### 7 -i CHAPTER 7. PRODUCT PRICE DETERMINATION

TABLE OF CONTENTS

7.1 INTRODUCTION ........................................................................................................... 7 -1 7.2 METHODOLOGY .......................................................................................................... 7 -1 7.2.1 Discount Determination ....................................................................................... 7 -1 7.2.2 End-User Price Determination ............................................................................. 7 -2 7.2.3 Exception Relief for 700 Series T8 GSFLs ......................................................... 7-3 7.3 RESULTS ........................................................................................................................ 7 -4 7.3.1 End-User Prices for General Service Fluorescent Lamps .................................... 7 -4 7.3.2 End-User Prices for Incandescent Reflector Lamps ............................................ 7 -5

LIST OF TABLES

Table 7.3.1 End-User Prices for 4-Foot Medium Bipin GSFLs .................................................. 7 -4 Table 7.3.2 End-User Prices for 4-foot T5 Minitature Bipin (MiniBP) SO GSFLs .................... 7 -4 Table 7.3.3 End-User Prices for 4-foot T5 MiniBP HO GSFLs .................................................. 7 -5 Table 7.3.4 End-User Prices for 8-foot Single Pin (SP) Slimline GSFLs ................................... 7 -5 Table 7.3.5 End-User Prices for 8-foot Recessed Double Contact (RDC) HO GSFLs ............... 7 -5 Table 7.3.6 End-User Prices for IRLs .......................................................................................... 7-6

### 7 -1 CHAPTER 7. PRODUCT PRICE DETERMINATION

7.1 INTRODUCTION This chapter describes the methodology the U.S. Department of Energy (DOE) followed in developing end-user prices for general service fluorescent lamps (GSFLs) and incandescent reflector lamps (IRLs) considered in this rulemaking. It also provides the initial results for the lamp end-user prices.

In energy conservation standards rulemakings, DOE often develops cost-efficiency relationships in the engineering analysis (chapter 5 of th is technical support document [TSD]). Then, DOE applies markups to derive end-user prices. For this rulemaking, DOE derived candidate standard levels (CSLs) in the engineering analysis and prices in this chapter of the TSD. The product price determination develops end-user prices directly because reverseengineering a lamp is impractical, as the lamps are not easily disassembled. By combining the

re sults of the engineering analysis and the product price determination, DOE derived typical inputs for use in the life-cycle cost (LCC; chapter 8 of th is TSD) analysis and the national impact

a nalysis (NIA; chapter 10 of th is TSD).

Because DOE recognizes that consumers may be required to purchase a new ballast to accommodate higher efficacy GSFLs and/or choose to replace their ballast to obtain higher

e nergy savings, DOE also developed prices for ballasts. Appendix 7A of th is TSD describes the methodology used to derive the end-user prices for the ballasts that are considered in the

e ngineering analysis.

7.2 METHODOLOGY

End -user price refers to the average product price a consumer pays before tax and inst allation. In its review of publicly available prices for GSFLs and IRLs, DOE observed a

ra nge of end-user prices paid for a lamp, depending on the distribution channel through which the lamp is purchased. Based on feedback from manufacturer interviews, GSFL and IRL manuf acturers usually sell through a distribution chain that may involve dealers or retailers; distributors or wholesalers; contractors ; state, city, or local governments; and original equipment manufacturers (OEMs). Of the possible distribution chains, DOE identified three main channels (sta te procurement, large distributors including do- it -yourself stores, and Internet retailers). Using these main channels, DOE developed three different end-user prices (low, medium, and hig h) as representative of a range of publicly available prices. In developing end-user prices, DO E gathered publicly available lamp pricing data after the compliance date of the standards
pr omulgated by the previous rulemaking amending GSFL and IRL standard levels (hereafter the “2009 Lamps Rule ”)

. 74 FR 34080 (July 14, 2009).

7.2.1 Discount Determination DOE first collected manufacturer suggested price lists (hereafter referred to as “blue book s ”) for covered GSFLs and IRLs. Blue book prices refer to suggested retail prices issued by manuf acturers and are usually specified for bulk quantity purchases. Starting with a consistent

### 7 -2

set of aggregated blue book prices, DOE calculated an average discount ratio based on the

c orresponding lamp prices offered in state procurement contracts and by Internet retailers. a 

### DOE found that the discounts did not vary with wattage or efficacy, and therefore applied a single discount for all GSFLs and a single discount for IRLs to estimate end-user prices.

State procurement contracts typically offered the greatest discounts off bl ue book prices : approximately 83 percent off the blue book for GSFLs and about 75 percent off the blue book for I RLs. These contract prices represent large purchases and therefore reflect steep discounts. The refore state procurement contract pricing constitutes the high discount and was used to develop the low end-user prices. Prices were the highest at Internet retailers because consumers
t ypically purchase from Internet retailers in small volumes. Discounts based on Internet retailers were approximately 55 percent off the blue book for GSFLs and about 36 percent off the blue book f or IRLs. Therefore, Internet retailer pricing constitut es the low discount and was used to develop the high end-user prices. DOE was unable to find an adequate amount of pricing infor mation from large distributors, such as do- it -yourself stores, to empirically determine a discount factor. Distributor pric es are generally not publicly available and the price quotes that could be obtained from distributors reflect ed regional discounts. DOE visited several large distributors, including Home Depot, Lowe’s, Target, and Walmart, but found very fe w covered products that were compliant with the standards adopted in the 2009 Lamps Rule that require compliance in July 2012 (hereafter the “July 2012 standards”). However, manufacturer feedback

a nd DOE research indicated that the large distributor channel represents the medium price relative to the state procurement and Internet prices. Therefore, using an average of the state procurement and Internet discounts, DOE developed a medium discount of approximately 69
pe rcent off the blue book for GSFLs and about 56 percent off the blue book for IRLs. These discounts were used to develop the medium end -user prices.

7.2.2 End-User Price Determination In chapter 5 of this TSD, DOE identified representative lamps for each CSL analyzed in the G SFL and IRL product classes. DOE applied the discounts developed in section 7.2.1 to the aggregated blue book values of each representative lamp to obtain a low, medium, and hig h enduser price. For the representative lamps for which blue book prices were unavailable, DOE

e xtrapolated pricing from similar lamps whose blue book prices were available. This was done b y using the blue book prices of equivalent lamps from an alternative manufacturer and by de veloping price ratios based on wattage and/or technology, as appropriate.

B ecause one of the T5 high output ( HO ) lamps analyzed at CSL 1 was not commercially available, DOE developed a scaling factor based on the prices of the T5 standard output (SO) lamps. DOE calculated the ratio between the blue book prices at the baseline and CSL 1 for the full wa ttage T5 SO representative lamps. DOE then applied this ratio to the aggregated blue book

va lue of the full wattage T5 HO baseline lamp to determine the price for the T5 HO model lamp
at CSL 1. See appendix 5A of th is TSD for further detail on this modeled lamp.

a To calculate discounts for state procurement contracts and internet retailers, DOE analyzed lamps that had more than one state procurement price or Internet retail price.

### 7 -3

After generating end-user prices, DOE added sales tax and installation costs, where appropriate, to derive the total, installed end-user cost for the LCC analysis (chapter 8 of this TSD).

7.2.3 Exception Relief for 700 Series T8 GSFLs At the time of this analysis, Philips Lighting Company (Philips), GE Lighting (GE), OSRAM SYLVANIA, Inc. (OSI), Ushio America, Halco Lighting Technologies, Premium Quality Lighting, Inc., Tailored Lighting, Inc., Litetronics International, Inc., Satco Products, Inc., DLU Lighting USA, Westinghouse Lighting Corporation, Ascent Battery Supply, L.L.C., EiKO , Ltd., and Topaz Lighting Corporation have been granted waivers exempting their 700 series T8 lamps from the July 2012 standards for a period of two years. This group includ es the three manufacturers that hold the majority of the domestic market share of GSFLs (GE, OSI, and Philips). The waiver was granted per the Requests for Adjustments provision (also known as “exception relief”), which allows a manufacturer to submit a hardship waiver to DOE’s Office of Hearings and Appeals (OHA).

In this case, the exception relief focused on the impact of standards on the supply and de mand of rare earth phosphors. Rare earth phosphors are a key technology in increasing the efficacy of fluorescent lamps. Specifically, the use of terbium, europium, and yttrium allows a lamp to emit light at the wavelengths to which human eyes are most sensitive. The exception relief was sought and granted on the basis that due to the global supply restriction of rare earth phosphors a nd rising world demand for these phosphors, manufacturers would be unable to attain the ne cessary amount to produce standards-compliant lamps. 1 

### In the framework stage of this rulemaking, DOE received comments from manufacturers that an increased demand for rare earth phosphors would be difficult to meet as the phosphors are sourced from China, which has imposed export quotas on the elements. The increase in demand would also likely increase rare earth phosphor prices according to manufacturers. However, while an increase is likely, manufacturers stated that the rare earth market is uncertain and they are unable to predict possible future prices under the various market forces. See chapter 2 of this TSD for further discussion.

As noted previously, DOE used the latest lamp price s available at the time of this analysis, which are reflective of a market in which most companies are able to manufacture

a nd/or sell non-compliant 700 series T8 lamps. Based on the reasoning by which the exception

re lief was granted, the requirement for more rare earth phosphors to produce standards-compliant lamps ( i.e.
, 800 series for most product classes) and the subsequent rising prices of these phosphors may drive lamp prices higher than at the time of this analysis ( i. e. , with the exception relief in place). However, due to the exception relief, there is no historical pricing data to analyze for a market in which 700 series T8 non-compliant lamps were not available. Therefore, DOE

wa s unable to determine the exact impact on lamp prices as a result of an increased demand for rare earth phosphors due to existing GSFL standards. However, DOE has conducted sensitivity analyses that evaluate the potential impacts of changes in rare earth prices on lamp prices and subsequently, cost to the consumer.

DOE derived high and low rare earth phosphor price scenarios using historical phosphor price data and determined the impacts of these scenarios on LCC savings and NIA results. See

### 7 -4

appendix 9B for a description of the rare earth phosphor impact scenario assessed in the NIA and

c hapter 10 of this TSD for results of this sensitivity for the NIA. See appendix 8B of this TSD for results of this sensitivity for the LCC. DOE also determined the maximum possible increase in rare earth phosphor prices that would maintain positive LCC savings for consumers at each C SL. See appendix 7B of this TSD for results of this analysis.

7.3 RESULTS

Sections 7.3.1 and 7.3.2 below summarize the low, medium, and high end-user prices for GSFLs and IRLs. Prices for ballasts are presented in appendix 7A of this TSD.

7.3.1 End-User Prices for General Service Fluorescent Lamps The following tables present the end-user prices for GSFLs. The prices presented do not include sales tax.

Table 7.3. 1 End-User Prices for 4-Foot Medium Bipin GSFLs

CSL ANSI

Lamp Wattage W Lamp Efficacy lm/W Initial

Lumen Output lm Mean Lumen Output lm CRI CCT

Kelvin Rated

Life hrs Low Price 2011$ Medium

Pric e 2011$ High

Price 2011$

Baseline 32.5 89.2 2

, 900 2

, 725 83 4

, 100 24

, 000 $ 2.49 $4. 53 $ 6

. 58

CSL 1 32.5 90.0 2

, 925 2

, 770 85 4

, 100 24

, 000 $ 2.68 $4.88 $7.08

CSL 2 26.6 93 .0 2

, 475 2

, 350 85 4

, 100 24

, 000 $4.76 $8.68 $12.60

CSL 2 32.5 95.4 3

, 100 2

, 941 85 4

, 100 24

, 000 $4.07 $7.42 $10.77

CSL 2 28.4 96.0 2

, 725 2

, 560 85 4

, 100 24

, 000 $3.56 $6.49 $9.42



### Table 7.3. 2 End-User Prices for 4-foot T5 Minitature Bipin (MiniBP) SO GSFLs

CSL ANSI

Lamp Wattage W Lamp Efficacy lm/W Initial

Lumen Output lm Mean Lumen Output lm CRI CCT

Kelvin Rated

Life hrs Low Price 2011$ Medium

Price 2011$ High

Price 2011$

Baseline 27.8 104.3 2

, 900 2

, 697 85 4

, 100 30

, 000 $3.02 $5.51 $8.00

CSL 1 27.8 109.7 3

, 050 2

, 898 85 4

, 100 30

, 000 $3.53 $6.44 $9.36

CSL 1 26 111.5 2

, 900 2

, 660 85 4

, 100 25

, 000 $3.78 $6.89 $10.00

CSL 1 25 116.0 2

, 900 2

, 750 85 4

, 100 35

, 000 $4.16 $7.58 $11.01

### 7 -5

Table 7.3. 3 End-User Prices for 4-foot T5 MiniBP HO GSFLs

CSL ANSI

Lamp Wattage W Lamp Efficacy lm/W Initial

Lumen Output lm Mean Lumen Output lm CRI CCT

Kelvin Rated

Life hrs Low Price 2011$ Medium

Price 2011$ High

Price 2011$

Baseline 53.8 92.9 5
, 000 4

, 850 86 4

, 100 24

, 000 $3.90 $7.12 $10.33

CSL 1 5 3.8 97.3 5
, 237 4

, 871 82 4

, 100 30

, 000 $4.64 $8.46 $12.28

CSL 1 50 100.0 5
, 000 4

, 650 85 4

, 100 30

, 000 $5.99 $10.92 $15.85

CSL 1 47 102.1 4

, 800 4

, 410 84 4

, 100 30

, 000 $6.91 $12.61 $18.30



### Table 7.3. 4 End-User Prices for 8-foo t S ingle Pin (SP) Slimline GSFLs

CSL ANSI

Lamp Wattage W Lamp Efficacy lm/W Initial

Lumen Output lm Mean Lumen Output lm CRI CCT

Kelvin Rated

Life hrs Low Price 2011$ Medium

Price 2011$ High

Price 2011$

Baseline 60.1 98.2 5
, 900 5
, 430 82 4

, 100 24

, 000 $6.79 $12.39 $17.99

CSL 1 60.1 99.0 5
, 950 5
, 650 85 4

, 100 24

, 000 $7.84 $14.30 $20.76

CSL 1 54 105.6 5
, 700 5
, 360 85 4

, 100 24

, 000 $8.59 $15.67 $22.74

CSL 1 50 108.0 5
, 400 5
, 075 85 4

, 100 24

, 000 $10.53 $19.20 $27.88



### Table 7.3. 5 End-User Prices for 8-foo t Re cessed Double Contact (RDC) HO GSFLs

CSL ANSI

Lamp Wattage W Lamp Efficacy lm/W Initial

Lumen Output lm Mean Lumen Output lm CRI CCT

Kelvin Rated

Life hrs Low Price 2011$ Medium

Price 2011$ High

Price 2011$

Baseline 86 95.2 8

, 000 7
, 600 78 4

, 100 18

, 000 $6.44 $11.75 $17.05

CSL 1 86 97.6 8

, 200 7
, 800 86 4

, 100 18

, 000 $7.76 $14.15 $20.55



### 7.3.2 End-User Prices for Incandescent Reflector Lamps The following table presents the end -user prices for IRLs. The prices presented do not include sales tax.

### 7 -6

Table 7.3. 6 End-User Prices for IRLs

CSL Lamp

Shape Lamp Wattage W Lamp Efficacy lm/W Initial

Lumen Output lm Rated Life

hrs Low Price

2011$ Medium

Price 2011$ High

Price 2011$

Baseline 1 PAR38 60 17.8 1

, 070 1

, 500 $5.44 $9.57 $13.92

Baseline 2 PAR38 60 18.3 1

, 100 3

, 000 $5.37 $9.45 $13.75

CSL 1 PAR38 55 20.0 1

, 100 4

, 400 $9.29 $16.34 $23.77

### 7 -7 REFERENCES

1 

### Philips Lighting Company, et al. OHA Case Nos. EXC-12-0001, EXC-12 -0002, EXC-12 -0003 (2012). Accessible here: http://energy.gov/sites/prod/files/oha/EE/EXC-12-0001thru03.pdf

.