CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES
 

TABLE OF CONTENTS
 

8.1 INTRODUCTION ........................................................................................................... 8-1
 

8.1.1 General Approach for LCC and PBP Analyses ............................................................... 8-1
 

8.1.2 Overview of LCC and PBP Inputs................................................................................... 8-3
 

8.1.3 New Home and Replacement Fractions of Shipments .................................................... 8-9
 

8.2 LIFE-CYCLE COST INPUTS ...................................................................................... 8-10
 

8.2.1 Total Installed Cost Inputs............................................................................................. 8-10
 

8.2.1.1 Room Air Conditioners................................................................................ 8-12
 

8.2.1.2 Clothes Dryers ............................................................................................. 8-15
 

8.2.2 Operating Cost Inputs .................................................................................................... 8-20
 

8.2.2.1 Annual Energy Consumption....................................................................... 8-22
 

8.2.2.2 Room Air Conditioner Energy Prices.......................................................... 8-23
 

8.2.2.3 Clothes Dryer Energy Prices........................................................................ 8-27
 

8.2.2.4 Energy Price Trends..................................................................................... 8-30
 

8.2.2.5 Repair and Maintenance Costs..................................................................... 8-32
 

8.2.2.6 Product Lifetime .......................................................................................... 8-32
 

8.2.2.7 Discount Rates ............................................................................................. 8-36
 

8.2.2.8 Effective Date of Standard........................................................................... 8-42
 

8.2.3 Product Energy Efficiency in the Base Case ................................................................. 8-43
 

8.2.3.1 Room Air Conditioners................................................................................ 8-43
 

8.2.3.2 Clothes Dryers ............................................................................................. 8-44
 

8.3 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS...................................... 8-44
 

8.3.1 Room Air Conditioners.................................................................................................. 8-46
 

8.3.1.1 Summary of Results..................................................................................... 8-46
 

8.3.1.2 Distributions of Impacts............................................................................... 8-47
 

8.3.1.3 Range of Impacts ......................................................................................... 8-51
 

8.3.2 Clothes Dryers ............................................................................................................... 8-60
 

8.3.2.1 Summary of Results..................................................................................... 8-60
 

8.3.2.2 Distributions of Impacts............................................................................... 8-63
 

8.3.2.3 Range of Impacts ......................................................................................... 8-68
 

8.4 REBUTTABLE PAYBACK PERIOD.......................................................................... 8-75
 

8.4.1 Inputs.............................................................................................................................. 8-75
 

8.4.2 Results............................................................................................................................ 8-76
 

LIST OF TABLES 

Table 8.1.1 Room Air Conditioners: LCC and PBP Input Summary..................................... 8-5
 

Table 8.1.2 Clothes Dryers: LCC and PBP Input Summary................................................... 8-8
 

Table 8.2.1 Inputs for Total Installed Cost ........................................................................... 8-10
 

Table 8.2.2 Room Air Conditioners: Baseline Manufacturer Costs ..................................... 8-12
 

Table 8.2.3 Room Air Conditioners: Standard-Level Manufacturer Cost Increases ............ 8-12
 

Table 8.2.4 Room Air Conditioners: Overall Markups ........................................................ 8-13
 

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Table 8.2.5 Room Air Conditioner: Installation Costs ......................................................... 8-13
 

Table 8.2.6 Room Air Conditioner, Less than 6,000 Btu/h, With Louvers: Total 

Installed Costs.................................................................................................... 8-14
 

Table 8.2.7 Room Air Conditioner, 8,000–13,999 Btu/h, With Louvers: Total Installed
 

Costs................................................................................................................... 8-14
 

Table 8.2.8 Room Air Conditioner, 20,000 Btu/h or more, With Louvers: Total
 

Installed Costs.................................................................................................... 8-15
 

Table 8.2.9 Room Air Conditioner, 8,000–13,999 Btu/h, Without Louvers: Total
 

Installed Costs.................................................................................................... 8-15
 

Table 8.2.10 Clothes Dryers: Baseline Manufacturer Costs................................................... 8-15
 

Table 8.2.11 Vented Dryer, Standard: Standard-Level Manufacturer Cost Increases............ 8-16
 

Table 8.2.12 Vented Dryer, Electric, Compact: Standard-Level Manufacturer Cost
 

Increases............................................................................................................. 8-16
 

Table 8.2.13 Vent-less Dryer, Electric: Standard-Level Manufacturer Cost Increases.......... 8-16
 

Table 8.2.14 Clothes Dryers: Overall Markups ...................................................................... 8-17
 

Table 8.2.15 Clothes Dryer Installation Costs ........................................................................ 8-17
 

Table 8.2.16 Vented Dryer, Electric, Standard: Consumer Product Costs, Installation
 

Costs, and Total Installed Costs......................................................................... 8-18
 

Table 8.2.17 Vented Dryer, Electric, Compact (120V): Consumer Product Costs,
 

Installation Costs, and Total Installed Costs...................................................... 8-18
 

Table 8.2.18 Vented Dryer, Electric, Compact (240V): Consumer Product Costs,
 

Installation Costs, and Total Installed Costs...................................................... 8-19
 

Table 8.2.19 Vented Dryer, Gas: Consumer Product Costs, Installation Costs, and Total
 

Installed Costs.................................................................................................... 8-19
 

Table 8.2.20 Vent-less 240V Dryer, Electric: Consumer Product Costs, Installation
 

Costs, and Total Installed Costs......................................................................... 8-20
 

Table 8.2.21 Vent-less Combination Washer/Dryer, Electric: Consumer Product Costs,
 

Installation Costs, and Total Installed Costs...................................................... 8-20
 

Table 8.2.22 Inputs for Operating Cost................................................................................... 8-21
 

Table 8.2.23 Room Air Conditioners: Residential Sector Average Annual Energy Use
 

by Efficiency Level............................................................................................ 8-22
 

Table 8.2.24 Room Air Conditioners: Commercial Sector Average Annual Energy Use
 

by Efficiency Level............................................................................................ 8-22
 

Table 8.2.25 Vented Electric Clothes Dryers: Average Annual Energy Use by
 

Efficiency Level................................................................................................. 8-23
 

Table 8.2.26 Vented Gas Clothes Dryers: Average Annual Energy Use by Efficiency
 

Level .................................................................................................................. 8-23
 

Table 8.2.27 Vent-less Clothes Dryers: Average Annual Energy Use by Efficiency
 

Level .................................................................................................................. 8-23
 

Table 8.2.28 Commercial Sector Marginal Electricity Prices ................................................ 8-27
 

Table 8.2.29 Average Electricity Prices in 2007 .................................................................... 8-28
 

Table 8.2.30 Average Residential Natural Gas Prices in 2007............................................... 8-29
 

Table 8.2.31 Average Residential LPG Prices in 2007........................................................... 8-30
 

Table 8.2.32 Room Air Conditioners: Product Lifetime Estimates and Sources ................... 8-33
 

Table 8.2.33 Clothes Dryers: Product Lifetime Estimates and Sources ................................. 8-34
 

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Table 8.2.34 Lifetime Parameters........................................................................................... 8-36
 

Table 8.2.35 Average Shares of Considered Household Debt and Equity Types (%) ........... 8-37
 

Table 8.2.36 Average Nominal Interest Rates for Household Debt Classes (%) ................... 8-37
 

Table 8.2.37 Average Real Effective Interest Rates for Household Debt Classes (%) .......... 8-38
 

Table 8.2.38 Average Nominal and Real Interest Rates for Household Equity Classes ........ 8-38
 

Table 8.2.39 Shares and Interest or Return Rates Used for Household Debt and Equity
 

Classes................................................................................................................ 8-39
 

Table 8.2.40 Data for Calculating Weighted-Average Cost of Capital for Commercial
 

Sectors................................................................................................................ 8-41
 

Table 8.2.41 Weighted-Average Cost of Capital for Commercial Sectors............................. 8-42
 

Table 8.2.42 Discount Rates for Commercial Sectors ............................................................ 8-42
 

Table 8.2.43 Room Air Conditioners Energy Efficiency: Base Case Market Shares............. 8-43
 

Table 8.2.44 Vented Clothes Dryers Energy Efficiency: Base Case Market Shares.............. 8-44
 

Table 8.2.45 Vent-less Clothes Dryers Energy Efficiency: Base Case Market Shares .......... 8-44
 

Table 8.3.1 Room Air Conditioners, <6,000 Btu/h, with Louvers: LCC and PBP
 

Results................................................................................................................ 8-46
 

Table 8.3.2 Room Air Conditioners, 8,000–13,999 Btu/h, with Louvers: LCC and PBP
 

Results................................................................................................................ 8-46
 

Table 8.3.3 Room Air Conditioners, ≥20,000 Btu/h, with Louvers: LCC and PBP
 

Results................................................................................................................ 8-47
 

Table 8.3.4 Room Air Conditioners, 8,000–13,999 Btu/h, Without Louvers: LCC and
 

PBP Results........................................................................................................ 8-47
 

Table 8.3.5 Vented Clothes Dryers, Electric, Standard: LCC and PBP Results................... 8-61
 

Table 8.3.6 Vented Clothes Dryers, Compact (120V): LCC and PBP Results .................... 8-61
 

Table 8.3.7 Vented Clothes Dryers, Compact (240V): LCC and PBP Results .................... 8-62
 

Table 8.3.8 Vented Clothes Dryers, Gas: LCC and PBP Results ......................................... 8-62
 

Table 8.3.9 Vent-less Clothes Dryers, Electric (240V): LCC and PBP Results................... 8-63
 

Table 8.3.10 Vent-less Clothes Dryers, Electric Combination: LCC and PBP Results ......... 8-63
 

Table 8.4.1 Room Air Conditioners: Rebuttable Payback Periods....................................... 8-76
 

Table 8.4.2 Clothes Dryers: Rebuttable Payback Periods .................................................... 8-76
 

LIST OF FIGURES 

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ....................... 8-5
 

Figure 8.2.1 Residential and Commercial Electricity Price Trends....................................... 8-31
 

Figure 8.2.2 Residential Natural Gas Price Trend.................................................................. 8-31
 

Figure 8.2.3 Residential LPG Price Trend ............................................................................. 8-32
 

Figure 8.3.1 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers, Base
 

Case LCC Distribution....................................................................................... 8-48
 

Figure 8.3.2 Room Air Conditioners, Residential 8,000–13,999 Btu/h, with Louvers,
 

Base Case LCC Distribution.............................................................................. 8-48
 

Figure 8.3.3 Room Air Conditioners, Residential ≥ 20,000 Btu/h, with Louvers, Base
 

Case LCC Distribution....................................................................................... 8-49
 

Figure 8.3.4 Room Air Conditioners, Residential 8,000–13,999 Btu/h Through Wall,
 

without Louvers, Base Case LCC Distribution.................................................. 8-49
 

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Figure 8.3.5 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers, CSL 3
 

LCC Savings Distribution.................................................................................. 8-50
 

Figure 8.3.6 Room Air Conditioners, Commercial < 6,000 Btu/h, with Louvers, CSL 3
 

LCC Savings Distribution.................................................................................. 8-50
 

Figure 8.3.7 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers,
 

Standard Level 3 PBP Distribution.................................................................... 8-51
 

Figure 8.3.8 Room Air Conditioners, Commercial < 6,000 Btu/h, with Louvers,
 

Standard Level 3 PBP Distribution.................................................................... 8-51
 

Figure 8.3.9 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers, Range
 

of Average LCC Savings ................................................................................... 8-52
 

Figure 8.3.10 Room Air Conditioners, Residential 8,000–13,999 Btu/h, with Louvers,
 

Range of Average LCC Savings........................................................................ 8-52
 

Figure 8.3.11 Room Air Conditioners, Residential ≥ 20,000 Btu/h, with Louvers, Range
 

of Average LCC Savings ................................................................................... 8-53
 

Figure 8.3.12 Room Air Conditioners, Residential 8,000–13,999 Btu/h Through Wall,
 

without Louvers, Range of Average LCC Savings............................................ 8-53
 

Figure 8.3.13 Room Air Conditioners, Commercial < 6,000 Btu/h, with Louvers, Range
 

of Average LCC Savings ................................................................................... 8-54
 

Figure 8.3.14 Room Air Conditioners, Commercial 8,000–13,999 Btu/h, with Louvers,
 

Range of Average LCC Savings........................................................................ 8-54
 

Figure 8.3.15 Room Air Conditioners, Commercial ≥ 20,000 Btu/h, with Louvers,
 

Range of Average LCC Savings........................................................................ 8-55
 

Figure 8.3.16 Room Air Conditioners, Commercial 8,000–13,999 Btu/h Through Wall,
 

without Louvers, Range of Average LCC Savings............................................ 8-55
 

Figure 8.3.17 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers, Range
 

of Average Payback Period................................................................................ 8-56
 

Figure 8.3.18 Room Air Conditioners, Residential 8,000–13,999 Btu/h, with Louvers,
 

Range of Average Payback Period .................................................................... 8-57
 

Figure 8.3.19 Room Air Conditioners, Residential ≥ 20,000 Btu/h, with Louvers, Range
 

of Average Payback Period................................................................................ 8-57
 

Figure 8.3.20 Room Air Conditioners, Residential 8,000–13,999 Btu/h Through Wall,
 

without Louvers, Range of Average Payback Period ........................................ 8-58
 

Figure 8.3.21 Room Air Conditioners, Commercial < 6,000 Btu/h, with Louvers, Range
 

of Average Payback Period................................................................................ 8-58
 

Figure 8.3.22 Room Air Conditioners, Commercial 8,000–13,999 Btu/h, with Louvers,
 

Range of Average Payback Period .................................................................... 8-59
 

Figure 8.3.23 Room Air Conditioners, Commercial ≥ 20,000 Btu/h, with Louvers,
 

Range of Average Payback Period .................................................................... 8-59
 

Figure 8.3.24 Room Air Conditioners, Commercial 8,000–13,999 Btu/h Through Wall,
 

without Louvers, Range of Average Payback Period ........................................ 8-60
 

Figure 8.3.25 Clothes Dryers, Electric Standard, Base Case LCC Distribution ...................... 8-64
 

Figure 8.3.26 Clothes Dryers, Electric Compact 120V, Case LCC Distribution..................... 8-64
 

Figure 8.3.27 Clothes Dryers, Electric Compact 240V, Base Case LCC Distribution............ 8-65
 

Figure 8.3.28 Clothes Dryers, Gas, Base Case LCC Distribution............................................ 8-65
 

Figure 8.3.29 Clothes Dryers, Vent-less 240V, Standard Base Case LCC Distribution ......... 8-66
 

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Figure 8.3.30 Clothes Dryers, Vent-less Combination Washer/Dryer, Standard Base 

Case LCC Distribution....................................................................................... 8-66
 

Figure 8.3.31 Clothes Dryers, Electric Standard, Standard Level 3 LCC Savings
 

Distribution ........................................................................................................ 8-67
 

Figure 8.3.32 Clothes Dryers, Electric Standard, Standard Level 3 PBP Distribution............ 8-67
 

Figure 8.3.33 Clothes Dryers, Electric Standard, Range of LCC Savings............................... 8-68
 

Figure 8.3.34 Clothes Dryers, Electric Compact 120V, Range of LCC Savings..................... 8-69
 

Figure 8.3.35 Clothes Dryers, Electric Compact 240V, Range of LCC Savings..................... 8-69
 

Figure 8.3.36 Clothes Dryers, Gas, Range of LCC Savings ................................................... 8-70
 

Figure 8.3.37 Clothes Dryers, Vent-less 240V , Range of LCC Savings ................................ 8-70
 

Figure 8.3.38 Clothes Dryers, Vent-less Combination Washer/Dryer, Range of LCC
 

Savings............................................................................................................... 8-71
 

Figure 8.3.39 Clothes Dryers, Vented, Electric Standard, Range of Payback Periods ............ 8-72
 

Figure 8.3.40 Clothes Dryers, Vented, Electric Compact 120V, Range of Payback
 

Periods................................................................................................................ 8-72
 

Figure 8.3.41 Clothes Dryers, Vented, Electric Compact 240V, Range of Payback
 

Periods................................................................................................................ 8-73
 

Figure 8.3.42 Clothes Dryers, Vented, Gas, Range of Payback Periods.................................. 8-73
 

Figure 8.3.43 Clothes Dryers, Vent-less 240V , Range of Payback Periods ........................... 8-74
 

Figure 8.3.44 Clothes Dryers, Vent-less Combination Washer/Dryer, Range of Payback
 

Periods................................................................................................................ 8-74
 

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CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES 

8.1 INTRODUCTION 

This chapter describes the U.S. Department of Energy (DOE)’s methodology for 

analyzing the economic impacts of possible energy efficiency standards for room air conditioners 

and clothes dryers on individual consumers. The effect of standards on individual consumers 

includes a change in operating expense (usually decreased) and a change in purchase price 

(usually increased). This chapter describes three metrics DOE used to determine the effect of 

standards on individual consumers: 

•	 Life-cycle cost (LCC) is the total consumer expense over the life of an appliance, 

including purchase expense and operating costs (including energy expenditures). DOE 

discounts future operating costs to the time of purchase, and sums them over the lifetime 

of the product. 

•	 Payback period (PBP) measures the amount of time it takes consumers to recover the 

assumed higher purchase price of more energy-efficient products through lower operating 

costs. 

•	 Rebuttable payback period is a special case of the PBP. Where LCC and PBP are 

estimated over a range of inputs reflecting actual conditions, rebuttable payback period is 

based on laboratory conditions, specifically DOE test procedure inputs. 

Inputs to the LCC and PBP calculations are discussed in sections 8.2 and 8.3, 

respectively, of this chapter. Results for the LCC and PBP are presented in section 8.4. The 

rebuttable PBP is discussed in section 8.5. Key variables and calculations are presented for each 

metric. DOE performed the calculations discussed here using a series of Microsoft Excel® 

spreadsheets which are accessible on the Internet 

(http://www.eere.energy.gov/buildings/appliance_standards/). Details and instructions for using 

the spreadsheets are discussed in appendix 8-A. 

8.1.1 General Approach for LCC and PBP Analyses 

Life-cycle cost is the total consumer expense over the life of an appliance, including 

purchase expense and operating costs (including energy expenditures). DOE discounts future 

operating costs to the time of purchase, and sums them over the lifetime of the product. DOE 

defines LCC by the following equation: 

N OC t LCC = IC +∑ t

t =1 (1+ r)

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Where:
 

LCC = Life-cycle cost in dollars,
 

IC = Total installed cost in dollars,
 

∑ = Sum over the lifetime, from year 1 to year N,
 

N = Lifetime of appliance in years,
 

OC = Operating cost in dollars,
 

r = Discount rate, and
 

t = Year for which operating cost is being determined.
 

The payback period is the amount of time it takes the consumer to recover the estimated 

higher purchase expense of more energy-efficient products as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase expense (i.e., from a less energyefficient design to a more energy-efficient design) to the decrease in annual operating 

expenditures. This type of calculation is known as a “simple” payback period, because it does 

not take into account changes in operating expense over time or the time value of money; i.e., the 

calculation is done at an effective discount rate of zero percent. 

The equation for PBP is: 

ΔIC 

PBP = ΔOC 

Where: 

ΔIC = Difference in the total installed cost between the more energy efficient design 

and the baseline design, and 

ΔOC = difference in annual operating expenses. 

Payback periods are expressed in years. Payback periods greater than the life of the 

product indicate that the increased total installed cost is not recovered with the reduced operating 

expenses. 

Recognizing that several inputs to the determination of consumer LCC and PBP are 

either variable or uncertain, DOE conducted the LCC and PBP analyses by modeling both the 

uncertainty and variability in the inputs using Monte Carlo simulation and probability 

distributions. A detailed explanation of Monte Carlo simulation and the use of probability 

distributions is contained in appendix 8-B. DOE developed LCC and PBP spreadsheet models 

incorporating both Monte Carlo simulation and probability distributions by using Microsoft 

Excel® spreadsheets combined with Crystal Ball® (a commercially available add-in program). 

In addition to characterizing several of the inputs to the analyses with probability 

distributions, DOE developed a sample of individual households that use each of the appliances. 

By developing household samples, DOE was able to perform the LCC and PBP calculations for 

each household to account for the variability in energy consumption and/or energy price 

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associated with each household. For room air conditioners, DOE also developed a sample of 

commercial buildings that use this product. 

As described in chapter 7, DOE used the DOE Energy Information Administration 

(EIA)’s 2005 Residential Energy Consumption Survey (RECS) to develop household samples 

for room air conditioners and clothes dryers.1 The 2005 RECS consists of 4,382 housing units 

and was constructed by the EIA to be a national representation of the household population in the 

United States. DOE used RECS to establish the variability of annual energy use of room air 

conditioners and clothes dryers and of energy prices. DOE was able to assign a unique annual 

energy use and/or energy price to each household in the sample. Due to the large sample of 

households considered in the LCC and PBP analyses, the range of annual energy use and/or 

energy prices is quite large (the actual ranges of energy consumption were presented in chapter 

7). The variability across households in annual energy use and/or energy pricing contributes to 

the range of LCCs and PBPs calculated for any particular standard level. 

DOE displays the LCC and PBP results as distributions of impacts compared to the 

baseline conditions. Results are presented at the end of this chapter and are based on 10,000 

samples per Monte Carlo simulation run. To illustrate the implications of the analyses, DOE 

generated a frequency chart depicting the variation in LCC and PBP for each standard level 

considered. 

8.1.2 Overview of LCC and PBP Inputs 

DOE categorizes inputs to the LCC and PBP analyses as follows: (1) inputs for 

establishing the purchase expense, otherwise known as the total installed cost, and (2) inputs for 

calculating the operating cost. 

The primary inputs for establishing the total installed cost are: 

•	 Baseline manufacturer cost: The costs incurred by the manufacturer to produce products 

meeting existing minimum efficiency standards. 

•	 Standard-level manufacturer cost increases: The change in manufacturer cost associated 

with producing products to meet a particular standard level. 

•	 Markups and sales tax: The markups and sales tax associated with converting the
 

manufacturer cost to a consumer product cost.
 

•	 Installation cost: The cost to the consumer of installing the product. The installation cost 

represents all costs required to install the product other than the marked-up consumer 

product cost. The installation cost includes labor, overhead, and any miscellaneous 

materials and parts. Thus, the total installed cost equals the consumer product cost plus 

the installation cost. 

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The primary inputs for calculating the operating cost are: 

•	 Product energy consumption: The product energy consumption is the site energy use 

associated with operating the product. 

•	 Product efficiency: The product efficiency dictates the product energy consumption 

associated with standard-level products (i.e., products with efficiencies greater than 

baseline products). 

•	 Energy prices: Energy prices are the prices paid by consumers for energy (i.e., electricity 

or gas). 

•	 Energy price trends: DOE used the EIA Annual Energy Outlook 2009 (AEO2009) to 

forecast energy prices into the future for the results presented in this chapter. 

•	 Repair and maintenance costs: Repair costs are associated with repairing or replacing 

components that have failed. Maintenance costs are associated with maintaining the 

operation of the product. 

•	 Lifetime: The age at which the product is retired from service. 

•	 Discount rate: The rate at which DOE discounted future expenditures to establish their 

present value. 

The data inputs to PBP are the total installed cost of the product to the consumer for each 

energy efficiency level and the annual (first year) operating expenditures for each energy 

conservation standard level. The inputs to the total installed cost are the product cost and the 

installation cost. The inputs to the operating costs are the annual energy cost, the annual repair 

cost, and the annual maintenance cost. The PBP uses the same inputs as the LCC analysis, except 

that energy price trends and discount rates are not required. Since the PBP is a “simple” payback, 

the required energy price is only for the year in which a new energy conservation standard is to 

take effect. The energy price DOE used in the PBP calculation was the price projected for that 

year. Discount rates are also not required for the simple PBP calculation. 

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating 

cost inputs for the calculation of the LCC and PBP. In the figure below, the yellow boxes 

indicate the inputs, the green boxes indicate intermediate outputs, and the blue boxes indicate the 

final outputs (the LCC and PBP). 

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Baseline 

Manufacturer 

Cost 

Std-Level 

Manufacturer 

Cost 

Manufacturer 

Markup 

Retailer or 

Distributor 

Markup 

Sales Tax 

Installation 

Cost 

Energy 

Consumption 

Equipment 

Price 

Lifetime 

Operating 

Expense 

Annual Energy 

Expense 

Lifetime Repair and 

Maintenance 

Cost 

Discount Rate 

Energy Price 

Trends 

Annual 

Operating 

Expense 

Payback 

Period 

Life-Cycle 

Cost 

Energy Prices 

Total Installed 

Cost 

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP 

Tables 8.1.1 and 8.1.2 summarize the input values that DOE used to calculate the LCC 

and PBP for room air conditioners and clothes dryers, respectively. Each table summarizes the 

total installed cost inputs and the operating cost inputs including the lifetime, discount rate, and 

energy price trends. DOE characterized all of the total cost inputs with single-point values, but 

characterized several of the operating cost inputs with probability distributions that capture the 

input’s uncertainty and/or variability. For those inputs characterized with probability 

distributions, the values provided in the following tables are the average or typical values. 

Table 8.1.1 Room Air Conditioners: LCC and PBP Input Summary 

Input Product Class Average or Typical Value Characterization 

Baseline 

Manufacturer Cost 

(2008$) 

Less than 6,000 

Btu/h $136 Single-Point Value 

8,000–13,999 Btu/h $169 (for 8 kBtu/h) 

$218 (for 12 kBtu/h) Single-Point Values 

20,000 Btu/h or 

more 

$325 Single-Point Value 

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8,000–13,999 Btu/h 

(Thru the Wall) 

$217 (for 8 kBtu/h) 

$238 (for 12 kBtu/h) Single-Point Values 

Standard-Level 

Manufacturer Cost 

Increase (2008$) 

Less than 6,000 

Btu/h 

EL 1 = $5 

EL 2 = $11 

EL 3 = $20 

EL 4 = $30 

EL 5 = $36 

Single-Point Value 

8,000–13,999 Btu/h 

8 kBtu/h 12 kBtuh 

Single-Point Values 

El 1 = $9 

EL2 = $18 

EL 3 = $29 

EL 4 = $34 

El 1 = $6 

EL2 = $13 

EL 3 = $31 

EL 4=$103 

20,000 Btu/h or 

more 

EL 1 = $14 

EL 2 = $29 

EL 3 = $52 

EL 4 = $81 

Single-Point Value 

8,000–13,999 Btu/h 

(Thru the Wall) 

8 kBtu/h 12 kBtuh 

EL 1 = $2 Single-Point Values EL 2 = $4 

EL 3 = $16 

EL 1 = $5 

EL 2 = $11 

EL 3 = $27 

Manufacturer 

Markup All 1.26 Single-Point Value 

Retailer Markup All Baseline = 1.45 

Incremental = 1.15 Single-Point Value 

Sales Tax All 1.0657 Single-Point Value 

Installation Cost 

(2008$) 

Less than 6,000 

Btu/h $59 Single-Point Value 

8,000–13,999 Btu/h $101 Single-Point Value 

20,000 Btu/h or 

more 

$202 Single-Point Value 

8,000–13,999 Btu/h 

(Thru the Wall) $101 Single-Point Value 

Annual Energy Use 

Less than 6,000 

Btu/h 

Residential baseline use = 

688 kWh 

Commercial baseline use = 

640 kWh 

Variability based on usage 

8,000–13,999 Btu/h 

Residential baseline use = 

672 kWh 

Commercial baseline use = 

1,181 kWh 

Variability based on usage 

20,000 Btu/h or 

more 

Residential baseline use* = 

1,118 kWh 

Commercial baseline use* 

= 3,343 kWh 

Variability based on usage 

8,000–13,999 Btu/h 

(Thru the Wall) 

Residential baseline use* = 

712 kWh 

Commercial baseline use* 

= 1,359 kWh 

Variability based on usage 

8-6 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

2014 Average 

Energy Prices 

(2008$) 

All Residential = 13.7 ¢/kWh 

Commercial = 20.0 ¢/kWh Variability based on region. 

2014 Marginal 

Energy Prices 

(2008$) 

All Residential = 12.5 ¢/kWh 

Commercial = 18.3 ¢/kWh Variability based on region. 

Repair and 

Maintenance Costs All No cost increase with 

efficiency 

No cost increase with 

efficiency 

Lifetime All 10.5 years Weibull distribution 

Discount Rate All Residential = 4.8% 

Commercial = 5.7% Custom distribution 

Energy Price Trend All AEO 2009 Reference Case Two sensitivities: 

High & Low Growth Cases 

8-7 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.1.2 Clothes Dryers: LCC and PBP Input Summary
 

Input Product Class 

Average or Typical 

Value Characterization 

Baseline 

Manufacturer Cost 

(2008$) 

Vented Electric 

Standard $221.88 Single-Point Value 

Vented Electric 

Compact 120V $222.12 Single-Point Value 

Vented Electric 

Compact 240V $222.12 Single-Point Value 

Vented Gas $261.89 Single-Point Value 

Vent-less 240V $575.43 Single-Point Value 

Vent-less 

Combination $750.56 Single-Point Value 

Standard-Level 

Manufacturer Cost 

Increase (2008$) 

Vented Electric 

Standard 

EL1 = $11.89 

EL2 = $63.56 

EL3 = $97.48 

EL4 = $98.78 

EL5 = $98.14 

EL6 = $259.13 

Single-Point Value 

Vented Electric 

Compact 120V 

EL1 = $10.95 

EL2 = $63.37 

EL3 = $96.45 

EL4 = $97.75 

EL5 = $97.11 

EL6 = $246.35 

Single-Point Value 

Vented Electric 

Compact 240V 

EL1 = $10.95 

EL2 = $63.37 

EL3 = $96.45 

EL4 = $97.75 

EL5 = $97.11 

EL6 = $246.35 

Single-Point Value 

Vented Gas 

EL1 = $14.79 

EL2 = $65.36 

EL3 = $156.01 

EL4 = $157.31 

EL5 = $156.67 

Single-Point Value 

Vent-less 240V 

EL1 = $1.30 

EL2 = $0.66 

EL3 = $13.01 

EL4 = $69.02 

EL5 = $216.37 

Single-Point Value 

Vent-less 

Combination 

EL1 = $0.81 

EL2 = $54.04 

EL3 = $55.34 

EL4 = $54.70 

EL5 = $230.83 

Single-Point Value 

Manufacturer 

Markup All 1.26 Single-Point Value 

Retailer Markup All Baseline = 1.45 Single-Point Value 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incremental = 1.15 

Sales Tax All 0.8 Single-Point Value 

Installation Cost 

(2008$) 

Vented Electric 

Standard $120 Single-Point Value 

Vented Electric 

Compact 120V $120 Single-Point Value 

Vented Electric 

Compact 240V $120 Single-Point Value 

Vented Gas $149 Single-Point Value 

Vent-less 240V $118 Single-Point Value 

Vent-less 

Combination $118 Single-Point Value 

Annual Energy Use 

Vented Electric 

Standard Baseline = 519 kWh Variability based on usage 

Vented Electric 

Compact 120V Baseline = 270 kWh Variability based on usage 

Vented Electric 

Compact 240V Baseline = 290 kWh Variability based on usage 

Vented Gas Baseline = 1.65 MMBtu 

(gas) and 71 kWh (elec.) Variability based on usage 

Vent-less 240V Baseline = 351 kWh Variability based on usage 

Vent-less 

Combination Baseline = 424 kWh Variability based on usage 

Energy Prices Electricity 10.7 ¢/kWh Variability based on region 

Gas 12.66 $/MMBtu Variability based on region 

Repair and 

Maintenance Costs All No cost increase with 

efficiency 

No cost increase with 

efficiency 

Lifetime All 16.03 years Weibull distribution: 

1 to 40 years 

Discount Rate All 4.7% Custom distribution 

Energy Price Trend All AEO 2009 Reference 

Case 

Two sensitivities: 

High & Low Growth Cases 

8.1.3 New Home and Replacement Fractions of Shipments 

The LCC and PBP analyses use separate values for new home applications and 

replacement applications for some variables, since the type of application influences these 

variables. Such variables are markups, installation costs, and discount rates. The derivation of the 

appropriate values in each case for new home applications and replacement applications is given 

in chapter 6 for markups, and given in this chapter for installation costs and discount rates. 

For clothes dryers, DOE found indications that some builders install a washer and dryer 

in new homes. Using 1997–2007 AHS data, DOE estimated that builders install a clothes dryer 

in 37 percent of new homes. Thus, 5 percent of total shipments in 2014 are accounted for in new 

8-9 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

construction applications. For room air conditioners, DOE assumed that there would be no new 

home installations. 

8.2 LIFE-CYCLE COST INPUTS 

Because DOE gathered most of its data for the LCC and PBP analyses in 2008, DOE 

expresses dollar values in 2008$. 

8.2.1 Total Installed Cost Inputs 

DOE defines the total installed cost using the following equation: 

IC = CPC + INST 

Where: 

CPC = consumer product cost (i.e., consumer cost for the product only), and 

INST = installation cost or the consumer cost to install products. 

The product cost is based on how the consumer purchases the product. As discussed in 

chapter 6, Markups to Determine Product Cost, DOE defined markups and sales taxes for 

converting manufacturing costs into consumer product costs. 

Table 8.2.1 summarizes the inputs for the determination of total installed cost. 

Table 8.2.1 Inputs for Total Installed Cost 

Baseline Manufacturer Cost 

Standard-Level Manufacturer Cost 

Distribution Chain Markups 

Sales Tax (replacement applications) 

Installation Cost 

The baseline manufacturer cost is the cost incurred by the manufacturer to produce 

products meeting existing minimum efficiency standards. Standard-level manufacturer selling 

price increases are the change in manufacturer cost associated with producing products at a 

standard level. Markups and sales tax convert the manufacturer cost to a consumer product cost. 

The installation cost is the cost to the consumer of installing the product and represents all costs 

required to install the product other than the marked-up consumer product cost. The installation 

cost includes labor, overhead, and any miscellaneous materials and parts. 

DOE calculated the total installed cost for baseline products based on the following 

equation: 

8-10 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IC = CPC + INST BASE BASE BASE 

= COST + INST MFG × MU OVERALL _ BASE BASE 

Where: 

ICBASE = baseline total installed cost, 

CPCBASE = consumer product cost for baseline models, 

INSTBASE = baseline installation cost, 

COSTMFG = manufacturer cost for baseline models, and 

MUOVERALL_BASE = baseline overall markup (product of manufacturer markup, baseline 

retailer or distributor markup, and sales tax). 

DOE calculated the total installed cost for standard-level products based on the following 

equation: 

IC = CPC + INST STD STD STD 

= (CPC + ΔCPC )+ (INST + ΔINST ) BASE STD BASE STD 

= (CPC + INST )+ (ΔCPC + ΔINST ) BASE BASE STD STD 

= IC + (ΔCOST × MU + ΔINST ) BASE MFG OVERALL _ INCR STD 

Where: 

ICSTD = standard-level total installed cost, 

CPCSTD = consumer product cost for standard-level models, 

INSTSTD = standard-level installation cost, 

CPCBASE = consumer product cost for baseline models, 

ΔCPCSTD = change in product cost for standard-level models, 

INSTBASE = baseline installation cost, 

ΔINSTSTD = change in installation cost for standard-level models, 

ICBASE = baseline total installed cost, 

ΔCOSTMFG = change in manufacturer cost for standard-level models, and 

MUOVERALL_INCR = incremental overall markup (product of manufacturer markup, 

incremental retailer or distributor markup, and sales tax). 

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the total installed cost for room air conditioners and clothes 

dryers. 

8-11 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.2.1.1 Room Air Conditioners 

Baseline Manufacturer Cost. DOE developed the baseline manufacturer costs for room 

air conditioners as described in chapter 5, Engineering Analysis. The baseline manufacturer costs 

are shown in Table 8.2.2. 

Table 8.2.2 Room Air Conditioners: Baseline Manufacturer Costs 

Product Class 

Baseline 

IEER 

Baseline 

EER 

Manufacturer Cost 

(2008$) 

Less than 6,000 Btu/h, 

Without louvers 

9.52 9.7 $136 

8,000–13,999 Btu/h, 

Without louvers (8 kBtu/h) 

9.69 9.8 $169 

8,000–13,999 Btu/h, 

Without louvers (12 KBtu/h) 

9.72 9.8 $218 

20,000 Btu/h or more, 

Without louvers 

8.47 8.5 $325 

8,000–13,999 Btu/h, With 

louvers (8 kBtu/h) 

8.41 8.5 $217 

8,000–13,999 Btu/h, With 

louvers (12 kBtu/h) 

8.44 8.5 $238 

Standard-Level Manufacturer Cost Increases. DOE used a combination of cost data 

submitted by AHAM and a reverse engineering analysis to develop manufacturer cost increases 

associated with increases in room air conditioner efficiency levels. Refer to chapter 5, 

Engineering Analysis, for details. Table 8.2.3 presents the standard-level manufacturer cost 

increase for each considered efficiency level. 

Table 8.2.3 Room Air Conditioners: Standard-Level Manufacturer Cost Increases 

Less than 6,000 Btu/h 

with Louvers 

8,000-13,999 Btu/h 

with Louvers 

20,000 Btu/h or more 

with Louvers 

8,000-13,999 Btu/h 

without Louvers 

IEER Manufacturer 

Cost Increase 

(2008$) 

IEER Manufacturer 

Cost Increase 

(2008$) 

IEER Manufacturer 

Cost Increase 

(2008$) 

IEER Manufacturer 

Cost Increase 

(2008$) 

8 kBtu/h 12 kBtu/h 8 kBtu/h 12 kBtu/h 

10.1 $4.5 10.3 $9.1 $6.4 9.0 $13.7 8.9 $2.5 $4.5 

10.6 $10.6 10.8 $17.5 $13 9.4 $29.1 9.3 $4.4 11.4 

11.1 $19.5 11.3 $28.8 $37.1 9.8 $51.5 9.8 $15.6 $27.2 

11.6 $29.7 11.5 $33.5 $102.9 10.0 $80.6 

12.0 $36.5 

Overall Markup. The overall markup is the value determined by multiplying the
 

manufacturer and retailer markups and the sales tax together to arrive at a single markup value.
 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.4 shows the overall baseline and incremental markups for room air conditioners. Refer 

to chapter 6, Markups to Determine Product Cost, for details. 

Table 8.2.4 Room Air Conditioners: Overall Markups 

Markup Baseline Cost Markup Incremental Cost Markup 

Manufacturer 1.26 

Retailer 1.45 1.15 

Sales Tax 1.067 

Overall 1.95 1.55 

Installation Cost. The cost of installation covers all labor and material costs associated 

with the replacement of a product or the installation of a product in a new home. DOE derived 

installation costs for room air conditioners from data in the RS Means 2008. This book provides 

estimates on the labor required to install residential room air conditioner. Table 8.2.5 provides 

both bare costs (i.e., costs before overhead & profit) and installation costs including overhead 

and profit. DOE determined that installation costs would not be impacted with increased 

efficiency levels. A similar finding was made in the previous rulemaking conducted for room air 

2 conditioners.

Table 8.2.5 Room Air Conditioner: Installation Costs 

Labor 

Hours 

Bare Costs (2008$) Including Overhead & Profit 

(2008$)** 

Product Class Labor Material Total Labor Material* Total 

Less than 6,000 

Btu/h 1 $38 $0 $38 $59 $0 $59 

8,000–13,999 Btu/h 2 $67 $0 $67 $101 $0 $101 

20,000 Btu/h or 

more 

4 $134 $0 $134 $202 $0 $202 

* Material costs including overhead and profit equal bare costs plus 10 percent profit. 

** Labor costs including overhead and profit equal bare labor costs plus labor markup in RSMeans.. 

Source: RS Means 

Total Installed Cost. The total installed cost is the sum of the consumer product cost and 

the installation cost. Tables 8.2.6 through 8.2.9 present the total installed costs for the room air 

conditioner product classes. Prices and costs are presented at the baseline level and each energy 

efficiency level. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.6 Room Air Conditioner, Less than 6,000 Btu/h, With Louvers: Total Installed 

Costs 

IEER 

Residential Total 

Installed Cost 

(2008$) 

Commercial Total 

Installed Cost 

(2008$) 

9.52 $329 $328 

10.1 $337 $336 

10.6 $347 $346 

11.1 $362 $361 

11.6 $379 $378 

12.0 $389 $388 

Table 8.2.7 Room Air Conditioner, 8,000–13,999 Btu/h, With Louvers: Total Installed 

Costs 

IEER 

Residential Total 

Installed Cost 

(2008$) 

Commercial Total 

Installed Cost 

(2008$) 

9.69 or 9.72* $489 $488 

10.3 $503 $502 

10.8 $517 $516 

11.3 $543 $542 

11.5 $602 $601 

* For 8 and 12 kBtu/h 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.8 Room Air Conditioner, 20,000 Btu/h or more, With Louvers: Total Installed 

Costs 

IEER 

Residential Total 

Installed Cost 

(2008$) 

Commercial Total 

Installed Cost 

(2008$) 

8.47 $860 $860 

9.0 $884 $884 

9.4 $913 $912 

9.8 $951 $951 

10.0 $996 $996 

Table 8.2.9 Room Air Conditioner, 8,000–13,999 Btu/h, Without Louvers: Total Installed 

Costs 

IEER 

Residential Total 

Installed Cost 

(2008$) 

Commercial Total 

Installed Cost 

(2008$) 

8.43 $557 $556 

8.9 $562 $561 

9.3 $569 $568 

9.8 $590 $589 

8.2.1.2 Clothes Dryers 

Baseline Manufacturer Price. DOE developed the baseline manufacturer costs for 

clothes dryers as described in chapter 5, Engineering Analysis. The baseline manufacturer costs 

are shown in Table 8.2.10. 

Table 8.2.10 Clothes Dryers: Baseline Manufacturer Costs 

Product Class 

Baseline Integrated 

Energy Factor 

(lb/kWh) 

Baseline 

Energy Factor 

(lb/kWh) 

Manufacturer 

Cost 

(2008$) 

Vented, Electric, Standard 2.96 3.01 $221.88 

Vented, Electric, Compact (120 v) 3.00 3.13 $222.12 

Vented, Electric, Compact (240 v) 2.79 2.90 $222.12 

Vented, Gas 2.63 2.67 $261.89 

Vent-less, Electric, Compact (240 v) 2.29 2.37 $575.43 

Vent-less Electric Combination Washer/ Dryer 1.90 1.95 $750.56 

Standard-Level Manufacturer Cost Increases. DOE used cost data submitted by AHAM 

to develop manufacturer cost increases associated with increases in clothes dryer efficiency 

levels. Refer to chapter 5, Engineering Analysis, for details. Tables 8.2.11 and 8.2.13 present the 

standard-level manufacturer cost increases for the considered product classes. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.11 Vented Dryer, Standard: Standard-Level Manufacturer Cost Increases
 

Electric Gas 

Integrated Energy 

Factor 

(lb/kWh) 

Standard-Level 

Manufacturer Cost Increase 

(2008$) 

Integrated Energy 

Factor 

(lb/kWh) 

Standard-Level 

Manufacturer Cost 

Increase (2008$) 

3.04 $11.89 2.71 $14.79 

3.10 $63.56 2.80 $65.36 

3.33 $97.48 2.97 $156.01 

3.35 $98.78 2.98 $157.31 

3.40 $98.14 3.02 $156.67 

4.52 $259.13 -­ -­

Table 8.2.12 Vented Dryer, Electric, Compact: Standard-Level Manufacturer Cost 

Increases 

120 V 240 V 

Integrated Energy 

Factor 

(lb/kWh) 

Standard-Level 

Manufacturer Cost Increase 

(2008$) 

Integrated Energy 

Factor 

(lb/kWh) 

Standard-Level 

Manufacturer Cost 

Increase (2008$) 

3.08 $10.95 2.86 $10.95 

3.15 $63.37 2.96 $63.37 

3.37 $96.45 3.06 $96.45 

3.41 $97.75 3.10 $97.75 

3.53 $97.11 3.19 $97.11 

4.69 $246.35 4.34 $246.35 

Table 8.2.13 Vent-less Dryer, Electric: Standard-Level Manufacturer Cost Increases
 

Compact (240 v) Combination Washer/Dryer 

Integrated Energy 

Factor 

(lb/kWh) 

Standard-Level 

Manufacturer Cost Increase 

(2008$) 

Integrated Energy 

Factor 

(lb/kWh) 

Standard-Level 

Manufacturer Cost 

Increase (2008$) 

2.31 $1.30 2.15 $0.81 

2.37 $0.66 2.34 $54.04 

2.39 $13.01 2.36 $55.34 

2.59 $69.02 2.42 $54.70 

3.54 $216.37 3.31 $230.83 

Overall Markup. The overall markup is the value determined by multiplying the 

manufacturer and retailer markups and the sales tax together to arrive at a single markup value. 

Table 8.2.14 shows the overall baseline and incremental markups for clothes dryers. Refer to 

chapter 6, Markups to Determine Product Cost, for details. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.14 Clothes Dryers: Overall Markups
 

Markup Baseline Incremental 

Manufacturer 1.26 

Retailer 1.45 1.15 

Sales Tax 1.068 

Overall 1.95 1.55 

Installation Cost. DOE derived baseline installation costs for clothes dryers from data in 

the RS Means 2008. This book provides estimates on the labor required to install clothes dryers. 

Table 8.2.15 provides both bare costs (i.e., costs before overhead and profit) and installation 

costs including overhead and profit. DOE found no evidence that installation costs would be 

impacted with increased efficiency levels. A similar finding was made in the previous 

rulemaking conducted for clothes dryers.3 

Table 8.2.15 Clothes Dryer Installation Costs 

Labor 

Hours 

Bare Costs (2008$) Including Overhead & Profit 

(2008$) 

Installation Type Labor Material Total Labor** Material* Total 

Electric Vented Clothes 

Dryers (Retrofit) 2.5 $84 $0 $84 $126 $0 $126 

Electric Vented Clothes 

Dryers (New Owner) 2 $67 $0 $67 $101 $0 $101 

Electric Vented Clothes 

Dryers (New Construction) 1 $34 $34 $68 $51 $37 $88 

Gas Clothes Dryers 

(Retrofit) 2.5 $105 $0 $105 $158 $0 $158 

Gas Clothes Dryers (New 

Owner) 2 $84 $0 $84 $126 $0 $126 

Gas Clothes Vented Dryers 

(New Construction) 1 $42 $34 $76 $63 $37 $100 

Vent-less Dryers (Retrofit) 2.5 $84 $0 $84 $126 $0 $126 

Vent-less Dryers (New 

Owner) 2 $67 $0 $67 $101 $0 $101 

Vent-less Dryers (New 

Construction) 1 $34 $0 $68 $0 $37 $50 

* Material costs including overhead and profit equal bare costs plus 10 percent profit.
 

** Labor costs including overhead and profit equal bare labor costs plus labor markup in RSMeans..
 

Source: RS Means
 

Total Installed Cost. The total installed cost is the sum of the consumer product cost and 

the installation cost. Tables 8.2.16 through 8.2.21 present the consumer product costs, 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

installation costs, and total installed costs by efficiency level for the considered clothes dryer 

product classes. 

Table 8.2.16	 Vented Dryer, Electric, Standard: Consumer Product Costs, Installation 

Costs, and Total Installed Costs 

Level 

Integrated 

Energy Factor 

(lb/kWh) 

Product Cost 

(2008$) 

Installation Cost 

(2008$) 

Total Installed 

Cost 

(2008$) 

Baseline 2.96 433 120 552 

1 3.04 451 120 571 

2 3.10 531 120 651 

3 3.33 583 120 703 

4 3.35 585 120 705 

5 3.40 584 120 704 

6 4.52 833 120 953 

Table 8.2.17 Vented Dryer, Electric, Compact (120V): Consumer Product Costs, 

Installation Costs, and Total Installed Costs 

Level 

Integrated 

Energy Factor 

(lb/kWh) 

Product Cost 

(2008$) 

Installation Cost 

(2008$) 

Total Installed 

Cost 

(2008$) 

Baseline 3.00 433 120 553 

1 3.08 450 120 570 

2 3.15 531 120 651 

3 3.37 582 120 702 

4 3.42 584 120 704 

5 3.53 583 120 703 

6 4.69 814 120 934 

8-18 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.18 Vented Dryer, Electric, Compact (240V): Consumer Product Costs, 

Installation Costs, and Total Installed Costs 

Level 

Integrated 

Energy Factor 

(lb/kWh) 

Product Cost 

(2008$) 

Installation Cost 

(2008$) 

Total Installed 

Cost 

(2008$) 

Baseline 2.79 433 120 553 

1 2.86 450 120 570 

2 2.96 531 120 651 

3 3.06 582 120 702 

4 3.10 584 120 704 

5 3.19 583 120 703 

6 4.34 814 120 934 

Table 8.2.19 Vented Dryer, Gas: Consumer Product Costs, Installation Costs, and Total 

Installed Costs 

Level 

Integrated 

Energy Factor 

(lb/kWh) 

Product Cost 

(2008$) 

Installation Cost 

(2008$) 

Total Installed 

Cost 

(2008$) 

Baseline 2.63 512 149 661 

1 2.71 535 149 684 

2 2.80 613 149 762 

3 2.97 753 149 903 

4 2.98 755 149 905 

5 3.02 754 149 904 

8-19 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.20 Vent-less 240V Dryer, Electric: Consumer Product Costs, Installation Costs, 

and Total Installed Costs 

Level 

Integrated 

Energy Factor 

(lb/kWh) 

Product Cost 

(2008$) 

Installation Cost 

(2008$) 

Total Installed 

Cost 

(2008$) 

Baseline 2.29 1122 118 1240 

1 2.31 1124 118 1242 

2 2.37 1123 118 1241 

3 2.39 1143 118 1260 

4 2.59 1229 118 1347 

5 3.54 1457 118 1575 

Table 8.2.21 Vent-less Combination Washer/Dryer, Electric: Consumer Product Costs, 

Installation Costs, and Total Installed Costs 

Level 

Integrated 

Energy Factor 

(lb/kWh) 

Product Cost 

(2008$) 

Installation Cost 

(2008$) 

Total Installed 

Cost 

(2008$) 

Baseline 1.90 1464 118 1582 

1 2.15 1465 118 1583 

2 2.34 1548 118 1665 

3 2.36 1550 118 1667 

4 2.42 1549 118 1666 

5 3.31 1821 118 1939 

8.2.2 Operating Cost Inputs 

DOE defines the operating cost (OC) by the following equation:
 

OC = EC + RC + MC
 

Where: 

EC = energy expenditure associated with operating the product,
 

RC = repair cost associated with component failure, and
 

MC = cost for maintaining product operation.
 

Table 8.2.22 shows the inputs for determining the annual operating costs and their 

discounted value over the product lifetime. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.22 Inputs for Operating Cost
 

Annual Energy Consumption 

Energy Prices and Price Trends 

Repair and Maintenance Costs 

The annual energy consumption is the site energy use associated with operating the 

product. The annual energy consumption varies with the product efficiency. Energy prices are 

the prices paid by consumers for energy (i.e., electricity or gas). Multiplying the annual energy 

consumption by the energy prices yields the annual energy cost. Repair costs are associated with 

repairing or replacing components that have failed. Maintenance costs are associated with 

maintaining the operation of the product. DOE used energy price trends to forecast energy prices 

into the future and, along with the product lifetime and discount rate, to establish the present 

value of lifetime energy costs. 

DOE calculated the annual operating cost for baseline products based on the following 

equation: 

OC = ( AEC × PRICE ) + RC + MC BASE BASE ENERGY BASE BASE 

Where:
 

OCBASE = operating cost for baseline product,
 

AECBASE = annual energy consumption for baseline product,
 

PRICEENERGY = energy price,
 

RCBASE = repair cost associated with component failure for baseline product, and
 

MCBASE = cost for maintaining baseline product operation,
 

DOE calculated the annual operating cost for standard-level products based on the 

following equation: 

OC = ( AEC STD × PRICE ) + RC STD + MC STD ENERGY STD 

Where: 

OCSTD = operating cost for standard-level products, 

AECSTD = annual energy consumption for standard-level products, 

PRICEENERGY = energy price, 

RCSTD = repair cost associated with component failure for standard-level 

products, and 

MCSTD = cost for maintaining standard-level products operation. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the operating costs for room air conditioners and clothes 

dryers. 

8.2.2.1 Annual Energy Consumption 

As described in chapter 7, Energy Use Characterization, and the beginning of this chapter 

in section 8.1.1, DOE developed a sample of individual households from RECS 2005 that use 

each of the appliances. By developing household samples, DOE was able to perform the LCC 

and PBP calculations for each household to account for the variability in both energy use and 

energy price associated with each household. The annual energy consumption values in the 

tables below are averages. DOE captured the variability in energy consumption when it 

conducted its LCC and PBP analyses. 

Room Air Conditioners. Tables 8.2.23 and 8.2.24 provide the average annual energy 

consumption by efficiency level for each room air conditioner product class. 

Table 8.2.23	 Room Air Conditioners: Residential Sector Average Annual Energy Use by 

Efficiency Level 

Less than 6,000 Btu/h 

with Louvers 

8,000–13,999 Btu/h 

with Louvers 

20,000 Btu/h or more 

with Louvers 

8,000–13,999 Btu/h 

without Louvers 

IEER Energy Use 

(kWh) 

IEER Energy Use 

(kWh) 

IEER Energy Use 

(kWh) 

IEER Energy Use 

(kWh) 

9.52 688 9.71 672 8.47 1118 8.43 712 

10.1 648 10.3 632 9.0 1052 8.9 673 

10.6 618 10.8 602 9.4 1007 9.3 644 

11.1 590 11.3 576 9.8 966 9.8 611 

11.6 565 11.5 566 10.0 947 

12.0 546 

Table 8.2.24 Room Air Conditioners: Commercial Sector Average Annual Energy Use by 

Efficiency Level 

Less than 6,000 Btu/h 

with Louvers 

8,000–13,999 Btu/h 

with Louvers 

20,000 Btu/h or more 

with Louvers 

8,000–13,999 Btu/h 

without Louvers 

IEER Energy Use 

(kWh) 

IEER Energy Use 

(kWh) 

IEER Energy Use 

(kWh) 

IEER Energy Use 

(kWh) 

9.52 640 9.71 1181 8.47 3343 8.43 1359 

10.1 604 10.3 1110 9.0 3146 8.9 1285 

10.6 575 10.8 1059 9.4 3012 9.3 1230 

11.1 549 11.3 1012 9.8 2889 9.8 1167 

11.6 526 11.5 994 10.0 2832 

12.0 508 

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Clothes Dryers. Tables 8.2.25 through 8.2.27 provide the average annual energy 

consumption by efficiency level for the considered clothes dryer product classes. 

Table 8.2.25	 Vented Electric Clothes Dryers: Average Annual Energy Use by Efficiency 

Level 

Electric, Standard Electric, Compact (120V) Electric, Compact (240V) 

IEF 

(lb/kWh) 

Energy Use 

(kWh) 

IEF 

(lb/kWh) 

Energy Use 

(kWh) 

IEF 

(lb/kWh) 

Energy Use 

(kWh) 

2.96 519 3.00 270 2.79 290 

3.04 504 3.08 263 2.86 283 

3.10 495 3.15 258 2.96 274 

3.33 461 3.37 241 3.06 265 

3.35 457 3.41 237 3.10 260 

3.40 445 3.53 225 3.19 248 

4.52 335 4.69 169 4.34 183 

Table 8.2.26 Vented Gas Clothes Dryers: Average Annual Energy Use by Efficiency Level
 

IEF 

(lb/kWh) 

Gas Energy 

Use 

(MMBtu) 

Electrical 

Energy Use 

(kWh) 

2.63 1.65 71.4 

2.71 1.60 71.4 

2.80 1.53 71.4 

2.97 1.45 67.9 

2.98 1.45 63.6 

3.02 1.45 51.6 

Table 8.2.27 Vent-less Clothes Dryers: Average Annual Energy Use by Efficiency Level
 

Electric, Compact (240V) Electric, Combo 

Washer/Dryer 

IEF 

(lb/kWh) 

Energy Use 

(kWh) 

IEF 

(lb/kWh) 

Energy Use 

(kWh) 

2.29 351 1.90 424 

2.31 347 2.15 375 

2.37 335 2.34 344 

2.39 332 2.36 340 

2.59 307 2.42 328 

3.54 224 3.31 239 

8.2.2.2 Room Air Conditioner Energy Prices 

For room air conditioners, DOE developed estimates of marginal electricity prices to 

calculate electricity cost savings. The marginal price for a given consumer is the cost of the next 

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increment of electricity use on their utility bill, and is an appropriate estimate of the value of 

savings that a consumer would see in the real world. For a peak-coincident end use such as airconditioning, there is a general expectation that the actual cost of operating the appliance is 

higher than the average price of electricity. These increased costs are often reflected in utility 

tariff structures, through block rates, different types of demand charges, or mandatory time-ofuse rates. Accurate estimation of marginal prices requires taking rate structures into account 

explicitly. 

In general, several methods and data sources can be used to calculate electricity prices. 

After reviewing the strengths and weaknesses of different approaches and the available data, the 

Department chose to base the analysis on the utility tariffs comprising the TAP (Tariff Analysis 

Project) database.4 This approach provides an up-to-date and geographically diverse data set that 

can accurately capture real prices. Other data sources have various weaknesses that could lead to 

significant errors in the estimated electricity cost savings, and do not provide sufficient 

information to allow the Department to respond adequately to stakeholder comments. A more 

detailed discussion of electricity price data and calculation methods is presented in appendix 8-E, 

along with a description of the tariff-based approach, the data used, and validation tests. 

For the room air conditioner analysis, electricity prices are required for both residential 

and commercial consumers. The LCC analysis is based on a consumer sample derived from 

RECS and CBECS, and both an average annual price and a seasonal marginal price are required 

for each household or building in the sample. The basic methodology is to estimate the 

customer’s monthly electricity use, and use the tariff data to calculate the corresponding 

electricity bill. Empirical marginal prices are calculated by taking the difference between the bill 

for the baseline electricity use and the bill for a candidate standard level, and dividing by the 

change in energy use. This approach requires estimation of monthly consumer electricity use for 

the baseline and the energy savings associated with each candidate standard level. As both the 

rate structures and the required energy data differ significantly for residential and commercial 

consumers, the details of the approach for these two sectors are discussed separately. 

Residential Electricity Prices. The calculation methodology provides, for each 

household in the LCC sample, an average annual price and a monthly marginal price. To 

compute these prices, the monthly baseline energy consumption must first be estimated. This is 

done using the monthly billing data from the RECS 2001 dataset; details of the calculation are 

presented in appendix 8-F.a Given the monthly energy use, twelve monthly bills per household 

are calculated using the tariffs. To increase the effective size of the sample, within a region each 

household is paired with each utility in its region. The pairing of a household with a utility is 

referred to as an account. The utilities are weighted by the fraction of customers they serve 

within a region. Taking the weighted sum over accounts provides a single set of prices for each 

household. 

a There is as yet no monthly data for 2005 RECS. 

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The annual average baseline price is calculated as a simple average over the twelve 

monthly baseline bills. To calculate monthly marginal prices for each account, the monthly 

energy use is decremented by seven percent and the bill recalculated. The marginal price in each 

month is defined as the bill savings divided by the energy savings. Monthly variability in the 

marginal price is due primarily to seasonal rates. Season definitions vary by utility. The annual 

cost savings are equal to the monthly marginal price times the monthly energy savings, summed 

across months. A description of how the monthly energy savings are estimated for each 

efficiency level is given in chapter 7. 

Commercial Electricity Prices. Electricity tariffs for commercial consumers can be very 

complex, incorporating block rates, seasonal rates, demand charges, time-of-use rates, etc. To 

calculate commercial electricity bills requires both the monthly consumption and demand; for 

utilities with mandatory time-of-use (TOU) tariffs consumption and demand data are required for 

each TOU period. This monthly data is not available for the CBECS 2003 records used in the 

LCC sample, so bills cannot be calculated directly. CBECS does provide annual electricity 

consumption and expenditures for each record, which is used here to estimate the average annual 

price. For marginal prices, the estimates are based on regional coefficients developed in a 

previous analysis of commercial buildings.5 6 

Monthly billing data, consisting of electricity consumption, demand, and expenditures, 

are available for the CBECS 1992 and CBECS 1995 survey years. For all CBECS records with 

sufficient data, interpolation methods were used to define consumption and demand values for 

twelve calendar months. These monthly data were run through the TAP bill calculation tools to 

provide the corresponding monthly expenditures for the utilities in the tariff sample. As for the 

residential analysis, each building is assigned to each utility in its region. As CBECS does not 

use the “Large State” flag, regions are defined as the nine census divisions, with the climate zone 

field used to separate the Mountain and Pacific census divisions into north and south 

subdivisions.b Once a building is assigned to a utility, the tariff is assigned automatically based 

on the annual peak demand and/or energy consumption and the tariff rules. 

Monthly marginal prices for this dataset were calculated using the methodology 

described above, with one modification: because the customer bill depends on both energy 

consumption and demand, separate marginal prices were developed to represent the effect of 

varying these two quantities independently. The monthly marginal energy consumption (or 

demand) price is calculated simply by decrementing the energy consumption (or demand) and 

recalculating the bill. In equation form: 

• ΔE is the change in electricity consumption 

• ΔBE is the resulting change in the bill 

• MPE = ΔBE/ΔE is the marginal consumption price in units of dollars per kWh. 

b Region 8.1 corresponds to CBECS climate zone 1, and 8.2 to all other climate zones. Region 9.1 includes CBECS 

climate zones 1, 2 and 3, while Region 9.2 includes climate zones 4 and 5. 

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• ΔD is the change in demand 

• ΔBD the resulting change in the bill 

• MPD = ΔBD/ΔE is the marginal demand price in units of dollars per kW. 

It is important to note that the marginal demand price is not the same as the demand 

charge. It is a more general construct, defined empirically, that combines the impact of ordinary 

demand charges and so-called hours charges (variable block rates in which the block size 

depends on demand). Given changes ΔE and ΔD to the baseline energy use, the total change in 

the bill is: 

ΔB = ΔBD + ΔBE. 

In practice it is simpler to estimate the load factor than it is to estimate ΔD directly. The 

load factor is the ratio of the average hourly electricity use to the peak demand; if this ratio is 

approximately the same for the load decrements, then 

LF = ΔE/(NH*ΔD) 

Where: 

NH = the number of hours in the billing period, here equal to 8760/12,
 

LF = the billing period load factor.
 

Using this expression, the empirical marginal price EMP for commercial customers is 

defined as: 

EMP = MPE + MPD/( NH * LF ) 

The bill savings are equal to ΔB = EMP * ΔE. 

The load factor is estimated as: 

HRS 

LF = avg 

HRS peak 

Where: 

HRSavg = average hours of operation, and
 

HRSpeak = peak hours of operation.
 

The average hours of operation were determined for each product class as described in 

chapter 7. To determine peak hours of operation, DOE multiplied the number of months with 

cooling degree-days greater than zero by the average number of hours in a month (730). Monthly 

cooling degree-data were determined using the aforementioned NOAA weather station match. 

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To apply this methodology to the CBECS 2003 records used for the current rule-making, 

DOE used seasonal, regional average values for the marginal energy price MPE and the marginal 

demand price MPD. The summer season covers the months May through September, and the 

winter season all other months. Regional weighted averages are calculated by summing over all 

the buildings in a region, using the CBECS building weights. These values are shown in Table 

8.2.28. 

The commercial tariff data were last updated in 2004. To convert to 2008 dollars, two 

datasets were used: the report Average Regulated Retail Price of Electricity7 for the years 2004 

through 2007, and the EEI Typical Bill reports8 for 2007 to 2008. Based on these data, a 

weighted-average price escalation factor for each region was calculated using consumer counts 

as the weights. The consumer counts come from the most recent EIA Form 861 data, which is for 

2007.9 EIA data from 2003 through 2006 were used to determine how much the rate of price 

escalation differs on average between the publicly vs. privately owned utility companies. 

Table 8.2.28 Commercial Sector Marginal Electricity Prices 

Marginal Energy Prices 

(2008 ¢/kWh) 

Marginal Demand Prices 

(2008 $/kWh) 

Region Annual Summer Winter Annual Summer Winter 

1 11.42 11.56 11.22 14.43 16.58 12.91 

2 9.47 9.78 9.20 12.73 13.82 11.88 

3 6.26 6.34 6.15 12.05 12.73 11.54 

4 4.62 4.93 4.39 4.45 5.08 3.99 

5 7.34 7.31 7.33 8.24 8.48 8.08 

6 6.04 5.90 6.13 6.99 7.37 6.74 

7 8.67 9.49 7.69 5.79 6.55 5.22 

8 6.99 6.95 7.01 7.69 7.85 7.56 

8.1* 4.87 5.00 4.80 3.85 3.86 3.86 

8.2* 7.27 7.20 7.30 8.25 8.42 8.10 

9.1* 5.76 5.75 5.76 2.69 2.68 2.68 

9.2* 11.64 11.82 11.28 6.47 8.92 4.25 

* Census divisions 8 and 9 are divided by HDD and CDD into two subdivisions. 

8.2.2.3 Clothes Dryer Energy Prices 

Using data from EIA, DOE derived average annual energy prices for 13 geographic areas 

in the United States — the nine U.S. Census Divisions, with four large States (New York, 

Florida, Texas, and California) treated separately. For Census Divisions containing one of these 

large States, DOE calculated the regional average values leaving out data for the large State—for 

example, the Pacific region average does not include California, and the West South Central does 

not include Texas. Using these data, DOE assigned an appropriate price to each household in the 

sample, depending on its location. 

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Residential Electricity Prices. DOE collected 2007 residential monthly electricity prices 

from EIA Form 826.10 The EIA Form 826 data include monthly electricity sales, revenue from 

electricity sales, and electricity prices for each State. DOE calculated monthly regional electricity 

prices by weighting the simple average of monthly electricity prices by the number of residential 

electricity consumers in each State.11 Finally, DOE aggregated and averaged the prices by the 

nine U.S. Census Divisions and four large states. Table 8.2.29 shows the monthly average results 

for each geographic area. 

Table 8.2.29 Average Electricity Prices in 2007 

Geographic Area 

Residential 

(2008$/kWh) 

New England $0.172 

Middle Atlantic (excludes NY) $0.126 

East North Central $0.102 

West North Central $0.087 

South Atlantic (excludes FL) $0.098 

East South Central $0.087 

West South Central (excludes TX) $0.093 

Mountain $0.096 

Pacific (excludes CA) $0.097 

New York $0.177 

Florida $0.149 

Texas $0.128 

California $0.116 

U.S. $0.116 

Residential Natural Gas Prices. DOE obtained the data for the natural gas price 

calculation from EIA’s Natural Gas Navigator.12 This publication includes a compilation of 

monthly natural gas prices by State, for residential, commercial, and industrial customers. DOE 

weighted the residential natural gas prices for each State by the number of natural gas consumers 

in each State13 and transformed the values from units of $/tcf to $/MMBtu. Finally, DOE 

aggregated and averaged the prices by the nine U.S. Census Divisions and four large states. 

Table 8.2.30 displays the 2007 annual natural gas prices. 

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Table 8.2.30 Average Residential Natural Gas Prices in 2007
 

Geographic Area 

New England 

Middle Atlantic (excludes NY) 

East North Central 

West North Central 

South Atlantic (excludes FL) 

East South Central 

West South Central (excludes TX) 

Mountain 

Pacific (excludes CA) 

New York 

Florida 

Texas 

California 

U.S. 

Source: EIA Natural Gas Navigator. 

Residential Average Prices 

(2008$/MMBtu) 

17.7 

16.1 

13.2 

14.3 

18.9 

16.1 

15.2 

13.1 

15.0 

16.9 

11.9 

14.1 

21.6 

14.6 

Residential LPG Prices. DOE collected 2006 average LPG prices from EIA’s 2006 State 

14 Energy Consumption, Price, and Expenditures Estimates (SEDS). SEDS includes annual LPG 

prices for residential, commercial, industrial, and transportation consumers by State. DOE 

weighted the average residential LPG prices for each State by the amount of LPG consumed by 

each State. Finally, DOE aggregated and averaged the prices by 13 geographic areas (Table 

8.2.31). To present the LPG price data for the same year as the other fuels (2007), DOE scaled 

the 2006 prices using data in AEO2009. 

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Table 8.2.31 Average Residential LPG Prices in 2007
 

Geographic Area 

Annual Average 

(2008$/MMBtu) 

CD 1 - New England 29.84 

CD 2 - Middle Atlantic (excludes NY) 29.74 

CD 3 - East North Central 23.11 

CD 4 - West North Central 20.22 

CD 5 - South Atlantic (excludes FL) 27.84 

CD 6 - East South Central 27.06 

CD 7 - West South Central (excludes TX) 24.87 

CD 8 – Mountain 24.67 

CD 9 - Pacific (excludes CA) 28.85 

CD 10 - New York 29.28 

CD 11 – California 30.77 

CD 12 – Texas 27.82 

CD 13 – Florida 32.82 

CD 14 - United States 25.90 

8.2.2.4 Energy Price Trends 

DOE used price forecasts by the EIA to estimate future trends in natural gas and 

electricity prices. To arrive at prices in future years, it multiplied the average prices described in 

the preceding section by the forecast of annual average price changes in EIA’s AEO2009.15 To 

estimate the trend after 2030, DOE followed past guidelines provided to the Federal Energy 

Management Program (FEMP) by EIA and used the average rate of change during 2020–2030 

for electricity and the average rate of change during 2015–2030 for natural gas and LPG. 

DOE calculated LCC and PBP using three separate projections from AEO2009: 

Reference, Low Economic Growth, and High Economic Growth. The updated version of 

AEO2009, which reflects the provisions of the American Recovery and Reinvestment Act that 

were enacted in February 2009, only forecasts the reference case, so DOE calculated the high 

and low growth price trends based on the three scenarios presented in an earlier release of 

AEO2009.

16 The high and low growth cases show the projected effects of alternative growth 

assumptions on energy markets. Figures 8.2.1, 8.2.2, and 8.2.3 show the residential and 

commercial electricity, natural gas, and LPG price trends, respectively, based on the three 

AEO2009 projections. For the LCC results presented in section 8.4, DOE used only the energy 

price forecasts from the AEO reference case. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

Figure 8.2.1 Residential and Commercial Electricity Price Trends
 

Figure 8.2.2 Residential Natural Gas Price Trend
 

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Figure 8.2.3 Residential LPG Price Trend 

8.2.2.5 Repair and Maintenance Costs 

The maintenance cost is the cost of regular scheduled product maintenance. The repair 

cost is the cost to repair the product when it fails. Typically, small incremental changes in 

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

baseline products. However, products with efficiencies that are significantly higher than the 

baseline are more likely to incur higher repair and maintenance costs because their higher 

complexity and higher part count typically increases the cumulative probability of failure. DOE 

found no evidence that repair and maintenance costs would be impacted with increased 

efficiency levels for both room air conditioners and clothes dryers. A similar finding was made 

3, 17 in the previous rulemakings for these products.

8.2.2.6 Product Lifetime 

The product lifetime is the age at which the product is retired from service. Appliance 

magazine provides estimates of the low, high, and average years of an appliance’s lifetime. The 

estimates, which are based on first-owner use of the product, represent the expert judgment of 

Appliance staff based on input obtained from various sources. DOE also identified other sources 

that give lifetimes for room air conditioners and clothes dryers (see Tables 8.2.32 and 8.2.33). 

Because the basis for the estimates in the literature was uncertain, DOE developed a method 

using household survey data to estimate the distribution of room air conditioner and clothes dryer 

lifetimes in the field. 

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Table 8.2.32 Room Air Conditioners: Product Lifetime Estimates and Sources
 

Typical Lifetime or Range (years) Source 

Original Sources 

Average = 9; Low = 7 Appliance Magazine, September 200818 

12.5 ASHRAE 200819 

15 CEC 200520 

12 European Rulemaking Draft Report21 

Average = 15; High = 20 NRDC22 

Other Sources 

Lifetime Source 

9 Appliance 

Magazine, 1997 ENERGY STAR Savings Calculatorc 

18 EnerGuide 2005 Natural Resources Canada, 200823 

15 NA New Mexico Market Assessment, Itron 200624 

18 NA Nebraska Public Power District25 

12 See endnote NYSERDA SBC, 200226 

9 NA RTF (Northwest), 200227 

12.5 DOE TSD 1997 NCEP report, LBNL 200428 

19 Aspen Memo, 

2002 

NYSERDA Deemed Savings Database: ENERGY 

STAR29 

13 (TTW) DOE TSD 2005 NYSERDA Deemed Savings Database: ENERGY 

STAR13 

Low = 8, High =16 NEMS Residential Demand Module, 200830 

13 LBNL 200831 

Average = 10–15, 

Low = 8-12, High 

= 14-18 

LBNL 199432 

10 Consortium for Energy Efficiency33 

10 - 12 American Council for an Energy Efficient 

Economy, 200734 

Note: NA means the data source is not stated in the reference. 

c ENERGY STAR Savings Calculator, Products, Room AC. Efficient and conventional models. 

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Table 8.2.33 Clothes Dryers: Product Lifetime Estimates and Sources
 

Typical Lifetime or Range (years) Source 

Original Sources 

Average = 12; Low = 8; High = 15 Appliance Magazine, September 200818 

15 CEC 200520 

18 CALMAC 200035 

Other Sources 

Lifetime Source 

Average = 

12; Low = 8; 

High = 15 

Appliance Magazine, 2006 BTS Core Databook, 200736 

18 EnerGuide 2005 Natural Resources Canada, 200737 

18 DOE Framework Document Itron, Report to CEC, 2007 

18 NA CEC Consumer Energy Center website 

18 See endnote CEC Flex Your Power website 

14 NA Nebraska Public Power website 

18 NA New Mexico Market Assessment, Itron 

20068 

12 Nexant, PECI Questar Gas, Utah, from Deemed Savings 

Database, 2006 

14 RTF (Northwest) CW/CD spreadsheet, 2008 

Note: NA means the data source is not stated in the reference. 

Estimation of Survival Function. The Residential Energy Consumption Survey (RECS) 

records the presence of various appliances in each household, and places the age of each 

appliance into bins comprising several years. Data from the U.S. Census’s American Housing 

Survey (AHS),38 which surveys all housing including vacant and second homes, enabled DOE to 

adjust the RECS data to reflect the presence of appliances outside of primary residences. By 

combining the results of both surveys with the known history of appliance shipments (collected 

from Appliance magazine or directly from manufacturer trade associations), DOE estimated the 

percentage of appliances of a given age still in operation. This survival function, which DOE 

assumed has the form of a cumulative Weibull distribution, provides an average and a median 

appliance lifetime. 

The Weibull distribution is a probability distribution commonly used to measure failure 

rates.d Its form is similar to an exponential distribution, which models a fixed failure rate, except 

d For reference on the Weibull distribution, see sections 1.3.6.6.8 and 8.4.1.3 of the NIST/SEMATECH e-Handbook 

of Statistical Methods, <www.itl.nist.gov/div898/handbook/>. 

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that a Weibull distribution allows for a failure rate that changes over time in a particular fashion. 

The cumulative Weibull distribution takes the form: 

⎛

⎜

⎝

x−θ ⎞

⎟

⎠

β

−

P(x) =
 e
 α for x > θ and
 

P(x) = 1 for x ≤ θ
 

Where:
 

P(x) = probability that the appliance is still in use at age x,
 

x = appliance age,
 

α = scale parameter, which would be the decay length in an exponential
 

distribution, 

β = shape parameter, which determines the way in which the failure rate 

changes through time, and 

θ = delay parameter, which allows for a delay before any failures occur. 

When β = 1, the failure rate is constant over time, giving the distribution the form of a 

cumulative exponential distribution. In the case of appliances, β commonly is greater than 1, 

reflecting an increasing failure rate as appliances age. 

RECS is DOE’s primary resource for appliance ages. For several appliances, including 

room air conditioners and clothes dryers, the survey asks respondents to identify the appliance’s 

age as: 

• less than 2 years old, 

• 2 to 4 years old, 

• 5 to 9 years old, 

• 10 to 19 years old, or 

• more than 20 years old. 

The RECS has been conducted every three or four years for the past several decades. For 

this analysis, DOE used the surveys conducted in 1990, 1993, 1997, 2001, and 2005. DOE used 

the AHS count of housing units that contain room air conditioners or clothes dryers to scale the 

RECS data to better match the total installed stock. Table 8.2.34 shows the lifetime parameters 

for room air conditioners and clothes dryers. See appendix 8-C for more details. 

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Table 8.2.34 Lifetime Parameters
 

Product Class 

Calculated Values 

Weibull 

Parameters 

Minimum 

(years) 

Average 

(years) 

Maximum 

(years) 

Maximum 

percentile 

(%) 

Alpha 

(scale) 

Beta 

(shape) 

Room Air Conditioner 3 10.5 30 97 7.47 1.00 

Clothes Dryer 5 16.0 30 94 12.1 1.38 

8.2.2.7 Discount Rates 

The discount rate is the rate at which DOE discounted future consumer expenditures to 

establish their present value. DOE derived the discount rates for the LCC and PBP analyses from 

estimates of the finance cost of purchasing the considered products. Following financial theory, 

the finance cost of raising funds to purchase appliances can be interpreted as: (1) the financial 

cost of any debt incurred to purchase products, or (2) the opportunity cost of any equity used to 

purchase products. DOE considers both of these interpretations. 

The purchase of products installed in new homes entails different finance costs for 

consumers than the purchase of appliances bought directly by consumers. For room air 

conditioners and clothes dryers, however, DOE believes that few products are installed by 

builders in new homes. DOE also estimated discount rates for purchasers of room air 

conditioners in the commercial sector. 

Discount Rates for Residential Consumers. Households use a variety of methods to 

finance the purchase of major appliances. In principle, one could estimate the interest rates on 

the actual financing methods used to purchase appliances. However, the shares of different 

financing methods in total appliance purchases are unknown. DOE’s approach involves 

identifying all possible debt or asset classes that might be used to purchase the considered 

appliances, including household assets that might be indirectly affected.e DOE did not include 

debt from primary mortgages or assets considered non-liquid (such as retirement accounts), since 

these would likely not be indirectly affected by appliance purchases. DOE estimated the average 

shares of the various debt and equity classes in the average U.S. household equity and debt 

portfolios using data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) for 

1989, 1992, 1995, 1998, 2001, 2004, and 2007.39 Table 8.2.35 shows the average shares of each 

considered class. DOE used the mean share of each class across the seven surveys as a basis for 

estimating the weight of the classes in the direct or indirect financing of the considered 

appliances. 

e An indirect effect would arise if a household sold some assets in order to pay off a loan or credit card debt that 

might have been used to finance the actual appliance purchase. 

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Table 8.2.35 Average Shares of Considered Household Debt and Equity Types (%)
 

Type 

1989 

SCF 

1992 

SCF 

1995 

SCF 

1998 

SCF 

2001 

SCF 

2004 

SCF 

2007 

SCF Mean 

Home equity loans 4.3 4.5 2.7 2.8 2.8 4.4 4.6 3.7 

Credit cards 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1 

Other installment loans 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.6 

Other residential loans 4.4 6.9 5.2 4.3 3.1 5.8 7.1 5.3 

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.5 

Checking accounts 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.4 

Savings & money market 19.2 18.8 14.0 12.8 14.2 15.1 13.0 15.3 

Certificate of deposit (CD) 14.5 11.7 9.4 7.0 5.4 5.9 6.5 8.6 

Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 0.7 1.4 

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 6.7 9.5 

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 29.0 

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 18.6 

Total 100 100 100 100 100 100 100 100 

DOE estimated interest or return rates associated with each type of equity and debt. The 

data source for the interest rates for loans, credit cards, and lines of credit is the Federal Reserve 

Board’s SCF in 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Table 8.2.36 shows the average 

nominal rates in each year, and the inflation rates used to calculate real rates. For home equity 

loans, DOE calculated effective interest rates in a similar manner as for mortgage rates, since 

interest on such loans is tax deductible. Table 8.2.37 shows the average effective real rates in 

each year and the mean rate across the years. Since the interest rates for each debt carried by 

households in these years were established over a range of time, DOE believes they are 

representative of rates in the year in which amended standards would take effect. 

Table 8.2.36 Average Nominal Interest Rates for Household Debt Classes (%) 

1989 

SCF 

1992 

SCF 

1995 

SCF 

1998 

SCF 

2001 

SCF 

2004 

SCF 

2007 

SCF Mean 

Home equity loans 11.5 9.6 9.6 9.8 8.7 5.7 6.3 7.9 

Credit cards* - - 14.2 14.5 14.2 11.7 7.9 9.0 

Other installment loans 9.0 7.8 9.3 7.8 8.7 7.4 12.6 13.4 

Other residential loans 8.8 7.6 7.7 7.7 7.5 6.0 10.4 8.6 

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 6.3 7.4 

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85 

* No interest rate data available for credit cards in 1989 or 1992. 

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Table 8.2.37 Average Real Effective Interest Rates for Household Debt Classes (%)
 

1989 

SCF 

1992 

SCF 

1995 

SCF 

1998 

SCF 

2001 

SCF 

2004 

SCF 

2007 

SCF) Mean 

Home equity loans 3.8 4.3 4.4 5.8 3.8 1.9 3.3 3.9 

Credit cards* - - 11.0 12.7 11.1 9.1 9.7 10.7 

Other installment loans 4.9 5.8 7.0 6.6 6.1 5.4 5.8 6.0 

Other residential loans 4.0 4.7 4.8 6.0 4.6 3.3 3.4 4.4 

Other line of credit 9.6 9.4 9.3 10.2 7.3 6.0 9.7 8.8 

* No interest rate data available for credit cards in 1989 or 1992. 

DOE developed a probability distribution of interest rates for each debt class based on the 

SCF data. To account for variation among households, DOE sampled a rate for each household 

from the distributions for the appropriate debt class. Appendix 8-D presents the probability 

distribution of interest rates for each debt class that DOE used in the LCC and PBP analyses. 

Similar rate data are not available from the SCF for the asset classes, so the Department 

derived data for these classes from national-level historical data. The interest rates associated 

40 41 42 with certificates of deposit (CDs), savings bonds, and bonds (AAA corporate bonds) are 

from Federal Reserve Board time-series data covering 1977–2008. DOE assumed rates on 

checking accounts to be zero. Rates on savings and money market accounts are from Cost of 

Savings Index data covering 1984–2008.43 The rates for stocks are the annual returns on the 

Standard and Poor’s (S&P) 500 in 1977–2008.44 The mutual fund rates are a weighted average of 

the stock rates (two-thirds weight) and the bond rates (one-third weight) in each year from 1977– 

2008. DOE adjusted the nominal rates to real rates using an inflation index. Average nominal 

and real interest rates for the classes of assets are shown in Table 8.2.38. Since the interest and 

return rates for each asset type cover a range of time, DOE believes they are representative of 

rates in the year in which amended standards would take effect. 

Table 8.2.38 Average Nominal and Real Interest Rates for Household Equity Classes 

Average Nominal Rate (%) Average Real Rate (%) 

Checking accounts - 0.0 

Savings and money market 5.4 2.2 

CDs 6.6 2.3 

Savings bonds 7.7 3.3 

Bonds 8.5 4.1 

Stocks 11.6 7.1 

Mutual funds 10.3 5.8 

DOE developed a normal probability distribution of interest rates for each asset type by 

using the mean value and standard deviation from the distribution. To account for variation 

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among households, DOE sampled a rate for each household from the distributions for the 

appropriate asset class. Appendix 8-D presents the probability distribution of interest rates for 

each asset type that DOE used in the LCC and PBP analyses. 

Table 8.2.39 summarizes the average shares of the debt and asset shares over the six 

years of survey data and the mean real effective rates of each type of equity or debt. The average 

rate across all types of household debt and equity, weighted by the shares of each class, is 4.8 

percent. In its analysis, DOE assigned specific discount rates to each sample household from the 

distributions discussed above. 

Table 8.2.39	 Shares and Interest or Return Rates Used for Household Debt and Equity 

Classes 

Average Share of Household 

Debt plus Equity (%)* 

Mean Effective Real Rate 

(%)** 

Home equity loans 3.7 3.9 

Credit cards 2.1 10.7 

Other installment loans 1.6 6.0 

Other residential loans 5.3 4.4 

Other line of credit 0.5 8.8 

Checking accounts 4.4 0.0 

Savings and money market accounts 15.3 2.2 

CDs 8.6 2.3 

Savings bonds 1.4 3.3 

Bonds 9.5 4.1 

Stocks 29.0 7.1 

Mutual funds 18.6 5.8 

Total/Weighted-average discount rate 100 4.8 

* Not including primary mortgage or retirement accounts.
 

** Adjusted for inflation and, for home equity loans, loan interest tax deduction.
 

Discount Rates for Commercial Sector Purchasers. DOE derived the discount rate for 

commercial sector purchasers of room air conditioners from the cost of capital of publicly traded 

firms in the sectors that purchase those products. The firms typically finance equipment 

purchases through debt and/or equity capital. DOE estimated the cost of the firms’ capital as the 

weighted average of the cost of equity financing and the cost of debt financing for each year 

between 2001 and 2008. The costs of debt and equity financing usually are publicly available for 

firms in lodging and other commercial sectorsf that may purchase room air conditioners. 

DOE estimated the cost of equity using the capital asset pricing model (CAPM).45 The 

CAPM assumes that the cost of equity (ke) for a given company is proportional to the systematic 

f The “other commercial” sector includes financial institutions and all services other than lodging (SIC 6-8). 

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risk faced by that company, whereby high risk is associated with a high cost of equity and low 

risk is associated with a low cost of equity. The systematic risk facing a firm is determined by 

several variables: the risk coefficient of the firm (β), the expected return on risk-free assets (Rf), 

and the equity risk premium (ERP). The risk coefficient of a firm describes the risk associated 

with that firm represented by standard deviations in the firm’s stock price. The expected return 

on risk-free assets is defined by the yield on long-term government bonds. The ERP represents 

the difference between the expected stock market return and the risk-free rate. To estimate the 

expected return on risk-free assets and the equity risk premium, DOE used stock and bond data 

from Damodaran Online, a widely used source of information about debt and equity financing 

46,44 for most types of firms. The Damodaran Online data were adjusted for annual inflation 

using deflator data for the gross domestic product from the Bureau of Economic Analysis’ 

47 National Income and Product Accounts Tables. 

The cost of equity financing is estimated using the following equation: 

ke = Rf + (β× ERP)
 

Where:
 

ke = cost of equity,
 

Rf = inflation-adjusted expected return on risk-free assets,g
 

β = risk coefficient of the firm, and
 

ERP = equity risk premium.
 

The cost of debt financing (kd) is the interest rate paid on money a company borrows. The 

cost of debt is estimated by adding a risk adjustment factor (Ra) to the risk-free rate. This risk 

adjustment factor depends on the variability of stock returns represented by standard deviations 

in the firm’s stock price. Thus for firm i, the cost of debt financing is: 

k = di R f + Rai 

Where: 

kd = cost of debt financing for firm i,
 

Rf = expected return on risk-free assets, and
 

Rai = risk adjustment factor to risk-free rate for firm i.
 

DOE estimates the weighted-average cost of capital using the following equation: 

WACC = k × w + k × w e e d d 

g Ibbotson Associates argues that the arithmetic mean equates the expected future value with the present value and 

should be used in calculating the risk-free rate and equity risk premium when using CAPM to estimate discount 

rates (Stocks, Bonds, Bills, and Inflation 2009 Yearbook, Ibbotson Associates, p. 60). 

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Where: 

WACC = weighted average cost of capital,
 

we = proportion of equity financing, and
 

wd = proportion of debt financing.
 

The values of the parameters used in the calculations are shown in Table 8.2.40. 

Table 8.2.40 Data for Calculating Weighted-Average Cost of Capital for Commercial 

Sectors 

Sector Year β Rf 

% 

ERP 

% 

Ra 

% 

we 

% 

wd 

% 

Lodging 

2001 1.18 3.25 5.17 1.50 88 12 

2002 1.27 3.55 3.66 1.50 89 11 

2003 1.71 3.40 4.70 1.25 93 7 

2004 0.98 3.43 4.34 1.00 89 11 

2005 1.45 3.36 4.08 1.25 93 7 

2006 1.24 3.36 4.13 1.25 93 7 

2007 1.25 3.54 4.33 1.00 96 4 

2008 1.23 4.10 2.33 2.00 86 14 

Other 

Commercial 

2001 0.87 3.25 5.17 3.50 77 23 

2002 0.92 3.55 3.66 3.50 77 23 

2003 0.87 3.40 4.70 1.50 81 19 

2004 0.90 3.43 4.34 1.25 84 16 

2005 0.88 3.36 4.08 1.50 82 18 

2006 0.91 3.36 4.13 2.00 84 16 

2007 0.87 3.54 4.33 1.25 79 21 

2008 0.93 4.10 2.33 3.00 68 32 

Note: Parameters are defined on the preceding two pages. 

Using the procedure described above and the data in Table 8.2.40, DOE developed the 

real weighted-average cost of capital for the two commercial sectors that purchase room air 

conditioners. Those costs are listed in Table 8.2.41. 

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Table 8.2.41 Weighted-Average Cost of Capital for Commercial Sectors
 

Year Lodging (%) Other Commercial (%) 

2001 5.69 6.75 

2002 5.11 6.21 

2003 5.49 6.64 

2004 5.82 6.62 

2005 5.95 6.24 

2006 6.04 6.46 

2007 6.42 6.40 

2008 5.74 5.60 

Sector average 5.78 6.37 

DOE generated a distribution of discount rates within each sector. The standard deviation 

of the distribution for each sector is provided in Table 8.2.42. Weighting each sector’s discount 

rate by its estimated share of room air conditioner purchases, DOE estimated that the average 

discount rate for companies that purchase room air conditioners is 6.20 percent. 

Table 8.2.42 Discount Rates for Commercial Sectors 

Sector 

Discount Rate 

Share of 

Purchases (%) 

Average 

(%) 

Max. 

(%) 

Min. 

(%) 

Standard Deviation 

(%) 

Lodging 5.78 11.98 2.35 1.26 29 

Other commercial 6.37 15.65 2.48 1.72 71 

Weighted average 6.20 - - - 100 

To account for variations in discount rates within each sector, DOE applied a normal 

probability distribution to the average values and standard deviations in Table 8.2.42. DOE 

truncated the normal distribution using the maximum and minimum values. 

8.2.2.8 Effective Date of Standard 

The effective date is the future date when a new standard becomes operative. Based on 

DOE’s implementation report for energy conservation standards activities submitted pursuant to 

Section 141 of the Energy Policy Act of 2005, a final rule for the home appliances being 

considered for this standards rulemaking is scheduled for completion in June 2011.48 Therefore, 

the effective date of any new energy efficiency standards for these products will be three years 

after the final rule is published, which is June 2014. DOE calculated the LCC for all consumers 

as if they each would purchase a new product in the year the standard takes effect. 

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8.2.3 Product Energy Efficiency in the Base Case 

To estimate the percentage of consumers who would be affected by a standard at any of 

the potential efficiency levels, in its LCC analysis DOE considered the projected distribution of 

efficiencies for products that consumers purchase under the base case (the case without new 

energy efficiency standards). DOE refers to this distribution of product energy efficiencies as the 

base-case efficiency distribution. Using the projected distribution of efficiencies for each product 

class, DOE randomly assigned a product efficiency to each sample household and commercial 

user. If a household is assigned a product efficiency that is greater than or equal to the efficiency 

of the standard level under consideration, the LCC calculation shows that this household would 

not be affected by that standard level. The energy efficiency distributions that DOE used in the 

LCC analysis are described below. 

8.2.3.1 Room Air Conditioners 

To develop a base-case energy efficiency distribution for room air conditioners, DOE 

began with data that AHAM provided showing the distribution of room air conditioner 

efficiencies sold by product class in 2005–2007. Using these data, DOE derived the shares in 

Table 8.2.43. Regarding change in energy efficiency in coming years, the data on shipmentweighted average efficiency are inconclusive. Therefore, DOE assumed that the market shares of 

the efficiency levels in 2014 will be roughly the same as the shares in 2007. The market shares in 

Table 8.2.43 represent the products that consumers would be expected to purchase in 2014 in the 

absence of new standards. 

Table 8.2.43 Room Air Conditioners Energy Efficiency: Base Case Market Shares 

Less than 6,000 Btu/h 

with Louvers 

8,000–13,999 Btu/h 

with Louvers 

20,000 Btu/h or more 

with Louvers 

8,000–13,999 Btu/h 

without Louvers 

IEER Share IEER Share IEER Share IEER Share 

9.52 96.0% 9.7 51.4% 8.47 37.0% 8.4 39.0% 

10.1 0.0% 10.3 1.5% 9.0 6.1% 8.9 0.0% 

10.6 4.0% 10.8 44.3% 9.4 56.2% 9.3 61.0% 

11.1 0.0% 11.3 1.7% 9.8 0.7% 9.8 0.0% 

11.6 0.0% 11.5 1.1% 10.0 0.0% 

12.0 0.0% 

DOE also assembled data for 2002–2007 on market shares of ENERGY STAR room air 

conditioners by State and organized them into Census Divisions and four large States. In 

assigning a product efficiency to each sample household and commercial user, DOE accounted 

for regional patterns in the efficiency distribution. 

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8.2.3.2 Clothes Dryers 

To develop a base case energy efficiency distribution for clothes dryers, DOE began with 

data that AHAM provided showing the distribution of clothes dryer efficiencies sold by product 

class in 2005–2007. Because there is no evidence of change in average efficiency in recent years, 

DOE assumed that the shares remain the same in 2014. The market shares in Tables 8.2.44 and 

8.2.45 represent the products that households would be expected to purchase in 2014 in the 

absence of new standards. 

Table 8.2.44 Vented Clothes Dryers Energy Efficiency: Base Case Market Shares 

Electric, Standard Electric, Compact 

(120V) 

Electric, Compact 

(240V) 

Gas 

IEF 

(lb/kWh) 

Share IEF 

(lb/kWh) 

Share IEF 

(lb/kWh) 

Share IEF 

(lb/kWh) 

Share 

2.96 29.5% 2.79 38.9% 3.00 100.0% 2.63 26.8% 

3.04 49.9% 2.86 38.9% 3.08 0.0% 2.71 43.4% 

3.10 20.6% 2.96 0.0% 3.15 0.0% 2.80 28.9% 

3.33 0.0% 3.06 22.2% 3.38 0.0% 2.97 0.9% 

3.35 0.0% 3.10 0.0% 3.41 0.0% 2.98 0.0% 

3.40 0.0% 3.19 0.0% 3.53 0.0% 3.02 0.0% 

4.52 0.0% 4.34 0.0% 4.69 0.0% 

Table 8.2.45 Vent-less Clothes Dryers Energy Efficiency: Base Case Market Shares
 

Electric, Compact 

(240V) 

Electric, Combination 

Washer/Dryer 

IEF 

(lb/kWh) 

Share IEF 

(lb/kWh) 

Share 

2.29 100% 1.90 100% 

2.31 0.0% 2.15 0.0% 

2.37 0.0% 2.34 0.0% 

2.39 0.0% 2.36 0.0% 

2.59 0.0% 2.42 0.0% 

3.54 0.0% 3.31 0.0% 

8.3 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS 

This section presents the LCC and PBP results for room air conditioners and clothes 

dryers. As discussed in section 8.1.1, DOE’s approach for conducting the LCC analysis relied on 

developing samples of consumers that use each of the products. DOE also characterized the 

uncertainty of many of the inputs to the analysis with probability distributions. DOE used a 

Monte Carlo simulation technique to perform the LCC calculations on the consumers in the 

sample. For each set of sample consumers using the product in each product class, DOE 

calculated the average LCC and LCC savings and the median and average PBP for each of the 

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candidate standard levels (CSLs). At this stage of the rulemaking, the CSLs correspond to the 

energy efficiency levels presented in the preceding sections. 

DOE calculated LCC savings and PBPs relative to the base case products that it assigned 

to the sample households. As discussed in section 8.2.6, for some consumers DOE assigned a 

base case product that is more efficient than some of the CSLs. For that reason, the average LCC 

impacts are not equal to the difference between the LCC of a specific standard level and the LCC 

of the baseline product. 

LCC and PBP calculations were performed 10,000 times on the sample of consumers 

established for each product. Each LCC and PBP calculation was performed on a single 

consumer that was selected from the sample. The selection of a consumer was based on its 

weight (i.e., how representative a particular consumer is of other consumers in the distribution). 

Each LCC and PBP calculation also sampled from the probability distributions that DOE 

developed to characterize many of the inputs to the analysis. 

Based on the Monte Carlo simulations that DOE performed, for each CSL, DOE 

calculated the share of consumers with a net LCC benefit, with a net LCC cost, and with no 

impact. DOE considered a consumer to receive no impact at a given standard level if DOE 

assigned it a base case product that is the same as or has higher efficiency than the standard 

level. To illustrate the range of LCC and PBP impacts among the sample consumers, the sections 

below present figures that provide such information for each product class. 

The results presented in this section for room air conditioners combine the results for 

residential and commercial users, which means that DOE had to give an appropriate weight to 

the results for each type of user. DOE did not find any room air conditioner shipment data that 

gives a breakdown between commercial and residential purchasers. It based the shares of 

shipments in the effective year of each of these purchaser types on the estimated residential and 

commercial shares of the total national stock of room air conditioners in 2007. 

AHS 2007 provides the number of households with a room air conditioner (31.4 

million),h as well as the total number of residential room air conditioners 53.8 million residential 

room air conditioners in 2007. For calculating the stock of commercial room air conditioners, 

CBECS 2003 gives the total floor area cooled by room air conditioners. Assuming a ton of 

cooling capacity is adequate to cool 300 sq. ft., an average size of 10,000 Btu/h and a value of 

12,000 Btu/h per ton, DOE estimated that an average room air conditioner cools 250 sq. ft. 

Dividing the total floor area cooled by room air conditioners by 250 sq ft per room air 

conditioner yields a value close to 7 million room air conditioners in commercial buildings. 

Using the above values yields shares of the total room air conditioner stock of 88.4 percent for 

residential units and 11.6 percent for commercial units. 

h AHS provides a complete set of all households in the United States (not only households currently in use, but also 

vacant households and households with seasonal use). 

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8.3.1 Room Air Conditioners 

8.3.1.1 Summary of Results 

Tables 8.3.1 through 8.3.4 show the LCC and PBP results by CSL for each representative 

room air conditioner product class. The CSLs correspond to the energy efficiency levels included 

in the engineering analysis. With regard to the PBPs, DOE determined the median and average 

values by excluding the percentage of users not impacted by the standard. 

Table 8.3.1	 Room Air Conditioners, <6,000 Btu/h, with Louvers: LCC and PBP Results 

CSL IEER 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Users with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 9.5 $329 $648 $976 

1 10.1 $337 $613 $950 $26 15% 4% 81% 0.9 6.3 

2 10.6 $347 $586 $933 $42 20% 4% 76% 1.6 11.6 

3 11.1 $362 $561 $924 $51 30% 0% 70% 2.4 14.0 

4 11.6 $379 $539 $917 $57 36% 0% 64% 3.1 17.1 

5 12.0 $389 $522 $911 $63 38% 0% 62% 3.4 23.5 

* Discounted 

Table 8.3.2	 Room Air Conditioners, 8,000–13,999 Btu/h, with Louvers: LCC and PBP 

Results 

CSL IEER 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Users with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 9.7 $489 $655 $1,144 

1 10.3 $502 $614 $1,117 $14 14% 49% 37% 1.6 10.4 

2 10.8 $517 $584 $1,100 $23 17% 47% 36% 2.5 11.9 

3 11.3 $543 $556 $1,099 $24 53% 3% 44% 6.7 33.1 

4 11.5 $602 $546 $1,148 -$24 69% 1% 30% 11.2 79.1 

* Discounted 

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Table 8.3.3 Room Air Conditioners, ≥20,000 Btu/h, with Louvers: LCC and PBP Results
 

CSL IEER 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Users with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 8.5 $860 $1,255 $2,115 

1 9.0 $884 $1,181 $2,065 $21 14% 63% 23% 3.2 7.3 

2 9.4 $913 $1,131 $2,043 $33 21% 57% 23% 5.5 7.6 

3 9.8 $951 $1,084 $2,035 $40 63% 1% 37% 11.8 14.5 

4 10.0 $996 $1,062 $2,058 $17 71% 0% 29% 15.8 20.9 

* Discounted 

Table 8.3.4	 Room Air Conditioners, 8,000–13,999 Btu/h, Without Louvers: LCC and 

PBP Results 

CSL IEER 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Users with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 8.4 $557 $702 $1,259 

1 8.9 $562 $661 $1,223 $14 3% 61% 36% 0.8 2.6 

2 9.3 $569 $631 $1,200 $23 4% 61% 35% 1.1 3.7 

3 9.8 $590 $596 $1,186 $37 39% 0% 61% 4.7 17.9 

* Discounted 

8.3.1.2 Distributions of Impacts 

The figures below show the distribution of LCCs in the base case for each product class. 

Also presented below for a specific standard level are figures showing the distribution of LCC 

impacts and the distribution of PBPs. The figures are presented as frequency charts that show the 

distribution of LCCs, LCC impacts, and PBPs with their corresponding probability of 

occurrence. DOE generated the figures for the distributions from a Monte Carlo simulation run 

based on 10,000 samples. 

Base Case LCC Distributions. Figures 8.3.1 to 8.3.4 show the base case LCC 

distributions for the four room air conditioner representative product classes for residential 

consumers. DOE can generate similar figures for commercial purchasers. The figures show the 

full range of LCCs for the residential room air conditioner sample. 

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Forecast: LCC - level 0 - Resid < 6K
 

10,000 Trials Frequency Chart 9,702 Displayed
 

.039 388 

.029 291 

.019 194 

.010 97 

.000 0 

$328 $964 $1,600 $2,236 $2,872 

$ 

Figure 8.3.1 Room Air Conditioners, Residential < 6,000 Btu/h, with 

Louvers, Base Case LCC Distribution 

Forecast: LCC - level 0 - Resid 8K-14K
 

10,000 Trials Frequency Chart 9,720 Displayed
 

.039 390 

.029 292.5 

.020 195 

.010 97.5 

.000 0 

$441 $1,115 $1,790 $2,464 $3,139 

$ 

Figure 8.3.2 Room Air Conditioners, Residential 8,000–13,999 Btu/h, with 

Louvers, Base Case LCC Distribution 

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Frequency Chart 

$ 

.000 

.019 

.038 

.056 

.075 

0 

188.2 

376.5 

564.7 

753 

$896 $2,128 $3,360 $4,592 $5,824 

10,000 Trials 9,722 Displayed 

Forecast: LCC - level 0 - Resid > 20K 

Figure 8.3.3 Room Air Conditioners, Residential ≥ 20,000 Btu/h, with 

Louvers, Base Case LCC Distribution 

Frequency Chart 

$ 

.000 

.010 

.020 

.030 

.040 

0 

100.5 

201 

301.5 

402 

$539 $1,246 $1,953 $2,660 $3,367 

10,000 Trials 9,723 Displayed 

Forecast: LCC - level 0 - Resid 8K-14K 2 

Figure 8.3.4	 Room Air Conditioners, Residential 8,000–13,999 Btu/h
 

Through Wall, without Louvers, Base Case LCC Distribution
 

Standard-Level Distribution of Impacts. Figures 8.3.5 and 8.3.6 are examples of 

frequency charts showing the distribution of LCC savings for residential and commercial room 

air conditioners at CSL 3. DOE can generate frequency charts similar to those shown for every 

CSL. 

8-49 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

Forecast: LCC Saving - level 3 - Resid < 6K
 

10,000 Trials	 Frequency Chart 9,712 Displayed
 

.041 405 

.030 303.7 

.020 202.5 

.010 101.2 

.000 0 

($34) $51 $136 $221 $306 

$ 

Figure 8.3.5 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers, CSL 

3 LCC Savings Distribution 

Forecast: LCC Saving - level 3 - Comm < 6K
 

10,000 Trials Frequency Chart 9,736 Displayed
 

.040 397 

.030 297.7 

.020 198.5 

.010 99.25 

.000 0 

($31) $50 $131 $212 $293 

$ 

Figure 8.3.6	 Room Air Conditioners, Commercial < 6,000 Btu/h, with Louvers, 

CSL 3 LCC Savings Distribution 

Figures 8.3.7 and 8.3.8 are examples of frequency charts showing the distribution of 

PBPs for residential and commercial standard level 3 room air conditioners. DOE can generate 

frequency charts similar to those shown for every standard level. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

Frequency Chart 

.000 

.116 

.233 

.349 

.466 

0 

4659 

-1.00 81.45 163.90 246.35 328.80 

10,000 Trials 9,921 Displayed 

Forecast: Payback - level 3 - Resid < 6K 

Figure 8.3.7 Room Air Conditioners, Residential < 6,000 Btu/h, with Louvers, 

Standard Level 3 PBP Distribution 

Frequency Chart 

.000 

.164 

.327 

.491 

.655 

0 

6545 

-1.00 58.65 118.29 177.94 237.59 

10,000 Trials 9,980 Displayed 

Forecast: Payback - level 3 - Comm < 6K 

Figure 8.3.8	 Room Air Conditioners, Commercial < 6,000 Btu/h, with Louvers, 

Standard Level 3 PBP Distribution 

8.3.1.3 Range of Impacts 

Figures 8.3.9 through 8.3.16 show the range of LCC savings for the CSLs considered for 

each room air conditioner product class for residential and commercial users. For each standard 

level, the top and the bottom of the box indicate the 75th and 25th percentiles, respectively. The 

bar at the middle of the box indicates the median; 50 percent of the households have lifecycle 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

cost savings above this value. The ‘whiskers’ at the bottom and the top of the box indicate the 5th 

and 95th percentiles. The small box shows the average LCC savings for each standard level. 

Figure 8.3.9 Room Air Conditioners, Residential < 6,000 Btu/h, 

with Louvers, Range of Average LCC Savings 

Figure 8.3.10	 Room Air Conditioners, Residential 8,000–13,999 

Btu/h, with Louvers, Range of Average LCC 

Savings 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

Figure 8.3.11 Room Air Conditioners, Residential ≥ 20,000 Btu/h, 

with Louvers, Range of Average LCC Savings 

Figure 8.3.12	 Room Air Conditioners, Residential 8,000–13,999 

Btu/h Through Wall, without Louvers, Range of 

Average LCC Savings 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

Figure 8.3.13 Room Air Conditioners, Commercial < 6,000 Btu/h, 

with Louvers, Range of Average LCC Savings 

Figure 8.3.14	 Room Air Conditioners, Commercial 8,000–13,999 

Btu/h, with Louvers, Range of Average LCC 

Savings 

8-54 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

Figure 8.3.15	 Room Air Conditioners, Commercial ≥ 20,000 

Btu/h, with Louvers, Range of Average LCC 

Savings 

Figure 8.3.16	 Room Air Conditioners, Commercial 8,000–13,999 

Btu/h Through Wall, without Louvers, Range of 

Average LCC Savings 

Figures 8.3.17 through 8.3.24 show the range of PBPs for all CSLs considered for each 

room air conditioner product class for residential and commercial users. For each efficiency 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

level, the top and bottom of the box in the figure indicate the 75th and 25th percentiles, 

respectively. The bar at the middle of the box indicates the median: 50 percent of the households 

have a payback period above this value. The horizontal lines above and below each box indicate 

the 95th and 5th percentiles, respectively. The small box indicates the average PBP for each CSL. 

Figure 8.3.17 Room Air Conditioners, Residential < 6,000 Btu/h, 

with Louvers, Range of Average Payback Period 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

Figure 8.3.18	 Room Air Conditioners, Residential 8,000–13,999 

Btu/h, with Louvers, Range of Average Payback 

Period 

Figure 8.3.19 Room Air Conditioners, Residential ≥ 20,000 Btu/h, 

with Louvers, Range of Average Payback Period 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

Figure 8.3.20	 Room Air Conditioners, Residential 8,000–13,999 

Btu/h Through Wall, without Louvers, Range of 

Average Payback Period 

Figure 8.3.21 Room Air Conditioners, Commercial < 6,000 Btu/h, 

with Louvers, Range of Average Payback Period 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

Figure 8.3.22	 Room Air Conditioners, Commercial 8,000–13,999 

Btu/h, with Louvers, Range of Average Payback 

Period 

Figure 8.3.23	 Room Air Conditioners, Commercial ≥ 20,000 

Btu/h, with Louvers, Range of Average Payback 

Period 

8-59 

EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

Figure 8.3.24	 Room Air Conditioners, Commercial 8,000–13,999 

Btu/h Through Wall, without Louvers, Range of 

Average Payback Period 

8.3.2 Clothes Dryers 

8.3.2.1 Summary of Results 

Tables 8.3.5 through 8.3.10 summarize the LCC and payback period results by CSL for 

each considered clothes dryer product class. With regard to the PBPs shown below, DOE 

determined the median and average values by excluding the percentage of households not 

impacted by the standard. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.3.5 Vented Clothes Dryers, Electric, Standard: LCC and PBP Results
 

CSL 

Efficiency 

lb/kWh 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 2.96 $552 $657 $1,209 

1 3.04 $571 $638 $1,209 $0 19% 70% 10% 15.2 35.6 

2 3.10 $651 $627 $1,277 -$54 78% 21% 1% 78.0 244.6 

3 3.33 $703 $584 $1,287 -$64 87% 0% 13% 30.5 88.2 

4 3.35 $705 $578 $1,284 -$60 86% 0% 14% 27.5 40.2 

5 3.40 $704 $563 $1,267 -$44 79% 0% 21% 20.6 24.6 

6 4.52 $953 $424 $1,377 -$154 85% 0% 15% 24.9 34.7 

* Discounted 

Table 8.3.6 Vented Clothes Dryers, Compact (120V): LCC and PBP Results 

CSL 

Efficiency 

lb/kWh 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 3.00 $553 $343 $896 

1 3.08 $570 $334 $904 -$8 87% 0% 13% 28.7 74.4 

2 3.15 $651 $327 $978 -$82 100% 0% 0% 95.5 247.3 

3 3.37 $702 $306 $1,008 -$112 98% 0% 2% 61.1 158.0 

4 3.41 $704 $300 $1,004 -$109 98% 0% 2% 51.8 66.5 

5 3.53 $703 $285 $988 -$92 96% 0% 4% 35.4 38.1 

6 4.69 $934 $215 $1,148 -$253 96% 0% 4% 43.0 52.8 

* Discounted 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

 

Table 8.3.7 Vented Clothes Dryers, Compact (240V): LCC and PBP Results
 

CSL 

Efficiency 

lb/kWh 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 2.79 $553 $368 $921 

1 2.86 $570 $359 $929 -$3 34% 61% 5% 28.0 81.3 

2 2.96 $651 $347 $998 -$57 77% 22% 1% 84.8 227.4 

3 3.06 $702 $336 $1,038 -$88 77% 22% 1% 78.0 207.8 

4 3.10 $704 $330 $1,034 -$84 78% 0% 22% 49.0 60.9 

5 3.19 $703 $315 $1,018 -$68 76% 0% 24% 33.1 32.2 

6 4.34 $934 $232 $1,166 -$216 95% 0% 5% 38.6 47.8 

* Discounted 

Table 8.3.8 Vented Clothes Dryers, Gas: LCC and PBP Results 

CSL 

Efficiency 

lb/kWh 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 2.63 $661 $353 $1,014 

1 2.71 $684 $345 $1,029 -$4 25% 73% 2% 46.3 146.4 

2 2.80 $762 $335 $1,098 -$52 70% 30% 0% 117.6 342.4 

3 2.97 $903 $318 $1,220 -$174 99% 1% 0% 121.7 346.9 

4 2.98 $905 $312 $1,216 -$170 99% 0% 1% 92.3 109.5 

5 3.02 $904 $295 $1,199 -$152 98% 0% 2% 53.3 56.6 

* Discounted 

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Table 8.3.9 Vent-less Clothes Dryers, Electric (240V): LCC and PBP Results
 

CSL 

Efficiency 

lb/kWh 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 2.29 $1,240 $446 $1,686 

1 2.31 $1,242 $440 $1,683 $3 3% 0% 97% 4.7 4.5 

2 2.37 $1,241 $425 $1,666 $20 0% 0% 100% 0.6 0.6 

3 2.39 $1,260 $421 $1,682 $4 48% 0% 52% 10.4 10.2 

4 2.59 $1,347 $389 $1,736 -$50 90% 0% 10% 25.6 27.5 

5 3.54 $1,575 $284 $1,859 -$173 90% 0% 10% 30.2 38.7 

* Discounted 

Table 8.3.10 Vent-less Clothes Dryers, Electric Combination: LCC and PBP Results 

CSL 

Efficiency 

lb/kWh 

Life-Cycle Cost Life-Cycle Cost Savings Payback Period 

(years) 

Average 

Installed 

Cost 

Average 

Lifetime 

Operating 

Cost* 

Average 

LCC 

Average 

Savings 

Households with 

Median Average 

Net 

Cost 

No 

Impact 

Net 

Benefit 

Baseline 1.90 $1,582 $537 $2,119 

1 2.15 $1,583 $476 $2,059 $60 1% 0% 99% 0.3 0.8 

2 2.34 $1,665 $436 $2,102 $17 58% 0% 42% 12.6 32.7 

3 2.36 $1,667 $432 $2,099 $20 56% 0% 44% 12.1 18.4 

4 2.42 $1,666 $416 $2,083 $36 47% 0% 53% 10.1 12.3 

5 3.31 $1,939 $304 $2,242 -$124 82% 0% 18% 22.6 30.9 

* Discounted 

8.3.2.2 Distributions of Impacts 

The figures below show the distribution of LCCs in the base case for each product class. 

Also presented below, for a specific standard level, are figures showing the distribution of LCC 

impacts and the distribution of PBPs. The figures are presented as frequency charts that show the 

distribution of LCCs, LCC impacts, and PBPs with their corresponding probability of 

occurrence. DOE generated the figures for the distributions from a Monte Carlo simulation run 

based on 10,000 samples. 

Base Case LCC Distributions. Figures 8.3.25 to 8.3.30 show the base case LCC 

distributions for the six clothes dryer product classes that DOE analyzed for this rulemaking. The 

figures show the full range of LCCs for the clothes dryer sample. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

Forecast: LCC - level 0 - Standard Elec
 

10,000 Trials Frequency Chart 9,703 Displayed
 

.033 330 

.025 247.5 

.017 165 

.008 82.5 

.000 0 

$551 $1,132 $1,713 $2,295 $2,876 

$ 

Figure 8.3.25 Clothes Dryers, Electric Standard, Base Case LCC Distribution
 

Forecast: LCC - level 0 - Compact 120V 

10,000 Trials Frequency Chart 9,748 Displayed 

.034 344 

.026 258 

.017 172 

.009 86 

.000 0 

$552 $893 $1,233 $1,573 $1,914
 

$
 

Figure 8.3.26 Clothes Dryers, Electric Compact 120V, Case LCC Distribution
 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

Forecast: LCC - level 0 - Compact 240V
 

10,000 Trials Frequency Chart 9,748 Displayed
 

.034 336 

.025 252 

.017 168 

.008 84 

.000 0 

$552 $868 $1,184 $1,501 $1,817
 

$
 

Figure 8.3.27 Clothes Dryers, Electric Compact 240V, Base Case LCC Distribution
 

Forecast: LCC - level 0 - Gas Dryer 

10,000 Trials Frequency Chart 9,739 Displayed 

.039 393 

.029 294.7 

.020 196.5 

.010 98.25 

.000 0 

$632 $970 $1,308 $1,646 $1,984
 

$
 

Figure 8.3.28 Clothes Dryers, Gas, Base Case LCC Distribution
 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

Forecast: LCC - level 0 - Ventless 240V
 

10,000 Trials Frequency Chart 9,756 Displayed
 

.038 380 

.029 285 

.019 190 

.010 95 

.000 0 

$1,181 $1,610 $2,040 $2,469 $2,899
 

$
 

Figure 8.3.29 Clothes Dryers, Vent-less 240V, Standard Base Case LCC Distribution
 

Forecast: LCC - level 0 - Ventless Washer-Combo 

10,000 Trials Frequency Chart 9,756 Displayed 

.036 361 

.027 270.7 

.018 180.5 

.009 90.25 

.000 0 

$1,518 $2,036 $2,554 $3,071 $3,589
 

$
 

Figure 8.3.30 Clothes Dryers, Vent-less Combination Washer/Dryer, Standard Base 

Case LCC Distribution 

Figure 8.3.31 is an example of a frequency chart showing the distribution of LCC savings 

for standard level 3 for electric standard clothes dryers. DOE can generate similar frequency 

charts for every standard level. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

Forecast: LCC Saving - level 3 - Standard Elec
 

10,000 Trials Frequency Chart 9,805 Displayed
 

.033 325 

.024 243.7 

.016 162.5 

.008 81.25 

.000 0 

($152) ($86) ($20) $46 $112 

$ 

Figure 8.3.31 Clothes Dryers, Electric Standard, Standard Level 3 LCC Savings 

Distribution 

Figure 8.3.32 is an example of a frequency chart showing the distribution of PBPs for 

standard level 3 for electric standard clothes dryers. DOE can generate similar frequency charts 

for every standard level. 

Forecast: Payback - level 3 - Standard Elec 

10,000 Trials Frequency Chart 9,897 Displayed 

.000 

.062 

.124 

.187 

.249 

0 

622.2 

2489 

2.8 293.3 583.8 874.3 1,164.8 

Figure 8.3.32 Clothes Dryers, Electric Standard, Standard Level 3 PBP 

Distribution 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

 

 

8.3.2.3 Range of Impacts 

Figures 8.3.33 through 8.3.38 show the range of LCC savings for all the CSLs considered 

for each clothes dryer product class. For each standard level, the top and the bottom of the box 

indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the 

median; 50 percent of the households have lifecycle cost savings above this value. The 

‘whiskers’ at the bottom and the top of the box indicate the 5th and 95th percentiles. The small 

box shows the average LCC savings for each standard level. Negative savings means that the 

LCC increases relative to the base case. 

Electric Standard Average LCC Savings 

Average; Median; Box 25%-75%; Whisker: 5%-95% 

-400 

-300 

-200 

-100 

0 

100 

200 

300 

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 

Efficiency Level 

Average LCC Savings (2008$) 

median 

Average 

Figure 8.3.33 Clothes Dryers, Electric Standard, Range of LCC Savings
 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

Electric Compact 120V Average LCC Savings 

Median; Box 25%-75%; W hisker: 5%-95% 

-400 

-350 

-300 

-250 

-200 

-150 

-100 

-50 

0 

50 

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 

Efficiency Level 

Average LCC Savings

(2008$) 

median 

Average 

Figure 8.3.34 Clothes Dryers, Electric Compact 120V, Range of LCC Savings
 

Electric Compact 240V Average LCC Savings 

Median; Box 25%-75%; W hisker: 5%-95% 

-400 

-350 

-300 

-250 

-200 

-150 

-100 

-50 

0 

50 

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 

Efficiency Level 

Average LCC Savings (2008$)

median 

Average 

Figure 8.3.35 Clothes Dryers, Electric Compact 240V, Range of LCC Savings
 

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Gas Average LCC Savings 

Median; Box 25%-75%; W hisker: 5%-95% 

-290 

-240 

-190 

-140 

-90 

-40 

10 

Level 1 Level 2 Level 3 Level 4 Level 5 

Efficiency Level 

Average LCC Savings

(2008$) 

median 

Average 

Figure 8.3.36 Clothes Dryers, Gas, Range of LCC Savings
 

Ventless 240V Average LCC Savings 

Average; Median; Box 25%-75%; Whisker: 5%-95% 

-350 

-300 

-250 

-200 

-150 

-100 

-50 

0 

50 

100 

150 

Level 1 Level 2 Level 3 Level 4 Level 5 

Efficiency Level 

Average LCC Savings (2008$) 

median 

Average 

Figure 8.3.37 Clothes Dryers, Vent-less 240V , Range of LCC Savings
 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

 

 

 

Ventless Combination Average LCC Savings 

Median; Box 25%-75%; Whisker: 5%-95% 

-400 

-300 

-200 

-100 

0 

100 

200 

300 

400 

Level 1 Level 2 Level 3 Level 4 Level 5 

Efficiency Level 

Average LCC Savings (2008$)

median 

Average 

Figure 8.3.38	 Clothes Dryers, Vent-less Combination Washer/Dryer, Range of LCC 

Savings 

Figures 8.3.39 through 8.3.44 show the range of PBPs for all CSLs considered for each 

clothes dryer product class. For each efficiency level, the top and bottom of the box in the figure 

indicate the 75th and 25th percentiles, respectively. The bar at the middle of the box indicates the 

median: 50 percent of the households have a payback period above this value. The horizontal 

lines above and below each box indicate the 95th and 5th percentiles, respectively. The small box 

indicates the average PBP for each CSL. 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

Electric Standard Average LCC Savings 

Average; Median; Box 25%-75%; Whisker: 5%-95% 

0 

100 

200 

300 

400 

500 

600 

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 

Efficiency Level 

Average LCC Savings (2008$) 

median 

Average 

Figure 8.3.39 Clothes Dryers, Vented, Electric Standard, Range of Payback Periods
 

Electric Compact 120V Average Payback Period 

Median; Box 25%-75%; W hisker: 5%-95% 

0 

100 

200 

300 

400 

500 

600 

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 

Efficiency Level 

Average PBP (Years) 

median 

Average 

Figure 8.3.40 Clothes Dryers, Vented, Electric Compact 120V, Range of Payback 

Periods 

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EERE-2007-BT-STD-0010 COMMENT 20.3
 

 

 

 

 

 

Electric Compact 240V Average LCC Savings 

Median; Box 25%-75%; W hisker: 5%-95% 

0 

100 

200 

300 

400 

500 

600 

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 

Efficiency Level 

Average LCC Savings (2008$)

median 

Average 

Figure 8.3.41 Clothes Dryers, Vented, Electric Compact 240V, Range of Payback 

Periods 

Gas Average Payback Period 

Median; Box 25%-75%; W hisker: 5%-95% 

0 

100 

200 

300 

400 

500 

600 

700 

800 

Level 1 Level 2 Level 3 Level 4 Level 5 

Efficiency Level 

Average PBP (Years) 

median 

Average 

Figure 8.3.42 Clothes Dryers, Vented, Gas, Range of Payback Periods
 

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Ventless 240V Average Payback Period 

Average; Median; Box 25%-75%; Whisker: 5%-95% 

0 

20 

40 

60 

80 

100 

120 

Level 1 Level 2 Level 3 Level 4 Level 5 

Efficiency Level 

Average PBP (Years) 

median 

Average 

Figure 8.3.43 Clothes Dryers, Vent-less 240V , Range of Payback Periods
 

Ventless Combination Average Payback Period 

Median; Box 25%-75%; Whisker: 5%-95% 

0 

10 

20 

30 

40 

50 

60 

70 

80 

90 

Level 1 Level 2 Level 3 Level 4 Level 5 

Efficiency Level 

Average PBP (Years) 

median 

Average 

Figure 8.3.44 Clothes Dryers, Vent-less Combination Washer/Dryer, Range of 

Payback Periods 

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8.4 REBUTTABLE PAYBACK PERIOD 

DOE presents rebuttable PBPs to provide the legally established rebuttable presumption 

that an energy efficiency standard is economically justified, if the additional product costs 

attributed to the standard are less than three times the value of the first-year energy cost savings. 

(42 U.S.C. §6295 (o)(2)(B)(iii)) 

The basic equation for rebuttable PBP is the same as that shown in section 8.3, Payback 

Period Inputs. Unlike the analyses described in sections 8.2 and 8.3, however, the rebuttable PBP 

is not based on the use of household samples and probability distributions. Rather than 

distributions, the rebuttable PBP is based on discrete single-point values. For example, while 

DOE uses a probability distribution of regional energy prices in the distributional payback period 

analysis, it uses only the national average energy price from the probability distribution to 

determine the rebuttable PBP. 

Other than the use of single-point values, the most notable difference between the 

distribution PBP and the rebuttable PBP is the latter’s reliance on the DOE test procedure to 

determine a product’s annual energy consumption. The following sections identify the 

differences, if any, between the annual energy consumptions determined for the distribution PBP 

and the rebuttable PBP. 

DOE based the annual energy consumption values that it used to determine the rebuttable 

PBP for room air conditioners on the number of operating hours per year specified in the DOE 

test procedure.49 

DOE based the annual energy consumption values that it used to determine the rebuttable 

PBP for clothes dryers on the number of cycles per year specified in the DOE test procedure.49 

8.4.1 Inputs 

Inputs for the rebuttable PBP differ from the distribution PBP in that the calculation uses 

discrete values, rather than distributions, for inputs. Note that for the calculation of distribution 

PBP, because inputs for the determination of total installed cost were based on single-point 

values, only the variability and/or uncertainty in the inputs for determining operating cost 

contributed to variability in the distribution PBPs. The following summarizes the single-point 

values that DOE used in the determination of the rebuttable PBP: 

•	 Manufacturing costs, markups, sales taxes, and installation costs were all based on the 

single-point values used in the distributional LCC and PBP analyses. 

•	 Annual energy consumption is based on the DOE test procedure. 

•	 Energy prices are based on national average values for the year that new standards are 

assumed to take effect. 

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• An average discount rate or lifetime is not required in the rebuttable PBP calculation. 

• The effective date of the standard is assumed to be 2014. 

8.4.2 Results 

DOE calculated rebuttable PBPs for each standard level relative to the distribution of 

product energy efficiencies estimated for the base case. In other words, DOE did not determine 

the rebuttable PBP relative to the baseline energy efficiency level, but relative to the distribution 

of product energy efficiencies DOE determined for the base case (i.e., the case without new 

energy conservation standards). 

Table 8.4.1 presents the rebuttable PBPs for room air conditioners. Table 8.4.2 presents 

the rebuttable payback periods for clothes dryers. 

Table 8.4.1 Room Air Conditioners: Rebuttable Payback Periods 

Product Class IEER PBP (years) 

8000–13,999 Btu/h, with Louvers 10.3 2.5 

10.8 2.9 

≥20,000 Btu/h, with Louvers 9.0 1.5 

9.4 2.0 

9.8 2.5 

8000–13,999 Btu/h, without Louvers 8.9 0.9 

9.3 1.2 

9.8 2.1 

Table 8.4.2 Clothes Dryers: Rebuttable Payback Periods
 

Product Class IEF PBP (years) 

Vent-less Compact 240V 2.37 0.6 

Vent-less Combination 

Washer/Dryer 

2.15 0.2 

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