Results of the

Appliance

Rulemaking Process

Improvement Effort

Preliminary DRAFT for

Review

April 26, 1996

U.S. Department of Energy, Office

of Energy Efficiency and

Renewable Energy

1000 Independence Avenue, SW

Washington, DC 20585

202-586-9220

Fax: 202-586-9260

 EE-PI-96-001 COMMENT 32

Results of the 

Appliance 

Rulemaking Process 

Improvement Effort 

Preliminary DRAFT for 

Review 

April 26, 1996 

U.S. Department of Energy, Office 

of Energy Efficiency and 

Renewable Energy 

1000 Independence Avenue, SW 

Washington, DC 20585 

202-586-9220 

Fax: 202-586-9260 
List of Tables

1. Letter from the Assistant Secretary ................................................................ 1-1

2. Major Themes of Stakeholder Consultations ................................................. 2-1

2.1 Background and Methodology ............................................................................. 2-1

2.2 Process Improvements ............................................. ....... ............................... 2-2

2.3 Prioritization of Rulemaking ............................................................................... 2-2,

2.4 Analysis Improvements ....................................................................................... 2-3

2.4.1 Product Issues .................................................................................................. 2-3

2.4.2 Consumer Issues ............................................................................................... 2-5

2.4.3 Manufacturer Issues............. ............................................................................. 2-6

2.4.4 National Issues ................................................................................................. 2-10

2.5 DOE Decision-Making ........................................................................................ 2-13

2.5.1 Characterizing Uncertaintv .............................................................................. 2-13

2.5.2 Involving Senior DOE Decision-Makers .......................................................... 2-13

2.5.3 Alternatives to Appliance Standards .................................................................2-14

3. Process Improvement Plan for Appliance Efficiency Standards ................. 3-1

3.1 Objectives ............................................................................................................ 3-1

3.2 Proposed Process Improvements for the Development of Appliance and

Equipment Efficiency Standards ......................................................................... 3-2

3.2.1 Introduction ...................................................................................................... 3-2

3.2.2 Priority-Setting (All Products) ......................................................................... 3-2

3.2.3 Screening (Product-Specific) ........................................................................... 3-3

3.2.4 Analysis of Impacts ........................................................................................... 3-7

3.2.5 Final Standards ................................................................................................ 3-9

3.2.6 Crosscutting Analytical Assumptions ............................................................... 3-9

3.2.7 Test Procedures ................................................................................................ 3-10

3.2.8 Stakeholder Negotiations ................................................................................. 3-10

4. Analytical Improvements Agenda .................................................................... 4-1

4.1 Engineering Analysis .......................................................................................... 4-1

4.2 Impacts on Manufacturers .................................................................................. 4-1

4.3 Alternatives to Standards ................................................................................... 4-1

5. Next Steps........................................................................................................_ 5-1

5.1 Final Report on Results of the Appliance Rulemaking Process

Improvement Effort ........................................................................................... 5-1

5.2 Priority-Setting Analysis and Development of a New Regulatory Agenda....... 5-1

5.3 Current Status/On-Going Activities ................................................................... 5-1

5.4 Analytical Improvements Agenda ...................................................................... 5-2

Table 3-1: Decision Criteria for Priority-Setting .............................................. ..... 3-3

Table 3-2: Decision Criteria for Screening of Design Options, Phase I ................... 3-5

Table 3-3: Decision Criteria for Selection of Candidate Standard Levels, Phase 11. 3-6

Table 3-4: Decision Criteria for Selection of Proposed Standard ............................. 3-8

ii

 EE-PI-96-001 COMMENT 32

List of Tables 

1. Letter from the Assistant Secretary ................................................................ 1-1 

2. Major Themes of Stakeholder Consultations ................................................. 2-1 

2.1 Background and Methodology ............................................................................ 2-1 

2.2 Process Improvements ......................................................................................... 2-2 

2.3 Prioritization of Rulemaking ............................................................................... 2-2, 

2.4 Analysis Improvements ....................................................................................... 2-3 

2.4.1 Product Issues .................................................................................................. 2-3 

2.4.2 Consumer Issues ............................................................................................... 2-5 

2.4.3 Manufacturer Issues .......................................................................................... 2-6 

2.4.4 National Issues ................................................................................................. 2-10 

2.5 DOE Decision-Making ........................................................................................ 2-13 

2.5.1 Characterizing Uncertainty .............................................................................. 2-1 3 

2.5.2 Involving Senior DOE Decision-Makers ............................ , ............................. 2-13 

2.5.3 Alternatives to Appliance Standards ................................................................ 2-14 

3. Process Improvement Plan for Appliance Efficiency Standards ................. 3-1 

3.1 Objectives ............................................................................................................ 3-1 

3.2 Proposed Process Improvements for the Development of Appliance and 

Equipment Efficiency Standards ......................................................................... 3-2 

3.2.1 Introduction ...................................................................................................... 3-2 

3.2.2 Priority-Setting (All Products} ....................... ; ................................................. 3-2 

3.2.3 Screening (Product-Specific) ........................................................................... 3-3 

3.2.4 Analysis of bnpacts ............................... : ........................................................... 3-7 

3.2.5 Final Standards ................................................................................................ 3-9 

3.2.6 Crosscutting Analytical Assumptions ............................................................... 3-9 

3.2.7 Test Procedures ................................................................................................ 3-10 

3.2.8 Stakeholder Negotiations ................................................................................. 3-10 

4. Analytical Improvements Agenda .................................................................... 4-1 

4.1 Engineering Analysis, .......................................................................................... 4-1 

4.2 Impacts on Manufacturers .................................................................................. 4-1 

4.3 Alternatives to Standards ......................................... , .......................................... 4-1 

5.'Next Steps ...............................•..•........•.............•.......................•............•......... _ 5-1 

5.1 Final Report on Results of the Appliance Rulemaking Process 

Improvement Effort ........................................................................................... 5-1 

5.2 Priority-Setting Analysis and Development of a New Regulatory Agenda ....... 5-1 

5.3 Current Status/On-Going Activities ................................................................... 5-1 

5.4 Analytical Improvements Agenda ...................................................................... 5-2 

Table 3-1: Decision Criteria for Priority-Setting ....................................................... 3-3 

Table 3-2: Decision Criteria for Screening of Design Options, Phase 1 ................... 3-5 

Table 3-3: Decision Criteria for Selection of Candidate Standard Levels, Phase II. 3-6 

Table 3-4: Decision Criteria for Selection of Proposed Standard ............................. 3-8 

ii 
1. Letter from the Assistant Secretary

Department of Energy

Washington, DC 20585

Since the National Performance Review's recommendations on Regulatory Reform

were issued over two years ago, the U.S. Department of Energy has forged new ways of

carrying out its appliance standards rulemaking responsibilities. To supplement the

traditional rulemaking process, the Department has encouraged consensus-based

alternatives and invited interest group participation in the early stages of rule proposals

through technical sessions, workshops, and other agreement-based processes.

In September 1995, the Department announced a formal appliance efficiency standards

process improvement effort, calling on conservation groups, manufacturers, trade

associations, state agencies, utilities, and other interested parties to guide our work.

To date, the Department's process improvement efforts have consisted of four initiatives

all of which have included extensive and in-depth stakeholder consultation and review:

• A series of preliminary meetings were held to identify opportunities for

improvement in the rulenaking process, standards priority setting, analysis methods

and Department decision-making;

• In-depth interviews were conducted with thirty organizations that have participated

in past appliance rulemakings;

• A preliminary draft Process Improvement Plan was developed from these initial

meetings and interviews;

• A workshop was held to obtain broad stakeholder input on a Major Themes

document (summarizing the past consultations) and on the Department's draft

Process Improvement Plan.

This draft report presents the results of the Department's process improvement effort

and is being distributed for the purpose of obtaining additional comment from interested

parties. After this document has been reviewed and commented upon, it will receive

widespread publication and will form the basis for continuing to move forward with an

improved, more transparent process for the setting of energy efficiency standards for

appliances.

In this document, the Department presents its perspective on the major issues and

themes raised in previous consultations and, as requested by our stakeholders at the

March workshop, presents its plan in greater detail. The closing sections of the report

DRAFT 4/30/96 4 : 13 PM 1-1

 EE-PI-96-001 COMMENT 32

1. Letter from the Assistant Secretary 

Department of Energy 

Washington, DC 20585 

Since the National Performance Review's recommendations on Regulatory Reform 

were issued over two years ago, the U.S. Department of Energy has forged new ways of 

carrying out its appliance standards rulemaking responsibilities. To supplement the 

traditional rulemaking process, the Department has encouraged consensus-based 

alternatives and invited interest group participation in the early stages of rule proposals 

through technical sessions, workshops, and other agreement-based processes. 

In September 1995, the Department announced a formal appliance efficiency standards 

process improvement effort, calling on conservation groups, manufacturers, trade 

associations, state agencies, utilities, and other interested parties to guide our work. 

To date, the Department's process improvement efforts have consisted of four initiatives 

all of which have included extensive and in-depth stakeholder consultation and review: 

• A s.eries of preliminary meetings were held to identify opportunities for 

improvement in the rulerriaking process, standards priority setting, analysis methods 

and Department decision-making; 

• In-depth interviews were conducted with thirty organizations that have participated 

in past appliance rulemakings; 

• A preliminary draft Process Improvement Plan was developed from these initial 

meetings and interviews; 

• A workshop was held to obtain broad stakeholder input ona Major Themes 

document (summarizing the past consultations) and on the Department's draft 

Process Improvement Plan. 

This draft report presents the results of the Department's process improvement effort 

and is being distributed for the purpose of obtaining additional comment from interested 

parties. After this document has been reviewed and commented upon, it will receive 

widespread publication and will form the basis for continuing to move forward with an 

improved, more transparent process for the setting of energy efficiency standards for 

appliances. 

In this document, the Department presents its perspective on the major issues and. 

themes raised in previous consultations a'nd, as requested by our stakeholders at the 

March workshop, presents its plan in greater detail. The closing sections of the report 

DRAFT 4/30/96 4:13 PM 1-1 
describe the next steps in the Department's improvement effort. Three essential

elements are: a review of the manufacturing impact analysis model and methodologies;

a public workshop on alternatives to standards; and the commencement of work on the

prioritization of future rules, all of which will occur during the next few months and will

continue to invite extensive stakeholder consultation.

Tremendous effort has gone into the Department's process improvement planning by

the Department's many stakeholders. I want to thank you, and I look forward to

receiving your additional comments on this important Department initiative by May

20th, 1996.

Sincerely,

Christine A. Ervin

Assistant Secretary

Energy Efficiency and Renewable Energy

1000 Independence Avenue, SW

Washington, DC 20585

202-586-9220

Fax: 202-586-9260

DRAFT 4/30/96 4:13 PM ' 1-2

 EE-PI-96-001 COMMENT 32

describe the next steps in the Department's improvement effort. Three essential 

elements are: a review of the: manufacturing impact analysis model and methodologies; 

a publiC workshop on alternatives to standards; and the commencement of work on the 

prioritization of future rules, all of which will occur during the next few months and will 

continue to invite extensive stakeholder consultation. 

Tremendous effort has gone into the Department's process improvement planning by 

the Department's many stakeholders. I want to thank you, and I look forward to 

receiving your additional comments on this important Department initiative by May 

20th, 1996. 

DRAFT 4/30/96 4:13 PM ' 

Sincerely, 

Christine A. Ervin 

Assistant Secretary 

Energy Efficiency and Renewable Energy 

1000 Independence A venue, SW 

Washington, DC 20585 

202-586-9220 

Fax: 202-586-9260 

1-2 
2. Major Themes of Stakeholder Consultations

2.1 Background and Methodology

In September 1995, the U.S. Department of Energy (hereafter referred to as the

Department or DOE) initiated an appliance standards rulemaking process improvement

effort. To assist the Department in this effort, interested parties representing

conservation groups, manufacturers, trade associations, state agencies, and utilities were

asked to provide critical review and guidance in structuring the improvement process.

Using their expertise and experience with standards development, essential issues were

discussed through the use of a series of preliminary meetings, in-depth interviews, and a

public workshop.

Preliminary Meetings: A series of four meetings were held where persons representing

a range of interested parties identified opportunities for improvement in four general

areas:

• The rulemaking process

• Priority setting

• Analysis methods

• Department decision-making

Each of these items is discussed in detail in Sections 2.2 - 2.5.

Interviews: Stakeholders worked with the Department and its contractors in the

development of an interview guide that the Department used to obtain input from a

larger number of parties through in-person and phone interviews.

These interviews were held with a widespread sample of fifty individuals representing

thirty different interests, all of whom had participated in previous appliance

rulemakings. The interviews solicited specific comments on the various aspects of the

rulemaking process and methodology including:

• The formal regulatory process as specified by the law, including schedules

• The weighing of benefits and burdens of standards

• Technical and economic models/methodology

• Cooperative development of standards

• Consideration of alternatives to product standards

Workshop: The interviews and small group meetings helped the Department prepare for

a two-day public workshop on improving the appliance standards rulemaking process

which was held on March 19-20, 1996. Feedback obtained during this meeting helped

the Department better define key issues and was instrumental in preparing a more

detailed Process Improvement Plan as presented in Section 3 of this document.

The next four sections present the "Major Themes" of the stakeholder consultations.

Process Improvements, Prioritization of Rulemakings, Analysis Improvements, and

DOE Decision-Making are the broad areas that received extensive commentary.

DRAFT 4/30/96 4:13 PM 2-1

 EE-PI-96-001 COMMENT 32

2. Major Themes of Stakeholder Consultations 

2.1 Background and Methodology 

In September 1995, the U.S. Department of Energy (hereafter referred to as the 

Department or DOE) initiated an appliance standards rulemaking process improvement 

effort. To assist the Department in this effort, interested parties representing 

conservation groups, manufacturers, trade associations, state agencies, and utilities were 

asked to provide critical review and guidance in structuring the improvement process. 

Using their expertise and experience with standards development, essential issues were 

discussed through the use of a series of preliminary meetings, in-depth interviews, and a 

public workshop. 

Preliminary Meetings: A series of four meetings were held where persons representing 

a range of interested parties identified opportunities for improvement in four general 

areas: 

• The rulemaking process 

• Priority setting 

• Analysis methods 

• Department decision-making 

Each of these items is discussed in detail in Sections 2.2 - 2.5. 

Interviews: Stakeholders worked with the Department and its contractors in the 

development of an interview guide that the Department used to obtain input from a 

larger number of parties through in-person and phone interviews. 

These interviews were held with a widespread sample of fifty individuals representing 

thirty different interests, all of whom had participated in previous appliance 

rulemakings. The interviews solicited specific comments on the various aspects of the 

rulemaking process and methodology including: 

• The formal regulatory process as specified by the law, including schedules 

• The weighing of benefits and burdens of standards 

• Technical and economic models/methodology 

• Cooperative development of standards 

• Consideration of alternatives to product standards 

Workshop: The interviews and small group meetings helped the Department prepare for 

a two-day public workshop on improving the appliance standards rulemaking process 

which was held on March 19-20, 1996. Feedback obtained during this meeting helped 

the Department better define key issues and was instrumental in preparing a more 

detailed Process Improvement Plan as presented in Section 3 of this document. 

The next four sections present the "Major Themes" of the stakeholder consultations. 

Process Improvements, Prioritization of Rulemakings, Analysis Improvements, and 

DOE Decision-Making are the broad areas that received extensive commentary. 

DRAFT 4/30/96 4:13 PM 2-1 
2.2 Process Improvements

A common element in many of the suggestions from stakeholders for an improved

process was the perceived need for more participation by all groups in all stages of

the standards setting process.

The Department promulgates appliance standards through a notice and comment

rulemaking process involving two rounds of public comment. The regulations are

established by a three-phase public process: (a) Advance Notice of Proposed

Rulemaking (ANOPR), (b) Notice of Proposed Rulemaking (NOPR), and (c) Final

Rule.

Building upon the National Performance Review's regulatory reform initiative, which

began in 1993; an effort has been underway at the Department to increase stakeholder

consultation at every stage of the rulemaking process. In addition to holding the formal

public hearings and soliciting written comments, the Department has attempted to

increase its use of public workshops and other less formal tools to develop more

effective standards. Whenever possible, the Department has encouraged consensus

rulemaking such as the consensus recommendations recently proposed to the

Department for new refrigerator standards.

The Department received broad support for its recent attempts to "open" the rulemaking

process and obtain input from interested parties in the early stages of the rulemaking

process-well in advance of the ANOPR. Many participants felt that the past process

did not provide sufficient stakeholder involvement or dialogue prior to the issuance of

the NOPR. Stakeholders recommended that the Department continue to involve

participants early and often in the process, since frequent interaction provides a more

balanced perspective on potential standards levels and identifies critical information

required to effectively conduct the analyses.

Institutionalizing early involvement of stakeholders is an important objective of the

Department's Process Improvement Plan.

2.3 Prioritization of Rulemaking

Stakeholders expressed the desire to have the Department prioritize rulemakings

with input from the public and using clearly established criteria.

Stakeholders were concerned that the Department was critically behind schedule in its

statutory requirements and could not achieve the original rulemaking timetable set by

legislation. Prioritization of future rulemakings was emphasized as a fundamental

means of improving the efficacy of the appliance program. The Department agreed that

focusing attention on high priority rulemakings, rather than trying to address all required

rulemakings at once, would be more productive.

DRAFT 4/30/96 4:13 PM 2-2

 EE-PI-96-001 COMMENT 32

2.2 Process Improvements 

A common element in many of the suggestions from stakeholders for an improved 

process was the perceived need for more participation by all groups in all stages of 

the standards setting process. 

The Department promulgates appliance standards through a notice and comment 

rulemaking process involving two rounds of public comment. The regulations are 

established by a three-phase public process: (a) Advance Notice of Proposed 

Rulemaking (ANOPR), (b) Notice of Proposed Rulemaking (NOPR), and (c) Final 

Rule. . 

Building upon the National Performance Review's regulatory reform initiative, which 

began in 1993; an effort has been underway at the Department to increase stakeholder 

consultation at every stage of the rulemaking process. In addition to holding the formal 

public hearings and soliciting written comments, the Department has attempted to 

increase its use of public workshops and other less formal tools to develop more 

effective standards. Whenever possible, the Department has encouraged consensus 

rulemaking such as the consensus recommendations recently proposed to the 

Department for new refrigerator standards. 

The Department received broad support for its recent attempts to "open" the rulemaking 

process and obtain input from interested parties in the early stages of the rule making 

process-well in advance of the ANOPR. Many participants felt that the past process 

did not provide sufficient stakeholder involvement or dialogue prior to the issuance of 

the NOPR. Stakeholders recommended that the Department continue to involve 

participants early and often in the process, since frequent interaction provides a more 

balanced perspective on potential standards levels and identifies critical information 

required to effectively conduct the analyses. 

Institutionalizing early involvement of stakeholders is an important objective of the 

Department's Process Improvement Plan. 

2.3 Prioritization of Rulemaking 

Stakeholders expressed the desire to have the Department prioritize rulemakings 

with input from the public and using clearly established criteria 

Stakeholders were concerned that the Department was critically behind schedule in its 

statutory requirements and could not achieve the original rulemaking timetable set by 

legislation. Prioritization of future rulemakings was emphasized as a fundamental 

means of improving the efficacy of the appliance program. The Department agreed that 

focusing attention on high priority rulemakings, rather than trying to address all required 

rulemakings at once, would be more productive. 

DRAFT 4/30/96 4:13 PM 2-2 
Suggested criteria to be used in planning and prioritizing future rules include:

• The legislated schedule

• The potential for energy savings

• An evaluation of market direction

• The status of related test procedure revisions, if required

• The status of regulation development (amount of analysis and other work already

completed)

• The presence of unresolved issues

• The interrelationships with other Department or other agency regulations

(Environmental Protection Agency, etc.).

The Department agreed that focusing attention on high priority rulemakings,

rather than trying to address all required rulemakings at once , would be more

productive. The Department has identified the development of the Executive

Branch 's Regulatory Agenda, currently published twice yearly, as the process

during which it could obtain significant stakeholder input into priority setting.

Prioritization of rulemakings is a major element in the Department 's Process

Improvement Plan, which is described in greater detail in Section 3 .2. The specific

criteria the Department is considering are found in Table 3-1.

2.4 Analysis Improvements

The Department, in consultation with its stakeholders, defined four broad categories of

issues that needed to be addressed in its analysis of economic impacts: product issues,

consumer issues, manufacturer issues, and national benefit and cost issues. Each is

discussed in detail in the following sections.

2.4.1 Product Issues

The first broad analysis improvement category focuses on issues relating to product

attributes. Product issues arise in the course of conducting the engineering analysis,

which seeks to answer three questions: (1) What are "technically feasible" design

options?; (2) How much would these options cost?; and (3) How much energy would

they save? This component of the rulemaking analysis involves obtaining

manufacturing data, and may require developing or modifying product energy

performance simulation models.

The focus of stakeholder comments has been on the Department's interpretation of what

constitutes a "technically feasible" product design, as well as with the difficulties of

setting standards for products that are components of larger systems.

"Max Tech"

Several stakeholders oppose the way the Department has historically applied the

statutory provision requiring that a maximum technologically feasible design

("max tech") be considered for each product under review in the standards

rulemaking process.

DRAFT 4/30/96 4:13 PM 2-3

 EE-PI-96-001 COMMENT 32

Suggested criteria to be used in planning and prioritizing future rules include: 

• The legislated schedule 

• The potential for energy savings 

• An evaluation of market direction 

• The status of related test procedure revisions, if required 

• The status of regulation development (amount of analysis and other work already 

completed) 

• The presence of unresolved issues 

• The interrelationships with other Department or other agency regulations 

(Environmental Protection Agency, etc.). 

The Department agreed that focusing attention on high priority rulemakings, 

rather than trying to address all required rulemakings at once, would be more 

productive. The Department has identified the development of the Executive 

Branch's Regulatory Agenda, currently published twice yearly, as the process 

during which it could obtain significant stakeholder input into priority setting. 

Prioritization of rulemakings is a ~ajor element in the Department's Process 

Improvement Plan, which is described in greater detail in Section 3.2. The specific 

criteria the Department is considering are found in Table 3-1. 

2.4 Analysis Improvements 

The Department, in consultation with its stakeholders, defined four broad categories of 

issues that needed to be addressed in its analysis of economic impacts: product issues, 

consumer issues, manufacturer issues, and national benefit and cost issues. Each is 

discussed in detail in the following sections. 

2.4.1 Product Issues 

The first broad analysis improvement category focuses on issues relating to product 

attributes. Product issues arise in the course of conducting the engineering analysis, 

which seeks to answer three questions: (1) What are "technically feasible" design 

options?; (2) How much would these options cost?; and (3) How much energy would 

they save? This component of the rulemaking analysis involves obtaining . 

manufacturing data, and may require developing or modifying product energy 

performance simulation models. 

The focus of stakeholder comments has been on the Department's interpretation of what 

constitutes a "technically feasible" product design, as well as with the difficulties of 

setting standards for products that are components of larger systems. 

"Max Tech" 

Several stakeholders oppose the way the Department has historically applied the 

statutory provision requiring that a maximum technologically feasible design 

("max tech") be cons.dered for each product under review in the standards 

rulemaking process. ' 

DRAFT 4/30/96 4:13 PM 2-3 
The Energy Policy and Conservation Act (EPCA) requires that standards achieve the

maximum improvement in energy efficiency that is both "technologically feasible" and

"economically justified." Accordingly, for each class of product under consideration, a

maximum technologically feasible design ("max tech") is identified. If a standard level

achieving the maximum technologically feasible improvement in efficiency is not

economically justified, EPCA requires DOE to explain why.

The criteria used by the Department for evaluating design options for technical

feasibility are the design options already in use by industry or that research has

progressed to the development of a prototype. These criteria are consistent with the

court ruling in Herrington v. Natural Resources Defense Council.

Manufacturer interests generally believe that the Department has misapplied "Max

Tech" by giving consideration to designs that should be immediately dismissed on the

bases of criteria such as manufacturing practicality, anti-competitive patent restrictions,

and product utility, reliability, and safety. Manufacturers have expressed their desire to

see the theoretical "Max Tech" level quickly eliminated from consideration, when

justified, to reduce uncertainty as to the likely direction of the standards process. As

described below, the Department already considers these criteria, but often does so in

later analyses.

Several interested parties have suggested that DOE should not consider options without

demonstration of manufacturing practicality. Currently, the ability to manufacture is

considered under the economic justification analysis.

One manufacturer has recommended that DOE not consider design options which are

subject to patent restrictions. EPCA, however, already directs the Department to

consider in a separate analysis any lessening of competition that is likely to result from

appliance standards..

Several manufacturers and trade associations commented that in past rulemakings,

candidate standards levels were considered that did not meet industry norms for product

utility, reliability, and safety. Utility, reliability, and safety issues are specifically

analyzed during the engineering analysis. To the extent that comments or research show

that a product's utility or performance characteristics are modified, a separate product

class with a different efficiency standard could be created.

The Department expects that more stakeholder consultation during the

engineering analysis will help identify technologies that appear to have

unacceptable impacts. DOE has the flexibility to structure its analysis to consider

elements of economic justification such as, manufacturing practicality, product

utility, and anti-competitive effects early enough in the process to eliminate further

analyses of levels which can be rejected on these bases.

Components vs. Systems

Stakeholders were concerned that, at times , the Department overlooked system

interactions when setting standards for a product.

DRAFT 4/30/96 4:13 PM 2-4

 EE-PI-96-001 COMMENT 32

The Energy Policy and Conservation Act (EPCA) requires that standards achieve the 

maximum improvement in energy efficiency that is both "technologically feasible" and 

"economically justified." Accordingly, for each class of product under consideration, a 

maximum technologically feasible design ("max tech") is identified. If a standard level 

achieving the maximum technologically feasible improvement in efficiency is not 

economically justified, EPCA requires DOE to explain why. 

The criteria used by the Department for evaluating design options for technical . 

feasibility are the design options already in use by industry or that research has 

progressed to the development of a prototype. These criteria are consistent with the 

court ruling in Herrington v. Natural Resources Defense Council. 

Manufacturer interests generally believe that the Department has misapplied "Max 

Tech" by giving consideration to designs that should be immediately dismissed on the 

bases of criteria such as manufacturing practicality, anti-competitive patent restrictions, 

and product utility, reliability, and safety. Manufacturers have expressed their desire to 

see the theoretical "Max Tech" level quickly eliminated from consideration, when 

justified, to reduce uncertainty as to the likely direction of the standards process. As 

described below, the Department already considers these criteria, but often does so in 

later analyses. 

Several interested parties have suggested that DOE should not consider options without 

demonstration of manufacturing practicality. Currently, the ability to manufacture is 

considered under the economic justification analysis. 

One manufacturer has recommended that DOE not consider design options which are 

subject to patent restrictions. EPCA, however, already directs the Department to 

consider in a separate analysis any lessening of competition that is likely to result from 

appliance standards .. 

Several manufacturers and trade associations commented that in past rulemakings, 

candidate standards levels were considered that did not meet industry norms for product 

utility, reliability, and safety. Utility, reliability, and safety issues are specifically 

analyzed during the engineering analysis. To the extent that comments or research show 

that a product's utility or performance characteristics are modified, a separate product 

class with a different efficiency standard could be created. 

The Department expects that more stakeholder consultation during the 

engineering analysis will help identify technologies that appear to have 

unacceptable impacts. DOE has the flexibility to structure its analysis to consider 

elements of economic justification such as, manufacturing practicality, product 

utility, and anti-competitive effects early enough in the process to eliminate further 

analyses of levels which can be rejected on these bases. 

Components vs. Systems 

Stakeholders were concerned that, at times, the Department overlooked system 

interactions when setting standards for a product. 

DRAFT 4/30/96 4:13 PM 2-4 
Manufacturers of lighting products and electric motors asked the Department to pay

more attention to system interactions when regulating their products. Motors and

ballasts are components of larger systems that deliver a service; lighting, air movement,

pumping, etc. Mandating an efficiency standard on a component may not contribute to

system energy savings in some situations. Instead, there may be more cost effective

means of achieving higher total system efficiency. For example, in lighting, many

factors such as luminare type and positioning, lamp type (incandescent, fluorescent,

HID), control strategy, and even wall color can have a greater impact on energy savings

than a lamp's efficiency. For this and similar reasons, several manufacturers suggested

that alternatives to product standards be given greater consideration when regulating

components.

The Department believes lighting products will make an excellent case study to

begin developing methodologies for evaluating alternatives to standards.

This summer, DOE will host a workshop to review the engineering re-analysis in

support of the ballast rulemaking . At that time, the Department will solicit input

on a proposed methodology for evaluating alternatives to standards.

2.4.2 Consumer Issues

The second broad analysis improvements category focuses on issues relating to the

impact of standards on consumers. Three issues dominated the discussions relative to

the impact on consumers: a lack of consumer participation in the standards process; the

merits of life-cycle costing; and the importance of distributive impacts.

Consumer Participation

Stakeholders expressed concern about the lack of consumer participation in past

rulemakings and in the process improvement effort itself.

The Department recognizes that in improving the standards development process, DOE

should institutionalize processes that actively solicit consumer input during

rulemakings. Two potential avenues were suggested: (1) linkages with organizations

that have a large membership of consumers; and (2) direct consumer contact through

polling or focus groups of a representative sample of individual consumers.

In the course of future rulemakings, the Department will reach out to consumers to

seek their input as to the impact of candidate standards levels and/or design

options on product utility and performance.

Life-Cycle Costs and Payback Period

Several stakeholders recommended the Department abandon life -cycle costing.

Some industry participants suggested the Department adopt a three-year payback hurdle

to better approximate the observed purchasing criteria of the average consumer. Others

consider life-cycle-costing appropriate but asked for greater consideration of the

uncertainties both in the inputs and the results.

DRAFT 4/30/96 4 :13 PM 2-5

 EE-PI-96-001 COMMENT 32

Manufacturers of lighting products and electric motors asked the Department to pay 

more attention to system interactions when regulating their products. Motors and 

ballasts are components of larger systems that deliver a service; lighting, air movement, 

pumping, etc. Mandating an efficiency standard on a component may not contribute to 

system energy savings in some situations. Instead, there may be more cost effective 

means of achieving higher total system efficiency. For example, in lighting, many 

factors such as luminare type and positioning, lamp type (incandescent, fluorescent, . 

HID), control strategy, and even wall color can have a greater impact on energy savings 

than a lamp's efficiency. For this and similar reasons, several manufacturers suggested 

that alternatives to product standards be given greater consideration when regulating 

components. 

The Department believes lighting products will make an excellent case study to 

begin developing methodologies for evaluating alternatives to standards. . 

This summer, DOE will host a workshop to review the engineering re-analysis in 

support of the ballast rulemaking. At that time, the Department will solicit input 

on a proposed methodology for evalu~ting alternatives to standards. 

2.4.2 Consumer Issues 

The second broad analysis improvements category focuses on issues relating to the 

impact of standards on consumers. Three issues dominated the discussions relative to 

the impact on consumers: a lack of consumer participation in the standards process; the 

merits of life-cycle costing; and the importance of distributive impacts. 

Consumer Participation 

Stakeholders expressed concern about the lack of consumer participation in past 

rulemakings and in the process improvement effort itself. 

The Department recognizes that in improving the standards development process, DOE 

should institutionalize processes that actively solicit consumer input during 

rulemakings. Two potential avenues were suggested: (1) linkages with organizations 

that have a large membership of consumers; and (2) direct consumer contact through 

polling or focus groups of a representative sample of individual consumers. 

In the course of future rulemakings, the Department will reach out to consumers to 

seek their input as to the impact of candidate standards levels and/or design 

options on product utility and performance. 

Life-Cycle Costs and Payback Period 

Several stakeholders recommended the Department abandon life-cycle costing. 

Some industry participants suggested the Department adopt a three-year payback hurdle 

to better approximate the observed purchasing criteria of the average consumer. Others 

consider life-cycle-costing appropriate but asked for greater consideration of the 

uncertainties both in the inputs and the results. 

DRAFT 4/30/96 4:13 PM 2-5 
The Department is statutorily required to consider the savings in operating costs

throughout the estimated average life of the covered product compared to any increase

in price or maintenance expenses.

The Department will continue to use life-cycle costing in the economic justification

of standards levels. However, the screening analysis, described in section 3.2.3, will

consider uncertainty in life-cycle-costing.

Distributive Impacts

Most stakeholders suggested that the Department give some level of consideration

to the differential impact of standards on the non-average consumer.

The Department is concerned about the variability of impacts on consumer life-cycle

costs. The Department will use regional analysis and sensitivity analysis tools to

evaluate the potential distributive impacts of candidate standards levels. The

Department will consider negative impacts on large segments of society in determining

standards levels. Where these impacts are high, DOE will consider voluntary programs

to bring about the additional potential energy savings.

Given the uncertainties in determining the "average " costs,, and given the

"variance" in costs, the Department is committed to considering benefits over a

range of situations in setting standards levels.

2.4.3 Manufacturer Issues

The third broad analysis improvements category focuses on issues relating to the impact

of standards on manufacturers. The analysis of the impact of appliance standards on

manufacturers is extremely controversial. Numerous assumptions cannot be verified

empirically for such issues as cost pass-through, elasticity of demand, foregone

investments, and manufacturing costs. This section describes these and other issues

raised both by industry and other stakeholders on the Department's analysis of the

impacts of standards on manufacturers.

The Department uses models to estimate the short-term and long-term impacts of new or

amended standards on industry profitability. The computations are performed by the

Manufacturer Analysis Model (MAM) consisting of the earlier Lawrence Berkeley

Laboratory (LBL) Manufacturer Impact Model (MIM) and the industry-developed

Government Regulatory Impact Model (GRIM). To predict the effect of standards on

industry profits and return-on-equity, the MAM model estimates how much of the cost

increase imposed by standards will be passed-on to consumers. It estimates how the

price increase and the accompanying reduction of energy operating costs will influence

consumer demand for the product. Finally, given the new price, cost, and sales volume,

the model computes industry profitability. Industry views elements of this methodology

as seriously flawed. As is discussed in more detail later in this section, improvements

to, or replacement of the current analytical models will be studied extensively in the

Department's analysis improvement initiative.

DRAFT 4/30/96 4:13 PM 2-6

 EE-PI-96-001 COMMENT 32

The Department is statutorily required to consider the savings in operating costs 

throughout the estimated average life of the covered product compared to any increase 

in price or maintenance expenses. . 

The Department will continue to use life-cycle costing in the economic justification 

of standards levels. However, the screening analysis, described in section 3.2.3, will 

consider uncertainty in Iife-cycle-costing. 

Distributive Impacts 

Most stakeholders suggested that the Department give some level of consideration 

to the differential impact of standards on the non-average consumer. 

The Department is concerned about the variability of impacts on consumer life-cycle 

costs. The Department will use regional analysis and sensitivity analysis tools to 

evaluate the potential distributive impacts of candidate standards levels. The 

Departmentwill consider negative impacts on large segments of society in determining 

standards levels. Where these impacts are high, DOE will consider voluntary programs 

to bring about the additional potential energy savings. 

Given the uncertainties in determining the "average" costs, and given the 

"variance" in costs, the Department is committed to considering benefits over a 

range of situations in setting standards levels. 

2.4.3 Manufacturer Issues 

The third broad analysis improvements category focuses on issues relating to the impact 

of standards on manufacturers. The analysis of the impact of appliance standards on 

manufacturers is extremely controversial. Numerous assumptions cannot be verified 

empirically for such issues as cost pass-through, elasticity of demand, foregone 

investments, and manufacturing costs. This section describes these and other issues 

raised both by industry and other stakeholders on the Department's analysis of the 

impacts of standards on manufacturers. 

The Department uses models to estimate the short-term and long-term impacts of new or 

amended standards on industry profitability. The computations are performed by the 

Manufacturer Analysis Model (MAM) consisting of the earlier Lawrence Berkeley 

Laboratory (LBL) Manufacturer Impact Model (MIM) and the industry-developed 

Government Regulatory Impact Model (GRIM). To predict the effect of standards on 

industry profits and return-on-equity, the MAM model e~timates how much of the cost 

increase imposed by standards will be passed-on to consumers. It estimates how the 

price increase and the accompanying reduction of energy operating costs will influence 

consumer demand for the product. Finally, given the new price, cost, and sales volume, 

the model computes industry profitability. Industry views elements of this methodology 

as seriously flawed. As is discussed in more detail later in this section, improvements 

to, or replacement of the current analytical models will be studied extensively in the 

Department's analysis improvement initiative. 

DRAFT 4/30/96 4:13 PM 2-6 
Average and Small Manufacturers

Many stakeholders feel that the characterization of an "average" company has

limited value for setting standards.

The MAM estimates the impact of standards by modeling a hypothetical "average"

company which is representative of the industry. Important parameters used in the

model include the cost structure of the firm, profitability ratio, relative costs of

complying with new standards and marketing strategies. Financial data are collected

from publicly available sources such as Value Line, Standard and Poor's, Moody's, and

company reports. Manufacturers and trade associations have commented that "average"

companies do not exist and thus the analysis has limited value. In addition, they noted

that standards may disproportionately burden smaller companies whose costs associated

with meeting standards can be disproportionately high compared to larger companies.

The Department takes very seriously the concerns about smaller manufacturers.

Explicit treatment of small/niche manufacturers is integral to the Department's

Analysis Improvement Plan described in Section 4.

Elasticity of Demand

Some stakeholders would like to see the Department update data for estimating the

elasticity of demand for products covered by legislation.

A critical influence on profits is the change in consumer appliance purchase behavior

resulting from the increase in price and the reduction in operating cost attributable to

standards. The MAM takes these effects into consideration by using separate demand

elasticities for both changes in costs. The elasticities used were originally estimated

based on data developed in the 1970s by the Oak Ridge National Laboratory (ORNL).

The Department agrees with many stakeholders that it would be useful to have updated

data for estimating elasticity. Other interests, however, expressed skepticism over the

ultimate outcome since the elasticity for an industry as a whole may be very different

than that experienced by individual firms.

The Department's analytical approach for dealing with ill-defined parameters has been

to perform sensitivity analyses using a wide range of possible input values. As a

practical matter, developing new elasticity data would be time consuming, expensive,

and potentially controversial. If it can be shown that the economic impacts are

acceptable within a logical range of elasticity values, costly research would be

unnecessary.

During the analysis improvement effort, DOE will consult stakeholders on the

merits of conducting future research to evaluate consumer elasticity of demand for

regulated products.

DRAFT 4/30/96 4 :13 PM 2-7

 EE-PI-96-001 COMMENT 32

A verage and Small Manufacturers 

Many stakeholders feel that the characterization of an "average" company has 

limited value for setting standards. 

The MAM estimates the impact of standards by modeling a hypothetical "average" 

company which is representative of the industry. Important parameters used in the 

model include the cost structure of the firm, profitability ratio, relative costs of 

complying with new standards and marketing strategies. Financial data are collected 

from publicly available sources such as Value Line, Standard and Poor's, Moody's, and 

company reports. Manufacturers and trade associations have commented that "average" 

companies do not exist and thus the analysis has limited value. In addition, they noted 

that standards may disproportionately burden smaller companies whose costs associated 

with meeting standards can be disproportionately high compared to larger companies. 

The Department takes very seriously the concerns about smaller manufacturers. 

Explicit treatment of small/niche manufacturers is integralto the Department's 

Analysis Improvement Plan described in Section 4.· , 

Elasticity of Demand 

Some stakeholders would like to see the Department update data for estimating the 

elasticity of demand for products covered by legislation. ' 

A critical influence on profits is the change in consumer appliance purchase behavior 

resulting from the increase in price and the reduction in operating cost attributable to 

standards. The MAM takes these effects into consideration by using separate demand 

elasticities for both changes in costs. The elasticities used were originally estimated 

based on data developed in the 1970s by the Oak Ridge National Laboratory (ORNL). 

The Department agrees with many stakeholders that it would be useful to have updated 

data for estimating elasticity. Other interests, however, expressed skepticism over the 

ultimate outcome since the elasticity for an industry as a whole may be very different 

than that experienced by individual firms. 

The Department's analytical approach for dealing with ill-defined parameters has been 

to perform sensitivity analyses using a wide range of possible input values. As a 

practical matter, developing new elasticity data would be time consuming, expensive, 

and potentially controversial. If it can be shown that the economic impacts are 

acceptable within a logical range of elasticity values, costly research would be 

unnecessary . 

During the analysis improvement effort, DOE will consult stakeholders on the 

merits of conducting future research to evaluate consumer elasticity of demand for 

regulated products. . 

DRAFT 4/30/96 4:13 PM 2-7 
Cost Pass-Through

Some Stakeholders believe that current analysis models do not accurately calculate

how appliance prices will rise relative to the increased costs of manufacturing

higher efficiency appliances.

The primary issue regarding cost pass-through is how appliance prices will rise relative

to the increased costs of manufacturing higher efficiency appliances. A major

difference between the MIM and GRIM models is that the MIM forecasts annual

appliance shipments and prices. GRIM considers these to be exogenous variables that

must be entered based on informed judgment. Manufacturer associations question the

economic assumptions used in MIM.

Depending on consumer reaction to new, high. efficiency, more expensive products,

manufacturers may be able to pass all, some, or none of their increased costs through to

the purchaser. Unfortunately, minimal data are available on price changes and they are

hard to interpret especially in light of the major industry restructuring that has occurred

during the same period in which standards have taken effect. Possibilities for

addressing this issue include scenario analysis and active manufacturer participation in

performing the analysis. The Department intends to further explore these, and other

possibilities, in the near-term.

The Department's analysis improvement effort will focus on the issue of cost passthrough.

Cumulative Burden

Some stakeholders indicated that the Department does not adequately consider the

effects of complying with multiple regulations when economic impacts on

manufacturers are analyzed.

Cumulative burden may be the result of complying with regulations from multiple

federal agencies, or the compound effect of proposed efficiency standards for several

products on a full-line manufacturer. MIM is designed to only analyze the impact of

standards on industry profitability for an individual appliance. This results in treating

each manufacturer as a single-product manufacturer.

The Department recognizes the importance of accounting for the cumulative effects of

multiple regulations on manufacturers. In its analysis improvement effort, the

Department will be exploring new ways to account for the cumulative effects of

standards for several appliance product types on a multi-product company.

The proposed process, detailed in Section 3, allows for consideration of cumulative

burden both in rule prioritization and in the calculation of manufacturer impacts.

Stranded Assets

Some stakeholders feel that the Department is overlooking some of the short-term

financial burdens new appliance standards place on manufacturers.

DRAFT 4/30/96 4:13PM 2-8

 EE-PI-96-001 COMMENT 32

Cost Pass-Through 

Some Stakeholders believe that current analysis models do not accurately calculate 

how appliance prices will rise relative to the increased costs of manufacturing 

higher efficiency appliances. 

The primary issue regarding cost pass-through is how appliance prices will rise relative 

to the increased costs of manufacturing higher efficiency appliances. A major 

difference between the MIM and GRIM models is that the MIM forecasts annual 

appliance shipments and prices. GRIM considers these to be exogenous variables that 

must be entered based on informed judgment. Manufacturer associations question the 

economic assumptions used in MIM. 

Depending on consumer reaction to new, high. efficiency, more expensive products, 

manufacturers may be able to pass all, some, or none of their increased costs through to 

the purchaser. Unfortunately, minimal data are available on price changes and they are 

hard to interpret especially in light of the major industry restructuring that has occurred 

during the same period in which standards have taken effect. Possibilities for 

addressing this issue include scenario analysis and active manufacturer participation in 

performing the analysis. The Department intends to further explore these, and other 

possibilities, in the near-term. 

The Department's analysis improvement effort will focus on the issue of cost passthrough. 

Cumulative Burden 

Some stakeholders indicated that the Department does not adequately consider the 

effects of complying with multiple regulations when economic impacts on 

manufacturers are analyzed. 

Cumulative burden may be the result of complying with regulations from multiple 

federal agencies, or the compound effect of proposed efficiency standards for several 

products on a full-line manufacturer. MIM is designed to only analyze the impact of 

standards on industry profitability for an individual appliance. This results in treating 

each manufacturer as a single-product manufacturer. 

The Department recognizes the importance of accounting for the cumulative effects of 

multiple regulations on manufacturers. In its analysis improvement effort, the 

Department will be exploring new ways to account for the cumulative effects of 

standards for several appliance product types on a multi-product company. 

The proposed process, detailed in Section 3, allows for consideration of cumulative 

burden both in rule prioritization and in the calculation of manufacturer impacts. 

Stranded Assets 

Some stakeholders feel that the Department is overlooking some of the short-term 

financial burdens new appliance standards place on manufacturers. 

DRAFT 4/30/96 4:13PM 2-8 
One of the significant burdens of new appliance standards can be the consequential

obsolescence of existing manufacturing assets including tooling and equipment. This

burden is believed to fall most heavily on smaller manufacturers who have limited

available capital and/or smaller production quantities over which their costs can be

amortized.

The Department will seek to expand the manufacturer impact analysis to evaluate

the likely impacts of stranded assets on manufacturers.

Foregone Investments

Some manufacturers are concerned about the impact of energy efficiency

standards on product innovation.

Several manufacturers claim that recurring requirements to invest in energy efficiency

reduce their ability to enhance non-energy product features and attributes which are

attractive to consumers and stimulate the sales of new products.

Other stakeholders maintain that energy efficiency standards are a strong stimulus for

product innovation, frequently leading to enhanced quality and features. The possible

short-term costs of dealing with new standards may lead to long-term benefits in

product innovation and international competitive advantage. Additionally, national

standards that anticipate standards levels that are eventually adopted in numerous

countries can open foreign markets and pre-empt the loss of domestic markets to more

efficient foreign markets.

The Department believes that energy efficiency standards, if properly conceived, can

stimulate product innovation and increase U.S. industry competitiveness in international

markets. If efficiency standards are phased-in in a manner that is consistent with normal

business capital-investment cycles, the cost of compliance may be minimal and the

benefits substantial.

The likely impacts of standards on product features and technology development

will be a decision criterion for the selection of proposed standards . The analysis

methods and data requirements needed to perform this determination will be

studied with stakeholders during the analysis improvement effort.

Alternate Methodologies

Several stakeholders are concerned that the current appliance rulemaking process

relies too heavily on quantitative models.

The Department recognizes that accurately evaluating the impact of standards on

manufacturers may require substantial revisions to the current analysis methods. DOE

intends to add more qualitative measures to enhance the analysis. Numerous parties

have expressed considerable skepticism of computer models. Past analyses have relied

too heavily on models that are over-complicated, hard to use, and poorly understood by

those most impacted by their outputs. Compounding the difficulty, the data needed to

run the models are proprietary and manufacturers are reluctant to fully disclose the

necessary information. In addition, companies willing to share information sometimes

DRAFT 4/30/96 4 :13 PM 2-9

 EE-PI-96-001 COMMENT 32

One of the significant burdens of new appliance standards can be the consequential 

obsolescence of existing manufacturing assets including tooling and equipment. This 

burden is believed to fall most heavily on smaller manufacturers who have limited 

available capital and/or smaller production quantities over which their costs can be 

amortized. . 

The Department will seek to expand the manufacturer impact analysis to evaluate 

the likely impacts of stranded assets on manufacturers. 

Foregone Investments 

Some manufacturers are concerned about the impact of energy efficiency 

standards on product innovation. 

Several manufacturers claim that recurring requirements to invest in energy efficiency 

reduce their ability to enhance non-energy product features and attributes which are 

attractive to consumers and stimulate the sales of new products. 

Other stakeholders maintain that energy efficiency standards are a strong stimulus for 

product innovation, frequently leading to enhanced quality and features. The possible 

short-term costs of dealing with new standards may lead to long-term benefits in 

product innovation and international competitive advantage. Additionally, national 

standards that anticipate standards levels that are eventually adopted in numerous 

countries can open foreign markets and pre-empt the loss of domestic markets to more 

efficient foreign markets. 

The Department believes that energy efficiency standards, if properly conceived, can 

stimulate product innovation and increase U.S. industry competitiveness in international 

markets. If efficiency standards are phase'd-in in a manner that is consistent with normal 

business capital-investment cycles, the cost of compliance may be minimal and the 

benefits substantial. 

The likely impacts of standards on product features and technology development 

will be a decision criterion for the selection of proposed standards. The analysis 

methods and data requirements needed to perform this determination will be 

studied with stakeholders during the analysis improvement effort. 

Altemate Methodologies 

Several stakeholders are concerned that the current appliance rulemaking process 

relies too heavily on quantitative models. 

The Department recognizes that accurately evaluating the impact of standards on 

manufacturers may require substantial revisions to the current analysis methods. DOE 

intends to add more qualitative measures to enhance the analysis. Numerous parties 

have expressed considerable skepticism of computer models. Past analyses have relied 

too heavily on models that are over-complicated, hard to use, and poorly understood by 

those most impacted by their outputs. Compounding the difficulty, the data needed to 

run the models are proprietary and manufacturers are reluctant to fully disclose the 

necessary information. In addition, companies willing to share information sometimes 

DRAFT 4/30/96 4:13 PM 2-9 
find that their accounting systems are incompatible with the data needs of the DOE

models.

At the March workshop, stakeholders expressed their sense that the past analyses were

overly dependent on "black box" models, insufficiently validated by empirical evidence,

and based on some highly controversial assumptions.

As was announced at the March workshop, the Department is initiating a complete

review of the manufacturing impact analysis methodologies . The review may

require improvements to, or replacement of, the current analytical models.

Interested parties will be invited to play a major role in this improvement effort.

2.4.4 National Issues

The fourth broad analysis improvements category focuses on a number of cross-cutting

issues relevant to estimating the national benefits of energy efficiency standards.

Need of the Nation to Save Energy

Several stakeholders took issue with the Department's treatment of the need for

national energy conservation, and expressed the opinion that this need was not

proven.

The Department believes that more efficient use of energy in our building stock is

needed to reduce our reliance on foreign oil, reduce the adverse environmental

impacts of energy use, and to stimulate economic growth.

• U.S. oil imports are at record levels, are continuing to grow, and are projected to

reach 70 percent by 2020. High oil imports make a significant contribution to the

trade deficit and, according to a Department of Commerce analysis earlier this year,

constitute a threat to U.S. economic security. Persian Gulf countries are projected to

control 70 percent of the global market for oil by 2010. The buildings sectorresidential and commercial buildings-currently uses over 31 quads of primary

energy annually. This is about 36 percent of the total U.S. energy consumption, and

includes 65 percent of all electricity used in the U.S.

• Energy costs consumers about $210 billion annually; the average household spends

about $1,200 annually. When consumers save money on energy bills, they spend

the savings on more labor-intensive goods and services thereby stimulating

economic growth as well as creating jobs.

• The carbon dioxide emissions attributable to primary energy use in the our nation's

buildings constitutes 35 percent of national and 8 percent of global totals. In

addition, buildings-related emissions of sulfur and nitrogen oxides account for

50 percent and 25 percent respectively of U.S. totals. Successfully achieving the

Department's goals will reduce carbon emissions from forecast levels of between 60

to 100 million metric tons annually by the year 2010. Emissions of sulfur and

nitrogen oxides also will be greatly reduced.

DRAFT 4/30/96 4:13 PM 2-10

 EE-PI-96-001 COMMENT 32

find that their accounting systems are incompatible with the data needs of the DOE 

models. 

At the March workshop, stakeholders expressed their sense that the past analyses were 

overly dependent on "black box" models, insufficiently validated by empirical evidence, 

and based on some highly controversial assumptions. 

As was announced at the March workshop, the Department is initiating a complete 

review of the manufacturing impact analysis methodologies. The review may 

require improvements to, or replacement of, the current analytical models. 

Interested parties will be invited to playa major role in this improvement effort. 

2.4.4 Nationallssues 

The fourth broad analysis improvements category focuses on a number of cross-cutting 

issues relevant to estimating the national benefits of energy efficiency standards. 

Need of the Nation to Save Energy 

Several stakeholders took issue with the Department's treatment of the need for 

national energy conservation, and expressed the opinion that this need was not 

proven. 

The Department believes that more efficient use of energy in our building stock is 

needed to reduce our reliance on foreign oil, reduce the adverse environmental 

impacts of energy use, and to stimulate economic growth. 

• U.S. oil imports are at record levels, are continuing to grow, and are projected to 

reach 70 percent by 2020. High oil imports make a significant contribution to the 

trade deficit and, according to a Department of Commerce analysis earlier this year, 

constitute a threat to U.S. economic security. Persian Gulf countries are projected to 

control 70 percent of the global market for oil by 2010. The buildings sectorresidential and commercial buildings-currently uses over 31 quads of primary 

energy annually. This is about 36 percent of the total U.S. energy consumption, and 

includes 65 percent of all electricity used in the U.S. 

• Energy costs consumers about $210 billion annually; the average household spends 

about $1,200 annually. When consumers save money on energy bills, they spend 

the savings on more labor-intensive goods and services thereby stimulating 

economic growth as well as creating jobs. 

• The carbon dioxide emissions attributable to primary energy use in the our nation's 

buildings constitutes 35 percent of national and 8 percent of global totals. In 

addition, buildings-related emissions of sulfur and nitrogen oxides account for 

50 percent and 25 percent respectively of U.S. totals. Successfully achieving the 

Department's goals will reduce carbon emissions from forecast levels of between 60 

to 100 million metric tons annually by the year 2010. Emissions of sulfur and 

nitrogen oxides also will be greatly reduced. 

DRAFT 4/30/96 4:13 PM 2-10 
Goals of the Standards Program

Stakeholders recommended that the Department clearly enunciate the goals of the

appliance standards program.

Narrowly defined, the goal of the program is to implement the legislatively mandated

objective of prescribing appliance efficiency standards levels which "achieve the

maximum improvement in energy efficiency" which is, " technologically feasible and

economically justified." The standards program does not have quantified energy

savings targets. Setting strict numerical goals on a mandatory program would require

assumptions about technology innovation that are inappropriate.

Further guidance as to the mission of the program is obtained in the Administration's

Sustainable Energy Strategy. A key objective of the Administration is to: "Increase the

efficiency of energy use in order to:

• Maximize energy productivity to strengthen our economy and improve living

standards;

• Prevent pollution to reduce the adverse environmental impacts associated with

energy production, delivery, and use; and

• Keep America secure by reducing our vulnerability to global energy market shocks."

Although the standards program in isolation has no energy savings goals,

appliance standards are an integral component of the Office of Building

Technologies, State, and Community Program's (BTS) strategy for reducing the

energy intensity of our buildings by 20 percent by the year 2010.

BTS programs include: (1) research, development and demonstration of advanced

energy-efficient and renewable energy technologies; (2) appliance and building codes

and standards; and (3) market outreach and conditioning. The overall objective of BTS

is to cost effectively maintain energy consumption from non-renewable sources at or

below its current level of approximately 32 quads through the year 2010. Considering

the predicted growth in population, GNP, and standard of living, it will be necessary to

reduce the current household energy intensity from 181 million Btu/household/year to

141 million Btu/household/year. For commercial buildings these figures are 172,000

Btu/sq. ft/year in 2010 down from 198,000 Btu/sq. ft/year in 1993.

Significance of Energy Savings

Stakeholders expressed varying interpretations of the meaning of the phrase

"significant energy savings".

EPCA instructs DOE not to issue standards for a type or class of covered product if the

Secretary determines, by rule, that the establishment of such standards will not result in

"significant" conservation of energy. The issue of significance of energy savings is very

controversial. Manufacturers claim that the savings are becoming insignificant because

DRAFT 4/30/96 4:13 PM 2-11

 EE-PI-96-001 COMMENT 32

Goals o/the Standards Program 

Stakeholders recommended that the Department clearly enunciate the goals of the 

appliance standards program. 

Narrowly defined, the goal of the program is to implement the legislatively mandated 

objective of prescribing appliance efficiency sta.ndards levels which "achieve the 

maximum improvement in energy efficiency" which is, " technologically feasible and 

economically justified." The standards program does not have quantified energy 

savings targets. Setting strict numerical goals on a mandatory program would require 

assumptions about technology innovation that are inappropriate. 

Further guidance as to the mission of the program is obtained in the Administration's 

Sustainable Energy Strategy. A key objective of the Administration is to: "Increase the 

efficiency of energy use in order to: . 

• Maximize energy productivity to strengthen our economy and improve living 

standards; 

• Prevent pollution to reduce the adverse environmental impacts associated with 

energy production, delivery, and use; and 

• Keep America secure by reducing our vulnerability to global energy market shocks." 

Although the standards program in isolation has no energy savings goals, 

appliance standards are an integral component of the Office of Building 

Technologies, State, and Community Program's (BTS) strategy for reducing the 

energy intensity of our buildings by 20 percent by the year 2010. 

BTS programs include: (1) research, development and demonstration of advanced 

energy-efficient and renewable energy technologies; (2) appliance and building codes 

and standards; and (3) market outreach and conditioning. The overall objective of BTS 

is to cost effectively maintain energy consumption from non-renewable sources at or 

below its current level of approximately 32 quads through the year 2010. Considering 

the predicted growth in population, GNP, and standard of living, it will be necessary to 

reduce the current household energy intensity from 181 million Btulhouseholdlyear to 

141 million B tulhouseholdlyear. For commercial buildings these figures are 172,000 

Btu/sq. ftJyear in 2010 down from 198,000 Btu/sq. ftJyear in 1993. 

Significance of Energy Savings 

Stakeholders expressed varying interpretations of the meaning of the phrase 

"significant energy savings". 

EPCA instructs DOE not to issue standards for a type or class of covered product if the 

Secretary determines, by rule, that the establishment of such standards will not result in 

"significant" conservation of energy. The issue of significance of energy savings is very 

controversial. Manufacturers claim that the savings are becoming insignificant because 

DRAFT 4/30/96 4:13 PM 2-11 
of decreasing marginal benefits, while conservationists claim that any savings are

significant.

The prioritization of rulemakings will enable the Department to focus on products

with the most potential for energy savings.

Site vs. Source

Some stakeholders noted that calculating energy efficiency based on point-of-use

data and separating classes by fuel type can result in an unfair treatment of fossil

fuels and send false information to consumers.

In accounting for the energy consumed in the. U.S. economy, two metrics are commonly

used: (1) site energy, as measured at the point of utilization; and (2) source energy,

which occurs at the point of generation or extraction. In the case of fossil fuels, such as

oil and gas, the amount of energy measured at the source is similar to the amount used at

the site. For electricity, however, the difference is significant. The EPCA provisions

establishing the standards program define energy use as the quantity of energy directly

consumed at the point of use and energy efficiency is defined as the ratio of useful

output to input energy, also measured at the site.

The Department recognizes the importance of this subject, and has initiated a wide

review of its site-source policy encompassing the Appliance Testing, Standards,

and Labeling programs, the Home Energy Rating Systems Program, Building

Codes, and the Federal Energy Management program.

The Office of Codes and Standards is committed to working with interested parties to

improve the information made available to consumers. For example, recently the

Department held a workshop to obtain input on possible descriptors for appliances

which use more than one energy source. Furthermore, as described in Section 3, in the

course of future rules, DOE will seek consumer input to ensure that important product

performance and labeling issues are identified.

Monetization of Environmental Externalities

Some stakeholders recommended that the Department account more explicitly for

environmental externalities in the economic analysis of different standards levels.

For appliance efficiency standards, the relevant environmental externalities reflect the

adverse health effects and other social costs associated with emissions of pollutants due

to energy consumption. The standards setting process tracks three types of energyrelated emissions: sulfur dioxide (SO2), nitrous oxides (No) and carbon dioxide (CO2).

Outside the scope of the current analysis are other types of emissions, such as

particulates, carbon monoxide, air toxins, volatile organic compounds, solid wastes, and

water discharges associated with energy use.

During the recent consultations, a number of interested parties suggested that DOE

account more explicitly for environmental and other externalities in the economic

analysis of different standards levels. In order to incorporate such externalities into the

economic analyses, the Department would have to convert physical quantities of

DRAFT 4/30/96 4:13 PM 2-12

 EE-PI-96-001 COMMENT 32

of decreasing marginal benefits, while conservationists claim that any savings are 

significant. 

The prioritization of rulemakings will enable the Department to focus on products 

with the most potential for energy savings. 

Site vs. Source 

Some stakeholders noted that calculating energy efficiency based on point-of-use 

data and separating classes by fuel type can result in an unfah; treatment of fossil 

fuels and send false information to consumers. 

In accounting for the energy consumed in the U.S. economy, two metrics are commonly 

used: (1) site energy, as measured at the point of utilization; and (2) source energy, 

which occurs at the. point of generation or extraction. In the case of fossil fuels, such as 

oil and gas, the amount of energy measured at the source is similar to the amount used at 

the site. For electricity, however, the difference is significant. The EPCA provisions 

establishing the standards program define energy use as the quantity of energy directly 

consumed at the point of use and energy efficiency is defined as the ratio of useful 

output to input energy, also measured at the, site. 

The Department recognizes the importance of this subject, and has initiated a wide 

review of its site-source policy encompassing the Appliance Testing, Standards, 

and Labeling programs, the Home Energy Rating Systems Program, Building 

Codes, and the Federal Energy Management program. 

The Office of Codes and Standards is committed to working with interested parties to 

improve the information made available to consumers. For example, recently the 

Department held a workshop to obtain input on possible descriptors for appliances 

which use more than one energy source. Furthermore, as described in Section 3, in the 

course of future rules, DOE will seek consumer input to ensure that important product 

performance and labeling issues are identified. 

Monetization of Environmental Externalities 

Some stakeholders recommended that the Department account more explicitly for 

environmental externalities in the economic analysis of different standards levels. 

For appliance efficiency standards, the relevant environmental externalities reflect the 

adverse health effects and other social costs associated with emissions of pollutants due 

to energy consumption. The standards setting process tracks three types of energyrelated emissions: sulfur dioxide (S02)' nitrous oxides (No) and carbon dioxide (C0 2), 

Outside the scope of the current analysis are other types of emissions, such as 

particulates, carbon monoxide, air toxins, volatile organic compounds, solid wastes, and 

water discharges associated with energy use. 

During the recent consultations, a number of interested parties suggested that DOE 

account more. explicitly for environmental and other externalities in the economic 

analysis of different standards levels. In order to incorporate such externalities into the 

economic analyses, the Department would have to convert physical quantities of 

DRAFT 4/30196 4:13 PM 2-12 
emissions or other impacts into monetary values. A significant number of stakeholders

were strongly opposed to monetizing externalities. It is important to note that current

appliance standard levels do consider the physical effects of alternate standards on

emissions and oil imports, and do not include monetization of externalities. Reduction

of pollutants from new standards is reported separately, but no monetaryvalues are

assigned. Reductions in emissions become part of the net national benefits estimated by

the Department and are weighed along with the other statutory factors in determining a

standards level.

A Supplemental ANOPR published in 1994, solicited comments on whether a sound

analytical basis existed for estimating the monetary value of externalities. If a sound

analytical basis existed, the Department indicated that it would consider these values in

conjunction with estimates of the total net national benefits but not in the analysis of

consumer life-cycle costs. In consideration of the comments received, DOE announced

in the July 1995 NOPR that it was not proposing to monetize externality estimates for

lack of a sound analytical framework.

To date, the Department has not identified a sound analytical basis for monetizing

environmental or any other externalities.

Job Creation

In the recent consultations the Department was asked to explain how it measures the

impact on jobs of proposed rules.

Currently, the Department does not analyze the impact of standards on job

creation or loss.

2.5 DOE Decision -Making

Some stakeholders are concerned that, historically, Department decisionmakers have not

received sufficient information before making decisions regarding standards. In

particular, stakeholders expressed concerns about how: (1) uncertainty was overlooked

in the process; (2) key decisionmakers were absent from formal hearings; and (3)

alternatives to regulatory standards received little consideration.

2.5.1 Characterizing Uncertainty

Several stakeholders have observed that Department decision makers are not presented,

with information that characterizes the range of uncertainty associated with DOE's

analysis. Participants recommended that sensitivity analysis results be integrated into

the briefing materials.

2.5.2 Involving Senior DOE Decision-Makers

Several groups recommended that senior DOE staff, including the Assistant Secretary

for Energy Efficiency and Renewable Energy, be present at formal hearings. This

would enable interested parties to communicate directly with decision-makers. One

commentor at the March workshop described proceedings of the California Energy

Commission in which decision-makers not only listen to comments from stakeholders,

DRAFT 4130/96 4:13 PM 2-13

 EE-PI-96-001 COMMENT 32

emissions or other impacts into monetary values. A significant number of stakeholders 

were strongly opposed to monetizing externalities. It is important to note that current 

appliance standard levels do consider the physical effects of alternate standards on 

emissions and oil imports, and do not include monetization of externalities. Reduction 

of pollutants from new standards is reported separately, but no monetary values are 

assigned. Reductions in emissions become part of the net national benefits estimated by 

the Department and are weighed along with the other statutory factors in determining a 

standards level. 

A Supplemental ANOPR published in 1994, solicited comments on whether a sound 

analytical basis existed for estimating the monetary value of externalities. If a sound 

analytical basis existed, the Department indicated that it would consider these values in 

conjunction with estimates of the total net national benefits but not in the analysis of 

consumer life-cycle costs. In consideration of the comments received, DOE announced 

in the July 1995 NOPR that it was not proposing to monetize externality estimates for 

lack of a sound analytical framework. 

To date, the Department has not identified a sound analytical basis for monetizing 

environmental or any other externalities. 

Job Creation 

In the recent consultations the Department was asked to explain how it measures the 

impact on jobs of proposed rules. 

Currently, the Department does not analyze the impact of standards on job 

creation or loss. 

2.5 DOE Decision-Making 

Some stakeholders are concerned that, historically, Department decisionmakers have not 

received sufficient information before making decisions regarding standards. In 

particular, stakeholders expressed concerns about how: (1) uncertainty was overlooked 

in the process; (2) key decisionmakers were absent from formal hearings; and (3) 

alternatives to regulatory standards received little consideration. 

2.5.1 Characterizing Uncertainty 

Several stakeholders have observed that Department decision makers are not presented. 

with information that characterizes the range of uncertainty associated with DOE's 

analysis. Participants recommended that sensitivity analysis results be integrated into 

the briefing materials. 

2.5.2 Involving Senior DOE Decision-Makers 

Several groups recommended that senior DOE staff, including the Assistant Secretary 

for Energy Efficiency and Renewable Energy, be present at formal hearings. This 

would enable interested parties to communicate directly with decision-makers. One 

commentor at the March workshop described proceedings of the California Energy 

Commission in which decision-makers not only listen to comments from stakeholders, 

DRAFT 4/30/96 4:13 PM 2-13 
but also asked questions, offered possible compromises for discussion, and made final

decisions in the public forum.

The Department is looking into establishing an Appliance Advisory Committee,

chaired by the Assistant Secretary and including stakeholder participation, to

regularly review issues pertaining to the appliance rulemaking process.

2.5.3 Alternatives to Appliance Standards

Some stakeholders commented that there are a variety of ways to reduce energy

consumption, and that no energy efficiency standards should be mandated until

alternative options are thoroughly considered.

Federal minimum efficiency standards will continue to play a role in improving

appliance efficiency by prohibiting the sale of inefficient products. However, at the

Department of Energy and throughout the Administration, staff are seeking voluntary

alternatives to increased regulation wherever appropriate.

The Office of Energy Efficiency and Renewable Energy established a task force to

study the interplay between the standards process, research, and voluntary market pull

activities in the building sector. Its task is to identify and prioritize criteria which will

enable the Department to identify opportunities for market mechanisms in lieu of new or

amended standards. This group will report on their progress and solicit input at a public

workshop to be held this summer.

DRAFT 4/30/96 4 : 13 PM 2-14

 EE-PI-96-001 COMMENT 32

but also asked questions, offered possible compromises for discussion, and made final 

decisions in the public forum. 

The Department is looking into establishing an Appliance Advisory Committee, 

chaired by the Assistant Secretary and including stakeholder participation, to 

regularly review issues pertaining to the appliance rulemaking process. 

2.5.3 Alternatives to Appliance Standards 

Some stakeholders commented that there are a variety of ways to reduce energy 

consumption, and that no energy efficiency standards should be mandated until 

alternative options are thoroughly considered. 

Federal minimum efficiency standards will continue to playa role in improving 

appliance efficiency by prohibiting the sale of inefficient products. However, at the 

Department of Energy and throughout the Administration, staff are seeking voluntary 

alternatives to increased regulation wherever appropriate. 

The Office of Energy Efficiency and Renewable Energy established a task force to 

study the interplay between the standards process, research, and voluntary market pull 

activities in the building sector. Its task is to identify and prioritize criteria which will 

enable the Department to identify opportunities for market mechanisms in lieu of new or 

amended standards. This group will report on their progress and solicit input at a public 

workshop to be held this summer. 

DRAFT 4/30/96 4:13 PM 2-14 
3. Process Improvement Plan for Appliance Efficiency

Standards

3.1 Objectives

In response to the stakeholder concerns identified during the recent consultations,

the Department of Energy has developed a draft process improvement plan.

The major objectives of the process improvement plan are:

Early Involvement of Stakeholders - DOE will seek to have early input from

stakeholders in setting rulemaking priorities and structuring the analysis for particular

products. Stakeholders will be invited to provide input for the selection of design

options and will help DOE identify analysis, data, and modeling needs.

Increased Predictability of the Rulemaking Timetable - The Department will use the

Regulatory Agenda to set priorities and timetables for standards development and test

procedure modification.

Increased Use of Product Expertise - DOE will increase the use of technical experts in

developing, performing and reviewing the analyses. Draft analytical results will be

distributed for peer and stakeholder review.

Early Elimination of Impractical or Problematic Design Options - The Department will

not engage in detailed analysis of design options if it concludes that manufacture or

service of the design is impractical, or if it determines that standards will adversely

affect the utility of the product.

Consideration of Alternatives to Standards - The Department will continue to use

voluntary efforts to increase efficiency and evaluate other market forces leading to

increased efficiency.

Enhanced Analysis of Impacts - The Department intends to expand its analyses of the

impacts considered. The scope of the analyses also will be broadened to consider the

variability of impacts on different groups of manufacturers and consumers.

Improved Analytical Methods - DOE will initiate an effort to improve the analysis of

impacts on manufacturers and institute other improvements to key analysis methods.

Support of Consensus Rulemaking - DOE will encourage and support consensus

rulemaking by stakeholders whenever possible.

Reduced Time and Cost of Developing Standards - The Department believes that

increased stakeholder involvement and increased use of technical experts will improve

the quality of the analysis and will avoid the need for re-analysis. The new process for

developing standards will substantially reduce the time from an ANOPR to the issuance

of a final rule on an updated standard, while also decreasing the government and private

resources required to complete this process. The whole process, from the date of

issuance of the regulatory Agenda indicating that work is about to begin on the

development of a new standard, to issuance of the final rule, should take no more than

three years. The time required from issuance of an ANOPR to issuance of a final rule

should be less than 18 months.

DRAFT 4/30/96 4:13 PM 3-1

 EE-PI-96-001 COMMENT 32

3. Process Improvement Plan for Appliance Efficiency 

Standards 

3.1 Objectives 

In response to the stakeholder concerns identified during the recent consultations, 

the Department of Energy has developed a draft process improvement plan. 

The major objectives of the process improvement plan are: 

Early Involvement of Stakeholders - DOE will seek to have early input from 

stakeholders in setting rulemaking priorities and structuring the analysis for particular 

products. Stakeholders will be invited to provide input for the selection of design 

options and will help DOE identify analysis, data, and modeling needs. 

Increased Predictability of the Rulemaking Timetable - The Department will use the 

Regulatory Agenda to set priorities and timetables for standards development and test 

procedure modification. 

Increased Use of Product Expertise - DOE will increase the use of technical experts in 

developing, performing and reviewing the analyses. Draft analytical results will be 

distributed for peer and stakeholder review. 

Early Elimination of Impractical or Problematic Design Options - The Department will 

not engage in detailed analysis of design options if it concludes that manufacture or 

service of the design is impractical, or if it determines that standards will adversely 

affect the utility of the product. 

Consideration of Alternatives to Standards - The Department will continue to use 

voluntary efforts to increase efficiency and evaluate other market forces leading to 

increased efficiency. 

Enhanced Analysis of Impacts - The Department intends to expand its analyses of the 

impacts considered. The scope of the analyses also will be broadened to consider the 

variability of impacts on different groups of manufacturers and consumers. 

Improved Analytical Methods - DOE will initiate an effort to improve the analysis of 

impacts on manufacturers and institute other improvements to key analysis methods. 

Support of Consensus Rulemaking - DOE will encourage and support consensus 

rulemaking by stakeholders whenever possible. 

Reduced Time and Cost of Developing Standards - The Department believes that 

increased stakeholder involvement and increased use of technical experts will improve 

the quality of the analysis and will avoid the need for re-analysis. The new process for 

developing standards will substantially reduce the time from an ANOPR to the issuance 

of a final rule on an updated standard, while also decreasing the government and private 

resources required to complete this process. The whole process, from the date of 

issuance of the regulatory Agenda indicating that work is about to begin on the 

development of a new standard, to issuance of the final rule, should take no mote than 

three years. The time required from issuance of an ANOPR to issuance of a final rule 

should be less than 18 months. 

DRAFT 4/30/96 4:13 PM 3-1 
The Department believes that the objectives of the process improvement plan can

be realized without changes to the existing law.

3.2 Proposed Process Improvements for the Development of Appliance and

Equipment Efficiency Standards

3.2.1 Introduction

The following sections describe, in some detail, the Department's proposed process for

updating appliance and equipment efficiency standards mandated by existing law. The

Department believes that the proposed process will, when fully implemented, achieve

all of the objectives set forth in Section 3.1. A number of elements of the new process

will be phased in, because they depend on improved analytical methods that have yet to

be developed or because the process of updating the standards for some categories of

appliances and equipment is already well underway. For those products for which the

standards development process is already underway, the Department will perform a

case-by-case review in order to develop a plan for applying the new process to these

rulemakings.

Section 4 describes the steps the Department intends to take to improve certain

analytical methods used in the development of standards, and Section 5 describes the

next steps in the process improvement effort for priority setting and planning product

rules.

The Department intends to treat its process improvement plan as a living document,

which will be modified and improved regularly in order to be responsive to experience

gained and comments received during the course of its implementation.

3.2.2 Priority-Setting (All Products)

In the future, the Department intends to consult with stakeholders on its planned

analytical and rulemaking agenda. As described in this section , stakeholders will be

able to comment on a draft agenda that will be the basis for the final priority list issued

in the Administration 's Regulatory Agenda.

Priority-Setting Analysis and Development of Draft Agenda - At least once a year,

Department staff will prepare an analysis of each of the criteria identified in Table 3-1

based largely on existing literature , direct communications with stakeholders and other

experts, and internal documents. The results of this analysis will be used by decisionmakers to develop rulemaking priorities and proposed schedules for the development

and issuance of all rulemakings . The DOE analysis, priorities and proposed rulemaking

schedules will be documented and distributed for review and comment.

Stakeholder Review and Comment - Stakeholders will be able to submit written

comments on the Department's analysis, priorities, and proposed rulemaking schedules.

Each year, DOE expects to hold a public workshop to facilitate stakeholder review and

comment on the priority analysis and proposed rulemaking schedules.

DRAFT 4/30/96 4:13 PM 3-2

 EE-PI-96-001 COMMENT 32

The Department believes that the objectives of the process improvement plan can 

be realized without changes to the existing law. 

3.2 Proposed Process Improvements for the Development of Appliance and 

Equipment Efficiency Standards 

3.2.1 Introduction 

The following sections describe, in some detail, the Department's proposed process for 

updating appliance and equipment efficiency standards mandated by existing law. The 

Department believes that the proposed process will, when fully implemented, achieve 

all of the objectives set forth in Section 3.1. A number of elements of the new process 

will be phased in, because they depend on improved analytical methods that have yet to 

be developed or because the process of updating the standards for some categories of 

appliances and equipment is already well underway. For those products for which the 

standards development process is already underway, the Department will perform a 

case-by-case review in order to develop a plan for applying the new process to these 

rulemakings. 

Section 4 describes the steps the Department intends to take to improve certain 

analytical methods used in the development of standards, and Section 5 describes the 

next steps in the process improvement effort for priority setting and planning product 

rules. 

The Department intends to treat its process improvement plan as a living document, 

which will be modified and improved regularly in order to be responsive to experience 

gained and comments received during the course of its implementation. 

3.2.2 Priority-Setting (All. Products) 

In the future, the Department intends to consult with stakeholders on its planned 

analytical and rule making agenda. As described in this section, stakeholders will be 

able to comment on a draft agenda that will be the basis for the final priority list issued 

in the Administration's Regulatory Agenda. 

Priority-Setting Analysis and Development of Draft Agenda - At least once a year, 

Department staff will prepare an analysis of each of the criteria identified in Table 3-1 

based largely on existing literature, direct communications with stakeholders and other 

experts, and internal documents. The results of this analysis will be used by decisionmakers to develop rulemaking priorities and proposed schedules for the development 

and issuance of all rulemakings. The DOE analysis, priorities and proposed rulemaking 

schedules will be documented and distributed for review and comment. 

Stakeholder Review and Comment - Stakeholders will be able to submit written 

comments on the Department's analysis, priorities, and proposed rulemaking schedules. 

Each year, DOE expects to hold a public workshop to facilitate stakeholder review and 

comment on the priority analysis and proposed rulemaking schedules. 

DRAFT 4/30/96 4:13 PM 3-2 
Issuance of Final Regulatory Agenda - At least once a year, the Department will issue,

simultaneously ,with the issuance of the Administration 's Regulatory Agenda, a final set

of rulemaking priorities, the accompanying analysis, and the schedules for all priority

rulemakings that it anticipates within the next two years.

Table 3-1: Decision Criteria for Priority-Setting

Significance of Potential Energy Savings : Estimates of product fuel use; impacts of plausible

Estimated energy savings technologies based on literature or expert views.

Significance of Potential Economic Benefits : Cost savings derived from estimated energy

Estimated life-cycle cost savings for individual savings; technology cost estimates based on

consumer and Nation. literature or stakeholder input.

Significance of Potential Environmental or Air emission impacts derived from energy savings

Energy Security Benefits: Estimated impacts on estimates and other impacts based on literature or

air emissions, and other product-specific impacts, if expert communication.

significant.

Statutory Deadline: EPCA

Incremental DOE Resources-Required to Internal DOE documents (estimates would not

Complete Rulemaking Process: Budget and staff include resources already expended).

resource requirements to complete rulemaking.

Timing/Burden of Other Federal Regulatory Communications with other agencies and

Actions : Assessment of burdens or scheduling stakeholder input.

implications of other related Federal actions.

Stakeholder Recommendations : Specific Stakeholder input.

recommendations regarding relative priority or

desired schedule of different rulemakings,

especially if consensus recommendations are made

by a representative group of stakeholders.

Evidence of Market-Driven or Voluntary Existing literature and stakeholder input.

Efficiency Improvements : Initial assessment of

market trends and the possible impacts of existing

utility programs, and Federal, state, or other

voluntary programs.

Costs/Impacts of Delay: Assessment of any Existing literature and stakeholder input.

special costs or impacts of delaying the standards

development process.

Status of Required Changes to Test Procedures: Internal documents and communications with NIST.

If changes to existing test procedures are required

prior to the proposal of updated standards, the

status and schedule for such test procedure

modifications.

Other Relevant Factors

DRAFT 4/30/96 4:13 PM 3-3

 EE-PI-96-001 COMMENT 32

Issuance of Final Regulatory Agenda - At least once a year, the Department will issue, 

simultaneously ,with the issuance of the Administration's Regulatory Agenda, a final set 

of rulemaking priorities, the accompanying analysis, and the schedules for all priority 

rulemakings that it anticipates within the next two years. 

Table 3-1: Decision Criteria for Priority-Setting 

Decision Criteria" ' , ~ ",!'\< ' Basis of Assessment-p

, , 

Significance of Potential Energy Savings: Estimates of product fuel use; impacts of plausible 

Estimated energy savings technologies based on literature or expert views. 

Significance of Potential Economic Benefits: Cost savings derived from estimated energy 

Estimated life-cycle cost savings for individual savings; technology cost estimates based on 

consumer and Nation. literature or stakeholder input. 

Significance of Potential Environmental or Air emission impacts derived from energy savings 

Energy Security Benefits: Estimated impacts on estimates and other impacts based on literature or 

air emissions, and other product-specific impacts, if expert communication. 

significant. 

Statutory Deadline: EPCA 

Incremental DOE Resources'Required to Internal DOE documents (estimates would not 

Complete Rulemaking Process: Budget and staff include resources already expended). 

resource requirements to complete rulemaking. 

Timing/Burden of Other Federal Regulatory Communications with other agencies and 

Actions: Assessment of burdens or scheduling stakeholder input. 

implications of other related Federal actions. 

Stakeholder Recommendations: Specific Stakeholder input. 

recommendations regarding relative priority or 

desired schedule of different rulemakings, 

especially if consensus recommendations are made 

by a representative group of stakeholders. 

Evidence of Market-Driven or Voluntary Existing literature and stakeholder input. 

Efficiency Improvements: Initial assessment of 

market trends and the possible impacts of existing 

utility programs, and Federal, state, or other 

voluntary programs. 

Costs/Impacts of Delay: Assessment of any Existing literature and stakeholder input. 

special costs or impacts of delaying the standards 

development process. 

Status of Required Changes to Test Procedures: Internal documents and communications with NIST. 

If changes to existing test procedures are required 

prior to the proposal of updated standards, the 

status and schedule for such test procedure 

modifications. 

Other Relevant Factors 

!{. 

DRAFT 4/30/96 4:13 PM 3-3 
3.2.3 Screening Design Options (Product-Specific)

The screening analysis, as described in this section, will be used to narrow the range of

design options being considered by the Department for the development of standards

levels. Stakeholders will be consulted to identify key issues, develop a list of design

options, and to help the Department identify the expertise necessary to conduct the

analysis.

The screening analysis will be performed in two phases. In Phase I, DOE will identify

the product categories and design options to be analyzed in detail, and identify those

design options eliminated from further consideration. In Phase II, DOE will perform the

engineering analysis and the benefit/cost analysis for selected candidate standards

levels. The results of the screening analysis will be published in a Technical Support,

Document to accompany the ANOPR.

Phase I: Identifying Issues and Design Options

Identification of Issues and Stakeholder Representatives - The Department (through the

regulatory agenda and direct communications with key stakeholders) will begin to

identify the key issues to be addressed during the development of product specific

efficiency standards. The Department will conduct one or more open meetings in order

to help identify and prioritize key issues, as well as to identify individuals willing to

participate in a standing group of stakeholder representatives providing input to the

standards development process.

Initial Screening of Candidate Design Options by the Department, with Input and

Review by Stakeholders - In consultation with stakeholders, the Department will develop,

a list of design options for consideration. Initially, the candidate design options would

encompass all those technologies considered to be technically feasible (see Table 3-2).,

Following the development of this initial list of design options, DOE, in consultation

with stakeholders, would review each option to gather input into whether it was

practicable to manufacture ( install and service) and whether it would have any

significant impact on product utility. Finally, DOE would apply the relevant criteria

used in the priority-setting process (see Table 3-1) to the design options. The reasons

for eliminating any design option at this stage of the process would be fully

documented, and ultimately published as part of the Advance Notice of Proposed

Rulemaking. In making its determination, the Department will consider the criteria

identified in Table 3-2 and weigh them with the benefits resulting from the standards

level under consideration.

Definition of Issues for Analysis and Contractor Expertise Requirements by DOE, with

Input and Review by Stakeholders The Department, in consultation with stakeholders,

will identify issues (e.g., impacts on specific types or groups of manufacturers or

consumers, remaining concerns regarding the practicability of the product or possible

impacts on consumer utility, etc.) that will be examined in the second phase of the

analysis. DOE, in consultation with stakeholders, will identify the types of specialized

expertise that may be required by the contractor(s) performing the second phase of the

screening analysis and impact analyses.

DRAFT 4/30/96 4:13 PM 3-4

 EE-PI-96-001 COMMENT 32

3.2.3 Screening Design Options (Product-Specific) 

The screening analysis, as described in this section, will be used to narrow the range of 

design options being considered by the Department for the development of standards 

levels. Stakeholders will be consulted to identify key issues, develop a list of design 

options, and to help the Department identify the expertise necessary to conduct the 

analysis. 

The screening analysis will be performed in two phases. In Phase I, DOE will identify 

the product categories and design options to be analyzed in detail, and identify those 

design options eliminated from further consideration. In Phase II, DOE will perform the 

engineering analysis and the benefit/cost analysis for selected candidate standards 

levels. The results of the screening analysis will be published in a Technical Support· 

Document to accompany the ANOPR. 

Phase I: Identifying Issues and DeSign Options 

Identification of Issues and Stakeholder Representatives - The Department (through the 

regulatory agenda and direct cornmunicatio'ns with key stakeholders) will begin to 

identify the key issues to be addressed during the development of product specific 

efficiency standards. The Department will conduct one or more open meetings in order 

to help identify and prioritize key issues, as well as to identify individuals willing to 

participate in a standing group of stakeholder representatives providing input to the 

standards development process. 

Initial Screening of Candidate Design Options by the Department, with Input and 

Review by Stakeholders - In consultation with stakeholders, the Department will develop, 

a list Qf design options for consideration. Initially, the candidate design options would 

encompass all those technologies considered to be technically feasible (see Table 3-2). 

Following the development of this initial list of design options, DOE, in consultation 

with stakeholders, would review each option to gather input into whether it was 

practicable to manufacture ( install and service) and whether it would have any 

significant impact on product utility. Finally, DOE would apply the relevant criteria 

used in the priority-setting process (see Table 3-1) to the design options. The reasons 

for eliminating any design option at this stage of the process would be fully 

documented, and ultimately published as part of the Advance Notice of Proposed 

Rulemaking. In making its determination, the Department will consider the criteria 

identified in Table 3-2 and weigh them with the benefits resulting from the standards 

level under consideration. 

Definition of Issues for Analysis and Contractor Expertise Requirements by DOE, with 

Input and Review by Stakeholders - The Department, in consultation with stakeholders, 

will identify issues (e.g., impacts on specific types or groups of manufacturers or 

consumers, remaining concerns regarding the practicability of the product or possible 

impacts on consumer utility, etc.) that will be examined in the second phase of the 

analysis. DOE, in consultation with stakeholders, will identify the types of specialized 

expertise that may be required by the contractor(s) performing the second phase of the 

screening analysis and impact analyses. 

DRAFT 4/30/96 4:13 PM 3-4 
Table 3-2 : Decision Criteria for Screening of Design Options, Phase I

Decision ^CrllterWvil`," Ex arnples of D.

Technical Feasibility: Technologies now Documented components of Manufacturers,

incorporated in commercial products or in commercial products or product experts

working prototypes of commercial products prototypes.

would be considered technically feasible.

Practicability to Manufacture and Service: Number of units produced and Manufacturers,

If the technology (or a technically comparable serviced; markets served; retailers and

technology) can be produced in commercial technical comparison of service business;

products and serviced by persons serving the comparable technologies; skills market experts

relevant market (at the time of the effective required to service and skills of

standard), then it will be considered existing service personnel.

practicable to manufacture and service.

Impacts on Product Utility to Consumers: Comparison of current products Retailers, market

The technology must have no significant to new units; consumer survey or experts,

adverse impact on the utility of the product to focus group results. manufacturers

consumers.

Review of Criteria Used for Priority-Setting: Review of any significant Manufacturers,

Significance of energy, economic, changes in priority-setting retailers, product,

environmental benefits; status of required test assessments. market, and

procedure modifications; others, as environmental

appropriate. impact experts

Identification of Technology/Industry Experts for Peer Review - DOE, in consultation

with stakeholders, will identify a group of technology/industry experts who can provide

independent, expert review of the results of the second phase of the screening analysis

and the subsequent impact analysis. These experts will be, in addition to, and to the

maximum extent possible, independent from stakeholders and other interested parties.

DOE Selection of Contractor(s) - Using the specifications of necessary contractor

expertise developed in consultation with stakeholders, DOE will select appropriate

contractors, subcontractors, and as necessary, expert consultants to perform the second

phase of the screening analysis and the impact analysis.

Phase II : Engineering and Benefit/Cost Analyses

Identification of Engineering Analytical Methods and Tools, in Consultation with

Experts - The DOE contractor, in consultation with the "experts group", will select the

specific engineering analysis tool(s) to be used in the analysis of the remaining design

options.

Engineering and Life-Cycle Cost Analysis of Design Options - The DOE contractor will

perform engineering and initial life-cycle cost of the remaining design options.

Review by Expert Group and Stakeholders - The results of the contractor's engineering

and initial life-cycle cost analysis will be distributed for review by experts and

stakeholders, and a workshop may be scheduled to review these results.

DRAFT 4/30/96 4:13 PM 3-5

 EE-PI-96-001 COMMENT 32

Table 3-2: Decision Criteria for Screening of Design Options, Phase I 

Decision Criteria~l\ ~ Examples of Relevant Data, Likely Sources , 

and Analysis ~ 

Technical Feasibility: Technologies now Documented components of Manufacturers, 

incorporated in commercial products or in commercial products or product experts 

working prototypes of commercial products prototypes. 

would be considered technically feasible. 

Practicability to Manufacture and Service: Number of units produced and Manufacturers, 

If the technology (or a technically comparable serviced; markets served; retailers and 

technology) can be produced in commercial technical comparison of service business; 

products and serviced by persons serving the comparable technologies; skills market experts 

relevant market (at the time of the effective required to service and skills of 

standard), then it will be considered existing service personnel. 

practicable to manufacture and service. 

Impacts on Product Utility to Consumers: Comparison of current products Retailers, market 

The technology must have no significant to new units; consumer surveyor experts, 

adverse impact on the utility of the product to focus group results. manufacturers 

consumers. 

Review of Criteria Used for Priority-Setting: Review of any significant Manufacturers, 

Significance of energy, economic, changes in priority-setting retailers, product, 

environmental benefits; status of required test assessments. market, and 

procedure modifications; others, as environmental 

appropriate. impact experts 

Identification of Technologyllndustry Experts for Peer Review - DOE, in consultation 

with stakeholders, will identify a group of technology/industry experts who can provide 

independent, expert review of the results of the second phase of the screening analysis 

and the subsequent impact analysis. These experts will be, in addition to, and to the 

maximum extent possible, independent from stakeholders and other interested parties. 

DOE Selection ofContractor(s) - Using the specifications of necessary contractor 

expertise developed in consultation with stakeholders, DOE will select appropriate 

contractors, subcontractors, and as necessary, expert consultants to perform the second 

phase of the screening analysis and the impact analysis. 

Phase II: Engineering and Benefit/Cost Analyses 

Identification of Engineering Analytical Methods and Tools, in Consultation with 

Experts - The DOE contractor, in consultation with the "experts group", will select the 

specific engineering analysis tool(s) to be used in the analysis of the remaining design 

options. . 

Engineering and Life-Cycle Cost Analysis of Design Options - The DOE contractor will 

perform engineering and initial life-cycle cost of the remaining design options. 

Review by Expert Group and Stakeholders - The results of the contractor's engineering 

and initial life-cycle cost analysis will be distributed for review by experts and 

stakeholders, and a workshop may be scheduled to review these results. 

DRAFT 4/30/96 4:13 PM 3-5 
Identification of Initial Candidate Standard Levels - Based on the results of the

engineering and initial life-cycle cost analysis, DOE will define, in consultation with its

contractor and with input from stakeholders, the candidate standard levels for further

analysis.

Selection of Candidate Standard Levels based on Engineering, and Consumer Life Cost

and National Net Present Value Analyses - Using the results of its engineering analysis

and other available data, the DOE contractor will perform additional consumer lifecycle cost and National net present value analyses of each of the candidate standard

levels identified. Based on the results of these analyses and a review of any significant

changes in the assessment of other criteria already considered, DOE will, if appropriate,

propose a further narrowing of the range of candidate standard levels.

Table 3-3 : Decision Criteria for Selection of Candidate Standard Levels, Phase II

611'la

M

I MEN

Costs and Savings of Design Options :

^NOMZ;9=

Definition of baseline unit; Expected variability

Manufacturing, retail, installation, service and engineering analysis tool or of costs and

life-cycle cost impacts of each design.option. model; estimates of savings as a result

manufacturing, retail, of installation costs,

installation and service costs, and usage or

and performance effects for performance

each design option. variations.

Consumer Life-Cycle Cost Impacts of Definition of baseline energy Expected variability

Candidate Standard Levels: National efficiency trend; National of costs and

average payback analysis and life-cycle cost average consumer energy price savings as a result

impacts, with sensitivity or regional analyses and usage data; models or of installation costs,

reflecting variations in energy cost and usage. other calculation tools; data on and usage or

energy price and usage performance

variations. variations.

National Net Present Value of Candidate Estimated future sales trends

Standard Levels: Estimated total National net and usage patterns of products

present value of each candidate standard level to be covered by new

over useful life of products. standards.

Review of Criteria Used for Priority-Setting (see above)

and Phase I Screening : Significance of

energy, economic and environmental benefits;

status of required test procedures and

modifications; market driven or voluntary

efficiency improvements; others, as

appropriate.

Documentation of Decisions on candidate standard selection - If DOE decides not to

continue the standards development process because it appears at that time that no

candidate standard level meets the criteria specified in law, a decision not to proceed

will be announced. If standards appear justified, the Department will publish an

Advance Notice of Proposed Rulemaking (ANOPR) in the Federal Register, and will

distribute a Technical Support Document containing the elements analyzed to this point.

The ANOPR will specify candidate standard levels but will not propose a particular

standard.

DRAFT 4/30/96 4:13 PM 3-6

 EE-PI-96-001 COMMENT 32

Identification of Initial Candidate Standard Levels - Based on the results of the 

engineering and initiallife-cyc1ecost analysis, DOE will define, in consultation with its 

contractor and with input from stakeholders, the candidate standard levels for further 

analysis. 

Selection of Candidate Standard Levels based on Engineering, and Consumer Life Cost 

and National Net Present Value Analyses - Using the results of its engineering analysis 

and other available data, the DOE contractor will perform additional consumer lifecycle cost and National net present value analyses of each of the candidate standard 

levels identified. Based on the results of these analyses and a review of any significant 

changes in the assessment of other criteria already considered, DOE will, if appropriate, 

propose a further narrowing of the range of candidate standard levels. 

Table 3-3: Decision Criteria for Selection of Candidate Standard Levels, Phase" 

/' / '~, Decision Criteria' "; : "', , ' Analysis Methods and Data :;, ,; t"", Other Inputs "':~ " ' "", , ;, , ,Ih '", R' t, " i' , , " ""~,, "", ,', ,'" 'J equlremens.t" " .• "" '", " 

Costs arid Savings of Design Options: 

Manufacturing, retail, installation, service and 

life-cycle cost impacts of each design,option. 

Consumer Life-Cycle Cost Impacts of 

Candidate Standard Levels: National 

average payback analysis and life-cycle cost 

impacts, with sensitivity or regional analyses 

reflecting variations in energy cost and usage. 

National Net Present Value of Candidate 

Standard Levels: Estimated total National net 

present value of each candidate standard level 

over useful life of products. 

Review of Criteria Used for Priority-Setting 

and Phase I Screening: Significance of 

energy, economic and environmental benefits; 

status of required test procedures and 

modifications; market driven or voluntary 

efficiency improvements; others, as 

appropriate. 

Definition of baseline unit; 

engineering analysis tool or 

model; estimates of 

manufacturing, retail, 

installation and service costs, 

and performance effects for 

each design option. 

Definition of baseline energy 

efficiency trend; National 

average consumer energy price 

and usage data; models or 

other calculation tools; data on 

energy price and usage 

variations. 

Estimated future sales trends 

and usage patterns of products 

to be covered by new 

standards. 

(see above) 

Expected variability 

of costs and 

savings as a result 

of installation costs, 

and usage or 

performance 

variations. 

Expected variability 

of costs and 

savings as a result 

of installation costs, 

and usage or 

performance 

variations. 

Documentation of Decisions on candidate standard selection - If DOE decides not to 

continue the standards development process because it appears at that time that no 

candidate standard level meets the criteria specified in law, a decision not to proceed 

will be announced. If standards appear justified, the Department will publish an 

Advance Notice of Proposed Rulemaking (ANOPR) in the Federal Register, and will 

distribute a Technical Support Document containing the elements analyzed to this point. 

The ANOPR will specify candidate standard levels but will not propose a particular 

standard. 

DRAFT 4/30/96 4:13 PM 3-6 
Other information dissemination activities will include:

• Public Comment and Hearing - There will be at least 60 days for public comment on

the ANOPR, with at least one public hearing or workshop.

• Stakeholder and Expert Review - DOE will make a special effort to inform and

solicit comments from all stakeholders and experts previously involved in the

process.

3.2.4 Analysis of Impacts

The impact analysis will fine-tune earlier analyses based on the comments received on

the ANOPR. Additionally, economic impact analyses will be performed in four areas:

(1) manufacturing impacts, (2) utility impacts, (3) regulatory impacts, and (4)

environmental impacts. The Department will propose updated standards based on the

results of the impact analysis. The Proposed Rule will be accompanied by a complete

Technical Support Document. A detailed description of the impact analysis stage

follows.

Review of Public, Stakeholder, and Expert Comments - All comments on the Advance

Notice of Proposed Rulemaking and the Technical Support Document will be reviewed

and considered.

A. Encouragement of Stakeholder Negotiations - If a representative group of

stakeholders has begun negotiations prior to the Department's initiation of an impact

analysis, DOE will consider deferring its own impact analysis until the stakeholder

negotiations are completed or until the participants in the negotiations indicate that they

are unable to reach a timely agreement.

B. DOE Analysis - In cases where stakeholders do not pursue negotiation of consensus

standards recommendations or such negotiations are not successful, the Department will

undertake its impact analyses. Based on the results of this analysis, DOE will propose

to establish updated standards at the candidate standard level that appears to be the most

desirable, given the criteria set forth in the statute . Under these circumstances, DOE

will take the following steps:

• Review Candidate Standard Levels and Select Analytical Tools for Impact Analyses

- Based on an analysis of the comments received on the ANOPR and further

consultations with stakeholders and experts, DOE and its contractor will consider

whether the range of candidate standard levels should be narrowed further, and then

will choose the analytical tools to be used in performing the impact analyses.

• Conduct of Impact Analyses - DOE's contractor will conduct specified impact

analyses so as to support DOE's consideration of each of the decision criteria

identified in Table 3-4.

DRAFT 4/30/96 4:13 PM 3-7

 EE-PI-96-001 COMMENT 32

Other information dissemination activities will include: 

• Public Comment and Hearing - There will be at least 60 days for public comment on 

the ANOPR, with at least one public hearing or workshop. 

• Stakeholder and Expert Review - DOE will make a special effort to inform and 

solicit comments from all stakeholders and experts previously involved in the 

process. 

3.2.4 Analysis of Impacts 

The impact analysis will fine-tune earlier analyses based on the comments received on 

the ANOPR. Additionally, economic impact analyses will be performed in four areas: 

(1) manufacturing impacts, (2) utility impacts, (3) regulatory impacts, and (4) 

environmental impacts. The Department will propose updated standards based on the 

results of the impact analysis. The Proposed Rule will be accompanied by a complete 

Technical Support Document. A detailed description of the impact analysis stage 

follows. 

Review of Public, Stakeholder, and Expert Comments - All comments on the Advance 

Notice of Proposed Rulemaking and the Technical Support Document will be reviewed 

and considered. 

A. Encouragement of Stakeholder Negotiations - If a representative group of 

stakeholders has begun negotiations prior to the Department's initiation of an impact 

analysis, DOE will consider deferring its own impact analysis until the stakeholder 

negotiations are completed or until the participants in the negotiations indicate that they 

are unable to reach a timely agreement. 

B. DOE Analysis - In cases where stakeholders do not pursue negotiation of consensus 

standards recommendations or such negotiations are not successful, the Department will 

undertake its impact analyses. Based on the results of this analysis, DOE will propose 

to establish updated standards at the candidate standard level that appears to be the most 

desirable, given the criteria set forth in the statute. Under these circumstances, DOE 

will take the following steps: 

• Review Candidate Standard Levels and Select Analytical Tools for Impact Analyses 

- Based on an analysis of the comments received on the ANOPR and further 

consultations with stakeholders and experts, DOE and its contractor will consider 

whether the range of candidate standard levels should be narrowed further, and then 

will choose the analytical tools to be used in performing the impact analyses. 

CD Conduct of Impact Analyses - DOE's contractor will conduct specified impact 

analyses so as to support DOE's consideration of each of the decision criteria 

identified in Table 3-4. 

DRAFT 4/30/96 4:13 PM 3-7 
Table 3-4 : Decision Criteria for Selection of Proposed Standard

Decision Criterla'0':O'^'--

Stakeholder Recommendations : Consensus

recommendations on updated efficiency levels

submitted by a representative group of stakeholders.

Impacts on Manufacturers: Estimated impacts on New, improved manufacturer Interviews with

return on equity, assessments of impacts on impact methodologies selected

manufacturers of specific categories of products, manufacturers;

small or specialized manufacturers ; assessment of review of literature

cumulative burden on manufacturers of multiple on product market

Federal regulatory requirements, including efficiency and manufacturers

standards for other products, as well as non-DOE characteristics;

regulations. expert

communications

Impacts on Consumers : Estimated impacts based Revised Life-Cycle-Cost, net Focus groups or

on: national average energy price and energy usage; present value and sensitivity surveys, if impacts

major regional differences in usage and/or energy analyses reflecting on consumer utility

prices; significant variations in installation costs or comments on ANOPR; use or satisfaction

performance with sensitivity analyses using high and of regional impact or other might be

low discount rates and high and low energy price models to estimate variable significant.

forecasts. Consideration of changes to product utility. costs and savings, whenever

these are substantial.

Impacts on Utilities: Estimated marginal impacts on Utility impact models

electric and gas utility costs and revenues.

Impacts on the Environmental and Energy Based on current average

Security: Estimated impacts of candidate standard and expected emissions, per

levels on the physical quantities of carbon emissions, kwh, from the electric utility

and relevant criteria pollutants or pollution control sector or from direct

costs. Estimated impacts on oil use. controlled combustion of gas

or oil.

Impacts on Competition: Assessment of likely Dept. of Justice

effects on competition among manufacturers of the analysis of impacts

affected product and related products. on competition and

an expert

assessment of

impacts on other

market factors.

Impacts of Non-Regulatory Alternatives to Data on actual participation Views of

Standards: Assessment of possible and likely in, or impacts of, existing manufacturers,

impacts of existing market driven and other voluntary nonregulatory alternatives; retailers and other

changes in product efficiency, usage, and related estimated impacts based on experts.

characteristics. prior experience or expert

views.

Review of Criteria Used for Priority-Setting and (see above) (see above)

Screening : Significance of energy, economic and

environmental benefits; others, as appropriate

Issuance of Notice of Proposed Rulemaking - documenting all analysis and decisionmaking to date, and proposing a standard level, to be followed by:

DRAFT 4/30/96 4:13 PM 3-8

 EE-PI-96-001 COMMENT 32

Table 3-4: Decision Criteria for Selection of Proposed Standard 

Decision Criteria' Analysis Methods and Data';',' Other Inputs " , ' , Requirements','" ' , '? 

Stakeholder Recommendations: Consensus 

recommendations on updated efficiency levels 

submitted by a representative group of stakeholders. 

Impacts on Manufacturers: Estimated impacts on New, improved manufacturer Interviews with 

return on equity, assessments of impacts on impact methodologies selected 

manufacturers of specific categories of products, manufacturers; 

small or specialized manufacturers; assessment of review of literature 

cumUlative burden on manufacturers of multiple on product market 

Federal regulatory requirements, including efficiency and manufacturers 

standards for other products, as well as non-DOE characteristics; 

regulations. expert 

communications 

Impacts on Consumers: Estimated impacts based Revised Life-Cycle-Cost, net Focus groups or 

on: national average energy price and energy usage; present value and sensitivity surveys, if impacts 

major regional differences in usage and/or energy analyses reflecting on consumer utility 

prices; significant variations in installation costs or comments on ANOPR; use or satisfaction 

performance with sensitivity analyses using high and of regional impact or other might be 

low discount rates and high and low energy price models to estimate variable significant. 

forecasts. Consideration of changes to product utility. costs and savings, whenever 

these are substantial. 

Impacts on Utilities: Estimated marginal impacts on \Jtility impact models 

electric and gas utility costs and revenues. 

Impacts on the Environmental and Energy Based on current average 

Security: Estimated impacts of candidate standard and expected emissions, per 

levels on the physical quantities of carbon emissions, kwh, from the electric utility 

and relevant criteria pollutants or pollution control sector or from direct 

costs. Estimated impacts on oil use. controlled combustion of gas 

or oil. 

Impacts on Competition: Assessment of likely Dept. of Justice 

effects on competition among manufacturers of the analysis of impacts 

affected product and related products. on competition and 

an expert 

assessment of 

impacts on other 

market factors. 

Impacts of Non-Regulatory Alternatives to Data on actual participation Views of 

Standards: Assessment of possible and likely in, or impacts of, existing manufacturers, 

impacts of existing market driven and other voluntary nonregulatory alternatives; retailers and other 

changes in product efficiency, usage, and related estimated impacts based on experts. 

chan:lcteristics. prior experience or expert 

views. 

Review of Criteria Used for Priority-Setting and (see above) (see above) 

Screening: Significance of energy, economic and 

environmental benefits; others, as appropriate 

Issuance of Notice of Proposed Rulemaking - documenting all analysis and decisionmaking to date, and proposing a standard level, to be followed by: 

DRAFT 4/30/96 4:13 PM 3-8 
• Public Comment and Hearing: There would be at least 75 days for public comment

on the NOPR, with at least one public hearing or workshop.

• Stakeholder and Expert Review: DOE would make a special effort to inform and

solicit comments from all stakeholders and experts previously involved in the

process.

3.2.5 Final Standards

As described in this section, the Department will update the analysis in response to the

comments received and will issue the Final Rule.

Review of Public, Stakeholder, and Expert Comments - All comments on the Proposed

Standards and the Technical Support Document will be reviewed and considered.

Final Revisions to Impact Analyses and Standards - Based on the comments received,

the impact analyses used to select the proposed standard will be modified, as necessary,

and finalized. If major changes are required at this stage , stakeholders and experts will

be given an opportunity to review the revised analysis.

Issuance of Final, Updated Efficiency Standards - DOE will select the updated standard

based on the criterion identified in Table 3-4, and issue a final rule accompanied by a

final Technical Support Document.

3.2.6 Crosscutting Analytical Assumptions

Underlying Economic Assumptions - The appliance standards analyses generally use the

same economic growth and development assumptions that underlie the Energy

Information Administration's (EIA's) Annual Energy Outlook (AEO). The Energy

Information Administration'usually bases the Annual Energy Outlook on the economic

forecasts of the Council of Economic Advisers.

Energy Price and Demand Trends - Appliance standards analyses usually adopt the

mid-range energy price and demand scenario of the EIA's most current AEO. Price

sensitivities are likely to be based on the EIA's high and low energy price scenarios.

Product-Specific Energy Efficiency Trends, without Updated Standards - Productspecific energy efficiency trends are likely to be based on a combination of the

efficiency trends forecast by the EIA's residential and commercial demand model of the

National Energy Modeling System (NEMS) and product-specific assessments by DOE

and its contractors.

Discount Rates - For residential consumers, a mid-range real discount rate of 6 percent,

with sensitivity analyses using 2 and 15 percent real discount rates would be used. For

commercial equipment users, a mid-range real discount rate of 8 percent, with

sensitivity analyses at 4 and 12 percent would be used. For national net present value

calculations, a 7 percent real discount rate would be used. For manufacturer impacts,

DOE plans to continue to use a 12 percent real discount rate.

DRAFT 4/30/96 4:13 PM 3-9

 EE-PI-96-001 COMMENT 32

• Public Comment and Hearing: There would be at least 75 days for public comment 

on the NOPR, with at least one public hearing or workshop. 

• Stakeholder and Expert Review: DOE would make a special effort to inform and 

solicit comments from all stakeholders and experts previously involved in the 

process. 

3.2.5 Final Standards 

As described in this section, the Department will update the analysis in response to the 

comments received and will issue the Final Rule. 

Review of Public, Stakeholder, and Expert Comments - All comments on the Proposed 

Standards and the Technical Support Document will be reviewed and considered. 

Final Revisions to Impact Analyses and Standards - Based on the comments received, 

the impact analyses used to select the proposed standard will be modified, as necessary, 

and finalized. If major changes are required at this stage, stakeholders and experts will 

be given an opportunity to review the revised analysis. 

Issuance of Final, Updated Efficiency Standards - DOE will select the updated standard 

based on the criterion identified in Table 3-4, and issue a final rule accompanied by a 

final Technical Support Document. 

3.2.6 Crosscutting Analytical Assumptions 

Underlying Economic Assumptions - The appliance standards analyses generally use the 

same economic growth and development assumptions that underlie the Energy 

Information Administration's (EIA's) Annual Energy Outlook (AEO). The Energy 

Information Administration usually bases the Annual Energy Outlook on the economic 

forecasts of the Council of Economic Advisers. 

Energy Price and Demand Trends - Appliance standards analyses usually adopt the 

mid-range energy price and demand scenario of the ErA's most current AEO. Price 

sensitivities are likely to be based on the EIA's high and low energy price scenarios. 

Product-Specific Energy Efficiency Trends, without Updated Standards - Productspecific energy efficiency trends are likely to be based on a combination of the 

efficiency trends forecast by the EIA' s residential and commercial demand model of the 

National Energy Modeling System (NEMS) and product-specific assessments by DOE 

and its contractors. 

Discount Rates - For residential consumers, a mid-range real discount rate of 6 percent, 

with sensitivity analyses using 2 and 15 percent real discount rates would be used. For 

commercial equipment users, a mid-range real discount rate of 8 percent, with 

sensitivity analyses at 4 and 12 percent would be used. For national net present value 

calculations, a 7 percent real discount rate would be used. For manufacturer impacts, 

DOE plans to continue to use a 12 percent real discount rate. 

DRAFT 4/30/96 4:13 PM 3-9 
Environmental and Energy Security Externalities - DOE expects to continue to calculate

and consider the physical quantities of emissions avoided (or caused) by appliance

efficiency standards. In some cases, such as sulfur oxide emissions, it may be

appropriate to estimate the effects of standards on emission control costs, because actual

emissions are, capped by the Clean Air Act.

3.2.7 Test Procedures

During the screening process, the Department will decide whether test procedures need

to be revised.

Identifying the Need to Modify Test Procedures - DOE, in consultation with

stakeholders, experts, and NIST will attempt to identify any necessary modifications to

established test procedures before initiating the standards development process. The

Department recognizes that any such test procedure modifications must be finalized

before the NOPR is issued.

Developing and Proposing Revised Test Procedures - Modifications to test procedures

will begin with the stakeholder and expert consultation occurring early in the screening

stage of the standards development process. Any necessary modifications will be

proposed before issuance of an ANOPR.

Issuing Final Test Procedure Modification - Final, modified test procedures will be

issued prior to the NOPR.

Effective Date of Modified Test Procedures - If required only for the evaluation and

issuance of updated efficiency standards , modified test procedures will generally not go

into effect until the effective date of updated standards.

3.2.8 Stakeholder Negotiations

Throughout the standards development process, but especially following the issuance of

the ANOPR, DOE will encourage stakeholders to negotiate among themselves with the

goal of developing common recommendations to the Department on product categories

and standard levels, as well as on more specific analytical issues.

Identification of Representative Stakeholders - Stakeholder negotiation will be of most

value to the Department if participants are reasonably representative of all major parties

interested in the outcome of the standards development process, including consumers,

manufacturers, utilities, states and representatives of environmental or energy efficiency

interest groups.

Technical Support of Negotiations, Including Impact Analyses Based on Statutory

Criteria - In order to facilitate such negotiations, DOE will make available, upon

request, appropriate technical and legal support to the group, and will provide copies of

all relevant public documents and analyses.

The Department will also give serious consideration to any requests for its participation

in stakeholder negotiations, recognizing that such DOE participation may trigger an

DRAFT 4/30/96 4:13 PM 3-10

 EE-PI-96-001 COMMENT 32

Environmental and Energy Security Externalities - DOE expects to continue to calculate 

and consider the physical quantities of emissions avoided (or caused) by appliance 

efficiency standards. In some cases, such as sulfur oxide emissions, it may be 

appropriate to estimate the effects of standards on emission control costs, because actual 

emissions are, capped by the Clean Air Act. 

3.2.7 Test Procedures 

During the screening process, the Department will decide whether test procedures need 

to be revised. 

Identifying the Need to Modify Test Procedures - DOE, in consultation with 

stakeholders, experts, and NIST will attempt to identify any necessary modifications to 

established test procedures before initiating the standards development process. The 

Department recognizes that any such test procedure modifications must be finalized 

before the NOPR is issued. 

Developing and Proposing Revised Test Procedures - Modifications to test procedures 

will begin with the stakeholder and expert consultation occurring early in the screening 

stage of the standards development process. Any necessary modifications will be 

proposed before issuance of an ANOPR. 

Issuing Final Test Procedure Modification - Final, modified test procedures will be 

issued prior to the NOPR. 

Effective Date of Modified Test Procedures - If required only for the evaluation and 

issuance of updated efficiency standards, modified test procedures will generally not go 

into effect until the effective date of updated standards. 

3.2.8 Stakeholder Negotiations 

Throughout the standards development process, but especially following the issuance of 

the ANOPR, DOE will encourage stakeholders to negotiate among themselves with the 

goal of developing common recommendations to the Department on product categories 

and standard levels, as well as on more specific analytical issues. 

Identification of Representative Stakeholders - Stakeholder negotiation will be of most 

value to the Department if participants are reasonably representative of all major parties 

interested in the outcome of the standards development process, including consumers, 

manufacturers, utilities, states and representatives of environmental or energy efficiency 

interest groups. 

Technical Support of Negotiations, Including Impact Analyses Based on Statutory 

Criteria - In order to facilitate such negotiations, DOE will make available, upon 

request, appropriate technical and legal support to the group, and will provide copies of 

all relevant public documents and analyses. 

The Department will also give serious consideration to any requests for its participation 

in stakeholder negotiations, recognizing that such DOE participation may trigger an 

DRAFT 4/30/96 4:13 PM 3-10 
obligation to comply with the procedural requirements of the Federal Advisory

Committee Act.

Stakeholder Recommendations - The consensus recommendations, and supporting

analysis, of any representative group of stakeholders will be given substantial weight by

DOE in the development of a proposed rule. If the supporting analysis provided by

negotiators addresses all of the statutory criteria and uses valid economic assumptions

and analytical methods, DOE will strongly consider using this supporting analysis as the

basis of a proposed rule. DOE's proposed rule will explain any deviations from the

consensus recommendations from stakeholders.

DRAFT 4/30/96 4:13 PM 1

3-11

 EE-PI-96-001 COMMENT 32

obligation to comply wnh the procedural requirements of the Federal Advisory 

Committee Act. 

Stakeholder Recommendations - The consensus recommendations, and supporting 

analysis, of any representative group of stakeholders will be given substantial weight by 

DOE in the development of a proposed rule. If the supporting analysis provided by 

negotiators addresses all of the statutory criteria and uses valid economic assumptions 

and analytical methods, DOE will strongly consider using this supporting analysis as the 

basis of a proposed rule. DOE's proposed rule will explain any deviations from the 

consensus recommendations from stakeholders. 

DRAFT 4/30/96 4:13 PM 3-11 
4. Analytical Improvements Agenda

At the March 1996 workshop, the Department introduced the elements of a cooperative

effort to improve the methods for analyzing the likely impacts of standards on

stakeholder groups. This presentation had three goals: to obtain input on how this

analysis should be conducted; to get feedback on which analysis issues should be given

highest priority; and to begin developing a schedule for the analysis improvements.

Improvement areas, as identified at the workshop, are summarized below.

4.1 Engineering Analysis

Because many of the analytical issues involved in the engineering analysis of the

rulemaking analysis are product specific, the Department's approach to improving the

analysis methods will be to work closely with stakeholders during the course of

rulemakings. Primary areas where the Department will be seeking input include:

• Identification and selection of industry experts

• Selection of suitable engineering models and suggestions for their improvement

0 Improvements to the methods used to obtain cost data

• Validation of data and data sources

• Development of alternative approaches to address uncertainty

• Needs for product research and development associated with the evaluation of

design options.

4.2 Impacts on Manufacturers

The Department is initiating a review of the manufacturing impact analysis models and

methodologies in close cooperation with interested parties. The Department will be

starting with a "clean sheet of paper," possibly leading to the improvements, or

replacement, of the current analysis methodologies. The Department seeks to include

more qualitative methods to enhance whatever quantitative models are chosen. Issues

raised during the consultations, including treatment of small/niche manufacturers and

the cumulative impact of multiple standards will be addressed.

The Department of Energy intends to hold a public workshop this summer to begin

development of new approaches to conducting the manufacturer impact analysis.

4.3 Alternatives to Standards

The Department of Energy has initiated a review of its R&D, market pull, and standards

programs to ensure a thoughtful prioritization and selection among appliance project

opportunities. Elements of this review include:

• Rigorous consideration of market solutions

• Consideration of Federal and private sector initiatives

DRAFT 4/30/96 4:13 PM 4-1

 EE-PI-96-001 COMMENT 32

4. Analytical Improvements Agenda 

At the March 1996 workshop, the Department introduced the elements of a cooperative 

effort to improve the methods for analyzing the likely impacts of standards on 

stakeholder groups. This presentation had three goals: to obtain input on how this 

analysis should be conducted; to get feedback on which analysis issues should be given 

highest priority; and to begin developing a schedule for the analysis improvements. 

Improvement areas, as identified at the workshop, are summarized below. 

4.1 Engineering Analysis 

Because many of the analytical issues involved in the engineering analysis of the 

rulemaking analysis are product specific, the Department's approach to improving the 

analysis methods will be to work closely with stakeholders during the course of 

rulemakings. Primary areas where the Department will be seeking input include: 

• Identification and selection of ~ndustry experts 

• Selection of suitable engineering models and suggestions for their improvement 

• Improvements to the methods used to obtain cost data 

• Validation of data and data sources 

• Development of alternative approaches to address uncertainty 

• Needs for product research and development associated with the evaluation of 

design options. 

4.2 Impacts on Manufacturers 

The Department is initiating a review of the manufacturing impact analysis models and 

methodologies in close cooperation with interested parties. The Department will be 

starting with a "clean sheet of paper," possibly leading to the improvements, or 

replacement, of the current analysis methodologies. The Department seeks to include 

more qualitative methods to enhance whatever quantitative models are chosen. Issues 

raised during the consultations, including treatment of small/niche manufacturers and 

the cumulative impact of multiple standards will be addressed. 

The Department of Energy intends to hold a public workshop this summer to begin 

development of new approaches to conducting the manufacturer impact analysis. 

4.3 Alternatives to Standards 

The Department of Energy has initiated a review of its R&D, market pull, and standards 

programs to ensure a thoughtful prioritization and selection among appliance project 

opportunities. Elements of this review include: 

• Rigorous consideration of market solutions 

• Consideration of Federal and private sector initiatives 

DRAFT 4/30/96 4:13 PM 4-1 
• Public participation in the planning and review of programs

• Improved resource allocations.

Preliminary criteria that may suggest an increased emphasis on non -regulatory

alternatives to standards include:

• Inequitable distribution of consumer life-cycle costs resulting from variable

appliance usage patterns and energy prices

• Standards which would result in products with a greatly increased first cost

• New technology with undemonstrated utility , serviceability, reliability or safety

Inequitable distribution of costs and benefits among regions of the country resulting

from variable climate conditions and energy prices

• Inequitable distribution of financial impacts on manufacturers with particular

consideration of small manufacturers and possible anti-competitive effects

• Strong commitment by manufacturers and distribution channels to voluntary efforts

• New technology which would require major changes to manufacturing processes

and industry infrastructure

• Absence of an adequate manufacturing, sales, and servicing infrastructure.

DRAFT 4/30/96 4:13 PM 4-2

 EE-PI-96-001 COMMENT 32

• Public participation in the planning and review of programs 

• Improved resource allocations. 

Preliminary criteria that may suggest an increased emphasis on non-regulatory 

alternatives to standards include: 

• Inequitable distribution of consumer life-cycle costs resulting from variable 

appliance usage patterns and energy prices 

• Standards which would result in products with a greatly increased first cost 

• New technology with undemonstrated utility, serviceability, reliability or safety 

• Inequitable distribution of costs and benefits among regions of the country resulting 

from variable climate conditions and energy prices 

• Inequitable distribution of financial impacts on manufacturers with particular 

consideration of small manufacturers and possible anti-competitive effects 

• Strong commitment by manufacturers and distribution channels to voluntary efforts 

• New technology which would require major changes to manufacturing processes 

and industry infrastructure 

• Absence of an adequate manufacturing, sales, and servicing infrastructure. 

DRAFT 4/30/96 4:13 PM 4-2 
5. Next Steps

5.1 Final Report on Results of the Appliance Rulemaking Process Improvement

Effort

To ensure full consideration, stakeholder comments on this Draft Report must be

received by the Department of Energy no later than May 20, 1996.

• The Department expects to issue the Final Report during June.

5.2 Priority-setting analysis and development of a new Regulatory Agenda

• Comments on the criteria that the Department proposes to consider in the prioritysetting process, and on the process DOE intends to follow, must also be received by

May 20.

• In late May, the Department will begin its first priority-setting analysis and, by, early

July, DOE will issue a draft Regulatory Agenda based on the results of this analysis.

The draft Regulatory Agenda will: indicate for each covered product whether DOE

is proposing to initiate or continue, during the next two years, the development of

updated standards for that product category; document the contents and results of the

priority-setting analysis which DOE used to develop the draft Regulatory Agenda;

indicate the next steps for all currently active rulemakings; describe any variations

from the new process that will be followed for specific products; and provide a

schedule for completion of each rulemaking identified.

• During the summer, the Department will hold a public workshop in order to

describe, and obtain stakeholder comments on, the draft Regulatory Agenda.

• Distribution of Program priorities in late summer with publication of the Regulatory

Agenda in the Federal Register in October 1996.

5.3 Current Status of On-going Activities

In parallel with the process improvement effort and the development of a new

Regulatory Agenda, the Department. is continuing work on the supporting analyses for

several standards rulemakings already underway, including:

Refrigerators: The analysis of comments is complete. At this time, DOE

believes that no major changes to the underlying analysis of the proposed refrigerator

standards is necessary. However, the Department expects to consult with

manufacturers and other interested parties to determine whether alterations to the

proposed standards suggested by some stakeholders are desirable.

Ballasts: The analysis underlying the proposed standards has been substantially revised

and has been circulated for technical review by manufacturers and other interested

parties. A public workshop to review this revised analysis, as well as to discuss and

DRAFT 4/30/96 4:13 PM 5-1

 EE-PI-96-001 COMMENT 32

5. Next Steps 

5.1 Final Report on Results of the Appliance Rulemaking Process Improvement 

Effort 

• To ensure full consideration, stakeholder comments on this Draft Report must be 

received by the Department of Energy no later than May 20, 1996. 

• The Department expects to issue the Final Report duri~g June. 

5.2 Priority-setting analysis and development of a new Regulatory Agenda 

• Comments on the criteria that the Department proposes to consider in the prioritysetting process, and on the process DOE intends to follow, must also be received by 

May 20. 

• In late May, the Department will begin its first priority-setting analysis and, by early 

July, DOE will issue a draft Regulatory Agenda based on the results of this analysis. 

The draft Regulatory Agenda will: indicate for each covered product whether DOE 

is proposing to initiate or continue, during the next two years, the development of 

updated standards for that product category; document the contents and results of the 

priority-setting analysis which DOE used to develop the draft Regulatory Agenda; 

indicate the next steps for all currently active rulemakings; describe any variations 

from the new process that will be followed for specific products; and provide a 

schedule for completion of each rulemaking identified. 

• During the summer, the Department will hold a public workshop in order to 

describe, and obtain stakeholder comments on, the draft Regulatory Agenda. 

• Distribution of Program priorities in late summer with publication of the Regulatory 

Agenda in the Federal Register in October 1996. 

5.3 Current Status of On-going Activities 

In parallel with the process improvement effort and the development of a new 

Regulatory Agenda, the Department. is continuing work on the supporting analyses for 

several standards rulemakings already underway, including: 

Refrigerators: The analysis of comments is complete. At this time, DOE 

believes that no major changes to the underlying analysis of the proposed refrigerator 

standards is necessary. However, the Department expects to consult with 

manufacturers and other interested parties to determine whether alterations to the 

proposed standards suggested by some stakeholders are desirable. 

Ballasts: The analysis underlying the proposed standards has been substantially revised 

and has been circulated for technical review by manufacturers and other interested 

parties. A public workshop to review this revised analysis, as well as to discuss and 

DRAFT 4/30/96 4:13 PM 5-1 
plan a proposed DOE assessment of possible non-regulatory alternatives to updated

ballast efficiency standards, is planned for late Spring. DOE will consult with interested

parties to schedule the date for the workshop and elaborate a detailed agenda.

Cooking Products and Room Air Conditioners: The analyses underlying the proposed

standards for these two product categories have been substantially revised and are now

being circulated for technical review by manufacturers and other interested parties.

Comments will be due two months after the revised analysis has been circulated.

5.4 Analytical improvements agenda

Manufacturer Impact Analysis Workshop: In order to initiate the process of developing

new and substantially improved methods for assessing the impacts of standards' on

manufacturers, DOE is planning to hold a public workshop in June 1996. At the

workshop, DOE will review in detail the existing analyses methodologies, lead a

discussion on a draft work plan for the development of new methods for assessing

manufacturer impact, and invite comments and suggestions from participants.

Alternatives To Standards Workshop: In order to initiate the process of developing

methods for comparing the likely benefits and costs of updated efficiency standards to

various non-regulatory alternatives, DOE is planning to hold a public workshop in June

1996. At the workshop, DOE will present its ideas on how to perform such

comparative analyses and will invite comments and suggestions from participants.

DRAFT 4/30/96 4:13 PM 5-2

 EE-PI-96-001 COMMENT 32

plan a proposed DOE assessment of possible non-regulatory alternatives to updated 

ballast efficiency standards, is planned for late Spring. DOE will consult with interested 

parties to schedule the date for the workshop and elaborate a detailed agenda. 

Cooking Products and Room Air Conditioners: T,he analyses underlying the proposed 

standards for these two product categories have been substantially revised and are now 

being circulated for technical review by manufacturers and other interested parties. 

Comments will be due two months after the revised analysis has been circulated. 

5.4 Analytical improvements agenda 

Manufacturer Impact Analysis Workshop: In order to initiate the process of developing 

new and substantially improved methods for assessing the impacts of standards' on 

manufacturers, DOE is planning to hold a public workshop in June 1996. At the 

workshop, DOE will review in detail the existing analyses methodologies, lead a 

discussion on a draft work plan for the development of new methods for assessing 

manufacturer impact, and invite comments and suggestions from participants. 

Alternatives To Standards Workshop: In order to initiate the process of developing 

methods for comparing the likely benefits and costs of updated efficiency standards to 

various non-regulatory alternatives, DOE is planning to hold a public workshop in June 

1996. At th~ workshop, DOE will present its ideas on how to perform such 

comparative analyses and will invite comments and suggestions from participants. 

DRAFT 4/30/96 4:13 PM 5-2