standard level 1 would produce a NPV of $528 million to consumers. The corresponding NPV numbers for levels 2-5 are $508 million, minus $135 million, $1.294 billion, and $196 million, respectively. See Technical Support Document, Table 5.13. The negative NPV at standard level 3 indicates that at this standard level, society would spend more to purchase and operate washing machines, as measured in 1987 dollars, than under the base case. C. Energy Savings. As indicated above, standards will result in significant savings of electricity consumption for clothes washers. D. Lessening of Utility or Performance of Products. As indicated above, DOE established classes of products in order to assure that the standards analyzed would not lessen the existing utility or performance of clothes washers. E. Impact of Lessening Competition. The determination of this factor was made by the Attorney General. In its review of the proposed standards for clothes washers, the Department of justice (DOJ) concluded that "a significant lessening of competition may occur under certain conditions," such as the need for the smaller competitors to undertake substantial redesign or retooling. (DO], NO. 38, at 4). In the Notice of Proposed Rulemaking, standard level I and 2 were met by eliminating the warm rinse option and adding thermostatic mixing valves. DOJ found that "some manufacturers may not be able to comply with the proposed standards by making these design changes and may need to undertake more substantial redesign or retooling that would impose substantial fixed costs." If, as DOE believes, some manufacturers may elect to retain the warm/warm setting and warm water rinse in response to marketplace demands, then manufacturers will have greater costs than estimated thus far, and these increased costs are likely to affect smaller competitors more severely than larger ones. F. Need to Save Energy. Clothes washers use electricity directly and are responsible for the water heater energy consumption that is necessary to supply the heated water to the clothes washer. Water heater energy consumption is either in electricity or natural gas, depending upon the water heater. Consequently, clothes washers are responsible for both gas and electricity consumption. In 1987,1.6 percent of source electricity (or, .442 Quad) and 1.4 percent of natural gas consumption (or, .241 Quad) were accounted for on a national basis by clothes washers. In addition, decreasing future electricity demand as a result of standards will decrease air pollution. See Technical Support Document, Appendix D 8. The greatest decreases in air pollution will occur for sulfur oxides (listed in equivalent weight of sulfur dioxide, or SO2). For standard level 5, in the year 2015, the estimated S02 reduction would be 89,418 tons. This reduction represents 0.55 percent of the United States SO2 emissions that are expected to be emitted by power plants in that year. Standard level 5 would also result in a decrease in nitrogen dioxide (NO2) emissions for the year 2015 of 74.997 tons, This decrease represents 0.7 percent of the total NO2 emissions expected to be emitted by power plants in that year. Another consequence of the standards will be the reduction of carbon dioxide (CO2) emissions. Standard level 5 is estimated to reduce United States CO2 emissions by about 0.43 percent for the year 2015. In 2015, standard level 4 is expected to reduce SO2, NO2 and CO2 emissions by .53,.67, and .41 percent, respectively. Standard level 3 reductions

As a result of provisions in the recently enacted Clean Air Act Amendments of 1990 (Pub. L 101-W. November 15, 1990), the calculated reductions of SO2 and NO2 have been overestimated. For SO2, any emission. reductions caused by appliance standards prior to the year 2000, will be part of much greater SCn reductions that are required by the new amendments . After the year 2000, SO2 reductions achieved through appliance standards or any other means by those emitting SO2
can be earned as credits. These are credits to emit an amount of SO2 equivalent to the amount of the
SO2 reduction that created the credits. The new amendments allow those earning the credits either to sell them to others or to "bank" them for future use. Therefore, after the year 2000, to the extent that appliance standards result in SO2 credits being earned , and to the extent that such standardsinduced credits are sold and used by others, the National SO, reductions will not occur. The new law also requires that utility boilers emit
lower levels of NO2. As a result, the expected emissions of NO, will be less than was assumed in the Department' s estimation of the N02, savings achievable through the present appliance standards revisions. The actual NO2 reductions resulting from today's standard revisions will be lees than those presented here. are expected to be .07,.09, and .06 percent for SO2, NO2 and CO2, respectively in 2015. For SO2, NO2, and CO2 emissions in 2015, the respective reductions under standard level 2 are .06,.08, and .05 percent; for standard level 1, the respective emissions reductions would be .05, .06, and.04 percent,
G. Other Factors. After the closing date of the record for the proposed rule, DOE became aware of a new type of washing machine now available in Europe. DOE believes that this new design, top-loading with horizontal-axis rotation, has great energy savings potential. However, since DOE did not propose any standards based on this design and there is no information on this technology in the record, DOE does not believe that it could establish a standard based on this design in today's final rule. Based on the limited data acquired to date, DOE has analyzed design options based on this technology. The results are presented below; however, DOE notes that all aspects of these analyses are subject to change as more data become available. Based on the great energy savings potential of this design, DOE is evaluating this technology as soon as possible and has included clothes washers in the Advance Notice of Proposed Rulemaking for Nine Products. 55 FR 39624, September 28, 1990. In light of this, DOE considered whether to issue a final rule for clothes washers today or whether to repropose a new rule instead. Because of the time involved in reproposing and the energy savings thus lost, DOE decided to issue a final rule today for clothes washers to achieve energy savings now but giving great consideration to minimizing retooling costs for manufacturers. Minimizing retooling costs was given great weight in today's Final Rule because DOE is reconsidering clothes washer standards presently. If this reconsideration results in standards based on a top-loading horizontal axis rotation design, major redesign and retooling would be necessary. DOE does not believe it would be economically justified to impose a major retooling at this time. 5. Conclusion. Section 325(l)(2)(A) of the Act specifies that the Department must consider, for amended standards, those standards that "achieve the maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified." Accordingly, the Department first considered the max tech level of efficiency, i.e., standard level 5, for amended clothes washer standards.

### 22270 Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

Of the standard levels analyzed, level 5 will save the most energy (5.92 quads between 1993 and 2015). In order to meet this standard

, the Department assumesthat all clothes washers will be toploading, horizontal-axis machines. Such machines are presently available in Europe. In addition to the top-loading,
horizontal

- axis, technology

, standard level 5 would involve changes that can presently be incorporated

, namely, the elimination of warm rinses, an improved motor, thermostatic mixing valves, and a plastic tub. As mentioned above, the principal technology on which this standard level is based, top loading

, horizontal-axis rotation, was brought to the attention of the Department after the close of the comment period on the proposed rule. Since no one has had a chance to comment on it, and since no comments on it were volunteered during the comment period

, the Department believes that it cannot issue a final rule based on this technology

. Furthermore, the results of the analysis are not considered to be firm and are subject to possible change following public comment and further analysis in a separate proceeding

. Based on the above and because the top-loading, horizontal

- axis rotation design represents the predominant energy saving feature in standard level 5, standard level 5 was not considered for this Final Rule. Standard level 4, also, is based principally on the same horizontal axis technology as standard level 5

. For the reasons mentioned above, therefore, the Department believes that it cannot consider it for this final rule. The next most stringent standard level
is standard level 3. This standard level is projected to save 0.81 quad of energy
between 1993

. and 2015 . Among the level's other positive impacts are the projections of lower LCC's than those for the baseline (by $52.80 and $2.30 for clothes washers connected to electric

water heaters and gas water heaters, respectively). In addition, for households with electric water heaters, the payback for standard level 3 is projected to be only 2

.7 years. Furthermore

, the LBL

-MIM projects that the ROE of a prototypical manufacturer would be 6.31 percent , which would exceed the base case projection of 6.05 percent

. However, this standard wouldpreclude the purchase of the most costeffective unit; it would cause an increase in LCC ( compared to the minimum LCC point ) of $25.00 and $28.00 for a top-loading standard-sized clothes .vasher connected to an electric water heater and a gas water heater, respectively. On the other hand, the payback to consumers with gas water heaters would be 7.2 years, half that of the appliance's 14.1 years average lifetime. In addition, this standard level would raise the purchase price to consumers by 11 percent, resulting in a decline in shipments of nearly two million units between 1993 and 2015. As a consequence, the NPV of this standard would be a negative $135 million, the lowest of any standard level. The negative NPV and increase in LCC (compared to the minimum LCC point) of this standard level are troubling to the Department, for they indicate that at this standard level, society would spend more to purchase and operate washing machines than under the base case. Additionally, standard level 3 could involve substantial increased costs to manufacturers. As noted above, the improved motor design option used to achieve the energy savings of this standard level added $7.50 to the per unit cost of manufacturing clothes washers. Analytically, the Department treated this cost as a variable cost as it asstuned that all parts would be purchased. Earlier, however, it was noted that Whirlpool had commented that because an improved motor would require an improved suspension system, the company would have to undertake $5 million in tooling costs for the improved suspension system. While the Department did not treat any of the costs in its analysis for this standard level as fixed costs, it recognizes that fixed costs could be substantial for some other manufacturers, as well. While not treated as such in the analytical output, DOE believes that retooling costs for standard level 3 could be significant. Since DOE has decided to consider the horizontal axis technology with its associated fixed costs as soon as possible, the Department issues a final rule today that imposes minimal impacts on manufacturers' retooling

costs. The Department, therefore, concludes that the burdens of standard level 3 for clothes washers outweigh the benefits, and rejects the standard level. Standard level 2 would save 0.68 quad of energy between 1993 and 2015, and would repay itself to the consumer in 0.8 years (for electric water heat), and 2.2 years (for gas water heat), thereby passing the rebuttable presumption test for both water heating fuels. Among the level's other positive impacts are the projections of lower LCC's than those of the baseline (by $89.10 and $34.60 for
clothes washers connected to electric 

### water heaters and gas water heaters, respectively), However, compared to the minimum LCC point, this standard level would cause an increase in life-cycle cost of $2.00 for top-loading standard-sized
clothes washers connected to either an electric water heater or a gas water heater. This standard level could involve substantial increased costs to manufacturers. As noted above, the improved motor design option used to achieve the energy savings of this standard level added $7.50 to the per unit cost of manufacturing clothes washers. Analytically, the Department treated this cost as a variable cost as it assumed that all parts would be purchased. Earlier, however, it was noted that Whirlpool had commented that because an improved motor would require an improved suspension system, the company would have to undertake $5 million in tooling costs for the improved suspension system. While the Department did not treat any of the costs in its analysis for this standard level as fixed costs, it recognizes that fixed costs could be substantial for some other manufacturers , as well. While not treated as such in the analytical output, DOE believes that retooling costs for standard level 2 could be significant. Since DOE has decided to consider the horizontal axis technology with its associated fixed costs as soon as possible, the Department issues a final rule today that imposes minimal impacts on manufacturers' retooling

costs. In addition, as discussed above, DOE believes that some manufacturers may elect to continue to offer the warm/ warm setting and warm water rinse option. If this were to occur, a standard at this level could result in manufacturers needing to undertake more substantial redesign or retooling which would impose substantial fixed costs and which would likely affect smaller competitors more severely than larger ones. Therefore, the Department concludes that the burdens of standard level 2 for clothes washers outweigh the benefits, and rejects the standard level as not being economically justified. After carefully considering the analysis, the Department is amending the NAECA-imposed 1988 standard for clothes washers with standard level 1 for clothes washers. The Department concludes that standard level I for clothes washers saves a. significant amount of energy and is technologically feasible and economically justified. There would be significant energy savings at this level of efficiency. During

### Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

the period 1993-2015, these savings are calculated to be 0.57 quad of primary energy. Such savings would total more than 4.7 percent of base case energy use. In addition, the standard could have a positive effect on the environment by reducing the emissions of NO2 and SO2 by as much as 0.02 and 0.01 percent, respectively, by the year 2015. However, as discussed above, to the extent that SO2 credits will be used, the SO2 reductions will not occur. Furthermore, the standard will reduce emissions of CO2 by 11.683 million tons, or 0.01 percent, over the forecast period. The standard is also expected to reduce water use by six billion gallons over the forecast period. The technologies that are necessary to meet this standard are presently available. The Department finds the level to be economically justified. The consumer payback of this standard level is immediate since the small cost of changing the controls to eliminate any warm rinse settings is not expected to be added to the retail.price of a clothes washer. This standard has the lowest LCC and is expected to result in a reduction in LCC of approximately $106.30 and $43.00 for clothes washers connected to electric water beaters and gas water heaters, respectively. Additionally, the standard is expected to have only a moderate impact on the prototypical manufacturer's ROE, causing a 0.19 percentage point decline. Since this standard does not involve substantial redesign or retooling, the Department expects that it will not have negative impacts on smaller competitors.
b. Clothes Dryers
1. Efficiency Levels Analyzed. Standard level 1 corresponds to efficiencies achieved by the addition of moisture- or temperature-termination; level 2 corresponds to efficiencies achieved by adding insulation; level 3 adds exhaust heat recycling efficiencies; level 4 adds, to level 3 electric dryers, microwave clothes drying efficiencies; and level 5 adds, to level 3 for electric dryers, efficiencies achievable with heat pump clothes drying. These standard levels are presented in Tables 4-3 and 4-4.

TABLE 4-3.-STANDARD LEVELS ANALYZED FOR STANDARD CAPACITY ELECTRIC AND GAS CLOTHES DRYERS

Standard level Energy factor (lb/Kwh)

gas electric

Baseline . .............................. 2.60 2.30
1 .........................................:..... 2.95 2.61 TABLE 4-3.-STANDARD LEVELS ANALYZED FOR STANDARD CAPACITY ELECTRIC AND GAS CLOTHES DRYERS-Continued

Standard level Energy factor electric (lb/Kwh)

gas

2 ....._ ......................................... 3 ................................................ 4 ................................................ 5 ................................................

TABLE 4-4.-STANDARD LEVELS ANALYZED FOR COMPACT ELECTRIC

CLOTHES DRYERS

Energy Factor (1b/KWh)

Compact, 120V Compact,

240V

Standard level baseline. 2.70 2.50
1 ............................... 3.07 2.84
2 ................................ 3.13 2.90
3 ................................ 3.33 3.08

4 ............. .................. 4.23 3.92 5 ................................ 8.95 8.28 3.01

3.21
4.07
8.61 Electricity

1993-2015, the following energy savings from clothes dryers would occur: 22" Z 7 

### 1 G^

Gas

,58 Quad.......... .03 Quad. .76'Quad.......... C5 Quad. 1.4 Quads........ .12 Quad. 3.63 Quads ...... .02 Quad. 6.61 Quads ...... .22 Quad.

The negative gas savings at levels 4 and 5 are a result of those standards imposing such a large price increase on electric clothes dryers that a substantial switch to gas dryers occurs. This switch is so great that aggregate gas consumption exceeds that of the base case, i.e., there are negative savings of gas at those standard levels: See Technical Support Document, Table 5.18. 4. Economic Justification. A. Economic Impact on Manufacturers and

Consumers. The per unit increased cost
to manufacturers to meet the level 1 efficiency is $8 for a standard electric or gas unit. To meet levels 2-5, the additional cost increases, compared to the baseline, are $14.60, $44.60, $102.10 and $164.60, respectively, for electric dryers; for gas dryers, the additional per unit cost, compared to the baseline, to meet standard levels 2 and 3 are $14.60 and $44.60, respectively. See Technical Support Document. Tables 3.22 and 3.25. At these levels of efficiency, the incremental consumer price increases, compared to the baseline, for electric clothes dryers are $13, $23.70, $72.30, $167.50, and $395.30. For-gas dryers, the consumer price increases at levels 1-3 are $13.00, $23.70, and $72.30, respectively. See Technical Support Document Tables 6.9 and 6.10. The per unit reduction in annual cost of operation (energy expense) of standard electric clothes dryers at level 1 is $9.20, standard level 2 would reduce energy expenses by an additional $1.30; standard level 3 by $4.00; standard level 4 by an additional $13.10; and standard level 5 by an additional $25.70. For gas dryers, the annual cost of operation at level 1 is reduced by $2.60; standard level 2 would reduce energy expenses by an additional $0.40; and standard level 3 by $1.10. See Technical Support Document, Table 6.9.
The LBL-MIM results for clothes dryers estimate that standard level.l would cause manufacturers to have an increase in ROE from 6.8 percent in the base case to 9.6 percent. At standard levels 2 through 5, the ROE's (compared to the base case ROE) are 7.9, minus 2.3, minus 15.5 and minus 30.3 percent, respectively. See Technical Support Document, Table 7.25. 2. Payback Period. Table 4-5 presents the payback periods for the efficiency levels analyzed for the most prevalent classes of product (standard electric and gas). For standard-size electric clothes dryers, only standard levels 1 and 2 satisfy the rebuttable presumption test; these levels result in paybacks to the consumer in less than 3 years. For standard gas clothes dryers, however, there is no standard level whose efficiency improvement will repay itself to the consumer in less than 3 years.

TABLE 4-5.-PAYBACK PERIODS OF DESIGN OPTIONS (YEARS) FOR STANDARD

ELECTRIC AND GAS CLOTHES DRYERS

Standard level Payback periods

Gas

2 ................................................ 3 ................................................

5 .............................................. Electric

1.2
2.5
5.7 

### 6.0

6.9

3. Significance of Energy Savings. The Department estimated the energy savings that are expected to result by the year 2015 from the energy consumption of new electric and gas clothes dryers sold in the absence of amended standards and compared it to the energy consumption of new electric and gas clothes dryers sold under amended standards. When energy conservation standards are imposed, the LBL-REM projects that over the period

### 2227 2 Federal Register / Vol. 56, No. 93 / Tuesday,. May 14, 1931 / Rules and Regulations

The reason for the striking declines in ROE under standard levels 3-5 is thought to be the industry's price elasticity of demand: These standard levels cause such a large price increase that a significant decline in the quantityof dryers demanded occurs. In LBLMIM, this decrease in units demanded causes a greater reduction in revenue than in variable costs and, as a result, a decrease in profit and ROR This industry has displayed: continuing consolidation for several decades, especially during periods of low earnings. By increasing profitability, as DOE projects at standard: levels l and 2. standards could lead to a. reduction in the rate of such consolidations,. thereby possibly contributing to more robust competitiveness than is likely in the base case. The Department's characterization of the prototypical manufacturer in the base case assumes that manufacturers' typical clothes dryer designs are based. on the combination of options presented in the Engineering Analysis for the baseline unit. If manufacturers use a different combination of design options to produce clothes dryers that minimally comply with the 1994 standard, the Department may have inappropriately characterized the financial posi.ti on of the prototypical manufacturer in the LBL-MIM. Furthermore, since financial data of the type. needed to characterize the prototypical manufacturer are generally not available, DOE had to make a number of assumptions based on the limited data that is publicly available, e.g., Securities and Exchange Commission 10K reports. and company annual reports. This approach was originally discussed in the advance notice of proposed rulemaking (53 FR 17712, May 18,1988), and the Department did not receive any comments that indicated a change in approach was warranted. S. Life-Cycle Cost and Net Present Value. The LCC analysis indicates that at each possible standard level for standard electric dryers, but only at level l for gas dryers, the increase- in purchase price would be offset by savings in operating expenses. See Technical Support Document. Table 6.1. Also, of the candidate standard levels, standard level 2 for standard electric clothes dryers and standard level I for gas clothes dryers- had the lowest LCC. This indicates that at these levels the standard would not cause any economic burden on the average consumer because of the decreasing: LCC. Based on 1988 usage patterns, compared to the base case, standard Ievel I would cause a reduction in, LCC of $76.80 for standard electric clothes dryers and $12.10 for standard gas clothes dryers; standard level 2 would reduce LCC from the base case for an electric dryer by $42.20, but raise that of a gas dryer by $1.50; standard level 3
would result in an LCC decrease from the base case of $32.30 for a standard electric dryer, but an increase of $39.30 for a gas clothes dryer; standard level 4 for a standard electric dryer would result in a decrease in LCC of $66.20, compared to the base case; and standard level 5 would result in a $90.00 decrease in LCC, compared to the base case. See Technical Support Document, Table 6.1.
While DOE examined the effect of different discount rates (2, 7, and 15 percent) on the LCC curves and generally found little impact, the Department did not. consider higher discount rates. Since such rates would be beyond the range of real, after-tax rates that consumers would likely face in financing the purchases of clothes washers. Similarly, DOE did not consider different energy prices, including regional prices, in the LCC analysis. Since this is to be, a national standard, DOE believed the National
average energy prices were appropriate. However, DOE did examine the effect of a usage rate different from the 416 cycles per year set by the DOE test procedure. Recent Procter and Gamble data appear to indicate that the national average clothes. washer annual usage rate is 406 cycles per year, more than 2 percent less than the test procedure representative average use cycle. The slightly lower usage numbers•result in the lower life-cycle cost estimates that were presented above. See Technical Support Document, section 6:1.1 The NPV analysis indicates that standard level I would produce an NPV of $1.263 billion over the forecast period (of which $1.212 billion would be
attributed to the standard on electric dryers). At standard level 2, the NPV would be $1.301 billion, of which $1.292 billion would come from the. standard on electric dryers. Standard level 3 would produce an electric dryer NPV of $1.009 billion and a gas dryer NPV of minus $231 million, for a total NPV for the standard of $778. million. Standard level 4 would produce a $1.811 billion NPV for electric. dryers, but, under this standard level, the NPV for gas dryers would be a negative $284 million, leaving the standard's NPV at $1.527 billion. Lastly, standard level 5 . would produce an NPV of $806 million (of which the standard would produce an NPV of $1.285 billion and minus $479 million on electric and gas dryers, respectively): See. Technical Support Document, Table 5.22. C. Energy Savings. As indicated above, standards will result in savings of energy consumption by clothes dryers. The cumulative energy savings over the 1993-2015 period would range from 0.61 Quad at standard level I to 6.39 Quads at standard level 5- See Technical Support Document; Table 5.1& D. Lessening of Utility or Performance of Products. As indicated above, DOE established classes: of products in order to ensure that the. standards analyzed would not lessen the existing utility or performance of clothes dryers. - E. Impact of Lessening Competition.The determination of this factor wasmade by the Attorney General. In its comments on the proposed rule, The Department of justice. concluded that the proposed standard was not likely to produce a competitive impact (DOJ, NO; 38 at 4). F. Need to Save•Energy. Clothes dryers use electricity and natural gas as their energysources.Between 1993 and 2015, without amended standards; clothes dryers. are- expected to consume 14.84 quads of energy. Standard level 1 would save .61 quads, or 41 percent, of that amount; while standard levels. 2-S would save 55, 10.2, 24.3

, and 45,6, percent, respectively. The- savings at standard levels 4 and 5 are due almost entirely to electric clothes dryers. In addition, as noted above for clothes washers, decreasing future electricity demand as a result of standards will decrease air pollution. See Technical Support Document, Appendix D.9 The greatest decreases in air pollution caused by amended standards, on clothes dryers will occur for. sulfur oxides (listed in equivalent weight of sulfur dioxide, or SO2). For standard level 5, in the year 2015, the estimated SO2 reduction would be 171,240 tong. This reduction represents 1.06 percent of the United, States SO2 emissions that are expected to be emitted by power plants in that year.

Standard level 5 would also result in a decrease in nitrogen dioxide (NO2) emissions for the year 2015 of 125,372 tons. This decrease represents 1.18 percent of the total NOz emissions expected to be emitted by power plants in that year. Standard level 5 is
estimated to reduce United States CO2 emissions by about 0.60 percent for the' year 2015. In 2015, standard level 4 is expected to reduce SO2, NO-.,. and CO2 emissions by .52..59 and .31 percent, respectively. Standard. level 3 reductions are expected to be .20,.23 and .13 percent

9 Asso see footnote numbers, above.

### Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

for SO2, NO2 and CO2, respectively in
2015. The reductions of SO2, NO2, and CO2 for standard level 2 in 2015 are expected to be .11, .13, and .07 percent, respectively, while the respective reductions at standard level I are .08, .10, and .05 percent. G. Other Factors. There were no additional factors affecting clothes dryers considered in this review. 5. Conclusion. Section 325(I)(2)(A) of the Act specifies that the Department must consider, for amended standards, those standards that "achieve the maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified." Accordingly, the Department first considered the max tech level of efficiency, i.e., standard level 5, for amended electric clothes dryer standards. In this conclusion, discussion of standards for electric clothes dryers will be presented first, followed by the discussion of standards for natural gas clothes dryers. A. Electric Clothes Dryers. Of the standard levels analyzed, level 5 will save the most energy (8.39 quads). The technologies that would be involved in meeting this standard level are temperature- or moisture- sensing automatic termination, insulation, and a heat pump. The Department is not aware of the existence of any residential-sized heat pump clothes dryers. The consumer payback of this standard is 6.9 years, less than one-half the estimated 17.1 years average lifetime of clothes dryers. At $921, this standard level is at the LCC minimum, and is $127
less than the LCC of the baseline unit. The standard, however, would increase the purchase price of electric clothes dryers by 132 percent ($395), thereby precluding many consumers from being able to purchase the product. Under this standard, shipments of electric clothes dryers are expected to decrease by nearly 19 percent, or 16.3 million units over the 1993-2015 period. The NPV is estimated to be $1.285 billion. Because of the decline in shipments, resulting in large part from the great price increase, the standard would have a devastating impact on the prototypical manufacturer's ROE, driving it down from a positive 6.8 percent in the base case to a negative 30.3 percent (a decline of 548 percent). Such a loss situation would undoubtedly have adverse competition impacts. The Department, therefore, concludes that the burdens of this standard level outweight the benefits, and, consequently, rejects standard level 5. The next most stringent standard level for electric clothes dryers is standard level 4. This standard level would save the second greatest amount of energy (3.63 quads). The principal energy-conserving technology in standard level 4 is microwave energy. Microwave clothes dryers have been built and undergone limited testing. The consumer payback of this standard level in 6.0 years. It has the second lowest LCC which, at $945, is $103 below the base case . At $467, its price is nearly 56 percent more expensive that the baseline unit; this would preclude many consumers from being able to purchase the product. Shipments would decrease by more than 15 percent, or 13.1 million units over the 1993-2015 period. The NPV is $1.811 billion, the highest of any standard level, Because of the 15 percent decline in shipments under standard level 4, the prototypical manufacturer's ROE would decline from a positive 6.8 percent in the base case to a negative 15.5 percent (a decline of nearly 328 percent). This would also likely have adverse competitive effects. The Department, therefore, concludes that burdens of standard level 4 outweigh the benefits, and rejects standard level 4 for electric clothes dryers., Standard level 3 for electric clothes dryers, the next most stringent level, would save 1.4 quads of energy. This standard level would involve automatic termination, insulation, and recycling of exhaust heat, all designs that can presently be found on clothes dryers. The consumer payback is 5.7 years. The LCC, at $979, is $69 below the baseline. The purchase price, $372, is 24 percent more expensive that the baseline unit, which could preclude many consumers from being able to purchase the product. Shipments would decline by nearly 3 percent, or 2.4 million units over the forecast period. The NPV is $1.009 billion, the lowest of any standard level. Because of the price increases and shipments decline, the impact on the prototypical manufacturer's ROE would be to drop from a positive 6.8 percent in the base case to a negative 2.3 percent (a decline of 134 percent-this result includes level 3 for gas dryers as well). This could lead to adverse impacts on competition. Accordingly, the Department believes the burdens of level 3 outweigh the benefits, and rejects this standard level. The next most energy-conserving standard level is standard level 2. After carefully considering the analysis, theDepartment is amending the NAECA

### 22273

imposed 1988 standard for electric clothes dryers with standard level 2. The Department concludes that level 2 standards for electric clothes dryers save a significant amount of energy, are technologically feasible and economically justified. As discussed above, there will be significant energy savings at this level of efficiency. During the period 1993-2015, these savings are calculated to be 0.76 quad of primary energy. Such savings would total more than 5 percent of base

case energy use. In addition, the standards will have a positive effect on the environment. The technologies that are necessary to meet this standard are presently available. The Department finds the level to be economically justified. The

consumer payback of this standard level is 2.5 years for electric clothes dryers. This standard also results in a reduction in LCC of $79. In addition, the standard
will result in an NPV to the nation of $1.292 billion. Additionally, the standard is expected to have a positive impact on, the prototypical manufacturer's ROE, causing an increase from 6.8 percent in the base case to 7.9 percent under this standard. Lastly, by increasing profitability, this standard level could have positive competitive effects. B. Gas Clothes Dryers. Of the standard levels analyzed, level 3 will save the most energy (0.12 quad). The technologies that would be involved in meeting this standard level are temperature or moisture termination, insulation , and recycling of exhaust heat. These technologies are all presently available. The consumer payback of this standard is 21.2 years. At $582, it is at the LCC maximum, and is $33 more expensive than the baseline unit. The standard would increase the purchase price of a gas clothes dryer by $72, or 21 percent, thereby precluding

some consumers from being able to purchase the product. Shipments of gas clothes dryers are expected to decline 1.1 million units (5.1 percent) during 1993-2015. The net present value is a negative $231 million. The prototypical manufacturer's ROE at level 3 would, as noted above, decline from a positive 6.8 percent in the base case to a negative 2.3 percent (which includes the result at level 3 for electric clothes dryers). This could lead to negative competitive impacts. The Department believes that the burdens of this standard level outweigh the benefits and, therefore, rejects standard level 3 for gas clothes dryers. The next most energy-conserving standard level is standard level 2. After

### 22274 Federal Register Vol. 56, No. 93 / Tuesday , May 14,. 1991 / Rules and Regulations

carefully considering the analysis, the Department is amending the NAECA imposed 1988 standard for gas clothes dryers with standard level 2. The Department concludes that level 2 standards for gas clothes dryers save a significant amount of energy, are technologically feasible and economically justified, and that the benefits of the standards outweigh the burdens. As discussed above, there would be significant energy savings at this level of efficiency. During the period 1993-2015, these savings are calculated to be 0.05 quad of primary energy. Such savings would total 4.1 percent of base case

energy use. The technologies that are necessary to meet this standard are presently available. The Department finds the level to be economically justified. The consumer payback of this standard level is 9.3 years. In addition, the standard would result in an NPV to the nation of $9 million. The standard. is expected to have a positive impact on the prototypical manufacturer's ROE, causing a 1.1 percentage point increase (this includes level 2 results for electric dryer production, also). This standard results in a reduction in LCC of $5. The standard, however, is beyond the minimum life-cycle cost point, thereby precluding consumers from purchasing the most cost-effective unit. 

### c. Dishwashers
1. Efficiency Levels Analyzed. Table 4-6 presents the efficiency level's selected for analysis for 1993. Alternate levels were selected to generate a range of impacts for analysis. Initially, the levels were selected for the class of standard dishwasher (115 volt). Level 5 corresponds to the highest efficiency level identified in the engineering analysis. Levels 4 through I correspond to successively lower efficiencies than that of level S. Each level was analyzed discretely in the engineering analysis. Standard levels for the compact class of dishwashers were based on the combination of design options for the standard dishwasher (115 volt).

TABLE 4-6.-ALTERNATIVE EFFICIENCY LEVELS FOR 1993 FOR DISHWASHERS (ENERGY FACTOR=LOADSIKWHIYR.)

Product class

Compact Dishwashers (115V) __.....» ............ ............ _......... Standard Dishwasher (115V)......... _.....

2. Payback Period. Standard level 1 involves efficiencies achievable by reducing the use of hot water from 12.0 to 9.5 gallons per cycle,. which was achieved with an improved food filter,
level 2 involves additional efficiencies achievable with an improved motor; level 3 adds, to level 1. a booster heater that heats 20 percent of the incoming water, level 4 adds, to level 3, an improved motor, and level 5 adds, to level 4, an improved fill control. Table 4-7 presents the payback period for the efficiency levels analyzed for the most prevalent class of product (standard dishwasher (115 volt)). For dishwashers connected to an electric water heater,
all five standard levels meet the rebuttable presumption test in that the payback is less Than three years. For dishwashers connected to gas water heaters, however, only standard levels I and 2 satisfy the rebuttable presumption

test.

TABLE 4-7.-PAYBACK PERIODS (YEARS)

STANDARD D I SHWASHER ( 1 15 VOLTS)

Standard level Payback period

With gas With electric

water water heater il. heater

................... .._.._...... 1.9 0.7 2......._...._._._...__.._...., 26 1.2 3...._......... _.......... ._.._...... 4.2 1.1 4 ........... ................ ........__. 4.3 1.4
5..... .-•--. 5:8 2.0 Baseline.

0.49 0.32

3. Significance of Energy Savings. To estimate the energy savings by the year 2015 due to amended standards, the energy consumption of new dishwashers
sold in the absense of amended standards is compared to amended standards. When revised energy conservation standards are imposed, the LBL-REM projects that over the period 1993-2015, the following savings would
be attributable to the increased
standards: Level 1-0.42 Quad. Level 2.46 Quad. Level 3--0.73 Quad. Level 4-0.87 Quad. Level 5-0.99 Quad. 4. Economic Justification. A. Economic fmpact on Manufacturers and Consumers. The per unit increased cost to manufacturers to meet the level 1 efficiency (improved food filter) is $7.50, while the addition of improved motor efficiency in standard level 2 costs an additional $4.00. Standard level 3 provides efficiencies obtained by substituting for the improved motor a booster heater that heats 20 percent of, the water passing through it; this adds another $6,in manufacturing costs. Standard level 4 adds back an improved motor to standard level 3, adding $4 to manufacturing costs. Lastly, standard level 5. the max tech level, achieves efficiencies obtained by adding an improved fill control to standard level 4: this adds another $8 in manufacturing costs. See Technical Support Document. Table 3.3. 1

0.50 0.38 Level analyzed

2

0.60 0.39 3

0.62

0.45 4

0.63

0:4& 5

0.47

Compared' to the baseline, standard level 1 ,would cause a price increase of $10.80 for a standard dishwasher. Standard level 2 would have a $17.10 higher price, while standard level 3's dishwasher Would be $26 more expensive. Under standard level 4, a dishwasher would be $32.30 more expensive while level 5's price would exceed that of the baseline by $45. See Technical Support Document, Table 6.4. The per unit reductions in annual cost of operation (energy expense) at level I are $12.00 and $5.50 for a standard-sized dishwasher connected to an electric water heater and a gas water heater. respectively; standard level2 would reduce energy expenses by an additional $1.00 and $1.00; standard level 3 by $7.10 and $1.30; standard level 4 by $1.00 and $1.00; and standard level 5 by $1.20 and $0.60. respectively. See Technical Support Document, Table 6A. The LBL-MIM projects manufacturers' long-run ROE to be 6.77 percent for dishwashers in the base case. At level 1. the LBL--MIM predicts that a prototypical dishwasher manufacturer would have an ROE of 6.65 percent.. a decrease of 1.8 percent At level 2, the. manufacturer's ROE is expected to be 6.59 percent, a 2.7 percent decline. At level 3, the LBL-MLM projects that the. prototypical dishwasher manufacturer's ROE would be 6.45 percent, a decrease of 4.7 percent from the base case. The expected ROE for the prototypical manufacturer at level 4 is 6 .51 percent, a decline of 3.8 percent, while the

### Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations 22275

expected ROE at level 5 is 6.74 percent, a decline of only 0.4 percent from the base case. See Technical Support Document, Table 7.9. The Department's characterization of the prototypical manufacturer in the. base case assumes that manufacturers' typical dishwasher designs are based on the combination of options presented in the Engineering Analysis for the baseline unit. If manufacturers use a different combination of design options to produce dishwashers that minimally comply with the 1993 standard, the Department may have inappropriately characterized the financial position of the prototypical manufacturer in the LBL-MTM. Furthermore, since financial data of the type needed to characterize the prototypical manufacturer are generally not available, DOE had to make a number of assumptions based on the limited data publicly available, e.g., Securities and Exchange Commission 10K reports and company annual reports. This approach was originally discussed in the Advance Notice of Proposed Rulemaking (53 FR 17712, May 18,1988), and the. Department did not receive any comments that indicated a change in approach was warranted. B. Life-Cycle Cost and Net Present Value. The LCC analysis indicates that for each possible standard level the increase in purchase price would be offset by savings in operating expenses. Standard level 4 corresponds to the minima of the LCC curves. See Technical Support Document, Table 6.3. This indicates that the standard level would not cause any economic burden on the average consumer. Compared to the base case, standard level 1 would cause reductions in LCC of $87.80 and $34.30 for a standard dishwasher connected to electric and gas-fired water heaters, respectively; standard level 2 would reduce LCC by $59.40 and $24.30, respectively; level 3. would result in decreases of $94.50 and $22.00, respectively; standard level 4 would reduce LCC by $96.50 and $24.00 for dishwashers drawing water from an electric- or gas -fired water heater. respectively. Lastly, standard level 5, the max tech level, would reduce LCC by $92.10 and $15.50, respectively.

While DOE examined the effect of
different discount rates (2, 7, and 15 percent) on the LCC curves and generally found little impact, the Department did not consider higher discount rates, since such rates would be beyond the range of real, after-tax

rates that consumers would likely face in financing the purchases of clothes washers. Similarly, DOE did not consider different energy prices, including regional prices, in the LCC analysis. Since this is to be a national standard, DOE believed the National average energy prices were appropriate. However, DOE did examine the effect of a usage rate different from the 32Z cycles per year set by the DOE test procedure. Recent Procter and Gamble data appear to indicate that the national average clothes washer annual usage rate is 285 cycles per year, more than 11 percent less than the test procedure representative average use cycle. The slightly lower usage numbers result in the lower life-cycle cost estimates that were presented above. See Technical Support Document, section 6.1.1. The NPV analysis indicates that if a standard were adopted at level 1, there would be an NPV of $300 million from energy savings over the period 1993- 2015. At levels 2-5, the corresponding NPV's would be $327 million, $272 . million, $434 million, and $129 million, respectively. See Technical Support Document,. Table 5.6. C. Energy Savings. As discussed above.. DOE concluded that standards, at each candidate standard level, resulted in a significant saving of energy. The cumulative energy savings over the 1993-2015 period would range from 0.42 quad at standard level 1, to .99 quad at standard level 5. See Technical Support Document, Table 5.3. D. Lessening of Utility or Performance of Products. As indicated above,. DOE established classes of products in order to assure that the standards analyzed would not lessen the existing utility or performance of dishwashers. However, there is no assurance that future utility or performance of dishwashers wouldnot be lessened as a result of standardsinduced disincentives to investments in energy-using new features. In addition, the Department believes adoption of any of the design options considered will also not affect utility or performance. E. Impact of Lessening Competition. The determination of this factor was made by the Attorney General in the Justice Department's review of the proposed standards. In that review, which is presented above, DOJ concluded that the proposed standard level for dishwashers would not result in a lessening of competition. (DOJ, No. 38 at 31. DOJ did not, however, evaluate the competitive effects of more stringent standards. F. Need to Save Energy. Dishwashers use electricity as a primary energy source, both for operation of the motors and for the electric coils that are used in the drying cycle. In addition, that portion of water heater electricity consumption that provides hot water to the dishwasher is considered to be indirect dishwasher electricity consumption. Similarly, since some of the hot water that is supplied to dishwashers comes from gas water heaters, dishwashers are responsible for indirect gas consumption, too. As with amended standards on the other two product types in this notice, decreasing future electricity demand as a result of standards on dishwashers will decrease air pollution. See Technical Support Document, Appendix D.10 The greatest decreases in air pollution will occur for sulfur oxides (listed in equivalent weight of sulfur dioxide, or SO2). For standard level 5, in the year 2015, the estimated SO2 reduction would be 15,090 tons. This reduction represents .09 percent of the
United States SO2 emissions that are expected to be emitted by power plants. in that year. Standard level 5 would also result in a
decrease of 12, 490 tons of nitrogen - dioxide (NO2) emissions for the year 2015. This decrease represents.12 percent of the total NO2 emissions expected to be emitted by power plants in that year. Standard level 5 is estimated to reduce United States C02 emissions by about .07 percent for the year 2015.
In 2015, standard level 4 is expected to reduce S02, NO2 and CO2 emissions by .08, .10, and.06 percent, respectively.
Standard level 3 reductions are expected to he .06,.08, and.05 percent for SO2, NO2 and C02, respectively in
2015. In 2015, standard levels 2 and I would each reduce SO2 power plant emissions by .04 percent. NO2 power plant emissions by.05 percent, and U.S. COI emissions by.03 percent.. G. Other Factors. As noted above, one
other factor considered in this rulemaking was the water savings that could result from more efficient dishwashers. 5. Conclusian: As noted above, the Act requires that, in establishing standards, the Department look first at that standard that maximizes- energy savings, i.e., the max tech level of efficiency. For dishwashers, the max tech level is standard level S. Of the standard levels analyzed, level 5 saved the most energy (0.99 quad). In order to meet this standard, DOE assumes that all dishwashers would have booster heaters that allow the consumer to reduce the thermostat setting, on their water heaters to 120 F. If this occurs; the energy savings resulting from the standard are likely to be even greater since the analysis

10 Also see footnote e , above.

### 22276 Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

accounts for only the savings in reduced water heater energy consumption for that water used by the dishwasher, not the total household hot water consumption. The total amount of the savings, however, is unknown since some consumers may elect not to reduce their water heater thermostat setting. In addition, this standard level had the largest positive impact on the environment due to reduced water use, and reduced emissions of CO2, NO2, and
502. The technologies required to meet this standard level are reduced water use, improved motor efficiency, booster heater and improved fill control. Although these technologies are available now in some dishwashers, the last item, improved fill control, requires that the unit be installed levelly to achieve its maximum energy savings. Current product designs allow foroverfill in order to provide for units outof-level. The consumer payback of this standard ranges from 2 years for a dishwasher connected to an electric water heater to 5.9 years for one connected to a gas water heater. The payback for dishwashers connected to gas water heaters is nearly half of the product's 12.6 year average lifetime. While the LCC of level 5 is lower than that of the baseline unit, it is greater than the minimum LCC point, thereby possibly precluding consumers from purchasing the most cost-effective unit. The LCC would be approximately $138 and $32 lower for dishwashers connected to electric water heaters and gas water heaters, respectively. The standards, however, are projected to increase the purchase price of dishwashers approximately 15 percent, thereby precluding some consumers from being able to purchase the product. The sales of dishwashers are expected to decrease by two percent due to standards, or over two million units over the period analyzed. As a result of the decreasing sales, and increase in LCC from the minimum, this standard is expected to have an NPV of $129 million, the lowest of any standard leveL The standard is expected to have minimal impact on the prototypical manufacturer, causing its ROE to decrease by 0.03 percentage points. As stated above, standard level 5 is the max tech level which, by definition, incorporates all of the design options identified to improve energy efficiency. In conducting the engineering analysis, DOE did not make any provisions for tolerances on performance estimates. Given this fact, DOE is concerned about establishing the standard at the max tech level without consideration of a tolerance. If one or more of the design options do not perform exactly as calculated, or if they do not perform as efficiently in concert together as expected, the manufacturers would have no other design options to which to turn. The max tech level therefore becomes a special case that the Department believes can be considered only with allowance for tolerances. Since the analysis did not consider tolerances, DOE believes it must reject level 5, but notes that level 4, which is being selected, requires an energy factor improvement from the baseline which is only 7 percent less than that required by level 5. Thus, level 4, as analyzed without any tolerance, is equivalent, on a performance basis, to level 5 with a 7 percent tolerance. The next most energy-conserving standard level is standard level 4. After carefully considering the analysis, theDepartment is amending the NAECAimposed 1988 standard for dishwasters with standard level 4 for dishwashers. The Department concludes that level 4 standards for dishwashers save a significant amount of energy, are technologically feasible and economically justified.
As discussed above, there would be significant energy savings at this level of efficiency. During the period 1993-2015, these savings are calculated to be 0.87 quad of primary energy. Such savings would total more than 12 percent of base case energy use. In addition, the standard could have a positive effect on the environment by reducing the
emissions of NO2 and SO2 as much as 0.10, and 0.08 percent, respectively, in the year 2015. However, as discussed above, to the extent that SO2 credits will be used, the SO2 reductions will not occur. Furthermore, the standard will reduce emissions of CO2 by 17.864 million tons, or 0.06 percent, over the forecast period. The standard is also expected to reduce water use by more than 200 billion gallons over the forecast period. The technologies that are necessary to meet this standard are presently available. The Department finds the level to be economically justified. The consumer payback of this standard level ranges from 1.4 years for dishwashers connected to electric water heaters to 4.3 years for one connected to a gas water heater. This standard is also at the minimum of the LCC curve, resulting in a reduction in LCC of approximatelay $142 and $39 for dishwashers connected to electric water heaters and gas water heaters, respectively. In addition, the standard would result in an NPV to the nation of $434 million, the largest of any standard level. Lastly, the standard is expected to have only a modest impact on the prototypical manufacturer's ROE, causing a 0.26 percentage point drop.

V. Environmental

, Regulatory Impact, Federalism

, and Regulatory Flexibility Reviews
The Department has reviewed today's proposed action in accordance with the Department's obligations under: • The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 at seq.), the Council on Environmental Quality regulations implementing the procedural provision of NEPA regulations (40 CFR part 1500 et seq.), and the Department's own NEPA regulations (10 CFR part 1021); • Executive Order 12291 (46 FR 13193, February 19, 1981) which pertains to agency review of the impact of Federal regulations; • Executive Order 12612 (52 FR 41685, October 30,1987) which pertains to agency consideration of Federal actions that would have a substantial direct effect on States, on the relationship between the Federal Government and the States, and on the distribution of power and responsibilities among the various levels of government; and • The Regulatory Flexibility Act (5 U.S.C. 601 at. seq.) which requires, in part, that an agency prepare an initial regulatory flexibility analysis for any proposed rule unless it determines that the rule will not have a "significant economic impact on a substantial number of small entities." In the event that such an analysis is not required for a particular rule, the agency must publish a certification and explanation of that determination in the Federal Register.

a. Environmental Review
In issuing the proposed-rule, the Department prepared an Environmental Assessment (EA) (DOE/EA-0386) that was published within the Technical Support Document (DOE/CE-0267, July 1989). The environmental effects associated with various standard levels were found not to be significant, and a Finding of No Significant Impact (FONSI) was published along with the proposed rule. (54 FR 32766, August 9, 1989) In conducting the analysis for the final rule, the Department included and evaluated several design options suggested by comments on the proposed rule. As a result, the energy savings estimates and resulting environmental effects in the final rule differ slightly from those presented in the proposed

### Federal Register / Vol. 56 -No. 93 1 Tuesday, May 14, 1991 1 Rules and Regulations

rule. Nevertheless, most of the environmental effects analyzed for the final rule fall within the range of impacts that were described in the EA that was prepared for the proposed rule. For example, in the year 2010, the savings of sulfur dioxide (SOs), nitrogen dioxide (NO2), and carbon dioxide (C02) from the standard on clothes washers are expected to be 8,449 tons, 6,556 tons , and 730,000 tons, respectively. In the EA, savings of SO2, NO2, and CO2. in 2010 from the clothes washer standards totalled up to 21.598 tons, 15,875 tons , and 1,677 million tons, respectively. Since the FONSI was issued for these larger savings, the final rule's smaller savings can, the Department concludes, also be considered not significant Similarly, in the year 2010, the savings of SO2, NO2 and CO2 from the standard on clothes dryers are expected to be 17,725 tons, 12,200 tons, and 1.157 million tons, respectively. These expected savings are all less than the

amounts reported in the FONSI, wherein the SO2, NO2, and CO2 savings totalled up to 38,230 tons , 25,641 tons, and 2.398 million tons, respectively. The SO2, NO2, and CO2 savings from the dishwasher standard are expected to be 13,867 tons, 10,366 tons and 1.102 million tons, respectively, in 2010. These
environmental effects fall outside the results reported in its FONSI. Nevertheless, they fall within the range of impacts which were discussed in the paragraphs above for clothes washers and clothes dryers, and for which
FONSI' s were issued. . Since all of the environmental effects expected from this final rule fell within ranges of environmental impacts that have been found not to be significant, the Department has concluded that these environmental effects also are not significant. Therefore, the Department has determined that an Environmental Impact Statement (EIS) was not required. Nevertheless, as noted above, the environmental effects were considered in selecting the final standards for these appliances.
b. Regulatory Impact Review
Executive Order 12291 (46 FR 13193. February 19, 1981) directs that, in proposing a major rule," an agency

""Major rule" means any regulation that is likely to result in: (1) An annual effect on the economy of $100 million or more; (2) A major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencier. or geographic regions; or (3) Significant adverse effects on competition

, employment

. investment, productivity, innovation. or on the ability of United
Stotea

-based enterprises to compete with foraignhased enterprises in domestic or export markets. perform a regulatory analysis. Such an analysis presents major alternatives to the regulation that could substantially achieve the same regulatory goal at lower cost, as well as a description of the costs and benefits (including potential net benefits) of the proposed rule.
DOE has determined that this proposed rule is a "major rule." Accordingly, a Final Regulatory Impact Review has been prepared and submitted to the Office of Management and Budget (OMB). OMB has reviewed the Regulatory Analysis under Executive Order 12291. The Regulatory Analysis is summarized below. This summary focuses on the major alternatives considered in arriving at the proposed approach to improving the energy efficiency of consumer products. The reader is referred to the complete draft "Regulatory Impact Analysis," which is contained in the TSD, available as indicated at the beginning of this notice. It consists of: (1) A statement of the problem addressed by this regulation, and the mandate for governm ent action; (2) a description and analysis of the feasible policy alternatives to this regulation; (3) a quantitative comparison of the impacts of the alternatives; and (4) the economic impact of the proposed standard. It should be noted at the outset that none of the alteratives that were examined for these three products saved as much energy as the proposed rule. Also, most of the alternatives would require that enabling legislation be enacted, since authority to carry out those alternatives does not presently exist. Alternatives for Achieving Consumer Product Energy Conservation Six major alternatives were identified by DOE as representing feasible policy alternatives for achieving consumer product energy efficiency. These alternatives include. • No New Regulatory Action.
• Informational Action. -Product labeling -Consumer education • Prescriptive Standards- • Financial Incentives,
-Tax credits -Rebates • Voluntary Energy Efficiency Targets. • The Proposed Approach (Performance Standards). Each alternative has been evaluated in terms of its ability to achieve significant energy savings at reasonable costs, and has been compared to the effectiveness of the final rule. 

### 22277

If no new regulatory action were taken, then no new standards would be Implemented for dishwashers, clotheswashers, and clothes dryers. This isessentially the "base case" for each appliance. In this case, between the years 1993 and 2015 there would be expected energy use of 34.18 Quads of primary energy, with no energy savings and a zero net present value.
Several alternatives to the base case can be grouped under the heading of informational action. They include consumer product labeling and DOE's public education and information program. Both of these alternatives are mandated by the Act. One base case alternative would be to estimate the energy conservation potential of enhancing these programs. To model this possibility, the Department assumed that market discount rates wouldbe lowered by five percent for purchasers of these three products. This resulted in

energy savings equal to.01 Quad, with expected consumption equal to 34.18 Quads. The net present value is estimated to be $10 million. Another method of setting standards would entail requiring that certain design options be used on each product, i.e., prescriptive standards. For these three products, prescriptive standards are assumed to be implemented as standards at one level below the performance standards, with the exception of clothes washers which are already at standard level 1. For example; prescriptive dishwasher standards are assumed to be at standard level 3 instead of level 4 as in the performance standards. The lower standards level entails slightly smaller expenditures for tooling and purchased parts. Consequently, the economic impacts that are expected before the implementation date should be slightly smaller for prescriptive standards. This resulted in energy consumption, between 1993 and 2015, of 32.14 Quads, and say: ings of 2.04 Quads. The net present value, in 1987 dollar's, was $212
billion. Various financial incentive falter natives were tested. These included tax credits and rebates to consumers, as well as tax credits to manufacturers. The tax credits to consumers were assumed to be 15 percent of the increased expense for higher energy efficiency features of these appliances, while the rebates were assumed to be 15 percent of the increase in equipment prices. The tax credits to consumers showed a modest change from the base case, saving .24 Quad with a net present value of $720 million. Consumer rebates showed more sizable changes; they

### 22278 Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

would save 1.16 Quads with a net the relationship between the Federal present value of $1.86 billion.- Government and the States, or on the Another financlal'incentive that was distribution of power and - considered was tax credits to responsibilities among various levels of manufacturers for the production of government. If there are sufficient energy-efficient dishwashers, clothes substantial direct effects, then Executive washers, and clothes dryers. In this Order 12612 requires preparation of a scenario, an investment tax credit (ITC) federalism assessment to be used in all of 20 percent was assumed. The tax decisions involved in promulgating and credits to manufacturers had almost no implementing a regulation or a rule. effect; the energy consumption estimates The Department finds that today's are 34.19 Quads with savings equal to final rule will not have a substantial -.01 Quad, and a net present value direct effect on State governments. State equal to $220 million. regulations that may have existed on

### The'impact of this scenario is so small these three products were preempted bybecause the ITC was applicable only to the Federal standards established in the tooling and machinery costs of the NAECA. States could petition the firms, i.e., the firms' fixed costs, and Department for exemption from such most of the design improvements that preemption, and none have done so. would likely be adopted to manufacture Today's final rule has no added effect more efficient versions of these products on States. Thus, based on the foregoing, would involve purchased parts. the Department finds that the Expenses for purchased parts would not preparation of a federalism assessment be eligible for an ITC. for this rulemaking is not warranted. Two scenarios of voluntary energy The Act provides for subsequent State efficiency targets were examined; in the petitions for exemption from
first one, the proposed energy preemption, which necessarily means conservation standards were assumed that the determination as to whether a to be voluntarily adopted by all the State law prevails must be made on a
relevant manufacturers in five years, case-by-case basis using criteria set and, in the second scenario, the forth in the Act. When DOE receives proposed standards were assumed to be adopted in 10 years. In these scenarios, such a petition , it. will be appropriate to

would result in consider preparing a federalism the five ear del y ay energy consumption by these appliances
of 32.62 Quads

, energy savings of 1.56 assessment consistent with the criteria in the Act.
Quads, and a net present value of $860 d RegulatwyFlexibilityReview million; the 10 year delay would result in 33.28 Quads of energy being consumed, Regulatory Flexibility Act of 1980

, 0.90 Quad being saved, and a net (Pub. L. 96-354) requires an assessment present value of $530 million. of the impact of regulations on small

These scenarios assume that there businesses. Small businesses are would be universal voluntary adoption defined as those firms within an of the energy conservation standards by industry that are privately owned and these appliance manufacturers, an less dominant in the market. assumption for which there is no In this rulemaking, three different reasonable assurance. products and, hence, industries are Lastly, all of these alternatives must being addressed. Regulatory flexibility be gauged against the performance issues will be discussed for the standards that are being proposed in dishwasher, clothes washer, and clothes this notice. Such performance standards dryer industries for which standards are would result in energy consumption of being prescribed. dishwashers, clothes washers, and First, the energy conservation clothes dryers to total an estimated 31.92 Quads of primary energy over the 1993-2015 time period. Savings would be 2.26 Quads, and the net present value would be an expected $2.26 billion. As noted at the beginning of this section, none of the alternatives that were considered for these products would save as much energy as the proposed rule.

c. Federalism Review - standard on those dishwasher manufacturers who could be considered small businesses will be discussed. Dishwasher manufacturing firms can be divided into two groups: Those that compete on large sales-volume products and those that compete in small, specialized markets. Small firms are generally forced to specialize in small market niches that offer some protection from the cost advantage that large firms hold when they can produce in volume. Executive Order 12612 (52 FR 41685, This effect can even be observed among October 30,1987) requires that the major producers in the tendency of regulations or rules be reviewed by any the smaller major producers to produce substantial direct effects on States, on somewhat more specialized products. There are significant differences among the major firms. As the Department learned from discussions with industry consultants, average cost has an inverse relationship to firm size. Thus, the industry. has economies of scale, and large firms (to the extent that their facilities are up-to-date) have lower average costs than small firms. This fact, coupled with increasing competitiveness of the national and international markets, probably accounts for the continuing consolidation that has been occurring for several decades. The fact that the consolidation has been producing larger firms strongly corroborates the finding that large firms have a cost advantage. A principal implication of consolidation is that the smaller of the firms will be, on average

, in more danger of failing or being bought out than will the large firms. Because of the greater precariousness of smaller firms, any decrease in average profitability is more likely to damage seriously a smaller firm, and an increase in average profitability, is more likely to mean the difference between success and failure for a smaller firm. From the point of view of competitiveness, a decrease in average profitability could speed up the process of consolidation, producing a less competitive industry, while an increase in average profitability could help maintain the current levels of competition. Either effect might well be temporary , because, in the long run, the number of firms should be determined by the industry's cost structure and by the way a single firm's elasticity of demand relates to the number of competing firms. Although larger firms have a cost advantage due to economies of scale, the very small firms in the dishwasher manufacturing industry have found market niches in which to survive profitably. The small firms sell dishwashers primarily to the replacement and kitchen remodel markets, which tend to offer higher profit margins than does the builder market. As a. result, it is possible, according to industry consultants, that small firms would have an easier time passing through increased variable costs that result from the standard, and thus may be affected more positively than the large firms. Second, the impact of the energy conservation standard on clothes washer manufacturers needs to be addressed. The standard is an efficiency 

### level that was achieved by the elimination of a warm rinse option. For those manufacturers who choose to

### Federal Register / Vol. 56, No. 93 / Tuesday, May 14, 1991 / Rules and Regulations

meet the standard by eliminating that option, there will be essentially a zero cost increase resulting from the
standard. Finally, the impact of the energy conservation standards on clothes dryer manufacturers needs to be addressed. The LBL-MJM indicates, through its prediction of an increase in typical ROE, that the proposed standards are likely to slow down the consolidation process temporarily. This would lead to a temporary slowing down of the continuing decrease in this industry's competitiveness. However, this prediction would be tempered by the observation that if standards were technologically difficult to meet, they could hurt some smaller firms the most. since smaller firms tend to have less sophisticated research and development capabilities. This is not a eignifir-, issue since tl,' os ru1ard levels on nin+t s aryers will not be technologically difficult to meet. In view of the foregoing, the Department has determined and hereby certifies pursuant to section 605(b) of the Regulatory Flexibility Act that today's action will not have a "significant economic impact on a substantial number of small entities." In conclusion, for each of these three industries, the Department finds that the standard levels prescribed in today's Final Rul^ will not "have a significant economic impact or. a substantial number of small entities," and it is not necessary to prepare a regulatory flexibility analysis.
List of Subject:, in 10 CFR Part 430 Administrative practice and procedure, Energy conservation, Household appliances. 

### 22279

In consideration of the foregoing, part 

### (2) Clothes washers manufactured on 430 of chapter II of Title 10, Code of or after May 14,1994, shall have an Federal Regulations, is amended as set energy factor no less than: 

### forth below.
Issued in Washington, DC, April 25, 1991. Energy factor (Cu Product class . /Kwh/cycle) ft J. Michael Davis, . Assistant Secretary, Conservation and Renewable Eneby.



### PART 430-ENERGY CONSERVATION PROGRAM F OR CONSUMER PRODUCTS

1. The authority citation for Part 430 is revised to read as follows:
A 'horityy: 42 U.S.C. 8291-5309. _...a section 43U.12, paragraphs (f), (g) and (h) are revised to read as follows:

§ 430.32 Energy conservation standards and effective dates. 

### * * * * (f) Dishwashers. (1) Dishwashers manufactured between January 1, 1988, and May 14, 1994 shall be equipped with an option to dry without heat. (2) Dishwashers manufactured on or after May 14,1994, shall have an energy factor no less than:

Product class

I. Compact Dishwasher (less than 22 Inches in exterior width)........... ii. Standard Dishwasher (equal to or greater than 22 Inches in exterior width) ................................. Energy factor (cycles/KWh)

0.62

0.46



### (g) Clothes washers. (1) Clothes washers manufactured between January 1, 1988, and May 14, 1994, shall include 

### an unheated rinse water option. I. Top Loading, Compact(less than 1.6 fL3 capacity). ii. Top Loading, Standard(1.6 ft.' or greater capacity).iii. Top Loading, Semi-Automatic. iv. Front Loading ...................... v. Suds saving .......................... 0.90.

1.18.

Not Applicable.'

Not Applicable.' Not Applicable.'

' These classes shall have an unheated rinse water option.



### * * *
(h) Clothes dryers. (1) Gas clothes dryers manufactured between January 1, 1988, and May 14,1994, shall not be equipped with a constant burning pilot. (2) Clothes dryers manufactured on or after May 14, 1994, shall have an energy factor no less than;

Product class

i. Electric, Standard (4.4 ft 3 or greater capacity) ................................................... ii. Electric, Compact (120v) (less than 4.4 ft a capacity) ...................................... Iii. Electric, 'Compact (240v) (less than 4.4 ft 3 capacity) ...................................... iv. Gas ..........................................................

* * * * *

[FR Doc. 91-10285 Filed 5-13-91; 8:45 am]

BILLING CODE 6450-01-M Energy factor (lbs/ KWh)

3.01

3.13

2.90
2.67