Energy Conservation Standards Rulemaking Framework Document for Certain Small Diameter, Elliptical Reflector, and Bulged Reflector Incandescent Reflector Lamps

RIN: 1904-AC15

U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Building Technologies Program

April 23, 2010TABLE OF CONTENTS

1 Introduction

.................................................................................................................. ............. 1

1.1 Overview of the Fram ework Document

............................................................................. 1

1.2 Authority

..................................................................................................................... ........ 1

1.3 Background

.................................................................................................................... ..... 3

1.3.1 History of Standards Rulemaking for ER , BR, and Small Diameter Incandescent Reflector Lamps

............................................................................................................ 3

1.3.2 Current Rulemaking Process

................................................................................... 3

2 Rulemaking Analyses Overview and Proposed Methodology

................................................. 4

2.1 Test Procedures

............................................................................................................... .... 4

2.2 Off Mode and Standby Mode Ener gy Consumption Standards

.......................................... 5

2.3 Market and Technology Assessment

.................................................................................. 5

2.3.1 Scope of Coverage

.................................................................................................. 6

2.3.2 Product Classes

....................................................................................................... 7

2.3.2.1 Lamp Spectrum

.............................................................................................. 7

2.3.2.2 Lamp Diameter

............................................................................................... 8

2.3.2.3 Input Voltage

.................................................................................................. 8

2.3.3 Market Assessment

................................................................................................. 8

2.3.4 Technology Assessment

.......................................................................................... 9

2.4 Screening Analysis

............................................................................................................ 11

2.5 Engineering Analysis

........................................................................................................ 1 2

2.5.1 Approach

............................................................................................................... 12

2.5.2 Representative Produ ct Classes

............................................................................ 13

2.5.3 Baseline Lamps

..................................................................................................... 13

2.5.4 Higher-Efficacy Lamp Designs

............................................................................ 14

2.5.5 Efficiency Levels

.................................................................................................. 16

2.5.6 Scaling to Product Classes Not Analyzed

............................................................. 17

2.6 Energy Use Characterization

............................................................................................ 18

2.7 Product Price Determination

............................................................................................. 19

2.8 Life-Cycle Cost and Payback Period Analyses

................................................................ 20

2.8.1 Installation Costs

................................................................................................... 23

2.8.2 Electricity Prices

................................................................................................... 23

2.8.3 Electricity Price Trends

......................................................................................... 23

2.8.4 Lifetime

................................................................................................................. 23

2.8.5 Analysis Period

..................................................................................................... 24

2.8.6 Consumer Discount Rates

..................................................................................... 24

2.9 Shipments Analysis

........................................................................................................... 24

2.9.1 Historical Shipments

............................................................................................. 25

2.9.2 Installed Stock

....................................................................................................... 26

2.9.2.1 Existing/Emerging Technologies Scenarios

................................................. 26

2.9.2.2 Additional Shipments Growth Due to the July 2009 Final Rule

.................. 27

2.9.3 Market-Share Matrices

.......................................................................................... 27

2.10 National Impact Analysis

............................................................................................ 28

2.10.1 Approach

......................................................................................................... 28

i2.10.2 Base-Case and Standards-Case Forecasted Efficacies

.................................... 29

2.10.3 National Impact Analysis Inputs

..................................................................... 30

2.11 Life-Cycle Cost Subgroup Analysis

........................................................................... 33

2.12 Manufacturer Impact Analysis

.................................................................................... 33

2.13 Utility Impact Analysis

............................................................................................... 34

2.14 Employment Impacts Analysis

................................................................................... 34

2.15 Environmental Assessment

......................................................................................... 35

2.16 Monetization of Emissions Reductions

...................................................................... 37

2.17 Regulatory Impact Analysis

........................................................................................ 38

LIST OF TABLES

Table 2.1 Product Classes

..................................................................................................... .......... 7 Table 2.2 Incandescent Reflector Lamp Technology Options

..................................................... 10 Table 2.3 Baseline Lamp Characteristics

...................................................................................... 14 Table 2.4 65 W BR30 Higher Efficacy Lamp Designs

............................................................... 15 Table 2.5 45 W R20 Higher E fficacy Lamp Designs

.................................................................. 16 Table 2.6 IRL Efficiency Levels

.............................................................................................. .... 17 Table 2.7 Summary of Inputs and Key Assumptions Used for the LCC Analyses

..................... 22 Table 2.8 Inputs to the National Impact Analysis

......................................................................... 30

iiLIST OF ACRONYMS

AEO Annual Energy Outlook ANOPR Advanced notice of proposed rulemaking BPAR bulged parabolic aluminized reflector (reflector lamp shape) BR bulged reflector (reflector lamp shape) BT Building Technologies Program

CAIR Clean Air Interstate Act CAMR Clean Air Mercury Rule CBECS Commercial Buildings Energy Consumption Survey CCT correlated color temperature CFR Code of Federal Regulations CFL compact fluorescent lamp

CO 2 carbon dioxide

CSL candidate standard level DOE U.S. Department of Energy EIA Energy Information Administration EISA 2007 Energy Independence and Security Act of 2007 EL efficiency level EPA Environmental Protection Agency EPACT 1992 Energy Policy Act of 1992 EPACT 2005 Energy Policy Act of 2005 EPCA Energy Policy and Conservation Act ER elliptical reflector (reflector lamp shape) FR Federal Register GRIM Government Regulatory Impact Model Hg mercury HIR halogen infrared reflector HVAC heating, ventilating and air conditioning INPV industry net present value IRL incandescent reflector lamp LCC lifecycle cost LMC U.S. Lighting Market Characterization Volume I MECS Manufacturer Energy Consumption Survey (MECS) MIA Manufacturer Impact Analysis NEMS National Energy Modeling System NEMS-BT National Energy Modeling System – Building Technologies NES national energy savings NIA National Impact Analysis NOPR notice of proposed rulemaking

NO X nitrogen oxides NPV net present value PAR parabolic aluminized refl ector (reflector lamp shape) PBP payback period

R reflector (reflector lamp shape) RCFL reflector compact fluorescent lamp

iiiRECS Residential Energy Consumption Survey RIA regulatory impact analysis

SBA Small Business Administration SEC U.S. Securities and Exchange Commission

SO 2 sulfur dioxide TSD technical support document

U.S.C. United States Code

V volts

W watts

ivRulemaking Framework Document for Certain Small Diameter, Elliptical Reflector, and Bulged Reflector Incandescent Reflector Lamps

1 Introduction

1.1 Overview of the Framework Document

The purpose of this framework document is to describe the detailed analytical approaches the U.S. Department of Energy (DOE) anticipat es using to evaluate potential amended energy

conservation standards for certain incandescen t reflector lamps (IRLs). The framework document informs interested parties of the analy tical methods, data source s, and key assumptions DOE plans to use in its notice of proposed rule making (NOPR) stage. The framework document is the starting point for developing energy conservation standards and is not a definitive statement on any issue to be determined in the rulemaking. DOE will analyze each product class of incandescent reflector lamps under consider ation to determine whether amended energy

conservation standards are technol ogically feasible, economically justified, and would result in significant energy savings. DOE will maintain in formation about this ru lemaking on its website

at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/incandescent_lamps.html

.

While DOE invites comment on all aspects of the material presented in this document, several specific issues on which DOE seeks comment are set out in comment boxes like this one. DOE uses these comment boxes to highlight issues and ask specific questions on the approaches DOE is proposing to follow to conduct the analyses required for the standards rulemaking. Such requests for feedback are numbe red sequentially throughout the document and are repeated in Appendix A.

1.2 Authority

Title III of the Energy Policy and C onservation Act of 1975 (42 U.S.C. 6291 et seq .) (EPCA or the Act) established the Energy C onservation Program for Consumer Products Other Than Automobiles, covering major household appliances. Subsequent amendments expanded

Title III of EPCA to include a dditional consumer products and ce rtain commercial and industrial equipment. In particular, the Energy Policy Act of 1992 (EPACT 1992) included amendments to EPCA that added as covered produc ts certain IRLs with wattages of 40 watts (W) or higher, and that established energy conservation standard s for these IRLs. In defining the term “incandescent reflector lamp,” EPACT 1992 excluded lamps with elliptical reflector (ER) and bulged reflector (BR) bulb shapes, and with diam eters of 2.75 inches or less. Therefore, such IRLs were neither included as covered produc ts nor subject to EPCA’s standards for IRLs.

However, section 322(a)(1) of the Energy Independence and Security Act of 2007 (EISA 2007) subsequently amended EPCA to expand the Act’s definition of “incandescent reflector lamp” to include lamps with a diameter between 2.25 and 2.75 inches, as well as lamps with ER, BR, bulged parabolic aluminized reflector (BPAR), or similar bulb shapes. (42 U.S.C. 6291(30)(C)(ii) and (F)) Consequently, these lamp s became covered products subject to EPCA’s

1standards for IRLs, except that section 322(b) of EISA 2007 also amended EPCA to exempt from the IRL standards the following categories of these lamps: (1) lamps rated 50 watts or less that are ER30, BR30, BR40, or ER40; (2) lamps rated 65 watts that are BR30, BR40, or ER40 lamps; and (3) R20 incandescent reflector lamp s rated 45 watts or less (lamps that have a diameter of 2.5 inches or less, such as R20 la mps, are commonly referred to as small diameter lamps). (42 U.S.C. 6295(i)(1)(C)) (Hereafter, DOE refers to these lamps collectively as the “exempt IRLs.”)

In a recent rulemaking to consider amendi ng EPCA’s standards for IRLs and certain other types of lamps, DOE initially concluded that it lacked authority to set standards for the exempt IRLs. 74 FR 16920, 16930 (April 13, 2009). DOE also concluded, therefore, that these lamps were not covered by the EPCA directive th at DOE consider amending the Act’s standards for IRLs and other lamps. (42 U.S.C. 6295(i)) However, upon consideration of the comments it received in that rulemaking, DOE decided to reexamine these conclusions. 74 FR 16920, 16930

- 31 (April 13, 2009); 74 FR 34080, 34092 (July 14, 2009).

DOE has undertaken this reexamination a nd has now concluded, for the reasons that follow, that it has the authority under EPCA to adopt standards for the exempt IRLs, and that these lamps are covered by the directive in 42 U.S.C. 6295(i) to amend EPCA’s standards for IRLs. First, by amending the definition of “incandescent reflector lamp” (42 U.S.C. 6291(30)(C)(ii) and (F)), EISA 2007 effectively broug ht ER, BR, and small diameter lamps into the Federal energy conservation standards prog ram as covered product, thereby granting DOE regulatory authority. Additionally, althoug h 42 U.S.C 6295(i)(1)(C) exempts certain ER, BR, and small diameter lamps from statutorily-pr escribed standards, EISA 2007 grants DOE authority to amend the standards laid out in 42 U.S.C 6295(i)(1), which includes subparagraph (C). As a result, the statutory text did not ex empt the bulbs from future regulation, only from the specified minimum standards in 42 U.S.C. 6295(i )(1). Consequently, DOE is conducting this rulemaking to address the poten tial for development of energy conservation standards for the exempt IRLs.

DOE must design any new or amended st andard for these products to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. Such standards must also result in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A) and (3)) To determine whether a proposed standard is economically justified, DOE must, after receiving comments on the propose d standard, determine whether the benefits of the standard exceed its burdens to the greatest extent practicable, weighing the following

seven factors:

1. The economic impact of the standard on manufacturers and consumers of products subject to the standard;

2. The savings in operating costs throughout th e estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products which are likely to result from the imposition of the standard;

23. The total projected amount of energy sa vings likely to result directly from the imposition of the standard;

4. Any lessening of the utility or the performan ce of the covered products likely to result from the imposition of the standard;

5. The impact of any lessening of competition, as determined in writin g by the Attorney General, that is likely to result from the imposition of the standard;

6. The need for national energy conservation; and

7. Other factors the Secretary [o f Energy] considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

1.3 Background

1.3.1 History of Standards Rulemaking for ER, BR, and Small Diameter Incandescent Reflector Lamps

As indicated above, EISA 2007 amended EP CA both to add as covered products the exempt IRLs (42 U.S.C. 6291(30)(C)(ii) and (F )) and to exempt them from EPCA’s energy conservation standards for IRLs (42 U.S.C. 6295(i)(1)(C). As also indicated, DOE initially concluded that it lacked authority to adopt sta ndards for the exempt IRLs. Accordingly, in the recent lamps standards rulemaking, DOE’s analyses did not examine whether standards for these exempt IRLs might be warranted. (74 FR 34080, July 14, 2009) Based upon a reexamination of its authority, DOE decided to conduct this separa te rulemaking to asse ss energy conservations standards for the exempt IRLs.

1.3.2 Current Rulemaking Process

By publishing a notice of public meeting ( NOPM), DOE is initiating the rulemaking to consider energy conservation standards for the exempt IRLs. To consider and develop such standards, DOE intends to conduct the following technical analyses in this rulemaking:

• A market and technology assessment to char acterize the relevant product markets and existing technology options, including prototype designs.

• A screening analysis to review each technology option and determine if it is technologically feasible; is practical to manuf acture, install, and service; would adversely affect product utility or product availability; or would have adverse impacts on health and safety.

• An engineering analysis to develop cost -efficiency relationshi ps that show the manufacturer’s cost of achieving increased efficiency.

• An energy-use characterization analysis to determine the annual energy use of the exempt

IRLs.

3• A product-price analysis that determines low, medium, and high prices for consumers of exempt IRLs.

• Life-cycle cost (LCC) and payback period (PBP) analyses to calculate, at the consumer level, the discounted savings in operating co sts (less maintenance and repair costs) throughout the estimated average life of these products, compared to any increase in the installed cost for the products likely to result directly from imposition of the standard.

• A shipments analysis to forecast shipments of the exempt IRLs, which will then be used to calculate the national impacts of standard s on energy, net present value (NPV), and

future manufacturer cash flows.

• A national impact analysis (NIA) to assess the aggregate impacts at the national level of

the NPV of total consumer LCC and national energy savings.

• An LCC subgroup analysis to evaluate varia tions in customer characteristics that might cause a standard to affect particular c onsumer sub-populations, such as low-income households, differently than the overall population.

• A manufacturer impact analysis (MIA) to estimate the financial impact of standards on manufacturers and to calculate impacts on competition, employment, and manufacturing capacity.

• A utility impact analysis to estimate the eff ects of proposed standards on electric utilities.

• An employment impact analysis to assess the aggregate impacts on national employment.

• An environmental assessment to provide estimates of the effects of amended energy

conservation standards on three pollutants—sulfur dioxide (SO 2 ), nitrogen oxides (NO

x ), and mercury—as well as carbon emissions.

• A regulatory impact analysis to present majo r alternatives to proposed amended energy

conservation standards that could achieve subs tantially the same regulatory goal at a

lower cost.

This framework document and the associated public meeting represent the first step in the process to consider adoption of energy conservation standards for the exempt IRLs. Because the previous rulemaking for IRLs was completed relatively recently, DOE possesses methodologies for all stages of the analysis that have alre ady been vetted and revised according to public comments. Accordingly, DOE intends to present the results of its analyses in the notice of proposed rulemaking (NOPR) phase. DOE is issuing the framework document and NOPM with the intention of receiving as much feedback as possible regarding the methodologies, data, and key assumptions that will be used for the anal yses before performing the NOPR analyses. The analyses and proposed methodologies that will be used for the NOPR phase of this rulemaking

are described in detail in the fra mework document, available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/incandescent_lamps.html

.

2 Rulemaking Analyses Overv iew and Proposed Methodology

2.1 Test Procedures

DOE’s test procedures for fluorescent and inca ndescent lamps are set forth in the Code of Federal Regulations (CFR) at 10 CFR part 430, s ubpart B, appendix R. These test procedures provide detailed instructions for measuring the performance of general service fluorescent lamps

4and IRLs, as well as performance attributes of general service incandescent lamps, largely by incorporating several industry standards. In July 2009, in response to comments, DOE adopted amendments to the IRL test procedure, updatin g several industry standards. 74 FR 31829 (July 6, 2009). Although DOE previously has not regulate d the products addressed in this rulemaking, DOE believes that the IRL test procedures pr ovided in 10 CFR 430, subpart B, appendix R are appropriate for ER, BR, and sm all diameter IRLs. Therefore, DOE is not proposing any amendments to the IRL test procedure. DOE requests comments on this tentative conclusion.

Item 1 DOE welcomes comment on its conclusion that the test procedures for IRL covered by this rulemaking do not need to be updated. DOE believes that the IRL test procedures currently provided in 10 CFR part 430, subpart B, appendix R are appropriate for the ER, BR, and small diameter IRLs t hat are the subject of this rulemaking.

2.2 Off Mode and Standby Mode Energy Consumption Standards

Section 310(3) of EISA 2 007 amended EPCA to require new or amended energy conservation standards adopted for a covered pro duct after July 1, 2010 to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) As the final rule in this standards rulemaking is scheduled for publication after July 1, 2010, DOE has done a preliminary analysis of the potential for energy savings associated with the regulation of standby mode and off mode energy use in these additional IRLs. Similar to DOE’s conclusion in the July 2009 final rule, DOE has determined that the IRLs that are the subjects of this rulemaking do not operate in standby mode or off mode. 74 FR 34080, 34094 (July 14, 2009).

To meet EISA 2007’s definitions of ‘‘activ e mode,’’ ‘‘off mode,’’ and ‘‘standby mode’’ applicable to IRL (42 U.S.C. 6295(gg)(1)), the lamp must not be providing any active mode function ( i.e. , emitting light). However, to reach such a state, the lamp must be entirely disconnected from the main power source ( i.e. , switched off), thereby not satisfying the requirements of operating in o ff mode. In addition, DOE believes that all covered products that

meet the definition of “incande scent reflector lamp” are single-function products and do not offer any secondary user-oriented or protective functio ns. Thus, IRLs do not satisfy the definition for “standby mode.” Therefore, DOE maintains that it is not feasible to incorporate off mode or standby mode energy use into the energy conser vation standards for IRLs and is not considering amendments to the standard to address lamp operation in such modes. DOE requests comments

on this tentative conclusion.

Item 2 DOE welcomes comment on its decision to not amend energy conservation standards to address lamp operation in “off mode” or “standby mode.” DOE does not believe that any commercially-available IRLs satisfy the definition for “off mode” or “standby mode” operation. Therefore, DOE maintain s that it is not feasible to incorporate off mode or standby mode energy use into the energy conservation standards for IRLs.

2.3 Market and Technology Assessment

52.3.1 Scope of Coverage

EPCA defines “incandescent reflector lamp” as follows: “...[A] lamp in which light is produced by a filament heated to incandescence by an electric current . . . (commonly referred to as a reflector lamp) which is not colored or desi gned for rough or vibra tion service applications, that contains an inner reflective coating on the outer bulb to direct the light, an R, PAR, ER, BR, BPAR, or similar bulb shapes with E26 medium screw bases, a rated voltage or voltage range that lies at least partially within 115 and 130 volts, a diameter which exceeds 2.25 inches, and has a rated wattage that is 40 watts or higher .” (42 U.S.C. 6291(30)(C), (C)(ii) and (F))

EPCA further clarifies this definition of IR L by defining the lamp types excluded from the definition: “The term ‘rough service lamp’ means a lamp that--(i) has a minimum of 5 supports with filament configurations that are C–7A, C–11, C–17, and C– 22 as listed in Figure 6–12 of the 9th edition of the IESNA Lighting ha ndbook, or similar configurations where lead wires are not counted as supports; and (ii) is de signated and marketed specifically for ‘rough service’ applications, with -- (I) the designa tion appearing on the lamp packaging; and (II) marketing materials that identify the lamp as being for rough service.” (42 U.S.C. 6291(30)(X))

The term “vibration service lamp” means “a lamp that—(i) has filament configurations that are C-5, C-7A, or C-9, as listed in Figure 6-12 of the 9th Edition of the IESNA Lighting Handbook or similar configurations;(ii) has a maximum wattage of 60 wa tts; (iii) is sold at retail in packages of 2 lamps or less; and (iv) is de signated and marketed specifically for vibration

service or vibration-resistant applications, with—(I) the desi gnation appearing on the lamp packaging; and (II) marketing materials that identify the lamp as being vibration service only.” (42 U.S.C. 6291(30)(AA))

The term “colored incandescent lamp” means “an incandescent lamp designated and marketed as a colored lamp that has—(i) a colo r rendering index of less than 50, as determined according to the test method given in C.I.E. publication 13.3–1995; or (ii) a correlated color temperature of less than 2,500K, or greater th an 4,600K, where correlated temperature is computed according to the Journal of Opti cal Society of America, Vol. 58, pages 1528–1595 (1986 1 ).” (42 U.S.C. 6291(30)(EE))

As discussed earlier, section 322(b) of EISA 2007 incorporates several exemptions to the IRL standards in the new section 325(i)(1)( C) of EPCA. (42 U.S.C. 6295(i)(1)(C)) These exemptions are as follows: (1) lamps rated 50 watts or less that are ER30, BR30, BR40, or ER40; (2) lamps rated 65 watts that are BR30, BR40, or ER40 lamps; and (3) R20 incandescent reflector lamps rated 45 watts or less. As the July 2009 final rule has already evaluated amending

standards for all IRLs other than the aforem entioned exemptions, in this rulemaking, DOE intends to evaluate establishing energy conser vation standards for solely the exempted ER, BR,

and small diameter IRLs.

1 This journal article was incorrectly cited in the U.S. Code. The correct citation appears at 10 CFR 430.3(n).
62.3.2 Product Classes

When evaluating and establishing energy c onservation standards, DOE divides covered products into classes by the type of energy us ed, capacity, other performance-related features that affect efficiency, and fact ors such as the utility of the product to users. (See 42 U.S.C. 6295(q)) In the July 2009 final rule, DOE adopted product classes for IRLs based on three lamp attributes: (1) modified/standard -spectrum; (2) lamp diameter; a nd (3) input voltage. In addition, DOE decided to analyze standard levels for IRLs that allowed the minimum efficacy requirement to vary as a function of rated wattage. 74 FR 34080, 34099 (July 14, 2009). Given the similarity in technology between the IRLs for which standard s were adopted in the July 2009 final rule and those additional IRLs being analyzed in this rulemaking, DOE believes that a similar approach to product classes is appropriate. 74 FR 34080, 34082 (July 14, 2009). Table 2.1 summarizes the product classes adopted in the July 2009 final rule and being considered in this rulemaking. Id

. DOE invites comment on whether there are any un ique characteristics of these additional ER, BR, and small diameter R-shaped IRLs that would warrant a different approach to product classes. The following section describes and discusses the product classes of IRLs that DOE is considering for this rulemaking.

Table 2.1 Product Classes

Spectrum Diameter, inches Voltage, volts

> 2.5 ≥ 125

Standard < 125

≤ 2.5 ≥ 125

< 125

> 2.5 ≥ 125

Modified < 125

≤ 2.5 ≥ 125

< 125

2.3.2.1 Lamp Spectrum

Modified-spectrum lamps (as defined in 42 U.S.C. 6291(30)(W)) provide a unique performance-related feature to consum ers, in that they offer a different spectrum of light from a typical standard-spectrum incandescent lamp, mu ch like two fluorescent lamps with different correlated color temperature 2 (CCT) values. Modified-spectrum lamps may ensure better color discrimination and often appear more similar to natural daylight, possibly resulting in psychological benefits. 3 In addition to providing a uni que performance feature, DOE also understands that the technologies that modify the spectral emission from these lamps also decrease their efficacy because a portion of the li ght emission is absorbed by the coating. Given the reduction in efficacy, DOE believes that some modified-spectrum lamps may not be able to meet standards if subjected to the same levels as standard-spectrum lamps. That, in turn, could

2 Correlated color temperature means the absolute temperature of a blackbody whose chromaticity most nearly resembles that of the light source. 10 CFR 430.2.

3 ‘‘Full Spectrum Q&A,’’ National Lighting Product Information Program, Vol. 7 Issue 5 (March 2005). Available

at: http://www.lrc.rpi.edu/programs/nlpip/lightingAnswers/fullSpectrum

. 7cause the unavailability of such products, thereb y eliminating this performance-related feature

from the IRL market. DOE notes that the statute prohibits DOE from prescribing a standard if such standard is likely to result in the unavailability of performance characteristics or features for a covered product type. (42 U.S.C. 6295(o)(4)) T hus, DOE believes it is a ppropriate to establish separate product classes for modified-spectrum lamps and standard-sp ectrum lamps, based on modified-spectrum lamps’ unique performance feature and the impact of this performance feature on product efficacy.

2.3.2.2 Lamp Diameter

In the July 2009 final rule, DOE adopted se parate product classes for smaller-diameter lamps ( i.e. , lamps with a diameter less than or equal to 2.5 inches). 74 FR 34080, 34082 (July 14, 2009). Such lamps provide a distinct utility (suc h as the ability to be installed in smaller fixtures) which generally results in lower efficacy because they have an inherently lower optical efficacy than larger-diameter lamps of similar f ilament size. In addition, DOE is aware that additional efficacy losses are associated with the installation of double-ended burners (a technology option to increase efficacy) in smaller-diameter lamps. Therefore, DOE is considering establishing separate product classes for lamps with a diameter of 2.5 inches or less and lamps with a diameter greater than 2.5 inches.

2.3.2.3 Input Voltage

Current DOE test procedures provide for lamp s rated at 130 volts (V) to be tested at 130 V and for lamps rated at 120 V to be tested at 120 V. However, DOE is aware that a large number of consumers actually operate 130 V lamps at 120 V, which results in longer lifetime but lower efficacy. With a single efficacy level (EL) for lamps rated at each voltage, this situation would effectively lead to a lower efficacy requi rement for these 130 V lamps that are run at 120 V, compared to 120 V lamps run at 120 V. These 130 V lamps would not re quire the same level of technology as 120 V-rated lamps to meet the sa me standard, and, thus, they would be cheaper to produce. Therefore, setting higher standa rds for IRLs without accounting for voltage differences could result in increased migration to the 130 V lamps and possible lost energy savings. For these reasons, in the July 2009 fi nal rule, DOE set separa te standards for 130 V lamps by establishing separa te product classes based on rate d voltage. 74 FR 34080, 34082 (July 14, 2009). Similar to the approach discussed in the July 2009 final rule, DOE is considering establishing two separate sets of product classes: (1) lamps with a rated voltage less than 125 V, and (2) lamps with a rated voltage greater than or equal to 125 V.

In summary, DOE is considering product cl ass divisions based on standard/modified spectrum, lamp diameter, and input voltage. DOE requests comments on these product class

divisions.

Item 3 DOE welcomes comments on its decisi on to base product class divisions on standard/modified spectrum, lamp diameter, and input voltage.

2.3.3 Market Assessment

8As part of the market assessment, DOE will qualitatively and quantitatively characterize the structure of the exempted incandescent reflector lamp market. DOE will identify and characterize the manufacturers of exempted incandescent reflector lamps, estimate market shares and trends in the market, and address regulatory and non-regulatory initiatives intended to improve the energy efficiency or reduce the en ergy consumption of the exempted incandescent reflector lamps.

The market assessment phase allows DOE to gather data that will assist in identifying important issues later in the rulemaking, such as potential small business impacts, competitive disruptions, and other factors that may arise from enacting standards. For example, DOE will use historical equipment shipments and prices as an indicator of futu re shipments and prices. Market structure data will be particularly useful for assessing competitive impacts as part of the MIA. This phase also allows DOE to start identif ying technologies commonly used for improving efficiency by reviewing product literature, industry publications, and company websites.

DOE understands that there are considerable data available on manufacturers, market shares, and other information. Such data are e ssential to the development of technologicallyfeasible, economically-justified energy conservation standards. Interested parties are encouraged to submit any available, applicable data to DOE. The National Electrical Manufacturers Association (NEMA) is the trade association for manufacturers of incandescent reflector lamps. DOE expects that NEMA will play an important ro le in providing market information, including information on manufacturers, market shares, and trends in the market.

Item 4 DOE invites interested parties to submit data relevant to the market assessment in the form of a written comment. This is incl udes historical shipments of the exempted incandescent reflector lamp market by lamp type, lamp wattage, and market sector.

2.3.4 Technology Assessment

In the technology assessment, DOE identifies technology options that appear to improve product efficacy. This assessment provides th e technical background and structure on which DOE bases its screening and engineering analyses. Table 2.2 lists the technology options DOE identified to improve the efficacy of IRLs in the July 2009 final rule. 74 FR 34080, 34098 (July 14, 2009). For a complete discussion on these te chnology options, please see chapter 3 of the July 2009 final rule technical support document (TSD). 4

4 The July 2009 final rule TSD is available at the following web address: http://www1.eere.energy.gov/buildings/appliance_standards/residential/incandescent_lamps_standards_final_rule_ts

d.html

. 9Table 2.2 Incandescent Reflect or Lamp Technology Options

Name of Technology Option Description July 2009 Final Rule TSD

Reference

Higher-Temperature Operation Operating the filament at higher temperatures, the spectral output shifts to lower wavelengths, increasing its overlap with the eye sensitivity curve. This measure may shorten the operating life of the lamp. Chapter 3, Section 3.3.2.1

Microcavity Filaments Texturing, surface perforations, microcavity holes with material fillings Chapter 3, Section 3.3.2.2

Novel Filament Materials More-efficacious filament alloys Chapter 3, Section 3.3.2.3

Thinner Filaments Thinner filaments to increase operating temperature. This measure may shorten the operating life of the lamp. Chapter 3, Section 3.3.2.4

Efficient Filament Coiling Coiling of the filament to increase surface area Chapter 3, Section 3.3.2.5

Crystallite Filament Coatings Layers of micron or submicron crystallites deposited on the filament surface Chapter 3, Section 3.3.2.6

Efficient Filament

Orientation Positioning the incandescent filament to increase light emission out of the lamp Chapter 3, Section 3.3.2.7

Higher-Efficiency Inert Fill

Gas Filling lamps with alternative gases, such as Krypton, to improve efficacy by reducing heat

conduction Chapter 3, Section 3.3.2.8

Luminescent Gas Gaseous fills that react with certain wavelengths of the filament emission to generate visible light Chapter 3, Section 3.3.2.9

Tungsten-Halogen Lamps Small diameter fused quartz envelope with a halogen molecule to re-deposit tungsten on the filament. Commonly referred to as a “halogen” lamp. Chapter 3, Section 3.3.2.10

Higher-Pressure TungstenHalogen Lamps Increased pressure of the halogen capsule by increasing the density of halogen elements. Chapter 3, Section 3.3.2.11

Non-Tungsten Regenerative Cycles Novel filament materials that incorporate a regenerative cycle Chapter 3, Section 3.3.2.12

Infrared Glass Coatings Infrared coatings (both phosphor and thin-film) to reflect some of the radiant energy back onto the filament. When used in conjunction with a halogen capsule, this technology option is referred to as a halogen infrared reflector (HIR) lamp. Chapter 3, Section 3.3.2.13

Integrally-Ballasted LowVoltage Lamps The ballast converts the operating voltage of the lamp from line voltage to a lower voltage. Chapter 3, Section 3.3.2.14

Higher-Efficien cy Reflector Coatings Alternative internal coatings with higher reflectivity Chapter 3, Section 3.3.2.15

Trihedral Corner

Reflectors Individual corner reflectors in the cover glass that reflect light directly back in the direction from

which it came Chapter 3, Section 3.3.2.16

Efficient Filament

Placement Positioning the filament to increase light emission out of the lamp Chapter 3, Section 3.3.2.17

10Item 5 DOE welcomes comments on all of the t echnology options it is considering for IRLs, including any omissions or revisions necessary to have a more comprehensive technology assessment for the exempt IRLs cover ed in this rulemaking. In the context of commenting on technology options, DOE also requests information on the feasibility, performance improvement, and cost of the technology options, as well as any recent developments in their technical maturity.

2.4 Screening Analysis

The purpose of the screening analysis is to screen out technologies that will not be considered further in the analysis. These “scree ned out” technologies will not be considered as possible methods of improving the efficiency of IRLs. Following development of the initial list of technologies (during the mark et and technology assessment), DOE will review and evaluate each technology based on the following four criteri a, as specified by 10 CFR part 430, subpart C, appendix A, sections 4(a)(4) and 5(b):

1. Technological feasibility

. DOE will consider technologies incorporated in commercial products or in working prototypes to be technologically feasible.

2. Practicability to manufacture, install, and service

. If mass production and reliable

installation and servic ing of a technology in commerci al products could be achieved on the scale necessary to serve the relevant market at the time the standard comes into effect, then DOE will consider that technology practi cable to manufacture, install, and service.

3. Adverse impacts on product or equipment utility to consumers or availability . If DOE determines a technology would have a sign ificant adverse impact on the utility of the product to significant subgroups of consumer s, or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not consider this technology

further.

4. Adverse impacts on health or safety

. If DOE determines that a technology will have significant adverse impacts on health or sa fety, it will not consider this technology

further.

DOE’s reasoning for eliminating any technologies from consideration during the screening analysis will be documented and published as part of the NOPR, and will be available for review and comment by interested parties. DOE is seeking comments from interested parties about the technologies that should be considered for the NOPR analysis.

Several technologies for improving the effici ency of incandescent reflector lamps were considered for the July 2009 final rule that we re ultimately screened out during the screening analysis. Specifically, the following technolog ies were screened out: microcavity filaments, novel filament materials, crys tallite filament coa tings, luminescent gas, non-tungsten-halogen regenerative cycles, infrared phosphor coatings, and trihedral corner reflectors. See chapter 4 of the technical support document for the July 2009 final rule for more details.

11Item 6 DOE requests comments regarding the tec hnologies that were screened out for the July 2009 final rule and whether any additi onal technology options should be screened out for this rule. Specifically, DOE is seeki ng any data or information that would allow DOE to determine whether it is still appropria te to screen out these technologies.

2.5 Engineering Analysis

The engineering analysis identifies potential, increasing efficacy levels above the level of the baseline model for each product class. Thos e technologies not eliminated in the screening analysis (design options) are inputs to this pr ocess. Design options consist of discrete technologies ( e.g. , halogen capsules, infrared reflective coatings). As detailed in the July 2009 final rule, to ensure that efficacy levels analyz ed are technologically f easible, DOE concentrated its efforts on developing produc t efficacy levels associated with “lamp designs," based upon commercially-available lamps that incorporate a range of design options in the engineering analysis. 74 FR 34080, 34102 (July 14, 2009). However, when necessary, DOE supplemented commercially-available product in formation with an examinati on of the improved performance

attributable to discrete technologies so that a substitute la mp at each efficacy level would be available for each baseline lamp.

In energy conservation standard rulemaki ngs for other products, DOE often develops cost-efficiency relationships in the engineering analysis. However, for this rulemaking (similar to the July 2009 final rule), DOE will develop efficacylevels in the engineering analysis and enduser prices in the product price determination. By combining the results of the engineering analysis and the product price determination, DOE will derive typical inputs for use in the LCC

and NIA. See the section 2.7 of this framework document for further details on the product price

determination.

2.5.1 Approach

For this rulemaking, DOE is using the same methodology for the engineering analysis that was detailed in the July 2009 final rule. 74 FR 34080, 34102-08 (July 14, 2009). The following is a summary of the steps taken in that engineering analysis:

• Step 1: Select Repres entative Product Classes

• Step 2: Select Baseline Lamps

• Step 3: Identify Higher-Efficacy Lamp Replacements

• Step 4: Develop Efficiency Levels.

A more detailed discussion of the methodology DOE followed to perform the engineering analysis can be found in the engineering analysis chapter of the July 2009 final rule TSD (chapter 5).

122.5.2 Representative Product Classes

As discussed in section 2.3.2 of this framework document, DOE is considering establishing eight product classes for exempt IRLs . Similar to the approach in the July 2009 final rule, DOE is not planning to directly analyz e each and every product class. Instead, DOE will carefully select certain product cla sses to analyze, and then scale its analytical findings for those representative product classes to other product classes that are not analyzed. 74 FR 34080, 34102 (July 14, 2009).

As discussed in section 2.3.2, DOE intends to subdivide the exempt IRLs into eight product classes with three subdivisions: (1) high versus low voltage; (2) large versus small diameter lamps; and (3) modified spectrum versus standard spectrum. As detailed in the July 2009 final rule, DOE chose to analyze the sta ndard-spectrum incandescent reflector lamp product class because standard-spectrum lamp s are more common than modified-spectrum lamps. After analyzing catalog da ta and talking to industry expe rts, DOE found that lamps with voltage ratings less than 125 V also are more co mmon than lamps with higher voltage ratings. 74 FR 34080, 34102 (July 14, 2009). Similar to the July 2009 final rule, for this rulemaking, DOE intends to analyze the product classes characteri zed by standard spectrum and voltage less than 125 V. Also, DOE found that among the lamps cove red in the July 2009 final rule, lamps with a diameter greater than 2.5 inches are significantly more common than lamps of smaller diameters. Although, in the July 2009 final rule, DOE chose to directly analyze only lamps with diameters greater than 2.5 inches, for this rulemaking, DOE is considering directly analyzing both the large and small diameter product classes. 74 FR 34080, 34102 (July 14, 2009). DOE is considering this change because a large portion of the exempted IRL being considered for energy

conservation standards in this rulemaking have small diameter s (the R20 lamps with a rated wattage of 45 watts or less).

2.5.3 Baseline Lamps

Once DOE identifies the representative product classes for analysis, DOE selects the representative units for analysis ( i.e. , baseline lamps) from within the representative product class. These representative units are generally what DOE believes to be the most-common, leastefficacious lamps in their respective product classe s. To establish the baseline lamps for this rulemaking, DOE analyzed manufacturer catalogs to determine which currently-sold products fall within the scope of the current IRL exemp tions. Based on the number of models sold across several manufacturer catalogs, DOE found that tw o lamp types make up most of the exempted lamp market: 65 W BR30 and 45 W R20. For this rulemaking, DOE is considering analyzingthese two baseline lamps for the standard-spectrum, low-voltage, large-diameter and smalldiameter product classes, respectively. Tabl e 2.3 depicts the common efficacy and lifetime characteristics of these baseline lamps.

13Table 2.3 Baseline Lamp Characteristics

Baseline

Lamp Wattage Initial Light Output Efficacy Lamp

Lifetime

W Lm lm/W hr

BR30 65 620 9.5 2,000

R20 45 380 8.4 2,000

2.5.4 Higher-Efficacy Lamp Designs

As described in the July 2009 final rule engineering analysis, DOE considers only “design options”—technology options used to improve lamp efficacy that are not eliminated in the screening analysis. 74 FR 34080, 34102 (July 14, 2009). In the July 2009 final rule, DOE’s selection of design options guid ed its selection of higher-effic acy lamp designs and efficacy

levels. Id . DOE identified natural “technology-based” di visions in the market around the type of incandescent technology used ( e.g. , non-halogen, halogen, or halogen infrared reflector (HIR)). DOE also identified certain technology options and created model lamps to represent the efficacy those technology options could achieve.

DOE also accounted for lumen output when DOE established lamp designs for its analyses. For the LCC analysis, where possible, DOE considered those lamps that: (1) emit lumens equal to the lumen output of the baseline lamp, or below that lamp by no more than 10 percent; and (2) result in energy savings. DO E took this approach in order to accurately characterize the cost-effectiveness of a particular efficacy level if a consumer makes an informed decision that maintains light output. However, because all consumers may not make such decisions, lamp designs that under-illuminate, over- illuminate, or do not result in energy savings

were considered in the NIA.

In the July 2009 final rule, DOE selected lamp designs and efficiency levels by observing natural efficacy divisions in the marketplace that correspond to the use of more-efficacious technologies ( e.g. , halogen capsules, HIR technology, and improved reflector coatings). 74 FR 34080, 34102 (July 14, 2009).

For this rulemaking, DOE intends to adopt these same technology divisions to develop higher-efficacy lamp design and efficiency levels. Because the lamps covered under this rulemaking are exempt from standards, DOE will analyze the baseline lamp designs from the July 2009 final rule as a higher-efficacy la mp option in this rulemaking. 74 FR 34080, 34102 (July 14, 2009). Table 2.4 and Table 2.5 present the higher-efficacy lamp designs DOE intends to analyze in this rulemaking for the 65 W BR 30 and 45 W R20 baseline lamps, respectively. As seen in Table 2.4, for the 65 W BR30 lamp, DOE is considering analyzing the same lamp designs as those analyzed for the 50 W PAR30 baseline in the July 2009 final rule. 74 FR 34080, 34102 (July 14, 2009). As DOE believes that there is no clear utility difference between BR-, R

- , and PAR-shaped lamps, DOE intends to analyze PAR-shaped lamps as direct replacements for the BR- and R-shaped lamps. DOE developed the initial higher-efficacy lamp designs that serve as replacements for the 45 W R20 lamp by examining catalogs for commercially-available lamps and by estimating efficacy increases for each de sign option employed. As seen in Table 2.4 and

14Table 2.5, DOE’s initial lamp designs for analys is do not have wattage s below 40 W for two reasons. First, DOE’s scope of coverage of in candescent reflector lamps, as defined by EPCA, has a minimum wattage of 40 W. Second, DOE unde rstands that there are difficulties employing some higher-efficacy design options (such as HI R capsules) in lamps with wattages below 40 W. Because DOE has preliminarily decided to not analyze lamps below the 40 W limit, many of the higher-efficacy lamp replacements for the 65 W BR30 and 45 W R20 lamps have higher lumen outputs than the baselines.

Table 2.4 65 W BR30 Higher Efficacy Lamp Designs

Efficacy Level (EL) Design Option Lamp Descriptor Wattage Efficacy Initial Light Output Lamp

Life

W lm/W lm hr

Baseline Incandescent BR30 65.0 9.5 620 2,000

EL1 Halogen PAR30 50.0 12.6 630 3,000

EL2 Improved Halogen (Xenon) PAR30 47.8 13.2 630 3,000

EL3 Long-Life HIR PAR30 46.0 13.5 620 6,000

Improved Halogen (Silver) PAR30 45.0 14.0 630 3,000

EL4 HIR PAR30 41.8 15.1 630 3,000

EL5 Improved HIR PAR30 40.0 17.0 680 4,000

Low-Lifetime Improved HIR PAR30 40.0 17.0 680 3,000

EL6 Improved HIR

Plus PAR30 40.0 19.1 765 4,200

Low-Lifetime Improved HIR

Plus PAR30 40.0 19.1 765 2,500

15Table 2.5 45 W R20 Higher Efficacy Lamp Designs

Efficacy

Level Design Option Lamp Descriptor Wattage Efficacy Initial Light Output Lamp

Life

W lm/W lm hr

Baseline Incandescent R20 45.0 8.4 380 2,000

EL1 Halogen PAR20 40.0 10.4 416 2,500

EL2 Improved Halogen (Xenon) PAR20 40.0 10.9 437 2,500

EL3 Long-Life HIR PAR20 40.0 12.1 483 6,000

Improved Halogen (Silver) PAR20 40.0 11.6 463 2,500

EL4 HIR PAR20 40.0 13.3 530 3,000

EL5 Improved HIR PAR20 40.0 14.3 570 3,000

EL6 Improved HIR

Plus PAR20 40.0 15.8 633 3,000

2.5.5 Efficiency Levels

As wattage increases for incandescent lamps, efficacy generally increases. So that the efficacy levels (ELs) reflected the performance of these lamps, in the July 2009 final rule, DOE established that the efficacy requirement for IR Ls varies according to the following equation:

a*P 0.27 , where “a” is a constant specifying the technology level and “P” is the wattage of the lamp. 74 FR 34080, 34104 (July 14, 2009). For this rulemaking, DOE intends to maintain the

continuous function for IRL in th e same equation form used in the July 2009 final rule. In addition, because the majority of lamp designs disc ussed above are identical to those analyzed in the July 2009 final rule, DOE intends to adopt EL1 through EL5 from the July 2009 final rule as EL2 through EL6 for this rulemaking. Similarl y, the baseline lamps from the July 2009 final rule will become EL1 for this rulemaking and the exempt lamps will become the new baseline. 5
74 FR 34080, 34102-8 (July 14, 2009).

In summary, DOE will consider six efficacy levels in the NOPR. EL1 is based on a halogen lamp with a lifetime of 3,000 hours for large diameter lamps and 2,500 hours for small diameter lamps. EL2 is based on an improved ha logen lamp that uses xenon, a higher-efficiency inert fill gas, and has a life time of 3,000 or 2,500 hours for large or small diameter lamps, respectively. EL3 is based on a halogen infrared lamp with a lifetime of 6,000 hours. A halogen lamp using a silverized reflector coating also meets this EL. EL4 is based on the 3,000-hour HIR lamp. EL5 is based on an improved HIR lamp w ith a lifetime of 4,000 hours for large diameter lamps and 3,000 hours for small diameter lamps. EL6 is based on a further improved HIR lamp

5 In the July 2009 final rule, there was not a baseline lamp identified for small diameter lamps because those product classes were not directly analyzed. For this rulemaking, DOE intends to select a small diameter lamp for EL1 that uses an equivalent technology (halogen) as the analyzed baseline lamps in the July 2009 final rule.
16with a lifetime of 4,200 or 3,000 hours for large or small diameter lamps, respectively. In the July 2009 final rule, DOE used IRL compliance report data to adjust the efficacy levels presented in the April 2009 NOPR downward to better refl ect the observed compliance efficacies of commercially-available lamps that feature the de scribed technologies of each EL. DOE intends to adopt the same approach in this rulemaking. Table 2.6 lists the ELs DOE intends to analyze for both representative product cl asses in this rulemaking.

Table 2.6 IRL Efficiency Levels

Lamp Wattage,

W Lamp Type Diameter,

inches Voltage,

V Efficiency Level*

1 2 3 4 5 6

40–205 Standardspectrum > 2.5 < 125 4.2 4.6 4.8 5.4 5.9 6.4

≤ 2.5 < 125 3.8 4.0 4.2 4.8 5.0 5.4

*The values in this table are the coefficients A in the equation A*P ^ 0.27, which represents the efficacy level requirement for IRL. P is the rated wattage of the lamp.

2.5.6 Scaling to Product Classes Not Analyzed

As discussed above, DOE plans to select certain product classes as “representative” product classes where DOE would concentrate its analytical effort. DOE chooses these representative product classes pr imarily because of their high market volumes. In the July 2009 final rule, DOE stated that IRLs operated at 130 V are generally 15 percent more efficacious than when they are operated at 120 V; thus, DOE estab lished a separate product class such that 130 V IRLs would be subject to standards that ar e 15-percent higher than 120 V IRL standards, allowing DOE to take into account the efficacy reduction that 130 V IRLs will experience when operated at 120 V. 74 FR 34080, 34107-08 (July 14, 2009). For modified-spectrum lamps, as discussed in the July 2009 final rule, DOE conducted an analysis to determine how the concentration of neodymium affects efficacy of IRLs. Using that analysis, DOE implemented a 15-percent reduction in efficacy levels for th e modified-spectrum IRL product classes. 74 FR 34080, 34106 (July 14, 2009). In consideration of the similarity in technologies between the exempt IRLs covered in this rulemaking and those covered in the July 2009 final rule, DOE intends to use the same scaling relationships for this rulemaking as those established in the July

2009 final rule. 74 FR 34080, 34105-8 (July 14, 2009).

Item 7 DOE welcomes comments on its decision to use the same methodology for the engineering analysis as that used in the Ju ly 2009 final rule. DOE specifically requests comments on the following: (1) the designated representative product classes; (2) the selected baseline lamps; (3) the selected higher-efficiency lamp designs; (4) the efficiency levels considered for analysis; and (5) the adj ustments considered for scaling to product classes not analyzed.

172.6 Energy Use Char acterization

The purpose of the energy-use characterization is to estimate the energy consumption of the baseline and higher-efficacy lamps considered in this analysis. DOE determines the energy consumption of the lamps through the rated power ( i.e. , rated in watts) and the way consumers use the lamp ( i.e. , operating hours per year). This analysis, which is meant to represent typical energy consumption in the field, is an input to both the LCC and PBP analyses and the NIA. The energy-use characterization enables DOE to determine the LCC and the PBP of more-efficacious lamps relative to the baseline lamp. DOE derives the annual energy consumption of lamps by multiplying the power rating by the number of hours of operation per year.

In the July 2009 final rule, DOE developed operating hours for IRLs in both the

residential and commercial s ectors. 74 FR 34080, 34111 (July 14, 2009). DOE did not analyze IRLs in the industrial sector, because they ar e rarely used in industrial settings. 74 FR 16920, 16954 (April 13, 2009). As the exempt IRLs are s imilar to those included in coverage by the July 2009 final rule, DOE does not intend to analyze exempt IRLs in the industrial sector for this rulemaking. In addition, DOE accounted for va riability of operating hours by developing a distribution of operating hours for the LCC spre adsheet. DOE used the U.S. Lighting Market Characterization Volume I (LMC) 6 to determine operating hour s. The LMC is based on thousands of building audits and surveys and provides national-level da ta on operating hours by building type and lamp category for all sectors. Within the commercial sector, the distributions were broken down by application, and within the residential sector, the distribution was broken down by room type.

In conjunction with data from the LMC, DOE used data from the Energy Information Administration’s (EIA) 2003 Co mmercial Building Energy C onsumption Survey (CBECS) 7

, 2005 Residential Energy Consumption Survey (RECS) 8 , and the 2002 Manufacturing Energy Consumption Survey. 9 These EIA studies provide informa tion on the distribution of buildings within the U.S., by building type and Census Division. DOE used the LMC’s operating hour data by building type and the EIA’s data by building type and Census Division to derive operating hours by Census Division. This allo wed DOE to correlate the electricity price

distribution and sales tax distribution with the operating hour distribution by Census Division in the LCC spreadsheet.

6 U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Energy Conservation Program for Consumer Products: Final Report: U.S. Lighting Market Characterization, Volume I: National Lighting Inventory and Energy Consumption Estimate (2002). Available at: http://www.eere.energy.gov/buildings/info/documents/pdfs/lmc_vol1_final.pdf.

7 U.S. Department of Energy, Energy Information Administration, Commercial Building Energy Consumption Survey: Micro-level data, file 2 Building Activities, Speci al Measures of Size, and Multi-building Facilities (2003). Available at: http://www.eia.doe.gov/emeu/cbecs/public_

use.html.

8 U.S. Department of Energy, Energy Information Administration, Residential Energy Consumption Survey: File 1: Housing Unit Characteristic (2006). Available at: http://www.eia.doe.gov/emeu/recs/recs2001/publicuse2001.html.

9 U.S. Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey, Table 1.4: Number of Establishments by First Use of Energy for All Purposes (Fuel and Nonfuel) (2002). Available

at: http://www.eia.doe.gov/emeu/mecs/mecs2002/data02 / shelltables.html.
18For the residential sector, DOE used RECS building data and LMC residential sector operating hour data. The 2005 RECS data indicate the probability that a certain building type is

within a Census Division. The LMC indicates th e occurrence of certain room types within a given building type and the operating hour character istics of typical lamps in these rooms. By using probabilities derived from RECS, the LCC model selected a building of a certain type and

Census Division. The model then se lected a room within that building type using LMC data and presented operating hour data for a typical lamp in that room.

DOE used a similar approach to the one described for the residential sector to develop a distribution of operating hours in the commercial sector. However, in lieu of room type, the model selected operating hour s based on application. The 2003 CBECS data indicate the probability a certain building type is located in a certain Census Division. Once the LCC model selected a building, DOE used the LMC to indicate the probability a lamp was installed in a certain application in that building. The LMC then estimated the operating hour characteristics of a typical lamp for that application.

Item 8 DOE welcomes comments on its methodol ogy to determine operating hours for covered lamps in the commercial and residential sectors.

2.7 Product Price Determination

This section explains how DOE is considerin g developing end-user prices for baseline products and higher-efficacy products, and how DO E is considering deve loping the sales tax figures to use in the analyses.

In the July 2009 final rule, DOE obtained manufacturers’ publis hed end-user price schedules for lamps (hereafter called the manufacturer’s ‘‘blue book’’ or ‘‘lamp price schedules’’) as well as information on discounts applied to those price schedules from distributors, State contr acts, and other publicly-available info rmation sources. In addition, DOE obtained information on distributor pricing ( i.e. , what a distributor would pay) for commercial, industrial, and institutiona l consumers of lamps. 74 FR 34080, 34110-11 (July 14, 2009).

Starting from a consistent set of prices in the blue books, DOE looked at publiclyavailable prices in State procurement contracts, at large electrical supply distributors, home

improvement/hardware stores, and other sources of publicly-available end-user prices, such as Internet retailers. In its review of publicly-available market prices, DOE observed a range of enduser prices paid for a given lamp, depending on the distribution channel through which it was purchased and the volume at which it was purch ased. DOE observed that State procurement contracts typically negotiated a discount of around 70 to 90 percent off the blue book. In the vast majority of instances, these discounts applie d uniformly to all products on a price schedule irrespective of the volume of a particular lamp.

Internet retailers, electrical supply distribut ors, and home-improvement/ hardware stores generally reflected prices paid by consumers in the medium-to-high range of prices. Furthermore, these channels usually applied diff erent discounts to lamps depending on their sales

19volume. Since many high-efficacy lamps are ‘‘n iche’’ products, DOE observed that they were generally less discounted than commodity lamps.

Using this information, DOE developed th ree sets of discounts from the blue books, representing the range of low, medium, and high lamp prices for IRLs. To reflect future commoditization of higher-efficacy lamps when they become the minimum complying products, the discounts DOE applied to blue books to deri ve the low, medium, and high prices are a

constant markdown across all la mps. Commercially-available IRL products did not span the full range of efficacies considered. For those lamps where commercial pricing was not available, DOE extrapolated pricing from available lamps.

Once DOE calculated end-user prices, DOE added sales tax and, if appropriate, installation costs to derive the total, installed end-user cost. For the reference case in the LCC, DOE used the medium lamp prices, but it also conducted analysis at the low and high lamp prices, to ascertain the impact of these othe r price points. In the NIA, DOE used only the medium prices because this price scenario best represents the average purchase price for a variety of consumers nationwide.

For this rulemaking for exempt IRLs, DOE is considering using the same prices for the 65 W BR30 baseline lamp and its higher-efficacy re placements as those de veloped for the July 2009 final rule. 74 FR 34080, 34110-11 (July 14, 2009). Because DOE did not establish prices for small diameter lamps in the July 2009 fina l rule, for the 45 W R20 baseline lamp, DOE will use discounted blue book prices to establish a ba seline lamp price. Then, because many of the higher-efficacy lamp replacements are not commercially-available, DOE intends to apply the same incremental prices betw een technologies (calculated from the 65 W BR30) to the 45 W R20 baseline lamp price. DOE requests comments on its approach to developing lamp prices for lamps covered by this rulemaking for exempt IRLs.

In the July 2009 final rule, DOE presented sales tax figures that represented State and local sales taxes that were applied to the consumer product price. 74 FR 34080, 34111 (July 14, 2009). It was a multiplicative factor that increa sed the consumer product price. DOE derived State and local taxes from data provi ded by the Sales Tax Clearinghouse. 10 The data represented weighted averages that included county and city rates. DOE is considering using the same methodology to develop sa les tax figures for this rulemaking for exempt IRLs. DOE requests comments on this approach.

Item 9 DOE welcomes comments on its decision to use the same methodology as the July 2009 final rule to develop lamp prices and sales tax figures for this rulemaking.

2.8 Life-Cycle Cost and Payback Period Analyses

10 Sales Tax Clearinghouse, Aggregate State Tax Rates (2007). Available at: http://thestc.com/STrates.stm

. 20This section describes the LCC and payback period analyses and the spreadsheet model DOE intends to use for analyzing the economic impacts of possible standards on individual

consumers. DOE will conduct the LCC and PBP an alyses using a spreadsheet model developed in Microsoft Excel, similar to the one develope d for the July 2009 final rule. When combined with Crystal Ball (a commercially-available software program), the LCC and PBP model generates a Monte Carlo simulation 11 to perform the analysis by incorporating uncertainty and variability considerations.

The LCC analysis estimates the impact of a standard on consumers by calculating the net cost of a lamp under a base-case scenario (in wh ich no new energy conservation standard is in effect) and under a standards-case scenario (in which a potential energy conservation standard is applied). As detailed in the July 2009 final rule, the life-cycle cost of a particular lamp design is composed of the total installed cost (which includes manufacturer selling price, sales taxes, distribution chain mark-ups, and any installation cost), operating expenses (energy, repair, and maintenance costs), product lifetime, and discount rate. 74 FR 34080, 34108 (July 14, 2009). As noted in the July 2009 final rule, DOE also incorporated a residual value calculation to account for any remaining lifetime of lamps at the end of the analysis period. Id . The residual value is an estimate of the produc t’s value to the consumer at the end of the life-cycle cost analysis period. In addition, this residual value mu st recognize that a lamp system may continue to function beyond the end of the analysis peri od. DOE calculates the residual value by linearly prorating the product’s initial cost consistent with the methodology described in the Life-Cycle Costing Manual for the Federal Energy Management Program

. 12

The payback period is the change in product purchase expense due to an increased energy conservation standard, divided by the change in annual operating cost that results from the standard. Stated more simply, the payback period is the time period it takes to recoup the increased purchase cost (including installati on) of a more-efficient product through energy savings. DOE expresses this period in years. As in the July 2009 final rule, DOE intends to use a “simple” PBP for this rulemaking, because the PBP does not take into account other changes in operating expenses over time or the time value of money. 74 FR 34080, 34113 (July 14, 2009). As inputs to the PBP analysis, DOE used the total installed cost of the pr oduct to the consumer for each efficacy level, as well as the first year annual operating costs for each efficacy level. The calculation requires the same inputs as the LCC, except for energy price trends and discount rates; only energy prices for the year the standard takes effect are needed.

Section 325(o)(2)(B)(iii) of EPCA states that there is a re buttable presumption that an energy conservation standard is economically ju stified if the increased installed cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard, as calculated under th e applicable DOE test procedure. (42 U.S.C.

11 Monte Carlo simulations model uncertainty by utilizing probability distributions instead of single values for certain inputs and variables.

12 Fuller, Sieglinde K. and Stephen R. Peterson, National Institute of Standards and Technology Handbook 135 (1996 Edition); Life-Cycle Costing Manual for the Federal Energy Management Program (Prepared for U. S. Department of Energy, Federal Energy Management Program, Office of the Assistant Secretary for Conservation and Renewable Energy)(Feb. 1996). Available at: http://fire.nist.gov/fire/firedocs/build96/PDF/b96121.pdf

. 216295(o)(2)(B)(iii)) DOE’s LCC and PBP analyses generate values that calculate the payback period for consumers of potential energy conser vation standards, which includes, but is not limited to, the three-year payback period contemplated under the rebuttable presumption test. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manuf acturer, nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of th is analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential sta ndard level (thereby supporting or rebutting the results of any preliminary determination of econo mic justification).

Table 2.7 summarizes the approach and data that DOE intends to use to derive the inputs to the LCC and PBP calculations for the exempt IRLs rulemaking. The following sections discuss several of these inputs not addr essed by other analyses DOE conducts.

Table 2.7 Summary of Inputs and Key A ssumptions Used for the LCC Analyses

Inputs Description

Consumer Product

Price Applies discounts to manufacturer catalog (“blue-book”) pricing in order to represent low, medium, and high prices for all lamp categories. See Product Price Determination.

Sales Tax Derives weighted-average tax values for each Census Division and large State from data provided by the Sales Tax Clearinghouse. See Product Price Determination.

Installation Cost Derives costs using the RS Means Electrical Cost Data, 2007 to obtain average labor times for installation, as well as labor rates for electricians and helpers based on wage rates, benefits, and training costs.
Annual Operating

Hours Determines operating hours by associating building-type-specific operating hours data with regional distributions of various building types using the 2002 U.S. Lighting Market Characterization and the Energy Information Administration’s (EIA) 2003 Commercial Building Energy Consumption Survey (CBECS) and 2005 Residential Energy Consumption Survey. See Energy Use Characterization.
Product Energy Consumption Rate Determines lamp input power based on published manufacturer literature. See Engineering Analysis.
Electricity Prices Price: Based on EIA’s 2007 Form EIA-861 data.
Variability: Regional energy prices determined for 13 regions
Electricity Price

Trends Forecasts with EIA’s Annual Energy Outlook ( AEO) 2009

.

Lifetime Lamp lifetime based on published manufacturer literature where available. Where manufacturer literature was not available, DOE derived lamp lifetimes as part of the engineering analysis.

Discount Rate Residential: Approach based on the finance cost of raising funds to purchase lamps either through the financial cost of any debt incurred to purchase product or the opportunity cost of any equity used to purchase equipment, based on the Federal Reserve’s Survey of Consumer Finances data for 1989, 1992, 1995, 1998, 2001, 2004, and 2007. Uses data from the Cost of Savings Index dataset covering 1984 to 2008.
Commercial: Derives discount rates using the cost of capital of publicly-traded firms in the sectors that purchase lamps, based on data in the 2003 CBECS, Damodaran Online, Ibbotson’s Associates, the 2007 Value Line Investment survey, Office of Management and Budget (OMB) Circular No. A-94, 2008 State and local bond interest rates, and the U.S. Bureau of Economic Analysis.
Analysis Period Based on the baseline lamp life divided by the annual operating hours of that lamp.
Lamp Purchasing

Events DOE assesses two events: lamp failure and new construction/renovation.

222.8.1 Installation Costs

As detailed in the July 2009 final rule, DOE considers the total installed cost of a lamp to be the consumer product price (incl uding sales taxes) plus the installation cost. 74 FR 34080, 34108 (July 14, 2009). For the commercial sector, DOE assumes an installation cost that was the product of the average labor rate and the time needed to install a lamp. In the residential sector,

DOE assumes that consumers would install thei r own replacement lamps and, thus, would incur

no installation cost.

In the July 2009 final rule, DOE derived cost s using the “RS Means Electrical Cost Data,

2007 13 ” to obtain average labor times for installation, as well as labor rates for electricians and helpers based on wage rates, bene fits, and training costs. DOE uses “RS Means Electrical Cost Data, 2007,” because labor costs in RS Means are based on labor union agreements and construction wages, as well as actual working conditions in 30 major U.S. cities. 74 FR 34080, 34109 (July 14, 2009). In the July 2009 final rule, DOE estimated that the rates for electricians and electrician’s helpers in 2007 dollars are $55.41 per hour and $27.70 per hour, respectively. DOE also determined the lamp replacement la bor rate to be $15.94 per hour in 2007 dollars. 74 FR 34080, 34109 (July 14, 2009). DOE intends to us e the same installation rates for this rulemaking for exempt IRLs.

2.8.2 Electricity Prices

In the July 2009 final rule, DOE determined energy prices by deriving regional average prices for 13 geographic areas consisting of the nine U.S. Census Divisions, with four large States (New York, Florida, Texas, and Calif ornia) treated separately. 74 FR 34080, 34109 (July 14, 2009). The derivation of prices was based on data in EIA’s Form EIA-861. 14 DOE intends to use the same methodology for this rulemaking for exempt IRLs.

2.8.3 Electricity Price Trends

DOE will use projections of national average electricity prices to residential and commercial consumers to estimate future energy prices and energy bill savings in its LCC analysis. DOE will use the most recently available edition of EIA’s Annual Energy Outlook ( AEO ) as the default source of projections for future energy prices.

2.8.4 Lifetime

13 R. S. Means Company, Inc., 2007 RS Means Electrical Cost Data (2007).

14 Energy Information Administration, Form EIA-861 Final Data File for 2006 (2006)(Last accessed June 20, 2008). Available at: .
23When possible, DOE intends to use manufacturer literature to measure lamp lifetimes for exempt IRLs, as in the July 2009 final rule. 74 FR 34080, 34109 (July 14, 2009). When published manufacturer literature is not available, DOE will derive lamp lifetimes as part of the engineering analysis.

2.8.5 Analysis Period

The analysis period is the span of time over which the LCC is calculated. For the July 2009 final rule, DOE used the longest baseline lamp life in a product class divided by the annual operating hours of that lamp as the analysis period. 74 FR 34080, 34110 (July 14, 2009). During Monte Carlo simulations for the LCC analysis, DOE selected the analysis period based on the longest baseline lamp life divided by the annual operating hours chosen by Crystal Ball. For this rulemaking for exempt IRLs, DOE intends to retain this methodology.

2.8.6 Consumer Discount Rates

The calculation of consumer LCC requires the use of an appropriate discount rate. DOE uses the discount rate to determine the present value of lifetime operatin g expenses. The discount rate used in the LCC analysis represents the rate from an individual consumer’s perspective. 15

For consumers of exempt IRLs, DOE plans to use the same approach that it relied on to develop discount rates for July 2009 final rule ( i.e. , deriving the discount rates from estimates of the interest or “finance cost” to purchas e residential products). 74 FR 34080, 34109 (July 14, 2009). The finance cost of raising funds to purchase these products can be interpreted as: (1) the financial cost of any debt incurred to purchase pro ducts (principally interest charges on debt), or (2) the opportunity cost of any equity used to purchase products (principally interest earnings on household equity). Household equity is represente d by holdings in assets such as stocks and bonds, as well as the return on homeowner equity . Much of the data required, which involves determining the cost of debt and equity, come s from the Federal Reserve Board’s triennial Survey of Consumer Finances

. 16

Item 10 DOE welcomes comments on its decision to use a similar approach as the July 2009 final rule to conduct the LCC and PBP analyses.

2.9 Shipments Analysis

This section presents the methodology DOE is considering for the shipment analysis, which is an input into the national impact an alysis and manufacturer impact analysis. The

15 The consumer discount rate is in contrast to the disc ount rates used in the national impact analysis, which are intended to represent the rate of return of capital in the U.S. economy as well as the societal rate of return on private consumption.

16 Available at: http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html

.

24following section provides a summary of the shipment methodology from the July 2009 final rule and highlights those areas in which the analysis for this rulemaking will remain the same or differ. 74 FR 34080, 34115-16 (July 14, 2009).

In the July 2009 final rule, DOE developed a base-case shipment forecast for each analyzed lamp type to depict what would happe n to energy use, and to consumer costs for purchase and operation of lamps, in the absence of new or revised energy conservation standards.To evaluate the impacts of such standards for those lamps, DOE compared the estimated basecase projection against forecasted estimates of wh at would happen if DOE were to promulgate

standards for IRLs.

DOE followed a four-step process to forecast shipments for IRLs. First, DOE used 2001

- to-2005 historical shipment data from NEMA a nd other publicly-availabl e sources to estimate the total historical shipments ( i.e. , NEMA member and non-NEMA me mber shipments) of each lamp type analyzed. Second, based on these histor ical shipments and the average service lifetime of each lamp type, DOE calculated the installe d stock of lamps in 2005. Third, by applying growth, emerging technologies, and shipment assumptions, DOE projected lamp stock from 2006 to 2042. DOE then calculated the lamp shipments required to meet the lamp stock projections based on operating hours and lifetimes. DOE calibrated its shipments model to reflect confidential shipment data provided by NEMA for 2006 and 2007. Finally, DOE developed

base-case and standards-case market-share matric es as another model input. The market-share matrices characterized the efficacy, power rating, light output, and lifetime of the lamp designs.

DOE is considering adopting this methodolog y for the present rulemaking for exempt IRLs. Each of the above steps is discussed in further detail below.

2.9.1 Historical Shipments

As discussed in the July 2009 final rule, NEMA provided shipment data on IRLs spanning from 2001 to 2005. 74 FR 34080, 34115-16 (July 14, 2009). Recognizing that these shipment figures cover only NEMA members, DO E increased these estimates slightly to account for the volume of IRLs that were imported and/ or manufactured by non-NEMA lamp companies. DOE assumed NEMA shipments represented 85 pe rcent of all halogen lamp shipments and 70 percent of all incandescent lamp shipments. Furthermore, DOE used manufacturer product catalogs to estimate the market share of the prod ucts covered by the July 2009 final rule versus those products that were exempt. DOE estimated that for both the comme rcial and residential sectors, 60 percent of the historical non-halogen lamp shipments were exempt from standards.

In the July 2009 final rule, to model IRLs op erated in the commercia l sector separately from those operated in the residential sector, DOE used a reflector lamp study conducted by the New York State Energy Research and Development Authority 17 with additional shipment data

17 New York State Energy Research and Development Authority, Incandescent Reflector Lamps Study of Proposed Energy Efficiency Standards for New York State (2006).
25submitted by NEMA (NEMA, No. 17 at p. 2) 18 to estimate the percentage of incandescent and halogen IRL shipments by sector. DOE estimated that 33 percent of incandescent and 60 percent of halogen lamp shipments go to the commercia l sector, whereas 67 percent of incandescent and 40 percent of halogen shipments go to the residential sector.

For this rulemaking for exempt IRLs, DOE will continue to use this same historical shipment data and the assumptions presented above to develop forecasts for the exempted lamp types. DOE requests comments on these assumptions.

2.9.2 Installed Stock

Based on these historical shipments and the average service lifetime of each lamp type, DOE calculated the installed stock of lamps (total lamp sockets) in 2005. DOE assumed a distribution of operating hours in the residential sector due to the variety of usage patterns present in a single home. DOE then used growth in floor space, lamp replacement, and assumptions regarding emerging technologies to model the installed stock from 2006 to 2042. DOE determined anticipated growth in the number of IRL sockets using historical residential building growth from RECS 2005 and historical commercial floor space growth from CBECS

2003

.

In this rulemaking for exempt IRLs, DOE is considering using a similar methodology with a several changes. Because the final rule fo r these products is expected to be published in 2011 and take effect in 2014, DOE will project the installed stock from 2006 to 2043. DOE will update the emerging technology percentages to re flect the wattage and lumens of the selected baseline lamps. Additionally, DOE will attempt to account in the ba se case for an additional shift of shipments to lamps covered by this rulemaking once th e July 2009 final rule takes effect. DOE requests comments on this methodology.

2.9.2.1 Existing/Emerging Technologies Scenarios

In the July 2009 final rule, DOE accounted fo r the market impact of reflector compact fluorescent lamps (RCFLs) and emerging technolog ies in the NIA by deducting the anticipated RCFL/emerging technology market share fro m the installed base. 74 FR 34080, 34117-18 (July 14, 2009). For example, if DOE projected that 10 percent of consumers would switch from IRLs to other emerging technologies, DOE would reduce the installed stock of IRLs by this amount. This methodology effectively reduced the size of the market impacted by energy conservation standards, without requiring DOE to prepare estimates of the price and efficacy of those emerging technologies for the NIA model. Thus , DOE could incorporate the impact of RCFLs and emerging technologies in the base-case a nd standards-case, without having to prepare uncertain forecasts for those technologies.

18 This written comment, document number 17, was submitted in response to the Energy Conservation Program for Commercial and Industrial Equipment: High–Intensity Discharge Lamps and is available in Docket #EE-DET-03

- 001.
26DOE is considering using the same methodolog y for this rulemaking for exempt IRLs, but will update its projecti ons of percentage market penetrati on to reflect the characteristics of the baselines selected in the engineering analysis. DOE requests comments on the emerging and existing technology scenarios.

2.9.2.2 Additional Shipments Growth Du e to the July 2009 Final Rule

The standards adopted in the July 2009 final ru le take effect in 2012. At that time, IRLs covered by that rulemaking will be required to comply with what is equivalent to efficiency level 5 of this rulemaking. 74 FR 34080, 34082 (July 14, 2009). As these lamps have higher prices than the baseline lamps being considered in th is rulemaking for exempt IRLs, consumers who make purchase decisions based on first cost will likely purchase a lamp exempted from those standards (but covered by this rulemaking). T hus, in 2012, it is likely that shipments of lamps covered by this rulemaking will increase as some consumers purchase the cheapest lamp available. In addition to growth due to new construction, DOE is considering modeling this effect in the base-case shipment foreca st. DOE requests comments on this approach.

2.9.3 Market-Share Matrices

As discussed in the engineering analysis and the LCC analysis, consumers have available to them a variety of choices in terms of types of lamps. Consumers often make their choice after considering lamp attributes such as lifetime, efficacy, price, lumen output, and rated wattage. Therefore, within each product class, DOE believes it necessary to directly account for the mix of technologies which consumers select in the ba se case and standards case. In order to account for the range of possible consumer choices, DOE will develop and populate technology marketshare matrices. These market-share matrices alloca te percentage market shares to each of the lamp technologies for the base case and standa rds case by proportioning lamp stocks. This enables the IRL shipment model to capture a migration to different lamps over time in both the

base case and standards case. To establish th e base-case market-share matrices, DOE requests comment on the average shipment-weighted wattage or market shares by wattage of the IRLs covered under this rulemaking.

In addition, for the standards-case market-share matrices in the July 2009 final rule, DOE implemented two shipment scenarios for IR Ls: (1) ‘‘roll-up,’’ and (2) ‘‘shift.’’ 74 FR 34080, 34115-16 (July 14, 2009). The ‘‘roll-up’’ scenario represented the standards case assuming all product efficacies in the base case which did not meet the standard would ‘‘roll-up’’ to meet the

new standard level. Those consumers that were above the standard level were considered unaffected and continued to purchase the same base-case lamp. The ‘‘roll-up’’ scenario characterized consumers primarily driven by the fi rst-cost of the lamp, and they were restricted to replacing their base-case lamp with an equal wattage lamp when possible. The ‘‘roll-up’’ scenario, therefore, represents a lower bound of energy-savings scenario. In contrast, the

‘‘shift’’ scenario modeled the standards case assu ming all product efficacies were affected by the standard (whether or not their base-case efficac y met the standard). This scenario, in which consumers were driven by both lamp cost and energy savings, resulted in an upper-bound energy-savings scenario.

27For this rulemaking, DOE is considerin g only modeling a “roll-up” scenario. DOE believes that consumers purchasing lamps covered by this rulemaking are primarily driven by the first-cost of the lamp and, therefore, will continue to purchase the lowest-cost lamp available. DOE makes this assumption because the exempt IRL are less expensive than the IRL covered by the lamps rule and also less efficient. If consumers were motivated by energy savings, they would already have been purchasing a more efficien t lamp. This behavior is best modeled by the “roll-up” rather than the “shift” scenario. DOE requests comments on the tentative selection of

this standards-case scenario.

Item 11 DOE requests comment on the methodology it is considering to forecast shipments and specifically on: (1 ) historical shipment data and the assumptions presented to develop shipment forecasts; (2) the percen t market penetration of existing and emerging technologies; (3) modeling a shift to exempted IRL in the base case due to the July 2009 final rule; and (4) considering only a roll-up scenario in the standards case.

2.10 National Impact Analysis

The NIA assesses cumulative national energy savings (NES) and the cumulative national economic impacts of efficacy levels. The analysis measures economic impacts using the NPV metric, which represents the “net present value” ( i.e. , future amounts discounted to the present) of total customer costs and savings expected to result from new standards at specific efficacy levels. For a given efficiency level, DOE calculates the NPV, as well as the NES, as the

difference between a base-case and the standards-case forecasts.

DOE determines national annual energy consumption as the product of the annual energy consumption per unit lamp system and the number of total units in the installed stock. The perunit annual energy consumption is a function of lamp efficacy and la mp wattage. Cumulative energy savings are the sum of the annual NE S determined over a specified time period. DOE calculates net economic savings each year as the difference between total operating cost savings

and increases in total installe d costs. Cumulative economic savi ngs are the sum of the annual NPVs determined over a specified time period.

2.10.1 Approach

In the standards case, more-efficacious products gradually re place less-efficacious products over time. This affects calculations of the NES and NPV, which are both a function of the total number of units in use and their efficacies, and, thus, depend on annual shipments and the lifetime of a product. Both calculations start by first estimating the installed lamp stock. Asdiscussed in the shipments analysis, new lamp types shipped over time are specified by marketshare matrices. These shipments are tracked through the analysis period to establish the installed stock of lamps.

In the standards case, given that most consumers are likely to install lamps with energy consumption less than or equal to their base-case counterparts, the energy consumption per unit of capacity used by the products in service gradually decreases in the standards case relative to the base case. In the July 2009 final rule, to estima te the resulting national energy savings at each

28CSL, DOE followed a four-step process. 74 FR 34080, 34114 (July 14, 2009). First, DOE calculated the national site-energy 19 consumption for IRLs in each year, beginning with the expected effective date of the standards for the base-case forecast and each standards-case forecast. Second, DOE determined the annual site-e nergy savings, consisting of the difference in site-energy consumption between the base case and the standards case. DOE also estimated and reported additional heating, ve ntilating, and air conditioning (HVAC) interaction savings associated with increased lamp efficacy in the commercial sector. Third, DOE converted the annual site-energy savings into the annual amount of energy save d at the source of electricity generation ( i.e. , primary energy), using a site-to-source conversion factor that varies by year (calculated from AEO2009 projections). Finally, DOE summe d the annual source-energy savings

from 2012 to 2042 to calculate the total NES for th at period. DOE is considering using the same methodology to calculate NES in this rulemaki ng for exempt IRLs. DOE requests comments on this methodology.

To estimate NPV in the July 2009 final rule, DOE calculated the net impact each year as the difference between total operating cost savings (or the electricity cost savings) and increases in total installed costs (which consist of manufacturer selling price, sales taxes, and installation cost). 74 FR 34080, 34114 (July 14, 2009). DOE calcu lated the national NPV at each efficiency level using a three-step process. First, DOE determined the total product costs under the

standards case and the base case from the total installed cost (incl uding product prices, installation, and replacement cost s) and shipments of lamps. S econd, DOE determined the total operating costs in the base case and standards case from electricity prices and the stock of lamps. Third, DOE determined the difference between th e net operating cost savi ngs and the net product cost increase to get the net savings (or expens e) for each year. DOE then discounted the annual net savings (or expenses) to 2009 for lamps boug ht during the analysis period and summed the discounted values to provide the NPV of an efficiency level. An NPV greater than zero shows net savings ( i.e. , the efficiency level would reduce cust omer expenditures relative to the base case in present-value terms). An NPV that is less than zero indicates that the efficiency level would result in a net increase in customer expenditures in present-value terms. DOE is considering using the same methodology to calculat e NPV in this rulemaking for exempt IRLs. DOE requests comments on this methodology.

2.10.2 Base-Case and Standards-Case Forecasted Efficacies

A key aspect of the estimates of NES and NP V is the proportion of future lamp shipments meeting different efficacies for the base case (without new standards) and each of the standards cases (with new standards). Because key inputs to the calculation of the NES and NPV are dependent on the estimate of the la mps shipped at different efficaci es, it is important to know the projected efficacy-distribution of lamp shipments. However, with regard to the calculation of the NES, it is also important to note that the total energy savings per unit is not solely dependent on the lamp efficacy, but also on the lamp wattage . Because most consumers select lamps by wattage when purchasing lamps, per-unit energy consumption for a particular standards-case

19 “Site energy” is the energy consumed by the lamp systems directly as they are operated at the end-use site.

29purchase is not necessarily less than per-unit energy consumption for the corresponding basecase purchase. For example, a hi gher-efficacy lamp can be purchased at the same wattage under the standards case, thereby increasing lumen out put without reducing energy consumption. As discussed in the shipments analysis, the base-case and standards-case forecasted efficacies are primarily determined by inputs into the market-s hare matrices, which are then used in the NIA

model.

2.10.3 National Impact Analysis Inputs

Table 2.8 summarizes the major inputs to th e NES and NPV spreadsheet models. DOE provides a brief description of key inputs below.

Table 2.8 Inputs to the Na tional Impact Analysis

Inputs Description Shipments Annual shipments from shipments model

Effective Date of Standard 2014 Analysis Period 2014 to 2043 Unit Energy Consumption (kWh/yr) Established in the energy-use characterization for each lamp analyzed

Total Installed Cost Established in the product price determination for each lamp analyzed Electricity Price Forecast Based on AEO2009 forecasts to 2030 and an extrapolation beyond

2030 Energy Site-to-Source

Conversion Conversion varies yearly and was generated by DOE/ EIA’s National Energy Modeling System (NEMS) program (a time-series conversion factor; includes electric generation, transmission, and distribution losses). Conversion factors beyond

2030 were held constant. HVAC Interaction Savings 6.25 % of total energy savings in the commercial sector. Assumed negligible in the residential sector.

Rebound Effect 1 % of total energy savings in the commercial and industrial sectors. 8.5 % of total energy savings in the residential sector.

Discount Rate 3 % and 7 % real

Present Year Future costs and savings are discounted to 2009.

One of the critical inputs to the NES and NP V calculations is the analysis period. DOE recognizes that the life-cycle of IRLs is estimated to be less than 30 years; however, in the July 2009 final rule, DOE decided to use an analysis period from 2012 to 2042 for consistency with the shipment and national impact analyses of other rulemakings. 74 FR 34080, 34114 (July 14, 2009). DOE is considering the same approach in this rulemaking for exempt IRLs. DOE requests comments on this methodology.

The site-to-source conversion factor is the multiplicative factor DOE uses for converting site-energy consumption (the energy used at th e end-use site) into primary or source energy consumption (the energy used at the source before transmission or conversion losses). For electricity, the conversion factors vary over time due to projected changes in generation sources ( i.e. , the power plant types projected to provide electricity to the country). For the July 2009 final rule, DOE calculated annual average site-t o-source conversion factors using DOE/EIA’s National Energy Modeling System (NEMS) program (a time-series conversion factor; includes

30electric generation, transmission, and dist ribution losses). 74 FR 34080, 34114-15 (July 14, 2009). Conversion factors for beyond 2030 were he ld constant. DOE is considering using the same methodology to calculate site-to-source conversion factors in this rulemaking for exempt IRLs. DOE requests comments on this methodology.

In the July 2009 final rule, DOE decided to include HVAC interaction in its calculation of the NES but not in the NPV calculation. 74 FR 34080, 34115 (July 14, 2009). The HVAC interaction factor measures the reduced cooling loads and increased heating loads that result

from their interaction with more-efficacious lighting systems. To account for HVAC energy savings, DOE used the analysis completed by the 2000 Ballast Rule 20 , which calculated an HVAC interaction energy savings of 6.25 percent of total energy savings. This analysis incorporated changes in both heating and cooling loads as a result of the standard. The analysis also involved calculating the lighting HVAC inter action energy savings on buildings built before 1989 (5 percent of total energy savings) and ones built from 1990 to 1995 (10 percent of total energy savings). The ballast analysis assumed th at over the analysis period, the building stock would move from the 5 percent interaction fact or towards the 10 percent interaction factor. Using simple scaling methods, 6.25 percent was us ed as an average interaction over the entire analysis period. Using this same methodology fo r the July 2009 final rule, an analysis period ranging from 2012 to 2042 would have had a slight ly higher HVAC energy savings. However, overall HVAC savings with lighting may also decr ease due to more-efficient heating and cooling systems. Considering these competing factors, DO E used 6.25 percent of total energy savings as the HVAC energy savings in commercial sect or for IRLs. DOE did not include HVAC

interaction in the residential sector because it believed IRLs to have a minor impact on HVAC energy usage in that market. In this rulema king for exempt IRLs, DOE is also considering including HVAC interaction in its calculation of NES, at the same percent of total savings used in the July 2009 final rule ( i.e. , 6.25 percent). DOE requests comment s on this interaction factor.

In the July 2009 final rule, DOE consider ed the rebound effect that occurs after installation of energy-efficient lighting equipment. 74 FR 34080, 34115 (July 14, 2009). DOE examined a summary of the literature regard ing the rebound effect in relation to lighting equipment. Based on four studies, the summary estimated that, for a 100 percent increase in energy efficiency, values of “take-back” or re bound for residential ligh ting were between 5 and 12 percent of the energy consumption savings. In addition, with regards to a commercial firm’s response to higher-efficiency lighting, the su mmary estimated 0 to 2 percent for values of rebound for lighting. Therefore, in the calculati on of national energy savings due to energy conservation standards on lighting, DOE used a rebound rate of 8.5 percent in the residential sector and 1 percent in the commercial sector. DOE believes that this rulemaking for exempt

IRLs should account for the rebound effect descri bed above. DOE is considering using the same rebound rates as used by the July 2009 final rule . DOE requests comments on these rates for the

residential and commercial sectors.

20 65 FR 56739 (September 19, 2000). U.S. Department of Energy, Energy Efficiency and Renewable Energy, Office of Building Research and Standards, Technical Support Document: Energy Efficiency Standards for Consumer Products: Fluorescent Lamps Ballast Final Rule (Sept. 2000). Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/gs_fluorescent_0100_r.html.
31The inputs to the NPV calculation are total installed cost per unit (see product price determination), annual ope rating cost savings per unit, total a nnual installed cost increases, total annual operating cost savings, di scount rate, present value of increased installed costs, and present value of operating cost savings.

The annual operating cost savings per unit incorp orates changes in electricity costs due to a standard efficacy level and lower energy c onsumption per unit. In the July 2009 final rule, DOE forecasted electricity prices based on EIA’s AEO2009 . 74 FR 34080, 34115 (July 14, 2009). By using both of these values, DOE was able to establish the annual operating cost savings per unit. DOE is considering using the sa me methodology in this rulemaking for exempt

IRLs.

The total annual installed cost increase is e qual to the annual change between the base case and standards case in the per-unit total installed cost of the product multiplied by the shipments forecasted for each lamp design. The to tal annual operating cost savings are equal to the change in the annual operating costs per unit of the product and the tota l lamp stock by lamp design.

DOE multiplies monetary values in future ye ars by the discount rate to determine the present value. In the July 2009 final rule, DOE estimated national impacts using both a 3-percent and a 7-percent real discount rate as the average r eal rate of return on private investment in the

U.S. economy. 74 FR 34080, 34122-23 (July 14, 2009). DOE used these discount rates in accordance with the U.S. Office of Management and Budget (OMB) guidance to Federal agencies on the development of regulatory an alysis (OMB Circular A–4 (Sept. 17, 2003)), particularly section E, “Identif ying and Measuring Benefits and Costs.” For purposes of its analysis, DOE defined the present year as 2009. DOE is considering using the same discount rates in this rulemaking for exempt IRLs. DOE requests comments on the appropriateness of

these discount rates.

The present value of increased installed costs is the annual installed cost increase in each year ( i.e. , the difference between the standards case and base case), discounted to the present, and summed for the time period over which DOE is considering the installation of product ( i.e.

, from the effective date of standards, 2014, to the year 2043). The increase in total installed cost refers to both product cost and installation cost a ssociated with the higher energy efficacy of product purchased in the standards case compared to the base case.

The present value of operating cost savi ngs is the annual operating cost savings ( i.e. , the

difference between the base case and standards cas e) discounted to the present, and summed over the period from the effective date, 2014, to the time when the last unit installed in 2043 is retired from service. Savings are decreases in operating costs associated with the higher energy efficacy of products purchased in the standards case co mpared to the base case. Total annual operating cost savings is the savings per unit multiplied by the number of units surviving in a particular

year.

32Item 12 DOE welcomes comments on its decision to use the same inputs and methodology as the July 2009 final rule to calculate NES and NPV.

2.11 Life-Cycle Cost Subgroup Analysis

The LCC (consumer) subgroup analysis eval uates economic impacts on selected groups of consumers who might be adversely affected by a change in the national energy conservation standards for the considered products. DOE evaluates impacts on particular subgroups of consumers primarily by analyzing the LCC impacts and PBP for those particular consumers. For this rulemaking, DOE intends to evaluate impac ts of standards on low- income and senior-only households. DOE seeks input regarding which co nsumer subgroups it should consider in this rulemaking.

In comparing potential impacts on the differe nt consumer subgroups, DOE will evaluate variations in energy prices, energy use, and inst allation costs that might affect the impacts of a standard on the consumer subgroups.

Item 13 DOE currently plans on assessing the impacts on low-income households and senior citizens, but seeks input regardi ng which other consumer subgroups it should consider in this rulemaking.

2.12 Manufacturer Impact Analysis

The purpose of the MIA is to identify and quantify the likely impacts of amended energy

conservation standards on manufacturers of exempted IRLs. During the NOPR stage of analysis, DOE will analyze and consider a wide range of quantitative and qualitative industry impacts that may occur due to amended energy conservation standards. DOE will identify and analyze these impacts through industry research, public comment s, and interviews with manufacturers and other interested parties. Other sources of information will incl ude reports published by industry groups, trade journals, the U.S. Census Bureau, and U.S. Securities and Exchange Commission (SEC) 10-K filings.

Initially, DOE will conduct a profile of the IRL manufacturer industry by gathering pertinent qualitative and qua ntitative financial and market info rmation, including industry cost structures, employment metrics, and compe titive behavior. Next, DOE will conduct detailed interviews with manufacturers of exempt IRL to gain insight into the potential impact of amended standards on sales, direct employment , capital assets, and i ndustry competitiveness. DOE will use the information gathered in the industry profile to shape an interview guide that will be distributed to manufacturers prior to these interviews. The guide will facilitate the discussion of production costs, shipment projections, product mix , conversion costs, markups, competitive impacts, manufacturing capacity, and other relevant topics. Because standards may have differential impacts on groups of manufacturers with different cost structures or business models, DOE will also identify and characteri ze any such subgroups during interviews.

33DOE is aware that amended standards ma y require additional investment, raise production costs, and affect revenue through hi gher prices. To quantify these potential impacts on manufacturers, DOE will calcula te standards-induced changes in industry and subgroup cash flows using the Government Regulatory Impact Model (GRIM). This will enable DOE to derive a base-case and standards-case industry net presen t value. The inputs to the GRIM will include financial information, manufacturin g costs, shipment forecasts, and price forecasts developed in other analyses. Lastly, based on the information gathered during intervie ws and other research, DOE will assess impacts on competition, manufacturi ng capacity, employment, and regulatory burden. DOE requests comments on its methodology for assessing the impacts on manufacturers of products covered under this rulemaking.

Item 14 DOE welcomes comments on its met hodology for assessing the impacts on manufacturers of products covered under this rulemaking.

2.13 Utility Impact Analysis

To estimate the effects of energy conservation standards for exempt IRLs on the utility industry, DOE plans to use a variant of EIA’s NEMS that is tailored to DOE’s Building Technologies Program (NEMS-BT). The utility imp act analysis is a comparison between the NEMS-BT model results for the base case ( i.e. , the AEO reference case) and standards cases. The utility impact analysis reports the changes in installed capacity and generation that result for each standard level by plant type. DOE will model the impacts from amended energy conservation standards using NEMS-BT to generate forecasts that deviate from the AEO

reference case. 21 DOE requests comments on its approach to assessing utility impacts of standards on the products cove red under this rulemaking.

Item 15 DOE welcomes comments on its approach to assessing utility impac ts of potential standards on the products covered under this ru lemaking. To estimate the effects of energy conservation standards for exempt IRLs on the ut ility industry, DOE plans to use a variant of EIA’s NEMS that refers to DOE’s Building Technologies Program (NEMS-BT).

2.14 Employment Impacts Analysis

The promulgation of energy conservation sta ndards can affect employment both directly and indirectly. Direct employment impacts are cha nges in the number of employees at the plants that produce the covered equipment, along with the affiliated distribution and service companies, resulting from the standards. DOE will evaluate direct employment impacts in the MIA.

Indirect employment impacts may result from expenditures shifting between goods (the substitution effect) and changes in income and overall expenditure levels (the income effect) that

occur due to the standards. DOE defines indirect employment impacts from standards as net jobs

21 Several descriptions of NEMS-BT models from previous rulemakings, including general service fluorescent lamps and incandescent reflector lamps, can be found on DOE’s website at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ch_14_lamps_standards_final_tsd.pdf

. 34eliminated or created in the general economy as a result of increased spending driven by the increased equipment prices and reduced spending on energy.

The indirect employment impacts will be investigated in the employment impact analysis using the Pacific Northwest National Laboratory’ s “Impact of Sector Energy Technologies” (ImSET) model. The ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis, and estimates the employment and inco me effects of energy-saving technologies in buildings, industry, and transportation. In comparison with simple economic multiplier approaches, ImSET allows for more complete and automated analysis of the economic impacts of energy conservation investments. DOE requ ests comments on its a pproach to assessing employment impacts of standards on the pr oducts covered under this rulemaking.

Item 16 DOE welcomes comments on its approach to assessing employment impacts of standards on the products covered under this ru lemaking. The indirect employment impacts are investigated in the employment impact anal ysis using the Pacific Northwest National Laboratory’s “Impact of Sector Energy Technologies” (ImSET) model whereas the direct employment impacts are calculated during the manufacturer impact analysis.

2.15 Environmental Assessment

The intent of the environmental assessment is to quantify and consid er the environmental effects of amended energy conservation standa rds for the ER, BR, and small diameter IRL covered by this rulemaking. The primary enviro nmental effects of these standards would be reduced power plant emissions resulting from reduced consumption of electricity. DOE will assess these environmental effects by using NEMS-B T to provide key inputs to its analysis. The portion of the environmental a ssessment that will be produced by NEMS-BT considers carbon dioxide (CO 2 ), nitrogen oxides (NO X ), and mercury (Hg). The environmental assessment also considers impacts on SO 2 emissions. After a brief discu ssion of general methodology, this section will address each of the relevant emissions. The next section then explains how DOE plans to monetize the benefits asso ciated with emissions reductions.

Carbon Dioxide

In the absence of any Federal emissions cont rol regulation of power plant emissions of

CO 2 , a DOE standard is likely to result in reductions of these emissions. The CO 2 emission reductions likely to result from a standard will be estimated using NEMS-BT and national energy savings estimates drawn from the NIA spreadsheet model. The net benefit of the standard is the difference between emissions estimated by NEMS-BT at each standard level considered and the

AEO Reference Case. NEMS-BT tracks CO 2 emissions using a deta iled module that provides results with broad coverage of all sector s and inclusion of interactive effects.

Sulfur Dioxide

DOE has preliminarily determined that SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and regional emissions cap and trading programs that are likely to eliminate the standards’ impact on SO 2 emissions. The costs of meeting such emission

35cap requirements are reflected in the electricity prices and forecasts used in DOE’s analysis of

the standards. Title IV of the Clean Ai r Act sets an annual emissions cap on SO 2 for all affected

EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (DC) are also limited under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005)), which creates an allowance-based trading program that will gradually replace the Title IV program in thos e States and DC. (The recent legal history surrounding CAIR is discussed below.) The attainme nt of the emissions caps is flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO 2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. However, if the standard resulted in a permanent increase in the quantity of unused emission allowances, there would be an overall

reduction in SO 2 emissions from the standards. While th ere remains some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap and trade system, the NEMS-BT modeling system that DOE plans to use to forecast emissions reductions currently indicates that no phys ical reductions in power sector emissions would occur for SO 2

.

Nitrogen Oxides

NEMS-BT also has an algorithm for estimating NO X emissions from power generation. The impact of these emissions, however, will be affected by the CAIR, which the Environmental Protection Agency (EPA) issued on May 12, 2005. CAIR will permanently cap emissions of

NO X in 28 eastern states and the District of Columbia. 70 FR 25162 (May 12, 2005).

Much like SO 2 emissions, a cap on NO X emissions means that the amended fluorescent lamp ballast standards may have little or no physical effect on these emissions in the 28 eastern States and the DC covered by CAIR. Although CA IR has been remanded to the EPA by the DC Circuit, it will remain in effect until it is replaced by a rule cons istent with the Court’s July 11, 2008, opinion in North Carolina v. EPA. 531 F.3d 896 (DC Cir. 2008); see also North Carolina

v. EPA, 550 F.3d 1176 (DC Cir. 2008). Because all States covered by CAIR opted to reduce

NO X emissions through participation in cap-and- trade programs for electric generating units, emissions from these sources are capped across the CAIR region.

DOE plans to use NEMS-BT to estimate the emissions reductions from possible

standards in the 22 States wh ere emissions are not capped.

Mercury

Similar to emissions of SO 2 and NO X , future emissions of Hg would have been subject to emissions caps. In May 2005, EPA issued th e Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 2005). CAMR would have permanently capped emissions of mercury for new and existing coal-fired power plants in all States by 2010. However, on February 8, 2008, the DC

Circuit issued its decision in New Jersey v. Environmental Protection Agency , in which the DC Circuit, among other actions, vacated th e CAMR. 517 F.3d 574 (DC Cir. 2008). EPA has decided to develop emissions standards for pow er plants under the Clean Air Act (Section 112),

consistent with the DC Circ uit’s opinion on the CAMR. See

36http://www.epa.gov/air/mercuryr ule/pdfs/certpetition_withdrawal.pdf . Pending EPA's forthcoming revisions to the rule, DOE is excluding the CAMR from its Environmental Analysis. In the absence of CAMR, a DOE sta ndard would likely reduce Hg emissions and DOE plans to use NEMS-BT for this rulemaking to estimate these emission reductions. However, DOE continues to review the impact on Hg emissi ons of rules that reduce energy consumption, and may revise its assessment of Hg emission reduc tions in future rulemakings.

Particulate Matter

DOE acknowledges that particulate matter (PM) impacts are of concern due to human exposures that can impact health. But impact s of PM emissions reduction are much more difficult to estimate than other emissions reductions due to the complex interactions between PM, other power plant emissions, meteorology, and atmospheric chemistry that impact human exposure to particulates. Human exposure to PM us ually occurs at a significant distance from the power plants that are emitting particulates and particulate precursors. When power plant emissions travel this distance, they undergo highly complex atmospheric chemical reactions. Although the EPA does keep inventories of direct PM emissions of power plants, in its source attribution reviews, the EPA doe s not separate direct PM emissions from power plants from the sulfate particulates indirectly produced through complex atmos pheric chemical reactions. The great majority of PM emissions from power plan ts are of these seconda ry particles (secondary sulfates). Thus, it is not useful to examine how the amended standard impacts direct PM emissions independent of indir ect PM production and atmospheric dynamics. Therefore, DOE is not planning to assess the impact of these standa rds on particulate emissions. Further, even the cumulative impact of PM emissions from power plan ts and indirect emissions of pollutants from other sources is unlikely to be significant.

Item 17 DOE welcomes comments on its plan to use NEMS-BT to conduct the environmental assessment on the equipment covered by this rulemaking. DOE is particularly interested in whether there ar e any other approaches to the environmental

assessment that it should consider and th e advantages and disadvantages for each approach.

2.16 Monetization of Emissions Reductions

For those emissions for which real nationa l emission reductions are anticipated (CO 2 , Hg,

and NO X for 22 states), only ranges of estimated economic values base d on environmental damage studies of varying quality and applicability are available. Therefore, DOE plans on reporting estimates of monetary benefits derived using these values and plans to consider these benefits in weighing the cost s and benefits of each of the standard levels considered.

In order to estimate the monetary value of benefits resulting from reduced emissions of

CO 2 emissions, it is DOE’s intent to use in its an alysis the most current Social Cost of Carbon (SCC) values developed a nd/or agreed to by interagency reviews. The SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net agricultural productivity loss, human health effects, property damage from sea level rise, and changes in ecosy stem services. Any effort to quantify and to

37monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantifi cation and monetization, the SCC can be used to provide estimates of the social benefits of reduc tions in GHG emissions.

At the time of this notice, the most recen t interagency estimates of the potential global benefits resulting from reduced CO 2 emissions in 2010 were $4.7, $21.4, $35.1, and $64.9 per

metric ton in 2007 dollars. These values are then adjusted to 2009$ using the standard GDP deflator value for 2008 and 2009. For emissions (or emission reductions) that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 per cent should be used to adjust the global SCC to calculate domestic effects, although preference will be given to consideration of the global

benefits of reduc ing CO2 emissions.

DOE recognizes that scientific and economic kno wledge continues to evolve rapidly as to

the contribution of CO 2 and other GHG to changes in the fu ture global climate and the potential resulting damages to the world economy. Thus, these values are subject to change.

DOE also intends to estimate the potential monetary benefit of reduced NO X emissions resulting from the standard levels it considers. For NO X emissions, availabl e estimates suggest a very wide range of monetary values for NO X emissions, ranging from $370 per ton to $3,800 per

ton of NO X from stationary sources, measured in 2001$ (equivalent to a range of $442 to $4,540 per ton in 2008$). Refer to the OMB, Office of Information and Regu latory Affairs, “2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,” for additional information. In accordance with U.S. Office of Management and Budget (OMB) guidance, DOE will conduct two calculati ons of the monetary benefits derived using each of the economic values used for NO X , one using a real discount rate of 3 percent and another using a real discount rate of 7 percent. 22

DOE does not plan to monetize estimates of Hg in this rulemaking. DOE is aware of multiple agency efforts to determine the appropriate range of values used in evaluating the potential economic benefits of re duced Hg emissions. DOE has decided to await further guidance regarding consistent valuation and reporting of Hg emissions be fore it once again monetizes Hg in its rulemakings.

Item 18 DOE welcomes comments on its approach for the monetization of emissions.

2.17 Regulatory Impact Analysis

In the NOPR and final rule stages of this rulemaking, DOE will prepare a regulatory impact analysis, which addresses the potential for non-regulatory approaches to supplant or augment energy conservation standards to improve the efficiency of IRLs on the market. DOE recognizes that voluntary or other non-regulatory efforts by manufactur ers, utilities, and other

22 OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).

38interested parties can result in substantial efficiency improvements. DOE intends to analyze the likely effects of non-regulatory initiatives on prod uct energy use, consumer utility, and LCCs. DOE will attempt to base its assessment on the actual impacts of any such initiatives to date, but will also consider information presented regarding the impacts that any existing initiative might

have in the future.

If DOE determines that amended energy c onservation standards for the exempt IRLs would constitute a significant regulatory ac tion, DOE will prepare and submit to OMB for

review the assessment of costs and benefits required under sec tion 6(a)(3) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993).

Item 19 DOE welcomes comments on the methodology it is considering for the regulatory impact analysis.

APPENDIX A – LIST OF ITEMS FOR COMMENT

Item 1 DOE welcomes comment on its conclusion that the test procedures for IRL covered by this rulemaking do not need to be updated. DOE believes that the IRL test procedures currently provided in 10 CFR part 430, subpart B, appendix R are appropriate for the ER, BR, and small diameter IRLs that are the subject of this rulemaking. ............................... 5

Item 2 DOE welcomes comment on its decision to not amend energy conservation standards to address lamp operation in “off mode” or “standby mode.” DOE does not believe that any commercially-available IRLs satisfy the definition for “off mode” or “standby mode” operation. Therefore, DOE maintains that it is not feasible to incorporate off mode or standby mode energy use into the energy conservation standards for IRLs....................... 5

Item 3 DOE welcomes comments on its decisi on to base product class divisions on standard/modified spectrum, lamp diameter, and input voltage. ........................................ 8

Item 4 DOE invites interested parties to submit data relevant to the market assessment in the form of a written comment. This is includes historical shipments of the exempted incandescent reflector lamp market by lamp type, lamp wattage, and market sector. ....... 9

Item 5 DOE welcomes comments on all of the tec hnology options it is considering for IRLs, including any omissions or revisions necessary to have a more comprehensive technology assessment for the exempt IRLs covered in this rulemaking. In the context of commenting on technology options, DOE also requests information on the feasibility, performance improvement, and cost of the technology options, as well as any recent developments in their technical maturity.......................................................................... 11

Item 6 DOE requests comments regarding the technologies that were screened out for the July 2009 final rule and whether any additional tec hnology options should be screened out for this rule. Specifically, DOE is seeking any data or information that would allow DOE to

determine whether it is still appropriate to screen ou t these technologies........................ 12

Item 7 DOE welcomes comments on its decision to use the same methodology for the engineering analysis as that used in the July 2009 final rule. DOE specifically requests comments on the following: (1) the designated representative product classes; (2) the selected baseline lamps; (3) the selected higher-efficiency lamp designs; (4) the

39efficiency levels considered for analysis; a nd (5) the adjustments considered for scaling to product classes not analyzed......................................................................................... 17

Item 8 DOE welcomes comments on its methodology to determine operating hours for covered lamps in the commercial a nd residential sectors............................................................... 19

Item 9 DOE welcomes comments on its decision to use the same methodology as the July 2009 final rule to develop lamp prices and sales tax figures for this rulemaking. .................... 20

Item 10 DOE welcomes comments on its decision to use a similar approach as the July 2009 final rule to conduct the LCC and PBP analyses. ............................................................. 24

Item 11 DOE requests comment on the methodology it is considering to forecast shipments and specifically on: (1) historical shipment da ta and the assumptions presented to develop shipment forecasts; (2) the percent market penetration of existing and emerging technologies; (3) modeling a shift to exempted IRL in the base case due to the July 2009 final rule; and (4) considering only a roll- up scenario in the standards case.................... 28 Item 12 DOE welcomes comments on its decision to use the same inputs and methodology as the July 2009 final rule to calculate NES and NPV. ......................................................... 33 Item 13 DOE currently plans on assessing the impacts on low-income households and senior citizens, but seeks input regarding which ot her consumer subgroups it should consider in this rulemaking................................................................................................................ .. 33

Item 14 DOE welcomes comments on its methodol ogy for assessing the impacts on manufacturers of products covere d under this rulemaking............................................... 34

Item 15 DOE welcomes comments on its approach to assessing utility impacts of potential standards on the products covered under this rulemaking. To estimate the effects of energy conservation standards for exempt IRLs on the utility industry, DOE plans to use

a variant of EIA’s NEMS that refers to DOE’s Building Technologies Program (NEMS

BT). .......................................................................................................................... ......... 34

Item 16 DOE welcomes comments on its approach to assessing employment impacts of standards on the products cove red under this rulemaking. The indirect employment impacts are investigated in the employment impact analysis using the Pacific Northwest National Laboratory’s “Impact of Sector En ergy Technologies” (ImSET) model whereas the direct employment impacts are calculated during the manufacturer impact analysis. 35 Item 17 DOE welcomes comments on its plan to us e NEMS-BT to conduct the environmental assessment on the equipment covered by this ru lemaking. DOE is particularly interested in whether there are any other approaches to the environmental assessment that it should consider and the advantages and di sadvantages for each approach.................................. 37

Item 18 DOE welcomes comments on its approach fo r the monetization of emissions. ......... 38

Item 19 DOE welcomes comments on the methodology it is considering for the regulatory impact analysis. .............................................................................................................. ... 39

40