# 9d "

Wednesday,
March 15, 2000



# Department of Energy

Office of Energy Efficiency and Renewable Energy

10 CFR Part 430 Energy Conservation Program for Consumer Products; Fluorescent Lamp
Ballast Energy Conservation Standards; Proposed Rule 

## Wednesday,

March 15, 2000



# Part V



# Department of Energy

Office of Energy Efficiency and Renewable Energy

10 CFR Part 430 

### Energy Conservation Program for Consumer Products; Fluorescent Lamp Ballast Energy Conservation Standards; Proposed Rule14128 Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules

DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy

10 CFR Part 430
[Docket Number EE-RM

-97-500]

RIN 1904-AA75 Energy Conservation Program for Consumer Products : Fluorescent Lamp Ballasts Energy Conservation Standards

AGENCY : Office of Energy Efficiency and Renewable Energy, Department of Energy ACTION : Notice of proposed rulemaking and public hearing.

SUMMARY : The Energy Policy and Conservation Act, as amended, prescribes energy conservation standards for certain major household appliances, and requires the Department of Energy (DOE, Department, or we) to administer an energy conservation program for these products. The National Appliance Energy Conservation Amendments of 1988 require DOE to consider amending the energy conservation standards for fluorescent lamp ballasts. The Department conducted several analyses regarding the energy savings, benefits and burdens of amended energy conservation standards for fluorescent lamp ballasts and has shared the results of these analyses with all stakeholders. Based on these analyses, several of the major stakeholders, including manufacturers and energy efficiency advocates, submitted to the Department a joint proposal for the highest standard level which they believe to be technically feasible and economically justified. Based on our review of this proposal and our analyses, we believe the standards they proposed are technically feasible and economically justified. Therefore, today we propose to amend the energy conservation standard for fluorescent lamp ballasts for commercial and industrial applications as recommended in the joint proposal and announce a public hearing.

DATES : Comments must be received on or before May 29, 2000. The Department requests 10 copies of the written comments and, if possible, a computer disk. Oral views, data, and arguments may be presented at the public hearing to be held in Washington, D.C., beginning at 9:00 a.m. on April 18,
2000. Requests to speak at the hearing must be received by the Department no later than 4:00 p.m., April 3, 2000, Copies of statements to be given at the public hearing must be received by the Department no later than 4:00 p.m., April 6, 2000. The DOE panel will read the statements in advance of the hearing and would appreciate the oral presentations to be limited to a summary of the statement. The length of each oral presentation is limited to 15 minutes.
ADDRESSES : The hearing will be held at the U.S. Department of Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW, Washington, DC. Written comments, oral statements, and requests to speak at the hearing are to be submitted to Brenda Edwards-Jones, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Energy Conservation Program for Consumer Products: Fluorescent Lamp Ballasts, Docket No. EE-RM-97-500, 1000 Independence Avenue, S.W., Washington, D.C. 20585-0121. Copies of the public comments received, the Technical Support Document (TSD) and the transcript of the public hearing may be read at the DOE Freedom of Information Reading Room, U.S. Department of Energy, Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW, Washington, DC 20585, (202) 586-3142, between the hours of 9:00 a.m. and 4:00 p.m., Monday through Friday, except Federal holidays. Copies of the TSD may be obtained from: U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Forrestal Building, Mail Station EE-41, 1000 Independence Avenue, SW, Washington, DC 20585. (202) 586-9127. Copies of the analysis can also be found on the Codes and Standards Internet site at: http://www.eren.doe.gov/buildings/ codes-standards/applbrf/ballast.html. For more information concerning public participation in this rulemaking proceeding see Section VII, "Public Comment Procedures," of this Notice.
FOR FURTHER INFORMATION CONTACT: Carl Adams, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, EE-41, 1000 Independence Avenue, SW, Washington, DC 20585-0121, (202) 586- 9127, or Eugene Margolis, U.S. Department of Energy, Office of General Counsel, GC-72, 1000 Independence Avenue, SW, Washington, DC 20585, (202) 586-9507.

SUPPLEMENTARY INFORMATION:

I. Introduction a. Authority b. Background H. General Discussion a. Test Procedures b. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels c. Energy Savings 1. Determination of Savings 2. Significance of Savings d. Rebuttable Presumption e. Economic justification 1. Economic Impact on Manufacturers and Consumers 2. Life-Cycle Costs 3. Energy Savings 4. Lessening of Utility or Performance of Products 5. Impact of Lessening of Competition 6. Need of the Nation to Conserve Energy 7. Other Factors III. Methodology a. Life-Cycle-Cost Spreadsheet b. National Energy Savings Spreadsheet c. Manufacturer Impact Analysis and Government Regulatory Impact Model (GRIM) d. NEMS Environmental Analysis IV. Discussion of Comments V. Analytical Results a. Efficiency Levels Analyzed b. Significance of Energy Savings c. Payback Period d. Economic justification 1. Economic Impact on Manufacturers and Consumers 2. Life-Cycle Cost 3. Energy Savings, Net Present Value and Net National Employment 4. Lessening of Utility or Performance of Products 5. Impact of Lessening of Competition 6. Need of the Nation to Save Energy 7. Other Factors e. Conclusion VI. Procedural Issues and Regulatory Reviews a. Review Under the National Environmental Policy Act b. Review Under Executive Order 12866, "Regulatory Planning and Review" c. Review Under the Regulatory Flexibility
Act d. Review Under the Paperwork Reduction
Act e. Review Under Executive Order 12988, "Civil Justice Reform" f. "Takings" Assessment Review g. Review Under Executive Order 13132 h. Review Under the Unfunded Mandates Reform Act i. Review Under the Treasury and General Government Appropriation Act of 1999 j. Review Under the Plain Language Directives VII. Public Comment Procedures a. Participation in Rulemaking b. Written Comment Procedures c. Public Hearing 1. Procedure for Submitting Requests to Speak 2. Conduct of Hearing

I. Introduction
a. Authority Part B of Title III of the Energy Policy and Conservation Act, Public Law 94- 163, as amended by the National Energy Conservation Policy Act, Public Law 

### 14128 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 430
[Docket Number EE-RM-97-500]

R1N 1904-AA75
Energy Conservation Program for Consumer Products: Fluorescent lamp Ballasts Energy Conservation Standards

AGENCY: Office ofEnergy Efficiency and Renewable Energy, Department of Energy

ACTION: Notice ofproposed rulemaking and public hearing.

SUMMARY: The Energy Policy and Conservation Act, as amended, prescribes energy conservation standards for certain major household appliances, and requires the Department ofEnergy (DOE. Department. or we) to administer an energy conservation program for these products. The National ApplianceEnergy Conservation Amendments of 1988 require DOE to consider amending the energy conservation standards for fluorescent lamp ballasts. The Department conducted several analyses regarding the energy savings. benefits and burdens ofamended energy conservation standards for fluorescent lamp ballasts and has shared the results ofthese analyses with all stakeholders. Based on these analyses. several ofthe major stakeholders. including manufacturers and energy efficiency advocates. submitted to the Department

ajoint proposal for the highest standard level which they believe to be technically feasible and economically justified. Based on our review ofthis proposal and our analyses. we believe the standards they proposed are technically feasible and economically justified. Therefore, today we propose to amend the energy conservation standard for fluorescent lamp ballasts for commercial and industrial applications

as recommended in thejoint proposal and announce a public hearing.

DATES: Comments must bereceived on

orbefore May 29. 2000. TheDepartment requests 10 copies ofthe written
comments and. ifpossible. a computer disk. Oral views. data. and arguments may be presented at the public hearing
to be held inWashington. D.C

.. beginning at 9:00 a.m. on April 18. 2000.

Requests to speak at the hearing must be received by the Department no later than 4:00 p.m

.. April 3. 2000. Copies of statements tobegiven at the public hearing mustbereceivedby the Department no later than 4:00 p.m

.. April 6. 2000. The DOE panel will read the statements in advance ofthe hearing andwould appreciate the oral presentations to be limited to a summary ofthe statement. The length of each oral presentation is limited to 15 minutes.

ADDRESSES: The hearing will be held at the U.S. Department ofEnergy. Forrestal Building. Room lE-245. 1000 Independence Avenue. SW. Washington. DC. Written comments. oral statements. and requests to speak at the hearing are to be submitted to Brenda Edwards-Jones. U.S. Department ofEnergy. Office ofEnergy Efficiency and Renewable Energy. Energy Conservation Program for Consumer Products: Fluorescent Lamp Ballasts. Docket No. EE-RM-97-500. 1000 Independence Avenue. S.W

.. Washington. D.C. 20585-0121.

Copies ofthe public comments received. the Technical Support Document (TSD) and the transcript of the publichearing may be read at the DOE Freedom ofInformation Reading Room. U.S. Department ofEnergy. Forrestal Building. Room lE-190. 1000 Independence Avenue. SW. Washington. DC 20585. (202) 586-3142. between the hours of9:00 a.m. and 4:00
p.m

.. Monday through Friday. except Federal holidays. Copies ofthe TSD
may be obtained from: U.S. Department ofEnergy. Office ofEnergy Efficiency and Renewable Energy. Forrestal Building, Mail StationEE-41. 1000 Independence Avenue. SW. Washington. DC 20585. (202) 586-9127. Copies ofthe analysis can also be found

on the Codes and Standards Internet site
at: http://www.eren.doe.govlbuildings/ codes_standards/applbrf/ballast.html.

For more information concerning public participation inthis rulemaking proceeding see Section VII. "Public Comment Procedures." ofthis Notice.

FOR FURTHER INFORMATION CONTACT: Carl Adams. U.S. Department ofEnergy. Office ofEnergy Efficiency and Renewable Energy. EE-41, 1000 Independence Avenue. SW. Washington. DC 20585-0121. (202) 586- 9127. or Eugene Margolis. U.S. Department ofEnergy. Office ofGeneral Counsel. GC-72. 1000 Independence Avenue. SW. Washington. DC 20585. (202) 586-9507.

SUPPLEMENTARY INFORMATION:
1. Introduction

a. Authority b. Background 

### n. General Discussion

a. Test Procedures b. Technological Feasibility
1. General 2. MaximumTechnologically Feasible

Levels

c. Energy Savings 1. Determination ofSavings 2. Significance ofSavings d. Rebuttable Presumption

e. EconomicJustification 1. Economic Impact on Manufacturers and

Consumers 2. Life-Cycle Costs 3. Energy Savings 4. Lessening ofUtility or Performance of

Products 5. Impact ofLessening ofCompetition 6. Need ofthe Nationto Conserve Energy 7. Other Factors 

### m. Methodology

a. Life-Cycle-Cost Spreadsheet b. National Energy Savings Spreadsheet

c. Manufacturer Impact Analysis and

Government Regulatory Impact Model (GRIM) d. NEMS Environmental Analysis IV. Discussion ofComments V. Analytical Results

a. Efficiency Levels Analyzed b. Significance ofEnergy Savings

c. Payback Period d. EconomicJustification
1. Economic Impact on Manufacturers and

Consumers 2. Life-Cycle Cost 3. Energy Savings. Net Present Value and

Net NationalEmployment 4. Lessening ofUtility or Performance of

Products 5. Impact ofLessening ofCompetition 6. Need ofthe Nation to Save Energy 7. Other Factors

e. Conclusion VI. Procedural Issues and Regulatory Reviews

a. Review Underthe National

Environmental Policy Act b. Review UnderExecutive Order 12866.

"RegulatoryPlanning and Review"

c. Review Underthe Regulatory Flexibility

Act d. Review UnderthePaperworkReduction

Act

e. Review UnderExecutive Order 12988.

"Civil Justice Reform" f. "Takings" AssessmentReview
g. Review UnderExecutive Order 13132 h. Review UndertheUnfunded Mandates

Reform Act i. Review Under the Treasury and General

Government Appropriation Act of 1999 j. Review Underthe Plain Language

Directives VII. Public CommentProcedures

a. Participation in Rulemaking b. Written Comment Procedures

c. Public Hearing 1. Procedure for Submitting Requests to

Speak 2. Conduct ofHearing

I. Introduction

Q.

### Authority

Part B ofTitle III ofthe Energy Policy and Conservation Act. Public Law 94- 163. as amended by theNational Energy Conservation Policy Act. Public LawFederal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14129

95-619, by the National Appliance Energy Conservation Act, Public Law 100-12, by the National Appliance Energy Conservation Amendments of 1988, Public Law 100-357, and the Energy Policy Act of 1992, Public Law 102-486 1 created the Energy Conservation Program for Consumer Products other than Automobiles. The consumer products subject to this program (often referred to hereafter as "covered products") include fluorescent lamp ballasts. Under.the Act, the program consists essentially of three parts: Testing, labeling, and Federal energy conservation standards, The Department, in consultation with the National Institute of Standards and Technology, amends or establishes new test procedures for each of the covered products. Section 323. The test procedures measure the energy efficiency, energy use, or estimated annual operating cost of a covered product during a representative average use cycle or period of use. They must not be unduly burdensome to conduct. Section 323 (b)(3). A test procedure is not required if DOE determines by rule that one cannot be developed. Section 323(d)(1). Test procedures appear at 10 CFR part 430, subpart B. The Federal Trade Commission (FTC) prescribes rules governing the labeling of covered products after DOE publishes test procedures. Section 324(a). The FTC labels indicate the annual operating cost for the particular model and the range of estimated annual operating costs for other models of that product. Section 324(c)(1). Disclosure of estimated operating cost is not required if the FTC determines that such disclosure is not likely to assist consumers in making purchasing decisions, or is not economically feasible. In such a case, the FTC must require a different useful measure of energy consumption. Section 324(c). At the present time, there are Federal Trade Commission rules requiring labels for the following products: Room air conditioners, furnaces, clothes washers, dishwashers,water heaters, refrigerators, refrigeratorfreezers and freezers, central air conditioners and central air

I Part B of Title III of the Energy Policy and Conservation Act, as amended by the National Energy Conservation Policy Act, the National Appliance Energy Conservation Act, the National Appliance Energy Conservation Amendments of 1988, and the Energy Policy Act of 1992, is referred to in this notice as the "Act." Part B of Title III is codified at 42 U.S.C. 6291 et seq. Part B of Title III of the Energy Policy and Conservation Act, as amended by the National Energy Conservation Policy Act only, is referred to in this notice as the National Energy Conservation Policy Act. conditioning heat pumps, and fluorescent lamp ballasts. The National Appliance Energy Conservation Amendments of 1988 prescribed Federal energy conservation standards for ballasts. Section 325(g). The Act specifies that the standards are to be reviewed by the Department no later than January 1, 1992. Section 325(g)(7)(A). Any new or amended standard must be designed so as to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. Section 325(o)(2)(A). Section 325(o)(2)(B)(i) provides that before DOE determines whether a standard is economically justified, it must first solicit comments on a proposed standard. After reviewing comments on the proposal, DOE must then determine that the benefits of the standard exceed its burdens, based, to the greatest extent practicable, on a weighing of the following seven factors:
(I) The economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard; (II) The savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to-result from the imposition of the standard; (III) The total projected amount of energy savings likely to result directly from the imposition of the standard; (IV) Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard; (V) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard; (VI) The need for national energy conservation; and (VII) Other factors the Secretary considers relevant. In addition, section 325(o)(2)(B)(iii) establishes a rebuttable presumption of economic justification in instances where the Secretary determines that "the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy * * * savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure * * "The rebuttable presumption test is an alternative path to establishing economic justification. Section 327 of the Act addresses the effect of Federal rules on State laws or regulations concerning testing, labeling, and standards. Generally, all such State laws or regulations are superseded by the Act. Section 327(a)-(c). Exemptions to this general rule include: (1) State standards prescribed or enacted before January 8, 1987, and applicable to appliances produced before January 3, 1988 (section 327(b)(1)); (2) State procurement standards which are more stringent than the applicable Federal standard (Section 327(b)(3) and (f)(1)- (4)); (3) State regulations banning constant burning pilot lights in pool heaters (Section 327(b)(4)); and (4) State standards for television sets effective on or after January 1, 1992, may remain in effect in the absence of a Federal standard for such product (Section 327(b)(6) and 327(c)).
b. Background The National Energy Conservation Policy Act,2 which amended the Energy Policy and Conservation Act, required DOE to establish mandatory energy efficiency standards for each of the 13 covered products. These standards were to be designed to achieve the maximum improvement in energy efficiency that was technologically feasible and economically justified. The National Energy Conservation Policy Act provided, however, that no standard for a product be established if there were no test procedure for the product, or if DOE determined by rule either that a standard would not result in significant conservation of energy, or that a standard was not technologically feasible or economically justified. In determining whether a standard was economically justified, the Department was directed to determine whether the benefits of the standard exceeded its burdens by weighing the seven factors discussed above. The National Appliance Energy Conservation Act, which became law on March 17, 1987, amended the Energy Policy and Conservation Act in part by: Redefining "covered products"(specifically, refrigerators, refrigeratorfreezers, and freezers were combined into one product type from two; humidifiers and dehumidifiers were deleted; and pool heaters were added); establishing Federal energy conservation standards for 11 of the 12 covered products; and creating a schedule, according to which each standard is to be reviewed to determine

2 The consumer products covered by the National Energy Conservation Policy Act included: Refrigerators and refrigerator

-freezers ; freezers; dishwashers; clothes dryers; water heaters; room air conditioners; home heating equipment not including furnaces; television sets; kitchen ranges and ovens; clothes washers; humidifiers and dehumidifiers ; central air conditioners; and
furnaces. 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 14129

95-619, bythe National Appliance Energy Conservation Act, Public Law 100-12,bythe National Appliance Energy Conservation Amendments of 1988, Public Law 100-357, and the Energy Policy Act of 1992, Public Law 102-486 1 created the Energy Conservation Program for Consumer Products otherthan Automobiles. The

consumerproducts subject to this program (often referred to hereafter as "covered products") include fluorescent lamp ballasts.

Under.the Act, the program consists essentially ofthree parts: Testing, labeling, and Federal energy conservation standards. The Department, in consultation with the National Institute ofStandards and Technology, amends or establishes new test procedures for each ofthe covered products. Section 323. The test procedures measure the energy efficiency, energy use, or estimated annual operating cost ofa covered product during a representative average

use cycle or period ofuse. They must not be unduly burdensome to conduct. Section 323 (b)(3). A test procedure is
not required ifDOE determines byrule that one cannotbe developed. Section 323(d)(1). Test procedures appear at 10 CFR part 430, subpart B.

The Federal Trade Commission (FTC) prescribes rules governing the labeling ofcovered products after DOE publishes
test procedures. Section 324(a). The FTC labels indicate the annual operating cost for the particular model and the range ofestimated annual operating costs for other models ofthat product. Section 324(c)(1). Disclosure ofestimated operating cost is not required ifthe FTC determines that such disclosure is not likely to assist consumers in making purchasing decisions, or is not economically feasible. In such a case, the FTC must require a different useful

measure ofenergy consumption. Section 324(c). At the present time, there are Federal Trade Commission rules requiring labels for the following products: Room air conditioners, furnaces, clothes washers, dishwashers,
water heaters, refrigerators, refrigeratorfreezers and freezers, central air conditioners and central air

1 Part B ofTitle III ofilie Energy Policy and Conservation Act. as amendedbyilie National Energy Conservation Policy Act. ilie National ApplianceEnergy Conservation Act. ilie National Appliance Energy Conservation Amendments of 1988, and ilie Energy Policy Act of 1992, is referred
to in iliis notice as ilie "Act." Part B ofTitle III is codified at 42 V.S.c. 6291 et seq. Part BofTitle III ofilie Energy Policy and Conservation Act, as amended by ilie National Energy Conservation Policy Act only, is referred to in this notice as ilie National Energy Conservation Policy Act. conditioning heat pumps. and fluorescent lamp ballasts.

The National Appliance Energy Conservation Amendments of 1988 prescribed Federal energy conservation standards for ballasts, Section 325(g). The Act specifies that the standards are to be reviewedbytheDepartment no later thanJanuary 1. 1992. Section 325(g)(7)(A),

Any new or amended standard must be designed so as to achieve the maximum improvement in energy efficiency that is technologically feasible and economicallyjustified. Section 325(0)(2)(A).

Section 325(0)(2)(B)(i) providesthat before DOE determines whether a standard is economicallyjustified. it
must first solicit comments on a proposed standard. After reviewing
comments on the proposal. DOE must then determine that the benefits ofthe standard exceed its burdens. based. to the greatest extent practicable. on a weighing ofthe following seven factors:

(I) The economic impact ofthe standard on the manufacturers and on the consumers of the products subject to such standard;

(II) The savings in operating costs throughout the estimated average life ofthe covered product in the type (or class) comparedto any increase in the price of. or in the initial charges for. or maintenance
expenses of. the covered products which are likely to·result from the imposition ofthe standard;

(III) The total projected amount ofenergy savings likely to result directly from the imposition ofthe standard;

(IV) Any lessening ofthe utility orthe performance ofthe covered products likely to result from the imposition ofthe standard;

(V) The impact ofany lessening of competition. as determined in writing by the Attorney General. that is likely to result from the imposition ofthe standard;

(VI) The need for national energy conservation; and

(VII) Other factors the Secretary considers relevant.

In addition. section 325(0)(2)(B)(iii) establishes a rebuttable presumption of economicjustification in instances where the Secretary determines that "the additional cost to the consumer of purchasing a product complying with

an energy conservation standard level will be less than three times the value ofthe energy * 

### * * savings during the first year thatthe consumerwill receive

as a result ofthe standard. as calculated underthe applicable test procedure 

### *

., x" Therebuttable presumption test is an alternative path to establishing economicjustification.

Section 327 ofthe Act addresses the effect ofFederal rules on State laws or regulations concerning testing. labeling. and standards. Generally. all such State laws orregulations'are superseded by the Act. Section 327(a)-(c). Exemptions
to this general rule include: (1) State standards prescribed or enacted before January 8. 1987. and applicable to appliances producedbefore January 3. 1988 (section 327(b)(1)); (2) State procurement standards which are more stringentthan the applicable Federal standard (Section 327(b)(3) and (f)(1)- (4)); (3) State regulationsbanning
constantburning pilot lights in pool heaters (Section 327(b)(4)); and (4) State standards for television sets effective on

or afterJanuary 1. 1992. may remain in effect in the absence ofa Federal standard for suchproduct (Section 327(b)(6) and 327(c)).



### b. Background

The National Energy Conservation Policy Act.2 which amended the Energy Policy and Conservation Act. required DOE to establish mandatory energy efficiency standards for each ofthe 13 covered products. These standards were to be designed to achieve the maximum improvement in energy efficiency that

was technologically feasible and economicallyjustified.

The National Energy Conservation Policy Act provided. however. that no standard for a productbe established if there were no test procedure for the product. or ifDOE determined by rule eitherthat a standard would not result in significant conservation ofenergy. or that a standard was not technologically feasible or economicallyjustified. In determining whether a standard was economicallyjustified. the Department

was directed to determine whetherthe benefits ofthe standard exceeded its burdensby weighingthe seven factors discussed above.

The National Appliance Energy Conservation Act. whichbecame law on March 17. 1987. amended the Energy Policy and Conservation Act in partby: Redefining "coveredproducts" (specifically. refrigerators. refrigeratorfreezers. and freezers were combined into one product type from two; humidifiers and dehumidifiers were deleted; and pool heaters were added); establishing Federal energy conservation standards for 11 ofthe 12 covered products; and creating a schedule. according to which each standard is to be reviewed to determine

2 The consumer products covered by ilie National Energy Conservation PolicyAct included: Refrigerators and refrigerator-freezers; freezers; dishwashers; c10ilies dryers; water heaters; room air conditioners; home heating equipment not includingfurnaces; television sets; kitcl1en ranges and ovens; c10ilies washers; humidifiers and dehumidifiers; central airconditioners; and furnaces.14130 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

if an amended standard is required. It also established the rebuttable presumption test of economic justification. The National Appliance Energy Conservation Amendments of 1988, which became law on June 28, 1988, established Federal energy conservation standards for fluorescent lamp ballasts. These amendments also created a review schedule for DOE to determine if any amended standard for fluorescent lamp ballasts is required. The Energy Policy Act of 1992, which became law on October 24, 1992, addressed various commercial appliances and equipment. As directed by the Act, DOE published an advance notice of proposed rulemaking for fluorescent lamp ballasts, as well as a variety of other consumer products. (55 FR 39624, September 28, 1990). The advance notice presented the product classes that DOE planned to analyze, and provided a detailed discussion of the analytical methodology and analytical models that the Department expected to use in performing the analysis to support this rulemaking. Pursuant to section 325 of the Act, DOE proposed to revise the energy conservation standards applicable to fluorescent lamp ballasts, as well as a variety of other consumer products. 59 FR 10464 (March 4, 1994). On January 31, 1995, the Department published a Rulemaking Determination that, based on comments received, it would issue a revised notice of proposed rulemaking for fluorescent lamp ballasts. 60 FR 5880 (January 31, 1995). A moratorium was placed on publication of proposed or final rules for appliance efficiency standards as part of the FY 1996 appropriations legislation. Pub. L. 104-134. That moratorium expired on September 30, 1996. On July 15, 1996, the Department published a Process Improvement Rule establishing procedures, interpretations and policies to guide the Department in the consideration of new or revised appliance efficiency standards (Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products). 61 FR 36974. The Department conducted numerous meetings, workshops and discussions regarding energy efficiency standards for fluorescent lamp ballasts resulting in the publication of a Draft Report on Potential Impact of Possible Energy Efficiency Levels for Fluorescent Lamp Ballasts, July, 1997; a Summary of Inputs for the Technical Support Document: Energy Efficiency Standards for Fluorescent Lamp Ballasts, April 20, 1998; and a Ballast Manufacturer Impact Analysis Analytical Approach, April 10, 1998. 62 FR 38222 (July 17, 1997) and 63 FR 16706 (April 6, 1998). A workshop was conducted on these analyses and documents on April 28, 1998. 63 FR 16706 (April 6, 1998). Based on comments and the growing popularity of electronic ballasts with T8 lamps, the Department solicited further comments specifically on the issue of whether market shifts (e.g., from T12 to T8 lamps) should be considered in determining the impact of an energy conservation standard on commercial and industrial consumers, manufacturers and the nation. 63 FR 58330 (October 30, 1998). Further comments on the above analyses, and modifications resulting from those comments, culminated in publishing a revised analysis on the Codes and Standards Internet site (http:// www.eren.doe.gov/buildings/ codes-standards/applbrf/ballast.html) in April of 1999. We also conducted a workshop reviewing this analysis on June 1, 1999. 64 FR 24634 (May 7, 1999). On the basis of comments received on these documents, DOE reviewed its analysis and prepared a TSD. On October 12 and 13, 1999, the National Electrical Manufacturers Association convened a meeting where its members negotiated with representatives of the American Council for an Energy Efficient Economy, the Natural Resources Defense Council, the Alliance to Save Energy and the Oregon Energy Office to produce a joint comment proposal for amended fluorescent lamp ballast standards. (Hereafter referred to as the joint Comment.) We have evaluated the impacts of the joint comment proposal and those results are presented in Appendix E of the TSD.

II. General Discussion

a. Test Procedures The Act provides that no standard for a product be established if there is no test procedure for the product. The Amendments of 1988 set forth test procedures and energy conservation standards for fluorescent lamp ballasts. Based upon the Amendments of 1988, the Department established Federal test procedures for fluorescent lamp ballasts. 56 FR 18682 (April 24, 1991). As of the effective date of the energy conservation standards (ballasts manufactured on or after January 1, 1990; sold by the manufacturer on or after April 1, 1990; or incorporated into a luminaire by a luminaire manufacturer on or after April 1, 1991), all ballasts, be they energy efficient magnetic, cathode cutout or electronic, for use in connection with F40T12, F96T12 or F96T12HO lamps, are required to meet a ballast efficacy factor as measured by the Federal test procedures. No one has petitioned DOE indicating the Department's test procedures were inadequate for testing fluorescent lamp ballasts using the above technologies. Since these are the same technologies considered in today's proposed rule, the Department considers the current Federal test procedures applicable and appropriate for today's proposed rule. Furthermore, stakeholders commenting in the joint Comments stated that they consider the current Federal test procedures applicable and appropriate for the new recommended ballast standards. (Joint Comment, No. 91 at 6).
b. Technological Feasibility

1. General There are lamp ballasts in the market at all of the efficiency levels analyzed in today's notice. The Department, therefore, believes all of the efficiency levels discussed in today's notice are technologically feasible.
2. Maximum Technologically Feasible Levels The Act requires the Department, in considering any new or amended standards, to consider those that "shall be designed to achieve the maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified." (Section 325 (o)(2)(A)). Accordingly, for each class of product under consideration in this rulemaking, a maximum technologically feasible (max tech) design option was identified. Ballast efficiency is expressed as a ballast efficacy factor, BEF. It is equal to BF/W, where BF is the ballast factor expressed as a percentage (e.g., 90, not 0.90) and W is the input power to the ballast in ANSI (American National Standards Institute) C82.2-1984 in Watts. The most efficient technology presently available is a high frequency electronic ballast; this is considered the maximum technologically feasible (MTF) design for this analysis. The operation at high frequency (20 Kilohertz (kHz) or more) increases the lamp efficacy and also allows for lower ballast losses. For each product class and technology that we analyzed, there is a range of efficiencies in the marketplace. In consideration of this range, we used a different approach to selecting BEF level for the purposes of today's analysis than 

### 14130 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

ifan amended standard is required. It also established the rebuttable presumption test ofeconomic justification.

The National Appliance Energy Conservation Amendments of 1988, which became law on June 28, 1988, established Federal energy conservation standards for fluorescent lamp ballasts. These amendments also created a review schedulefor DOE to determine if any amended standard for fluorescent lamp ballasts is required.

The Energy Policy Act of 1992, which became law on October 24,1992, addressed various commercial appliances and equipment.

As directed by the Act, DOE published an advance notice of proposed rulemaking for fluorescent lamp ballasts, as well as a variety of other consumer products. (55 FR 39624, September 28,1990). The advance notice presented the product classes that DOE plannedto analyze, and provided a detailed discussion ofthe analytical methodology and analytical models thatthe Department expected to

use inperforming the analysis to support this rulemaking.

Pursuant to section 325 ofthe Act, DOE proposed to revise the energy conservation standards applicable to fluorescent lamp ballasts, as well as a variety ofother consumer products. 59 FR 10464 (March 4,1994). On January 31,1995, the Department published a Rulemaking Determination that, based

on comments received, it would issue a revised notice ofproposed rulemaking for fluorescent lamp ballasts. 60 FR 5880 (January 31, 1995).

A moratorium was placed on publication ofproposed or final rules for appliance efficiency standards as part ofthe FY 1996 appropriations legislation. Pub. L. 104-134. That moratorium expired on September 30, 1996.

OnJuly 15,1996, the Department published a Process ImprovementRule establishingprocedures, interpretations and policies to guide the Department in the consideration ofnew orrevised appliance efficiency standards (Procedures for Consideration ofNew or Revised Energy Conservation Standards for Consumer Products). 61 FR 36974.

The Department conducted numerous meetings, workshops and discussions regarding energy efficiency standards for fluorescent lamp ballasts resulting in the publication ofa Draft Report on Potential Impact ofPossible Energy Efficiency Levels for Fluorescent Lamp Ballasts, July, 1997; a Summary of Inputs for the Technical Support Document: Energy Efficiency Standards for Fluorescent Lamp Ballasts, April 20, 1998; and a Ballast Manufacturer Impact Analysis Analytical Approach, April 10, 1998.62 FR 38222 (Julv 17, 1997) and 63 FR 16706 (April 6, i998). A workshop was conducted on these analyses and documents on April 28, 1998.63 FR 16706 (April 6, 1998). Based on comments and the growing popUlarity ofelectronicballasts withT8 lamps, the Department solicited further
comments specifically onthe issue of whether market shifts 

### (e.g., from T12 to T8 lamps) shouldbe considered in determiningthe impact ofan energy conservation standard on commercial and industrial consumers, manufacturers and the nation. 63 FR 58330 (October 30,1998). Further
comments on the above analyses, and modifications resulting from those comments, culminated in publishing a revised analysis on the Codes and Standards Internet site (http:// www.eren.doe.gov/buildings/ codes_standards/applbrf/ballast.html) in April of 1999. We also conducteda workshop reviewing this analysis on June 1, 1999. 64 FR 24634 (May 7, 1999). On the basis ofcomments received on these documents, DOE reviewed its analysis and prepared a TSD.

On October 12 and 13, 1999, the National Electrical Manufacturers Association convened a meeting where its members negotiated with representatives ofthe American Council for an Energy Efficient Economy, the Natural Resources Defense Council, the Alliance to Save Energy and the Oregon Energy Office to produce a joint
comment proposal for amended fluorescent lamp ballast standards. (Hereafter referred to as theJoint Comment.) We have evaluated the impacts ofthejoint comment proposal and those results are presented in Appendix E ofthe TSD.



## n. General Discussion



### a. Test Procedures

The Act provides that no standard for

a productbe established ifthere is no test procedure for the product. The Amendments of 1988 set forth test procedures and energy conservation standards for fluorescent lamp ballasts. Based upon the Amendments of 1988, the Department established Federal test procedures for fluorescent lamp ballasts. 56 FR 18682 (April 24, 1991). As ofthe effective date ofthe energy conservation standards (ballasts manufactured on or afterJanuary 1, 1990; sold bythe manufacturer on or after April 1, 1990;

or incorporated into a luminaire by a luminaire manufacturer on or after April 1, 1991), all ballasts, bethey energy efficient magnetic, cathode cutout or electronic, for use in connection with F40T12, F96T12 or F96T12HO lamps,

are required to meet aballast efficacy factor as measured bythe Federal test procedures. No one has petitioned DOE indicatingthe Department's test procedures were inadequate for testing fluorescent lamp ballasts usingthe above technologies. Since these are the

same technologies considered in today's proposed rule, the Department considers the current Federal test procedures applicable and appropriate for today's proposed rule. Furthermore, stakeholders commenting inthe Joint Comments stated that they considerthe
current Federal test procedures applicable and appropriate for the new recommended ballast standards. (Joint Comment, No. 91 at 6).



### b. Technological Feasibility

1. General

There are lamp ballasts in the market
at all ofthe efficiency levels analyzed in today's notice. The Department, therefore, believes all ofthe efficiency levels discussed in today's notice are technologically feasible.

2. Maximum Technologically Feasible Levels

The Act requires the Department, in considering any new or amended standards, to considerthose that "shall be designed to achieve the maximum improvement in energy efficiency * * * which the Secretary determines is technologically feasible and economicallyjustified." (Section 325 (0)(2)(A)). Accordingly, for each class of product under consideration in this rulemaking, a maximum technologically feasible (max tech) design option was identified.

Ballast efficiency is expressed as a ballast efficacy factor, BEF. It is equal to BF/W, where BF is the ballast factor expressed as a percentage 

### (e.g., 90, not 0.90) and W is the inputpowerto the ballast inANSI (American National Standards Institute) C82.2-1984 in Watts. The most efficient technology presently available is a high frequency electronic ballast; this is considered the maximum technologically feasible (MTF) design for this analysis. The operation at high frequency (20 Kilohertz (kHz) or more) increases the lamp efficacy and also allows for lower ballast losses.

Foreach product class and technology that we analyzed, there is a range of efficiencies in the marketplace. In consideration ofthis range, we used a different approachto selecting BEF level for the purposes oftoday's analysis thanFederal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules 14131

for the setting of the trial standard levels. The analysis represents the probable average savings from a movement from the base case to the MTF option (electronic ballast), which itself has a range of BEFs. In contrast, the proposed trial standards set BEF levels that allow the large majority of electronic ballasts to meet the standard. The following paragraph explains the two approaches in more detail. For the analysis of electronic ballasts, we chose the median (50 percentile) BEF as the value to use from the electronic ballast product data supplied by the National Electrical Manufacturers Association (NEMA). These data are found in Appendix A of the TSD. For each product class, about half of the ballasts on the market have efficiencies greater and half lower than the level chosen for the analysis. Therefore, the unit energy consumption calculated for a ballast at the median efficiency will result in an energy use close to the average for that product class. The Department believes this median approach properly reflects the energy savings impact from using electronic ballasts rather than magnetic ballasts. For the purpose of setting efficiency standards, the Department chose not to differentiate within a technology (such as electronic high frequency ballasts) and decided to choose BEF levels that the vast majority of models would be able to meet. Therefore, for electronic ballasts in each product class, we chose the 10 percentile BEF level of efficiency. This means that 90 percent of the existing electronic ballast models can meet the standard being considered. In order to clearly show the differences in these BEFs, we report in the table below both the proposed standard level BEF - (10th percentile) and the corresponding analysis level BEF (50th percentile) for each product class analyzed.

ELECTRONIC FLUORESCENT LAMP BALLAST EFFICACY FACTORS 3

Application for operation of Analysis BEF (50th percentile) Standards BEF (10th percentile)

One F40 T12/40-watt lamp

...................................................................................................................... 2.34 2.29 Two F40 T12/40-watt lamps

.................................................................................................................... 1.19 1.17 Three F40 T12/40-watt lamps

................................................................................................................. 0.78 0.76 Two F96 T12140-watt lamps .................................................................................................................... 0.65 0.63 Two F96 T12HO/40-watt lamps .............................................................................................................. 0.43 0.39

Another consideration in choosing MTF levels is that experience shows that there is some variation in the BEFs of "identically" manufactured electronic ballasts of any product class. As indicated in Table A.3, Appendix A of the TSD, there is sometimes only a small spread between the 10 and 50 percentile BEFs. By choosing the standard level at the 10th percentile rather than the 50 percentile level, the Department is allowing manufacturing tolerance to the ballast manufacturers.
c. Energy Savings
1. Determination of Savings The Department forecasted energy savings through the use of a national energy savings (NES) spreadsheet, which forecasted energy savings over the period of analysis for candidate standards relative to the base case. The Department quantified the energy savings that would be attributable to a standard as the difference in energy consumption between the candidate standards case and the base case. The base case represents the forecast of energy consumption in the absence of amended mandatory efficiency standards. The NES spreadsheet model is described in section III.b of this notice, infra, and also in Appendix B of the TSD. One of the very important inputs to the model is the forecast of magnetic ballast shipments in the absence of amended mandatory standards. Two shipments scenarios (shipments of magnetic ballasts decline until 2015 and shipments decline until 2027) were examined to attempt to cover the range of possibilities for market shares of electronic and magnetic ballasts (see Chapter 5 of the TSD). Additionally, in evaluating the joint comment proposal, the Department used a third shipment scenario (flat magnetic ballast shipment forecast) as the upper bound as described in Appendix E of the TSD. The NES spreadsheet model first calculates the energy savings in site energy or kilowatt-hours (kWh). Site energy is the energy directly consumed at building sites by the lamp/ballast systems of interest. The energy savings to the nation is expressed in quads, that is, quadrillions of British thermal units (Btus). This is the source energy needed to generate and transmit the electricity consumed. A time series of conversion factors is used to convert site energy (kWh) to source energy (Btu). Chapter 5 of the TSD contains a table of these conversion factors, which are derived from DOE/ETA's Annual Energy Outlook 1999. term "significant" has never been defined in the Act, the U.S. Court of Appeals, in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), concluded that Congressional intent in using the word "significant" was to mean "non-trivial."
d. Rebuttable Presumption The National Appliance Energy Conservation Act established new criteria for determining whether a standard level is economically justified. Section 325(o)(2)(B)(iii) states:
If the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy * * * savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure, there shall be a rebuttable presumption that such standard level is economically justified. A determination by the Secretary that such criterion is not met shall not be taken into consideration in the Secretary's determination of whether a standard is economically justified. If the increase in initial price of an appliance due to a conservation standard would repay itself to the consumer in energy savings in less than three years, then we presume that such standard is economically justified.4 This

3It should be noted the analyses were performed assuming energy saver lamps and the values in the table below are for full-wattage T12 lamps. Table 3.5 in the TSD contains both watts and BEF values for various ballast types operating T12 energy saver lamps. 2. Significance of Savings
Under section 325(o)(3)(B) of the Act, the Department is prohibited from adopting a standard for a product if that standard would not result in "significant" energy savings. While the 4 For this calculation, the Department calculated cost-of-operation based on the DOE test procedures with assumed usage shown in Table 3.5 of the TSD. Commercial and industrial consumers that use the ballasts less hours will experience a longer payback Continued 

### Federal Register 

### IVol. 65, No. 51 

### IWednesday, March 15, ZOOO/Proposed Rules 

### 14131

for the setting ofthe trial standard levels. The analysis represents the probable average savings from a movement from the base case to the MTF option (electronicballast), which itselfhas a range ofBEFs. In contrast, the proposed trial standards set BEF levels that allowthe large majority of electronicballasts to meetthe standard. The following paragraph explains the
two approaches in more detail.

For the analysis ofelectronicballasts,

we chose the median (50 percentile) BEF as the value to use from the electronic ballast product data supplied bythe National Electrical Manufacturers Association (NEMA). These data are found in Appendix A ofthe TSD. For each product class, about halfofthe ballasts onthe market have efficiencies greater and halflower than the level chosen for the analysis. Therefore, the unit energy consumption calculated for

a ballast atthe median efficiency will result in an energy use close to the
average for that product class. The Department believes this median approach properly reflects the energy savings impact from using electronic ballasts ratherthan magneticballasts.

Forthe purpose ofsetting efficiency standards, the Department chose not to differentiate within a technology (such

as electronic highfrequency ballasts) and decidedto choose BEF levels that the vast majority ofmodels would be able to meet. Therefore, for electronic ballasts in each product class, we chose the 10percentile BEF level ofefficiency. This means that 90 percent ofthe existing electronicballast models can meetthe standardbeing considered. In order to clearly show the differences in these BEFs, we report inthe table below boththe proposed standard level BEF

. (10th percentile) and the corresponding analysis level BEF (50th percentile) for eachproduct class analyzed.

ELECTRONIC FLUORESCENT LAMP BALLAST EFFICACY FACTORS 3

Application for operation of Analysis BEF Standards BEF (50th percentile) (10th percentile)

One F40 T12140-watt lamp

...................................................................................................................... 2.34 2.29 Two F40 T12140-watt lamps

.................................................................................................................... 1.19 1.17 Three F40 T12140-watt lamps

................................................................................................................. 0.78 0.76 Two F96 T12140-watt lamps

................................................................................................................... . 0.65 0.63 Two F96 T12HO/40-watt lamps

.............................................................................................................. 0.43 0.39

Another consideration in choosing MTF levels is that experience shows that there is some variation in the BEFs of "identically" manufactured electronic ballasts ofanyproduct class. As indicated in Table A.3, Appendix A ofthe TSD. there is sometimes only a small spread between the 10 and 50 percentile BEFs. By choosingthe standard level at the 10thpercentile ratherthan the 50 percentile level. the Department is allowing manufacturing toleranceto the ballast manufacturers.



### c. Energy Savings

1. Determination ofSavings

The Department forecasted energy savings through the use ofa national energy savings (NES) spreadsheet. which forecasted energy savings over the period ofanalysis for candidate standards relative to the base case. The Department quantified the energy savings that wouldbe attributable to a standard as the difference in energy consumptionbetween the candidate standards case and the base case. The ba!le case represents the forecast of energy consumption in the absence of amendedmandatory efficiency standards.

The NES spreadsheet model is described in section III.b ofthis notice, 

### infra. and also inAppendix B ofthe

3 It should be noted the analyses were performed assuming energy saver lamps andthe values in the table below are for full-wattage T12 lamps. Table 3.5 in the TSD contains both watts and BEF values for various ballast types operating T12 energy saver lamps. TSD. One ofthe very important inputs
to the model is the forecast ofmagnetic ballast shipments inthe absence of amended mandatory standards. Two shipments scenarios (shipments of magneticballasts declineuntil 2015 and shipments decline until 2027) were examined to attempt to coverthe range ofpossibilities for market shares of electronic and magnetic ballasts (see Chapter 5 ofthe TSD). Additionally, in evaluating the joint commentproposal. the Department used a third shipment scenario (flat magnetic ballast shipment forecast) as the upperbound as described in Appendix E ofthe TSD.

The NES spreadsheet model first calculates the energy savings in site
energy or kilowatt-hours (kWh). Site energy is the energy directly consumed
atbuilding sites by the lamplballast systems ofinterest. The energy savings
tothe nation is expressed in quads. that is, quadrillions ofBritish thermal units (Btus). This is the source energy needed
to generate and transmit the electricity consumed. A time series ofconversion factors is usedto convert site energy (kWh) to source energy (Btu). Chapter 5 ofthe TSD contains atable ofthese conversion factors, which are derived from DOE/EIA's Annual Energy Outlook 1999.

2. Significance ofSavings

Under section 325(0)(3)(B) ofthe Act, the Department is prohibited from adopting a standard for a product ifthat standard would not result in "significant" energy savings. While the term "significant" has never been defined in the Act, the U.S. Court of Appeals, in

### NaturalResourcesDefense Council v. 

### Herrington, 768 F.2d 1355. 1373 (D.C. Cir. 1985). concluded that Congressional intent in using the word "significant" was to mean "non-trivial."

d. 

### RebuttablePresumption

The National Appliance Energy Conservation Act established new criteria for determining whether a standard level is economicallyjustified. Section 325(0)(2)(B)(iii) states;

Ifthe Secretary finds that the additional
cost to the consumer ofpurchasing a product complying with an energy conservation standard level will be less than three times the value ofthe energy * * * savings during the first year that the consumerwill receive

as a result ofthe standard. as calculated under the applicable test procedure, there shall be a rebuttable presumption that such standard level is economicallyjustified. A determination by the Secretary that such criterion is notmet shall notbe taken into consideration in the Secretary's determination ofwhether a standard is economicallyjustified.



### Ifthe increase in initial price ofan appliance due to a conservation standardwouldrepay itselfto the

consumer in energy savings in less than three years, thenwe presumethat such standard is economicallyjustified.4 This

• For this calculation. theDepartment calculated cost-of-operation based on the DOE test procedures with assumed usage shown in Table 3.5 ofthe TSD. Commercial and industrial consumers that use the ballasts less hours will experience a longer payback
Continued14132 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

presumption of economic justification can be rebutted upon a proper showing.
e. Economic Justification As noted earlier, Section 325(o)(2)(B)(i) of the Act provides seven factors to be evaluated in determining whether a conservation standard is economically justified.
1. Economic Impact on Manufacturers and Consumers The July 1996 Process Improvement Rule established procedures, interpretations and policies to guide the Department in the consideration of new or revised appliance efficiency standards (Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer products). 61 FR 36974 (July 15, 1996). Key objectives of the rule have direct bearing on the implementation of manufacturer impact analyses. First, the Department will utilize an annual cash flow approach in determining the quantitative impacts on manufacturers . This includes a shortterm assessment based on the cost and capital requirements during the period between the announcement of a regulation and the time when theregulation comes into effect, and a longterm assessment. Impacts analyzed include industry net present value, cash flows by year, changes in revenue and income, and other measures of impact, as appropriate. Secondly, the Department will analyze and report the impacts on different types of manufacturers, with particular attention to impacts on small manufacturers. Thirdly, the Department will consider the impact of standards on domestic manufacturer employment, manufacturing capacity, plant closures and loss of capital investment. Finally, the Department will take into account cumulative impacts of different DOE regulations on manufacturers. For consumers

, measures of economic impact are the changes in purchase price and annual energy expense. The purchase price and annual energy
expense, i.e., life-cycle cost, of each standard level are presented in Chapter 4 of the Technical Support Document (TSD). Under section 325 of the Act, the life-cycle cost analysis is a separate factor to be considered in determining economic justification. Additionally, the Department has decided to consider, under factor seven, "other factors theSecretary considers relevant," the lifecycle cost impacts on those subgroups of commercial and industrial consumers who, if forced by standards to purchase

while those that use them more will have a shorter payback. electronic ballasts, would choose to switch from T12 to T8 lighting systems.
2. Life-Cycle Costs
One measure of the effect of proposed standards on consumers is the change in operating expense as compared to the change in purchase price, both resulting from standards. This is quantified by the difference in the life-cycle costs between the baseline and the more efficient technologies for the lamp/ballast combinations analyzed. The lifecycle cost is the sum of the purchase price and the operating expense, including installation and maintenance expenditures, discounted over the lifetime of the appliance. For each lamp/ballast combination, we calculated the life-cycle costs for three technologies: energy efficient magnetic, cathode cutout and electronic ballasts. We used real discount rates of 4, 8 and 15 percent for the calculations. The assumption is that the consumer purchases the ballast in 2003. Price forecasts are taken from the 1999 Annual Energy Outlook of the Energy Information Administration (DOE/EIA0383). For the probability-based lifecycle cost analysis, we used a distribution of marginal electricity prices for a data base of commercial buildings (see Chapter 4 and Appendix B of the TSD). The life-cycle cost calculations include ballast and lamp
costs (purchase prices and installation costs for both and replacement costs for lamps only) and annual electricity costs of the lamp/ballast system operation over the lifetime of the ballast. Chapter 4 of the TSD contains the details of the life-cycle cost calculations including those considered under factor seven below, infra. 3. Energy Savings
While significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, the Act requires DOE, in determining the economic justification of a standard

, to consider the total projected energy savings that are expected to result directly from revised standards. The Department used the NES spreadsheet results, discussed earlier, in its consideration of total projected savings. The savings are provided in Section V of this notice.
4. Lessening of Utility or Performance of Products
This factor cannot be quantified. In establishing classes of products and design options and by providing exemptions, the Department tried to eliminate any degradation of utility or performance in the products under consideration in this rulemaking. An issue of utility that was considered was the possibility of interference with certain equipment, such as medical monitoring equipment, caused by the high frequency of electronic ballasts. To prevent any interference that cannot be solved by electronic ballast designers, the Department is not establishing a standard for TO ballasts, thereby allowing magnetic T8 ballasts for such applications.
5. Impact of Lessening of Competition It is important to note that this factor has two parts; on the one hand, it assumes that there could be some lessening of competition as a result of standards; and on the other hand, it directs the Attorney General to gauge the impact, if any, of that effect. In order to assist the Attorney General in making such a determination, the Department has provided the Attorney General with copies of this notice and the Technical Support Document for review.

6. Need of the Nation To Conserve Energy We report the environmental effects from each standard level for each product under this factor in Section V of this notice.

7. Other Factors This provision allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. Under this factor, the Secretary has decided to consider the life-cycle cost impacts on those subgroups of consumers who, if forced by standards to purchase electronic ballasts, would choose to switch from T12 to T8 lighting systems. This analysis is part of the Department's continuing effort to study the economic impact of standards on consumers. While the Department does not believe it can set standard levels based on consumer purchasing behavior given the findings of the court in Natural Resources Defense Council v. Herrington, 768 F. 2d 1355, 1406-07 (D.C. Cir. 1985), where the court stated that "the entire point of a mandatory program was to change consumer behavior" and "the fact that consumers demand short payback periods was itself a major cause of the market failure that Congress hoped to correct," the Department will consider and evaluate the impact of likely consumer actions. The Secretary has also decided to consider the joint Comment. This 

### 14132 Federal Register/Vol. 65, No. 51/Wednesday, March 15, ZOOO/Proposed Rules

presumption ofeconomicjustification

canbe rebutted upon a proper showing.

e. 

### EconomicJustification

As noted earlier, Section 325(0)(2)(B)(i) ofthe Act provides seven factors to be evaluated in determining whether a conservation standard is economicallyjustified.

1. Economic Impact on Manufacturers and Consumers

TheJuly 1996 Process Improvement Rule established procedures, interpretations and policies to guide the Department in the consideration ofnew

or revised appliance efficiency standards (Procedures for Consideration ofNew or Revised Energy Conservation Standards for Consumer products). 61 FR 36974 (July 15, 1996). Key objectives ofthe rule have direct bearing on the implementation ofmanufacturer impact analyses. First, the Department will utilize an annual cash flow approach in determiningthe quantitative impacts on manufacturers. This includes a shortterm assessment based on the costand capital requirements during the period between the announcement ofa regulation and the time when the regulation comes into effect, and a longterm assessment. Impacts analyzed include industry net present value, cash flows by year, changes in revenue and income, and other measures ofimpact,

as appropriate. Secondly. the Department will analyze and reportthe impacts on different types of manufacturers. with particular attention
to impacts on small manufacturers. Thirdly. the Department will consider the impact of standards on domestic manufacturer employment. manufacturing capacity. plant closures and loss ofcapital investment. Finally. the Department will take into account cumulative impacts ofdifferent DOE regulations on manufacturers.

For consumers. measures ofeconomic impact are the changes in purchase price and annual energy expense. The purchase price and annual energy expense. 

### i.e., life-cycle cost. ofeach standard level are presented in Chapter 4 ofthe Technical SupportDocument (TSD). Under section 325 ofthe Act, the life-cycle cost analysis is a separate factor tobe considered in determining economicjustification. Additionally. the Department has decided to consider. under factor seven. "other factors the Secretary considers relevant." the lifecycle cost impacts on those subgroups ofcommercial and industrial consumers who. ifforced by standards to purchase

while those that usethem more will have a shorter payback. electronic ballasts. would choose to switch from T12 to T8lighting systems.
2. Life-Cycle Costs

One measure ofthe effect ofproposed standards on consumers is the change in operating expense as compared to the change inpurchase price. bothresulting from standards. This is quantified by the difference in the life-cycle costs betweenthebaseline and the more efficient technologies for the lamp/ ballast combinations analyzed. The lifecycle cost is the sum ofthe purchase price and the operating expense, including installation and maintenance expenditures. discounted over the lifetime ofthe appliance.

For each lamplballast combination.

we calculated the life-cycle costs for three technologies: energy efficient magnetic. cathode cutout and electronic ballasts. We used real discount rates of 4.8 and 15 percent for the calculations. The assumption is that the consumer purchases the ballast in 2003. Price forecasts are taken from the 1999 

### AnnualEnergy Outlook ofthe Energy Information Administration (DOE/ElA0383). For the probability-based lifecycle cost analysis. we used a distribution ofmarginal electricity prices for a data base ofcommercial buildings (see Chapter 4 and Appendix B ofthe TSD). The life-cycle cost calculations include ballast and lamp
costs (purchase prices and installation
costs for both and replacement costs for lamps only) and annual electricity costs ofthe lamplballast system operation

over the lifetime oftheballast. Chapter 4 ofthe TSD contains the details ofthe life-cycle cost calculations including those considered under factor seven below. 

### infra.

3. Energy Savings

While significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard. the Act requires DOE. in determiningthe economic justification ofa standard. to consider thetotal projected energy savings that

are expected to result directly from revised standards. The Department used theNES spreadsheet results. discussed earlier, in its consideration oftotal projected savings. The savings are provided in SectionV ofthis notice.

4. Lessening ofUtility or Performance of Products

This factor cannotbe quantified. In establishing classes ofproducts and design options andby providing exemptions. the Department tried to eliminate any degradation ofutility or performance in the products under consideration inthis rulemaking.

An issue ofutility that was considered was the possibility of interference with certain equipment. such as medical monitoring equipment. causedby the high frequency of electronicballasts. To prevent any interferencethat cannotbe solvedby electronic ballast designers. the Department is not establishing a standard for T8 ballasts. thereby

_ allowing magnetic T8 ballasts for such applications.

5. Impact ofLessening ofCompetition

Itis importantto note that this factor has two parts; on the one hand. it

assumes that there couldbe some lessening ofcompetition as a result of standards; and on the otherhand, it directs the Attorney General to gauge the impact. ifany. ofthat effect.

In order to assist the Attorney General in making such a determination. the Department has provided the Attorney General with copies ofthis notice and the Technical Support Document for

- review.

6. Need ofthe Nation To Conserve Energy

We report the environmental effects from each standard level for each productunder this factor in Section V ofthis notice.

7. Other Factors

This provision allows the Secretary of Energy. in determining whether a standard is economicallyjustified, to consider any other factors that the Secretary deems to be relevant. Under this factor. the Secretary has decided to consider the life-cycle cost impacts on those subgroups ofconsumers who. if forced by standards to purchase electronic ballasts. would choose to switch from T12 to T8 lighting systems. This analysis is part ofthe Department's continuing effort to study the economic impact ofstandards on consumers. Whilethe Department does notbelieve it can set standard levels based on

consumer purchasingbehavior given the findings ofthe court in

### Natural ResourcesDefense Council v. 

### Herrington, 768 F. 2d 1355, 1406-07 (D.C. Cir. 1985), where the court stated that "the entire point ofa mandatory
program was to change consumer behavior" and "thefact that consumers demand short payback periods was itselfa major cause ofthe market failure that Congress hoped to correct," the Departmentwill consider and evaluate the impact oflikely consumer actions.

The Secretary has also decidedto consider the Joint Comment. ThisFederal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14133

proposal segments the ballast market by defining replacement ballasts and proposes extended implementation dates for all segments of the ballast market to comply with the new standards. The proposal also includes certain exemptions. All of these proposals are oriented toward mitigating financial impacts on manufacturers and ensuring a minimal level of disruption to the ballast replacement marketplace.
III. Methodology

The Process Rule outlines the procedural improvements identified by the interested parties. 61 FR 36974. The process improvement effort also included a review of the: (1) Economic models; (2) analytical tools; (3) methodologies; (4) non-regulatory approaches; and (5) prioritization of future rules. The Department developed two new spreadsheet tools to meet the objectives of the Process Rule. The first spreadsheet calculates Life-Cycle-Cost (LCC) and Payback. The second calculates national energy savings (NES). We tailored versions of these two spreadsheets for the ballast analyses. The Department also completely revised the methodology used in assessing manufacturer impacts including the adoption of the Government Regulatory Impact Model (GRIM). Additionally, DOE has developed a new approach using the National Energy Modeling System (NEMS) to estimate impacts of ballast energy efficiency standards on electric utilities and the environment. The Department used a version of Energy Information Administration's (EIA) NEMS for the utility and environmental analyses. NEMS simulates the energy economy of the U.S. and has been developed over several years by the EIA primarily for the purpose of preparing the Annual Energy Outlook (AEO). NEMS produces a widely-known baseline forecast for the U.S. through 2020 that is available in the public domain. The version of NEMS used for appliance standards analysis is called NEMS-BRS 5, and is based on the AE099 version with minor modifications. NEMS offers a sophisticated picture of the effect of standards since its scope allows it to measure the interactions between the various energy supply and demand sectors and the economy as a whole.

5EIA approves use of the name NEMS to describe only an AEO version ofthe model without any modification to code or data

. Because our analysis
entails some minor code modifications and the model is run under various policy scenarios thatdeviate from AEO assumptions, the name NEMSBRS refers to the model as used here. a. Life-Cycle-Cost Spreadsheet
This section describes the LCC spreadsheet model used for analyzing the economic impacts of possible standards on individual commercial and industrial consumers. Details of the spreadsheet model can be found in Appendix A. We conduct the LCC analysis with a spreadsheet model developed in Microsoft Excel for Windows 95. When combined with Crystal Ball (a commercially available software program), the LCC model can use a Monte Carlo simulation to perform the analysis by incorporating uncertainty and variability considerations. The spreadsheet is organized so that ranges (distributions) can be entered for each input variable needed to perform the calculations. The LCC output can be either a point value when we use the average value of the inputs or a distribution when we use distributions for some or all of the inputs. In the analyses described in this notice, we used distributions for the most important input variables. The life-cycle cost calculations include ballast and lamp costs (purchase price and installation cost for both and replacement cost for lamps only) and annual electricity costs of the lamp/ballast system operation over the lifetime of the ballast. The inputs to the life-cycle cost analysis include: The year standards take effect, the discount rate, the electricity price projections, ballast prices, annual lighting hours, ballast life, ballast input power, and initial and lamp replacement costs. Chapter 4 ofthe TSD contains the details of the lifecycle cost calculations. In certain cases (when a T8 lamp/ ballast system is considered as replacing a T12 lamp/ballast system), an additional input (mean lamp lumens) was required. We used this input to normalize the unequal light outputs for the two lamp types.
b. National Energy Savings Spreadsheet In order to make the analysis more accessible and transparent to all stakeholders, we developed a spreadsheet model that uses Excel in Windows 95 to calculate the national energy savings (NES) and the national economic costs and savings from new standards. We can change input quantities within the spreadsheet. For example, one can easily change the ballast prices. Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or outputs. We conduct sensitivities by running different scenarios. DOE uses the NES spreadsheet to perform calculations of national energy savings based on user inputs similar to those for the LCC spreadsheet. The national energy savings, energy cost savings, equipment costs and net present value of benefits for several product classes are forecast from the chosen start year through 2030. The
forecasts provide annual and cumulative values for all four output parameters. The Department calculates the national energy savings by subtracting energy use under a standards scenario from energy use in a base case (no standards scenario). Energy use is reduced when an energy efficient magnetic (EEM) ballast is replaced by either a cathode cutout (CC) or an electronic ballast. For CC standards, the user can specify what percent of EEM ballasts are converted to electronic and what percent to CC. For an electronic standard, the user can specify what percent of EEM ballasts are converted to T12 or T8 electronic. Unit energy savings for each product class are the same as calculated in the LCC spreadsheet. Additional information about the NES spreadsheet can be found in Chapter 5 and Appendix B of the
TSD. User inputs include: (1) A choice from among several electricity price projections; (2) effective date of the ballast standard; (3) discount rate and discount year; (4) a shipments forecast; and (5) ballast assumptions. Ballast assumptions include inputs such as annual lighting hours and ballast prices. Additionally, we use a time series of conversion factors to change from site to

source energy. One of the more important components of any estimate of future impact is shipments. Forecasts of shipments for the base case and standards case were used as inputs to the NES spreadsheet. The shipments portion of the spreadsheet forecasts EEM ballast shipments from 1997 to 2030. One base case scenario assumes decreasing shipments of EEM ballasts until the year 2015. Another base case scenario assumes decreasing shipments until the year 2027. The decreasing shipments scenarios are determined by

one user input: The year by which EEM ballast shipments decrease to 10 percent of the 1997 value. The decrease in EEM shipments is linear. Once that 10 percent value is reached, shipments remain at that value through 2030. Additional details on the various shipments forecasts are provided in Chapter 5 of the TSD. 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 14133

proposal segments theballast marketby defining replacementballasts and proposes extended implementation dates for all segments oftheballast market to complywith the new standards. The proposal also includes certain exemptions. All ofthese proposals are orientedtoward mitigating financial impacts on manufacturers and ensuring a minimal level ofdisruption
to theballastreplacement marketplace.



## m. Methodology

The Process Rule outlines the procedural improvements identified by the interested parties. 61 FR 36974. The process improvement effort also included a review ofthe: (1) Economic models; (2) analytical tools; (3) methodologies; (4) non-regulatory approaches; and (5) prioritization of future rules.

The Department developedtwo new spreadsheet tools to meet the objectives ofthe Process Rule. The first spreadsheet calculates Life-Cycle-Cost (LCC) and Payback. The second calculates national energy savings (NES). We tailored versions ofthese two spreadsheets for the ballast analyses. The Department also completely revised the methodology used inassessing manufacturer impacts including the adoption ofthe Government Regulatory Impact Model (GRIM).

Additionally, DOE has developed a

new approach using the National Energy Modeling System (NEMS) to estimate impacts ofballast energy efficiency standards on electric utilities and the environment. The Department used a version ofEnergy Information Administration's (EIA) NEMS for the utility and environmental analyses. NEMS simulates the energy economy of the U.S. and has been developed over several years by the EIA primarily for the purpose ofpreparingthe Annual Energy Outlook (AEO). NEMS produces

a widely-known baseline forecast for the U.S. through 2020 that is available in the public domain. The version of NEMS used for appliance standards analysis is called NEMS-BRS 5, and is based on the AE099 version with minor modifications. NEMS offers a sophisticated picture ofthe effect of standards since its scope allows itto

measure the interactions between the various energy supply and demand
sectors and the economy as a whole.

5EL'l. approves use ofthe name NEMS to describe only an AEO version ofthe model without any modification to code or data. Because our analysis entails some minOT code modifications and the model is run under various policy scenarios that deviate from AEO assumptions. the name NEMSBRS refers to the model as used here. 

### a. Life-Cyc1e-Cost Spreadsheet
This section describes the LCC spreadsheet model used for analyzing the economic impacts ofpossible standards on individual commercial and industrial consumers. Details ofthe spreadsheet model canbe found in Appendix A. We conduct the LCC analysis with a spreadsheet model developed in Microsoft Excel for Windows 95. When combined with Crystal Ball (a commercially available software program), the LCC model can

use a Monte Carlo simulation to perform the analysis by incorporating uncertainty and variability considerations. The spreadsheet is organized so that ranges (distributions)

can be entered for each input variable needed to perform the calculations. The LCC output can be either a point value when we use the average value ofthe inputs or a distribution when weuse distributions for some or all ofthe inputs. In the analyses described in this notice, we used distributi'ons for the
most important input variables.

The life-cycle cost calculations includeballast and lamp costs (purchase price and installation cost for both and replacement cost for lamps only) and annual electricity costs ofthe lamplballast system operation over the lifetime ofthe ballast. The inputs to the life-cycle cost analysis include: The year standards take effect, the discount rate, the electricity price projections, ballast prices, annual lighting hours, ballast life, ballast input power, and initial and lamp replacement costs. Chapter 4 of the TSD contains the details ofthe lifecycle cost calculations.

In certain cases (when a T8 lamp/ ballast system is considered as replacing

a T12 lamp/ballast system). an additional input (mean lamp lumens)

was required. We used this input to normalize the unequal light outputs for the two lamp types.
h. NationalEnergy Savings Spreadsheet

In order to make the analysis more accessible and transparent to all stakeholders, we developed a spreadsheetmodel that uses Excel in Windows 95 to calculatethe national
energy savings (NES) and the national economic costs and savings from new standards. We can change input quantities withinthe spreadsheet. For example, one can easily change the ballast prices. Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or outputs. We conduct sensitivitiesbyrunning different scenarios.

DOE uses the NES spreadsheet to perform calculations ofnational energy savings based on user inputs similarto those for the LCC spreadsheet. The national energy savings, energy cost savings, equipment costs and net present value ofbenefits for several product classes are forecast from the chosen start year through 2030. The forecasts provide annual and cumulative values for all four output parameters.

The Department calculates the national energy savings by subtracting
energyuse under a standards scenario from energy use in a base case (no standards scenario). Energy use is reduced when an energy efficient magnetic (EEM) ballast is replaced by either a cathode cutout (CC) or an electronic ballast. For CC standards, the

user can specify what percent ofEEM ballasts are converted to electronic and what percent to Cc. For an electronic standard, the user can specify what percent ofEEM ballasts are converted to T12 or T8 electronic. Unit energy savings for each product class are the

same as calculated in the LCC spreadsheet. Additional information about the NES spreadsheet canbe found in Chapter 5 and Appendix B ofthe TSD.

User inputs include: (1) A choice from
among several electricity price projections; (2) effective date ofthe ballast standard; (3) discountrate and discount year; (4) a shipments forecast; and (5) ballast assumptions. Ballast assumptions includeinputs such as annual lighting hours and ballast prices. Additionally, we use a time series of conversion factors to change from site to

source energy.

One ofthe more important components ofany estimate offuture impact is shipments. Forecasts of shipments for the base case and standards case were used as inputs to theNES spreadsheet. The shipments portion ofthe spreadsheet forecasts EEM ballast shipments from 1997 to 2030. One base case scenario assumes decreasing shipments ofEEM ballasts until the year 2015. Anotherbase case scenario assumes decreasing shipments until the year 2027. The decreasing shipments scenarios are determined by

one user input: Theyearby which EEM ballast shipments decrease to 10 percent ofthe 1997 value. The decrease in EEM shipments is linear. Once that 10 percentvalue is reached, shipments remain at that value through 2030. Additional details on the various

. shipments forecasts are provided in Chapter 5 ofthe TSD.14134 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

c. Manufacturer Impact Analysis and Government Regulatory Impact Model (GRIM) The manufacturer analysis estimates the financial impact of standards on manufacturers and calculates impacts on employment and manufacturing capacity. Prior to initiating the detailed manufacturing impact analysis for the ballast rulemaking, the Department prepared a document titled "Ballast Manufacturer Impact Analysis Analytical Approach." This document was presented at a public workshop held on April 28, 1998. We developed the approach from the general framework for Manufacturing Impact Analyses presented by the Department in March 1997 and modified for its application to the ballast rule. The document outlined procedural steps and identified issues for consideration. As proposed in the Approach document, the manufacturer impact analyses (MIA) was conducted in four phases. Phase 1, Industry Profile and Issue Definition, consisted of two activities, namely, preparation of an industry characterization and the conduct of an issue identification workshop. The second phase, "Strawman" Industry Cash Flow, had as its focus the larger industry. In this phase, the GRIM was used to prepare a "strawman" industry cash flow analysis. Here the Department used publicly available information developed in Phase 1 to adapt the GRIM model structure to facilitate the analysis of new ballast standards. In the Phase 3, Sub-Group Impact Analysis, individual manufacturers used the strawman cash flow as a template from which individual company level cashflows were developed from GRIM. Phase 3 also entailed the documentation of additional impacts on employment and manufacturing capacity through an interview process. Finally in Phase 4, Industry Cash Flow, individual cash flows were aggregated into three groups, one including all manufacturers, a second including full line manufacturers of magnetic and electronic ballasts, and a third including manufacturers producing only electronic ballasts.
1. Phase 1, Industry Profile and Issue Definition Phase 1 of the Manufacturer Impact Analysis consisted of two activities, namely, preparation of an Industry Characterization, and the conduct of an issue analysis workshop. Prior to initiating the detailed impact studies, the Department received input on the present and past structure and market characteristics of the ballast industry. This activity involved both quantitative and qualitative efforts to assess the industry and products to be analyzed. Issues addressed included manufacturer market shares and characteristics; trends in number of firms; the financial situation of manufacturers; and trends in ballast characteristics and markets. We presented publicly available quantitative data published by U.S. Bureau of Census with regards to the ballast industry at the April 28, 1998, workshop. These reports include such statistics as the number of companies, manufacturing establishments, employment, payroll, value added, cost of materials consumed, capital expenditures, product shipments, and concentration ratios. To further assist in performing the Industry Profile and to define key issues, the Department conducted a series of interviews with ballast manufacturers in late 1996 and early 1997. DOE distributed summaries of these interviews at the "Public Workshop on the Revised Life Cycle Cost and Engineering Analysis of Fluorescent Lamp Ballasts," held on March 18, 1997. The interviews and review of public literature suggested that the following guidelines be followed to assess the impacts of a new ballast standard. First, the Manufacturer Impact Analysisshould be performed on a company-bycompany basis and the industry impact constructed from an aggregation of impacts on individual companies. Second, the analysis should recognize the increasingly global nature of the ballast industry. Gains or losses in U.S. sales will have consequences for manufacturers regardless of where their production facilities are located. Where possible, the analysis should be structured to assess impacts at U.S. National, North American, and Global levels. Finally, the Manufacturer Impact Analysis should include consideration of direct industry suppliers and luminaire and lamp manufacturers. The Department recognized that manufacturers do not operate in isolation and that changes in production levels or economic health of a manufacturer can have significant impacts on its suppliers and other trade allies.
2. Phase 2, "Strawman" Industry Cash Flow Phase 2 of the manufacturer analyses has as its focus the "larger" industry. As such, this phase resembles the Department's past practice of modeling a "prototypical" firm with average industry values. The analytical tool used for calculating the financial impacts of standards on manufacturers is the GRIM. In phase 2, we used GRIM to perform a "strawman" industry cash flow analysis. Section III.c below, describes briefly the GRIM's operating principles. Given the relatively small number of firms in the industry, the Department proposed to create an Industry Cash Flow Analysis using a "bottom-up" approach. Essentially, each manufacturer was asked to provide its own cash flow analysis to be aggregated with all other manufacturer submittals. In order to facilitate individual manufacturer analysis, the Department prepared "strawman" scenarios for a "prototypical" manufacturer from publicly available financial information. Manufacturers then performed their individual cash flows by modifying relevant parameters in the strawman to meet their own situation (price, cost, financial, shipments, etc.). For the strawman, the Department prepared a list of financial values to be used in the GRIM industry analysis. We estimated these by studying publicly available financial statements of fluorescent lamp ballast manufacturers. A detailed definition of financial inputs and their values for a "prototypical" ballast manufacturer is contained in Attachment C of the document, entitled "Financial Inputs to GRIM for the Ballast Rulemaking Analysis." We derived strawman values for prices from the Bureau of Census' Current Industrial Reports (CIRs). The dollar value of ballast shipments from factories is divided by the quantity of ballasts shipped to arrive at the per unit manufacturer price. In order to estimate manufacturing costs-labor, materials, depreciation/tooling, etc.-from the average manufacturer prices obtained from CIRs, we developed a typical ballast industry cost structure from publicly available information from the Census of Manufacturers (CMs) and from transformer industry statistics (SIC# 3612), and which we obtained from Robert Morris Associates (RMA) reports. Finally in preparing the draft industry cash flow analysis, the Department used the same ballast shipment scenarios developed for the NES spreadsheet.
3. Phase 3, Sub-Group Impact Analysis The Department conducted detailed interviews with ballast manufacturers representing over 95 percent of domestic ballast sales to gain insight into the potential impacts of standards. During these interviews, the Department solicited the information necessary to 

### 14134 Federal Register/Vol. 65, No. 51 IWednesday, March 15, 2000/Proposed Rules



### c. ManufacturerImpactAnalysis and GovernmentRegulatoryImpactModel (GRIM)

The manufacturer analysis estimates the financial impact ofstandards on manufacturers and calculates impacts

on employment and manufacturing capacity.

Priorto initiatingthe detailed manufacturing impact analysis for the ballast rulemaking, the Department prepared a documenttitled "Ballast Manufacturer ImpactAnalysis Analytical Approach." This document

was presented at a public workshop held on April 28, 1998. We developed the approach from the general framework for Manufacturing Impact Analyses presentedbythe Department inMarch 1997 and modified for its application to the ballastrule. The document outlined procedural steps and identified issues for consideration.

As proposed in the Approach document, the manufacturer impact analyses (MIA) was conducted in four phases. Phase 1, Industry Profile and Issue Definition, consisted oftwo activities, namely, preparation ofan industry characterization and the conduct ofan issue identification workshop. The second phase, "Strawman" Industry Cash Flow, had as its focus the larger industry. In this phase, the GRIM was used to prepare a "strawman" industry cash flow analysis. Here the Department used publicly available information developed in Phase 1 to adaptthe GRIM model structure to facilitate the analysis ofnewballast standards. In the Phase 3, Sub-Group Impact Analysis, individual manufacturers usedthe strawman cash flow as a template from which individual company level cashflows

were developed from GRIM. Phase 3 also entailed the documentation of additional impacts on employment and manufacturing capacity through an interview process. Finally in Phase 4, Industry Cash Flow, individual cash flows were aggregated intothree groups,

one including all manufacturers, a second including full line manufacturers ofmagnetic and electronicballasts, and a third including manufacturers producing only electronicballasts.

1. Phase 1,IndustryProfile and Issue Definition

Phase 1 ofthe ManufacturerImpact Analysis consisted oftwo activities, namely, preparation ofan Industry Characterization, and the conduct ofan issue analysis workshop. Priorto initiatingthe detailed impact studies, the Department received input onthe present and past structure and market characteristics oftheballast industry. This activity involvedboth quantitative and qualitative efforts to assess the industry and products to be analyzed. Issues addressed included manufacturer market shares and characteristics; trends in number offirms; the financial situation ofmanufacturers; and trends inballast characteristics and markets.

We presentedpublicly available quantitative data published by U.S. Bureau ofCensus withregards to the ballast industry at the April 28, 1998, workshop. These reports include such statistics as the number ofcompanies, manufacturing establishments, employment, payroll, value added, cost ofmaterials consumed, capital expenditures, product shipments, and concentration ratios.

To further assist in performing the Industry Profile andto define key issues, the Department conducted a series ofinterviews with ballast manufacturers in late 1996 and early 1997. DOE distributed summaries of these interviews at the "Public Workshop on the Revised Life Cycle Cost and Engineering Analysis of Fluorescent Lamp Ballasts," held on March 18, 1997.

The interviews and review ofpublic literature suggested thatthe following guidelines be followed to assess the impacts ofa new ballast standard. First, the Manufacturer Impact Analysis should be performed on a company-bycompany basis andthe industry impact constructed from an aggregation of impacts on individual companies. Second, the analysis shouldrecognize the increasingly global nature ofthe ballast industry. Gains or losses in U.S. sales will have consequences for manufacturers regardless ofwhere their production facilities are located. Where possible, the analysis shouldbe structured to assess impacts at U.S. National, North American, and Global levels. Finally, the Manufacturer Impact Analysis should include consideration ofdirectindustry suppliers and luminaire and lamp manufacturers. The Departmentrec:ognized that manufacturers do not operate in isolation and that changes inproduction levels or economic health ofa manufacturer can have significant impacts on its suppliers and othertrade allies.

2. Phase 2, "Strawman" Industry Cash Flow

Phase 2 ofthe manufacturer analyses has as its focus the "larger" industry. As such, this phase resembles the Department's past practice ofmodeling

a "prototypical" firm with average industry values. The analytical tool used for calculatingthe financial impacts ofstandards on manufacturers is the GRIM. In phase 2, we used GRIM
to perform a "strawman" industry cash flow analysis. Section m.cbelow, describesbriefly the GRIM's operating principles.

Given the relatively small number of firms in the industry, theDepartment proposed to create an Industry Cash Flow Analysis using a "bottom-up" approach. Essentially, each**~** manufacturerwas askedto provide its

own cash flow analysis to be aggregated withall other manufacturer submittals.

In orderto facilitate individual manufacturer analysis, theDepartment prepared "strawman" scenarios for a "prototypical" manufacturer from publicly available financial information. Manufacturers then performed their individual cash flows by modifying relevant parameters in the strawmanto meet their own situation (price, cost, financial, shipments, 

### etc.).

For the strawman, the Department prepared a list offinancial values to be used in the GRIM industry analysis. We estimated these by studying publicly available financial statements of fluorescent lamp ballast manufacturers. A detailed definition offinancial inputs and their values for a "prototypical" ballast manufacturer is contained in Attachment C ofthe document, entitled "Financial Inputs to GRIM for the Ballast Rulemaking Analysis." We derived strawman values for prices from the Bureau ofCensus' Current Industrial Reports (CIRs). The dollar value of ballast shipments from factories is dividedbythe quantity ofballasts shippedto arrive at the perunit manufacturer price. In order to estimate manufacturing costs-labor, materials, depreciation/tooling, etc.-fromthe
average manufacturer prices obtained from CIRs, we developed a typical ballast industry cost structure from publicly available information from the Census ofManufacturers (CMs) and from transformer industry statistics (SIC# 3612), and whichwe obtained from Robert Morris Associates (RMA) reports. Finally inpreparing the draft industry cash flow analysis, the Department used the sameballast shipment scenarios developed for the NES spreadsheet.

3. Phase 3, Sub-Group ImpactAnalysis

The Department conducted detailed interviews withballast manufacturers representing over 95 percent of domesticballast sales to gain insight into the potential impacts ofstandards. Duringthese interviews, the Department solicited the information necessary toFederal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules

evaluate cashflows and to assess employment and capacity impacts. The interview process had a key role in the manufacturer impact analyses, since it provided an opportunity for manufacturers to express privately their views on important issues and provide confidential information needed to assess financial, employment and other business impacts. To support the development of company cashflows, the interview guide solicited information on the possible impacts of new standards on manufacturing costs, product prices, and sales. The evaluation of the possible impacts on direct employment, and assets also drew heavily on the information gathered during the interviews. The interview guide solicited both qualitative and quantitative information. We requested supporting information whenever applicable. DOE asked interview participants to identify all confidential information provided in writing or orally. Approximately two weeks following the interview, we provided an interview summary to give manufacturers the opportunity to confirm the accuracy and protect the confidentiality of all collected information.
4. Phase 4, Industry Cash Flow As previously described, we used the GRIM spreadsheet and an interview guide to perform the ballast Manufacturer Impact Analysis on a company-by-company basis. This process has the benefit of enabling the impacts of standards to be evaluated at multiple levels of aggregation. The total industry impact was constructed from an aggregation of impacts on individual companies. The Department aggregated the individual cash flows into three groups, one including all manufacturers, a second including full line manufactures of magnetic and electronic ballasts only, and a third group including manufacturers producing only electronic ballasts. This aggregation scheme was selected as the most representative of the range of impacts on individual manufactures compared to the industry aggregate values.
5. GRIM Spreadsheet A change in standards affects a manufacturer's cashflow in three distinct ways. Increased levels of standards will: (1) Require additional investment; (2) raise production costs; and (3) affect revenue through higher prices and, possibly, lower quantities sold. To quantify these changes, the Department performs an industry and manufacturer cashflow analyses using the GRIM. The GRIM analysis uses a number of inputs-annual ballast shipments; ballast prices; manufacturer costs such as materials and labor, selling and general administration costs, taxes, and capital expenditures-to arrive at a series of annual cash flows beginning from before implementation of standards and continuing explicitly for several years after implementation. The measure of industry net present values are calculated by discounting the annual cash flows from the period before implementation of standards to some future point in time. Additional information about the GRIM spreadsheet can be found in Chapter 6 of the TSD.
d. HEMS Environmental Analysis The environmental analysis provides estimates of changes in emissions of nitrogen oxides (NOx) and carbon from carbon dioxide (CO2). The Department used NEMS-BRS for the fluorescent ballast environmental analyses (as well as the utility analyses). NEMS-BRS is run similar to the AE099 NEMS except that commercial lighting energy usage is reduced by the amount of energy (electricity) saved due to proposed ballast standards. The input of energy savings are obtained from the NES spreadsheet. For the environmental analysis, the output is the forecasted physical emissions. The net benefits of the standard is the difference between emissions estimated by NEMS-BRS and the AE099 Reference Case. The environmental analysis isrelatively straightforward from NEMSBRS. Carbon emissions are tracked in NEMS-BRS using a detailed carbon module that provides robust results because of its broad coverage of all sectors and inclusion of interactive effects. The only form of carbon tracked by NEMS-BRS is CO2. However, in this report the carbon savings are reported as elemental carbon. The two airborne pollutant emissions that have been reported in past analyses,SO2 and NOx, are reported by NEMSBRS. NOx results are based on forecasts of compliance with existing legislation. In the case of SO2, the Clean Air Act Amendments of 1990 set an emissions cap on all power generation. The attainment of this target, however, is flexible among generators and is enforced by applying market forces, through the use of emissions allowances and tradable permits. As a result, accurate simulation of SO2 trading tends to imply that physical emissions effects will be zero because emissions will always be at, or near, the ceiling. This fact has caused considerable confusion in the past. There is virtually no real possible SO2 environmental benefit 14135

from electricity savings as long as there is enforcement of the emission ceilings. Please see Appendix D of the TSD for a discussion of this issue. Alternative price forecasts corresponding to the high and low economic growth side cases found in AEO99 have also been generated for use by NES and will be explored in a similar fashion with NEMS-BRS runs.

IV. Discussion of Comments As noted above, the DOE proposed to revise the energy conservation standards applicable to fluorescent lamp ballasts on March 4, 1994. On January 31, 1995, the Department published a rulemaking determination that, based on comments received, it would issue a revised notice of proposed rulemaking for fluorescent lamp ballasts. Since that time, the Department conducted numerous meetings, workshops and discussions regarding energy efficiency standards for fluorescent lamp ballasts, resulting in a Draft Report on Potential Impact of Possible Energy Efficiency Levels for Fluorescent Lamp Ballasts, July, 1997; Summary of Inputs for the Technical Support Document: Energy Efficiency Standards for Fluorescent Lamp Ballasts, April 20, 1998; and Ballast Manufacturer Impact Analysis Analytical Approach, April 10, 1998. 62 FR 38222 (July 17, 1997) and 63 FR 16706 (April 6, 1998). A workshop was conducted on these analyses and documents on April 28, 1998. 63 FR 16706 (April 6, 1998). Based on comments and the growing popularity of electronic ballasts with T8 lamps, the Department solicited further comments specifically on the issue of whether market shifts (e.g., from T12 to T8 lamps) should be considered in determining the impact of an energy conservation standard on commercial and industrial consumers, manufacturers and the nation. 63 FR 58330 (October 30, 1998). Further comments on the above analyses, and modifications resulting from those comments, culminated in publishing an analysis on the Codes and Standards Internet site (http://www.eren.doe.gov/ buildings/codes_standards/applbrf/ ballast.html) in April of 1999. We also conducted a workshop on that analysis on June 1, 1999. 64 FR 24634 (May 7, 1999). These analyses presented the impacts of standards on consumers, the nation and manufacturers. The Department considers all comments regarding this rulemaking made prior to the three documents and posted revised analyses listed above, to have been resolved or contained within comments pertaining to those documents. Therefore, in today's notice of proposed Federal Register/VoI. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 

### 14135

evaluate cashflows and to assess employment and capacity impacts.

The interviewprocess had a key role inthe manufacturer impact analyses, since it provided an opportunity for manufacturers to express privately their views on important issues and provide confidential information needed to

assess financial, employment and other business impacts. To supportthe development ofcompany cashflows, the interviewguide solicited information on the possible impacts ofnew standards

on manufacturing costs, productprices, and sales. The evaluation ofthe possible impacts on direct employment, and
assets also drew heavily onthe information gathered during the interviews. The interview guide solicited both qualitative and quantitative information. We requested supporting information whenever applicable.

DOE asked interview participants to identify all confidential information providedin writing or orally. Approximately two weeks following the interview, we provided an interview
summaryto give manufacturers the opportunity to confirm the accuracy and protect the confidentiality ofall collected information.

4. Phase 4, Industry Cash Flow

As previously described, we used the GRIM spreadsheet and an interview guide to perform the ballast Manufacturer Impact Analysis on a company-by-company basis. This process has the benefit ofenablingthe impacts ofstandards to be evaluated at multiple levels ofaggregation. The total industry impactwas constructed from

an aggregation ofimpacts on individual companies. The Department aggregated the individual cash flows into three groups, one including all manufacturers,

a second including full line manufactures ofmagnetic and electronic ballasts only, and a thirdgroup including manufacturers producing only electronic ballasts. This aggregation schemewas selected as the most representative ofthe range ofimpacts on individual manufactures compared to the industry aggregate values.

5. GRIM Spreadsheet

A change in standards affects a manufacturer's cashflow inthree distinctways. Increased levels of standards will: (1) Require additional investment; (2) raise production costs; and (3) affect revenue through higher prices and, possibly, lower quantities sold. To quantify these changes, the Department performs an industry and manufacturer cashflow analyses using the GRIM. The GRIM analysis uses a number of inputs-annualballast shipments; ballastprices; manufacturer costs such

as materials and labor, selling and general administration costs, taxes, and capital expenditures-to arrive at a series ofannual cash flows beginning from before implementation of standards and continuing explicitlyfor several years after implementation. The

measure ofindustry net present values

are calculated by discounting the annual cash flows from the period before implementation ofstandards to some future point intime. Additional information about the GRIM spreadsheet

canbe found in Chapter 6 ofthe TSD.

d. NEMS EnvironmentalAnalysis

The environmental analysis provides estimates ofchanges in emissions of nitrogen oxides (NOx) and carbon from carbon dioxide (C02 ), The Department used NEM8-BRS for the fluorescent ballast environmental analyses (as well

as the utility analyses). NEM8-BRS is

run similarto the AE099 NEMS except that commercial lighting energy usage is reducedby the amount ofenergy (electricity) saved due to proposed ballast standards. The input ofenergy savings are obtained from the NES spreadsheet. For the environmental analysis, the output is the forecasted physical emissions. The net benefits of the standard is the difference between emissions estimated by NEM8-BRS and the AE099 Reference Case.

The environmental analysis is relatively straightforward from NEMSBRS. Carbon emissions are tracked in NEM8-BRS using a detailed carbon modulethat provides robust results because ofits broad coverage ofall
sectors and inclusion ofinteractive effects. The only form ofcarbon tracked by NEMS-BRS is CO2

. However, in this report the carbon savings are reported as elemental carbon.

The two airborne pollutant emissions that havebeen reported in past analyses, S02 and NOx, are reported by NEM8- BRS. NOx results are based on forecasts ofcompliance with existing legislation. In the case ofS02, the Clean Air Act Amendments of 1990 set an emissions
cap on all powergeneration. The attainment ofthis target, however, is flexible among generators and is enforced by applying market forces, through the use ofemissions allowances and tradable permits. As a result,
accurate simulation ofS02 tradingtends
to imply that physical emissions effects will be zerobecause emissions will alwaysbe at, or near, the ceiling. This fact has caused considerable confusion in the past. There is virtually no real possible S02 environmental benefit from electricity savings as long as there is enforcement ofthe emission ceilings. Please see AppendixD ofthe TSD for

a discussion ofthis issue.

Alternative price forecasts correspondingto thehigh and low economic growth side cases found in AE099 have also been generated for use by NES and will be explored in a similar fashion with NEMS-BRS runs.
IV. Discussion ofComments

As noted above, the DOE proposed to revise the energy conservation standards applicable to fluorescent lamp ballasts

on March 4,1994. On January 31, 1995, the Department published a rulemaking determination that, based on comments received, it would issue a revised notice ofproposedrulemaking for fluorescent lampballasts. Sincethattime, the Department conducted numerous meetings, workshops and discussions regarding energy efficiency standards for fluorescent lamp ballasts, resulting in a Draft Report on Potential Impact of Possible Energy Efficiency Levels for Fluorescent Lamp Ballasts, July, 1997; Summary ofInputs for the Technical SupportDocument: Energy Efficiency Standards for Fluorescent Lamp Ballasts, April 20, 1998; and Ballast Manufacturer Impact Analysis Analytical Approach, April 10, 1998. 62 FR 38222 (July 17, 1997) and 63 FR 16706 (April 6, 1998). A workshop was conducted onthese analyses and documents on April 28, 1998. 63 FR 16706 (April 6, 1998). Based on comments and the growing popUlarity ofelectronic ballasts with T8 lamps, the Department solicited further comments specifically on the issue ofwhether market shifts (e.g., from T12 to T8 lamps) shouldbe considered in determining the impact ofan energy conservation standard on commercial and industrial consumers, manufacturers and the nation. 63 FR 58330 (October 30, 1998). Further
comments onthe above analyses, and modifications resulting from those comments, culminated inpublishing an analysis on the Codes and Standards Internet site (http://www.eren.doe.gov/ bUildings/codes_standards/applbrfl ballast.html) in April of 1999. We also conducted a workshop on that analysis

on June 1, 1999. 64 FR 24634 (May 7, 1999). These analyses presented the impacts ofstandards on consumers, the nation and manufacturers. The Department considers all comments regarding this rulemaking made prior to the three documents and posted revised analyses listed above, to have been resolved or contained within comments pertainingto those documents. Therefore, in today's notice ofproposed14136 Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules

rulemaking, the Department is only addressing comments made relative to those documents. Additionally, the National Electrical Manufacturers Association (NEMA), the American Council for an Energy Efficient Economy (ACEEE), the Natural Resources Defense Council (NRDC), the Alliance to Save Energy (Alliance) and the Oregon Energy Office (Oregon) submitted a joint comment for amended fluorescent lamp ballast standards. (Joint Comment, No. 91). While these stakeholders had previously commented on the above three documents and the web posting, the Department assumes, based on their joint comment, that it supercedes their previous comments. Therefore, their previous comments are not addressed in today's notice.
Life Cycle Cost Parameters Electricity price: The Edison Electric Institute and Mr. Glenn Schleede raised questions about the electricity prices used in the 1997 Report, particularly about the possible effects of increased competition in the utility industry on prices. (EEI, No. 12 at 2-3 and Schleede, No. 15 at 4-8 and 13-20 and No. 21 at 2-4). To reflect increased competition in the electricity industry due to restructured markets, the AE099 reference case assumes a transition to competitive retail pricing in five regions-California, New York, New England, the Mid-Atlantic Area Council (consisting of Pennsylvania, Delaware, New Jersey, and Maryland), and the Mid-America Interconnected Network (consisting of Illinois and parts of Wisconsin and Missouri).6 The specific restructuring plans differ from State to State and utility to utility, but most call for a transition period during which customer access will be phased in. The transition period reflects the time needed for the establishment of competitive market institutions and the recovery of stranded costs as permitted by regulators. The region-wide 10 percent rate reduction required in California is represented. For the other regions it is assumed that competition will be phased in between 1999 and 2007, with fully competitive prices beginning in 2008 . In all the competitively priced regions, the generation price (the price for the energy alone) is set by the marginal cost of generation. Transmission and distribution prices are assumed to remain regulated. Several comments, including EEI and Mr. Schleede suggested marginal

6 For more information on restructuring assumptions, please see pp. 14-15 of the AE099. electricity rates should be used instead of average values. (EEI, No. 12 at 2, Schleede, No. 15 at 6 and No. 21 at 3, CDA, No. 25 at 2 and NEMA, No. 27 at 20-21). Mr. Schleede also suggested that instead of using one electricity price for all years of the analysis, a projection of future electricity prices should be used. (Schleede, No. 15 at 5). In response to comments on marginal energy prices, we performed a separate analysis, whose goal was to generate marginal electricity prices for the commercial sector. Because of the large number of electric utilities in the U.S., we chose a small subset of electric utilities for this analysis. We analyzed the electric bills (with and without standards) of a large number of commercial buildings in each of these utility districts. In the TSD (see Chapter 4), we show how a distribution of marginal electricity prices was obtained from this analysis of rate schedules for 24 utilities for the year 1997. We projected these marginal prices for each future year of the analysis by using the rate of decrease in the EIA Annual Energy Outlook 1999, as shown in Table 4.2 in Chapter 4 of the TSD. Alternative electricity price scenarios shown in Table 4.2 are also available to users of the Life Cycle Cost and National Energy Savings spreadsheets. Mr. Schleede indicated that the sensitivity analysis, which considered the full distribution of U.S. commercial electricity prices, was an improvement over the previous practice of just using a point estimate. (Schleede, No. 21 at 1). Additional comments on marginal electricity prices were received after the posting of analysis results on the DOE web site in April of 1999. Mr. Schleede stated DOE and its contractors have continued their ambivalence about removing fixed costs from the life cycle cost calculations. (Schleede, No. 76 at 1). Mr. Schleede is incorrect. We have used marginal electricity prices for all life-cycle cost savings calculations and there are no fixed costs in the marginal electricity prices used as described in Appendix B of the TSD. EEI does not agree with the calculations of "epsilon" values as shown in the April 1999 text report entitled Life Cycle Cost Results. EEI would like to see how DOE handled the issues oflighting load factors (e.g., the
amount of lighting actually used during the day, such as 90 percent of the fixtures) which affect kWh energy reductions, and coincidence and diversity factors which will affect the kW demand reductions (and their economic impact). (EEI, No.48 at 2). The Department describes the method in Appendix B of the TSD, Marginal Energy Prices report: Demand Decrement Due to Standards-The Role of Lighting Coincidence and Diversity. EEI commented that a line in the LCC results writeup reads "the change in the bill divided by the change in energy usage yields the marginal electricity price." EEI stated that this is not analytically correct. For commercial (and industrial) customers, there is a marginal kWh price and a marginal kW price that should not be "blended" for a cost analysis. The change in the kWh energy portion cost of the bill divided by the change in energy usage yields the marginal kWh energy price, and the change in the kW demand cost of the bill divided by the change in the peak kW demand (monthly and/or on-peak) yields the marginal kW demand price. These two marginal costs are separate and calculated differently. (EEI, No. 48 at 4). The bill is a combination of the kWh (energy) and kW (demand) components, and the Department calculated them separately in order to derive the marginal electricity prices. The use of a proportional demand decrement (calculated as explained in Appendix B of the TSD, Marginal Energy Prices) enabled DOE to calculate each of the contributions to bill savings associated with kWh savings and kW savings. Published sources for average commercial prices (defined as revenues from energy and demand charges combined, divided by energy sales) are expressed on a per kWh basis, "blending" the energy and demand charges. For consistency with those sources of projected commercial energy prices, the Department sees no practical alternative to including the kW (demand) savings component, expressed on a per kWh basis, in the derivation of marginal commercial prices. EEI stated it is not sure how DOE performed the calculation of epsilons for industrial customers, as only the procedure for commercial customers was outlined in the text report (DOE web posting of April, 1999). (EEI, No. 48 at 4). The epsilon distribution calculated for the commercial sector was also used for calculating the industrial marginal electricity prices from the industrial average electricity prices. EEI stated that DOE used the "average" electric price, rather than the marginal electricity price, on the spreadsheet under the "Results" tab. This has the result of showing more favorable results for life cycle cost savings, paybacks, and the globalized 

### 14136 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

rulemaking, the Department is only addressing comments made relative to those documents. Additionally, the National Electrical Manufacturers Association (NEMA), the American Council for an Energy Efficient Economy (ACEEE), the Natural Resources Defense Council (NRDC), the Alliance to SaveEnergy (Alliance) and the Oregon Energy Office (Oregon) submitted ajoint comment for amended fluorescent lampballast standards. (Joint Comment, No. 91). While these stakeholders had previously commented

on the above three documents and the web posting, the Department assumes, based ontheirjoint comment, that it supercedes their previous comments. Therefore, their previous comments are not addressed in today's notice.

Life Cycle Cost Parameters

Electricityprice:The Edison Electric Institute and Mr. Glenn Schleede raised questions about the electricity prices used in the 1997 Report, particularly aboutthe possible effects ofincreased competition inthe utility industry on prices. (EEl, No. 12 at 2-3 and Schleede, No. 15 at 4-8 and 13-20 and No. 21 at 2-4).

To reflect increased competition in the electricity industry due to

. restructured markets, the AE099 reference case assumes a transition to competitive retail pricing in five regions-{;alifornia. New York. New England. the Mid-Atlantic Area Council (consisting ofPennsylvania. Delaware. New Jersey. and Maryland), and the Mid-America Interconnected Network (consisting ofIllinois and parts of Wisconsin and Missouri).6 The specific restructuring plans differ from State to State and utility to utility. but most call for a transition period during which
customer access will be phased in.

The transition period reflects the time needed for the establishment of competitive market institutions and the recovery ofstranded costs as permitted byregulators. Theregion-wide 10 percentrate reduction required in California is represented. Forthe other regions it is assumed that competition will be phasedinbetween 1999 and 2007. with fully competitive prices beginning in 2008. In all the competitively priced regions. the generation price (the price for the energy alone) is setby the marginal cost ofgeneration. Transmission and distribution prices are assumed to remain regulated.

Several comments. including EEl and Mr. Schleede suggested marginal

6 For more infonnation on restructuring assumptions. please see pp. 14-15 ofthe AE099. electricity rates should be used instead ofaverage values. (EEl. No. 12 at 2. Schleede. No. 15 at 6 and No. 21 at 3. CDA. No. 25 at 2 and NEMA. No. 27 at 20-21). Mr. Schleede also suggested that instead ofusing one electricity price for all years ofthe analysis. a projection of future electricity prices shouldbeused. (Schleede, No. 15 at 5).

In response to comments on marginal energy prices. we performed a separate analysis. whose goal was togenerate marginal electricityprices for the commercial sector. Because ofthe large number ofelectric utilities in the U.S

.. we chose a small subset ofelectric utilities for this analysis. We analyzed the electric bills (with and without standards) ofa large number of commercial buildings in each ofthese utility districts. In the TSD (see Chapter 4). we show how a distribution of marginal electricity prices was obtained from this analysis ofrate schedules for 24 utilities for the year 1997. We projected these marginal prices for each future year ofthe analysis by using the
rate ofdecrease in the EIA Annual Energy Outlook 1999. as shown in Table 4.2 in Chapter4 ofthe TSD. Alternative electricity price scenarios shown in Table 4.2 are also available to users of the Life Cycle Cost and National Energy Savings spreadsheets.

Mr. Schleede indicated thatthe sensitivity analysis. which considered the full distribution ofU.S. commercial electricity prices. was an improvement

over the previous practice ofjust using

a point estimate. (Schleede. No. 21 at 1).

Additional comments on marginal electricity prices were received after the posting ofanalysis results on theDOE web site in April of 1999.

Mr. Schleede stated DOE and its
contractors have continuedtheir ambivalence about removing fixed costs from the life cycle cost calculations. (Schleede. No. 76 at 1).

Mr. Schleede is incorrect. We have used marginal electricity prices for all life-cycle cost savings calculations and there are no fixed costs in the marginal electricity prices used as described in Appendix B oftheTSD.

EEl does not agree with the calculations of"epsilon" values as shown in the April 1999 text report entitledLife Cycle Cost Results. EEl would like to see howDOE handled the issues oflighting load factors (e.g., the
amount oflighting actuallyused during the day. such as 90 percent ofthe fixtures) which affect kWh energy reductions, and coincidence and diversity factors which will affect the kW demandreductions (and their economic impact). (EEl. No.48 at 2). The Department describes the method in Appendix Bofthe TSD. Marginal Energy Prices report: Demand Decrement Due to Standards-The Role ofLighting Coincidence and Diversity.

EEl commented that a line in the LCC results writeup reads "the change in the bill dividedbythe change in energy usage yields the marginal electricity price." EEl stated that this is not analytically correct. For commercial (and industrial) customers. there is a marginal kWh price and a marginal kW price that should not be "blended" for

a cost analysis. The change in the kWh energy portion cost ofthe bill divided by the change in energy usage yields the marginal kWh energy price. and the change in the kW demand cost ofthe bill divided bythe change in the pe'ak kW demand (monthly and/or on-peak) yields the marginal kW demand price. These two marginal costs are separate and calculated differently. (EEL No. 48
at 4).

The bill is a combination ofthe kWh (energy) and kW (demand) components. and the Department calculated them separately in orderto derive the marginal electricity prices. The use ofa proportional demand decrement (calculated as explained in Appendix B ofthe TSD. Marginal Energy Prices) enabled DOE to calculate each ofthe contributions to bill savings associated with kWh savings and kW savings.

Published sources for average commercial prices (defined as revenues from energy and demand charges combined. divided by energy sales) are expressed on a per kWh basis. "blending" the energy and demand charges. For consistency with those

sources ofprojected commercial energy prices. theDepartment sees no practical alternative to including the kW (demand) savings component. expressed

on a per kWh basis. in the derivation of marginal commercial prices.

EEl stated it is not sure how DOE performed the calculation ofepsilons for industrial customers. as only the procedure for commercial customers

was outlinedin the text report (DOE web posting ofApril. 1999). (EEL No. 48 at 4).

The epsilon distribution calculated for the commercial sector was also used for calculating the industrial marginal electricity prices from the industrial average electricity prices.

EEl stated that DOE used the "average" electric price. ratherthan the marginal electricity price. on the spreadsheetunderthe "Results" tab. This has the result ofshowing more favorable results for life cycle cost savings. paybacks. andthe globalizedFederal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules 14137

percentage of winners and losers. (EEI, No. 48 at 4). The results (life-cycle cost savings, payback and percent winners and losers) are calculated using marginal prices applied to electricity savings. The sheet titled "Results" in the LCC version 4 spreadsheet does use average valuesfor the purpose of calculating a lifecycle cost for each technology. However, this sheet was only provided as a check to allow the user to estimate LCC and payback periods using average values and then compare them to the results obtained with distributions (in Crystal Ball) for the main inputs. We will relabel the "Results" sheet to "LCC and Payback Periods Using Average Values for All Inputs" to avoid confusion in any future analysis. Mr. Schleede stated that electricity prices are falling faster than the EIA forecast in Annual Energy Outlook, 1998 and 1999 Reference cases. (Schleede, No. 76 at 1). DOE used the EIA forecast over the period 2003-2030. The rate of decrease over the last few years is influenced by electricity deregulation and seems unlikely to translate into a 27 year trend. Mr. Schleede stated that there is a wide variation in electricity prices and many people and organizations would be forced to incur higher life cycle costs if DOE proceeds with ballast standards. (Schleede, No. 76 at 1). The Department uses a distribution of electricity prices as input to its LCC analysis and reports the percentage of end-users with higher and lower LCC from ballast standards. Annual Lighting Hours: The values we used for annual lighting hours in the 1997 Report were based on average values from energy audits performed by Xenergy, Inc. on over 25,000 buildings between 1990 and 1994, as described in Section A.4 of the 1997 Report. EEI asked that a +/ - range be given for the average annual operating hours. (EEI, No. 12 at 3). We are using ranges of annual lighting operation hours, as shown in Figures 4.4 through 4.9 of the TSD, in calculating consumer life cycle costs. These distributions range from less than 200 hours of use to over 8,000 hours. Other LCC Inputs: EEI asked if U-tube lamps were included. (EEI, No. 12 at 3). U-tube lamps are driven by the same ballasts as straight-tube lamps; therefore, we did not conduct separate LCC analyses for them (the wattages and lamp prices are only slightly different). Ballasts that drive U-tube lamps are included in the NEMA data to generate shipments data for the NES (see National Energy Savings below). EEI suggested that F96T8 lamp ballasts be included in the analysis. (EEI, No. 12 at 3). Other comments, on the limited re-opening of the record, also suggested including 8-foot T8
ballasts . (Osram Sylvania Inc, No. 34 at 3 and Motorola Lighting Inc., No. 33 at 2 and ACEEE, No. 77 at 3). Since F96T8 lamp/ballast systems have small market shares, the Department did not collect data and analyze them separately or include them in today's proposed rule. International Consulting Services (ICS) asked that the faster lumen depreciation of T8s be taken into account. (ICS, No. 17 at 5). The Lighting Upgrade Manual published by EPA's Green Lights Program (EPA-430-B-95-009), February 1997 edition, Lighting Maintenance section, page 3, has a graph of lamp lumen depreciations. The four-foot T8 lamps have a flatter lamp lumen depreciation curve than do the four-foot T12 lamps, showing that T8s have slower lumen depreciation than T12. The same is true for the eight-foot T12 and T8 lamps. However, we did not consider this effect in the LCC analysis, as it does not generally impact lamp lifetime or relamping times, and, therefore, does not affect the result of the analysis. National Energy Impacts In the 1997 Report, we used the COMMEND model to project ballast sales and National Energy Impacts. In response to comments that COMMEND was difficult to understand and use, we developed a spreadsheet calculation tool for use in the TSD analyses as was previously discussed under Methodology. We used the NES spreadsheet to estimate national energy savings and economic parameters. We divided the comments received on national energy impacts into five categories : COMMEND-related comments, the NES model and approach, shipments and market shares, lighting/HVAC (heating, ventilating, and air conditioning) interactions, and nonregulatory programs.

COMMEND-Related Comments

Several issues on COMMEND (e.g., ballast sales) were raised by comments. Since today' s analysis uses the NES spreadsheet model instead of COMMEND, these issues are no longer relevant and are not addressed.
Non-Regulatory Programs EEI suggested that the impacts of voluntary efficiency programs should be

more adequately taken into account. It also observed that although the dollar amount spent on Demand Side Management (DSM) programs has declined in recent years, the numbers of ballasts installed because of DSM programs may still have remained the same or even increased, since the price differential between magnetic and electronic ballasts has gone down (EEI, No. 12 at 1). Since the NES spreadsheet that we used to calculate energy savings requires projections of future ballastshipments as an input, we must makesome assumptions concerning the annual shipments of energy efficient magnetic (EEM) ballasts under a scenario of no amended standards. Since it is not possible to know how these shipments will change in the future, the Department decided to analyze several possible futurescenarios. The influence of nonregulatory programs on magnetic ballast shipments is implicitly accounted for in these shipment scenarios (described in Chapter 5 of the TSD and also later in this proposed rule). Scenarios in which magnetic ballast shipments continue to decline over time, reflect some level of continued impact of non-regulatory incentive programs. See section V below for a more detailed description of the assumptions of these scenarios. Since the release of the 1997 Report, the Department has undertaken a more detailed analysis of non-regulatory program impacts on the ballast market by studying utility DSM program impacts, ASHRAE/IES building code impacts, EPA Green Lights/EPA-DOE Energy Star Buildings, and DOE FEMP programs. We conducted a study 7 to estimate the number of fluorescent ballasts affected by DSM rebates from 1992 to 1997. We combined detailed analysis of data on spending amounts and units receiving rebates from several major utilities, accounting for up to 30 percent of the national total, with EIA estimates of national energy efficiency spending to produce estimates of ballasts rebated. Results indicate that the number of rebates and the percentage of the ballast market affected by rebates have both declined since 1995, at the same time that the magnetic ballast market began to level off. Under EPACT, the states are upgrading their building codes to match the lighting provisions in ASHRAE/IES Standard 90.1-1989. When revised as Standard 90.1-1999, the code's lower lighting power density limits will be an incentive for increasing use of electronic

7 Busch, Chris, Turiel, I., Atkinson, B.A., McMahon, J.E., Eto, J.H. 1999. "DSM Rebates for Electronic Ballasts: National Estimates (1992-1997) and Assessment of Market Impact." Lawrence Berkeley National Laboratory. Federal Register

### IVo!. 65, No. 51/Wednesday, March 15, 

### 2000/Proposed Rules 

### 14137

percentage ofwinners and losers. (EEl, No. 48 at 4).

The results (life-cycle cost savings, payback and percentwinners and losers) are calculatedusing marginal prices applied to electricity savings. The sheet titled "Results" inthe LCC version
4 spreadsheet does use average values for the purpose ofcalculating a lifecycle cost for eachtechnology. However, this sheet was only provided

as a checkto allowthe userto estimate LCC and payback periods using average values and then compare them to the results obtainedwith distributions (in Crystal Ball) for the main inputs. We will relabel the "Results" sheet to "LCC and PaybackPeriods Using Average Values for All Inputs" to avoid confusion in any future analysis.

Mr. Schleede stated that electricity prices are falling faster than the EIA forecast in Annual Energy Outlook, 1998 and 1999 Reference cases. (Schleede, No. 76 at 1).

DOE used the EIA forecast overthe period 2003-2030. The rate ofdecrease

over the last few years is influenced by electricity deregulation and seems unlikely to translate into a 27 year trend.

Mr. Schleede stated that there is a wide variation in electricity prices and
many people and organizations would be forced to incurhigher life cycle costs ifDOE proceeds withballast standards. (Schleede, No. 76 at 1).

The Department uses a distribution of electricity prices as input to its LeC analysis and reports the percentage of end-users with higher and lower LCC from ballast standards.

AnnualLightingHours: The values

we used for annual lightinghours in the 1997 Report were based on average values from energy audits performedby Xenergy, Inc. on over 25,000 buildings between 1990 and 1994, as described in Section A.4 ofthe 1997 Report.

EEl asked that a +1

- range be given for the average annual operatinghours. (EEl, No. 12 at 3).

We are usingranges ofannual lighting operation hours, as shown inFigures 4.4 through 4.9 ofthe TSD, in calculating

consumer life cycle costs. These distributions range from less than 200 hours ofuse to over 8,000 hours.

OtherLCCInputs: EEl asked ifU-tube lampswere included. (EEl, No. 12 at 3).

U-tube lamps are driven bythe same ballasts as straight-tube lamps; therefore, we did not conduct separate LCC analyses for them (the wattages and lamp prices are only slightly different). Ballaststhat drive U-tube lamps are included inthe NEMA data to generate shipments data for the NES (see National Energy Savings below). EEl suggested that F96T8lamp ballasts be includedin the analysis. (EEl, No. 12 at 3). Other comments, on the limited re-opening oftherecord, also suggested including 8-foot T8 ballasts. (Osram SylvaniaInc, No. 34 at 3 and Motorola Lighting Inc., No. 33 at 2 and ACEEE, No. 77 at 3).

Since F96T8 lamplballast systems have small market shares, the Department did not collect data and analyze them separately or includethem intoday's proposed rule.

International Consulting Services (ICS) asked thatthe faster lumen depreciation ofT8s betaken into
account. (ICS, No. 17 at 5).

The Lighting Upgrade Manual publishedby EPA's Green Lights Program (EPA-43D-B-95-D09), February 1997 edition, Lighting Maintenance section, page 3, has a graph oflamp lumen depreciations. Tl,le four-foot T8 lamps have a flatter lamp lumen depreciation curve than do the four-foot T12 lamps, showing that T8s have slower lumen depreciation than T12. The same is true for the eight-foot T12 and T8lamps. However, we did not consider this effect inthe LCC analysis,

as it does not generally impact lamp lifetime orrelamping times, and, therefore, does not affect the result of the analysis.

National Energy Impacts

In the 1997 Report, we used the COMMEND model to projectballast sales and National Energy Impacts. In response to comments that COMMEND

was difficult to understand and use, we developed a spreadsheet calculation tool for use in the TSD analyses as was previously discussed under Methodology. We used the NES spreadsheet to estimate national energy savings and economic parameters.

We divided the comments received on national energy impacts into five categories: COMMEND-related comments, the NES model and approach, shipments and market shares, lighting/HVAC (heating, ventilating, and air conditioning) interactions, and nonregulatory programs.
COMMEND-Related Comments

Several issues on COMMEND (e.g., ballast sales) were raised by comments. Since today's analysis uses the NES spreadsheet model instead of COMMEND, these issues are no longer relevant and are not addressed. Non-RegulatoryPrograms

EEl suggestedthatthe impacts of voluntary efficiency programs shouldbe

more adequately taken into account. It also observedthat although the dollar amount spent on Demand Side Management (DSM) programs has declined inrecent years, the numbers of ballasts installed because ofDSM programs may still have remained the

same or even increased, since the price differential between magnetic and electronic ballasts has gone down (EEl, No. 12 at 1).

Since the NES spreadsheet that we usedto calculate energy savings requires projections offuture ballast shipments as an input, we must makesome assumptions concerningthe annual shipments ofenergy efficient magnetic (EEM) ballasts under a scenario ofno amended standards. Since it is not possibleto know how these shipmentswill change in the future, the Department decided to analyze several possible future scenarios. The influence ofnonregulatory programs on magnetic ballast shipments is implicitly accounted for in these shipment scenarios (described in Chapter 5 ofthe TSD and also later in this proposed rule). Scenarios in which magneticballast shipments continueto decline over time, reflect some level of continued impact ofnon-regulatory incentive programs. See section Vbelow for a more detailed description ofthe assumptions ofthese scenarios.

Since the release ofthe 1997 Report, the Department has undertaken a more detailed analysis ofnon-regulatory program impacts onthe ballast market by studying utility DSM program impacts, ASHRAE/lESbuilding code impacts, EPA Green Lights/EPA-DOE Energy Star Buildings, and DOE FEMP programs. We conducted a study 7 to estimate the number offluorescent ballasts affected by DSM rebates from 1992 to 1997. We combined detailed analysis ofdata on spending amounts and units receiving rebates from several major utilities, accounting for up to 30 percent ofthe national total, with ElA estimates ofnational energy efficiency spending to produce estimates of ballasts rebated. Results indicate that the number ofrebates andthe percentage ofthe ballast market affected byrebates haveboth declined since 1995, at the sametime that the magnetic ballast marketbegan to level off. Under EPACT, the states are upgrading their building codes to match the lighting provisions inASHRAE/IES Standard 90.1-1989. When revised as Standard 90.1-1999, the code's lower lighting power density limits will be an incentive for increasinguse ofelectronic

7 Busch, Chris. Turiel, I., Atkinson, B.A., McMahon, J.E., Eto, J.H. 1999. "DSM Rebates for Electronic Ballasts: National Estimates (1992-1997) and Assessment ofMarket impact." Lawrence Berkeley National Laboratory.14138 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

ballasts. DOE is preparing a new code for Federal buildings that will also encourage the use of electronic ballasts. The EPA programs (first Green Lights and now the EPA-DOE Energy Star Buildings) provide voluntary incentives for lighting upgrades that include electronic ballasts. The DOE FEMP Procurement Challenge and Federal Relighting Initiative are having modest but important impacts increasing the market share for electronic ballasts purchased for Federal buildings. Other programs such as the Voluntary Luminaire Program created by the National Lighting Collaborative under EPACT, NEMA's Energy Cost Savings Council, DOE's Rebuild America, and DOE's Lighting Technology Roadmap also provide incentives to move the market toward more efficient fluorescent ballasts.
Utility and Environmental Analyses

The NEMS has been used to estimate impacts of ballast energy efficiency standards on electric utilities. The Department used a version of EIA's NEMS, called NEMS-BRS, for the utility and environmental analyses. NEMS simulates the energy economy of the U.S. and has been developed over several years by the EIA primarily for the purpose of preparing the Annual Energy Outlook (AEO). NEMS produces a widely-known baseline forecast for the U.S. through 2020 that is available in the public domain. NEMS-BRS offers a picture of the effect of standards since its scope allows it to measure the interactions between the various energy supply and demand sectors and the economy as a whole. Fuels for Electricity Generation: EEI pointed out that projections for oil and gas generation after 1995 are available from GRI, EPRI, and EIA, and DOE could use them in its analysis (EEI, No. 12 at 3). Most analyses use EIA data such as electric utility fuel prices as a starting point. The important result for estimating the effect of standards on utility costs is not the overall fuel mix, but the marginal effect on fuel consumption and power plant construction. EEI stated that the values used for the heat rate (for conversion of electricity from site to source energy) are overstated. It indicated that the analysis is using the total U.S. generation capacity (not a marginal capacity type of analysis) and is using EIA methodology. EEI asserts the values are overstated for the following reason: EIA assigns the same heat rate of fossil-fuel power plants to renewable power plants. This assumption creates an artificial heat rate for hydroelectric, wind, solar, biomass, and other forms of renewable energy. For the approximately 10 percent (and growing) portion of renewable electricity generation, EIA assigns a value of over 10,000 Btu/kWh to generation that has 0 Btu/kWh or 3,412 Btu/kWh. EEI states this factor alone leads to an overstatement of primary energy savings . In addition, EEI asserts that with the advent of restructuring, there are many new technologies that could lower the overall heat rate at a much quicker rate than shown in the 1999 Annual Energy Outlook (AEO). EEI proposes that the lower end of the
ranges for national energy savings should be significantly lower to account for this possibility. (EEI, No. 48 at 3).Table 5.3 in the TSD shows the siteto-source heat rates used in our analysis for the period 2003-2030. They are average rates for the commercial sector obtained from AE099. We have compared these values to marginal values we obtained from a NEMS analysis. The marginal heat rate is the change in fuel delivered to generating stations divided by the change in electricity sales . For the NEMS analysis, we only considered thermal generation. For most years in the analysis period, the marginal heat rate was lower than the average heat rate. Overall, if we had used a marginal heat rate rather than the average heat rate, source quads would be reduced by about 4 percent. EEI is in agreement with the analysis showing a declining heat rate over the analysis period. However, it asserts the values shown in AEO 1999 should be considered to be the high end of the range of inputs for the analysis period. (EEI, No. 48 at 3). Other scenarios will show a faster rate of decline in heat rates over the next 20- 30 years. The Department executed its analysis using the AEO99 Reference Case. The average heat rate extracted from AEO99 and used in the analysis declines from 10,871 Btu/kWh in year 2001 to 9,196 Btu/kWh in year 2030. This is equivalent to increasing the energy conversion efficiency of thermal power generation from 31 percent to almost 37 percent. This is a major assumed improvement, especially given that many generating assets in place today will still be serving marginal duty cycles during most of the forecast period. Conservation Load Factor: EEI also stated that it was not clear how the Conservation Load Factor (CLF) was calculated, and asked if it was calculated on a regional level first and then aggregated, or at the national level only. (EEI, No. 12 at 3). The CLF is not used in the NEMS analysis so this question is no longer relevant. SO2 and NOx emissions: EEI suggested that because SO2 and NOX emissions have declined over the past several years, marginal emissions due to energy savings will be lower than average emissions . (EEI, No. 12 at 3). Total emissions of SO2 are unlikely to be affected by any policy, such as efficiency standards, because emissions are capped by legislation. The actual reduction in NOx emissions will be determined by which marginal thermal generation is reduced through lower electricity sales. Most new capacity is likely to be both efficient and clean, and therefore operate at low marginal cost high in the dispatch order (i.e., utilities will dispatch the newer, cleaner sources before going to the older, more expensive sources). Generation from these new resources is therefore unlikely to be reduced by a reduction in electricity sales . On the contrary, it is likely that the displaced generation will be from older, dirtier plants low in the dispatch order. Appliance Standards Environmental and Utility Model (ASEUM): EEI and Mr. Schleede concurred that the ASEUM model's methodology may be outdated in an era of deregulated utilities that are unlikely to remain vertically integrated. (EEI, No. 12 at 4 and Schleede, No. 15 at 7-8). It is true that the electric utility industry is undergoing a radical restructuring, and the assumptions of cost recovery underlying ASEUM are becoming dated. We agree that we needed other methodologies to carry out the utility analysis, and we used the NEMS-NAECA for this purpose.

Ballast Market Shift (From T12 Magnetic to T8 Electronic) The 1997 Report, and all previous analyses, analyzed the impact of an electronic ballast standard by essentially assuming that users of magnetic ballasts with T12 lamps would switch to electronic ballasts with T12 lamps if the former ballast type became obsolete. As described in the Notice of Limited Reopening of the Record and Opportunity for Public Comment, the Department solicited comments on consideration of consumers who might choose electronic ballast T8 systems over electronic ballast T12 systems and

consumers who might choose electronic ballasts over cathode cutout ballasts. 63 FR 58330 (October 30, 1998). DOE asked for comments on certain aspects of both the electronic ballast and the cathode cutout ballast standard levels: Whether a market shift from magnetic T12 

### 14138 Federal Register

### IVol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

ballasts. DOE is preparing a new code for Federal buildings that will also encourage the use ofelectronic ballasts. The EPA programs (first Green Lights and now the EPA-DOE Energy Star Buildings) provide voluntary incentives for lighting upgrades that include electronic ballasts. The DOE FEMP Procurement Challenge and Federal Relighting Initiative are having modest butimportant impacts increasingthe market share for electronicballasts purchased for Federal buildings. Other programs such as the Voluntary Luminaire Program created by the National Lighting Collaborative under EPACT. NEMA's Energy Cost Savings Council. DOE's Rebuild America. and DOE's Lighting Technology Roadmap also provide incentives to move the market toward more efficient fluorescent ballasts. Utility and Environmental Analyses

The NEMS has been used to estimate impacts ofballast energy efficiency standards on electric utilities. The Department used a version ofElA's NEMS, called NEMS-BRS, for the utility and environmental analyses. NEMS simulates the energy economy ofthe U.S. and has been developed over several years by the ElA primarily for the purpose ofpreparingthe Annual Energy Outlook (AEO). NEMS produces

a widely-known baseline forecast for the U.S. through 2020 that is available in the public domain. NEMS-BRS offers a picture ofthe effect ofstandards since its scope allows it to measure the interactions between the various energy supply and demand sectors andthe economy as a whole.



### Fuelsfor Electricity Generation: EEl pointed out that projections for oil and
gas generation after 1995 are available from GR!. EPR!, and ElA. and DOE could use them in its analysis (EEl, No. 12 at 3).

Most analyses use ElA data such as electric utility fuel prices as a starting point. The important result for estimatingthe effect ofstandards on utility costs is not the overall fuel mix, but the marginal effect on fuel consumption and powerplant construction.

EEl stated that the values used for the heat rate (for conversion ofelectricity from site to source energy) are overstated. It indicated thatthe analysis is using thetotal U.S. generation capacity (not a marginal capacity type of analysis) and is using ElA methodology. EEl asserts the values are overstated for the following reason: EIA assigns the

same heat rate offossil-fuel power plants to renewable power plants. This assumption creates an artificial heat rate for hydroelectric, wind. solar, biomass. and other forms ofrenewable energy. Forthe approximately 10 percent (and growing) portion ofrenewable electricity generation, ElA assigns a value ofover 10,000 Btu/kWh to generation that has 0 Btu/kWh or 3,412 Btu/kWh. EEl states this factor alone leads to an overstatement ofprimary energy savings. In addition. EEl asserts that with the advent ofrestructuring, there are many newtechnologies that could lowerthe overall heat rate at a much quickerrate than shownin the 1999 Annual Energy Outlook (AEO). EEl
proposes that the lower end ofthe ranges for national energy savings shouldbe significantly lowerto account for this possibility. (EEl, No. 48 at 3).

Table 5.3 in the TSD shows the siteto-source heat rates used in our analysis for the period 2003-2030. They are average rates for the commercial sector obtained from AE099. We have compared these values to marginal values we obtained from a NEMS analysis. The marginal heat rate is the change in fuel delivered to generating stations dividedbythe change in electricity sales. For the NEMS analysis.

we only considered thermal generation. For most years in the analysis period, the marginal heat rate was lower than the average heat rate. Overall, ifwe had used a marginal heat rate ratherthan the average heat rate. source quads would be reduced by about 4 percent.

EEl is in agreement with the analysis showing a declining heat rate over the analysis period. However. it asserts the values shown in AEO 1999 should be consideredto be the high end ofthe range ofinputs for the analysis period. (EEl, No. 48 at 3).

Other scenarios will show a faster rate ofdecline in heat rates over the next 20- 30 years. The Department executed its analysis using the AE099 Reference Case. The average heatrate extracted from AE099 and used inthe analysis declines from 10.871 Btu/kWh in year 2001 to 9,196 Btu/kWh in year 2030. This is equivalentto increasingthe energy conversion efficiency ofthermal power generation from 31 percent to almost 37 percent. This is a major assumed improvement. especially given that many generating assets in place today will still be serving marginal duty cycles duringmost ofthe forecast period.



### Conservation LoadFactor: EEl also stated that it was not clear how the Conservation Load Factor (CLF) was calculated. and asked ifitwas calculated on a regional level first and then aggregated. or at the national level only. (EEl, No. 12 at 3). The CLF is not used intheNEMS analysis so this question is no longer relevant.



### S(h andNOx emissions:EEl suggested that because S02 and NOX emissions have declined over the past several years. marginal emissions due to energy savings will be lower than average emissions. (EEl, No. 12 at 3).

Total emissions ofS02 are unlikely to be affected by any policy, such as efficiency standards, because emissions

are cappedby legislation. The actual reduction in NOx emissions will be**~** determined by which marginal thermal generation is reduced through lower electricity sales. Most new capacity is likely to be both efficient and clean, and therefore operate at low marginal cost high in the dispatch order (i.e., utilities will dispatchthe newer, cleaner sources before going to the older. more expensive sources). Generation from these new resources is therefore unlikely to be reduced by a reduction in electricity sales. On the contrary. it is likely that the displaced generation will be from older, dirtierplants low in the dispatch order.



### Appliance Standards Environmental and UtilityModel (ASEUMj: EEl and Mr. Schleede concurred that the ASEUM model's methodology may be outdated in an era ofderegulated utilities that are unlikely to remain vertically integrated. (EEl. No. 12 at 4 and Schleede. No. 15 at 7-8).

Itis true that the electric utility industry is undergoing a radical restructuring, and the assumptions of
cost recovery underlying ASEUM are becoming dated. We agree thatwe needed other methodologies to carry out the utility analysis, and we used the NEMS-NAECA for this purpose.
BallastMarket Shift (From T12 Magnetic to T8 Electronic)

The 1997 Report. and all previous analyses, analyzed the impact ofan electronic ballast standardby essentially assuming thatusers ofmagnetic ballasts with T12 lamps would switch to electronic ballasts with T12lamps ifthe former ballast typebecame obsolete. As described in theNotice ofLimited Reopening ofthe Record and Opportunity for Public Comment. the Department solicited comments on consideration ofconsumers who might choose electronic ballast T8 systems

over electronicballast T12 systems and

consumers who might choose electronic ballasts over cathode cutoutballasts. 63 FR 58330 (October 30, 1998). DOE asked for comments on certain aspects ofboth the electronic ballast and the cathode
cutoutballast standard levels: Whether

a market shift from magnetic T12Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14139

ballasts to electronic T8 ballasts is likely, the extent of such a shift, and whether the impacts of these shifts should be considered. In the Joint Comment, the stakeholders stated that they assumed 95 percent of consumers of electronic ballasts would switch from T12 to T8 lamps. (Joint Comment, No. 91 at 8). Northwest Energy Efficiency Alliance (NEEA) stated that in its region with a mature market for electronic ballasts, the standard practice in new construction/renovation is a fixture with an electronic T8 ballast; this results partially from building codes as well as from economics. Cathode cutout systems are rare, with customers selecting electronic ballasts instead because of energy-efficiency, light quality, and the ability to drive multiple lamps. (NEEA, No. 38 at 1-2). The Tennessee Valley Authority (TVA) explained that its procedure is to replace failed magnetic T12 ballasts with electronic T12 ballasts because of availability, cost (when the lighting hours are too short for a good payback with a T8 system); and maintenance (if only part of the ballasts in a space need replacement, the T12 lamps are retained). For major system replacement, electronic T8 systems were considered the first option. (TVA, No. 36 at 1). The statute requires the Department to establish different classes where appropriate, and today's proposed rule would prescribe separate ballast efficacy factors for each lamp-ballast combination. To determine economic impact on manufacturers and consumers, DOE looks to reasonably predict likely market impacts. That is, some consumers with T12 lamps and magnetic ballasts would switch to T8 lamps with electronic ballasts if the magnetic T12 ballast was eliminated. Furthermore, the Secretary has determined to examine the impact of this consumer sub-group under economic factor 7. Mr. Glenn Schleede comments that DOE has continued its long-standing practice of giving little consideration to the interests of real consumers who end up_ bearing the burden of energy efficiency standards. (Schleede, No. 76 at 2). The Department believes it has considered the interests of real consumers, and any burdens on them, by including the full range of electric prices, ballasts prices, operating life and ballast life that consumers will experience and calculating the full range of impacts on consumers. Furthermore, we studied the economic impact of the standard on consumers by considering and evaluating likely GRIM spreadsheet to the ballast consumer actions. As a result, we are rulemaking, DOE developed a revised presenting impacts on consumers questionnaire to capture all issues moving from T12 lamps with magnetic relevant specifically to the ballast ballasts to T12 lamps with electronic industry and its suppliers. ballasts and also consumers moving Subsequent to the April 28 workshop, from T12 lamps with magnetic ballasts the Department met with industry to T8 lamps with electronic ballasts. representatives to discuss the rationale Both of these likely occurrences arise for using the cash flow analysis from the consumer not being able to buy methodology to measure financial a T12 magnetic ballast under the impacts. The Department also reviewed standard being proposed. However, details of the spreadsheet calculations at while modeling and giving this meeting. The discounted cash flow consideration to consumer actions, the approach is a widely used technique for Department does not believe it can set evaluating a company's value (Net standard levels based on consumer Present Value (NPV)), and is frequently purchasing behavior given the used in capital budgeting decisions for
conclusions of the court in Natural evaluating capital spending proposals. It Resources Defense Council v. is also used for evaluating financial Herrington, 768 F. 2d 1355, 1406-07 impacts of plant closures and business (D.C. Cir. 1985), where the court stated restructuring. The Department agreed to that "the entire point of a mandatory revise GRIM to add features that program was to change consumer explicitly provide the capability to behavior" and "the fact that consumers include one-time charges such as plant demand short payback periods was closures and asset write-offs. itself a major cause of the market failure The Department believes that the that Congress hoped to correct." modified GRIM accurately captured the Manufacturer Impact Analysis financial impacts of a step change in technology. In contrast to other The general MIA methodology appliance rulemakings that make only presented by the Department in March incremental changes to standard levels, 1997, was developed with substantive this rulemaking would result in input from ballast manufacturers on standards based on a completely new issues relevant to the ballast technology. To comply with final rulemaking. Ballast manufacturers standards, manufacturers would be provided very useful insights that required to make significantly higher resulted in the incorporation of new capital investments (e.g., new plants, factors for consideration in the analysis equipment and production processes), of manufacturer impacts, namely The capital investment numbers input impacts on domestic manufacturer into GRIM reflect this step change in employment, manufacturing capacity, technology and produce negative plant closures and loss of capital impacts on the manufacturer's cash investment. Cooperation from ballast flows. Furthermore, the Subgroup manufacturers also helped DOE in Impact Analysis proposed in the MIA proposing the interview guide approach methodology and carried out in part as a critical MIA tool for identifying through interviews with manufacturer issues relevant to each individual representatives considered impacts on manufacturer. The ballast rulemaking employment, manufacturing capacity was the first for which DOE conducted and competitive effects due to an one-on-one interviews with the electronic ballast standard. manufacturers. This process helped To ensure that the manufacturer DOE appreciate the usefulness of this impact analysis captured the potential methodology for assessing qualitative impacts of a radically transformed impacts. ballast market, the Department and The Department of Energy held a NEMA members developed a scenario public workshop on April 28, 1998, to analysis methodology to be included in present information and invite comment the ballast MIA. In creating their on several topics relating to energy- projections for future revenues and efficiency standards for fluorescent profit margins, manufacturers were lamp ballasts. One major topic for asked to consider two different discussion was the Manufacturer Impact competition scenarios. In the first Analysis (MIA). In developing the scenario, it was assumed that Manufacturer Impact Analysis manufacturers would maintain their document for the April 28, 1998, current market share. In the second workshop, DOE tried to address the scenario, we asked manufacturers to concerns that ballast manufacturers consider the impact of a new entrant in raised with the Department in previous the industry which would capture a 15 meetings or through personal percent share, Under the new entrant interviews. In addition to tailoring the scenario, we redistributed market shares 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 14139

ballasts to electronicT8 ballasts is likely, the extent ofsuch a shift, and whether the impacts ofthese shifts should be considered.

Inthe Joint Comment, the stakeholders stated that they assumed 95 percent ofconsumers ofelectronic ballasts would switch from T12 to T8 lamps. (Joint Comment, No. 91 at 8).

Northwest Energy Efficiency Alliance (NEEA) stated that in its region with a mature market for electronic ballasts, the standard practice in new construction/renovation is a fixture with

an electronic T8 ballast; this results partially from building codes as well as from economics. Cathode cutout systems are rare, with customers selecting electronicballasts instead because ofenergy-efficiency, light quality, and the ability to drive multiple lamps. (NEEA, No. 38 at 1-2).

The Tennessee Valley Authority (TVA) explainedthat its procedure is to replace failed magnetic T12 ballasts with electronic T12 ballasts because of availability, cost (when the lighting hours are too short for a good payback with a T8 system); and maintenance (if only part ofthe ballasts in a space need replacement, the T12 lamps are retained). For major system replacement, electronic T8 systems were considered the first option. (TVA, No. 36 at 1).

The statute requires the Departmentto establish different classes where appropriate, and today's proposed rule would prescribe separateballast efficacy factors for each lamp-ballast combination. To determine economic impact on manufacturers and
consumers, DOE looks to reasonably predict likely market impacts. That is,

some consumers with T12lamps and magnetic ballasts would switch to T8 lamps with electronic ballasts ifthe magnetic T12 ballast was eliminated. Furthermore, the Secretary has determined to examine the impact of this consumer sub-group under economic factor 7.

Mr. Glenn Schleede comments that DOE has continuedits long-standing practice ofgiving little consideration to the interests ofreal consumers who end up bearingthe burden ofenergy efficiency standards. (Schleede, No. 76 at 2).

The Departmentbelieves ithas considered the interests ofreal
consumers, and anyburdens on them, by including the full range ofelectric prices, ballasts prices, operating life and ballast life that consumers will experience and calculating the full range ofimpacts on consumers. Furthermore, we studied the economic impact ofthe standard on consumersby considering and evaluating likely

consumer actions. As a result, we are presenting impacts on consumers moving from T12 lamps with magnetic ballasts toT12 lamps with electronic ballasts and also consumers moving from T12lamps with magnetic ballasts
to T8 lamps with electronic ballasts. Both ofthese likely occurrences arise from the consumer notbeing able tobuy

a T12 magnetic ballastunderthe standard beingproposed. However, while modeling and giving considerationto consumer actions, the Department does notbelieve it can set standard levels based on consumer purchasingbehavior given the conclusions ofthe court in Natural Resources Defense Council v. Herrington, 768 F. 2d 1355. 1406-07 (D.C. Cir. 1985), where the court stated that "the entire point ofa mandatory program was to change consumer behavior" and "thefact that consumers demand short payback periods was itselfa major cause ofthe market failure that Congress hoped to correct."

Manufacturer Impact 

### Analysis

The general MIA methodology presentedby the Department in March 1997, was developed with substantive input from ballast manufacturers on issues relevantto the ballast rulemaking. Ballast manufacturers provided very useful insights that resulted in the incorporation ofnew factors for consideration in the analysis ofmanufacturer impacts, namely impacts on domestic manufacturer employment, manufacturing capacity, plant closures and loss ofcapital investment. Cooperation from ballast manufacturers also helped DOE in proposing the interview guide approach

as a critical MIA tool for identifying issues relevantto each individual manufacturer. The ballast rulemaking

was the first for which DOE conducted

one-on-one interviews with the manufacturers. This process helped DOE appreciate the usefulness ofthis methodology for assessing qualitative impacts.

The Department ofEnergy held a publicworkshop on April 28, 1998, to present information and invite comment

on several topicsrelating to energyefficiency standards for fluorescent lamp ballasts. One major topic for discussion was the Manufacturer Impact Analysis (MIA). In developing the Manufacturer Impact Analysis document for the April 28, 1998, workshop, DOE tried to address the

concerns thatballastmanufacturers raised with the Department inprevious meetings orthrough personal interviews. In addition to tailoring the GRIM spreadsheet to theballast rulemaking, DOE developed a revised questionnaire to capture all issues relevant specifically to the ballast industry and its suppliers.

Subsequent to the April 28 workshop, theDepartment metwith industry representatives to discuss the rationale for using the cash flow analysis methodology to measure financial impacts. The Department also reviewed details ofthe spreadsheet calculations at this meeting. The discounted cash flow approach is a widely usedtechnique for evaluating a company's value (Net PresentValue (NPV)), and is frequently used in capital budgeting decisions for evaluating capital spending proposals. It is also used for evaluating financial impacts ofplant closures and business restructuring. The Department agreed to revise GRIM to add features that explicitly provide the capability to include one-time charges such as plant closures and asset write-offs.

The Department believes that the modified GRIM accurately captured the financial impacts ofa step change in technology. In contrastto other appliance rulemakings that make only incremental changes to standard levels, this rulemaking would result in standardsbased on a completely new technology. To comply with final standards, manufacturers would be required to make significantly higher capital investments (e.g.• new plants, equipment and production processes). The capital investment numbers input into GRIM reflect this step change in technology and produce negative impacts on the manufacturer's cash flows. Furthermore, the Subgroup Impact Analysis proposed in the MIA methodology and carried out in part through interviews with manufacturer representatives considered impacts on employment, manufacturing capacity and competitive effects dueto an electronicballast standard.

To ensure thatthe manufacturer impact analysis capturedthe potential impacts ofa radically transformed ballast market, the Department and NEMA members developed a scenario analysis methodologyto be included in theballast MIA. In creatingtheir projections for future revenues and profit margins, manufacturers were asked to considertwo different competition scenarios. Inthe first scenario, it was assumedthat manufacturers would maintain their
current market share. In the second scenario, we asked manufacturers to considerthe impact ofa new entrant in the industry which would capture a 15 percent share. Under the new entrant scenario, we redistributed market shares14140 

### Federal Register /Vol. 65, No. 51/Wednesday, March 15, 2000 /Proposed Rules

and manufacturers were able to define new prices and costs (gross margins). The competition scenario analysis is described in greater detail in the TSD. Additional scenarios were constructed assuming a status quo in profit margins, the "existing dynamics" scenario, and a new entrant in the magnetic ballast market, or "magnetic new entrant" scenario. We conducted the GRIM analysis and other elements of the MIA separately for each manufacturer. To report a representative variation in impacts between manufacturer sub groups while maintaining the confidentiality of individual manufacturers, DOE constructed three different cashflows: One for manufacturers of both magnetic and electronic ballasts, a second for manufacturers producing electronic ballasts only, and a third that combines both sub groups of manufacturers. Likewise, we evaluated employment and manufacturing capacity effects from an electronic ballast standard on a company-by-company basis and reported them for both subgroups. To the extent consistent with the confidentiality concerns of individual manufacturers, we reported important variations between manufacturers within subgroups qualitatively. The analysis results include a discussion of the impacts of the cashflow results on the business prospects of manufacturers in each subgroup, with reference to specific manufacturers where permitted by these manufacturers. For the participating manufacturers, the GRIM analysis did not distinguish plants located outside the United States from United States' plants. We calculated employment impacts for these same firms and reported separate results for domestic and Mexican plants. We performed a detailed analysis of the impacts of an electronic ballast standard on ballast manufacturer suppliers. This analysis included a quantitative evaluation of manufacturer cashflows and jobs. In total, 30 firms were invited to participate in interviews. Seventeen of these suppliers served magnetic ballast production, eleven electronic ballast production, and six served both magnetic and electronic markets. Nineteen organizations that serve magnetic ballast applications participated in interviews. Eight organizations that serve electronic ballast applications participated in interviews. In total, nine plant tours were held, five of which were at suppliers of magnetic products and four of which were tours of electronic supplier plants. The analysis demonstrated that the organizations interviewed provided a representative group of supplier industries, which we used to evaluate the impacts on supplier industries as a whole. Additionally we visited one lamp manufacturer's fluorescent lamp plant and interviewed plant and corporate representatives. The Department decided to gather and analyze information on manufacturer impacts from other lamp manufacturers as well, and an analysis of this information is presented in Section V. NEMA commented that the manufacturer impacts reported for a standard that began in the year 2003 were too severe and that standards that produced such impacts could not be economically justified. (NEMA, No. 85). NEMA, as a part of the Joint Comment, commented that their proposed staggered implementation dates mitigate such adverse impacts. (Joint Comment, No. 91 at 7). Standards Proposals

NEMA described new market data on ballasts, as well as percentage of lamps driven by magnetic and electronic ballasts. This shows that electronic ballast penetration of the total commercial and industrial lighting market has increased to 55 percent of total ballast shipments in 1998. Electronic ballast market penetration has increased from 44 percent to 62 percent in 1998, when measured by the more relevant criteria of the number of lamps operated. For ballasts used only in commercial and industrial new construction, renovations and retrofits in 1998, electronic ballast penetration has increased to 63 percent, measured by ballast shipments, and to 70 percent measured by the number of lamps operated. (NEMA, No. 50 at 26 and Attachment B and NEMA, No. 85 at 44). ACEEE agreed with NEMA that the percentage of lamps ballasted electronically is the most important figure; however, the growth rate during 1993-1995 of 9 percent was larger than the growth rate of 2.8 percent from 1995 to 1998, supporting the "Decreasing Shipments to 2027" base case. (ACEEE, No. 77 at 9-10). Oregon Office of Energy noted that the magnetic ballast shipments increased in 1997 and remained stable in 1998, casting doubt on the base case scenarios that show steady decline of magnetic ballasts (Oregon, No. 81 at 5 and 7). The CEC also stated that a national standard would complement California's Title 24 building code policies by ensuring that savings are realized in retrofit applications as well as new construction. (CEC, No. 82 at 1). Additionally, the Department received comments from the Vermont Residential Energy Efficiency Program, Conservation and Renewable Energy Systems, Broward County Florida, Alto Manufacturing Company, Rocky Mountain Chapter of the Sierra Club, State of Vermont, California Energy Commission, Northeast Energy Efficiency Partnerships, Pacific Gas and Electric, Northwest Energy Efficiency Alliance, Sacramento Municipal Utility District, Boston Edison, Eastern Utilities, Green Mountain Power, New York Power Authority, Eugene Water and Electric Board and 35 private citizens urging the Department to establish standards requiring electronic ballasts citing the delay in promulgating this rulemaking, the phasing out of utility incentive programs for ballasts, the energy savings and environmental and economic benefits. In commenting on the possibility of a market shift, Osram Sylvania (OSI) proposed that the Department separately consider each of the three major ballast market segments: OEM (fixtures for new construction/renovation), Retrofit (early replacement of systems) and Replacement (existing ballast replacement at failure). The first two markets are appropriate for electronic T8 systems, while the third has existing reduced-wattage lamps that are incompatible with electronic ballasts. OSI commented that 34-Watt lamps are incompatible with electronic ballasts because of their conductive coating that facilitates starting with magnetic ballasts. It stated that technical solutions were possible but impractical: "Smart" ballasts that overcome the problem for the 34-Watt lamp would not be compatible with 40-Watt high CRI lamps that meet the EPACT lamp standards and would be expensive; design of 34-Watt lamps without the conductive coating would be expensive; controlling the resistance of the conductive coating to allow compatibility with both ballast types would be unreliable over the range of lamps and over their normal lives, since the coating varies widely for any manufacturer and between manufacturers. The expenditure of resources by lamp manufacturers to design a lamp to meet this need would promote an obsolete system when the market should be moving toward TS systems. OSI also stated that the lamp industry has the capacity to handle a market transition from a mixture of T12 to T8 lamps toward T8 lamps over a 3-year period, but would require a multimillion dollar capital investment and additional time to handle a more widespread transition for all market sectors. (OSI, No. 34 at 2-5). 

### 14140 Federal Register IVol. 65, No. 51 IWednesday, March 15, 2000/Proposed Rules

and manufacturers were able to define

new prices and costs (gross margins). The competition scenario analysis is described ingreater detail in the TSD. Additional scenarios were constructed assuming a status quo in profit margins, the "existing dynamics" scenario, and a

new entrant inthe magnetic ballast market, or "magnetic new entrant" scenario.

We conducted the GRIM analysis and other elements ofthe MIA separately for each manufacturer. To report a representative variation in impacts between manufacturer sub groups while maintainingilie confidentiality of individual manufacturers, DOE constructed three different cashflows: One for manufacturers ofboth magnetic and electronic ballasts, a second for manufacturers producing electronic ballasts only, and a third that combines both sub groups ofmanufacturers. Likewise, we evaluated employment and manufacturing capacity effects from

an electronic ballast standard on a company-by-companybasis and reported them for both subgroups. To the extent consistent withthe confidentiality concerns ofindividual manufacturers, we reported important variations between manufacturers within subgroups qualitatively. The analysis results include a discussion of the impacts ofthe cashflowresults on thebusiness prospects ofmanufacturers in each subgroup, with reference to specific manufacturers where permitted by these manufacturers.

For the participating manufacturers, the GRIM analysis did not distinguish plants located outside the United States from United States' plants. We calculated employment impacts for these same firms and reported separate results for domestic and Mexican plants.

We performed a detailed analysis of the impacts ofan electronicballast standard on ballast manufacturer

- suppliers. This analysis included a quantitative evaluation ofmanufacturer cashflows andjobs. Intotal, 30 firms

were invited to participate in interviews. Seventeen ofthese suppliers served magnetic ballast production, eleven electronic ballast production, and six servedboth magnetic and electronic markets. Nineteen organizations that serve magneticballast applications participated ininterviews. Eight organizationsthat serve electronic ballast applications participated in interviews. Intotal, nine planttours

wereheld, five ofwhich were at suppliers ofmagnetic products and four ofwhich weretours ofelectronic supplier plants. The analysis demonstrated that the organizations interviewed proVided a representative group ofsupplier industries, which we used to evaluate the impacts on supplier industries as a whole.

Additionally wevisited one lamp manufacturer's fluorescent lamp plant and interviewed plant and corporate representatives. The Department decidedto gather and analyze information onmanufacturer impacts from other lamp manufacturers as well, and an analysis ofthis information is presented in Section V.

NEMA commented that the manufacturerimpacts reported for a standard thatbegan in the year 2003

weretoo severe and that standards that produced suchimpacts could not be economicallyjustified. (NEMA, No. 85). NEMA, as a part oftheJoint Comment, commented that their proposed staggered implementation dates mitigate such adverse impacts. (Joint Comment, No. 91 at 7).

StandardsProposals

NEMA described new market data on ballasts, as well as percentage oflamps driven by magnetic and electronic ballasts. This shows that electronic ballast penetration ofthetotal commercial and industrial lighting markethas increasedto 55 percent of total ballast shipments in 1998. Electronic ballast market penetration has increased from 44 percentto 62 percent in 1998, when measured by the

more relevant criteria ofthe number of lamps operated. For ballasts used only in commercial and industrial new construction, renovations andretrofits in 1998, electronic ballast penetration has increased to 63 percent, measured by ballast shipments, and to 70 percent measured by the number oflamps operated. (NEMA, No. 50 at 26 and Attachment BandNEMA, No. 85 at 44). ACEEE agreed with NEMA that the percentage oflamps ballasted electronicallyis the most important figure; however, the growth rate during 1993-1995 of9 percent was larger than the growth rate of2.8 percent from 1995
to 1998, supportingthe "Decreasing Shipmentsto 2027" base case. (ACEEE, No. 77 at 9-10). Oregon Office ofEnergy notedthat the magnetic ballast shipments increased in 1997 and remained stable in 1998, casting doubt

on the base case scenarios that show steady decline ofmagneticballasts (Oregon, No. 81 at 5 and 7). The CEC also statedthat a national standard would complementCalifornia's Title 24 building code policiesby ensuringthat savings are realized inretrofit applications as well as new construction. (CEC, No. 82 at 1).

Additionally, the Department received comments from the Vermont Residential Energy Efficiency Program, Conservation and Renewable Energy Systems, Broward County Florida, Alto Manufacturing Company, Rocky Mountain Chapter ofthe Sierra Club, State ofVermont, California Energy Commission, Northeast Energy Efficiency Partnerships, Pacific Gas and Electric, Northwest Energy Efficiency Alliance, Sacramento Municipal Utility District, Boston Edison, Eastern Utilities, Green Mountain Power, New YorkPowerAuthority, Eugene Water and Electric Board and 35 private citizens urging the Department to establish standards requiring electronic ballasts citing the delay in promUlgating this rulemaking, the phasing out of utility incentive programs for ballasts, the energy savings and environmental and economic benefits.

In commenting on the possibility ofa market shift, Osram Sylvania (OSI) proposed thatthe Department separately consider each ofthe three major ballast market segments: OEM (fixtures for new construction/renovation), Retrofit (early replacement ofsystems) and Replacement (existing ballast replacement at failure). The first two markets are appropriate for electronic T8 systems, while thethird has existing reduced-wattage lamps that are incompatible with electronic ballasts.

OS! commented that 34-Watt lamps

are incompatible with electronicballasts because oftheir conductive coating that facilitates starting with magnetic ballasts. It stated that technical solutions were possiblebut impractical: "Smart"ballasts that overcome the problem for the 34-Watt lamp would not be compatible with 40-Watt high CRI lamps that meet the EPACT lamp standards and would be expensive; design of34-Watt lamps without the conductive coating would be expensive; controllingthe resistance ofthe conductive coating to allow compatibility withbothballasttypes wouldbe unreliable over the range of lamps and over their normal lives, since the coating varies widely for any manufacturer and between manufacturers. The expenditure of

resources by lamp manufacturers to design a lamp to meetthis need would promote an obsolete system when the market shouldbe moving toward T8 systems. OSl also statedthatthe lamp industry has the capacity to handle a markettransition from a mixture ofT12
to T8 lampstoward T8 lamps over a 3- yearperiod, but would require a multimillion dollar capital investment and additional time to handle a more widespread transition for all market
sectors. (OSl, No. 34 at 2-5).Federal Register/ Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14141

A rapid shift to electronic ballasts would require lamp companies to make special adjustments to the lamps, orwould drive end-users to purchase fullwattage T12 lamps. (OSI, No. 34 at 2 and OSI, No. 84 at 1). OSI recommended that BEFs be developed for 4-foot and 8- foot systems that disallow magnetic and cathode cutout ballasts (with several exemptions listed below) and that a standard with these BEFs be applied to OEM and retrofit ballasts 3 years after the standards publication date. Application of the standard BEFs to the replacement market would be delayed for 5 years beyond the effective date (a total of 8 years from publication), allowing development of retrofit incentive programs for building owners and allowing lamp manufacturers greater transition time for T8 lamp manufacture. Proposed exemptions include residential luminaires for T8 or smaller diameter lamps, dimmingballasts, 8-foot High Output, lowtemperature, outdoor, magnetic ballasts, non-lighting applications, and ballasts with unresolved or unanticipated interference issues per application to the Department by a manufacturer or trade association. (OSI, No. 34 at 1-3). Five comments supported the proposal by OSI to varying degrees. (Motorola Lighting Inc (MLI), No.. 33 at 1-2, Holophane, No. 39 at 1-2, Lightolier, No. 40 at 1, and ASE No. 41 at 3, and Peerless Lighting, No. 52 at 1- 3).Motorola supported the proposal by OSI and recommended the application of new BEFs to the OEM and retrofit market at the earliest possible date. (MLI, No. 33 at 1). Motorola agreed with delaying the application of BEFs to the replacement market, but recommended a delay of two years rather than five years from the effective date. Further, it urged that BEFs for T8 magnetic ballasts be developed, and that all of the BEF levels be achievable by major ballast manufacturers. (MLI, No. 33 at 2). Holophane supported the OSI proposal, particularly the approach recognizing systems rather than components. It proposed that exemptions include dimming ballasts, 8-foot High Output outdoor ballasts, and special ballasts addressing interference issues. The luminaire manufacturers will be able to incorporate electronic ballasts as long as the ballast manufacturers can meet the demand; the only impact on their market will be the adjustment of lighting levels from fixtures with the new systems. Holophane recommended a delay of application of BEFs for the replacement market for "a reasonable period of time." (Holophane, No. 39 at 1). Lightolier noted that 80 percent of its fixtures use electronic ballasts for T8 or T5 lamps; of the remainder, intended for the distributor/contractor market, less than half use electronic ballasts. Lightolier recommended that the Department give serious consideration to the OSI proposal. (Lightolier, No. 40 at 1). Peerless agreed with the analysis of the two market segments, stated that disallowing magnetic ballasts would have short-term repercussion including the development of T12 electronic ballasts for a short-term market, and that a delay period would allow the lamp manufacturing industry to adjust to the increased T8 market. (Peerless, No. 53 at 1-3). ASE urged that the analysis consider the separate effects on the 3 different market channels, andsupported OSI's proposal for a timelimited exemption for replacement ballasts if such an approach is administratively feasible. (ASE, No. 41 at 2-3). The Department decided to analyze the five and two year delay standards proposal suggested above. The description and results of this analysis are shown in section V of this notice. The Joint Comment presented the Department with a proposal for segmenting the market and extending the implementation dates to mitigate the burdens to acceptable levels while maintaining most of the benefits of standards. For example, the phase-in period for the standards proposed in the Joint Comment is approximately five years, until April 1, 2005. This allows the manufacturers and the marketplace additional time to make an orderly transition from energy efficient magnetic ballasts to the more efficient ballasts that would be required if today's proposal were adopted. In addition, the joint Comment proposed an additional five-year phase in for standards for ballasts intended for replacement market. While it is generally impossible to distinguish a ballast for the replacement market from one used in new construction or renovation, the Joint Comment recommends that replacement ballasts be labeled for replacement use, have output leads which, when fully extended, are less than the length of the lamp it is intended to operate and they are shipped in packages of ten or less. DOE agrees replacement ballasts, as proposed by the joint Comment would not likely be used other than to replace an existing ballast. In addition to the above, the joint Comment also proposed limiting the exemptions relative to the extant standards. For example, the standards found in the National Appliance Energy Conservation Amendments of 1988 provided exemptions for cold temperature and dimming ballasts. The Joint Comment proposed limiting the exemption for cold temperature ballasts to those capable of being dimmed to 50 percent or less of its maximum output and the cold temperature ballast exemption would be limited to ballasts for use with two F96T12HO lamps at an ambient temperature of -20°F and which is for use with outdoor signs. The recommended changes to the dimming and cold temperature exemptions will result in the standards being applied to products previously not subject to the standards. The standard for two F96T12HO lamps has not been modified, however, since it would apply to more products, the changes proposed by the joint Comment will result in higher energy savings for this product class than if the standards were raised, but applied with the extant exemption. (Joint Comment, No. 91 at 5).
V. Analytical Results
a. Efficiency Levels Analyzed The Department utilized two base case forecasts of shipments of magnetic ballasts without standards as follows:
Base Case: Decreasing Shipments to 2015 (5 percent reduction)
In this base case, we assumed magnetic ballast shipments after 1997 decrease at the rate at which most magnetic ballasts declined from 1993 through 1997, reaching a base level by 2015. This rate of decreasing magnetic ballasts shipments represents a reduction of approximately 5 percent per year relative to 1997 shipments. The base level represents 10 percent of the magnetic ballast shipments in 1997 for each ballast class, and is carried out to2030. This base case assumes that nonregulatory programs as well as market forces result in the same rate of transition to electronic ballasts as observed from 1993 through 1997.
Base Case: Decreasing Shipments to 2027 (3 percent reduction)

In this base case , we assumed magnetic ballast shipments decrease at a slower rate, reaching the same base level by 2027. This rate of decreasing magnetic ballasts shipments roughly represents a reduction of 3 percent per year relative to 1997 shipments. The base level represents 10 percent of the magnetic ballast shipments in 1997 for each ballast class, and is carried out to2030. This base case assumes that nonregulatory programs and market forces affect a slower rate of transition to electronic ballasts than observed in recent years. 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, ZOOO/Proposed Rules 

### 14141

A rapid shift to electronic ballasts would require lamp companies to make special adjustments to the lamps, or would drive end-users to purchase fullwattage T12 lamps. (OSI, No. 34 at 2 and OSI, No. 84 at 1). OSI recommended that BEFs be developed for 4-foot and 8- foot systems that disallow magnetic and cathode cutoutballasts (with several exemptions listed below) and that a standard with these BEFs be applied to OEM and retrofit ballasts 3 years after the standards publication date. Application ofthe standard BEFs to the replacement market would be delayed for 5years beyond the effective date (a total of8 years from publication), allowing development ofretrofit incentiveprograms for building owners and allowing lamp manufacturers greater transition time for T8 lamp manufacture. Proposed exemptions includeresidential luminaires for T8 or smaller diameter lamps, dimming ballasts, 8-foot High Output, lowtemperature, outdoor, magnetic ballasts, non-lighting applications, and ballasts with unresolved or unanticipated interference issues per application to the Departmentby a manufacturer or trade association. (OSI, No. 34 at 1-3).

Five comments supported the proposal by OSI to varying degrees. (Motorola Lighting Inc (MLI), No. 33 at 1-2. Holophane, No. 39 at 1-2, Lightolier, No. 40 at 1, and ASE No. 41
at 3, and Peerless Lighting, No. 52 at 1- 3).

Motorola supportedthe proposal by OS! and recommended the application ofnew BEFs to the OEM and retrofit market at the earliest possible date. (ML!, No. 33 at 1). Motorola agreed with delaying the application ofBEFs to the replacement market, but recommended

a delay oftwo years rather than five years from the effective date. Further, it urged that BEFs for T8 magnetic ballasts be developed. andthat all ofthe BEF levels be achievable by majorballast manufacturers. (MLI, No. 33 at 2). Holophane supportedthe OSI proposal, particularly the approach recognizing systems rather than components. It proposedthat exemptions include dimmingballasts, 8-foot High Output outdoorballasts, and special ballasts addressing interference issues. The luminaire manufacturers will be able to incorporate electronic ballasts as long as theballast manufacturers can meetthe demand; the only impact on their market will be the adjustment of lighting levels from fixtures with the

new systems. Holophane recommended

a delay ofapplication ofBEFs for the replacement market for "areasonable period oftime." (Holophane, No. 39 at 1). Lightolier noted that 80 percent ofits fixtures use electronicballasts for T8 or T51amps; ofthe remainder, intended for the distributor/contractor market, less than halfuse electronic ballasts. Lightolierrecommendedthatthe Departmentgive serious consideration
to the OS! proposal. (Lightolier, No. 40
at 1). Peerless agreed with the analysis ofthe two market segments, stated that disallowing magnetic ballasts would have short-term repercussion including the development ofT12 electronic ballasts for a short-term market, and that

a delay period would allow the lamp manufacturing industry to adjust to the increased T8 market. (Peerless. No. 53 at 1-3). ASE urged that the analysis consider the separate effects on the 3 different market channels, and supported OS1's proposal for a timelimited exemption for replacement ballasts ifsuch an approach is administratively feasible. (ASE, No. 41
at 2-3).

The Department decided to analyze the five andtwo year delay standards proposal suggested above. The description andresults ofthis analysis

are shown in section V ofthis notice.

The Joint Comment presented the Department with a proposal for segmenting the market and extending the implementation dates to mitigate the burdens to acceptable levels while maintaining most ofthe benefits of standards. For example, the phase-in period for the standards proposed in the Joint Comment is approximately five years, until April 1, 2005. This allows the manufacturers and the marketplace additional time to make an orderly transition from energy efficient magnetic ballasts to the more efficient ballasts that wouldbe required if today's proposal were adopted. In addition, the Joint Comment proposed

an additional five-year phase in for standards for ballasts intended for replacement market. While it is generally impossible to distinguish a ballast for the replacement market from

one used in new construction or renovation, theJoint Comment recommends that replacementballasts be labeled for replacementuse, have output leads which, when fully extended, are less than the length ofthe lamp it is intendedto operate and they

are shipped in packages often or less. DOE agrees replacementballasts, as proposed bytheJoint Comment would
not likely be used otherthan to replace

an existingballast. In addition to the above, the Joint Comment also proposed limiting the exemptions relative to the
extant standards. For example, the standards found inthe National ApplianceEnergy Conservation Amendments of 1988 provided exemptions for cold temperature and dimmingballasts. TheJoint Comment proposed limiting the exemption for cold temperatureballasts to those capable ofbeing dimmed to 50 percent

or less ofits maximum output and the cold temperature ballast exemption would be limited to ballasts for use vvith
two F96T12HO lamps at an ambient temperature of

- 20°F and which is for

use with outdoor signs. The recommended changes to the dimming and cold temperature exemptions will result in the standards being applied to products previously not subject to the standards. The standard for two F96T12HO lamps has not been modified, however, since itwould apply
to moreproducts, the changes proposed by the Joint Commentwill result in higher energy savings for this product class than ifthe standards were raised, but applied with the extant exemption. (Joint Comment, No. 91 at 5).



### V. Analytical Results

a. 

### EfficiencyLevelsAnalyzed

The Department utilized two base

case forecasts ofshipments ofmagnetic ballasts without standards as follows:

Base Case: Decreasing Shipments to 2015 (5 percentreduction)

In this base case, we assumed magnetic ballast shipments after 1997 decrease at the rate at which most magnetic ballasts declined from 1993 through 1997, reaching a base level by 2015. This rate ofdecreasing magnetic ballasts shipments represents a reduction ofapproximately 5 percent per year relative to 1997 shipments. The base level represents 10 percent ofthe magnetic ballast shipments in 1997 for each ballast class, and is carried out to 2030. This base case assumes that nonregulatory programs as well as market forces result in the same rate of transition to electronic ballasts as observed from 1993 through 1997.

Base Case: Decreasing Shipments to 2027 (3 percentreduction)

In this base case, we assumed magneticballast shipments decrease at

a slowerrate, reaching the samebase level by 2027. This rate ofdecreasing magnetic ballasts shipmentsroughly represents a reduction of3 percent per year relative to 1997 shipments. The base level represents 10 percent ofthe magneticballast shipments in 1997 for each ballast class, and is carried out to 2030. This base case assumes that nonregulatory programs and market forces affect a slowerrate. oftransition to electronic ballasts than observed in
recentyears.14142 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

The Department also analyzed the impact of two trial standard levels; one was for electronic ballasts and the other for cathode cutout ballasts.

Electronic Ballast Standards Scenarios
We also evaluated the following scenarios to capture the range of national impacts from likely consumer choices (scenarios 1 and 2) and to evaluate suggested implementation schemes presented in comments (scenarios 3 and 4) for electronic ballast standards: Scenario 1. This scenario assumes that 100 percent of magnetic T12 ballasts are converted to electronic T12 ballasts. This scenario is intended to model the impacts of minimal compliance with the standard in regard to commercial and industrial consumer choice. Scenario 2. This scenario assumes that all magnetic T12 ballasts are converted to electronic ballasts, with 5 percent becoming T12 ballasts and 95 percent becoming T8 ERS ballasts. This scenario is intended to model the trends in the current market where nearly all (95 percent) of electronic ballasts purchased from 1993-1997 have been T8 ballasts. Scenario 3. This scenario assumes that the new/renovation luminaire market segment converts all magnetic T12 ballasts to electronic T8 ballasts starting on the effective date. We assume that this segment comprises 70 percent of the total magnetic T12 ballast market, based on the current luminaire market. The remaining 30 percent assumed replacement market has an additional delay of 5 years, after which these ballasts are converted to electronic ballasts, with 5 percent becoming T12 ballasts and 95 percent becoming T8 ballasts. This scenario allows a differing impact of the standards on these two market segments by providing an additional adjustment period for the replacement market for users in existing buildings and on lamp manufacturers to prepare for the new ballast type and market shift. Scenario 4. This scenario has identical assumptions to scenario 3, except that the additional delay period for the replacement market is 2 years. We compared each of the above four standard level forecasts with that of the two different base cases . We denoted forecasts under the "Decreasing Shipments to 2015" base case as scenarios 1A, 2A, 3A, and 4A. We called forecasts runs with the "Decreasing Shipments to 2027" base case scenarios 1B, 2B, 3B, and 4B.

Cathode Cutout Trial Standards
For cathode cutout standards, we also evaluated the following scenarios to capture the range of national impacts from likely consumer choices for a possible cathode cutout standard: Scenario 5. This scenario assumes that 100 percent of magnetic T12 ballasts are converted to cathode cutout T12 ballasts. The exception is the F96T12 ballast class, for which there is no cathode cutout option. These ballasts are assumed to remain as magnetic ballasts under the standards. This scenario is intended to model the impacts of minimal compliance with the standard in regard to commercial and industrial consumer choice. Scenario 6. This scenario assumes that the 30 percent replacement market T12 ballasts are converted to cathode cutout T12 ballasts, and the 70 percent new/renovation market T12 ballasts are converted to electronic ballasts, with 5 percent of the electronic ballasts becoming T12 ballasts and 95 percent becoming T8 ballasts. We denoted forecasts run with the Decreasing Shipments to 2015 base case as 5A and 6A. We called forecasts run with the Decreasing Shipments to 2027 base case Scenario 5B and 6B. joint Comment

In addition, we evaluated two scenarios based on the standards recommended by the joint Comment: Decreasing magnetic ballast shipments to 2015 and decreasing magnetic ballast shipments to 2027. In evaluating the joint comment proposal, the Department also used a third shipment scenario (flat magnetic ballast shipment forecast) as the upper bound as described in Appendix E of the TSD.
b. Significance of Energy Savings
To estimate the energy savings through the year 2030 due to revised standards, we compared the energy consumption of ballasts under the base case to the energy consumption of ballasts complying with the standard. As discussed above, there are eight electronic ballast standards scenarios and four cathode cutout standards scenarios. The results presented in Tables V.1a and V.1b use the AEO Reference Case forecast. (The TSD shows the results for the AEO High and Low cases, with total benefits respectively higher and lower than those for the Reference Case.) The tables show the energy savings for each of the standards scenarios.

TABLE V.1A.-ENERGY SAVINGS FROM ELECTRONIC STANDARDS

Electronic standards for units sold from 2003 to 2030

Scan 1A Scen 1B Scen 2A Scen 2B Scen 3A Scen 3B Scen 4A Scen 4B Scenario T12 T12 T12178 T121T8 pecr2015 Decr2027 Decr2015 Decr2027

Decr2015 Decr2027 Decr2015 Decr2027

Total Quads Saved

........ 1.01 1

.79 1.66 2

.93 1.43 2

.66 1.57 2.84 Total Quads Saved w/ HVAC .......................... 1.08 1

.9 1.76 3

. 12 1.52 2.82 1

.67 3.02

TABLE V. 1 B.-ENERGY SAVINGS FROM CATHODE CUTOUT STANDARDS

Cathode cutout standards for units sold from 2003 to 2030

Scen 5A Scen 5B Scen 6A Scen 6B Scenario 100% CC 100% CC 37% CC 37% CC Decr2015 Decr2027 Decr2015 Decr2027

Total Quads Saved

.......................................................................................... 0.48 0.85 1.12 1.98 Total Quads Saved w/HVAC

........................................................................... 0.51 0

.91 1.19 2.11 

### 14142 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

The Department also analyzed the impact oftwo trial standard levels; one
was for electronicballasts andthe other for cathode cutoutballasts.

Electronic Ballast Standards Scenarios

We also evaluatedthe following scenarios to capture therange of national impacts from likely consumer choices (scenarios 1 and 2) andto evaluate suggested implementation schemes presented in comments (scenarios 3 and 4) for electronic ballast standards:

Scenario 1. This scenario assumes that 100 percent ofmagnetic T12 ballasts are converted to electronic T12 ballasts. This scenario is intended to model the impacts ofminimal compliance with the standard in regard
to commercial and industrial consumer choice.

Scenario 2. This scenario assumes that all magnetic T12 ballasts are converted to electronic ballasts, with 5 percent becomingT12 ballasts and 95 percentbecoming T8 ERS ballasts. This scenario is intendedto model the trends in the current market where nearly all (95 percent) ofelectronic ballasts purchased from 1993-1997 have been T8 ballasts.

Scenario 3. This scenario assumes thatthe new/renovation luminaire market segment converts all magnetic T12 ballasts to electronicT8 ballasts starting on the effective date. We

assume thatthis segment comprises 70 percent ofthe total magnetic T12 ballast market, based on the current luminaire market. Theremaining 30 percent assumed replacement market has an additional delay of5 years, after which these ballasts are converted to electronic ballasts, with 5 percent becomingT12 ballasts and 95 percent becomingT8 ballasts. This scenario allows a differing impact ofthe standards on these two market segments by providing an additional adjustment period for the replacement market for users in existing buildings and on lamp manufacturers to prepare for the newballast type and market shift.

Scenario 4. This scenario has identical assumptions to scenario 3. exceptthat the additional delay period for the replacement market is 2years.

We compared each ofthe above four standard level forecasts with that ofthe
two different base cases. We denoted forecasts underthe "Decreasing Shipmentsto 2015"base case as scenarios lA, 2A, 3A, and 4A. We called forecasts runs withthe "Decreasing Shipmentsto 2027" base case scenarios IB, 2B, 3B, and 4B.

Cathode Cutout Trial Standards

For cathode cutout standards. we also evalua.ted the following scenarios to capture the range ofnational impacts from likely consumer choices for a possible cathode cutout standard:

Scenario 5. This scenario assumes that 100 percent ofmagnetic T12 ballasts are converted to cathode cutout T12 ballasts. The exception is the F96T12 ballast class, for which there is

no cathode cutout option. These ballasts

are assumed to remain as magnetic ballasts under the standards. This scenario is intended to model the impacts ofminimal compliance with the standard inregard to commercial and industrial consumer choice.

Scenario 6. This scenario assumes that the 30 percent replacement market T12 ballasts are converted to cathode cutout T12 ballasts, and the 70 percent new/renovation market T12 ballasts are converted to electronicballasts, with 5 percent ofthe electronicballasts becoming T12 ballasts and 95 percent becomingT8 ballasts.

We denoted forecasts run withthe Decreasing Shipments to 2015 base case

as 5A and 6A. We called forecasts run with the Decreasing Shipments to 2027 base case Scenario 5B and 6B.

Joint Comment

In addition, we evaluated two scenariosbased on the standards recommendedby theJoint Comment: Decreasing magneticballast shipments
to 2015 and decreasing magneticballast shipments to 2027. Inevaluating the jointcommentproposal. the Department also used a third shipment scenario (flat magnetic ballast shipment forecast) as the upperbound as described in Appendix E ofthe TSD.



### b. Significance of Energy Savings

To estimate the energy savings through the year 2030 due to revised standards, we compared the energy consumption ofballasts under the base

case to the energy consumption of ballasts complying with the standard. As discussed above, there are eight electronic ballast standards scenarios and four cathode cutout standards scenarios.

The results presentedin Tables V.la and V.lb use the AEO Reference Case forecast. (The TSD shows the results for the AEO High and Low cases, with total benefits respectively higher and lower than those for the Reference Case.) The tables showthe energy savings for each ofthe standards scenarios.

TABLE V.1A.-ENERGY SAVINGS FROM ELECTRONIC STANDARDS

Seenario

Total Quads Saved

........ Total Quads Saved wI

HVAC

.......................... Electronic standards for units sold from 2003 to 2030

Seen 1A Seen 1B Seen 2A Seen 2B Seen 3A Seen 3B

T12 T12 T121T8 T121T8 Decr2015 Decr2027 Decr2015 Decr2027 Decr2015 Decr2027

1.01 1.79 1.66 2.93 1.43 2.66

1.08 1.9 1.76 3.12 1.52 2.82

TABLE V.1B.-ENERGY SAVINGS FROM CATHODE CUTOUT STANDARDS

Seenario Cathode cutout standards for units sold from 2003 to 2030

Seen 5A 100% CC Decr2015 Seen 5B 100% CC Decr2027

Total Quads Saved

.......................................................................................... 0.48 0.51 0.85 0.91 Total Quads Saved w/HVAC

.....:

..................................................................... Seen 4A Decr2015

Seen 6A 37% CC Decr2015 1.57

1.67

1.12 1.19 Seen 4B Decr2027

2.84

3.02

Seen 6B 37% CC Decr2027

1.98 2.11Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules 14143

The Department finds that each of the standards scenarios considered above would result in a significant conservation of energy. Energy savings from the electronic ballast standards scenarios range from 1.01 Quads to 2.93 Quads of source energy without considering HVAC savings. The energy savings are larger for the slower decreasing shipments forecast to 2027 compared to those with the faster decreasing shipments forecast to 2015. Energy savings for scenario 2 with T8 electronic ballasts are almost 65 percent greater than those for scenario 1 with T12 electronic ballasts. For scenario 3, the five-year phase-in period causes a savings reduction of around 10 to 15 percent from that of scenario 2. For scenario 4, the 2-year phase-in period results in a savings reduction of about 5 percent from scenario 2. For the cathode cutout standards scenarios, energy savings range from 0.48 Quads to 1.98 Quads without considering HVAC savings. The scenario 6 savings from partial conversion to electronic ballasts are about 2.3 times higher than those of scenario 5. The additional HVAC savings increase the total energy savings for all levels by 6.25 percent. In Table V.2, we present the energy savings of the joint Comment. The results use the AEO Reference Case forecast with the energy savings from 2005 to 2030. The energy savings of the Joint Comment range from 1.20 Quads to 2.32 Quads without considering HVAC savings.

TABLE V.2.-ENERGY SAVINGS, RESULTING FROM JOINT COMMENT

Energy savings, resulting from joint comment

, for units sold from 2005 to 2030

Scenario Dec 2015 Dec 2027

Total Quads Saved

.................................................................................................................................................. 1.20 2.32 Total Quads Saved w/ HVAC .................................................................................................................................. 1.27 2.46

c. Payback Period

The Act requires the Department to examine payback periods to determine if the three year rebuttable presumption of economic justification applies. In Table V.3, we list the median payback energy varies little between the two periods for product classes and design years (2003 and 2005), we believe the options. While we did not analyze the paybacks shown below are effect of a two-year delay in the effective representative of a 2005-effective date of the comments as found in the standard as well. Joint Comment, because the cost of

TABLE V. 3.-SUMMARY OF PAYBACK PERIOD

Product class Design option Sector Median payback (yrs)

1F40 ....................................................................... T12 CC ......................... .... Commercial

........................................ 24.8 T12 ERS ............................................ Commercial

........................................ 6.4 2F40

....................................................................... T12 CC

............................................... Commercial

........................................ 10.7 T12 ERS ............................................ Commercial

........................................ 5.4 3F40 ....................................................................... T12 CC

............................................... Commercial ........................................ 9.9 Tandem-Wired

........................................................ T12 ERS ............................................ Commercial

........................................ 6.4 3F40 ....................................................................... T12 CC ............................................... Commercial

........................................ 11.5 Not Tandem

-Wired

................................................. T12 ERS

............................................ Commercial

........................................ 3.3 4F40 ....................................................................... T12 CC ............................................... Commercial

........................................ 9.3 T12 ERS

............................................ Commercial

........................................ 4.8 2F96

....................................................................... T12 EIS .............................................. Commercial

........................................ 5.9 T12 EIS .............................................. Industrial

............................................. 8.8 2F96HO .................................................................. T12 CC ............................................... Commercial ........................................ 2.1
T12 ERS

............................................ Commercial

........................................ 2.4 T12 CC ............................................... Industrial

............................................. 5.4 T12 ERS

............................................ Industrial

............................................. 3.1



### d. Economic Justification

1. Economic Impact on Manufacturers and Consumers

We performed a Manufacturer Impact Analysis (MIA) to determine the impact of standards on manufacturers. The complete analysis is Chapter 6 of the TSD. In general, manufacturers of "affected" magnetic ballasts and their suppliers would be negatively impacted. Also, most ballast manufacturers reported that they would add additional electronic ballast capacity to meet a new standard. None of the manufacturers stated that they would leave the industry or go out of business as a result of an electronic ballast standard. Commercial and industrial consumers will also be affected by increased ballast standards in that they will experience higher purchase prices for ballasts and lower operating costs for lighting systems. These impacts are best captured by changes in life cycle costs which are discussed in section V.d.2.
Ballast Manufacturer Analysis In conducting the analysis, we conducted detailed interviews with seven ballast manufacturers that together supply more than 95 percent of the domestic magnetic and electronic ballast markets. The interviews provided valuable information used to evaluate the impacts of a new standard on manufacturers' cash flows, manufacturing capacities and employment levels. The MIA was performed on a company-by-company basis. We elected to group manufacturers exhibiting similar product mix characteristics, as this represents the most comprehensive way of reporting the variation of impacts on different manufacturers while ensuring the confidentiality of individual manufacturers' positions. Based on Federal Register

### IVoI. 65, No. 51

### IWednesday, March 15, 

### 2000/Proposed Rules 

### 14143

The Department finds that each ofthe standards scenarios considered above would result in a significant conservation ofenergy. Energy savings from the electronicballast standards scenarios range from 1.01 Quads to 2.93 Quads ofsource energy without considering HVAC savings. The energy savings are larger for the slower decreasing shipments forecast to 2027 compared to those withthe faster decreasing shipments forecast to 2015. Energy savings for scenario 2 with T8 electronic ballasts are almost 65 percent greater than those for scenario 1 with T12 electronic ballasts. For scenario 3, the five-year phase-in period causes a savings reduction ofaround 10 to 15 percent from that ofscenario 2. For scenario 4, the 2-year phase-in period results in a savings reduction ofabout 5 percent from scenario 2. Forthe cathode cutout standards scenarios, energy savings range from 0.48 Quads to 1.98 Quads without considering HVAC savings. The scenario 6 savings from partial conversion to electronicballasts

are about 2.3 times higherthan those of scenario 5. The additional HVAC savings increasethe total energy savings for all levels by 6.25 percent.

InTable V.2, we presentthe energy savings ofthe Joint Comment. The results use the AEO Reference Case forecast with the energy savings from 2005 to 2030. The energy savings ofthe Joint Comment range from 1.20 Quads
to 2.32 Quads without considering HVAC savings.

TABLE V.2.-ENERGY SAVINGS, RESULTING FROM JOINT COMMENT

Energy savings, resulting from joint comment, for units sold from 2005 to 2030

Scenario Dec 2015 Dec 2027

Total Quads Saved

.................................................................................................................................................. 1.20 1.27 2.32 2.46 Total Quads Saved wI HVAC

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



### c. Payback Period

The Act requires the Department to examine payback periods to determine ifthe three year rebuttable presumption ofeconomicjustification applies. In Table V.3, we list the median payback periods for product classes and design options. While we did not analyze the effect ofa two-year delay in the effective date ofthe comments as found in the Joint Comment, because the cost of energy varies littlebetween the two years (2003 and 2005), we believe the
pay backs shownbelow are representative ofa 2005-effective standard as well.

TABLE V.3.-SUMMARY OF PAYBACK PERIOD

1F40

2F40

3F40 Product class Design option

T12 CC

............................................... T12 ERS

............................................ T12 CC

............................................... T12 ERS

............................................ T12 CC

............................................... Sector

Commercial

........................................ Commercial

........................................ Commercial

........................................ Commercial

........................................ Commercial

........................................ Median payback

(yrs)

24.8

6.4

Tandem-Wired

.,...................................................... T12 ERS

............................................ Commercial

........................................ 10.7 5.4 9.9 6.4 3F40

....................................................................... T12 CC

............................................... Commercial

........................................ 11.5 3.3 9.3 4.8 5.9 8.8 2.1 2.4 5.4 3.1 Not Tandem-Wired

................................................. T12 ERS

............................................ Commercial

........................................ 4F40

....................................................................... T12 CC

............................................... Commercial

........................................ T12 ERS

............................................ Commercial

........................................ 2F96

....................................................................... T12 EIS

.............................................. Commercial

........................................ T12 EIS

.............................................. Industrial

............................................. 2F96HO

.................................................................. T12 CC

............................................... Commercial

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



### d. EconomicJustification

1. Economic Impact on Manufacturers and Consumers

We performed a Manufacturer Impact Analysis (MIA) to determine the impact ofstandards on manufacturers. The complete analysis is Chapter 6 ofthe TSD. Ingeneral, manufacturers of "affected" magnetic ballasts and their suppliers wouldbe negatively impacted. Also, mostballast manufacturers reported thatthey would add additional electronic ballast capacity to meet a new standard. None ofthe manufacturers statedthat they would leave the T12 ERS

............................................ Commercial

........................................ T12 CC

............................................... Industrial

............................................. T12 ERS

............................................ Industrial

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

industry or go out ofbusiness as a result ofan electronicballast standard. Commercial and industrial consumers will alsobe affected by increased ballast standards in thatthey will experience higher purchase prices for ballasts and lower operating costs for lighting systems. These impacts are best capturedby changes in life cycle costs which are discussed in sectionV.d.2.


### BallastManufacturerAnalysis

Inconducting the analysis, we conducted detailed interviews with

sevenballast manufacturers that together supply more than 95 percent of the domestic magnetic and electronic ballast markets. The interviews provided valuable information used to evaluate the impacts ofa new standard

on manufacturers' cash flows, manufacturing capacities and employment levels. The MIA was performed on a company-by-company basis. We elected to group manufacturers exhibiting similar product mix characteristics, as this represents the most comprehensive way ofreporting the variation ofimpacts on different manufacturers while ensuring the confidentiality ofindividual manufacturers' positions. Based on14144 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

information obtained from manufacturer interviews , we divided the manufacturers into two sub-groups:

TABLE V.4.-BALLAST MANUFACTURER

Sub-group 1 Manufacturers of both magnetic and electronic ballasts

Advance Transformer Company MagneTek, Inc. Robertson Worldwide SLi Lighting/PowerLighting Products

Impacts on the entire industry were obtained by aggregating the impacts on the two sub-groups.
Impacts on Ballast Manufacturer Cash Flows

As summarized, four cash flows were calculated for each shipment forecast. Manufacturers worked with us to develop their most likely cash flow impacts for both the 2015 and 2027 Industry shipment scenarios. These cash flows are identified by the name "Manufacturer Submittal." In developing cash flow estimates under the Manufacturer Submittal scenario it is assumed that manufacturers retain their 1997 shares of the electronic market in the new electronic market. The "Electronic Ballast New Entrant" scenario was devised in order to capture the likely cash flow impacts resulting from the redistribution of market shares among the existing manufacturers as a new entrant gains a 15 percent market share of the new electronic market. A "Magnetic Ballast New Entrant" Scenario was also developed to analyze the potential impact of a new entrant(s) in the magnetic ballast industry. This scenario captures possible cash flow impacts resulting from the redistribution of market shares among the existing manufacturers as a new entrant gains a 15 percent share of the magnetic ballast market. Finally, in order to evaluate how assumptions concerning future market dynamics Sufi-group 2 Manufacturers that produce only electronic ballasts

Howard Industries. Motorola Lighting, Inc. Osram Sylvania Products Inc.

contributed to the impacts reported in the Manufacturer Submittal scenario, we prepared a separate cash flow that

assumes no change in magnetic and electronic ballast profit margins before and after standard: the "Existing Dynamics" scenario . The four scenarios are summarized below: Manufacturer Submittal: Cash flows and net present value (NPV) were calculated using manufacturer prices, manufacturing costs, operating margins, capital investment estimates, and other financial parameters as provided by the individual manufacturers. This scenario reflects each manufacturer's expectation of its "most likely" future profitability under new standards with the constraint that it assumes that its electronic ballast market share remains at the 1997 level. Electronic Ballast New Entrant: This scenario assumes that one or more new entrants will capture 15 percent of the new electronic ballast market. Manufacturer market shares in the 1997 electronic market are redistributed to accommodate the new market entrant(s). Magnetic Ballast New Entrant: This scenario assumes that one or more new entrants will capture 15 percent of the magnetic ballast market beginning in the year 2000, both in the Base Case and the Standards Case. This assumption is supported by the fact that a few of the existing electronic ballast manufacturers have publicly announced plans to manufacture and/or source magnetic ballasts in the U.S., irrespective of a DOE standard. Existing manufacturer market shares in the 1997 magnetic ballast market are redistributed to accommodate the new market entrant(s). Furthermore, this scenario assumes that the new entrant(s) will result in increased competition, which will reduce the profitability of the magnetic ballast business from its current levels to those seen in the more competitiveelectronic ballast business poststandards. Existing Dynamics: This scenario assumes that there will be no change in competitive dynamics when an electronic ballast standard comes into effect, and hence electronic ballast manufacturer market shares and profit margins in the case of a standard will remain similar to their values in the absence of a standard.
Tables V.5 and V.6 summarize the financial impacts for the four scenarios under the two base case forecasts of shipments. The impacts reported are the change in NPV and this change as a percentage of the industry value represented by the cash flow generated by all (magnetic and electronic) ballast shipments in the regulated product classes. Note that for the industry results, the Electronic Ballast New Entrant scenario is the same as the Manufacturer Submittal scenario because the new entrant(s) cash flow was modeled using shipment weighted average financial parameters of all existing electronic ballast manufacturers.

TABLE V.5.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2015 (5% DECLINE) SHIPMENT
SCENARIO

Scenarios Base case NPV ($mil) Standard case

NPV ($mil) Change in

NPV ($mil) Change in

NPV (%)

Cash flow impacts on business represented by all regulated product classes

- Magnetic and Electronic
Sub-group I (magnetic and electronic producers)

Manufacturer Submittal

.................................................................................... 288.9 198.9 -90.0 -31 Electronic Ballast

, New Entrant

....................................................................... 288.9 199.1 -89.8 -31 Magnetic Ballast

, New Entrant

........................................................................ 216.2 161.6 -54.6 -25 Existing Dynamics ........................................................................................... 288.9 219.0 -69.9 -24
Sub-group 2 (electronic only producers)

Manufacturer Submittal

.................................................................................... 131.7 152.0 20.3 15 Electronic Ballast, New Entrant

....................................................................... 131.7 145.8 14.1 I 11 

### 14144 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

information obtained from manufacturer interviews, we divided the manufacturers into two sub-groups:

TABLE VA.-BALLAST MANUFACTURER

Sub-group 1 SUO-group 2 Manufacturers of both magnetic and electronic ballasts Manufacturers that produce only electronic ballasts

Advance Transformer Company MagneTek, Inc. Howard Industries. Motorola Lighting, Inc. Robertson Worldwide Osram Sylvania Products Inc. SLi Lighting/PowerLighting Products

Impacts on the entire industry were obtained by aggregating the impacts on the two sub-groups

.. 

### Impacts on BallastManufacturer Cash Flows

As summarized, four cash flows were calculated for each shipment forecast. Manufacturers worked with us to develop theirmost likely cash flow impacts for both the 2015 and 2027 Industry shipment scenarios. These cash flows are identified by the name "Manufacturer Submittal." In developing cash flow estimates under the Manufacturer Submittal scenario it is assumed that manufacturers retain their 1997 shares ofthe electronic market in the new electronic market. The "Electronic Ballast New Entrant" scenario was devised in orderto capture the likely cash flow impacts resulting from the redistribution ofmarket shares among the existing manufacturers as a

new entrant gains a 15 percent market share ofthe new electronic market. A "Magnetic Ballast NewEntrant" Scenario was also developed to analyze the potential impa,ct ofa new entrant(s) inthe magnetic ballast industry. This scenario captures possible cash flow impacts resulting from the redistribution ofmarket shares among the existing manufacturers as a new entrant gains a 15 percent share ofthe magneticballast market. Finally, in order to evaluate how assumptions concerning future market dynamics contributed to the impacts reported in the Manufacturer Submittal scenario,

we prepared a separate cash flow that

assumes no change in magnetic and electronic ballast profit margins before and after standard: the "Existing Dynamics" scenario. The four scenarios

are summarizedbelow:



### Manufacturer Submittal: Cash flows and net present value (NPV) were calculated using manufacturer prices, manufacturing costs, operating margins, capital investment estimates, and other financial parameters as provided by the individual manufacturers. This scenario reflects each manufacturer's expectation ofits "most likely" future profitability undernew standards with the constraint that it assumes that its electronic ballast market share remains at the 1997 level.



### Electronic BallastNewEntrant: This scenario assumes that one or more new entrants will capture 15 percent ofthe

new electronicballast market. Manufacturer market shares in the 1997 electronic market are redistributed to accommodate the new market entrant(s).



### Magnetic BallastNewEntrant: This scenario assumes that one or more new entrants will capture 15 percent ofthe magneticballast market beginning inthe year 2000, both in the Base Case and the Standards Case, This assumption is supportedby the fact that a few ofthe existing electronic ballast manufacturers have publicly announcedplans to manufacture andlor source magnetic ballasts inthe U.S., irrespective ofa DOE standard. Existing manufacturer market shares in the 1997 magnetic ballast market are redistributed to accommodate the new market entrant(s). Furthermore, this scenario assumes that the new entrant(s) will result in increased competition, which will reduce the profitability ofthe magnetic ballast business from its current levels
to those seen in the more competitive electronic ballast business poststandards.



### ExistingDynamics: This scenario

assumes that there will be no change in competitive dynamics when an electronic ballast standard comes into effect, and hence electronic ballast manufacturer market shares and profit margins in the case ofa standard will remain similarto their values in the absence ofa standard.

Tables V,5 and V,6 summarize the financial impacts for the four scenarios underthe two base case forecasts of shipments. The impacts reported are the change in NPV and this change as a percentage ofthe industry value represented by the cash flow generated by all (magnetic and electronic) ballast shipments inthe regulated product classes. Note that for the industry results, the Electronic Ballast New Entrant scenario is the same as the Manufacturer Submittal scenario becausethe new entrant(s) cash flow

was modeled using shipment weighted average financial parameters ofall existing electronic ballast manufacturers.

TABLE V.5.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2015 (5% DECLINE) SHIPMENT SCENARIO

Scenarios Base case NPV ($mil) Standard case NPV ($mil) Change in NPV ($mil)

Cash flow impacts on business represented by all regulated product classes-Magnetic and Electronic
Sub-group 1 (magnetic and electronic producers)

Manufacturer Submittal

.................................................................................... Electronic Ballast, New Entrant

....................................................................... Magnetic Ballast. New Entrant

........................................................................ EXisting Dynamics

........................................................................................... 288.9 288.9 216.2 288.9
Sub-group 2 (electronic only producers)

Manufacturer Submittal

.................................................................................... Electronic Ballast, New Entrant

....................................................................... 131.7 131.7 198.9 -90.0 199.1 -89.8 161.6 -54.6 219.0 -69.9

152.0 20.3 145.8 14.1 I Change in NPV(%)

-31 -31 -25 -24

15 11Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14145

TABLE V.5.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2015 (5% DECLINE ) SHIPMENT
SCENARIO-Continued

Base case Standard case Change in Change in Scenarios NPV ($mil) NPV ($mil) NPV ($mil) NPV (%)

Magnetic Ballast

, New Entrant

........................................................................ 131.7 152.0 20.3 15 Existing Dynamics

........................................................................................... 131.7 141.0 9.3 7

Electronic Ballast New Entrant

Electronic Ballast, New Entrant ....................................................................... 0.0 6.0 6.0

Magnetic Ballast New Entrant

Magnetic Ballast, New Entrant ........................................................................ 4.5 2.0 -2.5 -55

Industry (Sub-group 1 + Sub

-group 2)

Manufacturer Submittal .................................................................................... Electronic Ballast, New Entrant ....................................................................... Magnetic Ballast, New Entrant ........................................................................ Existing Dynamics ........................................................................................... 420.6 420.6 352.4 420.6 350.9

350.9 315.6 359.9 -69.7

-69.7 -36.8 -60.7 -17

-17
-10
-14

TABLE V.6.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2027 (3% DECLINE) SHIPMENT
SCENARIO

Scenarios Base case NPV ($mil) Standard case

NPV ($mil) Change in

NPV ($mil) Change in

NPV(%)

Cash flow impacts on business represented by all regulated product classes

-Magnetic and Electronic

Sub-group 1 (magnetic and electronic producers)

Manufacturer Submittal .................................................................................... Electronic Ballast, New Entrant ....................................................................... Magnetic Ballast , New Entrant ........................................................................ Existing Dynamics ........................................................................................... 318.3 318.3 220.9 318.3 204.6

204.9 161.7 224.7 -113.7

-113.4 -59.2 -93.6 -36

-36 -27 -29

Sub-group 2 (electronic only producers)

Manufacturer Submittal .................................................................................... Electronic Ballast, New Entrant ....................................................................... Magnetic Ballast, New Entrant ........................................................................ Existing Dynamics ........................................................................................... 123.0 150.5 27.5 22 123.0 144.3 21.3 17 123.0 150.5 27.5 22 123.E 139.5 16.5 13

Electronic Ballast New Entrant

Electronic Ballast, New Entrant ....................................................................... 0.0 6.0 6.0

Magnetic Ballast New Entrant

Magnetic Ballast, New Entrant ........................................................................ 6.2 2.2 -4.0 -65

Industry (Sub-group I + Sub

-group 2)

Manufacturer Submittal .................................................................................... Electronic Ballast, New Entrant ....................................................................... Magnetic Ballast, New Entrant ........................................................................ Existing Dynamics ........................................................................................... 441.3 441.3 350.1 441.3 355.1

355.1 314.4 364.2 -86.2

-86.2 -35.7 -77.1 -20

-20
-10
-17

Uncertainty Analysis of Cash Flows
The NPV values presented in the above tables incorporate significant restructuring costs primarily associated with plant closures in the U.S. and Mexico. The large majority of these costs are directly associated with the closure of the remaining large U.S.- based ballast plant. In consideration of the past trend towards consolidation of magnetic ballast production to Mexico, a sensitivity analysis was conducted on the cash flows assuming that the restructuring costs associated with the plant closures would occur in the base case (in absence of standards). It was found that these costs contribute approximately $14 million to the negative impacts under all scenarios. A sensitivity analysis was also conducted to analyze the impact of certain business risks. Specifically, a scenario was developed whereby changes in market demand would cause magnetic ballast shipments to decline at twice the rate, i.e., 10 percent per year between 1999 and 2002, remain constant through 2005 and then continue declining at 5 percent per year 

### Federal Register/Vol. 65, No. 51/Wednesday. March 15, 2000/Proposed Rules 

### 14145

TABLE V.5.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2015 (5% DECLINE) SHIPMENT SCENARlo-Continued

Scenarios Base case Standard case Change in NPV ($mil) Change in NPV(%) NPV ($mil) NPV ($mil)

Magnetic Ballast, New Entrant

........................................................................ 131.7 152.0 20.3 9.3 15 7 Existing Dynamics

........................................................................................... 131.7 141.0

Electronic Ballast New Entrant

Electronic Ballast, New Entrant

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

# I 0.0 

# I

Magnetic Ballast New Entrant

Magnetic Ballast, New Entrant

........................................................................ 1 4.51

Industry (Sub-group 1 + Sub-group 2)

Manufacturer Submittal

.................................................................................... Electronic Ballast, New Entrant

....................................................................... Magnetic Ballast, New Entrant

........................................................................ EXisting Dynamics

........................................................................................... 420.6 420.6 352.4 420.6 6.0 

### I 6.0 

### I

2.0 

# I -2.51 -55

350.9 -69.7 -17 350.9 -69.7 -17 315.6 -36.8 -10 359.9 -60.7 -14

TABLE V.6.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2027 (3% DECLINE) SHIPMENT SCENARIO

Scenarios Base case NPV ($mil) Standard case NPV ($mil) Change in NPV ($mil) Change in NPV(%)

Cash flow impacts on business represented by all regulated product classes-llllagnetic and Electronic

Sub-group 1 (magnetic and electronic producers)

Manufacturer Submittal

.................................................................................... 318.3 318.3 220.9 318.3 Electronic Ballast, New Entrant

....................................................................... Magnetic B;;lIast, New Entrant

........................................................................ Existing Dynamics

........................................................................................... Sub-group 2 (electronic only producers)

Manufacturer Submittal

.................................................................................... 123.0

# I

123.0 Electronic Ballast, New Entrant

....................................................................... Magnetic Ballast, New Entrant

........................................................................ 123.0 123.0 

### I Existing Dynamics

................................................,..........................................
Electronic Ballast New Entrant

Electronic Ballast, New Entrant

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

# I 0.0 

# I

Magnetic Ballast, New Entrant Magnetic Ballast New Entrant

Industry (Sub-group 1 + Sub-group 2) 6.2

Manufacturer Submittal

.................................................................................... 441.3 441.3 350.1 441.3 Electronic Ballast, New Entrant

....................................................................... Magnetic Ballast, New Entrant

....................................................................... . Existing Dynamics

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



### UncertaintyAnalysis ofCash Flows

The NPV values presented in the above tables incorporate significant restructuring costs primarily associated withplant closures inthe U.S. and Mexico. The large majority ofthese
costs are directly associated with the closure ofthe remaining large U.S.- basedballast plant. In consideration of the pasttrend towards consolidation of magneticballastproductionto Mexico,

a sensitivity analysis was conducted on the cash flows assuming that the restructuring costs associated with the plant closures would occur in the base

case (in absence ofstandards). Itwas found thatthese costs contribute approximately $14 million to the negative impacts under all scenarios. 204.6 204.9 161.7 224.7

150.5 144.3 150.5, 139.51

6.0 

# I

2.2

355.1 355.1 314.4 364.2 -113.7 -113.4

-59.2 -93.6

27.51 21.3 I 27.51 16.5

6.0

# I

-4.0

-86.2 -86.2 -35.7 -77.1 -36 -36 -27 -29

22 17 22 13

-65

-20 -20 -10 -17

A sensitivity analysis was also conducted to analyze the impact of certain business risks. Specifically, a scenario was developed whereby changes in market demand would cause magneticballast shipments to decline at twice the rate, 

### i.e., 10 percent per year between 1999 and 2002, remain
constant through 2005 and then continue declining at 5 percent peryear14146 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

beginning 2006. It was further assumed that these abrupt changes in shipments impact the magnetic ballast industry competitive dynamics by reducing profit margins in the 2000 through 2005 time frame, to levels observed in the electronic ballast market.

TABLE V.7.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2015 (5% DECLINE) SHIPMENT
SCENARIO WITH PLANT CLOSURES IN THE BASE CASE IN 2003

Scenarios Base case NPV ($mil) The cash flow impacts with the 2003

plant closure assumption and the business risks as outlined above are presented in the Table V.7.

Standard case NPV ($mil) Change in

NPV ($mil) Change in

NPV (%)

Cash flow Impacts on business represented by all regulated product classes-Magnetic and Electronic Sub-group 1

'Manufacturer Submittal .................................................................................... 288.9 198.9 -90.0 -31 Manufacturer Submittal with plant closure in 2003 ......................................... 275.2 198.9 -76.3 -28 Business risk: abrupt change in shipments ..................................................... 263.7 179.5 -84.2 -32
Sub-group 2

Manufacturer Submittal .................................................................................... 131.7 152.0 20.3 15 Manufacturer Submittal with plant closure in 2003 ......................................... 131.7 152.0 20.3 15 Business risk: abrupt change in shipments ..................................................... 131.7 152.0 20.3 15

Industry (Sub-group I + Sub

-group 2)

Manufacturer Submittal .................................................................................... 420.6 350.9 -69.7 -17 Manufacturer Submittal with plant closure in 2003 ......................................... 406.9 350.9 -56.0 -14 Business risk: abrupt change in shipments ..................................................... 395.4 331.5 -63.9 -16

Impacts on Ballast Manufacturer Employment Employment impacts are reported in two categories: Direct employment impacts: These impacts consider jobs directly involved with the production of "affected" magnetic or electronic ballasts. In facilities producing "affected" and other types of ballasts, only direct and overhead jobs related to "affected" ballasts are considered in this category. In situations where ballast companies own component manufacturing operations, such as capacitor plants or magnet wire operations, job impacts on these plants are reported within this category. Impacts on other component suppliers are presented in a separate section titled "Impact on Suppliers to the Fluorescent Lamp Ballast Industry." Associated employment impacts: These impacts consider jobs impacted by business decisions driven by the "direct" employment impacts. For example, if in a manufacturing plant with 100 employees, 50 are producing "affected" magnetic ballasts and the remaining 50 are producing "unaffected" magnetic ballasts, such as residential ballasts, then an electronic ballast standard would result in the loss of 50 direct jobs. Faced with this situation the company might decide to close operations in its plant due to the dramatically reduced capacity utilization. Such a decision would result in the loss of the remaining 50 jobs. These 50 jobs would then be reported as "associated" employment impacts. Manufacturers in Sub-group 1 anticipate that absent standards, direct employment associated with manufacturing "affected" magnetic ballasts will decrease approximately in the same proportion as shipments. Faced with this decline, manufacturers in Sub-group 1 intend to maintain high plant capacity utilization by replacing the loss in direct jobs with new associated jobs. These new associated jobs may be the result of new product introductions, plant consolidations or decisions to make in-house, parts currently sourced from suppliers. The uncertainty with regards to the timing of any plant closures in the base case-after the year 2003-results from the difficulty in anticipating how many associated jobs can be maintained in the long run. Gains in associated jobs will not necessarily maintain plant capacity utilization in the long run and a threshold may be reached that requires the plant to be closed. For example, one manufacturer suggested that for its supplier plant a drop of 30 percent in capacity could lead to closure.

Table V.8 summarizes the employment impacts of an electronic ballast standard under the two shipment scenarios. The table assumes a standards effective date of 2003.

TABLE V.8.-INDUSTRY-WIDE EMPLOYMENT IMPACTS OF AN ELECTRONIC BALLAST STANDARD (ORDERLY DECLINE IN U.S. MANUFACTURING)

Country of manufacture Direct jobs lost in magneticballast manufacturing

2015 (5% decline) shipment scenario Associated jobs at risk inmagnetic ballast manufacturing Direct jobs 4 s

gained in electronic ballast manufacturing Net direct jobs

lost

USA .................................................................................................................. 1666 2406 500 166 Mexico .............................................................................................................. 1570 3190 700 870 

### 14146 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

beginning 2006. It was further assumed that these abrupt changes in shipments impact the magneticballast industry competitive dynamics byreducing profit margins inthe 2000 through 2005 time frame, to levels observed in the electronicballastmarket. The cash flow impacts with the 2003 plant closure assumption and the business risks as outlined above are presented in the Table V.7.

TABLE V.7.-CASH FLOW IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE 2015 (5% DECLINE) SHIPMENT SCENARIO WITH PLANT CLOSURES IN THE BASE CASE IN 2003

Scenarios Base case NPV ($mil) Standard case NPV ($mil) Change in NPV ($mil) Change in NPV(%)

Cash flow impacts on business represented by all regulated product classes-Magnetic and Electronic Subllroup 1

.Manufacturer Submittal

.................................................................................... 288.9 Manufacturer Submittal with plant closure in 2003

......................................... 275.2 Business risk: abrupt change in shipments

..................................................... 263.7

SUbllroup 2

Manufacturer Submittal

.................................................................................... 131.7 Manufacturer Submittal with plant closure in 2003

......................................... 131.7 Business risk: abrupt change in shipments

..................................................... 131.7

Industry (Sub-group 1 + Sub-group 2)

Manufacturer Submittal

.................................................................................... 420.6 406.9 395.4 Manufacturer Submittal with plant closure in 2003

......................................... Business risk: abrupt change in shipments

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



### Impacts on BallastManufacturer Employment

Employment impacts are reported in
two categories:



### Direct employmentimpacts: These impacts considerjobs directly involved with the production of"affected" magnetic or electronic ballasts. In facilities producing "affected" and other types ofballasts, only direct and overheadjobs related to "affected" ballasts are considered in this category. In situations where ballast companies

own component manufacturing operations, such as capacitor plants or magnet wire operations,job impacts on these plants are reported within this category. Impacts on other component suppliers are presented in a separate section titled "Impact on Suppliers to the Fluorescent Lamp Ballast Industry."



### Associatedemploymentimpacts: These impacts considerjobs impacted bybusiness decisions drivenby the "direct" employment impacts. For example, ifin a manufacturing plant with 100 employees, 50 are producing "affected" magnetic ballasts andthe remaining 50 are producing "unaffected" magnetic ballasts, such as residential ballasts, then an electronic ballast standard would result in the loss of50 directjobs. Faced with this situation the company might decide to close operations in its plant due to the dramaticallyreduced capacity utilization. Such a decision would result in the loss ofthe remaining 50 jobs. These 50 jobs would then be reported as "associated" employment impacts.

Manufacturers in Sub-group 1 anticipate that absent standards, direct employment associated with manufacturing "affected" magnetic ballasts will decrease approximately in the same proportion as shipments. Faced withthis decline. manufacturers in Sub-group 1 intendto maintain high plant capacity utilizationbyreplacing 198.9 198.9 179.5

152.0 152.0 152.0

350.9 350.9 331.5 -90.0 -76.3 -84.2

20.3 20.3 20.3

-69.7 -56.0 -63.9 -31 -28 -32

15 15 15

-17 -14 -16

the loss in directjobs with new associatedjobs. These new associated jobs may be the result ofnew product introductions. plant consolidations or decisions to make in-house. parts currently sourced from suppliers.

The uncertainty withregards to the timing ofany plant closures in thebase case-aftertheyear 2003-results from the difficulty in anticipating how many associatedjobs canbe maintained in the long run. Gains in associatedjobs will
not necessarily maintain plant capacity utilization in the long run and a threshold may be reached that requires the plant to be closed. For example. one manufacturer suggested that for its supplierplant a drop of30 percent in capacity could leadto closure.

Table V.8 summarizesthe employmentimpacts ofan electronic ballast standard underthe two shipment scenarios. The table assumes a standards effective date of2003.

TABLE V.B.-INDUSTRY-WIDE EMPLOYMENT IMPACTS OF AN ELECTRONIC BALLAST STANDARD (ORDERLY DECLINE IN U.S. MANUFACTURING)

Direct jobs lost Country of manufacture in magnetic ballast manu-

facturing

2015 (5% decline) shipment scenario

# ~:~~;.:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 1

# ~~~~ 1 Associated jobs at risk in magnetic ballast manufacturing

2406

1 3190 Direct jobs 4 5 gained in electronic ballast manufacturing

500 1 700 Net direct jobs lost

166 870

### Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

TABLE V.8.-INDUSTRY-WIDE EMPLOYMENT IMPACTS OF AN ELECTRONIC BALLAST STANDARD (ORDERLY DECLINE IN U.S. MAN UFACTURING)-Continued

Country of manufacture Direct jobs lost in magneticballast manufacturing Associated

jobs at risk inmagnetic ballast manufacturing Direct jobs 4 5

gained in electronic ballast manufacturing Net direct jobs lost

USA .................................................................................................................. 717 2363 557 160 Mexico

.............................................................................................................. 1727 3161 769 958 2027 (3% decline) shipment scenario 14147

I Includes both factory and non-factory jobs supporting magnetic ballast production. 2These "associated" jobs are assumed relocated to Mexico. 3These "associated" jobs will be relocated to other plants in Mexico or elsewhere. 4Includes jobs from Sub-groups 1 and 2. 5 Does not include potential associated jobs added in these plants.

Uncertainty in Ballast Manufacturer Employment Impacts

As previously discussed, there exists some uncertainty relative to the closure date of current magnetic ballast production facilities in the base case. The employment impacts presented in Table V.8 assume a base case with an orderly decline in the U.S. magnetic ballast employment until 2015 or 2027. The large majority of these employment impacts are directly associated with the closure of the remaining large U.S.- based magnetic ballast plant. In consideration of the past trend towards consolidation of magnetic ballast production to Mexico, a sensitivity analysis was conducted on the employment impacts assuming that the employment impacts associated with the plant closures would occur in the base case (in absence of standards). These impacts are detailed in the Table V.9. The scenario assumes that the lost U.S. jobs would be picked up by increased manufacturing activity in the Mexican plants, thereby increasing the employment impact of a standard on Mexican jobs.

TABLE V.9.-INDUSTRY-WIDE EMPLOYMENT IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE SCENARIO

WHERE (U.S. MAGNETIC BALLAST PLANTS CLOSE IN 2003 IN THE BASE CASE)

Country of manufacture Direct jobs lost in magneticballast manufacturing

2015 (5% decline) shipment scenario Associated jobs at risk inmagnetic ballast manufacturing Direct jobs 4 5

gained in electronic ballast manufacturing Net direct

jobs lost/ gained,

U.S.A .................................................................................................................. 10 20 500 500 jobs gained Mexico ................................................................................................................ 2236 3 596 700 1536 jobs lost

2027 (3% decline) shipment scenario

U.S.A .................................................................................................................. 0 0 557 557 jobs gained Mexico ................................................................................................................ 2444' 3 524 769 1675 jobs lost
I Includes both factory and non-factory jobs supporting magnetic ballast production. 2These "associated" jobs are assumed relocated to Mexico. 3These "associated" jobs will be relocated to other plants in Mexico or elsewhere. 4Includes jobs from Sub-groups 1 and 2. 5Does not include potential associated jobs added in these plants.

Impacts on Ballast Manufacturing Capacity It is likely that an electronic ballast standard would negatively impact magnetic ballast production capacity in the U.S. and Mexico. As mentioned previously, there is evidence to suggest that magnetic ballast production facilities in the U.S. may be closed regardless of a standard, and a sensitivity analysis was conducted to examine the impacts of this scenario. While there is a degree of uncertainty over what will happen to domestic magnetic ballast production facilities in the absence of a standard, in all likelihood, the imposition of a new electronic ballast standard will result in the closure of one magnetic ballast production facility in the U.S., and in the partial closure of another in Mexico. Additionally two manufacturer-owned (captive) ballast supplier facilities would most likely be impacted: A capacitor plant in Mexico could close and a magnet wire plant, located in the U.S., could also close. Although the scenario whereby magnetic ballast production facilities are closed in 2003 in the base case was examined, all manufacturers in Subgroup 1 suggested that in the absence of a standard they would continue to manufacture "affected" magnetic ballasts in their current manufacturing plants. They did not anticipate any plant closures or shifting of production 

### Federal R.egister/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 

### 14147

TABLE V.B.-INDUSTRY-WIDE EMPLOYMENT IMPACTS OF AN ELECTRONIC BALLAST STANDARD (ORDERLY DECLINE IN U.S. MANUFACTURING)-Continued

Directjobs lost Country of manufacture in magnetic ballast manu-

facturing

2027 (3% decline) shipment scenario

USA

.................................................................................................................. 717 1727 Mexico

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

1Includes both factory and non-factoryjobs supporting magnetic ballast production. 2These "associated"jobs are assumed relocated to Mexico.

3These "associated"jobs will be relocated to other plants in Mexico or elsewhere.

4 Includes jobs from Sub-groups 1 and 2.

SDoes not include potential associated jobs added in these plants.



### Uncertainty in BallastManufacturer EmploymentImpacts

As previously discussed, there exists

some uncertainty relative to the closure date ofcurrent magnetic ballast production facilities in the base case. The employment impacts presented in Table V.S assume a base case with an orderly decline inthe U.S. magnetic ballast employment until 2015 or 2027. The large majority ofthese employment impacts are directly associated with the closure ofthe remaining large U.S.- based magneticballast plant.

In consideration ofthe pasttrend towards consolidation ofmagnetic ballast production to Mexico, a sensitivity analysis was conducted on theemployment impacts assuming that Associated jobs at risk in magnetic ballast manufacturing

2363 3161 Directjobs 4 5 gained in electronic ballast manufacturing

557 769 Net directjobs lost

160 958

the employment impacts associated with the plant closures would occur in thebase case (in absence ofstandards). These impacts are detailed inthe Table 

## v.g. The scenario assumes that the lost U.S. jobs would be picked up by increased manufacturing activity in the Mexican plants, thereby increasing the employment impact ofa standard on Mexicanjobs.

TABLE V.9.-INDUSTRY-WIDE EMPLOYMENT IMPACTS OF AN ELECTRONIC BALLAST STANDARD UNDER THE SCENARIO WHERE (U.S. MAGNETIC BALLAST PLANTS CLOSE IN 2003 IN THE BASE CASE)

Directjobs lost Country of manufacture in magnetic ballast manu-

facturing

2015 (5% decline) shipment scenario

U.S.A

.......,.............................,............................,............................................... 10

Mexico

................................................................................................................ 2236

2027 (3% decline) shipment scenario

U,S.A

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

### o

2444' Mexico

.........................,......................................................................................

1 Includes both factory and non-factoryjobs supporting magnetic ballast production. 2These "associated"jobs are assumed relocated to Mexico,

3These "associated"jobs will be relocated to other plants in Mexico or elsewhere.

4 Includes jobs from Sub-groups 1 and 2.

5 Does not include potential associated jobs added in these plants.



### Impacts on 

### BallastManufacturing Capacity

Itis likelythat an electronic ballast standardwould negatively impact magneticballast production capacityin the U.S. and Mexico. As mentioned previously, there is evidenceto suggest that magneticballast production facilities in the U.S. maybe closed regardless ofa standard, and a sensitivity analysis was conductedto examine the impacts ofthis scenario. While there is a degree ofuncertainty overwhatwill happento domestic magneticballastproduction facilities in the absence ofa standard, in all likelihood, the imposition ofa new electronic ballast standard will result in theclosure ofone magneticballast production facility in the U.S., and in the partial closure ofanotherinMexico. Additionallytwo manufacturer-owned (captive) ballast supplier facilities would most likely be impacted: A capacitorplant in Mexico could close Associated Directjobs 4 5 jobs at risk in Net direct magnetic bal- gained in elec- jobs lost! tronic ballast last manufac- manufacturing gained, turing

20 500 500jobs gained 3596 700 1536 jobs lost



### o 557 557 jobs gained 3524 769 1675jobs lost

and a magnet wire plant, located in the U.S., could also close.

Although the scenario whereby magnetic ballastproduction facilities

are closed in 2003 in the base case was examined, all manufacturers in Subgroup 1 suggested that in the absence of

a standard they would continue to manufacture "affected" magnetic ballasts in their current manufacturing plants. They did not anticipate any plant closures or shifting ofproduction14148 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

of "affected" magnetic ballasts from one Table V.10 summarizes the possible plants in the U.S. and Mexico, assuming plant to another before the year 2010. impact of a new electronic ballast plants remain open in the base case as standard on existing manufacturing manufacturers predict.

TABLE V.10.-IMPACTS ON MANUFACTURING CAPACITY DUE TO AN ELECTRONIC BALLAST STANDARD

Plant Location Description Action

Plant 1

..................... U.S.A .................................................... Magnetic ballast

................................... Closure.
Plant 2 ..:.................. U.S.A .................................................... Magnet Wire ..................................... Possible Closure.
Plant 3

..................... Mexico

.................................................. Magnetic ballast

................................... Partial Closure.
Plant 4

..................... Mexico .

................................................. Capacitors

............................................ Closure.
Plant 5

..................... U.S.A .................................................... Electronic ballast .................................. Expansion.
Plant 6

..................... U.S.A .................................................... Electronic ballast .

................................. Expansion.
Plant 7

..................... Mexico

.................................................. Electronic ballast .................................. Expansion.
Plant 8

..................... Mexico

.................................................. Electronic ballast .

................................. Expansion.

An electronic ballast standard would lead to increased electronic ballast manufacturing capacity in the U.S. and Mexico. In order to meet increased sales resulting from a new electronic ballast standard, two of the four manufacturers in Sub-group 1 plan to develop additional electronic ballast manufacturing capacities in Mexico. The smaller manufacturers in Sub-group 1 plan no major plant closures or expansions and will accommodate the new product mix requirements within their existing facilities. In Sub-group 2, two manufacturers stated that they would add significant electronic ballast manufacturing capacity in the U.S. to meet the new standard.
Impact on Small Ballast Manufacturers
Two relatively small manufacturers currently produce both "affected" magnetic and electronic ballasts. One of these manufacturers would be a "small business" as defined in the Regulatory Flexibility Act (See discussion in the Procedural Issues and Regulatory Reviews section of this preamble). Both the small manufacturers had their respective electronic and magnetic ballast manufacturing operations in the same plants. It seems their smaller size and less automated operations provides them with the flexibility to adapt to a new electronic ballast standard without significant asset write-offs or plant closures. However, the negative impacts on the small manufacturers' cash flows from operations were similar in proportion to those reported by the two large manufacturers in Sub-group 1. As a result

, in the 5% scenario

, we estimate that small manufacturers will experience a 16 percent loss in their NPV compared to a 34 percent loss in NPV for the two large manufacturers. As with other Sub-group 1 manufacturers, neither of these manufacturers stated that an electronic ballast standard would force them to leave the industry or go out of business. Impact on Ballast Industry Suppliers
New energy-efficiency standards for fluorescent lamp ballasts will also affect ballast industry suppliers. To estimate this impact, we performed a detailed analysis of the impacts of an electronic ballast standard on suppliers to the ballast industry. We invited 31 supplier firms to participate in interviews. These firms were identified by manufacturers to represent the key components contained in the bills of materials for "affected" magnetic and electronic ballasts. Eleven of these suppliers served magnetic ballast production, eleven electronic ballast production, and nine supplier plants served both magnetic and electronic production. Sixteen of the 20 organizations serving magnetic ballast production participated in interviews and/or provided plant tours, Eleven of the 20 organizations serving electronic ballast production participated in interviews and/or provided plant tours. Table V.11 shows an average (weighted by shipment levels) distribution of materials and components cost for "affected" magnetic ballasts. Interviews and literature sources provided information needed to estimate financial and employment impacts of a new energy efficiency standard for ballasts on suppliers responsible for approximately 91 percent of the cost of materials.

TABLE V.11.-COST OF MATERIALS FOR "AFFECTED" MAGNETIC BALLASTS

Material type Contribution to total cost of materials (%)
Magnet and Lead Wire ............. Steel case and CRML .............. Capacitors ................................. Thermal protectors, clamps, potting Other ......................................... 40 23 16

12 9 The industries analyzed and represented are: ® Cold rolled steel finished for ballast

cases ® Cold rolled motor laminate (CRML) steel for use primarily in transformers ® Magnet wire ® Lead wire • Thermal protectors ® Clamps to secure the stack of CRML stamped sections making up the ballast transformer to the proper size ® Potting and impregnation compounds ® Capacitors With the exception of a very small fraction of metallized film capacitors produced outside the U.S. and materials produced in plants owned and operated by the ballast manufacturers themselves, all of these components are produced domestically in the United States. Except for the clamps, all these industries (not necessarily the same plants) also serve the production of electronic ballasts. The analyses for financial and employment impacts considered materials supplied to magnetic and electronic ballasts together for those industries which serve both markets. Table V.12 exhibits a similar distribution of materials and components costs for an electronic ballast alternative to the "affected" magnetic ballast. The table shows a higher number of components for electronic ballasts. The cost of materials for electronic ballasts is approximately 30 percent higher than that for "affected" magnetic ballasts.

TABLE V. 12.-BENCHMARK COSTS FOR ELECTRONIC BALLASTS

Item

Film Capacitors

......................... PC Board

, Thermal Protectors, Potting

................................... Contribution to total cost of materials (%)

17

15 

### 14148 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

of"affected" magneticballasts from one plantto anotherbefore the year 2010. Table V.l0 summarizes the possible impact ofa new electronic ballast standard on existing manufacturing plants inthe U.S. and Mexico, assuming plantsremain open in the base case as manufacturers predict.

TABLE V.10.-IMPACTS ON MANUFACTURING CAPACITY DUE TO AN ELECTRONIC BALLAST STANDARD

Plant Location Description Action

Plant 1

..................... U.S.A

.................................................... Magnetic ballast

................................... Closure. Plant 2

..;.................. U.S.A

.................................................... Magnet Wire

......................................... Possible Closure. Plant 3

..................... Mexico

.................................................. Magnetic ballast

................................... Partial Closure. Plant 4

..................... Mexico

.................................................. Capacitors

............................................ Closure. Plant 5

..................... U.S.A

.................................................... Electronic ballast

.................................. Expansion. Plant 6

..................... U.S.A

.................................................... Electronic ballast

.................................. Expansion. Plant 7

..................... Mexico

.................................................. Electronic ballast

.................................. Expansion. Plant 8

..................... Mexico

.................................................. Electronic ballast

.................................. Expansion.

An electronicballast standard would lead to increased electronic ballast manufacturing capacity in the U.S. and Mexico. In order to meet increased sales resulting from a new electronic ballast standard, two ofthe four manufacturers in Sub-group 1 plan to develop additional electronic ballast manufacturing capacities in Mexico. The smaller manufacturers in Sub-group
1 plan no major plant closures or expansions and will accommodate the

new product mix requirements within their existing facilities. In Sub-group 2,
two manufacturers stated that they would add significant electronic ballast manufacturing capacity in the U.S. to meet the new standard. 

### Impact on 

### SmallBallastManufacturers

Two relatively small manufacturers currently produceboth "affected" magnetic and electronic ballasts. One of these manufacturers wouldbe a "small business" as defined in the Regulatory Flexibility Act (See discussion inthe Procedural Issues and Regulatory Reviews section ofthis preamble). Both the small manufacturers had their respective electronic and magnetic ballast manufacturing operations in the

same plants. It seems their smaller size and less automated operations provides them with the flexibility to adapt to a

new electronicballast standardwithout significant asset write-offs or plant closures. However, the negative impacts

on the small manufacturers' cash flows from operations were similar in proportion to those reportedby the two large manufacturers in Sub-group 1. As

a result, in the 5

### % scenario, we estimate that small manufacturers will experience a 16 percent loss in their NPV comparedto a 34 percent loss in NPV for the two large manufacturers.

As with other Sub-group 1 manufacturers, neither ofthese manufacturers statedthat an electronic ballast standard would force them to leave the industry or go out ofbusiness. 

### Impact on 

### BallastIndustry Suppliers

New energy-efficiency standards for fluorescent lamp ballasts will also affect ballast industry suppliers. To estimate this impact, we performed a detailed analysis ofthe impacts ofan electronic ballast standard on suppliers to the ballast industry. We invited 31 supplier firms to participate in interviews. These firms were identified by manufacturers
torepresent the key components contained in the bills ofmaterials for "affected" magnetic and electronic ballasts. Eleven ofthese suppliers served magnetic ballast production, eleven electronic ballast production, and nine supplier plants servedboth magnetic and electronic production. Sixteen ofthe 20 organizations serving magnetic ballast production participated ininterviews and/orprovided plant tours, Eleven ofthe 20 organizations serving electronicballast production participated in interviews and/or providedplanttours.

Table V.ll shows an average (weightedby shipment levels) distribution ofmaterials and components cost for "affected" magnetic ballasts. Interviews and literature sources provided information needed to estimate financial and employment impacts ofa new energy efficiency standard for ballasts on suppliers responsible for approximately 91 percent ofthe cost ofmaterials.

TABLE V.11.-COST OF MATERIALS FOR "AFFECTED" MAGNETIC BALLASTS

Material type

Magnet and Lead Wire

............. Steel case and CRML

.............. Capacltors

................................. Contribution to total cost of materials (%)

40 23 16 The industries analyzed and represented are:

.. Cold rolled steel finished for ballast

cases

.. Cold rolled motor laminate (CRML) steel for use primarily intransformers

.. Magnet wire

• Lead wire

.. Thermal protectors

.. Clamps to secure the stack ofCRML stamped sections making up the ballast transformer to the proper size

.. Potting and impregnation compounds

.. Capacitors With the exception ofa very small fraction ofmetallized film capacitors produced outside the U.S. and materials producedin plants owned and operated by the ballastmanufacturers themselves, all ofthese components are produced domestically in the United States. Except for the clamps, all these industries (not necessarily the same plants) also serve the production of electronicballasts. The analyses for financial and employment impacts considered materials supplied to magnetic and electronicballasts together for those industries which

serve both markets.

Table V.12 exhibits a similar distribution ofmaterials and components costs for an electronic ballast alternative tothe "affected" magneticballast. The table shows a higher number ofcomponents for electronicballasts. The cost ofmaterials for electronicballasts is approximately 30 percenthigherthan that for "affected" magneticballasts.

TABLE V.12.-BENCHMARK COSTS FOR ELECTRONIC BALLASTS

Item Contribution to total cost of materials (%)
Thermal protectors, clamps,

POtting 12 Film Capacitors

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

................................... 9 PC Board, Thermal Protectors, 17

_Oth_e_r_._

..

_ .._

.._

...

_ .._

... _ .._

.._

...

_ .._

...

_ .._

... _ .. _ .._

... _.-'--____ Potting

................................... 15Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules 14149

TABLE V.12.-BENCHMARK COSTSFOR ELECTRONIC BALLASTS-Continued

Item Contribution to total cost of materials (%)

Steel case and CRML ..............Magnet and lead wire, connectors

........................................ Transistors

................................Ceramic and Electrolytic capacitors

.................................. Bobbins

..................................... Diodes

....................................... Ferrite Cores

............................. Others .......................................

The analysis of supplier impacts focuses on domestic (production facilities within the United States) suppliers. A substantial portion of the components that go into producing electronic ballasts is produced in 12

12 10

7 6 6 5 10 foreign plants. We estimated the fraction of each component produced domestically in 1997. To the extent that domestic suppliers can maintain this market share, they could recover some of the "affected" magnetic ballast revenue and associated employment level that they would lose if an electronic ballast energy efficiency standard were to go into effect. The industries analyzed were producers of printed circuit boards and bobbins. No first hand financial or employment information was collected from industry representatives for transistors, diodes, or ferrite cores. We combined these three industries with a half dozen other smaller contributors to the cost of materials and assumed pro-rated values for net income, depreciation, and capital expenditure levels to estimate cash flow for this group. This "other" group of suppliers represents approximately 27 percent of supplier revenue, meaning about 73 percent of electronic ballast supplier financial values is based on direct contact with industry representatives. The comparable figure for the magnetic ballast supplier side is 9 percent "other" and 91 percent based on interviews with suppliers. The analysis considers a reference case wherein domestic suppliers maintain their 1997 market shares in the electronic ballast component market. Through discussions with supplier industries it became apparent that there existed some uncertainty as to the probability that ballast manufacturers would continue to source their components domestically in the event of an electronic standard. To bracket the uncertainty, separate cash flows were performed for the extreme case where all components for electronic ballasts were purchased from foreign sources. The financial impacts associated with the reference and "worst" cases are summarized in the following Tables.

TABLE V.13.-ESTIMATED NPV IN $MILLIONS FOR SUPPLIER INDUSTRIES, ASSUMING DOMESTIC SUPPLIER INDUSTRIES MAINTAIN THEIR 1997 MARKET SHARES (REFERENCE CASE)

Industry

Capacitor .......................................................................... Magnet, Lead Wire, Connectors ...................................... TP, Metal Clamps, Potting & Impregnating ..................... Steel ................................................................................. Other Mag/Electronic Suppliers

....................................... PC Board, Bobbins .......................................................... Other Electronic Suppliers ...............................................

Total .......................................................................... 0.31 -2.57 -1.51 -4.14 -1.23 0.94 0.65

-7.55 5% Scenario, 1998-2015

Base case Standard

case Change

$mil

1.28
11.40 8.55 16.59 6.11 1.87 .79

46.59 1.59

8.83 7.05 12.45 4.87 2.81 1.44

39.04 3% Scenario,1998-

Base case Standard

case

1.34 12.39 10.24 18.74 6.81 1.45 1.04

52.01

TABLE V. 14.-ESTIMATED NPV IN $MILLIONS FOR SUPPLIER INDUSTRIES

, ASSUMING FOREIGN SUPPLIERS CAPTURE ALL
THE NEW ELECTRONIC BALLAST MARKET (WORST CASE).

5% Scenario

, 1998-2015
Industry Base case Standard
case

Capacitor

........................................................................ 1.28 .89 Magnet

, Lead Wire, Connectors

.................................... 11.40 8.06 TP, Metal Clamps, Potting & Impregnating

................... 8.55 5.69 Steel ............................................................................... 16.59 11.05 Other .............................................................................. 6.11 4.13 PC Board

, Bobbins

........................................................ 1.87 0.25 Other Electronic Suppliers .

............................................ 0.79 0.16

Total ........................................................................ 46.59 30.23

The financial impact ranges from a Impacts on Supplier Employment reference case $7.55 million decline in NPV cash flow under the 5% scenario to a "worst" case $20.69 million decline under the 3% scenario. Change $mil

-.39 -3.34 -2.86 -5.54 -1.97 -1.62 -0.64

-16.36

The reference-case employment impacts under the 3% and 5% scenarios are summarized in Table V.15 and indicate a range of 313-340 jobs lost and 3% Scenario

, 1998-2

Base case

1.34 12.39 10.24 18.74 6.81 1.45 1.04

52.01 1.74

9.27 7.59 14.21 5.18 2.69 1.88

42.56

Standard
case

.92 8.37 5.92 11.54 4.31 0.15 0.09

31.3 027

Change $mil

0.41 -3.13 -2.65 -4.53 -1.63 1.24 0.84

-9.45

027

Change $mil

-0.41 -4.03 -4.31 -7.20 -2.50 -1.3 -0.94

-20.69

potential for 129-144 to be gained back. If all the new electronic ballast market were to go to foreign firms, no jobs would be gained back, and thus in the worst case about 313-340 domestic jobs would be lost. 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 14149

TABLE V.12.-BENCHMARK COSTS foreign plants. We estimated the fraction ofeach componentproduced domestically in 1997. To the extentthat domestic suppliers can maintain this market share, they could recover some ofthe "affected" magnetic ballast

revenue and associated employment level that they would lose ifan FOR ELECTRONIC BALLASTS-COntinued

Item

Steel case and CRML

.............. Magnet and lead wire, connectors

........................................ Transistors

................................ Ceramic and Electrolytic capacitors

.................................. Bobbins

..................................... Diodes

....................................... FerTite Cores

............................. Others

....................................... Contribution to total cost of materials (%)

12 electronic ballast energy efficiency standard were to go into effect. The
12 industries analyzed were producers of 10 printed circuitboards and bobbins. No first hand financial or employment
7 information was collectedfrom industry
6 representatives for transistors, diodes, or 6 ferrite cores. We combinedthese three 5 industries with a halfdozen other 10 smallercontributors to the cost of ------------'----- materials and assumed pro-rated values

The analysis ofsupplier impacts focuses on domestic (production facilities within the United States) suppliers. A substantial portion ofthe components that go into producing electronic ballasts is produced in for net income, depreciation, and capital expenditure levels to estimate cash flow for this group. This "other" group of suppliers represents approximately 27 percent ofsupplierrevenue, meaning about 73 percent ofelectronic ballast supplierfinancial values is based on direct contact with industry representatives. The comparable figure for the magneticballast supplier side is
9 percent "other" and 91 percent based

on interviews with suppliers.

The analysis considers a reference

case wherein domestic suppliers maintain their 1997 market shares inthe electronic ballast component market. Through discussions with supplier industries itbecame apparent that there existed some uncertainty as to the probability thatballast manufacturers would continue to source their components domestically in the event of

an electronic standard. To bracket the uncertainty, separate cash flows were performed for the extreme case where all components for electronic ballasts

were purchased from foreign sources. The financial impacts associated with the reference and "worst" cases are summarized inthe following Tables.

TABLE V.13.-EsTIMATED NPV IN $MILLIONS FOR SUPPLIER INDUSTRIES, ASSUMING DOMESTIC SUPPLIER INDUSTRIES
MAINTAIN THEIR 1997 MARKET SHARES (REFERENCE CASE)

5% Scenario, 1998-2015 30/0 Scenario, 1998-2027 Industry Standard Change Standard Change Base case case $mil Base case case $mil

Capacitor

.......................................................................... 1.28 1.59 0.31 1.34 1.74 0.41 Magnet, Lead Wire, Connectors

...................................... 11.40 8.83 -2.57 12.39 9.27 -3.13 TP, Metal Clamps, Potting & Impregnating

..................... 8.55 7.05 -1.51 10.24 7.59 -2.65 Steel

................................................................................. 16.59 12.45 -4.14 18.74 14.21 -4.53 Other Mag/Electronic Suppliers

....................................... 6.11 4.87 -1.23 6.81 5.18 -1.63 PC Board, Bobbins

.......................................................... 1.87 2.81 0.94 1.45 2.69 1.24 Other Electronic Suppliers

............................................... .79 1.44 0.65 1.04 1.88 0.84

Total

.......................................................................... 46.59 39.04 -7.55 52.01 42.56 

## ! -9.45

TABLE V.14.-EsTIMATED NPV IN $MILLIONS FOR SUPPLIER INDUSTRIES, ASSUMING FOREIGN SUPPLIERS CAPTURE ALL
THE NEW ELECTRONIC BALLAST MARKET (WORST CASE).

5% Scenario, 1998-2015 3% ScenariO, 1998-2027 Industry Standard Change Standard Change Base case case $mil Base case case $mil

Capacitor

........................................................................ 1.28 .89 -.39 1.34 .92 -0.41 Magnet, Lead Wire, Connectors

.................................... 11.40 8.06 -3.34 12.39 8.37 -4.03 TP, Metal Clamps, Potting & Impregnating



### ................... 8.55 5.69 -2.86 10.24 5.92 -4.31 Steel

............................................................................... 16.59 11.05 -5.54 18.74 11.54 -7.20 Other

.............................................................................. 6.11 4.13 -1.97 6.81 4.31 -2.50 PC Board, Bobbins

........................................................ 1.87 0.25 -1.62 1.45 0.15 -1.3 Other Electronic Suppliers



### ........................-.................... 0.79 0.16 -0.64 1.04 0.09 -0.94

Total

........................................................................ 46.59 30.23 -16.36 52.01 31.3 -20.69



### Impacts on 

### SupplierEmployment The financial impact ranges from a reference case $7.55 million decline in NPV cash flow under the 5% scenario
to a "worst" case $20.69 million decline underthe 3% scenario. The reference-case employment impacts underthe 3% and 5% scenarios

are summarized in Table V.15 and indicate a range of313-340jobs lost and potential for 129-144 to be gained back. 

### Ifall the new electronic ballast market

wereto go to foreign firms. nojobs wouldbe gainedback, and thus in the
worst case about 313-340 domesticjobs wouldbe lost.14150 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

TABLE V.15.-ESTIMATED EMPLOYMENT IMPACTS FOR SUPPLIER INDUSTRIES ASSUMING DOMESTIC SUPPLIERS MAINTAIN
THEIR 1997 MARKET SHARES.

Industry

Capacitor .......................................................................... Magnet & Lead ................................................................ TP, Metal Clamp . ............................................................. Steel ................................................................................. Metallized Film ................................................................. Other Magnetic/Electronic ................................................ PC Board, Bobbins .......................................................... Other Electronic ............................................................... Associated Plant Closure .................................................

Total ..........................................................................

Impacts on Luminaire Manufacturers The Department interviewed eight luminaire manufactures with a combined market share approaching 85 percent of the market segments affected by a new ballast standard. The Department specifically investigated how a new energy efficiency standard for ballasts might change luminaire manufacturer profitability and cash flow. Of the eight manufacturers interviewed, two reported they will suffer no impacts and two others believe their impacts would be minimal. The four other manufacturers believe they will suffer varying levels of decreased company value. From the information obtained in the interviews, estimates of reductions in NPV were prepared for each of the four manufacturers reporting negative impacts. These projections incorporated the financial figures and rationale provided by the manufacturers. Three different rationales were presented in support of diminished profitability and value. One or more manufacturers are experiencing greater profitability with electronic ballasts. The NPV reduction assumes that a standard which eliminates magnetics as the commodity 5% Scenario, 1998-2015

Jobs lost

27 69 52 58 44 40 0 

### 0
23

313 34

10
14
13
1
8
23
26

129 Net jobs lost [gained]

corresponding reduction in profit margin. For both shipment scenarios, the aggregated reduction in NPV for the four firms totals approximately 13.5 million dollars assuming the current difference in margins for luminaires incorporating magnetic or electronic ballasts would continue absent standards. This appears to be a very speculative assumption given the trend towards convergence of magnetic and electronic luminaire margins reported by most luminaire manufacturers. If in fact margins do converge by the implementation date of a new standard, the impacts attributed to price margin differences disappear and the total impacts are reduced to a value of approximately 4.5 million dollars. In addition to the previous financial impacts, manufacturers reported significant other costs and business disruptions associated with potential new ballast standards. There were concerns expressed that a standard would divert resources from new product and technology introduction and result in lost opportunities. Large efforts would also be needed to revise product literature and perform photometric tests. Further, many product would render electronic ballasts business processes and information the commodity product and competition systems relative to materials would eliminate the premium for electronic ballasts. One or more manufacturers are experiencing greater profitability with magnetic ballasts. The NPV reduction is a direct consequence of replacing sales of higher margin products by lower margin sales. The third view presented concerns the high price sensitivity of low-end luminaires, particularly one and two lamp strip lights. It was assumed for that analysis that not all incremental costs for electronic ballasts could be passed on to consumers with a management and other systems would need to be revised. The costs associated with these issues, not including lost opportunities were reported to be approximately one million dollars.
Impacts on Luminaire Manufacturer Employment Of the eight luminaire manufacturers interviewed, six stated that employment impacts from an electronic ballast standard would be be minimal, if any, within their companies. Two manufacturers, however, believe a new standard would probably reduce Potential jobs gained

[7] 59 38 45 43 32 [23] [261 23

184 3% Scenario, 1998-2027

Jobs lost Potential

jobs gained Net jobs lost

[gained]

29 76 57 63 48 44 

### 0 0
23

340 37

11
15
14
1
9
27
30

144 [81

65 42 49 47 35 [27] [30] 23

196

employment levels in their U.S. facilities. This reduction is assumed to be caused by reductions in export sales and a loss of flourescent luminaire sales in favor of incandescent luminaires. Based on its analysis of these issues and in agreement with the majority view of interview participants, the Department believes the employment impacts of a ballast standard would be minimal. Two manufacturers expressed a concern that since their export markets are primariliy magnetic, a drop in domestic ballast manufacturing volumes would cause upward pressure on magnetic luminaire prices and compel them to raise export prices for luminaires. Local luminaire manufacturers, they believe, could find less costly sources for magnetic ballasts resulting in decreased export sales for U.S. companies. Furthermore, these manufactures fear that given the importance of linear flourscent fixtures in most customer orders, winning or losing a project can depend heavily on price levels of the these luminaires. If flourecscent luminaire sales are lost to local competitors then, they believe, U.S. companies could also lose sales of HID luminaires, emergency lighting, exit signs and various other products. The Department believes these employment impacts would be very small for two reasons. First economic theory and real world experience suggests that in competitive markets, overcapacity leads to increased-not decreased-price competition. Second the export market is concentrated in the Canadian and Mexican markets where U.S. ballast manufacturers are major participants and could compete with local ballasts manufacturers. Another stated potential cause of reduced U.S. luminaire manufacturing jobs is the possible movement away from flourescent luminaires in favor of incandescent luminaires in the more 

### 14150 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, ZOOO/Proposed Rules

TABLE V.iS.-EsTIMATED EMPLOYMENT IMPACTS FOR SUPPLIER INDUSTRIES ASSUMING DOMESTIC SUPPLIERS MAINTAIN
THEIR 

### 1997 MARKET SHARES.

50/0 Scenario, 1998-2015 3% Scenario, 1998-2027 Industry Jobs lost Potential Net jobs lost Jobs lost Potential Net jobs lost jobs gained [gained] jobs gained [gained]

Capacitor

.......................................................................... 27 34 Magnet & Lead

................................................................ 69 10 TP, Metal Clamp,

............................................................. 52 14 Steel

................................................................................. 58 13 Metallized Film

................................................................. 44 1 Other Magnetic/Electronic

................................................ 40 8 PC Board, Bobbins

.......................................................... 0 23 Other Electronic

............................................................... 0 26 Associated Plant Closure

.,'"

............................................ 23 ··.......·····n
....
Total

.......................................................................... 313 129



### Impacts on 

### Luminaire Manufacturers

The Department interviewed eight luminaire manufactures with a combined market share approaching 85 percent ofthe market segments affected by a new ballast standard. The Department specifically investigated how a new energy efficiency standard for ballasts might change luminaire manufacturer profitability and cash flow. Ofthe eight manufacturers interviewed, two reported they will suffer no impacts and two others believe their impacts would be minimal. The four other manufacturers believe they will suffer varying levels ofdecreased company value.

From the information obtained inthe interviews, estimates ofreductions in NPV were prepared for each ofthe four manufacturers reporting negative impacts. These projections incorporated the financial figures and rationale providedby the manufacturers. Three different rationales were presented in support ofdiminished profitability and value.

One or more manufacturers are experiencing greater profitability with electronic ballasts. The NPV reduction

assumes that a standard which eliminates magnetics as the commodity product would render electronicballasts the commodity product and competition would eliminatethe premiumfor electronicballasts.

One or more manufacturers are experiencing greater profitability with magneticballasts. TheNPV reduction is

a direct consequence ofreplacing sales ofhigher marginproducts by lower margin sales.

The third view presented concerns the high price sensitivity oflow-end luminaires, particularly one and two lamp strip lights. Itwas assumed for that analysis that not all incremental
costs for electronic ballasts couldbe passed onto consumers with a corresponding reduction inprofit margin.

For both shipment scenarios, the aggregated reduction in NPV for the four firms totals approximately 13.5 million dollars assuming the current difference in margins for luminaires incorporating magnetic or electronicballasts would continue absent standards. This appears to be a very speculative assumption given the trend towards convergence of magnetic and electronic luminaire margins reported by most luminaire manufacturers. Ifin fact margins do convergeby the implementation date of

a new standard, the impacts attributed
to price margin differences disappear and the total impacts are reduced to a value ofapproximately 4.5 million dollars.

In addition to the previous financial impacts, manufacturers reported significant othercosts and business disruptions associated with potential

new ballast standards. There were

concerns expressedthat a standard would divertresources from new product and technology introduction and result inlost opportunities. Large efforts would also be needed to revise product literature and perform photometric tests. Further, many business processes and information systems relative to materials management and other systems would need to be revised. The costs associated withthese issues, not including lost opportunities were reportedto be approximately one million dollars. Impacts on Luminaire Manufacturer Employment

Ofthe eight luminaire manufacturers interviewed, six stated that employment impacts from an electronic ballast standard would be be minimal, ifany, within their companies. Two manufacturers, however, believe a new standard would probablyreduce [7] 29 37 [8] 59 76 11 65 38 57 15 42 45 63 14 49 43 48 1 47 32 44 9 35 [23] 0 27 [27] [26] 0 30 [30]

23 23

.................... 23

184 340 144 196

employment levels in their U.S. facilities. This reduction is assumedto be caused by reductions in export sales and a loss offlourescent luminaire sales in favor ofincandescent luminaires. Based on its analysis ofthese issues and in agreement with the majority view of interview participants, the Department believes the employment impacts ofa ballast standard would be minimal.

Two manufacturers expressed a 'concern that since their export markets

are primariliy magnetic, a drop in domesticballast manufacturing volumes would cause upward pressure on magnetic luminaire prices and compel them to raise export prices for luminaires. Localluminaire manufacturers, they believe, could find less costly sources for magnetic ballasts resulting in decreased export sales for U.S. companies. Furthermore, these manufactures fear that given the importance oflinear flourscent fixtures in most customer orders, winning or losing a project can depend heavily on price levels ofthe these luminaires. If flourecscent luminaire sales are lost to local competitors then, they believe, U.S. companies could also lose sales of HID luminaires, emergency lighting. exit signs and various other products. The Department believes these employment impacts would be very small for two

reasons. First economictheory and real world experience suggests that in competitive markets, overcapacity leads
to increased-not decreased-price competition. Second the export market is concentrated in the Canadian and Mexican markets where U.S. ballast manufacturers are major participants and could competewith local ballasts manufacturers.

Another stated potential cause of reduced U.S. luminaire manufacturing jobs is the possible movement away from flourescent luminaires in favor of incandescent luminaires in the moreFederal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14151

first cost sensitive commercial market segments. However, there was considerable differences of opinion as to the significance of any such movement in lighting systems. The general view was that there is already a significant cost premium for fluorescent lighting and this premium is not likely to greatly increase given ballast pricing trends. Therefore the Department has not included any employment reductions for luminaire manufacturers because of this potential effect.
Impacts on Lamp Manufacturers Three major manufacturers, GE Lighting, OSI, and Philips Lighting Company dominate the domestic market for linear fluorescent lamps. Together these three manufacturers serve approximately 90 percent of the U.S. market. As trade allies of the fluorescent ballast manufacturing industry, they may experience an impact from a new energy-efficiency standard applied to fluorescent lamp ballasts. Some ballast and lamp industry sources and othershave speculated that a new energyefficiency standard for ballasts would substantially accelerate the transition from T12 lamps to T8, thus having an impact on lamp manufacturers as well as ballast manufacturers. As discussed previously, OSI commented that the lamp industry had the capacity to handle the transition from T12 lamps to T8 lamps in the OEM market resulting from an electronic ballast rule over a period of three years. OSI believes, however, it doubtful the lamp industry could handle, in addition, any significant transition to T8 lamps of the installed base of T12 lamps in less than 8 years following an electronic ballast rule. OSI commented that if magnetic ballasts were no longer available, large resources would be diverted to the development of energy saving T12 lamps compatible with electronic ballasts or electronic ballasts compatible with energy saving T12 lamps. The Department invited representatives from each of the three major lamp manufacturers to estimate the impact that a new ballast standard might have on them. One manufacturer chose not to participate in the discussions, so the following results are based on talks with two major manufacturers. There was agreement that a new standard would accelerate the shift in market share from T12 to T8 lamps. The manufacturers further agreed the current transition to T8 lamps is being handled well and that any acceleration in the transition must be served while retaining enough T12 capacity to serve the replacement market. The replacement market for T12 lamps is large, over 85 percent of the 1998 market of 340 million lamps were T12 lamps. The lamp manufacturing industry can gear up to serve the increase in OEM demand for T8 lamps with a 3-4 year lead-time. However, to serve any increased replacement market at the same time would require an acceleration in capacity expansion for T8 production and early retirement of T12 capacity which would have financial impacts. The Department is uncertain as to how the replacement market might respond to today's proposed standard. Consumers might make spot replacements, as suggested by ACEEE earlier, or ballast manufacturers may develop electronic T12 ballasts compatible with T12 energy saver lamps or there could be an acceleration to T8 lamps in the replacement market. Given this uncertainty, we did not attempt to quantify the impact on lamp manufacturers of an electronic ballast standard applied to the replacement ballast market before the 8 year implementation date suggested by OSI.
2. Life-Cycle Cost

More efficient ballasts would affect commercial and industrial consumers in two ways: operating expense would probably decrease and purchase price would probably increase. We analyzed the net effect by calculating the LCC. Inputs required for calculating LCC include end-user prices for ballasts and lamps, electricity rates (cents/ kiloWatthour), energy savings, annual lighting operating hours, labor rates, installation times, period of the analysis, ballast lifetimes, lamp lifetimes, and discount rates. A detailed discussion of the sources and methods used for arriving at an estimate of these parameters is in the TSD. Briefly, we obtained end-user prices for ballasts from a survey of ballast distributors from various parts of the country; we estimated marginal electricity rates as described later in this section; we based operating hours upon Xenergy building energy audit data; we derived installation costs from journeyman wages listed in the National Electrical Estimator 1995; the period of analysis is the ratio of ballast life to the annual operating hours; lamp life is the average of lamp life under spot and group replacement where spot replacement lamp life is the lamp rated life from manufacturer's catalog and group replacement is 75 percent of the rated life; and the discount rate is 8 percent. We estimated the marginal electricity rates by first calculating the marginal rate faced by a sample of commercial customers in buildings throughout the U.S. This was compared with the average electricity rates for the same customers. The percent difference between the average and marginal rates (Epsilon) was calculated for each customer. We then used this Epsilon distribution to convert the average electricity price from a specific United States utility into marginal electricity price by using the formula:
Marginal Electricity Price = Average Electricity Price x (1 + Epsilon)
We performed a probability-based LCC analysis with a computer program called Crystal Ball. For each of four inputs (ballast price, electricity price, ballast lifetime, and annual lighting hours) to the LCC model, we defined a probability-based distribution of the input to account for the variability of the input. Instead of using a single "average" value to represent the input in its entirety, we used the whole distribution to calculate the LCC. The output of the LCC model is a mean LCC savings for each product class as well as a probability distribution or likelihood of LCC reduction or increase. We present a summary of the results in Table V.16. The column titled "Delta LCC" gives the change in LCC when switching from the baseline option of EEM ballast to the listed design option. "% Winners" represents the probability of the design option resulting in reduced LCC. Table 4.4 of the TSD also shows the life cycle cost impacts when starting from an energy efficient magnetic T8 ballast.

TABLE V. 16.-SUMMARY OF DELTA LCC* RESULTS

Product class % Market Design option Sector Delt

Mean (1997$) a LCC

%Winners**

7 1F40 .

....................................................................... 1 5 1 T12 CC .......................... I Commercial .................... 1 -4 Federal Register/Vol. 65. No. 51/Wednesday. March 15. ZOOO/Proposed Rules 

### 14151

fIrst cost sensitive commercial market segments. However. there was considerable differences ofopinion as to the signifIcance ofany such movement inlighting systems. The general view

was that there is already a signifIcant
cost premium for fluorescent lighting and this premium is not likelyto greatly increase given ballast pricingtrends. Therefore theDepartmenthas not included any employmentreductions for luminaire manufacturersbecause of this potential effect. 

### Impacts on LampManufacturers

Three major manufacturers. GE Lighting. OSI. and Philips Lighting Company dominate the domestic market for linear fluorescent lamps. Together these three manufacturers serve approximately 90 percent ofthe U.S. market. As trade allies ofthe fluorescent ballast manufacturing industry. they may experience an impact from a new energy-efficiency standard applied to fluorescent lamp ballasts. Some ballast and lamp industry sources and others have speculated that a new energyefficiency standard for ballasts would substantially accelerate the transition from T12 lamps to T8. thus having an impact on lamp manufacturers as well

as ballast manufacturers.

As discussed previously. OSI commented that the lamp industry had the capacityto handle the transition from T12 lamps to T8 lamps in the OEM market resulting from an electronic ballast rule over a period ofthree years. OSI believes. however. it doubtful the lamp industry could handle. in addition. any significant transition to T8 lamps ofthe installed base ofT12 lamps in less than 8 years following an electronicballast rule. aS! commented that ifmagnetic ballasts were no longer available. large resources would be diverted to the development ofenergy saving T12 lamps compatible with electronic ballasts or electronic ballasts compatible with energy saving T12 lamps.

The Department invited representatives from each ofthe three major lamp manufacturers to estimate the impact that a newballast standard might have on them. One manufacturer chose not to participate in the discussions. so the following results are based on talks with two major manufacturers. There was agreement that a new standard would accelerate the shift in market share from T12 to T8 lamps. The manufacturers further agreed the current transition to T8 lamps is beinghandled well and that any acceleration inthe transition mustbe served while retaining enoughT12 capacityto serve the replacement market. The replacement market for T12 lamps is large. over 85 percent ofthe 1998 market of340 million lamps were T12 lamps. The lamp manufacturing industry can gear up to servethe increase in OEM demand for T8 lamps with a 3-4year lead-time. However. to

serve any increasedreplacement market
at the same time would require an acceleration in capacity expansion for T8 production and early retirement of T12 capacity which would have fInancial impacts.

The Department is uncertain as to how the replacement market might respondto today's proposed standard. Consumers might make spot replacements. as suggestedby ACEEE earlier. orballast manufacturers may develop electronicT12 ballasts compatible with T12 energy saver lamps

or there could be an acceleration to T8 lamps in the replacement market. Given this uncertainty. we did not attemptto quantify the impact on lamp manufacturers ofan electronic ballast standard applied to the replacement ballast market before the 8 year implementation date suggested by as!.

2. Life-Cycle Cost

More efficientballasts would affect commercial and industrialconsumers in
two ways: operating expense would probably decrease and purchase price would probably increase. We analyzed the net effect by calculating the LCC. Inputs required for calculating LCC include end-userprices for ballasts and lamps. electricity rates (cents/ kiloWatthour). energy savings. annual lighting operatinghours. labor rates. installation times. period ofthe analysis. ballast lifetimes. lamp lifetimes. and discountrates. A detailed discussion ofthe sources and methods used for arriving at an estimate ofthese parameters is inthe TSD. Briefly. we obtained end-userprices for ballasts from a survey ofballast distributors from various parts ofthe country; we estimated marginal electricityrates as described later in this section; we based operating hours upon Xenergy bUilding energy audit data; we derived installation costs from journeyman
wages listed in the National Electrical Estimator 1995; the period ofanalysis is theratio ofballast life to the annual operating hours; lamp life is the average oflamp life under spot and group replacement where spotreplacement lamp life is the lamp rated life from manufacturer's catalog and group replacement is 75 percent ofthe rated life; and the discount rate is 8 percent.

We estimated the marginal electricity
rates by first calculating the marginal
rate faced by a sample ofcommercial
customers inbuildings throughout the U.S. This was compared with the
average electricity rates for the same customers. Thepercent difference between the average and marginal rates (Epsilon) was calculated for each
customer. We then used this Epsilon distribution to convert the average electricity price from a specific United States utility into marginal electricity price by using the formula: Marginal Electricity Price = Average

ElectricityPrice x (1 + Epsilon)

We performed a probability-based LCC analysis with a computer program called Crystal Ball. For each offour inputs (ballast price. electricity price. ballast lifetime. and annual lighting hours) to the LCC model. we defined a probability-based distribution ofthe input to account for the variability of the input. Instead ofusing a single "average" value to represent the input in its entirety. we usedthe whole distribution to calculate the LCe. The output ofthe LCC model is a mean LCC savings for each product class as well as

a probability distribution or likelihood ofLCC reduction or increase.

We present a summary ofthe results inTable V.16. The columntitled "Delta LCC" gives the change inLCC when switching from thebaseline option of EEM ballast to the listed design option. "% Winners" represents the probability ofthe design option resulting in reduced LCe. Table 4.4 ofthe TSD also showsthe life cycle cost impacts when starting from an energy efficient magneticT8 ballast.

TABLE V.16.-SUMMARY OF DELTA LCC* RESULTS

Product class % Market Design option Sector

1F40

........................................................................ 5 T12 CC

.......................... Commercial

.................... Delta LCC

Mean (1997$)

-4 %Winners**

714152 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

TABLE V.16.-SUMMARY OF DELTA LCC* RESULTS-Continued

Delta LCC
Product Gass % Market Design option Sector Mean (1997$) %Winners *

T12 ERS ........................ Commercial .................... 4 68 2F40 ........................................................................ 36 T12 CC .......................... Commercial .................... -2 31 T12 ERS ........................ Commercial .................... 6 80 3F40 ........................................................................ 1 T12 CC .......................... Commercial .................... -2 33 Tandem-Wired ........................................................ T12 ERS ........................ Commercial .................... 5 68 3F40 Not ................................................................. 10 T12 CC. .......................... Commercial .................... -4 23 Tandem-Wired ........................................................ T12 ERS ........................ Commercial ....... ........ 18 - 98 4F40 ........................................................................ 22 T12CC ............................ Commercial .................... -2 36 T12 ERS ........................ Commercial .................... 12 87 2F96 ........................................................................ 23 T12 EIS .......................... Commercial .................... 7 75 T12 EIS .......................... Industrial ........................ -2 35 2F96HO .................................................................. 2 T12 CC .......................... Commercial .................... 11 90 T12 ERS ....................... T12 CC .......................... Commercial .................... Industrial ........................ 28 1 98

50 T12 ERS ........................ Industrial ........................ 151 94

'A positive Delta LCC implies a LCC savings whereas a negative number implies an increase in LCC % ballasts with reduced life cycle cost (winners), noted as "certainty level" by Crystal Ball.

3. Energy Savings, Net Present Value and Net National Employment
As indicated, we conclude that standards will result in significant savings of electricity by ballasts for each standards scenario

. These energy savings have value to society, as measured by the net present value analysis. The net present value analysis is a measure of the net savings to society from standards and are summarized in the following tables.

TABLE V.17A.-NET PRESENT VALUE FROM ELECTRONIC STANDARDS

Electronic standards for units sold from 2003 to 2030 discounted at 7% to 1997 (in billion 1997 $)*

Scen 1A Scen 1B Scen 2A Scen 2B Scen 3A Scen 3B Scen 4A Scen 4B Scenario T12 T12 T12/T8 T12/T8 Decr2015 Decr2027 Decr2015 Decr2027

Decr2015 Decr2027 Decr2015 Decr2027

Total Benefit .................. 1.97 3.13 3.22 5.13 2.68 4.46 2.98 4.85 Total Equipment Cost .... 1.01 1.62 0.8 1.27 0.64 1.08 0.72 1.18 Net Present Value .......... 0.96 1.51 2.43 3.86 2.03 3.38 2.26 3.68

'Total Benefit and Net Present Value do not include HVAC savings.

TABLE V.17B.-NET PRESENT VALUE FROM CATHODE CUTOUT STANDARDS

Cathode cutout standards for units sold from 2003 to 2030 discounted at 7% to 1997 (in billion 1997 $)

Scen 5A 100% Scen 5B 100% Scen 6A 37% Scen 6B 37% Scenario CC Decr2015 CC Decr2027 CC Decr2015 CC Decr2027

Total Benefit

..................................................................................................... 0.94 1 .49 2.18 3.47 Total Equipment Cost ...................................................................................... 0.78 1.26 0.58 0.93 Net Present Value ........................................................................................... 0.16 0.23 1.60 2.54

Since the covered lamp ballasts are commercial products, these net savings apply to American business and industry. NPV is the difference between additional equipment costs and electricity cost savings. The NPV for the electronic ballast standards scenarios ranges from about 0.96 billion to 3.86 billion dollars (1997 dollars). NPV increases under the slower decreasing shipments forecast to 2027. NPVs for scenario 2 with T8 electronic ballasts are about 2.5 times those for scenario 1 with T12 electronic ballasts. For scenario 3, the five-year phase-in period causes an NPV reduction of around 15 percent over scenario 2. For scenario 4, the 2-year phase-in period results in an NPV reduction of about 5 percent over Scenario 2.

For the cathode cutout standards scenarios, NPV ranges from 0.16 to 2.54 billion dollars, For scenario 6, the NPV is 10 to 11 times greater than that of scenario 5. Note that we did not include HVAC energy cost savings in any of the NPV calculations. The net present value analysis from the standards in the Joint Comments is summarized in Table V.18. TABLE V.18.-NET PRESENT VALUE RESULTING FROM JOINT COMMENT

Joint comment standards for units sold from 2005 to 2030 discounted at 7% to 1997 (in

billion 1997 $)

Scenario

1.95
0.53 1.42 3.51

0.91 Dec2015 Dec2027

Total Benefit

............. Total Equipment Cost Net Present Value .... 2.60

The Department committed in its 1996 Process Improvement Rule to develop estimates of the employment 

### 14152 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

TABLE V.16.-SUMMARY OF DELTA LCC* RESULTs-Gontinued

Product class % Market Design option Sector

T12 ERS

........................ Commercial

.................... 2F40

........................................................................ 36 T12 CC

.......................... Commercial

.................... T12 ERS

........................ Commercial

.................... 3F40

........................................................................ T12 CC

.......................... Commercial

.................... Tandem-Wired

........................................................ T12 ERS

........................ Commercial

.................... 3F40 Not

................................................................. 10 T12 CC'

.......................... Commercial

.................... Tandem-Wired

........................................................ T12 ERS

........................ Commercial

.................... 4F40

........................................................................ 22 T12CC

............................ Commercial

.................... T12 ERS

........................ Commercial

.................... 2F96

........................................................................ 23 T12 EIS

.......................... Commercial

.................... T12 EIS

.......................... Industrial

........................ 2F96HO

.................................................................. 2 T12 CC

.......................... Commercial

.................... T12 ERS

........................ Commercial

.................... T12 CC

.......................... Industrial

........................ T12 ERS

........................ Industrial

........................ *A positive Delta LCC implies a LCC savings whereas a negative number implies an increase in LCC

..%ballasts with redueed life cycle cost (winners), noted as "certainty level" by Crystal Ball. Delta LCC

Mean (1997$)

4 -2

6 -2

5 -4 18 -2 12 7 -2 11 28

1 15 %Winners··

68 31 80 33 68 23 98 36 87 75 35 90 98 50 94

3. Energy Savings, NetPresent Value and Net National Employment

As indicated, we conclude that standards will result in significant savings ofelectricity by ballasts for each standards scenario. These energy savings have value to society, as measured by the net present value analysis. The net present value analysis is a measure ofthe net savings to society from standards and are summarized in the following tables.

TABLE V.17A.-NET PRESENT VALUE FROM ELECTRONIC STANDARDS

Electronic standards for units sold from 2003 to 2030 discounted at 7% to 1997 (in billion 1997 $)*

Seen 1A Seen 1B Seen 2A Seen 2B Seen 3A Seen 3B Seen 4A Scen 4B Seenario T12 T12 T121T8 T12!T8 Decr2015 Decr2027 Decr2015 Decr2027 Decr2015 Decr2027 Decr2015 Decr2027

Total Benefit

................... 1.97
1 3.13 3.221 5.13 2.68

1 4.46 2.98 4.85 Total Equipment Cost

.... 1.01 1.62 0.81 1.27 0.64 1 1.08 0.72 1.18 Net Present Value

.......... 0.96
1 1.51 2.43 3.86 2.03 i 3.38 2.26 3.68

*Total Benefit and Net Present Value do not include HVAC savings.

TABLE V.17B.-NET PRESENT VALUE FROM CATHODE CUTOUT STANDARDS

Cathode cutout standards for units sold from 2003 to 2030 discounted at 7% to 1997 (in billion 1997 $)

Seenario Seen 5A 100% I Seen 5B 100% CC Decr2015 CC Decr2027 Seen 6A 37% 

# I Seen 6B 37% CC Decr2015 CC Decr2027
I Total Benefit

..................................................................................................... 0.94 0.78 0.16 Total Equipment Cost

...................................................................................... Net Present Value

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

Since the covered lamp ballasts are commercial products, these net savings apply to American business and industry. NPV is the differencebetween additional equipment costs and electricity cost savings. TheNPV for the electronicballast standards scenarios
ranges from about 0.96 billion to 3.86 billion dollars (1997 dollars). NPV increases underthe slower decreasing shipments forecast to 2027. NPVs for scenario 2 with T8 electronic ballasts

are about 2.5 times those for scenario 1 with T12 electronic ballasts. For scenario 3, the five-year phase-in period

causes an NPV reduction ofaround 15 percent over scenario 2. For scenario 4, the 2-year phase-inperiod results in an NPVreduction ofabout 5 percent over Scenario 2.

Forthe cathode cutout standards scenarios, NPV ranges from 0.16 to 2.54 billion dollars. For scenario 6, the NPV is 10 to 11 times greaterthanthat of scenario 5. Note that we did notinclude HVAC energy cost savings in any ofthe NPV calculations.

The net presentvalue analysis from the standards inthe Joint Comments is summarized inTable V.1B. 1.49 1.26 0.23 2.181 3.47 0.581 0.93 1.60 2.54

TABLE V.1B.-NET PRESENT VALUE RESULTING FROM JOINT COMMENT

Joint comment standards for units sold from 2005 to 2030 discounted at 7% to 1997 (in billion 1997 $)

Seenario

Total Benefit

............. Total Equipment Cost Net Present Value

.... Dec2015 Dec2027

1.95 3.51 0.53 0.91 1.42 2.60

TheDepartment committed in its 1996Process ImprovementRule to develop estimates ofthe employmentFederal Register/Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules 14153

impacts of proposed standards in the economy in general. 61 FR 36983. As discussed above, energy efficiency standards for ballasts are expected to reduce electricity bills for commercial and industrial consumers, although these savings are likely to be partially offset by increased costs for lighting equipment. The resulting net savings are expected to be redirected to other forms of economic activity. These shifts in spending and economic activity are expected to affect the demand for labor, but there is no generally accepted method for estimating these effects. One method to assess the possible effects on the demand for labor of such shifts in economic activity is to compare sectoral employment statistics developed by the Labor Department's Bureau of Labor Statistics (BLS). The BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. BLS data indicate that expenditures in the electric sector generally are associated with fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy. There are many reasons forthese differences, including the capitalintensity of the utility sector and wage differences. Based on the BLS data alone, we believe the increase in the demand for labor resulting from shifts in economic activity would offset any reduced demand in the domestic ballast industry as a result of a ballast standard. In developing this proposed rule, the Department attempted a more precise analysis of the impacts on national labor demand using an input/output model of the U.S. economy. The model characterizes the interconnections among 35 economic sectors using the data from the Bureau of Labor Statistics. Since the electric utility sector is morecapital-intensive and less laborintensive than other sectors (see Bureau of Economic Analysis, Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II), Washington, D.C., U.S. Department of Commerce, 1992), a shift in spending away from energy bills into other sectors would be expected to increase overall employment. The results of the Department's analysis are shown in Appendix E of the TSD. This analysis also concluded that the shifts in sectoral expenditures likely to result from the proposed ballast standard would likely increase the net national demand for labor. While both this input/output model and the direct use of BLS employment data suggest the proposed ballast standards are likely to increase the net demand for labor in the economy, the gains would most likely be very small relative to total national employment. For several reasons, however, even these modest benefits are in doubt: o Unemployment is now at the lowest rate in 30 years. If unemployment remains very low during the period when the proposed standards are put into effect, it is unlikely that the standards could result in any net increase in national employment levels.a Neither the BLS data nor the inputoutput model used by DOE include the quality or wage level of the jobs. One reason that the demand for labor increases in the model may be that the jobs expected to be created pay less than the jobs being lost. The benefits from any potential employment gains would be reduced if job quality and pay are reduced. o The net benefits from potential employment changes are a result of the estimated net present value of benefits or losses likely to result from the proposed standards, it may not be appropriate to separately identify and consider any employment impacts beyond the calculation of net present value. Taking into consideration these legitimate concerns regarding the interpretation and use of the employment impacts analysis, the Department concludes only that the proposed ballast standards are likely to produce employment benefits that are sufficient to offset fully the expected adverse impacts on employment in the domestic ballast industry. Because this is the first time DOE has performed such an analysis for an efficiency standards rulemakings, public comments are solicited on the validity of the analytical methods used and the appropriate interpretation and use of the results of this analysis.
4. Lessening of Utility or Performance of Products
An issue of utility that was considered was the possibility of interference with certain equipment, such as medical monitoring equipment, caused by the high frequency of electronic ballasts. To prevent any interference that cannot be solved by electronic ballast designers, the Department is not establishing a standard for T8 ballasts, thereby allowing magnetic T8 ballasts for such applications. 5. Impact of Lessening of Competition

The determination of this factor must be made by the Attorney General.
6. Need of the Nation to Save Energy Enhanced energy efficiency improves the Nation's energy security, strengthens the economy and reduces the environmental impacts of energy production. The energy savings from ballast standards result in reduced emissions of carbon and NOx. Cumulative emissions savings over the 18-year period modeled are shown in Table V.19.

TABLE V.19.-CUMULATIVE EMISSIONS REDUCTIONS (2003-2020)

Range for Range for Electronic Cathode Cut- Range ResultEmission Standards out Standards ing from Joint (standards (standards 5 Comments 1-4) and 6)

Carbon (Mt) .................................................................................................................................. 12-30 6-20 11-19 NOx (kt) ....................................................................................................................................... 41-97 20-65 34-60

The annual carbon emission 5.7 kt in 2015.8,9 Total carbon and NOx reductions range up to 2.3 Mt in 2020 emissions for each of the 12 studied and the NOx emissions reductions up to standards are reported in Tables D-1a

•million metric tons (Mt). • thousand metric tons (kt). and D-1b, Appendix D, of the TSD. In addition, equivalent results for the high and low economic growth cases for standards level 2b are reported in Table D-2 of the TSD. The outcome of the analysis for each case is shown as both 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 

### 14153

impacts ofproposed standards inthe economy in general. 61 FR 36983.

As discussed above, energy efficiency standards for ballasts are expectedto reduce electricity bills for commercial and industrial consumers, although these savings are likely to be partially offsetby increased costs for lighting equipment. Theresulting net savings are expectedto beredirected to other forms ofeconomic activity. These shifts in spending and economic activity are expectedto affect the demand for labor, butthere is nogenerally accepted method for estimating these effects.

One methodto assess the possible effects on the demand for labor ofsuch shifts in economic activityis to compare sectoral employment statistics developed by the Labor Department's Bureau ofLabor Statistics (BLS). The BLS regularly publishes its estimates of the number ofjobs per million dollars ofeconomic activity in different sectors ofthe economy, as well as thejobs created elsewhere in the economyby this same economic activity. BLS data indicate that expenditures in the electric
sector generally are associated with fewer jobs (both directly and indirectly) than expenditures in other sectors ofthe economy. There are many reasons for these differences, including the capitalintensity ofthe utility sector andwage differences. Based onthe BLS data alone, we believe the increase in the demand for labor resulting from shifts in economic activity would offset any reduced demand in the domestic ballast industry as a result ofa ballast standard.

In developing this proposedrule, the Department attempted a more precise analysis ofthe impacts on national labor demand using an input/outputmodel of the U.S. economy. The model characterizes the interconnections among 35 economic sectors using the data from the Bureau ofLabor Statistics. Since the electricutility sector is more capital-intensive and less laborintensive than other sectors (see Bureau ofEconomic Analysis, Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS 

### Ill, Washington, D.C., U.S. Department ofCommerce, 1992), a shift in spending away from energy bills into other sectors would be expectedto increase overall employment. The results ofthe Department's analysis are shown in Appendix E ofthe TSD. This analysis also concludedthat the shifts in sectoral expenditures likely to result from the proposedballast standard would likely increase the net national demand for labor.

While both this input/outputmodel and the direct use ofBLS employment data suggest the proposedballast standards are likely to increase the net demand for labor in the economy, the gains would most likely be very small relative to total national employment. For several reasons, however, eventhese modestbenefits are in doubt:

• Unemployment is now at the lowest rate in 30 years. If

### unemployment remains very low during the period when the proposed standards are put into effect, it is unlikely that the standards could result in any net increase in national employment levels.

• Neitherthe BLS data northe inputoutput model usedby DOE include the quality or wage level ofthejobs. One

reason that the demand for labor increases inthe model may be thatthe jobs expected to be created pay less than thejobs being lost. The benefits from any potential employment gains would be reduced ifjob quality and pay are reduced.

• The netbenefits from potential employment changes are a result ofthe estimated net present value ofbenefits

or losses likely to result from the proposed standards, it may notbe appropriate to separately identify and consider any employment impacts beyondthe calculation ofnet present value.

Taking into consideration these legitimate concerns regarding the interpretation and use ofthe employment impacts analysis, the Department concludes only that the proposed ballast standards are likely to produce employment benefits that are sufficient to offset fully the expected adverse impacts on employment in the domesticballast industry.

Because this is the first time DOE has performed such an analysis for an efficiency standards rulemakings, public
comments are solicitedonthe validity ofthe analytical methods used and the appropriate interpretation and use ofthe results ofthis analysis.

4. Lessening ofUtility or Performance of Products

An issue ofutility that was considered was the possibility of interference with certain equipment, such as medical monitoring equipment, caused by the high frequency of electronic ballasts. To prevent any interference that cannot be solved by electronic ballast designers, the Department is not establishing a standard for T8 ballasts, thereby allowing magnetic T8 ballasts for such applications.

5. Impact ofLessening ofCompetition

The determination ofthis factor must be made by the Attorney General.

6. Need ofthe Nation to Save Energy

Enhanced energy efficiency improves the Nation's energy security, strengthens the economy and reduces the environmental impacts ofenergy production. The energy savings from ballast standards result in reduced emissions ofcarbon and NOx
. Cumulative emissions savings over the 18-yearperiod modeled are shown in Table V.19.

TABLE V.19.-CUMULATIVE EMISSIONS REDUCTIONS 

### (2003-2020)

Emission

Carbon (Mt)

.................................................................................................................................. NOx (kt)

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



### The annual carbon emission reductionsrange up to 2.3 Mt in 2020 and theNOx emissions reductions up to 5.7 kt in 

### 2015. 8

•9 

### Total carbon and NOx emissions for each ofthe 12 studied standards are reported inTablesD-la

Bmillion metric tons (Mt).
"thousand metric tons (kt). Range for Range for Electronic Cathode Cut-**Ran~e** ResultStandards out Standards ins om Joint (standards (standards 5 omments 1-4) and 6)

12-30 6-20 11-19 41-97 20-65 3<H)0



### and D-lb, AppendixD, ofthe TSD. In addition, equivalentresults for the high and low economic growth cases for standards level 2b are reportedin Table D-2 oftheTSD. The outcome ofthe analysis for each caseis shown as both14154 Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules

emissions and deviations from the AE099 Reference Case result. Emissions for the Joint Comment are presented in Appendix E of the TSD. 7. Other Factors We present in Table V.20 a summary of the life-cycle cost results for those subgroups of commercial and industrial

consumers who, if forced by standards to purchase electronic ballasts, would choose to switch from T12 to T8 lighting systems. The column titled "Delta LCC" gives the change in LCC when switching from the baseline option of EEM ballast to the listed design option. "% Winners" represents the probability of the design option resulting in reduced
LCC.

TABLE V.20.-SUMMARY OF DELTA LCC* RESULTS

Delta LCC Product Class Design Option Sector Mean (1997$) %Winners**

1 F40 ............................................................................ T8 ERS ............................ Commercial ..................... 17 98 2F40 ............................................................................ T8 ERS ............................ Commercial ...................... 18 98 3F40 Tandem-Wired ................................................... T8 ERS ............................ Commercial ...................... 27 98 3F40 Not Tandem-Wired ............................................. T8 ERS ............................ Commercial ...................... 56 100 4F40 w/o Dual Switching ............................................ T8 ERS ............................ Commercial ...................... 54 100 4F40 Dual Switching ................................................... T8 ERS ............................ Commercial ...................... 44 99

*A positive Delta LCC implies a LCC savings whereas a negative number implies an increase in LCC
% ballasts with reduced life cycle cost (winners), noted as "certainty level" by Crystal Ball.

For commercial and industrial consumers that choose four foot T8 lamps with their electronic ballasts, who in the current market represent 95 percent of purchasers of electronic ballasts, 98 to 100 percent will have life cycle cost savings which average 17 to 54 dollars. We did not evaluate commercial and industrial consumers of eight foot lamps, but we expect them to have similarly robust positive results. As stated, the Department analyzed the joint Comment in terms of national energy savings, net present value, national employment impacts and emission reductions. These results are also shown in Appendix E of the TSD. For the common scenario between the Department's analysis and the joint Comment proposal of a market transformation by 2027 and a shift to T8 lamps, the above benefits are approximately 24 percent less than the Department's analysis which started the standards in the year 2003. However, the burdens on the manufacturers are also reduced to lower levels. The manufacturers have commented that their proposed staggered implementation dates mitigate the adverse impacts.

e. Conclusion
Section 325(1) of the Act specifies that the Department must consider, for amended standards, those standards that "achieve the maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified" and which will "result in significant conservation of energy." Accordingly, the Department first considered the benefits and burdens of the max tech level of efficiency, i.e., electronic ballast standards. Furthermore, in considering this standard level, the Department considered the staggered implementation scheme recommended in the joint Comments.
Significant Conservation of Energy The Department concludes that an electronic ballast standard saves a significant amount of energy. The energy savings reported for an electronic ballast standard in the Department's analysis ranged between 1.20 to 2.32 Quads of energy, not including the HVAC effects. The Department considers energy savings within this range to be significant.
Technological Feasibility The Department concludes that an electronic ballast standard is technologically feasible as these products are currently available and comprise roughly half of the market.
Summary of Economic Impacts In determining economic justification, the Department considered the burdens and benefits of an electronic ballast standard. The burdens accrue to the manufacturers of magnetic ballasts, some of their suppliers and employees, and to some commercial and industrial consumers who, because of factors such as lower than average electric costs or hours of operation, will experience increased life cycle costs. On the other hand, most commercial and industrial consumers will benefit from lower life cycle costs due to energy savings. These lower costs to the nation's businesses and industries produce increased jobs in the economy at large and the energy savings result in reduced atmospheric emissions. The Department gave considerable weight to the recommendations of the joint Comment which attempts to balance these burdens and benefits. The proposal reduces energy savings by approximately 24 percent compared to the Department's analysis for the common scenario of a market transformation by 2027 and a shift to T8 lamps. These reductions come mainly from delaying the effective dates of the standards from the year 2003 to 2005 and later for replacement ballasts. However, these same extensions also reduce the impacts of the standards on manufacturers from what the Department estimated to levels which the manufacturers state are mitigated. While the Department did not revise the MIA, we believe the manufacturers' statement in the Joint Comment that the impacts on them from the proposal are mitigated is sufficient to conclude that, given the benefits, today's proposed standards are economically justified.
Economic Impact on Manufacturers

Over the range of cash flow scenarios and shipment forecasts that the Department studied for standards starting for all classes in 2003, we estimated that manufacturers that produce both magnetic and electronic ballasts would loose between 54.6 and 113.7 millions of dollars of NPV as a result of electronic standards. Manufacturers that currently produce electronic ballasts only were estimated to gain 9.3 to 27.5 millions of dollars of NPV. Domestic suppliers to the ballast industry were expected to loose between 7.55 and 20.69 millions of dollars of NPV. Luminaire manufacturers were expected to loose between 5.5 and 14.5 millions of dollars 

### 14154 Federal Register IVoI. 65, No. 51 IWednesday, March 15, 2000/Proposed Rules

emissions and deviations from the AE099 Reference Case result. Emissions for the Joint Comment are presented in Appendix E ofthe TSD. 7. Other Factors
We present in Table V.20 a summary ofthe life-cycle cost results for those subgroups ofcommercial and industrial

consumers who, ifforced by standards
to purchase electronic ballasts, would chooseto switch from T12 to T8lighting systems. The column titled "Delta LCC" gives the change inLCC when switching .from the baseline option ofEEM ballast
to the listed design option. "% Winners" represents the probability of the design option resulting inreduced LCe.

TABLE V.20.-SUMMARY OF DELTA 

### LCC· RESULTS

Delta LCC Product Class Design Option Sector Mean (1997$) %WinnerS"

1F40

............................................................................ T8 ERS

............................ Commercial

...................... 17 18 27 56 54 44 98 98 98 2F40

............................................................................ T8 ERS

............................ Commercial

...................... 3F40 Tandem-Wired

................................................... T8 ERS

............................ Commercial

...................... 3F40 Not Tandem-Wired

............................................. T8 ERS

............................ Commercial

...................... 100 100 99 4F40 wlo Dual Switching

............................................ T8 ERS

............................ Commercial

...................... 4F40 Dual Switching

................................................... T8 ERS

............................ Commercial

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

*A positive Delta LCC implies a LCC savings whereas a negative number implies an increase in LCC ** % ballasts with reduced life cycle cost (winners), noted as "certainty level" by Crystal Ball.

For commercial and industrial

consumers that choose four foot T8 lamps with their electronic ballasts, who in the current market represent 95 percent ofpurchasers ofelectronic ballasts, 98 to 100 percent will have life cycle cost savings which average 17 to 54 dollars. We did not evaluate commercial and industrial consumers of eight foot lamps, but we expect them to have similarly robust positive results.

As stated, the Department analyzed theJoint Comment in terms ofnational
energy savings, net present value, national employment impacts and emission reductions. These results are also shown in Appendix E ofthe TSD. Forthe common scenario between the Department's analysis and the Joint Comment proposal ofa market

. transformation by 2027 and a shift to T8 lamps, the above benefits are approximately 24 percent less than the Department's analysis which started the standards in theyear 2003. However, the burdens on the manufacturers are also reduced to lower levels. The manufacturers have commented that their proposed staggered implementation dates mitigate the adverse impacts.



### e. Conclusion

Section 325(I) oftheAct specifies that the Department must consider, for amended standards, those standards that "achievethe maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified" and which will "result in significant conservation of energy." Accordingly, the Department first considered the benefits and burdens ofthe max tech level of efficiency, 

### i.e., electronic ballast standards. Furthermore, in considering this standard level, the Department considered the staggered implementation scheme recommended in theJoint Comments. 

### Significant Conservation of Energy
The Department concludes that an electronic ballast standard saves a significant amount ofenergy. The energy savings reported for an electronic ballast standard in the Department's analysis ranged between 1.20 to 2.32 Quads ofenergy, not including the HVAC effects. The Department considers energy savings within this range to be significant. 

### Technological Feasibility

The Department concludes that an electronic ballast standard is technologically feasible as these products are currently available and comprise roughly halfofthe market. 

### Summary of EconomicImpacts
In determining economicjustification, theDepartment considered the burdens and benefits ofan electronic ballast standard. Theburdens accrue to the manufacturers ofmagneticballasts,

some oftheir suppliers and employees, and to some commercial and industrial

consumers who,because offactors such

as lowerthan average electric costs or hours ofoperation, will experience increased life cycle costs. Onthe other hand, most commercial and industrial

consumers will benefit from lower life cycle costs due to energy savings. These lower costs to the nation's businesses and industries produce increasedjobs in the economy at large andthe energy savings result inreduced atmospheric emissions. The Departmentgave considerable weight to the recommendations ofthe Joint Comment which attempts to balance these burdens and benefits. The proposal reduces energy savings by approximately 24 percent compared to the Department's analysis for the

common scenario ofa market transformation by 2027 and a shift to T8 lamps. These reductions come mainly from delaying the effective dates ofthe standards from the year 2003 to 2005 and later for replacementballasts. However, these same extensions also reduce the impacts ofthe standards on manufacturers from whatthe Department estimated to levels which the manufacturers state are mitigated. While the Department did not revise the MIA, we believe the manufacturers'
statement in the Joint Comment that the impacts on them from the proposal are mitigated is sufficient to conclude that, given the benefits, today's proposed standards are economicallyjustified.



### EconomicImpact on Manufacturers

Over the range ofcash flow scenarios and shipmentforecasts thatthe Department studied for standards starting for all classes in 2003, we estimated that manufacturers that produce both magnetic and electronic ballasts would loose between 54.6 and 113.7 millions ofdollars ofNPV as a result ofelectronic standards. Manufacturers that currently produce electronic ballasts only were estimated
togain 9.3 to 27.5 millions of dollars of NPV. Domestic suppliers to the ballast industry were expectedto loose between 7.55 and 20.69 millions of dollars ofNPV. Luminaire manufacturers were expected to loose between 5.5 and 14.5 millions ofdollarsFederal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules 14155

of NPV. Cumulatively, the Department estimates that businesses involved in the ballast industry would have net losses of between 47.4 and 121.4 millions of dollars of NPV as a result of electronic standards starting in the year 2003. This loss of value comes mainly from the lower profitability of the electronic ballast market compared to the magnetic ballast market. Additionally, restructuring costs associated with plant closures and expansions and changes in capacity utilization make up the rest of the loss in value. Manufacturers report that a domestic magnetic ballast manufacturing plant, and possibly a domestic magnet wire plant, would close if an electronic ballast standard became effective in 2003. It was also reported that a capacitor plant and part of a magnetic ballast manufacturing plant, both located in Mexico, would also close. Additionally, it was reported that two domestic electronic ballast manufacturing plants, and two located in Mexico, would expand. The Department has included these assumptions in the above NPV values. However, given the downward trend in magnetic ballast shipments, statements by manufacturers that the market is transitioning away from magnetic ballasts and the movement of domestic magnetic ballast manufacturing facilities to Mexico in recent years, it certainly seems possible that the plants associated with magnetic ballasts might be closed, or moved to Mexico, even in the absence of standards. Therefore, the Department also considered a scenario where the domestic magnetic ballast manufacturing facilities close in the base case. Under this assumption the losses to manufacturers that produce both magnetic and electronic ballasts, and to the total industry, would be reduced by 13.7 million dollars from the previous figures to a range of 33.7 to 107.7 millions of dollars of NPV. Employment Impacts
Given the manufacturer reported plant closure and expansion assumptions, the Department estimated that between 666 and 717 direct domestic magnetic ballast manufacturing jobs, along with 313 to 340 domestic supplier jobs, would be lost. The Department also estimated that between 500 and 557 direct domestic electronic ballast manufacturing jobs, along with zero to 144 supplier jobs would be created. Thus, the Department estimated that the impact on direct domestic employment in the ballast industry would be a net loss of between 350 and 500 jobs. However, given the movement of domestic magnetic ballast manufacturing facilities to Mexico in recent years, it certainly seems possible that many of these jobs would be moved to Mexico in the absence of an electronic ballast standard. Therefore, the Department also considered a scenario where the domestic magnetic ballast manufacturing facility closes in the base case. Under this scenario, no direct domestic magnetic ballast manufacturing jobs would be lost and the impact on direct domestic employment in the ballast industry would be a net gain of between 500 and 557 jobs. In addition to the direct domestic jobs, the Department also estimated that there are between 363 and 406 associated domestic jobs in the ballast industry that, while not being eliminated, are at risk of being moved to Mexico as a result of business decisions. Additionally, the Department estimated that between 1,570 and 1,727 direct magnetic ballast manufacturing jobs in Mexico would be lost while 700 to 769 direct electronic ballast manufacturing jobs would be created in Mexico. Under the scenario where the domestic magnetic ballast manufacturing facility closes in the base case, no associated domestic jobs are at risk of being moved to Mexico as result of standards, while the direct magnetic ballast manufacturing jobs lost in Mexico grows to between 2,236 and 2,444 jobs.
Consumer Impacts As a result of the Department's analysis, we believe most commercial and industrial consumers will save money. In total, we estimated the energy savings to have a net present value to American business and industry of 1.42 to 2.60 billion dollars, depending on the forecast of switching from magnetic ballasts to electronic ballasts in the absence of standards, and the rate of switching from T12 to T8 lamps in the face of standards. Commercial consumers will experience lower life cycle costs which range from an average savings of 4 dollars for a 1F40T12 ballast to an average savings of 18 dollars for a 3F40T12 not tandem-wired ballast. Within these respective averages, 68 to 98 percent of the consumers will have lower life cycle costs while 32 to 2 percent will have higher life cycle costs. Those commercial consumers who also switch to T8 lamps will experience even lower life cycle costs which range from an average savings of 17 dollars for a 1F40T8 ballast to an average savings of 56 dollars for a 3F40T8 ballast. Within these respective averages 98 to 100 percent of the consumers will have lower life cycle costs. The Department believes almost every commercial consumer who switches to an electronic ballast for T8 lamps will save money. Industrial consumers using F96T12 lamps, who represent 26 percent of F96T12 lamps, will experience higher life cycle costs with average costs of 2 dollars per ballast. Within that average, 35 percent will have lower life cycle costs while 65 percent will have higher life cycle costs. The above industrial consumer impacts are for T12 lamps and, while we did not evaluate industrial consumers of eight foot T8 lamps, we expect them to have a much larger proportion with lower life cycle costs as was the case for all consumers of four foot lamps who switch from T12 to T8 lamps. National Impacts
As stated earlier, the energy savings reported for an electronic ballast standard in the Department's analysis ranged from 1.20 to 2.32 Quads of energy. These energy savings would result in carbon emission reductions of 11 to 19 million metric tons and NOx emission reductions of 34 to 60 thousand metric tons.
Net Benefits of Proposed Standard After carefully considering the analysis, comments and benefits versus burdens, the Department proposes to amend the energy conservation standards for fluorescent lamp ballasts as proposed by the joint Comment. The Department concludes this standard saves a significant amount of energy and is technologically feasible and economically justified. In determining economic justification, the Department finds that the benefits of energy savings, consumer life cycle cost savings, national net present value increase, job creation and emission reductions resulting from the standard outweigh the burdens of the loss of manufacturer net present value, possible plant closings and job loss and consumer life cycle cost increases for some users of fluorescent lamp ballasts covered by today's notice.
VI. Procedural Issues and Regulatory Review

a. Review Under the National Environmental Policy Act
In issuing the March 4, 1994 Proposed Rule for energy efficiency standards for eight products

, one of which was fluorescent lamp ballasts, the Department prepared an Environmental 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 

### 14155

ofNPV. Cumulatively, the Department estimates that businesses involved in theballast industry would have net losses ofbetween 47.4 and 121.4 millions ofdollars ofNPV as a result of electronic standards starting in the year 2003. This loss ofvalue comes mainly from the lower profitability ofthe electronic ballast market compared to the magnetic ballast market. Additionally, restructuring costs associated with plant closures and expansions and changes in capacity utilizationmakeup therest ofthe loss in value.

Manufacturers report that a domestic magneticballast manufacturing plant, and possibly a domestic magnet wire plant, would close ifan electronic ballast standardbecame effective in 2003. Itwas also reported that a capacitorplant and part ofa magnetic ballast manufacturing plant, both located in Mexico, would also close. Additionally, itwas reported that two domestic electronicballast manufacturing plants, and two located in Mexico. would expand. The Department has included these assumptions inthe above NPV values.

However. giventhe downward trend in magnetic ballast shipments.
statementsby manufacturers that the market is transitioning away from magneticballasts and the movement of domestic magnetic ballast manufacturing facilities to Mexico in
recent years. it certainly seems possible that the plants associated with magnetic ballasts might be closed. or moved to Mexico. even in the absence of standards. Therefore. the Department also considered a scenario where the domestic magnetic ballast manufacturing facilities close in the base case. Underthis assumption the losses to manufacturers that produce both magnetic and electronic ballasts. and to the total industry. would be reducedby 13.7 million dollars from the previous figures to a range of33.7 to 107.7 millions ofdollars ofNPV. 

### EmploymentImpacts

Given the manufacturerreported plant closure and expansion assumptions. the Department estimated that between 666 and 717 direct domestic magnetic ballast manufacturingjobs. along with 313 to 340 domestic supplierjobs. would be lost. TheDepartment also estimated that between 500 and 557 direct domestic electronic ballast manufacturingjobs. along with zero to 144 supplierjobs would be created. Thus. theDepartment estimated that the impact on direct domestic employment inthe ballast industry would be a net loss ofbetween 350 and 500 jobs.

However. given the movement of domestic magneticballast manufacturing facilities to Mexico in
recent years. it certainly seems possible that many ofthesejobs wouldbe moved
to Mexico in the absence ofan electronic ballast standard. Therefore. theDepartment also considered a scenario wherethe domestic magnetic ballast manufacturing facility closes in the base case. Under this scenario. no direct domestic magnetic ballast manufacturingjobs would be lost and the impact on direct domestic employment in theballast industry would be a net gain ofbetween 500 and 557 jobs.

In addition to the direct domestic jobs. the Department also estimatedthat there are between 363 and 406 associated domestic jobs in the ballast industry that. while not being eliminated. are at risk ofbeing moved to Mexico as a result ofbusiness decisions. Additionally, theDepartment estimated thatbetween 1.570 and 1,727 direct magneticballastmanufacturingjobs in Mexico wouldbe lost while 700 to 769 direct electronic ballast manufacturing jobs would be created in Mexico. Under the scenario where the domestic magnetic ballastmanufacturing facility closes in the base case. no associated domesticjobs are at risk ofbeing moved
to Mexico as result ofstandards. while the direct magnetic ballast manufacturingjobs lost in Mexico grows tobetween 2.236 and 2.444jobs.



### ConsumerImpacts

As a result ofthe Department's analysis, we believe most commercial and industrial consumers will save money. Intotal, we estimated the energy savings to have a net present value to Americanbusiness and industry of 1.42
to 2.60 billion dollars. depending on the forecast ofswitching from magnetic ballaststo electronicballasts in the absence ofstandards. and the rate of switching from T12 to T8 lamps in the face ofstandards.

Commercial consumers will experience lower life cycle costs which range from an average savings of4 dollars for a IF40T12 ballast to an average savings of 18 dollars for a 3F40T12 not tandem-wiredballast. Withinthese respective averages. 68 to 98 percent ofthe consumers will have lower life cycle costs while 32 to 2 percent will havehigher life cycle costs. Those commercial consumers who also switch to T8 lamps will experience even lower life cycle costs which range from

an average savings of 17 dollars for a IF40T8 ballast to an average savings of 56 dollars for a 3F40T8 ballast. Within these respective averages 98 to 100 percent ofthe consumers will have lower life cycle costs. The Department believes almost every commercial

consumer who switches to an electronic ballast for T81amps will save money.

Industrial consumers using F96T12 lamps. who represent 26 percent of F96T12 lamps, will experience higher life cycle costs with average costs of2 dollars perballast. Withinthat average, 35 percentwill have lower life cycle
costs while 65 percent will have higher life cycle costs. The above industrial

consumer impacts arefor T121amps and

.. while we did not evaluate industrial consumers ofeight foot T8 lamps. we expect them to have a much larger proportionwith lower life cycle
costs as was the case for all consumers offour foot lamps who switch from T12
to T81amps.


### National Impacts

As stated earlier. the energy savings reported for an electronicballast standard in the Department's analysis ranged from 1.20 to 2.32 Quads of energy. These energy savings would result in carbon emission reductions of 11 to 19 million metrictons and NOx emission reductions of34 to 60 thousand metric tons.


### Net Benefits of Proposed Standard
After carefully considering the analysis. comments andbenefits versus burdens. the Department proposes to amend the energy conservation standards for fluorescent lamp ballasts

as proposedby theJoint Comment. The Department concludes this standard

saves a significant amount ofenergy and is technologically feasible and economicallyjustified. In determining economicjustification. the Department finds that the benefits ofenergy savings.

consumer life cycle cost savings. national net present value increase.job creation and emission reductions resulting from the standard outweigh thebUrdens ofthe loss ofmanufacturer
net presentvalue. possible plant closings andjob loss and consumer life cycle cost increases for some users of fluorescent lamp ballasts covered by today's notice.

VI. Procedural Issues and Regulatory Review

a. 

### Review Under the National EnvironmentalPolicyAct

In issuingthe March 4.1994 Proposed Rule for energy efficiency standards for eight products. one ofwhich was fluorescent lamp ballasts. the Department prepared an Environmental14156 Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

Assessment (EA) (DOE/EA-0819) that was published within the Technical Support Document for that Proposed Rule. (DOE/EE-0009, November 1993.) We found the environmental effects associated with various standard levels for fluorescent lamp ballasts, as well as the other seven products

, to be not significant

, and we published a Finding of No Significant Impact (FONSI). 59 FR 15868 (April 5, 1994). In conducting the analysis for today's Proposed Rule, the Department evaluated design options as suggested in
comments

. As a result

, the energy savings estimates and resulting environmental effects from revised energy efficiency standards for fluorescent lamp ballasts in today's proposal differ somewhat from those that we presented for fluorescent lamp ballasts in the 1994 Proposed Rule. Nevertheless

, the environmental effects expected from today's Proposed Rule would fall within ranges of environmental impacts from the revised energy efficiency standards for fluorescent lamp ballasts that DOE found in the FONSI not to be significant.
b. Review Under Executive Order 12866, 'Regulatory Planning and Review' Today's regulatory action has been determined to be an "economically significant regulatory action" under Executive Order 12866, "Regulatory Planning and Review." (58 FR 51735, October 4, 1993). Accordingly, today's action was subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA). The draft submitted to OIRA and other documents submitted to OIRA for review have been made a part of the rulemaking record and are available for public review in the Department's Freedom of Information Reading Room, 1000 Independence Avenue, SW, Washington

, DC 20585, between the hours of 9:00 a.m

. and 4:00 p.m., Monday through Friday, telephone (202) 586-3142. The following summary of the Regulatory Analysis focuses on the major alternatives considered in arriving at the proposed approach to improving the energy efficiency of consumer products

. The reader is referred to the complete draft "Regulatory Impact Analysis," which is contained in the TSD, available as indicated at the beginning of this NOPR. It consists of: (1) A statement of the problem addressed by this regulation, and the mandate for government action; (2) a description and analysis of the feasible policy alternatives to this regulation; (3) a quantitative comparison of the impacts of the alternatives ; and (4) the national economic impacts of the proposed standard. DOE identified the following eight major policy alternatives for achieving

consumer product energy efficiency. These alternatives include: ® No New Regulatory Action • Informational Action
-Product Labeling -Consumer Education m Financial Incentives -Tax Credits -Rebates ® Voluntary Energy Efficiency Targets ® Mass Government Purchases • Lighting Research and Development • Building Codes ® The Proposed Approach (Performance Standards) Each alternative has been evaluated in terms of its ability to achieve significant energy savings at reasonable costs, and has been compared to the effectiveness of the proposed rule. These alternatives were analyzed with the NES model, as explained in the RIA section and Appendix B of the TSD. The results are reported for lighting energy savings only (HVAC interactive impacts would increase the savings by 6.25 percent). Many alternatives assume a conversion rate, which means the percentage of ballasts that would be magnetic for any year in the base case that are T8 electronic in the alternative case; the base case already assumes that some ballasts would be electronic without policy action. The performance standards case has a 100 percent conversion rate to electronic ballasts. If no new regulatory action were taken, then no new standards would be implemented for these products. This is essentially the "base case." For this analysis, we considered two base cases (the "Decreasing shipments to 2015" case and the "Decreasing shipments to 2027" case). In this section, we report two values for the base cases and policy alternatives

, corresponding to each base case respectively . For the base cases, between the years 2003 and 2030, there would be expected energy use of 83.3- 90.6 Quads (87.9-96.6 EJ) of primary energy, with no energy savings and a zero net present value (see Appendix B of the TSD for the derivation of these estimates). Several alternatives to the base cases can be grouped under the heading of informational action. They include

consumer product labeling and DOE public education and information
programs. Both ofthese alternatives are already mandated by, and are being implemented under the Act. In addition, there are other programs that promote currently

-efficient technologies. These include the National Electrical Manufacturers Association's Energy Cost Savings Council, the Environmental Protection Agency's Energy Star Buildings/Green Lights Program, and the Energy Policy Act's Voluntary Luminaire Program. One base case alternative would be to estimate the energy conservation potential of enhancing these programs . To model this possibility

, we assumed that the market impacts of these programs resulted in a 3 percent annual conversion rate to electronic ballasts. This resulted in energy savings equal to 0.05-0

.09 Quad (0.05-0.09 EJ), with net present value estimated to be $0

.08-0.12 billion. Another base case alternative would be to assume that enhanced labeling and consumer education promote advanced technologies

, such as daylighting. To model this possibility, we assumed that some consumers influenced by the policy would select electronic dimming ballasts, while others would select regular electronic ballasts. For those using dimming ballasts, we assumed that the fluorescent lamp ballast kiloWatthour savings were 40 percent higher for F40 and F96 fluorescent lamp ballasts, that there was no daylighting potential for industrial sector F96HO, that incremental prices for dimming fluorescent lamp ballasts were seven dollars higher than for regular electronic ballasts, and that there was an annual 0.6 percent conversion rate to dimming fluorescent lamp ballasts

. The annual conversion rate for the remaining consumers affected by the policy who selected regular electronic ballasts was 2.4 percent

. This possibility resulted in energy savings of 0.05-0 .10 Quad (0.06- 0.10 EJ), with a net present value of $0.08-0.13 billion. Various financial incentive alternatives were tested

. These included tax credits and rebates to consumers, as well as tax credits to manufacturers. Both the tax credits to consumers and the consumer rebates were assumed to reduce the incremental ballast expense for electronic ballasts by 50 percent. We assumed that the tax credits caused a conversion rate to electronic ballasts of 7 percent

. The tax credits to consumers showed a change from the base case, saving 0.12-0.21 Quad (0.12-0.22 EJ) with a net present value of $0.20-0.31 billion. Consumer rebates were assumed to result in a conversion rate of 12 percent

. Consumer rebates showed slightly higher energy savings; they would save 0.20-0.36 Quad (0.21-0.38 EJ), with a net present value of $0.34- 0.53 billion. 

### 14156 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

Assessment (EA) (DOE/EA-0819) that

was published within the Technical SupportDocument for that Proposed Rule. (DOE/EE-0009, November 1993.) We found the environmental effects associated with various standard levels for fluorescent lamp ballasts, as well as the other seven products, tobe not significant, and we published a Finding ofNo Significant Impact (FONSI). 59 FR 15868 (April 5, 1994).

In conducting the analysis for today's Proposed Rule, the Department evaluated design options as suggested in
comments. As a result, the energy savings estimates and resulting environmental effects from revised energy efficiency standards for fluorescent lamp ballasts in today's proposal differ somewhat from those that we presented for fluorescent lamp ballasts in the 1994 Proposed Rule. Nevertheless, the environmental effects expected from today's Proposed Rule would fall withinranges of environmental impacts from the revised energy efficiency standards for fluorescent lamp ballasts that DOE found in the FONSI not to be significant.

b. Review UnderExecutive Order 12866, 'RegulatoryPlanning andReview'

Today's regulatory action has been determined to be an "economically significant regulatory action" under Executive Order 12866, "Regulatory Planning and Review." (58 FR 51735, Odober4,1993). Accordingly, today's action was subject to review underthe Executive Orderby the Office of Information and Regulatory Affairs (OIRA).

The draft submitted to OIRA and other documents submitted to OIRA for review havebeen made a part ofthe rulemaking record and are available for publicreview inthe Department's Freedom ofInformation Reading Room, 1000 Independence Avenue, SW, Washington, DC 20585, between the hours of9:00 a.m. and 4:00 p.m., Monday through Friday, telephone (202) 586-3142.

The following summary ofthe Regulatory Analysis focuses onthe major alternatives considered in arriving
at the proposed approachto improving the energy efficiency ofconsumer products. The reader is referred tothe complete draft "Regulatory Impact Analysis," which is contained in the TSD, available as indicated at the beginning ofthis NOPR. It consists of: (1) A statement oftheproblem addressed by this regulation, and the mandate for government action; (2) a description and analysis ofthe feasible policy alternatives to this regulation; (3) a quantitative comparison ofthe impacts ofthe alternatives; and (4) the national economic impacts ofthe proposed standard.

DOE identifiedthe following eight major policy alternatives for achieving

consumer product energy efficiency. These alternatives include:

.. No NewRegulatory Action

.. Informational Action -Product Labeling -ConsumerEducation

.. Financial Incentives -Tax Credits -Rebates

.. Voluntary Energy Efficiency Targets

.. Mass Government Purchases

.. Lighting Research and Development

.. Building Codes

.. The Proposed Approach (Performance Standards)

Each alternative has been evaluated in
terms ofits ability to achieve significant energy savings at reasonable costs, and has been compared to the effectiveness ofthe proposed rule. These alternatives

were analyzed with the NES model, as explained in the RIA section and Appendix B ofthe TSD. The results are reported for lighting energy savings only (HYAC interactive impactswould increase the savings by 6.25 percent). Many alternatives assume a conversion rate, which means the percentage of ballasts thatwouldbe magnetic for any year in thebase case that are T8 electronic in the alternative case; the base case already assumes that some ballasts would be electronic without policy action. The performance standards case has a 100 percent conversionrate to electronic ballasts.

Ifno new regulatory action were taken, then no new standards wouldbe implemented for these products. This is essentially the "base case." For this analysis, we consideredtwo base cases (the "Decreasing shipments to 2015"

case andthe "Decreasing shipments to 2027" case). In this section, we report two values for the base cases and policy alternatives, correspondingto each base

case respectively. For the base cases, between theyears 2003 and 2030, there would be expected energy use of83.3- 90.6 Quads (87.9-96.6 ED ofprimary
energy, with no energy savings and a

zero net present value (see Appendix B ofthe TSD for the derivation ofthese estimates).

Several alternatives to the base cases

canbe grouped underthe heading of informational action. They include

consumerproduct labeling and DOE public education and information programs. Both ofthese alternatives are already mandated by, and are being implemented undertheAct. In addition, there are other programs that promote currently-efficienttechnologies. These includethe National Electrical Manufacturers Association's Energy Cost Savings Council, the Environmental Protection Agency's Energy Star Buildings/Green Lights Program, and the Energy Policy Act's Voluntary Luminaire Program. One base

case alternative would be to estimate the energy conservation potential of enhancing these programs. To modeL this possibility, we assumed that the market impacts ofthese programs resulted in a 3 percent annual conversion rate to electronic ballasts

. Thisresulted in energy savings equal to 0.05-0.09 Quad (0.05-0.09 ED, with net present value estimated to be $0.08-0.12 billion.

Anotherbase case alternative would beto assume that enhanced labeling and

consumer education promote advanced technologies, such as daylighting. To model this possibility, we assumed that

some consumers influenced by the policy would select electronic dimming ballasts, while others would select regular electronic ballasts. Forthose using dimmingballasts, we assumed that the fluorescent lamp ballast kiloWatthour savings were 40 percent higher for F40 and F96 fluorescent lamp ballasts, that there was no daylighting potential for industrial sectorF96HO, that incremental prices for dimming fluorescent lamp ballasts were seven dollars higherthan for regular electronic ballasts, and that there was an annual 0.6 percent conversion rate to dimming fluorescent lamp ballasts. The annual conversion rate for the remaining

consumers affected bythe policy who selected regular electronic ballasts was 2.4 percent. This possibility resulted in energy savings of0.05-0.10 Quad (0.06- 0.10 ED, with a net presentvalue of $0.08-0.13 billion.

Various financial incentive alternatives were tested. These included
tax credits and rebates to consumers, as well as tax credits to manufacturers. Boththe tax credits to consumers and the consumerrebates were assumed to reduce the incremental ballast expense for electronic ballasts by 50 percent. We assumed that the tax credits caused a conversion rate to electronic ballasts of 7percent. The tax credits to consumers showed a change from thebase case, saving 0.12-0.21 Quad (0.12-0.22 EJ) with a net present value of$0.20-0.31 billion. Consumerrebates were assumed
to result in a conversionrate of 12 percent. Consumerrebates showed slightly higher energy savings; they would save 0.20-0.36 Quad (0.21-0.38 En, with a net present value of$0.34- 0.53 billion.Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules 14157

Another financial incentive that was considered was a tax credit to manufacturers for the additional costs of producing electronic ballasts. In this scenario

, we assumed a tax credit of 20 percent of the increased costs to manufacturers for retooling in the years 2001-2003 (when these costs would be incurred). 10 These costs depreciated over a ballast lifetime resulted in a $0.04 reduction in the incremental purchase price. The tax credits to manufacturers had an insignificant effect, with no energy savings and a zero net present value.Two scenarios of voluntary energyefficiency targets were examined. In the first one, the proposed energy conservation standards were assumed to be voluntarily adopted by all the relevant manufacturers 5 years later than mandatory standards. In the second scenario, the proposed standards were assumed to be adopted 10 years later. In these scenarios, voluntary improvements having a 5-year delay, compared to implementation of mandatory standards, would result in energy savings of 0.84-1.91 Quads (0.88-2.02 EJ), and a net present value of $0.96-2.04 billion; voluntary improvements having a 10-year delay would result in 0.34-1.05 Quads (0.36- 1.1 EJ) being saved, and a net present value of $0.33-0.96 billion. These scenarios assume that there would be universal voluntary adoption of the energy conservation standards by fluorescent lamp ballast manufacturers, an assumption for which there is no reasonable assurance. Another policy option that we reviewed was that of massive purchases of electronic ballasts by Federal, State, and local governments. We modeled this policy by assuming that all ballasts purchased by these government entities were electronic ballasts, which, coupled with a modest impact on the remaining market, resulted in a 10 percent national conversion rate. This policy option resulted in energy savings of 0.17-0.30 Quad (0.18-0.32 EJ) and a net present value of $0.25

-0.40 billion. We also reviewed a policy of lighting research that could [there is no cost reduction in this policy] add more efficient alternatives to fluorescent electronic T-12 and T-8 ballasts. To analyze this option, we assumed that the conversion rate to controls

, such as dimming fluorescent lamp ballasts, was 1.6 percent, that there was a time delay of 5 years for new technology options to reach the market, that the incremental kiloWatthour savings was 40 percent,

10 Manufacturer Impact Analysis, conversion capital expenditures (see the TSD, chapter 6). and the increase in the incremental electronic ballast cost was seven dollars. This resulted in energy savings of 0.01- 0.04 Quad (0.01-0.05 EJ), with a net present value that we estimated to be $0.01-0.04 billion. Still another policy option that we reviewed was one of aggressive promotion of state adoption and enforcement of commercial building codes, including those for major lighting system renovations. To analyze this option, we assumed a one percent to three percent electronic ballast conversion

, for each base case, respectively. This resulted in energy savings of 0.05-0

. 15 Quad (0.05-0.16 EJ), and a net present value of $0.06- 0.18 billion. Lastly, all of these alternatives must be gauged against the performance standards that are being proposed in this NOPR. Such performance standards would result in energy savings of 1.20- 4.90 Quads (1.27-5.17 EJ) (without HVAC savings) and the net present value would be an expected $1.42-5.41 billion. (These estimates represent the lower and upper bounds of the results of all scenarios analyzed). As indicated in the paragraphs above, none of the alternatives that were examined for these products saved as much energy as the proposed rule. Also, most of the alternatives would require that enabling legislation be enacted, since authority to carry out those alternatives does not presently exist.
c. Review under the Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an assessment of the impact of regulations on small businesses

. Small businesses are defined as those firms within an industry that are privately owned and less dominant in the market. The Standard Industrial Classification (SIC) Code for fluorescent lamp ballast manufacturers is 36124. To be categorized as a "small" fluorescent lamp ballast manufacturer

, a firm must employ no more than 750 employees. In the fluorescent lamp ballast industry, there is one "small" manufacturer who produces both "affected" magnetic and electronic ballasts

. The "small " manufacturer has its electronic and magnetic ballast manufacturing operations in the same plant. Its smaller size and less automated operations would seem to provide it with the flexibility to adapt to a new electronic ballast standard without significant asset write-offs or plant closures. The negative impacts on the "small" manufacturer's cash flows from operations, however, would likely be similar in proportion to those of the larger manufacturers. Since only one of the seven manufacturers of fluorescent lamp ballasts is "small," the Departmentconcludes that its proposed energyefficiency standards rulemaking would not affect a "substantial" number of "small" manufacturers. In addition, the firm's flexible manufacturing operations, along with the expected _ proportional financial impacts, stronglysuggests that the proposed energyefficiency standards would not produce "significant" economic impacts on that one manufacturer. In view of the foregoing, the Department has determined and hereby certifies pursuant to section 605(b) of the Regulatory Flexibility Act that, for this particular industry, the proposed standard levels in today's Proposed Rule will not "have a significant economic impact on a substantial number of small entities," and it is not necessary to prepare a regulatory flexibility analysis.
d. Review Under the Paperwork Reduction Act No new information or record keeping requirements are imposed by this rulemaking . Accordingly, no Office of Management and Budget clearance is required under the Paperwork Reduction Act. 44 U.S.C. 3501 et seq.
e. Review Under Executive Order 12988, "Civil Justice Reform" With respect to the review of existing regulations and the promulgation of new regulations

, Section 3(a) of Executive Order 12988, "Civil Justice Reform," 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 

### 14157

Another financial incentive that was considered was a tax creditto manufacturers for the additional costs of producing electronic ballasts. In this scenario, we assumed a tax credit of20 percent ofthe increased costs to manufacturers for retooling in the years 2001-2003 (when these costs would be incurred). 10 These costs depreciated

over a ballast lifetime resulted in a $0.04 reduction in the incremental purchase price. The tax credits to manufacturers had an insignificant effect, with no energy savings and a zero net present value.

Two scenarios ofvoluntary energyefficiency targets were examined. In the first one, the proposed energy conservation standards were assumed to be voluntarily adopted by all the relevant manufacturers 5 years later than mandatory standards. In the second scenario, the proposed standards

were assumed to be adopted 10 years later. In these scenarios, voluntary improvements having a 5-year delay, compared to implementation of mandatory standards, would result in energy savings of0.84-1.91 Quads (0.88-2.02 EJ), and a net present value of$0.96-2.04 billion; voluntary improvements having a 10-year delay would result in 0.34-1.05 Quads (0.36- 1.1 En being saved, and a net present value of$0.33-0.96 billion. These scenarios assume that there would be universal voluntary adoption ofthe
energy conservation standardsby fluorescent lampballast manufacturers,

an assumption for which there is no reasonable assurance.

Another policy optionthat we reviewed was that of massive purchases· ofelectronic ballasts by Federal, State, and local governments. We modeled this policy by assuming that allballasts purchased by these government entities

were electronic ballasts, which, coupled with a modest impact on theremaining market, resulted in a 10 percent national conversion rate. This policy option resulted in energy savings of0.17-0.30 Quad (0.18-0.32 EJ) and a net present value of$0.25-0.40 billion.

We also reviewed a policy oflighting research that could [there is no cost reduction inthis policy] add more efficient alternatives to fluorescent electronic T-12 and T-8ballasts. To analyze this option, we assumed that the conversion rate to controls, such as dimming fluorescent lampballasts, was 1.6 percent, that there was a time delay of5 years for new technology options to reach the market, thatthe incremental kiloWatthour savings was 40 percent,

10Manufacturer Impact Analysis. conversion capital expenditures (see the TSD. chapter 6). and the increase in the incremental electronic ballast cost was seven dollars. This resulted in energy savings of0.01- 0.04 Quad (0.01-0.05 EJ), with a net presentvaluethat we estimated to be $0.01-0.04 billion.

Still another policy optionthatwe reviewed was one ofaggressive promotion ofstate adoption and enforcement ofcommercial building codes, includingthose for major lighting system renovations. To analyzethis option, we assumed a one percent to three percentelectronicballast conversion, for eachbase case, respectively. This resulted in energy savings of0.05-0.15 Quad (0.05-0.16 EJ), and a net presentvalue of$0.06- 0.18 billion.

Lastly, all ofthese alternatives must be gauged against the performance standards that are being proposed in this NOPR. Such performance standards would result in energy savings of 1.20- 4.90 Quads (1.27-5.17 EJ) (without HVAC savings) and the net present value would be an expected $1.42-5.41 billion. (These estimates represent the lower and upper bounds ofthe results ofall scenarios analyzed). As indicated in the paragraphs above, none ofthe alternatives that were examined for these products saved as much energy as the proposed rule. Also, most ofthe alternatives would require that enabling legislationbe enacted, since authorityto carry out those alternatives does not presently exist.

c. 

### Review undertheRegulatory FlexibilityAct

The Regulatory Flexibility Act, 5 U.S.C. 601 

### et seq., requires an assessment ofthe impact ofregulations

on small businesses. Small businesses

are defined as those firms within an industry that are privately owned and less dominant in the market.

The Standard Industrial Classification (SIC) Code for fluorescent lamp ballast manufacturers is 36124. To be categorized as a "small" fluorescent lamp ballast manufacturer, a firm must employ no morethan 750 employees.

Inthe fluorescent lamp ballast industry, there is one "small" manufacturerwho produces both "affected" magnetic and electronic ballasts. The "small" manufacturerhas its electronic and magnetic ballast manufacturing operations in the same plant. Its smaller size and less automated operations would seem to provide itwith the flexibility to adapt
to a new electronicballast standard without significant asset write-offs or plant closures.

The negative impacts on the "small" manufacturer's cash flows from operations, however, would likely be similar in proportion tothose ofthe larger manufacturers.

Since only one ofthe seven manufacturers offluorescent lamp ballasts is "small," the Department concludes that its proposed energyefficiency standards rulemaking would
not affect a "substantial" number of "small" manufacturers. In addition, the firm's flexible manufacturing operations, along with the expected proportional financial impacts, strongly suggests that the proposed energyefficiency standards would not produce "significant" economic impacts on that

one manufacturer.

In view ofthe foregoing, the Department has determined and hereby certifies pursuantto section 605(b) of the Regulatory Flexibility Act that, for this particular industry, the proposed standard levels in today's Proposed Rule will not "have a significant economic impact on a substantial number of small entities," and it is not necessary to prepare a regulatory flexibility analysis.


### d. Review Under the Paperwork ReductionAct

No new information orrecord keeping requirements are imposed by this rulemaking. Accordingly, no Office of Management and Budget clearance is required underthe Paperwork Reduction Act. 44 U.S.C. 3501 

### et seq.

e. Review UnderExecutive Order 12988, "CivilJustice Reform"

With respectto the review ofexisting regulations and the promulgation of

new regulations, Section 3(a) of Executive Order 12988, "Civil Justice Reform," 61 FR 4729 (February 7,1996). imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting

errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct ratherthan a general standard and promote simplification and burdenreduction. Withregard to the reviewrequiredby section 3(a), section 3(b) ofExecutive Order 12988 specifically requires that Executive agencies make every reasonable effort to

ensure that the regulation: (1) Clearly specifies the preemptive effect, ifany; (2) clearly specifies any effect on existing Federal law orregulation; (3) provides a clear legal standardfor affected conduct while promoting simplification and burdenreduction; (4) specifies the retroactive effect, ifany; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under anyguidelines14158 Federal Register / Vol. 65, No. 51 / Wednesday, March 15, 2000 / Proposed Rules

issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE reviewed today's proposed rule under the standards of section 3 of the Executive Order and determined that, to the extent permitted by law, the final regulations meet the relevant standards.
f. "Takings" Assessment Review It has been determined pursuant to Executive Order 12630, "Governmental Actions and Interference with Constitutionally Protected Property Rights," 52 FR 8859 (March 18, 1988), that this regulation would not result in any takings that might require compensation under the Fifth Amendment to the United States Constitution.
g. Review Under Executive Order 13132 Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined today's proposed rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. State regulations that may have existed on the products that are the subject of today's proposed rule were preempted by the Federal standards established in the NAECA Amendments of 1988. States can petition the Department for exemption from such preemption based on criteria set forth in EPCA.
h. Review Under the Unfunded Mandates Reform Act With respect to a proposed regulatory action that may result in the expenditure by the private sector of $100 million or more (adjusted annually for inflation), section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires a Federal agency to publish estimates of the resulting costs, benefits and other effects on the national economy. 2 U.S.C. 1532(a), (b). Section 202 of UMRA authorizes an agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the proposed rule. 2 U.S.C. 1532(c). The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The Supplementary Information section of the Notice of Proposed Rulemaking and "Regulatory Impact Analysis" section of the TSD for this Proposed Rule responds to those requirements. Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise or the selection of such an alternative is inconsistent with law. As required by section 325(0) of the Energy Policy and Conservation Act (42 U.S.C. 6295(o)), this Proposed Rule would establish energy conservation standards for fluorescent lamp ballasts that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified. A full discussion of the alternatives considered by DOE is presented in the "Regulatory Impact Analysis" section of the TSD for this Proposed Rule.
i. Review Under the Treasury and General Government Appropriations Act of 1999 Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule or policy that may affect family well-being. Today's proposal would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
j. Review Under the Plain Language
Directives Section 1(b)(12) of Executive Order 12866 requires that each agency shall draft its regulations to be simple and easy to understand, with the goal of minimizing the potential for uncertainty and litigation arising from such uncertainty. Similarly, the Presidential memorandum of June 1, 1998 (63 FR 31883) directs the heads of executive departments and agencies to use, by January 1, 1999, plain language in all proposed and final rulemaking documents published in the Federal Register, unless the rule was proposed before that date. Today's proposed rule uses the following general techniques to abide by Section 1(b)(12) of Executive Order 12866 and the Presidential memorandum of June 1, 1998 (63 FR 31883): ® Organization of the material to serve the needs of the readers (stakeholders). ® Use of common, everyday words in short sentences. ® Shorter sentences and sections. We invite your comments on how to make this proposed rule easier to understand.

VII. Public Comment Procedures
a. Participation in Rulemaking The Department encourages the maximum level of public participation possible in this rulemaking. Individual commercial and industrial consumers, representatives of consumer groups, manufacturers, associations, States or other governmental entities, utilities, retailers, distributors, manufacturers, and others are urged to submit written statements on the proposal. The Department also encourages interested persons to participate in the public hearing to be held in Washington, DC, at the time and place indicated at the beginning of this notice. The DOE has established a comment period of 75 days following publication of this notice for persons to comment on this proposal. We will make available for review in the DOE Freedom of Information Reading Room all public comments received and the transcript of the public hearing.

b. Written Comment Procedures Interested persons are invited to participate in this proceeding by submitting written data, views or arguments with respect to the subjects set forth in this notice. We provided instructions for submitting written comments at the beginning of this notice and below. You should label comments both on the envelope and on the documents, "Fluorescent Lamp Ballast Rulemaking (Docket No. EE-RM-97-500)," and submit them for DOE receipt by the date specified at the beginning of this notice. Please submit one signed copy and a computer diskette (WordPerfect 8) or ten (10) copies (no telefacsimiles) to: 

### 14158 Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

issuedby theAttorney General. Section 3(c) ofExecutive Order 12988 requires Executive agencies to review regulations in light ofapplicable standards in section 3(a) and section 3(b) to determine whether they are met orit is unreasonable to meet one or more of them. DOE reviewed today's proposed rule underthe standards ofsection 3 of the Executive Order and determined that, to the extent permitted by law, the final regulations meetthe relevant standards. 

## f. "Takings"AssessmentReview

Ithasbeen determined pursuantto Executive Order 12630, "Governmental Actions andInterference with Constitutionally Protected Property Rights," 52 FR 8859 (March 18, 1988), thatthis regulation would not result in any takings that might require compensation underthe Fifth Amendment to the United States Constitution.

g. 

### Review UnderExecutive Order 13132

Executive Order 13132 (64 FR 43255, August 4,1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion ofthe States and carefully assess the necessity for such actions. DOE has examined today's proposed rule and has determined that itwould not have a substantial direct effect on the States, on the relationship betweenthe national government and the States, or on the distribution ofpower and responsibilities among the various levels ofgovernment. State regulations that may have existed on the products that are the subject oftoday's proposed rule were preemptedby the Federal standards established inthe NAECA Amendments of 1988. States can petitiontheDepartment for exemption from such preemptionbased on criteria
set forth inEPCA.


### h. Review Under the Unfunded Mandates ReformAct

Withrespect to a proposedregulatory action that may result inthe expenditurebythe private sector of $100 million or more (adjusted annually for inflation), section 202 ofthe Unfunded Mandates Reform Act of 1995 (UMRA) requires a Federal agency to publish estimates ofthe resulting costs, benefits and other effects on the national economy. 2 U.S.C. 1532(a), (b). Section 202 ofUMRA authorizes an agency to respond to the content requirements ofUMRA in any other
statement or analysis that accompanies the proposed rule. 2 U.S.C. 1532(c).

The contentrequirements ofsection 202(b) ofUMRA relevant to a private
sectormandate substantially overlap the economic analysis requirements that apply under section 325(0) ofEPCA and Executive Order 12866. The Supplementary Information section of the Notice ofProposed Rulemaking and "Regulatory Impact Analysis" section of theTSD for this Proposed Rule responds
to those requirements.

Under section 205 ofUMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating arule for which a written
statement under section 202 is required. DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives ofthe rule unless DOE publishes an explanation for doing otherwise or the selection of such an alternative is inconsistent with law. As requiredby section 325(0) ofthe Energy Policy and Conservation Act (42 U.S.C. 6295(0)), this Proposed Rule would establish energy conservation standards for fluorescent lamp ballasts that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be bothtechnologically feasible and economicallyjustified. A full discussion ofthe alternatives considered by DOE is presented in the "Regulatory Impact Analysis" section ofthe TSD for this ProposedRule.



### i. Review Under the Treasury and General GovernmentAppropriations Actof1999

Section 654 ofthe Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agenCies to issue a Family PolicymakingAssessment for any proposed rule or policy that may affect family well-being. Today's proposal would not have any impact onthe autonomy or integrity ofthe family as

an institution. Accordingly, DOE has concludedthat itis notnecessary to prepare a Family Policymaking Assessment. j. 

### Review UnderthePlain Language Directives

Section 1(b)(12) ofExecutive Order 12866 requires that each agency shall draft its regulations to be simple and
easy to understand, withthe goal of minimizing the potential for uncertainty and litigation arising from such uncertainty. Similarly, the Presidential memorandum oOune 1, 1998 (63 FR 31883) directs the heads ofexecutive departments and agencies to use, by January 1,1999,plain language in all proposed and final rulemaking documents published in the Federal Register, unless therule was proposed beforethat date.

Today's proposed ruleuses the following general techniques to abide by Section 1(b)(12) ofExecutive Order 12866 andthe Presidential memorandum oOune 1, 1998 (63 FR**~** 31883):

.. Organization ofthematerial to

serve the needs ofthe readers (stakeholders).

.. Use ofcommon, everyday words in short sentences.

.. Shorter sentences and sections. We invite your comments on how to make this proposed rule easier to understand.

VIT. Public CommentProcedures

a. 

### Participation in Rulemaking

The Department encourages the maximum level ofpublicparticipation possible inthis rulemaking. Individual commercial and industrial consumers, representatives ofconsumergroups, manufacturers, associations, States or other governmental entities, utilities, retailers, distributors, manufacturers, and others are urged to submit written
statements on the proposal. The Department also encourages interested persons to participate in the public hearingto be held in Washington, DC,
at the time and place indicated at the beginning ofthis notice.

The DOE has established a comment period of75 days following publication ofthis notice for persons to comment on this proposal. We will make available for review inthe DOE Freedom of Information Reading Room all public
comments received and the transcript of the public hearing.



### b. Written CommentProcedures

Interested persons are invited to participate inthis proceedingby submittingwritten data, views or arguments withrespectto the subjects
set forth inthis notice. We provided instructions for submittingwritten
comments at the beginning ofthis notice andbelow.

You shouldlabel commentsboth on the envelope and on the documents, "FluorescentLamp Ballast Rulemaking (Docket No. EE-RM-97-500)." and submit them for DOE receiptby the date specified at the beginning ofthis notice. Please submit one signed copy and a computer diskette (WordPerfect 8) or ten (10) copies (no telefacsimiles) to:Federal Register /Vol. 65, No. 51 /Wednesday, March 15, 2000/Proposed Rules

U.S. Department of Energy, Attn: Brenda Edwards-Jones, Office of EnergyEfficiency and Renewable Energy, EE41, 1000 Independence Avenue, SW, Washington, DC 20585-0121, (202) 586-2945, e-mail: Brenda.EdwardsJones@ee.doe.gov. The Department will also accept electronically-mailed comments, but you must supplement such comments with a signed hard copy. All comments received by the date specified at the beginning of this notice and other relevant information will be considered by DOE before final action is taken on the proposed regulation. All written comments received on the proposed rule will be available for public inspection at the DOE Freedom of Information Reading Room, as provided at the beginning of this notice. If you submit information or data that you believe is confidential, and should not be publicly disclosed, you should submit one complete copy of your document and ten (10) copies or one electronic copy from which the information believed to be confidential has been deleted. We will make our own determination regarding the confidentiality of the information or data according to our regulations at 10 CFR 1004.11. Factors of interest to DOE, when evaluating requests to treat information as confidential, include: (1) A description of the item; (2) an indication as to whether and why such items of information have been treated by the submitting party as confidential, and whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known or available from other sources; (4) whether the information has previously been available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person that would result from public disclosure; (6) an indication as to when such information might lose its confidential character due to the passage of time; and (7) whether disclosure of the information would be in the public interest. c. Public Hearing 1. Procedure for Submitting Requests to Speak
The time and place of the public hearing are indicated at the beginning of this notice. The Department invites any person who has an interest in these proceedings, or who is a representative of a group or class of persons having an interest, to make a written request for an opportunity to make an oral presentation at the public hearing. Such requests should be labeled both on the letter and the envelope, "Fluorescent Lamp Ballast Rulemaking (Docket No. EE-RM-97-500)," and should be sent to the address, and must be received by the time specified, at the beginning of this notice. Requests may be hand-delivered or telephoned between the hours of 8:30 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. The person making the request should briefly describe the interest concerned and, if appropriate, state why he or she is a proper representative of the group or class of persons that has such an interest, and give a telephone number where he or she may be contacted. Each person selected to be heard will be so notified by DOE as to the approximate time they will be speaking. Each person selected to be heard is requested to submit an advance copy of his or her statement prior to the hearing as indicated at the beginning of this notice. In the event any persons wishing to testify cannot meet this requirement, that person may make alternative arrangements in advance by so indicating in the letter requesting to make an oral presentation. 2. Conduct of Hearing The Department reserves the right to select the persons to be heard at the hearing, to schedule the respective presentations, and to establish the procedures governing the conduct of the hearing. The length of each presentation is limited to 15 minutes. A DOE official will be designated to preside at the hearing. The hearing will not be a judicial or an evidentiary-type hearing, but will be conducted in accordance with 5 U.S.C. 533 and section 336 of the Act. At the conclusion of all initial oral statements at each day of the hearing, each person who has made an oral statement will be given the opportunity to make a rebuttal statement, subject to time limitations. The rebuttal statement will be given in the order in which the initial statements were made. The official conducting the hearing will accept additional comments or questions from those attending, as time permits. Any interested person may submit, to the presiding official, written questions to be asked of any person making a statement at the hearing. The presiding official will determine whether the question is relevant, and whether time limitations permit it to be presented for

answer. Further questioning of speakers will be permitted by DOE. The presiding official will afford any interested person 14159

an opportunity to question other interested persons who made oral presentations, and employees of the United States who have made written or oral presentations with respect to disputed issues of material fact relating to the proposed rule. This opportunity will be afforded after any rebuttal statements, to the extent that the presiding official determines that such questioning is likely to result in a more timely and effective resolution of such issues. If the time provided is insufficient, DOE will consider affording an additional opportunity for questioning at a mutually convenient time. Persons interested in making use of this opportunity must submit their request to the presiding official no later than shortly after the completion of any rebuttal statements and be prepared to state specific justification, including why the issue is one of disputed fact and how the proposed questions would expedite their resolution. Any further procedural rules regarding proper conduct of the hearing will be announced by the presiding official. A transcript of the hearing will be made, and the entire record of this rulemaking, including the transcript, will be retained by DOE and made available for inspection at the DOE Freedom of Information Reading Room as provided at the beginning of this notice. Any person may purchase a copy of the transcript from the transcribing reporter.
List of Subjects in 10 CFR Part 430

Administrative practice and procedure, Energy conservation, Household appliances.
Issued in Washington, D.C., on January 18, 2000.
Dan W

. Reicher, Assistant Secretary, Energy Efficiency and Renewable Energy.

For the reasons set forth in the preamble Part 430 of Chapter II of Title 10, Code of Federal Regulations, is proposed to be amended as set forth below.

PART 430-ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

1. The authority citation for Part 430 continues to read as follows:

Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

2. Section 430.32 of subpart C is amended by revising paragraph (m) to read as follows: 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 

### 14159

U.S. Department ofEnergy, Attn: Brenda Edwards-Jones, Office ofEnergy Efficiency and Renewable Energy. EE41.1000 Independence Avenue. SW. Washington. DC 20585-0121. (202) 586- 2945. e-mail: Brenda.EdwardsJones@ee.doe.gov.

The Department will also accept electronically-mailed comments, but you must supplement such comments with a signed hard copy.

All comments receivedby the date specified at thebeginning ofthis notice and otherrelevant information will be consideredby DOE before final action is taken on the proposed regulation.

All written comments received onthe proposed rule will be available for public inspection at the DOE Freedom ofInformation Reading Room, as provided at the beginning ofthis notice.



### Ifyou submit information or datathat you believe is confidential. and should
not be publicly disclosed. you should submit one complete copy ofyour document and ten (10) copies or one electronic copy from which the information believedto be confidential has been deleted. We will make our own determination regarding the confidentiality ofthe information or data according to ourregulations at 10 

### CFR 1004.11.

Factors ofinterestto DOE. when evaluating requests to treat information

as confidential, include: (1) A description ofthe item; (2) an indication

as to whether and why such items of information have beentreated by the submitting party as confidential. and whether and why such items are customarily treated as confidential within the industry; (3) whetherthe information is generally known or available from other sources; (4) 

### whether the information has previously been available to others without obligation concerning its confidentiality; (5) an explanation ofthe competitive injury to the submitting person that wouldresult from public disclosure; (6) an indication as to when such information might lose its confidential character due to the passage oftime; and (7) whether disclosure ofthe information wouldbe inthe public interest.

c. PublicHearing

1. 

### Procedure for Submitting Requests to Speak

Thetime and place ofthe public hearing are indicated at thebeginning of this notice. The Department invites any person who has an interest inthese proceedings. or who is a representative ofa group orclass ofpersons having an interest, to make a writtenrequest for an opportunity to make an oral presentation at the public hearing. Such requests shouldbe labeled both onthe letter and the envelope. "Fluorescent Lamp Ballast Rulemaking (Docket No. EE-RM-97-500)." and should be sent to the address, andmustbe received by the time specified. atthebeginning ofthis notice. Requests maybe hand-delivered

ortelephonedbetweenthehours of8:30

a.m. and 4:30 p.m

.. Monday through Friday. except Federal holidays.

The person making the request should briefly describe the interest concerned and. ifappropriate. state why he or she is a properrepresentative ofthe group
or class ofpersons that has such an interest. and give atelephone number where he or she may be contacted. Each person selected to be heard will be so notified by DOE as to the approximate time they will be speaking.

Each person selected to be heard is requestedto submit an advance copy of his orher statement prior to the hearing

as indicated at the beginning ofthis notice. In the event any persons wishing
to testify cannotmeetthis requirement. that person may make alternative arrangements in advance by so indicating inthe letterrequesting to make an oral presentation.

2. Conduct ofHearing

The Department reserves the right to select the persons to be heard at the hearing. to schedule therespective presentations. and to establish the procedures governing the conduct ofthe hearing. The length ofeach presentation is limited to 15 minutes.

A DOE official will be designated to preside at the hearing. The hearing will
notbe a judicial or an evidentiary-type hearing. but will be conducted in accordance with 5 U.S.C. 533 and section 336 ofthe Act. At the conclusion ofall initial oral statements at each day ofthe hearing. each person who has made an oral statement will be given the opportunityto make a rebuttal
statement. subjectto time limitations. The rebuttal statement will be given in the order in whichthe initial statements

were made. The official conductingthe hearing will accept additional
comments or questions from those attending, as time permits. Any interested person may submit. to the presiding official. written questions to be asked ofany person making a statement at thehearing. The presiding official will determine whetherthe question is relevant, and whethertime limitations permit itto be presented for

answer.

Furtherquestioning ofspeakers will be permitted by DOE. Thepresiding

. official will afford any interested person an opportunityto question other interested persons who made oral presentations, and employees ofthe United States who have made written or oral presentations withrespect to disputed issues ofmaterial fact relating
to the proposed rule. This opportunity will be afforded after any rebuttal
statements. to the extent that the presiding official determines that such questioning is likely to result in a more timely and effective resolution ofsuch issues. Ifthe time provided is insufficient. DOE will consider affording an additional opportunity for questioning at a mutually convenient time. Persons interested in making use ofthis opportunity must submittheir request to the presiding official no later than shortly after the completion ofany rebuttal statements andbe prepared to state specificjustification, including why the issue is one ofdisputed fact and howthe proposed questions would expedite their resolution.

Any further procedural rules regarding proper conduct ofthe hearing will be announced by the presiding official.

A transcript ofthe hearing will be made. and the entire record ofthis rulemaking. including the transcript. will be retainedby DOE and made available for inspection at the DOE Freedom ofInformation Reading Room

as provided at the beginning ofthis notice. Any person may purchase a copy ofthe transcript from the transcribing reporter.

List 

### ofSubjects in 10

### CFR Part 430



### Administrative practice and procedure. Energy conservation. Household appliances.

Issued inWashington. D.C., on January 18, 2000.
Dan W. Reicher,
AssistantSecretary, EnergyEfficiencyand RenewableEnergy.



### Forthe reasons set forth inthe preamble Part 430 ofChapter II ofTitle 10, Code ofFederal Regulations, is proposed to be amended as set forth below.

PART 430-ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS



### 1. The authority citation for Part430 continues to read as follows:

Authority: 42 U.S.C. 6291-6309; 28 U.S.c. 2461 note.



### 2. Section 430.32 ofsubpart Cis amended by revising paragraph (m) to read as follows:14160 Federal Register/Vol. 65, No. 51 /Wednesday, March 15, 2000 /Proposed Rules

§430.32 Energy conservation standards (B) Sold by the manufacturer on or (B) To operate with an input current and effective dates. after April 1, 1990; or frequency of 60 Hertz; and (C) Incorporated into a luminaire by a (C) For use in connection with an (m) Fluorescent lamp ballasts. luminaire manufacturer on or after April F40T12, F96T12, or F96T12HO lamps (1) Except as provided in paragraphs 1, 1991; and shall have a power factor of 0.90 or (m)(2), (m)(3), and (m)(4) of this section, reater and shall have a ballast efficac each fluorescent lamp ballast- (ii) Designed - y g
(i) (A) Manufactured on or after (A) To operate at nominal input factor not less than the following:
January 1, 1990; voltages of 120 or 277 volts;

Application for operation of Ballast input voltage Total nominal

lamp wafts Ballast efficacy

factor

One F40 T12 lamp ...................................................................................................................... 120 40 1.805 277 40 1.805 Two F40 T12 lamps ..................................................................................................................... 120 80 1.060 277 80 1.050 Two F96T12 lamps

...................................................................................................................... 120 150 0.570 277 150 0.570 Two F96T12HO lamps

................................................................................................................ 120 220 0.390 277 220 0.390

(2) The standards described in paragraph (m)(1) of this section do not apply to: (i) a ballast that is designed for dimming or for use in ambient temperatures of 0° F or less, or (ii) A ballast that has a power factor of less than 0.90 and is designed for use only in residential building applications. (3) Except as provided in paragraph (m)(4) of this section, each fluorescent lamp ballast- (i) (A) Manufactured on or after April 1, 2005; (B) Sold by the manufacturer on or after July 1, 2005; or (C) Incorporated into a luminaire by a luminaire manufacturer on or after April 1, 2006; and (ii) Designed- (A) To operate at nominal input voltages of 120 or 277 volts; (B) To operate with an input current frequency of 60 Hertz; and (C) For use in connection with an F40T12, F96T12, or F96T12HO lamps; shall have a power factor of 0.90 or greater and shall have a ballast efficacy factor not less than the following:

Application for operation of Ballast Input voltage Total nominal

lamp wafts Ballast efficacy

factor

One F40 T12 lamp ...................................................................................................................... 120 40 2.29
277 40 2.29
Two F40 T12 lamps

..................................................................................................................... 120 80 1.17 277 80 1.17 Two F96T12 lamps ...................................................................................................................... 120 150 0.63 277 150 0.63 Two F96T12HO lamps

................................................................................................................ 120 220 0.39 277 220 0.39

(4) (i) The standards described in labeled for use only in residential (C) Is marked "FOR REPLACEMENT paragraph (m)(3) of this section do not building applications; or USE ONLY"; apply to: (D) A replacement ballast as defined (D) Is shipped by the manufacturer in (A) A ballast that is designed for in subparagraph (ii). packages containing not more than 10 dimming to 50 percent or less of its (ii) For purposes of this paragraph ballasts; maximum output; (m), a replacement ballast is defined as (E) Has output leads that when fully (B) A ballast that is designed for use a ballast that: extended are a total length that is less with two F96T12HO lamps at ambient (A) Is manufactured on or before June than the length of the lamp with which temperatures of - 20° F or less and for 30, 2010; it is intended to be operated; and use in an outdoor sign; (B) Is designed for use to replace an (F) Meets or exceeds the ballast (C) A ballast that has a power factor existing ballast in a previously installed efficacy factor in the following table:
of less than 0.90 and is designed and luminaire; 

### 14160 

### Federal Register IVoI. 

### 65, No. 51 I

### Wednesday, March 15, 2000/Proposed Rules

§430.32 Energy conservation standards and effective dates. 

### * 

### * * * *

(m) 

### Fluorescent lamp ballasts. (1) Except as provided in paragraphs (m)(2), (m)(3), and (m)(4) ofthis section, each fluorescent lampballast-

(il (A) Manufactured on or after January 1, 1990; (B) Sold by the manufacturer on or after April 1, 1990; or

(C) Incorporated into a luminaireby a luminaire manufacturer on or after April 1.1991; and

(ii) Designed

- (A) To operate at nominal input voltages of 120 or 277 volts;

Application for operation of

One F40 T12 lamp

Two F40 T12 lamps

.....................................................................................................................
Two F96T12 lamps

......................................................................................................................
Two F96T12HO lamps

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

### I

(2) The standards described in paragraph (m)(l) ofthis section do not apply to:

(il a ballast that is designed for dimming or for use in ambient temperatures of0° F or less, or

(ii) A ballast that has a power factor ofless than 0.90 and is designed for use only inresidential building applications. (3) Except as provided inparagraph (m)(4) ofthis section, each fluorescent lamp ballast-

(il (A) Manufactured on or after April 1,2005;

(B) Soldby the manufacturer on or after July I, 2005; or

(C) Incorporated into a luminaire by a luminaire manufacturer on or after April 1,2006; and

Application for operation of

One F40 T12 lamp

Two F40 T12 lamps

.....................................................................................................................
Two F96T12 lamps

......................................................................................................................
Two F96T12HO lamps

(4) 

### (il The standards described in paragraph (m)(3) ofthis section do not apply to:

(A) A ballastthat is designed for dimming to 50 percent or less of its maximum output;

(B) A ballast that is designed for use withtwo F96T12HO lamps at ambient temperatures of

- 20° F or less and for

use in an outdoor sign;

tC) A ballastthathas

# a power factor ofless than 0.90 and is designed and labeled for use only inresidential building applications; or

(D) A replacementballast as defined in subparagraph (ii).

(ii) For purposes ofthis paragraph (m), a replacementballast is defined as

a ballast that:

(A) Is manufactured on orbefore June 30,2010;

(B) Is designed for useto replace an existing ballast in a previously installed luminaire; (B) To operate with an input current frequency of60 Hertz; and

(C) Foruse in connection with an F40T12, F96T12, orF96T12HO lamps shall have a powerfactor of0.90 or greater and shall have a ballast efficacy factor not less than the following:

Ballast input Total nominal Ballast efficacy

voltage lamp watts factor

120 40 1.S05 277 40 1.S05 120 SO 1.060 277 SO 1.050 120 150 0.570 277 150 0.570 120 220 0.390 277 220 0.390

(ii) Designed- (A) To operate at nominal input voltages of 120 or 277 volts;

(B) To operate with an input current frequency of60 Hertz; and

(C) For use in connection with an F40T12. F96T12, orF96T12HO lamps; shall have a power factor of0.90 or greater and shall have a ballast efficacy factor not less than the following:

Ballast Input Total nominal Ballast efficacy

voltage lamp watts factor

120 40 2.29 277 40 2.29 120 SO 1.17 277 SO 1.17 120 150 0.63 277 150 0.63 120 220 0.39 277 220 0.39

(C) Is marked "FORREPLACEMENT USE ONLY";

(D) Is shippedbythe manufacturer in packages containing notmore than 10 ballasts;

(E) Has output leads thatwhen fully extended are a total length that is less than the length ofthe lamp with which it is intended to be operated; and

(F) Meets or exceeds theballast efficacy factor in the following table:Federal Register /Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules 14161

Application for operation of Ballast input voltage Total nominal

lamp watts Ballast efficacy

factor

One F40 T12 lamp ...................................................................................................................... 120 40 1.805 277 40 1.805 Two F40 T12 lamps ..................................................................................................................... 120 80 1.060 277 80 1.050
Two F96T12 lamps

...................................................................................................................... 120 150 0.570 277 150 0.570
Two F96T12HO lamps ..

.............................................................................................................. 120 220 0.390
277 220 0.390

[FR Doc. 00-6106 Filed 3-14-00; 8:45 am]

BILLING CODE 8450-01-P 

### Federal Register/Vol. 65, No. 51/Wednesday, March 15, 2000/Proposed Rules

Application for operation of

One F40 Ti2 lamp

Two F40 T12 lamps

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

Two F96Ti2 lamps

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

Two F96Ti2HO lamps

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

* 

### * 

### * * * [FR Doc. ()(}-fj106 Filed 3-14-00; 8:45 am]

BlLUNG CODE**~1-P** Ballast input Total nominal voltage lamp watts

120 40 277 40 120 80 277 80 120 150 277 150 120 220 277 220 

### 14161

Ballast efficacy factor

1.805 1.805 1.060 1.050 0.570 0.570 0.390 0.390