FINAL RULE TECHNICAL SUPPORT DOCUMENT (TSD):

ENERGY EFFICIENCY STANDARDS FOR CONSUMER

PRODUCTS: CLOTHES WASHERS

Including:

Environmental Assessment

Regulatory Impact Analysis

December 2000

U.S. Department of Energy

Assistant Secretary,

Energy Efficiency & Renewable Energy

Office of Building Research and Standards

Washington, DC 20585

EE-RM-PET-100 COMMENT 88
This document was prepared for the Department of Energy

by staff members of the

Lawrence Berkeley National Laboratory

and

Arthur D. Little, Inc.

EE-RM-PET-100 COMMENT 88
TABLE OF CONTENTS

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CHAPTER 1. INTRODUCTION

1.1 OVERVIEW 1-1

1.2 STRUCTURE OF THE DOCUMENT 1-2

CHAPTER 2. ANALYTICAL FRAMEWORK

2.1 BACKGROUND 2-2

2.2 MARKET AND TECHNOLOGY ASSESSMENT 2-2

2.2.1 Market Assessment 2-2

2.2.2 Technology Assessment 2-4

2.2.3 Base Case Shipments Forecast 2-4

2.3 SCREENING ANALYSIS 2-4

2.3.1 Product Classes 2-4

2.3.2 Baseline Units 2-4

2.3.3 Design Options/Efficiency Levels 2-5

2.3.4 Proprietary Designs 2-5

2.4 ENGINEERING ANALYSIS 2-5

2.4.1 Energy Savings Potential and Manufacturing Costs 2-5

2.5 LIFE-CYCLE COST (LCC) AND PAYBACK ANALYSES 2-6

2.5.1 LCC Spreadsheet Model 2-7

2.5.2 Price 2-7

2.5.2.1 Retail Price 2-7

2.6 NATIONAL IMPACTS ANALYSIS 2-8

2.6.1 National Energy Savings (NES) Spreadsheet Model 2-8

2.6.2 Shipments 2-9

2.6.3 Net National Employment Impacts 2-9

2.7 CONSUMER ANALYSIS 2-9

2.7.1 Purchase Price Increases 2-10

2.7.2 Consumer Participation 2-10

2.8 MANUFACTURER IMPACT ANALYSIS 2-10

2.8.1 Industry Cash Flow 2-11

2.8.2 Manufacturer Sub-Group Analysis 2-12

2.8.3 Interview Process 2-12

2.9 COMPETITIVE IMPACT ASSESSMENT 2-13

2.10 UTILITY ANALYSIS 2-13

2.11 ENVIRONMENTAL ASSESSMENT 2-15

2.12 REGULATORY IMPACT ANALYSIS 2-15

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EE-RM-PET-100 COMMENT 88
CHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

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3.1 INTRODUCTION 3-1

3.2 PRODUCT CLASSES 3-1

3.3 MANUFACTURERS AND MARKET SHARES 3-1

3.4 HISTORICAL SHIPMENTS 3-2

3.5 RETAILERS 3.5

3.6 PRICE DISTRIBUTION 3-6

3.7 PRODUCT CHARACTERISTICS 3-9

3.8 MARKET SATURATION 3-12

3.9 VOLUNTARY PROGRAMS (TO INCREASE WASHER EFFICIENCY /

PROMOTE HORIZONTAL AXIS MACHINES) 3-13

3.10 FUELUSE 3-13

3.11. INDUSTRY COST STRUCTURE 3-15

3.12 INVENTORY LEVELS AND CAPACITY UTILIZATION RATES 3-17

3.13 TECHNOLOGY ASSESSMENT 3-18

3.14 ENERGY EFFICIENCY 3-18

3.15 DETERMINING MEF VALUES FOR VERTICAL AXIS COMPACT CLOTHES

WASHERS 3-19

CHAPTER 4. ENGINEERING ANALYSIS

4.1 INTRODUCTION 4-1

4.2 PRODUCT CLASSES 4-1

4.3 BASELINE UNIT 4-1

4.4 COST-EFFICIENCY DATA COLLECTION 4-2

4.4.1 Characterizing Uncertainty 4-2

4.4.2 Variability in Costs between Manufacturers 4-3

4.4.3 Manufacturer Assumptions for Supplying Data 4-3

4.5 DATA AGGREGATION 4-5

CHAPTER 5. MANUFACTURING COST ASSESSMENT

5.1 PROGRAM OBJECTIVES 5-1

5.2 MANUFACTURING COST ESTIMATES AND ASSUMPTIONS 5-1

5.3 COST STRUCTURE OF THE SPREADSHEET MODEL 5-4

5.4 RESULTS FROM THE ANALYSIS 5-8

5.4.1 Results for High-Volume Manufacturers 5-8

5.4.2 Results for Low-Volume Manufacturers 5-12

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EE-RM-PET-100 COMMENT 88
CHAPTER 6. MARK-UPS FOR PRICE DETERMINATION

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6.1 OVERVIEW 6-1

6.2 RETAIL MARK-UPS 6-2

6.2.1 Background 6-2

6.2.2 Retail Price Information 6-3

6.2.2.1 Consumer Expenditure Surveys (CBS) 6-3

6.2.2.2 Dealerscope Merchandising Statistical and Marketing Reports 6-4

6.2.2.3 ELCAP Clothes Washer Sales Information 6-5

6.2.3 Manufacturer Price Information 6-5

6.2.3.1 Current Industrial Reports (CIR) 6-5

6.2.3.2 AHAM Fact Book 6-6

6.2.4 Retail Mark-ups from Manufacturer and Retail Price Information 6-6

6.2.5 Retail Mark-ups Estimated from Sec's Financial Statements 6-8

6.3 SALES TAX 6-10

6.4 MANUFACTURER MARK-UPS 6-10

6.4.1 Background 6-10

6.4.2 Manufacturer Price and Mark-up for the Baseline Standard Clothes Washer

6-11

6.4.3 Manufacturer Price and Mark-ups for Different Efficiency Levels 6-12

6.4.3.1 Pre-ANOPR Analysis 6-12

6.4.3.2NOPRAnalysis 6-12

CHAPTER 7. LIFE-CYCLE COSTS AND PAYBACK PERIOD

7.1 INTRODUCTION 7-1

7.1 .1 General Approach for LCC and Distribution PBP 7-1

7.2 LIFE-CYCLE COST (LCC) 7-2

7.2.1 Definition 7-2

7.2.2 LCC Inputs 7-2

7.2.2.1 Purchase Expense 7-3

7.2.2.2 Lifetime 7-4

7.2.2.3 Cycles Per Year 7-5

7.2.2.4 Energy Per Cycle 7-6

7.2.2.5 Electricity Marginal Prices 7-7

7.2.2.6 Gas Marginal Prices 7-li

7.2.2.7 Oil Prices 7-14

7.2.2.8 LPG (propane) Prices 7-15

7.2.2.9 WaterPer Cycle 7-16

7.2.2.10 Water and Wastewater Removal Prices 7-17

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EE-RM-PET-100 COMMENT 88
7.2.2.11 Discount Rate . 7-21

7.2.2.12 Fuel Use of Water Heater and Clothes Dryer ............. 7-24

7.2.2.13 Year to Start Date ................................... 7-25

7.2.2.14 Base Case Design ................................... 7-25

7.2.2.15 Standard Case Design ............................... 7-25

7.2.3 LCC Results ................................................... 7-25

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7.3 DISTRIBUTION PAYBACK PERIOD 7-34

7.3.1 Metric 7-34

7.3.2 Inputs 7-34

7.3.3 Results 7-35

7.4 REBUTTABLE PBP 7-39

7.4.1 Metric 7-39

7.4.2 Inputs 7-40

7.4.3 Preliminary Results 7-41

7.5 USER iNSTRUCTIONS FOR SPREADSHEET 7-42

7.5.1 What does the Life-Cycle Cost (LCC) Spreadsheet Do7 7-42

7.5.2 What are the Worksheets in the Workbook7 7-42

7.5.3 How Does the User Operate the Spreadsheet9 7-43

7.5.4 What Is the Lcc (Sample Calculation) Sheet Used For9 7-44

7.5.5 How Does the User Run the Crystal Ball Simulation?

(LCC Distribution Sheet) 7-44

7.5.6 What Kind of Output Does Crystal Ball Generate7 7-45

CHAPTER 8. CONSUMER ANALYSIS

8.1 INTRODUCTION TO CONSUMER ISSUES 8-1

8.2 FOCUS GROUPS AND CONJOINT ANALYSIS 8-2

8.2.1 Results of Focus Groups and Conjoint Analysis 8-2

8.3 CONSUMER SUB-GROUP ANALYSIS 8-3

8.3.1 Life-Cycle Cost & Payback Results for Subgroups 8-3

8.3.2 Data Used in the Consumer Subgroup Analysis 8-9

CHAPTER 9. CLOTHES WASHER SHIPMENTS MODEL: REVISED MODEL

9.1 OVERVIEW 9-1

9.1.1 Definition of Market Segments and Ownership Categories in the

Shipments Model 9-1

9.1.2 Recent Enhancements of Shipments Model 9-5

9.1.3 Review of Other Published Research 9-6

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EE-RM-PET-100 COMMENT 88
9.2 METHOD . 9-7

9.2.1 Definitions .................................................... . 9-7

9.2.1.1 Stock .................................................. . 9-7

9.2.1.2 Events .................................................. . 9-7

9.2.1.3 Decisions ............................................... . 9-7

9.2.2 Purchases from New Housing and Housing Moves ..................... . 9-8

9.2.2.1 Definition ............................................... . 9-8

9.2.2.2 Approach ............................................... . 9-9

9.2.2.3 Current Assumptions ...................................... . 9-9

9.2.3 Existing Housing with Regular Washers ............................. 9-10

9.2.3.1 Definition ............................................... 9-10

9.2.3.2 Approach ............................................... 9-10

9.2.3.3 Current Assumptions ...................................... 9-14

9.2.4 Households without Clothes Washers ............................... 9-15

9.2.4.1 Definition ............................................... 9-15

9.2.4.2 Approach ............................................... 9-15

9.2.4.3 Current Assumptions ...................................... 9-17

9.2.5 Households with Extended-Life Washers ............................ 9-17

9.2.5.1 Definition ............................................... 9-17

9.2.5.2 Approach ............................................... 9-17

9.2.6 Accounting Equations ........................................... 9-19

9.3 MODEL ............................................................ 9-22

9.3.1 Logit Probability of Purchase Model ................................ 9-23

9.3.1.1 Logit Equation ........................................... 9-23

9.3.1.2 Utility Coefficients and Elasticity ............................ 9-24

9.3.2 Clothes Washer Consumer Analysis ................................ 9-26

9.3.3 Stated vs. Revealed Preferences .................................... 9-26

9.3.4 Determination of Decision Sensitivities ............................. 9-27

9.3.4.1 Savings/Operating Cost Sensitivity ........................... 9-28

9.3.4.2 Features Sensitivity ....................................... 9-29

9.3.5 Calibration of Shipments Model ................................... 9-30

9.3.6 Range of Shipments Model Forecasts ............................... 9-32

9.4 RESULTS .......................................................... 9-33

9.4.1 Sales impacts of Standards-Induced price changes ..................... 9-35

9.4.1.1 New Clothes Washers ..................................... 9-35

9.4.1.2 Used Clothes Washers ..................................... 9-36

9.4.2 Impacts on Mean Age of Washers, Used Market, and Washer Repairs

9.5 CONCLUSIONS ..................................................... 9-37

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CHAPTER 10. NATIONAL ENERGY IMPACTS AND REGULATORY IMPACT

ESTIMATES

10.1 iNTRODUCTION 10-1

10.1.1 Methodology and Definitions 10-1

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EE-RM-PET-100 COMMENT 88
10.2 NATIONAL ENERGY/WATER SAVINGS (NES) . 10-2

10.2.1 Definition .. .................................................. . 10-2

10.2.2 NES Inputs . .................................................. . 10-3

10.2.2.1 Annual Energy Consumption (AEC) ................... . 10-4

10.2.2.2 National Energy Savings (NES) ....................... . 10-4

10.2.2.3 Source Conversion Factor (srcconv) .................. . 10-5

10.2.2.4 Stock of Clothes Washers by Vintage (STOCKV) ......... . 10-6

10.2.2.5 Cycles per Year (ncycie) .............................. . 10-6

10.2.2.6 Energy per Cycle (UEC) ............................ . 10-6

10.2.2.7 Annual Water Consumption (AWC) ................... . 10-9

10.2.2.8 Water per Cycle (UWC) ............................ . 10-9

10.2.2.8 Clothes Washer Shipments .......................... 10-10

10.2.2.10 Voluntary Programs ................................ 10-10

10.3 NET PRESENT VALUE (NPV) ........................................ 10-11

10.3.1 NPVMetric .................................................. 10-11

10.3.2 NPVlnputs . .................................................. 10-12

10.3.2.1 Discount Factor ................................... 10-12

10.3.2.2 Present Value of Costs (PVC) ........................ 10-12

10.3.2.3 Present Value of Savings (PVS) ...................... 10-13

10.3.2.4 Net Equipment Cost ................................ 10-13

10.3.2.5 Total Operating Cost Savings ........................ 10-14

10.4 OUTPUT FOR NES & NPV ........................................... 10-14

10.4.1 Assumptions .................................................. 10-15

10.4.2 Base Case Shipments ........................................... 10-15

10.4.3 National Energy Savings and Net Present Value from Possible Standards .. 10-15

10.5 USER INSTRUCTIONS FOR NES/SHIPMENTS SPREADSHEET ........... 10-18

10.5.1 BASIC OPERATING INSTRUCTIONS ............................ 10-18

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CHAPTER 11. MANUFACTURER IMPACT ANALYSIS

11 .1 MANUFACTURER IMPACT ANALYSIS METHODOLOGY 11-1

11.1.1 Phase 1: Industry Profile 11-1

11.1.2 Phase 2: Preliminary Industry Cash Flow Analysis 11-2

11.1.3 Phase 3: Sub-Group Impact Analysis 11-2

11.1.4 Small Manufacturer Sub-Group 11-3

11.2 INPUTS TO THE GRIM 11-4

11.2.1 Overview of GRIM Spreadsheet 11-4

11.2.2 Financial Inputs to the GRIM 11-6

11.2.2.1 Tax Rate 11-7

11.2.2.2 WorkingCapital 11-7

11.2.2.3 Selling, General and Administration (SG&A) 11-8

11.2.2.4 Research and Development (R&D) 11-8

11.2.2.5 Depreciation 11-9

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EE-RM-PET-100 COMMENT 88
11.2.2.6 CapitalExpenditures . 11-10

11.2.2.7 Cost of Capital/Discount Rate ........................ 11-10

11.2.3 GRIM Shipments .............................................. 11-15

11.2.3.1 Impact of New Energy-Efficiency Standards for Clothes

Washers on Export Sales ............................ 11-24

11.2.4 Manufacturing Costs ........................................... 11-25

11.2.4.1 Baseline Industry Cost Structure ...................... 11-25

11.3 IMPACTS ON CASH FLOW .......................................... 11-27

11.3.1 Base Case NPV ............................................... 11-27

11.3.2 Standard Case NPV ............................................ 11-28

11.3.2.1 Impact of Standards on Manufacturer Prices and Profit

Margins ................................... 11-28

11.3.2.2 Impact of New Energy-Efficiency Standards on Manufacturing

Costs ...................................... 11-29

11.3.2.3 Definition of Business Scenarios ...................... 11-31

11.3.2.4 "No Consolidation" Scenario ......................... 11-31

11.3.2.5 Consolidation Scenario ............................. 11-34

11.4 IMPACT ON CLOTHES DRYER BUSINESS ............................ 11-36

11.4.1 Dryer Employment Impacts ...................................... 11-39

11.5 CLOTHES WASHER REPAIR INDUSTRY ANALYSIS .................... 11-41

11.5.1 KeyAssumptions .............................................. 11-41

11.5.2 Impact of New Energy Efficiency Standards on the Repair Industry ...... 11-42

11.6 IMPACTS ON MANUFACTURING CAPACITY .......................... 11-45

11.6.1 Manufacturing Facilities ........................................ 11-45

11.6.2 The Impact of New Energy Efficiency Standards on the Production

Facility Mix .................................................. 11-45

11.6.3 The Impact of New Energy Efficiency Standards on Capacity Utilization and

Manufacturing Assets Levels at Domestic Production Facilities ......... 11-47

11.6.3.1 Assumption 1: Capital Structure (% of Revenue) Remains

Unchanged ................................. 11-48

11.6.3.2 Assumption 2: The Per Unit Clothes Washer Capital

Requirements Are Unchanged .................. 11-49

11.7 IMPACT OF THE EFFECTIVE DATE ON NEW STANDARD .............. 11-50

11.7.1 The Impact of a Delay in the Effective Date on Cash Flow .............. 11-51

11.7.1.1 Discounting ...................................... 11-51

11.7.1.2 Ordinary Capital Expenditures Assumption ............. 11-51

11.7.1.3 R&D Assumption .................................. 11-52

11.7.2 The Impact of a Delay in Effective Date on Dryer and Clothes Washer

Repair Businesses ............................................. 11-53

11.8 IMPACT ON SMALL MANUFACTURERS .............................. 11-53

11.8.1 Introduction .................................................. 11-53

11.8.2 Small Manufacturer Modeling Approach ........................... 11-55

11.8.2.1 Price Assumption .................................. 11-55

11.8.2.2 ShipmentsAssumption ............................. 11-56

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EE-RM-PET-100 COMMENT 88
11.8.2.3 Product Conversion Cost Assumption .................. 11-56

11.8.2.4 Capital Investment Assumption ....................... 11-56

11.8.2.5 Summary of Key Assumptions ....................... 11-57

11.8.3 Summary of Results ............................................ 11-58

11.8.4 Other Impacts ................................................. 11-59

11.9 EMPLOYMENT IMPACTS ........................................... 11-59

11.9.1 Impact on Workforce Skills Required Under New Energy Efficiency

Standards .................................................... 11-63

11.10 CUMULATIVE REGULATORY BURDEN .............................. 11-63

11.10.1 Regulations on Other Products Produced by Clothes Washer

Manufacturers ............................................. 11-63

11.10.2 Other Regulations .......................................... 11-66

11.11 IMPACT ON SUPPLIERS ............................................ 11-66

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CHAPTER 12. UTILITY IMPACTS ANALYSIS

12.1 SUMMARY 12-1

12.2 PURPOSE OF THE ANALYSIS 12-1

12.3 ASSUMPTIONS 12-2

12.4 METHODS 12-3

12.5 RESULTS 12-4

CHAPTER 13. NET NATIONAL EMPLOYMENT

13.1 NET NATIONAL EMPLOYMENT 13-1

13.2 iNPUTS TO NET NATIONAL EMPLOYMENT SPREADSHEET 13-5

APPENDICES

APPENDIX A. CLOTHES WASHER MANUFACTURERS

APPENDIX B. COMPACT MEF VALUES

B.1 iNTRODUCTION B-i

B.2 BACKGROUND B-i

B.3 INSTRUCTIONS FOR TEST PROCEDURE SPREADSHEET

{Compact_MEFvalue.xls] B-2

B.4 DEFiNITIONS B-3

B.5 SAMPLE RESULTS FOR DETERMINING MEF VALUES B-4

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EE-RM-PET-100 COMMENT 88
APPENDIX C. DEVELOPMENT OF A STANDARDIZED ENERGY TEST CLOTH

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APPENDIX D. MANUFACTURING COST ASSESSMENT - BILL OF MATERIALS

D.l BILL OF MATERIALS (BOM) D-l

D.2 FABRICATION PROCESSES D-3

D.2.i Assembly Processes D-5

APPENDIX E. APPROACH FOR UNCERTAINTY AND VARIABILITY

E.l INTRODUCTION E-l

E.2 UNCERTAINTY E-l

E.3 VARIABILITY E-l

E.4 APPROACHES TO UNCERTAINTY AND VARIABILITY E-2

APPENDIX F. WATER AND WASTEWATER PRICES

F.l SOURCE OF INFORMATION F-i

F.2 METHOD TO DETERMINE HISTORICAL WATER AND WASTEWATER

PRICE TREND F-4

F.3 IMPLEMENTATION INTO LCC SPREADSHEET F-4

APPENDIX G. LIFE-CYCLE-COST RESULTS

G.1 LIFE-CYCLE-COST RESULTS G-1

APPENDIX H. PAYBACK PERIOD RESULTS

H.1 PAYBACK PERIOD RESULTS H-i

APPENDIX I. CONSUMER RESEARCH REPORT

1.1 INTRODUCTION 1-2

1.2 SOURCES OF INFORMATION 1-2

1.3 SOURCES AND PROJECTS 1-2

1.3.1 Major Studies by Consortiums 1-2

1.3.1.2 THELMA (The High-Efficiency Laundry

Metering & Marketing Analysis Project) 1-2

1.3.1.3 THELMA Task 2.1 Final Report 1-3

1.3.1.4 THELMATask2.3 Draft 1.5

I..3.1.5 THELMA Task 4 Draft 1-7

1.3.1.6 THELMA, Final Report 1-8

1.3.2 Bern / Kansas Study 1-9

1.3.3 WashWise I-li

1.3.4 Northeast Energy Efficiency Partnership (NEEP) 1-14

1.4 INDIVIDUAL UTILITY DEMAND SIDE MANAGEMENT/MARKET

TRANSFORMATION PROGRAMS 1-15

1.4.1 Pacific Gas & Electric (PG&E) - Utility Survey 1-15

1.4.2 Commonwealth Electric - Utility Survey 1-15

1.4.3 Consumer Publications 1-16

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EE-RM-PET-100 COMMENT 88
1.4.3.1 Consumer Reports/Consumers Union . 1-16

1.4.3.2 Consumer New Zealand publication ............ 1-16

1.4.3.3 Choice - (Australian Consumer Magazine) ........ 1-17

1.5 TRADE ORGANIZATIONS .................................. 1-17

1.5.1 The Soap and Detergent Association (SDA) .............. 1-17

1.5.2 Arthur D. Little (ADL) Report on behalf of AHAM, 1991 1-18

1.5.3 EPRI (Electric Power Research Institute) Journal .......... 1-19

1.5.4 Fort Hood Demonstration Study (metering study) .......... 1-20

1.6 GOVERNMENT PROJECTS ................................. 1-20

1.6.1 Energy Star Program ................................ 1-20

1.6.2 Commercial Laundry Field Study ...................... 1-21

1.6.3 MacDill Air Force Base .............................. 1-22

1.6.4 Fort Hood Demonstration Study (metering study) .......... 1-23

1.6.5 Fort Hood Government Procurement (DOD) ............. 1-23

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APPENDIX J. CLOTHES WASHER CONSUMER ANALYSIS

J.l EXECUTIVE SUMMARY J-1

J.2 FOCUS GROUPS J-l

J.3 CONJOINT ANALYSIS J-2

J.4 RESULTS J-2

J.5 CONCLUSIONS J-3

J.6 METHODOLOGY J-5

J.6. 1 Introduction J-5

J.6.2 Focus Groups J-6

J.6.3 Conjoint Analysis J-6

J.6.4 Summary J-16

J.7 FOCUS GROUP RESULTS J-16

J.7.l Introduction J-16

J.8 CONJOINT SESSION SURVEY RESULTS J-20

J.8. 1 Introduction J-20

J.8.2 Conjoint session Survey Results J-2l

J.8.2.3 Demographics J-21

J.9 CONJOINT ANALYSIS RESULTS J-28

J.9. 1 Introduction J-28

J.10 FOCUS GROUP ATTRIBUTE RESULTS J-46

J. 11 TOP 5 ATTRIBUTES FROM CONJOINT ANALYSIS SESSIONS J-52

J.12 CONJOINT SESSIONS SURVEY WITH RESPONSE FREQUENCIES . J-53

J.13 CONJOINT ANALYSIS CARDS AND INSTRUCTIONS J-62

J.14 INSTRUCTIONS J-68

J.14.l Clothes Washers J-68

J.15 CONJOINT ANALYSIS COEFFICIENT ESTIMATES J-70

J.16 ELASTICITY CALCULATIONS J-73

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EE-RM-PET-100 COMMENT 88
APPENDIX K. LIFE-CYCLE-COST RESULTS FOR CONSUMER SUBGROUPS

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APPENDIX L. PAYBACK PERIOD RESULTS FOR CONSUMER SUBGROUPS

APPENDIX M. SUPPLEMENTAL SHIPMENTS FORECAST CHARTS

M.i INTRODUCTION M-1

APPENDIX N. NATIONAL ENERGY SAVINGS (NES) ELASTICITY

N.i INTRODUCTION N-i

APPENDIX 0. MANUFACTURER INTERVIEW GUIDE

0.1 INTRODUCTION 0-i

0.2 CURRENT ORGANIZATIONAL CHARACTERISTICS 0-i

0.3 INDUSTRY INFRASTRUCTURE 0-2

0.4 MANUFACTURER CASH FLOW ANALYSIS 0-2

0.5 COMPETITIVE IMPACTS ASSESSMENT 0-4

0.6 EMPLOYMENT IMPACTS ASSESSMENT 0-4

0.7 MANUFACTURING CAPACITY IMPACTS ASSESSMENT 0-4

0.8 CUMULATIVE IMPACT OF REGULATION 0-5

APPENDIX P. GOVERNMENT REGULATORY IMPACT MODEL (GRIM)

P.1.1 INTRODUCTION AND PURPOSE P-i

P.1.2 MODEL DESCRIPTION P-i

P.1.3 INCOME STATEMENT P-S

P.1.4 MAJOR ASSUMPTIONS P-7

P.2. EXHIBITS P-i2

APPENDIX Q. LIST OF ACRONYMS AND ABBREVIATIONS

APPENDIX R. LIFE-CYCLE-COST AND NATIONAL ENERGY SAVINGS USING

THE MOST CURRENT RECS 1997 AND AEO 2000 DATA

R. i INTRODUCTION R- i

R. i. i How Updating RECS and AEO Data Affects the Anaiysis R- 1

R. 1.1.1 Input Parameter Changes to LCC / Payback Spreadsheet R- 1

R. 1.1.2 Input Parameter Changes to NES / Shipment Spreadsheet ... .R-2

R.2 LIFE-CYCLE-COST & PAYBACK PERIOD R-2

R.2. 1 Life-Cycle-Cost Results R-3

R.2.2 Distribution Payback Results R-4

R.2.3 Rebuttable Payback Period Resuits R-4

R.2.4 Comparison of LCC & Payback Period Results R-5

R.3 NATIONAL ENERGY SAVINGS (NES) R-6

R.3. i National Energy and Water Savings Results R-6

R.3.2 Comparison of NES Results for AE099/RECS93 and AEO2000/RECS97 In put

Data R-8

TOC-xiii

EE-RM-PET-100 COMMENT 88
ENVIRONMENTAL ASSESSMENT FOR RESIDENTIAL CLOTHES WASHERS

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ENVIRONMENTAL ASSESSMENT

1. SUMMARY . EA-l

2. PURPOSE OF THE ANALYSIS EA-2

3. ASSUMPTIONS EA-3

4. METHODS EA-3

4.1 Carbon EA-3

4.2 Power Sector NO EA-3

4.3 Power Sector SO2 EA-4

4.4 Household Emissions EA-4

4.5 Fuel-Cycle Emissions EA-4

4.6 Interpolation EA-4

4.7 Extrapolation EA-5

4.8 Water Usage Reduction EA-5

5. RESULTS EA-5

5.1 Power Sector Emissions EA-5

5.2 Residential Sector Emissions EA-8

5.3 Power and Residential Sector Emissions EA-1 1

5.4 Fuel-Cycle Emissions EA-l 1

5.5 Reduction in Water Use EA-12

5.6 High and Low Sensitivity Analysis EA-12

6. CONCLUSION EA-16

APPENDIX EA.l EMISSION FACTORS FOR COMBUSTION FROM NATURAL GAS,

LPG, AND OIL FIRED RESIDENTIAL WATER HEATERS AND

CLOTHES DRYERS

APPENDIX EA.2 UPSTREAM EMISSION FACTORS FROM COAL AND NATURAL

GAS PRODUCTION

APPENDIX EA.3 INTERPOLATION OF UTILITY AND ENVIRONMENTAL

RESULTS FROM NEMS-BRS OUTPUT

REGULATORY IMPACT ANALYSIS

1. INTRODUCTION RIA-1

2. METHODOLOGY RIA-l

2.1 No New Regulatory Action RTA-3

2.2 Enhanced Public Education RIA-3

TOC-xiv

EE-RM-PET-100 COMMENT 88
2.3 Financial Incentives

2.3.1 Tax Credits to Consumers ..........................

2.3.2 Tax Credits to Manufacturers .......................

2.3.3 Consumer Rebates ................................

2.3.4 Low Income and Seniors Subsidy ....................

2.4 Voluntary Efficiency Targets ...............................

2.4.1 Voluntary 5 year delay

2.4.2 Voluntary 10 year delay

2.5 Mass Government Purchases ...............................

2.6 Early Replacement Programs ...............................

2.6.1 Early Replacement with existing efficiency washers

2.6.2 Early Replacement with Washer having a 35% Reduction in

Energy Use

2.7 Performance Standards ...................................

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RIA-4

RIA-4

PJA-5

RIA-7

RIA-8

RIA-8

RIA-9

RIA-9

RIA-lO

3. RESULTS RIA-il

LIST OF TABLES

Table 2.1 Comparison of 1994 and 2000 Non-Regulatory Alternatives to Standards . . . 2-15

Table 3.1 Market Shares (%) and Consolidation in the Washer Industry, 1977-1998 . . . . 3-2

Table 3.2. Number of Establishments in Household Laundry Equipment (SIC 3633)... . 3-2

Table 3.3 Industry Unit Shipments 3-3

Table 3.4 Washer Shipments by Access 3-4

Table 3.5 Washer Sales by Type of Outlet 3-5

Table 3.6 Clothes Washer Unit Sales by Price Range 3-6

Table 3.7 Producer Price Index, Annual Average (1982=100) 3-7

Table 3.8 Consumer Price Index (All Urban Consumers); Annual Average

(1982-1984= 100) 3-8

Table 3.9 Washer Characteristics (1995) 3-9

Table 3.10 Brand Names, Price Level and Market Share of Major Manufacturers 3-11

Table 3.11 Washer Market Share by Brand 3-12

Table 3.12 Market Saturation by Fuel Type Among Housing Units with

Clothes Washers 3-14

Table 3.13 Employment and Earnings 3-15

Table 3.14 Information from the 1992 and 1997 Census of Manufactures 3-15

Table 3.15 Summary of SEC 10-K Reports of Appliance Manufacturers 3-16

Table 3.16 End-of-year Inventory, 1977-1997 3-17

Table 3.17 Full Production Capacity Utilization Rates* (%) 3-17

Table 3.18 Product Characteristics of Clothes Washer Tested 3-18

Table 3.19 Summary of Appendix J and Jl Test Results 3-19

TOC-xv

EE-RM-PET-100 COMMENT 88
Table 3.20 Estimated MEF Values for 1.56 and 1.96 Cubic foot Clothes Washers ..... 3-20

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Table 4.1 Energy-use Data 4-5

Table 4.2 Aggregated Cost Data using "Most Likely" Values 4-8

Table 4.3 Industry Cost Distributions for 5%, 10%, 15% 20% and 25% Improvements

Applied to an Existing V-axis Clothes Washer 4-9

Table 4.4 Industry Cost Distributions for 35%, 40%, 45% and 50% Improvements

Applied to a H-axis Clothes Washer 4-10

Table 5.1 Summary of Clothes Washers Analyzed 5-1

Table 5.2 Key Manufacturing Assumptions 5-3

Table 5.3 Assumptions for High / Low-Volume Manufacturer 5-4

Table 5.4 Major Manufacturing Processes 5-5

Table 5.5 Greenfield Investment for and Depreciation Life of Plant, Equipment 5-9

Table 5.6 Summary of Sensitivity Analysis 5-12

Table 5.7 Greenfield Investment for Aimual Production Volume

of 1.5 & 0.3 Million Units 5-14

Table 6.1 Retail Prices of Clothes Washers from 1986 through 1994 obtained from the

Consumer Expenditure Surveys 6-4

Table 6.2 Retail Prices of Clothes Washers from 1986 through 1995 estimated from

Dealerscope Merchandising's Annual Statistical Reviews 6-4

Table 6.3 Shipment Weighted Retail Prices of Clothes Washers from 1994 through

1997 Based on ELCAP Retail Sales Data 6-5

Table 6.4 Manufacturer Prices of Clothes Washers from 1986 through 1996 Estimated

from Current Industrial Reports 6-6

Table 6.5 Manufacturer Prices of Clothes Washers from 1986 Through 1996 Estimated

Using Data from the Aham Fact Book 6-6

Table 6.6 Retail Mark-ups for Clothes Washers from 1986 Through 1994 Using Retail

Prices from the Consumer Expenditure Surveys, and Manufacturer Prices

from the Current Industrial Reports 6-7

Table 6.7 Retail Mark-ups Estimated from Different Data Sources 6-8

Table 6.8 Gross Margins for Retailers of Electronics, Home Office Equipment and

Major Appliances 6-9

Table 6.9 Manufacturing Cost of a Baseline Clothes Waher Estimated from the

Industry Cost Structure 6-11

Table 7.1 Quantities in LCC Spreadsheet 7-3

Table 7.2 Cycles per Year for Persons per Household 7-6

Table 7.3 Summary of Nominal Interest Rates 7-22

Table 7.4 Distribution of Discount Rates 7-23

Table 7.5 Shares in Households of Water Heaters and Dryers by Fuel Type 7-24

Table 7.6 Summary of LCC Results for the Reference Case 7-30

TOC-xvi

EE-RM-PET-100 COMMENT 88
Table 7.7 Summary of Life-cycle Cost Results -AEO High Growth & High Water

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Escalation Rate 7-31

Table 7.8 Summary of Life-Cycle Cost Results - AEO Low Growth & Low Water

Escalation Rate 7-32

Table 7.9 Summary of Payback Period Results-AEO Reference 7-36

Table 7.10 Summary of Payback Period Results-AEO High Growth & Water

Escalation Rate 7-37

Table 7.11 Summary of Payback Period Results -AEO Low Growth & Water

Escalation Rate 7-38

Table 7.12 Rebuttable Presumption Payback in Years 7-41

Table 8.1 Consumer Subgroup LCC Savings and Percent of Households Benefitting ... 8-4

Table 8.2 Consumer Subgroup Payback Period Comparisons 8-5

Table 8.3 Summary of LCC Results - Low Income 8-7

Table 8.4 Summary of LCC Results Senior (head of household over 65) 8-7

Table 8.5 Summary of Payback Period Results - Low Income 8-8

Table 8.6 Summary of Payback Period Results - Senior 8-8

Table 8.7 Profile of RECS Households for Entire Sample and Subgroups 8-10

Table 10.1 National Energy/Water Saving Inputs 10-4

Table 10.2 Example of Average Electric Consumption for the Base Case 10-8

Table 10.3 Percent of Annual Clothes Washer Shipments having Energy Consumption

Equivalent to Horizontal Axis Washers 10-10

Table 10.4 Net Present Value Inputs 10-12

Table 10.5 Assumptions Used for Generating Preliminary National Impacts 10-15

Table 10.6 Range of Energy Savings and NPV for Each Standard Level 10-16

Table 10.7 Reference Case - All Parameters Set to Medium or Average 10-16

Table 10.8 NES Results: proposed rule (MEF = 1.04 @2004 & MEF=l.26 @2007) . . 10-17

Table 10.9 Efficiency Level: Energy and Water Savings (proposed rule) 10-17

Table 10.10 National Energy Saving Quantities and their Locations in the National

Energy Savings Spreadsheet 10-19

Table 10.11 Net Present Value Quantities and their Locations in the National Energy

Savings Spreadsheet 10-19

Table 11 .1 Average Income Tax Rates 11-7

Table 11.2 Average Working Capital as a Percentage of Revenues 11-8

Table 11.3 Average SG&A Expense as a Percentage of Revenues 11-8

Table 11.4 Average R&D Costs as a Percentage of Revenues 11-9

Table 11.5 Average Depreciation Expense as a Percentage of Revenue 11-9

Table 11.6 Average Capital Expenditures as a Percentage of Revenues 11-10

Table 11.7 CostofDebtandDebtRatio 11-li

Table 11.8 Average Rates of Return (1990-96) and Risk Premiums (1926-94) on

Some Securities (figures in percent per year) 11-13

TOC-xvii

EE-RM-PET-100 COMMENT 88
Table 11.9 Average Beta Values for Two Appliance Manufacturers ............... 11-14

Table 11.10 Comparison of Financial Data .................................... 11-15

Table 11.11 Clothes Washer Shipment Forecasts for the Base Case and Standard Case

(High Price Elasticity Shipment Scenario) .......................... 11-16

Table 11.12 Clothes Washer Shipment Forecasts for the Base Case and Standard Case

(Medium Price Elasticity Shipment Scenario) ........................ 11-18

Table 11.13 Clothes Washer Shipment Forecasts for the Base and Standard Case

(Medium Price/Income Elasticity Shipment Scenario) ................. 11-20

Table 11.14 Percentage Decreases in Shipments ................................ 11-23

Table 11.15 Annual Shipments of Clothes Washers from 1990 through 1996 (million) . 11-24

Table 11.16 Calculation of Calibration Factor for GRIM Shipment Forecast ......... 11-25

Table 11.17 Industry Average Baseline Cost Structure ........................... 11-27

Table 11.18 Industry Cash Flow Results for the "No Consolidation" Scenario - High

Price Elasticity ................................................ 11-32

Table 11.19 Industry Cash Flow Results for the "No Consolidation" Scenario - Medium

Price Elasticity ................................................ 11-32

Table 11.20 Industry Cash Flow Results for the "No Consolidation" Scenario - Medium

Price/Income Elasticity ......................................... 11-33

Table 11 .21 Industry Cash Flow Results for the " Industry Consolidation" Scenario -

High Price Elasticity ........................................... 11-34

Table 11.22 Industry Cash Flow Results for the "Industry Consolidation" Scenario -

Medium Price Elasticity ......................................... 11-35

Table 11.23 Industry Cash Flow Results for the "Industry Consolidation" Scenario -

Medium Price/Income Elasticity .................................. 11-35

Table 11.24 Shipment-weighted Manufacturer Price of Dryers from 1990

through 1996 ................................................. 11-36

Table 11.25 Cost and Financial Information Used in the Dryer GRIM ............... 11-37

Table 11.26 Standard Case NPV for Dryer Business - High Price Elasticity Scenario

Efficiency Improvement ......................................... 11-38

Table 11.27 Standard Case NPV for Dryer Business - Medium Price Elasticity Scenario

Efficiency Improvement ......................................... 11-38

Table 11.28 Standard Case NPV for Dryer Business - Medium Price/Income Elasticity

Scenario ..................................................... 11-39

Table 11.29 Repair Industry Revenue Assumptions ............................. 11-44

Table 11.30 Net Present Value of OEM Repair Revenues ($ Millions) .............. 11-44

Table 11.31 Manufacturer Implied Impact of New Efficiency Standards on Production

Facility Mix .................................................. 11-46

Table 11.32 Clothes Washer Industry Property, Plant and Equipment Forecasts for the

Baseline and Trial Standard Level 4 (35 percent Efficiency Improvement) . 11-48

Table 11.33 Estimate of Industry Stranded Assets (Assuming Industry Maintains

Current Cost Structure) ($million) ................................ 11-49

Table 11.34 Estimate of Industry Stranded Assets (Assuming Industry Maintains

Current Value of Plant, Property and Equipment) ($million) ............ 11-50

Table 11.35 Stranded Assets as a percent of Pre-standard Assets .................. 11-52

TOC-xviii

EE-RM-PET-100 COMMENT 88
Table 11.36 Standards-Related Design & Marketing Expenditures ................. 11-53

Table 11.37 Base Year Shipments ........................................... 11-56

Table 11.38 Change in Value of Small Manufacturers, Results for the "No

Consolidation" Scenario - High Price Elasticity Scenario (%) ........... 11-58

Table 11.39 Change in Value of Small Manufacturers, Results for the "No

Consolidation" Scenario - Medium Price Elasticity Scenario (%) ........ 11-58

Table 11.40 Change in Value of Small Manufacturers, Results for the "No

Consolidation" Scenario - Medium Price/Income Elasticity Scenario (%) . . 11-58

Table 11.41 "Worst Case" Manufacturer Implied Impact of New Energy Efficiency

Standards on Employment Levels resulting from Plant Closures* 11-60

Table 11.42 Expected Incremental Labor Costs at Various Efficiency Levels ......... 11-61

Table 11.43 Future Regulations Affecting Appliance Manufacturers ................ 11-64

Table 11.44 Market Shares of Major Clothes Washer Manufacturers in Other Products

Faced with Future Regulations ................................... 11-64

Table 11.45 Estimated Impacts of Approaching Regulations on Clothes Washer

Manufacturers ................................................ 11-65

Table 11.46 Average Breakup of Raw Materials and Component Costs in U.S

Manufactured Clothes Washers (as % of Total Materials Cost) .......... 11-66

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Table 12.1 AE099 Reference Case Forecast 12-6

Table 12.2 MEF = 1.634 (50% Reduction in Energy Usage Forecast) 12-7

Table 12.3 MEF = 1.362 (40% Reduction in Energy Usage Forecast) 12-8

Table 12.4 MEF = 1.257 (35% Reduction in Energy Usage Forecast) 12-9

Table 12.5 MEF = 1.089 (25% Reduction in Energy Usage Forecast) 12-10

Table 12.6 MEF = 1.021(20% Reduction in Energy Usage Forecast) 12-11

Table 12.7 MEF 1.04 in 2004 and 1.26 in 2007; 2-Tier Forecast 12-12

Table 12.8 MEF 1.04 in 2004 and 1.26 in 2007; 2-Tier High Elasticity Sensitivity

Forecast 12-13

Table 12.9 MEF 1.04 in 2004 and 1.26 in 2007; 2-Tier Medium Price/Income

Sensitivity Forecast 12-14

Table 12.10 MEF 1.04 in 2004 and 1.26 in 2007; 2-Tier High Economic Growth

Forecast 12-15

Table 12.11 MEF 1.04 in 2004 and 1.26 in 2007; 2-Tier Low Economic Growth

Forecast 12-16

Table B. 1 Input Parameter Assumptions for Estimating MEFs from Energy Factors . . . . B-4

Table B.2 Estimated MEF Values for 1.56 and 1.96 Cubic Foot Clothes Washers B-5

Table D. 1 Major Manufacturing Processes D-3

Table F. 1 Summary of Market Segments - Weighted RECS Households having a Washer

and a Dryer F-6

Table F.2 Marginal Prices and Escalation Rates F-b

TOC-xix

EE-RM-PET-100 COMMENT 88
Table J. 1 Hypothetical Example -Conjoint Data Using the Purchase Card For Purchase

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Probability Estimation J- 10

Table J.2 Hypothetical Example - Individual Ranked Conjoint Data For Equipment Choice

Estimation J- 13

Table J.3 DOE Clothes Washer Focus Group Response Rates J-17

Table J.4. Focus Group Results Most Important Clothes Washer Attributes J- 18

Table J.5 Top Twelve Clothes Washer Attributes Listed by Conjoint Respondents . . J-20

Table J.6 Sampling Results J-2l

Table J.7 Income Distribution J-22

Table J.8 Ethnic Background of Respondents J-22

Table J.9 Distribution of Educational Achievement J-23

Table J. 10 Distribution of Expected Price for a New Clothes Washer J-24

Table J-1 1 Distribution of Desired Price Range for a New Washer J-25

Table J-12 Choice Sensitivity to Price Change; All Respondents J-26

Table J.13 Option Choice Sensitivity to Price Change; Respondents with

Income Less than $25,000 Per Year J-27

Table J.14 Option Choice Sensitivity to Price Change; Respondents

Over 65 Years of Age J-27

Table J. 15 Attribute Definitions J-29

Table J. 16 Regression Coefficients and Relative Importance; All Respondents J-3 1

Table J. 17 Regression Coefficient Estimates for Regional Subgroups J-32

Table J.18 Regression Coefficient Estimates for Regional Subgroups J-33

Table J. 19 Relative Importance Statistics for Demographic Subgroups J-34

Table J.20 Relative Importance Statistics for Regional Subgroups J-35

Table J.21 Purchase Model Coefficient Estimates; Full Sample J-37

Table J.22 Purchase Scenario for Demographic Subgroups J-38

Table J.23 Purchase Scenarios for Regional Subgroups J-39

Table J.24 All Focus Groups - 10 Groups - 90 Participants J-46

Table J-25 Washington DC Focus Group, Combined Group, 16 Participants J-47

Table J.26 San Francisco Bay Area Focus Group, Combined Group, 18 Participants . . J-48

Table J.27 Madison Focus Group, Combined Group, 19 Participants J-49

Table J.28 Dallas Focus Group, Combined Group, 17 Participants J-S0

Table J.29 Miami Focus Group, Combined Group, 20 Participants J-5 1

Table J.30 Top Five Attributes from Conjoint Analysis Session, 429 Respondents J-52

Table N. 1 Trial Standard Level 1, MEF=l .021(20% Reduction in Energy Use) N-2

Table N.2 Trial Standard Level 1, MEF=1.02l N-2

Table N.3 Trial Standard Level 2, MEF=1 .089 (25% Reduction in Energy Use) N-3

Table N.4 Trial Standard Level 2, MEF= l .089 N-3

Table N.5 Trial Standard Level 4, MEF=l .257 (35% Reduction in Energy Use) N-4

Table N.6 Trial Standard Level 4, MEF=1 .257 N-4

Table N.7 Trial Standard Level 5, MEF= l .362 (40% Reduction in Energy Use) N-S

TOC-xx

EE-RM-PET-100 COMMENT 88
Table N.8 Trial Standard Level 5, MEF= l .362 ................................ N-S

Table N.9 Trial Standard Level 6, MEF= l.634 (50% Reduction in Energy Use) ...... N-6

Table N.l0 Trial Standard Level 6, MEF= 1.634 ................................ N-6

Table N. 11 Trial Standard Level 3, MEF= 1 .04/1.26 in 2004/2007 .................. N-7

Table N.12 Trial Standard Level 3, MEF= 1.04/1.26 in 2004/2007 .................. N-7

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Table N. 13 Trial Standard Level 1, MEF= 1.021(20%, Medium Price/Income Elasticity) N-9

Table N. 14 Trial Standard Level 1, MEF= 1.021 N-9

Table N.lS Trial Standard Level 2, MEF 1.089 (25%, Medium Price/Income Elasticity) N-b

Table N.16 Trial Standard Level 2, MEF= l.089 N-b

Table N. 17 Trial Standard Level 4, MEF= l .257 (3 5%, Medium Price/Income Elasticity) N-b 1

Table N.18 Trial Standard Level 4, MEF=1.257 N-b 1

Table N. 19 Trial Standard Level 5, MEF 1 .362 (40%, Medium Price/Income Elasticity) N-12

Table N.20 Trial Standard Level 5, MEF=l.362 N-12

Table N.21 Trial Standard Level 6, MEF= 1.634 (50%, Medium Price/Income Elasticity) N-13

Table N.22 Trial Standard Level 6, MEF= 1.634 N-13

Table N.23 Trial Standard Level 3, MEF= l.04/l.26 in 2004/2007 N-14

Table N.24 Trial Standard Level 3, MEF= b .04/1.26 in 2004/2007 N-14

Table N.25 Trial Standard Level 1, MEF= 1.021 (20%, High Price Elasticity) N-15

Table N.26 Trial Standard Level 1, MEF= l.021 N-15

Table N.27 Trial Standard Level 2, MEF= l.089 (25%, High Price Elasticity) N-b6

Table N.28 Trial Standard Level 2, MEF= 1.089 N-16

Table N.29 Trial Standard Level 4, MEF= l .257 (35%, High Price Elasticity) N-l7

Table N.30 Trial Standard Level 4, MEF= l .257 N-l7

Table N.31 Trial Standard Level 5, MEF=1.362 (40%, High Price Elasticity) N-18

Table N.32 Trial Standard Level 5, MEF=b.362 N-18

Table N.33 Trial Standard Level 6, MEF= 1.634 (50%, High Price Elasticity) N-19

Table N.34 Trial Standard Level 6, MEF= b.634 N-19

Table N.35 Trial Standard Level 3, MEF= 1.04/1.26 in 2004/2007 N-20

Table N.36 Trial Standard Level 3, MEF= l.04/1.26 in 2004/2007 N-20

Table R. 1 Summary of LCC Results R-3

Table R.2 Summary of Payback Period Results R-4

Table R.3 Rebuttable Presumption Payback in Years R-4

Table R.4 LCC for Trial Standard Level 3 R-5

Table R.5 Distribution Payback Periods for Trial Standard Level 3 R-5

Table R.6 Rebuttable Presumption Payback Periods for Trial Standard Level 3 R-5

Table R.7 Reference Case - All Parameters Set to Medium or Average R-6

Table R.8 NES Results: Proposed Rule (MEF=1.04 in 2004 & MEF = 1.26 in 2007) .. . R-6

Table R.9 Efficiency Level: Energy and Water Savings (proposed rule, TSL 3) R-7

Table R.10 NES Results: Proposed rule (MEF = 1.04 in 2004 & MEF = 1.26 in 2007) . . . R-8

TOC-xxi

EE-RM-PET-100 COMMENT 88
ENVIRONMENTAL ASSESSMENT

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Table 1 Annual Power Sector Emissions for all Standards EA-6

Table 2 Cumulative emissions reductions through 2020: Power Sector EA-8

Table 3 Change in Household Emissions for all Standards EA-9

Table 4 Cumulative Emissions reductions through 2020: Households EA- 10

Table 5 Cumulative Emissions reductions through 2020: Household and Power

Sectors EA-1 1

Table 6 Cumulative Emissions Reductions through 2030: Household and Power

Sectors EA-1 1

Table 7 Cumulative Reduction in Water Use to 2030 EA-12

Table 8 High and Low Economic Growth: Power Sector Emissions for Negotiated

Standard EA- 13

Table 9 High and Low Price Elasticity Scenarios: Power Sector Emissions for Negotiated

Standard EA-14

Table 10 High and Low Economic Growth Change in Household Emissions for

Negotiated Standard EA- 15

Table 11 High and Low Price Elasticity: Change in Household Emissions for

Negotiated Standard EA- 15

Table 12 Cumulative Emission & Water Reduction for High & Low Economic

Growth Sensitivities to 2030 EA-16

Table 13 Cumulative Emission & Water Reduction with Elasticity Sensitivities

to 2030 EA-16

Table EA- 1.1 Estimated National Average Emission Factors for Household Fuel Combustion of

Natural Gas, Fuel Oil#2, and LPG EA. 1-2

Table EA-2. 1 Estimated Upstream Emission Factors and Relative Percentages to Direct Power

Plant Combustion Emissions EA.2-2

REGULATORY IMPACT ANALYSIS

Table RIA. 1 Results for Non-regulatory Alternatives RIA- 12

Table RIA.2 Non-regulatory Alternative Assumptions RIA- 13

LIST OF FIGURES

Figure 2.1 Clothes Washer Rulemaking Framework 2-3

Figure 2.2 Flow Diagram of the Manufacturer Impact Analysis Methodology 2-11

Figure 3.1 Washer Market Share by Type, 1998 3-4

Figure 3.2 Producer Price Index for All Commodities and for Laundry Equipment,

1967-1998 3-7

Figure 3.3 Consumer Price Index for All Items and for Laundry Equipment, 1982-1999 . 3-8

Figure 3.4 Washing Machine Market Share by Cubic Capacity 3-10

Figure 3.5 Washing Machine Market Shares by Speed 3-10

TOC-xxii

EE-RM-PET-100 COMMENT 88
Figure 3.6 Clothes Washer Saturation Rates (% of Household Units) ............... 3-13

Figure 3.7 Water Heater and Dryer Fuel Use .................................. 3-14

Figure 3.8 Washing Machine Industry Cost Structure as a Percentage of Revenues .... 3-16

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Figure 4.1 Illustrative Input Distributions for Incremental Manufacturing Costs 4-3

Figure 5.1 Full Production Cost 5-2

Figure 5.2 Manufacturing Cost Assessment Stages 5-4

Figure 5.3 Range of Cost Premiums for H-Axis, High Efficiency V-Axis Over V-Axis

Baseline 5-7

Figure 5.4 Cost Composition by Washer Type 5-8

Figure 5.5 Full Production Cost Breakdown by Sub-Assembly Level 5-8

Figure 5.6 Investment Cost Breakdown by Major Manufacturing Process 5-9

Figure 5.7 Monte Carlo Simulation of Aggregated Baseline Cost 5-10

Figure 5.8 Monte Carlo Analysis: Relative Importance of Each Input Factor 5-11

Figure 5.9 Range of Cost Premiums for Low Volume Manufacturers 5-13

Figure 5.10 Averaged Cost Differentials by Category and Washer Type from the Means . 5-14

Figure 5.11 Investment Requirements by Category 5-15

Figure 6.1 Average Costs and Mark-ups for the Baseline Clothes Washer 6-1

Figure 6.2 Retail Mark-ups Estimated from Different Data Sources 6-8

Figure 7.1 Percent of Clothes Washers Surviving since Year of Original Purchase 7-5

Figure 7.2 Weighting of the Number of Washer Cycles per Year 7-6

Figure 7.3 Distribution of 1997 Marginal Residential Electricity Prices (In 1997$) 7-9

Figure 7.4 Alternative Electricity Price Trends 7-10

Figure 7.5 Distribution of 1997 Marginal Residential Gas Prices (In 1997$) 7-12

Figure 7.6 Alternative Natural Gas Price Trends 7-13

Figure 7.7 Alternative Oil Price Trends 7-15

Figure 7.8 Alternative LPG Price Trends 7-16

Figure 7.9 Water use Per Cycle vs. MEF 7-17

Figure 7.10 1998 Urban Water & Wastewater Price Distribution, in 1997 Dollars 7-19

Figure 7.11 1998 Urban Water Price Distribution, in 1997 Dollars 7-20

Figure 7.12 Water and Wastewater Price Trends 7-21

Figure 7.13 Distribution of Consumer Discount Rates 7-23

Figure 7.14 MEF = 1.089, Reference Case. Frequency Chart of LCC Differences 7-27

Figure 7.15 MEF = 1.089, Reference Case. Cumulative Chart of LCC Differences 7-28

Figure 7.16 Baseline Life-Cycle Cost Distribution 7-29

Figure 7.17 Consumers Having LCC Savings for Reference,

High and Low Growth Scenarios 7-33

Figure 7.18 MEF = 1.089, Reference Case-Frequency Chart of Payback Periods 7-35

Figure 7.19 Payback Periods for Reference, High and Low Growth Scenarios 7-39

Figure 8.1 Summary of Subgroup Life-Cycle Costs 8-5

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EE-RM-PET-100 COMMENT 88
Figure 8.2 Summary of Subgroup Payback Periods . 8-6

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Figure 9.1 Flow Diagram for Clothes Washer Shipments Model 9-3

Figure 9.2 Decision Tree for New Housing and Housing Moves 9-8

Figure 9.3 Decision Tree for Replacement and Repair of Regular Washers in Existing

Housing 9-10

Figure 9.4 Probability of Survival for Regular Clothes Washer 9-12

Figure 9.5 Relative Probability of Regular Replacement, Repair, Early Replacement

and No Action as a Function of Clothes Washer Age for 1997 9-13

Figure 9.6 Decision Tree for Housing Without a Washer 9-16

Figure 9.7 Decision Tree for Housing with Extended-Life Clothes Washers 9-17

Figure 9.8 Survival Probability Function for Extended Lifetime Washers 9-19

Figure 9.9 Model Development 9-23

Figure 9.10 Estimated Price vs. Savings Relation for Current Market Conditions 9-28

Figure 9.11 Inter-comparison of Models with Different Primary Economic

Decision Variables 9-31

Figure 9.12 Clothes Washer Shipments Forecasts 9-33

Figure 9.13 Estimated Standards Impacts on New Clothes Washer

Shipments and Sales 9-34

Figure 9.14 Estimated Standards Impacts on Used Clothes Washer

Shipments and Sales 9-35

Figure 9.15 Estimated Standards Impacts on Washer Age, Lifetime, and

Number of Repairs 9-37

Figure 10.1 Annual Cost and Savings for the Proposed Clothes Washer Rule 10-17

Figure 11.1 Using GRIM to Conduct the Cash Flow Analysis 11-5

Figure 11.2 Clothes Washer Shipment Forecasts for Base Case and the Negotiated

Standard Level 11-22

Figure 11.3 Implied Impact of Decline in Washer Shipments on Clothes Dryer

Employment Levels 11-40

Figure 11.4 Estimated Number of Clothes Washer Repairs (High Price Elasticity

Shipment Scenario) 11-43

Figure 11.5 Predicted Impact on U.S. Clothes Washer Industry Employment Levels . . 11-62

Figure 13.1 Net National Employment Impacts 13-1

Figure 13.2 Employment Impacts of Consumer Energy and Water Savings 13-3

Figure 13.3 Employment Impact of Incremental Clothes Washer Price 13-4

Figure 13.4 Employment Impacts in Energy Supply Sector 13-5

Figure 13.5 Projected Increase in U.S. Consumer Expenditures to Purchase Clothes Washers

After Standards 13-6

Figure 13.6 Projected U.S. Consumer Savings in Electricity Bills: Energy Efficiency

Standards on Clothes Washers 13-7

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EE-RM-PET-100 COMMENT 88
Figure 13.7 Projected U.S. Consumer Savings in Natural Gas Bills: Energy Efficiency

Standards on Clothes Washers ..................................... 13-8

Figure 13.8 Projected U.S. Consumer Savings in Oil Bills: Energy Efficiency Standards on

Clothes Washers ................................................ 13-9

Figure 13.9 Projected Savings due to Clothes Washer Standards: Residential Electricity

............................................................ 13-10

Figure 13.10 Projected Savings due to Clothes Washer Standards: Residential Natural Gas

(including LPG) ............................................... 13-11

Figure 13.11 Projected Savings due to Clothes Washer Standards: Residential Oil ..... 13-12

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Figure D. 1 Manufacturing Cost Assessment Approach D- 1

Figure D.2 Structured Bill of Materials D-2

Figure D.3 Fabrication Process Cycle Time Estimates D-4

Figure F.1 Location of 38 Cities Used for Determining Price Escalation F-2

Figure F.2 Annual Percent Change in Water & Wastewater Prices for 38 Cities (from 1986-

1998, in 1997$) F-3

Figure F.3 Annual Percent Change in Water-Only Prices for 38 Cities (from 1986-1998, in

1997$) F-4

Figure F.4 Flow Chart for Water Choice in LCC Spreadsheet F-8

Figure F.5 Water and Wastewater Price Trends F-9

Figure G.1 MEF of 0.860 (5% Reduction in Energy Use), Reference Case

Frequency Chart of LCC Differences G-2

Figure G.2 MEF of 0.860 (5% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences G-2

Figure G.3 MEF of 0.908 (10% Reduction in Energy Use), Reference Case.

Frequency Chart of LCC Differences G-3

Figure G.4 MEF of 0.908 (10% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences G-3

Figure G.5 MEF of 0.961 (15% Reduction in Energy Use), Reference Case.

Frequency Chart of LCC Differences G-4

Figure G.6 MEF of 0.961 (15% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences G-4

Figure G.7 MEF of 1.021(20% Reduction in Energy Use), Reference Case.

Frequency Chart of LCC Differences G-5

Figure G.8 MEF of 1.02 1 (20% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences G-5

Figure G.9 MEF = 1.04 in 2004, Reference Case. Frequency Chart of

LCC Differences G-6

Figure G. 10 MEF = 1.04 in 2004, Reference Case. Cumulative Chart of

LCC Differences G-6

Figure G. 11 MEF of 1.089 (25% Reduction in Energy Use), Reference Case.

TOC-xxv

EE-RM-PET-100 COMMENT 88
Frequency Chart of LCC Differences ............................... G-7

Figure G. 12 MEF of 1.089 (25% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences .............................. G-7

Figure G.13 MEF of 1.257 (35% Reduction in Energy Use), Reference Case

Frequency Chart of LCC Differences ............................... G-8

Figure G. 14 MEF of 1.257 (35% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences .............................. G-8

Figure G. 15 MEF = 1.26 in 2007, Reference Case. Frequency Chart of

LCC Differences ............................................... G-9

Figure G. 16 MEF = 1.26 in 2007, Reference Case. Cumulative Chart of

LCC Differences ............................................... G-9

Figure G.17 MEF of 1.362 (40% Reduction in Energy Use), Reference Case.

Frequency Chart of LCC Differences .............................. G-10

Figure G. 18 MEF of 1.362 (40% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences ............................. G-10

Figure G. 19 MEF of 1.485 (45% Reduction in Energy Use), Reference Case.

Frequency Chart of LCC Differences .............................. G-1 1

Figure G.20 MEF of 1.485 (45% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences ............................. G- 11

Figure G.2 1 MEF of 1.634 (50% Reduction in Energy Use), Reference Case.

Frequency Chart of LCC Differences .............................. G- 12

Figure G.22 MEF of 1.634 (50% Reduction in Energy Use), Reference Case.

Cumulative Chart of LCC Differences ............................. G- 12

Figure G.23 MEF of 0.860 (5% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G-13

Figure G.24 MEF of 0.86 (5% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G-13

Figure G.25 MEF of 0.908 (10% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G-14

Figure G.26 MEF of 0.908 (10% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G-14

Figure G.27 MEF of 0.961 (15% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G- 15

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Figure G.28 MEF of 0.961 (15% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences G- 15

Figure G.29 MEF of 1.021(20% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences G-16

Figure G.30 MEF of 1.021(20% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences G-.16

Figure G.3 1 MEF = 1.04 in 2004, Low Growth. Frequency Chart of

LCC Differences G-17

Figure G.32 MEF = 1.04, Low Growth. Cumulative Chart of LCC Differences G-17

Figure G.33 MEF of 1.089 (25% Reduction in Energy Use), Low Growth.

TOC-xxvi

EE-RM-PET-100 COMMENT 88
Frequency Chart of LCC Differences .............................. G- 18

Figure G.34 MEF of 1.089 (25% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G- 18

Figure G.35 MEF of 1.257 (35% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G-19

Figure G.36 MEF of 1.257 (35% Reduction of Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G-19

Figure G.37 MEF = 1.26 in 2007, Low Growth. Frequency Chart of LCC Differences . G-20

Figure G.38 MEF = 1.26 in 2007, Low Growth. Cumulative Chart of LCC Differences G-20

Figure G.39 MEF of 1.362 (40% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G-21

Figure G.40 MEF of 1.362 (40% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G-21

Figure G.41 MEF of 1.485 (45% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G-22

Figure G.42 MEF of 1.485 (45% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G-22

Figure G.43 MEF of 1.634 (50% Reduction in Energy Use), Low Growth.

Frequency Chart of LCC Differences .............................. G-23

Figure G.44 MEF of 1.634 (50% Reduction in Energy Use), Low Growth.

Cumulative Chart of LCC Differences ............................. G-23

Figure G.45 MEF of 0.860 (5% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-24

Figure G.46 MEF of 0.86 (5% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-24

Figure G.47 MEF of 0.908 (10% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-25

Figure G.48 MEF of 0.908 (10% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-25

Figure G.49 MEF of 0.961 (15% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-26

Figure G.50 MEF of 0.961 (15% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-26

Figure G.51 MEF of 1.02 1 (20% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-27

Figure G.52 MEF of 1.02 1 (20% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-27

Figure G.53 MEF = 1.04 in 2004, High Growth. Frequency Chart of

LCC Differences .............................................. G-28

Figure G.54 MEF = 1.04 in 2007, High Growth. Cumulative Chart of

LCC Differences .............................................. G-28

Figure G.55 MEF of 1.089 (25% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-29

Figure G.56 MEF of 1.089 (25% Reduction in Energy Use), High Growth.

TOC-xxvii

EE-RM-PET-100 COMMENT 88
Cumulative Chart of LCC Differences ............................. G-29

Figure G.57 MEF of 1.257 (35% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-30

Figure G.58 MEF of 1.257 (35% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-30

Figure G.59 MEF = 1.26 in 2007, High Growth. Frequency Chart of

LCC Differences .............................................. G-3 1

Figure G.60 MEF = 1.26 in 2007, High Growth. Cumulative Chart of

LCC Differences .............................................. G-3 1

Figure G.61 MEF of 1.362 (40% Reduction in Energy Usage), High Growth.

Frequency Chart of LCC Differences .............................. G-32

Figure G.62 MEF of 1.362 (40% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-32

Figure G.63 MEF of 1.485 (45% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-33

Figure G.64 MEF of 1.485 (45% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-33

Figure G.65 MEF of 1.634 (50% Reduction in Energy Use), High Growth.

Frequency Chart of LCC Differences .............................. G-34

Figure G.66 MEF of 1.634 (50% Reduction in Energy Use), High Growth.

Cumulative Chart of LCC Differences ............................. G-34

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Figure H.1 MEF of 0.860 (5% Reduction in Energy Use), Reference Case H-2

Figure H.2 MEF of 0.908 (10% Reduction in Energy Use), Reference Case H-2

Figure H.3 MEF of 0.961 (15% Reduction in Energy Use), Reference Case H-3

Figure H.4 MEF of 1.02 1 (20% Reduction in Energy Use), Reference Case H-3

Figure H.5 MEF of 1.04 in 2004, Reference Case H-4

Figure H.6 MEF of 1.089 (25% Reduction in Energy Use), Reference Case H-4

Figure H.7 MEF of 1.257 (35% Reduction in Energy Use), Reference Case H-S

Figure H.8 MEF = 1.26 in 2007, Reference Case H-S

Figure H.9 MEF of 1.362 (40% Reduction in Energy Use), Reference Case H-6

Figure H. 10 MEF of 1.485 (45% Reduction in Energy Use), Reference Case H-6

Figure H. 11 MEF of 1.634 (50% Reduction in Energy Use), Reference Case H-7

Figure H.12 MEF of 0.860 (5% Reduction in Energy Use), Low Growth H-8

Figure H.13 MEF of 0.908 (10% Reduction in Energy Use), Low Growth H-8

Figure H.14 MEF of 0.961 (15% Reduction in Energy Use), Low Growth H-9

Figure H. 15 MEF of 1.021(20% Reduction in Energy Use), Low Growth H-9

Figure H.16 MEF = 1.04 in 2004, Low Growth H-b

Figure H.17 MEF of 1.089 (25% Reduction in Energy Use), Low Growth H-b

Figure H.18 MEF of 1.257 (35% Reduction in Energy Use), Low Growth H-il

Figure H.19 MEF = 1.26 in 2007, Low Growth H-il

Figure H.20 MEF of 1.362 (40% Reduction in Energy Use), Low Growth H-i2

Figure H.21 MEF of 1.485 (45% Reduction in Energy Use), Low Growth H-12

TOC-xxviii

EE-RM-PET-100 COMMENT 88
Figure H.22 MEF of 1.634 (50% Reduction of Energy Use), Low Growth ........... H-13

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Figure H.23 MEF of 0.860 (5% Reduction in Energy Use), High Growth H-14

Figure H.24 MEF of 0.908 (10% Reduction in Energy Use), High Growth H-14

Figure H.25 MEF of 0.961 (15% Reduction in Energy Use), High Growth H-iS

Figure H.26 MEF of 1.02 1 (20% Reduction in Energy Use), High Growth H-iS

Figure H.27 MEF = 1.04 in 2004, High Growth H-16

Figure H.28 MEF of 1.089 (25% Reduction in Energy Use), High Growth H-16

Figure H.29 MEF of 1.257 (35% Reduction in Energy Use), High Growth H-17

Figure H.30 MEF = 1.26 in 2007 H-18

Figure H.3 1 MEF of 1.362 (40% Reduction in Energy Use), High Growth H- 18

Figure H.32 MEF of 1.485 (45% Reduction in Energy Use), High Growth H-19

Figure H.33 MEF of 1.634 (50% Reduction in Energy Use), High Growth H-19

Figure K.1 MEF of 0.860 (5% Reduction in Energy Use), Low Income K-2

Figure K.2 MEF of 0.860 (5% Reduction in Energy Use), Low Income K-2

Figure K.3 MEF of 0.908 (10% Reduction in Energy Use), Low Income K-3

Figure K.4 MEF of 0.908 (10% Reduction in Energy Use), Low Income K-3

Figure K.5 MEF of 0.961 (15% Reduction in Energy Use), Low Income K-4

Figure K.6 MEF of 0.961 (15% Reduction in Energy Use), Low Income K-4

Figure K.7 MEF of 1.02 1 (20% Reduction in Energy Use), Low Income K-S

Figure K.8 MEF of 1.02 1 (20% Reduction in Energy Use), Low Income K-S

Figure K.9 MEF = 1.04 in 2004, Low Income K-6

Figure K.10 MEF = 1.04 in 2004, Low Income K-6

Figure K. 11 MEF of 1.089 (25% Reduction in Energy Use), Low Income K-7

Figure K.12 MEF of 1.089 (25% Reduction in Energy Use), Low Income K-7

Figure K.13 MEF of 1.257 (35% Reduction in Energy Use), Low Income K-8

Figure K. 14 MEF of 1.257 (35% Reduction in Energy Use), Low Income K-8

Figure K.1S MEF = 1.26 in 2007, Low Income K-9

Figure K.16 MEF of 1.26 in 2007, Low Income K-9

Figure K.17 MEF of 1.362 (40% Reduction in Energy Use), Low Income K-b

Figure K.18 MEF of 1.362 (40% Reduction in Energy Use), Low Income K-b

Figure K. 19 MEF of 1.485 (45% Reduction in Energy Use), Low Income K-li

Figure K.20 MEF of 1.485 (45% Reduction in Energy Use), Low Income K-il

Figure K.21 MEF of 1.634 (50% Reduction in Energy Use), Low Income K-12

Figure K.22 MEF of 1.634 (50% Reduction in Energy Use), Low Income K-12

Figure K.23 MEF of 0.860 (5% Reduction in Energy Use), Senior K-13

Figure K.24 MEF of 0.860 (5% Reduction in Energy Use), Senior K-13

Figure K.25 MEF of 0.908 (10% Reduction in Energy Use), Senior K-14

Figure K.26 MEF of 0.908 (10% Reduction in Energy Use), Senior K-14

Figure K.27 MEF of 0.961 (15% Reduction in Energy Use), Senior K-iS

Figure K.28 MEF of 0.961 (15% Reduction in Energy Use), Senior K-iS

Figure K.29 MEF of 1.021 (20% Reduction in Energy Use), Senior K-i6

TOC-xxix

EE-RM-PET-100 COMMENT 88
Figure K.30 MEF of 1.02 1 (20% Reduction in Energy Use), Senior ................ K-16

Figure K.31 MEF = 1.04 in 2004, Senior ...................................... K-17

Figure K.32 MEF = 1.04 in 2004, Senior ...................................... K-17

Figure K.33 MEF of 1.089 (25% Reduction in Energy Use), Senior ................ K-18

Figure K.34 MEF of 1.089 (25% Reduction in Energy Use), Senior ................ K-18

Figure K.35 MEF of 1.257 (35% Reduction in Energy Use), Senior ................ K-19

Figure K.36 MEF of 1.257 (35% Reduction in Energy Use), Senior ................ K-19

Figure K.37 MEF = 1.26 in 2007, Senior ...................................... K-20

Figure K.38 MEF = 1.26 in 2007, Senior ...................................... K-20

Figure K.39 MEF of 1.362 (40% Reduction in Energy Use), Senior ................ K-21

Figure K.40 MEF of 1.362 (40% Reduction in Energy Use), Senior ................ K-21

Figure K.41 MEF of 1.485 (45% Reduction in Energy Use), Senior ................ K-22

Figure K.42 MEF of 1.485 (45% Reduction in Energy Use), Senior ................ K-22

Figure K.43 MEF of 1.634 (50% Reduction in Energy Use), Senior ................ K-23

Figure K.44 MEF of 1.634 (50% Reduction in Energy Use), Senior ................ K-23

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Figure L. 1 MEF of 0.860 (5% Reduction in Energy Usage), Low Income L-2

Figure L.2 MEF of 0.908 (10% Reduction in Energy Consumption), Low Income L-2

Figure L.3 MEF of 0.961 (15% Reduction in Energy Use), Low Income L-3

Figure L.4 MEF of 1.021(20% Reduction in Energy Usage), Low Income L-3

Figure L.5 MEF of 1.04 in 2004, Low Income L-4

Figure L.6 MEF of 1.089 (25% Reduction in Energy Use), Low Income L-4

Figure L.7 MEF of 1.257 (35% Reduction in Energy Use), Low Income L-5

Figure L.8 MEF = 1.26 in 2007, Low Income L-5

Figure L.9 MEF of 1.362 (40% Reduction in Energy Use), Low Income L-6

Figure L. 10 MEF of 1.485 (45% Reduction in Energy Use), Low Income L-6

Figure L. 11 MEF of 1.634 (50% Reduction in Energy Use), Low Income L-7

Figure L.12 MEF of 0.86 (5% Reduction in Energy Use), Senior L-8

Figure L.13 MEF of 0.908 (10% Reduction in Energy Use), Senior L-8

Figure L.14 MEF of 0.961 (15% Reduction in Energy Use), Senior L-9

Figure L.15 MEF of 1.021 (20% Reduction in Energy Use), Senior L-9

Figure L.16 MEF = 1.04 in 2004, Senior L-10

Figure L.17 MEF of 1.089 (25% Reduction in Energy Use), Senior L-10

Figure L. 18 MEF of 1.257 (35% Reduction in Energy Use), Senior L-1 1

Figure L.19 MEF= 1.26 in 2007. Senior L-11

Figure L.20 MEF of 1.362 (40% Reduction in Energy Use), Senior L-12

Figure L.21 MEF of 1.485 (45% Reduction in Energy Use), Senior L-12

Figure L.22 MEF of 1.634 (50% Reduction in Energy Use), Senior L-13

Figure M. 1 Shipments Forecasts for Medium Elasticity Price/income Shipments Model . M- 1

Figure M.2 Shipments Forecasts for Medium Elasticity Price-driven Model M-2

Figure M.3 Shipments Forecasts for High Elasticity Price-driven Model M-3

Figure N.1 Trial Standard Level 1, MEF= 1.02 1 N-2

TOC-xxx

EE-RM-PET-100 COMMENT 88
Figure N.2 Trial Standard Level 2, MEF= 1.089 ................................ N-3

Figure N.3 Trial Standard Level 4, MEF= i .257 ................................ N-4

Figure N.4 Trial Standard Level 5, MEF = 1.362 ............................... N-5

Figure N.5 Trial Standard Level 6, MEF = 1.634 ............................... N-6

Figure N.6 Trial Standard Level 3, MEF = 1.04/1.26 ............................ N-7

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Figure N.7 Trial Standard Level 1, MEF= 1.021 N-8

Figure N.8 Trial Standard Level 2, MEF= 1.089 N-9

Figure N.9 Trial Standard Level 4, MEF= 1.257 N-10

Figure N.10 Trial Standard Level 5, MEF= 1.362 N-il

Figure N.l 1 Trial Standard Level 6, MEF= 1.634 N-12

Figure N.12 Trial Standard Level 3, MEF= 1.04/i .26 in 2004/2007 N-l3

Figure N. 13 Trial Standard Level 1, MEF= 1.021 N- 14

Figure N.14 Trial Standard Level 1, MEF= 1.021 N-iS

Figure N.lS Trial Standard Level 4, MEF= 1.257 N-l6

Figure N.16 Trial Standard Level 5, MEF= 1.362 N-17

Figure N.17 Trial Standard Level 6, MEF= 1.634 N-18

Figure N.18 Trial Standard Level 3, MEF= 1.04/1.26 in 2004/2007 N-l9

Figure R. 1 Distribution of Life-Cycle-Costs Savings for an MEF of 1.26 R-3

Figure R.2 Distribution of Payback Periods for a MEF of 1.26 R-4

Figure EA-3.1 a An Example of the Interpolation of a Trial Standard Level: Difference in

Coal Capacity EA.3-4

Figure EA-3.lb Close-Up of the Interpolation of Trial Standard Level X2 from Xl EA.3-5

Figure EA-3.2 Example of Trial Standard Level Xl: Marginal Nox Emissions EA.3-6

Figure EA-3.1 a An Example of the Interpolation of a Trial Standard Level:

Difference in Coal Capacity EA.3-S

Figure EA-3.l b Close-Up of the Interpolation of Trial Standard

Level X2 from Xl EA.3-4

Figure EA-3.2 Example of Trial Standard Level Xl: Marginal NO Emissions EA.3-5

TOC-xxxi

EE-RM-PET-100 COMMENT 88
CHAPTER 1. INTRODUCTION

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TABLE OF CONTENTS

1.1 OVERVIEW 1-1

1.2 STRUCTURE OF THE DOCUMENT 1-2

I-i

EE-RM-PET-100 COMMENT 88
CHAPTER 1. INTRODUCTION

1.1 OVERVIEW

Part B of Title III of the Energy Policy and Conservation Act, Public Law 94-163, as

amended by the National Energy Conservation Policy Act, Public Law 95-6 19, the National

Appliance Energy Conservation Act, Public Law 100-12, the National Appliance Energy

Conservation Amendments of 1988, Public Law 100-357, and the Energy Policy Act of 1992, Public

Law 102-486, (the Act or EPCA), created the Energy Conservation Program for Various Consumer

Products other than Automobiles. 42 U.S.C. §6291-6309.

The National Appliance Energy Conservation Act of 1987 amended the Act to impose

prescriptive standards (design feature requirements) for clothes washers as part of the energy

conservation program for consumer products. EPCA, §325(g), 42 U.S.C. §6295 (g). The design

feature requirement that clothes washers shall have an unheated rinse option was effective for

appliances manufactured on or after January 1, 1988. The Act required the Department to conduct

a rulemaking by January 1, 1990, to determine if the above mentioned standards should be amended.

The Act provided that any amendment to the standards would apply to products manufactured three

years after the rulemaking. The Final Rule was issued on May 14, 1991, and is effective for products

manufactured on or after May 14, 1994, (hereinafter referred to as the May 1991 Final Rule). 56 FR

22279. The Act also requires the Department to conduct a subsequent rulemaking no later than five

years after the date of publication of the previous final rule.

Before the Department determines whether or not an energy conservation standard is

economically justified, it must first solicit comments on the proposed standard. EPCA, §325 (p),

42 U.S.C. §6295 (p). 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. EPCA, §325(o)(2), 42 U.S.C. §6295 (o)(2). After reviewing comments on the proposal,

the Department must then detennine 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, initial charges, or maintenance

expenses for the covered products that are likely to result directly from the imposition of the

standard;

(3) The total projected amount of energy, or as applicable, water, 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;

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(5) The impact of any lessening of competition, as determined in writing by the Attorney

General, that is likely to result from the imposition of the standard;

(6) The need for national energy and water conservation; and

(7) Other factors the Secretary considers relevant.

The Department initiated a clothes washer rulemaking to determine if the standards (design

feature requirements) imposed by the Act should be amended. The Department published an

Advance Notice of Proposed Rulemaking (ANOPR) (53 FR 17712, May 18, 1988), a Notice of

Proposed Rulemaking (NOPR) (54 FR 32744, August 9, 1989), and the May 1991 Final Rule. The

May 1991 Final Rule mandated performance-based energy conservation standards for clothes

washers. The standards specified a minimum energy factor (EF) for two of the five classes of clothes

washers (top-loading standard and top-loading compact). The energy conservation standards in the

May 1991 Final Rule are effective for products manufactured on or after May 14, 1994.

On November 14, 1994, the Department issued an ANOPR to begin the second review of

energy efficiency standards for clothes washers, dishwashers and clothes dryers. The methodologies

presented in this report outline analytical approaches designed to evaluate the economic impacts

according to the criteria in the Act. It includes the approach for an engineering analysis of the

manufacturing cost and clothes washer performance data; for forecasting the number and efficiency

of products sold, for determining prices and operating expenses; for determining change in

investment, revenues, and costs to manufacturers of the products; for calculating the costs and

benefits to consumers, and the nation as a whole; and for assessing the environmental impacts of the

proposed standards. This Technical Support Document (TSD) is intended to supplement and provide

additional technical information for the concurrently released NOPR.

1.2 STRUCTURE OF THE DOCUMENT

This TSD consists of thirteen Chapters and seventeen Appendices.

Chapter 1 Introduction: outlines the structure of the document.

Chapter 2 Analytical Framework: describes the new rulemaking process step-by-step.

Chapter 3 Marketing and Technology Assessment: characterizes the relevant product markets

and existing technology options.

Chapter 4 Engineering Analysis: contains detailed energy use and cost information.

Chapter 5 Manufacturing Cost Assessment: determines the manufacturing cost by physically

taking apart washers.

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Chapter 6 Mark-ups for Price Determination: establishes a range of mark-ups from

manufacturing cost to retail price.

Chapter 7 Life-Cycle Cost and Payback Period: describes the effects of standards on individual

purchasers and users of the appliances. It compares the life-cycle cost of appliances

and other measures of consumer impact with and without the proposed standards.

Chapter 8 Consumer Analysis: describes the affect on the utility and performance of more

efficient washers as experienced by consumers. Evaluates the attributes of washers,

or what consumers value in a washing machine. Also evaluated is the effect of

standards on subgroups such as different household income levels.

Chapter 9 Shipments: describes how the shipments are forecasted before and after new

minimum efficiency standards.

Chapter 10 National Energy Impacts: describes national forecast of energy consumption,

efficiency of new units, units installed in households and annual appliance sales in

the absence (or presence) of new regulations.

Chapter 11 Manufacturer Impact Analysis: describes the financial impact on manufactures.

Chapter 12 Utility Impact Analysis: determines the decrease in electricity and natural gas needed.

For electricity it determines the primary energy source for electricity generation.

Chapter 13 Employment: describes estimated changes in net national employment due to

possible new clothes washer standards.

There are two separate reports that are bound in with the TSD.

Environmental Assessment: This determines the reduction in emissions due to higher efficiency

standards.

Regulatory Impact Analysis: This analysis determines the impact of non-regulatory alternatives to

standards.

Appendices in this report are listed below:

Appendix A List Of Clothes Washer Manufacturers

Appendix B Compact MEF Values

Appendix C Development of a Standardized Energy Test Cloth

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Appendix D Manufacturing Cost Assessment - Bill of Materials

Appendix E Approach for Uncertainty and Variability

Appendix F Water and Wastewater Price Analysis

Appendix G Life-Cycle-Cost Results

Appendix H Payback Period Results

Appendix I Consumer Research Report

Appendix J Clothes Washer Consumer Analysis

Appendix K Life-Cycle-Cost Results for Consumer Subgroups

Appendix L Payback Period Results for Consumer Subgroups

Appendix M Supplemental Shipment Forecast Charts

Appendix N National Energy & Water Savings Results

Appendix 0 Manufacturer Interview Guide

Appendix P Government Regulatory Impact Model (GRIM)

Appendix Q List of Acronyms and Abbreviations

Appendix R Life-Cycle-Cost and National Energy Savings Using the Most Current RECS 1997

and AEO 2000 Data.

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CHAPTER 2. ANALYTICAL FRAMEWORK

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TABLE OF CONTENTS

2.1 BACKGROUND 2-2

2.2 MARKET AND TECHNOLOGY ASSESSMENT 2-2

2.2.1 Market Assessment 2-2

2.2.2 Technology Assessment 2-4

2.2.3 Base Case Shipments Forecast 2-4

2.3 SCREENING ANALYSIS 2-4

2.3.1 Product Classes 2-4

2.3.2 Baseline Units 2-4

2.3.3 Design Options/Efficiency Levels 2-5

2.3.4 Proprietary Designs 2-5

2.4 ENGiNEERiNG ANALYSIS 2-5

2.4.1 Energy Savings Potential and Manufacturing Costs 2-5

2.5 LIFE-CYCLE COST (LCC) AND PAYBACK ANALYSES 2-6

2.5.1 LCC Spreadsheet Model 2-7

2.5.2 Price 2-7

2.5.2.1 Retail Price 2-7

2.6 NATIONAL IMPACTS ANALYSIS 2-8

2.6.1 National Energy Savings (NES) Spreadsheet Model 2-8

2.6.2 Shipments 2-9

2.6.3 Net National Employment Impacts 2-9

2.7 CONSUMER ANALYSIS 2-9

2.7.1 Purchase Price Increases 2-10

2.7.2 Consumer Participation 2-10

2.8 MANUFACTURER IMPACT ANALYSIS 2-10

2.8.1 Industry Cash Flow 2-11

2.8.2 Manufacturer Sub-Group Analysis 2-12

2.8.3 Interview Process 2-12

2.9 COMPETITIVE IMPACT ASSESSMENT 2-13

2.10 UTILITY ANALYSIS 2-13

2.11 ENVIRONMENTAL ASSESSMENT 2-14

2.12 REGULATORY IMPACT ANALYSIS 2-15

LIST OF TABLES

Table 2.1 Comparison of 1994 and 2000 Non-Regulatory Alternatives to Standards . . . 2-15

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LIST OF FIGURES

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Figure 2.1 Clothes Washer Rulemaking Framework 2-3

Figure 2.2 Flow Diagram of the Manufacturer Impact Analysis Methodology 2-11

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CHAPTER 2. ANALYTICAL FRAMEWORK

In prescribing new or amended energy efficiency appliance standards, the Department must

achieve the maximum improvement in energy efficiency that is technologically feasible and

economicallyjustified. This section provides a description of the analytical framework used by the

Department in developing standards and assessing impacts. It discusses the major components of the

analytical framework and the interrelationships among the components that ensure consistency

throughout the analyses. A diagram of the analytical framework is shown in Figure 2.1.

The analyses performed are:

o A Market and Technology Assessment to characterize the relevant product markets and existing

technology options including prototype designs. (Subtask 1 in Fig. 2.1)

o A Screening Analysis to review each technology option and determine if it is practicable to

manufacture, install and service, would adversely impact product utility or product availability,

or would have adverse impacts on health and safety. (Subtask 2 in Fig. 2.1)

o An Engineering Analysis to determine the maximum technologically feasible energy efficiency

level and develop cost-efficiency relationships to show the manufacturer cost of achieving

increased efficiency. (Subtask 3 in Fig. 2.1)

o LCC and Payback Analyses to calculate the savings in operating costs throughout the estimated

average life of the covered product compared to any increase in the price, initial charges, or

maintenance expenses for the product likely to result directly from the imposition of the

standard. (Subtask 5 in Fig. 2.1)

° A National Impacts Analysis to assess the aggregate impacts at the national level of consumer

payback, net present value (NPV) of total consumer LCC, national energy and water savings and

national employment. (Subtask 8 in Fig. 2.1)

• A Consumer Analysis to evaluate variations in household characteristics (e.g., energy prices,

appliance use behavior, installation costs) that might cause a standard to impact particular

consumer sub-populations such as low-income households differently than the overall

population. (Subtask 10 in Fig. 2.1)

• A Manufacturer Impact Analysis (MIA) to estimate the financial impact of standards on

manufacturers and to calculate impacts on, employment, and manufacturing capacity. (Subtask

11 inFig.2.l)

• A Utility Analysis to estimate the effects of proposed standards on electric and gas utilities.

(Subtask 12 in Fig. 2.1)

• An Environmental Assessment to provide estimates of changes in emissions of pollutants (sulfur

and nitrogen oxides and carbon dioxide). (Subtask 13 in Fig. 2.1)

o A Regulatory Impact Analysis to present major alternatives to proposed standards that could

achieve substantially the same regulatory goal at a lower cost. (Subtask 14 in Fig. 2.1)

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2.1 BACKGROUND

In September 1995, the Department announced a formal effort to consider further

improvements to the process used to develop appliance efficiency standards, calling on energy

efficiency groups, manufacturers, trade associations, state agencies, utilities and other interested

parties to provide input to guide the Department. On July 15, 1996, the Department published a

Final Rule: Procedures for Consideration of New or Revised Energy Conservation Standards for

Consumer Products (hereinafter referred to as the Process Rule). 61 FR 36974. The Process Rule

outlines the procedural improvements identified by the interested parties. The process improvement

effort also included a review of the: 1) economic models; 2) analytical tools; 3) methodologies; 4)

non-regulatory approaches; and 5) prioritization of future rules. The Department will also take into

account uncertainty and variability by doing scenario or probability analysis. For a more detailed

discussion, see Appendix E.

The clothes washer standards rulemaking is the first rule to be developed under the Process

Rule. The Department developed the analytical framework for the clothes washer rulemaking in

response to stakeholder concerns regarding the application of the Process Rule to the clothes washer

rulemaking. This analytical framework was presented during a clothes washer workshop held on

July 23, 1997. It describes the methodology, the analytical tools and the relationship between the

various analyses. The following sections provide a general description of the different analytical

components of the rulemaking framework.

2.2 MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment characterizes the relevant product markets and

existing technology options including prototype designs.

2.2.1 Market Assessment

When initiating a standards rulemaking, the Department develops information on the present

and past industry structure and market characteristics of the product(s) concerned. This activity

consists of both quantitative and qualitative efforts to assess the industry and products based on

publicly available information. Issues to be addressed include: 1) manufacturer market share and

characteristics; 2) trends in the number of firms; 3) the financial situation of manufacturers; 4)

existing non-regulatory efficiency improvement initiatives; and 5) trends in product characteristics

and retail markets. The information collected serves as resource material to be used throughout the

rulemaking.

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