CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF DOCUMENT ............................................................................................. 1

1.2 OVERVIEW OF APPLIANCE STANDARDS ................................................................. 1

1.3 OVERVIEW OF SMALL ELECTRIC MOTOR STANDARDS...................................... 2

1.4 STRUCTURE OF THE DOCUMENT............................................................................... 4

LIST OF TABLES

Table 1.3.1 Small Electric Motors Analyses.............................................................................. 3

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CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF DOCUMENT

This preliminary Technical Support Document (TSD) provides the analytical approaches,

inputs and results associated with DOE’s study of energy conservation standards for small

electric motors. This preliminary TSD also serves to provide technical detail and is a

compendium to the life­cycle cost (LCC) and payback period (PBP) and national impact analysis

1 spreadsheets that are posted on the DOE’s website for the preliminary analyses.

1.2 OVERVIEW OF APPLIANCE STANDARDS

Part C of title III of the Energy Policy and Conservation Act (EPCA) provides for an

energy conservation program for certain commercial and industrial equipment. (42 U.S.C. 6311­

6317) In particular, section 346(b) of EPCA states that the Secretary of Energy must prescribe

testing requirements and energy conservation standards for those small electric motors for which

the Secretary determines that standards would be technologically feasible and economically

justified, and would result in significant energy savings. (42 U.S.C. 6317(b))

Before DOE determines whether to adopt a proposed energy conservation standard, it

first solicits comments on the proposed standard. DOE designs any new or amended standard to

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

economically justified. (42 U.S.C. 6295(o)(2)(A), 42 U.S.C. 6313(a)(6)(B)(i) and (b)(3)(A), and

42 U.S.C. 6317(a)(1) and (c)) To determine whether economic justification exists, DOE must

review comments on the proposal and determine that the benefits of the proposed 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 the 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 likely to result from

imposition of the standard;

3. the total projected amount of energy savings likely to result directly from

imposition of the standard;

4. any lessening of utility or performance of the covered products likely to result

from imposition of the standard;

1 DOE website:

http://www.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html.

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5. the impact of any lessening of competition, as determined in writing by the

Attorney General, likely to result from imposition of the standard;

6. the need for national energy conservation; and

7. other factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B))

1.3 OVERVIEW OF SMALL ELECTRIC MOTOR STANDARDS

On July 10, 2006, the Secretary of Energy issued a determination stating “...the

Department believes that standards for considered small motors appear economically justified

based on balanced consideration of the information and analysis available to the Department at

this time.” 71 FR 38807. DOE defines “considered small motors” as capacitor­start motors,

including both induction­run and capacitor­run, and non­servo three­phase motors.

The Secretary’s determination was based partly on analyses conducted by Lawrence

Berkley National Laboratory (LBNL). In February 2002, LBNL published a report entitled

Determination Analysis of Energy Conservation Standards for Small Electric Motors, which

assessed options for setting energy conservation standards. That report was based on

information from annual sales data, average load data, and research on existing and potential

small motor efficiencies obtained from several organizations.

DOE reviewed the comments it received from stakeholders on this draft analysis

published in 2002 and then prepared its final, positive, determination for small electric motors on

July 10, 2006. In that notice, DOE indicated that it found energy conservation standards for

small electric motors appeared to be technologically feasible, economically justified and would

result in significant energy savings. 71 FR 38799. As a result of this positive determination,

DOE published an Energy Conservation Standards Rulemaking Framework Document for Small

Electric Motors in 2007. This document describes the procedural and analytical approaches that

DOE anticipated that it would use to evaluate the establishment of energy conservation standards

2 for small electric motors. 72 FR 44990 (August 10, 2007).

On September 13, 2007, DOE held a public meeting to discuss the proposed analytical

framework. The analytical framework presented at the public meeting described different

analyses, such as life­cycle cost and payback, the methods proposed for conducting them, and

the relationships among the various analyses. Table 1.3.1 below provides a list of all the

rulemaking analyses conducted, and a which stage of the rulemaking DOE publishes those

analyses.

2 The document is available at the DOE website:

http://www.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html.

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Table 1.3.1 Small Electric Motors Analyses

Preliminary Analyses NOPR Final Rule

Market and technology

assessment

Revised preliminary analyses Revised analyses

Screening analysis Life­cycle cost subgroup

analysis

Engineering analysis Manufacturer impact analysis

Energy use and end­use load

characterization

Utility impact analysis

Markups for equipment price

determination

Employment impact analysis

Life­cycle cost and payback

period analyses

Environmental assessment

Shipments analysis Regulatory impact analysis

National impact analysis

Preliminary manufacturer

impact analysis

Representatives of small motor manufacturers, a nationally recognized trade association,

and a prominent energy efficiency advocacy group attended the framework document public

meeting and indicated their willingness to work with DOE in its analysis of potential energy

conservation standards. The major items discussed at the public meeting included definitions for

covered small electric motors and equipment classes; matters of proprietary designs; ties between

efficiency improvements and incremental manufacturing costs; baseline and potential efficiency

levels; base­case trends under different regulatory scenarios; analyses of costs to manufacture

energy efficient small electric motors and the relationship to selling prices; LCC analyses and

methods; LCC subgroups that may be more impacted by efficiency standards over other groups;

motor rating, loading, and operating hours; the impacts of a standard on domestic energy

supplies; and the scope of an environmental assessment.

One interested party submitted written comments, during the framework document

comment period, which addressed options for the screening analysis, approaches for the

engineering analysis, discount rates, the number and basis for the efficiency levels to analyze, the

national energy savings and net present value analyses, impacts on national employment, and the

manufacturer impact analysis. DOE worked with its contractors in preparing the preliminary

analyses to address the issues interested parties raised in response to the framework document.

As part of information gathering and sharing, DOE prepared and circulated three

interview guides to small motor manufacturers in 2007 and early 2008 (see preliminary TSD

appendices 12A, 12B, and 12C). DOE issued these interview guides to small electric motor

manufacturers with the following objectives: (1) to obtain the manufacturer selling price (MSP)

versus efficiency curves for the engineering analysis; (2) to obtain market­related information for

the covered motors, including an estimate of shipments; (3) to assess any preliminary impacts on

manufacturers that may be associated with higher efficiency designs; and (4) to foster

cooperation between DOE and these interested parties, who may choose to participate in the

manufacturer impact analysis following the public meeting comment period. The interview

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guides requested input on (1) the relationship between manufacturing selling price and efficiency

for four representative units selected by DOE; (2) market data such as distribution channels and

end­use operating profiles for small motors; (3) preliminary manufacturer’s impacts; and (4)

national shipment estimates (to be aggregated by the Business Information Service of the

National Electrical Manufacturers Association).

DOE used, in its engineering analysis, some of the information gathered in response to

the interview guides and follow­up conversations with manufacturers, but because only two

companies responded to the interview guides, DOE could not use this input as part of its

preliminary analysis published today. Following completion of the review of the preliminary

analysis published today, DOE will confer with manufacturers to schedule interviews in order to

develop the manufacturer impact analysis for the NOPR (see preliminary TSD chapter 12).

1.4 STRUCTURE OF THE DOCUMENT

This preliminary TSD consists of 14 chapters and two reports.

Chapter 1 Introduction: Provides an overview of the appliance standards program and how

it applies to the small electric motors rulemaking, provides a history of DOE’s

actions to date, and outlines the structure of the preliminary TSD.

Chapter 2 Analytical Framework: Describes the rulemaking process, provides an overview

of each analysis, and discusses comments received during the framework

document public meeting comment period.

Chapter 3 Market and Technology Assessment: Provides DOE’s definition of a small

electric motor, the proposed equipment classes, and names of the major industry

players. This chapter also provides an overview of small electric motor

technology, including techniques employed to improve small electric motor

efficiency.

Chapter 4 Screening Analysis: Discusses the design options identified in chapter 3 that

improve small motor efficiency, and determines which of these will be evaluated

further and which will be screened out using four screening criteria.

Chapter 5 Engineering Analysis: Presents detailed cost and efficiency information for the

motors that constitute the representative units for analysis. This chapter describes

DOE’s approach to the engineering analysis for determining manufacturer costs

and selling prices.

Chapter 6 Energy Use and End­Use Load Characterization: Discusses the process DOE

used for generating energy use estimates and end­use load profiles for small

electric motors.

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Chapter 7 Markups for Equipment Price Determination: Discusses the methods DOE used

for establishing markups to convert manufacturer selling prices to installed

customer equipment prices.

Chapter 8 Life­Cycle Cost and Payback Period Analyses: Describes the impact of potential

candidate standards on consumers of small electric motors. This chapter

compares the life­cycle cost of small motors and other measures of consumer

impact with and without candidate standard levels.

Chapter 9 Shipments Analysis: Provides a shipments estimate for 2007 and the methods

DOE used for forecasting shipments with and without candidate standards levels.

Chapter 10 National Impact Analysis: Describes the national forecast of energy

consumption, efficiency of new units, and annual equipment sales with and

without new regulations.

Chapter 11 Life­Cycle Cost Subgroup Analysis: Evaluates impacts on any identifiable

groups or customers who may be disproportionately affected by any proposed

national energy efficiency standard level. (This analysis is conducted at the

NOPR stage).

Chapter 12 Manufacturer Impact Analysis: Assesses the impacts on small motor

manufacturers of any proposed energy efficiency standard. In addition to

financial impacts, a wide range of quantitative and qualitative effects may occur

following adoption of a standard that may require changes to the manufacturing

practices for these products. (This analysis is conducted fully at the NOPR stage;

at this time, a preliminary manufacturer impact analysis is presented in this TSD).

Chapter 13 Utility Impact Analysis: Analyzes the effects of proposed small electric motor

standard levels on electricity sales. The utility impact analysis compares model

results for the base case and policy cases in which proposed standards are in

place. (This analysis is conducted at the NOPR stage).

Chapter 14 Employment Impact Analysis: Estimates national job creation or elimination

(direct and indirect effects) resulting from possible standards due to reallocation

of the associated commercial expenditures for purchasing and operating

equipment. (This analysis is conducted at the NOPR stage).

Environmental Assessment Report: Assesses the impacts of proposed small electric motor

standard levels on certain environmental indicators. (This report is developed during the NOPR

stage).

Regulatory Impact Analysis Report: Evaluates major alternatives to standards to achieve

customer product energy efficiency. (This report is developed during the NOPR stage).

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